Paddy Burke (Fine Gael)
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I welcome the Minister of State at the Department of Finance, Deputy Simon Harris, on his first visit to the Seanad and congratulate him on his elevation to Minister of State.

Simon Harris (Wicklow, Fine Gael)
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I thank you. I am delighted to be in Seanad on my first outing as Minister of State at the Department of Finance and the Department of Public Expenditure and Reform.
The National Treasury Management Agency (Amendment) Bill 2014 delivers on one of the key parts of the programme for Government and of our medium-term economic strategy, which was published last December. There are four principal elements to the legislation I am introducing today. First, it will establish the Ireland strategic investment fund, the ISIF. The ISIF will take over the assets of the National Pensions Reserve Fund, NPRF, and use the discretionary assets of the fund, some €6.9 billion at the end of March last, for investment in the Irish economy in order to promote economic growth and help foster employment. Second, it will put the New Economy and Recovery Authority, NewERA, on a statutory basis. NewERA is up and running as a business unit of the NTMA, providing financial and commercial advice on commercial semi-states to shareholding Ministers. Third, it will restructure the corporate governance of the NTMA and its associated entities. These governance structures are relatively complex as a result of the assignment of additional functions to the agency since it was established in 1990. Under the Bill the agency, in addition to its core function of borrowing on behalf of the Exchequer and managing the national debt, will be directly responsible for the Ireland strategic investment fund, NewERA, the functions of the National Development Finance Agency, NDFA, and the State Claims Agency. Finally, the Bill will provide a statutory basis for the legal costs unit within the State Claims Agency, which deals with claims against State bodies. The unit was established to deal with third-party costs arising from certain tribunals of inquiry. There will be no impact in respect of NAMA.
I wish to present some of the main provisions of the Bill. There are eight Parts and four Schedules. Part 1 contains the preliminary and general provisions, including the Short Title. Part 2 contains provisions in relation to the governance structure of the agency. I will explain the background in more detail to make clear what we are proposing in the Bill.
The National Treasury Management Agency was established in 1990 under the National Treasury Management Agency Act 1990 to borrow on behalf of the Exchequer and to manage the national debt. The agency was established outside normal public sector structures, with operational freedom to negotiate market-competitive salaries. This business model was designed to enable the NTMA to compete with the private sector and attract and retain specialists in mid-career who would not normally be attracted to working in a public sector environment.
Over the years, the agency's remit has been considerably extended. The principal additional functions are as follows. The agency is the manager of the National Pensions Reserve Fund, which was established in 2001. The investment of the fund is the responsibility of the NPRF Commission. The agency is the body through which the National Development Finance Agency performs its functions. The National Development Finance Agency was established in 2003. Its role is to provide financial advice to State bodies undertaking major public investment projects and to procure and deliver public private partnership projects in sectors other than transport and local authorities. It also procures non-PPP schools on behalf of the Department of Education and Skills. The agency, acting through its NewERA unit, provides advice to shareholding Ministers in relation to commercial semi-states. The agency is responsible for providing risk management advice and claims management assistance to State authorities with the aim of ensuring that the State's liabilities and expenses are contained at the lowest achievable level. The agency is known as the State Claims Agency when dealing with claims against State bodies. The agency also provides business services and staff to NAMA.
I will turn to the governance structures underlying these functions. The NTMA does not have a board, although it does have an advisory committee whose role is to advise on matters referred to it by the agency. The chief executive of the NTMA is directly responsible to the Minister for the performance of the functions of the agency. The chief executive reports directly to the Minister on the NTMA's funding and debt management and State Claims Agency and NewERA functions. To that extent the agency is more like a Government Department than a State agency.
The NPRF, NDFA and NAMA were established under their own governing legislation and each has its own governing body. The NTMA acts as the executive in respect of the NPRF and the NDFA. It assigns staff to NAMA and also provides it with business and support services and systems. The NTMA chief executive is ex officio a member of the NPRF Commission and the board of NAMA and the chairman of the NDFA. A director of the NTMA acts as CEO of the NDFA. That is the situation as we have it now.
The agency has carried out the functions it has been assigned with skill and dedication. However, the governance structure under which it operates has become unwieldy and complex as new functions have been bolted on. As we put NewERA, the ISIF and the legal costs unit on a statutory footing, we are taking the opportunity to simplify and streamline the governance structures of the NTMA and its associated entities. The legislation will convert the agency into a body with members, effectively a board. It will have a total of nine members, six members appointed by the Minister for Finance, serving a five-year term, and, ex officio, the chief executive officer of the NTMA, the Secretary General of the Department of Finance and the Secretary General of the Department of Public Expenditure and Reform. The Minister for Finance will nominate one of the appointed members as chairperson. The reconstituted NTMA will continue to be directly responsible for the borrowing and debt management functions, as well as the State Claims Agency and various other functions such as the Central Treasury Service, just as it is now. In addition, it will be directly responsible for the Ireland strategic investment fund and NDFA functions, rather than acting on behalf of other statutory bodies, and it will have NewERA. No changes are proposed to the existing arrangements in respect of NAMA.
On foot of the changes outlined above, the NTMA advisory committee and the NDFA and its board will be dissolved, as will the State Claims Agency policy committee. The NPRF Commission will also be dissolved as soon as practicable.
Part3 establishes the New Economy and Recovery Authority, NewERA, on a statutory basis. NewERA is already up and running as part of the NTMA, providing financial and commercial advice on commercial semi-states to shareholding Ministers. Financial and commercial advice covers advice on a wide range of things: a Minister's statutory role, exercising rights as ashareholder, governance, expected rates of return, dividend policy, corporate and investment strategy, acquisitions and disposals, as well as appointments and the remuneration of directors and the chief executive. NewERA will not have an executive role in its own right. It is a dedicated source of commercial advice for relevant Ministers who will continue to carry out their current executive functions. NewERA will also be able to provide project management services and oversight in respect of acquisitions, disposals and restructurings, at the request of a relevant Minister.
The Bill sets out the designated commercial semi-state bodies on which the agency will provide advice. They are the ESB, Ervia, formerly Bord Gáis Eireann, Irish Water, Bord na Móna, Coillte Teoranta, EirGrid and any other State body specified by order.
The Bill provides that the agency may provide financial and commercial advisory functions relating to other bodies if requested by the Minister with responsibility for the body.
The Minister for Public Expenditure and Reform will have power to give directions to NewERA as to the performance of its functions. He or she must first consult the Minister for Finance and any relevant shareholding Minister. This mirrors the ministerial power of direction over other NTMA functions. Any such directions must be published. NewERA will be required to submit a report on the financial performance of each of the commercial semi-States under its remit to the Minister for Public Expenditure and Reform and relevant Ministers each year.
The Bill provides that the agency, in consultation with relevant Ministers, may develop proposals for investment in order to support economic activity and employment in energy, water, telecommunications and forestry and any other sector that is specified by order.
Part 4 gives the agency responsibility for the role in relation to infrastructure projects currently carried out by the National Development Finance Agency, NDFA. The NDFA was established on 1 January 2003 to provide a financial advisory service to State authorities in respect of capital projects over a certain size, at present €20 million. It is a body corporate with a chief executive and board, which discharges its functions through the NTMA. It is proposed that the NDFA and its board will be dissolved and its functions will be assigned to the agency.

Part 5 establishes a legal costs unit within the State Claims Agency to look after costs awarded by certain tribunals of inquiry. The NTMA, as the State Claims Agency, manages personal injury claims, including bullying and harassment and third party property damage claims against specified State authorities, as well as associated risks. On foot of a Government decision, the agency has started to advise on costs awarded by the Mahon tribunal on planning matters and the Moriarty tribunal on payments to politicians. The Bill puts this function on a statutory basis. This is being done to minimise the State's exposure and deliver significant savings to the Exchequer because third party costs represent the bulk of tribunal costs. These costs are awarded in principle by tribunals and their amounts are determined in retrospect.

Part 6 establishes the Ireland Strategic Investment Fund, ISIF. The assets and the liabilities of the NPRF - just over €20 billion at the end of March - will become the assets and liabilities of the ISIF. The NPRF was set up as an investment fund to supplement Exchequer resources from 2025 on when the burden of social welfare and public service pensions is expected to have increased considerably. The fund was invested on a global basis accordingly. As Senators will be aware, a portion of the fund was used to recapitalise the banks during the financial crisis. These investments were worth some €13 billion at the end of March and are held at the direction of the Minister for Finance. The balance in the fund - €6.9 billion at the end of March - will be used by the agency for investment on a commercial basis in a manner designed to support economic activity and employment in the State. The intention is to make funding available across the board for infrastructure, SMEs and whatever. While the issue of the future cost of pensions has not gone away, the Government believes fostering economic activity and employment in Ireland is a greater priority in the current circumstances and that the resources of the NPRF should be redeployed accordingly. As the Minister for Finance has stated, the best way to ensure the State will be in a position to meet its future obligations is to ensure we have a growing economy.

The agency will set the overall investment strategy for the fund and in so doing will consult the Minister for Finance and the Minister for Public Expenditure and Reform and have regard to views expressed by them. An investment committee will be established by the agency which will be responsible for individual decisions in line with the investment strategy and within parameters set by the agency. The Bill carries over from the NPRF Act 2009 the power of the Minister to direct that the fund be used to recapitalise the banks. This is being done as a pragmatic precautionary measure. It is not envisaged that the provision will ever be used. However, if for whatever reason, the Government needed to provide funding for the financial system, the likelihood is that it would need to be in a position to do so quickly. It should be noted that this is a measure that can be used only in exceptional circumstances.

Part 7 dissolves the National Pensions Reserve Fund Commission, the National Development Finance Agency, the NTMA Advisory Committee and the State Claims Policy Committee.

Part 8 contains two provisions that were added on Committee Stage in Dáil Éireann. Section 54 allows Ministers to provide guarantees or indemnities in respect of borrowings by State authorities in respect of public private partnerships. Section 55 allows the NTMA to use the PPSN number as a unique identifier for its State savings retail investment products.

There are four Schedules to the Bill which deal with consequential matters. Schedules 1 and 2 amend existing legislation to take account of the provisions of the Bill, for example, deleting references to the National Pensions Reserve Fund Commission. The SIF will be exempt from tax in the same way as the NPRF. Schedule 3 lists State authorities for which the agency, in its NDFA role, provides advice on financing public investment projects. Schedule 4 contains detailed technical provisions ensuring the changes envisaged in the legislation work smoothly. It also removes the requirement to pay the Exchequer contribution of 1% of GNP to the National Pensions Reserve Fund in 2014.

The establishment of NewERA and the ISIF will play a catalytic role in accelerating investment in strategic infrastructure and providing commercial financing and investment in areas that support economic growth and employment. As the economy grows and demand increases, it is essential that well priced financing is available to assist business to trade, grow and create jobs. I look forward to a constructive debate on the Bill.

Thomas Byrne (Fianna Fail)
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I welcome the Minister of State. I think we are all delighted he has been appointed. It is slightly ironic that his first appearance is in the Seanad, but he is very welcome and we are delighted to have him. It is a huge personal honour for him and I hope he will be a Minister of State to the full in the Department because the OPW plays a serious and important role for the entire country. I visited Oldbridge House with which I am sure the Minister of State will become familiar. The staff there were very interested in who would be appointed as Minister of State this week. The Minister of State's name did not come up in the conversation I had with them at the weekend, but I am sure they will be delighted and will certainly look forward to him visiting them. The same applies to the offices in Trim, County Meath.

The Seanad should possibly have given the Minister of State the courtesy of allowing him a few days to get up to speed in the Department. It was a bit much to ask him to come here tonight to put this legislation through, but he has risen to the challenge, which we welcome. He will be happy to note that we will be supporting the legislation. I understand everybody will be supporting it. I am sure we will all have our own reservations and amendments that we will bring forward on Committee Stage, but we support the passage of the Bill. However, it is overdue, although not as a result of any delay caused by the Minister for State. The Government should have looked at this legislation much sooner. It seems that many things are being done with an eye to the general election when perhaps they might have been done some time ago.

It has been mentioned that services such as broadband, water and energy will be supported by the SIF. They are vworthy, but I do not think social housing is mentioned in the legislation. It is something that should possibly be looked at because it is said to be a priority in the latest version of the programme for Government that we received last week. It specifically relates to the private sector and working towards the provision of 25,000 houses per year; therefore, I would like to see something being done on that side. All of us in the greater Dublin area are coming across frightening cases. Only today I heard about the particularly frightening case of homelessness, an issue I would like to see prioritised as, I am sure, would other Members of the House.

It is important to note the role of the NTMA. Overall, it has done a very good job in managing the State's money outside the Civil Service. It is a model that worked very well for a time - certainly when the economy and stock market were rising. It obviously has had difficulties since and owing to the economic crisis, a lot of the money has been used for purposes other than those intended. The Bill looks to rationalise and simplify the Government's instructions to the NTMA to establish a more integrated approach to the performance of its functions which have expanded significantly since it was established in 1990 by Mr. Albert Reynolds. There will be a chairperson and other members with overarching responsibility for the agency's existing debt management and State Claims Agency functions and functions relating to infrastructural projects carried out by the NDFA, the ISIF and NewERA. There will be no change to the proposals relating to NAMA.

The legal costs unit will be established to deal with third party costs arising from tribunals of inquiry, which is welcome. It is amazing because the last report was released over two years ago and those inquiries were still being legislated for. It just proves the point that they were totally unsuitable and not fit for purpose in doing something speedily and at low cost. We are two years on from the Mahon tribunal and over three years on from the Moriarty tribunal and these issues are still arising.

Three years ago we suggested leveraging private pension funds in the NPRF as a means of supporting infrastructural investment. Yes, the Government is doing this now, but it is belated. Given the failure to deliver on existing promises, there must be considerable doubt about whether this will produce benefits. We can only hope that it will, but there is doubt based on the track record of the Government. I am not including the Minister of State in this because he has only joined the Government today.

We will support the Bill. We will have amendments on Committee Stage which will probably be taken some time this week because there is a rush to get legislation through. I think the Seanad generally agrees that rushing legislation through at the last minute is unfortunate; there is a huge number of Bills going through the Seanad today and every day this week, yet we had days in the past few weeks on which there really was nothing to do. That is not a very good way to carry out the people's business and to bring forward very important legislation such as this which we want to support, work and hope will bring tangible improvements to the economy.

Aideen Hayden (Labour)
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I welcome the Minister of State to the House. I agree with my colleague, Senator Byrne, that we are pleased indeed to have him in the House on his first appearance in his current official function. I welcome the legislation before the House. If I was to be absolutely honest about it, it is a little overdue. It has been on the cards since the beginning of the Government's term in office. Anyway, it is certainly welcome and contains several important features.

I take this opportunity to acknowledge the undisputed success of the National Treasury Management Agency. The Minister of the day took the view that to create such an agency outside of the permanent Civil Service would give a certain amount of freedom in terms of recruitment, management and so forth. It has been a highly successful operation and perhaps as a testament to that success several other functions have come within its remit over time.

I wish to comment on the legislation and some of the broader issues. I question the role of the State Claims Agency within the overall umbrella. To my mind there is considerable justification for some of the other arms of the NTMA and its various cloaks, whether it is wearing the NewERA cloak, the Ireland Strategic Investment Fund cloak or whatever cloak it is wearing. The State Claims Agency does not necessarily fall comfortably within the NTMA in that sense. It has 77 employees and deals effectively with legal costs. I am simply throwing it out there. Given the expertise of the NTMA and the various roles that fall within its remit in terms of investment, treasury management and so forth I am unconvinced that what is effectively a legal costs operation should fall within the agency's remit.

Several criticisms have been made about putting the National Pensions Reserve Fund within a new body whose remit is entirely investment within the State. Those criticisms fall within two camps. One camp maintains we should have done this far sooner, that we should put all our eggs into the Irish economy and use the money in the National Pensions Reserve Fund to stimulate the Irish economy, irrespective of whether we are looking for an economic return. The other arm of the debate is along the lines that we must look to the future, we have an ageing population and that it took us long enough to acknowledge that we could not continue to pay pensions out of current expenditure indefinitely, especially since over many years public servants and ordinary citizens have paid into the National Pensions Reserve Fund through PRSI contributions and have a right to have that money protected. In reality, because of the banking crisis we have seen a certain proportion of that money go towards recapitalising the banks, to the point where we are basically putting forward what is left of the fund for investment in the Irish economy. I believe this proposal answers those two concerns. It is important that we stimulate the Irish economy. In fact, it is critical, but is also critical that we protect the interests of Irish pensioners in future. Therefore it is important for the Ireland Strategic Investment Fund to have a commercial mandate and I welcome that it does.

As Senator Byrne noted, how that fund invests in future will be critical for the Irish economy. The Minister of State referred to certain areas in his speech. I agree completely with Senator Byrne that we have a major issue with infrastructural investment in this country which is not covered by the areas the Minister of State mentioned. One of these areas is social housing. We need to look outside the box in terms of how we use the funds available to deal with that particular infrastructural deficit, which is certainly a major infrastructural deficit at the moment.

Several of the comments made on this legislation in the Dáil were highly critical of the idea that we would require a 50% or 50% plus engagement of private funds with the ISIF. There has been considerable criticism of public private partnerships in the context of social housing but I believe much of that criticism is perhaps overstated. Recently, I had reason to be in Fatima Mansions. When we consider the redevelopment of Fatima Mansions there is no question or doubt but that the community there has benefited considerably from the private investment. It is unfortunate that PPPs are now decried as a bad thing. This is not to say that in future we cannot have successful PPPs when it comes to investment, particularly investment in social housing. We need to look to the stock of State assets, particularly the social housing stock, and examine how it can be leveraged in future through something like the ISIF to put investment into social housing. I completely agree with my colleague, Senator Byrne, that this critical issue must be addressed.

One of the criticisms made about NewERA is that it is a vehicle for privatisation. In fact if I had any criticism to make about how we should progress with NewERA, I would make the opposite argument. I believe NewERA should be a holding company for the State in respect of all of its assets. NewERA should holds assets on behalf of the State and semi-state companies. Perhaps one of the fences that we need to jump emotionally is to see the entirety of our State investment as a source of further investment in future. Let us think back to the 1950s and 1960s. When State companies were set up, they were set up with a reason - to fill a gap that could not be filled by other enterprises. Now we look at them as sacred cows that cannot be interfered with. I prefer to see them as a source of funding in order that we can look at other issues that we are not addressing, for example, new technologies or, for the sake of argument - I would not even dream of mentioning it in this House - potentially looking at other sources of energy like nuclear power. We should not see the stock of our current State enterprises as cast in stone. Rather we should see them as something that we can leverage in future for the benefit of our society.

There is no question or doubt that unless we have stimulus in the Irish economy coupled with reasonable growth and, dare I say it, reasonable inflation we will be unable to come out of the situation we are in. This is positive legislation, especially in terms of building on the success of the NTMA model. It recognises that we have State assets that we can leverage. It also recognises that we need to leverage these in a way that protects the interests of pensioners. It acknowledges the need for stimulus in the economy. I am very much of the view that we stand at a critical path now. We cannot continue to remove money out of the Irish economy. We cannot borrow as a State in the way we would like to or in the way other Governments before us had the privilege of doing. We need to think outside the box. I believe that moving assets into ISIF is indeed the way to go, but it must be done in a commercially sensitive way and with the future interests and security of pensioners at its heart.

Sean Barrett (Independent)
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I welcome the Minister of State, Deputy Harris, on his first day or the first few hours of being elevated to that status. It is great to have him in the House and he is welcome indeed.

It is great to have him here.

My first impression from looking through the explanatory memorandum and from the Minister's speech is the emphasis on the strategic investment fund corporate governance. Is this the type of jargon that got us into trouble in 2008? How about efficient investment projects or the ability to appraise investments and publish the results? We have had an appalling banking system, which was aided and abetted by appalling public policy failures in both the Department of Finance and in the Central Bank. I do not know if we have remedied any of those yet or what recommendations the banking inquiry will make on them. A greater level of economic expertise than we had is required in the banks, the Department and the Central Bank. They imploded and did serious damage to this country, from which we are now trying to recover. We are raiding a pension fund for an investment which we find will give us no return until 2025 - section 47 provides that there will be no payments to the Exchequer before 2025. Earlier we had a debate about a bankrupt pension fund of an airport company owning €750 million, so we must get our act together in respect of these investments. Calling it "strategic" just introduces one to the problem, rather than solving it.

I agree with Senator Hayden about the legal costs unit. It appears to operate quite well as it is, so I do not know why it is necessary to change the way it is organised. With regard to governance, the Minister referred to negotiating market competitive salaries for the agency. When it was run from within the Department of Finance at Civil Service competitive salaries the country was solvent. In the case of market competitive salaries, I hope there are no people in these agencies earning multiples of what the Taoiseach earns. I said that earlier when the Minister, Deputy Noonan, was here. That is a daft, artificial commercial market because of the way we rescued the banks. If we could have rescued the banks and got rid of most of the management, then we would see what their market salaries were. They bankrupted the country and their banks and they were not paid market competitive salaries. There should be a serious penalty against people who conducted themselves in that manner.

The Minister mentioned that the National Development Finance Agency was established in 2003. It was therefore in place when the worst excesses of what happened between then and 2008 were occurring. What was it doing at the time? Did it not see what was happening to this country? I am also a sceptic about public-private partnerships. The former Minister for Transport, Tourism and Sport, Deputy Varadkar, told us the ones for roads would be a drain on the Exchequer all of the time. I liked some risk sharing in these projects but we appear to have signed up to a large number of projects, particularly the two toll roads between Dublin and Navan and Cavan, which will never raise enough money for the taxpayer. We were outsmarted by people doing the calculations on the other side.

There is also the allied problem of accountancy firms that prepared books for Irish banks which proved to be fictitious when we bought the banks. The smallest bank bailout proved to be one of the largest bank bailouts. We require a great deal more financial expertise than we have in that area.

The Minister said that the agency is more like a Government Department than a State agency. I am not sure that is the answer. Some Government Departments ran this country on a solvent and conservative basis for many years and some State agencies did not. The Minister said the agency may provide financial and commercial advisory functions to other bodies, if requested by the Minister with responsibility for that body. The expertise is required right across the public capital programme. When one looks at our debt to GDP ratio, which is one of the world's highest, about one third of it was due to the banks. Most of the rest was dud capital projects. We called it infrastructure. Transport 21 was to cost €35 billion, but there was not an ounce of economics in it when it was published. They were simply campaigns to spend loads of money.

There is no stimulus effect in a small open economy. The Irish Fiscal Advisory Council has said that. We signed up for free trade a long time ago and one creates the stimulus in countries from which people buy the imports. In fact, the Minister, Deputy Noonan, on a previous occasion in the House, said that we must forget about the multiplier because it really does not exist anymore in the Irish economy. We need good projects rather than relying on multipliers.

The Minister said, "The intention is to make funding available across the board, for infrastructure, SMEs, whatever." That is a casual type of statement. It should be for good projects that are analysed, tested and assessed as to whether they are worthwhile. I hope the investment committee will be able to do that. The Bill carries over from the National Pensions Reserve Fund Act 2009 the power of the Minister to direct that the fund be used to recapitalise the banks. The Minister said, "This is being done as a pragmatic precautionary measure." That would cause an immense reaction. People have had it up to here with the way the banks have conducted themselves. Indeed, I welcome what the Minister, Deputy Noonan, was doing earlier in his visit here to try to bypass that with the strategic bank. Apart from investing in property, and that is damaging the economy, I do not envisage the Irish banks being able to invest in small and medium enterprises.

With regard to the PPS numbers and the NTMA, that is controversial. In fact, the controversy this morning is their use by Irish Water.

Interest rates have never been so low. What is holding back the development of the economy is the immense weight of debt we have. Much of that debt was incurred by ill-advised capital investments in the past. I recall when myself and Joe Durcan, a fellow economist, did a lecture series in the Institute of Public Administration for local authority members. The view was that, in terms of appraisal of expenditure, anything would get through if it was called "capital". Capital will leave one with large debts and if there are no assets, one's debts gets larger and larger. Therefore, we must assess the entire public capital programme. I believe the Comptroller and Auditor General should be involved, as I said to the Minister, Deputy Noonan, earlier, because he knows the mistakes we have made previously. It is his job to research them and he should be involved in this. I will propose, in page 29 of the Bill, to involve him in giving guidance on how we spend the money.

I must apologise to the Minister. The deadline for tabling amendments was before we heard him speak, so if he finds that some of the amendments relate to items he has already dealt with in his contribution, it was due to the timetable and is not a reflection on what he said to us. On Committee Stage we will do our best to assist him in what is a very important exercise, and we will support him in that regard.

Michael D'Arcy (Fine Gael)
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It does not seem long ago since the Minister of State, Deputy Harris, and I started the European election campaign in the mart in Carnew. I congratulate him on his appointment and wish him the best of luck in his term of office. It is perhaps the most important junior Ministry in the State.

The Bill is hugely important. As Senator Hayden said, we must acknowledge the success of the NTMA. It is, perhaps, one of the better State agencies, being better administered and the most professional in the public service. It is, to some extent, a victim of its own success. It has experienced add-ons, bolt-ons and extensions which have made the structure unwieldy. I also enjoy listening to Senator Barrett. That unwieldy structure and, perhaps, lesser governance than what should be in place can sometimes lead to a deficiency. To some extent, that is what this Bill is about, to have what is effectively a board of directors for the debt management, the ISIF fund, the National Development Finance Agency and the State Claims Agency. I accept that the State Claims Agency does not fit awfully well there, to a degree, but the expertise of the people in that agency is probably better than anywhere else.

The really important aspect of this Bill for the public is the establishment of the ISI fund.

That fund should operate in areas where a market deficiency exists. I am not referring to taking risks in respect of certain projects, rather I am talking about situations where the lending institutions are not prepared to fund projects that will give rise to additional benefits which may not be obvious. We must get people back to work. It is as simple as that. All of the efforts of the Oireachtas, local authorities and every other sector of society revolve around getting people back into employment. We are concerned with removing them from the live register, where they are a cost, and getting them into employment, where they can pay taxes. There is a dual benefit in this regard and if we are successful, the country will return to a financial position that will allow it to trade successfully. I have not even mentioned the impact on the dignity of those who are obliged to go to their local post offices or to the 200 social welfare offices throughout the country in order to claim benefits. Getting people back into employment leads to better social cohesion and better relationships. It would put the country in the position in which we want it to be, namely, that which it occupied in the late 1990s and early 2000s before people went nuts as a result of their exposure to the opium of property. If people return to work, the State will benefit.

I reiterate that the market deficiency is the really important aspect of this matter. The investment should not be made in competition with other funding agencies, namely, the retail banks. The latter are supposed to possess the relevant expertise but some of us have our doubts about that. The structures the banks have put in place have created their own difficulties. If there is a project that is jobs-laden, that is not an obvious risk and that has been scrutinised and analysed by people with ability who can see the wood for the trees, then it should proceed. Senator Barrett has often referred to a lack of people in the Department of Finance who possess the necessary qualifications. If a person is qualified in a certain discipline, he or she can sometimes be incapable of seeing the true benefit which may eventually be realised from a particular project outside his or her area of expertise. We need to find a balance and I am not, under any circumstances, referring to taking risks. However, we must take risks when it comes to getting people back to work. Everything else is irrelevant. There are 75,000 people in employment today who were not working this time last year. I am always amazed why there is not more comment about this wonderful news story, particularly when people can discuss Garth Brooks incessantly for almost two weeks. There has been no comment on the 75,000 people to whom I refer either entering or returning to the workplace because it does not sell newspapers.

I support section 22 but I would welcome more detail in respect of it. The section states that the State will invest in energy, water, telecommunications, forestry and, on the basis of ministerial orders, other sectors. That is somewhat vague. ESB, Bord Gáis and other entities are well capable of going out into their respective markets. There will not be a deficit in the context of energy. The latter is being funded by the EIB and other international entities. That is not the deficit to which I am referring. We must ensure that we know what are the other sectors referred to in section 22. There is certainly a deficit within the hospitality sector. There is a need for someone to step up in respect of this sector, particularly as we have witnessed the quantity of jobs created as a result of the reduction in VAT from 13.5% to 9%. However, there remains a deficit in this sector.

The final matter to which I wish to refer relates to the fact that the ISI fund should be examined in an analytical way. On previous occasions I have highlighted the fact that there are certain urban areas throughout the country which contain certain sites that are crucial to their development. I am not referring to a property tax break here. I am concerned about brownfield sites and sites on which there are buildings which are close to dereliction in respect of which the market will not fund development projects because there would be no return to be obtained. I am being cautious and cagey when I state that some of the fund should be made available in respect of the development of the sites. If we do as I suggest, it will benefit the urban areas to which I refer. There are 50 or 60 of these sites throughout the country, one of which is located in Courtown and of which the Minister of State is aware. The site in question is the location of two boarded-up, derelict hotels which overlook a very small, quaint harbour. It is not feasible to build a new hotel on the site because one could buy an existing one elsewhere for perhaps one half or one third of the cost of construction. We cannot leave the site in question derelict in an area which has a population of 5,500 people. The site is crucial to the urban setting of Courtown. As already stated, there are 50 or 60 such sites throughout the country and the Minister of State may be familiar with some that are located in his constituency of Wicklow.

We must be proactive in respect of this matter. We cannot sit and wait for the market to become involved. If we do, the sites to which I refer will remain derelict for years. Again, I am not talking about taking risks. However, on occasions when the market is not prepared to become involved, the State should perhaps be prepared to step in. There would be no need to commit the fund in its entirety to the projects in question, rather a percentage of it could be used. We could be cautious in the beginning and set aside a certain amount in respect of a number of pilot projects which could be considered for investment either in the context of section 22 or the forthcoming budget.

John Crown (Independent)
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It is an honour for Seanad Éireann that the Minister of State made his maiden ministerial speech here. I cannot but note the near Shakespearean symmetry of him offering his ministerial maidenhood to the Seanad, the very organ of State which he and his party sought to amputate in last autumn's referendum. We wish Deputy Harris well in what will hopefully be a long ministerial career.

I accept that I am somewhat slow. In that context, I am staggered by the speed with which the Minister of State has grasped the intricacies of his new job and by the fact that in just one afternoon he put together a new policy document and had it typed up. I am tremendously impressed by the way democracy works.

Michael D'Arcy (Fine Gael)
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The Minister of State's staff were ready to go.

John Crown (Independent)
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We were always taught that pensions were sacrosanct, that they were different. A pension was a special kind of saving one made and certain rules applied in respect of it. One could not touch one's pension. If one experienced a very rainy day, one could not gain access to it. One could only access one's pension on a particular date that had been determined many years previously. In return, one received certain tax breaks and concessions. One lost one's control over and discretion in respect of how one's money was spent in order to, as it were, make that deal.

I was troubled when I witnessed the scale of the catastrophe which struck our country in recent years, particularly in the context of the number of people who lost their businesses or whose homes were plunged into negative equity. I had the idea - I could not act on it because we are not allowed to introduce money Bills in this House - that we should allow, on a discretionary basis, people who are in debt to access the lump sums in their pensions, pay a little more tax in respect of the money involved and use it to get themselves out of debt. This would have had the effect of providing a degree of recapitalisation for the banks, of making loans perform better, of bringing more revenue into the Exchequer and of allowing people to, perhaps, save their businesses. Ultimately, the latter might have resulted in the generation of much employment in the years to come. Due to the fact that we are somewhat constitutionally limited in the context of what we can do in this House, I could not bring forward legislation. When I discussed my proposal with some of the Minister of State's senior colleagues, they indicated that they thought it somewhat hare-brained. However, I notice one or two of them have now adopted it and have put it forward in the Lower House.

The conundrum we face is that while those in government tell me that I cannot use my pension fund to get myself out of debt, of which I would love to be free, they can use my pension fund to get themselves out of the debt that they have put me in. That is reason I am a bit troubled by certain aspects of the specifics of this Bill. I may not be great on the arithmetic - the points were a bit lower for medicine in my day although they were still pretty high. The Minister of State referred to a portion of the fund being used to recapitalise the banks during the financial crisis - a portion sounds like something small and modest, but if I am doing the arithmetic correctly, the portion is two thirds of the fund. The Minister of State is saying that bit is worth €13 billion and what is left is somewhere shy of €7 billion. Possibly the €13 billion has appreciated from a lower figure over the years when it was first invested but it seems that this was a relatively large proportion.

I also would have a little difficulty with the philosophical underpinning of the remark that bank capitalisation could indeed be resorted to again but only in exceptional circumstances and it is not envisaged that it would ever happen. Who envisaged the original bank guarantee? The nature of exceptional circumstances is that they tend to be the type of thing that one does not envisage but they happen. The question is whether it was wise for us to use that money in this way at that time and whether it would be wise to allow a future Government to misbehave, overspend, under-tax and misinvest with the security blanket that it can still tap into the assiduously, carefully and prudently collected pension funds of its citizens through the National Pensions Reserve Fund, to say nothing of rating as has been done? They are private pension funds, so people tend to be hit with a double whammy. Perhaps things will be very different after the revolution but the coalition of people who gave us the bank guarantee - who as I recall were Sinn Féin, Fine Gael, Fianna Fáil, the Green Party and the rump of the PDs, with my honourable colleagues from the Labour Party across the House being the only dissenting voices at the time - are likely to still occupy some portion of a future coalition Government where the same decision could be made and the question is: do we want to give them that authority?

On the question of who will work in it, how will their voices be heard, who will they represent and what conflicts of interest will they have, I am a little troubled by the idea that it appears that the board of the National Pensions Reserve Fund is being stood down and sucked into this whole thing. Over the years we were always told that there should prudent pension managers and bank managers, people who follow the rules, who had fiduciary responsibilities in their dealings, who did not make crazy casino-like investments, who were careful and who looked after people's interests. As we know, during the early years of this century, those rules became arbitrarily and unwisely rewritten and people started using those funds for all kinds of other speculative activities. Bank managers stopped caring about a customer's ability to repay the loan and started caring more about their ability to get a bonus. I am a little troubled that in all of this we appear to be losing the steadying hand of a cadre of people whose only job is to make sure there is money in the pension fund for a rapidly ageing society. I was doing the arithmetic on those appointed to the new Cabinet. I am 57 years old and if I was in the Cabinet I would be one of the younger third of the people in it. The questions of the effective age are reaching all across the country but it seems we will have no one in the new dispensation at a high level whose only job is to look after the pensions at a time when we are going to need them more than ever.

I do not want to paraphrase Einstein too much but I would refer to his famous quotation about the definition of lack of wisdom being to repeat the same mistakes. We are institutionalising the position of the Secretary General of the Department of Finance. With no personal disrespect to any of the recent incumbents, it is not immediately obvious that they have been extraordinary repositories of expertise in terms of the stewardship of the public finances over the past decade and I am not speaking of any in particular. These seem to have been by and large with one exception appointed in accordance with traditional Civil Service career advancement policies even though a whole other group of people were being assiduously recruited through non-traditional, non-Civil Service pay grades, as the Minister of State told us in his opening contribution, presumably to attract the very best people with that particular skillset. Were those people overruled by the people who were on the more traditional pay scales? It seems that they probably were. Do we have absolute clarity that there will be protection for whistleblowers in the new organisation because, as we have seen in recent years and we are to the point of this now being near folklore, we were told there was no one in the Department of Finance who had any financial expertise but in the case of Ms Mackle it now transpires there was but a decision was made not only to ignore her but to tell her to be quiet.

Do we have guarantees that we will concentrate all of this diverse range of financial responsibilities into a unified bureaucracy and a unified board structure, with the protection that exists for dissenting voices because it was the failure of dissenting voices to be allowed exist, be articulated and be listened to that was a huge cause of the problem we faced? As I said previously, and I am probably boring my Seanad colleagues when I say this, there were many folks who were responsible for the financial meltdown but the people who were most responsible were those in government. The builders and the developers acted rationally in their own self-interest, not necessarily very wisely but they were in a system where there was a great deal money floating around and people had loans to buy houses they could not afford so the guys would build the houses. The banks behaved rationally because there was credit flowing and they were getting bonuses for the more loans they gave. The people who we paid and entrusted with the responsibility of acting not in their own rational self-interest but in the collective self-interest were Government Inc., both elected members and officialdom, and they were the ones who failed. Will these new structures maximise the chance that this kind of systems failure will not occur again?

I welcome the Minister of State, it is very nice to have him here in Seanad Éireann. I am sure he is as glad as we are now that we were not abolished, having had the opportunity to come into the House, and we look forward to many interactions with him in the future.

Catherine Noone (Fine Gael)
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I welcome the Minister of State and congratulate him on his elevation and no doubt he will do a superb job in what is a senior junior Ministry. I am sure it is a great day for him and his family and I wish him the very best of luck.

I welcome the Bill, as the purpose for which it is being introduced is an important one. It goes without saying that in the past the National Treasury Management Agency showed that it could perform admirably with the responsibility put upon it, to which other Senators have alluded, even though at times very difficult tasks were given to it. The NTMA was set up to cater for and manage State debt, to rearrange investment in such a way as to be of benefit to the economy. It did so admirably and is to be lauded for what it has done. Since then it has been expanded greatly. For example, it now manages the National Pensions Reserve Fund, about which Senator Crown has just spoken at length, and acts as Ireland's agent for the purchase of carbon credits as well as handling the State's liabilities under the auspices of the State Claims Agency. Its functions have increased greatly as has its scope and its personnel. Its personnel has expanded to a larger degree than would be ideal. I would not have the same exposure, on a professional basis, to the other areas in the NTMA as I have had to the State Claims Agency. Even though, on the face of it, it does not seem appropriate for it be a part of the NTMA, the fact that it has real experts in the areas of litigation is to its credit. It handles claims extremely well and in a very professional manner. These liabilities to the State are a potential debt to it and I think it is fitting it is there. It does more than handle costs, it handles claims in a very intricate and hands-on type of way. That is something of huge benefit to the State.

As has been mentioned, this Bill will therefore work to streamline and simplify the structures of governance at the National Treasury Management Agency to enable a more integrated approach to the performance of its functions which have grown considerably since it was established in 1990. When the agency began in 1990 it was not envisaged that it would have either the number of functions or personnel that it has today. The agency will be reconstituted as a body with the chairperson and other members who will have overarching responsibility for the agency's existing debt management and State Claims Agency functions, the role in regard to infrastructure projects currently filled by the National Development Finance Agency, the Ireland Strategic Investment Fund and NewERA. There will be no change in its role of providing business services and staff to the National Asset Management Agency which will continue to have its own separate board.

This is important, as unsteadying NAMA's processes could be detrimental to its work.
The Bill also converts the NPRF into the Ireland strategic investment fund, ISIF, and gives it a statutory mandate to make commercial investments in Ireland that support economic activity and employment. I agree with my colleague, Senator Michael D'Arcy, that it is the only show in town. It must be encouraged by NAMA. This provision is positive. While I understand that some Members have reservations, it will allow us to unlock capital funding and enable businesses across the country through investment.
A concern was raised about the possibility of the ISIF being used for political pet projects and its board being stuffed. As the then Minister of State, Deputy O'Dowd, pointed out in the Dáil, this is a commercial fund; it will not invest in political pet projects and the public assets entrusted to it will not be frittered away. The Secretaries General of the Departments of Finance and Public Expenditure and Reform and the chief executive of NAMA will be ex officiomembers of the ISIF's board, thereby increasing transparency. Board members would not be involved in political pet projects. This is an important point, and the governance structure of the National Treasury Management Agency, NTMA, is vital to its future success.
The agency's board will be appointed by the Minister, but the members of the investment committee, those who will discuss the investment processes, will not be appointed by the Minister. Two must be members of the board, with the remainder appointed by the board of the NTMA with the consent of the Minister for Finance. This secures the committee from direct political appointments.
I have every confidence that the ISIF's commercial mandate will be measured by its ability to attract private sector co-investors. It seems the Bill will provide for the streamlining and simplification of the NTMA's governance structure, allowing it to continue performing as ably as it has to date and ensuring future successes. I commend the Bill and thank the Minister of State for attending the House on his first day in office.

Kathryn Reilly (Sinn Fein)
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I welcome the Minister of State to the House and congratulate him on his appointment. It is good to see that the proverb, "Old age and treachery will always overcome youth and enthusiasm", is not true in this case.

Sean Barrett (Independent)
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Hear, hear.

Kathryn Reilly (Sinn Fein)
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I wish the Minister of State well in his post over the coming years.

Sinn Féin will support the Bill. However, it would be remiss of me not to mention some of our concerns with it, which were raised during its passage through the Dáil. Today, the Seanad discussed the strategic banking corporation of Ireland, SBCI, and how it might play a stimulus role. Likewise, this Bill has the potential to move towards that model. It is regrettable that the NTMA's mandate to invest in the real economy is so narrow. The conditions attached to any investment are restrictive and undermine much of its potential. It is disappointing that the social and environmental outcomes do not count for more in how the fund can be used. Sinn Féin has always argued that the NPRF should be used to provoke stimulus in our stagnant economy.

I will address a number of negative points. The Minister of State has probably anticipated that I will mention the legal promotion of NewERA. The purpose of NewERA is to facilitate the sale of State assets, but we oppose the sale of profitable or strategically important assets. It is noteworthy that the Bill does not compel the Minister to get the permission of the Oireachtas before selling assets.

I am trying to be brief, as much of what I want to discuss has already been debated. We object to the narrow focus allowed to the investment committee when deciding where to invest. As Senator Byrne and others mentioned, there should be a wider remit so that priorities such as housing programmes might be included.

It is also of concern that the one instance in which the Minister can give a straight direction to the fund is in the bailing out of banks and financial institutions. This provision is contained in section 42 and was debated in the Dáil, but a satisfactory reason was not given for its inclusion.

Although we have some concerns with the legislation, we want it to progress. We all have the same goal - to stimulate the economy, help people return to work and encourage the creation of SMEs, which will employ people. I look forward to working with the Minister of State in the coming period.

Simon Harris (Wicklow, Fine Gael)
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I thank the Seanadóirí for their warm welcome. I accept the irony pointed out by Senator Crown and implied by Senator Byrne, but Senator Crown and I, as well as others, enjoyed robust debates and exchanges during the course of that referendum and I congratulated him on its democratic outcome, which I fully respect. I look forward to engaging with Senators. I respect them individually and the institution as a whole. In my role with the OPW and procurement, if I can assist the House or Senators with issues, I will be more than happy to attend the House as often as required. I look forward to that.

Senator Crown was also concerned - or, perhaps, impressed - with the speed at which I had equipped myself with knowledge of the Bill. As he knows, the Lower House has already dealt with this legislation. I was also a member of the Select Sub-Committee on Finance, which debated this Bill, so I was somewhat familiar with its provisions before my appointment today.

I thank Senator Reilly, who has left, and others for their kind comments. While I am the youngest Member of the Dáil, Senator Reilly has the honour of being the youngest Member of the Oireachtas. That is nice to see in this House as well.

It is a terrible position to be in, but I must first apologise to the House for an error in my script. My opening remarks referred to sections 54 and 55 as having been included on Committee Stage in Dáil Éireann, but that was incorrect. The correct sections are section 55, on ministerial guarantees in respect of public private partnerships, and section 56, on the use of PPS numbers by the NTMA.

I will respond to some of the issues that have been raised and look forward to a more robust and detailed exchange on them on Committee Stage, which I envisage will be later this week. Senator Michael D'Arcy stated that the ISIF should be available for areas where there is a market deficiency and should not compete with banks in sectors that are already well serviced. It is not intended that the ISIF displace areas that have adequate funding. Quite the contrary, as the ISIF will have a commercial investment mandate. As such, it can act as a catalyst to attract private sector co-investment in areas where financing is not readily available from traditional sources so that economic growth and employment might be fostered. This addresses the issues referred to by Senators on all sides of the House.

Senator Barrett queried the section that allowed the NTMA to use a unique identifier for purchasers of its retail savings products. I will outline the rationale for the House. The agency needs to be able to distinguish between its clients, not just for the normal commercial purposes, but because it needs to monitor holdings where there are tax exemptions on interest up to certain limits. There are also obligations under the EU savings directive. In the Government's opinion, it would be an unwarranted waste of public money to require the NTMA to set up a parallel system of identification where there is already a ready-made State system. This provision has been cleared by the Department of Social Protection and the Office of the Data Protection Commissioner.

Senators Byrne, Hayden and Reilly referred to social housing, a key priority for the Government that was reiterated in our recently published construction strategy and the statement of Government priorities that was published by the Taoiseach and the Tánaiste on Friday. I will focus on the Bill and the NTMA's functions in that regard. The investment sectors in which NewERA will operate are those in which it already has expertise from its shareholder executive's activities. Social housing is not one of those areas. A role in that regard may be more suitable to other areas of the NTMA family. For example, NAMA has co-operated actively with the Department of the Environment, Community and Local Government and the Housing Finance Agency, HFA, in seeking to match the residential stock controlled by its debtors and receivers with the requirements for social housing. More needs to be done in that regard, and Senator Hayden has spoken on this point. Investment in social housing will fall within the remit of the ISIF so long as it is commercial in nature.

I stress that one of the aims of the changes to the NTMA governance structures proposed in the Bill is to enable it to act in a more integrated manner in the performance of its functions.

I might add, as Senator Aideen Hayden referred to it - this is important - that the NDFA already has statutory authority to enter into a PPP arrangement for the provision of social housing. Perhaps this is something we might discuss further on Committee Stage and I look forward to engaging with Members on it.

Senator Sean D. Barrett raised a number of issues, on which he proposes to table amendments on Committee Stage. I very much appreciate his explanation and look forward to dealing with the amendments.

The issue of the State Claims Agency was raised by Senators Aideen Hayden and Michael D'Arcy, among others. I will outline the rationale for the change. The State Claims Agency was set up in 2001 to manage claims for and against the State. The setting up of the agency within the NTMA meant that it was possible to recruit the specialised staff needed to work in this area because it operated outside normal public sector structures. The agency could offer market competitive salary levels to attract experienced people in mid-career from the private sector. The Bill leaves the agency virtually untouched, apart from the dissolution of the policy committee. It extends its remit to make it responsible for managing claims for costs arising from tribunals of inquiry. I note the comments of Senator Thomas Byrne on how such tribunals are not fit for purpose and that there must surely be a better way to establish facts.

Senator John Crown raised the issue of whistleblowing and wondered whether there would be protection for whistleblowers in the reorganised agency. I want to bring clarity to that issue. Section 17 replaces section 14 of the National Treasury Management Agency Act 1990 which covers the disclosure of confidential information. It updates the existing provision to take account of the new structures proposed for the NTMA and developments in the disclosure of confidential information since the NTMA was established. The existing provision is strict. It is an offence for a person to disclose information obtained in the course of carrying out duties on behalf of the agency. The new section is more nuanced and, I hope, more progressive and welcome. It will continue to be an offence to disclose, without the consent of the agency, information obtained while performing functions on its behalf. This is essential, given that staff of the agency will have access to very sensitive commercial information. However, it will not now be an offence to disclose confidential information in certain circumstances, including to the Minister for Finance or An Garda Síochána where it may relate to the commission of an offence. These qualifications means that there is now a route available for individuals who believe they should raise issues of concern outside the confines of the agency. Just as it is essential, given the pivotal role of the agency in financing the State, that sensitive commercial information be protected, clearly it is also essential that individuals be able to bring justifiable concerns to an outside authority without the risk of committing an offence. I welcome this provision in this Bill and the improvements made to it.

I am very grateful for the instructive engagement we have had on Second Stage and look forward to further engagement with Senators on Committee Stage. I thank the Acting Chairman for her good wishes and look forward to working with Members.

Caít Keane (Fine Gael)
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I congratulate the Minister of State on his first outing in the House and thank him for his detailed responses to the questions asked by Members.

Caít Keane (Fine Gael)
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When is it proposed to take Committee Stage?

Michael D'Arcy (Fine Gael)
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Tomorrow.