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 Header Item Other Questions
 Header Item Strategic Investment Fund Management

Tuesday, 2 July 2013

Dáil Éireann Debate
Vol. 809 No. 2

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Other Questions

Strategic Investment Fund Management

 67. Deputy Dara Calleary Information on Dara Calleary Zoom on Dara Calleary asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan the process that will be in place to maximise the economic and employment return from the Ireland Strategic Investment Fund; the investment horizon that will be taken by the fund; and if he will make a statement on the matter.  [31901/13]

Deputy Michael Noonan: Information on Michael Noonan Zoom on Michael Noonan As recently announced, the Government has decided to establish the Ireland strategic investment fund, ISIF, which will absorb National Pensions Reserve Fund, NPRF. The discretionary fund of the NPRF of approximately €6.4 billion will be channelled towards productive investment on commercial terms in the Irish economy. Officials of my Department are currently preparing the necessary legislation, which I hope to see enacted this year.

Using the Ireland strategic investment fund, we will maximise our resources to enhance growth in the economy and improve key infrastructure to maintain Ireland's attractiveness as a place to do business and to create jobs. My Department is working alongside the National Treasury Management Agency, NTMA, to develop the broad parameters for the investment strategy for the ISIF in parallel with developing the legislation, and it is envisaged that the work will align with that being done by my Department and the Department of Public Expenditure and Reform on a medium-term economic plan.

It is envisaged that the ISIF will seek to leverage and maximise its resources by attracting private sector co-investment. I am conscious that it is important that a level of independence is maintained to attract that private sector co-investment. To do this, the fund will need to demonstrate clearly that it acts on a commercial basis in order that the very fact that it is prepared to finance a proposal will reassure other potential investors that the project is sound. Any income, capital or other benefit received in respect of ISIF investments will be repaid into the fund and held or reinvested for the benefit of the fund. Whereas the need for the State to provide for social welfare and public service pensions obligations has not abated, fostering economic activity and employment is currently a greater priority and this will in turn put the State in a better position to meet its pension obligations in the longer term.

Deputy Michael McGrath: Information on Michael McGrath Zoom on Michael McGrath This is potentially a very positive development and I have a few questions on it. I assume the principle of retaining the NPRF remains and the Government will continue to have non-discretionary portfolios consisting of shareholdings in banks, for example. When the Minister refers to any returns from these commercial investments going back into the fund, is he talking about the strategic investment fund or the NPRF? It would be helpful to clarify that.

Will the Minister give us a sense of the governance arrangements that will apply to the Ireland strategic investment fund? Who will make the investment decisions? Will the Minister or the Government have a role in that or will it be adjudicated upon by an independent board under the aegis of the NTMA? For example, if the Government was convinced of the merits of a motorway between Cork and Limerick, and there was co-investment by the private sector, could it be ensured that it would happen? Will the decisions be political or will they come from the NTMA?

Deputy Michael Noonan: Information on Michael Noonan Zoom on Michael Noonan If we were to build a road between Cork and Limerick, the Department of Public Expenditure and Reform would have to put it down as a proposal. The NPRF would assess it on commercial grounds and if it were commercially viable, it could make the cut. If it were not, it would not make the cut. The initiation might be on the political policy side but the decision would be on commercial grounds, and the project would have to stand up to commercial analysis.

Within the existing statutory investment policy and in line with the ISIF announcement, the NPRF has undertaken a number of investments and initiatives under which NPRF capital would be invested on a commercial basis. There is a commitment to invest approximately €250 million in infrastructure, €118 million in public private partnership projects and finance of €500 million will be provided for the small and medium enterprise sector. It has entered into a collaborative relationship with Silicon Valley Bank on small and medium enterprise equity start-ups for the information technology industry. Additionally, the fund has been working closely with NewERA in respect of investment opportunities related to the commercial semi-State sector, and the NPRF is also in discussion with Irish Water with regard to the provision of a financing facility. This provides a flavour of the lead-in work, and when it is put on the statutory basis, the process will be more secure in its capacity to fund and leverage.

Deputy Michael McGrath: Information on Michael McGrath Zoom on Michael McGrath Will the Minister clarify my first question? Will the NPRF be retained into the future and is the principle of providing for the long-term pension liabilities of the State still being subscribed to? Are returns from commercial investments drawn from the NPRF money to be returned to the NPRF?

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