Amendment No. 8 arises out of Committee Stage proceedings. Amendments Nos. 8 to 11, inclusive, are related and will be discussed together.
National Treasury Management Agency (Amendment) Bill 2014: Report Stage (Resumed)
Debate resumed on amendment No. 8:
In page 27, line 32, after "for" to insert "public".
- (Deputy Ruth Coppinger)
This group of amendments set down by the Socialist Party Deputies seeks to provide for the inclusion of social and affordable housing in the list of projects that would be paid for by the taxpayer out of the National Pensions Reserve Fund and used in the new strategic investment fund. I said yesterday that it was amazing to anyone outside the House that such a thing would be excluded from a list of strategic investment projects. The most strategic need in the country is social and affordable housing for the 100,000 families on the housing list. Just before I came to the Chamber, I was contacted yet again by another family whose members have been sleeping in their car for the last couple of nights. This is not the first case of which we have heard. I could cite a whole number of other cases I have on my books. My cases must be very different from those of the Minister of State, Deputy O'Dowd, given that he has seen fit to leave this strategic need out of the legislation. I am amazed that the Tánaiste is not sitting beside the Minister of State, as she suddenly discovered over the weekend and talked loudly to the media about social and affordable housing and a low pay commission. She must be Rip Van Winkle and have been asleep for the last number of years. It is blatantly obvious that there is a crying need for housing to be built.
We need to include social and affordable housing because there are 100,000 families on the housing waiting lists of local authorities. There are also 100,000 families in mortgage arrears or distress. We have seen an increasing number of repossession attempts in the last number of weeks, yet the only plan the State currently has for the building of social housing units is for 449 units to be built. I have searched high and low and that is the entire number of social housing units, as far as I can see, that the State plans to build. By way of contrast, an average of 3,300 social housing units was built in every year between the 1890s and the 1990s. Now that we have a housing emergency and it is obvious that there is a need for public housing, the State talks about providing 449 units in the next couple of years.
There have been two major occasions in the history of the State on which a serious attempt was made to provide social and affordable housing. From 1932 to 1948, 53,000 local authority homes were built. We had a smaller population of 3 million people at that time. The per capita equivalent for today's population would mean the building of 79,500 units over a similar timeframe, or 4,500 per annum. In the 1930s and 1940s, ten times more housing was built than the current Government is planning in a country that was impoverished and in the grip of a recession. The 1970s was the second period during which the State intervened to take action. From 1971 to 1980, 64,170 council homes were built, again against the backdrop of a much smaller population of 3 million to 3.5 million.
In today's population figures, it would amount to 8,500 to 9,600 houses built each year if we use the 1970s as our model. One third of housing was social housing. We see the ideological aversion to social housing by Governments, including this one, in the past number of years. It started with Fianna Fáil and is continuing with Fine Gael and the Labour Party given that the latter holds that ministerial position. In the 1970s, 15% of all households lived in a council or local authority house, a figure that decreased in the 1990s to 8%. In the boom, significant house building took place but much of it was outside of people's price range and was overpriced. Only 10% was social housing and we have a serious crisis on our hands because Governments failed to listen to advisory groups. The National Economic Social Council, NESC, advised in 2004, when there was so much money in the country that 73,000 new social housing units should be built in the following six to seven years, amounting to 9,000 houses per year. That was completely ignored. The Government is introducing significant legislation that involves up to €6 billion being used for strategic projects. The building of homes can be commercially viable. We need affordable homes for the working poor who are priced out of buying houses and who cannot get mortgages. This is a major blockage in the banking system. Cheap rates could be provided for working people. We also need social housing for people with no prospect of buying a house.
The Government has the power to include the building of social and affordable houses and apartments in these projects and it is absolutely essential to do so. It is also essential councils discuss the matter and arrangements are made to allow councils to undertake house building. It should not just involve housing agencies as local authorities have a track record of building houses. I call on the Minister of State to accept the amendment if he wants to be taken seriously by the electorate, who have clearly identified housing as a key issue in the recent elections.
This issue was raised in the Committee of Public Accounts a few weeks ago. The Secretary General of the Department of the Environment, Community and Local Government appeared and I asked him about the financing of social housing. His response was that the Department is actively utilising the strategic investment fund to seek private equity and private investors in social housing. This was the response and I think there is no exclusion in doing so. It is actively operating on this basis.
Deputy Deasy has summarised what I was going to say. The Ireland strategic investment fund, ISIF, is money spent on joint ventures. A number of criteria apply to it, one of which is that the majority holding cannot be in the hands of the State. There must be a public private partnership, which is not something new for the National Development Finance Agency, NDFA, which is part of the NTMA. The NDFA has been working with bundles with an accumulated cost of over €20 million and has built many schools and other facilities for the State through public private partnerships.
On Second Stage, Deputy Higgins was present when I spoke in response to Deputy Richard Boyd Barrett about this point. The money can be used to build social housing. However, it can only be used in such a way that it is a public private partnership or if the State is not the main investor. If it were, it would be on the Government balance sheet. Deputy Coppinger is incorrect in saying her constituents are different from mine. In different local authorities, we know about the housing needs, all of which must be met. This is a clear way in which funding can be used and I understand proposals are being examined. It would be a productive use of the funds if it meets the criteria. On the Government and Opposition sides, there are no differences in what we want. We want social housing, job creation and the rules of the funding mean the criteria to which I referred apply. A public private partnership will work and if people can be found to co-invest, it makes a significant difference. I remember Deputy Richard Boyd Barrett making a proposal on this issue on Second Stage. We agreed that the points made by the Deputy made sense in the context of the rules of engagement for this fund. There is no issue.
There is a huge difference of approach between our view of how the disastrous crisis of housing need is to be resolved. The Minister of State keeps repeating that his party and the Government are well aware of the extent of the crisis, which raises the question of why the Government has let it get to this extreme. I listened with some incredulity to the Tánaiste and Minister for Social Protection expressing her heartfelt urgency to construct social housing. She must have fallen off a horse on her way to see the Taoiseach to be nominated as Tánaiste and had a sudden revelation after three and a half years apparently unaware of the extent of the suffering of ordinary people. How seriously can we take the Government in this regard?
The Minister of State sits there as part of a supposedly sovereign Government and tells us that the Government will allow itself to be constrained from putting money from the National Pensions Reserve Fund into the construction of public housing as a Government and as a public authority. Why does the Government have to go scouring the highways looking for private contractors when there was, traditionally such as in the 1970s, social housing in the State? There were problems in the 1970s but in 1975 8,700 homes were built by local authorities in one year. The Government is submitting to the right-wing neoliberal agenda dictated by the European Commission and its bureaucracy. If that is not the case, what is the problem? In the 1970s, up to 8,000 houses a year were produced by local authorities. What does our amendment, which is one of a series, suggest?
First, we want to ensure that the agency may, in consultation with Ministers, develop proposals for public investment in those sectors, including social and affordable housing, in order to support economic activity and employment and provide urgently needed infrastructure at the same time - in other words, social housing. We have included all of this here - necessary infrastructure for people who are suffering and in need of a home and a kick-start for economic activity, which will rebound with more employment in communities and more resources to go around, which will help turn around some of the disasters of austerity.
Our fourth amendment in this group makes a proposal regarding the functions of the agency, providing that it can enter into an arrangement with the Minister for Education and Skills in regard to the provision of school structures. We want this to say that it can "... enter into any arrangement or contract with a Local Authority or a public housing agency to finance the construction of social and affordable accommodation projects and the provision of the necessary social infrastructure necessary for such projects." By any moral standard, does it not make eminent sense that this should be the policy? Therefore, I defy the Minister of State to explain what is wrong with the idea that the State and the National Treasury Management Agency, or whatever name the Government wants to call it when it is performing this function, should go in with local authorities and finance the construction of social and affordable housing projects for people to rent and affordable homes for people to buy, when they could in this way resolve the housing crisis?
If, for example, we accept that eight good-quality social houses could be built at a cost of approximately €1 million, then €1 billion could give us 8,000 houses. If we invested €3 billion or €4 billion over a period of years, we would have approximately 30,000 homes, which would begin to address the disaster and quickly deal with the excess numbers on housing lists by providing homes for people. This would also free up thousands of spaces in private accommodation which could be used as transitional accommodation for people in desperate need. Will the Minister of State explain in language we can all understand what is wrong with this? If local authorities could do this in the 1970s and deliver at a rate of 4,000 to 8,000 units year after year, why in 2014, when these funds become available, can the Government not undertake this major project for this huge social need?
On the same theme, we discussed this on Committee Stage and we have been trying to inject a sense of urgency in the Dáil on this issue over the past three years, because this crisis is getting worse. Finally, we have an opportunity to do something about it. When this issue was first raised and when we said the solution was to build council houses rather than rely on the private sector, the response of various Ministers was to throw up their hands and ask where we were to get the money to build council houses, because the Government did not have it. We do have the money. We have €6 billion. If we spent this money, or a significant portion of it, it would be money well spent, no matter what way we look at it. Spending it would have multiple benefits. First, it would benefit the 100,000 families on council housing waiting lists, some of whom have been waiting for ten to fifteen years for a council house. These people would benefit enormously by finally getting a secure roof over their heads and security for their children, with all the enormous benefits for the cohesion of society and the creation of a stable environment for children who lack that currently and are pushed from pillar to post in a private rental sector which is out of control and where rents are unaffordable for huge numbers of people.
The other enormous benefit would be in terms of the revenue or finances of the State. Why do private developers get involved in housing and why was housing at the centre of the boom, not just in this country but internationally? Simply, the reason private investors are interested in this area is that they know everybody needs a house. People will always require a roof over their heads. Therefore, from the point of view of investors, housing was a sure-fire way of making money. Developers were not interested in housing people, but they knew people needed to be housed and knew they could make money. Of course, that profit-first approach to housing, regardless of the impact on the economy or housing provision based on need, had disastrous consequences for this economy and the global economy.
The value for the State in taking this on would be that it could regulate a housing market that has gone out of control. That chaos in the housing market, driven by its almost complete privatisation, was what led to the collapse of our economy and the global recession. This issue was at the heart of the international crisis. This occurred because people interested in housing purely for profit completely dominated the market. If, instead, a significant proportion of housing is provided by the State on a not-for-profit basis, we can regulate the market and stop prices and rents getting out of control. Not only this; the State would save significantly in regard to all the money we are currently pouring into the pockets of private landlords. Between leasing schemes, rent allowance and so on, this probably amounts to €750 million. This is money out the door, lost for ever and of no benefit to the State. The State spends all that money but gets nothing in return. It has no assets at the end of the process. If the State built houses, it would get a return on that revenue. The private sector understands it can get such revenue, but why can the State not see that building council houses would be a secure source of revenue for it? It would save on rent allowance payments and have a regular stream of money coming into its coffers.
The Minister of State has said that in so far as the State is considering using the fund in this way - I am glad it is considering this - this housing must be co-funded with the private sector. Why is this necessary? The private sector already has enough of the housing market without letting it into this area, which the Government seems to acknowledge we must return to. Why, however, must this return be dependent on the private market? Presumably, the Minister of State will have several answers to this question.
I assume one of them involves a reference to EU state aid rules. If that is the case and the rules require that we cannot provide housing for our citizens unless some gombeen in the private sector can make money out of it, that is a terrible indictment of us for signing up to them in the first instance. What sort of rules are these? Let us consider to where they led in the context of the public private partnerships, PPPs, that were the flagship projects in housing provision in Dublin. I refer to the regeneration projects at O'Devaney Gardens, Dominick Street and St. Michael's Estate. What happened at these locations was an absolute bloody disaster and it has had devastating consequences for communities that invested a great deal in trying to make the projects work. However, I think they were always sceptical about the PPPs involving Mr. McNamara. A great deal of energy, resources and work were invested over many years in trying to achieve some balance in respect of these PPPs in order to ensure people would be provided with proper housing, but what happened? All of the resources allocated were absolutely wasted, although many consultants made a hell of a lot of money out of the entire process.
The process in question has been ongoing for ten or 15 years and the most recent indications are that we are going to return to the PPP model. What Mr. McNamara and the other guys involved in the PPPs to which I refer wanted was to grab some of the land attached to O'Devaney Gardens. As part of their agreement to co-invest in the regeneration project, they insisted on being allowed to grab approximately one third of the land involved when the flats were knocked down in order that they could make a pile of money. If the project had proceeded, the community at O'Devaney Gardens would have lost some of the space available for the building of council houses as a result of the condition in question. However, nothing happened and no houses were delivered. Would it not have been more sensible to do it the old-fashioned way and just build the houses ourselves?
It goes on and on. There are similar examples of the same carry-on in Dún Laoghaire, including at a little Ballymun flats-style complex in a place called Mounttown. It took approximately 15 years from the time the flats were condemned as being uninhabitable for a new estate to be built due to the fact that the project was completely dependent on private developers, three of whom went bust. It was an unbelievable shambles.
Will the Deputy stick to discussing the amendments?
I am discussing them. I am highlighting from the point of view of the stability of the economy, providing housing for those who need it and improving the public finances and creating a revenue stream for the State which it could use in providing public services, housing, etc. why we need to use the relevant funds to invest directly in fully public housing. That is what has been repeatedly sought from the Government. If we are hamstrung in this regard by EU rules on state aid, that is a disgrace. We should be kicking up absolute murder and refusing to comply with them. To be honest, I sometimes think what I am referring to is used as an excuse. There appears to be an almost ideological predilection to involve the private sector in these projects, even when it is self-evident that this approach has failed.
I love the phrase "market failure". There has never been a more spectacular example of market failure that in this matter. That is precisely why we need a strategic investment on the part of the State to fill the gap left by the absolutely disastrous market failure we have witnessed. However, the Minister of State has indicated we can only do this on condition that we get the market on board. That is just laughable. We must do something rather than submit to this nonsense. Where there is a will, there is a way. I honestly believe a way could be found to circumvent EU state aid rules, particularly if there was a commitment on the part of the Government to do so. It would be money in the bank from the point of view of the State. I have not even mentioned the employment that would be created for building workers and the savings to which this would give rise within the social welfare system and so on. It would be a win-win if we were to decide to do as I suggest. That is what amendment No. 11 is about and some of us on this side of the House have been screaming for the Government to do it. Let us accept the amendment, establish what is suggested as a strategic priority for the State, its citizens and the economy and begin the process of investing the money directly without having to depend on cowboy private developers.
We have completed the first round of contributions on this group of amendments and will now move to the second round, to which the two minute limit applies. Before I ask the Minister of State to respond, does anyone wish to avail of the opportunity to make a two minute contribution?
Probably, but we want to hear what the Minister of State has to say.
As the Minister of State has already spoken to the amendments, his next contribution will be his last.
We asked a lot of questions.
We are hoping to get answers to them from the Minister of State.
He only has two minutes in which to respond.
I will answer the questions very simply-----
Members should be aware that if he responds now, the Minister of State cannot speak again. We are on Report Stage.
In that event, I will avail of the opportunity to make a two minute contribution.
I thought it was the case that he would respond and then we would do so.
He can only speak twice on Report Stage.
In such circumstances, I ask the Minister of State to take a precise note of the points we are making and respond to them in the language used by ordinary people.
This is a very simple matter. There is €6.9 billion which is owned by the working people and pensioners of the State and which is currently invested in commercial enterprises and corporate entities across the globe. The idea is to bring it back to Ireland and invest it here in order to create economic activity and jobs. I agree with this. However, it is clear that this project is being refracted through the ideological prism that is the current Fine Gael-Labour Party Government. There is the potential to utilise the funds to which I refer in housing provision and put together State-wide projects that would meet one of the most critical human and social needs in the country and alleviate some of the worst suffering being experienced by individuals and families who do not have homes. All we are seeking is that we follow, to some extent, the example of what was done in the 1970s in terms of the numbers of houses local authorities can construct to meet existing need.
Many local authorities did not build houses last year and that will be the case again this year. In that context, the amendment suggests the agency have the power to enter into arrangements with local authorities or a housing authority established by the Government in order to facilitate the provision of social and affordable housing. Why is it necessary to opt for privatisation and funnel substantial funds into the pockets of builders and developers, many of whom wrecked the country and its economy through their profiteering in the past and who one can now meet on their way out of NAMA? As what we are suggesting is the moral and sensible thing to do, let us hear the Minister of State's argument against it.
What we are seeking is the inclusion of social and affordable housing in these projects. The Minister of State has assured us that they will be included, but they are not even listed. That is the point. If they are going to be front and centre in the context of this fund, they should appear on the list of projects. I am amazed - I am not really - that the Minister of State referred to PPPs. The legacy of public private partnerships in the area of housing is disastrous. As previous speakers indicated, people in the inner city have been left looking at empty buildings as a result of the use of such partnerships. I know that the Minister of State has an ideological aversion to anything to do with public investment or funding.
The private sector, however, has no interest in building anything. I have just come off Fingal County Council but recently I attended a presentation there. There are 13,000 planning permission applications in the council area but not one of them is being taken up in any serious way because of the logjam in the banks and because developers do not believe that they will get a return. The Government is looking to those in the private sector at a time when they have no interest.
By the way, there is nothing socialist about this; this is Keynesianism. This is what was done by the State in the 1930s and the 1970s in particular when the State had to step in. Socialism involves taking the wealth out of the hands of the tiny private elite and using it completely to solve the ills in society.
I suggested that the constituents of the Minister of State must be different from mine because I do not know how the Minister of State can leave his office and not have the issue of this fund front and centre of the agenda. By the way, this is taxpayers' money, not the Minister of State's money. This money was put in by workers for the pension timebomb etc. and now it is being used. The Government lost most of it in the bailout but there is a little left. The Government should at least try to solve the problems for the people who did not cause the crisis in the first place and who have been left without homes.
I would like to hear from the Minister of State about the problem the Government has with taking on board what we are asking for. I have never heard a convincing argument from that side of the House about why we should not and cannot do that. It is not that we want to take political potshots and accuse the Minister of State of ideological this, that or the other. I simply cannot get my head around how the Government does not see this. We had denial for two and half years. Then, in recent months, finally, there has been an acknowledgement that we have a major problem. Of course the problem has been absolutely staring us in the face. It is spilling out onto the streets and it is a disaster. There are 50 families in south Dublin in cars; they do not even have emergency accommodation. It is an absolute disaster. Finally there is an awareness that we must do something. Is the Minister of State seriously telling us that we simply have to wait for the market, private investors and hedge funds? That simply will not happen.
The idea is that by putting the money into big public building programmes of local authority housing now we would see multiple benefits. Can the Minister of State explain why the Government has set its face against that? What is the problem? It was done before and it can be done again. No one else is going to do it.
Why is it not possible for the strategic investment fund to enter into an arrangement with local authorities or a State housing agency on commercial terms for the building of social housing? There is one consideration foremost in the mind of anyone looking to buy a commercial property or a residential property as an investment, that is, whether the owner will have tenants. There would be guaranteed tenants because there are 100,000 people on the social housing list. This means a guaranteed rental income yield from an investment in social housing. Can the Minister of State explain why there is a need to involve the private sector as a third party? Is it not possible to construct an arrangement on commercial terms between this fund and local authorities or housing agencies for the construction of social housing, using the resulting rental income to deliver a return?
When I was young we lived-----
Deputy McGrath is still young.
When I was a child my family lived in a county council house. The reality is that the opportunity we had then is denied to many people nowadays. At the time my parents used a scheme to move on to private ownership and avail of a grant of £5,000. This was approximately 30 years ago. For them and for many others social housing became a steppingstone to private ownership. For other people this will not be the case but there is nothing wrong with that. Social housing can be an end in itself for many people. Anyway, the opportunity is simply being denied to thousands of families because social houses are not being built, the sector has ground to a halt and there is a major deficit at the moment. Will the Minister of State explain why it is impossible to construct a commercial arrangement whereby some of the funds could be used to construct social housing to meet the crisis need that exists?
This issue was hammered out well in committee. The members of the Government are talking the talk in terms of the crisis in social housing and we are supposed to give the Government a bualadh bos because three years into its term of office it is recognising that it is a bad thing to keep social housing boarded up, rather than released in towns and villages throughout the State, and that we need to start constructing social housing to meet the demands of the citizens, particularly in our capital and other cities throughout the State.
Amendment No. 10 adds a clause to the effect that the agency would be required to bring forward proposals in respect of investment in those sectors to support economic activity and employment. It does not commit the agency to invest any money. No money would be committed by the agency to any area. It is a question of the agency bringing its expertise to bear on proposals for investment.
I would rather see social housing included in the directed investment part of this legislation such that the Government could direct investment into social housing to address the crisis. We should spend some of the €6.9 billion on social housing. However, this is a more modest amendment which allows for the agency to bring forward proposals for investment in the sector to support economic activity and employment. Any investment in social housing supports economic activity because economic activity would flow from it naturally. The construction of social housing would bring employment as well. It is a question of how the agency would consider investment proposals. I support amendment number 11. It goes further in respect of real investment in this area. Anyway, there is no reason whatsoever for the Government to dismiss amendment No. 10 since it only calls for proposals to be examined by the agency. The Minister of State may argue that the agency does not have the necessary expertise but we are creating the NewERA agency on a statutory footing. The Government should let the agency acquire the expertise.
One of the things inherited by this Government is a long social housing waiting list. The Government has exacerbated the problem by deciding not to construct social housing over its term of office, but this is not unique to the post-Celtic tiger period. The lack of social housing in this State has been a recurring theme throughout successive Governments and over many decades and generations. Let us develop the expertise whereby the agency can come forward with proposals for investment in the social housing sector, as it would in the forestry, telecommunications, water or energy sectors.
Will the Minister of State read his notes for us? We want to hear the explanations.
Sorry, Deputy. I ask the Minister of State to ignore that comment and to please respond.
I cannot hear him anyway. The green document contains what Deputy Higgins put down in his amendment and I have two minutes to reply to it.
I am looking for specific answers to the questions the Minister of State was asked.
In fairness, if I can speak, I am trying to do so. I understand I have a time limit and I will be as clear and simple as possible in my communications. What is this legislation doing? I hope the Deputies will vote for it because it will allow €6.9 billion of capital which is invested outside the State to come back into the country to work to create jobs. Furthermore, it will create, in the investment protocols therein, a return to the agreed public private partnership.
Deputy McGrath made an important point about commercial investment. These have to be commercial investments. A question was asked about State investment and commercial investment. Deputy McGrath can explain to Deputy Higgins that if it is done by the State only, then it goes on the Government balance sheet. However, if the State is not the majority participant, then it is off the Government balance sheet. Let us suppose a given amount of money can be used to build 100 houses. If we get an equal amount of public private partnership funding we can build not 100 but 200 houses.
This legislation does not include housing per se, but the conditions will allow for public private partnerships that existed under the National Development Finance Agency, NDFA. For example, as part of the €110 million allocated to building bundle 3 schools in recent years, 7,500 school places were provided for students around the country. The quality of the build was such that those schools won the world finance best European education project of the year award in 2013, Royal Institute of the Architects of Ireland awards and so on.
Did those students all have to wear Coca Cola T-shirts?
In fairness, I did not interrupt the Deputy.
Please, the Minister of State only has three seconds left.
I am sorry.
I am entitled to make my point. Both sides of the House want this to happen and agree that the more money that is invested the better. I have no problem with doubling the money. If the State invests X and a private enterprise invests X, then X + X = 2X. This is the reality.
The law the House is passing tonight and that I hope the Opposition will support does exactly what the Deputies and the people want. Public housing or other projects can be built if a project meets the criteria and is not on the State's balance sheet.
Will the Minister of State agree the amendment?
As Deputy Coppinger moved the amendment, she has a right of reply.
Has the Minister of State any sense of urgency about this problem? I submitted a written question last week. Six families have been helped by the Tánaiste's much publicised initiative with Threshold. Something is wrong somewhere. Obviously, the Government has no interest because it did not fund the initiative properly, not enough people were available to answer telephones, it was not well advertised etc. According to Focus Ireland, one family per day loses a home in Dublin because of rent increases. I estimate that the number must be higher. The Government's feedback does not indicate any urgency in this regard.
The private sector has no interest in engaging in the building of social housing. Landlords have no interest in accommodating social housing tenants, are getting rid of them and will not accept rent allowance. This is why the housing assistance payment, HAP, scheme will fail. Despite this, the Government expects private sector developers, who are not capable of building houses on their own, to begin building them for social and affordable housing purposes. It will not work. It is a law of capitalist economics that the State must intervene when the private sector has no interest, but the Government will not do so. Families will continue to suffer without social or affordable housing because of an ideological aversion imposed by Fine Gael and the troika. The troika's insistence that the Government cannot add to the State's balance sheet makes for depressing news for the hundreds of thousands people who cannot get houses.
While I was a councillor, I asked the council manager to request a loan to build social housing. I was given the same reply, that the Government did not allow it. What happened to fair competition? The Government is excluding councils that would like to build houses from doing so while it looks to the private sector to do the work.
Everything that the Deputies across the way represent is abhorrent. They will allow this problem to fester instead of acting decisively and building houses for people who need them. Government Deputies will look to the same people who crashed the economy in the first place and have not got their acts together since the recession. It will not work. Knowing this, why does the Government continue bowing to the tenets of the troika and claiming that nothing can be added to the balance sheet even when there is a dire social need? This is disappointing for people, but it must be well publicised. The Government is talking the talk about social housing and the Tánaiste has been rabbiting on about it for the past week, but there is no path towards providing that housing for those who need it.
Amendment put and declared lost.
I move amendment No. 9:
In page 27, line 33, after "employment" to insert "and provide urgently needed infrastructure".
Amendment put and declared lost.
I move amendment No. 10:
In page 27, between lines 37 and 38, to insert the following:
"(e) social and affordable accommodation;".
Amendment put:
The Dáil divided: Tá, 46; Níl, 87.
Tá
- Adams, Gerry.
- Boyd Barrett, Richard.
- Broughan, Thomas P.
- Calleary, Dara.
- Collins, Joan.
- Colreavy, Michael.
- Coppinger, Ruth.
- Cowen, Barry.
- Crowe, Seán.
- Daly, Clare.
- Doherty, Pearse.
- Donnelly, Stephen S.
- Dooley, Timmy.
- Ellis, Dessie.
- Ferris, Martin.
- Fleming, Sean.
- Fleming, Tom.
- Halligan, John.
- Healy, Seamus.
- Healy-Rae, Michael.
- Higgins, Joe.
- Kirk, Seamus.
- Kitt, Michael P.
- Mac Lochlainn, Pádraig.
- McConalogue, Charlie.
- McGrath, Finian.
- McGrath, Mattie.
- McGrath, Michael.
- McGuinness, John.
- McLellan, Sandra.
- Martin, Micheál.
- Moynihan, Michael.
- Ó Caoláin, Caoimhghín.
- Ó Cuív, Éamon.
- Ó Fearghaíl, Seán.
- Ó Snodaigh, Aengus.
- O'Brien, Jonathan.
- O'Dea, Willie.
- O'Sullivan, Maureen.
- Pringle, Thomas.
- Ross, Shane.
- Shortall, Róisín.
- Smith, Brendan.
- Stanley, Brian.
- Troy, Robert.
- Wallace, Mick.
Níl
- Bannon, James.
- Barry, Tom.
- Breen, Pat.
- Bruton, Richard.
- Burton, Joan.
- Butler, Ray.
- Buttimer, Jerry.
- Byrne, Catherine.
- Byrne, Eric.
- Cannon, Ciarán.
- Carey, Joe.
- Coffey, Paudie.
- Collins, Áine.
- Conaghan, Michael.
- Conlan, Seán.
- Connaughton, Paul J.
- Conway, Ciara.
- Coonan, Noel.
- Corcoran Kennedy, Marcella.
- Coveney, Simon.
- Daly, Jim.
- Deasy, John.
- Deenihan, Jimmy.
- Deering, Pat.
- Doherty, Regina.
- Dowds, Robert.
- Doyle, Andrew.
- Durkan, Bernard J.
- English, Damien.
- Farrell, Alan.
- Feighan, Frank.
- Ferris, Anne.
- Fitzgerald, Frances.
- Griffin, Brendan.
- Hannigan, Dominic.
- Harrington, Noel.
- Harris, Simon.
- Hayes, Tom.
- Heydon, Martin.
- Hogan, Phil.
- Howlin, Brendan.
- Humphreys, Heather.
- Keating, Derek.
- Kehoe, Paul.
- Kelly, Alan.
- Kenny, Seán.
- Kyne, Seán.
- Lawlor, Anthony.
- Lynch, Ciarán.
- Lyons, John.
- McCarthy, Michael.
- McEntee, Helen.
- McFadden, Gabrielle.
- McGinley, Dinny.
- McHugh, Joe.
- McLoughlin, Tony.
- McNamara, Michael.
- Maloney, Eamonn.
- Mitchell, Olivia.
- Mulherin, Michelle.
- Murphy, Dara.
- Murphy, Eoghan.
- Nash, Gerald.
- Naughten, Denis.
- Neville, Dan.
- Nolan, Derek.
- Noonan, Michael.
- Ó Ríordáin, Aodhán.
- O'Donnell, Kieran.
- O'Donovan, Patrick.
- O'Dowd, Fergus.
- O'Mahony, John.
- O'Reilly, Joe.
- O'Sullivan, Jan.
- Perry, John.
- Phelan, Ann.
- Rabbitte, Pat.
- Ring, Michael.
- Ryan, Brendan.
- Spring, Arthur.
- Stagg, Emmet.
- Stanton, David.
- Tuffy, Joanna.
- Twomey, Liam.
- Varadkar, Leo.
- Wall, Jack.
- Walsh, Brian.
Tellers: Tá, Deputies Joe Higgins and Ruth Coppinger; Níl, Deputies Paul Kehoe and Emmet Stagg.
Amendment declared lost.
Is amendment No. 11 being pressed?
Yes. I move amendment No. 11:
In page 29, between lines 25 and 26, to insert the following:
“(f) to enter into any arrangement or contract with a Local Authority or a public housing agency to finance the construction of social and affordable
accommodation projects and the provision of the necessary social infrastructure necessary for such projects.”.
Amendment put:
The Dáil divided: Tá, 45; Níl, 86.
Tá
- Adams, Gerry.
- Boyd Barrett, Richard.
- Broughan, Thomas P.
- Calleary, Dara.
- Collins, Joan.
- Colreavy, Michael.
- Coppinger, Ruth.
- Cowen, Barry.
- Crowe, Seán.
- Daly, Clare.
- Doherty, Pearse.
- Donnelly, Stephen S.
- Dooley, Timmy.
- Ellis, Dessie.
- Ferris, Martin.
- Fleming, Sean.
- Fleming, Tom.
- Halligan, John.
- Healy, Seamus.
- Healy-Rae, Michael.
- Higgins, Joe.
- Kirk, Seamus.
- Kitt, Michael P.
- Mac Lochlainn, Pádraig.
- McConalogue, Charlie.
- McGrath, Finian.
- McGrath, Mattie.
- McGrath, Michael.
- McGuinness, John.
- McLellan, Sandra.
- Moynihan, Michael.
- Naughten, Denis.
- Ó Caoláin, Caoimhghín.
- Ó Cuív, Éamon.
- Ó Fearghaíl, Seán.
- Ó Snodaigh, Aengus.
- O'Brien, Jonathan.
- O'Dea, Willie.
- O'Sullivan, Maureen.
- Ross, Shane.
- Shortall, Róisín.
- Smith, Brendan.
- Stanley, Brian.
- Troy, Robert.
- Wallace, Mick.
Níl
- Bannon, James.
- Barry, Tom.
- Breen, Pat.
- Bruton, Richard.
- Burton, Joan.
- Butler, Ray.
- Buttimer, Jerry.
- Byrne, Catherine.
- Byrne, Eric.
- Cannon, Ciarán.
- Carey, Joe.
- Coffey, Paudie.
- Collins, Áine.
- Conaghan, Michael.
- Conlan, Seán.
- Connaughton, Paul J.
- Conway, Ciara.
- Coonan, Noel.
- Corcoran Kennedy, Marcella.
- Coveney, Simon.
- Daly, Jim.
- Deasy, John.
- Deenihan, Jimmy.
- Deering, Pat.
- Doherty, Regina.
- Dowds, Robert.
- Doyle, Andrew.
- Durkan, Bernard J.
- English, Damien.
- Farrell, Alan.
- Feighan, Frank.
- Ferris, Anne.
- Fitzgerald, Frances.
- Griffin, Brendan.
- Hannigan, Dominic.
- Harrington, Noel.
- Harris, Simon.
- Hayes, Tom.
- Heydon, Martin.
- Hogan, Phil.
- Howlin, Brendan.
- Humphreys, Heather.
- Keating, Derek.
- Kehoe, Paul.
- Kelly, Alan.
- Kenny, Seán.
- Kyne, Seán.
- Lawlor, Anthony.
- Lynch, Ciarán.
- Lyons, John.
- McCarthy, Michael.
- McEntee, Helen.
- McFadden, Gabrielle.
- McGinley, Dinny.
- McHugh, Joe.
- McLoughlin, Tony.
- McNamara, Michael.
- Maloney, Eamonn.
- Mitchell, Olivia.
- Mulherin, Michelle.
- Murphy, Dara.
- Murphy, Eoghan.
- Nash, Gerald.
- Neville, Dan.
- Nolan, Derek.
- Noonan, Michael.
- Ó Ríordáin, Aodhán.
- O'Donnell, Kieran.
- O'Donovan, Patrick.
- O'Dowd, Fergus.
- O'Mahony, John.
- O'Reilly, Joe.
- O'Sullivan, Jan.
- Perry, John.
- Phelan, Ann.
- Rabbitte, Pat.
- Ring, Michael.
- Ryan, Brendan.
- Spring, Arthur.
- Stagg, Emmet.
- Stanton, David.
- Tuffy, Joanna.
- Twomey, Liam.
- Varadkar, Leo.
- Wall, Jack.
- Walsh, Brian.
Tellers: Tá, Deputies Joe Higgins and Ruth Coppinger; Níl, Deputies Paul Kehoe and Emmet Stagg.
Amendment declared lost.
Amendments Nos. 12 and 25 are related and will be discussed together by agreement.
I move amendment No. 12:
In page 39, to delete line 36 and substitute the following:
"(a) an investment made by the Agency pursuant to a direction under section 42 or 47(4)(b) or the proceeds held by the Agency pursuant to a direction under section 47(4)(c),".
Amendments Nos. 12 and 25 are technical amendments related to the directed investments in the banks made by the NPRF commission at the direction of the Minister for Finance. Amendment No. 12 clarifies that where the Minister directs the commission to hold the proceeds of the disposal of a directed investment in Government securities or in cash these also constitute directed investments and so are the responsibility of the Minister for Finance. The NTMA may disregard such an investment for the purpose of determining an investment strategy for the fund.
Amendment No. 25 is a technical amendment to paragraph 21, to the effect that all directions given to the NPRF commission under the National Pensions Reserve Fund Act will remain directed investments under the Ireland Strategic Investment Fund, ISIF, legislation following repeal of the NPRF legislation.
Amendment agreed to.
Amendments Nos. 13 to 15, inclusive, and 17 to 24, inclusive, are related and will be discussed together by agreement. Amendment No. 15 is a physical alternative to amendment No. 14 and amendments Nos. 20 and 21 are physical alternatives to amendment No. 19.
Am I correct that amendments Nos. 13 to 15, inclusive, and amendments Nos. 17 to 24, inclusive, are being taken together?
Yes.
That is very difficult.
It is normal practice on Report Stage that related amendments are discussed together and voted on separately.
I move amendment No. 13:
In page 40, line 8, to delete “Ireland Strategic Investment Fund” and substitute “National Strategic Investment Fund”.
Deputy Pearse Doherty said yesterday that no amendment was being accepted by the Government. Strictly, that is correct, but it is fair to state the Government has redrafted some of the amendments I proposed in a Government amendment, amendment No. 23, the one to which I will be speaking.
When the Ireland Strategic Investment Fund was announced, I felt there was a major shortcoming in the plan for it. The fund has the potential to amount to €15 billion, but no effort or thought was put into where the money might end up. It is important because the section dealing with the fund is about commercial investment in parts of the country that have been subject to no foreign direct investment in the past 30 years. Some 80% to 85% of foreign direct investment in the recent past has been in Cork, Dublin and Galway. IDA Ireland's efforts to attract a certain percentage of foreign direct investment to parts outside these urban areas have failed badly. It is clear and is now being admitted by IDA Ireland that regional aid incentives have also failed.
The Ireland Strategic Investment Fund is probably the only stimulus package the country will see for years and the way it has been put together is such that potentially 90% of the money could end up going to Dublin. The fund was formerly called the National Pensions Reserve Fund. When one considers that ownership of the pensions reserve fund was intended to be held for the entire country, what has been happening seems unwise and unfair. We could have circumstances in which 90% of Ireland Strategic Investment Fund moneys could end up in Dublin. There is some evidence to suggest this might be the case because of investment trends in the past 30 years.
The Government's amendment involves a reporting requirement which is necessary to remind the administrators of the fund and relevant Ministers that an account of where the money ends up is as important as the investment. There is no earmarking of specific amounts for Waterford, in my case, or County Donegal. At the very least, the question of where the money does not go needs to be a policy consideration. That is what the reporting requirement will achieve. It is the first time that an assessment of regional investment, or the lack thereof, has been required in law in a major financial measure. That is very important.
If one were coming at this legislation cold or reading the reporting provision for the first time, one might say the amendment, as drafted, was fairly standard. It is not. If one examines fairly major financial measures, one will find that there is no similar provision. This is extraordinary in itself when one considers what has happened in the past 20 or 30 years in respect of investment. It actually amounts to a tacit acknowledgement by the Government that there is a regional imbalance. In fairness, there is a certain honesty associated with the amendment. The critical point is that the Department of Finance has actually put it in black and white. That was the point of it. I appreciate the meetings and time made available, but, more than anything else, I appreciate the acknowledgement that there is an issue. When I spoke to others, including Ministers and secretaries general, they all agreed with me, but the reality was that nothing ever happened. For this to be put in writing is the significant point. Perhaps this is down to the way the Minister for Finance, Deputy Michael Noonan, operates. It probably has something to do with the fact that he is from Limerick also. I believe he agrees with the points I have been making in recent months on what has been occurring economically in a few urban areas and what has not been occurring almost everywhere else.
The significant parts of amendment No. 23 are paragraphs (f) and (g). Paragraph (a) refers to “an assessment on a regional basis of the impact of the Fund’s investments on economic activity and employment”, while paragraph (g) refers to “an assessment on a regional basis of the distribution of the investments made by the Fund”. These two measures should probably be standard in every significant expenditure measure from now on. With every big ticket measure, we need to consider where the money is and is not being invested. At the very least, there should be a requirement for an assessment of where money ends up being allocated to and the impact it has, or otherwise.
The Government needs to compensate across the board for the fact that there has been no appreciable recovery in parts of the country. I hear about national recovery, but there has been no recovery in some parts. There has been a general improvement across the country, but certain local economies are still stagnating, at best. That is why amendment No. 23 is significant. It acknowledges that there is a regional imbalance and that more attention needs to be paid to efforts to track and spread investment around the country.
I certainly agree with Deputy John Deasy on the need for balanced regional development, about which there is no question and for which I have always fought. As a member of Dublin County Council, for example, I noted the problems faced in Dublin involving too much pressure on services, including transport services, and inadequate infrastructure which did not benefit from proper investment. It has been clear for decades that development is considerably imbalanced, as is evident from the fact that virtually one third of the population of the State is in the greater Dublin area. It would certainly be to the benefit of society and communities nationally to have balanced investment. The great difference between Deputy John Deasy and me is that he believes this will come from private capitalists and I do not. Experience in the past five or six years shows that it will not come from private capitalists. What private capitalists have done to the people of Waterford, in particular, in recent years is an outrage on many fronts. The dissolution of Waterford Glass, for example, was an economic crime against the entire society but particularly against the people of Waterford. In a part of the country that desperately needed industry there was an A1 industry of worldwide renown. It is not gone entirely because there are some small developments involving craftsmen and craftswomen, but in reality the industry could have been developed as a national resource had it been taken into public ownership when the private capitalists were walking away. What was done to the workers in Bausch + Lomb was breathtaking. Again, a private multinational is involved. I certainly agree, therefore, on the issue of agency funding.
Social housing, an issue we have discussed, is one phenomenon that would ensure balanced development because it is needed in every part of the country.
Finally, amendment No. 15 seeks to insert the phrase “with emphasis on the provision of necessary, publicly owned infrastructure”. Publicly owned infrastructure is the key point. We have heard about the disaster of trying to rely on a private sector in which the developers and big builders are driven purely by profit. When that goes awry, as it has, communities are left high and dry. We have seen that to be the case all over Dublin, with community redevelopment projects that are simply stranded because a private developer has gone bust.
I will focus on amendment No. 19, but I also wish to refer to the issue of reporting on regional development. The Government's amendment is welcome. I would have liked the Government to go further with regard to what Deputy Deasy suggested. It is one thing to report but another to act. However, at least it gives those who wish to see balanced regional development the tools to argue the case.
Investment in the Border, midland and west, BMW, region is a case in point. There were commitments by the previous Government to invest a certain amount in greenfield sites outside Dublin and Cork, and that was reported on an annual basis in the annual report, as is suggested under this amendment. Time and again one saw that the commitments or targets laid down were never reached. It was great to have the report so one could be informed that the Government was failing to reach the targets for foreign direct investment in greenfield sites. What would have been better - in this regard, it is a pity that it appears the earlier amendments will not be accepted - is a commitment to balanced regional development, not just a report on it. However, I welcome the fact that in the annual report we will be told how well or how unsuccessfully, as the case may be, balanced regional development is affected by this fund.
There is another welcome aspect to this. "Balanced regional development" has disappeared from the dictionary, in my view. I see that time and again in Donegal. We see increases in job numbers but that does not filter through to counties such as Donegal. Much of the focus is on getting the State going, but not on looking at the impact and whether it is flowing to the regions. That is important. While we must get the country going again, and it is important that an overall net number of jobs is created and that there is investment and so forth, it is equally important that there is a balance between the regions. The Government must refocus its energy on that. For that reason, I welcome the Government's amendment. However, talk is cheap. We must walk the walk, not just talk the talk.
Amendment No. 19 seeks to delete a number of provisions in the Bill. Section 42 deals with directions to make certain investments. This is one of the most worrying areas in this legislation. The Government is providing itself with the ability to use the moneys in the National Pensions Reserve Fund which will be available to the agency and to direct the agency to invest those funds in two situations. This is where the earlier discussion on the amendments tabled by Deputies Coppinger and Higgins comes into play. There is no clear ability within the legislation for the Minister to say, with regard to the environment, housing, water or any such important issue, that he or she wishes to use the State's resources in the National Pensions Reserve Fund to invest in these vital areas. The only areas in which that is allowed are as a remedy to a serious disturbance in the economy of the State - while we would argue that social housing is a disturbance in the economy, I do not imagine that is the intention of the Government - or to prevent serious damage to a financial institution in the State and to ensure the continued stability of that system. It goes on to provide that for either or both of those purposes, the Minister may give directions to the agency to invest assets of the fund in specified securities of a credit institution or to underwrite or otherwise support the issue of any kind of securities of a credit institution. The provision is very clear. They are the two things that can happen for either of the above occurrences.
When we refer to a serious disturbance in the economy, I do not think it is a reference to 100,000 families on the housing lists, people having to live in their cars on the streets or, indeed, the growing number of people who are homeless. It is more than likely referring to credit institutions again. This is what scares the bejesus out of me - that this Government will do exactly what the previous Government did in-----
Watch your language, please.
Pardon?
Watch the unparliamentary language.
"Bejesus," is it?
Yes.
The Deputy is not supposed to say he is scared.
I did not know that was one of your words in your-----
It is not mine.
I did not know that. I have never actually seen that book, wherever it is. Perhaps you would circulate the words in it.
Check with the Clerk of the Dáil and he will advise you.
It is under his pillow.
Deputy Higgins has it up there.
I am not even going to look for another adjective. It scares me that the Government would do what the previous Government did in 2009, which is to deplete the resources in the National Pensions Reserve Fund and invest them in broken banks. If one looks at the percentage returns the National Pensions Reserve Fund was securing for its investments, they were quite healthy at 6%, if memory serves. However, that €21 billion was whittled down to today's figure of €6.9 billion, because the Minister decided to direct investments into broken banks. While this started with the Fianna Fáil Government, this Government finished the job and finished it spectacularly by using most of those resources to pump into AIB and Bank of Ireland.
Why would we put a provision like this in legislation? There is money available to the fund and it is clear that this is about trying to refocus that money on investments in Ireland that will get the country's economy back up and running, but the only way a Minister can interfere with the running of that fund or direct where that fund should be spent is in respect of broken banks or some other type of financial institution. That is simply wrong. This refers back to what I said earlier and yesterday. By using that mechanism in this legislation and because it is a direction and not an order, it does not necessarily mean that it must be approved by the Houses of the Oireachtas. This is one of the reasons that this legislation is deeply flawed.
Nobody in this House, although other Members might challenge this, has demanded that this legislation be brought before the House as many times as I have demanded it. This legislation was originally announced in August 2011 in respect of the ability to refocus the National Pensions Reserve Fund on investments in our economy instead of in economies across the globe. Time and again we have asked about the legislation. However, what the Government has decided to do - with a number of good legislative measures, it must be said - is to include other provisions with it. It includes this provision, originally introduced by Fianna Fáil, which allows it to whittle away this resource if a banker comes knocking at the Government's door again, saying, "We are in trouble. We messed up again. We need your resources, or the ATMs will not work," whereupon the Minister will sign the order or direction and tell the agency to put all its plans on hold as €2 billion or €3 billion must be put into the institution.
That is simply bad policy and bad politics. It is what got us into this mess in the first place, and we should not be looking at it again.
The Minister of State has also attached other sections to the Bill which have damaged it, particularly the whole issue of NewERA and the mechanism that allows for easier privatisation of State assets. This section of the Bill is simply not on and it should be deleted. While the provision may exist in statute already as a result of the 2009 amendment by the then Government, that does not mean it should be continued. It should be discontinued. The money Irish citizens put into the National Pensions Reserve Fund should be invested for the good of the Irish economy, not for any other reason.
The Government should be big enough and bold enough to do this. We were told three years ago that there was a revolution and that there was a new way of doing politics. The Government should stand up today and say that the old way is finished and that it will not allow itself in legislation the ability to whittle away people's hard-earned money that rests in the National Pensions Reserve Fund and put it into broken banks. It should say that it will end that provision in the law introduced by Fianna Fáil because it wants to make sure the people's money is invested to build our country again, not invested in broken banks and in bailing out the bankers and developers of the future.
I call Deputy Boyd Barrett.
On a point of order, I did not realise amendment No. 19 was in this section, as I thought amendment No. 16 was. Could I speak on that?
Yes, of course.
I want to make a few very important points on the amendment. I totally oppose this section and believe it should be deleted. This is meant to be a stimulus package for investment in projects, yet a provision is being written in for another bailout if it is ever needed. Already, €21 billion has been put into two banks from the National Pensions Reserve Fund, and it is now down to €13 billion, so €8 billion of pensioners' money has been lost. There should be no provision written into this Bill to lose more money if the call is made.
Some €64 billion has already been poured into the banks and the bailout of the bondholders and the developers who crashed this economy, as has been well recorded. We need funds for investment to create jobs for the almost 400,000 people who are unemployed, the people who are emigrating every day of the week and those who need a roof over their heads, not to step in and bail out another credit institution. It is ironic that it is written into section 42 that the money can be called on in the public interest. In the last debate we had, the Minister of State told us that nothing could be done unless it involved the private sector, but when the public interest is at stake, he is providing in the Bill that we can use public money to bail out these private institutions, which, obviously, they would be.
I am totally opposed to this. We need schools in my constituency and in many others, we need homes and we need job creation. We do not need a charter for another bailout with taxpayers' money.
First, on the regional development amendments which I believe were championed by Deputy Deasy, and which the Government appears to have taken on board, I believe he is absolutely right. Far too often in Irish politics, in my observation, there has been a city against country, or rural against urban, fake war or fake debate which is sometimes used cynically by politicians on either side of the supposed rural-urban divide to play people off against one another. Sadly, some politicians on the left - not our bit of the left but other bits - have gone along with that, rather pathetically in my opinion, in a cheap effort to buy votes in urban areas. They will point the finger at the people in the rural areas and say they are getting everything, while politicians in the rural areas point the finger point back and say they are getting it all in the cities. It is a cheap political game, but when one actually looks at the issue seriously, one can see we need balanced regional development. I have no doubt Deputy Deasy's motives are honourable ones and involve looking at the issue seriously. As a Dublin Deputy, I am deeply worried about the over-centralisation of everything in Dublin, which is not good. It is not just bad for the countryside; it is bad for Dublin. It produces a whole series of ills and evils, one of which is the craziness we are seeing in the property market again, which produces issues like the housing crisis because everything gets centralised in one place.
Of course, this is the way the market works. The people with the big money, like lemmings, chase each other to where they think they can make the most money, regardless of the wider interests of society, the economy and balanced development - not just at a regional level but balanced development in every sense of the word - and regardless of the need to make sure that investment is directed and planned in such a way as to have a sustainable, cohesive and balanced economy and society. Of course, the big difference between the big money people and the lemming is that when the lemming charges over the cliff, it is the lemming that goes over the cliff, but with the big money people, it is we who go over the cliff, and the big money people win every time. I believe, therefore, that these amendments point towards the need not to have profit and the bottom line as the main, or only, criteria in deciding where investment goes. The starting point of the strategic investment fund should be a recognition of market failure and of the market's lack of concern with balanced development and with strategic priorities from the point of view of society and the economy as a whole. Whether it is in ensuring we have balanced regional development or the necessary infrastructure we need to make a society work properly, such as social housing, that is what the strategic investment fund should be about. That emphasis on regional development is critically important. It is good that the Government has acknowledged that point and added an amendment to that effect. However, what I do not understand is why, if the Government sees a need for that, it does not wish to spell out the need for balance in other areas, such as housing and critical infrastructure. I just do not understand it. Is it because the Government is sensitive to the accusation that it is deserting its rural base and, therefore, it feels it has to include this, but there is less concern when it comes to other areas where balance and planning, to use an old-fashioned word, are needed? We need planning in investment because the market is not interested in rational planning; it is only interested in charging after the dollar, with the consequence of over-investment in one area, whether geographic or sectoral, and under-investment in other areas, whether geographic or sectoral. That is the problem. I fear that while the idea behind this Bill is a very good one, and one that is to be welcomed-----
That is good.
It is. We are 150% in favour of strategic investment. Indeed, it was part of our policy platform before the last election, and we were very glad when the Government talked about it. However, the difficulty is that there seems to be a whole series of caveats and qualifications about the need, essentially, to bring in the private sector and to make its investments conditional on getting the private sector on board. I believe the Government will face two problems in that regard. First, the private sector companies do not want to get on board in regard to things that are not sure-fire profit winners for them.
This will cause real difficulty in actually getting projects going or finishing them, as we have seen with public private partnerships, or where the deal we must do involves the public giving away way too much. We take all the risk and they take all the profit, as often happens with these PPPs. We do not know anything about it anyway because it is all surrounded by commercial secrecy. We cannot find any information until the whole thing goes belly-up. Those are real and serious problems and flaws at the heart of this legislation.
The section that allows the Minister to use this fund to bail out the banks is extraordinary. What was the ESM for? It is bad enough that we cannot get retrospective bank recapitalisation, but I thought the whole idea of the ESM was that we would never have to do this again because there would now be a fund across Europe that would ensure this did not have to happen. Actually, we discover that the Government is preparing again for massive bailouts. One of the things that is worth underlining when we are looking at all of this and when people mention the collapse of the National Pensions Reserve Fund from €24 billion to €6.9 billion, or whatever it is now, is that when the Government says, as it does with regard to social housing, that we cannot take on a project on a 100% basis because we can get double the amount if we get co-funding from the private sector, and that this is critical because otherwise it would be put on our balance sheet, is that the debt is the reason we are prohibited from borrowing more money to do this ourselves. We could use our money to leverage money and we would not need the private sector. The reason we cannot do it is the massive debt and the fact that we have a 120% debt-to-GDP ratio and a big deficit. We have all those things because we bailed out the banks. Otherwise, there would not be a problem. A country that does not have a massive debt on its back and a deficit, all of which were incurred because of the bank bailout, does not have those restrictions on it in terms of public investment. We have them, so we are required essentially to privatise or semi-privatise our investment programme because we bailed out the banks, incurred massive debts because of it and ran down our National Pensions Reserve Fund. That is the sort of vicious circle and vice grip the troika have got us in, which the previous and current Government have allowed them to do, such that we cannot engage in the public investment we really need in infrastructure, housing or balanced regional development. The idea that we would allow ourselves to do all that again is just crazy.
Deputy Higgins has spoken already, so I will allow him to speak again after the Minister of State.
Maybe he will make more sense this time.
I do not think Deputy Higgins and I will ever agree on issues such as this, but we might. A number of Deputies on the opposite side of the House have acknowledged the principle that if we have money to put into developing our economy, it is a big plus. This is money that is not in the country at the moment but will be brought back here and used in the way the legislation allows. The key point is that if it is €6.8 billion, and if by involving partners in PPPs we can leverage that fund to get double the money, it will double the impact. Some of the money has already been used in just that way. We have already put in €1.2 billion, and matching funds have been found to support SMEs. Funds to support SMEs are very welcome indeed, so it is working.
It is also true that the economy is definitely improving significantly. I do not have the unemployment figures for Deputy Pearse Doherty's constituency - I have no doubt that he does - but I do know that unemployment nationally has decreased from a high of 15% three years ago to about 11.6% now, which is below the European average. It is still exceptionally high and there are significant issues relating to youth unemployment and so on, but the trend is in the right direction. Unemployment is falling and more jobs are being created. When we got into power, we were losing something like 7,000 jobs per month - 7,000 people were losing their jobs every month. Now, approximately 5,000 people are becoming gainfully employed in our economy. These are the significant areas that have improved.
Deputy Deasy's point is very important. His amendment clearly directs our attention to the issue of balanced regional development. He is absolutely right about the unemployment situation in Waterford. We have read about and seen what happened down there. Clearly it happened in other parts of the country as well. The regions need more investment. The Minister for Finance is very conscious of the need to ensure that economic development is not concentrated in a few areas. Therefore, the Minister proposes to insert the new section 49 into the Bill, which will require the agency in its national report to provide an assessment of the regional distribution of the investments of the strategic investment fund and the economic and employment impact of these investments. This will enable the Government and the Oireachtas to understand the overall impact of reorienting the National Pensions Reserve Fund into the Ireland strategic investment fund. The fund is intended to benefit the entire country and to boost economic development and employment. It will be important to have data on the fund's investments in order to measure that impact. Deputy Deasy has submitted an amendment to the same effect. As the Government is proposing a different wording, I hope Deputy Deasy can support it in terms of what we are doing.
The legislation as currently drafted provides that the NTMA must consult with the Ministers for Finance and Public Expenditure and Reform and have regard to the views expressed by them. The Minister may consider regional views without the need to prescribe this in legislation. This provides the maximum level of flexibility. Our approach is to be less prescriptive in legislation in order to have flexibility in the strategic investment fund. If the strategic investment fund looks like a public policy tool, it may compromise its ability to attract private sector co-investment. By leveraging the funds, the strategic investment fund will be able to make a bigger impact on economic activity and employment in Ireland.
The Deputy said earlier that he wanted schools in his constituency. This is already happening under the schools bundle 3 PPP. Over €110 million has been invested into a project with a vision of more than 7,500 school places in eight schools around the country. This means that the funds that can be used productively with PPP investment produce a very positive result in terms of facilities in schools. There was a large conference recently in Dublin which was addressed by the Minister for Finance and people from the Ireland strategic investment fund. The conference was extremely well attended by businesspeople, be they from Waterford, Drogheda, Cork or Dublin, and looked at methods and packages of proposals for business. We are actively seeking partners out there. The fact that the State is prepared to play a core role in that investment strategy will strengthen the deal we are asking private enterprise to get involved in.
Many of the arguments the Deputies made will produce half the benefit of what we propose. What we propose via the fund will double what the Opposition proposes, which is the key issue.
It is not possible in advance to assess the level of commercial opportunities that will present on a regional basis, but we want them to happen. We are actively pushing for them and meeting people who are interested and who have proposals. Changing the name of the ISIF is not realistic.
I refer to the question of the directions to invest in banks. As I said previously in the debate, acceptance of amendment No. 19, tabled by Deputy Doherty, would involve the deletion of section 42. I can only repeat that the section has been included as a precautionary measure. There is no wish ever to see it used. The section makes it clear that it can be used only in exceptional circumstances. That goes to the heart of the matter. While I welcome the recognition of Deputies opposite of the principle underpinning the fund, I ask them, notwithstanding the ideological problems they have with it, if the fund can be doubled, why not do it? Why not have private enterprise come along in partnership with the State to provide social housing and so on? If a voluntary housing agency such as Respond! can go to the market to raise funds, theoretically, if it meets all the requirements and all the detail is signed off, that does not have to be, from the point of the view of the Deputies opposite, commercial in that context if it a registered voluntary agency. If it could raise funds, the State could work with the agency. Deputy Coppinger and others are correct that there is a deficit in investment, but if the State steps up to the mark and puts forward its tranche of cash, then private enterprise will be more likely to get involved. Companies obviously need a commercial return. This is probably the best news we have had in this country for many years because all this money up to now has been invested in other countries. It is now coming home to create jobs and infrastructure on a commercial basis.
On that basis, I hope Deputy Deasy accepts the explanation I have given. I acknowledge the issues he has raised and this is an attempt to acknowledge and address them and the issues raised by Opposition Members. Notwithstanding their arguments, the welcome they have given to the principle underpinning the fund is welcome. If we can go forward together and build on this, we can help to transform our economy in these difficult times.
I appreciate the comments of Deputies Doherty, Boyd Barrett and Higgins. Deputy Doherty said regional development was not in the dictionary. I might not disagree with that but, at the very least, the people running this fund will have to give it consideration now. It is better being in than not. There is an issue for Ministers and senior civil servants who make the macro financial decisions. In the public and private conversations I have had, the conclusion that everybody understands is that even though they say there has been an inordinately uneven spread of investment in the country over the past 20 years, nobody has an idea what to do about it. However, the way to start is by admitting the problem exists, and that is what the reporting requirement achieves to a certain extent. I am not alone in this view, as Deputy Michael McGrath tabled a similar amendment on Committee Stage.
All we need to do is examine what has happened in Dublin. Deputy Boyd Barrett is correct regarding property prices. Outside Dublin, Cork and Galway, they have stagnated and they are not increasing. It is a different world compared to Dublin. The attitude that a recovery will eventually trickle down to the provinces is pretty lazy. It is an idea that from what I have seen has not materialised to any great extent. I am glad this attitude does not inhabit the Department of Finance but, as a start, this fund is considerable, significant and important.
This country has had an unhappy experience with so-called public private partnership. Deputy Boyd Barrett outlined the experience of communities in Dublin which were left high and dry by developers who were supposed to redevelop their areas with the councils. When I was a member of the Committee of Public Accounts some years ago, the Comptroller and Auditor General was highly critical of one bundle of schools built via a PPP where value for money did not materialise. In PPPs, the taxpayer takes the risk while the partner takes the profit.
With regard to amendment No. 19, the Minister of State spent the past hour, up to this tranche of amendments, telling us why State aid and direct investment in public housing via a public agency was a no-no, but now there is no problem with State aid when it comes to making a provision for money to be ploughed into the banks. This is the double standard and the neoliberal philosophy of the troika - the EU, the IMF and the ECB - which are making all these rules to hamstring public authorities for the benefit of private entities, big capitalists, etc., by pushing privatisation and so on. However, they insisted that the people take a hit of €64 billion to rescue private bankers and bondholders. It is a complete contradiction, and that is why our amendment should be supported.
We agree on the need for strategic investment, but there are serious questions about whether this fund can deliver such investment. Even if the Minister of State says he wants that to happen and acknowledges the need for regional development and the need to invest in areas such as social housing or vital infrastructure, the money people want to know the bottom line and what they will get out of the arrangement. This is also the problem with Deputy Deasy's proposal. While the Government and the Department of Finance might hopefully, because of this, say they must consider regional development in the allocation of investments and so on, the same private sector that has over-centralised in Dublin and a few urban centres will say, "Sorry, we are not interested," and the Government will be hamstrung because it has to have co-financing. That is the problem. We will still be hostages to what the private sector wants.
One of the issues on which I cut my political teeth was the Dún Laoghaire baths. We had what was supposedly an ideological argument about public private partnerships. Most people just wanted something done on the site. They did not care whether the money came from private or public sources. The council at the time said it had to be done through a PPP because it was Government policy. We said that if it was a PPP, the private operator would insist on making so much money as a condition of its investment that the public would get nothing out of it, and that was exactly what happened.
The private company proposed a 19-storey office block when the people wanted a swimming pool. That is the problem, and it will be the problem with this fund. Even if there are good intentions, if projects are conditional on co-financing with the private sector, nothing may happen, or what happens may not be of any use to society.
There is another problem with the PPP arrangements that the Minister seems to be prioritising. Others have mentioned the M50 toll road and how much taxpayers paid for it. The Minister of State mentioned Respond! and other housing agencies. While I have no specific problem with any particular housing agency, I have a major problem if the Minister of State is directing that all house building is to come from housing agencies. These agencies are not accountable to the councillors elected by the people. We can challenge local authorities and work with their housing departments on issues affecting people, including council tenants. It is a further privatisation of the house building programme. The Minister of State may be unaware of another difficulty with the housing agencies, including Respond! and NABCO. Once they have built estates, housing agencies do not have funds to carry out repairs, and sometimes they do not have funds to finish the estates. Why will the Minister of State not allow councils to apply for funds in the same way as the housing agencies?
Sometimes, as I listen to debates, I wonder what is the point of trying to convince Fine Gael that we should not use our assets to bail out broken banks. No matter what I or any other member of the Opposition say, it will have no effect. Fine Gael is ideologically wedded to supporting capital above citizens. We have seen what Fine Gael has done during the past three years. It has followed the same banking policies as the previous Government, using State resources to pump up and bail out the banks and allowing them to continue with the same type of people in them.
On numerous occasions I have stood in this same spot asking the Government why we are continuing to pay senior officials in Anglo Irish Bank obscene amounts of money. I specifically mentioned John Bowe as an example of somebody who should not have been paid by the State to remain in his position because of the dealings he was involved in at the time in Anglo Irish Bank, which are public knowledge. When we heard his voice on the Anglo Irish Bank tapes, everybody was appalled. However, when sensible voices had said he should not be there and asked the Government to do something about it, the Government was hands-off. It treats bankers with kid gloves and does anything they wish. I will press amendment No. 19.
Regarding the Government's amendment No. 23, which refers to assessment "on a regional basis", what is the definition of "regional" in the Bill? Does it refer to the BMW region, the provinces, or everywhere outside Dublin?
The word "regional" refers to all areas including Dublin. It means it must be geographically balanced and proportionate to the areas' populations and their needs. The point is that everybody would get a fair crack.
There must be a definition of "regional". One cannot report on a regional basis if one does not know what the region is.
We all know what the regions are.
What are they?
I know the region in which I live. One of the key features of NewERA is that, in consultation with various Government Ministers, it can develop proposals for investment in sectors to support economic activity and employment, specifically energy, water, telecommunications and forestry. The legislation could create a very positive, constructive fund which is available to promote balanced regional development, create jobs and meet the needs of our economy. This is a key point in our development and I urge Deputies to support and vote for it. We are at a turning point at which the economy is improving, jobs are being created and there is a commitment, acknowledged by the Minister for Finance, in the point Deputy Deasy wanted to be accepted and understood. Once the legislation has been passed we will be able to engage in very significant development. I ask Deputies to reconsider their total opposition to matching funds. Matching funds means there will be double the money, and the projects can be doubled. If one has a plan that fits the template for the Ireland strategic investment fund, one can build double the number of houses and invest twice the amount that one could otherwise. It is a no-brainer.
Amendment, by leave, withdrawn.
Amendment No. 14 not moved.
I move amendment No. 15:
In page 40, line 20, after "State" to insert "with emphasis on the provision of necessary, publicly owned infrastructure".
Amendment put and declared lost.
I move amendment No. 16:
In page 41, lines 11 to 15, to delete all words from and including ", and" in line 11 down to and including "2010)" in line 15.
This relates to the important matter of the ability of councils and other agencies to borrow in order to participate in strategic investment. On page 41 of the Bill we see the effects of successive EU regulations which prohibit the Government from allowing such investments. It specifies that investments cannot have a negative impact on the net borrowing of the general Government of the State for any year. It allows rules from the EU, the troika and the IMF to prevent the Government from taking investment decisions as it sees fit to provide socially necessary infrastructure. It is also a recipe for the continuation of austerity, because there is no way austerity can end without borrowing in the public interest.
Fine Gael and the Labour Party took a hammering in the local and European elections on this issue because, after six years, the country has had enough. The only way we can escape the unemployment and emigration crisis is by borrowing at times to make necessary investment. This very damaging provision would prevent, for example, councils from borrowing to build vital houses.
Deputy Higgins may speak for a minute if he wishes, but we will have to adjourn the debate at 7.30 p.m.
There are only ten minutes left in it, so we will have to come back after 9 p.m., unfortunately.
I would like to give notice that I will be withdrawing the amendments in my name.
Debate adjourned.