This debate is to adjourn at 5.30 p.m., if not previously concluded.
I welcome to the House the Minister of State, Deputy Richmond. I wish him céad míle fáilte.
Vol. 301 No. 1
This debate is to adjourn at 5.30 p.m., if not previously concluded.
I welcome to the House the Minister of State, Deputy Richmond. I wish him céad míle fáilte.
Amendments Nos. 2, 9, 28 and 33 are related and may be discussed together, by agreement.
Amendment No. 4 is in the same group.
Amendment No. 4 is grouped with amendment No. 1 but no one was here to move that amendment. I will ask the Senator to move amendment No. 4 separately.
Will the Cathaoirleach repeat the group we are dealing with?
We are dealing with amendments Nos. 2, 9, 28 and 33. Does the Senator have a copy of the groupings?
I do not.
We will try to get her one. They are available in the anteroom. Amendments Nos. 2, 9, 28 and 33 are related and may be discussed together.
I move amendment No. 2:
In page 8, between lines 15 and 16, to insert the following:
“(3) The Agency may, in consultation with a Minister of the Government having functions in relation to a sector of the economy, develop proposals for investment in that sector in order to support economic activity and employment.”.
This amendment seeks to amend section 7 by providing that in developing an investment strategy for the fund, the agency shall act in a manner consistent with obligations under the Cluster Munitions and Anti-Personnel Mines Act 2008 and the Fossil Fuel Divestment Act 2018. There are also other Acts and provisions that could be elaborated on but these are crucial areas where Ireland has put in place strong legislative measures precluding investment. I want to ensure there is no ambiguity whatsoever in respect of investment in these areas. I will come back to that point in a moment. Unfortunately, we have seen situations where Ireland's investment has had ambiguity in respect of these matters.
Amendment No. 9 seeks to insert a new subsection in section 16 to require that in developing an investment strategy for the climate and nature fund, the agency would again act in a manner consistent with the Cluster Munitions and Anti-Personnel Mines Act 2008 and the Fossil Fuel Divestment Act 2018.
Amendment No. 28 seeks to insert a new section to provide that the Minister would, within 12 months of the Bill passing into legislation, lay a report before both Houses of the Oireachtas outlining how the use of external investment managers for the future Ireland fund, the infrastructure, climate and nature, ICN, fund and any other funds controlled by the agency impacts the State's national divestment obligations under the Acts of 2008 and 2018, and any future divestment policies the State may be mandated to pursue.
Amendment No. 33 seeks to insert a new section to provide that the agency will ensure that the assets of a relevant fund are not directly or indirectly invested in a manner which would contravene Part 4 of the Cluster Munitions and Anti-Personnel Mines Act 2008.
I am focusing on the area of potential investment in cluster munitions because it is something about which I feel strongly. I was lucky to be present in Croke Park when Ireland negotiated a global ban on cluster bombs and to be a part of the Cluster Munition Coalition at that time. Ireland was able to show leadership partly because it was free from the complications of a national defence industry and military industrial interests. We were a neutral country with a record of disarmament, which began with the historic work Ireland did on the non-proliferation treaty. We were in a unique and strong position because we were not implicated or invested in those kinds of weapons and that gave us credibility when the global ban was negotiated.
We have clear legislation which states there should be no investment of any kind in cluster munitions or in factories or companies that produce cluster munitions. The legislation is explicit and refers to the production of munitions of any kind. The legislation is not limited to cluster munitions but applies to any munitions. We have seen two areas recently where the Irish State has not been clear about how it is following through on oversight of investment. One relates to when we were having our committee oversight of the divestment Bill in respect of the occupied territories. I will come to further discussion of that later. From the officials who spoke, there was talk about the use of external asset managers and external actors, and that they have their packages of things they do and we engage with them and ask them to engage with their other clients. There was a sense of an arm's length to some of the oversight and scrutiny. That is the reason for amendment No. 28. I am concerned, frankly, at the level to which some of the crucial decision-making and the actions in respect of key policy points agreed by all of us in the Oireachtas, and not just belonging to one side of the House, seems to be delegated to external investment managers. There seems to be a sense that there is a bit of deniability or distance there. I will come back to that point again because I want it to be examined further.
That is why this is about a report. I am not prohibiting the use of external investment managers. I am saying it is an area that needs more scrutiny. That has certainly come to my attention from the finance committee. I know the Minister of State is interested in attention to detail in how things are done. I believe he should be examining it in more detail. That is why I have suggested in amendment No. 28 that there would be a report that looks at how these external investment managers are reflecting the State's divestment obligations. Certainly, we would not want a situation where there is simply an iterative process. That is what we heard about when we talked about the illegally occupied territories. The external investment manager might engage in a process where he or she might appeal to a company to think about doing things differently. An iterative process would not be adequate to meet our obligations under the Fossil Fuel Divestment Act.
I welcome to the Gallery the guests of Senator Martin Conway and Deputy Alan Dillon from the Multiple Sclerosis Society of Ireland. They are very welcome. A neighbour of mine, Leo O'Halloran, and his friend, Ewan, are here. I thank everybody for being here.
The legislation is strong and clear and should be implemented in a strong and clear way, not in a way that may be iterative, inadequate, at arm's length or without oversight. Then I come to the fact that, sadly, the Cluster Munitions And Anti-Personnel Mines Act 2008 did not seem to have been considered at all with regard to the recent ammunition production Act that went through the European Union. We had a hearing about that at the finance committee. The ammunition production support Act was, in most people's minds, quite extraordinary. It was an Act to direct €500 million from the multi-annual financial framework, which is the general EU budget, directly into supporting ammunition producers as an industry subsidy. It was justified by the European Commission with somewhat ludicrous twists of logic. For example, even though the Treaty on European Union is really clear that in cases where there are defence or military implications, that should not be coming from the general budget and it should require a unanimous vote, the Commission said it has not looked at it with regard to defence and military implications and that it is treating it simply as an industry support measure. Its justification was that it is an industry support measure that it needs to bring in because of Russia's invasion of Ukraine and the national supplies being depleted.
However, to be clear, this ammunition support Act simply supports these companies. It does not look to the weapons that they are sending to one place or another. They can sell weapons wherever they like. When we asked the Departments of Finance and Defence to speak to us about this, they did not give us any example of how they had considered the Cluster Munitions And Anti-Personnel Mines Act 2008 and the national implications for Ireland. To be clear, that is €500 million from the EU budget. The estimate that we had from the officials is that it is about €12 million of Irish money that has gone into a fund which goes to manufacturers which are making weapons and munitions, even though we have national legislation that says you cannot invest in any factory that manufactures munitions. It is a direct clash. Some €12 million of our money has been invested and national legislation states that we cannot have our money invested in that way.
This is a real concern. I believe we are inconsistent with our national legislation, leaving aside the separate argument which I know the Minister of State could have at a different time, which I have had with the Commission, where I believe that its interpretation of the Treaty on European Union is wrong and potentially disingenuous. It is a concern on a national level. I asked if the Departments considered it, if it was proved and if it was checked against our national legislation. They did not have any evidence that it was. I am putting this in because I know the Minister of State's reply and notes will say that this is already law and that I do not need to put it in. The point is that it is a law that is not being looked at by people who are making decisions about the Irish public's money.
For further context, the ammunition support fund goes to companies which are manufacturing ammunition and arms. Those arms can end up wherever. I have not even scrutinised the full list but when I began to, one of the companies, which I will not name, is a company that recently exported 10,000 tank shells to Israel. That is a company that is benefiting from this €500 million fund, to which the Irish contribution is €12 million. That is not okay. I do not believe the public would regard it as okay or that the Minister of State would regard it as okay. It is a failure to scrutinise. Of course, under the treaty, Ireland could have opted out under section 31. We could have said we cannot be part of this bit. Whatever the Minister of State's opinion about it overall as a strategy for the European Union, which I am passionate about, I think this is a terrible approach by the European Union in ramping up military production and investing in companies which have had tenfold increases in their sales to Israel. These are not companies struggling with production when the money is there, but the idea that the arms industry needs a boost of public money to keep it going is frankly ludicrous. That is by the by. Our concern here is about how Irish money is invested and spent.
I am sorry that this seems very wide and addresses some other issues, but it is why I have tabled the amendments. The Minister of State does not have to answer on all of these issues. I am not expecting him to, but I am saying we cannot be complacent. I have a recent example of a case where our national legislation on cluster munitions is not being properly scrutinised and thought about when decisions are being made on the allocation of the public's funding. I do not want that to be the case with these funds. It would be really regrettable if that was the case with these funds. It would taint what we are all hoping for from these funds. I sadly cannot be complacent about that fact, which is why I want to have it copper-fastened in the legislation.
I thank Senator Higgins for tabling these four amendments and for her clear rationale and motivation. Senator Higgins will understand that I am dealing with this legislation and have to respond specifically to it and address the issues that she raises in amendments as they apply to this legislation. I am not for an instant taking away from the points she has made. I accept her bona fides on them. Senator Higgins is right on many things and I would like to think we are in agreement with the thrust of these amendments. We want to make sure that the public finances are not invested in a way which breaches the provisions of the Cluster Munitions And Anti-Personnel Mines Act 2008 and the Fossil Fuel Divestment Act 2018. We are in agreement with the application of the principles of both of these Acts with regard to these funds.
The Senator already made the point that I will make, which is that we have legislation in place. That is not for an instant to take away from the clear example that the Senator has provided on a European level, but it is important for me to draw the contrast with that comparison. We are talking about domestic legislation that has domestic oversight. We are not talking about European legislation and interpretation of European treaties. This is something that we have control of. When I say "we", I mean the Government as well as the collective Oireachtas. We have the ability and responsibility to adhere absolutely to not just the spirit of the legislation cited but the full responsibilities therein. The Senator raised clear concerns about the role of investment managers. I know that will be part of further debate this afternoon.
I wish to make one point very clear. I am sorry this impression was perhaps not given during pre-legislative scrutiny and the associated discussion, but I hope I can underpin for Senator Higgins that it is absolutely the case that where the State is investing funds and there is a clear policy instruction or legislative requirement, the investment manager is required to follow those instructions. It is not a case of merely needing to take them into account or of paying attention to them, but a clear requirement. This is the long and the short of what is a key point. We absolutely expect the thrust of this legislation to be followed, and not on some sort of aspirational basis. This is what is happening because the legislation we have proposed and on which the Deputy and I engaged briefly on Second Stage is very clear in respect of the aims of the Government. It is also very clear in respect of the role the two funds can play and the return required. Equally, it is also clear regarding the responsibilities and existing requirements imposed by the Acts of 2008 and 2018.
The Senator has raised concerning issues relating to the EU. She has raised them before and we have debated them. We will take that into account. We know the processes through which we can take account of the aspects the Senator referred to under the treaties as well as directly as a member state government. Indeed, it is also possible to do so as a parliamentarian through the various functions available. I do not necessarily believe this is a debate for here and now. While I appreciate the example given, in the context of the amendments submitted by the Senator, the existing legislation is quite clear. For this reason, I am not in a position to accept any of the four proposed amendments.
I thank the Minister of State for his engagement. The point is that it has been under this Government's watch that the failure to apply this legislation properly has happened. This is not something for the EU. The question of the wider policy on the ASAP is an EU question, but the question of Ireland's involvement with, agreement to, participation in and contribution towards this programme is a national one. It is a question for the Government. I am concerned that there is a clear inconsistency between there being an absolutely explicit prohibition on investment of this kind in the Cluster Munitions And Anti-Personnel Mines Act 2008 and the fact that €12 million of Irish money, effectively, is going to these arms manufacturers. As I said, we know that at least some of these arms manufacturers are currently providing arms in breach of an International Court of Justice ruling that says every state should do what it can to prevent any acts of genocide. They are also going against the call of the UN Human Rights Council for an arms embargo. There is, therefore, a real tension evident here with this policy. That is one aspect. There is then the tension in regard to Ireland's engagement. It comes back to that law. I am not going to press the amendment now but I will come back to this on Report Stage.
I was somewhat shocked at what we heard last week in the finance committee. It was not simply that an attempt was made to explain why this measure was somehow compatible but that there seemed to be no consideration of the cluster munitions legislation. To be explicit, I reiterate that this legislation bans investment in any munitions. We need to take this legislation very seriously, especially when there are calls from the UN for an arms embargo and a requirement from the International Court of Justice that all countries would try to ensure they are in no way implicated in any act that contributes to a genocide.
Regarding external asset managers, with respect, I probably will press this amendment or I might withdraw it and bring forward a new one on this matter because it is a wider issue. Simply saying it is a requirement is fine and I am glad to hear it. I believe, however, that this area needs examination and more scrutiny. It is not simply enough to say that we told them this was the requirement. We must be examining what is actually happening. We must be considering the follow-through in this regard, exploring how these asset managers interpret this requirement and looking to see how it is monitored on our side. It is, therefore, an area that does need more examination.
Whenever we delegate a job to someone else to do on behalf of the Irish people, effectively, there must be very tight monitoring of it. It may be a practice that has not had as tight a level of scrutiny as it should have had in recent years. I am not impinging the reputation of any individual external asset manager. This is an area where more scrutiny is needed, however, and not simply around what the communication outward is but regarding what the effect of the communication is. Can we look to instances where there were failures and these were corrected, for example? Have there been examples of this type of failure happening where the outcome led to a change or shift in the way external asset managers were presenting a package or portfolio of goods? Where the State's requirement in this regard is having an impact is something I would like to look at.
As I said, this is an area where I feel, in the few points where I have encountered it, there was a lack of scrutiny. I am being frank. I am being vague because there has been a lack of scrutiny and that is why I want there to be a report. This is why I want this area to be examined. The Minister of State is in the position to bring about a real examination of how external asset managers are being employed, what the effect has been and how things have panned out. I might not press this amendment, but I would like to hear what the plans are in this regard other than simply sending a strong message at the outset. I refer as well to what the consequences are if there are situations where the requirements are not being met. I will, therefore, withdraw amendment No. 2, which is the first amendment in this grouping and then move to the first of my amendments in the next grouping.
Does the Minister of State wish to come in?
I will come in briefly. As I said, I appreciate the sentiment of the Senator's contribution. She is right that I am in a position as a Minister of State in the Government to be able to ensure we get the reassurances required in this regard. To be frank, I do not think there is a need for a legislative requirement for a report. The legislation is clear on what the responsibilities are in respect of asset managers. It is a fairly black-and-white binary issue from the perspective of the Government. I am not going to get into any issue in terms of the reporting process or sanctions because I am fully reassured and aware of the importance of this measure.
This is not just a situation where it would be nice if the asset managers paid attention to this stipulation. It is a direct and binding contractual instruction. It is a deadly serious requirement of any funds an asset manager is engaged by the State to oversee. These are professionals in this area and we need such professionals to do this work in this area. I am not a qualified asset manager and, although I stand to be corrected, I do not think any of us in the Chamber are. Perhaps Senator Casey is one. Who knows? Other than that, what we have here is a tight legislative instruction that gives due attention to the two existing relevant Acts already mentioned. The responsibilities imposed upon asset managers in this context are quite clear. I appreciate the Senator withdrawing amendment No. 2 but it remains the case that I am not in a position to accept the other three amendments we discussed in this group.
Amendments Nos. 3, 10 and 32 are related and may be discussed together by agreement.
I move amendment No. 3:
In page 8, between lines 15 and 16, to insert the following:
“(3) In developing the investment strategy for the FI Fund, the Agency shall ensure that such a strategy prevents the investment of public monies into undertakings operating within occupied territories.”.
This amendment seeks to amend section 7 in respect of the investment strategy for the Future Ireland fund by providing that "In developing the investment strategy for the FI Fund, the Agency shall ensure that such a strategy prevents the investment of public monies into undertakings operating within occupied territories".
Amendment No. 10 seeks to insert a new subsection in section 16 that would require that "In developing the investment strategy for the ICN Fund, the Agency [would] ensure that [the] strategy prevents the investment of public monies into undertakings operating within occupied territories."
Amendment No. 32 seeks to insert a new section into the Bill to provide that "The Agency shall ensure that the assets of a relevant Fund are not directly or indirectly invested in an undertaking operating within an occupied territory" and that "Where the Agency becomes aware that an undertaking in which the assets of a relevant Fund are directly or indirectly invested is, or becomes, an undertaking operating in an occupied territory, the Agency shall divest the assets of the relevant Fund from such investment as soon as practicable."
All of these amendments relate to the really important issue that our public moneys should not be invested in illegally occupied territories, or in undertakings that are operating in illegally occupied territories. It is a discussion we have had in terms of the divestment legislation which is being considered by the finance committee. It is far better to take the initial steps to avoid the investment in the first place rather than having to look to retrospective divestment after the fact.
The need for legislative guidance on this is very clear. When the NTMA spoke to the finance committee, it was very clear. It applied the Cluster Munitions and Anti-Personnel Mines Act 2008 and the Fossil Fuel Divestment Act 2018 because it is required to do so by legislation. We know the NTMA and others operate an exclusions list. I may come back with further questions and amendments on Report Stage around what exclusions list may be attached to these funds. In terms of the exclusions list, occupied territories are not on it because they were not required to be on it by legislation. Subsequently, there was the welcome decision by the Minister to seek partial divestment from some of the companies operating in illegally occupied territories.
When we talk about things like the occupied territories Bill, of which I am a co-sponsor, and indeed the Illegal Israeli Settlements Divestment Bill that is going through the Houses, the focus is on the legality of these new Bills and their proposals. To be clear, there is no legal basis on which we can trade with an illegally occupied territory. It is a not a matter of asking if divesting or ceasing trading is legal. The point is that there is no legal basis for trade with an illegally occupied territory in the first place. When we trade with an illegally occupied territory, we are operating outside the law as a State. There is no legal basis under the EU-Israel association agreement. Of course, there are many occupied territories, including Western Sahara, a place I have a great interest in and there are real concerns about trade in that area too. To focus on the one that is probably most on people's minds, the illegally occupied territories in Palestine, we cannot trade with an illegally occupied territory under any agreement that stands. We cannot do so under the GAT rules or under the WTO rules. None of those rules allows us to trade with an illegally occupied territory whose population cannot give permission for that trade. The EU-Israel association agreement by its very nature is explicitly with Israel and not with territories that it is illegally occupying. It is very clear. Occupied territories cannot be part of a trade agreement. When we trade with illegally occupied territories, we are literally trading with illegality and we are doing so outside of a proper legal basis. Similarly, when we invest in illegally occupied territory there is no legal basis for that. Under what guise are we trading with such a territory? Specifically in this case, the companies that are choosing to operate within illegal Israeli settlements in occupied territory are operating in a way that is outside the law. We have to ask if it is appropriate for us as a State to be investing in companies that conduct some of their practices and operations without a legal basis.
I welcome Deputy Michael Ring to the House with his guest, Darren Forde. Céad míle fáilte. Apologies, Senator.
That is fine.
To be clear, while I do not believe we should have to put these provisions in the law, apparently we actually have to include them to make it explicit. We heard from those who manage the assets of the State in the NTMA and other bodies that they need political or legislative direction in terms of doing the right thing, which they should be doing anyway. It would be incredibly regrettable. It is one thing that we are trying to unpick the poor and wrong investment choices made by the State in the past which have allowed us to be implicated in investing in companies that are operating outside of the proper law. This is serious. They are very big companies. Just because they are very big companies in some cases does not mean they are not breaking the law. It does not mean they are not operating without a legal basis. Some of the places where these companies are operating are disempowered or poor, lack recognition, and are less likely to be able to take action. We know the brave and long battle that Western Sahara has had in trying to take cases against the illegal operation of trade and extraction of resources from its territory, which is illegally occupied and awaiting a referendum. Currently there is no basis for Morocco to be trading in any goods that come from Western Sahara. They have been taking their case painstakingly through the European Court of Justice and so forth. It should not come to territories to do that. We should be doing the right things in the first place.
Now we are here so that we do not have to pass some future Bill in some future Oireachtas where we depressingly are trying to get divestment, asking questions or having statements about investments of the future Ireland fund or the infrastructure, climate and nature fund. I know much of that investment is going to be in Ireland. That is the hope. We hope it is happening nationally to a large extent. The problem is whether it will be with companies and entities that are also operating in occupied territories. It does not have to be a direct investment in whatever is happening, a particular practice in an occupied territory. It is about investment in companies and undertakings that are operating within occupied territories. For me, this is really clear. It is around not making mistakes that were made by the State in the past. Those mistakes are now being slowly unravelled but with a reluctance to face that some of the biggest companies Ireland has invested in are implicated in this way. That is why the divestment that is happening at the moment has been incomplete. This is an opportunity for us to get it right from the start on these funds. What is exciting about these funds is that they really are meant to be directed at the future and at the idea of infrastructure, climate and nature. They are meant to be directed towards things which are in themselves a public good. It would be a pity if that goal and mission were compromised by the kind of inappropriate investments that Ireland has sadly made in the past.
I thank the Senator for placing these amendments and for her very clear rationale on the justification and the very serious concerns that she holds in respect of current and previous or proposed investment strategies of the State. There is quite a bit in these amendments and I will address some aspects that the Senator did not directly refer to, if that is okay.
I am sorry; I must have skipped something.
No, just aspects of the amendments themselves. The thrust of your argument is well made; do not worry about that. I think it is important for the totality of the debate to examine some of the impact of the entire drafting of the legislation and what considerations a government may have to take in hand in respect of utilisation, as per the middle part of amendment No. 32, in respect of the use of the fourth Geneva Convention and the protocols therein. It is important to state when we use any of these protocols within legislation or as an amendment to legislation that they are in themselves extremely significant documents and set out a considerable amount in respect of international humanitarian law.
It is very important the State is able to withstand any constitutional challenge to the use of these protocols. While they have been adopted in certain parts of domestic legislation, there is a distinction between adopting protocols in national law and using the fourth convention as a basis for determining or defining an occupied territory on which to base investment decisions by the State. I remember that when Senator Higgins co-sponsored the Control of Economic Activity (Occupied Territories) Bill 2018 in the previous Seanad, of which I was a Member, we had quite a detailed debate quite late into the evening talking about western Sahara, because the focus was about how we define occupied territories at large. I know of the Senator's particular interest in that part of the world, even though the thrust of the legislation remains the occupied Palestinian territories. In that regard, the Senator is well aware of the discussions at pre-Committee Stage scrutiny in respect of the Illegal Israeli Settlements Divestment Bill 2023, a Private Members' Bill, which I will discuss in a few minutes at the discretion of the Cathaoirleach. In particular, when contributing to pre-Committee Stage scrutiny, Department officials outlined a number of issues with the proposed Private Members' Bill that I believe are relevant to this debate and in particular to these amendments.
One of the issues identified was that of creating a reliance on a definition determined by an external legal instrument and including it in domestic law. In making law in this State, under Article 15.2 of the Constitution, the Oireachtas has sole and exclusive authority. I point to the potential issue of providing an automatic legislative standing to a decision made outside the State that has not been agreed by the Oireachtas and can be changed by such an external source without further consideration by the Oireachtas. As I mentioned previously, the Private Members' Bill that is on the Order Paper, namely, the Illegal Israeli Settlements Divestment Bill 2023, which seeks to achieve a similar outcome, is being considered by the Oireachtas committee at pre-Committee detailed scrutiny stage at which the Senator is contributing. When officials from the Department were before that committee, they set out that the text of the Bill presented a number of challenges that also apply to these amendments.
I wish also to lay out exactly the detail of how the NTMA has divested from certain investments in the occupied Palestinian territories, as referred to by the Senator. The director of ISIF outlined that, as of 31 December 2023, ISIF's direct investments in companies on the UN database totalled approximately €4.2 million in 11 companies. He also outlined that ISIF's indirect investments include eight companies totalling approximately €9.4 million. ISIF has since taken an investment decision to divest from six of these companies with a total value of approximately €2.95 million. These six companies include a number of banks and one supermarket chain. Following the recent divestment on the basis of the risk that presented, ISIF will continue to keep under review the alignment of relevant investments within its investment parameters and commercial objectives. In practice, this means that if any other investment has or is later found to have the same risk characteristics as those six companies, those other investments then fall for consideration of divestment.
The final point I will make on this issue relates to the investment policies and strategies of each of the funds. As the Senator will see, there is a new legislative requirement that the NTMA, in the management and investment of the resources of the future Ireland fund, the infrastructure, climate and nature fund, and the Ireland Strategic Investment Fund will be required to have regard to environmental, social and governance risks, as we discussed in detail on Second Stage. The proposed framework will allow the flexibility to address investment or divestment in a way that primary legislation on individual environmental, social or governance issues does not. These can include issues such as an appropriate stance towards human rights abuses.
The Senator will also be aware of the actions taken by the State in respect of the ongoing conflict in and attack on Gaza and the wider Palestinian people by the State of Israel in terms of our diplomatic efforts and yesterday's historic recognition of Palestine as a state. As regards the Private Members' Bill I discussed, the Government has not made a decision about this Bill and is awaiting the pre-Committee scrutiny report. I note the Senator's intention with regard to using the Fourth Geneva Convention to define the occupied territories and I welcome that suggestion, despite the caveats because there are significant legal and policy challenges with adopting any legislation towards any occupied territories. However, it is on this wider basis, given that the Government has yet to decide its approach to the Private Members' Bill, which is very instructive in terms of the debate we are having here, and that, in the event of any decision to legislate, further legal and policy work would be needed if we were to accept it, that I cannot accept these three amendments at this stage.
We know this is Private Members' legislation and that, by its nature, it is going to be slow. It is quite early in the process, whereas this legislation is moving ahead apace, so it is important we get it right. The idea is that we would wait until after that legislation has been on its full journey before determining whether we want to have measures in terms of divestment. That is Private Members' legislation, which will have its consideration and has its suggested mechanisms, which are different, by the way, from the mechanisms I have suggested here. However, the responsibility sits with the Minister of State and the Government in terms of Government legislation and what mechanism the Government is going to use to assure the Irish public, whose hearts are broken, frankly, looking at some of the actions that are taking place currently in illegally occupied territories, that action will be taken. I should point out, and I believe it is in amendments Nos. 3 and 10, that I do not specify the mechanism. In only one of the amendments we discussed, amendment No. 32, do I discuss or suggest a mechanism, and I thank the Minister of State for the opportunity to dive in a bit more into that, and I will. In amendments Nos. 3 and 10, however, I do not suggest a mechanism and I leave it, in fact, at the discretion of the Government and Minister to design what mechanism they believe is appropriate, so there is no question there of cutting across national or Government powers. There needs to be some mechanism because I think the public wants to know - not to hope or to aspire but to know - that there is no investment in occupied territories. It seems there are the bones of a mechanism - I may not be happy with it and it may not be adequate to my purposes - in what has been applied in respect of investments in, as the Minister of State said, and the removal from certain companies - the figure cited was €9 million but I will not quote back the figures - of substantial millions that were invested in those companies and undertakings operating within illegally occupied territories and which the State has now divested itself of. The Minister of State indicated that were the same characteristics which were identified in respect of those companies to be found in other companies, it would be the intention to divest from them, but that is a policy and a policy can change tomorrow. It sounds to me, though, that if there is a policy and that policy is based on the consideration of certain characteristics, that should become a policy which is captured and reflected in the legislation and which is given as clear guidance, because, to be very clear, clear guidance is needed to those investing on behalf of the future Ireland fund and the infrastructure, climate and nature fund.
This goes another step further regarding external asset managers. If we do not give them clear guidance rather than simply saying economic and social governance in a loose sense of what that might mean, there are a lot of external asset managers who may choose not to interpret that as having any problem with occupied territories because the practice is many investment firms are investing. There is huge investment that takes place in illegally occupied territories and a significant amount of money flows through these illegally occupied territories and the companies that operate within them. There is the very fact the State had millions in investments from everywhere in the world in companies that operated within these illegally occupied territories, so it has happened and a simple general economic and social governance standards clause has not been sufficient in the past. A new policy has been introduced but it is only a policy of this Minister and Government. It is not copper-fastened by any legislative measures. It is not made clear, and because it is not copper-fastened in the legislation that is setting up these funds, there is absolutely no guarantee it will be applied when these moneys are being invested.
It is not something we can be clear on or complacent about.
I genuinely see no obstacle to the Minister of State's support for amendments Nos. 3 and 10. They simply state that the Irish public's money should not be invested in undertakings operating in occupied territories. The Minister of State can provide any definition he wishes of occupied territories, or even provide regulations that identify what the Irish State considers to be an occupied territory. Those regulations could make reference to the various articles of international law that I have mentioned in my definition – that is, if the Minister of State does not want to transcribe the international law directly into the legislation. That does not create any obstacle to amendments Nos. 3 and 10.
Amendment No. 32 provides support for the identification of occupied territories by referring to the relevant international law, the Fourth Geneva Convention. An "occupied territory" is defined as one occupied within the meaning of the convention and which has, according to my amendment, been "confirmed as such in a decision or advisory opinion of the International Court of Justice", "confirmed as such in a decision of the International Criminal Court", "confirmed as such in a decision of an international tribunal", or, and this relates to the discretionary power, "designated as such for the purposes of this Act" by a Minister. If the obstacle is that the final decision sits with the International Criminal Court, the International Court of Justice or an international tribunal, a version of my amendment could certainly be submitted on Report Stage – I will do so – that states the Irish State will set out its own definition of "occupied territories" with reference to the key Acts and legislation. In that way, the powers will remain within the Constitution and in accordance with principles of national sovereignty.
There is another approach that I might take on Report Stage, and that is to say we should not be investing in undertakings that are operating in any territory without a legal basis. Perhaps we spend too long trying to place the burden of proof on those who say a territory is occupied. Let us place the burden of proof on the undertaking by asking it to show us the territory in which it is operating is not occupied, its legal basis for operating in Israeli settlements in the West Bank that have been declared illegal under international law, or something indicating whether it believes it is operating within Israel rather than an illegally occupied territory. The undertaking should have to show the basis on which a territory is not regarded as occupied and on which it can stand over its decision. It is a little more onerous to have to proceed in this way and it would probably be simpler to exclude the occupied territories, but if it is too difficult to identify occupied territories, even with really clear reference points such as the International Criminal Court and the International Court of Justice, we just have to check everything.
It is not acceptable to have any risk at all of our money being part of what creates the wealth and impunity generated by those operating in occupied territories. I am referring to both the Western Sahara and occupied Palestinian territories. Occupation has been very lucrative for many people. The fact is that nobody seems to be calling companies to account where there is money to be made. We must not be complicit in this anymore because all of this contributes to a wider culture of impunity, one in which wealthy companies and wealthier countries can do what they want. It seems small, perhaps, to build a little mechanism into this Bill as it goes through, but it deals with our money. If the Minister of State does not want to accept my mechanism, I would like him to come back with one on Report Stage that shows how some of the public scrutiny criteria being applied at a time of public pressure will be consistently applied to the new funds, that the definitions of economic, social and governance measures will be clear, and what other mechanism we can apply to ensure there is no risk of Irish money being used in the way in question.
I intend to press amendment No. 32 and to propose different approaches on Report Stage. I am doing so in a genuinely constructive way but I am also deadly serious. I am not here simply to posture and relive some old argument; I am here because I do not want to see another euro of our money used in ways that contribute to suffering.
How stands the amendment?
First, I will continue with my response. I thank the Chair.
The Senator is entitled to respond but we need to move on.
I would like to continue.
I have a responsibility too.
Sure.
With regard to references to our past debates, I am bringing a new urgency. I have been talking about the occupied territories Bill for many years, but right now I believe this is urgent. It is urgent to ensure we do not have the kind of investment in question.
What the Minister of State said raises two further areas of concern. He mentioned that a future Government might have a different strategy. That is why we need to be really clear. It is simply not enough for a current Minister to be considering mechanisms and criteria – I would love to hear more about these and perhaps it would be useful to expand on them on Report Stage – or to be applying criteria on divestment from illegally occupied territories and undertakings operating in illegally occupied territories, because doing so is a matter of policy and a new Minister might have a different policy.
When it comes to Ireland's compliance with international law, the spirit of that law, multilateralism and human rights, it should not be at the discretion of a future government as to whether the State is going to invest in illegally occupied territories. That is not a matter which should be at the discretion of a new Government; it is one we should be getting off the table right now at the outset. A future government will make its decisions, but, right now, it is this Oireachtas that will pass the Bill before the House.
As the Minister of State knows well, when a Minister comes before the Houses, he or she is asking for legislation to be passed. It is very reasonable that parliamentarians say that they are open to legislation being passed but that there is an important condition attached. We do not have to throw our hands up and say we will not crowd a future government or leave it to make its own decisions. It is our responsibility to ensure that we give as clear guidance as possible on a manner such as this. I do not accept the idea that we should not be overly specific in setting strategy. It is not a matter of opinion when it comes to international human rights, international law or ensuring that the State is not contributing to the continued making of money from illegally occupied territories. I am quite comfortable with no future government having strategic options in respect of that issue.
In the context of its clear guidance and discretion, as already stated, the NTMA has allowed investment in illegally occupied territories and in companies and undertakings operating in those territories. It has done that under this Government's watch, and it has done it over a number of years. This is quite a different Bill, and the mechanisms involved are also quite different mechanisms. The NTMA was clear that illegally occupied territories are not included in the exclusions relating to its current economic, social or governance measures.
Before they leave, I welcome the ladies from the Thurles Active Retirement Group on my left and right. They are guests of Deputy Jackie Cahill, who, I am glad to say, is my colleague on corridor 2 in Leinster House 2000. I hope they enjoy the rest of their day. It was lovely to have them here. Slán.
I do not accept the two arguments relating to future discretion. It is simply not enough to say that the NTMA has offered clear guidance because the decisions made by the NTMA - which it was very comfortable with until it was eventually directed or encouraged otherwise by a Minister - allowed for the State to invest money in illegally occupied territories. We cannot say it will not happen because it has happened. We cannot be sure it will not happen again because we do not have concrete legal mechanisms to stop it happening again. That is what I want, namely a mechanism to ensure that it will not happen again. I am extremely open to a mechanism suggested by the Government. It does not have to be the mechanism we propose in amendment No. 28. I can think of a number of other mechanisms and approaches that could be used. Certainly, some mechanism should be put in place to give assurance to the public before this legislation finishes its journey, I hope, through the House and certainly through the Oireachtas.
How stands the amendment?
I will withdraw it and reserve the right to reintroduce it on Report Stage.
I move amendment No. 4:
In page 8, between lines 15 and 16, to insert the following:
“(3) Without prejudice to the generality of subsection (1), the FI Fund investment strategy shall have regard to the promotion of the economic development and stability of the State, across sectors including but not limited to housing, infrastructure, energy and water.”.
I welcome the Minister of State back to the House. Amendment No. 4 relates to the investment strategy under the future Ireland fund. Its purpose is to provide a focus to the investment strategy towards domestic investment within the State. At present, the only specification under the investment strategy is that money is to be invested inside and outside of the State. As we are all too aware, however, the State is suffering a chronic housing shortage and infrastructure deficits. These deficits are posing a real and significant threat to the competitiveness of our economy and the living standards of Irish people. There is a risk that the money allocated to this fund will be predominately invested abroad in search of higher interest yields. Under this Bill, the Government is legislating for annual contributions to the fund that will grow to €5.4 billion in 2030. It would be a missed opportunity should other jurisdictions benefit from investments under this fund while this State continues to face significant challenges in the areas of housing and infrastructure. As stated, the latter are holding our economy and our people back. Instead of creating a fund which will focus on investment abroad, the Government should use windfall corporation tax receipts to create a fund that will focus on infrastructure in Ireland. This is a view shared by others including the Nevin Economic Research Institute and IBEC.
Under this Government, the housing crisis has gone from bad to worse and has reached diabolical proportions. If it were focused on domestic investment, imagine the impact the fund could have in taking us out of the housing crisis. That is why we have tabled this amendment.
I thank the Senators for tabling this amendment and I thank Senator Warfield for his contribution. This is a repeat of a debate we had a number of weeks ago with the relevant spokespersons from the Senator's party in the Dáil. My response will remain the same in that I fully accept the clear intention and focus on the need for the State to improve investment in many areas, including of infrastructure and housing. However, there is an element here of missing the purpose and concept of the fund. The fund will deliver a commercial and societal return inside and outside this jurisdiction. It is important that we acknowledge the very clear focus of the national development plan and other plans on infrastructure.
The Senator referred to housing. It is really important, for the fullness of the debate, to provide clarity on the level of investment going on in housing in the State and the impact this is having. The Senator will know that, as matters stand, every working day, 350 new homes are being built in the State. Every week, 500 first-time buyers are purchasing their first home, thanks largely to policies the Senator's party opposed. The Senator will know well that we are seeing investment and the construction of social homes at a scale not seen since long before either of us were born. The money is being put in to deal with what is a clear issue. No one is hiding from the issue. In the first four months of this year, construction has commenced on more homes than were built in the entirety of last year. Money is being put into work now in order to address the very clear challenges being presented in terms of housing and the secondary challenges - they are not secondary in nature, but one comes from the other - in terms of making sure we have the water infrastructure, the roads, the public transport and the broadband required to meet the needs of an ever-growing population, as well as those of an ever-growing number of homes throughout this State.
The purpose of the fund is quite clear. One element is to invest in climate-focused areas that will provide a return. The other relates to the fact that we have seen record levels of corporation tax receipts in recent years. We acknowledge that. However, we also acknowledge that these are most likely, if not definitely, temporary in nature. That is why we have not just taken that money and ploughed it into current investment, which is what some other parties - albeit, not his - have demanded we do at every turn. We are well aware that this money is coming in now. The previous government, in which Senator Kyne was Chief Whip, invested in a rainy day fund.
At that time, Senator Warfield's party lambasted the very fundamentals of that arrangement and demanded that the money be spent there and then. I can tell the Senator that when it rained, we needed that money. It rained very significantly in terms of the impact of the Covid-19 pandemic, the war in Ukraine and so much else. As a result of decisions taken, we were in a position, last year, that capital expenditure in the State stood at record levels.
While I fully accept the bona fides of the Senator's argument and the concerns his party is raising, we are seeing a very clear focus, in the national development plan, in the level of capital spending agreed upon in the previous budget and in the capital spending that will be agreed on in the next budget, that will allow for sustainable work to tackle issues arising in housing, infrastructure, energy and water. This fund will be mandated to deliver a very clear return for the State by using windfall tax gains to ensure we can prepare and provide for future generations. That is exactly what our purpose is as Members of these Houses. On that basis, I will not be able to accept the Senator's amendment.
Amendments Nos. 5, 6 and 20 to 23, inclusive, are related and may be discussed together. Amendment No. 20 is consequential on amendment No. 5.
I move amendment No. 5:
In page 12, between lines 16 and 17, to insert the following:
""designated housing project” has the meaning assigned to it by section 21;".
These amendments relate to the infrastructure, climate and nature fund. Under the legislation, €2 billion will be contributed to the fund each year until 2030. The fund can be drawn down to support State expenditure from 2026 if there is a deterioration in the economy or in the fiscal position of the State. Moneys from the fund may be drawn to fund designated housing and environmental projects. Under the provisions, up to 22.5% of the fund may be drawn down to support climate- and nature-related projects in any given year from 2026. This provision is in recognition of the likely need for additional investments in environmental projects to ensure we meet our emissions targets. That is understandable.
However, we are in the grip of a housing crisis of epic proportions. My generation, in particular, is locked out of access to affordable homes and stuck in an out-of-control rental system. People face crippling rents with little hope of being able to buy a first home in which to build a future and a family. We need a massive increase in State investment in affordable and social housing. Why, then, is there no provision made in the Bill for drawdown from this fund for the purpose of funding the housing projects that are desperately needed across the State between now and 2030? This amendment is in recognition of the chronic housing shortage we are facing. Its purpose is to fund the housing projects that are so desperately needed in the years to come. It would allow the Minister for housing to specify designated housing projects in a similar manner to that in which Ministers may designate environmental projects under the legislation, and for the money to be drawn down for that purpose.
Amendments Nos. 22 and 23 relate to how the Irish Fiscal Advisory Council and the Minister consider instances in which early drawdown of funds would be warranted. In addition to indicators such as economic growth, the public finances and unemployment, housing and infrastructure deficits should also be considered. The legislation provides for significant contributions on behalf of the Exchequer to these funds, which come with opportunity costs in terms of investments that could be made elsewhere, such as in housing delivery. These amendments seek to ensure the chronic housing and infrastructure deficits we face will factor into those decisions. There can be no argument that addressing the housing crisis is not an option but an absolute necessity. I commend these amendments to the House. I hope the Minister of State will consider them.
I will always consider any amendment put forward by the Senator. Indeed, these amendments were considered and debated when they were proposed by his colleagues in the Dáil a number of weeks ago. The context of this discussion, which is key, is the real purpose of this fund. The point I am about to make might provide an element of reassurance to the Senator. Regrettably, we have seen in the past that at times of economic difficulty that we faced into in stark terms, including around the period when I first entered electoral politics, major infrastructural and housing programmes that were planned and desperately needed were, sadly, left open and vulnerable to the economic cycle in such a way that we developed a stop-start approach. The year Senator Kyne was elected to this House and I entered the Dáil, we saw fewer than 5,000 homes built. Last year, more than 32,000 homes were built, including the largest investment in social homes since long before many of us in this Chamber were born.
The start-stop approach to development also impacted on our capacity to deliver infrastructure as skills and competencies in business were lost during economic downturns and proved difficult to replace when economic conditions improved. We are all aware of the generation of skilled tradespeople who simply had to leave this jurisdiction many years ago, whether for Australia, Canada or elsewhere, because there was no work here. Whatever else we can say about the economy, we certainly can say there is good, well-paid work available at the moment. There are 2.71 million people at work today, which is more than the number who lived in this jurisdiction in the 1950s.
Crucially, this fund can be deployed to smoothen the investment cycle and support capital projects, including housing development. As I said in response to the previous amendment, we have massively increased capital expenditure from €4.5 billion to its current levels. We absolutely must ensure we can continue to maintain that capital expenditure through the years, regardless of what happens. A point I underline, which I hope the Senator will take in the spirit it is offered, is that housing will be one of the areas that benefits from the establishment of this fund. The second point is that we should remember the role of the fund, as I have laid out, in terms of using windfall tax resources in a way that will ensure we have the money to continue that capital expenditure as we go forward. The Government is quite clear in the legislation on how that can be achieved. That is not to take away in any measure from the very clear and serious investment in housing that is going on at record levels at the moment under the Government. It is clear that the existing expenditure levels are where the targeted focus must be. We must allow these two funds to do their job, knowing full well they will be there if we need to fill the gap, in addition to what is already being done by way of existing, planned-for capital expenditure.
I move amendment No. 6:
In page 12, line 26, to insert "or designated housing projects" after "designated environmental projects".
Amendments Nos. 7 and 8 are related and may be discussed together.
I move amendment No. 7:
In page 12, line 30, to delete "commercial" and substitute "financially, socially and environmentally sustainable".
Section 15(1) states:
The Agency shall hold or invest the assets of the ICN Fund on a commercial basis for the benefit of the ICN Fund, so as to seek to secure the optimal total financial return, as to both capital and income.
This amendment would amend the provision by inserting a requirement that the agency shall hold or invest the assets of the ICN fund on a "financially, socially and environmentally sustainable basis" for the benefit of the fund.
Placing an onus on the fund to operate "on a commercial basis", with that becoming its pre-eminent and main point of delivery, means that we miss an opportunity to ensure that this fund - as with much of what we talked about in the debate we have just had on housing and everything else - is actually delivering what we want for the State in the widest sense and in the greatest sense of good. We want it to deliver value for money in the sense of the greatest benefit that can be delivered for the State. When we are looking at what the greatest benefit is, we need to look at the financial, social and environmental benefits of investment. When we fail to do that and instead look solely at the commercial returns, we risk having almost a siloed approach whereby the fund may make some money commercially, but may create problems for the State by failing and missing an opportunity to tackle problems which will cost the State far more money in the long run.
An example of a commercial mandate that is almost limiting the activities and the potential of the State to tackle a really significant and expensive problem is the Coillte mandate, which is operating the business of forestry on a commercial basis. The shareholder letter which the State sent to Coillte explicitly talks about it being cash-generative and needing to prioritise cash-generative activities. At the same time, incidentally, Coillte does not make a huge amount of money for the State. In the end, it makes quite a small amount of profit in the sense of what is actually there and available and goes back to the State. It gives reasonably small dividends but its priority has to be cash and short-term, commercial delivery of dividends. On the other side, that is 7% of the land of the State and of our national territory. Ireland is about to be and will be facing huge costs as we fail to meet our climate and environmental targets which could be delivered, socially and environmentally. This is dealt with in legislation I have introduced to try to ensure the mandate of Coillte becomes, again, economically, socially and environmentally sustainable and delivers for the State on those levels. Then we ensure it is not a matter of saying we do not make money but of saying the choices we make about how we make money are ones which will also deliver from an environmental and social perspective. That does not just mean avoiding harm and problems down the line; it also means seizing opportunities and having a joined-up approach rather than each fund or company operating in a silo where it just has to get itself back into the black. Rather than being about showing that it has delivered a dividend of some kind on some commercial basis, it is necessary to say that the value which one can deliver can be far more.
My amendment is not designed to say that I do not care about the financial aspect. I know we will get a note to say we need to make money so that we can pay for things, but here is the thing: I care about that too. You can make money in a way that reduces the cost you will have for things like redressing climate impacts or social inequalities. In such circumstances, you are basically lowering the costs because you are getting added co-benefits from how you are spending your money. There is a simple idea that you can make your money any old way, and then spend it in certain places later on, but we have seen the poor investment choices I have highlighted previously. I refer to choices like the State investing in vulture or investment funds that buy up blocks of housing and drive up the costs for local authorities that also need to get their money from the State. In this example, even if the State can make profits from the investment funds it chooses to invest in - real estate investment trusts, REITs, and all the rest - it ultimately costs us a huge amount of money because the cost of housing has been driven up when local authorities try to compete to access and purchase social housing.
We need a joined-up approach. We do not need a fund which is simply operating on a commercial basis as if it is just a company or a commercial entity because it is not a commercial entity solely. It is a vehicle for the ambition and investment of the State in the infrastructure, the climate and the nature we want for our future generations and, indeed, for those of us around now. If that is what the fund is trying to deliver, we need to ensure the core mandate reflects that. When we talk about infrastructure, climate and nature, the intention and the very naming of the fund is clearly supposed to be about delivering on a social and environmental level as well as a financial level. If we simply put the commercial basis top and centre, anything that operates on a commercial basis is actually and ultimately operating for the maximum profits it can make within its own terms and operations. It hamstrings what we could be hoping for and delivering from this fund. If we get the mandate right, we get far more down the road. That is why I believe we should be looking at a different kind of mandate from the beginning - a more holistic mandate that would lead to an agency that is empowered to make really good and interesting choices. It may be a long-term choice that involves investing in a particular way with a possible return over five, ten or 20 years. Crucially, in the case of the State, a major cost can be avoided by investing now. That is what is going to deliver more for the people, for the public and ultimately for the public purse, rather than asking where the quickest money is or where money can be made which will make us look good on a commercial basis next year.
Amendment No. 8 seeks to amend section 15(3) by removing the provision that the assets of the fund might be held outside of the State, while retaining the permission for them to be invested outside of the State. Again, it is important that our assets and funds be held within the State and that we do not find ourselves compromised by having Irish State money effectively located and grounded in assets located around the world rather than within our State. That does not mean we cannot have investment outside of the State, but if this fund is meant to be about Ireland's infrastructure, climate and nature fund, ultimately the assets of the fund should be held within the State. The issue of where one's assets are held and located is funny and is coming to the fore very much, as the House will be aware, in what is happening in west Africa, when one looks to France and asks the "where is the gold?" question. It matters where things and assets are located. We have seen that with regard to insurance issues internationally. The assets of insurance funds are being held in Europe and then there is a refusal to fully pay out, even to the actual holders of those insurance funds in the case of other countries which have experienced natural disasters, for example. Where assets are located can matter. I hope to hear the Minister of State's thoughts on this. My instinct is that these assets should be held within the State.
I do not fully see how these amendments are grouped but I am happy to accept this arrangement.
Needless to say, I do not choose the grouping but I will speak to each amendment separately because they merit being treated as such. In any event, if there are votes, they will be taken consecutively.
From the outset, I think it is fair to say, although the Senator may choose to disagree, that there will be an element of this on which we are just going to disagree. It is okay to disagree as long as we do so agreeably. Based on the experience of ISIF and taking account of the approaches taken by other funds in other jurisdictions, it is important that there is a clear investment objective for the infrastructure, climate and nature fund. The investment policy for both funds will be to hold our investment assets of the funds on a commercial basis for the benefit of the funds so as to seek the optimal total financial return as both capital and income. Thus, the agency's mandate is to achieve a commercial return. The policy intention is to establish a financial asset for the State to deal with future liabilities.
In the case of the future Ireland fund, the intention is to build up the resources of the fund that can be used to support State expenditure from the 2040s onwards. This will allow for a period of long-term investment of the funds to deal with the future expected costs to be incurred by the State. Regarding the infrastructure, climate and nature fund, the intention here is also to build up the maximum financial return from the fund so this fund will have the maximum amount available to deal with climate change and the designated water and nature restoration issues. For the infrastructure, climate and nature fund, the investment horizon is to be much shorter, as the fund will disburse €3.15 billion from 2026 to 2030 in respect of climate and nature projects in order that we meet those goals and offset any financial penalties or concerns. This relates to the Climate Action and Low Carbon Development (Amendment) Bill put in place at the outset of this Government.
Regarding the detail of the proposed amendments, inclusion of the phrase “financially, socially and environmentally sustainable” would make it difficult for the NTMA to determine the types of investment for both funds. In any event, both funds and ISIF will be subject to environmental, social and governance, ESG, as part of the investment policy and strategy for each fund. I think the Senator will agree that we discussed this extremely clear and important definition at length on Second Stage. The requirement to consider ESG risks as part of the whole investment process is an effective way to ensure that these factors receive due prominence, which builds on the work done to date by the NTMA to be a responsible investor. When it comes to ESG work, there is a lot more to be done and I am not hiding away from that. Fundamentally, however, the tools are in place to ensure that will happen.
This gets to the crux of the fund and touches on the debate that took place on Senator Warfield’s previous amendment. We must ensure that we acknowledge that we have had large-scale windfall corporation tax returns in recent years. These are extremely welcome, but as we all know, they are likely to be very short-term. They are not sustainable. They are not something that we can bank on over the next two decades. That is why we need to use these funds to make sure we can generate equivalent funding that will be able to meet the clear societal needs of the State going forward into the next generation. We can achieve that by allowing these funds to generate a serious commercial return. This is not just a matter of using money to invest in a way that we agree with, although we absolutely will do so. We must also generate a return.
Amendment No. 8 relates to the phrase “held or invested”. The inclusion of the phrase “held or invested” is an important operational point that the NTMA needs to have when managing the fund. It will not be possible for the resource of the funds to be instantly invested inside or outside the State on receipt from the Exchequer. There needs to be flexibility with how the NTMA will manage the resource of the funds and it will be necessary that the NTMA can hold these assets as well as invest them. Given the importance of the funds being able to operate effectively and to align with the existing Ireland Strategic Investment Fund, I do not propose to accept either of the amendments.
My amendment states: “financially, socially and environmentally sustainable”. Perhaps if I had said “financially, environmentally and socially beneficial” or “the maximum financial, social and environmental return”, it may have contacted the sense of expansiveness the Minister of State is hoping for with the fund. I genuinely believe it is poor economics for the State as an actor to constantly look at how we make and spend money as though they are completely separate. We should join up how we think about both of them. I do not think it is responsible or good management of public finances. I have thought this about the area of public procurement for a while. I have highlighted it in respect of the mandates of certain organisations. There is this idea that we will make money in one area, but we will spend it in another area. That shows a lack of joined-up thinking, because we are not a company and we are not solely an investor. We are a State. We have an extraordinary power to be able to look at both sides of the equation, namely, the spending and the joining up, and look at what is the best decision for both of those aspects. We should not necessarily throw it up and then have it land. This is like how certain parts of economics do not stand up. For example, trickle-down economics does not work. That is economics that does not work.
I hope it makes a lot of money. However, it would be better overall if it made the same amount of money while we made choices that were more environmentally or socially sustainable and if those choices were checked against it. It would also be better if it made slightly less money but environmental and social decisions were taken in terms of how the money was spent, because that would create a situation where we as a State would incur less cost. I will press the amendment.
I move amendment No. 8:
In page 13, line 4, to delete “held or”.
I will withdraw my amendment and reserve the right to resubmit it on Report Stage.
I move amendment No. 9:
In page 13, between lines 28 and 29, to insert the following:
“(3) In developing the investment strategy for the ICN Fund, the Agency shall act in a manner consistent with obligations under—
(a) the Cluster Munitions and Anti-Personnel Mines Act 2008, and
(b) the Fossil Fuel Divestment Act 2018.”.
I move amendment No. 10:
In page 13, between lines 28 and 29, to insert the following:
“(3) In developing the investment strategy for the ICN Fund, the Agency shall ensure that such a strategy prevents the investment of public monies into undertakings operating within occupied territories.”.
I move amendment No. 11:
In page 13, between lines 31 and 32, to insert the following:
“(4) The Agency shall, in determining and reviewing the ICN Fund investment strategy, consult with the Joint Oireachtas Committee on Finance, Public Expenditure and Reform and Taoiseach and the Joint Oireachtas Committee on Environment and Climate Action.”.
Amendment No. 11 seeks to insert a new subsection into section 16 to require that the agency shall in determining and reviewing the ICN fund investment strategy consult with the Oireachtas Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach and the Oireachtas Joint Committee on Environment and Climate Action.
The Minister of State mentioned how different governments may have different visions for the investment strategy. They will not only bring the original determination of it; they may bring in further reviews of the strategy. Similar to the different governments, while the Oireachtas is agreeing to the establishment of these funds, the Oireachtas and our parliamentary committees also have something to contribute to the question of the investment strategy. This is particularly the case if it is intended that this fund is to be one of the main mechanisms through which we are seeking to achieve our climate goals. Again, that has been stated as one of the areas on which we hope the fund will deliver. I believe there is expertise and relevant insight that could be offered by both of those committees.
I thank the Senator for the proposed amendment. Under this legislation, there is a requirement for the NTMA to consult with the Minister of Finance and the Minister for Public Expenditure, National Development Plan Delivery and Reform and to have regard to the views expressed. This aligns with the existing requirements for the Ireland Strategic Investment Fund, and the Minister can also consult with other Ministers as appropriate.
In addition to this consultation process, as part of the Government approval of this Bill, it was agreed that the Minister of Finance would write a letter of expectations to the NTMA on how the funds will be managed. This will be an administrative operation allowing the Minister to further express the views of the Government as well as, in fact, the Oireachtas joint committees, if appropriate. The Minister will also engage with the NTMA in accordance with its oversight agreement.
I also make a point that given these funds will be managed by the NTMA, the agency will be accountable to the Oireachtas under its existing legislative framework. Sections 6A and 6B of the National Treasury Management Agency Act 1990 provide that the CEO and chairperson of the NTMA shall at the request of a committee of the Oireachtas attend before it or to give account for accounts and reports of the Comptroller and Auditor General. These reports will include the management of the new funds proposed.
This allows all aspects of the work of the NTMA to be discussed. As regards specific engagement, it is, of course, open to the relevant committee to engage with the NTMA on the investment strategy as the committee considers appropriate.
Given the power already exists, there is little need, therefore, to add this into this Bill. Based on the existing framework and the independence of the joint Oireachtas committees to engage with the NTMA, I do not propose to accept the amendment.
I move amendment No. 12:
In page 15, between lines 32 and 33, to insert the following:
“(6) For the avoidance of doubt, the Minister may not make a proposal for the purpose specified in section 14(2)(a) in respect of the ICN Fund where such funds would be utilised to provide financial relief to companies with an annual turnover of over €1 million.”.
The amendment seeks to insert a new subsection into section 19. Section 14(2) provides that the ICN fund can be used where the Minister deems there is a significant economic downturn and the funds are required to address it. This is to ensure that money set aside to address the most significant challenges of our time does not end up being used to provide bailouts to large companies and corporations. It is about ensuring that if there is a downturn, the priority will be to ensure we invest in a way that is most beneficial to the State and that we do not simply look to keep companies afloat with a subsidy. This has to be around infrastructure, nature and climate. I am open to discussion on whether €1 million should be the threshold or whether a larger or smaller threshold is appropriate, and I know there are different views. I have simply picked that figure.
We know there have been situations in the past where appropriate general supports that the State provided to companies during difficult times, such as during Covid and at other times, have been inadequate or have lacked refinement in their targeting, with the result that benefits were accrued by very large companies that were not, in fact, under financial pressure, when we know many smaller businesses really were under pressure and needed such benefits and schemes. It is appropriate to ensure that if there is a time of difficulty, the priority will be our collective public ambition for these funds and not simply the well-being of certain companies.
I thank the Senator for the proposed amendment. I will provide some context as to where we are at. As has been discussed throughout the debate on the Infrastructure, Climate and Nature Fund, there are two purposes provided for under this Bill, namely, to support State expenditure in any year from 2026 where there has been, or is likely to be in the subsequent year, a significant deterioration in the economic or fiscal position of the State, and in the years 2026 to 2030, on designated environmental projects. Where the Minister for Finance of the day has determined that there is a significant deterioration in the fiscal or economic position of the State, up to 25% of the value of the Infrastructure, Climate and Nature Fund can be drawn down to the Exchequer.
It is the intention that these resources would help offset any reductions in capital spending which might arise as a result of a fall-off in Government income. It is not intended to determine the types of projects which would benefit as these will be a matter for the Government of the day, but it would be possible to use this funding as substitute finance to allow an infrastructure project to be completed or, indeed, commence a new infrastructure project to ensure the stop-start approach of the past is not repeated, whereby capital expenditure is reduced in an economic downturn. Thus, the primary motivation is to support the completion of the national development plan. I want to be very clear that the mechanism proposed in the legislation is that the resources will be transferred from the fund to the Exchequer and will be allocated through the normal budgetary process.
As regards the specifics of the Senator’s amendment, it is not clear as to its intention. However, this legislation cannot tie the hands of the Government of the day and this would not stop other resources from being able to be used to support companies if such was required. Given the intention is to provide resources to the Exchequer for onward allocation, where there has been or is likely to be significant deterioration in the economic or fiscal position of the State, I maintain that the decision will rest with the Government of the day and, as such, I do not propose to accept this amendment.
I accept there may be difficulties with regard to where the Exchequer may spend it. I indicate my intention to come back with this amendment on Report Stage. There can be criteria around the circumstances under which we allow money to be redirected from these funds and we may look again at those criteria. In the case of a simple deterioration in the economic or fiscal position of the State, I believe there needs to be some mechanism which allows there to be a judgment call whereby the redirection of these funds should be towards something, or should be done where there is a reasonable expectation that reallocating such funds to the Exchequer will contribute to the kinds of things that are the ultimate goal of the fund in terms of infrastructure, climate and nature.
It may be the case that there is, for example, a national development project that needs further resources. I repeat that having better procurement policies that do not allow for supplementary charges would help to prevent that. It would be best to have quality procurement in the first place because we have seen this issue arise time and again on national development and other projects. Nonetheless, for such a project, it is important that it meets something like a criterion that would ensure it is another way in which we are furthering the national infrastructure.
I will withdraw my amendment. The point is that I do not think the money should be leaving the fund for just anything. If it is going to the Exchequer, it should be because there is a credible expectation or a credible argument put forward that by releasing these funds, we are moving towards one of the ultimate purposes and goals set when the fund was created in the first place.
Amendments 13 to 19, inclusive, are related and may be discussed together.
I move amendment No. 13:
In page 15, line 40, after “State” to insert “or internationally”.
I do not believe the amendment is worded correctly and I am not happy with my own wording of it. Effectively, what I wanted to indicate was that the important thing when we think about greenhouse gas emissions is that we think about reducing them internationally and collectively. The greenhouse effect is around the whole planet and carbon emissions are, effectively, a global concern. I wanted to ensure we did not have a situation where we were bound to consider greenhouse gas emissions in terms of the investment in Ireland while not having to consider those factors for any investment from the fund that might take place abroad. This is what I was trying to get at. I do not want to suggest that the fund should be redirected to carbon offsets. That is why I am worried about the wording and that the amendment could be construed in that way with regard to the reduction of greenhouse gases in Ireland or internationally. I signal that I will come back with this amendment. It is important that we think about both reducing greenhouse gas emissions in the State and Ireland's contribution to greenhouse gas emissions overall internationally, which is a slightly different approach. I want to signal that point, although I have to move amendment No. 13 because it is the first amendment in the grouping.
Amendment No. 14 concerns allowing the fund to be used in a way to implement policies which will facilitate a just transition for workers and communities. There is a great opportunity, if we do this right, to not just see new investment but new investment that is done in a way that supports communities and workers around the necessary, urgent and speedy changes that need to be made across so many sectors.
I am concerned that simply having a period of commercial focus may sometimes obscure the fact that we are, in some cases, looking to nurture a transition from sectors which are no longer compatible with a livable future, the workers within it and the communities around those industries. Some of that investment may not offer us an immediate, quick or obvious commercial return as the things that are already up and running. Sometimes, when an assets manager looks straight at the investment in the new opportunities and possibilities such as community start-ups or redirects of investment, he or she goes with the known or the established. However, the very nature of one of the goals and policies we have as a State is that just transition. That is why I feel it would be an important indicator to those who are managing these funds to think about just transition when they are making their decisions around the allocation of those funds. That might lead to better outcomes.
I could have, perhaps, worded amendment No. 15 differently. I may do so on Report Stage. I am talking about the principles of climate justice in this and that we are consistent when we are investing. When I think of climate justice, I am actually thinking about - and perhaps I should have worded it in this way - what we have in the UNFCCC and the Paris Agreement, that is, common but differentiated responsibilities and the fact that Ireland, as one of the countries with a greater record of emissions and as one of the wealthier countries, has a greater responsibility to deliver on climate action and to reduce our emissions.
There is another piece to climate justice, namely, the lack of investments we have seen in the climate transition that is needed for those countries adapting to the worst impacts of climate change which have done the least to cause it. It is important we do not end up with investments that, for example, add to the pressure on countries which have suffered the worst impacts of climate change despite having done the least to cause it. We have seen this time and time again whereby investments move problems and poor production to vulnerable countries. The problems are pushed aside and we add to the problems those countries face. That is not something we want to do. Climate justice ensures that we are trying to have a beneficial effect with our investments on climate and in tackling our collective global climate change obligations, which, under the Paris Agreement, are common but differentiated. We carry a slightly heavier responsibility. We must reflect that and ensure our investments are not just beneficial for Ireland but are globally beneficial in tackling climate change and in supporting countries which are seeking to adapt to its impacts. That would be part of the meaning of climate justice when we bring it through. Sadly, we sometimes have the situation whereby countries have nice policies at home but terrible policies in their investments overseas and that is not okay. Ultimately, when it comes to climate change, that is not going to keep our planet at a liveable temperature because it is not effective.
Amendment No. 16 seeks to amend section 21 to include a provision which would allow the infrastructure, climate and nature fund, ICN, to be used for the implementation of policies which aid the implementation and achievement of the United Nations sustainable development goals and its associated targets and indicators.
Amendment No. 17 is an optional definition. While I do not know if a definition is needed, this definition has been in other Government legislation and I thought to include it as an option.
Amendment No. 18 similarly seeks to insert a definition of a just transition. It is a term widely used internationally. A definition may or may not be needed in this regard, but we have presented a definition which has previously been proposed. As for the definition of a just transition which I am proposing here, we can either rely on the common definition of just transition and not include one within the Bill, which was the decision taken for the climate Act, or if we were to insert a definition, I suggest it should specify:
Bringing together workers and their trade unions, communities, employers and public representatives in social dialogue to develop, agree and drive the plans, policies and investments needed for a fast and fair transition to a low carbon economy and includes; the creation of sustainable employment and replacement jobs of equal quality based on the principles of decent work, the establishment of appropriate social supports and training, reskilling and enterprise programmes for workers and communities affected by the transition. The just transition process in Ireland may reflect and draw on the International Labour Organisation Guidelines on Just Transition.
That is a definition but I know it is not going to be accepted. I understand that. For me, it is important to read that definition because anybody who reads it can see that having sensible investments fits into that delivery and that kind of vision for just transition which has been outlined in that international, commonly-used definition.
Amendment No. 19 seeks to insert a definition of climate justice into the Bill and provides that:
Climate justice reflects the United Nations Framework Convention on Climate Change commitments on equity and “common but differentiated responsibilities and respective capabilities” and requires that the decisions and actions taken to reduce greenhouse gas emissions and to adapt to the effects of climate change should—
(a) support the people who are most affected by climate change but who have done the least to cause it and are the least equipped to adapt to its effects, and
(b) safeguard the human rights of the most vulnerable persons.”.
Climate is in the title of this fund, as is nature, about which I actually have not spoken enough. I wish to indicate that I may come back to the nature piece, to what we define in nature and to look a bit about where Ireland sits under the biodiversity convention in that regard. When I talk about these definitions of just transition and climate justice, they may seem abstract or lofty, but they are as real as real can be. They are the substance of tackling climate change. They are almost a list of the things we need to think about. Climate change is not simply a maths exercise. Tackling climate change is something that requires deep thought and joined-up thinking. That is why those concepts of just transition and climate justice, whether or not the Minister of State likes the definitions I propose, need to be reflected in any fund that is purporting to be a fund intended to deliver on climate change. They are really important. As I said, Ireland led the negotiation on the sustainable development goals and we need to show a great strengthening of our seriousness in how we reflect and join up those sustainable development goals, which are a blueprint for development. They are not a charitable project on the side. They are about sustainable development. They are meant to be the pathway which we follow to development. Anything like this, which is a fund designed to be a part of the future development of the State, should be passing itself through the prism of the sustainable development goals as that blueprint for development, which Ireland championed at an international level and has signed up to.
I wish to refer, briefly, to section 20 and the designated environmental projects. It states that a Minister of the Government may designate a project. Is that what is called additionality rather than substituting for projects that were proposed? I apologise if this may have been discussed during pre-legislative scrutiny as I am standing in for Senator Byrne. I presume it is additonality. It is over and beyond whatever requirements and not just using this fund to supplement or replace funding that was earmarked and voted on anyway?
I thank both Senators for their contributions. I will respond to the easy one first. Senator Kyne's presumption is correct. I would like to speak more widely to these amendments and acknowledge the contribution, as ever, from Senator Higgins. I would like to make a number of points about including these provisions. The main point to be considered for each of the additions is that only a finite number of resources are being deployed from this fund. By adding further objectives, we would dilute its impact in the existing identified areas.
This element of the infrastructure, climate and nature fund, valued at up to €3.15 billion aims to support projects that directly or indirectly contribute to climate change, nature, water quality and biodiversity objectives. The goals were identified in collaboration with the Ministers for the Environment, Climate and Communications and Housing, Local Government and Heritage.
A considerable amount of work is already being done on the specific objectives proposed by the Senator. This fund is not the sum total of the State’s efforts on climate and nature. I acknowledge the significance and importance of the UN sustainable development goals and I appreciate the Senator proposing this amendment. As the Senator is aware, Ireland remains firmly committed to the achievement of the sustainable development goals and takes a whole-of-government approach to the implementation of Agenda 2030, with each Minister having specific responsibility for implementing individual targets relating to their ministerial functions and each of the 169 targets relating to the goals being assigned to a lead Department.
Funding allocated to Ireland’s international development programme has increased significantly in the period since our most recent voluntary national review. Ireland’s official development assistance budget grew from €792 million in 2018 to €1.233 billion in 2023, an increase of 56%. Contributing to global sustainable development is clearly not just about the quantity of development assistance, but also its quality.
The National Implementation Plan for the Sustainable Development Goals 2022-2024 was published in October 2022 and runs until the end of this year. It was developed in collaboration with all Departments and key stakeholders and is based on input from two public consultation processes held in 2021. The plan sets out five strategic objectives and 51 actions, with 119 individual measures to increase Ireland’s ambition and strengthen implementation structures to achieve the sustainable development goals.
In July 2023, Ireland presented its second voluntary national review on progress relating to the sustainable development goals to the UN High-level Political Forum on Sustainable Development. The report found that Ireland is progressing well in achieving the goals. We have fully achieved over 80% of the 169 targets. The report also found that significant progress has been made on targets in areas such as education, hunger, health and well-being.
Regarding the just transition, the Climate Action and Low Carbon Development Amendment Act 2021, provided for the approval of plans by the Government on climate change for the purpose of pursuing the transition to a climate-resilient, biodiversity-rich and climate-neutral economy by no later than the end of 2050 and to thereby promote climate justice and just transition. The Government, through the climate action plan, has adopted an overarching framework for policy development, which takes a principles-based approach to define the just transition in Ireland. This framework comprises four principles that align with the International Labour Organization guidelines, United Nations Framework Convention on Climate Change and EU frameworks and recommendations, thereby enabling their application across diverse sectors. In line with the Government’s ambition that these principles be steadily mainstreamed into climate policy, key sectors are integrating these principles in the design of their respective policies and measures through the annual climate action plan. For example, Ireland is set to receive up to €84.5 million from the EU Just Transition Fund over the period to 2027. With the Government providing matching funding using Exchequer resources, up to €169 million will be available. Resources are already being deployed to meet these requirements. As the Senator has alluded to, a just transition is the fastest way to a green transition and is the only way which guarantees that we bring everybody with us as we move to a climate-neutral economy.
Regarding climate justice, it is recognised that there will be a significant shift when tackling the climate crisis, which runs the risk of hitting marginalised or vulnerable communities the hardest if their needs are not accounted for. The Government’s climate action plan contains a commitment to contribute €225 million per year to developing countries by 2025.
As regards the climate and nature part of the infrastructure, climate and nature fund, the intention here is to support positive climate actions and to assist in preventing the degradation of the natural environment, including rivers, lakes and oceans and assisting in preventing a reduction in biodiversity. There is important work to be done in this area and it is inappropriate to dilute the funding further to provide for other initiatives.
The two main points are that a range of measures are being implemented to address the areas referred to in these amendments and that, in light of the finite amount of resources being deployed from this fund, adding more objectives could dilute the impact of the Bill in the existing identified areas. On this basis, I cannot accept the amendments.
I thank the Minister of State. It is great to have a detailed response on the sustainable development goals. We rarely see detailed commentary on the latter. Regarding just transition and climate justice, this is not the only measure but it is probably one of the best-funded measures. In that context, I will press the amendments. That is not to say that all the money needs to be redirected. However, I feel that when money is being directed towards climate purposes, it should be checked against these principles. I will withdraw amendment No. 13 but I will press the other amendments because they are principles rather than causes that could be applied and checked through. I appreciate that the Minister of State has gone to the trouble of detailing those important considerations, particularly as I have not always received such a detailed response. I do not see them as potential causes but as principles that ought to be considered. For example, if two projects are being considered, the fact that one maps onto something like the just transition should give it the edge.
I move amendment No 14:
In page 16, between lines 12 and 13, to insert the following:
“(f) the implementation of policies which will facilitate a just transition for workers and communities,”.
I move amendment No 15:
In page 16, between lines 12 and 13, to insert the following:
“(f) the implementation of policies which further the principles of climate justice,”.
I move amendment No 16:
In page 16, between lines 15 and 16, to insert the following:
“(g) the implementation and achievement of the United Nations Sustainable Development Goals and associated targets and indicators,”.
I move amendment No 17:
In page 16, between lines 24 and 25, to insert the following:
“(3) In this section, “United Nations Sustainable Development Goals” means the United Nations Sustainable Development Goals 1 to 17 set out in the document entitled “Transforming our World: The 2030 Agenda for Sustainable Development, published by the UN Department of Economic and Social Affairs 2015” or any document which amends or replaces that document.”.
I move amendment No 18:
In page 16, between lines 24 and 25, to insert the following:
“(3) In this section, “just transition” means bringing together workers and their trade unions, communities, employers and public representatives in social dialogue to develop, agree and drive the plans, policies and investments needed for a fast and fair transition to a low carbon economy and includes; the creation of sustainable employment and replacement jobs of equal quality based on the principles of decent work, the establishment of appropriate social supports and training, reskilling and enterprise programmes for workers and communities affected by the transition. The just transition process in Ireland may reflect and draw on the International Labour Organisation Guidelines on Just Transition.”.
I move amendment No 19:
In page 16, between lines 24 and 25, to insert the following:
“(3) In this section, “climate justice” reflects the United Nations Framework Convention on Climate Change commitments on equity and “common but differentiated responsibilities and respective capabilities” and requires that the decisions and actions taken to reduce greenhouse gas emissions and to adapt to the effects of climate change should—
(a) support the people who are most affected by climate change but who have done the least to cause it and are the least equipped to adapt to its effects, and
(b) safeguard the human rights of the most vulnerable persons.”.
I move amendment No. 20:
In page 16, between lines 24 and 25, to insert the following:
“Designated housing projects
21. The Minister for Housing, Local Government and Heritage may designate in writing a housing project (in this Part referred to as a “designated housing project”) where he or she is satisfied that the project contributes directly or indirectly, or is likely to contribute, to the provision of social or affordable housing.”.
I move amendment No. 21:
In page 16, line 30, to insert “and/or designated housing projects” after “environmental projects”.
I move amendment No. 22:
In page 19, between lines 15 and 16, to insert the following:
“(b) housing and infrastructure deficits,”.
I move amendment No. 23:
In page 20, between lines 13 and 14, to insert the following:
“(c) housing and infrastructure deficits in relation to such years as the Minister considers appropriate,”.
Amendments Nos. 24 to 27, inclusive, are related and may be discussed together by agreement. Is that agreed? Agreed.
I move amendment No. 24:
In page 21, line 12, before “invest” to insert “directly”.
We do not need to go through this in great detail but these amendments relate to the same core issue, that question of the use of external asset managers. As I said, I am uncomfortable with the State's reliance on the use of such external asset managers. The policy needs analysis and potentially a review. Amendment No. 24 will provide that the agency will have to be directly investing the assets, which is intended to improve accountability and transparency in respect of those investments.
Amendment No. 25, similarly, will remove the provisions in section 28(2)(b) whereby investments may be conducted by external asset managers.
Amendment No. 27 will delete the provision, which I have some concern about it, in section 28(2)(b) that would allow the fund to enter into contracts and commitments of any description. That is a very wide provision, and I am concerned the fund may enter into an investment commitment from which it finds it hard to disentangle itself. If it enters into a commitment with, for example, entities that may choose, after the point of investment, to engage in some of the activities in respect of human rights or environmental damage we have discussed in other parts of the debate, it will make it much harder for the State to remove itself. Moreover, we look to the question where there will be a discussion about reasonable expectations that may have been made if a commitment has been made. As a result, the agency will effectively have a contract or commitment it will have to balance against social or environmental concerns, and I am not confident the social and environmental concerns or governance concerns will take precedence because we will be told there are legal complexities given the agency will have made commitments and signed contracts, with all that comes with that regarding legal expectations and so forth. It is easier when we are investing and we can just stop investing, but when we enter into contracts and commitments, that comes with problems for that core issue, which is essential for me and which I have emphasised throughout the debate, namely, proper oversight and accountability to ensure no Irish public money will be used for harm or in a way that is inappropriate. That is why, in amendment No. 27, I suggest the deletion of that provision. I have left everything else the agency might do in its borrowing, lending and purchasing, but I am seeking to remove it where it applies to contracts or commitments.
In the case of amendment No. 26, I have tried to include some political check and balance for those contracts and commitments in order that we will, at least, have some political accountability for those contracts and commitments that will provide that where the agency has entered into a contract or commitment, it will have to obtain the consent of the Ministers for Finance and Public Expenditure, National Development Plan Delivery and Reform, meaning they will have oversight of that decision to enter into a contract or commitment. Again, that means that if things go wrong, there will be a level of political accountability, and it will raise the bar for risk-proofing of any contract or commitment. The point is that a partnership can be risk-proofed, but what those people we have partnered with go on to do after we have signed the contract with them or made the commitment, and the other activities they may choose to engage in, are not something that can necessarily be anticipated at the time. This comes to the wider question of the need to build a divestment, which was one of the areas we discussed earlier. It is better to avoid improper investment in the first instance, but if it does occur, how do we build in an easy mechanism for divestment for the agency?
I will take the amendments together as they relate to the management of the funds by the NTMA. The elements the Senator proposes to amend are very important operational positions that have been carefully drafted to ensure the effective management of the new funds and to align with the existing framework of the Ireland Strategic Investment Fund. Amendment No. 24 would prevent the agency from making indirect investment such as pooled or fund investments. The ability to make indirect fund investments is a key requirement for funds of this scale to ensure the agency can avail of the efficiencies, expertise and range of diversified asset classes that can be accessed through third party investment managers. These amendments would undermine the NTMA's ability to invest resources effectively through the use of experienced investment managers and custodians, ensuring the funds will have access to global diversification and the widest possible range of asset classes and investment opportunities. The use of investment managers and custodians is a standard practice throughout the process of investing and holding such investments. Investment managers are required to manage the investment processes subject to the investment strategy and custodians are required to hold the assets of the funds.
In respect of the role of the Ministers for Finance and Public Expenditure, National Development Plan Delivery and Reform in the appointment of custodians, it would not be considered proportionate to include this requirement. The Oireachtas is providing the agency with the mandate to invest these resources with a policy and strategy that ensures value for money for the State. It would be inappropriate for Ministers to second-guess the investment decisions made by the agency or be involved in the approval of every contract or commitment entered into by the agency. As for oversight and transparency of these appointments, under section 32 it will be a requirement for the agency to provide information related to the investment management and custodian arrangements to the Minister. It is important, therefore, that the NTMA has every option available to it when investing resources of both funds and to ensure value for money. On that basis, I do not propose to accept the amendments.
I move amendment No. 25:
In page 21, lines 14 to 16, to delete all words from and including “in” in line 14 down to and including “managers),” in line 16.
I move amendment No. 26:
In page 21, line 18, after “description” to insert the following:
“following the consent of the Minister and the Minister for Public Expenditure, National Development Plan Delivery and Reform”.
I move amendment No. 27:
In page 21, to delete lines 21 and 22.
I move amendment No. 28:
In page 21, between lines 37 and 38, to insert the following:
“Report on external investment managers
29. (1) The Minister shall, within 12 months of the passing of this Act, lay a report before both Houses of the Oireachtas outlining how the use of external investment managers for the FI Fund, the ICN Fund and any other funds controlled by the Agency impacts on the State’s national divestment obligations under the Act of 2008 and the Act of 2018 and any future divestment policies the State may be mandated to pursue.
(2) In this section—
“Act of 2008” means the Cluster Munitions and Anti-Personnel Mines Act 2008;
“Act of 2018” means the Fossil Fuel Divestment Act 2018.”.
Amendments Nos. 29 to 31, inclusive, are related and may be discussed together by agreement. Is that agreed? Agreed. Amendment No. 31 is a physical alternative to amendment No. 30.
I move amendment No. 29:
In page 22, line 9, to delete “endeavour to”.
Amendment No. 29 seeks to amend section 31(1)(a) relating to the investment of fossil fuels by removing the term "endeavour" and thereby creating a stronger obligation. This relates to the nature fund, a fund that is meant to be for climate, infrastructure and nature. There should be no caveats when it comes to the question of investing in fossil fuels and fossil fuel undertakings.
I do not believe the Bill is adequate. Perhaps it is in line with the Fossil Fuel Divestment Act and so forth, but that is no longer ambitious enough. We see how woefully behind we are in our climate targets in Ireland. More crucially, hundreds have died in mudslides in Papua New Guinea. Fires are raging across parts of the world. We see desertification at an alarming rate. Climate change is looking terrifying in terms of the liveability of huge parts of this world. Separate from identifying opportunities for great new areas of investment or a different, greener and better future, we need to stop doing damage and digging when it comes to fossil fuels. That means we need to stop relying on fuels that are thousands of years in the making and burned to feed an insatiable economic model. We cannot be part of the problem.
We have used up a lot of the space we have. If we think of the global commons as being the space left in terms of emissions that can still be emitted before we reach a situation whereby our planet becomes unliveable, Ireland's share of the remaining available space is very small. It appears that we will exceed that in the next few years alone. We cannot have any loopholes or wishy-washiness around investments in fossil fuels, because investments make money from things that work against our collective survival on the planet.
Fossil fuels may need to be used in developing countries which are desperately trying to make the transition to putting the most basic infrastructure in place so that they have some kind of resilience. Countries like that can make some kind of case as they try to make a transition and build the kind of infrastructure that will allow them to survive and function as a society. Simply saying that we would like to continue investing in fossil fuels a bit, because it makes money for a fund that needs to deliver commercial returns and we will then use some of that money for projects down the line, cannot be justified. There must be no investment in fossil fuels.
It is not enough to say that we will endeavour to ensure that the assets of a fund are not directly invested in fossil fuels. Section 31(2) uses the term "endeavour", which is weak. It states that we shall endeavour to ensure that the assets of a relevant fund are not invested in an indirect investment, unless it is unlikely to have in excess of 15% of its assets invested or a lower percentage if the Minister so chooses. We are saying that we will try not to invest directly.
If we are to be confident in how these moneys are being managed on our behalf, we need to be confident that those who are managing them can do better than endeavouring to ensure something. Rather, they must ensure that our public money is not going directly into fossil fuels. Frankly, the provision suggesting that there can be an indirect investment if the company or undertaking we are investing in only has 15% of its assets invested in fossil fuels is not acceptable - 15% of what? A giant mega corporation may happen to have 15% of its assets in fossil fuels. That is not good enough. In that situation, we will know that we are investing indirectly in fossil fuels. That is not good enough. Can I check the grouping?
We are on amendments Nos. 29 to 31, inclusive.
There are loopholes in this section about getting around having a climate and nature fund that invests in fossil fuels. That is what is happening in this section. The section states that that we should try not to invest indirectly if it is a large part of whatever we are investing in. There is then section 31(3), which states that, notwithstanding sections 1 and 2 where we were going to try not to invest directly or indirectly, we can still invest where the investment is intended to be consistent with the achievement of the climate objective, the State's climate obligations and the policy of the Government as may be communicated. Again, Government policy can state that we are okay with this. Let us be clear. Fossil fuel investment is never consistent with climate change objectives or the policy of the Government. I oppose all of the language in section 31(3).
There are only three minutes left in this debate and we will then have to adjourn.
We are nearly finished. Maybe we can finish the Bill. I am happy to take a shorter response from the Minister of State.
I could go into great detail on all of the points the Senator has made. Throughout the course of this debate, she has a fair idea of what I am going to say and will appreciate the very clear position of the Government. There is a clear position which has been laid out not only in my remarks but throughout the Bill. I cannot accept the three amendments, but I am more than happy to engage with the Senator further to provide that reassurance in due course.
I move amendment No. 30:
In page 22, to delete lines 20 to 29.
I move amendment No. 31:
In page 22, to delete lines 27 to 29.
I move amendment No. 32:
In page 23, between lines 35 and 36, to insert the following:
“Investment in companies operating in occupied territories
32. (1) (a) The Agency shall ensure that the assets of a relevant Fund are not directly or indirectly invested in an undertaking operating within an occupied territory.
(b) Where the Agency becomes aware that an undertaking in which the assets of a relevant Fund are directly or indirectly invested is, or becomes, an undertaking operating in an occupied territory, the Agency shall divest the assets of the relevant Fund from such investment as soon as practicable.
(2) In this section—
“occupied territory” means a territory which is occupied within the meaning of the Fourth Geneva Convention, and which has been—
(a) confirmed as such in a decision or advisory opinion of the International Court of Justice,
(b) confirmed as such in a decision of the International Criminal Court,
(c) confirmed as such in a decision of an international tribunal, or
(d) designated as such for the purposes of this Act or any other enactment in a regulation made by the Minister.”.
I move amendment No. 33:
In page 23, between lines 35 and 36, to insert the following:
“Obligations under Cluster Munitions and Anti-Personnel Mines Act 2008
32. The Agency shall ensure that assets of a relevant fund are not directly or indirectly invested in a manner which would contravene Part 4 of the Cluster Munitions and Anti-Personnel Mines Act 2008.”.
When is it proposed to take Report Stage?
Next Tuesday.
Is that agreed? Agreed.