Dáil Éireann Debate, Wednesday - 22 February 2012
7Deputy Dessie Ellis asked the Minister for Finance with respect to Key Action 12 in the Action Plan for Jobs, the amount of moneys that will be available from the National Pension Reserve Fund to channel through the Strategic Investment Bank for commercial investment; if he has secured agreement from the Troika for this measure; and if he will make a statement on the matter. [9968/12]
View answerAs noted in the action plan for jobs, the strategic investment fund, SIF, whose establishment was announced by the Government in September 2011, will channel commercial investment from the National Pensions Reserve Fund, NPRF, towards productive investment in areas of strategic significance to the future of the Irish economy. As well as money from the NPRF, the SIF will seek matching commercial investment from private sector investors. It will comprise a series of sub-funds targeted at commercial investment in critical areas, including infrastructure, venture capital and provision of long-term capital for SMEs. The NPRF will take a lead role in the development and implementation of each sub-fund.
The NPRF's investment in the SIF will, like its existing investments, be on a commercial basis. Accordingly, such investment will not be classified as general Government expenditure in statistical terms and there will be no implications for the continued achievement of the general Government deficit targets we are committed to under the EU-IMF programme. Further investment by the NPRF in Ireland on a strictly commercial basis does not represent a material change in the purpose of the NPRF.
The resulting greater concentration of investment in Ireland on the part of the NPRF is expected to require the amendment of the NPRF's investment policy, which is set out in the National Pensions Reserve Fund Act 2000. Officials of my Department are liaising with the National Treasury Management Agency, as the manager of the NPRF, in identifying and drafting the necessary amendments to the legislation and I expect to bring forward proposals for amending legislation as soon as possible once that work is completed.
On the amount of money available in the National Pensions Reserve Fund, I am informed by the National Treasury Management Agency that, at 31 December last, the total value of the National Pensions Reserve Fund Discretionary Portfolio was €5.4 billion, of which €2.1 billion is in equities, €1.2 billion is in eurozone bonds and cash, and €2 billion is in alternative assets including private equity, property, commodities, infrastructure and absolute return funds.
As the Minister of State will be aware, for quite a while my party has been arguing that we use a portion of the National Pensions Reserve Fund to fund a stimulus programme for investment to get people back to work. Given that there are 439,000 on the live register and 6,000 people leaving the State every month in search of work, we definitely need to use that discretionary portfolio.
The question is very focused. The Government announced its jobs plan, in which key action No. 12 states: "Through the Strategic Investment Fund, channel commercial investment from the NPRF and matching investment from private sector investors towards productive investment in the Irish economy." While I welcome that, I want to know, given this is one of the key actions in the jobs plan, how much money the Government is ear-marking for investment. Obviously, the investment is commercial so the sector will have to tap into it. What pool of money is available for channelling commercial investment? Is it the full €5.4 billion or a portion of that? What discussion has the Government had with the troika? Is the troika agreeable to the level of funding that is available? It is clear that €250 million is available to the infrastructure fund. What is not clear is what pool of money is available for the commercial investment.
I will read the final paragraph of my original reply, which may help the Deputy. The reply states:
It should be noted that these funds are not all readily accessible. The NPRF commission has legally committed €1.2 billion to various fund investments, of which over €800 million is for investment in Ireland. The €800 million includes a commitment to provide funding on a commercial basis for the roll-out of the water metering programme, subject to certain other preconditions.
I agree with the Deputy that, at a time of such high unemployment, we have to strategically use the funds we have for the purposes of investment. He will note the decision of the Government yesterday and the announcement of the Minister, Deputy Howlin, today in respect of the disposal of State assets and how we can use a proportion of that sale for the purposes of investment in the real economy.
In the original negotiations with the troika, as the Deputy is probably aware, there was a view that as State assets were sold, the totality of the sale should go towards debt writedown. That is a position I suspect he, I and everyone else would fundamentally disagree with on the basis that if we have assets that can be used for productive purposes, we need those now in the economy. The announcement made by the Minister, Deputy Howlin, this morning and the Government decision taken yesterday, particularly as these assets are sold on a strategic basis, will mean that up to a third of that investment can be used for productive purposes within the economy.
The Government is mindful of this. We produced a jobs strategy but this must be backed up by hard cash and support where it is commercially useful and where it can leverage additional support.
This is a very simple question, so I will repeat it. Proposal No. 12 is one of the key proposals in the Government's jobs action plan. It proposes to channel commercial investment from the National Pensions Reserve Fund to productive investment. The question is how much money has the Government agreed with the National Pensions Reserve Fund, how much has it calculated will be available for this purpose and whether the troika has agreed to that figure. It is very simple.
In November 2011 the National Pensions Reserve Fund announced a commitment of €250 million to a new Irish infrastructure investment fund, which is seeking up to €1 billion from institutional investors in Ireland and overseas. It will invest in infrastructural assets here in Ireland, including assets being disposed of by the Government and commercial State assets.
There is also an opportunity, of which the Deputy may not be aware, through the European Investment Bank. Talks proceed in terms of leveraging additional support, which is one of the key issues the Taoiseach raised in the course of his recent discussions at a Council meeting. Obviously, if funds can be leveraged for investment in infrastructure and other purposes via the European Investment Bank, that would be another useful step.
The Government is in the process of establishing the strategic investment fund, which is a welcome development and can be used to channel investment into viable commercial projects. In that regard, is the Minister open to the proposal we made in our budget document in December and which is also supported by ICTU, that a portion of the €70 billion of assets held by Irish pension funds would be accessed and made available for investment through the strategic investment fund into commercial projects in Ireland? Will he consider this?
I note the comments made in the past on this matter by the Minister, Deputy Noonan. He is open to considering this. My understanding is that he will open a consultation process with the pensions industry soon, which could lead to an opportunity to use some of that resource. We are in an unusual position in that much of the pension funds that are collected here are not actually used here, as the Deputy knows.
To go back to the point made by Deputy Doherty, at a time when we have such high levels of unemployment, it makes sense to tap into the potential this could offer. There are obviously complicated factors in this regard which must be worked out. However, the Minister has said he is open to this. His consultation, as I understand it, will begin over the course of the next few months. If proposals came from the industry on how those funds could be leveraged towards investment purposes here, we are very open to that and would welcome it.
