Mervyn Taylor
Ceist:11 Mr. Taylor asked the Minister for Finance the estimated amount of funds moved out of Ireland for investment abroad by Irish investment institutions in 1989; and the comparable figure for 1990.
Ceisteanna—Questions. Oral Answers. - Investment Abroad.
I am advised by the Central Bank that net portfolio investment abroad in 1989 by Irish investment institutions was of the order of £600 million to £700 million. The 1989 outflow was exceptional in that it included a "once-off" adjustment of portfolios in response to a substantial relaxation of exchange controls from 1 January 1989. In addition, it was greatly exceeded by purchases of Irish Government securities by non-residents. In 1989 such purchases amounted to £1,320 million, compared with £867 million in 1988 and £240 million in 1986.
Capital flows during 1990 will be influenced by market developments during the year and by the portfolio adjustments which took place in 1989. Given the uncertainties associated with such flows, it is not the practice to provide forecasts of them.
Given that we have close on 250,000 people unemployed, would the Minister agree that it is an appalling reflection on Irish investment institutions, our policies and the economic conditions engendered by the Government, that between £600 million and £700 million have been invested abroad creating jobs in other countries when those jobs are so desperately needed at home? What does the Minister propose to do about this?
As the Deputy must be aware, we are moving towards the completion of the Single Market by 1992 which involves the free movement of people, services, capital and goods and as such we accept our obligations just like any other member of the Community. To give us time to prepare we have been given a special derogation so that the liberalisation of capital movement will not come into effect until July 1992. The Deputy is obviously looking at one side of the coin only when he states that between £600 million and £700 million have been invested abroad. This was the first opportunity given since the liberalisation of capital movement to Irish investment managers and fund managers to spread their portfolio investments. I have one view on this matter and the Deputy has his own views on it, but I would remind him that in relation to the movement of capital we were big winners, not losers. Let me repeat that during 1989 outsiders purchased £1,320 million of Irish Government gilts, which is double the amount invested abroad.
Would the Minister agree that he cannot compare the two figures in that that £1,320 million may have come from countries where they do not have the employment difficulties we have? Would he not agree that this highlights the oft quoted comment of the Government that if one creates the right conditions the jobs will flow? Now that these conditions have been put in place would he agree that it is a scandal and a disgrace that the Government allowed Irish firms to invest this enormous sum of money abroad at a time when there are 250,000 people unemployed and when that money could be invested here to create jobs in Ireland instead of creating jobs abroad? What is the Minister going to do about this?
We are having repetition.
That is all we are having. The Deputy should make up his mind whether he is in favour of a Single Market. Those are the obligations and the freedom of choice which obtain in the Single Market.
Is the Minister satisfied with the present position?
If the Deputy is not in favour he should stand up and say so. We would all then understand what he is trying to say. I would remind him that since March 1987 the differential between the key three months interest rates in Ireland and the United Kingdom has improved by over 6 percentage points and the corresponding differential with the German rates has improved by over 5 percentage points. That is an indication of the economic management of the economy which the Deputy tries to portray in a different light. As I say, he quite clearly is not in favour of the Single Market and does not want it.
What I do not accept is an unemployment figure of 250,000 and £700 million being moved out of the country.
If the Deputy wishes to accuse the pension fund managers of depriving their employees of the best possible returns that is his choice. All I am saying is that we are managing the economy and have managed to bring down interest rates to the differentials I have referred to. This was the first opportunity investment fund managers had to move funds out. I would not expect it to be repeated on an annual basis. I would say this is the first time for them to get a spread. The main beneficiary of this is the Irish economy and we got in twice as much as went out.
Could I ask the Minister——
No. 12 please. Deputy Taylor, we cannot debate this matter here today. A very brief question. I have given the Deputy quite some latitude.
The Minister is evading the key question of the Irish economic position and he is asking me whether I am satisfied——
This should not lead to argument.
——which is not to the point. Is he satisfied that close on a quarter of a million people are unemployed?
The Deputy has already made that point.
Is he satisfied with that, coupled with the fact that £700 million——
I am not satisfied with it.
——is being sent abroad. He is obviously satisfied with that.