Investment Limited Partnerships (Amendment) Bill 2019: Second Stage (Resumed)

Question again proposed: "That the Bill be now read a Second Time."

In wrapping up Second Stage, I wish to touch upon a number of issues that were raised, primarily by Deputy Michael McGrath. All I can do is accept his criticism about the delay in this legislation. The legislation has been ongoing for three and a half years. Our systems and structures are not sufficient to put in place financial services legislation. Under the new strategy, we are examining how to improve that situation. The industry advisory committee will be reporting on legislation annually in terms of what is required.

Work on the amendments has been ongoing since the summer. We want to ensure that we are in a good position to move quickly so that there are no delays in getting this legislation over the line.

The Central Bank of Ireland will be adequately resourced. We are talking about a further 1,500 jobs in the sector, bringing private equity investment from a point where Ireland had practically 0% of that international trade to a different level.

I do not know what that level will be as it will only become clear over time. From my international travels and meeting investors, including companies which invest on behalf of others, I have noted that there is a significant appetite to base private equity here. Without this Bill, we will not be able to take advantage of that appetite. The Bill will provide an opportunity for us to move into that space.

I do not have the answer to Deputy Michael McGrath's question regarding how tax applies, but I will ask for a note to be sent to the Committee on Finance, Public Expenditure and Reform, and Taoiseach in advance of Committee Stage of the Bill. The note will be helpful. The situation is likely to be similar to that which pertains for other vehicles, namely, that the tax is paid by the individual investor in the jurisdiction. That is why we have double taxation agreements and it is relatively standard internationally.

Deputy Cullinane criticised this Bill being taken ahead of other legislation. This process has been ongoing for three and a half years. I accepted Deputy Michael McGrath's fair and valid criticism on the delay in bringing the Bill forward. As he knows, I am quite self-critical. If I cannot get something moving, I will accept criticism in that regard even though it may not be my fault or that of my Department. This legislation has taken far too long.

We need to improve our provision in this area. This sector is too big and valuable to be shoved to the back burners. It provides 16,000 jobs throughout the country, including in the constituencies of Deputies Michael McGrath and Rabbitte and every other constituency. The provision of 500 jobs in Dublin, Cork or Galway would be welcome, but the 500 jobs provided by BNY Mellon in Wexford town are crucial to that area. State Street provides hundreds of jobs throughout the country. The sector provides 1,400 crucial jobs in Letterkenny and Northern Trust employs 1,400 people in Limerick. The sector provides essential employment in valuable clusters throughout the country.

Deputy Cullinane had a go at me regarding the Consumer Insurance Contracts Bill 2017. The Government is supporting that Bill. Its passage has been slow, but that has been the case for all legislation that has come before this Oireachtas, for good or ill.

We will flag the amendments regarding beneficial ownership requirements for the Bill. It is important. We are working hard to improve our offering for financial services and the Bill is what is required in that regard. It is tricky legislation. We will go through it in more detail on Committee Stage.

On delay, this is complex legislation which will impact on areas of partnership and company law and form an important part of our funds offering. In line with our commitment to active partnership with industry and taking a whole-of-Government approach, I made every effort to consult a broad range of stakeholders on these complex legal issues in modernising the legislation. The changes put forward are based on proposals by industry and in-depth consultation between the Department of Finance, the Central Bank, the Revenue Commissioners and the Department of Business, Enterprise and Innovation. This is not a case of dusting off legislation and putting it in front of the Dáil and Seanad. A significant amount of work has gone into it. The Bill is consistent with the new strategy, the launch of which Deputy Michael McGrath attended at Iveagh House. It is well-timed to take advantage of the capital markets union agenda to promote the establishment of private equity and venture capital funds in Ireland.

Sustainable green capital is a crucial aspects of the new strategy that is being implemented. It is also something that I wish to deliver and drive in financial service. I want us to be able to turn Dublin and Ireland into a global hub for sustainable green finance. It is estimated that $90 trillion will be required just to decarbonise, although that figure has to some extent been plucked out of thin air based on a certain calculation. There is slightly more than €4 trillion under administration in the funds sector in Ireland. The decarbonisation of the planet will require the largest deployment of capital in history and I am putting my hand up on behalf of the sector to establish that base here. Without this legislation, that will not happen. It can only work through blended finance, involving private equity and Government funds and borrowing. The Bill provides one leg of the stool and, without it, nothing will happen. That is why I am so eager for it to pass through the Houses as quickly as possible while undergoing full scrutiny, which I accept is necessary. The Houses should go through it in detail such that we can put our hand up and state that Ireland can be one of the global hubs for sustainable green finance. That is something we can do.

The amendments to the Irish Collective Asset-management Vehicles Act are required. Industry and the Central Bank have identified several adjustments to the Act which will enhance the efficiency and attractiveness of the structure, as well as some technical amendments. These changes must be undertaken in primary legislation. They will align the Irish Collective Asset-management Vehicles Act with certain parts of the Companies Act, providing clarity on priority of charges when an investment company converts into an Irish collective asset-management vehicle.

Deputy Michael McGrath raised the issue of tax and the consequences of introducing investment limited partnerships, ILPs. ILPs are tax transparent. They are taxed as though the partner or investor directly holds the relevant asset, rather than at the level of the fund, which is standard international practice. Departmental officials continue to monitor the area of taxation in investment funds. I highlight to the Deputy that this is part of the remit of the tax strategy group and in preparation for budget 2020 the Minister for Finance, Deputy Donohoe, asked his Department to publish a review of real estate investment trusts, Irish real estate investment funds and section 110 companies as they invest in the Irish property market. That review was made public earlier in the year.

The Bill is crucial if we want to give this jurisdiction the opportunity to compete for the largest deployment of capital in history. If we want to put our hand up for that investment to be made in areas such as Galway, Cork, Letterkenny, Athlone, Wexford and Dublin, we need to pass this legislation. Without it, the blended finance will not work. Without blending finance with the various other areas and multilateral banks, we will not be able to put our hand up because a leg of the stool will be missing, the stool will tip over and companies will continue to invest elsewhere. I look forward to Committee Stage of the Bill. It will be challenging. This is large and complex legislation impacting on the Companies Act and the Irish Collective Asset-management Vehicles Act. I hope that Members stay with the legislation and engage with its detail because this is too important to start playing petty games as Deputy Cullinane tried earlier.

Question put and agreed to.