ISIF must not be a substitute for capital spending – CIF
Use of the new Ireland Strategic Investment Fund (ISIF) must be in addition to Exchequer capital spending and can’t become a substitute for that source of expenditure, according to the Construction Industry Federation (CIF).
The CIF were speaking to welcome the announcement that the Government is reorienting the National Pension Reserve Fund and making the Fund’s €6.4 billion discretionary portfolio available for commercial investment in Ireland.
The Government announced these measures while providing an update on the NTMA (Amendment) Bill 2013 which will also formally establish NewERA. NewERA will be tasked with identifying new investment opportunities and will take a commercial approach with an emphasis on return on capital.
“The establishment of ISIF could lead to more investment in capital spending and that would create more construction opportunities throughout the economy,” said CIF Director General Tom Parlon. “The Government seems to have earmarked the potential use of the €6.4 billion for investment key economic infrastructure, particularly in the areas of water, energy and next generation telecommunications. There are a lot of different elements to improving infrastructure in these areas but all would require extensive construction work from various sectors within our industry. The type of projects involved could also have a broad geographical spread – creating construction work on a widespread regional basis.
“Our one concern about today’s announcement would be if the Government were to start using this funding as a replacement for Exchequer capital spending, rather than as an addition. Capital spending has dropped considerably already and we need to see it increasing if we are serious about stimulating the economy. There’s no point in using this money just to free up finance that was earmarked for capital spending and then putting that towards Exchequer current spending. That would be a very short sighted and backward step which would only put off the current spending decisions that need to be taken while undermining any attempt to stimulate the economy,” Mr. Parlon concluded.