Invest €6bn of fund in jobs - Begg

UP TO €6 billion of the National Pension Reserve Fund could and should be used to tackle the jobs crisis and infrastructure deficits, the Irish Congress of Trade Unions said yesterday.

A small stimulus would take the economy out of decline and give us a chance to get on our feet again, David Begg, Ictu general secretary, said at the launch of its pre-budget submission.

There was a “great danger” of entering a “deflationary spiral” unless we provided opportunities for growth, he said. The Government’s austerity policies had not worked and had made matters worse, trebling unemployment and increasing the deficit.

The proposal would see the pension fund invested in jobs initiatives led by the State, such as water conservation and retrofitting energy-inefficient buildings.

“We should also use it as a fund to promote innovation in the commercial sector on a risk-sharing basis,” Mr Begg said.

Ictu said the €24 billion pension reserve fund was being “raided” to buy shares in failed banks. It suggested investing €2 billion next year, and €2 billion in 2012 and 2013 respectively.

It said money from the fund could be invested to the satisfaction of the EU if it met certain criteria.

These included showing that the investment was commercial; that the Government must not have control of the project; and that the private sector must take full risk in the investment.

Proposals to ask the multinational sector to invest further in the economy was also part of the proposal. Congress wants multinationals to invest in Irish-based businesses by deferring repatriation of a portion of their profits.

“At the moment they are making huge profits,” said Mr Begg. “It’s not unreasonable to say: ‘you have a long-term interest in this country, would you not repatriate profits into other ventures with the private sector’?”

Congress is also proposing a temporary increase of 2 per cent in corporation tax until the 3 per cent of Gross Domestic Product deficit target is reached.

The submission also proposes that bank bondholders should be “burned” for a saving of up to €24 billion. It suggests the value of their holdings be reduced to 10 per cent of their nominal value.

Ictu economist Paul Sweeney said this would annoy the bank bondholders, but other bondholders would see that Ireland had got rid of liabilities and would be “queuing up to lend to us”.