The First Minister said both the UK and Scottish Governments must do everything possible to help unlock the 'wall of capital' built up during the recession, supporting productive investment, including pension fund involvement in both public and private infrastructure.
Mr Salmond told the National Association of Pension Funds’ Investment Conference, in Edinburgh, that some £2.5 billion of public infrastructure plans being funded through non-profit distributing (NPD) structures and initiatives such as the National Housing Trust (NHT) offer the prospect for long-term returns.
Scotland’s housing associations deliver annual turnover of more than £1 billion and hold housing assets worth £10 billion, funded by a combination of around £3 billion in private finance and some £7 billion from taxpayers.
"The sector’s strong balance sheet, together with its effective regulation and financial stability, offers a safe haven for pension fund investment," the First Minister told delegates.
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The NPD funding model, earmarked for projects such as the M8 motorway completion project, new Glasgow College and Sick Children’s Hospital in Edinburgh, involves the public sector paying an annual charge over a 25-30 year period once the asset has been built.
Mr Salmond said: "We expect to see benefits from our investment over a period of decades. And our investment horizons therefore match those of pension funds – which need to consider the value of their funds many decades into the future.
"We have a series of projects in the pipeline which can generate safe, predictable, long term revenues, while benefiting Scotland’s economy and society more widely. All of this gives you the opportunity to invest in Scotland’s future by building Scotland’s future. Seizing that opportunity will be good for Scotland, good for you and good for your members."
The decision to accelerate capital investment in Scotland had helped ensure the recession was shorter and shallower than the UK overall, the First Minister said, adding that, within Holyrood’s fixed budget, more than £200 million a year is being switched from resource spending to capital investment.
Mr Salmond also highlighted the huge potential returns in Scotland’s burgeoning renewables industry, which is expected to attract many hundreds of millions of pounds of investment and create tens of thousands of jobs over the next decade - with plans being developed to harness up to 10 GigaWatts of wind and 1.6 GW of wave and tidal capacity by 2020.
Investment opportunities here, he said, include the development of next-generation deep-water wind turbines and pioneering wave and tidal energy technologies – where major overseas companies including Mitsubishi, ABB, Alstom and most recently Samsung with an up to £100 million project in Fife, are already investing in Scotland.
He also pointed to the emerging multi-billion pound European grid infrastructure, where last month ScottishPower and National Grid awarded a £1 billion contract to lay the world’s longest subsea power cable to export greater amounts of green energy from Scotland.
(GK)
