Other Questions

State Banking Sector Regulation

Pearse Doherty


41. Deputy Pearse Doherty asked the Minister for Finance if he will instruct the State backed banks, including the National Asset Management Agency, NAMA,## not to sell loan books to vulture funds; and if he will make a statement on the matter. [10017/17]

This is a straightforward question on the sale of loan portfolios by banks and the National Asset Management Agency, NAMA, to vulture funds. On my question on Project Eagle which was overruled, for the record, the Department flagged the question for disqualification before the Ceann Comhairle ruled on it.

This question asks the Minister to instruct banks and NAMA not to sell loan books to vulture funds, which are unregulated entities. In addition, none of the intermediate companies or middle persons, as they could be described, which service loans on behalf of the vulture funds, has been authorised by the Central Bank. In recent years, customers have been thrown to the wolves while vulture funds have been reaping major tax benefits from the purchase of loan books.

As the Deputy is aware, non-performing loans remain at an elevated level across the European banking system and addressing this issue is one of the key priorities for the Single Supervisory Mechanism, SSM. In Ireland, significant progress has been made across the banking sector in reducing the level of non-performing loans since the financial crisis. Despite this progress, the level of such loans in the banking sector remains well above the European average. Hence, the SSM has tasked the management and board of each institution with developing and implementing a strategy to address this challenge. This challenge will have to be met irrespective of whether the State has a shareholding in the bank concerned.

As the Deputy knows, the relationship between the Minister for Finance and banks in which the State is a shareholder is governed by relationship frameworks, which can be found on my Department's website. In accordance with these relationship frameworks, the Minister for Finance has no direct function in commercial decisions made by the banks and these decisions are the responsibility of the board and management of the relevant institution. Notwithstanding the State's shareholdings in the banks, I must ensure the banks are run on a commercial, cost-effective and independent basis to protect their value as an asset to the State.

Similarly, I do not have a role in the National Asset Management Agency's commercial decisions. Under the National Asset Management Agency Act 2009, the agency has a well-established mandate to achieve the best possible return to the State by protecting, enhancing where possible, and ultimately realising the value of assets it has acquired. To achieve the maximum return to the taxpayer, NAMA was established as an independent commercial body under the direction of an independent board. I highlight for the Deputy that NAMA is operating within its mandate and progressing its objectives.

I should also highlight that there are substantial protections in place for customers in the event that a loan is sold to a third party. The Consumer Protection Act 2015 was designed to protect borrowers in this circumstance. Under the Act, purchasers of loan books must either be regulated by the Central Bank or the loans must be serviced by a credit servicing firm which is regulated by the Central Bank.

Additional information not given on the floor of the House

Under the Consumer Protection Act 2015, relevant borrowers whose loans are sold to third parties maintain the same regulatory protections they had prior to the sale, including under the various statutory codes, such as the consumer protection code and the code of conduct on mortgage arrears, issued by the Central Bank of Ireland and the Central Bank Act 2013 Regulations 2015, which came into operation on 1 July 2016. The sale of a loan does not change the terms of the contract or the borrower's rights and obligations under the original contract.

My Department will continue to keep all relevant legislation under review to ensure borrowers whose loans have been sold are properly protected and do not lose any protections which they previously enjoyed. In addition, the Department of Finance expects that the Central Bank, as regulator of credit servicing firms, will be vigilant in this area and raise any specific instances where they have found consumers have not had their protections upheld.

While the Minister's response may sound great, the reality is that the credit servicing firms are only regulated or authorised by the Central Bank because they were operating in Ireland before the relevant legislation was enacted. Not one of these firms has been authorised by the Central Bank under the new standards. This means that not only are the vulture funds not regulated, but none of the credit servicing firms has been regulated under the new standards or received approval from the Central Bank under these standards. Some 18 months after the enactment of the legislation, the reason these firms are defined as being regulated is that the so-called passporting section of the Act deemed them all to be regulated until such time as they met the new standards.

The Minister sounded like Pontius Pilate as he washed his hands of this issue. Tens of thousands of home owners' loans have been sold to vulture funds. The Minister's statement that he does not have a commercial relationship with the banks and that the relationship framework precludes him from having such a relationship is not true.

The Deputy's time has concluded.

According to documents we received from NAMA under freedom of information legislation, the Minister's position was that NAMA should not involve itself in housing if it meant the agency would repay its debts more slowly.

The Minister also gave other directions to NAMA.

I ask the Deputy to obey the Chair.

We can see from the minutes of meetings between the Minister and the banks that he engaged on issues such as tracker mortgages and variable interest rates.

The Deputy must listen to the Chair.

Will he continue to sit back while banks continue to sell loans to vulture funds?

I must point out that the rules of the House are set down by Members and implemented by the Business Committee. Every time a speaker exceeds the allotted time during questions, he or she ensures that some of his or her colleagues' questions will not be reached. This is unfair and I appeal to Members to abide by the rules. A Deputy has 30 seconds to introduce a question and the Minister two minutes to reply, after which both the Deputy and Minister may each make two further contributions of one minute. I ask all Deputies to stick to the rules the House has put in place.

The Deputy is incorrect in his assertion that the Consumer Protection Act is ineffective. Under the Consumer Protection Act 2015, relevant borrowers whose loans are sold to third parties maintain the same regulatory protections they had prior to the sale, including under the various statutory codes, such as the consumer protection code and the code of conduct on mortgage arrears, issued by the Central Bank of Ireland and the Central Bank Act 2013 Regulations 2015, which came into operation on 1 July 2016. The sale of a loan does not change the terms of the contract or the borrower's rights and obligations under the original contract.

To respond briefly to Deputy Burton's question as part of my response to Deputy Doherty, Deputy Burton effectively asked why the banks did not cut deals with more people with impaired loans. The investment funds that buy impaired loans are in the business of cutting deals and do so frequently. I watched an RTE programme on the purchase of loans by investment funds and speaking during a panel discussion at the end of the programme, a very well-known individual, who is highly regarded by persons with impaired mortgages, stated it was his experience that it was much easier to deal with vulture funds to secure a reduction in the amount owed than it was to deal with the banks. The obvious reason is that if one can buy at a discount, one has much more head room to cut a deal.

I ask Deputy Doherty to give way to allow Deputy Mick Wallace to make a quick comment.

We have sold a large slice of Ireland to vulture funds for a fraction of its value. Cerberus alone has bought par value loans of more than €25 billion for a fraction of what they are worth and it has wreaked havoc. How can the Minister claim he is not responsible for anything the National Asset Management Agency does? To whom is NAMA responsible, if not the Minister for Finance? Is the Minister telling the House he does not have any influence or control over what NAMA does? It beggars belief that no one has taken the agency to task in recent years. If the truth is told and a proper investigation carried out, I reckon we will find that NAMA has cost the State approximately €20 billion as a result of the manner in which it has operated.

Deputy Wallace has articulated the real point, which is one that was clearly presented to the public in an excellent RTE documentary. Not only was Ireland for sale but it was for sale tax-free as a result of policies pursued by this Government and its predecessor.

In fairness, the Minister responded to me on the section 110 issue and he outlined that it was the Fianna Fáil Government that engineered that into the NAMA agenda before NAMA was even established. However, he is still going to sit back and allow the banks to sell people's homes to vulture funds.

There is already a huge amount of damage done in this regard. It is reported that between 46,000 and 90,000 mortgages are to be sold. The idea that the Minister for Finance has no responsibility or role in this regard is not credible. The Minister may be able to fool the people who have not studied this matter but we know the directions he has issued to NAMA. We know, for example, that he directed NAMA to hold the IBRC loan and that he has given similar directions on numerous other occasions. The Minister can have a commercial role in regard to NAMA and he can issue directions to NAMA but he refuses to do so.

The strength of Deputy Doherty's advocacy and the fact that he puts information that is incorrect on the record does not make his arguments correct. I have always said that I have certain responsibilities for NAMA. I have those responsibilities for NAMA which are enshrined in the NAMA Act as enacted by the Houses of the Oireachtas. That legislation provides a role for the Minister for Finance but it does not give him or her the power to interfere in commercial decisions.

Deputy Wallace has made assertions today along the lines of those he has made on several previous occasions. I think he has a problem with Cerberus and that he should declare an interest-----

I have a lot of problems with it.

I know. I think the Deputy should declare an interest rather than act here as a neutral observer commenting for the public good. Let us be fair. The Deputy is a great man to make assertions under privilege.

I have had plenty to say about Cerberus outside too.

The Deputy is a great man to make assertions under privilege but it is true that he has an interest and he should declare that interest and then we would all know where we stand.

There are few people around who will stand up to it.

The Minister is fond of making points under privilege himself that he would not utter outside this House. However, the truth will out.

Property Tax Exemptions

Clare Daly


42. Deputy Clare Daly asked the Minister for Finance his plans to amend the relevant legislation such that homeowners with pyrite damage below the significant damage certification threshold which have not been accepted into the pyrite remediation scheme but are nonetheless worthless due to pyritic infill can avail of the LPT pyrite exemption. [9879/17]

This question relates to the property tax exemption for homes affected by pyrite in respect of which the Minister will be aware we had to fight to get an exemption. We had to fight for two years after 2013 to get that exemption improved because under the original scheme a person was required to spend thousands of euro on a test to get an exemption of a couple of hundred euro. The amendment made in 2015 is not fit for purpose. What does the Minister propose to do to ensure home owners of pyrite-affected properties can avail of the property tax exemption?

May I ask a question on the same issue?

No. I will allow the Deputy to put a question after the Minister has read his reply.

The local property tax, LPT, exemption is intended to apply to those properties that have a significant level of pyrite damage. While this means that not all properties that are affected by pyrite are eligible for the exemption, it is accepted that the presence of pyrite, whether it has already caused structural damage to a property or has the potential to cause such damage, will have a negative effect on the market value of the property. If the property was affected with pyrite on the valuation date then that can be reflected in the selected valuation band. If a property owner feels that the valuation band selected on the valuation date of 1 May 2013 did not take account of the existence of pyrite then he or she should make contact with Revenue to discuss the possibility of reducing the band.

The Deputy will be aware that the qualifying criteria in respect of exemption from LPT for properties with significant pyritic damage were modified by the Finance (Local Property Tax) (Amendment) Act 2015 which was signed into law on 20 December 2015. The Act modified the qualifying criteria to include properties where a certificate of damage has been completed by a competent person as set down in the relevant regulations, the property has been accepted into the pyrite remediation scheme operated by the Pyrite Resolution Board, an insurance company has remediated the property or provided sufficient funds to carry out the remediation or the person who built the property has remediated it or provided sufficient funds to carry out the remediation.

The relaxation of the certification requirement was one of the recommendations made by Dr. Don Thornhill in his review of the operation of the local property tax on behalf of the Government in 2015. The changes are significant in that where a property has been included in the pyrite remediation scheme by the Pyrite Resolution Board, PRB, without testing, or a property has been remediated by a guarantee company or by a builder or developer or where a party is compensated in lieu of remediation, without testing, Revenue will now accept confirmation of remediation or compensation from either the PRB or the relevant party for the purposes of exemption without testing or NSAI certification.

The Minister has addressed the area where the scheme works to give people pyrite exemptions but he has not addressed the question, which is what does he propose to do to improve the areas where the exemption cannot be gained even though the home owner's property is pyrite affected. The Minister appears to be suggesting in his reply that people could more or less submit a zero valuation and that would be accepted. That is not accepted by Revenue. The terms of the exemption are that a property must have a damage condition rating of 2, or 1 with progression, which means that homeowners with properties affected by pyrite and a damage condition rating of 1, and clearly with pyrite, are not gaining an exemption from the property tax. We have a ridiculous scenario whereby homeowners who suffered in homes affected by pyrite that were later remediated and sold on in perfect condition were unable to get an exemption from property tax for the years during which they lived in the pyrite affected property while the people who purchase the property can get an exemption for a house that is non-affected by pyrite. There are huge problems in terms of application of the exemption.

What does the Minister propose to do for the people who are not currently captured in the scheme even though their properties are valueless and why is there is a ceiling on the exemption? Why is the exemption limited to six or eight years? If a property cannot be certified or remediated and the house is valueless then the homeowner should get an exemption.

I have raised this issue with the Minister previously, at which time he indicated he would ask the Department to examine it. The response received was to the effect that the Minister is not prepared to do anything. This is a growing problem not only in Fingal but across the country. There are people whose homes are effectively valueless yet they have to pay the property tax. I echo Deputy Daly's remarks and I also ask what is the Minister prepared to do for the people who are not currently captured by the current scheme but are in extreme distress?

I said that I was not prepared to introduce further legislation to change the current legislative parameters but I think progress can be made administratively. As I said in my reply to Deputy Daly, if a property owner believes that the valuation band selected on the valuation date of 1 May 2013 did not take account of the existence of pyrite then he or she should make contact with Revenue to discuss the possibility of having the band reduced. In other words, if the house is worth a lot less than was thought in 2013 then there is an opportunity, with the agreement of Revenue, to declare a new valuation at a very low level and consequently the LPT liability will be significantly reduced if not eliminated completely.

I hear what the Minister is saying but that has not been the experience of people who have made that argument to Revenue. It is a self-assessment tax so one would assume that if the property concerned is one that the homeowner is not permitted to sell because it has pyrite the value would be nil and, therefore, there would be no liability. That is what the Minister is telling us today. We will be quoting that back to Revenue and hopefully it will not dispute what the Minister has said. If that was the interpretation that was brought in, then many home owners who have now been told by Revenue to pay up and who had money forcibly deducted would not be in this scenario. I hope that when we quote what the Minister has just said Revenue will implement it. Given that there is a lack of clarity on this issue, it might be best if the Minister would send Revenue a notice reminding it of its obligations in this regard such that any confusion, which undoubtedly does exist, can be avoided.

I understand the point the Deputy makes. If there is an administrative road block preventing what I expect to occur from occurring I will speak to the chairman of the Revenue Commissioners with a view to having it remediated at an administrative level.

Brexit Issues

Thomas P. Broughan


43. Deputy Thomas P. Broughan asked the Minister for Finance his Department's current entitlements regarding the way Ireland's contributions to, and funding supports from, the European Union will change following Brexit; and if he will make a statement on the matter. [9541/17]

The United Kingdom is a few weeks away from the triggering of Article 50. I asked the Minister about this issue in the past. Obviously, the second largest net contributor to the European Union will be leaving, which will result in some residual costs and contributions. As a result of the 2015 revision of our GDP statistics, we were due to pay perhaps an additional €300 million this year. Has the position on our EU contribution become any clearer?

I thank the Deputy for his question. Until it formally withdraws from the European Union, the United Kingdom will remain a full EU member with all its existing rights and obligations, including in regard to the EU budget. Brexit will involve complex discussions on the multi-annual financial framework, particularly as the United Kingdom is an important net contributor to the EU budget. Therefore, Brexit will have a significant impact on EU budget funding and expenditure and may need to be mitigated by increased contributions from other member states, reductions in EU funding programmes or a combination of both.

While my Department has undertaken some broad modelling work to estimate the potential impact of Brexit on our EU budget calculations, this analysis will need to be developed in more detail in the coming period, when the parameters of the budget negotiations are better defined. In particular, a key point will be getting agreement among the EU 27 on a common approach to the future of the EU budget.

The Committee on Budgetary Oversight has been discussing with the Governor of the Central Bank and the Economic Statistics Review Group the new concept of GDI, an attempt to measure many variables and engage in supplementary analysis in regard to GDP. Given what happened in 2015, are we not left in quite a vulnerable position? Our basic contribution this year is approaching €2.5 billion. This is a considerable amount of funding that we must provide. With regard to the revision of our statistics in 2015, are we considering very deeply the consistent impacts on the reduced EU budget given the exit of the United Kingdom?

Our contribution to the EU budget is calculated on our GDP, as calculated by EUROSTAT. The modifications suggested by the committee under the Governor of the Central Bank to have a more transparent domestic set of numbers which would not have built in the impact of the on-shoring of IT, which ran into the GDP figures, would not be taken into account for calculations on the EU budget. The United Kingdom is a net contributor so it stands to reason that, if it moves out, the pool will be smaller by the difference between what it gets and what it contributes. A question arises as to how the adjustment will be made. Either every member state will have to pay more or the budget will be reduced by pulling back on certain services that are now funded through the EU budget. The other variable is the amount of compensatory funds upfront for which the United Kingdom will be liable. Calculations indicate this could be from as low as €33 billion or €34 billion up to over €60 billion. That would go into the pool also. It is impossible to say except that the issues the Deputy raises in his question are real and must be resolved in the course of the negotiation over the next four, five or six years.

When does the Minister expect to get the revised figures, the GNI analysis? How will it operate in terms of international standards? In this regard, the Minister mentioned EUROSTAT. Also to be considered are the IMF and other bodies given the considerable impact Brexit will have on our unique economy.

Has the Minister taken any position on the long-standing liabilities the United Kingdom will have? We hear about the pension entitlements of British staff working as EU civil servants to the year 2050, etc.

There are estimates generated in Brussels that would be at the higher end of the range. These are rejected and refuted by the UK authorities. Where it will land, I could not even guess at this stage.

On the new methodology, as advised by the committee on Irish statistics, the intention is not to change the statistical base for our international calculations, as with the EU budget. The idea is that there will be a set of numbers with statistical aberrations taken out so foreign direct investors, the markets or colleague countries that trade with us will have a more realistic insight into the reality of the Irish economy rather than looking at GDP figures which, while they are real under the calculations required by EUROSTAT, we all agree do not reflect real economic activity in the country.

Employment Rights

Joan Burton


44. Deputy Joan Burton asked the Minister for Finance when the results of the consultation process concerning the impact of bogus self-employment arrangements will be published; and if he will make a statement on the matter. [9983/17]

Joan Burton


211. Deputy Joan Burton asked the Minister for Finance when the results of the consultation process concerning the impact of bogus self-employment arrangements will be published; and if he will make a statement on the matter. [9951/17]

I wish to raise the issue of bogus self-employment. Although employment rates continue to fall and there are very significant numbers of people at work, I am particularly concerned that rather than having many people employed in traditional employment, with the protections and rights this entails regarding income, access to trade unions and access to labour protection through legislation, there is a significant number of people on very low pay in bogus self-employment. The social welfare entitlements, including pension entitlements, of those in these circumstances will be very much diminished if they seek to exercise social protection rights or to exercise pension rights when they retire. I have raised this with the Minister before. There was a consultation on which he and I agreed quite some time ago. What has happened in terms of that process?

When the Deputy was Tánaiste and Minister for Social Protection, she and I, as Minister for Finance, launched a consultation process on the use of intermediary-type employment structures and self-employment arrangements, in addition to their impact on tax and PRSI. She will recall also that the consultation invited submissions from interested parties on possible measures to address the loss to the Exchequer that may arise under two sets of arrangements. The first of these is where an individual, who would otherwise be an employee, establishes a company to provide his or her services. The second is where an individual, who is dependent on and under the control of a single employer in the same manner as an employee, is classified as a self-employed individual.

Some 23 submissions were received and a report is being prepared. Indeed, we discussed the report and the wider issue of bogus self-employment generally during our Finance Bill debates in the Dáil late last year. I understand that the report on the consultation process is being been finalised by a working group of officials but it has not yet reached me or my colleague, the current Minister for Social Protection. As soon as it does, we will consider its contents, and then I expect we will publish it. I am not in a position to give the Deputy an exact date for publication but I am informed by officials that the drafting and editing process is now almost complete. After that, a meeting of the working group will take place, after which I expect to receive the report.

It is important to emphasise the nature of the report that is being produced; it is a report on the consultation process. This, however, was not a consultation process into the impact of bogus self-employment arrangements. Specifically, it was a consultation process on the use of intermediary-type employment structures and self-employment arrangements, and their impact on tax and PRSI. The issues are related, but not identical. The report will reflect the views of those individuals and organisations that responded and the analysis of these responses by the working group.

The Minister will recall - he may have the information in his briefing papers - that when we agreed to establish this, ICTU, SIPTU and various other trade unions had identified potential losses of more than €80 million to the Exchequer per annum in taxation, PRSI and other payments. That is not an inconsiderable amount of money.

Critically, people in bogus self-employment find themselves without the ordinary protections of labour law which ensure that their employment is properly regulated, they are at least paid the minimum wage and, as per the legislation that we introduced while in government, there are structured agreements in certain sectors between employers and the workers' trade union representatives.

I welcome the idea that there will be a publication at some stage and I urge the Minister to publish it, given that it is important to many people.

I do not want to confuse the issue of the tax and PRSI position of people who are genuinely self-employed. This matter relates to people who are not genuinely self-employed and are using the device for tax reduction purposes. The use of intermediary-type structures is becoming more prevalent as a means of providing labour, and legitimately so. From a tax and PRSI perspective, one of the consequences of these types of arrangements is that, rather than the end user applying the PAYE system in respect of the worker, that function becomes the responsibility of the worker. In addition to these formal intermediary-type structures, there are increasing instances of workers being classified as self-employed even though they might not possess the characteristics of entrepreneurship and risk-taking that are often perceived as features of self-employment.

The work is almost complete and will be submitted shortly to the working group. I will publish the report as soon as I have a clean copy and have put it through the Government.

When one speaks with, for example, young men in the construction industry, it is difficult to persuade them that working in fully ensured employment is as attractive as being established in an easily constructed self-employment wherein they pay minimal contributions but have no protection if they fall ill or have an accident. When they reach the end of their working lives, their pension entitlements may be significantly reduced. Since they are not employees, they lack fundamental protections.

Many workers in the IT and insurance sectors and so on are being offered a self-employment structure. We are moving away from the model in which people are at work. Instead of being genuine business owners involved in entrepreneurship, as the Minister described it, they are employees who have few options other than to accept the type of self-employment that is on offer, and often to their long-term detriment. This is a problem across a range of industries.

I acknowledge that Deputy Burton, as the former Tánaiste, was the joint sponsor of this consultation process. It is a good piece of work and I look forward to the report being available and debating it in the House. The construction and development industry, where these practices are prevalent, crashed during the recession and is emerging as a different industry, with contractors and developers only having a couple of key people and building by way of subcontractors with different skill sets. Quite a lot of the construction sector is becoming a manufacturing industry, where modular units are manufactured offsite and brought onsite to be put in place by subcontractors.

There has been a movement anyway towards increasing numbers of persons who are genuinely self-employed in the building industry. We must take that into account in our discussions. My objective is to root out tax evasion by persons falsely describing and constructing themselves as self-employed when they are actually employees.

Mortgage Interest Relief Application

Eugene Murphy


45. Deputy Eugene Murphy asked the Minister for Finance whether a person who has lost mortgage interest relief, MIR, due to falling into arrears but subsequently resumed paying the full mortgage payment, having cleared the arrears with an overpayment, can claim MIR for the years paid in full or must wait until the arrears are cleared fully on the account to claim the MIR going forward; and if he will make a statement on the matter. [9542/17]

Eugene Murphy


81. Deputy Eugene Murphy asked the Minister for Finance if a MIR payment can be reinstated on the payments that are being paid to date even though there are still arrears on the account in the case of a mortgage that has arrears attached to it but the mortgage holder has been paying over and above the amount of repayments monthly to deal with the arrears and keep up to date with the mortgage repayments going forward; and if he will make a statement on the matter. [9543/17]

In the case of a mortgage in arrears where the mortgage holder has been paying over and above the monthly repayments to deal with those arrears and keep up to date with the mortgage repayments in future, can MIR be reinstated even though there are still arrears on the account?

I propose to take Questions Nos. 45 and 81 together.

Section 244 of the Taxes Consolidation Act 1997 provides MIR in respect of qualifying interest paid in a tax year. The level of relief allowable in any tax year in respect of the amount of interest paid, inclusive of any arrears paid, cannot exceed the applicable rates and ceilings for that year. The applicable rate and ceiling for each qualifying person are determined by his or her personal circumstances, for example, whether he or she is a first-time buyer, single, married or in a civil partnership.

The mortgage interest ceilings that apply to first-time buyers - those within the first seven tax years of taking out their first mortgages - are €10,000 for a single individual and €20,000 for a married couple or civil partnership. For subsequent years, the ceilings reduce to €3,000 and €6,000, respectively.

Regarding the scenarios set out in the Deputy's questions, Revenue has confirmed that the persons in question are entitled to claim MIR as soon as they restart making mortgage payments. The relief entitlement may be increased to take account of the additional arrears payments being made, but the cumulative amount of relief granted cannot exceed the maximum level of the applicable rates and ceilings for the particular year in which the interest is paid. "Yes" is the answer, and if they are making arrears payments, they can add the relevant interest as long as they remain below the ceiling. Revenue has advised that the persons in question should contact its tax relief at source helpline at 1890 46 36 26 so the exact entitlement can be quantified, having due regard to the specific details of the cases.

The Deputy will be aware that there is a programme for Government commitment to retain MIR beyond the current end date on a tapered basis. Since legislation already provides for the relief to continue to the end of December 2017, it was not necessary to legislate for the extension in the Finance Bill 2016. In my Budget Statement in October, however, I confirmed my intention to extend MIR on a tapered basis to 2020, with the details of the extension to be set out in budget 2018. Deputy Michael McGrath is a strong advocate of this extension and we are fulfilling that commitment.

I am also pleased to note that, as mentioned in response to Deputy Burton's Priority Question, mortgage arrears and repossession data released by the Central Bank to the end of the third quarter of 2016 provide evidence that consistent progress is being made in addressing mortgage arrears, with the number of private dwelling home mortgage accounts in arrears continuing to fall for the 13th consecutive quarter.

That is interesting. I welcome the Minister's clarification of the issue. The young man in question bought his house in 2009 and was made redundant some time later. He subsequently regained employment and began to deal with the mortgage arrears on his account. He has been paying his full mortgage as well as extra to deal with the arrears since 2014, but tax relief at source was withdrawn from the account while he was making minimum payments.

He has been paying his mortgage in full, plus an additional amount to deal with the arrears. The EBS has refused to reapply mortgage interest relief to his mortgage, which would help him to get out of the current situation and to pay his arrears more quickly. What are the regulations regarding the application in this matter, and mortgage accounts in general? The Minister probably knows more about this issue than I do. In my view it is clear that the bank has deceived this man in a major way.

First, the mortgage interest relief only applies to interest which is paid. If somebody has an impaired mortgage and he or she is no longer paying interest he or she will not get interest relief, but one can get it back in subsequent years. The best thing to do would be for the Deputy or his constituent to ring the number I gave and to set out the case for the Revenue Commissioners because the advice they have given to me, which is incorporated in the reply I have outlined, would suggest that if all the facts are as the Deputy indicated, this man is entitled to the relief.

I thank the Minister for supplying the number. This man has been put through hell in his dealings with the EBS. In my view the EBS has breached many codes of conduct in dealing with the case. I have sent a comprehensive file of evidence of misconduct on the part of the EBS to the Minister's office, which was provided by the man involved. I urge the Minister to have a further look at the case.

The legal fees were added on to the balance of his mortgage account by the mortgage provider, EBS. He will be paying for them more than 27 years. The building society did that without his knowledge or consent. That is factual. He has paid more than €40,000 off his mortgage since 2014. However, he now owes more money than he borrowed, plus interest. This is what Deputy Michael McGrath and Deputy Pearse Doherty were talking about earlier. Some people are going through sheer hell in situations like this and we must get such matters straightened out. I thank the Minister for his response.

I suggest again that the Deputy ring Revenue to straighten out the interest relief the person is entitled to receive and if he wants to pursue the matter further in terms of a complaint, it is to Central Bank that the complaint should be addressed in the first instance.

State Banking Sector

Paul Murphy


46. Deputy Paul Murphy asked the Minister for Finance his plans to privatise the State's shares in the banking sector; and if he will make a statement on the matter. [10025/17]

AIB was the recipient of the second biggest bank bailout in the world - €20.7 billion – more than Morgan Stanley and Goldman Sachs combined, and second only to Anglo Irish Bank. Could the Minister report on his plans to privatise 25% of AIB at a significant loss to the taxpayer and could he give a commitment that there will be a vote in the Dáil before any such decision will be made on privatisation?

The position of the Government in regard to the State's shareholdings in the banking sector is very clear. These were investments the State had to make during the banking crisis, and it is the Government's intention that the State will exit these investments in a measured and careful manner. I have been clear in stating that my primary objective in the disposal of these assets will be recovering the maximum amount of money for the Irish taxpayer.

Clearly, in order for us to proceed with the sale of any of our banking assets, we would need to be satisfied that the market is prepared to put a fair and reasonable value on the relevant business, bearing in mind its current performance, its future prospects and the outlook for the Irish economy. Officials in my Department continue to monitor market conditions and the performance of banking equities with a view to planning appropriate exit strategies, consistent with what is set out in A Programme for a Partnership Government.

In regard to the individual assets, I have indicated that an IPO is the optimal route to recouping value from our investment in AIB with the earliest possible IPO window being the second quarter of 2017. Indeed, officials in my Department, along with our independent financial adviser, Rothschild, have done considerable preparatory work in this regard. In December of last year, following a competitive procurement process, three firms were appointed to act as joint global co-ordinators to lead a selling syndicate in preparation for a possible IPO. The firms have been appointed for an 18 month period and additional firms will be appointed to fill out the syndicate at an appropriate future date. The appointment of the firms as advisers does not signal any intention or obligation for us to proceed with a transaction, which will be subject to a number of factors, including favourable market conditions. AIB is due to publish its 2016 financial results on Thursday, 2 March 2017 and we will assess the market reaction. Clearly, AIB remains our immediate priority given its size. However, we continue to keep disposal strategies in relation to both Bank of Ireland and Permanent TSB under review.

More than €20 billion of public money was put in and AIB is now valued at €11.3 billion. That is a fire sale by anyone's standards and it is a rip-off of the public in order to hand the banks back into private ownership and the disaster that was and will be. A particular result is that in advance of the privatisation, which is under way, and presumably it will continue after that, is a more aggressive approach to non-performing loans. I raised the issue with the Minister last week at the finance committee and he said not to worry because there are no owner-occupiers involved. Since then it has come out in the media that owner-occupiers are involved. However, my point is that I also have concern for people who are not owner-occupiers. Those who let, as tenants in buy-to-let properties, could find themselves under real threat of eviction from vulture funds. The media have identified Cerberus as a likely buyer of Project Cyprus, the book of buy-to-let properties, and it has a disgusting record of looking after people.

The position of the Government in regard to the State's shareholdings in the banking sector is very clear. These were investments the State had to make during the banking crisis, and it is the Government's intention that the State will exit these investments in a measured and careful manner. I have been clear in stating that my primary objective in the disposal of these assets will be recovering the maximum amount of money for the Irish taxpayer.

Clearly, in order for us to proceed with the sale of any of our banking assets, we would need to be satisfied that the market is prepared. I have outlined much of the detail of the preparatory work we have already done. The next date of interest from my perspective is next Thursday when AIB's annual returns will be published. That will give the Deputy a reasonable insight into whether we could proceed or not and also into values. AIB has already returned significant amounts of money to the taxpayer and I am sure the Deputy is aware of that also.

The consequences of the privatisation or part-privatisation of AIB are clear. There would be a loss of public funds that were invested and the money that goes back would just go straight off the debt. There would also be a loss of potential control of a bank, which instead of being an instrument for profit could be an instrument for the benefit of society. In addition, there would be a loss of service for customers. Half of the branches in the North, totalling 15, have been closed. Most important, some people could lose their homes in advance of the privatisation happening because of the likes of Cerberus getting involved. I understand the Minister's ideological commitment to private ownership of the banking system but, given those consequences, does he not agree that the Dáil should debate this matter? If the Government wants to propose the sale of AIB, the Dáil should have a right to decide on the matter by vote.

First, the Deputy uses such terms as "give away" and "fire sale" very loosely. Like any asset, whether it is a bank, a house or a bicycle, it is only worth what a willing buyer is willing to give to a willing seller on any given day. When AIB was taken over by the State it was taken over because there were no willing purchasers. One would not have got €100 for it. It does not make sense to say AIB was worth €20 billion and now it is worth less. The point is that it was worth nothing when the State took it over.

We took it over for €20 billion.

No, we put a lot of money into it to recapitalise it. That was not the purchase price. That was the capital necessary to keep it going as a bank, and that is what it cost the State in terms of capital injection but it was not the market value.

Nobody was going to give €20 million for it. The problem was that nobody would give €20 for it at the time. Will we debate it? I will keep the Dáil informed. No decision has yet been made as to whether or not we are going for an IPO but I will keep Members informed every step of the way and we will see where the discussion leads.

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