Other Questions

Financial Services Sector

Seán Haughey

Question:

6. Deputy Seán Haughey asked the Minister for Finance the way the Government and, in particular, his Department are promoting the IFSC as an ideal location in which to do business; and if the IFSC Clearing House Group is still meeting regularly. [20413/17]

The Ceann Comhairle has given permission for Question No. 6 is in the name of Deputy Seán Haughey to be taken by Deputy Michael McGrath.

The question about the IFSC is directed at the Minister of State, Deputy Eoghan Murphy. It asks how the Government and, in particular, the Department, is promoting the IFSC as an ideal location in which to do business. It also asks for a report on the IFSC Clearing House Group. The Minister of State can widen his response beyond the IFSC as a location in which to do business and address the overall strategy for international financial services.

The Government is strongly committed to the promotion and development of the financial services industry in Ireland, both in the IFSC and other locations throughout the country. This commitment is illustrated by the launch in March 2015 of the Government’s IFS 2020 strategy. The vision of the strategy is for Ireland to be the recognised global location of choice for specialist international financial services, building on our strengths in talent, technology, innovation and excellent financial services. The aim of the strategy is to increase the numbers employed in international financial services in Ireland by 30% or 10,000 net new jobs over the five years of the strategy, from 2015 to 2020. I am pleased to say we are on track to reach this target. In 2015 over 2,600 net new jobs were created in the IFS sector in Ireland and in 2016 a further 2,000 net jobs were created. 

As part of the implementation of the 2020 strategy, new implementation structures were established and the clearing house group no longer exists. An industry advisory committee represents the financial services industry and a high level implementation committee, a senior group of civil and public servants, represents the public sector. These committees meet jointly on a quarterly basis under my chairmanship.

Officials in the Department are in regular contact with IDA Ireland to promote Ireland for international financial services and both the Minister and I have met various IFS firms to promote Ireland for international financial services investment. In 2016 a communications sub-group was launched as part of the IFS 2020 framework in order to co-ordinate consistent messaging and promotion of Ireland’s IFS offering to international investors. All IFS stakeholders, Government and industry bodies now use the IFS banner brand to promote Ireland on the international stage. The IFS 2020 strategy is reviewed annually through the publication of action plans. In January I launched the IFS 2020 action plan 2017. The action plan for 2017 is divided into two sections. Section 1 is a contextual piece outlining the development of the strategy, with a strong focus on Brexit. Section 2 contains a suite of 40 individual measures with lead Departments, agencies and organisations assigned responsibility to deliver these measures.

In January the second annual European financial forum was held in Dublin Castle. The forum which was hosted by me and the Department was designed to showcase Ireland's financial services offering to an international audience. About 650 individuals from more than 300 companies were present at the forum. A third annual European financial forum will be held in Dublin Castle on 31 January 2018.

I thank the Minister of State for his reply. I have read the action plan for 2017 and the 40 action points set out in it. I hope their implementation is going according to plan. Will the Minister of State give us an idea of the constraints and the issues being raised by firms with which he and IDA Ireland are engaging? In terms of regulatory capacity in Ireland, is he satisfied that there is sufficient capacity and openness in the Central Bank? He will be aware of the recent report in The Sunday Business Post on the issue. What are the issues with regard to office availability, high-end office accommodation, talent and the labour market? What are the constraints with which we could deal to enable us to do even better?

There are some encouraging signs, in the context of Brexit, of announcements that may be about to come our way. I ask the Minister of State to address those particular issues. Where are the constraints and where can we do better to improve our offering?

It is important to note, in the context of the Deputy's references to the IFSC Clearing House Group, that our offering is a whole of Ireland offering. It is not just about Dublin anymore or a particular geographic location north of the Liffey. We are talking here about IFS 2020. When one looks at the offering in terms of employment, one third of the jobs, which are increasing from 35,000 to 45,000, are located outside of Dublin.

Just before Easter the Department of Finance, as part of its Brexit preparations, had a round table with financial services entities in this country and as part of that dialogue we talked about the risks and opportunities in financial services. Presentations were given by various chambers of commerce around Ireland as to the offerings that they provide in the Brexit context, to make sure that we can get on top of all the possibilities that we now think are coming. In Deputy McGrath's own constituency, Connect Cork has been doing an excellent job not just here in Ireland but also in London and other overseas locations. I had the opportunity recently to go out with Connect Cork to talk about the offering there.

The Central Bank has increased its resources to deal with the increased interest that has come its way. It has released a number of statements recently about the changes it has made which have been received very positively. The Deputy also referred to office space. Approximately 3.5 million sq. ft. of office space is currently under development, 1 million sq. ft. of space is under refurbishment and planning permission has been granted for a further 5 million sq. ft. of office space in Dublin. However, there is also huge potential for office space outside of Dublin. In Cork, for example, approximately 1 million sq. ft. of office space is almost ready to go and will be available to new firms coming in. Deputy McGrath will be interested to know that we recently had a couple of positive announcements concerning financial services in Cork.

I acknowledge that the Department has engaged in the regions and in my own city of Cork. I know that the Minister of State has engaged quite significantly with Cork Chamber and UCC. There is a financial technology centre at UCC which collaborates very strongly with industry, including with State Street and other financial institutions. UCC also has an important tie-up with China. I acknowledge all of that. The regions can offer an awful lot in respect of financial services. The office accommodation, where it is available, is much more reasonably priced. There are significant strengths in the regions that the Department must continue to highlight. I welcome the fact that it is part of the offering and is being promoted when the Department and the IDA are doing their work in terms of attracting international financial services to Ireland.

Finally, on the net issue of the Central Bank, is the Minister of State satisfied with its approach? The Minister of State raised concerns in recent months about the role that other countries are playing on the regulatory front. He suggested that some are making offers to firms that they may not be able stand over. What is the latest information on that?

I am satisfied with the Central Bank's approach. The bank is an observer on the IFS 2020 joint committee, which I chair and to which I referred earlier. The Central Bank has a responsibility, independent of Government, to make sure that we can manage the changes that are coming as a result of Brexit.

I have raised concerns about the capacity for other jurisdictions to compete on level regulatory playing field and statements have been made on this issue recently by the European Central Bank, ECB, the Single Supervisory Mechanism, SSM, the European Securities and Markets Authority, ESMA and the European Insurance and Occupational Pensions Authority, EIOPA. Recent statements by Governor Lane of the Central Bank were very instructive in this regard. He pointed out that when it comes to regulation of entities in the Single Market, we are moving towards convergence. Proposals are on the table at the moment that will help that supervisory standard across the Single Market.

I wish to pick up on two important points made by the Deputy in his contribution. The Deputy referred to education and the tie-in with UCC, which is very important. We also have a great apprenticeship programme that was launched under IFS 2020 last year. The Deputy also made reference to the tie-ins with China and we are positioning ourselves as a gateway for international financial services into the Single Market. Asia has been a very strong part of that play and we are seeing significant interest from companies currently based in China and Japan which either have no entity here at the moment or only have a small entity in a particular sub-sector - for example, aviation and aircraft finance and leasing - which are now looking very seriously at Ireland. We expect some very positive announcements in that context in the near future.

Tax Exemptions

Clare Daly

Question:

7. Deputy Clare Daly asked the Minister for Finance further to Parliamentary Question No. 42 of 28 February 2017, if he will address a situation raised in correspondence (details supplied) regarding a local property tax exemption. [22893/17]

Clare Daly

Question:

21. Deputy Clare Daly asked the Minister for Finance further to statements in Dáil Éireann on 4 April 2017 that the Revenue Commissioners operate an administrative solution to the pyrite local property tax problem, if he will review the pyrite local property tax exemption in view of the fact that home owners whose properties cannot be sold or renovated due to the presence of pyrite are unable to avail of the exemption as a result of the way the legislation is constructed. [23567/17]

It is regrettable that we are back here again. In February, during questions to the Minister, I highlighted an anomaly in the LPT legislation which means that some property owners whose dwellings have pyrite are not able to avail of the pyrite exemption because of the manner in which the legislation has been constructed. The Minister agreed with me at that time and said that Revenue had what he called an "administrative" solution. Subsequent to that, however, home owners have contacted Revenue only to be told to "shove it". They are not getting an exemption, even though their houses are essentially valueless. We need to radically change the legislation.

I propose to take Questions Nos. 7 and 21 together.

I understand my Department has clarified with the Deputy that her question relates to statements made in the Dáil on 28 February 2017 rather than on 4 April.

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 relaxed the qualifying criteria which 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 the either the PRB or the relevant party for the purposes of exemption without testing or NSAI certification.

In regard to the operation of this exemption, Revenue is obliged to act in accordance with the provisions of the Finance (Local Property Tax) Act 2012, as amended, which requires that an LPT exemption on foot of pyritic damage can only apply to properties meeting specific criteria. A property can only be classified as exempt and the LPT charge eliminated where the level of pyritic damage is confirmed in accordance with the provisions of section 10A of the Act and the relevant documentation is presented to Revenue.

The Act provides that properties that are not exempt are liable for LPT. A property that does not qualify for exemption and continues to be in use or is suitable for use as a dwelling is liable for LPT and must be placed within a valuation band. While the valuation of a property is a matter of self-assessment, a property that is valued between €0 and €100,000 falls within the lowest valuation band, as per section 17 of the Act, and attracts the minimum LPT charge of €90 per annum which may be increased or decreased by up to 15% by the relevant local authority. Therefore, it is not possible for Revenue to grant an exemption or a reduction in the LPT liability on an administrative basis where the property does not qualify for exemption under the criteria set out in section 10A of the Act.

Regarding my response to a supplementary question from the Deputy on 28 February, and in case there is any misunderstanding, let me emphasise the factual position in relation to the LPT charge on such properties. As I outlined at that time, where the property is not exempt there is an opportunity, with the agreement of Revenue, to declare a new valuation which, while not totally eliminating the charge, may result in a significantly reduced liability for the householder. I am glad to have the opportunity to clarify the matter.

Revenue has confirmed that it accepts that the presence of pyrite, whether it has already caused structural damage or has the potential to do so, can have a negative effect on the market value of a property and persons who incorrectly valued their properties in 2013 should advise Revenue of the correct valuation and of the grounds for reducing the original value.

It is wholly unacceptable, having posed a question about deficiencies in existing legislation, to get an answer, half of which is taken up with telling me what the legislation contains. I know what the legislation contains which is why we are here. The legislation is not fit for purpose and in fairness, the Minister agreed with me on that point previously. Under the legislation as it is currently constructed, homes with pyrite which are valueless and which people cannot renovate, extend, decorate or sell but which do not have a sufficient amount of pyrite to warrant inclusion in the pyrite resolution scheme do not get a local property tax exemption. The Minister acknowledged the problem the last time we spoke about this and said that there was an administrative solution. What he seems to be telling me now is that people can say that their property is basically valueless, that it is in the lowest category of between €0 and €100,000, and then only pay €90 per year but that is not good enough.

It is not good enough, having acknowledged that there is a deficit or an anomaly in the legislation, to ask people to make payments on properties with no value in the same way as those whose properties have a value are making payments. I would like to hear the Minister's thoughts on the need to change the law in this area. I appreciate that it might be difficult for him to make such a change, given that he has said he is not interested in standing for office again. I realise we are in an intermediate period, but that is of no relevance to those who are required to make payments on valueless properties.

I will continue to carry out my duties until I am replaced by an incoming Minister for Finance. I told the Deputy in February that a householder who posted a new valuation to Revenue could have his or her local property tax liability significantly reduced, if not eliminated completely. In other words, a person who valued his or her property in one of the higher bands before the appearance of pyrite in the building can reduce the valuation to the lowest band, from zero to €100,000, now that pyrite has appeared. I emphasised to the Deputy that in such circumstances, Revenue could not eliminate completely the need for a valuation. However, when it is administering the scheme, it can accept a change in the valuation of a property such as those with which the Deputy is most familiar in her local authority area in order that the householder will pay the lowest level of €90, which could fall to approximately €70 if the local authority has exercised its discretion to reduce the rate by 15%, rather than the €213 level. That is the position. I never said we had changed the law in that regard. I said the valuations posted in 2013 could be changed if they had subsequently proved to be excessive.

I did not imply that the Minister had said he would change the legislation. He said the existing system was flexible enough to overcome the anomaly. When he said a homeowner could achieve a substantial reduction in his or her property tax liability, if not have it eliminated completely, the implication was that it could be eliminated completely under the current system. He has clarified the position today because this a self-assessed tax, that a person in these circumstances should declare that the value of his or her home is in the lowest bracket in order that his or her property tax liability will be reduced. While I accept his clarification, I put it to the Minister that he has previously acknowledged that the problem is with the law. I have attempted to change the law by tabling a Bill to amend the existing legislation. I have been in contact with the Bills Office for two months about my Bill. It sent me a letter today to tell me that, as an Opposition Deputy, I could not propose legislative changes that involved an appropriation of revenue. My changes would mean that people who have valueless properties would not have to pay €90. I do not think they should have to pay anything. Under the legislation as constructed, people whose houses have been fixed and do not have pyrite sometimes do not have to pay property charges for up to six years after selling these properties. It is an absolutely ridiculous scenario. Having gone to the trouble of proposing new legislation in this regard, I have been told by the clerk that I cannot change the law. Therefore, I appeal to the Minister at the eleventh hour of his period in this role to consider tabling legislation to make the change I am seeking. It is clear from his responses that legislative change is needed to give justice to families who have already been screwed and do not need to be screwed again.

Perhaps the words I used the last day might have been clearer. I said that when Revenue received a new valuation on a self-assessment basis, it could not eliminate the tax liability completely but that it could reduce it significantly in accordance with the law. An example of a significant reduction would be a change to a €70 or €90 property tax level, depending on whether the local authority in question has used its discretion to reduce the figure by 15%. I have no plans to introduce amending legislation dealing with the local property tax. In the course of every year the Department of Finance and Revenue have oversight of the legislation governing tax collection. If the Deputy were to make a submission to Revenue asking it to re-examine this matter, it might look on it favourably. There is an argument that if a family are in occupation of a house that is their principal primary residence, it has some value. If it is being used as a residence, it does not stand up to reason to say it has no value.

Sale of State Assets

Catherine Murphy

Question:

8. Deputy Catherine Murphy asked the Minister for Finance if he will use the proceeds from the sale of a bank (details supplied) to fund the State's infrastructure deficit and invest in housing and health services, rather than paying down the national debt; if he will publish the cost-benefit analysis of selling the bank; and if he will make a statement on the matter. [23573/17]

Catherine Murphy

Question:

19. Deputy Catherine Murphy asked the Minister for Finance if Dáil Éireann will be allowed to vote before a final decision is made on the future of a State-owned bank (details supplied) given that the bank is 99.9% owned by the State and received €20.8 billion in public funds when it was bailed out; and if he will make a statement on the matter. [23560/17]

Both questions relate to the possible sale of a portion of AIB, something that should not happen in advance of a Dáil vote and the publication of a cost-benefit analysis. However, as a result of a motion passed by the Dáil earlier today preventing the sale of AIB in advance of the renegotiation of the fiscal rules, these questions might be irrelevant at this stage

I propose to take Questions Nos. 8 and 19 together.

As I outlined previously, the sales of financial assets such as bank shares are transactions which do not result in a beneficial impact on the general Government balance under EUROSTAT rules. Such disposals are classified as financial transactions that essentially involve the exchange of one form of asset such as shares, equities and loans for another such as cash. Consequently, the sale of any shareholding in AIB would not count as general Government revenue. Therefore, we would not have increased capacity to spend money on capital projects as a result of the sale of shares in AIB without affecting the general Government balance. While cash proceeds from any sale of shares would not improve the deficit, they would result in a reduced requirement for Exchequer borrowing which would ultimately result in lower debt. A lower debt level would be beneficial for the fiscal sustainability of the State and lead to reduced interest payments in future years.

My strong view is that because public indebtedness increased partly due to the recapitalisation of the banks in which the State has investments, the appropriate way to treat one-off revenue from divesting the State of its banking assets would be to use such proceeds for debt reduction. Such disposals would also help to contain contingent liabilities for the State. This view has been endorsed by a number of outside institutions, including the IMF as part of its most recent Article IV review of Ireland. Furthermore, the Government does not believe the State should own and support banks when the capital markets are capable of providing this function and willing to do so. Equity investments in any sector are risky propositions. The State’s resources are better allocated to more appropriate areas. In addition, reducing the State’s shareholdings will help to foster greater competition in the banking sector. It is difficult to encourage new entrants when the State is seen as owning large elements of the banking sector. The sale of a significant shareholding in AIB is important to convey the message to investors that the State does not want to interfere in the operation of banks or to retain these investments indefinitely.

Question No. 19 relates specifically to the possibility of a Dáil vote. The programme for Government allows for the sale of not more than 25% of any bank before the end of 2018, plus any over-allotment option. As I said previously, I am committed to keeping Members of the House informed on the process and, ultimately, of any decision made in due course. I have not yet made a decision to proceed with a sale of shares in AIB. In order to proceed with an initial public offering, I would need to be satisfied that the market was prepared to put a fair and reasonable value on the bank's equity, bearing in mind its current performance, future prospects and the outlook for the economy. I would do so on the advice of officials in the Department of Finance and our financial advisers. The State's shareholding in AIB is held in the Ireland Strategic Investment Fund's directed portfolio. If I were to decide to take any action on the State's shareholding in AIB, I would write to the fund and direct it accordingly.

I would like to make a further comment that does not relate to banking policy. I have previously acknowledged the need for increased public investment.  The current capital plan sets a baseline from which the Government intends to increase investment in critical infrastructure and in areas such as housing and health services, as the Deputy identified, into the future.

As outlined in the 2017 Estimates, gross voted capital expenditure will increase to €4.5 billion in 2017. This represents an increase of almost €400 million in comparison to the 2016 outturn. By 2021, it is envisaged that gross voted capital expenditure will reach €7.3 billion, an increase of over 100% in comparison to its level in 2014. Based on my Department's gross national product, GNP, forecasts, Ireland's Exchequer public investment will reach 2.7% of GNP by 2021. These increases in investment in the coming years will be allocated to identified priorities on the basis of the outcome of the review of the capital plan under way.

The result of the vote earlier has not changed anything in terms of a reply I received previously on this matter. What I am seeking is a cost-benefit analysis and that the Dáil be the final arbiter in voting on this issue. It was the people who took on board the cost of bailing out the bank which is 99.9% owned by the State. Whether it is to be sold, we need to see a cost-benefit analysis and to be convinced in that respect. As the Minister knows, we can often save money by spending money. We will spend a great deal of money on fines, for example, because we are not investing in public transport. It is costing a good deal of money in having very unsatisfactory arrangements for housing provision because we are dealing with a crisis. We are at the point where AIB is producing a dividend which, I understand, can be spent on, for example, capital projects. If we were to sell a portion of AIB to pay debt, the difference would be negligible in servicing the debt. I do not understand the rationale for doing so.

I will make two points. In terms of the general government debt balance under EUROSTAT rules, selling AIB shares would not make a difference because we hold the asset in shares. When one sells it, one holds it in cash, but it has the same value and it is the same amount. It would not give us the freedom to spend under EUROSTAT rules. Therefore, if we were to spend, we would be in breach of the fiscal rules in general. It is due to the fact that this type of disposal is clarified as a financial transaction, whereas essentially it is the exchange of an asset in one form such as shares, equities and loans for another, namely, cash. Consequently, the shareholding in AIB would not count as general government revenue. When it comes to investing in infrastructure, it is a not a shortage of cash that is inhibiting additional investment in infrastructure but the fact that we have reached the ceiling under the fiscal rules. The issue is our capacity legally to spend additional moneys or capital, not the availability of cash. Therefore, the sale of AIB is irrelevant to the argument. We can borrow money very cheaply on any day of the week from the markets through the National Treasury Management Agency, NTMA, but we are not allowed to spend it if we have already used up the fiscal space available. We are exploring the possibility of funding quite a lot of infrastructure off balance sheet. We are in discussions with the European Investment Bank to see if we can achieve this objective.

That shows how eminently wise the Dáil was today in voting not to sell AIB shares until the fiscal rules were renegotiated. The rules favour the economies of countries where infrastructure is more developed. We will end up incurring fines, for example, owing to missing climate change targets because we do not have the ability to spend money on required projects and that will produce a cost for us into the future. What efforts are being made to renegotiate the fiscal rules to ensure that, as a country that is developing, we will have the capacity to spend to deal with essential issues to ensure sustainable development?

There was a misunderstanding in the vote this morning and the matter is still the subject of discussion with the Ceann Comhairle's office. We will see how it works out. Lest we forget, it was only in 2008 that the country virtually went bankrupt and it did so because too much was being spent against a reducing revenue flow. Whatever mythology one applies to burning bondholders and so on, the facts of the matter are that when the housing and development industry collapsed, every 10,000 houses built carried a value of €1 billion. When the output of houses went from almost 100,000 to 30,000 - the Deputy can do the sums - about €6 billion was taken from our revenue flow and we were no longer able to afford to pay for the running of the country on the basis on which it had been designed. We should not go back there. Day after day we hear people advocate for more spending on every kind of desirable project which might be popular with the electorate, but we have to think of what happened and might happen again.

Help-To-Buy Scheme

Pearse Doherty

Question:

9. Deputy Pearse Doherty asked the Minister for Finance if he will suspend the help-to-buy scheme in view of the large increases in house prices; and if he will make a statement on the matter. [23357/17]

Following the last discussion, it would be helpful if the Minister indicated whether the Government intends to respect the outcome of the vote on the resolution passed in the Dáil not to sell AIB shares. He should do that during Question Time.

My question relates to the help-to-buy scheme, a matter Deputy Michael McGrath has already teased out with the Minister. Our position on it is very clear. It is a bad scheme. The Minister talked about learning lessons from what happened in the past, yet he brought forward an incentive that would only result in an increase in house prices. Everybody and his or her dog warned the Government about this before the incentive was introduced. Many pointed to the fact that we had escalating house prices as a result of the Minister's failed help-to-buy scheme. Will he agree, at a minimum, to suspend the scheme? It made no sense to introduce it in the first place. It is a contributory factor in putting houses beyond people's reach and it could potentially lead to another boom-bust scenario.

I answered a similar question put by Deputy Michael McGrath, but I will read the reply to this one also. As the Deputy will be aware, the help-to-buy incentive was announced as part of Rebuilding Ireland: Action Plan for Housing and Homelessness. The plan contains a significant volume of responses to the current housing crisis, of which the help-to-buy incentive is just one. Therefore, the impact of the incentive on property prices should not be considered in isolation from the impact of other measures contained in the action plan which have been primarily designed to increase supply. My Department continues to monitor developments in the property market, including movements in property prices. In that regard and as I outlined, the Deputy may be aware that I have recently commissioned an independent economic impact assessment of the help-to-buy incentive which will be completed by Indecon Economic Consultants. The report will examine its potential impact on property prices, among other issues, and is due to be presented to me by 31 August.

In my view, it is the lack of supply that is primarily responsible for driving house prices higher. I point out that increases in house prices prevailed long before the introduction of the help-to-buy incentive. I also point out that the scheme is targeted at new build homes only and first-time buyers only and that it would be simplistic to designate the incentive as being the sole or major contributor to house price increases. Furthermore, the incentive has been designed to help first-time buyers to obtain the deposit required to facilitate the purchase of a home. Therefore, it helps first-time buyers to meet the loan-to-value requirements of the Central Bank's macro-prudential rules. However, the loan-to-income requirements of these rules must also be satisfied and the incentive plays no role in relation to that aspect.

Additional information not given on the floor of the House

The help-to-buy legislation, as passed by the Oireachtas in the Finance Act 2016, contains a sunset clause of 31 December 2019. I believe suspending the help-to-buy incentive at this point, as suggested by the Deputy, would be detrimental to those first-time buyers who are availing of or planning to avail of the incentive in order to facilitate the purchase of their first home. Furthermore, I do not believe such a suspension would have any impact in reducing the price increases being experienced in the market. However, I will review the position as part of my deliberations for budget 2018 when the results of the impact assessment are available.

Watching the Government on this issue is like watching a drowning man telling everybody that he is fine as the water comes up around his face. This week we had the International Monetary Fund telling us that, in the light of increasing houses prices, the planned review of the recently introduced help-to-buy scheme which might add to demand pressures was welcome. We have seen other reports which state it is a contributory factor, but we need to look at what is happening. The problem is that all of the arguments put forward by the Government have fallen flat on their face and it has been done again today. The primary reason articulated during the introduction of this measure was it would help people to raise a deposit in the light of Central Bank rules. First-time buyers must have a deposit of 10%, which means a loan-to-value ratio of 90%. Anybody with a loan-to-value ratio less than this had more to put towards a deposit. The released figures indicate that 72% of claims - not applications - were from individuals who had no problem whatsoever in reaching the deposit level. Let us put a figure on it, if it relates to motivation. A sum of €17 million has been paid out, meaning that approximately €13 million has been paid to people who did not have a problem because of Central Bank rules in the first place. Some of the claims came from people who could put 30% upfront in cash. The Minister is putting the country's money into their pockets when they do not need it.

As I stated, I never thought I would see Sinn Féin advocating policies to prevent young people from acquiring their first home. I gave the figure of €22 million to Deputy Michael McGrath today. It defies belief to argue that an injection of €22 million into house purchasing is the factor that is driving up prices when house purchasing is now back as a multi-million euro industry again and there is a very strong flow of mortgages facilitated by the prudential rule changes made by the Central Bank. It is very difficult to accept the argument that this has led to a general rise in house prices when it does not apply to second-hand homes. It is very difficult to believe it gives an injection to house prices when it only applies to first-time buyers. It certainly put a bit of jizz into the market for starter homes, but before it was introduced, there were no starter homes being built and if they were, they were not being purchased. It has been effective, but we will see what Indecon states. Whoever is here at the end of August or early September will make the report available and the Deputy should suspend the propaganda until he sees the evidence. What he is saying does not stand up to economic scrutiny.

The Minister is the master of the propaganda as I put hard facts to him. He has put money into the pockets of the 72% who have made claims under the help-to-buy scheme and they did not have a problem with the Central Bank rules. He states this is one of the primary reasons he introduced the scheme, but he does not want to deal with it - he wants to dismiss it - because he is wrong. He knows that it is flawed as the figures have come from the Revenue Commissioners. He makes the accusation that we are against young couples getting onto the property ladder. Is he off his rocker on this one? House prices are increasing by 10% per year. A house worth €400,000 will increase by €40,000 in the next year unless we do something about it. It is not just about the help-to-buy scheme; there is also the matter of supply and demand. Where there is constrained supply, the last thing one does is throw money at individuals in order that those who are selling houses put up the prices. It is having a knock-on effect within the market. Will the Minister ensure young couples will be able to get back onto the property ladder by stopping this scheme, as it is a contributory factor in the escalating house prices across the State? He has called my comments propaganda, but it is not just Sinn Féin who state this. We have heard similar statements from consultants, economists and even the IMF which is no friend of Sinn Féin. They tell us to be cautious and step carefully on this issue.

Will the Minister confirm that he will respect the vote result on the motion passed earlier today on the sale of shares in AIB?

I have answered that question. There was a misunderstanding in the votes today and the matter is now in dispute. There are discussions taking place with the Ceann Comhairle's office and we will await the outcome. I remind the House that it already committed to and voted on the programme for Government which includes a commitment to sell up to 25% of the shares in AIB. That is the position. Deputy Pearse Doherty will not agree with me and I will not agree with him. Indecon will bring forward a report by the end of August and we will then see what is the position.

Departmental Investigations

Pearse Doherty

Question:

10. Deputy Pearse Doherty asked the Minister for Finance the work his Department has carried out in examining the potential benefits of an all-Ireland economy; and if he will make a statement on the matter. [23356/17]

I ask the Minister about any work the Department of Finance has carried out in examining the potential benefits of an all-Ireland economy and if he will elaborate on the matter. He mentioned, in the context of the earlier question on Brexit, that 27 leaders of member states across Europe had discussed this issue in the context of the negotiating guidelines. What work, if any, is the Department of Finance doing in the context of an all-Ireland economy and preparing for Irish unity which I believe is inevitable? Is the Department considering ensuring some scoping work will be done on an all-Ireland economy?

I assume the Deputy is referring to the economic benefits of a united Ireland. As he will be aware, the principle of consent and the possibility of a change in the constitutional status of Northern Ireland are fundamental parts of the Good Friday Agreement which was endorsed by the people of this island, North and South. The calling of a Border poll under the terms of the Agreement would fall to the Secretary of State for Northern Ireland. The test to be applied is that he or she considers it likely that a majority of those voting would express a wish that Northern Ireland should cease to be part of the United Kingdom and form part of a united Ireland. There is no convincing evidence to suggest a majority of the people of Northern Ireland would opt for a change in its constitutional status. The Taoiseach has been clear in his view that this is not the time for such a process and that the conditions necessary to trigger it do not exist.

Given that there is a very low probability of reunification in the medium term, my Department has not estimated the potential positive, or negative, impacts of an all-Ireland economy and does not have plans to do so. However, given that both jurisdictions are currently part of the Single Market for goods, services, capital and labour, it is likely that many of the benefits of an all-Ireland economy are already in place. In any such study the full range of impacts would have to be considered; in other words, the costs and benefits. By way of example, it would be important to consider the fiscal impacts. As the Deputy will be aware, the state currently accounts for over two thirds of the Northern Irish economy and Northern Ireland currently runs substantial fiscal deficits. There are also material differences in public sector conditions, welfare systems and the overall economic structure of both jurisdictions, all of which would need to be taken into account. The Government is very supportive of North-South economic linkages which are advanced through the North-South Ministerial Council and by Ministers, North and South, collaborating outside that framework on an ongoing basis.

The Government needs to grasp the potential for the all-Ireland economy, which already exists and has grown organically because business people and entrepreneurs have recognised the benefits and value of that economy in growing jobs and businesses while taking advantages on both sides of the Border. They are ensuring they can tap into both markets and we know the significance of that. We have seem much of the good work done by InterTradeIreland in scoping sectors that are ripe for all-Ireland development, including pharmaceuticals, medical devices and software. As per InterTradeIreland's detailed report, these channels are ripe for all-Ireland development and economic integration, and they could clearly facilitate a large increase in expertise capacity and capabilities to the benefit of both North and South.

The Minister mentioned it in the context of the Good Friday Agreement and Irish unity and a Border poll - that is not what we are talking about. I believe it is inevitable and this is a step towards it but the all-Ireland economy can exist even without a change to the constitutional status of the North. What is required is an intergovernmental strategy to ensure the full potential of the all-Ireland economy is maximised, that it is supported and developed, that indigenous businesses are at its core and that we have a successful economy. This is really relevant to the constituency that I represent and that the Leas-Cheann Comhairle represents, where businesses need to be able to work on that basis and we need to harness that.

On an all-Ireland economy, two currencies apply. There is sterling North of the Border and the euro down here. The most salient factor that should be considered is the deficit position, as I mentioned in my reply. For the years 2013 and 2014, the total public sector revenue collected in Northern Ireland is estimated at €14.9 billion. The total public sector expenditure for the same two years was €24.1 billion, so there is a deficit of over €9 billion.

The deficit is €9.2 billion. Anyone advocating an all-Ireland economy would want to tell us where the €9.2 billion will come from if the UK authorities turn off the tap.

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