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Dáil Éireann debate -
Thursday, 30 Nov 2017

Vol. 962 No. 5

Priority Questions

Tracker Mortgage Examination

Michael McGrath

Question:

1. Deputy Michael McGrath asked the Minister for Finance the status of the tracker mortgage scandal; and if he will make a statement on the matter. [51247/17]

Pearse Doherty

Question:

2. Deputy Pearse Doherty asked the Minister for Finance when he will receive the next update from the Central Bank with regards to the tracker mortgage examination; and if he will make a statement on the matter. [51309/17]

Both questions are very similar. They ask the Minister to provide an update on the tracker mortgage scandal, in particular following his meeting with the banks and the subsequent update we got from Bank of Ireland that an additional 6,000 mortgage accounts had been identified as being affected. This is an opportunity for the Minister to give the House an update on the overall picture, whether he has heard anything since from the Central Bank or if it will still be mid-December when he gets a report from it, as he set out in October.

I propose to take Questions Nos. 1 and 2 together.

The Central Bank has advised me that in its most recent update of progress on the tracker mortgage examination, which was published last month, approximately 13,000 impacted accounts were identified as at the end of September through the industry-wide Central Bank examination. Prior to the examination, the Central Bank ensured a further 7,100 cases involving tracker mortgage issues were rectified and remedied.

Given the size and complexity of the task, the system-wide examination is taking time to complete. The Central Bank has advised that lenders are at varying stages of the process and that they are being challenged by the bank where the Central Bank is not satisfied with their reviews or redress and compensation proposals. All relevant lenders have now provided phase two reports to the Central Bank. However, the Central Bank's assurance work is ongoing and it is expected that additional accounts will be identified as this work progresses. As the Deputies will be aware, since last month's Central Bank update, Bank of Ireland has now agreed to include 6,000 additional accounts within the scope of the tracker compensation scheme.

Some lenders have commenced payment of redress and compensation to impacted customers, and the Central Bank expects that all remaining lenders will have implemented their redress and compensation programmes by the end of the year, with the majority of impacted customers receiving their redress and compensation by then. The Central Bank's priority continues to be to ensure that lenders identify all customers affected by their unacceptable failings and that they pay appropriate redress and compensation. The Central Bank will continue to pursue lenders accordingly, in line with the framework of the examination. The timing has not changed. The Central Bank will provide me with a further update report in mid-December on progress in relation to the tracker examination.

This scandal is growing arms and legs. The 13,000 has now become 19,000 when one includes the extra 6,000 from Bank of Ireland. Prior to that examination another 7,100 cases were uncovered. Between those alone, the total is now of the order of 26,000 mortgage accounts affected. Some banks have provided ranges of potential affected customers. The Minister has acknowledged that the number will grow.

The issue I wish to home in on is that of compensation, because it seems to me that there is no consistency across the various institutions. For AIB, it ranges between 15% and 30%. For Bank of Ireland, it seems to be a flat 10% in compensation and redress. For Ulster Bank, it is 12% for non-arrears and 13.5% to 20% for those in arrears. Permanent TSB seems to be in the region of 10%. My view is that the question of compensation should be entirely removed from the banks, and if that cannot be done on a mandatory basis then it should be done on a voluntary basis. There is no consistency. In instances where the harm is broadly the same, the compensation should be broadly the same, but it is not. It can vary by two to three times. That is simply not good enough. That is an issue I would like the Minister to address.

In recent weeks I met the Governor of the Central Bank again on this and other matters. I also met the Financial Services Ombudsman, whose organisation will play a very important role in the aftermath of more citizens receiving compensation and redress from the banks.

As to whether I expect the numbers to grow, the answer is "Yes, I do". That is why I was clear that a crucial piece of work which needs to be done before Christmas is to find out conclusively who has been affected.

As concerned as I am about those who have been affected, I have always been very clear that I want to know whether there are other customers of these banks who may have been affected but who do not know, and also customers who believe they are affected but who are in dispute with the banks in this regard. I expect that matter to be resolved by the middle of December.

Compensation levels are a matter for the Central Bank and the Financial Services Ombudsman. They have been challenging the banks on what has been offered. At the end of what has been a protracted and unacceptable affair within Irish banking, on top of all the other issues we have had to deal with, people have to be treated very fairly and they have to understand why they are treated that way.

With regard to the update, I was hoping we might have some more concrete figures. As we know and as Deputy Michael McGrath has alluded to, since the announcement there have been 6,000 additional victims of the tracker mortgage scandal in Bank of Ireland. There is no certainty, however, and there are no targets for when all 6,000 individuals will be compensated and have redress. People are still not clear on the deadline. They are very unhappy with the deadline set for Ulster Bank, for example. It can be extended for the next seven months.

Also arising are the issues of adequate compensation and people being put back on the adequate rate. The Minister will be aware that the Dáil passed a motion stipulating that the banks publish a weekly update on their position, detailing all customers affected and the number who have had redress and who received compensation. The Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach was to be updated but that has not happened. Will the Minister ask the banks to adhere to the will of this Parliament, which is that the committee be given a weekly update, as we all agreed in a motion passed unanimously a number of weeks ago?

On the Deputy's three questions, by the middle of December we will have to know the total number of people affected by this scandal. It continues to be vital to the Government to establish conclusively the number affected in this extraordinary episode which has caused such distress to so many and to ensure this is accepted by the banks in question.

On the question on Ulster Bank, I am not happy with the timing the bank has provided to me. I have engaged on this matter with the Central Bank, which is overseeing it. It has indicated that it believes the timescale given is the quickest in which Ulster Bank can do what is proposed, but it will continue to push Ulster Bank to try to have the work done sooner because its timing is different from the timings of the other banks in question.

With regard to the weekly update, I was not aware that the information was not being provided. I will follow up on the matter. My view, however, is that the best time to do this work would be after the Central Bank has published its report, which will be in December. At that point, we must know who has been affected and not affected. Until we know, providing weekly updates will not be helpful in getting the right agreement and solutions in place for all who have been affected. I will follow up on the matter, however.

The amount of compensation an affected person gets is as if it were determined in a game of roulette. There is no consistency across the various institutions. I am asking the Minister whether he agrees the power to decide on the level of compensation should be removed entirely from the banks. Currently, there are appeals panels but they are under the umbrella of the institutions concerned. There is absolutely no consistency. I have given the Minister the figures. The rate ranges from a low of 10% or so up to a high of approximately 30%; it depends on which institution one is with. That is simply not on. Where the harm is the same, the compensation should be broadly the same.

On the allowance for professional advice, AIB is paying €615 while Bank of Ireland is paying €250. This is not on. Even now, people are not being treated in a consistent fashion by the banks. I ask the Minister to consider this. The Central Bank does not have statutory powers but I firmly believe that the issue of compensation will become the story eventually when the institution gets to the bottom of who has to be included and ensures they receive the correct rate and redress. The compensation issue is coming down the tracks very quickly. The current structure is just not good enough.

The Deputy has made two points. First, for the purpose of achieving complete clarity, I must state the assessment panels or appeals panels in place are not under the umbrella of the banks in any way. I have seen the names of the individuals on the appeals boards and I am absolutely satisfied they are people of good and independent standing who will not be influenced by the opinions of the banks or me on this matter.

They are set up by the banks.

But the individuals will not be influenced by them. It is very important to be clear on that. If the Deputy has any concerns about this or views on how the arrangement could be strengthened, I will be very happy to hear them and determine how we can achieve what is proposed.

With regard to compensation levels, we have to reach an agreement with the banks, based on the powers available, on who will be affected first and how they will receive redress and compensation. There will be differing levels of compensation for people. The main factor that should influence this should be the individual's circumstances. I expect and want everybody to be treated fairly in this matter.

I should have said in responding to an earlier question by the Deputy that, since this issue developed, I have met a number of people who have been directly affected. The Oireachtas committee had met people; I had not. I felt it was appropriate to do so. I met over recent days a representative group of affected people. I already knew about the level of stress caused for people. That has been confirmed to me again. A reason I met the ombudsman recently was to deal with what will happen in the aftermath of the publication of the report in December.

The issue of compensation has been discussed widely at our committee meetings for many months now. We are in sync here in believing the arrangement is not working. We have heard testimonies showing it is not. I believe this will be dealt with only through the courts unless there is action to set up some type of uniform redress scheme. This is why we have taken forward the class-action legislation.

On a separate matter, I have brought to the attention of the Central Bank that it was a policy of Bank of Ireland, where customers with tracker mortgages sought to restructure loans, to add 1% to the tracker mortgage rate as part of the restructuring. I teased this out with the Minister in parliamentary questions over the past week or so. The answer obtained, through the Central Bank, was that this is not allowed unless it is the only viable option for the customer. The matter would have to be dealt with individually, and each individual would have to deem it the appropriate action. My information, which I have on good authority, is that what I describe was policy and standard practice within the bank. It was absolutely wrong, therefore. The Central Bank was not aware of this. I am following this up with it. I ask the Minister, on behalf of those customers whose mortgages were restructured and who had an additional 1% added to their tracker mortgage rates as a result, to take up this issue now instead of having to deal with it six or nine months down the line when we eventually force action on this matter. Will the Minister bring it up directly with the Central Bank and Bank of Ireland, in which he has a significant shareholding on behalf of the State?

Yes. As I indicated to the Deputy in response to the parliamentary question he put to me, we had to follow up on this matter with the Central Bank. The practice to which the Deputy is referring, on which he has had information made available to him, should not have occurred. It is another example of the appalling way in which this matter developed and has since been handled. If I can play a role in dealing with it, in the aftermath of the Central Bank finally determining who has been affected and who has not, I will do so but I must emphasise to the Deputy that the regulatory body dealing with all of this is the Central Bank and that I have to respect the work it is doing in this area and allow it to do it.

During the engagement that I will have with the banks in the aftermath of the report being published in December, there will be an opportunity for me to bring this matter up. I will do that. However, the body with which I will first bring it up is the Central Bank and I will be supporting its efforts in this area.

Insurance Industry

Michael McGrath

Question:

3. Deputy Michael McGrath asked the Minister for Finance the status of a company (details supplied); his plans to publish the actuarial report on the liquidation of the company; when he expects to receive legal advice from the Attorney General; if he has consulted with the industry on the way in which to deal with the residual claims outstanding following the liquidation; and if he will make a statement on the matter. [51248/17]

This question relates to Setanta Insurance and the fallout from the collapse of that company in April 2014. This matter has developed into a nightmare for many of the policyholders concerned. I have discussed it with the Minister of State, Deputy D'Arcy, on a number of occasions. The current state of play is that many Setanta policyholders are being told, legally, that they are potentially on the line themselves. They are potentially exposed by way of judgments against them, including judgment mortgages against their homes, in respect of any shortfall that might be left at the end of the process. This is a disgraceful situation that really needs to be dealt with forthwith. I hope the Minister of State has an update on the matter.

Setanta Insurance was placed in liquidation by the Malta Financial Services Authority on 30 April 2014. As the company was incorporated in Malta, liquidation is being carried out under Maltese law.

As the Deputy is aware, the Supreme Court delivered its judgment on 25 May 2017 and overturned the previous decisions of the High Court and the Court of Appeal that the Motor Insurers Bureau of Ireland, MIBI, was liable in respect of third-party motor insurance claims made against the policyholders of Setanta Insurance. The consequence of this is that the insurance compensation fund, ICF, has been deemed responsible for the payment of such third-party claims. As a result, the industry has no liability for the residual claims outstanding following the liquidation.

Regarding the actuarial report on the liquidation of Setanta, the Deputy should note that it was the liquidator who commissioned actuarial consultants, Willis Towers Watson, to carry out an analysis of Setanta Insurance's claims reserves as at 30 June 2017. The liquidator sought this report for the purposes of internal management reporting and to assist in determining the potential shortfall in assets available to cover the remaining liabilities as part of the liquidation process. The contents of the report are commercially sensitive in nature and were provided to me solely for the purposes of assessing the likely shortfall in the amount due to Setanta third-party claimants. Consequently, I am not in a position to publish the report.

Finally, as indicated previously, there is a legal concern that any Government intervention to fully compensate third-party claimants and then step into the shoes of these claimants to recover directly any balance due from the Setanta liquidation could result in the Government having a lower status in the creditor hierarchy and, thus, significantly reduce the amount it could recoup from the liquidator. In this respect, my Department has just received legal advice from a Maltese law firm on this matter. Officials are considering this advice and may need to consult the Office of the Attorney General before the Government can decide what to do about this issue.

I thank the Minister of State for his reply. We have a situation here where Irish motorists took out valid insurance policies from a firm that was regulated here, albeit only for conduct of business purposes. The firm went bust and, three and a half years later, many of these policyholders are faced with the very real threat that they will be held personally liable for any shortfall in the context of outstanding claims. That is just not good enough. It is a stain on the industry and the Government must deal with the matter. The figures involved are relatively modest. The overall claims reserve was €112.9 million. We know that the ICF will deal with 65% of that. The liquidator is now saying that there will be approximately 22% left, which leaves a shortfall in the region of €14 million to €15 million. Has the Minister of State sat down with the industry to discuss this issue and to explore potential solutions? When can the Minister of State commit to coming back to the House with regard to the legal advice the Government has received from the Maltese firm and having consulted the Attorney General? These people are in a very bad way. They are getting legal letters, three and a half years on, telling them that they could be personally liable. It is a disgrace and the Government must deal with it.

The legal letter from the Maltese law firm only arrived in the past few weeks and I have not yet received advice from the Attorney General on it. I have asked the officials in the Department of Finance who are in charge of this section to progress the matter as quickly as possible in terms of getting a legal opinion from the Attorney General. At that stage, I intend to sit down with the insurance industry. I cannot do so until we analyse the aforementioned letter. We will then make a determination as to what is the next step for the Department and, potentially, for the industry.

The Deputy's figures are broadly correct. We think that the shortfall will be somewhere between €15 million and €20 million. We do not know for sure because it will depend on the conclusion of the actuarial process. I am not insensitive to those individuals who are caught on the wrong side of this. As I said to the Deputy previously, while I cannot commit to any particular course of action, I am keeping every course of action open and available. I would like to have this matter concluded. I agree with the Deputy that it is a stain on the industry in terms of how people have been affected. I would certainly like to have the matter off the agenda sooner rather than later.

I ask the Minister of State to clarify when the next tranche of payments from the ICF can be made. I know, for example, that approximately one third of the outstanding claims have had the first payment made, which is up to 65% or €825,000 but my understanding is that such payments can only be made every six months. I ask the Minister to clarify when the next bundle of payments will be made. If they are ready, is it a legislative barrier that is preventing that from happening more quickly? If so, I am sure there would be agreement in this House to deal with that issue so that at least the payments can start to be made, even if only up to the 65% cap. That is one very practical, short-term step that the Minister of State could take to alleviate the burden somewhat. We must find a way of giving comfort to the policyholders who are faced with the frightening prospect, three and a half years on, of being personally liable. I think the Minister of State agrees that it is not good enough. We need to find a solution and time is important. This has been dragging on for a very long period. People need to be reassured that they are not going to be held liable and end up out of pocket themselves.

I am told that the next round of payments, up to 65%, will be in February. I will check if there is a legislative gap and if that is the case, I will come back to the Deputy on that. If it is a legislative issue, it will probably be difficult enough to resolve because as the Deputy knows, the insurance Bill is awaiting pre-legislative scrutiny. If it is not a legislative gap but something that could be done, I will consider it. If the term is every six months, we may be able to reduce it to every three months. However, I cannot commit to that until I determine whether it can be done. If it can be done, I will certainly try to do it.

Stamp Duty

Mattie McGrath

Question:

4. Deputy Mattie McGrath asked the Minister for Finance the cost-benefit analysis performed prior to the budget 2018 changes to agricultural stamp duty. [51409/17]

As the Minister knows, I had a lot of engagement with him on the Finance Bill. I tabled several amendments to the Bill and debated them with the Minister on the floor of the House. My question simply asks what cost-benefit analysis, if any, was carried out by the Department of Finance before the introduction of changes to stamp duty relating to agricultural land. Stamp duty is a dangerous tax upon which to predicate any budget because it can change drastically from one year to the next, depending on outturns, sales and so forth. As the Minister knows, there is not a lot happening in rural Ireland. We need stimulation rather than measures that will curtail activity.

Just before I answer Deputy Mattie McGrath's question, there are school pupils in the Gallery who are waving, making the thumbs up sign and dabbing down to all of us here. While we cannot wave back, I hope they are having a good visit.

I certainly hope the Minister is not going to dab back.

I will neither wave nor dab back but I hope they have a good visit and that one of them will be down here at some point in the future.

In my Budget Statement I announced an increase in the stamp duty rate for all non-residential property transactions, including agricultural land, from 2% to 6%. An economic rationale for this stamp duty increase was published on budget day. On the recommendation of the Minister for Agriculture, Food and the Marine, I also announced an extension of consanguinity relief for a further three years and that the stamp duty rate applying under the scheme would be fixed at 1%. Consanguinity relief is availed of in transferring farms to younger family members. It encourages the early transfer of farms to younger generations and is mostly relevant where the transferee does not qualify for an alternative relief such as the young trained farmer stamp duty exemption.

Following my Budget Statement I received correspondence from farming interests on a number of issues, including stamp duty. Following further discussions with the Minister for Agriculture, Food and the Marine I decided that, in addition to extending the period of the relief and fixing the associated stamp duty rate at 1%, the age rule for consanguinity relief would be removed. This means that it will be possible for all gifts and sales of farmlands to closely related family members who do not qualify for the 100% exemption available under the young trained farmer scheme to benefit from consanguinity relief at a stamp duty rate of 1%.

The question of an age limit will be revisited when the measure comes up for review towards the end of 2020. The young trained farmer relief will not be affected by the stamp duty rate change, as it provides for a full stamp duty exemption where the qualifying criteria are met.

I have also responded to representations from the Deputy and other Deputies and reintroduced a scheme that allows a farmer to claim relief from stamp duty where he or she sells and purchases land for the purposes of consolidating an existing farm holding. I have introduced these various reliefs in the expectation that they will be of benefit to the agriculture sector and in recognition of the importance of agriculture and the wider rural economy generally.

I appreciate the move the Minister made after the budget Statement, having been contacted by many Deputies and farming organisations. Deputy Michael Fitzmaurice and I tabled amendments on budget night, but they were voted down. The Minister has moved on the consanguinity relief clause and removed the age limit, but uncertainty was caused. He has not clarified the position where land deals are still being finalised. That remains a matter of concern. In the light of the announcement made yesterday by Commissioner Hogan, the Mercosur deal and so on, this is a volatile time for farming. This measure was unsettling and ill thought out. While there might be cranes and a boom in Dublin, there is no boom in agriculture, given the prices of all products - milk, grain, beef, poultry and pigs. In the context of Brexit, it was an ill-judged decision. As I said on the night of the budget, it is not a good idea to bank budget promises on stamp duty. We saw what happened when things went crazy during the boom before the tap was turned off following the bust. It is not reliable and, therefore, a concern.

The revenue property-related transaction taxes are generating for the Exchequer will be approximately 3% of the total tax take for next year, which is well below where it was in the period leading up to the crash. Regarding developments in terms of non-housing building and construction, my Department forecasts that this sector accounts for 8% of national income which would rise to 10% in the absence of a measure such as this. The long-term average figure is 7%. I put this measure in place with the aim of shifting some of the human capital and economic activity involved in the delivery of commercial property to the delivery of homes. That is one of my main reasons for introducing the measure. As I have told the Deputy a number of times, the rate of 2% compares to a figure of 6% in recent years and 9% for many years before that. The rate was too low and needed to be increased.

There has been a trebling of the rate from 2% to 6%. The Minister has stated only 3% of total revenue accrues from stamp duty, but it is false recovery. There is only a recovery in Dublin which I am glad that he has said is in the commercial building sector, not house building. The Government cannot build houses. It has completely lost its way in that regard. The Minister needs to climb a crane to look around to see what to do about the housing crisis. This measure was ill-judged and ill-timed. The Minister for Agriculture, Food and the Marine was unclear on what was happening on the night of the budget and the day after. As a result, he gave misleading information because he did not know. It has sent the wrong signal to farmers, particularly young farmers, who are trying to consolidate. Because of Brexit farmers must consolidate, having regard to how they are being treated by the banks, prices and the World Trade Organization talks. They cannot be static. I tabled an amendment on taxing vulture funds that were buying up land. The Minister did not accept it, but it would have generated significant revenue. He missed that opportunity and instead penalised ordinary farmers.

I have introduced measures to deal with the issue of consolidation. We made a further change to the Finance Bill to deal with the specific issue so as to ensure the incentives to allow farmers to consolidate their farm holdings would remain in place. I introduced a stamp duty rate of 1%-----

-----which is consistent with what we have done in the case of consanguinity relief.

Since the Budget Statement.

On the recovery in the commercial property market, commercial property values have risen by 75% since 2013.

These are national figures.

The Minister to continue, without interruption.

Values are up by 75%. If we do not use opportunities such as this to reset tax rates after that level of growth, we will be back on the path to having a narrow tax base that will not help to sustain the public services. It is the right measure. I faced a challenge. If I had redefined the definition of non-residential commercial property in the Finance Bill to remove a particular category of property in order that it would not be subject to a higher rate, everyone covered by the definition would then have expected me to do the same for them, but I cannot do that. It is the definition that has been in the tax code for a long period. Changing it for one would create an expectation that I would change it for everyone.

Local Authority Funding

Catherine Murphy

Question:

5. Deputy Catherine Murphy asked the Minister for Finance if the cross-departmental group has considered the overall funding available to local authorities in the context of the review of local property tax; if it is planned to deviate from the baselines set for each council; and if he will make a statement on the matter. [45570/17]

This question relates to the cross-departmental group that is considering local property tax and the revaluation expected to occur in 2019. Will the baseline figures for local authorities form part of its consideration? The baseline figures were set according to an analysis conducted in 2001, but they would have since been affected by the dramatic population changes.

The Department of Finance engaged Dr. Don Thornhill in 2015 to conduct a review to consider and make recommendations on the operation of local property tax, LPT, in particular any impact on LPT liabilities owing to property price developments. Dr. Thornhill made a number of recommendations in his report. His central recommendation was for a revised system whereby a minimum level of LPT revenues in each local authority area would be determined by the Government, ideally having regard to the apportionment between local authority areas of the historical yield. This, in turn, would allow for the estimation of LPT rates for each local authority area and their application by taxpayers and Revenue. Local authorities could adjust the rate upwards by a factor of up to 15%.

The new system was recommended by Dr. Thornhill, with a possible interim deferral of the next valuation date until November 2018 or November 2019. The previous Minister for Finance subsequently proposed to the Government that the revaluation date for local property tax be postponed from 2016 to 2019. This postponement meant that home owners were not faced with significant increases in their local property tax in 2017 as a result of increased property values. The postponement also gives sufficient time for the other recommendations made in Dr. Thornhill's report to be considered fully by the Government.

The Finance (Local Property Tax) (Amendment) Act 2015 gave effect to the postponement of the revaluation date of residential property for LPT purposes and also to two of the recommendations in Dr. Thornhill's report, involving LPT relief for properties affected by pyrite and for those occupied by persons with disabilities.

I have consistently stated that my Department will consider issues relating to the implementation of other recommendations in the Thornhill report in line with the 2019 timeline. The Government will make its position clear so that households will know well in advance what are its plans for LPT. In that regard, it is very important that the principle that formed a central part of the terms of reference for the 2015 review of LPT, that is, achieving relative stability in LPT payments of liable persons over both the short and long term, will inform our consideration of the matter.

My Department will consider work on this matter in the new year in conjunction with the Departments of Public Expenditure and Reform and Housing, Planning and Local Government and the Revenue Commissioners.

The Minister is indicating that the baselines will not be considered. The problem is that he is discussing historical information. The baselines were based on a needs and resources model that was developed in 2001 and that has been tweaked since then. Places exist now that did not exist then. How can the needs of such places have been taken into account? I appreciate the point on the amount that is retained and I have done quite an amount of work in seeking to understand the issue and the process behind the amount that goes into the equalisation fund. As regards the self-funding element, in 2016, for example, there was €108 million involved in self-funding, €85 million of which came from Dublin. That amount will increase because the Minister has not changed the baseline rates and is not counting new needs due to population changes. Why do we have a census of the population? Why do we advertise that a census is to be carried out because we want to decide where services are needed and yet the Minister does not factor that into the methodology of deciding where resources are allocated? There is no doubt that there are new needs in places with increased populations. There must be a way of building that into the system or there is a fundamental unfairness therein. If people feel a tax is unfair, they are more likely to destabilise it. There is an inherent unfairness in the LPT. Will the Minister address it?

We will consider the baseline issue in the context of the review that will start in the new year but we have made no decisions in respect of how the tax will be structured beyond the dates I have indicated. We will put the group in place to make recommendations to me and I will decide on what to do well in advance of the decision point for 2019. My objective is to ensure stability in regard to the LPT such that people know what their future liabilities will be and that organisations such as local authorities that are dependent on the LPT and the payments that come from it via the equalisation fund will know where they stand. It is worth acknowledging that, to date, seven local authorities have voted to increase LPT and four have sought to reduce it. The current broad trend is that more local authorities are deciding to increase the tax than seeking to cut it. That reflects the fact that the demand for increased services to which the Deputy refers manifests itself at local authority level.

The baseline in Wicklow, which has a population of 142,000, is €8.5 million. In Mayo, the population of which is 12,000 fewer, it is €19 million. In terms of overall spend, Mayo had approximately €130 million compared to €98 million or €99 million for Wicklow, yet the latter is a net contributor. If one pairs counties such as Wexford and Kerry or Tipperary and the part of Galway outside the city and if one looks at growing areas, one sees the same trend. The baseline ends up being a substitute for funding that would otherwise come from the Exchequer for services such as housing, transport and so on. Local authorities are unable to provide for increased needs because of that baseline. It is a fundamental flaw in the system. I will send a submission on the issue to the Minister and I hope it will be taken into account in the context of the review.

It is not a fundamental flaw in the structure. The structure is as it is because it has a historical link. When the fund was being organised and the structure for the LPT was being put in place, the Department looked back at funding that was previously received by local authorities, through the local government fund, by means of a general purpose grant. I then considered the level of pension-related deductions retained by local authorities. The LPT allocation now takes the place of the two previous sources of funding. As I said, issues regarding baseline, current and future liability and so on will be considered in the work that will be done in the first half of next year. If the Deputy wishes to make a submission on the matter, I would be very happy to receive and consider it.

I anticipate, given the views of the Social Democrats on the need to prioritise service improvements over tax cuts, that the Deputy will support the continued role of the LPT as a way of collecting revenue to fund public services in the future. It seems the Deputy is open to it playing a larger role in the future and that is part of the debate we need to have in this regard.

The next question is in the name of Deputy Alan Kelly but he is not present. We will move on to-----

I made an arrangement with the office of the Ceann Comhairle to take the question on behalf of Deputy Kelly.

Was the permission of the Ceann Comhairle given?

I will take the Deputy at her word.

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