Other Questions

EU Budget Contribution

Thomas P. Broughan

Question:

66. Deputy Thomas P. Broughan asked the Minister for Finance the projected level of expenditure on Ireland's EU contribution in 2019 and 2020; the projections for this expenditure post-Brexit and during the next multi-annual financial framework, MFF, to 2027; and if he will make a statement on the matter. [21622/18]

Ireland has been a net contributor to the EU budget since 2014. It is one of nine of the current 28 member states that are now net contributors. Ireland's contribution for this year will be €2.7 billion. How does the Minister envisage this sum rising in the context of our contribution in 2019 and 2020? It is a very large contribution. It is approximately twice the annual budget for the Garda Síochána. How would a no-deal Brexit and the proposal relating to the MFF impact on this?

The European Commission’s proposal for the MFF for the period 2021 to 2027 was published on 2 May 2018. I welcome the publication of the proposal, which marks the start of an important debate on the future of the EU budget. The proposals come at a time of great change and adjustment for the EU with new priorities and the departure of UK from the EU.

With Ireland’s growing prosperity we have moved from being a net beneficiary to a net contributor to the EU budget. As such, it is important that the next MFF will be an appropriately sized spending plan for the EU 27 in a post-Brexit era, and that it will be capable of meeting the priorities of the European Union.

Negotiations on those priorities and how they should be funded will be complex. The Deputy asked how Brexit will impact on all of this. It will do so in two different ways. First, the level of contribution currently made by the UK will obviously not continue into the future. The UK will honour some of the commitments it has but clearly it will not be contributing to future European Union budgets. The second effect is that it does not reduce the demand for expenditure from the European Union budget in other member states. The level of demand is there for the same or higher levels of expenditure and one of the key contributors to this budget will no longer be involved in the negotiation.

In the context of Ireland’s contributions under the next MFF, the European Commission’s post-2020 proposal would lead to an increase in this country's contributions to the EU budget. As the Deputy will be aware, the Taoiseach has already said that Ireland is open to contributing more. Clearly, we need to ensure that Ireland’s core priorities are protected. It is difficult to be definitive on the level of projected contributions because the negotiations have yet to commence.

I thank the Minister for his reply. What is his view of the Commission's MFF proposal? Does he agree with the proposed increase to 1.11% of GNI? Would he prefer the figure to be higher or lower? What is Ireland's position on this proposal? The Minister referred to the Taoiseach as saying that Ireland, as one of the nine net contributors to the European Union, will be prepared to pay more. What kind of territory are we talking about in this regard? The Minister's former colleague European Commissioner for Agriculture and Rural Development, Mr. Phil Hogan, said he wanted the figure to be 1.2% or 1.3% of GNI. Is that in the same territory as what the Minister envisages?

Has the Department made contingency plans regarding the additional funding Ireland will have to find for the EU?

I know Mr. Brian Hayes, MEP, puts a figure of an additional €200 million on the net impact of Britain leaving but continuing to pay, perhaps, for passporting rights, the open skies policy and so on. Is serious work being done by the Department in this area, given this €3 billion a year or more will have a huge impact on future budgets?

A huge amount of work is being done in this regard. On the Deputy's question on my view of what the future level of contribution should be, if I was to say that here today, I would probably be the first Minister involved in these negotiations to outline a figure in regard to our potential contribution in the future. We are at the very early stage of these negotiations. At this point in time, it is sufficient for Ireland to say very clearly that we believe that more should be paid if our core priorities can be protected. There are many other member states which have not even gone that far. In terms of whether we know what the future level of contribution will be once the UK leaves, at this point it is difficult to put a definitive figure on it because there are still so many open areas in regard to the negotiation between the UK and the EU.

Does the Minister think the figure is in the kind of territory referred to by his colleague in the European Parliament, Mr. Brian Hayes, or could it be much more significant? Obviously, as we go on post-2020 and begin to deal this new multiannual financial framework, there will be a huge and growing impact on our budgets and we also have concerns that there will be gaps in the Common Agricultural Policy. Is there any indication of the size of the net financial gap that will be left due to the UK leaving? This is something that has to be on the Department's horizon. It must also be seen in the context of the vision for Europe of President Macron, who was a very happy spectator at the football last night, given that his vision will have a huge impact on our future contributions.

To respond to the middle part of the Deputy's question, it is precisely because it refers to concerns we have about the funding of CAP, and the desire we have to protect, for example, funding of ERASMUS and research and development, that I am being careful in regard to putting a figure on a future Irish contribution. We are not engaged in a dialogue in this regard; this is a negotiation, as the Deputy understands. If I say here today what I believe the level of Irish contribution will be in the future, before we have secured agreement in regard to the protection of funding programmes that are important to Ireland, it will undermine our ability to secure our national interest in these negotiations. Our contribution will go up. The degree to which it will go up will depend upon our ability to secure areas that are important to Ireland.

In regard to some of the proposals of President Macron on the future of the EU budget, as the Deputy knows, there are some areas we are concerned about and would not be in a position to support, for example, in regard to the implementation of CCCTB across Ireland, but there are other areas on which we will be engaging with the European Commission to come up with a new budget because we will need one, and a more modern one than we have now.

Corporation Tax Regime

Richard Boyd Barrett

Question:

67. Deputy Richard Boyd Barrett asked the Minister for Finance the work he is undertaking to review the system of corporate tax relief and expenditure in preparation for budget 2019; and if he will make a statement on the matter. [31031/18]

As I have made clear repeatedly since I was elected to this House in 2011, I think the system of corporate tax reliefs and allowances are the dirty secret of the Irish tax code in that they bestow enormous tax breaks and big tax loopholes to the benefit of a small number of corporations. Whether it is research and development tax credits, knowledge development boxes, losses forward or intangible assets, and I have raised issues about the section 481 film relief, I can go through the list of loopholes that benefit the big multinationals. Will the Minister undertake a serious, forensic and open review of these in the context of the upcoming budget, when we could seriously do with some extra money for housing, health, infrastructure and a whole range of other pressing social needs?

We have already done that. As the Deputy will be aware, a review of the Irish corporate tax system was undertaken by Mr. Seamus Coffey, an independent expert, and was published in 2017. It was open, the public were able to make submissions to it, as were stakeholders, and the report was made public and published on the Department of Finance website. The terms of reference for that review included some of the issues touched on by the Deputy, such as tax transparency, avoiding preferential treatment, further implementing our international commitments, delivering tax certainty, maintaining competitiveness and maintaining the 12.5% corporation tax rate.

As part of an ongoing process of corporation tax reform, the review was followed by a public consultation on the review's recommendations and on the implementation of the anti-tax avoidance directive, ATAD. Implementation of the measures agreed at EU level under ATAD include the introduction of controlled foreign corporation rules, anti-hybrid rules, a new interest limitation ratio, the revision of exit tax provisions and a review of the general anti-abuse rule. This is a very significant undertaking which will substantially transform the corporate tax system over the coming years.

In regard to tax reliefs, we have a small number of specifically targeted tax reliefs. The focus of these reliefs is on the creation of additional employment, as is consistent with current Government policy, and on innovation, with a view to generating high value-added economic activity and further jobs in our country.

For the Minister to describe it as a small number of targeted allowances is incredible. The latest available figures for corporate tax, which are always a few years behind, which is itself a problem, are for 2015. They show €144 billion in gross profits and tax paid of €6.2 billion, which is less than 5%, not 12.5%. Let us look at one example, the research and development tax credit. In 2015 the research and development tax credit was €708 million. Does the Minister know who actually pays for that? He has to look no further than the report about Irish universities tumbling further down the international rankings and professors from those universities saying the reason Irish universities are falling down the rankings is because the staff to student ratio is going through the roof. Money that should be going into Irish universities for teachers, lecturers and students is going to a small number of multinational corporations which are avoiding tax. If we have money for research and development, instead of it going to super-wealthy, profitable and tax-avoiding multinationals, should it not go into our universities?

We are already investing in our universities. Project Ireland 2040, the plan published by the Government earlier in the year, includes the plan for increasing capital investment in our universities and institutes of technology for the next decade. Has the Deputy seen what is happening at the DIT campus at Grangegorman? That is public capital investment. Has he seen the decision recently by Trinity College in regard to providing an additional 1,000 spaces for students to study engineering and science? That is the result of investment that has been made both philanthropically and by the Higher Education Authority through the Department of Education and Skills and the Government. Has he seen the investment and loans from the European Investment Bank to all of the universities across our country in order to lead to further expansion and development?

That is investment. The Deputy cannot make the case that we are not increasing investment in higher and further education. For example, in the last budget we increased the employer's rate of PRSI by 0.1% to set up a national training fund that, in turn, is invested into higher and further education. This is the kind of investment he is calling for.

The facts speak for themselves. Irish universities have tumbled further down the international rankings. Why? As the professors of those universities explain, our teacher to student ratio in the universities is now rising to 1:20 as against 1:10 in China, for example.

A few buildings might be built but teachers must be employed and registration fees that are blocking people from going into third level must be removed. That requires more money going in but instead, €708 million in tax loopholes is given to a small number of multinational corporations. The incredible €20 billion in losses brought forward whereby banks pay no tax and the intangible assets where the big multinational corporations essentially siphon off profits into offshore tax havens facilitated by this country can be added to that list. It is absolutely shocking. Why does the Government not have a minimum effective corporate tax rate where these corporations pay the 12.5% that would release billions to put into our universities, housing, water infrastructure and so many other things that need real investment?

On the related issue of corporate tax receipts, it is the stand-out performer again in our Exchequer receipts and is up 15% year on year, which is 9% above the target. There is a lot of volatility in corporate tax receipts. Thankfully, it is all on the favourable side at the moment. It is good that we are collecting this money but is the Minister satisfied that the Revenue and the Department have a good handle on their capacity to predict the level of receipts we will get?

Yes I am. We understand the reasons why there has been a further change in corporate tax receipts for this year and we are increasingly clear on what our likely end point will be for 2018. We need to take care, however, in assuming that will continue into 2019, 2020 and beyond. We have seen very significant shifts in corporate tax receipts over the past number of years and I will not be basing budgetary plans for 2019 or beyond on the assumption that we will see further large increases like we have seen in the past. We need to be careful about planning for that in the future.

On Deputy Boyd Barrett's question, the reason why I will not bring in a minimum effective tax rate is because in my judgment, that would be harmful for jobs and investment in Ireland. If I was to bring that in and we were to lose any jobs as a result of it, there would be plenty of Deputies in this House calling for me to go and Deputy Boyd Barrett would probably come in here and point to this as an example of the collapse in global capitalism that he predicted was going to happen. As I said to Deputy Paul Murphy earlier on, there are 88,000 people employed in Dublin alone as a result of international investment. I am committed to addressing issues of international concern but it is not just a prerogative of large countries to be competitive. It is open to us to pursue our policies in that area too.

Employment Investment Incentive Scheme

Peter Burke

Question:

68. Deputy Peter Burke asked the Minister for Finance if he will address the delay in the approval of the employment and investment incentive scheme in view of the fact that it is hampering investment in the business sector; and if he will make a statement on the matter. [30766/18]

This is to ask the Minister for Finance to address the delay in the approval of the employment and investment incentive, EII, funding. This is critical for the small business sector. I know that state aid rules have been an issue and the Minister has conducted a review in the Department. I am interested to hear his views on it.

The employment and investment incentive, provided for in Part 16 of the Taxes Consolidation Act 1997, is an incentive whereby individuals who invest in certain companies obtain income tax relief on the amount invested. A number of conditions must be complied with. First, relief can only he granted to investors after ordinary shares have issued. Second, companies in which the investment can be made are those which carry on certain trading activities, are unquoted or have a balance sheet total of up to €43 million. Relief is only available where all of a company’s share capital is fully paid up from the date the shares were issued. There are additional rules which depend upon the age of the company. Companies which are less than seven years old and are raising EII for the first time have fewer requirements to meet than older companies or companies raising EII for a second or subsequent time.

Revenue has informed me that the increased complexity of the scheme, arising from changes in the Finance Acts of 2015 and 2017 to comply with state aid requirements means that each application takes longer to process than in previous years. The increased complexity also results in a large number of incomplete applications being made, which in turn increases the volume of correspondence dealt with by the processing team. In addition, there was an increase in the number of companies applying for relief.

During the passing of the Finance Act 2017, I announced a review of EII and the start-up relief for entrepreneurs scheme, to be completed in advance of this year's finance Bill. Among the matters to be addressed in the review is whether the incentives, as currently designed, provide a platform for the effective operation of the reliefs. The review is under way and the public consultation is now complete. I expect that proposals to address any shortcomings in the operation of the scheme will form part of the final analysis.

I welcome the response from the Minister. The delay in this funding getting approval is significant because when a small business is trying to raise finance, it needs certainty for those who might put money into the scheme. I am aware of one example in south Longford, which has the capacity to employ 30 people, Everyone's tax return is due at the end of October. People have to plan in terms of the cashflow required to discharge the tax liabilities. If they are considering investing in such schemes, they also need certainty to ensure the scheme is approved by Revenue. This is one of the points on which there are significant delays and many tax practitioners have raised the issue that there is a huge delay in getting approval for schemes. Small business is the lifeblood of our local economies. If investors cannot get approval for a significant scheme like this, it will be hampered. When we announce these schemes in the budget it is very important that they can be implemented and that investors can get relief in a timely manner.

I accept the Deputy's points. My objective is to have all of that work complete well in advance of the budget and to look at any points that need to be considered. As I am sure the Deputy is aware, we have made a number of changes at an operational level to deal with issues that have been raised on the operation of the scheme. We have brought in a new form because the original form was too brief. It led to follow-up queries that in turn delayed the overall process. We have now brought in a screening process at the start of the process to better deal with any issues upfront and to allow in turn for a quicker resolution of the entire process. We have brought in a new system to track the age of each case within the system to be better aware of any delays that could be developing and we have now brought in specific phone lines to deal with issues in this service. They have been open now since 14 March. It is my objective that we would have work done in advance of the finance Bill later on this year.

I welcome the response from the Minister and the updating of the new format. It is important that it is simple to apply for it. Obviously rules must be strict in terms of the qualifying criteria but when a firm can avail of this relief and when a taxpayer can put money in and avail of the scheme, it is a vital tool for business because the taxpayer gets relief and there is a chance to grow jobs, growth and investment in a local area. I have seen this being used to brilliant effect working as a tax practitioner for over a decade. I have seen how advantageous it has been for people to invest in the old business expansion scheme, BES. There is risk in all of these things but it is important that when there is a chance to grow the economy in ways that are cost effective for the taxpayer, that those opportunities are grasped.

I concur with what Deputy Burke has said. It is an issue I have raised in parliamentary questions and directly with the Revenue Chairman and the consistent feedback from the business community is that there are operational problems and the turnaround times with Revenue have lengthened. The changes made in the Finance Act last year seemed to have an impact, in that it became more complicated and confusing. As I look at the statistics as of the end of March, there were 180 open applications. In some cases the delay is obviously on the side of the applicant rather than the Revenue but the consistent feedback has been about operational problems and turnaround times with Revenue. I hope that aspect of it will form part of the outcome of the review.

I take the points made by the Deputies. I outlined the changes that have been made to the scheme since March in terms of the new form, the screening, the new telephone line and also the introduction of a case tracking process. We will have the work completed on the review of the scheme in advance of the finance Bill and I will take on board the concerns of the Deputies as I do that work.

Insurance Costs

Michael McGrath

Question:

69. Deputy Michael McGrath asked the Minister for Finance if he is satisfied with the steps being taken to address problems in the insurance market being experienced by consumers; and if he will make a statement on the matter. [30927/18]

This is a question relating to the problems in the insurance industry from a consumer perspective. Is the Minister of State satisfied with the progress that is being made by the cost of insurance working group, the recommendations and the phase 2 report on employer and public liability? I will come back on a few specific issues. I want to get the view of the Minister of State who is in charge as to whether he is satisfied with progress so far.

The cost of insurance working group was established in July 2016 as a result primarily of the rising cost of premiums in the motor insurance market. It was clear from the working group's extensive consultations that there was immense frustration and anger with the scale of price increases in recent years and the lack of understanding as to why that was happening. A similar view was expressed in the joint Oireachtas committee report. Consequently, transparency has been one of the key themes of both the motor and employer and public liability reports.

In this context an important step forward is the approval last week by the Government to publish the Central Bank (National Claims Information Database) Bill 2018. This Bill, when enacted, will enable the Central Bank to publish an annual report using data gathered from the insurance industry to increase transparency on the relationship between insurance premiums and related costs, identifying the factors that drive movements in the price of insurance in the State, the number of claims, as well as providing statistical analyses of the costs associated with settling claims, and importantly understanding the settlement channels used.

It is important to consider the Government's progress in addressing the problems in the insurance market in the context of the views expressed by both the Oireachtas joint committee and cost of insurance working group reports that there is no single policy or a legislative silver bullet to immediately stem or reverse premium levels. Therefore, when seen in this context, the step-by-step implementation of the bulk of the motor insurance report recommendations on schedule has been an important factor in creating the environment within which the average price of motor insurance premiums have been consistently falling since mid-2016, with the most recent CSO data for May 2018 indicating that private motor insurance premiums have decreased by 19% since peaking in July 2016.

However, I am conscious that there is still much work to be done and the cost of insurance working group project must continue to be a priority for Government and the relevant Departments must continue prioritising the implementation of the recommendations of the reports on the cost of motor insurance and employer and public liability insurance, and of the Personal Injuries Commission under Mr. Justice Nicholas Kearns.

I encourage the Minister of State to drive through the reforms that are necessary in the interests of the industry and of consumers. When he introduced the Insurance (Amendment) Bill 2018 last night, there was strong support across the House for the Bill. Equally, I have no doubt there will be strong support if he is to tackle in a meaningful way the key issues affecting consumers in the insurance sector.

One of the most depressing replies I got was about the CSO collecting data on the cost of business insurance, employer liability and public liability. It seems to be as far away as ever. At least we can measure the impact on premiums for motor insurance policies but we are operating blind when it comes to the cost of insurance for businesses, local community groups, voluntary bodies and sporting clubs. We are relying on their feedback, which is not positive. In a moment I will refer to other more specific issues. Could the Minister of State deal with that issue and try to get data on the cost of insurance in the non-motor area because there is a vacuum currently and it makes policymaking all the harder when we do not have access to basic information?

What surprised me most of all last night was the fact that although we got into a pretty general conversation, nobody discussed awards. The reason insurance is high in this jurisdiction is because of the level of awards. The Department of Finance has conducted a report in which we cross-referenced Irish awards with similar awards in the UK. The indications are that an Irish award is between three and five and a half times more than a similar award in the UK. We are out of kilter with most other jurisdictions. We must get a handle on that and get the settlement channels to remain within the book of quantum, leaving to one side the outlier awards that are coming through the courts, which are outside the book of quantum. This is the big issue we have to deal with. I am not in a position to cap the awards nor do I believe is this Chamber. We have asked the Law Reform Commission, LRC, to conduct a report on the potential capping of awards. We do not know yet whether the LRC is prepared to do that body of work but we hope we will know soon. We must get a handle on the awards in this jurisdiction because if the awards are high then the premiums will be high.

What the Minister of State seems to be saying is that we are heading towards a referendum if we want to deal with the issue of the level of awards which are impacting on the insurance industry and consumers. Has he received advice to the effect that there is no law this House can pass to address the issue of awards? The Personal Injuries Commission is benchmarking Ireland versus other jurisdictions, but is it its view that irrespective of what its recommendation will be that we do not have the capacity as a Legislature to address that issue? Could the Minister of State comment on that?

We need more engagement with the Personal Injuries Assessment Board, PIAB. We would welcome any moves in that regard. We need the information. The national claims information database has been consistently delayed. Other smaller issues that arise include the retention of CCTV data being aligned to the period within which people can report incidents so that at least claims can be defended. Bona fide claims should be dealt with and people who are the victims of accidents and involved in incidents should be properly compensated. Nobody is arguing otherwise, but there are issues in the industry that are having a really detrimental impact on consumers.

The Insurance Action Group reported and set out a number of clear actions that could be taken to improve the situation for many consumers around the country. People are feeling the pressure due to the cost of insurance. Many of those actions have either been delayed or have barely come into effect. One action which started in quarter 1 of this year was completed but all of the others were delayed. The national claims information database which was due to commence later this year has also been delayed. These are actions the Minister of State can promote, energise and get going. What steps is he taking to ensure that he catches up on those actions that have not been completed to bring them to fruition?

As I outlined last night, there have been huge delays in the implementation of the report. One of the biggest criticisms I had at the time of the report is that everything seemed to be long fingered, but even that long fingering has now resulted in a further long fingering in respect of the national claims information database and issues relating to premiums.

What the Minister of State said about awards gives an insight into his thinking. Anybody injured in a motor accident who has a legitimate claim should be paid an award. The issue in some cases is that people are over claiming. Last night I welcomed Charlie Weston's work, and it is important that it is reported that the courts are now questioning those issues. I mentioned the Minister of State's colleague as an example of where a large award was sought and a reduced amount was given by the courts. It is appropriate that the courts are challenging claims that are made. The insurance industry is under investigation for cartel-like activity. We need robust legislation and action from the Government which deals with this not only for motor insurance but for businesses as well and the community sector.

Anybody who says there have been huge delays is wrong.

There are delays involving a number of issues. In terms of the motor insurance report, 39 out of 43 recommendations will have been concluded by the end of this year. We will have concluded 26 out of 29 recommendations of the report on the cost of employer and public liability insurance. We are down into the legislative changes. The national claims information database will be implemented and will be published next week. I am open to anybody on the other side of the House providing time to this side of the House to get this through. I am absolutely committed to it. I thank my colleagues who will facilitate the movement of the Insurance (Amendment) Bill very quickly this week so I am open to doing this if I can get support or time.

In respect of section 8 and data retention, we hope to have that done in quarter three in order that the data period will reconcile with the period in which somebody will be obliged to inform an insured person that there is potentially a claim, Consequently, that person can keep that information, data and imagery in order that he or she has the opportunity to defend themselves properly. Section 14 of that Act is very important, as it will give the courts the opportunity to make an inference from people who do not comply with section 8. Consequently, if one shows up four months later and if the data and imagery are gone and one is not able to defend oneself properly, the courts can make an inference. The other aspect of this that is very important is that the legislation, namely, the Civil Liability and Courts Act 2004, is fine. The sanction is fine. The sanction for people who represent an exaggerated or fraudulent claim is a fine of €100,000 or prison or both. We do not need any more than that.

It is never acted upon.

It is never acted upon but what we want to do is put in place the pathway by which it will be acted upon

European Stability Programmes

Mick Barry

Question:

70. Deputy Mick Barry asked the Minister for Finance the way in which he will respond to the country-specific recommendations from the EU Commission. [30961/18]

Paul Murphy

Question:

81. Deputy Paul Murphy asked the Minister for Finance his views on the European Commission's country specific recommendations in relation to aggressive tax planning, pension reforms and healthcare; and if he will make a statement on the matter. [30979/18]

On 23 May 2018, the European Commission published recommendations on the 2018 national reform programme of Ireland and delivered a Council opinion on the stability programme of Ireland. Could the Minister comment on the recommendations it made?

I propose to take Questions Nos. 70 and 81 together.

The European Commission published the 2018 country-specific recommendations, CSRs, on 23 May 2018 as part of the European semester process. Similar to last year, Ireland received three recommendations. The first deals with the effectiveness of public finances and expenditure, the reduction of Government debt and broadening the tax base. The second references the implementation of the national development plan and the third addresses productivity growth and the resolution of long-term arrears.

These recommendations were based on the European Commission's country report for Ireland, which was published earlier in March. At the June meeting of the Economic and Finance Affairs Council, my colleagues and I welcomed and approved the publication of the country-specific recommendations, which were subsequently endorsed by the European Council. On Friday, 13 July, the country-specific recommendations will be adopted at the ECOFIN meeting that I will attend. I will bear these recommendations in mind as part of the overall process when preparing budget 2019.

It is important to note that Ireland did not receive a recommendation relating to aggressive tax planning, although it was referenced in the recitals to the country-specific recommendations. We remain committed to implementing the OECD base erosion and profit shifting recommendations and the recommendations of the Coffey review of Ireland's corporation tax code.

Part of the country-specific recommendation dealing with the effectiveness of public finances aimed to address the expected increase in age-related expenditure by increasing the cost-effectiveness of the healthcare system and pursuing the envisaged pension reforms. While healthcare policy is a matter for my colleague, the Minister for Health, my Department works closely with the Department of Health on an ongoing basis. The Departments have also worked closely on longer-term issues such the implementation of an agreement on prices of and access to medicines.

Matters relating to pensions reform are primarily a matter for my colleague, the Minister for Employment Affairs and Social Protection. Nevertheless, it is worth noting that in February, the Government agreed a roadmap for pensions reform. The roadmap takes a holistic view of pension issues and details specific measures presented under six strands to modernise and improve the sustainability of our pension system.

The European Commission report states that existing climate change mitigation efforts will not enable Ireland to achieve its 2020 climate goals domestically. It states that the way in which the Government might deal with this is by buying carbon allocations from other member states. That would indicate that the taxpayers would pay for a subsidy for both industry and agriculture. Does the Minister intend to shell out by buying carbon allocations and if so, how much does he intend to shell out?

The report also says that as it stands, the national mitigation plan offers few new mitigation measures. In other words, it is not up to speed or scratch. What will the Minister say to the Minister for Communications, Climate Action and Environment, Deputy Naughten, about that and what will he ask him to do?

I understand the plan contains a ten-year plan regarding higher capital investment in climate change, plans to modernise our supply of energy and deliver against a climate agenda about which the Deputy has spoken. It is fair to say that meeting the objectives we have will be very challenging but in terms of what we are doing about it, I have supported the Minister, Deputy Naughten, in putting in place a massively increased capital programme. I have put in place plans to increase the supply of public transport across our country. Is the taxpayer paying for that? The answer is "Yes". I would have thought Deputy Barry would be supportive of that.

The Minister's answer is "Yes" to buying carbon credits. I also asked the Minister how much he proposed to spend. He might respond to that.

The report also says that according to the OECD, childcare costs in Ireland relative to wages in 2015 were the highest for lone parents in the EU and the second highest in the Union for couples. It also states that the high cost of childcare can act as a barrier to accessing paid employment, particularly in low-income households, including single parents. That is a far cry from the promise made by a Minister who served in a Government in which the Minister served that there would be Scandinavian-style childcare for Irish parents at this stage. A recent ESRI report found that lone parents are being forced to take up work as a result of changes to the one-parent family payment and have suffered a fall in income. It pinpoints the lack of affordable childcare as one of the two key reasons for this. Is the Minister prepared to be honest with the House and state that Fine Gael clearly does not believe in publicly run, affordable childcare, which would benefit the people who need it?

We will have two short supplementaries from Deputies Michael McGrath and Pearse Doherty.

Mine relates to the third recommendation of the report, which relates to long-term arrears. What the Commission said was very interesting. In identifying solutions, it placed the emphasis on encouraging write-offs of non-recoverable exposures. The practice in Ireland is to sell on loan portfolios. We will be dealing with legislation tomorrow at committee to regulate these funds. What is the Minister doing to encourage write-offs, which is what the Commission is providing for, as opposed to the current strategy of banks, which seems to be to give the write-off to a fund to just sell on blocks of loans by way of loan portfolios?

It is very clear that the Commission is recommending something that Sinn Féin has putting forward for many years, namely, that the banks must deal with the fact that many households will not be able to pay the full amount on their mortgage and the solution is either repossession or the current position, which involves selling off to vulture funds, which will end up in the same position. The write-off of debt is the norm with business loans but for some reason, banks shy away from that option when it comes to domestic mortgages. Has the Minister had discussions with the chief executive officers, CEOs, of State-owned and controlled banks or where the State has a majority shareholding in the bank about the recommendation from the Commission that banks would pursue a policy of write-off of arrears?

I did not answer the question about the purchase of carbon credits but will do so now, so Deputy Barry should not assume an answer I have not yet given. I have not yet made any decisions about the purchase of carbon credits.

This is something I will have to do with the Minister, Deputy Denis Naughten, in the context of the coming budget.

On the Deputy's point on the affordability of childcare, the Minister for Children and Youth Affairs has brought in the first phase of a scheme of broader subsidies as part of how we further support the development of the childcare sector. She has also put an independent review system in place to see how that feeds into lower pricing.

It is welcome to hear Deputy Mick Barry refer to country-specific recommendations from the European Commission. I thought this was the kind of system he was against but he now appears to see the value in having the Commission make points about our economy's performance. It is welcome and this is similar to the journey made by Deputy Pearse Doherty on the role of fiscal rules in our economy

Deputy Barry will be in government soon.

Deputy McGrath took the shilling and stayed bought, fair play.

On long-term arrears, many of our banks have engaged in a process of reducing the value of mortgage debt. To answer Deputy Pearse Doherty's question, I will meet the CEOs of all the banks before the end of July in the context of setting up the banking standards board for Ireland.