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Dáil Éireann debate -
Thursday, 28 Apr 2022

Vol. 1021 No. 3

Ceisteanna Eile - Other Questions

Question No. 6 replied to with Written Answers

Insurance Industry

Cormac Devlin


7. Deputy Cormac Devlin asked the Minister for Finance the work that he is carrying out to ensure that the benefits of the insurance reform agenda are passed on to customers; and if he will make a statement on the matter. [20526/22]

I also express my condolences to the Minister, Deputy Donohoe, on the passing of his mother.

I would be grateful if the Minister of State could update the House on the Government's insurance reform agenda and the work being carried out to ensure the benefits are being passed on to consumers.

I thank the Deputy. There is a limit on the time available to facilitate me updating him and doing justice to the work I do specifically. On the issue of the timescale, the Deputy is fully aware that we have a wide-ranging plan for insurance reform underpinned by the action plan for insurance reform. This cross-departmental action plan was published in December 2020 with the most recent implementation report, from March 2022, indicating that work is progressing well. The vast majority of actions in the plan have been delivered, while the remainder are still ongoing. Over a two-year period from the time the plan was launched, every aspect of it will be fully implemented and everything Government agencies and Departments can do will be completed in that period.

Given the increasing priority and pace of reform, it is necessary for the industry to pass on the benefits to its consumers. The Minister and I have been clear on these points and have been holding the insurance sector to account on commitments made, in addition to having regular engagement with it.

I have met individually with the CEOs of the eight main insurers in the Irish market, twice since the adoption of the personal injuries guidelines. I am keen to continue my engagement with them and to hear their views on all matters regarding the Irish insurance market, while also ensuring that commitments to pass on cost savings arising from the insurance reform agenda in the form of reduced premiums to their customers are honoured. In this context, I note that motor insurance premiums are approximately 40% lower than they were about six years ago, which must be welcomed. They have decreased by between 12% and 14% since the Government came to office. In these meetings, and in my ongoing engagement with industry, I have consistently stressed the importance of insurers reflecting lower claims costs through reduced premiums and the need for insurers to respect the guidelines by not settling for amounts that are inconsistent with them. They have all assured me personally that they will strictly adhere to them.

We have seen those reductions particularly in motor insurance. People have experienced them. There has been good feedback from younger drivers in particular. That was a perennial issue for many years. Reducing the cost of insurance for consumers and businesses is critical, particularly when we see costs increase in energy, retail and other areas. I welcome the priority given to this issue by the Government. I acknowledge the work done in this area by the Ministers of State, Deputies Fleming, Troy and James Browne, and also by the Ministers for Finance; Enterprise, Trade and Employment; and Justice. I commend them on their efforts because from the get-go they have engaged with the insurance companies and we are seeing the benefits. The personal injury guidelines are clearly having impacts on the size of awards. Some 20% of awards are now under €5,000 and 29% are between €5,000 and €10,000, which means nearly half the awards are under €10,000. That compares with just 12% in 2020. Will the Minister of State give an indication of progress on the remaining actions in the Government's action plan on insurance reform?

I thank the Deputy for highlighting those points. The national claims information database, which is compiled by the Central Bank, is unique and provides a level of information that is not available in any other EU country.

An issue that has cropped up at all our meetings is that of pinch points. We are dealing with those very specifically on an area-by-area basis. This week we completed the Second Stage reading of the Insurance (Miscellaneous Provisions) Bill 2022. I hope it will go to Committee Stage shortly. It includes the issue of dealing with price walking which some people say is part of dual pricing. I want to acknowledge the ongoing work of Deputy Doherty on this matter over some time. We are bringing in specific aspects of that through our legislation. We are also dealing with State payments that insurance companies may have taken into consideration. That matter is before the courts.

In the immediate future, the legislation on duty of care will be going to the Cabinet. It is very important. The Personal Injuries Assessment Board, PIAB, legislation is also in the system. Test cases are holding up some of the delivery of those items.

Given the very significant reduction in the cost of awards, as I outlined, and the introduction of other measures, consumers and businesses will expect proportionate reductions in premiums to bring them into line with EU averages. I think we are seeing that. Consumers are certainly feeling that when they renew or examine other policies. If that trend continues, we will be in a very good position and more aligned with our EU counterparts than before. The work being undertaken is being felt by consumers at a critical time given the rise in costs in other areas.

It is actually a year this week since the Judicial Council guidelines came into effect. Awards have dropped dramatically but premiums have not. Even in motor insurance, they have not dropped to the level that we expected or, indeed, that the industry told us to expect. We are not seeing the reductions to business and community groups. It is a year on. We have been told to wait and see how it works. It is now time to get behind my legislation. The Government has stalled it for nine months. It will be before the committee next week for pre-legislative scrutiny. I am asking the Minister of State to get behind the legislation and collect the data that allows us to seek, empirically, whether the insurance industry is benefitting from the judicial guidelines that were put through by this House or whether all of that money is being passed on to consumers.

It is very important to point out that while the judicial guidelines are giving reductions of 40% in the cost of claims for soft tissue injuries and the most common injuries, no one who understood the system ever believed that would lead to a 40% reduction in premiums because the cost of those claims was the biggest cost to the insurance industry but it was not its only cost. That 40% will apply to the proportion of their costs that related to the cost of claims.

It should be 20% but it is not happening.

Whatever. The issue is that they are working so well that people have seen they are getting less, and that is why there are test cases. We have had a big increase in the number of people not accepting the new reduced awards and taking their claims to court. When we have those test cases through the courts, I hope the colleagues of the Judicial Council who wrote the guidelines will implement them in full. That has slowed up the settlement of many cases in the last several months since these guidelines were brought in. It is because they are very effective and people are having difficulty accepting the lower award. I hope that will wash through the courts as quickly as possible and all the reductions promised will pass through.

On business insurance, 93% of all businesses in Ireland have a total annual insurance premium of less than €5,000.

Questions Nos. 8 to 10, inclusive, replied to with Written Answers.

Credit Unions

David Stanton


11. Deputy David Stanton asked the Minister for Finance the way he plans to support credit unions in the expansion of services to encourage community development; and if he will make a statement on the matter. [21411/22]

Holly Cairns


16. Deputy Holly Cairns asked the Minister for Finance the steps he is taking to enable the credit union movement to grow as a key provider of community banking in the country. [21420/22]

Joe Flaherty


30. Deputy Joe Flaherty asked the Minister for Finance the initiatives that he is taking to expand the credit union sector; and if he will make a statement on the matter. [20525/22]

James Lawless


75. Deputy James Lawless asked the Minister for Finance when the review of the credit union policy framework will be completed; and if he will make a statement on the matter. [20528/22]

I acknowledge the great work that the Minister of State, Deputy Fleming, is doing in the area of credit unions, for example by updating and modernising them and creating community banking. What are his further plans to support credit unions in the expansion of services to encourage community development?

I propose to take Questions Nos. 11, 16, 30 and 75 together.

I thank the Deputy for raising the expansion of credit union services. The Government recognises the importance of credit unions. The programme for Government contains four specific commitments for the sector. These can be condensed into one key commitment, which is to enable the credit union movement to grow. That means growing credit unions' lending books. I addressed the Irish League of Credit Unions AGM in Belfast at the weekend which was also addressed by the registrar of credit unions. It was made clear at that meeting that the loan-to-asset ratio in the credit union movement is about 27%. That is not a sustainable level, which is why many of them have difficulties because they are not generating enough income. I have met many representatives of credit unions individually. Some of them have told me that in years gone by, 60% or 70% of their membership would borrow from them at different times of the year but for many credit unions the percentage of members who borrow from them now is well below 20%. Therefore, a key issue for the credit unions is not a shortage of savings but a shortage of loan applications. I really encourage them to lend more. The retrofit scheme is a perfect fit for the credit union movement because people who go into the scheme will need to borrow. Credit unions will be able to give loans over a longer period than they could historically. They will not have to take a charge on a house. The major banks will not want to finance them as much because they will be giving out big unsecured loans and it will not be worth their while to take out security on a house for a loan that might be for a retrofitting project. The scheme is perfect for the credit unions because they know their people and will be happy to give out unsecured loans. That is what I would encourage the credit unions to move into. They have lost business. Over the years, people used go to them for car loans but that is all done through garage finance now. It is a big issue and we are working constructively with them.

I thank the Minister of State for his response and acknowledge the work he has been doing on this. I hope he will manage to finish his work on the area because the targets are very laudable.

The credit unions tell me they see themselves as being punished for taking on members' savings by having to put aside at least 10% of all savings in reserves. They maintain that this can only be funded by making a surplus and putting it into reserves. They say that this is money that should be given back to members through dividends and rebates. They also maintain that no other financial institutions in Ireland, including the banks, have to do this. They have the most restrictive capital requirements of almost any financial institution globally. I acknowledge what the Minister of State said about the unprecedented growth in savings in recent years. That is why most credit unions have to limit the amount of savings that members can save with them. I tend to agree with the Minister of State that this is not good given the declining number of options to bank in our towns and villages. Has the Minister of State any plans to change this?

Since the Government came to office we have had detailed consultation with all the representative bodies in the credit union, several rounds of consultation culminating in a recent meeting I chaired with all the representative bodies. There is agreement across that entire group on 15 changes that will help the credit unions. We are starting to draft the legislation for those. There is much work in that and it is important.

The capital requirement is very important. There is a requirement for 10%. As I said, I was at the AGM of the credit unions. The unions themselves voluntarily have reserves at 16% nationally, so they can reduce the reserves they are talking about from 16% to 10% without any impact from the Central Bank. They are saying the 10% is a problem but very few credit unions are down at the 10%. Most of them are over 12%. If one got below 12% the Central Bank would look but there would not be two out of the whole 200 in that category. All the other credit unions in Ireland have reserves way in excess of what the Central Bank requires them to have and they are doing that themselves. The way to deal with it is to lend more money.

I thank the Minister of State for his response. I am quite interested in what he said about only two credit unions in the country being at that point. I have met one of them and its management are concerned about this. Perhaps I was just unfortunate to have met with the one that is in that position but its management maintains it was limiting its ability to expand, grow and take on more.

I wish to put something else to the Minister of State. In many of our towns and villages An Post is finding it difficult to get people to get on its mandate. Is there any way An Post and the credit unions could amalgamate and get together so where there is no An Post outlet in a town or village the credit union could perhaps perform that function, take on the role and maybe apply to An Post for the franchise?

That is an interesting point. Both those organisations deal with the Department of Finance. An Post has a good arrangement with AIB and Bank of Ireland for dealing with its cash business and everything like that. Especially as Ulster Bank is withdrawing from Ireland and the other banks have announced many branch closures, there is a fantastic opportunity for credit unions. In many towns throughout Ireland the credit union is the only financial institution left standing. Most of those areas may or may not have a post office or vice versa. I am loathe to suggest collaboration as I do not know that the credit unions would appreciate that but there is a logic in what the Deputy is saying. Both organisations have a strong tradition and are respected by the people. An Post and the credit union are probably the two most respected brand names in the country. However, both are separate organisations. It is an interesting point people may wish to speak to me about.

On the other point about the credit unions, if the Deputy wants to contact me through my office I will be happy to follow up any individual case and if needs be meet the credit union involved.

Could I ask one more question? It has to do with the levies.

I have lost track. I think the Deputy has been in twice already.

Have I? I am sorry about that.

He is going to get another chance in a minute because his name is coming up.

Okay, fair enough.

I am moving down through the list. I may miss someone if they are not here. Deputy Stanton is coming up again for Question No. 31.

I apologise a Leas-Cheann Comhairle, but has Deputy Mairéad Farrell been in contact about my taking her question for her?

I am going to take Deputy Stanton's next question. I have no notice of that.

Questions Nos. 13 and 14 replied to with Written Answers.
Question No. 16 replied to with Question No. 11.
Question No. 17 replied to with Written Answers.
Questions Nos. 19 to 21, inclusive, replied to with Written Answers.
Questions Nos. 23 to 29, inclusive, replied to with Written Answers.
Question No. 30 replied to with Question No. 11.

Research and Development

David Stanton


31. Deputy David Stanton asked the Minister for Finance his Department’s plans, if any, to encourage greater take up of the research and development, R and D, tax credit by small domestic companies; and if he will make a statement on the matter. [21412/22]

What are the Department of Finance's plans, if any, to encourage greater takeup of the R&D tax credit for small domestic companies?

The Deputy might give me a moment. We have jumped quite a few questions because people are not here this morning and I want to get my folder in order. I thank him for raising the issue. The research and development tax credit allows companies to claim a 25% tax credit in respect of expenditure incurred on qualifying R&D activities.

To conclude our conversation of a few moments ago on the credit unions, if there is anything the Deputy wants to contact me directly on I would be very happy for him to do so. We can take up any individual issue relating to the credit union movement. On levies, since we came to office, this Government has reduced the levies by 53%. It is a phenomenal reduction. I understand people would prefer to have little or no levies but it is important the credit union movement and credit unions themselves have adequate resources to meet all their requirements. We saw last week's AGM was mostly consumed with the issue of funding potential deficits in the pension scheme and I think the credit unions are dealing with that.

Returning to the current question, the programme for Government, Our Shared Future, recognises the importance of research, development and innovation as these are recurring themes across a number of the mission aims. Specifically in relation to small business taxes, there is a commitment to continue to encourage greater take-up of the R&D tax credit by small domestic companies by building on recent changes and examining issues with respect to preapproval procedures and reduced record keeping requirements.

A review of the R&D tax credit is taking place during 2022, alongside an evaluation of the knowledge development box. As part of this review, my officials published a public consultation relating to the operation of both reliefs. The consultation documents include questions on the interaction by small and medium enterprises with the R&D tax credit. The purpose of this public consultation is to consider the current challenges facing firms that are active in the R&D and intellectual property, IP, space as well as the implications of recent domestic and international tax reforms for these two reliefs. It is a fantastic scheme for the businesses that do it. Depending on their profits they can get a cash payment back to the company and if their taxation situation does not allow them to get it by way of tax they can get it back directly as a credit.

I thank the Minister of State for that response and his reply to my earlier question. Is he able to give me some idea about the takeup? What kind of rebates are we talking about? What kind of refunding and credits are we talking about? What percentage of companies are involved in this? What plans has the Minister of State to encourage more to get involved and to advertise and promote it?

The Deputy will appreciate I do not have the full schedule of costs. I am making a note to get that information from the Department through contact with the Revenue Commissioners. The latter will have the information on the number of businesses taking up that relief readily to hand. Through my office, I will ask for that information to be obtained and forwarded to the Deputy.

The second part of that question was what plans has the Minister of State or the Department to encourage companies further to take up this credit and also to promote it. Would the Minister of State agree with me that many companies do not know about this? There is a lack of awareness. How is the scheme to be expedited and promoted?

The promotion of this scheme genuinely falls to the Department of Enterprise, Trade and Employment. It is about business. We will write the cheque at the end of it but it belongs to that Department. From my own direct knowledge of the scheme I agree the small businesses do not know about it. The local enterprise offices, LEOs, know about it and Enterprise Ireland, EI, knows about it for its clients as well. In my own work as a Deputy, I realise there is very little happening with it in Ireland. Through the institutes of technology, as they were, or the technological universities as they are now, work was done with schemes through the LEOs or EI to spread the information and the number of applicants in the region, as it takes some work. There is, therefore, a linkage that can be done through the LEOs and EI. In my region some of the institutes of technology have been very strong. It meant counties that were not linked directly to one of those were possibly losing out. There is linkage to be done, though it will be primarily by the Department of Enterprise, Trade and Employment.

I am going to go back to No. 12.

Cost of Living Issues

Barry Cowen


12. Deputy Barry Cowen asked the Minister for Finance the estimated cumulative cost of the measures that he has taken since and including budget 2022 to help address cost of living issues; and if he will make a statement on the matter. [20523/22]

Will the Minister of State inform the House about the cumulative measures that have been taken by the Government to address the cost of living issues since and including budget 2022? I ask in order that the House be especially aware of the effort on the part of Government in this area. It has committed to these measures on numerous occasions in the House but I ask that the cumulative measures and the costs associated with them be relayed.

I thank the Deputy for raising this particular issue. We have had discussions here about various forms of taxation, which is one part of the issue the Government has been dealing with, but there have been many other interventions as well. The Government has intervened on four occasions to address the increases in the cost of living, at a combined cost of approximately €2.1 billion.

First, budget 2022 contained an income tax package of €520 million. On the expenditure side, a social welfare package worth €558 million was introduced including, among other measures, a general €5 rate increase for working-age and pension-age recipients, and a €5 increase in the fuel allowance. People are aware that the fuel allowance, with the €5 increase and the extended period of time during which it is being out, is now worth over €1,000 each to the 390,000 people in receipt of it.

This means that €390 million is being spent on the scheme, which is vastly superior to the level of expenditure a short time ago.

A suite of measures was introduced in mid-February, amounting to €505 million. Measures included an energy credit of €200 to every household in the country, a once-off lump sum payment in respect of the fuel allowance and a 20% reduction in public transport fares.

In March, the Government agreed to VAT-inclusive reductions in excise duty of 20 cent per litre in respect of petrol, 15 cent per litre in respect of diesel and 2 cent per litre in respect of marked gas oil known as green diesel.

Finally, earlier this month, the Government announced a further set of measures amounting to approximately €180 million. These measures include a reduction in the VAT rate for electricity and gas to 9% from 1 May until the end of October, an additional payment in respect of the fuel allowance and an extension of the reduction in excise duty until budget day in mid-October.

While the Government has been proactive in limiting the fallout from the impact of higher energy and other prices, there is a limit on what we can do as many of these matters are outside our control. The people of Ireland understand that. The priority is to minimise the impact on those who are most affected. Many of the drivers of these issues are beyond the Government's control and we cannot fully insulate people from their entire effects.

I thank the Minister of State. I note that the value of the measures the Minister of State has relayed is over €2.1 billion. I would like to ask him about the VAT commitments that have been made for the period until October of this year. Given the situation in Ukraine, and the impact of the war on energy prices, does the Minister of State see the VAT rate being revisited and the measure being extended? Maybe he would inform the House if that is the Government's thinking in this regard if the current circumstances remain or, indeed, their impacts increase.

I thank the Deputy for his question. As I have said, there were four measures introduced, starting with the budget. The February and March measures were followed by the most recent set of changes. The Minister for Finance has made it clear that this is the final intervention until the next budget. There are no further interventions planned over the summer months. These measures are designed specifically to take us up to budget night, at which stage any new measures agreed as part of the budget can be announced. It goes without saying - I am sure people are tired of the Government saying this - that these are matters for discussion in the lead-up to the budget and for decision on budget night. Such discussions have commenced already. Everybody knows we are not in a position to release any information in relation to that matter, other than to reiterate everything that has been said about the context Ireland will find itself in, including the Ukraine situation, which will be uppermost in all budget preparations.

Banking Sector

Darren O'Rourke


18. Deputy Darren O'Rourke asked the Minister for Finance his views on the current status of the withdrawal of banks (details supplied) from the Irish market and the closure of accounts and migration of their customers to receiving banks; if he has raised concerns with the banks with respect to their preparedness for this process; and if he will make a statement on the matter. [21436/22]

I want to ask the Minister his views on the current status of the withdrawal of KBC Bank and Ulster Bank from the Irish market, on the closure of accounts and migration of their customers to receiving banks, if he has raised concerns with the banks with respect to their preparedness for this process and if he will make a statement on the matter.

I thank the Deputy for raising this question. It is a matter that is relevant for many people. While it is regrettable that Ulster Bank and KBC Bank have decided to exit the Irish market, the Deputy will understand that the Minister for Finance does not have a role in relation to the commercial decisions of the banks. The Minister's priority is to ensure each bank withdraws from the market in an orderly manner. That word - "orderly" - is the most important one I will use here in this context. It must be done in an orderly manner. Ulster Bank has commenced issuing letters on a phased basis. KBC Bank is doing so as well. It is important that this happens in an orderly manner.

The Central Bank has a consumer protection role in relation to this matter and I believe it is watching this clearly. Not long ago, it issued a report on how long it was taking the main banks to answer their phones - people could not get through when they were ringing - and that was a forerunner to what it could see as a problem that can happen. If one cannot get through on the phone, how does one get to make an appointment to open a bank account? The fact that the Central Bank issued this report a while ago shows that it is alert to the situation. It is watching it carefully. The Central Bank is briefing the Department of Finance on a monthly basis. I stress that all these regulatory matters are matters for the Central Bank, and the Department of Finance does not have a direct role. The Central Bank is independent of the Government and the Minister cannot direct the banks which are leaving.

NatWest, which is selling Ulster Bank, is taking a share in Permanent TSB and that group will continue to have a presence in Ireland. That will be a further reason to ensure everything is done in an orderly manner.

In recent days, Ms Derville Rowland from the Central Bank has written directly to all the major banks and the 20 main direct debit instigators and companies to make sure all of them work together. I understand that Ms Rowland is asking for detailed responses from each of them in relation to preparedness and that a meeting is scheduled in the next couple of weeks directly with each of them.

The Minister of State has said that there is a wish that this proceeds in an orderly manner, but there must be concern at this stage that this will not happen and it will not be orderly. In fact, there are approximately 900,000 customers affected. I am sure every one of us knows from being contacted by those affected what their experiences have been. They talk about being put off, not being able to get through and not getting the type of support they want. They talk about their concern and what the future holds for them and for their accounts. We saw the measure - it was reported yesterday - that the Central Bank took, but I believe there is a role for the Minister to intervene and to ensure this process proceeds and there is an adequate response from the banks involved because people are deeply concerned that the process will not be orderly.

The letter issued by the Central Bank to the organisations I mentioned in passing seeks to reinforce and, to any extent necessary, clarify the application of the expectations of the Central Bank's previous letter of June 2021 and to invite the CEOs to a round-table meeting hosted by the director general of financial conduct affairs, Ms Derville Rowland. The following are the key issues and risks that have been identified: the notice period for people in relation to the closure of accounts; the application of the switching process; the new provider making commercial decisions in a manner that facilitates the customer making and executing a switch; direct debit originators; and vulnerable customers will have to be looked at. These are all the issues that will be uppermost in the meeting with the Central Bank to ensure this is done on an orderly basis. The Department of Finance and the Minister are not directly involved in these issues, but they are being kept fully apprised of them because they are conscious of them. The final message I would give to anyone who gets a letter from either bank is that they should respond as soon as they get the letter and should not put it to one side. If they respond, the process can go better than if they ignore the letter.

If past performance is any indication of future performance, we are right to be concerned here. It is important, rather than expecting that the matter will proceed smoothly, that measures are taken to ensure they proceed smoothly. This train has been rolling down the track and the time is getting shorter. On the commitment in terms of notification periods, continuity of service and protection of vulnerable customers, I am not convinced that the supports, the communications systems and the contact facilities are there. There are real concerns, particularly for people who are used to using their local retail bank and are not familiar or comfortable with online services. We saw it yesterday in the media with customers outlining their experience and frustration to date. Something needs to be done to address it.

The writing is on the wall here. We can all see it. That is why I have asked the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach to carry out a piece of work on this. We have issued detailed questionnaires to all the banks. All of them have responded, bar KBC Bank, but we will get its response soon, and we have engaged with the Central Bank on this. There will be a big, big problem here. There are 1 million accounts being closed over the next short period. The banks that are closing just want out. The receiving banks are not ready. They are not up for it. It is not only a matter of answering phones. People who have overdrafts must go into branches. Branches have been closed. Their staff have not been beefed up. There are serious problems coming down the line. There are vulnerable customers. There are direct debits. There are mortgages that will fail. All of this is happening.

I must take issue with the Minister of State's point that there is no role here for the Department of Finance.

The Minister for Finance, on behalf of the Irish State, is the majority shareholder in AIB. He is the major shareholder in Bank of Ireland. He is the majority shareholder in Permanent TSB. These are the three banks that are going to receive the 1 million customers. That is where the problem is. The infrastructure is not there to do this in an orderly timeframe. The Minister needs to intervene. He needs to call in the CEOs to complement the work that is being done by the Central Bank from a regulatory point of view.

I understand what the Deputies opposite are saying. As I said earlier, there are regular meetings with the Department of Finance about this process. I spoke to Ms Derville Rowland on the matter just a fortnight ago. Everybody in the Department and at the Central Bank, which will be at the forefront of facing these issues in conjunction with the banks, understands the issue. Banking & Payments Federation Ireland is currently sourcing a provider for a media campaign to inform customers on the actions required to move their current accounts if they currently hold an account with either Ulster Bank or KBC Bank. It is keeping the Department informed regarding the campaign and other matters at monthly meetings with the Department. A number of these meetings are taking place on an ongoing basis. A media campaign is going to be necessary and when people get the relevant letters, I ask them to respond so the switchover can be done on an orderly basis. I stress that the overriding point is that this situation will be solved in an orderly manner.

Question No. 32 replied to with Written Answers.
Questions Nos. 34 to 57, inclusive, replied to with Written Answers.

I am going to move through the questions. I am not sure if the Minister of State has the relevant replies with him but we are now moving on to Question No. 58.

Inflation Rate

Pearse Doherty


58. Deputy Pearse Doherty asked the Minister for Finance if he will introduce further targeted measures to support lower- and middle-income families in response to the level of inflation projected for 2022; and if he will make a statement on the matter. [21476/22]

This question relates to the willingness of the Government to introduce further targeted measures to support lower- and middle-income families in response to the high levels of inflation that are projected for 2022 and if he will make a statement on the matter. We are looking for further measures. I am sure the Minister of State's script will include references to everything the Government has done but as he has heard from everybody on the front line, it is not enough.

I thank the Deputy for raising the matter. I do not have a prepared response to his question. Most of the issues he has raised have been dealt with by way of motions in this House. There have already been two such motions this week. There were resolutions last night with respect to Revenue issues. The debate we have had this morning has covered a number of issues around the cost of living and the impact of inflation. Everybody accepts that the projections for inflation are much higher now than they were before the war in Ukraine. This is a matter that can have implications for everybody in Ireland. The people know that no government can fully insulate a country from the effects of the ongoing war in Ukraine. However, this Government is putting in as much effort as it can with the significant €2.1 billion in funding that was announced last October and which will run until the summer. Most of that money has been targeted towards the areas that need it most, which is important.

Of course, all of this is coming at a time when we have emerged, or are still emerging, from the pandemic. The worst effects of Covid, and the allied restrictions on the economy, have been lifted. There is pent-up demand. Many people were waiting to get work done and that has led to a surge in prices because everybody knows it is difficult to get tradespeople to do work in the construction industry and in many other sectors of the Irish economy. That in itself is a good point. There are now 2.5 million people in the workforce, which is the highest number ever in the workforce in Ireland. That figure is even higher than it was before the onset of the pandemic. People are getting back to work. More people are working now than were working before the pandemic. A wage is the best way of helping people with inflation, along with the targeted measures the Government has been introducing. Those measures were outlined at length last week and have been outlined this morning.

The Minister of State made the point that not every part of inflation can be offset by the Government and I recognise that. We have made that point over and over again. Not everybody can be insulated from the effects of inflation. However, a government should make sure the most vulnerable in society are protected first and protected the most. I put it to the Minister of State that the Government is washing its hands of the poorest in society and those who have the lowest incomes, particularly those who are dependent on a fixed income. Social welfare recipients saw an increase of approximately 2% in the most recent budget. Inflation is going to run at over 6% for the year and will be higher than that over the coming summer months. The Government is telling those families it is okay that they are going to be poor. Those families are going to be poor this year. The likes of the people in this House who are well paid, and Ministers who are very well paid, will suffer from inflation as well but they have the resources to deal with it. People who depend on social welfare, disability payments and fixed incomes do not have the ability to deal with the high cost of living and the fact that the Government has not brought forward a social welfare package is disgraceful. Will the Government consider dealing with those who are most affected by inflation and have the fewest resources to deal with it by bringing forward a social welfare package that increases core social welfare payments by at least €5?

A social welfare Bill is not required to bring a social welfare package through the House. We have seen that with respect to taxation and we saw it on several occasions with respect to Covid-19. I already mentioned the free fuel allowance. The scheme was extended by a number of weeks, which was worth more than €1,000 to the 390,000 people who are in receipt of that payment. That is a high figure and the people who benefited are the most vulnerable in the country. It is a fuel allowance. Since its inception, it was never meant to cover the entire cost of fuel. It is an allowance towards the cost of fuel. It was never intended to cover 100% of the cost of fuel. However, that figure is substantial.

I accept that people could do with more assistance and that is why everybody got the €200 energy credit, including people availing of social protection, low-paid workers and those on minimum wage. An additional lump sum of €125 for the fuel allowance will be paid to those 390,000 participants. People who have a free travel card have the benefit of that. A 20% reduction in many public transport fares will come in at the end of this month. The maximum amount that people who avail of the drugs payment scheme must pay has reduced from €144 per month to €80 per month, which is affecting 70,000 families.

I am not sure if the Minister of State does not get it. I do not know if he does not care or if the Government does not care. I do not want to personalise this criticism to the Minister of State. It must be accepted across the political divide that those who are most in need are those who are on low incomes and those who are on social welfare fixed incomes. The Government has not responded by increasing core social welfare payments. That means the decision that has been made by the Government, with which it is satisfied for the next number of months, is that these families will become poor. Many of those families were already in poverty or at risk of poverty in the first place. Many are in homes that are poorly insulated and, therefore, have higher energy costs than many other homes. The Government is turning its face against an increase in social welfare payments. Let me be clear when I say I do not care if a social welfare Bill is required or a measure is introduced. What I want is the political will to do it. The legislative process is not blocking the Government making a change. There is a lack of political will on the part of the Minister of State and his Cabinet colleagues to actually understand that we need to target initiatives and interventions at those who are most in need.

In case some people did not hear my earlier response, I reiterate that the Government has introduced the energy credit which effects everybody the Deputy has spoken about. The lump sum of €125 for the fuel allowance will be paid to 390,000 people. That scheme has already been extended by a number of weeks. There will be a temporary reduction in public transport fares and many, though not all, of the people the Deputy has referred to have free travel passes. Those who have to pay for public transport will benefit from the 20% reduction in the cost of fares. Any people who do not have a medical card will benefit from reduced costs under the drugs payment scheme in terms of what they must pay the pharmacy. The working family payment budget increase has recently been brought forward from 1 June to 1 April. That was a budget day measure that, under the Social Welfare Act, was intended to come in on 1 June. We have already brought that increase forward because it helps working families with children. That is one of the most important benefits we have introduced to the system. There has also been a reduction in the cost of school transport.

Questions Nos. 59 to 74, inclusive, replied to with Written Answers.
Question No. 75 replied to with Question No. 11.
Questions Nos. 76 and 77 replied to with Written Answers.

We will now go back to Question No. 15.

Tax Code

Richard Boyd Barrett


15. Deputy Richard Boyd Barrett asked the Minister for Finance if he is proposing any further reforms to section 481 film and tax relief to protect the employment status and rights of workers in the film industry, particularly given that production companies in receipt of this relief are abdicating their responsibility in this regard; and if he will make a statement on the matter. [21448/22]

I do not know what the latest figure is but in some years we give out between €80 million and €100 million in section 481 film tax relief. It is supposed to be about developing an industry and industry capacity but, time and again, when workers on film productions take cases to the Workplace Relations Commission, WRC, or try to assert their rights under the Protection of Employees (Fixed-Term Work) Act 2003, the film producers who get the section 481 relief go into court and say they could have no possible employment relationship with those workers. This is not acceptable.

I thank the Deputy for raising this issue. The section 481 tax relief provides a 32% payable credit for eligible expenditure on film production in Ireland. The expenditure has to be incurred in Ireland, meaning the benefit of the jobs and employment is here in Ireland. Historically, there was a situation where some of the expenditure did not have to be incurred in the State so the benefit was not accruing to people in employment in the State but that is no longer the case. The scheme is intended to act as a stimulus to the creation of an indigenous film industry in the State, creating quality employment opportunities and supporting the expression of the Irish culture. It is the expectation that the provision of such opportunities will be compliant with all applicable employment obligations, including legislative obligations and policies and procedures to ensure dignity at work.

To grow the industry in Ireland, we want quality and sustained employment and training opportunities in the sector. This is reflected in the undertaking of quality employment, which is required to be signed as part of the application process for section 481. I stress that the quality of employment undertaking must be given. There has been good progress over the last two years in negotiations between employer and worker representatives in the sector. For example, from January 2021 a modernised crew agreement was introduced which promotes good practice, regularises evolving work practices and provides for an industry pension scheme operating under the construction workers pension scheme. That is a very important development because many people may not be employed on a full-time basis and may be moving from employer to employer. It is very important that that is now there but it has only been in place since the beginning of last year. A monitoring structure to oversee the operation of the scheme is included, as is a commitment to developing the first work-life balance policy for the film and television industry. The agreement acts as a framework for the industry, covering all grades except film construction. I understand discussions are ongoing with a view to reaching an agreement covering film construction workers. Department officials will continue to monitor progress in this regard.

On account of the campaigning of film workers, and issues I raised with the Minister, an undertaking was brought in that requires compliance with the relevant employment legislation. Specifically, and probably most important, it requires compliance with the Protection of Employees (Fixed-Term Work) Act, which means the people employed gain recognition of service. Under the operation of the law, they can gain contracts of indefinite duration even though the work is episodic. However, the employers are signing the Government's declaration and then completely refusing to acknowledge those rights for workers. They are making fools of the Government. The head of Screen Producers Ireland, SPI, who the Minister of State says is negotiating an agreement, gave evidence to the court stating there was no possible basis, having due regard to the realities of the sector, on which a relationship of employment could be said to have existed between the parties. That was on the basis of the clearly established industry norms of practices governing working arrangements in the sector, including section 481. The employers who sign that undertaking and get the film tax relief are saying they cannot have employees. How can there be quality employment and training when they are saying they have no employees?

With regard to any specific workplace disputes, including the accusation of the abdication of any duty that befalls the company by law, the Workplace Relations Commission and the Labour Court are the organs of the State tasked to deal with the resolution of such matters. It is appropriate that any relevant claims be referred to those bodies for adjudication. There are no immediate plans in place to amend the section 481 legislation at this time. The film regulations provide that the Minister for Tourism, Culture, Arts, Gaeltacht, Sport and Media can set conditions relating to the employment when issuing a certificate for a qualifying film. The regulations stipulate that these conditions are to be met not just by the producer company but also by the qualifying company, a designated activity company, DAC, wholly owned by the producer company solely for the purpose of making one qualifying film. This is done on a film-by-film basis.

Obviously, the Minister, Deputy Donohoe, is more familiar with this matter. These companies are flouting the regulations. They are flouting them openly. They are signing the undertaking and then doing the exact opposite. Not only are they doing the exact opposite, they are saying there is no basis on which they can have employees. How can the Government give people tens of millions of euro, purely on the basis of creating quality employment and training, when those same people say publicly they cannot have employees? Does the Minister of State get the point? There are no employees. There are no rights. These companies can hire and fire people at will and nobody acquires any rights, even though the money the Government gives them is conditional on giving those rights and signing an undertaking. The companies can blacklist, victimise or penalise people. Anybody they do not like does not get on the next film production and has no recourse because the companies hide behind this DAC, even though the money is not given to the DAC. The money - public money - is given by the Government to the film producer, which then says it has no employees.

Should a producer company or qualifying company fail to adhere to a condition or obligation specified, the certificate granted by the Department may be rendered invalid and any credit claim may be subject to recoupment by Revenue under section 481. The companies must comply with that.

They are not complying with it. Nobody is enforcing it.

There can be a serious financial penalty. Maybe that has not happened because some of these regulations or new rules only came in last year. Ultimately, Revenue makes the final call on this and it has to be satisfied that all these conditions are met before it, on behalf of the taxpayer, hands out the money. The DAC is required to remain in legal existence for at least 12 months post the completion of the production. A number of cases have recently been taken to the WRC against production companies but they have failed due to the claims being undertaken outside the period allowable for such cases. It is important that the cases move quickly. There is only a legal obligation for the company to remain in existence for 12 months.

Some of the companies do not make a film for another year-----

-----and then they are statute-barred.

The company is in existence for 12 months after the completion of the production. That is the period of time in which the case must be taken.

Deputy Boyd Barrett will be on his feet again for this next question but we are running out of time.

Fiscal Policy

Éamon Ó Cuív


22. Deputy Éamon Ó Cuív asked the Minister for Finance the steps he intends taking in 2022 in relation to direct and indirect taxes to lessen the burden on people due to the very large increase in the cost of living, interest rates and fuel; and if he will make a statement on the matter. [20989/22]

Richard Boyd Barrett


33. Deputy Richard Boyd Barrett asked the Minister for Finance if he is proposing any tax or other measures to counteract the accelerating cost of living in all areas; and if he will make a statement on the matter. [21445/22]

The question is very simple. Is the Government going to propose an emergency budget to deal with the cost-of-living crisis? The cost-of-living crisis is hitting people at every single level. It is hitting them in terms of rents, accommodation, energy prices and the cost of normal consumer goods. The value of people's pay and income is also falling commensurately with the rise in inflation. We cannot wait until October for the Government to seriously address all these issues. We need an emergency budget to do that.

The Deputy will not get a chance to come in twice. He might get in once more.

I understand this question may have already been taken.

It may have been taken already. I am sorry.

This question proposes a tax or other measures to counteract the accelerating cost of living in all areas. This issue has been raised this morning, twice in Private Members' business this week and again in the motion yesterday. It has been the essence of four debates in the Dáil this week alone. I can reiterate everything I have said for the last hour and a half, which dealt predominantly with these issues, but the response to this question is on the public record.

It was grouped with Question No. 22 but that question was not actually taken.

Question No. 22 related to direct and indirect taxes. There were a series of measures in last year's budget, going up to this week, relating to the cost of living and helping people with cost-of-living issues. The Minister has indicated that there are no further measures planned until budget day.

The Deputy may have a last word.

We have just received another report about new rents going up by 9%.

That is on top of rents that have effectively doubled in recent years. They are going out of control. We need measures to address that, including rent controls, because that leads directly to people being homeless. The VAT reductions the Government has provided are pathetic, given the increased energy costs people are facing, particularly people with disabilities, single mothers, the vulnerable, the sick and so on who are disproportionately impacted, as well as low-paid workers. The Government's measures are nowhere near what is necessary. People's pay is effectively being slashed as we speak. We need increases in pay and income.

The Deputy mentioned the 390,000 people who are most vulnerable. The combined payments they receive from the Government, including the fuel allowance, as a result of the budget and the recent measures, is more than €1,000 in each case. It was never intended to cover their entire fuel bill for the year but it is a substantial contribution. The Government has extended the period and provided increases. It is well over €1,000 for the people most affected when the electricity payment is added. People appreciate the €2.1 billion put into this since budget day is substantial, but it was never intended to ameliorate all the effects of the Ukrainian war and other issues.