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Dáil Éireann debate -
Thursday, 16 Jun 2022

Vol. 1023 No. 6

Ceisteanna Eile - Other Questions

Fuel Prices

Aengus Ó Snodaigh

Question:

5. Deputy Aengus Ó Snodaigh asked the Minister for Finance if he will consider reducing the rate of excise duty applicable to petrol and diesel to ensure that, as the price of fuel increases, Government income does not also increase at a cost to households, businesses, taxi drivers and hauliers in particular; and if he will make a statement on the matter. [31304/22]

Jennifer Carroll MacNeill

Question:

21. Deputy Jennifer Carroll MacNeill asked the Minister for Finance the estimated cost of reducing excise duty on petrol and diesel to date in 2022 that was originally introduced to help with the cost-of-living pressures; and if he will make a statement on the matter. [31017/22]

Brendan Griffin

Question:

23. Deputy Brendan Griffin asked the Minister for Finance if he will further review taxes on transportation fuel given the further price increases; the estimated income that has been raised from transport fuel taxes and excise to date in 2022; the way this compares with the same period in 2019, 2020 and 2021 and with the projected figures by his Department at budget time; and if he will make a statement on the matter. [31298/22]

Matt Carthy

Question:

44. Deputy Matt Carthy asked the Minister for Finance the additional measures he intends to introduce to support workers who are impacted by soaring motor fuel costs. [31308/22]

Cormac Devlin

Question:

65. Deputy Cormac Devlin asked the Minister for Finance if he has any plans for a further extension of the timeline for the reduction in excise duties on petrol, diesel and marked gas oil; and if he will make a statement on the matter. [30070/22]

This question relates to the petrol and diesel crisis and the significant cost on households, businesses, taxi drivers and hauliers. Has the Minister for Finance considered reducing the rate of excise duty applicable to petrol and diesel in particular?

I propose to take Questions Nos. 5, 21, 23, 44 and 65 together.

I thank Deputy Ó Snodaigh for raising this question. As the House will be aware, excise duty is applied to fuels on a volumetric basis in the case of non-carbon charges and on the basis of carbon dioxide omissions in the case of carbon tax. As such, the revenue raised from excise duties does not increase in light of increased prices, as may be the case with the ad valorem application of taxation.

The Government is aware of the impact of rising fuel prices on households and businesses. These trends are driven by global factors, the single largest of which is what I call the Putin war in Ukraine, which affects everything underpinning our discussion today. Without that war, we would not be having this discussion. Yes, prices were increasing due to Covid. There were supply chain issues across the world's economy as well as pent-up savings, with people wanting to spend more. This has led to inflationary pressures. After two years of lower activity during Covid, there has been a surge in activity, which is increasing inflation.

The key issue people are concerned about is the Putin war. Most of the scenarios being produced by the ESRI and everyone else are based on what is happening in Ukraine and how it affects fuel. While we do not directly import fuel from Russia, other EU countries do. If they stop doing so, it will have a significant impact on the markets where we purchase fuel and limit other countries in where they source their fuel, adding to our inflationary pressures.

A key driver in the inflation in wholesale energy prices has been Ireland's rebound, which has been quick and strong as a small, open economy. More recently, the Putin war has been a significant factor.

I understand the Minister of State's point, but that does not solve the problem for those involved in farming, transport or haulage or for the ordinary worker who has to get to work and cannot rely on public transport because there is none in the area or it is not feasible. Their costs are going up. It is reckoned that, if inflation continues as it has been, prices will increase by between €750 and €1,000 per year. The Minister of State is correct about prices fluctuating, but they do not fluctuate to that degree. The Ukraine crisis is being used as an excuse to explain away the current rise, but the increases in petrol and diesel prices far predated the war in Ukraine.

People take temporary measures in an emergency, and this is an emergency. We took temporary measures for the past year or two during the pandemic. What emergency measures are going to be taken to ensure the increase in the cost of fuel is not passed on to those who cannot afford it?

I apologise for missing the start of the question. The specific question to the Minister of State is on soaring fuel prices and the impact they are having on workers and families. The Government introduced minimal reductions in excise measures in March and it has done nothing since in respect of the huge cost and burden of fuel prices on workers and families. We are four weeks away from recess and if the Government does not introduce a measure within those four weeks, we will be looking at the end of September or October. I dread to think what fuel prices will be at that stage. The implications of further increases in fuel prices for so many workers and families do not bear thinking about because they are already stretched to the limit. There is also an additional burden that the increase in fuel prices brings because everything is transported and when those transport costs increase so does the price of everything else, including foodstuffs. Will the Minister of State introduce measures that will help ease that burden before the summer recess?

On fuel excise, a package of measures, to the value of €320 million, was introduced on 10 March. I know the Deputy said that was little or nothing but €320 million is a substantial figure and that was only done quite recently. That reduced the VAT, inclusive of excise duty on petrol and diesel, by 20 cent and 15 cent per litre, respectively. These reductions mitigate the cost of a fill of a 60-litre tank by €12 for petrol and €9 for diesel. We know that as we head back into the next winter season, when it comes to the cost of home heating oil, those areas will become more important. There is not quite the same call on those resources during the summer.

However, I have made the following point already and the Deputy will also have heard about the ESRI report this morning. That contains food for thought for the Government for the forthcoming budget and preparation for same. I respect what the ESRI says even if I do not always agree with it. I often agree with what it says and the ESRI has talked about the measures we have introduced, including the precise ones the Deputy is proposing. I am not taking the following quote selectively; rather it is a big quote in bold print in its press statement:

If the objective is to protect those most affected by rising energy prices, cutting indirect taxes on energy – like VAT, fuel duty, or the carbon tax – is a poorly targeted response.

That is the case because it has run the figures and it says that wealthier and better off people on higher incomes are benefiting disproportionately and in a positive way from its point of view, rather than the people who need it more. The ESRI goes on to state in its press release:

Instead, increases to welfare payments, the fuel allowance, and even lump-sum payments like the household electricity credit are better targeted at those most affected by energy inflation

That is because energy inflation affects people on lower incomes more than people on higher incomes. Everyone got the €200 but proportionately, the value of that €200 was far more for a lower income household than for a more wealthy one. The ESRI is saying that some of these measures are more targeted because they help people on lower incomes to a much greater extent. Some parties in the House oppose this completely and think the solution to everything is solely in petrol and diesel. These other measures we have taken to reduce the cost on households and the cost of public transport also contribute and have to be taken into consideration.

I do not know whether the Government understands how stretched businesses are and how the first reaction for any business if it has an increased output is to pass that increase on to the customer. That includes the less well-off and those who are dependent on local shops and on getting to school. There has to be some measure to try to discourage businesses, hauliers, taxi drivers and any type of transport business in this country from passing on to the customer the increases they are being forced to pay because of the price of fuel. One of the ways we can do that is through taxation, rebates, reducing the excise duty and measures such as that. At this stage there has been a huge jump since March and March is what the Minister of State quoted. There has been an increase of 20 cent per litre since March. Not a thing has been done and it is likely to continue in the coming weeks and months.

Let us be clear that Sinn Féin has put forward a package of measures that are required to ease the burden of the cost-of-living crisis that so many are facing, including specific directed measures that would ensure social welfare recipients and people on lower incomes receive targeted supports. We also need to recognise the lived realities of hundreds of thousands of families. I will never forget the telephone conversation I had with a person who told me that on their way home from work they have to hold their breath while looking at the petrol gauge and cannot begin to think about how they will drive to work the next day, without even considering whether they will purchase a lunch for themselves as that is not an option. I asked the Minister of State a specific question. Will he introduce measures to support people in that position between now and the summer? He did not respond to that question so I will ask him again. Will the Government do a single thing to help those specific people between now and the summer recess? If it does not, those people will be waiting at least six months before this Government intervenes.

The Deputy's question is specific about the reduction in excise duties for petrol, diesel and marked gas oil. I know he said he has concerns about other issues and people on lower incomes and social welfare payments who might not be affected to the same extent as people trying to get to and from work. The question he asked was specifically on that issue and I have been confining my remarks to the specific question that was raised and, in particular, to what the ESRI said about that this morning, which I have quoted. The ESRI has talked about these issues. The European tax directive minimum rate for petrol is 35.9 cent per litre. Prior to the 9 March reduction it was 63.67 cent per litre and we reduced that to 46.59 cent per litre, a 21% VAT inclusive reduction. For diesel use as a propellent, the minimum rate is €330 per 1,000 litres, VAT inclusive, which equates to 33 cent per litre. Prior to the 9 March reduction it was 53.5 cent per litre so there have been significant reductions in that.

On the questions on this matter, I am advised by the Revenue that the costs of reducing excise duty on petrol and diesel are estimated at €27 million and €69 million, respectively, including VAT, for the period from 10 March to the end of April. We introduced those measures and they are continuing today, next week, the following week and right up to budget day.

Tax Collection

Bríd Smith

Question:

6. Deputy Bríd Smith asked the Minister for Finance if he has studied a recent paper on wealth taxes and the problems with previous attempts by European Union states to introduce wealth taxes (details supplied); the plans he has in this regard for the coming period; and if he will make a statement on the matter. [31246/22]

I want to follow on the discussion that has been going on. The question I am about to ask is quite significant because we are constantly being told that there are not enough resources to do all we have to do to deal with the various crises. Has the Minister of State looked at the recent Oxfam report that dealt with wealth taxes and the problems with previous attempts across the EU to introduce same? Does he have any plans in this regard in the coming period?

I thank the Deputy for bringing this recently published paper on wealth taxation by Emmanuel Saez and Gabriel Zucman to the attention of the Department of Finance. The paper is being reviewed but, in summary, it describes the historical experience of wealth taxation in Europe and draws lessons from this. It concludes that the wealth tax base was narrow in European countries due to large exemptions, tax avoidance and evasion. The paper explains why such exemptions were granted and how the authors contend they undermined European wealth taxes. The paper examines the issue from an EU-wide lens, with some discussion of specific countries, but it does not refer to Ireland. It is important that we mention the context that it is a European report that does not specifically refer to Ireland. I acknowledge that the Deputy has highlighted that and the paper is being examined.

While the Government understands the background to calls for a specific wealth tax in Ireland, it is important for people listening to note that contrary to the general impression given by some of those calling for such a tax, it is not the case that a wealth tax does not exist in Ireland. Ireland's wealth is taxed and taxes on wealth are in place. These wealth taxes include capital gains tax, which is significant, and most people who buy or sell houses or property will be aware of that. It also includes capital acquisitions tax and the local property tax and between them, according to Revenue’s annual report for 2021, those taxes raised €2.77 billion net last year.

The biggest wealth in Ireland is the value of people's households. We have a wealth tax on that, notwithstanding some parties of the left opposing that. Any revenue raised from a new wealth tax may not, therefore, be additional to the existing forms of wealth tax, as revenues from the latter could be affected by the introduction of new taxes.

On the broader issue of inequality, it is important to note that the taxation system in Ireland is deemed generally progressive by most independent observers.

I do not want to go down a rabbit hole of arguing with the Minister of State about the significance of the property tax. He says people's homes are the biggest form of wealth but for many it is a struggle to keep the roof over their head, pay the mortgage, etc. Putting the property tax on those who can ill-afford it is obscene. However, that is not what I am here to argue.

The Minister of State is evading my question on tax on wealth in this country because it is not directly in the Oxfam report. However, using the method that report applies, the first thing it points out is that the wealth of the top tier of society has increased hugely in Ireland. Nine billionaires have seen their wealth increase by €18 billion since the start of the pandemic to an obscene figure of €50 billion. We know we do not get back what we should in tax from that. The method Oxfam advocates allows for an exemption of up to €4 million, which I think is way too high but I use that figure to show how modest the report is. If we take that exemption rate, after that we could introduce a serious wealth tax that would bring in the money we need to deal with the various crises we face.

It is expected the top 1% of taxpayers, who are those with an annual income in excess of €200,000, will have paid 25% of total income tax and USC last year. That is a very large proportion of our total income tax. In comparison, it is estimated that 75% of taxpayers, those with an income of less than €50,000, will have paid 18% of the total income tax last year. They are the most recent figures I have available.

The Deputy will be aware a Commission on Taxation and Welfare was established in June 2021 and is currently carrying out its work. Wealth taxes, along with any other form of taxation, could fall within this review but the commission is undertaking an independent review. It would not be appropriate for the Minister or me on his behalf to speculate about the specifics of the working contents of that report, which will be published as soon as practicable. We cannot suggest to the commission what it should do. Taxpayers in Ireland in the €100,000 bracket generally pay 40% of their income in income tax. We have a more redistributive tax system than most countries.

If the Minister of State reads the Oxfam report when he gets a chance, he will see it is looking at extreme wealth and how it has doubled, tripled and, in the US, increased tenfold in recent years. In the 1980s, we were told there was no money, we were bust and needed to tighten our belts. We know since there was plenty of it but it was held in Ansbascher accounts, offshore tax havens and brass plate companies. We have seen the studies from the Paradise Papers and the Panama Papers so we know there were and are ways for the extremely wealthy not to tell the truth about their wealth. We have quite a lot of millionaires and nine billionaires in this country. For a small island, that is staggering.

The paper suggests many ways tax could be taken from the wealthy. Not to have them self-reporting would be a start, but rather to have somebody delve into their wealth; as well as not giving them this obscure way of hiding their wealth but forcing them to show it. Many wealthy companies and people say they cannot afford the tax because it is all in shares. They also suggest the Government take the tax in kind and take shares. We have worked out that could yield €4 billion, which would do a lot to provide free public transport, double the number of buses on the road and give free childcare to every family. A lot could be done with that to address the multiple crises we face.

I understand there is a small handful of wealthy people. I do not know any of them or where they live. I have not encountered them but I take the Deputy's point. If they are tax resident in Ireland, they are covered for all taxation therein. A small proportion of taxpayers, some 1%, pay 25% of all income tax. We have a similar pattern in corporation tax, where a small handful of major companies pay the vast bulk of it. To that extent, we collect tax, whether wealth or income tax, from the very profitable, wealthy organisations.

I gave an example of how tax is progressive in Ireland and what we have done on wealth tax. The top three forms of wealth in Ireland are as follows: people's houses, with the value of houses being the most significant part of wealth. The second most significant is farmland. Land is valuable but is a working asset for the next generation. The third most significant is people's pension funds, about which I would be concerned if we started taxing. People invest to make sure when they retire they are not dependent on the State and have a pension fund built up over the years, some of it in shares. I would be horrified if we were to start attacking pension funds, thinking we were getting solely at the wealthy. Most people need those funds and have put into it on the basis that they will be able to draw them down.

It is disingenuous of the Minister of State to keep referring to people's homes, farms and pensions. We are talking about an obscene level of wealth that is not properly taxed, as pointed out by the Oxfam report. The wealthiest in the globe have seen their wealth jump by €4.35 trillion during the pandemic. The report states that, globally, billionaires have had a terrific pandemic. With the investment in all the industries leading from that, we would have been able to see-----

Thank you, Deputy. That is your question finished.

The clock says I have 30 seconds.

That is for the next question. We have gone into Deputy Calleary's time.

Okay. I am sorry about that.

Insurance Industry

Dara Calleary

Question:

7. Deputy Dara Calleary asked the Minister for Finance the measures that he is taking to increase competition in the Irish insurance market; and if he will make a statement on the matter. [30073/22]

Much reform has been made on the jurisprudence side of insurance costs and legal costs, yet business insurance costs continue to rise. What action is the Government taking to address this issue and to follow up whether the reduction in legal costs and awards are being passed on in the form of reduced insurance premiums? What further actions are planned?

I thank the Deputy for highlighting the issue of the insurance market in Ireland. It is a key priority for this Government and, as he will be aware, we have established a Cabinet subgroup on insurance reform, chaired by the Tánaiste. Several Departments sit on the quarterly group meeting. The Department of Finance has a key role because insurance is a regulated industry. It comes directly under the purview of that Department because the Central Bank regulates that industry.

There are three major forms of insurance in Ireland. The motor insurance market is the biggest section with approximately 2.5 million vehicles on the roads. There have been significant price reductions consistently in recent times in that sector. Every day somebody says they made a phone call when they got their premium and got a reduction. The next biggest market is home insurance. Practically every house, but not every house, in Ireland has home insurance. It is a big market and the Central Bank is introducing measures on 1 July. We have legislation to ensure that happens, which went through the Dáil in the past couple of weeks and is now going through the Seanad. That will come in and should bring about a reduction in house insurance.

The Deputy rightly pointed out that business insurance is the most difficult issue because every business is different. Cars and motorists are a fairly homogenous group. We have done much in that area in terms of competition. Until recently, there were issues relating to childcare. One company that covers that entire sector is offering an attractive package and reducing its premiums. They want competition in the sector, which will happen now it is deemed to be profitable and there is a consistency of approach. Play Activity and Leisure Ireland, PALI, a play activity centre group, is the new broker that has come, with a major new international insurance company, into the market in recent weeks and taken over the entire sector. There will always be individual sectors and a number of improvements, which I will elaborate on, are being worked on.

I thank the Minister of State. I was contacted recently by a company in my constituency in the broader hospitality industry. It was closed for much of 2020 and 2021 as a consequence of Covid, yet has had a 300% increase in insurance costs since 2019.

There has also been a considerable increase in its excess. This is in spite of the changes to judicial guidelines which, as the Minister of State rightly said, have had a big impact on motor insurance premiums. One would assume they should also have had an impact on business insurance premiums, particularly in that space. Considering the degree to which the hospitality industry was shut down and the associated low level of claims made, there should surely be reductions in that area as well. What work is under way within the Department to monitor the cost of premiums as opposed to waiting on informal feedback? There should be some system of monitoring premium costs in order that an eye is constantly being kept on whether the reductions arising from the Government's work are being passed on to the customer.

With regard to competition, I welcome the arrival of a new company in this space but the difficulty is that history shows us that a company lands, takes all the business and then, when it pulls out, we are left scrambling again. How are we going to avoid that?

There are a couple of things I want to say on that. I acknowledge the case of that business. I am happy to talk to the Deputy about that company next week. If it is closed, it is closed, but if there is anything we can do through the industry, rather than through the Department of Finance, such as putting it in touch with people who may be able to help, we will be happy to help in that way or in any other way we can.

At government level, legislation to strengthen the role of the Personal Injuries Assessment Board, PIAB, is currently in the system and legislation on the duty of care has recently been approved by Cabinet. Businesses have said that this is the single most important aspect from their point of view. Up to now, if somebody had a slip or trip in a shop, restaurant, pub or garage, the person who owned the property was nearly always on the hook for everything regardless of whether the person was negligent in respect of where he or she was walking. That legislation will come through the Oireachtas this year. There was a very positive test case in this High Court a few weeks ago that upheld the personal injury guidelines. The legal profession earns €130 million from the insurance sector and, therefore, it has a vested interest in maintaining the status quo. This case may be appealed. Even though we have done our bit, we might have to wait for some of these guidelines to be fully confirmed through the courts before price reductions are seen. I meet the chief executives of the top major companies here on an ongoing basis to ensure these reductions will come through. They have assured us that, once the guidelines have been confirmed by the courts, price reductions will come through. The Oireachtas has done its bit but we are waiting for the courts to give final approval to what has been put in place, which we hope they will.

While we wait on the courts, premiums are going up. Public liability premiums increased by 16%, according to research from the Alliance for Insurance Reform. Many businesses cannot wait given the other cost pressures they are under. Again, I ask the Minister of State whether there will be price monitoring under the new system. Can we give a role to the Competition and Consumer Protection Commission with regard to price monitoring so that people can see that premiums are coming down? I know premiums are different for every business and reflect specific business conditions but guidance should be made publicly available and there should be some system of monitoring the insurance industry to ensure it is passing on the benefits of the work done in respect of insurance reform and legal reform. Otherwise, businesses will continue to have to pay substantial increases and that is before inflationary increases are considered. There is no sense in having done all of this unless we actually get prices down. What is the timeline on the PIAB legislation?

We expect the PIAB and duty of care legislation to pass through the Oireachtas this year, although it will be after the summer. With regard to the issue the Deputy is referring to, which is the publication of independent information as to what is actually happening, we can have a very useful discussion next week. Next week, the Central Bank will publish its second ever report on employer and public liability insurance costs, claims and premiums. When we are back here in the middle of the week, we will have a report from the Central Bank, which is in a better position to do this work than the Competition and Consumer Protection Commission because it has access to the microinformation and deals with all of the major insurance companies. I have no idea whether it will be good or bad news but we will have the information next week. That will be very helpful and will provide the objective information the Deputy is looking for.

Departmental Reviews

Catherine Connolly

Question:

8. Deputy Catherine Connolly asked the Minister for Finance further to Parliamentary Question No. 37 of 28 April 2022, the status of the review of the help-to-buy scheme; the person or body carrying out the review; and if he will make a statement on the matter. [30711/22]

I have a very specific question about the help-to-buy scheme. I have been following up on this since the review was announced. What is the status of the review? Which body or person is carrying it out? When will it be completed?

I thank the Deputy for raising this issue. As she has said, she has consistently raised this matter with the Minister for Finance. The help-to-buy incentive is a scheme to assist first-time purchasers with the deposit they need to buy or build a new home or apartment. The Deputy knows this but I am saying it for those listening. There are many different schemes so I wanted to put on record which one we are talking about. The incentive gives a refund of income tax and deposit interest retention tax paid to the State over the previous four years, subject to limits outlined in the legislation. The Taxes Consolidation Act 1997 outlines the definitions and conditions that apply to the scheme. As the Deputy will be aware, as part of budget 2022, the Minister for Finance announced that a formal review of the scheme will take place this year. The contract for the review has been awarded to Mazars following a competitive tender process. That is new information that we did not have the last time we spoke. This selection from a number of bidders was made in accordance with the relevant public sector procurement guidelines for procurements costing in the range of €25,000 to €144,000. The most economically advantageous tender was selected, which was from Mazars. I am informed that work on the review is under way and in keeping with the terms of reference provided in the request for tenders. The terms of reference are as follows:

To examine all aspects of the Help-to-Buy scheme [...]

In doing so, the review should explore the cost effectiveness of the scheme to-date, including the issue of deadweight. It should also examine the impact of the scheme on house prices since inception.

The findings should present an assessment on a national basis while highlighting any regional aspects.

Having regard to the Government’s Housing for All strategy, and in particular to other initiatives included in Housing for All that have the same broad policy objectives as currently apply for the scheme, to examine whether there is a continued role for Help-to-Buy and, if so, to present options on how such role might best be fulfilled in the most efficient and cost-effective manner in the medium to long term [...]

As part of the overall context, the review should draw on experience internationally and offer views in this regard as appropriate.

The study should be completed by c.o.b. Friday, 24 June 2022.

Since we last spoke, Mazars has been appointed. There is a deadline. As soon as the report is provided, the Minister will be able to consider it with a view to publication in due course. That is the timeline.

When precisely was Mazars appointed? Will the report be produced by the closing date of 24 June? It seems an extraordinarily tight timeline. It has already taken this long since the review was announced in October 2021. I welcome the positive news but I want clarification on that point. I also want to know the cost of it. The range under the procurement guidelines is €25,000 to €144,000. The background is very important. This was introduced in the budget in 2016 for 2017, as the Minister of State well knows. It was predicted to cost €40 million per year. Between January to November 2021 alone, it had cost €167 million, more than four times that figure. I understand it has now cost more than €500 million. We do not know if it represents value for money. We have had various reports and comments. In October 2021, Professor Kieran McQuinn of the ESRI said the scheme was adding to demand pressures. We know from the Parliamentary Budget Office that 41% of applicants had no need for deposit assistance.

I will clarify because it may be a little bit confusing. The Deputy may understand it but not everyone watching will. The selection from a number of bidders was in accordance with the relevant public procurement guidelines for procurements costing in the range of €25,000 to €144,000. It was expected that the tender would fall within that range. It is not necessarily the price. We have not given the price. I do not have the price here today. Mazars was only recently appointed. The tender process closed on 28 April. I think I saw in my notes that Mazars was appointed on or around 28 April but I ask that the Deputy not to hold me to that because I am speaking from my recollection on that particular issue. I take on board her view. Historically, the Government and the taxpayer have always supported a form of home ownership over the decades. It is part of the Irish psyche. This is another element that reinforces that.

I would appreciate clarification on when specifically Mazars was appointed. Will it be able to comply with the deadline of 24 June, which is tomorrow week? On the actual cost, I understand the range but would like to know the specific cost for the duration of the contract. Will it be published? With regard to the Minister of State's comment on the Irish psyche and home ownership, I do not believe this is a way to help people to own homes.

I believe that it is an inflationary procedure which adds to the prices. We know that over 40% of buyers did not need help with a deposit for houses priced at up to €600,000. That is not a way to increase affordability or to help people gain ownership. I hold a completely different view on the scheme, which I will not go into in the few seconds remaining. It is already on the record. I am fully in favour of public housing and ownership of housing, but not in the manner in which it is being done currently. It is being done piecemeal, like a jigsaw, which is adding to the cost all the time. The review of the scheme is supposed to be a fundamental one. How much is it costing? Will it be completed by Friday, 24 June, and published immediately?

I thank the Deputy for the additional questions. I do not have some of the information to hand. I will ask officials to forward to the Deputy as much information as possible on her questions in the coming days. I am not sure whether information on the cost of the review can be provided. I do not know the answer to that.

There is a broader issue. I am generally in favour of the scheme, whereas the Deputy is not. However, that is a broader issue and does not concern the specifics of the scheme. I benefited from getting income tax relief on the interest on my mortgage. It is gone now. I think it was part of the Irish psyche to get some help when buying a house. That is gone. This is a different scheme. Some people, including me, think it is a good idea, while others have reservations about it. However, that is a larger debate for another day.

Credit Unions

Seán Haughey

Question:

9. Deputy Seán Haughey asked the Minister for Finance if he will report on his engagement with credit unions and representative bodies to date in 2022; and if he will make a statement on the matter. [29754/22]

The Minister of State has been doing a lot of work and has engaged extensively with various elements of the credit union movement since his appointment. I want to get a sense of where we are at with the plan to support our credit unions in their ambition to grow and become a much bigger part of banking solutions, particularly community banking solutions.

To date in 2022, I have had 13 meetings with various credit union stakeholders, including the representative bodies, the Credit Union Advisory Committee, CUAC, and individual credit unions. I have also spoken at the AGMs of the Irish League of Credit Unions, the Credit Union Development Association, CUDA, and the Credit Union Managers Association, CUMA, as well as at the National Supervisors Forum summer forum just last weekend. I have met various credit union representative bodies which broadly supported the proposals emanating from the programme for Government review of policy framework. The review has been completed and legislative proposals will be brought to Cabinet shortly.

Significant work has been carried out in this area in the past 18 months. All the representative bodies attended a meeting in the Department that I chaired on 10 March 2022 and agreement was reached on 12 of the 14 proposals. The legislative proposals are scheduled to go to Cabinet in the next week or two, when we will have more information on them. I stress that we are not dealing with or infringing on the role of the Central Bank in terms of regulatory requirements. Those are for the Central Bank as regulator. The Department of Finance, politicians and the Government should not be involved in regulation, as I am sure the Deputy appreciates. We will have further information on the proposals as soon as they go to Cabinet.

There is general support for this area. The programme for Government has four measures on credit unions, all of which are important. The most important is the aim to grow the credit union movement. I have never engaged with credit unions without making a specific point, which I will repeat now. They must grow their lending books. I am aware that some people will talk about Central Bank restrictions. Those restrictions mainly deal with credit unions' deposit rates and how much they have to hold in reserve. The biggest issue facing the credit union movement is that a generation or two ago, credit unions were lending out 60% of their assets in loans. The majority of their members were saving and taking out loans. Recently, I have met with credit unions that are only lending to 15% of their members. The average loan-to-asset ratio in the credit unions is 26% or 27%. That is not sustainable. It has to be 36%, 46% or 56%. They lend money at a rate of 6% or 7%, on average. That is how they will become more sustainable in the future. They need to lend more money via credit, rather than serving as institutions for saving.

I acknowledge the Minister of State's engagement with the credit union movement. We cannot just dismiss the role of the Central Bank by saying this is a matter for the Central Bank. There is no doubt that the Central Bank's attitude and its regulation act as a brake on credit unions playing a bigger role in communities, in particular, in banking. That is historical. We need to reflect on how we can get the credit union movement to grow to the strengths it has in 2022, as opposed to ten years ago. Perhaps we have to review the regulations to allow credit unions to grow.

On the figures cited by the Minister of State, there are many credit unions that would like to lend, but cannot do so because they are not getting sanctioned for products or they are getting a large kickback. Credit unions are ideally placed to deal with the current cost-of-living crisis. As interest rates on home loans begin to rise, they are ideally placed to assist in the area of community banking, if they are given the flexibility to do so, by offering a home loan product that will reflect the area in which they operate.

I welcome that the Minister of State plans to bring proposals to Cabinet in the coming weeks. Will there be legislative leads out of those proposals? What does the Minister of State envisage will be the timeline for implementing those proposals?

The proposals being brought to Cabinet are specifically for legislation. They concern the 12 topics on which we want to legislate and there is agreement on those. After the proposals have been brought to Cabinet, I hope they will go for pre-legislative scrutiny as quickly as possible. On the timeline for getting the legislation through the Dáil in the second half of this year, the pre-legislative scrutiny process could take a day, a week or four or five months. That is outside my control. I know the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach has a very heavy workload. I ask the committee to prioritise pre-legislative scrutiny of the proposed legislation as soon as possible, so that we can get it through the Houses and enacted. The legislation will contain an element on a service level agreement between the Central Bank and the credit union movement, which does not exist currently. When a credit union contacts the Central Bank about a particular project or a new product it wants to offer, a timeline will be set out in the service level agreement. Currently, the process is open-ended. Many practical measures are being introduced in the legislation. I take on board the Deputy's point on the role of the Central Bank. It applies to banking as well.

I welcome movement on this matter. If the legislation is passed, how will it change the operation of the individual credit unions? Will it unleash them or give them the chance to be more responsive than they can be currently? As the Minister of State noted earlier, banks are withdrawing their physical services from communities, leaving many people who depend on branch banking exposed. The credit unions are perfectly placed to step in and provide physical banking services. Will there be provision in the legislation to assist them in doing that, particularly in communities where there might be a need for support to assist them in maintaining a physical presence, including through the provision of financial support similar to that being offered to post offices, in order that we have a certain viable level of physical financial transaction services in communities around the country?

The Deputy raised a number of points, which merit a more detailed discussion on another occasion, given the time constraints today. The levies the credit unions pay have been cut by 55% since this Government came into office, resulting in a very substantial saving of around €6 million. Three different credit union proposals have been approved by the Central Bank for lending to approved housing bodies, AHBs. It is now up to the credit unions and the AHBs to work out the commercial arrangements for that. The option to submit such proposals is open to every credit union in Ireland, if it chooses to avail of it. It is now up to the credit unions and AHBs to finalise the arrangements. The biggest thing the legislation will encourage is collaboration among the credit unions. No individual credit union can take on the big job of mortgage approvals. Back-office support and collaboration among credit unions are required. The service providers that supply the credit unions with current accounts or debit cards are being given statutory recognition in the legislation, which they do not have at the moment, to work on a collaborative basis at the request of individual credit unions. Most credit unions cannot take on the full range of services individually. Initiatives such as Cultivate, involving credit unions coming together voluntarily to offer new products, are the future of the movement.

Departmental Policies

Fergus O'Dowd

Question:

10. Deputy Fergus O'Dowd asked the Minister for Finance if further measures are being considered to help with the cost of living given the decrease in consumer spending in the first quarter of 2022; and if he will make a statement on the matter. [31335/22]

Ruairí Ó Murchú

Question:

27. Deputy Ruairí Ó Murchú asked the Minister for Finance if he will introduce an emergency budget and targeted measures to support struggling households following a research paper (details supplied); and if he will make a statement on the matter. [30059/22]

There has been a significant amount of to and fro today arising from the fact that a huge number of people are now in serious financial difficulty due to rising costs. I accept the Government cannot do everything but we need to see it doing more. We want to see an emergency budget, but I will not get into that now. We could talk about the Economic and Social Research Institute, ESRI, report and the views of the Irish Fiscal Advisory Council, IFAC, and the Central Bank. What promises will be made with a view to mitigating the difficulties people are experiencing?

I propose to take Questions Nos. 10 and 27 together.

I thank the Deputies for their questions. The decline in consumer spending in the first quarter of this year was mainly due to the mobility restrictions introduced because of the omicron wave of the pandemic. The Deputy referred to recent engagement with the Central Statistics Office, CSO, in his question. On the question of the cost of living, the Government has acted swiftly and frequently to address this issue, including through budget 2022 measures and more recent measures, adding up to €2.4 billion, which have been introduced to ease the burden on households, including with measures targeted at those in need.

In October, as part of the budget, the Government provided more than €1 billion in direct relief, incorporating a reduction in personal income tax and a social welfare package. Inflationary pressures intensified because of pent-up demand in the economy after the pandemic-related restrictions. There were also restrictions on getting products into the country due to various backlogs in production lines and those problems are still there and have added to inflation. The Putin war has also exacerbated the situation, primarily in its effect on the price of fuel, which affects people coming to and going from work, home-heating costs and the cost of running a business. That has exacerbated the situation.

The Government acted again in February with a package of €505 million to deal directly with the issue of rising energy prices. This included a €200 credit towards the cost of energy bills for every household in the country, a lump sum payment in respect of the fuel allowance and a cut to public transport fares.

The Deputy mentioned the ESRI report. It stated that the types of measures we introduced, such as the lump sum payments to help with household energy bills, were better targeted than an across-the-board fuel increase from which everybody, including wealthy people, would benefit. As the report stated, even though the same amount of €200 was given to each household, we know that lower income families have higher energy costs proportionally relative to their incomes. Therefore, the lump sum payment was proportionally more beneficial to those people. Those were the words of the ESRI this morning.

We all know the situation we are in. We are not taking away from what has been done by the Government to date but the fact is we are in a crisis and a disaster, to use terminology that is interchangeable now. We need to see action. It is no more than what any of us hear when we go around canvassing. No one is very interested in what has been done because they are more interested in what is going to be done. Given the circumstances people are in, we need action.

What we want to see is what is proposed in many of these reports. We need supports to be targeted at those who need it most. That is going to be difficult. We all know that a considerable amount of people have no choice about their use of fuel because they have to travel. We all know what we need to do with regard to wind energy, electric cars, infrastructure and public transport. We need to facilitate people who do not have those alternatives now. What are we going to do? We are heading towards the Dáil recess and unless we take action soon, none of this will be dealt with before September, October or later. That will be critical.

I will not go through the full list of measures we have introduced on an almost bimonthly basis since 1 January. Most recently, we reduced the rate of VAT for the hospitality sector to increase employment. The main task we have is getting people back to work. The best way of dealing with poverty in a household is to have an earned income in the house. That is better than the alternative. That measure was intended to get people back working in the hospitality industry, in our pubs, restaurants and hotels. There are now 2.5 million people in the workforce. The policies we are introducing are paying off. That is the highest number of people ever in the workforce.

In the coming weeks, the Government will publish the summer economic statement, which will set out the budgetary framework within which we will consider the measures to be introduced next October. The budgetary strategy will be aimed at restoring the public finances to a stable trajectory in the uncertain times ahead. We are going to see that in the coming weeks and it will set the framework for where the Government goes. It would be remiss of me not to acknowledge the fact that interest rates are rising and the taxpayer has a high level of national debt. We must be conscious of the extra cost of that debt on the Irish public.

We all accept we are in a situation that is far from perfect. We know that interest rates, inflation rates and all the rates one would not want to rise are rising. Unfortunately, the consumer, householder and citizen can feel all of this on a day-by-day basis. We must be able to offer them something so they can get through it. We all accept that employment, particularly highly paid employment, is a means of breaking poverty. However, a considerable number of people are falling into fuel poverty and becoming the working poor. We must facilitate them. They do not have alternatives to putting petrol or diesel in their cars. I understand we can still reduce their costs but it needs to be done straightaway. We also need to consider the cost of home-heating oil. We need to know what sorts of conversations the Government has had with the European Commission. What are the possibilities for cross-European mitigations? People need support as soon as possible. They are in dire need.

We will continue to assist households in dealing with the cost of living where it is possible to do so. It is imperative that policies are designed in a manner that does not increase inflation. Putting more Government and taxpayer money into the economy to try to counteract the effects every time there is an increase in inflation rates would add to the inflationary pressure. Budgetary policy must be carefully crafted to avoid becoming a part of the very problem we are trying to address.

The pandemic continued into this year. Some €7 billion was ear-marked for issues relating to Covid-19 this year. More than €3 billion of that was allocated and a further €4 billion remains unallocated and is in the contingency fund. There are ongoing costs relating to Covid so we cannot dip into that fund at this point because we do not know what will happen with the virus in the next six to eight months. We hope we will not need to fund a further response. Some of that money may have to be used because of the extra costs caused by the Putin war, including in dealing with the 35,000 Ukrainian refugees. None of us can dispute that if we have money to spare, we must look after families who are fleeing a war-torn economy. Nonetheless, we have put €2.5 billion into the Irish economy this year.

Derelict Sites

Steven Matthews

Question:

11. Deputy Steven Matthews asked the Minister for Finance his views on the introduction of a derelict property tax; if he will replace the derelict site levy that would be implemented by the Revenue Commissioners; if any research has been carried out by his Department into this proposal; and if he will make a statement on the matter. [31302/22]

I wish to hear the Minister of State's views on the introduction of a derelict property tax. Will the Government consider replacing the current derelict sites levy with a derelict property tax to be collected by Revenue? Has the Department done any research on this matter?

I thank the Deputy and appreciate his raising this matter.

Addressing vacancy and dereliction, and maximising the use of the existing housing stock, is a priority objective of the Government, as evidenced in the Housing for All strategy. One of the four pathways in the plan is specifically dedicated to this area.

The Minister for Finance has been advised by his colleague, the Minister for Housing, Local Government and Heritage, that the existing Derelict Sites Act imposes a general duty on every owner and occupier of land to take all reasonable steps to ensure that the land does not become, or continue to be, a derelict site. The Act also imposes a duty on local authorities to take all reasonable steps, including the exercise of appropriate statutory powers, to ensure that any land within their functional area does not become, or continue to be, a derelict site. These powers include the power to prosecute owners who do not comply with notices served, making compulsory land purchases and carrying out necessary work at charge to the owners for the cost.

The Minister has also been advised that the Department of Housing, Local Government and Heritage continues to liaise with local authorities on the implementation of the Act with a view to improving its effectiveness. In this regard, a review of the Act was initiated in November 2021 and initial submissions have been sought from local authorities on potential improvements to the legislative provisions and the way they are applied. We understand the Department of Housing, Local Government and Heritage is now in the process of establishing a focused working group to progress speedily this matter further.

It would be premature to speculate on possible legislative changes and improvements in the levy collection mechanisms, including replacing the current levy with a tax to be implemented by the Revenue Commissioners in advance of the completion of this review. It remains a work in progress. The process is open-ended but we want to see the report as quickly as possible so we can decide where to go next.

I thank the Minister of State. I am glad he referenced the Derelict Sites Act because it needs to be addressed. I have introduced a Private Members' Bill to address the issues involved and I hope it will be considered by the Department of Housing, Local Government and Heritage.

It is the taxation aspect of it that I am interested in, which is the responsibility of the Department of Finance. I am delighted to see work is in progress but this work needs to be expedited.

We have a housing crisis and there is no doubt about it. That has been well documented and much commented on lately. I see tackling dereliction and vacancy as an opportunity to bring life and living back into town centres, as well as addressing people's housing and accommodation needs. We have a derelict sites levy in place. In 2021, over €5 million worth of levies were issued but only €378,000 was collected by the local authorities. This levy is not functioning properly at local authority level, with less than 10% of what is owed being collected. That is why I suggest we introduce a tax rather than a levy, to be collected by the Revenue Commissioners. People pay attention to Revenue; they may not pay attention to the local authorities.

Everyone would agree with the Deputy's last point. When you get a letter from Revenue, you have to take it seriously. The Revenue Commissioners will get you eventually. Even if you are dead, Revenue will get what you owe from your estate. That is one of the sure things in life.

I understand that the operation of the legislation - the complications and implications involved - was very difficult and unwieldy. Issues arose relating to boundaries, registration, property ownership and so on. My local authority has issued a number of compulsory purchase orders, CPOs, on derelict sites and there is no reason for local authorities not to do so. It just takes a push from senior management to make it happen. Local authorities can all find reasons not to do it but there are glaring examples of the benefit of just getting on with it and serving the notice. Notices can be nailed to the door if it is not known who owns the property. That is part of the process and it is happening.

On the question of the involvement of the Revenue Commissioners, the Department of Finance cannot comment until it receives the report on possible taxation legislation. We have to hold back on that. On vacant properties more generally, the Revenue Commissioners is very active. I know from my constituency office that it is reviewing cases of people who are exempt from the local property tax, LPT, because they had an uninhabitable house. Revenue is of the view that if such properties can be made habitable, they should be brought back into use. There are different definitions between the Revenue and the local authorities but Revenue is doing very thorough work in this area, which is positive.

The CPO process is one that local authorities can use as a last resort when there is no movement but the introduction of a tax would serve as a land and building activation measure. Sometimes property owners just need a nudge in the right direction and introducing a tax would serve as a nudge. I am aware that the reasons for vacancy and dereliction are many and nuanced. The Joint Committee on Housing, Local Government and Heritage produced a report on this issue, to which this morning's Acting Chair, Deputy Higgins, contributed. There was cross-party agreement that we need taxation measures in the form of a dereliction tax and a vacant homes tax. I understand there has been some progress on a vacant homes tax. I will liaise further with the Minister of State on this as we approach the budget because I really believe taxation measures are what is required. Often when buildings sit vacant they have a negative effect on entire street scapes. If we can bring them back into use, that could have a really beneficial effect on towns and villages and local economies, both in terms of their general look and in meeting local housing needs.

I concur with everything the Deputy said. We all agree that we should be able to move on this more quickly. I acknowledge the work of the Joint Committee on Housing, Local Government and Heritage which put a lot of time into its report on this issue. I am not personally aware of any Private Members' Bill but that can be discussed in Government circles and with relevant Ministers.

I hope the aforementioned report is published as soon as possible. The Department of Finance has to stand back until it sees the report. In that context, I do not have any answer for Deputy Matthews this morning on taxation measures and will not have an answer until we get an assessment of the problem.

Insurance Coverage

Ruairí Ó Murchú

Question:

12. Deputy Ruairí Ó Murchú asked the Minister for Finance if he will provide an update on the status of his plans to address the rising cost of and limited access to public liability insurance; the detail of his recent engagements with an organisation (details supplied); and if he will make a statement on the matter. [30058/22]

This is not the first time we have spoken about public liability insurance. We all know it is a disaster. Many companies and organisations cannot get public liability insurance at all or if they are offered such insurance, the premium is terrible. What engagement has the Minister of State had with the industry on this? We all know that we need certain things to happen, some of which are in the gift of the Minister for Justice in the context of duty of care. We need to see action and we need to see prices coming down.

I thank Deputy Ó Murchú for raising this issue, which we have discussed previously. I appreciate and acknowledge his interest in this area. He is concerned to help various groups that are affected by limited access to public liability insurance. The Government recognises the concerns felt by many groups regarding the cost and availability of insurance and has prioritised insurance reform. As the Deputy is aware, we have an action plan for insurance reform and 80% of the actions under that plan have been done at governmental level. Some of the other actions will require implementation through the courts and are related to legislation we have recently passed. The judicial guidelines have been challenged and test cases have gone to court. I understand that one case was dealt with in recent weeks which upheld the guidelines. Some of the insurance companies wanted to see the outcome of those test cases. That will now give a level of certainty. Settlements were being held back while the outcome of those cases was awaited. A lot of people were not happy with the reduced rewards under the guidelines. Their solicitors advised them that they would have secured awards that were double in size last year and that the guidelines could reduce the possible payout by 40%. Many people have held off accepting awards until the guidelines were tested in court. We are making good progress on that and I am confident the Judiciary will stand by its own guidelines.

The other issue is duty of care legislation, which was cleared by the Government recently. I expect that legislation to go through the Oireachtas this year. That will be very important, as will the reform of the Personal Injuries Assessment Board, PIAB, to give the board a role in mediation. Until now, the board made a recommendation and told claimants they could take it or leave it. The Government's view is that if PIAB is given a conciliation role, it could negotiate an agreement between the two sides. We hope the relevant legislation can also be completed this year.

Finally, some new players are entering the market and these new insurance companies are beginning to help in some of the areas that had difficulties.

I appreciate some of the work that is being done. In fairness, this issue was thrown to the Minister of State when the area was already a disaster. We are dealing with issues now that should have been dealt with years ago. I am delighted to hear that more players are coming into the market and would be grateful if the Minister of State could provide an update on that. If it is not possible for him to do so in public, perhaps we could have a private conversation later.

The duty of care legislation is an absolute necessity. I have spoken previously about a community centre in Blackrock in Dundalk that was quoted a premium of between €10,000 and €11,000, which is absolutely mad. My local residents' association was quoted €3,200 because it has responsibility for a field in the middle of a housing estate. This is absolutely mad stuff and we really need to bring it to an end.

In certain cases, local authorities may not want to get involved but sometimes they can be pushed. This is especially true for semi-public areas but whether they can be taken in charge by local authorities is a separate issue.

Regarding new insurance businesses in Ireland, I joined IDA Ireland at a conference last Tuesday in Amsterdam at which the agency was meeting potential new clients. I also met a large American insurance company this week. I will not put its name on the record of the House today but it has started business in Ireland in recent weeks. It has taken some of the play activities under its wing and is now writing insurance in that area. It will provide cover for organisations when their next annual premium is due. I am not sure what month of the year that will be but the company is already in the market.

The main issue is that once we get the judicial guidelines settled by the courts and the duty of care legislation passed, people will know where they stand. The insurance companies say that the one thing they cannot cope with is uncertainty and there has been a lot of uncertainty in the insurance market until now. IDA Ireland is saying that now that there is some certainty in the Irish market, it can sell Ireland internationally and can invite insurance companies in whereas two years ago, it could not have done so. It can now actively try to attract more companies into the country and while that can be a long process, all of the signals are good. We want to see a reduction in premiums.

That is the best news I have heard in relation to public liability insurance but the Government must make sure it happens. I have spoken previously about insurance for those in the entertainment sector. At this point in time, none of the companies that offer bouncy castles for hire has insurance and that needs to be rectified.

I have been directly involved in encouraging the insurance industry to provide cover to certain sectors. The equine industry had a problem last year but we got that sorted out last spring. I was told last Christmas that there was no insurance available for ice rinks but two rinks succeeded in getting insurance. The situation with regard to play and activity groups is that a new American company has set up in Ireland in recent weeks and is moving into that market. The company has already met the national body for those groups and has, through a broker, offered policies from their next renewal date.

The Central Bank will issue a report next week on public liability and employers' liability. I do not know what is in the report but it will be very beneficial. We will have a discussion on that next week.

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