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Dáil Éireann debate -
Tuesday, 21 May 2024

Vol. 1054 No. 4

Ceisteanna Eile - Other Questions

Insurance Industry

Pádraig O'Sullivan

Question:

65. Deputy Pádraig O'Sullivan asked the Minister for Finance if he will provide an update on, or detail the progress of, the Office to Promote Competition in the Insurance Market; to outline his Department’s engagement with insurance companies; and if he will make a statement on the matter. [22711/24]

David Stanton

Question:

94. Deputy David Stanton asked the Minister for Finance to report on any recent interaction by his Department with the insurance industry; and if he will make a statement on the matter. [22729/24]

Will the Minister for Finance provide an update on, or detail the progress of, the Office to Promote Competition in the Insurance Market, outline his Department's engagement with insurance companies and make a statement on the matter?

I propose to take Questions Nos. 65 and 94 together.

I thank Deputies O'Sullivan and Stanton for their very timely and pertinent questions. As they will be aware, insurance reform remains a key priority for this Government and is being delivered via the action plan for insurance reform. As per the most recent action plan implementation report, published in February 2024, the vast bulk of the actions it contains are now either delivered or initiated. The importance that the Government places on this issue is evidenced by the fact that implementation is overseen by a Cabinet committee subgroup on insurance reform, chaired by the Tánaiste. Nevertheless, the Government is aware that certain groups can face difficulty in terms of affordability and availability of certain insurance lines. Accordingly, we continue to prioritise the delivery of the action plan, which will bring benefits to individuals, businesses and households alike.

Since assuming my current role a few weeks ago, I have been in the process of meeting the main insurers in the Irish market to set out the Government's expectation that savings arising from this whole-of-government reform agenda will be reflected via reduced premiums, as well as increased availability of cover. Major international insurers have indicated that they are impressed with the pace and scale of our reforms to date and point to Ireland as a positive example of Government action in this sector. Indeed, we have recently seen several new entrants to the market, with further positive indications in this space. I was particularly delighted to welcome OUTsurance and its creation of 300 jobs in the market just last week.

Last year, one of the key asks of both the insurance industry and reform campaigners was put in place – the rebalancing of the duty of care. The amendments to the Occupiers Liability Act 1995 will deliver major benefits to businesses, sports groups and community and voluntary organisations, in particular. This legislation should help to reduce frivolous claims proceeding to litigation. In time, cost savings from reduced claims should also help to lower premiums for businesses, particularly those engaged in activity-based or heavy-footfall areas, where claims associated with slips, trips and falls are more prevalent.

Other key reforms include the introduction of the personal injuries guidelines, with data from the Injuries Resolution Board indicating that the overall average award has fallen by 35% compared with awards made in 2020 under the book of quantum. Another key, complementary action is the Personal Injuries Resolution Board Act 2022, which aims to increase the number of personal injury claims settled through the Injuries Resolution Board, thereby reducing the expense and time associated with personal injuries litigation. Further actions aimed at lowering costs include measures to reduce fraud, and legislation placing perjury on a statutory footing for the first time.

In my engagement with the industry, including its representative body, Insurance Ireland, I have impressed upon it the importance of insurers increasing their risk appetite, especially to provide cover for small and niche sectors that may be experiencing issues with affordability and availability.

The Office to Promote Competition in the Insurance Market, which I chair, is in regular contact with areas that are experiencing insurance issues. It has become clear that the market is responding positively to the Government reform agenda, with insurance now available in previously difficult areas, such as equestrian activities, inflatable hire, ice-skating, sports clubs, play centres and SMEs. The office continues to assist in the connection of various groups experiencing insurance difficulties to relevant stakeholders and will maintain its engagement with IDA Ireland to help leverage the ongoing insurance reforms with the objective of targeting new entrants to the Irish market.

I assure the Deputies of the Government's intention to ensure the ongoing implementation of the action plan for insurance reform will continue to secure the availability and affordability of this key financial service.

I have no doubt that the Minister of State is acutely aware of the considerable costs faced by businesses in the current environment. The price of energy and the costs of purchasing and processing materials are considerable. It is no different with insurance premiums. Recently, Brian Hanley of the Alliance for Insurance Reform said insurers told the group that reforms were necessary for premiums to come down and that reforms were introduced but that, instead, we were seeing record-breaking insurance company profits while premiums continue to rise. The chairman of the Consumers' Association of Ireland, Michael Kilcoyne, said insurers were being unfair to policyholders and that they were certainly not passing on the benefits they had received from the reforms. The Minister of State rightly outlined the benefits of all the reforms undertaken. Given the number of reforms achieved or at least initiated, we are 95% there. Although a considerable amount of reform has been achieved, how has the Office to Promote Competition in the Insurance Market specifically performed in this area? He mentioned OUTsurance as one example. Does he anticipate that many other insurance companies will be entering the market in the short term?

I thank the Minister of State for his response. Following events like Storm Babet in east Cork, is he aware of delays in payouts to consumers and of the stress that can be caused if people must wait for a long period to have their claims met and indeed if they have to jump through all kinds of hoops to make a claim in the first place and have it accepted? Is there anything we can do to make it easier for people to make claims in the first place and ensure payments are made in a timely manner?

I thank the Deputies for the supplementary questions. I acknowledge absolutely the acute costs facing businesses. This issue is very relevant to my previous role. I have met representatives of the Alliance for Insurance Reform already. We had a recent roundtable event for those in the hospitality sector, which they attended. We expect other companies to enter the market. As I laid out, there are negotiations ongoing involving IDA Ireland, but we are really keen to see an increase in the level of risk taken on by existing insurers. They have indicated that they are starting to move into certain areas. As the Deputies will appreciate, I am loath to name individual companies that have moved into the hospitality sector, including the hotel sector. I can give anecdotal evidence. Several years ago, when my wife tried to set up a childcare facility, only one company was quoting, but now there are three. That is key.

With regard to Deputy Stanton's concern about delays in payouts, I am acutely aware of the importance of addressing this for so many businesses, particularly those in flood-affected areas like Midleton in the Deputy's constituency. I will undertake to raise this directly with Insurance Ireland. We have discussed the future of insurance in floodplain areas at great length, particularly in respect of the use of demountables. This is an area on which I am happy to engage further in due course.

It is great that existing insurers are willing to take greater risks and broaden the number of products they are offering people. That will be most welcome.

I read an article by Charlie Weston yesterday in which it was stated there has been a 35% decrease in the number of claims and the average award is down by 41%. Most of these major reforms were at the request of the industry. I recall members of the industry attending meetings of various Oireachtas committees and the quid pro quo was that if the Government implemented many of these reforms, prices would come down. Unfortunately, premiums continue to grow in a number of sectors. Now that those reforms have been introduced, when will premiums decrease significantly? If they do not, what steps is the Government going to take to ensure they do?

The number of complaints to the Financial Services Ombudsman last year rose considerably. Many of those complaints related to insurance and a number of them related to the delay in making claims and the difficulty in making claims in the first place. Delays in payouts was the big complaint. Will the Minister of State undertake to look at what is available to the consumer? Perhaps a faster and more efficient way can be put in place to deal with delayed payouts. Even the Financial Services Ombudsman is under pressure. If people are left waiting for a payment, and have to borrow money in the interim, that puts considerable pressure on businesses that are already suffering. Anything the Minister of State can do in that regard would be very welcome. I acknowledge the Minister of State's response when he said he will take up the issue with the insurance industry and I thank him for that.

I have a simple question. Is the insurance industry taking a hand at the Minister of State and the Government? For the past six years, the Government and Ministers, particularly Ministers in the Minister of State's party, have been telling insurance companies their expectation that they will reduce prices but prices have gone in the other direction for businesses and community groups. Does the Minister of State think the insurance industry is taking a hand at the Government? The insurance industry has taken all of the reforms that have been passed in these Houses and pocketed them. The profits of insurance companies are now at bumper levels and prices continue to rise, as they have every year since the parties opposite have been in government.

I thank the three Deputies for their interventions. For general premiums, the most drastic example has been the decrease in motor insurance over the past four years. There has been an average decrease of 24% in the cost of premiums in that sector, which is key progress that is extremely welcome. A lot of that is due to the decline in soft tissue injuries.

I will be quite frank and have no problem saying that I am disappointed in the rate and pace at which premiums are coming down. I expect them to come down a lot further. We made that case clearly when we met the insurers in recent weeks.

Premiums are not coming down.

We will continue to engage with insurers.

It is not the pace at which they are coming down; they are not coming down.

I did not interrupt you and I do not know why you keep doing this to Ministers. You asked a question and I am offering a supplementary reply. If that is what you want, we can do it.

Please speak through the Chair.

Premiums are not coming down.

With respect to the Leas-Cheann Comhairle, I would like to address all three points that were made. Deputy Stanton asked about the delay in payouts. I fundamentally agree that it is a key issue for individuals and businesses around the country. It is putting businesses out of action and people are waiting for such a serious length of time that they are unable to meet demands. It is absolutely an issue I will raise. We will have an opportunity to engage further on the next question.

Insurance Industry

Ruairí Ó Murchú

Question:

66. Deputy Ruairí Ó Murchú asked the Minister for Finance the short- to medium-term plans of the Government to ensure reductions in premiums for insurance products, particularly public liability insurance; and if he will make a statement on the matter. [22690/24]

Ruairí Ó Murchú

Question:

82. Deputy Ruairí Ó Murchú asked the Minister for Finance the Government's priorities in respect of insurance competition work and reform of the insurance market for the remainder of 2024; and if he will make a statement on the matter. [22689/24]

I wish to ask the Minister of State about the Government's short- and medium-term plans to ensure there are reductions in premiums for insurance products, particularly public liability insurance. This question follows on from the question that was previously on the floor. We are talking about reductions in settlement costs and the reforms that have happened in respect of duty of care, etc. However, the operating costs of insurance companies are still going through the roof. An enormous amount of businesses are under severe pressure.

I propose to take Questions Nos. 66 and 82 together.

I thank the Deputy for his questions. As has been outlined and is quite clear, insurance reform remains a key priority for this Government and is being delivered via the action plan for insurance reform. As the Deputy is aware, neither the Minister for Finance nor the Central Bank of Ireland can direct the pricing or provision of insurance products. This position is reinforced by the EU Single Market framework for insurance, the Solvency II directive.

Nevertheless, this Government is aware that certain groups are currently facing difficulty in terms of the affordability and availability of public liability insurance and has therefore continued to prioritise the delivery of the action plan for insurance reform. Significant progress has been achieved on these reforms, with the bulk of actions now complete. As Deputy Pádraig O'Sullivan outlined, over 95% are complete.

Last year, one of the key asks of both the insurance industry and reform campaigners was put in place, that is, the rebalancing of the duty of care. These amendments to the Occupiers' Liability Act 1995 will deliver major benefits, in particular to public liability cover for businesses, sporting groups and community and voluntary organisations. The policy intent of the legislation was to reduce the number of high-volume, low-cost claims for slips, trips and falls, and frivolous claims proceeding to litigation. In time, cost savings from reduced claims should also help to lower premiums for businesses, particularly those engaged in public-facing and heavy footfall areas where claims associated with slips, trips and falls prevail.

Since assuming my current role a few weeks ago, I have, as I said, been meeting the main insurers in the Irish market. I have also met a number of representative bodies of insurers, as well as the Law Society of Ireland, a representative group of mortgage brokers and various representative groups in the hospitality sector. I had those meetings to set out the Government's expectation that savings arising from this wide-ranging reform agenda will be reflected via reduced premiums, as well as increased availability of cover. I also held a risk round table earlier this month with key stakeholders in relation to hospitality and tourism to discuss what recent insurance reforms mean for such groups, allowing them to educate and empower their members when dealing with insurers. It is important that Government now promotes the reforms to ensure that their full impact can be felt across the board.

I assure the Deputy that seeking to secure a more sustainable and competitive market through deepening and widening the supply of insurance in Ireland remains a key policy priority for this Government and for me, as the relevant Minister of State. For my part, I am committed to working with my colleagues in the Government to complete outstanding reforms and monitoring their impact, with a view to achieving an improved insurance environment for all policyholders, including those with public liability cover.

We know what the Minister of State cannot do but it is a question of what he can do and what interaction he intends to have with these insurance companies as premiums are still going up. I get the idea that we knew that an issue existed in respect of duty of care. An argument could have been made that it could have been dealt with at an earlier stage. The problem was that a huge number of companies that operated in the public liability sphere, in childcare and other sectors, left the market. What conversation will happen with those insurance companies, particularly if premiums do not go down? They benefit when settlement costs go down.

On interactions intended to get new companies into this sphere, have there been any gains? I am asking specifically about public liability insurance.

I thank the Deputy for his supplementary contribution. As I have laid out, I have met seven of the nine major insurers at this stage. I have also met the representative bodies of the insurance industry, representatives of the Law Society of Ireland and the brokers, as well as representative groups in the hospitality industry, at a round table and in one-on-one meetings. I have another such meeting tomorrow.

The Deputy asked about tangible gains for increased competition. As I mentioned, just last week OUTsurance, a South African insurance company that also has a major presence in Australia, entered the Irish market. It is employing 300 people in Cherrywood in the constituency adjacent to mine. It has initially launched offerings in the motor and home insurance field with a desire, as stated by its CEO in the national press at the weekend and at the launch itself, to move into other areas. It has stated clearly that it wants to compete on price, which will mean lowering premiums and the average cost of premiums around the market. That is something with which we are keen to work. We work through the IDA but also work with the existing insurers to encourage them to move out their risk appetite, and most of them have done so.

We want far more companies to come into the market. We need the likes of OUTsurance, or whoever else, to engage specifically on public liability insurance. We know the issues that exist and the other added costs at the moment. It is an issue that affects community events, event tourism, sporting and community organisations. We all know the ridiculous premiums that have been charged for community centres. We are talking about sustainability across the board.

I will come back to my previous question. If premiums continue to rise while whatever benefits are pocketed by the insurance companies, it is not good enough.

I accept what the Minister cannot do but it is about what he can do and what he intends to do to ensure we see something-----

I am not sure that the clock was-----

I think you have gained considerable advantage from not having the clock.

My question is specifically on public liability. I want to draw the attention of the Minister of State to something which he might raise with the Minister for Education. It is specifically with regard to schools. I am aware of a particular school which typically pays €6,000 or €7,000 public liability insurance per annum. It has received three modular classrooms, which account for one quarter of the older school size. It is considerably smaller in terms of square footage but the public liability insurance quote for the three modular classrooms is €28,000. This is in comparison to €6,000 for the main building. I am not sure whether the Minister of State is aware of this issue but perhaps he could deal with the Minister for Education to see whether it is a prevalent issue with regard to public liability insurance specifically for schools.

One of the problems we consistently have is that the Minister of State continues to be almost a spokesperson for the insurance industry. He did it again. When I asked him whether the insurance industry is taking a hand at the Government he said he was not happy with the rate of decreases. Where are the decreases? This is the problem. Does the Minister of State not know what is happening out there, right here and right now? The most recent data from the national claims information database on public liability, which is what we are speaking about, shows that in 2022 it increased by 8%. Motor insurance fell for a couple of years but it in no way went back to where it was.

The CSO has shown that for every month over the past ten months, insurance has increased. It has increased by 6.1% since 2022. What is the Minister of State speaking about when he says he wants to see the rate of decrease escalate? What is happening out there is that the rates are increasing. This is why I am asking. When Deputy Varadkar said he was giving six months to the insurance industry to cut costs or else, it was in 2019. When he stood in the Dáil in the convention centre-----

We are way over time.

-----and said he expected insurance companies to cut the cost, it was 2021.

We are way over time.

What difference does it make now when the Minister of State tells them his expectations? Will they just take a hand at him-----

-----in the same way they took a hand at his partners in government and continued to raise prices?

It is a supplementary question, please.

Could there be built into the system an alert that would enable the Minister of State to identify sneaking or creeping increases that might not readily come to public attention?

I thank the Deputies for their supplementary questions. With regard to the issue raised by Deputy O'Sullivan, I was not aware of the specific issue with regard to modular builds and I will seek a conversation with the Minister, Deputy Foley, to see whether we can get resolution. It is of major concern to all of our constituencies. To respond to Deputy Durkan's point, we do work with the national claims information database and we do see this area.

With regard to the points raised by Deputies Ó Murchú and Doherty, we speak more generally about insurance. We have seen reductions in motor insurance and we will park that. With regard to public liability insurance, we can see areas where we quite simply have not seen reductions. I agree with Deputy Doherty, and I am not looking to disagree with him, that I am not happy with this at all. I made this point quite clearly with the insurance companies. I am no spokesperson for anyone here. I am Minister of State at the Department and I am a representative of the people of Dublin Rathdown. This is why I seek to make sure we do get lower premiums. We will continue to work on this. We look at lessening the hardening impact when we compare the situation here in Ireland with the United Kingdom where we see even larger increases. I will take on board the points made in the contributions of Deputies Doherty and Ó Murchú and we will see where we come to in a couple of months' time.

Small and Medium Enterprises

Joe Flaherty

Question:

67. Deputy Joe Flaherty asked the Minister for Finance if he will report on the SME credit demand survey 2023, which he published in April; and if he will make a statement on the matter. [22684/24]

Will the Minister report on the SME credit demand survey 2023 which was published in April, and will he make a statement on it?

I thank Deputy O'Sullivan for the question. SMEs are the lifeblood of the Irish economy and they account for 99.8% of all businesses in Ireland, along with 69.2% of all employment in the business economy. Recognising the importance of SMEs to Ireland, my Department has regularly carried out SME credit demand surveys since 2011. These surveys are critical tools to understand how the sector is performing and how needs for credit are being met.

The survey series provides an overview of the economic context and Government support measures. It includes detailed findings on business performance, investment activity and company assets. The survey series also provides the Government with vital information on which to base policy initiatives that support businesses to manage rising costs and further invest. This includes the temporary business energy support scheme, the Ukraine credit guarantee scheme and the growth and sustainability loan scheme among a range of other policy measures.

The most recent SME credit demand survey in its series, published in April 2024, focuses on the timeframe from January 2023 to December 2023. Unlike previous surveys conducted biannually, this was the first survey to cover an entire calendar year, in line with a recommendation from the retail banking review of 2022. This survey was conducted by Ipsos B&A on behalf of my Department. This survey on SME credit demand in Ireland is the most extensive, encompassing more than 1,500 participants engaged in detailed conversations. It provides a thorough overview of the SME sector in Ireland, ensuring that micro-enterprises, small businesses and medium-sized enterprises are proportionately represented based on their prevalence in the country.

The survey reveals a nuanced picture of SME trading performance in 2023. While 52% of SMEs reported increased turnover, this figure is slightly lower than the previous year. Notably, profitability saw an uptick, with 74% of SMEs reporting profits, compared to 68% in the prior period. This suggests a focus on cost management and efficiency. Credit demand remained steady, with 18%, or nearly one in five, of SMEs seeking bank finance in 2023.

The primary reason for not seeking credit was the availability of sufficient internal funds, at 76%, indicating a degree of financial prudence among SMEs. Demand for non-bank finance rose to 9%, reflecting a diversification of funding sources. The decline rate for applications held steady at 11%, with the main reason being failure to meet lending criteria. A total of 36% of applicants were required to provide collateral, a significant increase from the previous period. I can provide more information in response to Deputy O'Sullivan.

I thank the Minister. I know the Minister understands the importance of SMEs to the Irish economy. As he rightly outlined in his response, more than 99% of all business in the State, and almost 70% of all employment in the business economy, is provided by SMEs. The SME credit survey is a crucial component in ascertaining how business is performing, how investment is being undertaken and how accessible credit is to ensure that jobs and the economy continued to grow.

The Minister recently welcomed the survey, as he has outlined. I would like to hear the Minister's thoughts on several specific points that have been raised. A total of 16% of SMEs reported investing in climate-related activities during 2023, with the highest in energy efficiency followed by less polluting technologies. What are the Minister's thoughts on this? How will we try to increase this trend and increase the number of people investing in business and in upgrading energy efficiency? The report stated that 53% of SMEs reported increasing their prices during 2023. What steps is the Minister taking to address the trend of rising costs and prices?

I thank Deputy O'Sullivan. Overall the credit demand survey for 2023 paints a complex picture. It is multifaceted because, of course, SMEs operate in a range of sectors. Overall the results of the survey once again underline the resilience in the face of economic challenges. There is a steady demand for credit. It also highlights evolving investment patterns, one of which Deputy O'Sullivan correctly highlighted with regard to investment in climate and energy efficiency measures.

We continue to have work to do to highlight the supports that are there including, for example, the capital allowance regime we have for investment in energy efficient equipment. In recent budgets further changes have been made to make these schemes more attractive. Ultimately, we want to support businesses to decarbonise and reduce their own energy costs and make them more competitive. With regard to prices, the environment of inflation and the input costs that businesses have faced throughout last year and over the past number of years has forced many of them, reluctantly in some cases, to increase prices.

However, we are now in a much better place in terms of the moderation of inflation. That is beginning to work its way through to the data and hopefully will result in some businesses not being forced to increase prices.

As the Minister rightly said, there is probably a lag in the data as well insofar as there are 12 months, and interest rates and such are coming down. As the Minister rightly highlighted, businesses have proven to be resilient in that 82% of them said they had no change or had increased their turnover while 88% were either in profit or had broken even. "Resilience" is the right word to describe what businesses have endured and what they continue to demonstrate. The Minister also mentioned how average interest rates reported by SMEs rose from 5.13% in April to September of 2022, to over 7.2% in 2023. Could the Minister give any indication as to whether this trend has continued into 2024 and how he is going to mitigate the worst effects?

The Deputy's question is about interest rates facing SMEs. The changes in the interest rates being paid by SMEs were directly linked to the monetary policy environment, the ten successive interest rate increases we had from the ECB which worked their way through the system, in particular in respect of floating rate charges, variable rate loan products and then when it came to the re-pricing of fixed interest rate products by the commercial banks but also by the non-banks. I do not have further information on the early part of 2024 but I think that trend is likely to have continued. You would expect that by that stage, the interest rate increases would have fully worked their way through the system. We are now at a point where we expect that there will be movement in the other direction in monetary policy and interest rate decisions by the ECB including quite possibly in June in terms of the monetary policy committee meeting of the governing council. I would expect that, in the way that interest rates being charged to SMEs changed in line with increases in the ECB rate, the reverse will happen as rates begin to come down at the wholesale level.

Credit Unions

Aindrias Moynihan

Question:

68. Deputy Aindrias Moynihan asked the Minister for Finance his engagement to date with credit unions that currently have a savings cap limit of €30,000 to increase this limit; and if he will make a statement on the matter. [22719/24]

There is a whole range of people who want to support their local credit union, including clubs and societies and people with savings. A number of them have been raising with me that when they go to draw down a grant to do work on the house, for example, or sports capital funding, they come across this cap on the amount of money they can have in the credit union. Has the Minister of State had any engagement with the credit unions and the Central Bank about any flexibility on the cap on their credit union account?

I thank the Deputy for his question. However, I was a little bit confused and hope we might have a bit of clarification in our debate. There is a cap of €100,000, not €30,000 as is stated in the Deputy's question, on member savings, as outlined in Central Bank Regulation 35 of the Credit Union Act 1997 (Regulatory Requirements) Regulations 2016. As the Deputy is aware, the Central Bank makes all of its regulations independent of Government. Individual credit unions may take business decisions to limit the amount of savings they accept from their members to less than €100,000. This is a decision for the respective board of each independent credit union. It would not be appropriate for me to comment further on any such independent decisions made. Let us see what we can tease out in the debate, Deputy.

From January 2023 to date, the Minister, Deputy McGrath, my predecessor, the Minister of State, Deputy Carroll MacNeill and I have collectively engaged with over 104 credit unions. Just yesterday I engaged with all the credit unions in Donegal and Derry at a round table in Letterkenny. Separately, officials from the credit union policy unit have regular engagement with sector stakeholders. I can confirm that a €30,000 savings cap has not been raised as an issue at these meetings. There have been a small number of credit unions that have raised the €100,000 Central Bank regulatory limit. It is a very small number compared to the number we have engaged with.

I want to state that it is a priority for this Government to support the credit union sector as evidenced from the recently commenced Credit Union (Amendment) Act 2023. This Act enables credit unions, and will support their continued development towards providing the Irish consumer with a community based, composite financial services provider. We are keen to increase the number of people engaged in the credit union sector. We want to see more members of credit unions and credit unions lending more and allowing people to do more in their communities, be it home renovations or business loans. Particularly in the Deputy's part of the world, there is a very successful Cultivate scheme on which I engaged with a number of his local credit unions at a recent conference.

The issue has been raised with me by a number of different sources, including older people intending to do works on their own home who would be accessing a county council grant, or sports clubs advancing works on their own grounds. Instead of a bank, they are dealing with a credit union but when they go to draw down the grant there is a cap in force on their credit union account. They cannot receive in or have anything more than that cap. Many will not be familiar with the issue until it comes up. The grant body is telling them it has released funding but at the same time there is no money hitting the account. There are bills to pay. Very often, these funds are coming from State bodies anyway. I am trying to establish whether there would be flexibility on such caps.

As I stated, the maximum individual member savings limit is €100,000, which is a sizeable amount, particularly for most community groups. With the exception of large-scale sports capital grants, there are very few grants that we----

This is about a cap of €30,000.

There is not a cap of €30,000. That is up to the individual credit union. The policy of the Central Bank is €100,000. The reason they have that is to ensure the protection of members' savings and to ensure that credit union funding continues to be sufficiently diversified and is not dependent on a small number of members. The Deputy knows how the credit union works. You need an array of members. It makes no difference whether you are saving €5 a month on behalf of a grandchild, or you are a body that is receiving at a large scale. It does need a spread through the community and through the common bond. If there is an individual credit union that has a cap of €30,000, it is a matter for that credit union and a matter for the board. Perhaps the Deputy or the club can engage directly with the board. As members they are entitled to hear from the board the rationale for that reduced cap. As I said, the maximum cap applied by the Central Bank is €100,000. I do not think there is a need to go beyond that. Even if I did, it is a decision for the bank.

Just to clarify, the maximum of €100,000 is not an issue. It is not what is up for discussion. The issue is with far lower caps being imposed on credit union accounts in the region of €30,000. Some local credit unions in Cork are doing that. It would seem it is a more local or ad hoc arrangement. It is not clear on that. I ask the Minister of State to engage with the Central Bank and the credit unions on establishing how extensive the issue is. Given that a far higher cap is possible, there may be flexibility in it. This emerge, for example, when older people are getting a pension lump sum, when people are getting back money on a social welfare payment or are drawing down a grant from the council to re-roof the house. It is that lower end I am particularly focused on, and whether there is a possibility of flexibility, especially if it is an ad hoc cap.

The Deputy might write to me with the specific nature of the query and representations being made. That might give me an opportunity to look at the matter in more detail and see what role I can play, cognisant of the independence of the Central Bank and also of the boards of individual credit unions. The most recent data we have is that 70% of credit unions have imposed their own member savings cap and the average there is about €49,000. The figure of €30,000 is way below both the actual cap implemented by the Central Bank and the average. However, those data are five years old at this state. The landscape of credit unions was very different then. There has been a lot of consolidation since and a number of amalgamations across the country, including in my own constituency. Perhaps the Deputy would write to me and we might have an individual meeting about it where it is appropriate, and I will see what can be done.

Economic Data

Bernard Durkan

Question:

69. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which positive conclusions can be drawn from this country's economic performance when considered alongside other eurozone countries and all other European countries; if the methodology for the measurement of the economy here continues to be robust and accurate; and if he will make a statement on the matter. [22705/24]

Bernard Durkan

Question:

237. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he remains satisfied that this economy continues to perform well when considered in the overall European context; and if he will make a statement on the matter. [22987/24]

These questions seek to ascertain the extent to which the Minister has confidence in the robustness of the performance of this jurisdiction's economy when compared to other eurozone countries and non-eurozone countries.

I propose to take Questions Nos. 69 and 237 together.

The economic performance across the EU and Ireland was somewhat subdued last year amid weak global trade and GDP growth. In 2023, GDP grew by a modest 0.4% in the euro area and EU, while Irish GDP recorded a contraction of 3.2%. GDP growth in the euro area and Ireland is projected to pick up this year, though remaining below historical growth rates. The European Commission is projecting euro area and Irish GDP growth of 0.8% and 1.2%, respectively, for this year.

There are no inaccuracies in the way that Irish GDP is calculated, and it is measured in the same way here as it is measured across all European countries under the European system of national accounts. However, as is well-documented, GDP is not a suitable measure to be used in assessing the living standards of Irish residents, and my Department has been proactive in highlighting this fact. Indeed, last year was a perfect case in point, with measures of domestic economic activity, such as modified domestic demand, MDD, consumer spending and employment all showing growth, and GDP recording a decline. This is why my Department and many other institutions use measures such as modified GNI, that is, GNI*, and MDD that strips out the main globalisation-related distortions from GDP.

My Department is forecasting MDD growth of 1.9% for this year and 2.3% next year. This is in line with European Commission projections of 1.7% and 2.4% MDD growth for 2024 and 2025 in its recently published spring forecasts. There remains significant uncertainty surrounding the outlook for the international economy, however, and Ireland, which is highly integrated into the international economy, is facing many of the same headwinds as our European peers. Although inflation continues to ease, there remains the risk of renewed energy shocks adding to inflationary pressures. An escalation of geopolitical tensions would also have negative implications for both Irish and European economic growth.

I thank the Minister for that reply. To what degree does he, as he obviously does, continue to monitor the cause or causes of inflation, whether imported or generated nationally? To what extent can measures be taken at this stage to identify those tendencies? I ask this particularly since it seems to be fashionable nowadays to say it is inflation and everybody knows it is inflation. We do know this, but the sources of inflation are not necessarily so readily identified. To what extent can the Minister monitor this aspect?

We monitor inflation at the headline level but also the components of inflation quite closely, as would be expected. Every time a publication is issued by the Central Statistics Office and Eurostat, it is examined by officials in my Department, who report to me, give me a summary of them and their interpretation of the underlying trends. Of course, there is a difference between the harmonised rate, which is the agreed methodology across the European Union, and the consumer price index. The main difference is the inclusion of interest rate changes in the latter. We monitor that very closely. What has been interesting to see has been the reduction in energy prices, especially at wholesale level. We are beginning to see this change pass through to the retail level, but households and businesses can, and should, expect further reductions in retail energy prices in the period ahead. This will come as a welcome relief for many of them. The main risks that we face in our economy are external in nature and these are pretty much broadly balanced. We are anticipating growth this year of approximately 2% in MDD. I will respond further in a moment.

In the context of previous experiences this country has had when criticised internationally on the basis of the system we were using to measure the economic forces and trends at work here, which were sometimes quite dismissive, with references to leprechaun economics and so on and so forth, is the Minister absolutely certain we can robustly withstand any criticism that might come from such quarters in future? I ask this question given that in the past several years we have tended to receive criticism concerning our taxation policy in respect of the 12.5% level of tax on corporation profits, as well as other aspects of our economic policies. We have been treated quite unfairly by some commentators who toured the globe to take action against a smaller country and economy that did not have the same clout as they did.

The truth is that GDP is measured in Ireland in exactly the same way as in every other European country, but because we have a very large multinational sector, we believe it is important to have other measures of the economy as well. This is why we have MDD and GNI* and we publish all this information regularly. The agreed international measure of economic performance, though, whether that be growth or contraction, is GDP. Those numbers, therefore, are published for Ireland alongside all the other member states of the European Union but we have consistently pointed out that sector-specific and even product-specific trends or changes can impact Irish GDP given its nature.

What is encouraging is to note that exports have rebounded. The direction of travel is consistent with a pick-up in goods exports, which grew by 8% in the first quarter of this year compared to the last quarter of 2023. The reduction in GDP last year was driven by the external environment and it was sector- and product-specific. We believe this impact has largely washed through the system at this stage and there is now again growth in exports. This is manifesting in the positive projection for GDP across this year.

Go raibh maith agat.

Inflation Rate

Alan Farrell

Question:

70. Deputy Alan Farrell asked the Minister for Finance to provide an update on his Department's efforts to reduce inflation; and if he will make a statement on the matter. [22752/24]

Bernard Durkan

Question:

90. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he remains confident that budgetary measures taken here are adequately focused in order to discourage inflation, self-generated or imported; and if he will make a statement on the matter. [22706/24]

Bernard Durkan

Question:

238. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he remains confident that budgetary measures taken here are adequately focused in order to discourage inflation, self-generated or imported; and if he will make a statement on the matter. [22988/24]

My question relates to the ongoing efforts by the Minister's Department to reduce inflation. Significant domestic and international factors have reduced inflation over the recent period, which I acknowledge. I believe, though, that more needs to be done in this regard. My question relates to what measures the Minister is proposing to introduce in the coming months in an effort to reduce inflation.

I propose to take Questions Nos. 70, 90 and 238 together.

Inflation reached multidecade highs in 2022, averaging 8.1%, with a peak of 9.6% in June 2022, as measured using the harmonised method of the harmonised index of consumer prices, HICP. While the initial driver of this inflationary pressure was a surge in global energy prices, it subsequently became increasingly broad-based as price pressures spread throughout the economy. Since then, enormous progress has been made in reducing inflation, with headline HICP inflation of just 1.6% in April. Looking forward, my Department forecasts an inflation rate of just over 2%, on average, across this year as a whole.

The temporary and targeted nature of Government budgetary measures over this period of high inflation has been crucial in protecting households from the burden of the rising cost of living while avoiding adding to inflationary pressures. Research has shown that these measures were progressive, with those most in need benefiting the most. As part of budget 2024, the Government announced a package of once-off measures, net of windfall gains from the energy sector, amounting to €2.7 billion. This built upon multiple cost-of-living packages introduced over the past two years, which amounted to €12 billion.

While these exceptional supports helped households and businesses to absorb the worst impact of rising prices, inflation is now, thankfully, on a downward trajectory. I am conscious of the need for clarity on how this new environment will affect policy decisions in the context of our budgetary framework. The appropriate way to do this is as part of a normal budgetary process. In this regard, I will discuss economic policy issues with stakeholders as part of the national economic dialogue later this month.

I will then set out the broad parameters for the upcoming budget in the summer economic statement which we intend to publish prior to the recess in July.

I acknowledge all of those measures, particularly the temporary measures. I acknowledge of course the nature of them and their careful impact on the inflation rate. However, part of the reason I asked this question was to do with what I would refer to as ongoing creep, particularly in the inflation on consumer goods, services and fuel, which remains stubbornly high. We are 15 cent or 20 cent a litre off what I would describe as a crisis when we were getting two, three or four emails a day from constituents, observing the high costs of fuel. That is going back to 2022. Are there additional measures that perhaps the Minister will consider in the context of the budget? He does not necessarily have to mention them today. However, I believe there should be scope for measures which have the potential to reduce consumer costs.

I acknowledge the past work done by the Minister with regard to certain large multiples who have reduced their prices. I have not observed that of late.

On the same lines, I ask the Minister the extent to which his Department remains vigilant in relation to the actual causes of the inflation affecting a large range of consumer goods. In themselves they do not seem greatly worrying but put together they constitute a fairly sizable impact insofar as the purchaser, the consumer, is concerned and they gradually eat away into the confidence of the consumer. I ask whether, at this stage, measures continue to be taken to drill down into the actual reasons put forward in certain situations but in all situations where the inflation becomes a threat to the economy.

The dynamics of energy prices have been key in driving the headline inflation rate over recent years. The initial driver of inflation was a surge in energy prices that followed the Russian invasion of Ukraine. This substantially disrupted the supply of energy, in particular of natural gas, of which Russia was a large exporter to Europe. Wholesale gas prices peaked at £4 per therm in September 2022 having averaged £0.50 per therm prior to the pandemic. The increase in wholesale gas prices subsequently translated into higher retail prices. There was annual energy price inflation of at least 30% in every month from March 2022 to January 2023. In the past few months we appear to have turned a corner with energy prices. Wholesale gas prices for the past three months have averaged roughly £0.70 per therm. In April we witnessed a 6.3% annual decline in consumer energy prices. That speaks to the point I made earlier, that we have not yet seen the full pass through of the wholesale reductions to the retail level. I anticipate we will see further reductions at a retail level. Notwithstanding that some energy companies bought into futures contracts, hedged, and so on, I still anticipate that there will be further reductions at a retail level.

I thank the Minister. I appreciate those remarks and acknowledge of course that the home energy costs in particular are high because of those futures contracts that were entered into. I hope we will see a further reduction. As I said, the main point of my question was to determine whether additional measures would be introduced to try to lessen the burden of costs that have been borne by our constituents throughout the country over the past number of years, some of which, as the Minister rightly pointed out, have yet to dissipate. However, I acknowledge the measures the Minister's colleague in government, the Minister, Deputy Peter Burke, among others has introduced with regard to small businesses. I hope there will be a focus on this in the context of the drawing up of budget 2025.

In regard to fuel prices and possible reductions in the international markets, how is it determined that those reductions or increases can be transferred to the consumer, to benefit the consumer? From past experience we know that when increases are on the horizon, they are passed on quickly to the consumer and have a dramatic effect. While almost all consumer goods now are transported in one way or another, fuel costs obviously have a serious impact. To what extent can the Minister determine the validity of the increases causing inflation which are put forward by such companies?

I thank the Deputies. We are at a point in the budgetary cycle where we have published the stability programme update. We will have the national economic dialogue next month and then we will have the summer economic statement and will consider all of the issues that the Deputies have raised in deciding on the budgetary parameters. Then, more particularly when deciding on the individual measures, we need to strike a balance between recognising that the cost of living remains high. Even though headline inflation is falling that does not mean price levels are falling. However, on the other hand, we need to allow inflation to fall and the Government should not do anything that results in a further spike in inflation, because it is in all of our interests to get it down to that consistent level of around 2%, not just in Ireland put in the European Union and especially in the eurozone, to allow the European Central Bank to reduce interest rates. The issues are inextricably linked. The budget is a number of months away. I will take on board all of the points that the Deputies have made, when it comes to making specific decisions.

There is less than one minute left so Deputy Moynihan has 30 seconds just to raise the question.

Banking Sector

Cormac Devlin

Question:

71. Deputy Cormac Devlin asked the Minister for Finance his plans to ensure independent ATM operators register with the Central Bank of Ireland; and if he will make a statement on the matter. [22616/24]

The ability to do business with cash is so valuable for so many different people throughout the country and a key part of the ability to do your business in cash is to have access to an ATM network, to be able to get the cash out of the bank. Is the Minister in a position to ensure that all the ATMs would be registered and regulated? Increasingly, ATMs are not associated with the banks but more independent operators are on it. Will the Minister ensure they are registered and regulated?

In short, the answer is "yes, Deputy". The access to cash legislation is at a very advanced stage of preparation. We need to consult the European Central Bank because some of the matters in the Bill are relevant to the functions of the ECB but I expect we will be sending a copy of the Bill to it in the next number of weeks. In essence the Bill will provide for the registration and regulation of ATMs including ATM deployers. This will protect access to cash. It will also protect cash lodgment services for businesses, within branches. It is a very important piece of legislation and it is my intention to ensure it is passed later this year.

That completes questions to the Minister for Finance.

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Is féidir teacht ar Cheisteanna Scríofa ar www.oireachas.ie .
Written Answers are published on the Oireachtas website.
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