JOINT COMMITTEE ON FINANCE AND THE PUBLIC SERVICE debate -
Thursday, 4 Sep 2003

Vol. 1 No. 14

Business of Joint Committee.

Chairman

On correspondence, responses were received from both the Revenue Commissioners and the Ombudsman regarding a letter from Mr. Edward J. Carns which was redirected to this committee by the Committee of Public Accounts. All correspondence was circulated with the agenda. The Ombudsman's letter gives a detailed outline of the situation and says in summary that, having given the matter his fullest consideration, he felt that the right decision was taken in the case, namely, to accept the Revenue offer of €300,000. The Revenue response also indicates that the compromise solution arrived at between the Ombudsman and the Revenue of €300,000 in full and final settlement of the case satisfies the Ombudsman under section 6(5) of the 1980 Act, and the case was closed on that basis. Do members have any wish to explore the matter further? I suggest that we write to Mr. Carns, attaching both responses and closing the matter from the committee's viewpoint. Is that agreed? Agreed.

A letter was received from Mr. David Holden, the head of communications at the Bank of Ireland, clarifying the comments regarding branch closures which he made at the last meeting on 9 July. Members have all seen the contents confirming that.

Deputy Ó Caoláin

I would like Deputy McGrath's clarification, for he indicated to us that it had been closed, and that was the source of the information.

Chairman

Correct, but we will simply note that.

Deputy Ó Caoláin

That is all that we can do.

Chairman

We will let it go at that.

Senator O’Toole

We could send it to Deputy Cassidy.

Chairman

I was tempted to send it to Deputy Cassidy, but I have not done so. Perhaps after today I will.

A letter was received from Mr. S. McKinnon, chief executive of the Irish Payment Services Organisation Limited, on adverse media coverage which arose from the committee's last meeting with the banks. He would like an opportunity to address the committee and rebut some of the allegations made at that meeting. Does the committee agree that we should accede to that request? Before I ask for comments, my view on this as Chairman of the committee is that we had several of the banks and financial institutions here in July and we said that we would invite some other institutions in today, as we are now doing. The Competition Authority has now confirmed that it is carrying out a detailed investigation. We should send a transcript of today's proceedings to the Competition Authority, as it may be of assistance to it. We have already sent it the transcripts of the last meeting, and perhaps the Irish Payment Services Organisation Limited can take the matter up directly with the Competition Authority. On the other hand, if members feel that we should invite the organisation in here, it is up to them.

Deputy N. O’Keeffe

What is that?

Chairman

The Irish Payment Services Organisation Limited is a company owned, controlled and managed by the clearing banks for the processing of cheques and payments. It was not satisfied with certain comments, primarily those made by the Bank of Scotland, which criticised the organisation. This letter is a reply expressing concern about what was said.

Deputy N. O’Keeffe

We should hear from it, for we said the last day we were here that we were concerned about our lack of understanding of the clearing system and how money is transferred. We need information ourselves independently of anything alleged here.

Deputy Ó Caoláin

Mr. McKinnon and his colleague should certainly have an opportunity to present their side of the story. They were particularly focused on Mr. M. Duffy's contribution to our last meeting. It would be of interest to the members to have the opportunity to question Mr. McKinnon and his colleagues about the clearing system and just how closed an operation it is.

Chairman

I will take it as agreed that we will invite Mr. McKinnon.

Deputy R. Bruton

I would be interested to invite this group and hear a little more about the clearing house system. What is it hoped to do to bring to an end our series of hearings with the financial sector? Is it the intention to make a submission to the Competition Authority, to better inform the public and ourselves by way of a question and answer session or to draw some conclusions? Clearly, one of the key issues is whether the clearing system should be broken up or reconstituted and that is an issue the Competition Authority will be looking at very carefully. There are other issues in some non-competitive sectors where there are problems in particular sectors - the personal and the smaller business borrowing sectors, for example. Do we wish to take the next logical step and submit the committee's views to the Competition Authority or the Government on the future development of the banking sector?

Chairman

My instinct, given that the Competition Authority is inquiring into this matter specifically and IFSRA is making observations on it, was that I did not want many different bodies doing the same job and duplicating the work. I was hoping that after today's meeting - and if the committee want to invite the Irish Payment Services Organisation - that we would conclude this aspect of our agenda and hand it over to the Competition Authority by way of a submission or report. I would not like this to continue to roll given that other people are carrying out an intensive investigation.

Deputy N. O’Keeffe

Should not this committee do its own investigation and look at all the different aspects of the system? We have been told of a letter today from the clearing group. I do not think there are any financial institutions left that we can examine, unless, perhaps, the Central Bank which also has a role and it has a responsibility to the Department of Finance.

Deputy Ó Caoláin

It is the case that we have not invited all the commercial banking companies to come before the committee. Perhaps a judgment call should be made on whether we want to complete the list. The Chairman made reference earlier to having provided to the Competition Authority the transcript of our last meeting. Has the transcript been made available to the members of the committee, and, if not, will the Chairman arrange to have it done immediately?

Chairman

They are available on the website of the committees proceedings where they can be downloaded but they have not been circulated in hard copy. The electronic version was sent to the Competition Authority.

Deputy Ó Caoláin

Is that the methodology used to send them on to the Competition Authority?

Chairman

As the Deputy is aware the hard copy of the transcripts of committee proceedings regularly takes quite some time but in the interim they are available on the website. We have circulated the transcripts to the Competition Authority from the website.

Deputy Ó Caoláin

From the website?

Chairman

Yes. The hard copy has not yet been produced.

Deputy Ó Caoláin

But the transcripts are now currently accessible on the website.

Chairman

So I am informed. We will invite the Irish Payment Services Organisation to appear before the committee. Does the committee consider we should make a submission or a report to the Competition Authority and the Government, as a result of our hearings? We have always said we cannot invite every institution but we have invited a number of key institutions on this topic. For example, the Credit Union is just one of several and it is not here on behalf of the credit union movement but as a sample credit union. It will be difficult to draw conclusions on an industry-wide basis based on the handful of groups we have called before the committee.

Deputy N. O’Keeffe

Why did not the committee invite the Irish League of Credit Unions which is the parent body?

Chairman

The reason is that on a previous occasion the committee decided to invite in the Irish Bankers' Federation to discuss banking matters - this may have been during the last Dáil. We found this wholly unsatisfactory because every time we came to a difficult question we were told it was a matter for the individual banks and that the group was not before the committee as the spokesperson for the banks. We felt that to bring in the national representative bodies of these organisations would not serve a useful purpose and we wanted to call in the financial institutions who were dealing with the public. It was on that basis we invited individual financial organisations.

Deputy R. Bruton

We should draw some conclusions from our work. We should have a factual section of what we have found, on which there will not be disagreement among members. We will probably have a difficulty in finding a single set of recommendations to put to the Government or the Competition Authority. The Competition Authority said it would focus on small businesses and personal accounts. We may be of the opinion that it should focus also on the clearing system, having heard the evidence. We should try to arrive at consensus recommendations and we may have to go our separate ways on other issues relating to banking.

Deputy C. Lenihan

At this stage there is no need to speak with any other financial institutions. I suggest a letter be sent to the other financial institutions, who may be aggrieved that they were not consulted, stating that the investigation is being concluded, and that it was done on a sample basis of the larger and more important institutions. We should point out that if they wish to make a submission by a certain deadline that would be acceptable. On the basis of that we could proceed, as Deputy Bruton suggested, with our recommendations.

Senator O’Toole

Irish banks have the largest profit margins of any banks in Europe. The only conclusions on which we need to offer a view are whether Irish customers are being overcharged and whether we have benefited from being part of the Single Market? They are the two principal issues.

Chairman

After today's business, we will invite in the Irish Payment Services Board with a view to preparing a report at that stage. I shall move on to the next item of correspondence. A minute was received from the Department of Finance, enclosing for our consideration a copy of the consultation document on its proposal to introduce a carbon energy tax which arises from Ireland's international obligations under the Kyoto Protocol, the introduction of which the Minister for Finance announced in his 2003 budget speech. Do members wish to comment on this? We will have to deal with this as a separate item because it will be a major issue if a carbon energy tax is to be introduced. A copy of the minute has been circulated to the Oireachtas Joint Committee on the Environment and Local Government and other relevant committees, including the Oireachtas Joint Committee on Agriculture and Food.

Deputy Ó Caoláin

We should note that the requested submissions must be received before 30 September. We should take the opportunity to properly address what is involved here. A meeting has been scheduled for 17 September and, perhaps, that should be the substantive focus of our deliberations on that occasion. We should take the time to address a carbon energy tax and all that entails.

Deputy Nolan

I support that view. The Oireachtas Joint Committee on the Environment and Local Government has already taken some submissions on this issue and if the minutes of that submission were made available to members before the meeting on 17 September it would be helpful.

Chairman

Other committees have also looked at the issue.

Senator O’Toole

It is crucial that we look at it in the context of the changes in the last budget towards a taxation system for alternative energy, such as wind energy. It could be that we are moving in two different directions at the same time. If we have recommendations, now is the time to make them. I am sure the Chairman does not like to hear that, but that is the truth of the matter.

Chairman

I do like to hear it. We agree to list this as a substantive item on the agenda for the next meeting on 17 September so that we can have a response by the end of the month.

An invitation has been extended by the European Investment Bank to its 9th forum to be held in Dublin on 23 and 24 October on the theme, Vision of Environmental Sustainability - Europe's long-term energy and water policies. Does any member wish to attend this on behalf of the committee? A copy of the invitation has been circulated to members. Our committee has been invited to send a representative.

Deputy N. O’Keeffe

I propose that all members of the committee attend, if they so wish.

Chairman

Those who are free and who choose to attend. I suggest that any member who is interested in attending should contact the clerk to the committee and make the appropriate arrangements.

Deputy R. Bruton

The Chairman said the next meeting of the joint committee takes place on 17 September. Fine Gael is having a party meeting in Killarney on that day. If the meeting takes place on that date there will be no Fine Gael representatives present.

Chairman

I am trying to be helpful. Could we move it to the 18th or is there a difficulty with that?

Deputy Ó Caoláin

That creates a difficulty for another political party.

Deputy N. O’Keeffe

What about the 19th, Chairman?

Chairman

What about Friday, 19 September?

Deputy Ó Caoláin

With respect, Chairman, in terms of mooting that date, it is very difficult. People have already worked on the basis that 17 September was the designated date.

Chairman

I accept that.

Deputy N. O’Keeffe

The 19th is suitable to me.

Chairman

Will Deputy Ó Caoláin be able to arrange a substitute?

Deputy N. O’Keeffe

At 9.30 a.m.

Deputy Ó Caoláin

I can be here on 17 September.

Chairman

The majority appear to be agreeable to 18 September.

Senator White

Chairman, perhaps we could have the meeting at 9.30 a.m.

Chairman

The majority of members appear to want to change the date to the 18 or 19 September, subject to rooms being available. I know it is not convenient for everybody but I have to go by the wishes of the majority. Which date do members wish to choose, 18 or 19 September?

Deputy Ó Caoláin

I would prefer the 18th rather than the 19th. If it is a case of finding compromise, I will do my best but——

Chairman

We will opt for the 18th.

Deputy N. O’Keeffe

If Fine Gael is back in Dublin.

Deputy Ó Caoláin

Fine Gael, with respect, should have taken on board the fact that a meeting was set for 17 September because the rest of us had to do that.

Chairman

The point is noted but we will try to——

Deputy R. Bruton

We will all dance to Deputy Ó Caoláin's tune, is that the attitude?

Deputy Ó Caoláin

I would prefer that than having to dance to Deputy Bruton's tune.

Deputy R. Bruton

We have a two-day parliamentary party meeting, which is a legitimate reason.

Chairman

I am closing the discussion. We have agreed on Thursday, 18 September at 11 o'clock, I assume.

A draft programme of the conference of the public works committees of the European Parliament during the Italian Presidency was received. The conference is taking place on 13 and 14 November in Rome. Do members agree that a representative or representatives of this committee should attend? If so, in the interim the Clerk will liaise with convenors for nominations and in regard to the costs, which will be submitted for approval at the next committee meeting. Are members interested in attending the conference in Rome on 13 and 14 November, under the Italian Presidency, dealing with national Parliaments which are responsible for public works committees? The Office of Public Works is under the remit of the Department of Finance. Members of the environment committee may attend also. Deputy Nolan has expressed interest.

Deputy C. Lenihan

It is important we attend the conference because it deals with the national development plan and there is a great deal of controversy surrounding the way we have rolled out infrastructure here. It would be helpful to find out——

Chairman

We should also try to have some balance between Government and Opposition members. We will agree in principle that members can travel and we will contact members with the details on costs, travel arrangements and the proposal on numbers at the next meeting. In fairness, this committee uses very little of its travel budget, so there should not be a major problem on that front.

A letter was received from Mary O'Shea of IFSRA, responding to questions put to her by Deputy Conor Lenihan regarding early repayment penalties and early repayment of credit card bills, which time did not permit her to respond to at the meeting of 9 July. Is it agreed that we note the letter as being circulated to members of the committee? Agreed.

A letter was sent to the Chairman by Jim Connolly of Food Processing Technology Limited regarding his company's treatment by a particular bank. In light of the recent hearing by the committee, he wanted this correspondence to be drawn to the committee's attention and for it to be noted. Is it agreed that we note the correspondence received and which has been circulated to members? Agreed.

Deputy N. O’Keeffe

Is that in the file?

Chairman

Yes, it is circulated in the notes. An e-mail has been received from Denis Dunne on the lack of clarity in charging practices by the bank. Is it agreed that we note that correspondence which was received by e-mail? Agreed.

I received correspondence yesterday from Deputy Burton in connection with the National Pension Reserve Board, which I did not have time to put on my briefing note. I have been in contact with the members of that board. They issued their annual report during the summer. Representatives appeared before the Committee of Public Accounts recently and I have invited them to come before this committee. They are completing their accounts up to the end of September, which will be a nine months period, and as soon as possible after that, which will possibly be a month or so, they will come before us with up-to-date information which at that time will not yet be in the public arena. All we have seen to date from the National Pension Reserve Board is last year's figures but they will have up-to-date information when they appear before us, possibly at the end of October or early November. I suggest we deal with those issues at that time.

Deputy R. Burton

Chairman, perhaps you could circulate to members that letter and the other letter I sent to you yesterday.

Chairman

Yes.

Deputy R. Burton

I received both items only yesterday, which is the reason for the delay. A particular matter I also want them to address is the ethical policy of the investment funds they manage. That specific issue needs to be addressed.

Chairman

I will circulate a copy of the letter to members. I received it too late for it to be circulated in advance of today's meeting. It will be circulated to members over the next day or so.

The next item on the agenda is the finalisation of the discussion on the strategic management initiative work programme. I have not had an opportunity to discuss this issue in more detail with the vice-Chairman, Deputy Finneran, and perhaps we will deal with it on 18 September.

Deputy Finneran

Chairman, I do not think I will be available on 18 September but I will make an arrangement to have a discussion in the interim.

Chairman

That is fine, and we will discuss that matter in the meeting on 18 September.

I want to get agreement on the timetable for today's meeting, which has been circulated with the agenda. We are running a few minutes behind schedule but in the morning we will hear from the EBS, St. Canice's Credit Union and the Money Advice Bureau. We have allowed ten minutes for a presentation and 35 minutes for a question and answer session. I intend to conclude each section at the end of 45 minutes because otherwise we will not get a break and we have a lot of business to do in the afternoon. If members speak for too long, therefore, I will close the discussion with each organisation after 45 minutes. I ask members to keep their contributions brief so that as many members as possible will have an opportunity to speak.

Deputy N. O’Keeffe

Are we adjourning for lunch?

Chairman

We are adjourning for an hour.

Deputy N. O’Keeffe

What business have we after lunch?

Chairman

It is on the agenda. We will hear from the Department of Finance on debt and development and Dochas will make a presentation on the Irish contribution to that fund.

Another item concerns travel proposals. It was agreed at our last meeting that the committee would be represented at a meeting in Brussels on 7 October on the main guidelines of the European Parliament's approach to the 2004 budget. Costings and justification for travel are attached. Does the committee agree that the Chairman should represent the committee at this meeting? Should we travel economy or business class? I have indicated that I will represent the committee. There are no savings involved so I will travel business class. It is only an afternoon meeting representing the committee in Brussels.

On the question of scrutiny of EU legislative proposals, there are many items on our agenda after the summer break. There is a proposal outstanding that the committee decided to scrutinise - reference No. COM.2003.27 regarding VAT treatment of travel agents and tour operators. We also decided that in order to avert the possible necessity of inviting in the Department of Finance, a briefing note would be made available to the committee. It was agreed that members would decide whether to invite the Department of Finance officials to discuss this matter. Do members have a view on this matter or have they had an opportunity to review it?

Deputy Ó Caoláin

This is in relation to the travel industry, is that correct?

Chairman

Yes, it is in regard to VAT treatment of travel agents and tour operators.

Deputy Ó Caoláin

From a cursory examination of the documentation, I note that there is a difference in application in this regard in Ireland and Denmark as against other EU member states. This might merit some consideration by the committee, as there is an anomaly. I wonder if that is to the advantage or disadvantage of the Irish consumer?

Chairman

I take it we will agree to invite an official from the Department of Finance in order to discuss this matter at a meeting.

Deputy Ó Caoláin

That would be appropriate because this is an important area which affects many people annually in this jurisdiction. We need to examine the detail of this matter where the situation is not harmonious. Exemptions apply to Ireland and Denmark which do not currently operate the scheme.

Chairman

Apart from the content of it, I want to get agreement——

Deputy Ó Caoláin

——that we will proceed to do that, which I believe we should do.

Chairman

That is all I am seeking today. That is agreed. We will have a discussion on this matter when it arises.

The Sub-Committee on EU Scrutiny met on 24 July to consider a further range of proposals, one of which was referred to this committee for further scrutiny, COM(2003), 335, which is a proposal for a Council directive amending Directive 77/338 - EEC, concerning the common system of value added tax as regards conferment of implementation powers and the procedure for adopting derogations. Papers on this were circulated to members with the agenda. Do the members agree with the recommendation of the Sub-Committee on EU Scrutiny that the committee should further scrutinise this proposal?

Deputy R. Bruton

This is an important proposal which we should discuss. It emerges from the Commission's longer term ambitions that tax changes could be decided by qualified majority rather than by unanimity which is the current rule. Ireland has long been a supporter of unanimity in tax matters. While the VAT situation proposed here would not directly impinge on that, this is a proposal we need to examine with a fine-tooth comb because it has serious implications for countries like ourselves.

Chairman

I understand that the officials from the Department of Finance who would advise on this matter are the same ones who would deal with the earlier document——

Deputy Ó Caoláin

Which is also VAT related.

Chairman

Therefore, we will invite the officials in to make a presentation.

Deputy Ó Caoláin

They can address both issues.

Chairman

That is agreed.

As always, members should note that even where the Sub-Committee on EU Scrutiny does not recommend scrutinising a particular legislative proposal, this committee may still decide to do so. In our case, there are a number of proposals on which the sub-committee has recommended that no further scrutiny is necessary and these are contained in the documentation circulated. If the committee agrees with these recommendations that no further scrutiny of these particular documents is necessary, can we report that to the sub-committee? Is that agreed? Agreed.