JOINT COMMITTEE ON FINANCE AND THE PUBLIC SERVICE debate -
Wednesday, 13 Jul 2005

Business of Joint Committee.

Chairman

Apologies have been received from Deputy Ó Caoláin. The first item on the agenda is the minutes of the meeting of 29 June 2005. The draft minutes of the last joint committee have been circulated. Are they agreed? Agreed. Are there any matters arising? No.

People have a schedule of correspondence, the next item on the agenda. The first item is a decision by the Joint Committee on European Affairs Sub-Committee on European Scrutiny on 29 June 2005. I propose that we note the proposal to refer to the committee for information COM 2005/253, proposals for a directive of the European Parliament and the Council amending directive 2004/39EC on market and financial instruments as regards the disabled.

We received an invitation to attend a conference, Reinventing Retirement — Balancing Risk, on 7 July. I suggest we note that and move on.

The next item is a letter from the Combat Poverty Agency on ending child poverty in Ireland, a policy statement that is available from the committee secretariat if people wish to see it in detail. I suggest we note it and the relevant committee will examine the issue in detail. Is that agreed? Agreed.

The next item relates to SI 250 to 255 of 2005. These are about global valuations of BT Ireland, Meteor, O2, Vodafone, Eircom and Bord Gáis. Where any of these bodies have rateable assets in a local authority, a global valuation mechanism is agreed between the Valuation Office and local authorities. In any of the areas where the assets exist, they apportion the national rates bill as set for those individual organisations and it is divided on a pro rata basis based on the population for the local authority where they are based. If there is no Bord Gáis facility in a county, the local authority will not get rates from Bord Gáis. The Bord Gáis national rates figure is divided among the local authorities in which Bord Gáis has facilities. This was sent to us for information purposes and I do not see a need for the committee to scrutinise it.

Deputy Boyle

I do not see this as a problem for the major utility companies but I am concerned about telecommunications companies that have antennae. Some areas have more of them and distribution on a pro rata basis might not distribute fairly the risk involved. The statutory instruments on telecommunications might be looked at separately.

Chairman

The proposals in the statutory instrument are based on population. The only way to do this in the manner the Deputy suggests is to go through every single asset in the State and break them down on a local authority basis. This is to avoid that. We passed the Valuation Bill to allow global evaluation.

Deputy Boyle

Most of these installations are in mountainous locations in the west where the signal must be bounced from A to B. Installations exist in the west, and Dublin gets a benefit on a pro rata basis, but that does not seem fair in terms of local government finance.

Chairman

I take the point but I do not know if we can take it further. We can communicate with the Department of Finance on it.

Deputy Boyle

We could express our reservations.

Chairman

Yes, particularly about mobile telecommunications. ESB and Bord Gáis are more straightforward. We will note the statutory instruments as received.

The next item is a letter from the Department of Finance attaching a report on SI 81 of 2005 regarding section 91 of the Finance Act 2004. It deals with a deferred surrender to the central fund of funds in the capital envelop that were not spent in previous years. This came before us some time ago and we asked for a detailed note. It contains much interesting information. Is it agreed that we will note that? Agreed.

The next item is a letter from the Department of Finance acknowledging receipt of the interim report of the policy on commercial banks concerning consumer charges. I suggest we note that acknowledgement of our report.

The next item is a newsletter received by most Oireachtas Members from the Insurance Federation of Ireland. Is it agreed to note that? Agreed.

The next item is a letter from Anglo Irish Bank regarding Tralee Beef and Lamb. The bank states that it is willing to meet us to discuss the facts surrounding the closure of Tralee Beef and Lamb. When can the members of the sub-committee, Deputies Ned O'Keeffe, Paul McGrath, Ó Caoláin and Senator O'Toole, meet the bank? We have arranged to meet Bank of Ireland on the issue on Tuesday, 26 July.

Deputy Cregan

I would appreciate it if I could join them as I have an interest in this case.

Chairman

That is up to the committee. I have no problem with that but are members happy?

Deputy N. O’Keeffe

Deputies Paul McGrath and Cregan, the Chairman, myself and Senator O'Toole are in the group.

Chairman

Is Deputy Ó Caoláin not part of the group?

Deputy N. O’Keeffe

No.

Chairman

Very well. That is agreed. There is a meeting on 26 July with the Bank of Ireland on that issue. We can provide the details later. When will members be away on holidays? We have a meeting in the afternoon of 27 July. Are they available that morning?

Deputy N. O’Keeffe

I must attend a meeting of the Joint Committee on Enterprise and Small Business. I do not know what time it is sitting.

Chairman

This committee is meeting in the afternoon. I will be away from the following day for a fortnight which brings us into August. Will we try to meet on the morning of 27 July? Alternatively, we could meet on 26 July when we are meeting the Bank of Ireland.

Deputy N. O’Keeffe

I am free on that date.

Chairman

Does Deputy Paul McGrath have a note in his diary to meet the Bank of Ireland on 26 July at 2 p.m.? Will we try to meet Anglo Irish Bank that morning?

Deputy P. McGrath

Is the committee meeting on 27 July?

Chairman

The following day, yes. If we do not meet Anglo Irish Bank on the morning of the day we are due to meet the Bank of Ireland, we could meet at 4.30 p.m. that day. If that Tuesday does not suit Anglo Irish Bank, would the Wednesday morning suit members of the sub-committee, before the Committee on Finance and Public Service meets?

We will try for either the Tuesday or Wednesday morning. I will check the time of the Committee on Finance and Public Service meeting to see whether we should meet early or late. If neither of those days suits, we must postpone it until a couple of weeks into August.

The next item of correspondence is a letter from the Department of Finance regarding an invitation to the chairman of the decentralisation implementation group to come before the committee. Have members received the second batch of correspondence issued? It is probably in their pigeon holes since yesterday.

Deputy Bruton

Is he offering to meet us?

Chairman

Yes.

Deputy Bruton

We should take up his offer.

Chairman

Yes. The letter states that Mr. Flood will be glad to meet the committee. I suggest we set a date for September.

Senator Mansergh

There has been no development since that report. It is no longer finalising it.

Chairman

No.

Deputy McHugh

Why put this back to September? This is an important and relevant issue.

Chairman

Yes. We have two further meetings arranged this month, for 20 and 27 July, and items are scheduled for those, including legislation.

Deputy N. O’Keeffe

If we are not meeting in August, then September is the best option.

Chairman

The July agenda is set.

Deputy Burton

It makes more sense to meet him in September. He has not been long in the job so by September he might have more to report beyond what we discussed on the previous occasion.

Chairman

We have settled what items from our work programme will be on the agenda for the next two meetings. We will agree on September.

The next item of correspondence is a letter from the clerk to the Joint Committee on European Affairs attaching a calendar of EU Council meetings during the UK Presidency. I suggest we note that. If anyone wants to go through the details of that, the hard copy is in the pigeon-holes. Members have not brought them to this meeting.

The next item is the statutory instrument regarding value added tax short-term on the holiday sector. It concerns statutory instruments for the VAT to be charged on short-term guests on holiday sector. Are members happy to note that statutory instrument?

Deputy P. McGrath

What are the implications of that? It is my understanding that one does not have to register for VAT for providing a service if the income does not exceed €25,500 a year. If this group is to be exempt from VAT, as should happen, does that imply these people are earning in excess of €25,500? If they are making a significant income from this service——

Chairman

This relates to people who let part of a house for a period not likely to exceed eight consecutive weeks, a very short-term let. The eight weeks would not bring one up to €25,500.

Deputy P. McGrath

That is my point. Why does this have to be done when, as we said during our discussions on the Finance Bill, if one provides a service one does not have to register for VAT until one's income for the year exceeds €25,500? Is there a situation such that someone who has 25 houses, each let for only eight weeks, is exempt or does this apply on a once-off basis to individuals? I have no problem with individuals letting on a short-term basis not having to pay VAT. I assume the income will be declared for income tax purposes.

If, however this regulation facilitates large groups of lettings and holiday villages and so on, I would have difficulties with it. We should get some clarification on what this involves and where the need is expressed to put through this regulation.

Chairman

I cannot answer the question. We will ask for a briefing note which will be circulated immediately to all members to ensure that they get it directly during the recess. Members can then make their own decisions on the matter. This was issued on 29 June. We will ask for a reply within seven days because of the statutory instrument. Normally these regulations pass within 21 days. The officials should be able to do this immediately because they prepared the statutory instrument and have the information.

The next item is consideration of S.I.s 278, 284, 286, 291, 317, 329 and 330 of 2005. They are the commencement of certain provisions of chapter 2. Each one refers to a commencement date for various aspects of the 2005——

Deputy Bruton

S.I.s 329 and 330 are the levies to be paid to fund the financial service ombudsman's council. I would like to see a note explaining how these levies are derived. It is also timely to recall that legislation provides for a six-year look-back period for the financial service ombudsman's council for taking complaints. We have been alerted to the problem of endowment mortgages which were often established much earlier than six years ago. Shortfalls in these endowment mortgages are a continuing problem. The Irish Financial Services Regulatory Authority, IFSRA, was to provide a study which is long overdue. We were to have a hearing with IFSRA about endowment mortgages as soon as that report was available. The delay in issuing the report has delayed our hearings and has prolonged the frustration of people who have these products.

In the United Kingdom, some companies were found to have mis-sold these products and they are making a contribution towards the shortfall. It is important to provide some clarification of what is happening in this country. Perhaps the Chairman could write to IFSRA to find out what progress is being made on its study of endowment mortgages and note the committee's continuing interest in having a hearing with it on the basis of the report. I have received correspondence from people who are concerned about their position while those involved sit on their hands and say there is nothing they can do about it. We need to move forward and see whether we can do something about it and whether there is a contributory responsibility on the part of those who sold the policies.

Chairman

We will ask for that information on S.I.s 329 and 330. Both are to be given the seal of the financial services ombudsman council, signed by Dr. Con Power. I was not aware that he had the power to make statutory instruments. It is the first time that I have seen that body sign a statute. To my knowledge, 99.9% were signed by Ministers. We have seen one or two from the Revenue, but it is the first time that I have seen the financial services ombudsman signing statutory instruments.

Deputy Bruton

When was he given the power to set those fees?

Chairman

We must have done it.

Deputy Bruton

My issue is broader. The agency cannot investigate endowment mortgages because of the six-year rule. The committee needs to get to the bottom of the status of endowment mortgages and find out whether the companies in question are partially responsible for the underperformance, as has been found in the UK. I would be surprised if there were very different selling techniques here. Perhaps the Chairman might write to the consumer director of the Irish Financial Services Regulatory Authority to find out what has happened to that study.

Chairman

Yes, I will be happy to do that at the Deputy's request. We will note the remainder of the statutory instruments and then do that.

Deputy P. McGrath

S.I. 291 relates to the coming into effect of a mineral oil tax on coal. The explanatory note states that it provides for rates of tax on coal of €4.18 for business use and €8.36 for other use. What do those figures relate to? Is it a bag or a tonne of coal? This is an additional charge. Why is there a different rate for business and other use? Coal is a major fuel for heating and, in many cases, cooking for poorer sectors of the community that do not have oil heating or any other source of fuel. This tax will be passed directly to consumers. Why is there one rate for business and one for other use?

What will the effect on poorer sectors of the community be? If one passes this tax on to them and domestic use in general, it is the poorer sectors who will be hit since they are the main users of coal. They have the lowest income levels and are more dependent on weekly income to survive. I would like to know the implications and the knock-on effect. What will it add to a bag of coal? We must ensure that it is policed properly and that one is not adding a tax of €8.36 that, when it reaches the poor devil on the street that gets his bag of coal every week or whenever, is increased to double that amount. How will it be policed and why is there a different rate for business and other use?

Chairman

That is S.I. 284.

Deputy P. McGrath

My apologies. I thought it was S.I. 291.

Chairman

We will ask the Department of Finance for that information and for it to be circulated within seven days since the Houses are in recess. As it is a statutory instrument, departmental officials will have that information at their fingertips.

Deputy P. McGrath

Perhaps the clerk might inquire regarding the knock-on effect for real users, how the Department envisages the tax affecting them and why there is a different rate for business and other use.

Chairman

We are happy to do that. The last letter was from the Bank of Ireland group regarding Tralee Beef and Lamb. We have already dealt with that by arranging a meeting.

Deputy N. O’Keeffe

Will we meet privately?

Chairman

Yes. We should perhaps meet in Leinster House an hour before the meeting.

Deputy N. O’Keeffe

What time would that be?

Chairman

The meeting with the Bank of Ireland is scheduled for 2 p.m. on 26 July. We will meet before lunch so that we know why we are going out. The Bank of Ireland's head office is in Baggot Street, but we will meet here. If Deputies are driving out, they should let the secretariat know and the cars will be cleared in the car park for people to go into the Bank of Ireland. If they give them the details, that can be arranged. We may also have a meeting with Anglo-Irish Group that day. It is on St. Stephen's Green, which makes it within walking distance. It is seeking an agenda. The issues about which we must ask are straightforward, and we can supply that to it. That clears all correspondence on the agenda.

Deputy P. McGrath

If we are meeting the Anglo-Irish Group that morning, we would want to have a briefing session before. We should bear in mind that——

Chairman

An hour and a half for the first of the meetings.

Deputy P. McGrath

When the Chairman is scheduling the meetings, he should take account of our need for that.

Chairman

If we are meeting a group, committee members will convene before we go.

The next matter on the agenda is the discussion with the Ombudsman. We will suspend for a moment while she takes her seat.

Sitting suspended at 11.36 a.m. and resumed at 11.38 a.m.