SELECT COMMITTEE ON FINANCE AND THE PUBLIC SERVICE debate -
Wednesday, 23 May 2001

Vol. 4 No. 7

Euro Changeover (Amounts) Bill, 2001: Committee Stage.

Sections 1 to 3, inclusive, agreed to.

SECTION 4.

Minister for Finance (Mr. McCreevy)

I move amendment No. 1:

In page 4, between lines 15 and 16, to insert the following subsection:

"(1) Section 5 of the Economic and Monetary Union Act, 1998, is amended by the substitution for the definition of 'participating Member State' of the following:

" 'participating Member State' means-

(a) Belgium, Germany, Spain, France, Ireland, Italy, Luxembourg, Netherlands, Austria, Portugal and Finland;

(b) with effect from 1 January 2001, Greece, and

(c) any other Member State of the European Communities with effect from the date on which the single currency is duly adopted in such Member State as its currency;'.".

The purpose of the amendment is to update the definition of "participating Member State" in the Economic and Monetary Union Act, 1998, so as to include Greece which adopted the euro as its currency with effect from 1 January 2001 and to allow for the fact that further member states may do so in the future.

Amendment agreed to.

Section 4, as amended, agreed to.

NEW SECTION.

Mr. McCreevy

I move amendment No. 2:

In page 4, before section 5, to insert the following new section:

5.-The Central Bank Act, 1989, is hereby amended by the substitution of the following section for section 135:

135.-(1) No person shall be compellable to make any payment or do any act-

(a) on a public holiday, or

(b) on a day on which the TARGET system is closed which that person would not be compellable to make or do on Christmas Day or Good Friday by virtue of any rule of law relating to banking.

(2) Where a person would, apart from this section, be compellable to make any payment or do any act relating to banking on a public holiday or a day on which the TARGET system is closed the obligation to make such payment or to do such act shall be deemed to be complied with if such person makes the payment or does the act concerned on the next day on which he is compellable to make or do it.

(3) In this section-

"public holiday" has the same meaning as it has in paragraphs 1 and 2 of the Second Schedule to the Organisation of Working Time Act, 1997; and

"a day on which the TARGET system is closed" means such day or days as the Governing Council of the European Central Bank from time to time decide to be a day or days on which the Trans-European Automated Real-time Gross settlement Express Transfer system will be closed.'.".

This amendment provides for the deferral until the next working day of the giving of value by banks in respect of transactions to fall due for processing by them on a day when the TARGET inter-bank settlement system is closed by a decision of the European Central Bank. This is what already happens in respect of public holidays. The vast majority of the TARGET closed days already correspond with our public holidays. The exceptions are Labour Day on 1 May - our public holiday is on the first Monday in May - and 31 December this year when the ECB has decided that TARGET should be closed to safeguard the smooth conversion of retail payment systems and internal bank systems to the euro. The ECB has welcomed our intention to introduce this provision.

Amendment agreed to.

Section 5 agreed to.

NEW SECTION.

Mr. McCreevy

I move amendment No. 3:

In page 5, before section 6, to insert the following new section:

6.-(1) Section 85 of the Bankruptcy Act, 1988, is with effect from 1 January 2002, amended-

(a) in clause (i) of paragraph (a) of subsection (3) by the substitution of ’one euro in the euro’ for ’one pound in the pound’;

(b) in paragraph (a) of subsection (4) by the substitution of '50 cent or more in the euro' for 'fifty pence or more in the pound', and

(c) in paragraph (b) of subsection (4) by the substitution of ’50 cent in the euro’ for ’fifty pence in the pound’.

(2) Section 86(1) of the Bankruptcy Act, 1988, is with effect from 1 January 2002, amended by the substitution of 'one euro in the euro' for 'one pound in the pound'.

(3) Paragraph 24(10) of the First Schedule to the Bankruptcy Act, 1988, is with effect from 1 January 2002, amended by the substitution of 'one euro in the euro' for 'one pound in the pound'.".

The purpose of this amendment is to amend the Bankruptcy Act, 1988, to replace references to "pound in the pound" and "fifty pence in the pound" with appropriate references to euro amounts. These amounts represent thresholds or targets in relation to the settlement of the debts of a bankrupt and govern such matters as the discharge of the bankruptcy or the return of property etc., when all debts and costs are settled. A separate section is required in this case because the amounts are not expressed in a form which would enable their inclusion in the Schedules to the Bill. Certain monetary thresholds are being added to in the Fourth Schedule under amendment No. 11.

Mr. J. Mitchell

Should the reference to "50 cent in the euro" not read "50 cents in the euro"?

Mr. McCreevy

I asked my officials this question. The legal use is "cent". People should get used to saying "two euro, 68 cent". I would automatically have said "two euro, 68 cents."

Mr. J. Mitchell

That will never work, especially in the Dublin Central constituency.

Mr. McCreevy

The word to be used is "cent", not "cents".

Amendment agreed to.

Section 6 agreed to.

SECTION 7.

Mr. McCreevy

I move amendment No. 4:

In page 5, between lines 11 and 12, to insert the following subsections:

"(4) Section 5, this subsection and the Central Bank Acts, 1942 to 1998, shall be construed together as one Act and may be cited together as the Central Bank Acts, 1942 to 2001.

(5) Section 6, this subsection and the Bankruptcy Act, 1988, shall be construed together as one Act and may be cited together as the Bankruptcy Acts, 1988 and 2001.”.

The purpose of this amendment is to add two new subsections to section 7 which deals with citations. The amendment provides for the citation of the relevant section of this Bill as inserted by amendments provided for in amendments Nos. 2 and 3 of the principal Act to which they relate.

Mr. J. Mitchell

The State has gone out of its way to round downwards.

Mr. McCreevy

Everything done in that regard is in favour of the citizen.

Mr. J. Mitchell

Does the Minister not agree that it is likely that the private sector will round upwards? Is there anything we can do to ensure this does not happen because it will add to inflation, initially at any rate?

Mr. McCreevy

There is a worry here also because we will be the only country of the euro 12 in which the amounts in euro will be greater than those in the previous currency. The figures will look bigger and therefore there will be further opportunity for people converting the price of the pint, for example, to round upwards rather than downwards. As I said in reply to a parliamentary question from the Deputy, the Euro Changeover Board has entered into arrangements with some sectoral groups regarding codes of conduct. We will be keeping the matter under review.

The question of price manipulation is one to which the Director of Consumer Affairs will be paying close attention. The Deputy is correct. If an item costs £1, then the price in euros should be €1.2697 but the figure will automatically be rounded to €1.27.

Mr. Fleming

What about sums up to 50p?

Mr. McCreevy

This is exactly the difficulty to which Deputy Mitchell referred in parliamentary questions. People have entered into agreements with the Euro Changeover Board regarding voluntary codes of conduct and I mentioned this matter in my reply on Second Stage. These consumer aspects of the changeover are fundamentally a matter for the Minister responsible for consumer affairs and the Director of Consumer Affairs. They both relaunched a national code of practice on the euro changeover last December along with an action plan for consumers' protection. A key aspect of the code is that the participants would commit themselves to carry out the changeover fairly and to seek no advantage from the conversion. That is what they are signing up to. It is a voluntary code. The Minister responsible for consumer affairs and the Director of Consumer Affairs will be keeping this matter under observation. However, I accept that there is this difficulty that a person will have more euros in his or her pocket than the equivalent in pounds and there would be a temptation to take advantage on price.

Mr. J. Mitchell

This is of considerable importance, given that inflation is stubbornly high and it is fuelling wage demands. We must take a very robust approach to this in the period from the changeover date. There should be a process of public education to encourage people to tackle shopkeepers, fish and chip shops, or pubs which overcharge.

Most housewives do not believe that the rate of inflation is only 5.6%. They think it is higher. Certainly my wife has been saying to me for the past two years that every time you go into the shops it has got worse and certainly every time you go into the pub it has got worse. I hear many other women saying that is so. That, together with other factors, is having an impact on wage demands. I feel we should have a robust programme of public education encouraging people to challenge and report people who are charging too much and rounding upwards. It is important that we do that.

Mr. McCreevy

I concur with Deputy Mitchell and I will bring his remarks to the attention of the Minister responsible for consumer affairs and the Director of Consumer Affairs. They have already said that they will encourage people to take this robust approach. We will be increasing the intensity of the campaign and all we can hope for is that people will have a greater sense of awareness, that they will be on the ball, and that they will not be abused.

Mr. J. Mitchell

Is there a penalty?

Mr. McCreevy

At present, no.

Mr. J. Mitchell

Perhaps there should be a penalty. Perhaps a few early prosecutions would help to address the issue. I recognise that it is late in the day to be suggesting that but it may be something the Minister might consider for Report Stage.

Mr. McCreevy

It would be a matter which I would pass on to the Minister responsible for consumer affairs. For a considerable time I have voiced these concerns regarding what might happen on 1 January because there will be this opportunity for abuse. Even if inflation was as low as it was two years ago, I would still be worried about people taking advantage. It is something which I have brought to the attention of the Director of Consumer Affairs who is very much aware of it.

Mr. J. Mitchell

Section 7 cites the equivalent amounts in law. Does that apply to the private sector?

Mr. McCreevy

No.

Mr. J. Mitchell

To whom does this apply?

Mr. McCreevy

All the statutes scheduled to the Act. We have done it separately in the Finance Act, which was one of the reasons it was so long. The Social Welfare Bill did it independently. This is an Act to provide for this for all the other areas.

Mr. Briscoe

Although I am sure this will be done anyway, cardboard converters are easy for people to use and I would ask, first, that they would be circulated to everybody in the country and, second, that people be made aware where they can get them or that they be supplied to shops in order that people will have no difficulty getting them.

Mr. Fleming

Before we conclude, the Minister might gave us an indication of the approximate cost to the Exchequer of the handling of this operation which must be paid to the associated banks. This came up in previous discussions. I read that the Central Bank was inviting tenders for collecting the old currency and transferring the coin to mints abroad. How do we know we are getting value for money for the issuing of money through the ATMs? How is the Department assessing the costs being quoted by the bank? Every company will incur conversion costs and the banks will have their own internal costs, but what is the cost of work they are doing on behalf of the State?

Mr. McCreevy

The State will not be directly compensating any independent retail organisations or anybody else. Whatever costs people incur they will be allowable under the taxation code. If they are revenue costs, they will be allowable as an expenditure. If they are capital costs, they will be allowable under the capital allowances code.

As far as the arrangements entered into between the Central Bank and the banking institutions regarding the logistical implementation are concerned, an agreement has been reached between the Central Bank and the banks as to the costs they will bear. There will be some costs involved. It depends on what one wants to include in the total costs. In one sense the Central Bank profits will not be as high but the banks are bearing their own costs.

Mr. O’Flynn

What is the feedback from businesses? Are they prepared for the changeover or not? I am getting the impression that very few are prepared.

Mr. McCreevy

Over recent years surveys conducted periodically have shown an increasing level of awareness by the business community but it is not as high as we would want it to be. I spoke to people with small businesses, and, now that it is nearly 1 June and the changeover is coming at the end of the year, they hope that it will be all right on the night. At the minimum retail businesses must ensure that their technology, their cash registers and other equipment, are euro compliant. If they have not done that, they will be in serious trouble. I accept that in the first few weeks from 1 January there will be an expected level of confusion and a little more than that.

Mr. O’Flynn

Has the Minister any information about the computer companies which are preparing the software for companies? In my own case we have been waiting months to implement the changeover. I get the impression that some companies could be holding back as in the case of Y2K compliance and then waiting to come in and charge exorbitant amounts to implement the changeover.

Mr. McCreevy

Businesses have been reared through the Forfás campaign and a huge effort has been put into making people aware. Various financial institutions have taken the opportunity of marketing their wares in order to sell their particular products and to make people aware.

My own impression is that all the major retail outlets are geared up for it. That will be a major operation for them because we are using the retail outlets to hoover up the old currency and hand out the new currency. That is really how we are doing this. As I have been saying for at least the past two years, people should be ready for it now. Hopefully, we will not encounter more difficulties than we had expected. The retail magazines advertise software applications for this purpose. People would want to have their affairs in order. They do not have much time left.

Mr. Briscoe

I am convinced this will not be any more difficult than decimalisation which went very smoothly. Six months after the changeover people will be accustomed to it. They will learn to compare euro prices in shops.

Mr. McCreevy

The people handled decimalisation well and became accustomed to it. However, I point out to Deputy Briscoe that old uncles of mine, until the day they died, always converted prices into pounds, shillings and pence. That would have been 20-odd years after the event.

Amendment agreed to.

Question proposed: "That section 7, as amended, stand part of the Bill."

Mr. J. Mitchell

I may table an amendment on Report Stage to create an offence of overcharging.

Question put and agreed to.

Schedule 1 agreed to.

SCHEDULE 2.

Chairman

It is proposed that amendments Nos. 5, 10 and 12 be grouped for discussion.

Mr. McCreevy

I move amendment No. 5:

In page 7, between lines 24 and 25, to insert the following:

"

7.	Derelict Sites (Appeal Fees) Regulations, 1991 (S.I. No. 149 of 1991).	Column (2) of Table.
8.	Derelict Sites (Case Stated for High Court) (Fee) Regulations, 1991 (S.I. No. 148 of 1991).	Regulation 2.

".

This group of amendments, Nos. 5, 10 and 12, provide for convenient euro replacements for the fees and thresholds for appeals to the Valuation Tribunal in respect of market valuations under the Derelict Sites Act, 1990, and the fee payable to the Valuation Office in respect of a case stated to the High Court in respect of such appeals.

Mr. J. Mitchell

Obviously legislation has been repeatedly trawled through to see what needs to be added. However, it will probably be found that something has been overlooked. Has the Minister power by regulation to add to this and, if not, should he not take the power?

Mr. McCreevy

There is an EU regulation that does this automatically. This legislation changes pound amounts to convenient euro amounts. However, there is an EU regulation which supersedes this that causes automatic conversion. The Schedules to the Bill convert pound amounts to convenient euro amounts in favour of the citizen rather than having awkward amounts, for example, €146.48. That is the purpose of this legislation, but the EU regulation allows automatic conversion to take place and that supersedes all this.

Amendment agreed to.

Mr. McCreevy

I move amendment No. 6:

In page 7, between lines 29 and 30, to insert the following:

"

9.	Employment Agency Regulations, 1972 (S.I. No. 255 of 1972).	Regulation 5 and Table to that Regulation.

".

This amendment adds the annual fee in respect of a licence under the Employment Agency Act, 1971, to the range of fees and charges in respect of which convenient euro replacement amounts are provided in the Bill. With effect from 1 January 2001, the current fee of £400 will be replaced by the convenient amount of €500. As this amount is already listed in Schedule 1, all that is necessary is to add the statutory reference to Schedule 2.

Amendment agreed to.

Mr. McCreevy

I move amendment No. 7:

In page 8, line 19, to delete "Order" and substitute "Order, 1999".

This is a minor amendment to include a date which was inadvertently omitted. It inserts the date "1999" at the end of the title of the order at reference No. 18 in Schedule 2. The full title of the order should read Land Registration (Fees) Order, 1999 S.I. No. 343 of 1999). The date was omitted from the title of the order in the printing of the Bill.

Amendment agreed to.

Mr. McCreevy

I move amendment No. 8:

In page 8, to delete lines 25 and 26.

The purpose of this amendment is to delete the reference to the Litter Pollution Regulations, 1999, from Schedule 2 of the Bill. These regulations will no longer form the basis for the on the spot fine for litter pollution once the Waste Management (Amendment) Bill, 2001, is enacted. Hence the provision of a convenient euro amount in this case is not necessary. As the amounts involved, £50 and £60, occur in other statutory references in Schedule 2, there is no need to make consequential amendments to the list of amounts in Schedule 1.

Amendment agreed to.

Mr. McCreevy

I move amendment No. 9:

In page 9, between lines 27 and 28, to insert the following:

"

33.	Valuation (Case Stated for High Court) (Fee) Regulation, 1988 (S.I. No. 331 of 1988).	Regulation 2.

".

The purpose of this amendment is to bring within the scope of the Bill the fee payable to the Valuation Tribunal in respect of cases stated to the High Court. The Valuation Tribunal deals with appeals related to the rateable valuation of commercial property and, subject to the right of appeal to the High Court on a point of law, the decision of the tribunal is final. The £300 fee for stating a case to the High Court in respect of such an appeal is to be replaced by €375. As these amounts are already listed in Schedule 1, all that is necessary is to add the statutory reference to Schedule 2.

Mr. Foley

I take it there is no change from the current position.

Mr. McCreevy

No.

Amendment agreed to.

Schedule 2, as amended, agreed to.

SCHEDULE 3.

Mr. McCreevy

I move amendment No. 10:

In page 10, between lines 12 and 13, to insert the following:

"

10.	50,000	65,000
10.	100,000	130,000

".

Amendment agreed to.

Schedule 3, as amended, agreed to.

SCHEDULE 4.

Mr. McCreevy

I move amendment No. 11:

In page 11, between lines 6 and 7, to insert the following:

"

2.	Bankruptcy Act, 1988 (No. 27 of 1988).	Section 123(1)(d), section 123(1)(e), section 124 and section 129(a).

".

The purpose of this amendment is to add four thresholds under the Bankruptcy Act, 1988, to the range of thresholds in respect of which convenient euro replacement amounts are provided in the Bill. The thresholds represent monetary limits above which certain actions by a bank would constitute an offence under the Act. The actions concerned relate mainly to the removal or concealment of certain types of property or the arrangement of credit. The current threshold of £500 in each case will be replaced by €650. As these amounts are already listed in Schedule 3, it is only necessary to add the statutory references to Schedule 4 to bring the thresholds within the scope of the Bill.

Mr. J. Mitchell

There have been significant changes relating to bankruptcy in the Standards in Public Office Bill. It effectively changes the rules regarding bankruptcy where membership of the Houses of the Oireachtas is concerned. It is not automatic and must be voted on.

Mr. McCreevy

Second Stage of the Bill will be taken tomorrow.

Mr. J. Mitchell

In that context, I want to know more about this bankruptcy provision. Could the Minister explain it a little more and a little better?

Mr. McCreevy

I am not an expert on bankruptcy nor do I want to be, although one never knows. Bankruptcy is a jurisdiction of the High Court for the purposes of distributing equally among the creditors of an insolvent individual the proceeds of the sale of his assets, streamlining and consolidating the process of establishing the rights of creditors as against the debtor, alleviating the stress caused to insolvent individuals by the incessant attempts of creditors to levy execution against the goods of the debtor, protecting creditors from the fraudulent actions of debtors and bankrupts and penalising fraudulent debtors. The amendment adds four thresholds under the Bankruptcy Act to the range of thresholds in respect of which a convenient euro replacement is provided in the Bill. The actions concerned relate mainly to the removal or concealment of certain types of property or the arrangement of credit. The current threshold of £500 is replaced by €650. The figure of £500 would normally be €635. We are rounding up which is to the benefit of the bankrupt person.

Amendment agreed to.

Mr. McCreevy

I move amendment No. 12:

In page 11, between lines 12 and 13, to insert the following:

"

4.	Derelict Sites (Appeal Fees) Regulations, 1991 (S.I. No. 149 of 1991).	Column (1) of Table.

".

Amendment agreed to.

Schedule 4, as amended, agreed to.

TITLE.

Mr. McCreevy

I move amendment No. 13:

In page 3, line 13, after "CREDIT UNION ACT, 1997," to insert "TO AMEND THE BANKRUPTCY ACT, 1988, TO AMEND THE CENTRAL BANK ACT, 1989,".

The purpose of this amendment is to extend the Long Title of the Bill to include the amendments to the Central Bank Act, 1989, and the Bankruptcy Act, 1988, which are now effected in the Bill following the committee's acceptance of amendments Nos. 2 and 3.

Mr. J. Mitchell

I see in the Long Title the reference to the singular cent. Will there be dimes and quarters as well?

Mr. McCreevy

Cents and euros. Nothing else.

Mr. J. Mitchell

What coins will there be?

Mr. McCreevy

There will be 1c, 2c, 5c, 10c, 20c, 50c, €1 and €2 coins.

Mr. J. Mitchell

There will be no 25c?

Mr. McCreevy

No. The coins will be 1c, 2c, 5c, 10c, 20c, 50c, €1 and €2. There are €5, €10, €20, €50, €100, €200 and €500 notes.

Mr. J. Mitchell

Some of these could be——

Mr. McCreevy

There will be eight coins and seven notes.

Amendment agreed to.

Title, as amended, agreed to.