Wednesday, 16 Jan 2013

Written Answers Nos. 96-121

Departmental Bodies Establishment

Questions (96)

Patrick O'Donovan

Question:

96. Deputy Patrick O'Donovan asked the Minister for Finance if he will provide in tabular form the number of agencies, bodies, boards, quangos or other entities, which are financed from, answerable to or established by his Department that have been abolished, merged or re-organised since this Government took office; the savings that have been realised since the changes were made; the level of staff reduction that has been achieved; if he will provide details of further agency reductions that he intends to pursue in 2013; and if he will make a statement on the matter. [57878/12]

Written answers

Minister for Finance

In response to the Deputy’s question the following table contains details of bodies which arefinanced from, answerable to or established by my Department that have been abolished, merged or re-organised since March 2011.

Name of Body	Date merged or abolished	Savings that have been realised since the changes were made
Irish Nationwide Building Society ( INBS)	Merged with Irish Bank Resolution Company (IBRC) June 2011	Savings (not to the Exchequer directly of circa €200,000)*

*Still under review

I am not aware of any plans to abolish, merge or re-organise bodies under the aegis my Department in 2013.

Property Taxation Exemptions

Questions (97)

Terence Flanagan

Question:

97. Deputy Terence Flanagan asked the Minister for Finance if he will ensure that the wording of the property tax is changed in order that voluntary housing agencies are made exempt; and if he will make a statement on the matter. [57907/12]

Written answers

Minister for Finance

The Government is aware of the important role played by the Approved Housing Bodies in the provision of housing for those who face difficulty in living in our communities. To the extent that such groups are charities and are engaged in the provision of special needs housing, they should be eligible for the exemption for such housing which is provided for in the Finance (Local Property Tax) Act 2012. I understand that most of the various bodies that comprise the voluntary and co-operative sector in respect of the provision of social housing would have been approved for charitable status by the Revenue Commissioners. Indeed, such bodies must have such charitable status before they can be approved by the Department of the Environment, Community and Local Government for funding to be used in the provision of social housing. However, such groups also provide general needs housing in the same way as a local authority provides such housing. Depending on the level of local authority funding provided, some voluntary bodies may have flexibility to provide housing for those not eligible for local authority housing. To provide for a blanket exemption for such bodies would obviously be inequitable vis-à-vis local authority tenants. For this reason the Government decided not to accept the recommendation of the inter-Departmental Group chaired by Dr Don Thornhill on the design of a property tax (the “Thornhill Group”) that all charitable bodies should be exempt but to restrict the exemption to those properties that are used to provide accommodation to persons who, for reasons of old age, physical or mental disability or other cause need special accommodation and support to enable them to live in the community.

Nonetheless, I acknowledge that government policy places significant emphasis on the approved housing body sector as an important part of social housing supply in the future. The Government will actively engage with Approved Housing Bodies to ensure that the Local Property Tax does not impact on their ability to deliver housing units.

Pension Provisions

Questions (98)

Martin Ferris

Question:

98. Deputy Martin Ferris asked the Minister for Finance the amount that has been collected to date under the 0.6% pension levy; if the money is being ring-fenced for the purposes outlined on its introduction; and the number of jobs that have been created as a consequence. [57921/12]

Written answers

Minister for Finance

The pension fund levy raised €463 million in 2011 and €482 million in 2012. The implementation of a jobs and growth strategy is a key priority of the Government. The moneys raised from the pension fund levy are being used to pay for the Government’s Jobs Initiative introduced in May 2011. The Jobs Initiative contains a range of measures aimed at assisting in employment generation – providing opportunities for those who are out of work, to restore public morale and confidence in the economy and encourage spending by consumers.

Employment data are presented in net terms and information on gross flows into and out of employment is not available, making it difficult to assess the number of jobs created by any policy initiative.

Notwithstanding that quantifying the impact is difficult, I am confident that the measures introduced by the Government in May 2011, such as reducing the rate of VAT in the high value added tourism sector, are playing an important role in both creating and sustaining employment. Encouragingly, there are signs of stabilisation in labour market conditions. For instance, unemployment fell on an annual basis in the third quarter of 2012, the first such fall in a number of years while, according to the Budget Day forecasts, the unemployment rate is projected to have peaked in 2012.

Question No. 99 answered with Question No. 91.

Pension Provisions

Questions (100)

Eoghan Murphy

Question:

100. Deputy Eoghan Murphy asked the Minister for Finance his position on the transfer by AIB of €1.1 billion of its assets to its pension fund. [57931/12]

Written answers

Minister for Finance

The Deputy will be aware that the asset transfer to AIB’s pension scheme was directly linked to the bank’s Early Retirement and Voluntary Severance Programme and was essential for the bank to be able to fund these plans. It was not connected with addressing any existing deficit in the bank’s pension fund.

The achievement of these staff reductions in the bank is expected to result in annual savings to AIB in excess of €200m which is a critical component of AIB’s plans to return to long term viability. It is highly likely, that in the absence of this arrangement, the bank would have been unable to achieve its target staff departure figures on a voluntary basis which would have required the need for significant numbers of compulsory redundancies and brought with it associated industrial relations difficulties.

The nature of the transfer concerned also had an added advantage for the bank in that the loan assets concerned were indented for disposal as part of the bank’s deleveraging commitments.

Pension Provisions

Questions (101)

Eoghan Murphy

Question:

101. Deputy Eoghan Murphy asked the Minister for Finance his views on correspondence related to pension fund investments (details supplied). [57932/12]

Written answers

Minister for Finance

I assume from the details supplied that the Deputy is referring to small self-administered pension schemes (SSASs).

I am advised by the Revenue Commissioners that SSASs are a particular type of occupational pension scheme in respect of which special requirements apply in relation to their approval, operation and supervision. The reason for these requirements is to ensure that such schemes are “bona fide” established for the purposes of providing retirement benefits. The concern in this regard reflects the fact that, as such schemes are generally one member schemes – that member typically being a proprietary director – there is potential for a conflict of interest to arise. This is because the individual is not only the sole member of the scheme but is also normally the owner of the company sponsoring the scheme and a trustee of the scheme.

In order to achieve and maintain tax-exempt approved status under tax law and Revenue rules such schemes must, for example, appoint an independent professional pensioneer trustee who cannot be removed without prior Revenue approval and who must be a co-signatory on all financial transactions of the scheme. In addition, the scheme must submit annual accounts and regular actuarial reports to Revenue. Revenue rules also place strict limitations on the investment options open to such schemes. These include a prohibition on loans to the scheme member and on self-investment in, for example, the employer’s assets and restrictions on property investment.

As regards property investment, while such investments are permitted, the vendor must in all cases be at arm’s length from both the scheme and the employer including its directors and associated companies. Property disposals by a scheme must equally be on an arm’s length basis.

The proposal being put forward by the Deputy is that these property related restrictions should be relaxed so that a member of a small self-administered pension scheme could sell an investment property to his or her scheme with a view to divesting him or herself of distressed property assets, with the property then becoming part of their long term pension investment.

While I can appreciate the reasoning behind this proposal, I think it is important not to lose sight of the purpose of supplementary pension saving and the generous tax incentives that the State continues to provide to encourage it. The sole purpose of pension savings is to provide relevant benefits to the scheme member at the point of retirement or indeed earlier in the event of retirement on ill-health grounds. The activity envisaged under the proposal might not represent a prudent investment in many cases and could put the availability of those benefits when needed at undue risk. The regulatory and tax regimes governing the activities of supplementary pension provision are designed to encourage an individual to save for a pension and also to protect and secure those savings until they are needed in retirement. Those savings are not available for any other secondary purpose such as resolving financial difficulties of the scheme member, however unfortunate and difficult those situations can be.

I also appreciate that the proposal is well intentioned. However, it would be difficult, if the rules governing investment by SSASs were relaxed in the manner suggested, to resist calls for a broader relaxation to allow, for example, equally distressed assets such as family or holiday homes to be acquired by a pension scheme or to permit investment in the employing company to stave off short term cash flow difficulties. In other words, it could be a first step towards a dismantling of the very rules that are in place to protect an individual’s pension savings. For all these reasons I would not be in favour of this proposal.

Pension Provisions

Questions (102, 117, 173, 202)

Eoghan Murphy

Question:

102. Deputy Eoghan Murphy asked the Minister for Finance his plans to allow self-employed persons to have access to their pension funds in the same way that those who have made voluntary contributions to their pensions; and if he will make a statement on the matter. [57934/12]

Dara Murphy

Question:

117. Deputy Dara Murphy asked the Minister for Finance if it is possible to include a personal pension under the new guidelines on early pension release of 30% in Budget 2012; and if he will make a statement on the matter. [58105/12]

Robert Dowds

Question:

173. Deputy Robert Dowds asked the Minister for Finance if there is any provision in the recent changes to pensions to allow self employed people to withdraw money from their pensions ahead of schedule; and if not, if he will state whether he is considering such a provision. [1634/13]

Olivia Mitchell

Question:

202. Deputy Olivia Mitchell asked the Minister for Finance the reason the early access to pension funds as announced in Budget 2013 is limited insofar as it applied only to funded additional voluntary contributions; if he will consider including personal pensions going into the future; and if he will make a statement on the matter. [1874/13]

Written answers

Minister for Finance

I propose to take Questions Nos. 102, 117, 173 and 202 together.

In my Budget 2013 speech, I announced that I would make provision in Finance Bill 2013 for persons making Additional Voluntary Contributions (AVCs) used to supplement their main scheme retirement benefits to withdraw up to 30% of the value of those contributions. Any amounts withdrawn will be subject to tax at the individual’s marginal rate. The option will be available for 3 years from the passing of the Finance Bill.

This is a restricted measure which will enable rather than incentivize certain individuals to access part of their pension savings beyond their regular or compulsory pension contributions. I do not wish to damage future pension provision and it is important that individuals continue to provide for their retirement. For these reasons, I have no plans to extend the measure beyond AVCs.

Universal Social Charge Payments

Questions (103)

Eoghan Murphy

Question:

103. Deputy Eoghan Murphy asked the Minister for Finance the reason self-employed persons pay a higher rate of universal social charge on their earnings. [57935/12]

Written answers

Minister for Finance

The USC was introduced from 1 January 2011 and replaced the Income and Health Levies. The marginal rate for each of these levies was 6% and 5%, respectively, or 11% in total. The marginal rate for the USC was 7%. Taken in isolation the introduction of the USC, therefore, would have had the effect of reducing by 4 percentage points the top marginal tax rates for both PAYE and self-employed income earners paying at those rates. At the same time, the PRSI ceiling for PAYE taxpayers, which then stood at €75,036, was abolished which had the result of increasing by 4 percentage points the top marginal tax rate for PAYE taxpayers. So the two changes – the introduction of the USC and the abolition of the PRSI ceiling-taken together meant that the marginal tax rate for PAYE taxpayers remained unchanged.

In the case of the self-employed, there was no PRSI ceiling as the PRSI income ceiling for the self-employed had been abolished in Budget 2001. Therefore, without further change, the introduction of the USC would have reduced the top marginal rate for these taxpayers by 4 percentage points and would have had the unintended effect of benefiting high earning self-employed income earners, resulting in some high earning self-employed income earners actually making a gain from Budget 2011 in comparison to all other taxpayers.

To avoid the situation in which the top marginal rate for PAYE taxpayers remained unchanged while self-employed taxpayers benefited from a reduction of that rate by 4 percentage points, two further changes were made. A higher rate of USC of 10% was introduced for the self-employed in respect of income in excess of €100,000 and an additional 1 percentage point was added to the self-employed PRSI rate. This restored the self-employed top marginal tax rate to 55%, (41% income tax, 7% USC, an additional 3% USC on income over €100,000 and 4% PRSI), which is where they were in 2010 and ensured that high earning self-employed income earners did not actually make a gain from Budget 2011 in comparison to all other taxpayers.

Note (i): the ‘marginal’ rate of tax equates to the top rate of tax which an individual is paying.

Note (ii): the 10% rate of USC only applies to income over €100,000. The standard rates of Universal Social Charge apply to income under €100,000 and are:

- 2% on the first €10,036

- 4% on the next €5,980

- 7% on the balance.

An individual whose total income for a year does not exceed €10,036 is exempt from USC.

Note (iii): Self-employed individuals with income of less than €100,000 and PAYE employees pay tax, USC and PRSI at the same marginal rate of 52%.

Tax Reliefs Availability

Questions (104)

Terence Flanagan

Question:

104. Deputy Terence Flanagan asked the Minister for Finance the position regarding tax relief on pensions (details supplied); and if he will make a statement on the matter. [57976/12]

Written answers

Minister for Finance

In my Budget 2013 speech, I announced that changes to the maximum allowable pension fund at retirement for tax purposes (the Standard Fund Threshold - SFT) and other possible changes to give effect to the commitment in the Programme for Government to cap taxpayers’ subsidies for pension schemes which deliver pension income of more than €60,000 will be put in place in 2014.

The existing SFT regime applies across all pension arrangements in the private and public sectors and a number of significant and fundamental changes to the current regime may be required in order to deliver on the decision announced in the Budget. Among the various issues which will be considered, are the different impacts of the SFT as between Defined Contribution and Defined Benefit pension arrangements. In addition, alternatives to the use of the SFT regime to deliver on the Government’s commitment will also be explored.

Property Taxation Application

Questions (105)

Brendan Griffin

Question:

105. Deputy Brendan Griffin asked the Minister for Finance the position in relation to establishing a property tax rate for a family who live in a small family run hotel, which has a residential quarter as part of the hotel; the way is it anticipated that the liability will be calculated; and if he will make a statement on the matter. [57979/12]

Written answers

Minister for Finance

I am informed by the Revenue Commissioners that it would not be appropriate to give a definitive reply based on the information supplied by the Deputy.

Local Property Tax is a self-assessment tax. It is chargeable in respect of a building, or a part of a building that is in use as, or that is suitable for use as, a residence. However, it is not chargeable on the part of a building in respect of which commercial rates are payable.

If the residential part of the hotel is not included for the purpose of commercial rates, the amount of local property tax will be based on the “chargeable value” of that part. This is essentially the price that the unencumbered fee simple of a residential property, or the residential part of a property, might be expected to fetch on a sale on the open market were that property to be sold on the valuation date of 1 May 2013, in a manner that would secure the best possible price for the property. Such an open market sale would also require the retention of the benefit of any access to the property that would have existed prior to the sale.

In this case, the owner of the hotel will be required to establish the chargeable value of the residential part of the hotel. If the value is less than €1m, the local property tax liability will then depend on the chargeable band into which this chargeable value falls and tax will be charged at 0.18% on the midpoint of the relevant band. If the value is over €1 m, the tax will be charged at 0.18% on the first €1 m in value and 0.25% on any balance over €1m.

Pension Provisions

Questions (106)

Terence Flanagan

Question:

106. Deputy Terence Flanagan asked the Minister for Finance the position regarding the pensions levy (details supplied); and if he will make a statement on the matter. [57982/12]

Written answers

Minister for Finance

The statement referred to in the details supplied by the Deputy relates to the study undertaken by the Department of Social Protection, the Central Bank and the Pensions Board into the level of charges in the pensions industry. The report on this study was published by my colleague, Ms Joan Burton TD, the Minister for Social Protection in late October last. On its publication, Minister Burton highlighted the technical and complex nature of the report. She has given interested bodies and individuals a period of time to consider the report and its recommendations and to respond to her by the end of this month. She will then propose to Government on further policy or regulatory action necessary.

On the matter of the pension fund levy, I have held the view since the introduction of the levy that the companies who manage and administer the assets of the pension funds and schemes should generally be in a position to absorb the impact of the levy by reducing the charges and fees which they apply. I have pursued this issue with the representative bodies of these companies but the response has not been positive. I have been told that it would be a matter for individual companies to decide on the question of absorbing the cost of the levy into their existing fees and charges but that the scope for companies to do so is very limited. There have been calls to force the companies through legislation to absorb the levy but I do not consider that this approach, which would ignore the circumstances from case to case, would be appropriate.

As regards the companies specifically mentioned in the details supplied, the relationship between the State and those companies is that the Boards and management teams retain responsibility for determining strategy and commercial policies and conducting day-to-day operations. I will not intervene in the operational management decisions of the companies concerned.

Finally, I confirmed in my Budget 2013 speech that the pension fund levy will not be renewed after 2014 the final year of its four year duration.

Pension Provisions

Questions (107)

Terence Flanagan

Question:

107. Deputy Terence Flanagan asked the Minister for Finance the total level of private sector pension contributions for each of the past five years 2007-2011 as disclosed to him by industry bodies; and if he will make a statement on the matter. [57983/12]

Written answers

Minister for Finance

I am advised by the Revenue Commissioners that the relevant information they have in this area is in respect of the amounts of contributions to various pension arrangements for which income tax and corporation tax relief is claimed and relates to contributions in relation to both the public and private sectors. The information is in respect of contributions to Retirement Annuity Contracts (RACs) and Personal Retirement Savings Accounts (PRSAs) by self-employed individuals and employees in non-pensionable employment and also contributions by employees and employers via payrolls to occupational pension schemes and PRSAs. Contributions by companies on behalf of their employees are included in the figures provided by employers and these figures are derived from the annual P35 returns made by employers to the Revenue Commissioners. The total aggregated amounts of all contributions for the years 2007 to 2011 (rounded to the nearest € million) are included in the following table. It should be noted that the figures in the table for the most recent years are provisional and are subject to revision.

Tax Year	Contributions to RACs and PRSAs* €m	Contributions by Employees to Occupational Pension Schemes €m	Contributions by Employers to Occupational Pension Schemes and PRSAs on behalf of their Employees €m	Total €m
2007	1,244 4,262	1,555	1,463	4,262
2008	1,145 4,468	1,719	1,604	4,468
2009	872 3,927	1,549	1,506	3,927
2010	707 3,672	1,575	1,390	3,672
2011	Not Available Not Available	1,519	1,438	Not Available

* The information on RACs and PRSAs is based on income tax returns on Revenue records at the time the data were compiled for analytical purposes, representing approximately between 85% and 95% of all returns expected, depending on when the data was extracted for each year. As is done for the purpose of compiling annual estimates of cost to the Exchequer, these basic figures are, in accordance with normal practice, grossed-up at aggregate level to adjust for the perceived level of incompleteness. Information in relation to RACs and PRSAs for the tax year 2011 is not yet available as the returns have not yet been fully processed.

Alcohol Pricing

Questions (108)

Bernard Durkan

Question:

108. Deputy Bernard J. Durkan asked the Minister for Finance his future plans if any, to help alleviate hardship on publicans whose businesses have been adversely affected by the increase in the price of alcoholic beverages in recent years and the unregulated competition from large retail chains; and if he will make a statement on the matter. [57989/12]

Written answers

Minister for Finance

Because of successive price increases by the trade, the specific rather than ad valorem nature of the duties and the reduction of Alcohol Products Tax rates in Budget 2010, the value of excise duty rates on beer and wine (when measured as a percentage of retail prices) has fallen over the period 2002 to 2012.

In this context, prior to Budget 2013 there has been no general increase in the tax on alcohol products since 1994. The most recent increase on beer was in 1994. Excise on cider was increased in Budget 2002 to bring it into line with the rate for beer. Excise on spirits was increased the following year, and this increase was also applied to spirits-based alcopops. Excise on wine, with pro-rata increases for certain fermented and intermediate products, was increased in Budget 2009. There was a general decrease in rates for all alcohol products, of around 20% (inclusive of VAT), in Budget 2010. There was no change in Budgets 2011 and 2012. The Deputy should note that a 10 cent increase on beer still leaves the excise duty on beer below the 2010 level. The expected yield from these increases is approximately €180 million, a significant part of the overall increased revenue requirement for 2013.

The report of the National Substance Misuse Strategy Steering Group is a roadmap for the future direction of policy to deal with the misuse of alcohol. Real and tangible proposals are currently being finalised on foot of the report’s recommendations. My colleague, the Minister for Health intends to submit these proposals to the Government for consideration and approval as soon as possible.

It is emphasised that these proposals cover all of the areas mentioned in the report such as:

- Legislation on minimum unit pricing which is about setting a statutory floor price per gram of alcohol;

- access and availability of alcohol - including of course structural separation in retail units where alcohol is sold; and

- advertising and sponsorship.

As part of the process of developing these proposals, the Department of Health is in continuing discussions with various Departments. These include the Departments of Arts, Heritage and Gaeltacht; Transport, Tourism & Sport; Justice & Equality; and Communications, Energy & Natural Resources.

In the meantime, work on developing a framework for the necessary Department of Health legislation, governing among others, minimum unit pricing, is continuing. For example, in conjunction with Northern Ireland, a health impact assessment is being commissioned as part of the process of developing a legislative basis for minimum unit pricing. The health impact assessment will study the impact of different minimum prices on a range of areas such as health, crime and likely economic impact.

Mortgage Debt

Questions (109)

Eoghan Murphy

Question:

109. Deputy Eoghan Murphy asked the Minister for Finance his views on correspondence (details supplied) regarding the residential investment mortgages issue. [57992/12]

Written answers

Minister for Finance

This question relates to the interest restriction applying to residential lettings, whereby the deductibility of interest in computing taxable rental income from residential property (insofar as it would otherwise be allowable) is limited to 75% of such interest. This restriction was introduced in the April 2009 supplementary budget as part of an urgent revenue-raising package aimed at stabilising the public finances. The reduction in the level at which interest could be claimed for residential rental properties reduced the cost of this relief to the Exchequer by an estimated €95 million in a full year.

The context in which the 2009 measure was introduced, i.e. the need to stabilise public expenditure, still exists. Under the terms of the EU/IMF Programme of Financial Support for Ireland, the State is committed to further substantial reductions in public expenditure.

Tax Code

Questions (110)

Robert Dowds

Question:

110. Deputy Robert Dowds asked the Minister for Finance if he will outline the arguments for and against a tax on stud farms; and if he will provide an estimate of the amount that may realistically be raised by such a tax. [58034/12]

Written answers

Minister for Finance

I am advised by the Revenue Commissioners that the profits and gains arising from stud farms including, for example from the sale of horses and stallion services, are fully chargeable to income tax and corporation tax. I am also advised that profits or gains from the sale of certain stallion services which arose prior to 1 August 2008 were exempt from income tax and corporation tax. However, this exemption, which did not apply to any other profits arising from stud farms, was discontinued for such profits arising on or after 1 August 2008.

Since that date, stallions are treated as stock in trade and, where the stallion owner carries on a farming trade in the State, the purchase cost of a stallion may be written-off against the profits of that trade over a 4-year period at 25 per cent per annum.

As regards the tax yield from stud farm profits, I am advised by the Commissioners that, as income tax is assessed on the combined income of taxpayers after allowing appropriate deductions and reliefs, it is not possible to separately distinguish the tax arising on stud farm profits from the tax on other sources of income.

Question No. 111 answered with Question No. 91.

Question No. 112 answered with Question No. 94.

Question No. 113 answered with Question No. 94.

Question No. 114 answered with Question No. 91.

Property Taxation Application

Questions (115)

Michael Healy-Rae

Question:

115. Deputy Michael Healy-Rae asked the Minister for Finance if his attention has been drawn to the fact that all local authorities must now make an allowance in their estimates to pay the property tax on local authority houses and that this will put a further burden on the rate payers if the moneys have to be paid and it will result in services being cut; and if he will make a statement on the matter. [58050/12]

Written answers

Minister for Finance

In accordance with Section 11 of the Finance (Local Property Tax) Act 2012, local authorities will be liable to pay the Local Property Tax (‘LPT’). I am informed by the Revenue Commissioners that they are liaising with the Department of the Environment, Community and Local Government on the mechanisms by which local authorities will pay the tax due. Local authority owned properties have not been exempted from the LPT and they may increase rents to ensure that tenants of such housing units make a contribution to LPT, and to avoid anomalies that may otherwise have arisen. For example, in instances where local authorities owned and rented out a property in an otherwise privately owned housing estate, the tenant in such a property would not have been subject to the local property tax, while residents in other properties would have been subject to it, whether directly as owners or indirectly as occupiers of private rental properties. Such a situation would have clearly been unfair, and it is to avoid such issues that local authorities are liable to pay the LPT.

It is clear that local authorities require sufficient funding to ensure that they can operate effectively across their range of functions and responsibilities, and the introduction of the Local Property Tax is designed to achieve this goal. Income from the LPT will accrue to the local authorities to fund local services. It will be the responsibility of each individual local authority to manage its budget appropriately, taking into account the income and liabilities that may arise from the LPT.

Credit Unions Regulation

Questions (116)

Patrick Nulty

Question:

116. Deputy Patrick Nulty asked the Minister for Finance if he will ensure the concerns of credit union members are addressed in the Credit Union Bill as set out in correspondence (details supplied); and if he will make a statement on the matter. [58061/12]

Written answers

Minister for Finance

The Credit Union and Co-operation with Overseas Regulators Act 2012 was signed into law by the President on 19 December 2012 and its provisions in relation to restructuring and stabilisation have been commenced. The Act implements over 60 of the recommendations of the Final Report of the Commission on Credit Unions, which was agreed over a nine-month period by all Commission members, including credit union stakeholders.

The Act was passed by both Houses following a positive and constructive debate, in the course of which I took on board a number of amendments to reflect issues raised by credit union representatives where these did not compromise important principles in the legislation.

Among the amendments were the following:

- Term limits were increased from 9 years out of 15 years to 12 years out of 15 years;

- A number changes to exclusions from board membership;

- The definition of financial services legislation was amended so that it is now clear that it refers to that legislation as it applies to credit unions; and

- the list of classes of investment that a credit union may invest in under Central Bank regulations now specifically refers to public investment projects.

I have also made it clear that regulatory directions to credit unions under the Central Bank (Supervision and Enforcement) Bill will be made appealable to IFSAT.

The Government has made its position clear regarding its support for shared services and there is nothing in the Act to prevent this. However, on the issue of shared branching, I have commissioned a report from the Credit Union Advisory Committee (CUAC) which is to be submitted to me by the end of Q2 this year.

I would like to point out that there is no statutory obstacle to a credit union providing electronic payment accounts and many already do so; therefore, no change to the Act was required in respect of that issue.

The Question also refers to the development of a Memorandum of Understanding between the Central Bank and credit unions. The Central Bank has recently developed a consultation protocol for its engagement with the credit union movement. This protocol has been developed following consultation between the Central Bank, the Minister, credit union representative bodies and the Credit Union Advisory Committee. The protocol sets out how the Central Bank proposes to engage with credit unions in any formal consultation process prior to the introduction of new regulations and states that the Bank is committed to having clear, open and transparent engagement with stakeholders in fulfilling its financial regulation and supervisory objectives. In the course of the debate on the Act, I made it clear that I do not favour a statutory MoU and nor was one recommended by the Commission. We should be careful not to undermine the independence of the Central Bank must which must be able to act within its powers when required.

The Commission Report recommends that in order to ensure that the role and responsibilities of the board and management do not overlap and that board members have governance rather than executive responsibilities, the role of treasurer should be removed. In line with this, the Act removes the role of treasurer and assigns the relevant executive responsibilities to the management of the credit union. However, the Act was amended so that the Board takes on the role of presenting the accounts to a credit union’s members.

In relation to the tiered regulatory approach, the Act provides that requirements are to be set according to the “nature, scale and complexity” of credit unions or categories of credit unions so that tiering will not be limited to considerations of size alone.

Question No. 117 answered with Question No. 102.

Questions Nos. 118 to 121, inclusive, answered with Question No. 91.