Tuesday, 12 Feb 2013

Written Answers Nos. 205-226

Promissory Note Negotiations

Questions (205, 206)

Pearse Doherty

Question:

205. Deputy Pearse Doherty asked the Minister for Finance if he will confirm if a technical paper on resolving Ireland’s bank-related debt was ultimately finalised in conjunction with the bailout Troika of the IMF, EU and ECB for submission to principals of the Troika as indicated by An Taoiseach when he stated the troika stated it would produce a technical paper on this issue which is of such importance to the deficit and to our capacity to repay our debts; if such a technical paper was finalised; if he will provide the date it was finalised; if he will set out his plans to publish this document; and if it was not finalised, if he will provide the reason or reasons for that inaction. [6622/13]

Pearse Doherty

Question:

206. Deputy Pearse Doherty asked the Minister for Finance if a specific technical paper has been produced on the promissory notes by the Troika and the Government. [6623/13]

Written answers

Minister for Finance

I propose to take Questions Nos. 205 and 206 together.

As the Deputy is aware, this Government reached a conclusion to its discussions with the European Central Bank last week that delivered on our commitment to put in place a fairer and more sustainable arrangement on the IBRC Promissory Notes. Last week also saw the remnants of Anglo Irish Bank and Irish removed from the financial and political landscape.

The Irish Government has been working extremely hard to secure a deal on the Irish bank debt and in particular, in recent months on the issue of the IBRC Promissory Notes. This involved intense discussions with the ECB on all options in relation to the promissory notes, such as the source of funding, the duration of the notes, the interest rate applicable, the structure of repayment etc. These engagements with our European partners took on a number of forms and the proposal developed over time. A single technical paper was not the sum total of this process, given the scale and complexity of the matter. Needless to say, the announcements last week reflect the finalisation of this work.

I am satisfied that every available and appropriate opportunity to advance Ireland’s position in relation to legacy bank debt with our European partners has been availed of and that every effort to maintain the issue of the remaining Irish bank debt at the top of the European agenda will continue to be made.

Contingent Capital Notes

Questions (207)

Pearse Doherty

Question:

207. Deputy Pearse Doherty asked the Minister for Finance further to the announcement of his Department that negotiations to sell €500m - €1bn of Bank of Ireland contingent capital notes had concluded, if he will provide an assessment of the impact of the transaction on the prospects of securing a deal to recoup at a European level other sums used to bailout the banks. [6624/13]

Written answers

Minister for Finance

The State’s successful disposal of the Bank of Ireland contingent capital notes earlier this year is further evidence of investors’ confidence in Ireland and demonstrates that there is a market appetite for Irish assets. However, the Government is still heavily involved in drawing up the operational criteria that will guide direct bank recapitalisations by the European Stability Mechanism (ESM), in full respect of the 29 June 2012 euro area Summit statement.

The European Council stated on 14 December 2012 that “once an effective SSM is established, the ESM will be able to recapitalise banks directly. An agreement on the operational framework supporting this possibility, including the definition of legacy assets, should be agreed as soon as possible in the first semester of 2013”.

Ireland continues to be fully engaged in this process within the Eurogroup and among Heads of State or Government. Furthermore, officials from my Department also attend technical meetings with the ESM and other member states. In this regard, discussions remain on-going and no conclusion has been reached.

Notwithstanding these discussions, I also will continue to explore any market opportunities to get a return of any of the sums used to bail out the banks.

NAMA Loans Sale

Questions (208)

Pearse Doherty

Question:

208. Deputy Pearse Doherty asked the Minister for Finance if he will confirm if the National Asset Management Agency provides so-called staple finance or vendor finance to purchasers of its loans, as opposed to purchasers of its real estate property. [6625/13]

Written answers

Minister for Finance

NAMA advises that vendor finance may, on a case by case basis, be made available as part of the sales process relating to both qualifying assets and loans. NAMA advises that it has published an information guide on vendor finance, which is available on the NAMA website, www.nama.ie, to which the Deputy may wish to refer for further information.

Social Insurance Fund Deficit

Questions (209)

Pearse Doherty

Question:

209. Deputy Pearse Doherty asked the Minister for Finance further to the publication of the December 2012 Exchequer statement if he will explain the €300 million entitled Repayment of Loans to Social Insurance Fund; if he will confirm if there are further loans outstanding from the Social Insurance Fund; and if so, the amount and the scheduled repayment dates. [6627/13]

Written answers

Minister for Finance

Section 18 of the Social Welfare and Pensions Act, 2012, which amended Section 9 of the Social Welfare Consolidation Act, 2005, enables the Minister for Finance, having consulted with the Minister for Public Expenditure and Reform, to advance moneys from the Central Fund to the Social Insurance Fund via an account with the Paymaster General in order to maintain sufficient amount of moneys in the current account of the latter Fund to meet the sums payable from it. Due to the restricted number of banking days in the month of December, it was deemed necessary to ultilise this provision for cash flow purposes as payovers of the Social Insurance Fund’s PRSI income, which is collected via the Revenue ROS system, may be subject to payment transfer delay. An advance of 300 million euro, which was made from the Central Fund, was repaid in full by the Social Insurance Fund on 28 December 2012 upon the receipt of sufficient PRSI income. The repayment is reflected in the 2012 December Exchequer Statement. There are currently no advances from the Central Fund to the Social Insurance Fund.

Since mid-2010, the Social Insurance Fund is in receipt of subvention from voted moneys in order to bridge the gap between its income and expenditure. This subvention is provided for under section 9 of the Social Welfare Consolidation Act 2005. As a normal part of the subvention funding, the Fund will receive advances from the Paymaster General’s Supply Account, which in turn is funded from issues from the Central Fund. I am advised by the Department of Social Protection that at 31 December 2012 such advances were of the order of 125 million euro.This amount was not repayable by virtue of the subvention arrangement and as it was expended it become a charge on the Vote for Social Protection in January 2013 in accordance with Public Financial Procedures.

Credit Union Fund

Questions (210)

Pearse Doherty

Question:

210. Deputy Pearse Doherty asked the Minister for Finance further to the publication of the December 2012 Exchequer statement, if he will explain the €250m contribution to the credit union fund; and if he will provide an estimate of any additional contributions identified, showing the estimated date of disbursement and amount. [6628/13]

Written answers

Minister for Finance

The Credit Union Fund was established by ministerial order under section 57 of the Credit Union and Co-operation with Overseas Regulators Act 2012. I contributed €250 million to the Credit Union Fund in December 2012 to support the restructuring of the credit union sector by the Restructuring Board (‘ReBo’) in line with the recommendations of the Commission on Credit Unions. No further Exchequer contributions to the Fund are planned. The ReBo is working to the timetable set out in the Commission’s report and is expected to complete its work by the end of 2015 with any necessary disbursement of funding taking place before then. Any funding provided to credit unions will be on a recoupable basis.

Outright Monetary Transaction Scheme Eligibility

Questions (211)

Pearse Doherty

Question:

211. Deputy Pearse Doherty asked the Minister for Finance if he will provide an assessment as to whether the State now qualifies for the ECB’s outright monetary transactions scheme; if the State now qualifies, his basis for that belief; and if he does not believe the State now qualifies, the basis for that belief and any additional actions needed so as to qualify. [6629/13]

Written answers

Minister for Finance

The Governing Council of the ECB made a decision to establish the Outright Monetary Transaction (OMT) scheme on 2nd August 2012, and issued a press statement on 6th September 2012 which outlined its technical features. This press statement sets out that a necessary condition for OMT is strict and effective conditionality attached to an appropriate European Financial Stability Facility/European Stability Mechanism (EFSF/ESM) programme. Such programmes can take the form of a full EFSF/ESM macroeconomic adjustment programme or a precautionary programme (Enhanced Conditions Credit Line), provided that they include the possibility of EFSF/ESM primary market purchases. The ECB have also stated that OMT may also be considered for Member States currently under a macroeconomic adjustment programme “when they will be regaining bond market access”.

I believe the ECB’s announcement regarding its OMT programme is a significant development and is viewed as such by the financial markets.

The ECB press statement also notes that the ECB’s Governing Council will decide on the start, continuation and suspension of OMT, following a thorough assessment, in full discretion and acting in accordance with its monetary policy mandate. The decision on whether to grant OMT or otherwise in any particular case is therefore a matter for the ECB.

Bank Debt Restructuring

Questions (212)

Pearse Doherty

Question:

212. Deputy Pearse Doherty asked the Minister for Finance further to the statement by Permanent TSB in November 2012 confirming that it was selling loans with a value net of provisions and write-offs of €351m at February 2012, if he will identify the beneficial buyer of these loans. [6630/13]

Written answers

Minister for Finance

I am informed by Permanent TSB that the majority of the loan assets of Permanent TSB Finance Limited and the entire loan assets of Blue Cube Personal Loans Limited were sold to Consumer Auto Receivables Finance Limited in late 2012. In addition, a small portfolio of largely corporate loans was sold by Permanent TSB Finance Limited to a third party global bank. I am informed by Permanent TSB that the terms of the sale preclude it from providing additional information without the consent of the other parties.

Bank Debt Restructuring

Questions (213)

Pearse Doherty

Question:

213. Deputy Pearse Doherty asked the Minister for Finance further to the statement by Permanent TSB, confirming that it was selling loans with a value net of provisions and writeoffs of €351m at February 2012, in return for consideration of €287m, if he will confirm the loss that was booked by PTSB on the transaction; if he will outline the process undertaken by PTSB to dispose of the assets in order to maximize the return on the transaction; and if he will provide a schedule of the recipients, fees, and costs incurred by PTSB on the transaction. [6631/13]

Written answers

Minister for Finance

I am informed by Permanent TSB that the loss booked on disposal is subject to audit and will be published in the Bank’s Annual Report which is due to be published in March 2013. Permanent TSB advises that a competitive sales process was undertaken, facilitated by the Bank’s corporate finance advisors. The Bank has informed me that over 20 parties were initially invited to express their interest in acquiring the assets and that multiple bidders were maintained through each stage of the process. I have been informed by Permanent TSB that ultimately exclusivity was offered to the bidder whose offer maximised the return to the Bank. Permanent TSB informs me that the total fees payable to all advisors, for services provided over a 14 month period will be disclosed in the Annual Report.

Bank Debt Restructuring

Questions (214)

Pearse Doherty

Question:

214. Deputy Pearse Doherty asked the Minister for Finance further to the statement by Permanent TSB, confirming that it was selling two operating units to management for nominal consideration, if he will provide an outline of the valuations undertaken by PTSB of the two units so as to ensure the sale price was adequate; if he will provide the sales, operating profit, impairments and net profit after tax for the two units for each of the past five years; and if he will further provide the balance sheet for each of the units at 31 December 2011. [6632/13]

Written answers

Minister for Finance

I am advised by Permanent TSB that the sale price achieved after a detailed process was recommended by the financial advisers and approved by the Boards of Permanent TSB Finance and Permanent TSB. I am informed by Permanent TSB that the remaining information sought is commercially sensitive. Permanent TSB advises that the financial impact of the sale will be reflected in the Annual Report due to be published in March of this year.

Banking Sector Staff

Questions (215)

Pearse Doherty

Question:

215. Deputy Pearse Doherty asked the Minister for Finance further to the statement by Permanent TSB, confirming that it was selling two operating units to management for nominal consideration, if he will confirm the number of staff employed at both units and the number of staff being transferred to the buyer of the units; if he will confirm if any redundancies have resulted from the transaction; and, if so, the number and cost of such redundancies. [6633/13]

Written answers

Minister for Finance

As I previously stated in response to PQ 53111/12 Permanent TSB has advised me that there are 82 employees employed at the two operating units and that all of the staff are being transferred to First Citizen Finance Limited. Therefore no redundancies have resulted from the transaction.

Bank Debt Restructuring

Questions (216)

Pearse Doherty

Question:

216. Deputy Pearse Doherty asked the Minister for Finance further to the statement by Permanent TSB, confirming that it was selling loans with a value net of provisions and writeoffs of €351m at February 2012, if he will provide an outline of any other imminent disposals by PTSB. [6634/13]

Written answers

Minister for Finance

I am advised by Permanent TSB that no loan book disposals are envisaged by it at this time.

Bonds Redemption

Questions (217)

Pearse Doherty

Question:

217. Deputy Pearse Doherty asked the Minister for Finance if he will confirm that PTSB has sufficient resources to repay bonds which mature in April 2013 and that PTSB will not need any additional funding from the taxpayer. [6635/13]

Written answers

Minister for Finance

I have been informed by Permanent TSB that it currently has sufficient resources to repay the April 2013 maturity. Permanent TSB advises that these funds come from deposit growth and the benefits of restructuring the balance sheet.

General Government Debt

Questions (218)

Pearse Doherty

Question:

218. Deputy Pearse Doherty asked the Minister for Finance further to the publication of the December 2012 Exchequer Statement, if he will confirm the General Government Deficit for 2012 and a reconciliation between the GGD and the Exchequer Deficit for 2012. [6636/13]

Written answers

Minister for Finance

Budget 2013 contained a forecast General Government Balance (Deficit) of -8.2% of GDP which was based on the most up to date information available at the end of November. In light of the better than expected Exchequer returns for December 2012, it is now reasonable to expect that the General Government Balance (GGB) for 2012 will be under -8% of GDP. However, the first official estimate of the final GGB will be made by the Central Statistics Office in the Maastricht Returns at the end of March and will be published by Eurostat in mid to late April.

EU-IMF Programme of Support

Questions (219)

Patrick O'Donovan

Question:

219. Deputy Patrick O'Donovan asked the Minister for Finance if he will outline the agreement between the previous Government and the Troika in relation to property tax under the Memorandum of Understanding; and if he will make a statement on the matter. [6638/13]

Written answers

Minister for Finance

The EU-IMF Programme of Financial Support is subject to policy conditionality which is set out in programme documents - the Memorandum of Understanding on Specific Economic Policy Conditionality (MOU), the Memorandum of Economic and Financial Policies (MEFP) and the Technical Memorandum of Understanding. The conditionality in these documents is subject to continuing assessment by the Irish Authorities and the EU, IMF, ECB (the Troika) to ensure the board programme objectives are met. Such assessment is undertaken at the quarterly reviews. These reviews include discussions where programme commitments are updated and agreed after every mission. The introduction of a property tax has been a condition of the Programme since it was first negotiated in November 2010, and has remained a condition following subsequent reviews. In relation to the programme documents dated December 2010 the MEFP made reference to the introduction of a new residential-property based site value tax while the MOU, referred to the introduction of a property tax. Since then, in both the MOU and MEFP, the reference of the property tax has developed as the programme documents have been agreed after each review mission. The most recent references in the programme documents has been to a value-based property tax. All the programme documents referred to are available on the department website.

In light of the complex issues involved in a full property tax, the Government decided to introduce the Household Charge, a flat charge of €100, in 2012 as an interim measure. The Household Charge was a matter for the Minister for the Environment, Community and Local Government and has been abolished with effect from the 1 January 2013.

The Finance (Local Property Tax) Act 2012 was signed into law by the President on 26 December 2012. Under this legislation a local property tax charge will be payable on all relevant residential properties from 1 July 2013.

The Government decided that that the basis of assessment for the Local Property Tax should be market value, as recommended by the inter-Departmental Group chaired by Dr Don Thornhill (the “Thornhill Group”), which considered the structures and modalities of a property tax. I refer the Deputy to my answer to Question No. 127 of 18 December 2012 (56634/12) for more details on the group’s analysis, and to the report itself, which is available on the website of the Department of the Environment, Community and Local Government.

Property Taxation Application

Questions (220)

Dominic Hannigan

Question:

220. Deputy Dominic Hannigan asked the Minister for Finance if a married couple live together but the house is only in one of their names will the named homeowner's income be the only one taken into account for the payment of the tax or will the other person's income also be taken into account; and if he will make a statement on the matter. [6650/13]

Written answers

Minister for Finance

I am informed by the Revenue Commissioners that where a liable person is one of a married couple living together where the property on which Local Property Tax (LPT) is chargeable is in one name, the tax can be paid from either spouse’s income using the various payment options available. This includes payment by way of deduction at source from employment or occupational pension income. The liability to LPT is not affected by the income of the couple. However, the couple’s gross income is taken into account in establishing whether they qualify for full or partial deferral of the tax, regardless of whether the property is in the name of one member of the couple or in joint names. Therefore, where the residential property is the sole or main residence of the couple and their joint estimated gross income from all sources does not exceed €25,000 during the relevant year, they will be eligible to apply for full deferral of the LPT charge. Gross income from all sources in this context consists of both spouse’s total income before any deductions, allowances or reliefs that may be taken off for income tax purposes and includes income that is exempt from income tax and income from the Department of Social Protection but excludes Child Benefit. To determine whether deferral applies for 2013, the couple is required to estimate on 1 May 2013 what their total gross income for 2013 will be.

The couple will qualify for deferral of 50% of the LPT liability where both spouse’s estimated gross income from all sources is less than €35,000 for the year. The balance of 50% of the tax must be paid. Where the property was purchased with a mortgage, the thresholds of €25,000 and €35,000 are increased by 80% of the gross mortgage interest payments.

The deferral thresholds of €25,000 and €35,000 apply to civil partners and cohabitants as well as to married couples.

Equality Issues

Questions (221)

Mary Lou McDonald

Question:

221. Deputy Mary Lou McDonald asked the Minister for Finance the measures he has taken at Departmental level to ensure expenditure is managed with due consideration for matters of equality in the context of Ministers working within existing equality legislation. [6706/13]

Written answers

Minister for Finance

The Programme for Government contains a clear commitment that all public bodies would take due note of equality and human rights in carrying out their functions. The State and its bodies must, of course, comply with all provisions of equality legislation in the development and delivery of policies and services. My Department abides by all statutory requirements as well as Civil Service procedures and schemes in regard to equality matters and these are reflected, where appropriate, in expenditure transactions.

Promissory Note Negotiations

Questions (222)

Michael McGrath

Question:

222. Deputy Michael McGrath asked the Minister for Finance if there are any clauses in the terms of the Irish Bank Resolution Corporation promissory notes which would be triggered in respect of Irish Exchequer issued debt in the event of non-payment of the 31 March 2013 instalment; and if he will make a statement on the matter. [6708/13]

Written answers

Minister for Finance

As the Deputy is aware, this Government reached a conclusion to its discussions with the European Central Bank last week that delivered on our commitment to put in place a fairer and more sustainable arrangement on the IBRC Promissory Notes. Last week also saw the remnants of Anglo Irish Bank and Irish Nationwide removed from the financial and political landscape. Following the exchange of the Promissory Notes for long dated Irish government bonds last Friday, the Promissory Notes have been cancelled, the circumstances raised in this question have been overtaken by recent developments and the scenario raised cannot now occur.

Banking Sector Staff

Questions (223)

Joe Higgins

Question:

223. Deputy Joe Higgins asked the Minister for Finance the number of staff earning more than €100,000 per year who have taken early retirement from the EBS since the begining of 2012. [6733/13]

Written answers

Minister for Finance

I have been informed by AIB that there are no staff members who have taken early retirement from the EBS since the beginning of 2012, regardless of salary level.

Mortgage Arrears Proposals

Questions (224)

Finian McGrath

Question:

224. Deputy Finian McGrath asked the Minister for Finance if he will support a person (details supplied) in Dublin 5 regarding their mortgage. [6767/13]

Written answers

Minister for Finance

Firstly, I must confirm to the Deputy that it is not appropriate for me to comment or become involved in the mortgage arrangements of an individual borrower. Neither could I advise a customer whether or not to dispose of a property. I can assure the Deputy that the Government is committed to advancing appropriate measures to assist those mortgage holders who are experiencing genuine difficulty. In this regard, the Government is now actively implementing the main recommendations contained in the ‘Keane Report’.

A number of significant milestones have now been achieved:-

- The Personal Insolvency Act was signed into law by the President on the 26 December 2012. The Act will now be subject to a commencement order by the Minister for Justice, Equality and Defence

- The Minister for Housing and Planning has formally launched the “mortgage to rent” scheme on a nationwide basis;

- Lenders have provided details to the Central Bank on their proposed forbearance and loan modification options which will be made available, in appropriate cases, to their customers who are in mortgage difficulty. The roll out of these options has commenced with Central Bank oversight;

- An extensive independent mortgage advice framework has been put in place by the Minister of Social Protection comprising (i) an enhanced website www.keepingyourhome.ie (ii) a Mortgage Arrears information helpline and (iii) the provision of free independent ‘one-to-one’ professional financial advice to borrowers when considering a long term forbearance/resolution offer from their lender.

In addition, the Central Bank’s Code of Conduct on Mortgage Arrears is also key protection and provides that each bank must put in place a formal Mortgage Arrears Resolution Process to deal with its mortgage customers who are in arrears or pre-arrears and for the establishment of dedicated arrears support units and appeals processes to handle such cases.

In relation to the details provided by the Deputy, I have been informed by the lender concerned that it encourages customers facing mortgage difficulties to make immediate contact, so that appropriate options can be discussed, agreed, and progressed. As a starting point, the borrower should make an appointment with the local branch to arrange to complete a ‘Standard Financial Statement’, a key element of the sector wide Mortgage Arrears Resolution Process.

Voluntary Housing Sector

Questions (225)

Maureen O'Sullivan

Question:

225. Deputy Maureen O'Sullivan asked the Minister for Finance the actions he will take to increase access to mortgages for people obtaining homes through charitable housing organisations, who have a lower net disposable income and are refused loans through traditional banks; the way he intends to increase home ownership during the stagnation of the housing sector for those on lower incomes; the way he intends to make the financial sector more inclusive; and if he will make a statement on the matter. [6821/13]

Written answers

Minister for Finance

General housing policy, including policy on home ownership and the provision of mortgages by local authorities, to people who are unable to get a mortgage from a commercial lender for the purpose of purchasing a private house, is primarily a matter for the Department of the Environment, Community and Local Government. In that regard, the housing policy statement, published in June 2011 by that Department, signalled a shift to a tenure neutral high level objective and a clear commitment to restoring balance to the housing sector generally through a lesser reliance on home ownership. As such, Government will not act to prioritise one form of housing tenure over another. Nevertheless, the policy statement reaffirms the State’s commitment to supporting access to home ownership for lower to middle income households and the current range of paths to home ownership that are facilitated by house purchase loans from local authorities will remain in place in that regard. I should also add that direct lending to Approved Housing Bodies in the voluntary and co-operative housing sectors is now in place through the Housing Finance Agency (HFA) which operates under the aegis of the Minister for the Environment, Community and Local Government, and full details of the activities of the HFA can be found on the Agency’s website, http://www.hfa.ie .

Regarding the provision of mortgage finance for home purchase more generally, this Government is pursuing a number of actions to ensure that an increased, but financially sustainable, level of mortgage credit will be available to new borrowers from commercial lenders to meet the needs of the economy and society. This includes the very significant restructuring and right sizing of the banking sector to make it more focused on the real needs of the economy and the resolution of the existing problem of significant mortgage arrears and unsustainable mortgage debt which is acting as a drag on economic improvement.

Ultimately the Government is of the view that it is the regeneration of the economy, the restoration of employment levels and income growth that will provide the real social and economic improvements that will be required. That is why Government is focused through its many new initiatives at fostering and generating economic growth. The successful achievement of this objective will restore consumer confidence and bring the tangible and sustainable recovery that the country requires.

On the issue of financial inclusion, the Government has already commenced the process of providing universal access to basic banking services. The introduction of a Basic Payment Account is part of the Department of Finance’s Strategy for Financial Inclusion in Ireland. The Basic Payment Account is being developed as a gateway product for wider financial inclusion, that is, access to insurance, savings and credit products and work on introducing a Basic Payment Account in Ireland by certain providers commenced in 2012. Following an evaluation process, a full national rollout is planned for this year.

Tax Forms

Questions (226)

Sandra McLellan

Question:

226. Deputy Sandra McLellan asked the Minister for Finance the reason the Revenue Commissioners would not stamp a HPL1 form for a person (details supplied) in County Cork applying for social housing in Cork. [6860/13]

Written answers

Minister for Finance

I am informed by Revenue that the taxpayer presented a HPL1 form for stamping at their Cork office on 23 October 2012. A letter was issued to him on 24 October 2012 explaining that the form could not be stamped. The wording of the section on the form HPL1 to be completed by Revenue reads:

"I hereby certify, in accordance with my records and to the best of my knowledge, that the above named person has not previously claimed income tax relief in respect of interest paid on money borrowed to purchase or build a dwelling."

The taxpayer was in receipt of mortgage interest tax relief up to 2008, and so the form cannot be stamped by Revenue.