Written Answers Nos. 62 - 69
62. Deputy Thomas P. Broughan asked the Minister for Finance the remaining obligations, if any, Ireland has to the troika for budget 2014 under the terms of the 2010 bailout; if the backstop supports from the eurozone agencies, he recently referred to from January 2014, would come with further commitments to cut public services and raise taxes; and if he will make a statement on the matter. [10559/13]
View answerThe 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 broad 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 most recent Programme Documents, dated November 2012, had a commitment to publish a budget in December 2012 and to achieve a specified level of consolidation. In addition, the Programme Documents, dated November 2012, have a commitment to specify as far as possible the tax and spending measures for the 2014–15 consolidation. These commitments were met with the publication of Budget 2013. The Programme Documents referred to are available on the department’s website. In relation to Budget 2014, the MoU does not contain explicit requirements. However, the EU Council Recommendation on our excessive deficit, dated 7 December 2010, provides for the reduction of our General Government Deficit to 5.1% in 2014 and to below 3% in 2015 and this requirement is referenced in the EU Council Implementing Decision on Ireland’s Programme of Financial Support also dated 7 December 2010. As is always the case, I will not be drawn into speculation on the composition of Budget 2014. Separately our EU membership requires us to bring our General Government deficit below 3% of GDP by 2015.
In relation to the backstop measures, both the IMF and the European Stability Mechanism (ESM) can provide precautionary financial assistance.
The ESM Treaty provides, in Article 14, that the Board of Governors may decide to grant precautionary financial assistance in the form of a precautionary conditioned credit line (PCCL) or in the form of an enhanced conditions credit line (ECCL). The Treaty also provides for the conditionality, terms and conditions to be attached to such assistance. Further information in relation to these instruments is available on the ESM website at http://www.esm.europa.eu/.
The IMF has a number of precautionary or standby type facilities including Flexible Credit Line (FCL), the Precautionary and Liquidity Line (PLL), the Extended Funding Facility (EFF) and the Stand By Arrangement (SBA). These different instruments are designed to address different sets of circumstances, and the terms and conditions attaching to them are structured accordingly. Further information on these instruments is available on the IMF website at http://www.imf.org/.
Initial discussions on exit options were held during the most recent mission (January 29th to February 7th) and provided some further clarity on the possible options that might be available. Ireland will be the first country to exit an EU/IMF programme of this type. It was agreed that these discussions should continue before the next mission, with a view to a more meaningful engagement on that mission. All relevant options will be considered in the light of what is appropriate for Ireland, including the terms and conditions attaching to them. Evidently this will require further consideration and no decisions have been taken to date.
63. Deputy Caoimhghín Ó Caoláin asked the Minister for Finance the safeguards that are in place with regard to staff at Irish Bank Resolution Corporation who have been re-employed by the special liquidator to prevent privileged information being passed to potential purchasers of IBRC assets during the liquidation period. [10578/13]
View answerI have been informed that in addition to the policies and procedures that have been put in place by the Special Liquidators to ensure that no privileged information leaves IBRC (in Special Liquidation), employees owe a common law duty of confidentiality such that they cannot use confidential information obtained during the course of their employment to the detriment of their (former) employer. In addition Ethics in Public Office Acts apply to current and former executives and other office holders in the IBRC where the salary earned by those employees is not less than the maximum salary of a higher executive officer (general service grade, Class B PRSI) in the Civil Service (c.€55,415). Codes of Conduct issued under these Acts require that former office holders should act in a way which ensures an unfair advantage would not be conferred in a new appointment, by virtue of for example, access to official information the office holder previously enjoyed.
64. Deputy Mary Lou McDonald asked the Minister for Finance if he is satisfied with the take-up from small and medium sized enterprises in using the Credit Review Office; and if he will outline the way he implemented the recommendations in the review of the office. [10564/13]
View answerI am concerned at the low level of numbers of SMEs seeking reviews by the Credit Review Office. The most recent report by the Credit Reviewer shows that the Credit Review Office upheld the credit appeal in 118 cases or 55.9% of cases decided. The upheld appeals have resulted in €13M credit being made available to SMEs and farms, protecting 1,102 jobs. This shows that there is a strong prospect of success for SMEs going to the Credit Review Office and I would strongly encourage SMEs refused credit to seek a review by the Office. I find it difficult to understand why SMEs who are at risk of going out of business are not willing to seek a review of a refusal of credit. As a first step in implementing the recommendations of the assessment of the Credit Review Office published last year, I sanctioned an increase in the numbers on the Credit Review Panel in order to facilitate faster processing of decisions.
My officials are currently looking at how to implement the other appropriate changes to the Credit Review Office regime and at the liaison needed with other stakeholders in the process. This issue has been discussed at the SME State Bodies Group and will be discussed with the SME Funding Consultation Committee. The Credit Reviewer also said in his most recent report that he accepts the proposals in the assessment and that his team is working with stakeholders to implement these proposals where possible.
65. Deputy Seán Crowe asked the Minister for Finance if he or his Department has exchanged correspondence or had direct communication with the ECB or European Commission following the decision to use a further €16 billion of National Asset Management Agency's unallocated bonds in the purchasing of Irish Bank Resolution Corporation's assets following liquidation. [10574/13]
View answerI am advised that the issue of unallocated NAMA bonds was discussed with the ECB and EU Commission as part of the proposal on the IBRC liquidation. To be clear, the issuance of NAMA bonds will be used to purchase the CBI’s remaining lending to IBRC in the form of the ELA facility deed backed by a floating charge on the otherwise unencumbered assets of IBRC and supported by the Ministerial guarantee.
This will end the CBI’s lending relationship with IBRC and NAMA will become the largest creditor to the liquidation. The Special Liquidator is charged with discharging this loan from NAMA through a valuation and sales process of the remaining assets of IBRC over the coming months.
66. Deputy Joe Higgins asked the Minister for Finance if he has conducted a poverty impact study on the effect of the property tax on homeowners dependent on payments from his Department. [4104/13]
View answerI understand the Deputy is referring to the effect of the Local Property Tax (LPT) on homeowners dependant on payments from the Department of Social Protection. A Poverty Impact Assessment is connected with the Regulatory Impact Analysis (RIA) process. There was no requirement to carry out a RIA for the Finance (Local Property Tax) Act 2012 or the Finance (Local Property Tax) (Amendment) Bill 2013 as the guidelines as set out in section 3.4 of the Cabinet Handbook were followed, including a clear indication of the effect of the tax on persons experiencing or at risk of poverty or social exclusion. The Memorandum for Government on the Finance (Local Property Tax) Bill 2012 (as it was at the time) indicated that these issues were taken account of as part of the deliberative process, including the considerations of the expert group chaired by Dr Don Thornhill which considered the design of a property tax (the “Thornhill Group”). That group commissioned the Economic and Social Research Institute (ESRI) to conduct an analysis of the effect of a property tax, and the group had regard to the ESRI’s analysis in recommending the income limits for deferrals of the tax. The report of the Thornhill Group recommended deferral measures for groups at risk of poverty, and these recommendations were accepted by the Government.
The Finance (Local Property Tax) (Amendment) Bill 2013 contains other measures to assist those who have a real and material inability to pay the LPT, including deferral measures for liable persons in a personal insolvency arrangement and a provision to allow Revenue to grant a full or partial deferral in circumstances where a person suffers both an unexpected and unavoidable significant financial loss or expense, as a result of which he or she is unable to pay the LPT without causing excessive financial hardship.
67. Deputy Gerry Adams asked the Minister for Finance if he will explain the delay in the publication of the Mercer report on bankers’ salaries; the total cost to date of the report; and the estimated final cost. [10562/13]
View answerAs I indicated in my last reply (No. 105 of 20 February, 2013) my Department is in final discussions with the consultants on the report. I expect to bring it to Government imminently for decision. The estimated total cost of the Remuneration Review is €119,000 (ex VAT) – 50% of which has been paid to date.
68. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he has had discussions with the lending agencies here with a view to ensuring the ready availability of adequate working capital to the industrial, commercial and retail sectors with particular reference to the need to ensure that overdraft and-or working capital facilities are made available in a way to retain and expand various components of the sectors thereby contributing to national economic recovery; and if he will make a statement on the matter. [10591/13]
View answer100. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he receives regular communication from the banking sector with regard to the responsibility of the lending institutions to meet the credit requirements of business; and if he will make a statement on the matter. [10925/13]
View answerI propose to take Questions Nos. 68 and 100 together.
The Government recognises that SMEs are the lifeblood of the economy and will play a vital role in the recovery of employment growth in our country. One of the key priorities of the Programme for Government is to ensure that an adequate pool of credit is available to fund SMEs in the real economy during the restructuring and downsizing programme.
As I informed the Deputy in my reply to his Questions Nos. 47 and 73 answered on 17 January, the banks meet with the Department of Finance and the Credit Review Office on a quarterly basis to discuss progress in relation to SME lending. The monthly management meetings with the pillar banks also provide a forum for the issue of SME lending to be raised by the Department.
The pillar banks report to my Department and to the Credit Review Office on credit on a sectoral basis but this is commercially sensitive information and I am not in a position to release it. In his tenth quarterly report published on 11 February, the Credit Reviewer said “I have observed no geographic region or trade sector being relatively adversely affected by this contraction in these two banks.”
In addition, the Economic Management Council meets the banks on a regular basis and discusses the key issues pertaining to SME credit. Separately I have met the Boards of the pillar banks twice since the start of this year.
I have emphasised the importance of access to credit for SMEs and the need for an adequate flow of finance to be available to viable small businesses in Ireland in these meetings.
69. Deputy Dessie Ellis asked the Minister for Finance the terms under which the senior executives of Irish Bank Resolution Corporation are being rehired on short contracts to assist the special liquidator; if the executives are receiving the same monetary terms as their old contracts; and the number being rehired. [10577/13]
View answerI am informed that following the appointment of the Special Liquidator, 809 employee contracts were terminated in the Republic of Ireland. 802 employees were re-hired by the Special Liquidators on short term contracts to assist with the liquidation of Irish Bank Resolution Corporation Limited. The 7 employees who were not re-hired held senior positions within the Bank. The Special Liquidators confirmed to the employees who were re-hired (by letter dated 7 February 2013) that their “salary and frequency and method of salary payments” will apply at the same level that was in operation immediately prior to the appointment of the Special Liquidators.
