Written Answers Nos 1-21
9. Deputy John Browne asked the Minister for Finance if he will provide an update to his estimate for the cost to the Exchequer in 2013 of the liquidation of the Irish Bank Resolution Corporation; and if he will make a statement on the matter. [14054/13]
View answerThe February 2013 transactions in relation to the liquidation of IBRC and the exchange of the Promissory Notes for Irish Government bonds are expected to result in GGB and GGD benefits over time but there are potential upfront costs for the State that may be incurred. The two principal transaction costs are the payments required to be made by me, in my capacity as Minister for Finance, under Government guarantees and any payments to be made to NAMA to cover any shortfall (should one arise) following the sale of IBRC’s assets by the Special Liquidators. It was initially estimated that there could be payments required to be made by the Minister for Finance under the Eligible Liabilities Guarantee Scheme of circa €0.9 billion to €1.1 billion. The ELG Scheme provides an Irish State guarantee for specific issuances of eligible debt securities by participating institutions and for specific deposits placed with participating institutions. Any such payments would impact on GGB and GGD in the year that the transaction takes place. From an impact analysis perspective, it was initially assumed that ELG costs of €1.0 billion will arise in 2013, i.e., the midpoint of the circa €0.9 billion to €1.1 billion estimated range. An updated assessment of the expected ELG costs has been prepared by the Special Liquidators. This revised estimate now suggests that ELG costs will be in the region of circa €1.0 billion.
A Derivatives Guarantee is also provided by the Minister for Finance which guarantees all amounts payable by IBRC to derivative counterparties. It was not possible to produce a meaningful estimate with respect to potential costs under the Derivatives Guarantee at the time of the transaction. An assessment has now been prepared by the Special Liquidators which suggests that costs under the Derivatives Guarantee are expected to lie within the €50 million to €100 million range.
Separately, a Deposit Guarantee Scheme is in place which provides a guarantee of up to €100,000 per eligible depositor per institution. This scheme is funded by credit institutions lodging funds in a Deposit Protection Account maintained at the Central Bank. An assessment of the expected DGS costs has been prepared by the Special Liquidators, which suggests that DGS costs are expected to be less than €50 million. In any case, any payment from this fund does not represent a direct cost to the Minister for Finance.
So the total cost to the Exchequer as a result of the liquidation of IBRC is expected to be circa €1.1 billion, comprising costs under the ELG Scheme of circa €1.0 billion and costs under the Derivatives Guarantee of circa €50 to €100 million. This is broadly in line with initial estimates produced by my Department.
I also want to point out that, to the extent that there were assets available to settle unsecured creditors in the liquidation process the Minister for Finance would stand pari passu with other unsecured creditors and would be entitled to a clawback of some or all of the amounts paid out under guarantees. Indeed, the CBI would also stand pari passu with other unsecured creditors with respect to any amounts paid out under the DGS – and would, therefore, also be entitled to a clawback of some or all of the amounts paid out under the DGS depending on the availability of assets to settle such unsecured claims.
It is also important to note that the Minister for Finance will also be required to compensate NAMA if the amount raised from the sale of assets by the Special Liquidator is insufficient to cover amounts due to NAMA. The Special Liquidators are appointing independent valuation experts to determine the value of the assets but the shortfall, if any, will not be known, with any certainty, until the independent valuation and asset sale process has completed.
10. Deputy Thomas P. Broughan asked the Minister for Finance if he will outline the possible implications for Budget 2014 of the promissory note deal and any future deal on banking debt; and if he will make a statement on the matter. [13939/13]
View answerAs I have stated previously, it is important to note that some aspects of the promissory note deal are yet to be finalised. For example, the liquidator is in the process of overseeing a valuation and sales process for the assets of IBRC, while the final payments to be made under the ELG Scheme have not yet been determined. Nevertheless, simulations ran by my Department estimate that the General Government deficit will improve by approximately €1 billion per annum over the coming years, which will bring us €1 billion closer to attaining our 3% deficit target by 2015. However, this has to be seen in the light of the estimated General Government deficits of €8.9bn and €5.3bn in 2014 and 2015 respectively, as per Budget 2013.
While this agreement is a significant step forward in restoring sustainability to our public finances, this Government is well aware that there remains a considerable gap between what we get in revenue and what we spend. This situation is not sustainable over the longer term. In addition to the requirements to bring our deficit to under 3% of GDP by 2015 as per the EDP, it makes sense that we bring balance back to the public finances and stabilise and reduce our debt burden.
At this early stage of the year, I will not be drawn into speculation on the composition of the next Budget and the impact that this deal will have on it. There are a lot of other moving parts to be considered such as economic growth, tax take and expenditure performance. All of the above, including the impact of the promissory note deal, will form the basis of Government decisions regarding the Budget.
In terms of a potential bank deal, Ireland’s position on this is well known. It is essential that the measures introduced for direct banking recapitalisation achieve the object of breaking the link between the sovereign and the banks.
Ireland is now in the final year of its programme. It is important that the ESM’s banking recapitalisation tool does not rule out a retroactive deal for Ireland in respect of its viable banks. This will be an essential element in helping us to regain continuous market access and help improve the sustainability of our well-performing adjustment programme.
This message is being conveyed to my colleagues at ECOFIN where dialogue is ongoing but it is far too early to speculate the form and magnitude of any potential deal.
11. Deputy Pádraig Mac Lochlainn asked the Minister for Finance the cost of website from the Revenue Commissioners designed to give indicative values for properties subject to the property tax; and his views on whether it is fit for purpose compared to others. [14066/13]
View answerThe Local Property Tax (LPT) is a self-assessed tax. This means that the property owner must decide the market value of his or her own property and make a return to Revenue. In the absence of a national residential property valuation system, the valuation guidance developed by Revenue is designed to help property owners in self-assessing the market value of their property by giving them average, indicative values for their area. The Revenue guidance is based on a detailed analysis of all property sales in the State since January 2010. The guidance provides a benchmark to help people consider whether their particular property is more or less valuable than the average in an area. This guidance will be helpful in the majority of cases but there are always properties in an area that differ from the average.
The valuation guidance explicitly states that: “This service provides a guide to average market values of properties in a given locality and offers an indicative valuation band for properties depending on type, age and location. It does not provide market values for individual properties.”
This guidance should not be used in isolation but together with other sources of information and the property owner’s knowledge of their neighbourhood and their own property. In this regard, I welcome that there is a range of guidance now available to property owners to help them self-assess.
Revenue has made the guidance as simple as possible – users need only know their property’s type, age and location. The Revenue valuation guidance website combines two aspects – a simple point and click option to get an average valuation for an area (electoral district), combined with a ‘heat map’ showing relative valuations across electoral districts.
The valuation guidance website is a successful collaborative project between Revenue and Ordnance Survey Ireland, the national mapping authority. The site was developed by Revenue at a cost of €48,250 including VAT. This includes the development cost, external advice on the choice of system and an estimate of the project management and quality assurance time. For completeness, this does not include the staff time and costs attributable to the Local Property Tax project overall which could not easily be disaggregated and would have been incurred even if the valuation guidance website had not been developed.
The Revenue guidance follows similar methods to those used by tax administrations in other countries and meets internationally accepted standards for this type of work. In addition, it compares favourably to research in Ireland, including work by researchers in the Economic and Social Research Institute (ESRI). Other valuation guidance and models in Ireland, for example those produced by some property or real estate listings websites, also use similar methods to providing average valuations.
I am completely satisfied that the Revenue valuation guidance is fit for purpose and performs at least equally well, if not better, than other sources of valuation information that are available. I am confident that the Revenue valuation guidance will be useful for the majority of property owners in assisting them to value their homes. Furthermore, the use of the online mapping application, to provide the guidance, is an excellent example of the public sector using GIS (Geographic Information System) technology in a new and innovative manner.
Finally I would point out that all Revenue is asking – and all I am asking, as Minister – is for property owners to take a reasonable view of the value of their own property, and to be honest. The level of public debate this week on property valuation suggests that most people are engaging with the Local Property Tax, have a good general sense of the value of their property, are carrying out research to enable them to do their self-assessed return, and I welcome that.
12. Deputy Michael Colreavy asked the Minister for Finance if he will meet the former workers at the Irish Bank Resolution Corporation to discuss their situation regarding redundancy entitlements. [14062/13]
View answerI acknowledge the significant efforts and commitment made by the staff in IBRC over the past few difficult years whilst the bank was in wind down and the difficulties that arise for staff as a result of the liquidation but it was necessary to take the decision to liquidate IBRC in the larger public interest. There are standard rules which apply to the distribution of the assets of companies in liquidation and it would not be appropriate for me to interfere with these rules. However the State could intervene, if required, to ensure that statutory redundancy is available through the Social Insurance Fund and that arrears of pay, sick pay, holiday pay or pay in lieu of statutory notice (limited to EUR600 per week up to a maximum of eight weeks) are payable from the Insolvency Payments Scheme.
I can advise the Deputy that officials within my Department have already met with the IBOA and issues surrounding the status of the employees of the IBRC (in liquidation) were discussed. The Special Liquidators have advised that there is ongoing interaction between the IBOA and the Special Liquidators. The Special Liquidators met with the IBOA on Monday 11 March. The Special Liquidators have informed me that this was the earliest possible date following the unavoidable postponement of the previously arranged meeting of Wednesday, 6 March and the IBOA’s unavailability on Thursday and Friday, 7 and 8 March.
The Special Liquidators are highly cognisant of the issues that the IBOA have been highlighting and that significant steps have already been taken to address those concerns including the announcement on Tuesday 19 March by the Special Liquidators that contracts of staff would be extended out to 7 August with one month’s notice thereafter. This should provide significant reassurance to IBRC staff relative to the common position in liquidations where staff contracts are terminated on liquidation.
13. Deputy Dara Calleary asked the Minister for Finance the measures he is taking to tackle fuel smuggling in the border area; his views on whether the extension of the carbon levy to solid fuels may result in an additional form of smuggling; and if he will make a statement on the matter. [14055/13]
View answerI am informed by the Revenue Commissioners that the main form of criminality in the fuel sector is the laundering of marked gas oil and the sale of the laundered product as auto-fuel. Revenue is aware of the threat that this criminal activity poses to law-abiding businesses, and to the Exchequer in terms of lost revenue from mineral oil tax. The laundering process also threatens the environment, through the waste sludge that it generates, and laundered fuel can damage the engines of vehicles in which it is used. Combating this illegal activity is, therefore, a high priority for Revenue and enforcement action is taken at all stages of the fuel supply chain, against both those involved in the laundering process and those who sell laundered fuel. Considerable success is being achieved in this work. During 2012 11 oil laundries were detected and laundering equipment, materials and vehicles were seized, along with 199,000 litres of oil. A further 914,000 litres of illicit fuel were also seized, the greater part from retail outlets or in the course of delivery to such outlets. In addition, 57 retail outlets were shut down in the course of 2012 for trading without a licence for the sale of fuel or for breach of licence conditions, following the closure of 32 outlets during 2011.
Because of the links that organised criminality has with the illegal fuel trade, Revenue works closely with An Garda Síochána in combating it. A Cross-Border Fuel Fraud Enforcement Group, involving all relevant agencies from the State and from Northern Ireland, also facilitates and enhances cooperation in dealing with this form of criminality. Arising from its work, a number of groups involved in the laundering and distribution of illegal fuels, which operate in both jurisdictions, have been specifically targeted for investigation.
In addition to the ongoing enforcement action against the illegal fuel trade, steps are being taken to ensure enhanced supervision throughout the fuel supply chain, to deny fuel launderers access to marked fuel for laundering and to deny them access to market for their illegal product. Following on from a more robust approach to licensing requirements for the sale of auto-fuel adopted since 2011, a new licensing requirement for marked fuel traders came into operation from 1 October 2012. As well as these important licensing changes, there is a new requirement, effective as and from the start of this year, for all fuel traders to make monthly electronic returns on their fuel transactions to Revenue. This will facilitate Revenue in detecting unusual or anomalous patterns of activity in oil trading, and in taking action against fraudulent activity.
Revenue is also working in close cooperation with Her Majesty’s Revenue and Customs on obtaining an improved and more effective fuel marker. There was a very good response to a joint invitation to make submissions on the provision of a new marker, and the submissions received are being evaluated at present.
The extensive enforcement action that is being taken against illegal activity in the fuel market highlights the commitment to combating it. The new legislative steps that have been taken, together with the work on development of a more effective fuel marker, will serve to enhance the effectiveness of this action, and there will be no letting up in the work against those involved in this form of criminality.
On the matter of solid fuel carbon tax, the Revenue Commissioners will collect this tax on a self-assessed basis and will apply the full range of compliance interventions and enforcement provisions for self-assessed taxes.
Any person who makes a first supply of solid fuel in the State must register with the Revenue Commissioners and will be accountable and liable for payment of the tax. In circumstances where there are grounds to believe that a taxable supply of solid fuel has not been tax paid, including a supply by persons operating in the shadow economy, Revenue will investigate the person’s tax liabilities in accordance with the particular circumstances of each case. If confirmed, Revenue will enforce the collection of any unpaid tax and if offences have been committed under any part of the tax code, will take action to prosecute those offences.
Solid fuel carbon tax will become operational in a market that is already subject to strict regulation. Regulations to enable local authorities to control the type of coal supplied in the State have been put in place as part of the robust mechanism introduced by the Minister for the Environment to address the risk of coal products with lower environmental standards being sourced from outside the State, in particular Northern Ireland.
Suppliers who are producing and supplying solid fuel unlawfully are subject to investigation and prosecution by local authorities and other State Agencies charged with enforcing environmental regulations and preventing such supply. Revenue will liaise with these bodies, as required, to ensure that lawful supplies of solid fuels are properly taxed.
14. Deputy Gerry Adams asked the Minister for Finance if he will carry out an impact assessment of the property tax on the numbers of those in mortgage arrears. [14061/13]
View answerThe Government has considered the impact of the Local Property Tax (LPT) on those in mortgage arrears. The Thornhill Group (the inter-departmental group chaired by Dr. Don Thornhill to consider the design of a property tax) acknowledged that in current circumstances an additional case should be made to target assistance on owner occupiers suffering severe financial stress as a result of housing mortgage commitments undertaken during the housing boom period, aggravated in some cases by reductions in income. The Thornhill Group recommended increased deferral thresholds in cases where the mortgage was taken out between 1 January 2004 and 31 December 2008. The Government accepted the Thornhill Group’s recommendation but decided not to limit the increased thresholds to those who purchased properties during a particular time period. Therefore, an increased income threshold applies in the case of properties occupied as a sole or main residence and subject to a mortgage. In such cases, the gross income thresholds for both full and partial deferrals may be increased by 80% of the mortgage interest payments. A deferral option in qualifying cases in this regard will apply until the end of 2017 and will assist individuals currently in mortgage distress. Where a liable person no longer satisfies the necessary conditions, amounts deferred prior to the date on which eligibility ceased may continue to be deferred. Interest of 4% per annum will apply to any amounts deferred.
The Finance (Local Property Tax) (Amendment) Act 2013 provides that a person who has entered into an insolvency arrangement – i.e. a Debt Settlement Arrangement or a Personal Insolvency Arrangement under the Personal Insolvency Act 2012 – may qualify for a deferral of the LPT that falls due for payment by that person during the period for which the insolvency arrangement is in effect where a valid claim is made to the Revenue Commissioners.
This 2013 Act also introduces new measures which provide for the possibility of a deferral for liable persons who cannot without excessive hardship pay local property tax when it becomes payable, as a consequence of a significant and unexpected financial loss or expense (subject to the application for a deferral from the liable person to the Revenue Commissioners, in line with Revenue guidelines to be published, and notification from the Revenue that a deferral is allowed).
The Thornhill Group recommended that the LPT paid in respect of a rented property should be deductible for income tax or corporation tax purposes, in a similar manner to commercial rates and suggested that consideration be given to phasing in deductibility over a period of years. There is no provision in the legislation for such deductions at present. However, it is the intention of the Government to introduce such a provision on a phased basis, though the manner and timing of this has yet to be decided.
Taking all of the above measures into account, I believe any impact of the LPT on mortgage arrears will be limited.
Turning to mortgage arrears in general, this Government is conscious of the difficulty some home owners are experiencing in meeting their mortgage obligations and is committed to helping homeowners in distress to weather the recession, and to ensuring that Ireland has a sustainable housing policy. The main focus of attention is on those mortgage holders who are experiencing genuine difficulty in meeting the commitments in respect of their home. As set out in my Department’s Review of 2012, much work was done in relation to mortgage arrears and personal indebtedness to assist those in difficulty. A Steering Group, chaired by my Department, was established to oversee implementation of the Interdepartmental Mortgage Arrears Working Group (Keane Report) Report’s recommendations. The following key milestones were delivered in 2012:
- The Personal Insolvency Bill was published by the Department of Justice in June 2012;
- The Mortgage to Rent scheme was formally launched by the Department of Environment, Community and Local Government in June 2012;
- A three-phased approach to establishing a comprehensive Mortgage Arrears Information and Advice Service to provide the necessary supports to assist people in mortgage distress was launched by the Department of Social Protection in September 2012;
- The banks, with Central Bank oversight, completed pilots and commenced the roll-out of strategies and solutions to address loan arrears and unsustainable debt in October 2012; and
- A CEO was appointed by the Department of Justice to mobilise and operationalise the Insolvency Service of Ireland in October 2012.
The new Personal Insolvency Act was signed into law at the end of 2012. The legislation provides a legal framework for the resolution of unsustainable personal debt (including mortgage debt) and it will provide certainty for borrowers and lenders alike about the consequences of non-payment and failure to reach agreement. Complementing this legislation is a comprehensive set of measures implemented by the banks following detailed consultation with my Department. These include:
- An increase in staffing resources allocated to assisting in arrears management;
- The provision of alternative mortgage servicing arrangements; and
- A more focused strategy encompassing engagement, stabilisation and resolution.
In 2013 we will build on the progress made to date by continuing to lead key stakeholders, through chairing the Mortgage Arrears Steering Group, to deliver the remaining elements of the Mortgage Arrears programme by:
- The development of resolution targets by the banks, through Central Bank oversight; and
- The operation of the Personal Insolvency Act through the Insolvency Service of Ireland.
The Central Bank, which is represented in the Steering Group, recently announced new measures to address mortgage arrears, including the publication of performance targets for the main mortgage banks and proposed changes to the Code of Conduct on Mortgage Arrears (CCMA). The new approach is aimed at ensuring banks offer and conclude sustainable solutions for their customers in arrears by setting specific performance targets and proposing revisions to provisioning standards. The Central Bank is also proposing to update the CCMA so that it continues to provide protection to customers who cooperate with their bank while facilitating and promoting the resolution of arrears cases.
The Central Bank will assess whether the performance targets are being met. To the extent that the banks fail to meet these targets to the satisfaction of the Central Bank and within the timeframes set out, the Central Bank may take further regulatory action, which may include, without limitation, obliging a credit institution to hold additional own funds or requiring a credit institution to apply a specific provisioning policy or treatment of assets, in terms of own funds requirements. This is without prejudice to the power of the Central Bank to take regulatory action at an earlier date where appropriate.
15. Deputy Charlie McConalogue asked the Minister for Finance if he is satisfied with the logistical planning undertaken to date to administer the local property tax; and if he will make a statement on the matter. [14045/13]
View answerIntroducing a new tax regime for residential property in such a tight timeframe has been a significant challenge for the Revenue Commissioners along with all of their other responsibilities. Enacting the Finance (Local Property Tax) Act in December 2012 provided the basis for the development of the necessary systems. A small number of amendments were made to the original Act, which included some further exemptions from the charge and new types of deferral arrangements. These amendments were included in the Finance (Local Property Tax) (Amendment) Act 2013 which was signed into law by the President on 13 March 2013. The Finance (Local Property Tax) Act 2012 (as amended) sets out how Local Property Tax (LPT) is to be administered and how a residential property is to be valued for LPT purposes. Since the Government’s announcement last July that the Revenue Commissioners would be responsible for the administration of this new tax, the Commissioners have had extensive contacts with a wide range of Government Departments and Agencies through the Interdepartmental Group which was set up last August to help plan the introduction of LPT.
I am advised by the Revenue Commissioners that a wide range of payment options have been made available to liable persons, which will allow them to pay their LPT liability in full or by way of phased payments. Bi-lateral meetings have been held with the Department of Social Protection and the Department of Agriculture, Food and the Marine to ensure that the deduction at source option from certain payments administered by these Departments would be available to property owners. Meetings to assess progress on the necessary developments required to implement the deduction at source options are ongoing.
In addition, detailed discussions have also taken place with a number of private sector stakeholders including payroll administrators and payroll software specialists regarding the implementation of the deduction at source option and these groups are actively working to meet agreed timelines. A key element of the design of the tax is that property owners will have as much flexibility as possible to spread the payment of tax in equal instalments throughout the year and this is why the facility to deduct the tax at source is of such importance. Payment of LPT can also be made by single debit authority, debit/credit card, direct debit and cash. The Revenue Commissioners recently published details on their website of the payment service providers who will accept cash payments of LPT at their premises and they are An Post, Payzone and Omnivend. The three organisations concerned have a major nationwide reach that will ensure the widest possible availability of facilities where LPT payments can be made.
The additional resources required by Revenue for 2013 are noted in the Department of Public Expenditure and Reform Expenditure Report 2013. The Employment Control Framework includes 100 additional posts approved by my colleague, the Minister for Public Expenditure and Reform, in the context of the introduction of LPT. The Commissioners further advise that a Local Property Tax Branch, under the Office of the Collector-General, is now fully established in Ennis, Co. Clare to manage all aspects of the administration of the tax for both resident and non-resident customers. The Commissioners are deploying additional staff to this Branch by reconfiguring their District structure in the South West and relocating functions from Clare to Limerick. In addition, Revenue has contracted for external service delivery of some data capture and call centre services. At this point, Revenue’s dedicated LPT Helpline (at 1890 200 255) is fully functional and will be resourced appropriately to handle the anticipated high number of contacts.
A key aspect of the work undertaken by Revenue was the development of a comprehensive Register of residential properties in the State which is the cornerstone of the new tax. The Register was developed using data drawn from a range of sources including Revenue’s own databases, the Local Government Management Agency database and data from utility companies. This Register is being used to issue correspondence to property owners and work is still in progress to refine the Register and ensure, as far as possible, that all property owners will be contacted. The use of multiple databases does, however, bring the risk of duplication and the Commissioners have made every effort to lessen this risk. Another important aspect of the logistical preparations for introducing LPT has been the development of the IT systems for administering and collecting the new tax and its incorporation into Revenue’s existing IT infrastructure. I am advised by the Commissioners that these systems are also in place.
The Commissioners have prepared valuation guidance which, taken together with the owner’s own knowledge of the property, will assist him or her in assessing its value. The guidance includes an on-line interactive valuation guide which provides indicative property valuation bands depending on the property type, age and location. This facility was made available on the Revenue website on 10 March and has seen extensive use with almost 600,000 “hits” recorded in its first four days of operation.
The Deputy will also be aware that last week Revenue began the general issue of LPT Returns, an explanatory booklet and related information to the owners of 1.66 million properties who will be obliged to file their Returns by the relevant deadline - 7 May for those filing paper Returns and 28 May for those filing their Return on-line. The first property owners to have received the correspondence occurred on Wednesday 13 March and up to Friday 15 March, 178,941 letters had been posted by Revenue. The general issue of correspondence, given the volumes involved, is likely to run for four weeks.
I am also advised that property owners will have the option of completing and submitting their LPT return in paper or by electronic means. Revenue has developed a secure on-line system for filing LPT Returns that is user friendly and easily accessible on the Revenue website. This on-line system also went live on 13 March. From the taxpayer’s perspective, using the on-line system is the quickest and most straightforward way to complete and submit their LPT Returns, particularly so where there are multiple properties involved, as the system automatically calculates the LPT due for the individual properties, makes it easy to select a payment method from the wide range of options available and provides immediate access to Revenue’s on-line valuation guide. I am assured that all the processes and procedures required to handle the completed LPT return forms from property owners by the relevant due dates of 7 May 2013 for paper forms, and 28 May for online forms, will be in place.
To coincide with the issue of LPT Returns to property owners, a public information campaign was launched on 7 March with a Press Conference delivered by the Chairman of the Revenue Commissioners. This was followed by a number of radio and television interviews with Revenue spokespersons. Over the coming months Revenue will make spokespersons available particular to local radio to provide advice. A publicity campaign targeting radio and the print media has also just commenced. The Revenue website contains extensive information on how the tax will operate and the obligations for owners of residential properties, including Frequently Asked Questions which are updated regularly. Revenue is also working closely with the Citizens Information Service to optimise the opportunities for property owners to get advice and assistance in completing their LPT Return.
I am fully satisfied with the logistical planning undertaken by the Commissioners and am very pleased with the progress made to date. I am confident that they will deliver all of the necessary milestones prior to the commencement of the new regime on 1 July 2013.
16. Deputy Sean Fleming asked the Minister for Finance his views on whether the IMF will favourably consider a request to extend the repayment period for its loans to Ireland; and if he will make a statement on the matter. [14028/13]
View answerIn 2010 the IMF approved a programme under the Extended Fund Facility (EFF) to Ireland amounting to SDR 19.5 billion, which is equivalent to €22.5 billion, as part of the overall EU/IMF programme of financial support agreed at that time. The appropriate amortization schedule for EFF programmes with any member country of the IMF has been agreed and set by the IMF. This decision provides that repayments be made in 12 equal six-monthly instalments, within an outside range of four to ten years after each such disbursement. Ireland’s amortisation schedule reflects the parameters established by the IMF Executive Board. Given the size and structure of the IMF, with over 180 member countries, it would not be realistic to expect such a decision to be amended for one programme country in isolation. Further, it is not the IMF’s practice to extend repayment schedules.
Our policy priority now is to achieve a successful and durable exit from our programme. Discussions took place with Troika officials on exit options during the ninth review mission, which ran from 29th January to 7th February 2013 and these discussion have continued since then. The available options are being considered in the light of what is appropriate for Ireland, as a country with a well performing programme which is on track for a successful exit. Evidently this will require further consideration and no decisions have been taken to date.
17. Deputy Sandra McLellan asked the Minister for Finance if he will explain the decision of the National Assets Management Agency to provide €1bn in credit to a bust bank, the Irish Bank Resolution Corporation, at an interest rate of 1.52% per annum; the reason there is not such a scheme for small and medium enterprise; and the State aid implications of this order. [14081/13]
View answerAs the deputy is aware, on the 7th February 2013 I issued a Direction (NAMA/3/12/IBRC Act) to NAMA pursuant to the IBRC Act 2013 to provide such credit facilities to a special liquidator on such terms and conditions, as are specified in the direction. This was done in order to protect and preserve the value of the IBRC assets during the liquidation process and ultimately to protect the interests of the taxpayer. NAMA has complied with this Direction and made a €1 billion credit facility available to the special liquidator. The interest rate as per the facility agreement is referenced to the daily one-month euribor rate plus a margin of 140 basis points. The facility will be advanced to IBRC (in Liquidation) as needed for both the general corporate purposes of the Company and to discharge the Company’s obligations to derivatives counterparties under derivative collateral arrangements and/or obligations to the NTMA under the NTMA ISDA Master agreement. The amounts drawn under this facility shall constitute and rank as costs of the liquidation of the Company.
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. The Economic Management Council meets the banks on a regular basis and discusses the key issues pertaining to this priority. My officials also meet regularly with key stakeholders at the forum of the SME Funding Consultation Committee.
The Government has imposed SME lending targets on AIB and Bank of Ireland for the three calendar years, 2011 to 2013. Each bank was required to sanction lending of at least €3 billion in 2011, €3.5 billion in 2012 and €4 billion in 2013 for new or increased credit facilities to SMEs. Both banks have reported that they achieved their 2011 and 2012 targets.
In addition to these lending targets, the banks are required to submit their lending plans to the Department and the Credit Review Office at the beginning of each year, outlining how they intend to achieve their lending targets. The banks also meet with the Department of Finance and the Credit Review Office on a quarterly basis to discuss progress. The monthly management meetings with the banks also provide a forum for the issue of SME lending to be raised by the Department.
The Credit Review Office can review decisions by the banks to refuse, reduce or withdraw credit facilities, including applications for restructured credit facilities, from €1,000 up to €500,000. The Credit Review Office is currently overturning 55% of the refusal decisions referred to them and anyone who has been refused credit by the banks should avail of the services of the Credit Review Office. I have received a small number of representations from individual SMEs regarding the availability of credit. I have referred some of these SMEs to the Credit Review Office which has been able to provide assistance.
I recently sanctioned the appointment of six additional reviewers in the Credit Review Office to ensure that SMEs appealing the banks’ decisions to decline credit receive a considered and timely response to their application.
The credit stream available to SMEs now also includes the Microenterprise Loan scheme which will facilitate up to €40 million in additional lending to microenterprises over the next five years. In addition, the Temporary Partial Credit Guarantee Scheme can facilitate up to €150 million per annum of additional credit. The Scheme is designed for SME’s who, because of lack of collateral or because of the specialised sector they operate in, face difficulties in accessing bank credit.
It is vital that the banks continue to make credit available to support economic recovery. However, it is not in the interest of the banks, businesses or the economy for finance to be provided unless the business is viable and has the capacity to meet the interest payments and repay the sum borrowed.
18. Deputy Seamus Kirk asked the Minister for Finance when the restructuring of the credit union sector will be completed; and if he will make a statement on the matter. [14032/13]
View answerThe Credit Union and Co-operation with Overseas Regulators Act 2012 provides the statutory basis for the restructuring of credit unions and places the Restructuring Board (ReBo) on a statutory footing. The Government has provided €250m to the Credit Union Fund for restructuring under the Act. The ReBo is working towards the timetable set out in the Commission on Credit Union report, with a view to completing the process by the end of 2015.
19. Deputy Eamonn Maloney asked the Minister for Finance in the event that the special liquidator for Irish Bank Resolution Corporation does not realise the economic valuation of the assets of IBRC, his plans for the transfer of the assets into the National Asset Management Agency in view of reports (details supplied) and the plans in place to arrange for a transfer of Irish Bank Resolution Corporation staff to service these assets in an effort to maximise the return to the State. [14085/13]
View answerAs the deputy is aware as part of the Government’s decision on 7th February 2013 to appoint Special Liquidators to IBRC, it was decided that the National Asset Management Agency (NAMA) would acquire those loans which have not been sold after the Special Liquidators have completed their current valuation and sales process. It is expected that IBRC loans will be acquired from the Special Liquidator on a phased basis. NAMA has established a special purpose vehicle (National Asset Resolution Ltd – NARL) to acquire and manage IBRC loans following completion of the loan valuation and sales process.
As was pointed out recently by the Chairman of NAMA any new loans acquired by NAMA from the Special Liquidators later in the year will result in a significant increase in the agency’s workload. I would refer you to the recent press announcements made by both NAMA and IBRC in special liquidation regarding these developments which are available on their respective websites. NAMA has recently published, on the www.etenders.gov.ie website, a Request for Proposals (RFP) seeking two service providers to take over primary and special loan servicing on two distinct types of loans that may be acquired by NAMA under IBRC Act 2013 after completion of the loan sales process currently being conducted by KPMG, the Special Liquidators of IBRC:
- The first loan type are commercial property loans, residential investment and development loans and business banking loans; and
- The second are Personal loans, principally residential mortgage loans
It is envisaged that NAMA, which plans to recruit staff from IBRC, will operate in close conjunction with the service providers for both types of loans, including providing them with credit, legal, treasury, finance and accounting services.
As it is not yet clear what proportion of the current IBRC portfolio will transfer to NAMA, given that the Special Liquidators’ sales process has not concluded, it is not possible to provide estimates of the employee numbers that will be involved in the new arrangements being put in place by NAMA. As with the current NAMA portfolio acquired under the 2009 NAMA Act, a major objective will be to manage the incoming portfolio to be acquired under IBRC Act 2013 in a cost-effective and efficient manner on behalf of the taxpayer.
20. Deputy Peadar Tóibín asked the Minister for Finance the extra financial support that is planned in the multi-annual financial framework to tackle youth unemployment. [14073/13]
View answerAs part of the European Council agreement on the 2014 – 2020 Multi Annual Financial Framework of 7-8 February, it was decided to provide EUR 6 billion for a new Youth Employment Initiative for regions with youth unemployment above 25%. This funding will consist of EUR 3 billion from the European Social Fund and an additional EUR 3 billion from a new Youth Employment budget line. This initiative comes within the remit of the Departments of Public Expenditure and Reform, Social Protection and Education & Skills and I understand that the specific detail and modalities remain to be fully elaborated at European level. The European Commission has now published its legislative proposal for this initiative, which in the first instance will have to be considered by Council and then, in turn, negotiated with the European Parliament.
I am also informed that all of the technical data underpinning the eligibility criteria for this initiative are not yet available for 2012. However, it is expected both Irish regions, the Border, Midland and West and the Southern and Eastern Regions will qualify for funding. While I do not wish to pre-empt a final decision on funding, I can assure the House that we will be seeking to maximise the possible benefits to Ireland.
21. Deputy Michael Moynihan asked the Minister for Finance if he is satisfied with the pace of progress of investigations into the collapse of Irish Nationwide; if his attention has been drawn to the timetable under which they will be completed; and if he will make a statement on the matter. [14042/13]
View answerI have been advised that an investigation is being conducted under the Central Bank’s Administrative Sanctions Procedure into historic lending practices at INBS. I am advised that for legal reasons, including the Central Bank’s confidentiality obligations pursuant to section 33AK of the Central Bank Act 1942, no further details can presently be disclosed. I am further advised by the Central Bank that an appropriate number of enforcement staff, commensurate with the investigation’s complexity are dedicated to it and investigation resources are kept continuously under review. For the reasons already explained, no further details can be disclosed at this time.
