Written Answers Nos. 1-20
9. Deputy Derek Keating asked the Minister for Finance the percentage of the local property tax collected in 2013 that is being returned to the local authority area in which it was collected; and the percentage in relation to South Dublin County Council. [8242/14]
View answerSection 157 of the Finance (Local Property Tax) Act 2012, as amended, provides that, in each financial year commencing with 2014, the Minister shall pay from the Central Fund or the growing produce thereof into the Local Government Fund an amount equivalent to the LPT, including any interest paid thereon, paid into the Central Fund during that year.
Accordingly, receipts from the Local Property Tax (LPT) received in 2013 will remain in the Exchequer and will be used to meet the many expenditure obligations faced by the State. The allocation to the Local Government Fund for 2013 had already been decided before the LPT commenced and LPT receipts were not part of and were not planned to be a part of the Local Government Fund receipts and expenditure in 2013.
The Commissioners have confirmed that by the end of December 2013 €318 m had been transferred by Revenue to the Exchequer in respect of LPT.
As the Deputy will be aware, Budget 2014 forecast that €550 million would be collected in LPT receipts in 2014. These receipts will be placed in the Local Government Fund which comes under the aegis of the Minister for the Environment, Community and Local Government. Under the Local Government Act 1998 which established the Fund, the Minister manages, controls and authorises payments out of the Fund. Accordingly, the allocations from the Local Government Fund are a matter for the Minister of the Environment, Community and Local Government.
I am further informed by the Revenue Commissioners that compliance data in relation to the LPT for 2013 are available broken down by city and county councils nationally and the most up to date figures are published and can be obtained on the Commissioners website.
11. Deputy Michael McGrath asked the Minister for Finance the reason no specific lending targets are in place for the pillar banks for 2014; if he is satisfied the banks are meeting the credit needs of personal and business customers; and if he will make a statement on the matter. [8379/14]
View answerAs the Deputy is aware, as part of the 2011 recapitalisation exercise, the Government 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 last year and €4 billion in 2013 for new or increased credit facilities to SMEs. Both banks have achieved their 2011 and 2012 targets. I am informed that both banks sanctioned circa €4 bn in lending in 2013.
Having completed a process of deleveraging, both AIB and Bank of Ireland are now concentrating on growing their balance sheets. In this context, both banks recognise the need to increase business lending in the period up to 2016, including lending to the SME sector. Although the targets were a useful policy intervention, the focus now needs to shift towards the collation and examination, on a monthly basis, of more granular data on the funding of the activities of SMEs from both AIB and Bank of Ireland, the wider banking sector and increasingly the non-bank funding sector. This focus is further underpinned by the commitments contained in the "Access to Finance" chapter in the soon to be published Action Plan for Jobs 2014. I will shortly be writing to the banks with a view to ensuring their continued commitment to work closely with my Department in facilitating a positive business environment in which SMEs can prosper and contribute to economic growth, in addition to maintaining and increasing jobs in this vital sector.
In terms of banks meeting the needs of personal customers, the Government continues to work to create an environment conducive to the entry of new entrants, primarily through the implementation of policies to promote economic recovery and employment creation but also through different initiatives to ensure that there is an adequate pool of credit to underpin the recovery.
In this regard:
we are working to manage and minimise potential market expectations of future State support for the State owned banks which could act as a deterrent to new market entrants;
- we are actively bringing forward new initiatives to promote alternative sources of lending and credit in the Irish marketplace, the most recent example of this being the link with KfW the German State Development Bank;
- we are working to establish equality in the assessment of credit risk through the establishment of an industry wide credit register to allow for the appropriate measure of risk in lending, allowing incumbent and new lenders to lend with full visibility of the risk of that lending. The Credit Reporting Act was passed at the end of 2013;
- we are working to reduce switching costs to allow customers to move between banks more easily, enhancing competition and forcing banks to work hard to retain their customers on a commercial basis;
- we are in regular dialogue with potential market entrants as they evaluate potential opportunities in Ireland and will be supportive of new entrants as they emerge.
12. Deputy Seán Kyne asked the Minister for Finance with the completion of the pilot of the standard bank account concept, as recommended in the report on the Strategy for Financial Inclusion, if the roll-out of such a service scheduled for this year will involve a tendering process; if the facility will be available in one or multiple financial institutions; and if consideration has been given to utilising the most extensive network of any organisation offering financial service, that of An Post. [2669/14]
View answerThe Report on the Pilot project on the Standard Bank Account was published by my Department on 10 January last. The Pilot Project involved the 3 Irish retail banks - Allied Irish Banks, Bank of Ireland and permanent tsb. It is intended that those institutions will be involved in the roll out of the Standard Bank Account. It will not necessarily be the case that the next phase of work on the Standard Bank account will be limited to these institutions and more extensive participation would be welcome to ensure that the broadest possible reach to the financially excluded can be achieved. In that sense, the question of tendering does not necessarily arise at this point.
The Financial Inclusion Working Group, chaired by my Department includes An Post together with stakeholders from other Government Departments, the Central Bank of Ireland, retail banks, the National Consumer Agency and voluntary sector organisations. The Report of the Working Group on the Pilot project noted the view of stakeholders that one of the key elements required as part of the preparations for a successful national roll-out of a Standard Bank Account is greater involvement by An Post and the credit unions. This was seen as necessary to have the best possible channel for reaching the target cohorts. The Report also noted that barriers of existing infrastructure such as access to the clearing system had prohibited their more extensive involvement to date. My Department is currently engaged in a series of bilateral discussions with the stakeholders in order to best determine next steps following the pilot. The role of An Post is one of the issues which will be dealt with as part of this process.
13. Deputy Catherine Murphy asked the Minister for Finance if, in respect of the sale of the former Irish Bank Resolution Corporation loan books, he will indicate if the Special Liquidator has considered sale of individual mortgages to their corresponding borrowers so that they may refinance their loans themselves; the details of any recent agreed sales of loan books; at what price and which institutions the sale was agreed with; and if he will make a statement on the matter. [8362/14]
View answer38. Deputy Joe Higgins asked the Minister for Finance his views on passing on a write-down to mortgage customers with loans formerly with the Irish Nationwide Building Society rather than sell the loans on the international market. [8275/14]
View answerI propose to take Questions Nos. 13 and 38 together.
There is an obligation on the Special Liquidators to ensure that maximum value is extracted from the loan sales process for the benefit of all the creditors of IBRC including the State. The sales process plan and timeline for the sale of the residential mortgage portfolio has been developed following professional advice and in light of requirements for a robust and credible sales process in that context. The Special Liquidators have given significant consideration to and have sought independent advice from PWC in relation to how the residential mortgage portfolio is to be dealt with. Following that independent advice, the Special Liquidators have decided that the residential mortgage would be sub-divided into four tranches with a view to maximising market interest and return within the timelines set out in the Ministerial Instructions. I am advised that it is for this reason that the Special Liquidators have decided not to accept any bids from individual mortgage holders.
Neither I nor my officials had any role in the development of the sales process plan for the residential mortgage book and given the Special Liquidators obligations to ensure that maximum value is obtained for all creditors of the bank it is not possible for me to interfere in such decisions. For example the valuation price for performing mortgages is likely to be much higher than some of the discounts suggested in recent commentary, it would not be possible for me to direct the Special Liquidators to dispose of these loans to individual mortgage holders at such discounts as to do so would erode significant value for creditors and leave me open to challenge.
The valuation process for the residential mortgage portfolio was completed on 11 September 2013 and the sales process commenced on 14 October 2013. Following receipt of indicative bids, a reduced number of bidders were progressed to Phase 2 of the sales process which launched on 29 November 2013. The Special Liquidators expect to finalise the sale of these loans in March 2014.
For operational reasons, IBRC loan assets have been grouped into a number of portfolios which have been ascribed project names Evergreen, Sand, Rock and Salt, Stone and Pebble; In total, there are 15,734 Borrower Groups comprising 24,632 loans for sale across the 7 portfolios. In total only 33 of these Borrower Groups, representing 0.2% of total Borrower Groups were/ are being offered for sale on a stand-alone basis.
The first portfolio sale brought to the market by the Special Liquidators was concluded successfully in early December where the Evergreen portfolio achieved sales to third parties of 84% of the total portfolios at values above the independent valuations. The sales processes for the Sand, Rock, Salt, Stone and Pebble portfolios are all on going and it is therefore too early to comment on what percentage of each portfolio will be sold to third parties or will transfer to NAMA at the valuation price. However, the Special Liquidators are pleased with the level of interest shown by investors in the portfolios to date.
The Special Liquidators will not be providing details of the discount applied to loan assets to arrive at the valuation price or the price at which the loan books are subsequently sold at as this information is commercially sensitive information which could potentially have a detrimental impact on asset recovery from the impending sale process.
14. Deputy Sean Fleming asked the Minister for Finance his views on whether arrears in the sub-prime mortgage sector are being adequately addressed; and if he will make a statement on the matter. [8385/14]
View answerThe Central Bank has advised that there is no such regulated category as 'sub-prime' lender but that phrase is sometimes used to refer to some non-deposit taking 'retail credit firms'. Retail credit firms are a regulated category of entities which are authorised to provide credit (in the form of cash loans) directly to individuals. Some firms authorised in this category are mortgage lenders. Retail credit firms have been subject to regulation by the Central Bank since 1 February 2008. A register of all Retail Credit Firms is available on the Central Bank website at the following link: http://registers.centralbank.ie/DownloadsPage.aspx.
The Deputy will be aware that the Central Bank's Mortgage Arrears Resolution Targets (MART) announced last March set time bound and measurable targets for the 6 main banks requiring them to systematically address their arrears book.
The Central Bank has informed me that retail credit firms are not subject to the prudential standards set out in the Central Bank's MART. However, the same consumer protection framework applies to retail credit lenders as to other regulated lenders including the Consumer Protection Code and the Code of Conduct on Mortgage Arrears (CCMA). As such the Central Bank engages with these firms in relation to their treatment of borrowers under the mortgage arrears resolution process as provided for in the CCMA. In particular, the CCMA sets out requirements for all mortgage lenders, including retail credit firms, dealing with borrowers facing or in arrears on a mortgage secured on a primary home and provides a strong consumer protection framework to ensure that borrowers struggling to keep up mortgage repayments are treated in a fair and transparent manner by their lender and that long term resolution is sought by lenders with each of their co-operating borrowers in mortgage difficulty.
The Central Bank has informed me that retail credit firms were also included in the scope of the Central Bank's recent review of the 'Implementation of the Revised CCMA' by mortgage lenders, the purpose of which was to ensure that mortgage lenders achieved full implementation of the requirements of the revised CCMA by end December 2013.
The Central Bank has advised this category of lender is putting in place solutions to address the mortgage arrears difficulty some borrowers are facing. There are 17,807 principal dwelling houses accounts in this category of which 4,341 have been restructured. In addition, out of the 659 buy-to-let mortgage accounts, the Central Bank has advised that 68 have been restructured.
The Central Bank continues to engage with all mortgage lenders, including retail credit firms, in relation to lenders' mortgage arrears resolution strategies and approaches to dealing with borrowers in or facing arrears.
Early and effective engagement between borrowers and lenders is key to resolving cases of mortgage difficulty. Where there is effective and meaningful engagement regarding a mortgage difficulty, the data shows that an increasing number of durable long term mortgage restructures is being put in place.
15. Deputy Joe Higgins asked the Minister for Finance the total national debt in absolute figures and as a percentage of GDP for the years 2007 to 2013, inclusive; and the total interest paid in each of these years. [8276/14]
View answerA time series of the outstanding stock of National Debt expressed in nominal terms, and National Debt interest to 2012 are available from the Budgetary & Economic Statistics, published by my Department in late December. For convenience, the data for the years requested is reproduced in the table.
|
- |
National Debt |
- |
National Debt Interest |
|
- |
€ billion |
as % of GDP |
€ billion |
|
2007 |
37.6 |
19.8% |
1.6 |
|
2008 |
50.4 |
28.0% |
1.5 |
|
2009 |
75.2 |
46.3% |
2.5 |
|
2010 |
93.4 |
59.1% |
3.5 |
|
2011 |
119.1 |
73.2% |
4.5 |
|
2012 |
137.6 |
84.0% |
5.7 |
|
2013 |
173.9 |
104.9% |
7.3 |
|
Source: NTMA and Department of Finance |
- |
- |
- |
It should be noted that only provisional, unaudited figures are available for 2013 at this point, and the GDP figure used to calculate the 2013 debt ratio is the Budget 2014 estimate.
Whereas National Debt is the net debt incurred by the Exchequer after taking account of cash balances and other financial assets. General Government Debt is a measure of the total gross consolidated debt of the State and it is this debt measure, when expressed as a percentage of gross domestic product (GDP), that is the standard metric used for comparative purposes across the European Union. It is therefore more appropriate that we look at this metric. Data on General Government Debt is provided in the following table.
|
- |
General Government Debt |
- |
General Government Interest |
|
- |
€ billion |
as % of GDP |
€ billion |
|
- |
- |
- |
- |
|
2007 |
47.2 |
24.9% |
2.0 |
|
2008 |
79.6 |
44.2% |
2.4 |
|
2009 |
104.5 |
64.4% |
3.3 |
|
2010 |
144.2 |
91.2% |
5.0 |
|
2011 |
169.2 |
104.1% |
5.3 |
|
2012 |
192.5 |
117.4% |
6.1 |
|
2013 |
205.9 |
124.1% |
7.6 |
|
Source: CSO & Department of Finance |
It should be noted that the 2013 figures are the latest published Department of Finance estimates of General Government Debt and General Government interest costs, from the Budget 2014 publication. The next official figures will be available in the EDP notification tables (Maastricht tables) prepared by the CSO and published by Eurostat on the 21st of April 2014.
Taking into account the buyback, in mid-December 2013, of €4.1 billion of the 4% Treasury bond which matured on the 15th of January 2014, the current working estimate for the General Government debt to GDP ratio at the end of 2013, is around 122%. The first official outturn estimate of GDP for 2013 will be available in the Quarterly National Accounts, due to be published by the CSO in the second half of March 2014.
16. Deputy Dara Calleary asked the Minister for Finance if he is considering any changes to the manner in which the National Asset Management Agency recruits and remunerates staff; the contractual obligations it imposes on staff; and if he will make a statement on the matter. [8387/14]
View answerAs the Deputy may be aware, all NAMA staff are employees of the NTMA and under section 42 of the National Asset Management Agency Act 2009, the NTMA assigns staff to NAMA. Other than a small number of staff reassigned from other functions within the NTMA, NAMA staff are employed on the basis of specified purpose contracts - their employment lasts for as long as NAMA requires their particular function. NAMA reimburses the NTMA the costs incurred by the NTMA in assigning staff to NAMA.
The provisions of the Financial Emergency Measures in the Public Interest Act, 2013 were applied to the NTMA. Otherwise, the provisions of employment contracts are a matter for the NTMA.
Employees assigned to NAMA by the NTMA, as is the case with all other NTMA staff, are subject to Section 14 of the National Treasury Management Agency Act, 1990 which prohibits an employee from disclosing any information obtained while carrying out their duties as employees of the NTMA. Employees assigned to NAMA are also subject to a prohibition on release of confidential data under Sections 99 and 202 of the NAMA Act 2009. NTMA employees, including those assigned to NAMA, are subject to the Official Secrets Act. Contravention of these prohibitions is a criminal offence. These protections do not cease at the point of resignation but rather apply indefinitely and extend to former employees.
The notice period for NTMA employees assigned to NAMA is typically three months. NTMA contracts for employees assigned to NAMA have a provision entitling the NTMA to place the employee on garden leave at any point during the notice period during which time the employee may not work for another employer.
Following a review of its policy in respect of notice periods and post-termination restrictions on employment, which was conducted on the NTMA's behalf (as employer) by the law firm, Matheson, the NTMA is implementing a number of changes to its employment contracts, including the introduction of longer notice periods of 3 to 6 months (up from 1 to 3 months) for middle and senior management employees and garden leave provisions to be included in all new employment contracts. In addition, a new provision is being added in employment contracts, where relevant, that restricts departing staff from performing services for a new employer, during the first three or six months following the termination of their employment with the NTMA, relating to a transaction or other matter in respect of which they participated directly or substantially in the course of their employment with the NTMA and were in possession of confidential information as a result. In respect of NTMA employees assigned to NAMA, this provision has been introduced for all new employees and existing employees as they are promoted. The three-month notice period and garden leave provisions already apply to NTMA staff assigned to NAMA.
17. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which any excess scope exists for economic growth in addition to that already anticipated for 2014 and 2015 with particular reference to the prospect of narrowing the gap between revenue and current borrowing requirements and at the same retaining the target of borrowing at or below 3% of GDP; and if he will make a statement on the matter. [8293/14]
View answerThe last set of macroeconomic projections produced by my Department was published with the Budget in October of last year. On the basis of data available at the time, my Department projected real GDP growth of 2.0 per cent for 2014 and 2.3 per cent in 2015. The 2014 projection was endorsed by the Irish Fiscal Advisory Council as was required.
Since the Budget, there have been continued signs of recovery in Ireland's key trading partners, most notably in the UK, US and euro area.
On the domestic front, third quarter GDP figures were reasonably good and high-frequency data relating to the final quarter of last year are broadly encouraging. In the labour market, annual employment growth of 3.2 per cent (58,000 jobs) was recorded in the third quarter, while the unemployment rate has continued to fall. Retail sales were reasonably good at the end of last year, while car sales were up significantly in January.
In summary, therefore, the incoming data confirm my Department's view that recovery is underway. Having said that, risks to the outlook - both positive and negative - remain and we must be cognisant of these. A fuller assessment of the economic outlook, including updated forecasts, will be undertaken as part of the Stability Programme Update which will be published in April.
As I have repeatedly stressed, the Government is committed to ensuring that Ireland's public finances remain on a stable footing. In this regard, the Government remains determined to correct the excessive deficit - that is to bring it below 3 per cent of GDP - by 2015.
18. Deputy Clare Daly asked the Minister for Finance if he will review the decision to award the single parent tax credit to only one parent in view of the enormous financial and social hardship that is being imposed on families as a result of this budget measure. [8244/14]
View answerThe correct title of the new credit is the Single Person Child Carer Credit and not the single parent tax credit referred to by the Deputy. It is to the same value i.e. €1,650 per annum as the one-parent family tax credit and it also carries the same entitlement to the additional €4,000 extended standard rate band, which increases it to €36,800 per annum, before liability to higher rate of income tax arises. Only those on incomes above €32,800 would be affected by the loss of the extended standard rate band.
As the Deputy will be aware, the credit is more targeted, in that it is in the first instance, only available to the principal carer of the child. This follows on from a recommendation made by the Commission on Taxation in its 2009 report. A system that allows multiple claims in respect of the same child is unsustainable in the current fiscal environment.
The new credit is designed to be an activation measure, which was the original intention behind the One Parent Family Credit, which it replaces. It is designed to be an in-work benefit to support a principal carer to take up, or remain in, employment.
It is important to point out that those families who care for a relevant child for the majority of the year will retain access to the new credit and associated extended standard rate band.
This measure was discussed at length during the passage through the Oireachtas of the recent Finance Bill, at which I brought forward an amendment to allow the credit to be relinquished by a principal carer such that a secondary claimant can avail of it provided they meet certain qualifying conditions. The Government, by allowing for such relinquishing, where a principal carer chooses to do so for whatever reason, actually provided for an additional option for single person carers, over and above that recommended by the Commission on Taxation. The Finance (No. 2) Act 2013 was signed into law by the President as recently as 18 December 2013. Therefore, I have no plans to review the matter in the short term.
19. Deputy Dara Calleary asked the Minister for Finance the engagement his Department has had with the European Commission in respect of the preliminary investigation into Ireland’s corporation tax rules; and if he will make a statement on the matter. [8386/14]
View answer21. Deputy Pearse Doherty asked the Minister for Finance the communications he has had with the EU Commission regarding Ireland’s corporation tax regime or elements of it; and if he will make a statement on the matter. [8346/14]
View answerI propose to take Questions Nos. 19 and 21 together.
Ireland, like all Member States, from time to time receives queries from the Commission on a variety of issues, including tax, and we always cooperate fully with such requests for information.
As last week's comments by Commissioner Almunia confirmed, the European Commission has been asking various member states to provide information in relation to their corporation tax regime. This is clearly not a country specific or a company specific issue.
Ireland has the highest regard for the operation and authority of the European Treaties has been co-operating fully with this information gathering process since June 2013.
However , the essence of State Aid is about aiding a particular sector or type of investor and the Irish rules do not do that. As the Taoiseach, myself and other members of the Government have made clear, Ireland does not do special tax rate deals with companies. We operate an open, transparent and statute based taxation system that applies the same to all tax payers.
20. Deputy Mick Wallace asked the Minister for Finance his views on comments by the Central Bank Governor that banks may no longer have the technological capacity to engage in small and medium enterprise lending; and if he will make a statement on the matter. [2959/14]
View answerI assume the Deputy is referring to the comments attributed to the Governor of the Central Bank in the article contained in the "Irish Times" on 14 January last, entitled "Have the Banks Forgotten How to Lend?" These comments were not contained in the Governor's speech, which is published on the Central Bank website. I do not intend to comment specifically on unsubstantiated quotes attributed to third parties in newspapers.
However, on a more general note, the Credit Reviewer remarked in his seventh quarterly report in February 2012 that:
"overly rigid lending policies were a source of concern and this remains the case. I continue to see too many cases where the fundamental and common sense question of whether the bank will get its money repaid is being crowded out by adherence to overly rigid lending policies and procedures."
Since then, in the course of ongoing engagements between my Department and the banks, I am informed that specialist internal training has taken place in order for staff to deal with distressed SMEs as well as developing staff skills in relation to cashflow lending. I understand that the Institute of Bankers have held courses to assist bank staff in assessing the viability of SMEs when making lending decisions.
Having completed a process of deleveraging, both AIB and Bank of Ireland are now concentrating on growing their balance sheets. In this context, both banks recognise the need to increase business lending in the period up to 2016, including lending to the SME sector.
The Deputy will also be aware of the Government's success in developing alternative funding sources using the National Pension Reserve Fund, for example, the joint venture with Silicon Valley Bank which are designed to bring new technological capacity and fresh approaches to the funding markets for SMEs in Ireland.
