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Thursday, 27 Feb 2014

Written Answers Nos. 69-81

State Bodies Mergers

Questions (69)

Michael McGrath

Question:

69. Deputy Michael McGrath asked the Minister for Finance when he expects the merger of the Financial Services Ombudsman and the Pensions Ombudsman to take place; and if he will make a statement on the matter. [10231/14]

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Written answers

In line with Government policy, it has been decided to amalgamate the Office of the Pensions Ombudsman and the Office of the Financial Services Ombudsman. Primary legislation will be required to effect this amalgamation. Both the Department of Social Protection and my Department will be involved in the preparatory work and in the drafting of the necessary legislation. A Steering Group consisting of officials from the Department of Social Protection and my Department will be established to progress the work. The serving Ombudsmen will be consulted during all phases of the work. The proposed date for enactment of the necessary legislation has not yet been agreed.

Financial Services Ombudsman

Questions (70)

Michael McGrath

Question:

70. Deputy Michael McGrath asked the Minister for Finance his plans to amend the rule which prevents consumers making a complaint to the Financial Services Ombudsman if more than six years have passed from the date of the purchase; and if he will make a statement on the matter. [10232/14]

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Written answers

Under the Central Bank Act 1942, as amended, a consumer is not entitled to make a complaint to the Financial Services Ombudsman if the conduct complained of occurred more than six years before the complaint is made.

A complaint to the Pensions Ombudsman may be made within three years of the complainant first becoming aware of the act giving rise to the complaint, even if this is longer than six years.

Whether both windows of complaint should be similar when both offices are amalgamated, in line with the Government decision, is a policy matter which will be decided when the legislation is being developed. Providing the necessary protection to the consumer over the longer term is of paramount importance. Therefore, the  design of the appropriate  mechanisms to achieve this is complex, as it  involves a range of considerations, including the interface with the Statute of Limitations, existing consumer protection laws, complaints mechanisms and availability of records.

Tax Reliefs Availability

Questions (71)

Michael McGrath

Question:

71. Deputy Michael McGrath asked the Minister for Finance the number of customers for whom tax relief on their private medical insurance is capped; the percentage this is of all customers claiming tax relief on private medical insurance; and if he will make a statement on the matter. [10233/14]

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Written answers

I am advised by Revenue that according to its calculations, approximately 577,000 policy holders, covering 1.1 million insured individuals, are likely to be affected by the restriction of tax relief on medical insurance, which was announced as part of Budget 2014. This figure equates to almost 53% of all policies.

Revenue's calculations in this regard are based on its analysis of the Returns and gross premium price data provided by the Health Insurers in respect of 2012. The 2012 information is the most current 'full year' data set available to Revenue at this time. The Health Insurers are not obliged to file Returns in respect of 2013 until 30 June 2014.

Revenue also confirmed to me because the budget change only took effect from 16 October 2013 and because policy renewal dates occur throughout the year, the full impact of the changes will not be fully apparent until after the submission of the 2014 Returns, which are not due until 30 June 2015. 

Cycle to Work Scheme Administration

Questions (72)

Michael McGrath

Question:

72. Deputy Michael McGrath asked the Minister for Finance if he will amend the terms of the cycle to work scheme to allow persons who availed of tax relief under the scheme to purchase a second bike within the permitted five year period if the original bike they purchased was stolen and they can verify this fact; and if he will make a statement on the matter. [10234/14]

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Written answers

I have no plans to amend the Cycle To Work Scheme in the manner suggested by the Deputy. Bicycles are normally covered as part of a general household insurance policy or some people may opt to have specific cover for it. If an insurance policy pays out for a bicycle then the stolen one may be replaced but the tax break may only be availed of once in a 5-year period.

Tobacco Smuggling

Questions (73)

Michael McGrath

Question:

73. Deputy Michael McGrath asked the Minister for Finance the current number of Revenue Commissioners staff involved in combatting tobacco smuggling; the change in the number of staff working in the area since 2011; the reasons he believes that the number of seizures of tobacco has fallen sharply in recent years; and if he will make a statement on the matter. [10235/14]

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Written answers

I am advised by the Revenue Commissioners that combating the illegal tobacco trade is, and will continue to be, a high priority for them. Their work against this illegal activity includes a range of measures designed to identify and target those who are engaged in the supply or sale of illicit products, with a view to seizing the illicit products and prosecuting those responsible. This multi-faceted strategy includes ongoing analysis of the nature and extent of the problem, developing and sharing intelligence on national, EU and international basis, the use of analytics and detection technologies, and ensuring the optimum deployment of resources at both point of importation and within the country.

Interception of illicit tobacco products is achieved through a combination of risk analysis, profiling, intelligence and the screening of cargo, vehicles, baggage and postal packages. Revenue officers also target the illicit trade at the post-importation level by carrying out intelligence-based operations and random checks at retail outlets, markets and private and commercial premises.

In carrying out this important work Revenue works in close cooperation with other relevant agencies, both nationally and internationally. There is extensive cooperation between Revenue and An Garda Síochána, and the agencies concerned in the State and in Northern Ireland work closely together, through a cross-border group on tobacco enforcement, to combat the organised crime groups that are responsible for a large proportion of the illegal tobacco market.  In addition, cooperation takes place with other Revenue administrations and with the European Anti-Fraud Office, OLAF, in the ongoing programmes to tackle the illicit trade in tobacco products at international level.

Considerable success has been achieved in combating the illegal trade. Details of the quantities of cigarettes and tobacco seized each year since 2010 are set out in the following table.

 Year

Cigarettes

 -

 -

Tobacco

 -

 -

Seizures

Quantity (Million)

 -

Seizures

Quantity (Kgs)

2010

9,026

178.4

 -

1,171

3,367

2011

10,581

109.1

 -

1,500

11,158

2012

8108

95.6

 -

1,395

5,277

2013

5,797

40.8

 -

1,085

4,453

The quantity of cigarettes seized in a given year can be influenced significantly by the occurrence of a particularly large seizure or seizures, and the quantity of cigarettes seized in 2013 must be viewed against the background of a number of very large seizures in the preceding years. I understand also that Revenue participate actively in multilateral controlled deliveries of smuggled cigarettes and tobacco, resulting in the seizure of the illicit tobacco products in other jurisdictions before they reach Ireland.

I am advised that the quantity of cigarettes seized has declined in most EU Member States over the last number of years, and that this reflects, in considerable part, a changed modus operandi adopted by the organised crime gangs that are responsible for a large element of the illegal trade. There has been a movement from large consignments in containers to smaller consignments in deeper concealment within groupage loads, and these can be more difficult to detect. The Revenue Commissioners and their counterparts in other EU Member States are working together to combat this form of smuggling and to ensure that the disruptive effect of seizures on the illegal trade is maximised.

In relation to staff numbers I am informed by the Revenue Commissioners, that they are a fully integrated tax and customs administration and that it is not possible to disaggregate resources deployed exclusively at any given time on customs work or on policing illegal cigarette smuggling. Revenue currently has approximately 2,000 staff engaged on activities that are dedicated to target and confront non-compliance. These front-line activities include anti-smuggling and anti-evasion, investigation and prosecution, audit, assurance checks, anti-avoidance, returns compliance and debt collection.

The Revenue Commissioners are subject to the Employment Control Framework staffing reductions imposed since 2009.  Revenue's overall staffing levels have reduced from a total of 6,581(FTE) at the end of 2008 to its current level of 5,739 (FTE).  Notwithstanding this reduction, Revenue staff resources assigned to compliance activities have been maintained at around 2,000, so that they now represent a larger proportion of Revenue's staff.  The Revenue Commissioners have accorded a very high priority to the tackling of the illicit tobacco trade and they are committed to ensuring that, despite the staff reductions, this enforcement work will continue to be resourced to the maximum extent possible.

Banking Sector Remuneration

Questions (74, 75, 76)

Michael McGrath

Question:

74. Deputy Michael McGrath asked the Minister for Finance the total payroll savings that will be achieved by Bank of Ireland in 2014 and 2015 as part of the implementation of the Mercer report; the way this is broken down between pay and pensions; the number of persons who will experience a reduction in their remuneration; the total savings that will come from reductions in executive remuneration; and if he will make a statement on the matter. [10236/14]

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Michael McGrath

Question:

75. Deputy Michael McGrath asked the Minister for Finance the total payroll savings that will be achieved by AIB in 2014 and 2015 as part of the implementation of the Mercer report; the way this is broken down between pay and pensions; the number of persons who will experience a reduction in their remuneration; the total savings that will come from reductions in executive remuneration; and if he will make a statement on the matter. [10237/14]

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Michael McGrath

Question:

76. Deputy Michael McGrath asked the Minister for Finance the total payroll savings that will be achieved by Permanent TSB in 2014 and 2015 as part of the implementation of the Mercer report; the way this is broken down between pay and pensions; the number of persons who will experience a reduction in their remuneration; the total savings that will come from reductions in executive remuneration; and if he will make a statement on the matter. [10238/14]

View answer

Written answers

I propose to take Questions Nos. 74 to 76, inclusive, together.

As the information requested by the Deputy is forward looking, I am not in a position to provide this given its commercial sensitivity. However the Deputy may be aware that both Bank of Ireland and Allied Irish Banks are due to announce their 2013 annual results next week while permanent tsb is scheduled to announce its results on 26th March. I would expect that each of the banks will give an update on their progress in delivering targeted cost efficiencies on these dates. 

In relation to the Mercer report specifically, I have stated in a reply to an earlier Parliamentary Question  that based on the letters received from the banks detailing their respective strategies, and in light of the various subsequent industrial relations developments, I was satisfied that each of the banks would deliver remuneration cost savings of 6% to 10%. 

Each bank's individual proposal can be summarised as follows:

Bank of Ireland focused on changes to the defined benefit pension scheme that will affect all staff who are members of this scheme. The Deputy will be aware an agreement has now been reached with the IBOA in this regard. AIB included the closure of the defined benefit scheme to future accrual along with other changes including an increase in working hours which were agreed with the IBOA last July. Permanent tsb focused on the wind-up of the defined benefit pension scheme for all staff who were members of this scheme and this has now been completed.

For clarity, senior management in the banks have made the following contributions: in the case of Bank of Ireland the proposed pension changes affect all staff in the BSPF scheme including the Chief Executive. In the case of AIB reductions in pay and benefits of higher earners ranging from 7.5% to 15% were implemented in the second half of 2012 and it also should be noted that the members of the AIB Leadership Team all joined the bank since 2008 and receive reduced pension contributions when compared with their predecessors. In the case of ptsb all senior management joined the bank since 2008 and are on lower remuneration levels than their predecessors.

Housing Issues

Questions (77)

Terence Flanagan

Question:

77. Deputy Terence Flanagan asked the Minister for Finance the measures he is taking to increase housing supply in Dublin; and if he will make a statement on the matter. [10266/14]

View answer

Written answers

My Department continues to monitor developments in the housing market. As set out in the Medium-Term Economic Strategy, the Government will continue to work on addressing remaining challenges in the property and construction sectors. This will include developing an overall strategic approach to housing supply, identifying and implementing further improvements in the planning process to facilitate appropriate development, and seeking to improve financing options for development and mortgage provision.

As regards the National Asset Management Agency, NAMA is funding both unfinished housing units and new development. It is estimated that approximately 4,500 residential properties will be completed and available for sale or rent in Dublin over the 2014-16 period through NAMA debtors/receivers or joint ventures involving NAMA.  In addition, NAMA is funding the completion of existing properties and new residential developments in the main urban areas to which it has an exposure.  NAMA is working closely with the various local authorities in this respect.  NAMA has indicated that in many instances, planning issues and other obstacles need to be resolved to facilitate the delivery of new residential supply.

Banking Sector

Questions (78)

Terence Flanagan

Question:

78. Deputy Terence Flanagan asked the Minister for Finance if he has any concerns regarding AIB and Bank of Ireland providing corporate box sponsorship in various stadia; and if he will make a statement on the matter. [10273/14]

View answer

Written answers

As the Deputy will be aware under the Relationship Framework the State does not intervene in the day to day operations of the banks or their management decisions regarding commercial matters.

As commercial organisations both banks must manage their costs in a way that is reflective of their commercial activities. To that end both banks have undertaken significant cost reduction programmes over recent years aimed at reducing their overall cost base. These programmes are ongoing and are a necessary part of returning the banks to profitability.

Banking Sector Remuneration

Questions (79)

Terence Flanagan

Question:

79. Deputy Terence Flanagan asked the Minister for Finance if AIB and Bank of Ireland are authorised to give bonus payments to directors in the form of share options; and if he will make a statement on the matter. [10274/14]

View answer

Written answers

As the Deputy will be aware this Government's policy with respect to banking remuneration has been in place since mid-2011. In summary, remuneration in State supported banks is capped at €500,000 (excluding normal pension entitlements) and the payment of bonuses in any form is not permitted. I can also confirm for the Deputy that no policy changes are planned in the area of banking remuneration.

Credit Ratings

Questions (80)

Terence Flanagan

Question:

80. Deputy Terence Flanagan asked the Minister for Finance his views on Ireland's current credit rating and recent bond auctions; and if he will make a statement on the matter. [10276/14]

View answer

Written answers

Ireland's current  rating by the Rating Agencies is summarised in the table.

Credit Rating Agency

Long-Term rating, Outlook

Grade

Last action and date

Moody's

Baa3, Positive

Investment

One notch upgrade into investment grade and positive outlook 17 Jan 2014

Standard and Poor's

BBB+, Positive

Investment

Positive Outlook 12 July 2013

Fitch Ratings

BBB+, Stable

Investment

Re-affirmed 21 Feb 2014

DBRS

A(low), Negative

Investment

Re-affirmed 22 Nov 2013

R&I

BBB+, Stable

Investment

Re-affirmed 20 Jan 2014

The most recent change in Ireland's credit rating was by Moody's which upgraded Ireland by one notch to investment grade on 17 January 2014.  It was the first rating change by Moody's since it cut Ireland's rating to sub-investment grade in July 2011. Moody's cited two reasons for the upgrade:

1. the growth potential of the Irish economy, which together with ongoing fiscal consolidation is expected to bring government debt ratios down; and

2. the Irish Government's exit from its EU/IMF supported programme on schedule, with improved solvency and restored market access.

Ireland is now at investment grade with all five credit rating agencies and this will attract investors which had hitherto been unable to buy Irish government debt due to their mandates.  As a result of the recent upgrade by Moody's, some Asian and Middle-Eastern investors, along with others in Europe including insurance companies, are likely to be in a position to consider investing in Irish Government debt in future.  Market reaction to the Moody's announcement has been positive.

The announcement by Fitch Ratings on 21 February 2014 affirming its rating has had no impact on Ireland's government bond yields and, in fact, there has been a modest rally since then.  It is clear that Ireland has rebounded from the bottom of the 'ratings cycle'.  There is a view that the credit rating agencies are catching up on the market in terms of their increasingly positive view of Ireland.

On 7 January 2014 the National Treasury Management Agency issued a new 10-year bond by syndication.  The new €3.75 billion benchmark bond was priced at a spread of 166 basis points over the 10-year German bund at a yield of 3.543%.

Although the order book amounted to €14 billion, the NTMA decided to limit the size of the new bond to €3.75 billion in order to leave capacity for bond auctions in its funding programme for 2014.  Some 400 investors participated in the transaction with the largest share of demand coming from abroad, particularly pan-European and US real money accounts.  There was notable demand from the UK (26%) and Nordic regions (15%) as well as the US (14%), with strong support from the domestic investor base (17%).  49% of the take-up was from fund managers with banks comprising 27% and pension funds 10%.

This transaction is part of the process of normalising Ireland's market access it was necessary to demonstrate that Ireland had full market access having exited the EU/IMF programme.  The intensive investor relations programme made it possible to bring the new 10-year bond to the market at very short notice it had been made clear to investors that the NTMA intended issuing early in 2014.

The successful execution of a scheduled series of bond auctions would complete the process of market normalisation.  The NTMA's working plan for 2014 is to raise a total of around €8 billion, as prefunding for 2015, the remainder of which it is intended to be raised by way of a series of auctions, commencing on 13 March, involving the NTMA's network of Primary Dealers.

In 2013, the NTMA issued €2.5 billion of the existing 5-year benchmark bond by syndication at a yield of 3.32% in January and then in March sold €5 billion of a new 10-year benchmark bond by syndication at a yield of 4.15%. This was the first new 10-year benchmark issuance since January 2010, prior to Ireland's entry into the EU/IMF programme.

Regular auctions of short-term Treasury Bills, which resumed in July 2012, continued throughout 2013 with eight auctions during the year.  Each auction raised €500 million of 3-month money at an average annualised yield of 0.2%.  The next Treasury Bill auction is scheduled to take place on 20 March 2014.

Question No. 81 answered with Question No. 58.
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