Written Answers Nos. 29-59
29. Deputy Willie O'Dea asked the Tánaiste and Minister for Social Protection if her attention has been drawn to the fact that persons are having their social welfare benefits terminated on the basis of not replying to a voicemail from her Department; if this is in accordance with the law; and if she will make a statement on the matter. [46402/14]
View answerIt is not the policy of my Department to terminate any benefits by phone or on the basis of failing to respond to a phone call. While there is no information available in relation to the specifics of the claim in question, it would be normal practice for all matters relating to the disallowance of a claim to be communicated in a letter directly to the customer concerned. If the Deputy would like to pass on the details of the customer in question, I will see to it that the details of the case are investigated.
30. Deputy James Bannon asked the Tánaiste and Minister for Social Protection if she will review a carer's allowance application following new evidence in support of a case in respect of a person (details supplied) in County Longford; and if she will make a statement on the matter. [46422/14]
View answerI confirm that the Department received an application for carer’s allowance from the person in question on the 17th June 2014. The application was sent to a social welfare investigative officer for assessment of the level of care being provided and confirmation that all the conditions for receipt of carer’s allowance were satisfied. The person concerned was subsequently refused carers allowance on the grounds that he was not providing full-time care and attention as required. He was notified of this decision on the 16th October 2014, the reason for it and of his right of review or appeal. The person in question requested a review of this decision. However, following review of new evidence provided, the decision of the deciding officer remains unchanged. The person in question was notified of this decision on the 6th November 2014 and of his right of appeal. No notification of appeal has been received to date.
31. Deputy Dara Calleary asked the Tánaiste and Minister for Social Protection if consideration will be provided to the applicability of the Tús initiative to the Garda Reserve; and if she will make a statement on the matter. [46431/14]
View answerTús is a community work placement initiative introduced during 2011. It has been established to provide short-term, quality work opportunities for those who are unemployed and to support the provision of community service. This initiative is being delivered through the network of local development companies and Údarás na Gaeltachta.
The bodies eligible for support from Tús must be not-for-profit community and voluntary bodies. Private or public sector bodies are not eligible for support. I do not see any opportunity whereby Tús could be expanded in the manner suggested by the Deputy.
32. Deputy John Lyons asked the Tánaiste and Minister for Social Protection if there is further scope to expand the eligibility of the JobsPlus scheme to those out of work for shorter periods and who have been made offers by employers under the scheme. [46436/14]
View answerJobsPlus provides a direct monthly financial incentive to employers who recruit employees who were previously in receipt of a jobseeker’s payment for over 12 months. It is biased in favour of those who are longer-term unemployed and provides employers with two levels of payment: €7,500 over two years where a jobseeker who is 12-24 months unemployed is recruited and €10,000 for each person recruited who has been unemployed for more than 24 months. The subsidy is paid in monthly instalments over a two year period provided the employment is maintained.
The Government has no plans to alter the existing criteria which ensure that those longest unemployed remain the focus of this incentive. The Deputy should note, however, that it is planned to announce changes in the edibility criteria to support the Government’s commitment to the Youth Guarantee. I hope to in a position to implement these changes from January 2015.
Information about JobsPlus and other services that may be of interest to a jobseeker is available on www.jobsplus.ie or at any DSP Intreo Centre or on www.welfare.ie.
33. Deputy Michael Creed asked the Tánaiste and Minister for Social Protection the position regarding persons who are self-employed and who simultaneously qualify for a means tested social welfare payment, jobseeker's allowance; if such persons are liable for the minimum PRSI charge of €500; and if she will make a statement on the matter. [46442/14]
View answerAll self-employed workers with annual income in excess of €5,000 are liable for PRSI at the class S rate of 4%, subject to the minimum payment of €500. This entitles them to access a range of long-term benefits such as State pension (contributory) and widow’s, widower’s or surviving civil partner’s pension (contributory) as well as maternity benefit, adoptive benefit and guardians payment (contributory).
Self-employed workers with insufficient means may access social welfare supports by establishing entitlement to assistance-based payments such as jobseeker’s allowance and disability allowance. Self-employed workers can apply for the means-tested jobseeker’s allowance if their business ceases or if they are on low income as a result of a downturn in demand for their services.
In instances where a self-employed worker qualifies for a means tested social welfare payment and has annual self-employed income in excess of €5,000, he/she continues to be liable for class S PRSI at 4% on their self-employed income, subject to a minimum payment of €500.
34. Deputy Dan Neville asked the Tánaiste and Minister for Social Protection if she will change the home-makers credit scheme to include home-makers who were providing care prior to 6 April 1994; and if she will make a statement on the matter. [46468/14]
View answerThe homemaker’s scheme was introduced in 1994 to make qualification for State pension contributory (SPC) easier for those who take time out of the workforce for caring duties. The scheme allows up to 20 years spent caring for children under 12 years of age, or incapacitated people, to be disregarded when a person’s social insurance record is being calculated for pension purposes. The effect of this is to reduce the number of years by which the person’s contributions are divided, thereby increasing their yearly average, making it easier for them to qualify for a maximum rate SPC. It does not, therefore, involve the award of credits.
To be eligible for the homemaker’s scheme, a person must:
- Permanently live in the State (exception may be made where EU regulations apply),
- Be aged under 66,
- Have started insurable employment or self-employment before the age of 56,
- Not work full-time, although for the purposes of this scheme, a person can work and earn less than €38 gross per week,
- Care for a child (under 12) or an incapacitated person on a full-time basis.
It is important to note that the homemaker’s scheme will not, of itself, qualify a person for a SPC. The standard qualifying conditions for the SPC must also be satisfied. These require a person to enter insurable employment at least ten years before pension age, pay a minimum of 520 contributions at the correct rate (credited contributions do not satisfy this condition) and achieve a yearly average of at least 10 contributions paid or credited on their record.
Where someone age 66 or over does not satisfy the conditions to qualify for a SPC, or qualifies for less than the maximum rate, they may instead qualify for one the following:
- The means-tested State pension (non-contributory). The maximum personal rate of this pension is €219, which may be payable if their means are no more than €30 per week. A reduced rate may be payable if their means are no more than €245 per week. A living alone allowance may also be paid, where applicable.
- If a spouse receives the SPC, the other spouse may receive a payment, known as an increase for qualified adult (IQA), which may be up to €206.30 per week.
- If widowed, they may qualify for a widow's contributory pension, which they may claim either based on their spouse’s or their own social insurance record. The qualifying conditions for this require fewer contributions paid (260) than the SPC, and the maximum personal rate for those aged 66 or over is €230.30.
Where a person qualifies for more than one of the above payments, they are paid under the pension that is most advantageous to them.
The homemaker’s scheme was introduced from 1994, and as with most schemes, this was without retrospective effect. Costs in relation to this scheme, under the current rules, are expected to increase in the coming years due to the increase in female employment rates since 1994. The possibility of backdating was considered in the context of the Green Paper on Pensions. This found that backdating it to 1953 would cost approximately €160 million in additional spending annually. The amount reduces to €150 million if backdated to 1973/74.
These additional costs would be very significant and consequently, the Government has no plans to backdate this scheme prior to 1994. Any decision to change the scheme would have budgetary consequences and would have to be considered in the context of budget negotiations.
35. Deputy Stephen S. Donnelly asked the Tánaiste and Minister for Social Protection regarding the recent OECD report, OECD Reviews of Pensions Systems: Ireland, which recommended the introduction of mandatory pensions, if her Department has undertaken any comparative analysis of different options, that is, an auto enrolment option as oppose to mandatory pensions; and if she will make a statement on the matter. [46471/14]
View answerAs a result of changing demographics, the adequacy and sustainability of the Irish pensions system has become an increasing concern in recent years. With improvements in life expectancy, more people are living to pension age and living longer in retirement. Given these changing demographics and the incrementally upward pressure of pension provision on State finances, there is a need to encourage a long-term savings habit by individuals to supplement income from the State pension for those who will otherwise not be in a position to enjoy standards of living in retirement similar to those in pre-retirement.
The key recommendation of the OECD Review of Irish Pension System, a report I commissioned and which was completed in 2013, was to improve the adequacy of pensions by increasing coverage in the funded part of the pensions system through a universal mandatory or quasi-mandatory employment based pension system. In line with this recommendation and with the Programme for Government, the 2014-2016 Statement of Priorities confirmed that during 2015 the Government will agree a roadmap and timeline for the introduction of a new, universal supplementary pension saving scheme.
The constituent factors involved in constructing an efficient and effective universal pension system are complex and diverse and it is of critical importance that any system chosen is correctly designed.
Therefore, development of the roadmap will involve detailed consideration of the range of models and options available and will include co-operation across a range of Government Departments and engagement with all sectoral interests.
36. Deputy Michelle Mulherin asked the Minister for Finance the quantity of petrol which was identified in Bournemouth, England, last summer as contaminated and subsequently rejected as unfit for the UK market that was imported into this jurisdiction and by whom; and if he will make a statement on the matter. [46410/14]
View answer37. Deputy Michelle Mulherin asked the Minister for Finance if the Revenue Commissioners have established the source and chain of supply of contaminated petrol complained of by hundreds of persons in County Mayo and elsewhere since last summer whose vehicles have been destroyed or seriously damaged; the action that is being taken in this regard; and if he will make a statement on the matter. [46411/14]
View answer38. Deputy Michelle Mulherin asked the Minister for Finance the road side checks of petrol tankers for contaminated fuel that have been conducted by the Revenue Commissioners since last summer and prior to that as a matter of standard practice; the number and nature of such checks; and if he will make a statement on the matter. [46412/14]
View answer39. Deputy Michelle Mulherin asked the Minister for Finance the checks of petrol tanks in filling stations for contaminated fuel that have been conducted by the Revenue Commissioners since last summer and prior to that as a matter of standard practice in County Mayo in particular and elsewhere around the country; and if he will make a statement on the matter. [46413/14]
View answerI propose to take Questions Nos. 36 to 39, inclusive, together.
I am advised by the Revenue Commissioners, who are responsible for tackling fuel fraud, that they are very aware of the risks posed to consumers' vehicles, legitimate businesses and the Exchequer by all forms of fuel fraud.
Revenue undertakes, on an ongoing basis, an extensive programme of compliance and enforcement actions to ensure adherence to the legal requirements governing the supply and sale of mineral oil and to allow action to be taken against fraud. This involves, among other things, carrying out analysis of the monthly oil movement returns that oil traders are required to make, and of other supply chain data. In addition, Revenue officers conduct control or compliance visits to mineral oil traders, during which they examine transport and movement documentation and take samples of fuel for analysis.
Revenue officers have visited and taken samples from every filling station about which a complaint has been made in the context of the current concerns about fuel contamination, and these samples have been analysed by the State Laboratory. From June 2014 to date 175 samples have been subject to scientific analysis. Despite extensive testing by the State Laboratory, no evidence of any prohibited stretching agent has been found in any of the samples, except two samples taken from one site on the eastern seaboard. The conclusive results received in that particular case has resulted in seizure of the product and closure of the facility and a file is being prepared for prosecution.
Following a series of further tests conducted by the State Laboratory, results have been received in recent days which indicate the presence of traces of road diesel in several samples taken from a variety of locations (including County Mayo). This could indicate that petrol was contaminated with road diesel at some point in time. There is no rational economic reason or fraudulent incentive for anyone to deliberately mix normal road diesel with petrol. This contamination could have taken place earlier in the summer, well ahead of the problems manifesting themselves in cars in Co Mayo and elsewhere.
If the problems that have come to light were caused by an unintended contamination as a result of diesel being inadvertently mixed into petrol at some point along the supply chain, there would be no Revenue offence involved. However, the Deputy can be assured that the Revenue Commissioners are vigorously investigating the possibility of tax fraud being associated with the identified problems. In any instances where the analysis of petrol samples by the State Laboratory indicates the presence of illegal stretching agents, Revenue will take swift and robust action and pursue prosecutions against offenders where possible. They will also continue to work closely with An Garda Síochána and share information and intelligence on this issue.
I am advised also that, as part of Revenue's normal operating procedures, fuel delivery tankers are challenged when encountered by enforcement officers, particularly throughout the Border Midlands West Region. No cases of contaminated petrol have been identified as a result of these checks from June 2014 to date.
I am advised by the Revenue Commissioners, who are responsible for tackling fuel fraud, that they are aware of instances in the UK earlier this year where contaminated petrol was scientifically identified. I am unaware of any further details relating to this matter. I am however advised by the Revenue Commissioners that there are no instances of petrol being imported into Ireland from Bournemouth.
40. Deputy Pearse Doherty asked the Minister for Finance the number of mortgages in the State that are owned by securitisation special purpose vehicles; and if he will provide the names of these companies. [46433/14]
View answerThe Central Bank has informed me that it does not collect data on the number of mortgages in securitisation SPVs. However, data is available on the value of mortgage loans that have been transferred from Irish resident banks to securitisation vehicles. This data is published in Table A.18.2 on the Central Bank's website: http://www.centralbank.ie/polstats/stats/cmab/Pages/HouseholdCredit.aspx.
This table shows that securitised loans serviced by Irish resident credit institutions amounted to €38 billion in June 2014.
The Central Bank cannot specify individual securitisation vehicles for confidentiality reasons.
As I said in a reply to Question No. 68 on 5 November, information from company announcements in the public domain, would suggest that between 8,000 and 10,000 mortgages in total have been sold to unregulated entities in recent years.
41. Deputy Robert Troy asked the Minister for Finance in view of the unforeseen consequences that the liquidation of Irish Bank Resolution Corporation had on councils which held development bonds with the IBRC which are now worthless, if he will compensate these councils to enable them complete unfinished estates; and if he will make a statement on the matter. [46481/14]
View answerIt is incorrect to state that these bonds are worthless. It is likely that any liabilities arising under bonds/guarantees/indemnities entered into by IBRC in favour of the various County Councils will rank as unsecured claims in the special liquidation. The Special Liquidators have confirmed that there is likely to be a dividend for unsecured creditors of the liquidation. As such they have written to all unsecured creditors in the bank, including the local authorities, to invite them to submit a claim.
I am advised that the Department of the Environment, Community and Local Government are continuing to work with the relevant local authorities to ascertain the actual level of exposure that exists in relation to the development bonds previously entered into by IBRC in favour of the various County Councils or local authorities. Once that exposure is quantified the local authorities will submit a claim to the Special Liquidators in respect of the bonds.
42. Deputy Anthony Lawlor asked the Minister for Finance if his attention has been drawn to the Revenue Commissioners' policy of applying the 23% VAT rate to many everyday food supplements taken for health reasons, in contradiction to its own guidelines that food supplements, which provide sustenance, will be supplied at 0% VAT rate; the steps being taken by him to ensure that the 2011 VAT legislation is applied appropriately to food supplements to ensure that everyday supplements such as probiotics and glucosamine, which are classified as food products by the European Union and are regulated as such by the Food Safety Authority of Ireland, are not subject to VAT; and if he will make a statement on the matter. [46482/14]
View answerVAT is guided by EU VAT law, with which Irish VAT law must comply. The EU VAT Directive generally provides that supplies of goods and services be chargeable to VAT at the standard rate but that lower rates are permitted in very limited circumstances. Food products can only benefit from the zero rating in accordance with Article 110 of the VAT Directive which permits the retention of the zero rate for "clearly defined social reasons" where the products were liable to VAT at the zero rate on and since 1 January 1991.
As set out in the Revenue Commissioners' eBrief 70/2011, a range of food supplements and vitamins that encourage the maintenance of health, through the sustenance derived from a normal, healthy diet, benefit from the zero rate of VAT. The key consideration is whether the food supplement is one that forms part of a person's normal diet for the purposes of sustenance as opposed to enhancing a person's diet with a view to achieving a particular aim. A food supplement taken for the purposes of muscle growth or body mass increase, or for the purposes of weight reduction or bodily sculpture, cannot benefit from the zero rate since such products are not food. The two supplements specified in the Parliamentary Question, probiotics and glucosamine, could qualify as zero rated food supplements, or could be liable at the standard VAT rate, but there is insufficient information provided to make such a determination. If the Deputy could provide more information on the food supplements in question, the Revenue Commissioners can advise on their correct VAT treatment as appropriate.
I would also point out that food for the purposes of interpretation of the provisions of the VAT Consolidation Act 2010 has the ordinary and everyday meaning of food. Alternative definitions in other EU legislation are not relevant to the interpretation of food for VAT purposes.
43. Deputy Pearse Doherty asked the Minister for Finance the limits in actual figures and in percentage the expenditure benchmark will place on Government spending for the next five years if the Government's projected growth figures for these years are realised; and if he will make a statement on the matter. [46487/14]
View answerUnder the expenditure benchmark as introduced by the six-pack, the estimated general government expenditure is as set out as follows:
|
€bn |
2015* |
2016 |
2017 |
2018 |
2019 |
|
Permitted gross general government expenditure |
71.0 |
71.4 |
73.0 |
74.7 |
75.9 |
|
Year on Year Change |
|
0.6% |
2.3% |
2.3% |
1.7% |
*Expenditure Benchmark not applicable in 2015
In generating these figures, we have had to estimate a number of the inputs into the calculation including reference rates (based on potential growth rates), convergence margins, GDP deflators and known discretionary revenue measures. These figures will change over the coming years as information, particularly the inputs supplied by the European Commission - reference rates, conversion margins and GDP deflators - become available. There are also a number of technical and timing issues relating to EU implementation of fiscal rules which need to be resolved.
In addition, these figures are before any additional discretionary revenue measures are adopted in future Budgets.
44. Deputy Michael Healy-Rae asked the Minister for Finance his plans to cease the universal social charge which was introduced as a temporary measure to assist the country regain control of its finances; and if he will make a statement on the matter. [46494/14]
View answerThe Universal Social Charge (USC) was introduced in Budget 2011 to replace the Income Levy and the Health Levy. It was a necessary measure to widen the tax base, remove poverty traps and raise revenue to reduce the budget deficit. It is a more sustainable charge than those it replaced. It is applied at a low rate on a wide base. I should point out that it was never intended that the USC would be a temporary measure and thus I have no plans to cease it. The USC was designed and incorporated in to the Irish taxation system as part of its permanent structure and the revenues collected play a vital part in meeting the many expenditure demands placed on the Exchequer.
However, as a result of the changes introduced in the recent Budget, all those who currently pay income tax and or USC will see a reduction in their tax bill next year. As a direct result of the extension of the exemption threshold from €10,036 to €12,012, an additional 80,000 low income earners will be removed from the charge entirely. This means that 28% of all income earners will not pay any Universal Social Charge at all.
45. Deputy Michael Healy-Rae asked the Minister for Finance the position regarding insurance cover for flooding in areas (details supplied) in County Kerry; the action that will be taken regarding these cases; his plans to create a Government backed scheme for such cases; and if he will make a statement on the matter. [46495/14]
View answerI am aware that some householders and businesses have difficulties in obtaining flood insurance cover. However, neither I, as Minister for Finance, nor the Central Bank of Ireland, have the power to direct insurance companies to provide flood cover to specific individuals.
The provision of new flood cover or the renewal of existing flood cover is a commercial matter for insurance companies, which is based on a proper assessment of the risks they are accepting and the need to make adequate provisioning to meet these risks. As a matter of course, insurance companies carry out reviews of the risks they are prepared to insure against and sometimes make decisions to discontinue certain types of cover which they consider high risk. Insurance Ireland has indicated that 98% of policyholders have household insurance which includes flood cover.
I am advised that in cases where individuals are experiencing difficulty in obtaining flood insurance and believe that they are being treated unfairly it is open to them to contact Insurance Ireland which operates a free Insurance Information Service for those who have queries, complaints or difficulties in relation to insurance. Their service can be contacted at (01) 676 1914 or by email at info@insuranceireland.eu.
Government policy in relation to flooding is focussed on the development of a sustainable, planned and risk-based approach to dealing with flooding problems. The Office of Public Works is carrying out an assessment of flood risk throughout the country under the National Catchment Flood Risk Assessment & Management (CFRAM) Programme. This programme will include the production of a comprehensive suite of flood risk maps and the development of flood risk management plans for the areas most at risk. The plans will consider the best possible options, both structural and non-structural, for dealing with the risks on a long-term basis.
This commitment is underpinned by a very significant capital works investment programme which will see up to €225 million being spent on flood relief measures over a five year period from 2012 to 2016. Works are completed on a prioritised basis. Because of the cost and scale of these types of flood defence works, this approach will see benefits over the medium and long term.
The Deputy has raised the issue of flood insurance in Tralee, County Kerry. The OPW has advised that Tralee was identified through the national Preliminary Flood Risk Assessment as a location where flood risk was potentially significant. It is therefore designated as an Area for Further Assessment under the CFRAM Programme. A detailed flood risk assessment of Tralee is being carried out by engineering consultants on behalf of the OPW, under the Shannon CFRAM Study, in partnership with Kerry County Council. Draft flood maps, which represent predicted flood extents for certain probabilities of flood events, are currently being produced and these will be subject to public consultation during the coming months. Details of public consultation events will be advertised locally and will be available on the CFRAM Programme website www.cfram.ie.
The next phase in the CFRAM Study will be the flood risk mitigation options assessment process. Flood Risk Management Plans will be prepared in late 2015. The Office of Public Works and Insurance Ireland have agreed on a sustainable system of information sharing in relation to completed flood alleviation schemes. The outcome of this arrangement is that the insurance industry will have a much greater level of information and understanding of the extent of the protection provided by completed OPW flood defence works and will, therefore, be able to reflect this in assessing the provision of flood insurance to householders in areas where works have been completed. The OPW is continuing work on developing data on completed flood relief schemes in the format required by Insurance Ireland. The insurance industry is however committing to take the information into account in their assessment of risk and it is to be expected that this could facilitate the provision of flood cover in areas that are protected by completed schemes.
Following the severe weather events at the end 2013/early 2014, and on foot of Government decision to provide up to €19.6m for storm damages to public coastal protection and flood defence infrastructure, the OPW has allocated funding of €18.3m to local authorities for programmes of works to repair damaged public coastal protection and flood defence infrastructure. The overall response to the severe weather events was co-ordinated by the Department of the Environment, Community and Local Government, and the funding for repair of coastal defences is part of a total of up to €70 million which the Government has allocated for repair and remediation works arising from the storms.
46. Deputy Bernard J. Durkan asked the Minister for Finance the role he sees for redundant banks that have ceased to trade in the domestic market but have remained open to investment in corporate sectors; and if he will make a statement on the matter. [46503/14]
View answerGiven the extent and nature of the financial crisis in Ireland it was inevitable that the banking sector would consolidate in order for the sector to better match the needs of the economy and that individual banks would adjust their business models to focus on their strengths.
Under the Central Bank's Consumer Protection Code, banks are required to give a minimum of 2 months' notice before they close a consumer's account. It is important that consumers are given adequate notice to allow them to take the required steps to close or transfer their accounts.
I wish to highlight that all banks providing current accounts in Ireland are subject to the Central Bank's Current Account Switching Code, which is designed to make the process of switching current accounts easier and quicker and to offer protection and support for consumers when switching bank account. The Switching Code places obligations and time limits on both the old and the new bank when completing the switching process. Where accounts include credit facilities, such credit facilities will be subject to the credit assessment process applicable at the receiving bank.
I have said before that I expect that the restructuring of the banking sector in Ireland and the recovery of the economy will present opportunities for the entry of new market participants well positioned to be confident in the future profitability of an Irish branch or subsidiary.
It is important to highlight that the Irish financial market offers opportunities to institutions. This Government has taken steps to ensure that the Irish financial market is accessible to any financial institution considering establishing in Ireland. In seeking to reduce the barriers to entry which are specific to the Irish banking market, Section 149 of the Consumer Credit Act, as amended, which provides for the regulation of bank fees and charges has been disapplied for the first three years in the case of new financial service providers setting up in Ireland. This arrangement was provided for in the Central Bank (Supervision and Enforcement) Act 2013.
The Deputy will be aware of the entry into the market of a new retail credit firm authorised by the Central Bank over the summer.
The Deputy will also be aware of the creation of the Strategic Banking Corporation of Ireland (SBCI), ensuring that in future, Irish businesses have access to long-term funding.
47. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which the level of savings here continues to remain strong; if any fluctuations have occurred; if competing agencies for such savings have emerged; and if he will make a statement on the matter. [46504/14]
View answerIn economic terms the savings rate is defined as the share of household disposable income which is not devoted to consumption in a given period. The savings rate is usually positive, as households accumulate resources for future consumption. The savings rate can vary with the economic cycle but also because of larger structural changes in the economy such as population ageing.
Data from the first quarter of 2002 to the first quarter of 2014 are available from the CSO. Although the savings rate tends to fluctuate from quarter to quarter, there has been a jump in the savings rate since the sharp fall in economic activity between 2007 and 2011. Prior to Q4 2007, the household savings rate averaged 8.0 per cent. Between Q1 2008 and Q1 2014 it has averaged 12.4 per cent.
The increase in the savings rate has been driven by several factors:
- The decline in household income in the years following 2008 prompted the behavioural response by households of elevating their level of precautionary savings in response to increased uncertainty surrounding future income levels.
- The second main reason for the increase in the savings rate was the very large decline in household assets. As calculated by the Central Bank of Ireland (CBI), household assets have fallen by a little over a fifth since the end of 2007, largely due to the large decline in house prices. As a result, households have responded by reducing their liabilities. Households became net borrowers in early 2009 and have reduced liabilities by about one eighth since the end of 2007.
- Finally, Ireland's population has begun to age, a process which will continue in the decades ahead and which will drive savings behaviour to smooth consumption over the lifecycle.
48. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which the average industrial wage and-or GDP per capita here compares with other EU, Eurozone and Non-Eurozone States; and if he will make a statement on the matter. [46513/14]
View answerAccording to Eurostat, in 2013 Ireland's GDP per capita was more than 20 per cent above the EU average and the fifth highest in the EU.
The euro area and the United Kingdom show a GDP per capita level of close to 10 per cent above the EU-28 average while the comparable figure for the United States is more than 50 per cent above the EU-28 average.
In summary, Ireland's GDP per capita compares quite favourably with other Member States in the EU although it is lower than the level observed in the United States.
Volume indices of GDP per capita, 2013 (EU-28=100)
|
Country |
No. |
|
United States |
155 |
|
Ireland |
126 |
|
Euro area (18 countries) |
108 |
|
United Kingdom |
106 |
|
EU (28 countries) |
100 |
Source: Eurostat
49. Deputy Bernard J. Durkan asked the Minister for Finance the way economic growth in this jurisdiction now compares with all other EU member states, those within the eurozone and without; and if he will make a statement on the matter. [46514/14]
View answerThe most recent data available, Eurostat's flash estimate for Q3 GDP released on 14 November, suggest that GDP grew by 0.2 per cent in the euro area and by 0.3 per cent in the EU in that quarter. This weak growth is driven by developments in the four largest Member States: Germany grew by 0.1 per cent; France grew by 0.3 per cent; Italy contracted by 0.1 per cent and Spain grew by 0.5 per cent.
While growth in the euro area remains subdued, growth in Ireland's other key trading partners remains robust. Latest estimates for Q3 show quarterly growth of 0.7 per cent in the UK and 1.0 per cent in the USA.
Q3 data for Ireland will not be available until mid-December. However, Q2 data were very strong, with GDP growth of 1.5 per cent in that quarter, reflecting strong exports, a recovery in consumer spending and strong investment growth.
In addition, my Department is forecasting that Ireland's GDP will expand by 4.7 per cent this year and by 3.9 per cent next year. The European Commission is forecasting GDP growth for Ireland of 4.6 per cent in 2014 and 3.6 per cent in 2015, which would make Ireland the fastest growing economy in Europe this year and next.
50. Deputy Bernard J. Durkan asked the Minister for Finance the steps he will take to address the plight of those with AMRFs who cannot currently access more than 25% of their savings other than by way of a nominal monthly payment of less than €200 unless they have a guaranteed independent pension income of €12,700 per annum; the number of such schemes currently in operation; if they continue to be created; and if he will make a statement on the matter. [46515/14]
View answerIn my response to the Deputy's question of 4 November last on the same broad issue (Question No. 335), I outlined the various options available to individuals at retirement in relation to their Defined Contribution pension savings other than the immediate purchase of a pension annuity with those funds (after taking their tax-free retirement lump sum).
I would reiterate that the purpose of the supplementary pensions saving arrangements (and the tax incentives available for such arrangements) is to encourage individuals to provide over their working lives for an adequate pension income over the period of their retirement. The flexible options at retirement introduced and expanded over time in relation to Defined Contribution (DC) pension savings, and which I have outlined in the previous response to the Deputy (including the option and conditions relating to investment in an Approved Minimum Retirement Fund or AMRF), are designed to facilitate this purpose.
The option to take the balance of any DC pension savings (after the tax-free lump sum) as a single taxable lump sum amount or, alternatively, by way of investment in an Approved Retirement Fund or ARF is conditional on the individual having attained the age of 75 years or, if younger, having pension income in payment for life of €12,700 per annum at the time of exercising the option (which pension income could include a pension paid by the State). If these conditions are not satisfied, an individual must either invest in an AMRF or purchase a pension annuity with the remaining pension funds. These various requirements are in keeping with the aim of ensuring that individuals have a source of pension income over the entire period of their retirement.
In this year's Finance Bill, I have introduced an option to allow AMRF owners to draw-down up to 4% of the assets of such funds each year. This is primarily aimed at those individuals whose AMRF constitutes a significant part of their retirement funds and who, while not wishing to purchase a pension annuity with those funds, may require access to a portion of these funds to boost their existing income and provide a more certain form of income prior to reaching age 75. This change has been welcomed as improving the accessibility to pension savings, particularly of those with lower pension fund values at the point of retirement. I have no plans for further changes in this area at this time.
There is no requirement on Qualifying Fund Managers who hold and manage AMRFs on behalf of individuals to make returns to my Department or to the Revenue Commissioners in relation to the number of AMRFs under their management. I am not in a position to say, therefore, how many AMRFs are in place. I understand anecdotally, however, that investment in an AMRF is viewed by many at this time as a preferable option to the immediate purchase of a pension annuity. The funds in an AMRF can be used at any time to purchase a pension annuity and the AMRF automatically becomes an ARF with unfettered access to the funds, subject to taxation, when the beneficial owner reaches age 75 or satisfies the pension income requirement, if sooner.
51. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which provision might be made to ensure that first-time house buyers or those currently without a family home are not priced out of the market by investors; the extent to which provisions already in place to assist the first-time buyer remain effective; and if he will make a statement on the matter. [46516/14]
View answer55. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which it is expected that the Central Bank of Ireland may regulate the mortgage market in such a way as to facilitate the needs and requirements of first-time or homeless home buyers without having to accumulate unreasonable deposits; and if he will make a statement on the matter. [46520/14]
View answerI propose to take Questions Nos. 51 and 55 together.
As the Deputy is aware, the Central Bank of Ireland published a Consultation Paper on 7 October 2014 which includes proposals for new macro-prudential measures to enhance the resilience of the banking sector and households to housing market developments.
The Central Bank measures, as set out in the consultation document, would place restrictions on the loan to value (LTV) and loan to income (LTI) ratios banks can apply when lending for house purchase. They would apply to all mortgage lending in Ireland by regulated firms. The Central Bank has indicated that the primary objective of these measures is to increase the resilience of the banking and household sectors to the property market and to try to reduce the risk of bank credit and housing price spirals from developing in future.
The specific measures proposed for primary dwelling houses are to restrict new lending to a limit of 80% of the value of the property and to a maximum of 3.5 times gross annual income. It is important to note that the Central Bank has also stated that banks will be able to lend, in some instances, above these threshold limits. However, any lending in excess of the loan to value ratio must be limited to no more than 15% of the value of new loans issued and, in respect of exceeding the loan to income ratio, to no more that 20% of the value of new loans. Other exemptions will also be available in certain circumstances.
The Central Bank has also outlined measures for buy to let (BTL) mortgages which propose to restrict BTL lending above 70% LTV to no more than 10% of the value of all housing loans for investment purposes. The Central Bank has now commenced a consultation process on the proposed measures and submissions and comments on these can be made to realestate@centralbank.ie by 8th December 2014.
Furthermore, the Deputy will be aware that Budget 2015 contained a number of measures to support a functioning housing market. In particular, in order to support first-time buyers to save towards a deposit for their first home, DIRT will be refunded in respect of savings up to a maximum of 20% of the purchase price. This measure will run until the end of 2017.
52. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which homeowners whose mortgage loan books have been acquired by unregulated third parties can be assured of being appropriately accommodated by such lending agencies in a way which has primary regard for the homeowner where he or she makes a proposal that is reasonable; and if he will make a statement on the matter. [46517/14]
View answerWhere the purchaser of a loan book is not a regulated entity in Ireland, the purchaser may voluntarily apply the Central Bank codes when managing loan books. In the case of homeowners whose loan is now owned by an unregulated entity, the Code of Conduct on Mortgage Arrears (CCMA) may be applied in the same way that it would be by a regulated lender. The CCMA is designed to support co-operating borrowers and provides extensive protection to customers in difficulty. It specifies the concrete actions lenders must take in the fair treatment of their customers in order to deal with their mortgage arrears situation as part of a resolution (or MARP) process; it also specifies the series of steps which borrowers need to take in order to engage with their lender.
Of course, voluntary compliance is not enforceable and the Government committed in March 2014 to ensuring that the same protections are available for all consumers whose loans have been sold.
The mission of the Government in bringing forward this legislation is straightforward: To ensure that borrowers whose loans are sold by a regulated entity to a currently unregulated entity maintain the same regulatory protections as they had prior to the sale, including under various Central Bank Codes (including the Code of Conduct on Mortgage Arrears (CCMA)).
In July and August of this year the Department of Finance ran a public consultation seeking views on this proposed legislation. There have been nineteen submissions received from a range of respondents including the financial services industry, consumer groups, public representatives, individuals and other stakeholders. Officials in the Department of Finance have carefully considered the submissions and have been working intensively with the Central Bank and the Office of the Attorney General to progress this legislation. My officials will meet with and brief the Joint Committee on Finance and Public Expenditure and Reform about the legislation on 3 December. It is anticipated that the legislation will be published by the end of this year.
53. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which family home owners with mortgage arrears are accommodated by lending agencies to a similar extent to the support and tolerance the taxpayer through the State offered to the lending institutions in the bailout; the extent to which his Department continues to encourage such development; and if he will make a statement on the matter. [46518/14]
View answerThe fair resolution of the mortgage arrears problem is a key priority for Government and a comprehensive strategy, in line with the main recommendations of the 2011 Keane Report, has been developed. The implementation of this strategy is overseen at Government level by the Construction 2020, Housing, Planning and Mortgage Arrears sub-committee which is chaired by the Taoiseach.
The Government has significantly advanced a number of key measures in this regard, including:
1. An intensification by the Central Bank of its engagement with mortgage lenders to require them, under the Mortgage Arrears Resolution Targets (MART) process, to propose and conclude sustainable and durable alternative arrangements to their customers in mortgage arrears of greater than 90 days;
2. Significant reforms to personal insolvency and the establishment of the Insolvency Service of Ireland, to make it more accessible for people with unsustainable personal and mortgage debt to address their position;
3. Updating the Code of Conduct on Mortgage Arrears to provide safeguards to cooperating borrowers while also promoting and encouraging efforts by both lenders and borrowers to meaningfully address mortgage arrears or pre-arrears;
4. Mortgage to rent which is now available as a social housing response to allow people to remain in their house, where possible; and
5. The provision of an independent mortgage information and advice service.
The Central Bank's Code of Conduct on Mortgage Arrears (CCMA) 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 borrowers in arrears. Under the CCMA, if a borrower is not satisfied with the way that their lender is dealing with them or if they think the lender is not complying with the CCMA, the borrower can make a complaint to their lender. Borrowers also have the right to appeal to the lender's Appeals Board if they are not happy with the alternative repayment arrangement offered or where a lender declines to offer an alternative repayment arrangement or if they believe they have been wrongly classified as not co-operating. If the borrower is still unhappy with the outcome of the appeal or the complaint made to the lender, they can refer the matter to the Financial Services Ombudsman.
The monthly mortgage restructures and arrears data published by my Department also provides an impetus for those MART banks to increase the pace of provision of mortgage restructures. The Department's latest publication, with data for the end of September 2014, shows that the number of principal dwelling home or PDH mortgage accounts in arrears of greater than 90 days has fallen by over 2,000 accounts in the month to 67,854 accounts. In addition, the publication showed that total PDH mortgage accounts in arrears were now below 100,000 for the first time since the financial crisis.
Taken together, the framework is in place to enable banks to work with distressed homeowners to reach sustainable solutions for dealing with their personal indebted situations. However, early and effective engagement between borrowers and lenders is key to resolving the cases of mortgage difficulty. Where there is effective and meaningful engagement by all parties regarding a mortgage difficulty, the data shows that an increasing number of durable long-term mortgage restructures is being put in place. However, it is accepted that it will be necessary for lenders and borrowers to continue to build on this.
54. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which this economy remains competitive in the context of all others throughout the EU both within and without the eurozone; and if he will make a statement on the matter. [46519/14]
View answerSubstantial progress has been made in terms of improving Ireland's competitiveness in recent years.
There has been a significant improvement in economy-wide cost competitiveness. The European Commission in its autumn forecasts estimate that real unit labour costs in Ireland will fall by 4.3 per cent annually in 2014 which is the largest decline across all EU Member States and compares with a fall of 1.2 per cent in the UK, and increases of 0.1 per cent in the EU, 0.2 per cent in the US and 0.3 per cent in the euro over the same time period. Competitiveness has been achieved through wage moderation vis-a-vis trading partners as well as productivity improvements.
The real Harmonised Competitiveness Indicator (HCI) is a measure of the trade-weighted exchange rate for Ireland, adjusted for relative price developments. In October 2014, Ireland's real HCI fell by 3.9 per cent year on year. A fall indicates an improvement in price competitiveness and leaves Irish-based firms better equipped to compete on the international market.
Relatively low consumer price inflation over the last five years has meant that Irish price levels have fallen considerably relative to our euro area peers. For instance, annual HICP inflation in Ireland has been below that of the euro area average for every year since 2009. Despite continued low levels of HICP inflation in Ireland, the rate has now been at or above the euro are rate for several months. Developments in this regard will require ongoing monitoring to ensure that hard-won competitiveness gains are not lost in the years to come.
56. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which the risk of inflation continues to be monitored; the source of any such inflation; if house price inflation has featured; and if he will make a statement on the matter. [46521/14]
View answerMy Department monitors inflation developments in Ireland and elsewhere on a continuous basis and produces official forecasts twice a year during the two macroeconomic forecasting exercises: the Stability Programme Update in April and the annual budgetary process in October, which are independently endorsed by the Irish Fiscal Advisory Council.
As measured by the Harmonised Index of Consumer Prices (HICP), inflation grew by 0.4 per cent in October year-on-year . The main driver of headline inflation is the fall in the price of goods, notably commodity and non-energy industrial goods prices, while service price inflation remains relatively moderate. Core HICP inflation, which excludes energy prices and unprocessed food, was up 0.8 per cent over the year to October 2014. The modest price pressures in the economy continue to be driven by a small number of sectors (e.g. Alcohol Beverages and Tobacco; Miscellaneous Goods and Services; Restaurants and Hotels and Education).
House prices are monitored as part of the Macroeconomic Imbalances Procedure (MIP) as part of the European Semester. As the recently-published Alert Mechanism Report refers to house price developments in 2013, the small increase in Irish house prices in that year was well below the threshold for this indicator and therefore did not trigger an alert. It should be noted, however, that Irish residential property prices increased by 16.3 per cent in the year to October 2014.
The most recent forecasts by my Department, for Budget 2015, estimate an average annual rate of HICP inflation of 0.5 per cent for this year. In this context, the annual HICP inflation in the year to date has averaged 0.4 per cent. As such, we continue to operate in a low inflation environment. It is also important to note that deflationary trends were highlighted as an economic risk in Budget 2015 and continue to be monitored in this regard.
57. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which credit remains available to the small and medium enterprise sector with particular reference to the need to ensure adequate supply of credit to the domestic market; and if he will make a statement on the matter. [46522/14]
View answerThe Government recognises that small businesses play a central role in the sustainable recovery of the Irish economy. To facilitate this, Government policy since 2011 has been focused on ensuring that all viable SMEs have access to an appropriate supply of credit from a diverse range of bank and non-bank sources.
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, particularly lending to the domestic market, and have put on record their commitment to the SME sector. Both banks have recently reported on increased year on year sanctioning activity for lending to the SME sector.
My Department has been involved in a range of initiatives to encourage access to credit for small and medium sized businesses, and the SME State Bodies Group provides forum for the development and implementation of policy measures to enhance SME's access to a stable and appropriate supply of finance.
Some of the main policies introduced by this Government to encourage access to credit for small and medium businesses include:
- The Supporting SMEs Online Tool, a cross-government initiative, was launched in May 2014. On answering 8 simple questions, the small business will receive a list of available Government supports. The Supporting SMEs Online Tool is available at www.localenterprise.ie/smeonlinetool.
- The Strategic Banking Corporation of Ireland has been established as a means of ensuring that SMEs are provided with sufficient finance for growth and also ensuring that credit provided to SMEs meets their needs rather than the needs of those who offer the credit. The SBCI, from available funding of some €800 million initially, will provide a more extensive range of financing than is currently offered in Ireland such as loans of longer duration, with in-built payment holidays that encourage and enable growth of our SMEs. The SBCI will have a lower cost of funding and this bene t must be passed onto SMEs. The SBCI is working with its first lending partners to provide initial funding to the SME sector by the end of 2014. A full roll-out will occur from January 2015 with traditional bank lenders and importantly, new credit providers from beyond the traditional bank sector being involved which means SMEs will benefit from greater choice as well as more funding. More information on the SBCI can be found on www.sbci.gov.ie.
The Credit Guarantee Scheme encourages additional lending to small businesses by offering a partial Government guarantee to banks against losses on qualifying loans to eligible SMEs. My colleague, the Minister for Jobs, Enterprise and Innovation, will shortly bring legislation to the Oireachtas which enable the development of a more flexible Credit Guarantee Scheme with longer duration and more products and providers included.
- The Microenterprise Loan Fund, administered by Microfinance Ireland, provides loans of up to €25,000 to small businesses who have been refused credit by commercial banks. Microfinance Ireland works in partnership with the Local Enterprise Offices nationally to administer this fund. This scheme is currently being reviewed by the Department of Jobs, Enterprise and Innovation with a view to making proposed changes to enhance its effectiveness.
- The Credit Review Office helps SME or Farm borrowers who have had an application for credit of up to €3 million declined or reduced by either Bank of Ireland or Allied Irish Banks, and who feel that they have a viable business proposition. They also examine cases where borrowers feel that the terms and conditions of their existing loan, or a new loan offer, are unfairly onerous or have been unreasonably changed to their detriment. This is a strictly confidential process between the business, the Credit Review Office and the bank. The Credit Reviewer John Trethowan and his team have overturned 55% of the refusals that have been appealed to the Office. Further details are available at www.creditreview.ie.
The Government remains committed to the SME sector and sees it as the key engine of ongoing economic growth. Consequently the Department of Finance, working with the other relevant Departments and Agencies, will continue to monitor the availability of both bank and non-bank credit with a view to taking appropriate actions as warranted to ensure that SMEs in Ireland have the opportunity to reach their full potential in terms of growth and employment generation. In this context, the forthcoming Action Plan for Jobs 2015 will include a dedicated chapter and associated integrated set of actions to support the financing of growth in the SME sector.
58. Deputy Bernard J. Durkan asked the Minister for Finance if he is satisfied regarding the performance of all aspects of the economy in the post bailout period; his plans for corrective measures; and if he will make a statement on the matter. [46523/14]
View answer59. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which basic economic fundamental targets continue to be met throughout the post bailout period; if particular issues have arisen in this regard; and if he will make a statement on the matter. [46524/14]
View answerI propose to take Questions Nos. 58 and 59 together.
This Government's principal strategy for economic and budgetary policy has been to put the economy and the public finances on a more stable footing. Following the successful conclusion of the EU-IMF programme, the Irish economy has emerged from the crisis and there are clears signs that the economic recovery is well established.
First, estimates of economic activity for the second quarter of this year were very strong and were well ahead of consensus expectations, with GDP growing by 1.5 per cent over the quarter and by 7.7 per cent year-on-year. Taken in conjunction with first quarter data, GDP grew by 5.8 per cent in the first half of this year. The increase in economic activity is broadly-based with both domestic sectors and exporting sectors performing strongly.
Exports rose by 13 per cent in the year to the second quarter of this year. This was the fastest rate of expansion since 2001 and there is growing evidence that the impact of the patent expiry issue in the pharmaceutical sector has passed.
On the domestic front, personal consumption was up by 1.8 per cent year-on-year in the second quarter and investment increased by 18.5 per cent. Consumer spending has been strong in the first eight months of the year. Retail sales in the period January to October were up 6 per cent when compared with the same period in 2013. Core sales (excluding motor trades) were up almost 4 per cent over the same period. Investment in building and construction as well as in machinery and equipment spending are on a rising path.
Recovery is perhaps most clearly evident in the labour market with employment increasing in each of the last seven quarters. The total number of jobs has increased by over 80,000 jobs since the low-point in mid-2012. In line with this, the standardised unemployment rate has fallen from a peak of 15.1 per cent in early 2012 to 10.9 per cent in October.
My Department is forecasting full-year GDP growth of 4.7 per cent this year. This is being driven by strong growth in exports, but domestic demand indicators such as industrial production and retail sales are also in positive territory. This recovery has manifested itself in tax revenues which are expected to come in €1 billion (or 2.5 per cent) above original expectations.
Over the medium term, my Department is forecasting average annual GDP growth of just over 3 per cent in the 2015-2018 period. This is driven by a positive contribution from net exports on the back of economic growth in Ireland's trading partners. Domestic demand is set to contribute to growth as well, with growing employment and rising household incomes resulting in an increase in private consumption.
Notwithstanding the current improvement, risks to the outlook remain for Ireland. These relate to the low inflation observed in many advanced economics as well as geo-political tensions and the underperformance of the euro area economy. As highlighted in the material accompanying Budget 2015, the phenomenon of contracted production has boosted GDP in the first half of this year. It complicates the task of forecasting net exports at this juncture and, by extension, GDP.
In terms of the public finances, policy measures implemented by the Government have resulted in a decline in the deficit in recent years. This decline has been in a phased manner, consistent with the dual needs of supporting domestic activity as well as repairing the public finances. All of Ireland's interim deficit ceilings under the Excessive Deficit Procedure have been met and Ireland is firmly on track to achieve a deficit of below 3 per cent in 2015. This has been important in restoring Ireland's credibility in the international markets - bond yields have fallen substantially since the high rates of mid-2011. The debt ratio has peaked and is now on a downward path. After 2015, fiscal policy will be set in line with the requirement to move towards Ireland's medium-term budgetary objective, which is for a balanced budget in structural terms.
The macroeconomic and fiscal framework underpinning Budget 2015 was more favourable than anticipated. This was as a result of positive economic developments over the summer, an increase in tax revenues compared to profile as well as a reduction in national debt interest costs. This allowed the introduction of a package of income tax reductions and expenditure increases amounting to €1,050 million in Budget 2015, or about 0.5 per cent of GDP. This package is likely to have a positive short-run impact on aggregate demand in the economy compared to an alternative of no policy change. It is estimated that the Budget package will add 0.3 per cent to real GDP in 2015 and an additional 0.2 percentage points to employment growth.
