Written Answers Nos. 80-87
80. Deputy Lucinda Creighton asked the Minister for Finance the total number of pre-1915 properties in Dublin 2, 4 and 6 which could be eligible properties under the proposed Living City initiative; and if he will make a statement on the matter. [16166/15]
View answer81. Deputy Lucinda Creighton asked the Minister for Finance when an order will be made to designate the special regeneration areas under the proposed Living City initiative; when a commencement order will be made; the total number of representations he or his Department have had, seeking to have areas designated; and if he will make a statement on the matter. [16167/15]
View answerI propose to take Questions Nos. 80 and 81 together.
The Deputy will be aware that the purpose of the Living City Initiative is to provide an urban regeneration incentive to certain areas of six cities, namely Cork, Dublin, Galway, Kilkenny, Limerick and Waterford, which are most in need of regeneration. Officials from my Department have held discussions with the relevant local authorities to identify the areas of the six cities which might fall within the scope of the scheme. The Living City Initiative will be launched shortly, and as part of that launch, details of the special regeneration areas will be made public. I will not be announcing the areas to be designated until the initiative is to be commenced.
It is important to note that I do not see this as a wide-spread Initiative, as it is targeted at those areas which are most in need of attention.
With regard to representations, as the Deputy will understand my Department has received a number of submissions from interested parties including citizens and residents groups since the scheme was announced. A number of stakeholders, including residents, were also consulted as part of the ex-ante cost benefit analysis which was undertaken in respect of the original pilot cities of Limerick and Waterford.
82. Deputy Lucinda Creighton asked the Minister for Finance his plans to incentivise the banks to reduce the interest rate on variable rate mortgages; if he will indicate what those proposed plans are; and if he will make a statement on the matter. [16168/15]
View answerAt the outset, I would like to confirm to the Deputy that the lending institutions in Ireland - including those in which the State has a significant shareholding - are independent commercial entities. As Minister for Finance, I have no statutory role in relation to regulated financial institutions setting interest rates.
The mortgage interest rates that financial institutions operating in Ireland charge to customers are determined as a result of a commercial decision by the institutions concerned. Each institution determines the rate it charges its customers, depending on a number of factors, such as cost of funds, and commercial considerations (such as competition, risk pricing and the impact on deposit rates).
The Central Bank has responsibility for the regulation and supervision of financial institutions in terms of consumer protection and prudential requirements and for ensuring ongoing compliance with applicable statutory obligations. However, the Central Bank has no statutory role in the setting of interest rates by regulated entities, apart from the interest rate cap imposed on the credit union sector in accordance with the provisions of the Credit Union Act, 1997 and the requirement to be notified of penalty or surcharge interest imposed in respect of arrears.
Nonetheless, the issue of regulation of interest rates remains a policy area under active review and has been the subject of recent correspondence between the Department of Finance and the Central Bank. The current position is that the Central Bank does not have new proposals for the additional regulation of interest rates. However, as I have outlined in previous Parliamentary Questions, a former Deputy Governor indicated that, within its existing powers and through the use of persuasion, the Central Bank would continue to engage with specific lenders which appear to have standard variable rates set disproportionate to their cost of funds and this is a course of action I expect the Central Bank to continually appraise.
The Deputy should be aware that the Governor of the Central Bank, Patrick Honohan, in his opening statement to the Oireachtas Joint Committee on Finance, Public Expenditure and Reform last November stated that in Ireland, as in most advanced economies, it has long been understood that tight administrative control over the rates charged by banks would be counterproductive in ensuring a sufficient flow of properly priced credit on a lasting basis. Such control would strongly discourage new entrants when, in fact, ongoing competition in the banking sector will be crucial in ensuring that the economy is provided with efficient and cost effective banking services. In this regard, there have been some movements on mortgage interest rates of late by a number of institutions which suggest that the market may be entering a new and more competitive phase.
Furthermore, the Central Bank (Supervision and Enforcement Act) 2013 introduced changes to Section 149 of the Consumer Credit Act 1995 which regulates fees and charges in order to attract new entrants to the Irish banking sector and there is some evidence of improvements in the banking sector with a number of institutions introducing new products and adapting their business model. In the last 12 months there have been a number of new entrants to the Irish mortgage market bringing additional and welcome competition to this sector.
I should add that myself and the Governor of the Central Bank meet regularly, the latest of these meetings took place on 2 April. Among the items discussed was the issue of mortgage interest rates. The Governor provided an update on the ongoing work that he and his officials are carrying out on the issue of the standard variable rates charged by the lenders.
We noted that the SVRs charged in Ireland are higher than other euro area countries and have not fallen in line with ECB wholesale rates. The Central Bank will continue to research why this is the case and will publish results shortly. The Governor will update me on progress in due course.
83. Deputy Lucinda Creighton asked the Minister for Finance if he will clarify comments regarding a proposed relationship framework agreement with the Irish Bank Resolution Corporation, where it was noted that an increased level of oversight is considered necessary, in view of experiences to date; if he will publish the full contents of all the memorandums released to a newspaper (details supplied); and if he will make a statement on the matter. [16170/15]
View answerAs part of Ireland's third review under the EU/IMF Programme of Financial Support, a report on which was published in September 2011, there were a number of conditions/actions to which Ireland committed. One of these was to develop a framework to govern the exercise of the State's ownership rights in the banks resulting from the capital injections, including to put in place relationship frameworks with the banks to protect the commercial basis for the banks' operations while under State ownership. There was an end-March 2012 deadline in place for the introduction of these Relationship Frameworks with each of the banks in which the State acquired an interest in the context of the financial crisis to govern the relationship between the State, as shareholder, and each bank.
The Relationship Frameworks were designed to recognise the separation of each bank from the State, to ensure their businesses would be run on a commercial, cost effective and independent basis to ensure the value of the banks as an asset to the State , and to limit the State's intervention to the extent necessary to protect the public interest. Under the Relationship Frameworks each bank was to remain a separate economic unit with independent power of decision with its board of directors and management team retaining responsibility for determining the bank's strategies and commercial policies and conducting its day-to-day operations.
The revised Relationship Framework introduced with IBRC at end March 2012 was considerably more intrusive than those for the other banks. This was necessary given the increased level of oversight which was required given the unique position of IBRC as a run-down vehicle financially supported by the State through the Promissory Notes and the Department of Finance's experience with IBRC at that time.
I have sent a copy of the document of 8 March 2012 to you along with all other documents relating to this FOI which were released to the newspaper referred to in the question.
84. Deputy Michael McGrath asked the Minister for Finance further to Parliamentary Question No. 92 of 5 March 2015, if the investigation into the tax affairs of medical consultants has been concluded; the lessons that have been learned for tax compliance generally, from the investigation; and if he will make a statement on the matter. [16173/15]
View answerI am advised by the Revenue Commissioners that the main focus of their compliance interventions has been the tax issues arising from the incorporation of medical consultants' businesses. The tax risks identified include:
- the purported disposal of goodwill by medical consultants to their controlled companies;
- cross-charges being made between medical consultants and their controlled companies that lack any commercial basis;
- the claiming of personal expenses against professional income;
- insufficient or no supporting documentation to support large expenses claimed as tax deductions;
- excessive/incorrect tax deductions claimed in relation to salaries/pensions of spouses and children;
- the deferring of professional income to later tax periods thus delaying taxation.
The medical consultant's project is still ongoing. I am informed by Revenue that its approach to this project uses its well developed approach to testing the compliance of a sector on a district/regional basis, evaluating the preliminary results and then deciding whether to roll the project out nationally. Revenue also wrote to the representative bodies at an early stage of the project highlighting its concerns about certain practices and trends.
I am confident that Revenue will continue to follow through on this project and will also evaluate the project and use the insights gained to enhance compliance generally.
85. Deputy Michael McGrath asked the Minister for Finance if he will provide a full list of the investigations that have been conducted into the sale of a company (details supplied) by the Irish Bank Resolution Corporation in 2012; the status of these investigations; if he has requested the special liquidator to provide additional information on the sale; and if he will make a statement on the matter. [16174/15]
View answerUpon the receipt of critical representations following the transaction, Department of Finance officials inquired about the transaction with IBRC management as part of their regular engagement. Following initial discussions, they agreed with IBRC's Chairman and CEO (on 31 May 2012) that they would review the available information on the transaction involving Siteserv in greater detail to better understand the decisions taken and the impact these decisions had on the process and the final recovery for the bank.
This review by Department of Finance officials took place on 11 June 2012. Through this review, Department of Finance officials became concerned with certain aspects of the transaction, which were set out in the memos and briefing notes that have been released under recent Freedom of Information requests.
One primary concern raised was that IBRC had decided to allow Siteserv to control the sales process rather than IBRC to act in a primary role on this transaction. This decision appears to have given rise to a number of other subsequent actions which Department officials believed could, quite reasonably, be considered to have caused a reduction in the Bank's recovery on the Siteserv exposure.
On 25 July 2012, I met with IBRC's Chairman and CEO to discuss, among other things, the concerns regarding this transaction which were raised to me by Department of Finance officials following their engagement with IBRC management. During my meeting, I sought assurances around the concerns regarding the transaction. The Chairman provided me with strong assurances that the transaction had been thoroughly assessed by the IBRC Board and that the Board of IBRC were satisfied that the transaction was managed in the best manner possible to achieve the best result for the State, including the decision to allow Siteserv to control the sales process. It should be noted that the IBRC Board had a fiduciary responsibility to the bank's stakeholders and so, in light of this legal responsibility, the Chairman and the Board would have considered and provided such assurances following serious and careful consideration.
It is important to note that at all points mentioned above, the transaction had been concluded. Under the Relationship Framework which was in place at the time with IBRC, IBRC were not required to engage with me or my officials to discuss this transaction. They believed that this transaction was in the ordinary course of business, which was the orderly wind down of IBRC. It was the fiduciary responsibility of the Board of IBRC at that time to ensure that this transaction, along with all other matters in IBRC, was managed in the best way possible.
I am also aware that the Central Bank of Ireland reviewed this transaction. I understand that this review focused on the transaction process and not on whether the transaction was commercially sound or reputationally optimum.
This transaction pre-dated the appointment of the Special Liquidators of IBRC.
86. Deputy Sean Fleming asked the Minister for Public Expenditure and Reform the transfer arrangements that are in place for higher executive officers in the public service; if there are facilities at the moment where a person in a Government office in Dublin may transfer to a post in County Cavan or County Monaghan; and if he will make a statement on the matter. [15997/15]
View answerThere are no formal arrangements in place within the Civil Service to facilitate requests for transfers to other locations/employments, except in the case of grades represented by the Civil Public & Services Union. Transfers for these grades (mostly Clerical and Staff Officers) are arranged in accordance with formal procedures agreed with the Staff Side at General Council under the Conciliation and Arbitration Scheme for the Civil Service.
Interdepartmental transfers between other grades in the Civil Service can be arranged on an informal, head-to-head, basis. Such transfers are arranged between the officers seeking to move and the relevant Personnel Units and require the agreement of both Personnel Officers.
87. Deputy Tom Fleming asked the Minister for Public Expenditure and Reform if he will review the centralisation of purchasing, and aggregation of requirements, resulting in bigger contracts, thereby excluding small and medium size enterprises from the tendering process; his plans to amend the policy of dealing with fewer suppliers as part of public purchases, which is hugely detrimental to small businesses; and if he will make a statement on the matter. [16068/15]
View answerThe procurement reform programme is an important element of the Government's overall reform programme and is tasked with delivering increased value for money, more accurate and timely data and improvement in the capacity and capability of procurement across the public service. A new model for procurement was approved by the Government in September 2012, with common goods and services to be procured by a new central sourcing organisation, the Office of Government Procurement (OGP), and with central sectoral sourcing organisations in health, education, local government and defence procuring sectoral-specific goods and services.
Common goods and services (such as utilities, professional services and marketing, print and stationery) account for approximately 60% of the State's public procurement spend. Instead of public bodies each tendering separately for these common goods and services, the OGP will put in place contracts for these categories that all public bodies will buy from. Through the OGP, the Public Service will speak with one 'voice' to the market for services under this category of expenditure, eliminating duplication and taking advantage of the scale of public procurement to best effect.
I would point out that reform is being carried out in a manner that recognises the importance of SMEs. The Government acknowledges the significant role that SMEs play in the Irish economy and is committed to ensuring that SMEs are fully engaged with public sector procurement and the opportunities presenting. Circular 10/14 which was issued in April 2014 by my Department is aimed at opening up opportunities for small businesses that want to tender for public contracts and also to ensure that engaging with government procurement is easy and low cost. This guidance set out positive measures that contracting authorities are to take to promote the involvement of smaller enterprises as well as highlighting practices that are to be avoided because they can hinder small businesses in competing for public contracts.
I would also point out that the OGP supports the work of Enterprise Ireland and InterTrade Ireland in building awareness of public procurement and supporting training for small suppliers in bidding for public contracts. For example, in 2014 the OGP supported two "Meet the Buyer" events in Belfast and Dublin which were attended by approximately 1,600 suppliers. The OGP also supported the 'Go 2 Tender' programme run by InterTrade Ireland which was attended by approximately 400 SMEs. This year InterTrade Ireland also delivered a programme on consortia building to assist SMEs to jointly bid for State contracts.
Strengthening procurement capability in the public sector will improve the value for money that we get from the State's considerable procurement spend and will make a significant contribution to Ireland's deficit reduction targets and enable the State to deliver much needed services more efficiently. The OGP will continue to work with suppliers to ensure that winning Government business is done in a fair, transparent and accessible way and to ensure that Government procurement policies are business friendly.
