Written Answers Nos. 67-77
67. Deputy Bernard J. Durkan asked the Minister for Finance if he is satisfied that sub-prime lending has ceased or that any evidence exists of interest rates reminiscent of a previous era continuing to apply; and if he will make a statement on the matter. [18043/15]
View answerSub-prime lenders usually lend to borrowers who are unable to borrow from traditional lenders usually due to insufficient income or poor credit history. They charge higher interest rates due to the higher risk involved.
Moneylenders are licensed by the Central Bank of Ireland to engage in the business of Moneylending under Part VIII of the Consumer Credit Act, 1995 (as amended). The total cost of credit to the consumer under a moneylending agreement may be in excess of an APR of 23 per cent so could be considered a form of sub-prime lending.
However the phrase is often used to refer to mortgage lending and the new macro prudential regulations introduced earlier this year by the Central Bank of Ireland were put in place to support more sustainable mortgage lending and to increase the resilience of the banking and household sectors in relation to the property market. The regulations set certain loan to value and loan to income restrictions on residential mortgage lending and will apply to all mortgage lenders regulated by the Central Bank, including retail credit firms.
It should be noted that these regulations are additional to an individual lenders credit policies and are not designed to replace the requirements on regulated lenders to assess the affordability of credit and compliance with the other consumer protection measures as set out in the 2012 Consumer Protection Code.
Lists of authorised retail credit firms and moneylenders are available on the Central Bank's website.
68. Deputy Bernard J. Durkan asked the Minister for Finance if he remains satisfied regarding the availability of adequate credit facilities to small and medium-sized enterprises; and if he will make a statement on the matter. [18044/15]
View answerThis 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 facilities from a diverse range of bank and non-bank sources.
On 19 February 2015, the Strategic Banking Corporation of Ireland launched its initial range of products. The SBCI has already signed up the two largest SME lenders in the country, AIB and Bank of Ireland, to deliver products to SMEs. Loans have been available from 9 March 2015 at branches of both banks throughout the entire country. SBCI's funding must be passed to SMEs and the SMEs must receive the full benefit of any discounted rate offered to the partner lenders. SBCI has committed €200m to each of the initial bank lending partners and has a further €400m available to other future lenders. Talks are continuing with a number of other potential funding partners from both the banking and non-banking worlds. The SBCI will offer longer term loans, working capital facilities of 2 years' duration, loans to agriculture and loans for the refinancing of credit originally extended by banks who have since exited the Irish market. Further information is available at http://sbci.gov.ie/.
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 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. The Department of Jobs, Enterprise and Innovation and my Department have worked on an amendment to the existing guarantee scheme to provide funding to SMEs whose banks are exiting the Irish market. My colleague, the Minister for Jobs, Enterprise and Innovation, will shortly bring legislation to the Oireachtas which will 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.
In seeking to build on the progress to date and to further support the financing of growth within the SME sector our focus in 2015, outlined in the Action Plan for Jobs, will be to implement a series of actions under the following thematic areas:
- Support and influence the effective implementation of major policy initiatives to ensure that the maximum benefits are afforded to SMEs;
- Continue to raise awareness and understanding amongst SMEs and entrepreneurs of the full suite of State business supports that are available;
- Ensure that the Local Enterprise Office network is a key conduit in providing information, support and advice to small businesses on access to finance issues and strengthen the linkages between enterprise capacity building, accessing finance and business guidance;
- Deepen our engagement with international funding institutions;
- Facilitate and support the development of a more diverse range of financing options for SMEs;
- Maintain a strong focus on policy impact, evaluation and learning; and
- Develop measures to ensure prompt payments and promote improvements in the payment culture and practices in Ireland.
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.
69. Deputy Bernard J. Durkan asked the Minister for Finance the degree to which he remains satisfied that borrowers are not disadvantaged in instances where loan books are sold to regulated or unregulated institutions; and if he will make a statement on the matter. [18045/15]
View answerThe Consumer Protection (Regulation of Credit Servicing Firms) Bill 2015 will require entities dealing with the consumer to be authorised by the Central Bank and subject to its Codes of Conduct. Dealing with the consumer is credit servicing and the definition of credit servicing is broad. Owners of loan books who deal directly with consumers, that is, who are servicing their own loan books, will be regulated. Otherwise they can have the loan book serviced by a regulated credit servicing firm. The aim of the Bill is to ensure that borrowers who have had their loans sold on to unregulated institutions will have the same protections they had when their loan was with a regulated financial services provider.
The Bill was published in January and second stage of the Bill was taken in the Dáil on 4 February. Since then, my officials have been in contact with the Central Bank and with the Office of the Attorney General to further progress the legislation. The Bill will continue its progress through the legislative process and I look forward to further discussion of the Bill at Committee Stage.
70. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which the level of savings continues to remain strong; if fluctuations have occurred; if competing agencies for such savings have emerged; and if he will make a statement on the matter. [18046/15]
View answerCSO estimates for 2014 indicate that gross saving for the economy as a whole amounted to €45.6 billion, an increase of 23.9 per cent compared with 2013.
On a seasonally adjusted basis, the household savings ratio was almost 14 per cent in Q3 and Q4 of last year - the highest level since Q1 2012.
Household indebtedness in Ireland is high in comparative terms and as a result household savings are expected to remain strong as the deleveraging process continues. However, my Department expects a modest decline in the savings rate over the remainder of the decade as the need for precautionary savings recedes.
In terms of competing agencies for savings, the financial landscape is a dynamic one and there are always changes. However, I am not aware of any substantial changes in this area in recent months.
71. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which insurance costs here are comparable with those in other European and adjoining jurisdictions, with particular reference to the need for competitiveness; and if he will make a statement on the matter. [18047/15]
View answerInternational comparisons of insurance costs can prove problematic as a result of differences in law, in fiscal regime, in policyholder behaviour and in the expectations of policyholders from their insurance provider. Neither my Department nor the Central Bank of Ireland maintains information on the costs of insurance in Ireland or across the European Union.
The calculation of annual premium rates is a commercial decision for the insurance company in question. It should be noted that the ability of the Government to influence insurance costs is limited as insurance companies are required under European law to price in accordance with risk and neither I, as Minister for Finance, nor the Central Bank of Ireland has the power to direct insurance companies on the pricing of insurance products.
While competition in the market place acts as an effective constraint on insurance costs, insurance companies have to be conscious of their prudential obligations and are required by the Central Bank of Ireland to meet their capital requirements on an ongoing basis in order to ensure the sustainability of their business. In circumstances where they are exposed to a high level of claims, it is possible that their capital position can be affected with a consequential effect on prices. In this regard, it should be noted that the new prudential regime for insurers across the EU known as Solvency II, which will come into force from the start of 2016, will place a greater emphasis than the existing regime on the need to price risk appropriately, and will in turn require insurance companies to be more conscious of their pricing policy. This will benefit the consumer in many instances.
Government initiatives such as the establishment of the Personal Injuries Assessment Board and legislation to improve road safety, which has reduced accidents significantly, continue to make a major contribution to keeping insurance costs at a reasonable level.
72. Deputy Eoghan Murphy asked the Minister for Finance if he will examine a pension issue (details supplied). [18058/15]
View answerWhile it is not absolutely clear from the details supplied, I am assuming that the questions at issue relate to past changes that were made to the annual earnings limit which, along with age-related percentage limits, determine the maximum tax-relievable pension contributions that an individual can make in a tax year and to the 0.6% pension fund levy which I introduced in 2011.
In that regard, I am informed by the Revenue Commissioners that the earnings limit which was originally set at €254,000 in 2003 and increased through indexation to €275,239 by 2008, was subsequently reduced by the previous Government to €150,000 in 2009 and further reduced to its present level of €115,000 as part of a range of pension-related measures introduced in Budget and Finance Act 2011 by that administration.
It should be borne in mind that all of the pension-related changes made at that time were implemented against the very difficult and challenging budgetary situation which was facing the country and continued to face the country in the years that followed. It was clear that the tax base had to be broadened and tax expenditures curtailed or abolished if the serious financial and economic problems facing the country were to be addressed. Given the very significant cost of pension tax reliefs, such reliefs could not escape attention. Apart from contributing to the curbing of overall tax expenditures, the pension-related tax changes introduced also brought greater equity to the system by impacting for the most part primarily on higher earners. Indeed, I have introduced further restrictions in this area by, for example, reducing the Standard Fund Threshold (SFT) the maximum tax relievable pension fund at retirement to €2 million from its previous level of €2.3 million with effect from 1 January 2014 and by changing the valuation factor used for establishing the capital value of defined benefit pension schemes from a standard factor of 20 to a higher age-related factor that varies with the individual's age at the point at which pension benefits are drawn down. These changes to the SFT regime apply to pension arrangements across the board in both the private and the public sector.
In the same vein, the original 0.6% stamp duty levy on pension fund assets, which I introduced in 2011 and which ended last year, was used to fund the wide range of measures introduced in the Jobs Initiative to protect existing jobs and create new jobs. These include expenditure measures such as the JobBridge and the Springboard schemes, as well as a number of tax and PRSI incentives, such as the reduction in the VAT rate from 13.5% to 9% for the tourism and hospitality sectors and the halving of the lower employer PRSI rate. It is the case that the levy does not apply to unfunded public service pension schemes. However, the pensions of public servants have been subject to a public service pension reduction (PSPR) since 1 January 2011. The PSPR was introduced on 1 January 2011 under the Financial Emergency Measures in the Public Interest Act 2010. The PSPR is not a levy but is a pension cut affecting public service pensions, including those of former members of the Oireachtas and Ministers.
While the 0.6% pension fund levy has ceased and the lower 0.15% levy introduced for 2014 and 2015 will not apply beyond 2015, I have no plans to either repay the pension fund levy tax collected or to retrospectively reinstate the higher earnings limit for pension contributions, as may be implied in the details supplied with the question.
Overall, the restrictions in tax expenditures and the funds raised by way of the levy have helped to create the improving financial and economic position of the State. We have begun to see the benefits of this improving position as evident from the changes which I began in Budget 2015 and which will continue in future Budgets to reduce the income tax burden on low and middle income earners.
73. Deputy Eoghan Murphy asked the Minister for Finance if he will explain the discrepancies in respect of value added tax being charged by telecommunication companies (details supplied). [18069/15]
View answerThe VAT rating of goods and services is subject to the requirements of EU VAT law with which Irish VAT law must comply. The reduced VAT rate of 13.5% applies to the supply of gas and electricity in Ireland. The majority of EU Member States apply a much higher VAT rate to the supply of gas and electricity as EU VAT law provides that the standard VAT rate should apply to these services. However, as part of a derogation to EU VAT law, Ireland is entitled to retain a reduced rate to the supply of gas and electricity on the basis that we applied a reduced rate to the supply of domestic fuels on 1 January 1991.
Separately, in relation to telecommunication, internet and television broadcasting services provided by companies such as UPC or Vodafone, these services are subject to the standard rate of VAT which is 23% in Ireland.
In accordance with section 37(1) of the Value-Added Tax Consolidation Act 2010, the amount on which VAT is chargeable is the total consideration receivable by the supplier, "including all taxes, commissions, costs and charges whatsoever", but not including the VAT itself. This reflects EU VAT law, with which Irish tax law must comply. In this regard, Article 78 of the EU VAT Directive provides that the taxable amount shall include "taxes, duties, levies and charges, excluding the VAT itself".
In this respect, where the charge for a supply of service, such as an electricity bill, includes the Public Service Obligation (PSO) levy, VAT law dictates that VAT should be calculated on the PSO levy element of the charge as well as the charge for the service. The same situation applies in respect of a service charge on other bills as outlined by the Deputy.
74. Deputy Eoghan Murphy asked the Minister for Finance the cost to the Exchequer of the payment of increments to all public sector staff under his remit per year since 2008. [18070/15]
View answerI wish to inform the Deputy that the calculation of increments is a matter for the Payroll Shared Service Centre, who have informed me that because of the variables involved i.e. payees starting and leaving, staff moving on/off sick pay, staff changing worksharing patterns, etc. it is virtually impossible to provide an answer to this Parliamentary Question.
However my Officials are calculating figures based on an average of an increment per grade and the number of increments paid each year in my Department. Information in relation to bodies under the aegis of my Department are also being sought. I will revert to the Deputy directly as soon as the data are available.
75. Deputy Brendan Griffin asked the Minister for Public Expenditure and Reform when competition for permits (details supplied) will be initiated; the reason for the delay to date; and if he will make a statement on the matter. [17902/15]
View answerThe Office of Public Works (OPW) is preparing a competition process for new Boat Permits at Skellig which it is hoped will be publicly advertised in due course.
There are a number of legal implications relative to the proposed competition process to be assessed in conjunction with the OPW's advisers before the competition is advertised and these are being considered currently by the Chief State Solicitors Office and the Office of the Attorney General. Once these matters have been fully addressed, the OPW will make a decision in relation to the next steps.
76. Deputy Seán Kyne asked the Minister for Public Expenditure and Reform his plans regarding the rescinding of measures in the Financial Emergency Measures in the Public Interest Act 2013, with particular reference to the impact of the legislation on pensions currently in payment; and if he will make a statement on the matter. [17934/15]
View answerI have invited the Public Services Committee of ICTU to discussions on an approach to commencing the gradual unwinding of the Financial Emergency Measures in the Public Interest (FEMPI) legislation which provides inter alia for the imposition of a public service pension reduction (PSPR). Both I and my officials have also had a number of meetings and ongoing engagement with the Association of Retired Public Servants (ARPS) regarding the impact of the PSPR on public service pensions under the FEMPI legislation.
I have previously stated my intention, as a matter of priority, to move towards reducing the burden of public service pension reductions, with the initial focus on the people in receipt of low pensions, at the earliest date economic progress permits.
77. Deputy Billy Kelleher asked the Minister for Public Expenditure and Reform if he will provide, in tabular form, the number of applications for increases in remuneration for any person or persons received by his Department from public service employers since 1 January 2014; the details of the applications for increase, that is, the posts and levels of increase involved; whether the applications were approved; and if he will clearly indicate the number of these applications involving persons in agencies that were funded under section 38 of the Health Act 2004. [17975/15]
View answerI refer the Deputy to my reply to parliamentary question No. 321 on 21st April 2015 (ref. 15494/15). As regards agencies funded under Section 38 of the Health Act 2004, it is equally the case that any applications for increases in remuneration in respect of such agencies fall to be considered in the context of the Haddington Road Agreement and FEMPI legislation.
