Tuesday, 16 Jun 2015

Written Answers Nos. 275-287

Credit Availability

Questions (276)

Michael Healy-Rae

Question:

276. Deputy Michael Healy-Rae asked the Minister for Finance his views on a matter (details supplied) regarding business loans; and if he will make a statement on the matter. [23909/15]

Written answers

Minister for Finance

The Deputy will be aware that the Minister for Finance has no direct function in the relationship between banks and their customers and in relation to the banking decisions made by individual lending institutions at any particular time.  Such decisions are taken by the board and management of the institution and I cannot get involved in individual cases between a Bank and its customers. My function is to put in place an appropriate legislative framework for the regulation of the financial services sector.

The Government undoubtedly recognises that small businesses play a central role in a sustainable recovery of the Irish economy. To facilitate this, Government policy is 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 and Financing Growth for SMEs is a key aspect of the Action Plan for Jobs 2015.

My Department has been involved in a range of initiatives to encourage access to credit for small business, and the establishment of the State Bodies Group has also provided a forum where this issue is discussed and policy options explored.

The Credit Review Office (CRO) was established to assist SMEs or Farm borrowers who have had an application for credit of up to €3 million declined or reduced and who feel that they have a viable business proposition, or who 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. The Credit Review Office initially dealt with cases from Bank of Ireland and Allied Irish Banks customers and Ulster Bank recently announced it had voluntarily joined the Credit Review Office process. This is a strictly confidential process between the business, the Credit Review Office and the bank. Further details are available at www.creditreview.ie.

The following provides an overview of some other incentives introduced by Government to encourage access to credit for small business:

- The Strategic Banking Corporation of Ireland has been established to encourage small business, as an additional means of ensuring that SMEs are provided with sufficient access to credit, with increased flexibility such as loans of longer duration and loans with built-in payment holidays. SBCI loans are currently available through AIB and BOI and subsequent phases will see the SBCI supporting smaller, existing bank and non-bank funding providers and bringing in new participants to the Irish market.

- 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 Microenterprise Loan Fund, administered by Microfinance Ireland, was established under the Action Plan for Jobs and can provide 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 LEOs nationally to administer this fund.

- With over €2bn of Government supports available to small business in Ireland from over 20 Departments and Agencies, it is vital that SMEs can quickly access information on this range of supports available to them. With this in mind, 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. In the first four months after its launch, this website had over 17,000 unique visits. This Supporting SMEs Online Tool is available on the localenterprise.ie website.

- Another important initiative stemming from the work of the SME State Bodies Group is the range of Skillnets training programmes offered to SMEs. Included in these programmes is a ManagementWorks Programme, a subsidised management development training and mentoring programme available to businesses in all sectors to assist them to grow in terms of their sales, output and employment. Further information is available at http://www.managementworks.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 encourage small business and to ensure that viable SMEs in Ireland have the opportunity to reach their full potential in terms of growth and employment generation.

Question No. 277 answered with Question No. 241.

IBRC Loans

Questions (278)

Finian McGrath

Question:

278. Deputy Finian McGrath asked the Minister for Finance his views on correspondence (details supplied) regarding the Irish Bank Resolution Corporation Limited and the selling off of loans to a company which has a conflict of interest with the corporation; and if he will make a statement on the matter. [23934/15]

Written answers

Minister for Finance

I wish to advise the Deputy that, through ministerial representations, I have corresponded with those persons whose details are attached to this parliamentary question.

In relation to loan assets purchased by third party purchasers, neither I or the Special Liquidators are able to comment on the intentions and/or the subsequent actions of these third party purchasers once the loan assets have been sold.

The Government is committed to bringing forward legislation to protect mortgage holders. As you may be aware, the Consumer Protection (Regulation of Credit Servicing Firms) Bill 2015 was published in January. The purpose of the Bill is to ensure that consumers retain the protections they had prior to the sale of their loan. The second stage of the Bill was taken in the Dáil on 4th February 2015 and the Committee stage of the Bill was taken on 27th May 2015.

While the legislation is not retrospective, it will apply to all loans as defined, regardless of when they were acquired, thus capturing loans that have already been sold. A similar approach was used in 2013 in relation to debt management firms.

In relation to the perceived conflict of interest highlighted in the correspondence which is attached, I am unable to comment on the directorships of third party purchasers of loan assets. However, I can confirm that the Special Liquidators devised and ran a competitive sales process, following the receipt of independent advice, for all loan assets of IBRC which they have sold.

The SLs appointed PwC as independent advisors to value the residential mortgage portfolio and to provide advice in developing a strategy for the sale of the residential mortgage portfolio which would ensure that maximum value was obtained for all creditors of IBRC. Per my instruction, the assets of IBRC could only be sold at a price equal to or in excess of the independent valuations obtained.

Deposit Guarantee Scheme

Questions (279)

Finian McGrath

Question:

279. Deputy Finian McGrath asked the Minister for Finance his views on correspondence (details supplied) regarding the Irish League of Credit Unions and the deposit guarantee directive; and if he will make a statement on the matter. [23935/15]

Written answers

Minister for Finance

The Deposit Guarantee Scheme (DGS) provides protection of up to €100,000 per saver per credit institution, including credit unions. The scheme gives confidence to depositors that their money is safe in the event that a financial institution gets into financial difficulty.

Directive 2014/49/EU is a new Directive in relation to the DGS which is being transposed into Irish law.  Before transposition, the Department of Finance established a public consultation process to provide an opportunity for stakeholders to give their views on how discretion should be applied. This process concluded last Friday 12 June 2015.  While this Directive provides less flexibility in transposition to Member States than the previous Directive governing the DGS, Article 13 provides some discretion for Member States on the calculation of contributions to the DGS where a lower level of contribution for low risk sectors which, if justified, could be put in place. In relation to the contribution amount, Question 6 in my Department's consultation paper specifically asks whether or not credit unions should be considered a low risk sector and thus qualify for a lower level of contribution, it also requests justification for the answer provided.

All submissions received by my Department will now be examined and the views therein considered carefully over the coming weeks.

Tax Credits

Questions (280)

Eoghan Murphy

Question:

280. Deputy Eoghan Murphy asked the Minister for Finance if he will reverse his decision regarding the tax credits and benefits associated with health insurance (details supplied). [23941/15]

Written answers

Minister for Finance

Since 16 October 2013, tax relief for medical insurance premiums has been restricted to the first €1,000 per adult and the first €500 per child insured. Any portion of premium paid in excess of these ceilings no longer qualifies for tax relief.  Prior to this, income tax relief for medical insurance premiums was provided at source, at the standard rate of income tax, on the entire premium amount regardless of cost. Therefore, the State was paying 20% of the cost of all private medical insurance premiums.

The cost of Income Tax relief in respect of medical insurance increased significantly in the years leading up to Budget 2014, estimated at €404 million in 2011, €448 million in 2012 and €463 million in 2013. Despite the increasing cost of the relief, the numbers insured were estimated to have reduced by approximately 150,000 over the same period, while at the same time the level of medical cover decreased on some policies. Against this background the increase in costs was unsustainable. If the relief had remained unchanged and the trend was to continue, it was estimated that the cost would have increased to approximately €1 billion per annum by 2020.

Notwithstanding the recent reform, the tax system is still supporting those who can afford private medical insurance with the cost of the relief estimated at €354 million in 2014. Effectively that means that some taxpayers who could never afford private health insurance, or who have had to give up their policies due to personal circumstances, are continuing to provide financial support via the tax system to those individuals who can afford such insurance.

It should be noted that the Commission on Taxation in its 2009 report recommended the retention of medical insurance relief but that it should be limited. The introduction in Budget 2014 of an upper ceiling on the amount of medical insurance premiums that qualify for tax relief achieved this recommendation. 

It is unfair and unsustainable to allow unrestricted tax relief on private medical insurance premiums, particularly at a time when the general population has contributed so much to repairing the public finances. However, the new ceilings ensure a level of continuing support via the tax system for those who purchase medical insurance policies, while reducing Exchequer exposure to more expensive policies.

Referendum Expenditure

Questions (281)

Niall Collins

Question:

281. Deputy Niall Collins asked the Minister for Public Expenditure and Reform the full cost of holding the referendum on the age of eligibility for election to the Office of President; and if he will make a statement on the matter. [23013/15]

Written answers

Minister for Public Expenditure and Reform

The Referendums on Marriage Equality and Age of Eligibility for election to the Office of President together with the Bye-election in Carlow-Kilkenny were held on 22nd May 2015. Returning Officers are required to submit their accounts  for these election events to the Minister for Finance not later than six months after the date on which the poll was taken and so the final cost of the Referendums and Bye-election is not available at this time.

The estimated cost of the two recent Referendums is €15m. When two or more election events are held on the same day there are significant savings from the sharing of people and facilities. If a simple view is taken it can be said that the cost of each Referendum in this case is an estimated €7.5m. This portrayal of the estimated cost would attribute the significant savings, from having both polls on the same day, to each poll equally.  However it would not be possible to run one Referendum on its own for €7.5m.  

The Children Referendum, taken as a single poll, in November 2012  at a cost of €12.8m would be more indicative of the cost of a stand-alone referendum when compared with  the cost of €14.4m for the Abolition of the Seanad and Court of Appeal Referendums which were held on the same day in October 2013. The difference between the costs at €1.6m is an approximation of the additional cost of the second Referendum.  

Tribunals of Inquiry Recommendations

Questions (282)

Micheál Martin

Question:

282. Deputy Micheál Martin asked the Minister for Public Expenditure and Reform the actions taken from the recommendations made in the Moriarty tribunal report which he received in March 2011; and if he will make a statement on the matter. [23083/15]

Written answers

Minister for Public Expenditure and Reform (Deputy Brendan Howlin)

A substantial review of the effectiveness and efficiency of Ireland's current Ethics framework has been completed by my Department, including consideration of the recommendations of the Mahon and Moriarty Tribunals and other relevant recommendations, as well as international best practice.

Development of the Heads of a General Scheme for a comprehensive, reformed and modernised Public Sector Standards Bill has now been substantially progressed and they are expected to be submitted to Government shortly for approval.

Tribunals of Inquiry Recommendations

Questions (283)

Micheál Martin

Question:

283. Deputy Micheál Martin asked the Minister for Public Expenditure and Reform the number of meetings he has held in his Department on the recommendations in the Moriarty tribunal report; and if he will make a statement on the matter. [23084/15]

Written answers

Minister for Public Expenditure and Reform (Deputy Brendan Howlin)

I have held no meetings in my Department in relation to the recommendations in the Moriarty Tribunal Report. However, the one recommendation in the Moriarty Tribunal Report directly relevant to my Department's area of responsibility is among the matters considered in the context of the substantial review of the effectiveness and efficiency of Ireland's current Ethics framework recently completed by my Department. Development of the Heads of a General Scheme for a comprehensive, reformed and modernised Public Sector Standards Bill has now been substantially progressed. The Heads of the Scheme are expected to be submitted to Government shortly for approval.

EU Funding

Questions (284, 300)

Martin Heydon

Question:

284. Deputy Martin Heydon asked the Minister for Public Expenditure and Reform his views on proposed changes to the Ireland Wales INTERREG 5A programme to exclude inland counties including County Kildare which had previously been included and had accessed funding for local communities; the reason such changes were agreed; the alternative level of funding that will be available to such counties in the event that this proposal goes ahead; and if he will make a statement on the matter. [23910/15]

Jack Wall

Question:

300. Deputy Jack Wall asked the Minister for Public Expenditure and Reform his views on correspondence (details supplied) regarding the Ireland Wales Co-operation Programme 2014 to 2020; his plans to address the concerns in regard to the core issue; and if he will make a statement on the matter. [23364/15]

Written answers

Minister for Public Expenditure and Reform

I propose to take Questions Nos. 284 and 300 together.

The Ireland Wales Co-Operation Programme has a total value of approximately €100 million over the period 2014-2020.  It will support projects with partners in both Ireland and Wales focussing on activities across three priority areas: 

- Priority Axis 1: Cross Border Innovation

- Priority Axis 2: Adaptation of the Irish Sea and Coastal Communities to Climate Change

- Priority Axis 3: Cultural and Natural Resources and Heritage 

Given that the Ireland Wales border is a maritime border, the Programme must have a maritime focus.  Nevertheless, the eligible area in Ireland includes inland counties (Kildare, Carlow, Kilkenny, Tipperary) as well as coastal counties (Meath, Dublin, Wicklow, Waterford, Wexford, Cork, Kerry). 

Project partners in any of the counties in the eligible area may put forward project proposals for any of the priorities.  Given that it is a cross-border Programme, projects must have partners in both Ireland and Wales and they must have a cross-border added-value element.  In the case of one of the three priorities (Priority Axis 3:  Cultural and Natural Resources and Heritage) the project benefits must accrue to coastal communities.  This was a requirement of the European Commission and applies equally to Ireland and Wales.  Inland counties are not precluded from taking part in this priority, but the benefits must accrue to the coastal community as well as to the non-coastal community.

Ministerial Meetings

Questions (285)

Lucinda Creighton

Question:

285. Deputy Lucinda Creighton asked the Minister for Public Expenditure and Reform if he will report on all public and private, official and unofficial engagements and meetings with a person (details supplied) and with senior executives within the person's media companies here; and the outcome of such meetings. [23050/15]

Written answers

Minister for Public Expenditure and Reform

The position as set out in my response to Question No. 75 of 12 March 2014 remains. I have not had any other meetings with the person nor with any senior executives within the person's media companies.

Flood Prevention Measures

Questions (286)

Michael McCarthy

Question:

286. Deputy Michael McCarthy asked the Minister for Public Expenditure and Reform the progress of work under the catchment flood risk assessment management systems in respect of a location (details supplied) in County Cork; the progress in the Office of Public Works statutory consultation process; if the landowner will be consulted on same; and when a decision is expected. [23079/15]

Written answers

Minister of State at the Department of Public Expenditure and Reform

As indicated in my replies of 26 February 2015 and 28 April 2015, good progress is being made by engineering consultants undertaking regional studies on behalf of the Office of Public Works (OPW) under the Catchment Flood Risk Assessment and Management (CFRAM) Programme. The Programme involves an assessment of 300 mainly urban locations nationwide through mapping significant flood risk areas and producing flood risk management options and plans as required by the EU Floods Directive.

The draft predictive flood maps for Dunmanway are currently available for inspection on the South Western CFRAM Study website www.southwestcframstudy.ie and the landowner may currently provide feedback on same. A national statutory consultation is due to be held in late summer/early autumn; details of which will be advertised in the national media and on the CFRAM Programme website www.cfram.ie. All feedback received during the consultation period will form part of the process of finalisation of the flood maps.

Stability and Growth Pact

Questions (287)

Pearse Doherty

Question:

287. Deputy Pearse Doherty asked the Minister for Public Expenditure and Reform if he agrees with the Irish Fiscal Advisory Council that the budgetary projections in the 2015 stability programme update do not present a full picture of the likely costs of demographic aging and cost pressures in delivering existing programmes, as well as not taking into account explicit Government commitments to reduce taxes; and if he will make a statement on the matter. [23092/15]

Written answers

Minister for Public Expenditure and Reform

The Spring Economic Statement (SES) and the corresponding Stability Programme Update (SPU) outlined that fiscal space of the order of €1.2 to €1.5 billion is expected to be available for Budget 2016. The fiscal projections contained in those publications are based on a technical assumption of a budgetary package of €1.2 billion in 2016 which will be split evenly between expenditure increases and tax reductions.   

For the post-2016 period, the published fiscal projections reflect a no-policy-change scenario from an expenditure perspective, other than provision being made for a €300 million increase in gross voted expenditure per annum to offset demographic pressures. In addition, given the forecast improvements in the labour market with unemployment forecast to fall from 9.6% in 2015 to 6.9% in 2020 certain Live Register savings and savings from efficiencies and policy measures will make funds available to meet expenditure and other priorities.

The pace of annual structural adjustment consistent with this no-policy-change scenario, averaging 1.1% of GDP per annum, would significantly exceed the minimum required under the preventive arm of the Stability and Growth Pact (SGP) which has been set at greater than 0.5% of GDP. However, it is the Government's firm intention stated clearly in the SES  to make only the minimum adjustment required under the rules of the SGP in these years. This means that additional fiscal space will be available.

The Government will take decisions regarding the distribution of this fiscal space each year as part of the Budget. These decisions, and the dialogue and analysis which underpins them, will reflect the most up-to-date information on economic and fiscal conditions, including any emerging cost pressures, so as to optimise the impact of public expenditure on investment and service delivery.