Written Answers Nos. 1 - 116
107. Deputy Mick Wallace asked the Minister for Finance his role and his Department's role in the expected sale of Allied Irish Banks; his plans for the State-owned bank; and if he will make a statement on the matter. [24601/15]
View answerAIB is well on the road to recovery and officials in my department are working with AIB on reconfiguring its capital structure and setting out a path for the bank to begin to return capital to the State. Given the scale of the States investment some €20.8 billion and the different financial instruments this money is invested in, there are a range of options available to recoup value from the bank and it is critical that we get these decisions right. As a result Goldman Sachs International and William Fry are assisting the Department with this work by providing financial and legal advice respectively.
Reconfiguring the bank's capital structure, which is not longer fit for purpose given the new regulatory regime, is just the start of the process, but it is an essential first step on the road to recovering value for the taxpayer. Discussions commenced recently with the SSM (Single Supervisory Mechanism) and the Central Bank, AIB's regulators, regarding AIB's capital structure and this process is expected to take a number of months.
No decision has been made by the Government to sell any of our investments in AIB. All options remain on the table and while I have said previously that an Initial Public Offering or IPO on the stock market, looks like the most likely exit route for the State, it is too early to specify what steps will be taken or to put a timeline on decisions. Any sale will involve selling shares held by the ISIF.
As I have previously stated on numerous occasions, Government policy is that we will not remain a holder of our banking investments in the long term. Given our high debt to GDP ratio, we do not have the luxury of holding all of these investments indefinitely and I envisage receipts from the gradual sale of these investments helping to play their part in reducing the State's overall debt burden in the coming years.
108. Deputy Pearse Doherty asked the Minister for Finance the number of submissions received to the recent consultation on the future of the local property tax; and his plans arising from the consultation. [24539/15]
View answerThe Deputy will be aware that I have instigated a review to consider, and make recommendations, on the operation of the LPT, and any impacts on LPT liabilities due to property price developments.
A public consultation has been held as part of the review. The consultation period ran to April 30th, a period of 4 weeks. I am informed that over 50 written submissions were received, with detailed suggestions. All submissions have been considered, and I understand that drafting of the final report and recommendations is in process. Copies of all submissions made will be published on the Departments website in due course.
It is intended that the Review be presented to me no later than summer 2015, with a view to consideration of any recommendations therein in the context of the Budget. Until the report is finalised and presented to me I cannot say what action may be taken.
109. Deputy Peadar Tóibín asked the Minister for Finance if he is aware that there was a six-fold spike in Siteserv share trading prior to the sale of the company; that the Siteserv share register does not identify the persons who bought these shares; and if he will confirm if the Commission of Investigation into the Irish Bank Resolution Corporation will investigate these matters. [24534/15]
View answerAs the Deputy will be aware the terms of reference of the proposed Commission of Investigation in relation to IBRC include the following explicit terms of reference dealing with unusual share trading activity and information received by the Department of Finance:
"whether in respect of any transaction under investigation, any unusual share trading occurred which would give rise to an inference that inside information was improperly provided to or used by any persons, and in the event that such inference does arise whether such information was actually improperly provided or used,"
and
"in relation to each transaction under investigation, whether the Minister for Finance or his Department was kept informed where appropriate in respect of the transactions concerned, and whether he, or officials on his behalf, took appropriate steps in respect of the information provided to them."
Both Houses of the Oireachtas have approved these terms of reference. It is important that I do not interfere with or prejudice the important work to be conducted by the Commission of Investigation. In these circumstances it would be inappropriate for me to comment publicly in respect of information received in relation to the various transactions under review.
110. Deputy Dessie Ellis asked the Minister for Finance his plans for the use of proceeds from the sale of Aer Lingus. [23550/15]
View answerIt has been the consistent policy of the Government that proceeds received from the sale of assets should, to the greatest extent possible, be used to support and sustain economic recovery and employment creation. Under Eurostat rules, the proceeds arising from the sale of the State's shares in Aer Lingus, representing the sale of a financial asset, will have no beneficial impact on Ireland's General Government Balance (GGB), and so will not provide any capacity for additional Government expenditure on a GGB neutral basis.
For this reason the Government has decided to allocate the proceeds to a special fund - the Connectivity fund - which will operate on a commercial basis and therefore not constitute Government expenditure, but will facilitate the re-use of the proceeds for productive purposes within the economy on a GGB neutral basis.
The establishment of the new connectivity fund from the potential sale proceeds will be managed on a commercial basis by the Ireland Strategic Investment Fund (ISIF). The Fund will be structured as a sub-portfolio of the ISIF, and will be managed and controlled in the same way as the main portfolio is managed.
Given that the proceeds came from the sale of the State's stake in a transport asset, the fund will be dedicated to enhancing connectivity both within and for the State. It will allow for much needed investment in a range of commercially viable connectivity projects, both domestic and international. The projects will generate economic impact and competitiveness benefits for Ireland through enhancing our regional connectivity, improving attractiveness and competitiveness in the tourism sector, and promoting investment and enhanced opportunities for growth. For the purposes of the Fund, 'connectivity' will be broadly defined. Therefore, connectivity will be taken to include traditional transport type projects, such as ports and airports, and access to such assets. However, it will also take a wider definition of connectivity to include, for example, data connectivity (including broadband, fibre optic cables, interconnectors, etc) and energy connectivity (including energy inter-connectors and other related projects).
111. Deputy Thomas Pringle asked the Minister for Finance the retrospective nature of the Consumer Protection (Regulation of Credit Servicing Firms) Bill 2015; if the Bill will cover current ongoing situations, involving borrowers receiving warnings from banks in relation to their loans, including mortgages; and if he will make a statement on the matter. [24593/15]
View answerBorrowers whose loans are sold to unregulated entities will be protected by the Consumer Protection (Regulation of Credit Servicing Firms) Bill 2015 when it is enacted. The purpose of the Bill is to ensure that consumers retain the protections they had prior to the sale of their loan. This Bill 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 Code of Conduct on Mortgage Arrears specifically provides that the level of communications should be proportionate and not excessive, taking into account the circumstances of the borrowers, and that unnecessarily frequent communications should not be made.
The Bill was published in January and second stage of the Bill was taken in the Dáil on 4 February. The Bill is continuing its progress through the legislative process. The Bill was passed by the Dáil on 17 June and I look forward to further discussion of the Bill at Second Stage in the Seanad tomorrow (24 June).
The legislation will apply to all loans as defined, regardless of when they were acquired, thus capturing loan books that have already been sold. A similar approach was used in 2013 in relation to debt management firms. Also, when the requirement for a retail credit firm authorisation was itself introduced in 2007, existing non-deposit taking lenders (which up to then did not require authorisation from the Central Bank) had to get an authorisation from the Central Bank in order to continue their business. The Bill has transitional provisions to allow existing firms seek and obtain authorisation from the Central Bank while continuing to do business.
112. Deputy Peadar Tóibín asked the Minister for Finance as the principal shareholder in Allied Irish Banks, if he will confirm that existing contractual pension arrangements for current staff in the bank’s informational technology division's application and development management teams, whose jobs are to be outsourced to a third party, are provided for under the Transfer of Undertakings (Protection of Employment) Regulations 2006. [24533/15]
View answerAs the Deputy will be aware under the Relationship Frameworks the State does not intervene in the day to day operations of the banks in which it holds investments or their management decisions regarding commercial matters and hence any discussions around matters such as outsourcing are a matter for the bank, the relevant staff and their union representatives. Notwithstanding this position, my officials do take an active interest in how the bank's cost base evolves to ensure that the State's interests as shareholder are protected and to ensure that the Government's remuneration policy is enforced.
The bank has previously indicated that as part of its restructuring plan to reduce costs and increase efficiencies, outsourcing of certain functions would be considered in consultation with unions and affected staff. I have also been informed by the bank that there have been no compulsory redundancies as a result of its recent outsourcing activities. Any staff who transfer under outsourcing arrangements transfer under the TUPE regulations.
I have been informed that AIB has not at this stage confirmed any agreement to outsource some of its technology services in Application and Development Management teams to a third party provider. Should any such decision be confirmed, then affected staff will be informed immediately and AIB will enter into a full process of information and consultation with employee representatives, as required both by law and under engagement principles agreed with the Irish Bank Officials Association (IBOA).
As permitted by the relevant European Directive most occupational pension rights are not covered by Transfer of Undertakings Regulations (TUPE) in the Republic of Ireland (ROI.) Occupational pension rights transfer on a limited basis under TUPE Regulations in Northern Ireland.
It is expected that occupational pensions will form a key part of discussions during any consultation process that may arise with employee representatives. In all previous similar transactions involving AIB, agreement has been reached between AIB and employee representatives in relation to pension issues.
113. Deputy Terence Flanagan asked the Minister for Finance his plans to encourage competition in the banking sector and to drive down variable mortgage interest rates; and if he will make a statement on the matter. [24521/15]
View answerAs you know, I met with senior management of Ireland's six main mortgage providers in May and outlined my view, that Standard Variable Rates being charged in the Irish market are too high. There was agreement from all lenders that customers should have access to more competitive mortgage products as per my recommendation.
In addition, I outlined the need for greater competition in the market and the need for a more active and well-resourced campaign by the individual banks. This should focus on promoting awareness of their best offering and how easy it is for customers to take up new products and switch between different institutions if they wish to avail of better rates.
In advance of these meetings, I asked the Central Bank to prepare a report on the issue. This report on the influences on standard variable rate pricing in Ireland was submitted to the Department of Finance last month and has been published on both the Department of Finance and the Central Bank websites.
It is universally accepted that additional competition will have the effect of reducing prices to consumers, which in the mortgage sector means reducing the SVR. Lower rates are available for many standard variable mortgage customers if they switch lender. The banks must be convinced that they are at risk of losing customers if they persist with SVRs that are higher than the rate their customers could get elsewhere. People who are in a position to move mortgages should look into their options to do so. The Competition and Consumer Protection Commission website at consumerhelp.ie has useful information on mortgages and I understand that the CCPC is planning to provide better information to encourage mortgage switching. I fully accept that this is not an option for everyone but I would encourage people to take the time to explore it.
The Government made a commitment in the Statement of Government priorities 2014 to 2016 to applying downward pressure on mortgage rates by increasing and supporting competition in the market and it will continue to work to fulfil that commitment.
114. Deputy Michael McGrath asked the Minister for Finance the reason for the significant delay in establishing a central credit register to date; the implications of this delay for bank lending practices; if he is satisfied that the project will be operational in 2016; and if he will make a statement on the matter. [24578/15]
View answerThe Central Bank of Ireland is responsible for establishing the Central Credit Register. Since the enactment of the Credit Reporting Act, the Central Bank has:
- concluded an EU wide public procurement process in December 2014 to select a partner to establish and operate the Register on its behalf, signing contracts with CRIF Ireland Limited in February 2015;
- commenced a design stage to specify the detailed data requirements and conducted a data survey with representative lenders and
- published a Consultation Paper in April 2015 seeking views on key issues and in respect of which nineteen responses were received by the closing date of 12 June.
The Central Bank has advised that the next steps on the implementation of the Register involve:
- finalising the data requirements and overall solution design
- carrying out a privacy impact assessment to ensure appropriate controls are in place
- drafting the necessary regulations under the Act to provide the legal basis for lenders submitting data;
- consulting the Data Protection Commissioner on the draft regulations as required by the Act.
The Central Bank has indicated that it remains confident that a credit register solution will be in place by mid-2016 and will be capable of processing data submitted. The Central Bank continues to engage with lenders and their industry representative groups to understand the implications of change for the lenders. The operational implementation of the Register is a complex process and the final timeline will be influenced by the scale of the technical and operational changes to be implemented by over 500 lenders.
In its Consultation Paper, the Central Bank sought views on its proposal to have an initial credit register implementation phase focusing on lending to individuals followed by a subsequent phase addressing commercial credit. Responses to the Consultation Paper are now being reviewed and discussions continue on the phasing and extent of the data to be captured. The Central Bank's intention is to establish a realistic schedule for lenders to commence data submissions and subsequently to access the Register information through enquiries.
In the meantime, lenders may continue to access the private credit bureau services they had heretofore used for consumer lending. It is acknowledged that the Central Credit Register will provide a more comprehensive view of credit information for both individuals and businesses when it is fully operational.
115. Deputy Clare Daly asked the Minister for Finance if he will make provision for the recovery of the 2.53% stamp duty pension levy to members of the Irish Airlines (General Employees) Superannuation Scheme, through the taxation system, particularly if it is proposed by the Minister for Public Expenditure and Reform, as per the Lansdowne Road agreement, to reduce, from 2016, the pension levy deductions for public sector employees that were applied under the Financial Emergency Measures in the Public Interest Acts, and in view of the fact that most of the pensionable service years of retired pensioners in the scheme were earned while employed in the public sector, but that none of the public sector threshold pension levy exemptions have been applied to them. [24524/15]
View answerThis question refers to two separate and distinct measures. The first measure referred to is the stamp duty levies applying to the assets of funded pension arrangements introduced in 2011 to pay for the Jobs Initiative, the chargeable persons for which are the trustees of pension schemes and others responsible for the management of pension fund assets. The second measure is the pension-related deduction (PRD) which has applied to the remuneration of public servants since 2009.
The original 0.6% stamp duty levy on pension fund assets ended last year. The additional levy of 0.15% which I introduced for 2014 and 2015, mainly to help continue to fund Jobs Initiative, will also end after this year.
The position is that the equivalent value of all of the money raised from the stamp duty levy has been used to fund the wide range of measures introduced in the Jobs Initiative to protect existing jobs and to help create new jobs and the Initiative has been a success in this regard. The measures introduced include expenditure measures such as the JobBridge and 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.
While the pension fund levies have ceased and will be ceased as I have already outlined, I have no plans to repay the pension fund levy collected as may be implied in the question. The value of the funds raised by way of the levy have been used to protect and create jobs and this has helped to create the improving financial and economic position of the State. Taxpayers to whom the impact of the levy may have been passed on by the chargeable persons responsible for the payment of the levy (the pension scheme trustees etc) will benefit 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.
With regard to the PRD, I am informed by my colleague the Minister for Public Expenditure and Reform that the application of the PRD to public servants resulted in an average reduction of some 7% in the remuneration of public servants (from March 2009) and was followed by a further reduction of 6% from 1 January 2010 in the remuneration rates applicable to public servants. A third pay reduction applied to public servants earning in excess of €65,000 with effect from 1 July 2013 at rates ranging from 5.5% to 10%. I am further informed that these various reductions did not apply to employees of the organisations which form the membership of the pension scheme referred to in the question as they are not public service bodies for the purpose of the Financial Emergency Measures legislation under which these measures were introduced.
Finally, while changes to the PRD are proposed from next year under the Lansdowne Road Agreement which will result in reductions in the PRD, particularly affecting public servants on low and middle incomes, there is no provision for the repayment of PRD already deducted from the remuneration of affected public servants.
116. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which the European Council of Finance Ministers is alert to the likely consequences of a prolonged debate on the future of any member states leaving the Eurozone, for whatever reason; if it is understood that all member states need to recognise their responsibilities in any such situation, and that countries, like Ireland, have already made huge sacrifices in order to ensure their own country's viability and the well-being of the Union at large; and if he will make a statement on the matter. [24594/15]
View answerIssues related to the euro area are dealt with by the Eurogroup, rather than Ecofin, although it is normal practice for the President of the Eurogroup to debrief colleagues at the Ecofin.
When Member States get into difficulties, there are a number of European financial assistance mechanisms available to help resolve these issues in order to preserve the overall financial stability of the euro area. The euro area has an obligation to the Member States in these difficult times; Member States also have an obligation to reform their economy and return it to sustainable growth. This is what was done in the case of Ireland and as a result we successfully exited the EU-IMF programme of financial support on the 15th of December 2013, and did so without the need for a pre-arranged backstop. The programme met its key objectives - to put the public finances back on a sustainable path, to restore financial sector viability, to restore Ireland to financial market funding and to raise growth potential. Similar steps have been taken by other Member States including Spain and Portugal.
I have stated before that I want Greece to remain in the euro area and that a nominal write down is off the agenda. However, there is - of course - some room for manoeuvre in terms of maturity extension and other ways to reduce the burden of debt. This is what we have done in Ireland, in cooperation with our European partners, with the extension of maturities on our EFSF and EFSM loans, the reduction of interest rates, the replacement of the promissory notes with long-term bonds and the replacement of IMF loans with cheaper market-based funding.
A revised list of counter proposals was submitted by the Greek authorities yesterday. The Greek authorities will now work with the Institutions to come to an agreement by tomorrow that can be presented to the Eurogroup.
Even at this very late stage, there is still time for a deal to be agreed. It is still in everyone's interest that agreement is reached. The situation of Greece's finances is very challenging with immediate financing needs to be addressed. In addition, deposit outflows have continued from the banking system. Therefore, urgent agreement on the necessary structural reforms is imperative to conclude the 5th review and release the associated disbursements.
