Thursday, 16 Jun 2016

Written Answers Nos. 81-91

Stability and Growth Pact

Questions (82)

Pearse Doherty

Question:

82. Deputy Pearse Doherty asked the Minister for Finance if he envisages the deviation stripping out the one-off Allied Irish Banks widening by end-year and by how much, given that his spending projections imply non-compliance with the expenditure benchmark requirements for 2016 when the bank's transaction in 2015 is disregarded, with the associated overspend amounting to approximately €700 million on the basis of current stability programme update plans and given his record of under-provision for a number of Departments, in particular the Department of Health; and if he will make a statement on the matter. [16438/16]

Written answers

Minister for Finance

As the Deputy will be aware, assessment of our compliance with the budgetary provisions of the preventive arm of the Stability and Growth Pact, is conducted with reference to two complementary pillars, namely the expenditure benchmark and our annual improvement in relation to the structural balance. These ensure we are at, or are on the adjustment path towards our medium term objective of a structural deficit of 0.5 per cent of GDP.  

Under the expenditure benchmark one-off developments such as the Allied Irish Banks related transaction are not taken into account when calculating this measure. In relation to the structural balance, the Irish Fiscal Advisory Council's recently published Fiscal Assessment Report states that an over-performance in tax revenue in 2016 could secure compliance with this rule given current expenditure plans.

Separately, my colleague the Minister for Public Expenditure and Reform Pascal Donoghue T.D. recently announced a proposal to increase the 2016 voted expenditure by €540 million to allow targeted increases to support the delivery of key services in the Health Sector and by An Garda Síochána. As outlined in the April Stability Programme Update, increases of this order can be provided while continuing to deliver against the key fiscal targets.

These extra spending plans will be incorporated into the forthcoming Summer Economic Statement which will be published by my Department later this month. As part of this exercise a full review of all fiscal developments, including tax revenues, will be conducted.  

Fiscal Policy

Questions (83, 84, 85, 86)

Pearse Doherty

Question:

83. Deputy Pearse Doherty asked the Minister for Finance the components of the methodology of the medium-term forecasts that were produced using the European Union commonly agreed methodology; how the forecasts are calculated; and if he will make a statement on the matter. [16440/16]

Pearse Doherty

Question:

84. Deputy Pearse Doherty asked the Minister for Finance the details of the complementary medium-term baseline estimates and why they are better suited to the Irish economy, given the medium-term forecasts that were produced using the European Union commonly agreed methodology and work already commenced to develop a complementary set of medium-term baseline estimates for the supply side based on methodologies better suited to the characteristics of the Irish economy; and if he will make a statement on the matter. [16441/16]

Pearse Doherty

Question:

85. Deputy Pearse Doherty asked the Minister for Finance the work undertaken or plans to develop a complementary set of medium-term baseline estimates for the supply side, based on methodologies better suited to the characteristics of the Irish economy regarding the medium-term forecasts which are currently produced using the European Union commonly agreed methodology, which is only required for fiscal surveillance and which his Department has long recognised is not appropriate for Ireland; and if he will make a statement on the matter. [16442/16]

Pearse Doherty

Question:

86. Deputy Pearse Doherty asked the Minister for Finance his views on the assertion by the Irish Fiscal Advisory Council that there are risks that signs of overheating may again be missed if he exclusively relies on the commonly agreed methodology; and if he will make a statement on the matter. [16443/16]

Written answers

Minister for Finance

I propose to take Questions Nos. 83 to 86, inclusive, together.

My Department's macroeconomic forecasts, as published in the 2016 Stability Programme (SPU) in April, include a number of elements, principally estimates of demand in the economy, and also of the productive capacity, or supply side. The EU fiscal rules essentially seek to ensure sensible and sustainable budgetary policies, taking into account the impact of the economic cycle. For the purpose of assessing compliance with the fiscal rules, a Commonly Agreed Methodology (CAM) has been developed, which in essence seeks to assess the cyclical position of the economy, and on that basis, the appropriate fiscal policy stance for Member States, including Ireland. My Department's forecasts are prepared in a way which is consistent with the CAM, as required in the context of the European Semester.

As noted in the 2016 SPU, the CAM is subject to limitations particularly when applied to Ireland. Efforts continue at European level to improve the applicability of the CAM. As I have outlined in a recent parliamentary question reply (Ref 15737/16), my Department is in the process of developing alternative models for estimating potential output. Considerable work has been done on this front and is now nearing completion. An outline of this work is set out in Box 1, page 24, of the 2016 SPU, published in April. The intention is to publish the technical work in the short-term. However, I would stress that for the purposes of assessing the cyclical position of the economy in the context of the fiscal rules, the CAM is still the relevant metric.

I would also emphasise that both myself and my Department remain vigilant to signs of overheating. Consideration is given to a wide range of indicators, which include, but are not limited to, estimates of the cyclical position of the economy. My Department has not currently detected signs of overheating over the forecast horizon. Moreover, there are indications of spare capacity in the economy, particularly in the context of the labour market. Having said that, it is clear that with continued strong growth in the economy, the amount of spare capacity is declining and we must be conscious of this.

The Government, for its part, will not pursue budgetary policies to overheat the economy. Our emphasis is on continuing to implement sensible policies, including budgetary policies, aimed at ensuring sustainable growth and public finances.

Corporation Tax

Questions (87)

David Cullinane

Question:

87. Deputy David Cullinane asked the Minister for Finance the number of registered companies; the number that were liable for corporation tax; the number that paid it and the amount they paid; the number that did not pay it, in each case by payment bands (details supplied) in each of the years 2008 to 2015, in tabular form. [16471/16]

Written answers

Minister for Finance

I am informed by Revenue that the number of registered companies is available at http://www.revenue.ie/en/about/statistics/registrations-assessments-transactions-overview.html. It should be noted that this information reflects the total number of companies on record for the year irrespective of whether the company is trading and therefore obliged to file a Corporation Tax return for the year.

The tables show, by range of tax liability, the number of companies with a Corporation Tax return filed for each relevant tax year with a liability to Corporation Tax for the year and those without a liability to Corporation Tax for the year (including those with refunds and the associated amount of net Corporation Tax liability). The refund amounts shown relate mainly to refundable research and development tax credits and repayable withholding taxes on fees. Returns are filed for the years 2008 to 2014, information for the year 2015 is not available as the returns are not yet due in many cases.

Corporation Tax Liability For The Tax Year 2008

Range Of Tax Liability	Number of Companies	Amount Of Corporation Tax Liability
		€m
No Liability	82,480	-237.1
€1 - €25,000	40,246	175.1
€25,001 - €50,000	2,966	104.2
€50,001 - €75,000	1,197	73
€75,001 - €100,000	605	52.3
€100,001 - €200,000	963	135
€200,001 - €300,000	338	81.9
€300,001 - €400,000	176	60.8
€400,001 - €500,000	98	43.5
€500,001 - €600,000	82	44.6
€600,001 - €700,000	56	36
€700,001 - €800,000	47	35.4
€800,001 - €900,000	24	20.2
€900,001 - €1,000,000	33	31.2
€1,000,001 - €5,000,000	215	441.9
€5,000,001 - €10,000,000	33	245.2
over €10,000,000.	53	1,689.70
Total	129,612	3,032.90

Corporation Tax Liability For The Tax Year 2009

Range Of Tax Liability	Number of Companies	Amount Of Corporation Tax Liability
		€m
No Liability	77,064*	-115
€1 - €25,000	38,470	157.7
€25,001 - €50,000	2,873	101
€50,001 - €75,000	1,164	71
€75,001 - €100,000	542	46.9
€100,001 - €200,000	987	137.7
€200,001 - €300,000	344	84.7
€300,001 - €400,000	185	64.7
€400,001 - €500,000	116	51.4
€500,001 - €600,000	87	47.5
€600,001 - €700,000	73	47.8
€700,001 - €800,000	54	40.4
€800,001 - €900,000	37	31.4
€900,001 - €1,000,000	41	39.2
€1,000,001 - €5,000,000	324	701.9
€5,000,001 - €10,000,000	51	350.9
over €10,000,000.	76	2,029.50
Total	122,488	3,888.70

Corporation Tax Liability For The Tax Year 2010

Range Of Tax Liability	Number of Companies	Amount Of Corporation Tax Liability
		€m
No Liability	83,477*	-138.5
€1 - €25,000	34,443	143.3
€25,001 - €50,000	2,667	93.7
€50,001 - €75,000	1,028	62.7
€75,001 - €100,000	544	46.9
€100,001 - €200,000	891	127.1
€200,001 - €300,000	328	79.6
€300,001 - €400,000	186	64.5
€400,001 - €500,000	102	45.8
€500,001 - €600,000	83	45.2
€600,001 - €700,000	69	45
€700,001 - €800,000	55	41
€800,001 - €900,000	44	37.4
€900,001 - €1,000,000	30	28.4
€1,000,001 - €5,000,000	338	738.3
€5,000,001 - €10,000,000	52	369.7
over €10,000,000.	67	2,277.10
Total	124,404	4,107.20

Corporation Tax Liability For The Tax Year 2011

Range Of Tax Liability	Number of Companies	Amount Of Corporation Tax Liability
		€m
No Liability	90,749	-174.6
€1 - €25,000	28,596	126
€25,001 - €50,000	2,170	75.7
€50,001 - €75,000	858	52.7
€75,001 - €100,000	427	37
€100,001 - €200,000	838	118.7
€200,001 - €300,000	303	73.8
€300,001 - €400,000	181	63.3
€400,001 - €500,000	117	52
€500,001 - €600,000	89	48.8
€600,001 - €700,000	52	33.5
€700,001 - €800,000	42	31.7
€800,001 - €900,000	35	29.6
€900,001 - €1,000,000	32	30.5
€1,000,001 - €5,000,000	329	721.6
€5,000,001 - €10,000,000	51	352
over €10,000,000.	68	2,501.10
Total	124,937	4,173.40

Corporation Tax Liability For The Tax Year 2012

Range Of Tax Liability	Number of Companies	Amount Of Corporation Tax Liability
		€m
No Liability	89,929	-201.2
€1 - €25,000	30,536	136.1
€25,001 - €50,000	2,155	75.4
€50,001 - €75,000	876	53.4
€75,001 - €100,000	476	41.2
€100,001 - €200,000	863	119.8
€200,001 - €300,000	307	75
€300,001 - €400,000	188	64.4
€400,001 - €500,000	112	49.9
€500,001 - €600,000	82	44.9
€600,001 - €700,000	62	40.2
€700,001 - €800,000	52	39.1
€800,001 - €900,000	34	28.9
€900,001 - €1,000,000	34	32.1
€1,000,001 - €5,000,000	307	677.7
€5,000,001 - €10,000,000	50	341.6
over €10,000,000.	71	2,756.20
Total	126,134	4,374.70

Corporation Tax Liability For The Tax Year 2013

Range Of Tax Liability	Number of Companies	Amount Of Corporation Tax Liability
		€m
No Liability	92,770	-307.7
€1 - €25,000	33,883	153.3
€25,001 - €50,000	2,449	85.5
€50,001 - €75,000	981	60.2
€75,001 - €100,000	528	45.7
€100,001 - €200,000	925	131.1
€200,001 - €300,000	314	76.8
€300,001 - €400,000	193	67.4
€400,001 - €500,000	120	53.9
€500,001 - €600,000	95	52
€600,001 - €700,000	60	38.6
€700,001 - €800,000	49	36.7
€800,001 - €900,000	35	29.6
€900,001 - €1,000,000	28	26.6
€1,000,001 - €5,000,000	292	627.1
€5,000,001 - €10,000,000	66	454.5
over €10,000,000.	69	2,447.60
Total	132,857	4,078.90

Corporation Tax Liability For The Tax Year 2014

Range Of Tax Liability	Number of Companies	Amount Of Corporation Tax Liability
		€m
No Liability	92,114	-413.8
€1 - €25,000	36,786	175.4
€25,001 - €50,000	2,899	101.7
€50,001 - €75,000	1,201	73.9
€75,001 - €100,000	650	56.3
€100,001 - €200,000	1,056	148.1
€200,001 - €300,000	397	97
€300,001 - €400,000	213	73.6
€400,001 - €500,000	134	60.1
€500,001 - €600,000	91	50.2
€600,001 - €700,000	91	58.9
€700,001 - €800,000	56	41.8
€800,001 - €900,000	47	39.8
€900,001 - €1,000,000	36	34.1
€1,000,001 - €5,000,000	336	728.9
€5,000,001 - €10,000,000	73	493
over €10,000,000.	76	3,111.90
Total	136,256	4,930.90

 

Promissory Notes Negotiations

Questions (88)

Catherine Murphy

Question:

88. Deputy Catherine Murphy asked the Minister for Finance the schedule for extinguishing the former Anglo Irish Bank and Irish Nationwide promissory notes; why the original schedule was accelerated; his efforts to date and in the future to seek a write-down of this odious debt; and if he will make a statement on the matter. [16477/16]

Written answers

Minister for Finance

I assume the Deputy is referring to the bonds issued to the Central Bank of Ireland in February 2013 to replace the IBRC Promissory Notes which were extinguished as part of that transaction.

The Central Bank of Ireland is independent in the exercise of its functions and the management of its investment holdings are a matter for the bank themselves, neither I nor the Department of Finance have any role in the matter. 

The Central Bank of Ireland ("CBI") indicated a minimum disposal schedule of €0.5 billion up to the end of 2014, €0.5 billion per annum 2015-2018, €1 billion per annum 2019-2023 and €2 billion per annum after that until all the bonds are sold. However, the CBI also stated that it would dispose of the government bonds as soon as possible, provided conditions of financial stability permit. This position remains unchanged. Due to improved financial stability conditions, the disposals of fixed and floating rate government bonds from the Special Portfolio have been faster than the minimum. However, any decision to accelerate sales cannot be permanent or predetermined by the CBI as the sales programme must be able to adjust to market conditions taking into account the views of the NTMA regarding the management of the State's interest rate risk, the market absorption capacity, the State's general issuance programme and target maturity profile as well as the financial impact.

Motor Insurance

Questions (89)

Imelda Munster

Question:

89. Deputy Imelda Munster asked the Minister for Finance his plans to improve value for money and cover for motorists seeking car insurance, given the recent unprecedented and unjustified hikes in premiums and the difficulty many persons are experiencing in obtaining insurance cover. [15622/16]

Written answers

Minister for Finance

As Minister for Finance, I am responsible for the development of the legal framework governing financial regulation. Neither I, nor the Central Bank of Ireland, can interfere in the provision or pricing of insurance products. The EU framework for insurance expressly prohibits Member States from adopting rules which require insurance companies to obtain prior approval of the pricing or terms and conditions of insurance products. The provision of insurance cover and the price at which it is offered is a commercial matter for insurance companies and is based on an assessment of the risks they are willing to accept and adequate provisioning to meet those risks.

The question of the cost of insurance is a complex one involving a number of Government Departments, State Bodies and private sector organisations and while the provision and the pricing of insurance policies is a commercial matter for insurance companies, this does not preclude the Government from introducing measures that may, in the longer term, lead to a better claims environment that could facilitate a reduction in claims costs.

My Department has embarked on a review of policy in the insurance sector which is being undertaken in consultation with the Central Bank and other Departments and Agencies. The objective of the Review is to recommend measures to improve the functioning and regulation of the insurance sector.

The first phase of the Review is focussed on the motor insurance compensation framework and this work is nearing completion. The next phase of the Review involves examining the factors contributing to the increasing cost of insurance and identifying what short-term measures can be introduced to help reduce the cost of insurance for consumers and businesses.  Work on the Review of Policy in the Insurance sector will continue over the coming months.

I would also add that Insurance Ireland operates a free Insurance Information Service for those who have queries, complaints or difficulties in relation to obtaining insurance. In the event that a person is unable to obtain a quotation for motor insurance or feels that the premium proposed or the terms are so excessive that it amounts to a refusal to give them motor insurance, they should contact Insurance Ireland, 5 Harbourmaster Place, IFSC, Dublin 1, Telephone [phone] quoting the Declined Cases Agreement. 

General Government Debt

Questions (90)

Michael McGrath

Question:

90. Deputy Michael McGrath asked the Minister for Finance the composition of the general government debt in terms of Exchequer debt borrowings under the European Union and Ireland's European Union-International Monetary Fund programme, retail debt and other forms, the term to maturity and average interest rate on each component, in tabular form; and if he will make a statement on the matter. [16497/16]

Written answers

Minister for Finance

General Government Debt (GGD) is a measure of the total gross consolidated debt of the State compiled by the Central Statistics Office (CSO) and is the measure used for comparative purposes across the European Union. The National Debt is the net debt incurred by the Exchequer after taking account of cash balances and other financial assets. Gross National Debt is the principal component of GGD. GGD also includes the debt of central and local government bodies. GGD is reported on a gross basis and does not net off outstanding cash balances and other related assets.

Much of the information on GGD that the Deputy is seeking is available in the Stability Programme Update (SPU) published in April of this year. The published GGD figure for 2015 is €201.3bn, 93.8% of GDP, at an average interest rate of 3.3%. Further, Figure 4 on page 22 of the 2016 SPU, illustrates the maturity profile of long-term marketable and official debt as at end-March 2016 by facility type.

Details of the composition of General Government debt, its residual maturity and average interest rates as at end-2015 are set out in the table.

General Government Debt as at end December 2015
Instrument	Outstanding	Weighted Average residual maturity	Weighted Average Interest rate
	€bn	Years	%
Government Bonds	125.1	11.6	3.9%*
EU-IMF Programme**	49.7	12.1	2.2%
State Savings ***	16.7	***	0.83% - 2.26%
Other Medium and Long-Term Debt	1.2	11.5	4.0%
Short term debt	3.9	0.19 (71 days)****	-0.0%
Other general government debt	4.6	*****	*****
Total general government debt	201.3
Sources: NTMA, CSO

Rounding may affect totals. National Debt figures for end-December 2015 take account of the effect of currency hedging transactions.

Notes:

* This is the nominal interest rate which differs from the yield at issue.

** A prepaid margin of €0.53 billion was deducted from the EFSF loan of €4.19 billion drawn down on 1 February 2011 giving a net liability of €3.66 billion. The total net liability of €49.75 billion at end-December 2015 takes account of this reduction. EFSM loans are subject to maturity extensions designed to bring the original weighted average maturity to 19.5 years. It is not expected that Ireland will have to refinance any of its EFSM loans before 2027. However as the revised maturity dates of individual EFSM loans will only be determined as they approach their original maturity dates, the weighted average maturity figure above does not reflect the maturity extensions. Including certain assumptions for EFSM maturity extensions, the residual weighted average maturity of EU-IMF Programme loans was close to 14 years at end-2015. The EU-IMF Programme interest rate is an estimated weighted average, euro equivalent interest rate.

*** State Savings Schemes also include moneys invested by depositors in the Post Office Savings Bank (POSB) which does not form part of the National Debt but is part of other General Government Debt in the table above. These funds are mainly lent to the Exchequer as short-term advances and through the purchase of Irish Government Bonds. Taking into account POSB Deposits, total State Savings outstanding were €19.5 billion at end-December 2015. State Savings include products with original maturities ranging from 3-10 years. These products generally have a very high re-investment rate. Irrespective of the original term, NTMA State Savings products can be encashed on demand at any time repayment takes 7 days. Prize bonds can be encashed when 90 days have elapsed after the purchase date. The interest rates are the maximum interest rates (AER) payable on the fixed term fixed rate products available for purchase at end 2015. These rates were changed in June 2016.

**** The table shows the weighted average maturity and interest rate on short term paper which includes Euro Commercial Paper, Exchequer Notes and Central Treasury Notes.

*****The balance of GGD includes debt of Local Authorities, the Housing Finance Agency, non-commercial semi-state bodies, voluntary hospitals, and the HSE. This category also includes consolidation adjustments in respect of debt, including bonds, held by General Government entities.

Banking Sector Staff

Questions (91)

Michael McGrath

Question:

91. Deputy Michael McGrath asked the Minister for Finance the number of staff that Allied Irish Banks employs directly or under contract who are solely or primarily working on resolving issues relating to the Central Bank investigation of its handling of tracker mortgages; and if he will make a statement on the matter. [16499/16]

Written answers

Minister for Finance

Towards the end of last year the Central Bank initiated a review of tracker mortgage related issues across the industry. This review is ongoing and the Central Bank expects significant progress to be made by all lenders before the end of the year. AIB had initiated its own internal review a few months before the CBI announcement. This is a significant undertaking and AIB are treating this review as a top priority. Currently, c. 200 people at various levels and from across the Group have been mobilised and assigned to the programme. In addition c. 150 external contractors are providing supplemental project support and third party assurance as required by the Central Bank of Ireland.