Friday, 16 Dec 2016

Written Answers Nos. 112-133

Programme for Government Implementation

Questions (112)

Niall Collins

Question:

112. Deputy Niall Collins asked the Minister for Finance if the programme for Government commitment (details supplied) will be implemented fully in 2017; and if not, the reason therefore. [40828/16]

Written answers

Minister for Finance

I am aware of this commitment in "A Programme for a Partnership Government" to increase the Small Benefit Exemption. I will not commit at this stage to a specific date but I can confirm that I will consider its implementation in the context of the Budget and Finance Bill cycle in 2017.

Programme for Government Implementation

Questions (113)

Niall Collins

Question:

113. Deputy Niall Collins asked the Minister for Finance the position regarding the programme for Government commitment to provide a supportive tax regime for entrepreneurs and the self-employed. [40830/16]

Written answers

Minister for Finance

A number of measures have already been introduced by the Government in respect of the Programme for Government commitment referred to by the Deputy.

The Budget 2017 income tax package included an increase in the Earned Income Credit from €550 to €950 per annum.  This is a significant step towards the Programme for Government commitment to increase the credit to €1,650 by 2018.  The Earned Income Credit is available to self-employed individuals who have an active trade or profession and who do not have access to the PAYE credit, and it is of significant benefit to small business-owners right across the country including small retailers, publicans, farmers and tradesmen.

The Programme also committed to explore mechanisms through which Small to Medium Enterprises can reward key employees with share options in a tax-efficient manner.  Employee participation in their company's ownership and profits has been shown to increase competitiveness and support employment and growth, and appropriately targeted incentives may assist SMEs in attracting and retaining key staff members.  My Department conducted a review of tax policy in this area in 2016, which included the holding of a public consultation to which over 30 submissions were received. Following this review, in Budget 2017 I announced my intention to introduce a new, SME-focused, share-based incentive scheme in Budget 2018.  Such an incentive will require the approval of the European Commission and my officials will commence engagement with the Commission to ensure that the incentive will comply with State Aid rules in advance of the next Budget.

The Programme for Government also committed to introduce a PRSI scheme for the self-employed, and in Budget 2017 the Government announced the extension of access to Invalidity Pensions to the self-employed. Invalidity Pension is a pension payment for people who cannot work because of a long-term illness or disability. When someone develops a long-term illness it can cause serious financial repercussions. Gaining access to Invalidity Pension will provide the self-employed with a much stronger safety net to protect them in the event of injury or disablement. The self-employed will gain access to Invalidity Pension on the same basis as employees from December 2017.

Also announced in Budget 2017, is the extension of Treatment Benefits to the self-employed on the same basis as employees. The Treatment Benefit Scheme provides partial dental, optical and aural services to those who have made the required contributions.  This extension will come into effect from March 2017.  Treatment Benefit entitlements will be extended further from October 2017, providing additional dental and optical benefits.

In addition, jobseekers taking up self-employment will be able to access the Back to Work Enterprise Allowance after 9 months, down from 12 months. Minister Varadkar, the Minister for Social Protection, can provide further information in respect of the above initiatives if required.

Further to a commitment in the Programme for Government, my Department published, in July this year, an Income Tax Reform Plan containing a detailed overview of various policy considerations relevant to this reform, including the necessity to maintain the breadth of our income tax base and retain appropriate levels of taxation for high earners. The taxation of the self-employed is considered in some detail in this Income Tax Reform Plan, and the issues outlined therein will be borne in mind when considering future reform of the income tax system as it relates to the self-employed.

The purpose of the plan was to inform all members of the Oireachtas of the issues and options which will underpin future income tax reform, and it is my hope that all members of the Oireachtas will engage constructively in debating options for future reform in this area. In this regard the scope for change will be dependent on the level of available fiscal resources.

Tax Code

Questions (114)

Pearse Doherty

Question:

114. Deputy Pearse Doherty asked the Minister for Finance if the Revenue Commissioners are currently examining any other similar scheme of co-operatives involving shares given by co-ops to members and not taxed appropriately, which they intend to categorise as remuneration received by employees or self-employed contractors, in view of the recent tax assessments raised by the Revenue Commissioners regarding members of a co-op (details supplied) on the taxation of shares in the co-op received by members, in conjunction with milk received by the co-op from them and now being assessed to tax as trading income; if so, the details of same; and if he will make a statement on the matter. [40527/16]

Written answers

Minister for Finance

This is a matter for the Revenue Commissioners and, as the Deputy will be aware, Revenue is statutorily independent in the exercise of their functions. This independence, which dates back to the establishment of the Revenue Commissioners in 1923, is seen as critical to maintaining the integrity of the taxation system and forms a key pillar of Revenue's Governance framework.

I am advised by the Revenue Commissioners that their current compliance intervention activity, as regards patronage shares, is focused on patronage shares received by suppliers of milk as a consequence of and in proportion to the quantity of milk supplied, and the extent to which those share allocations are at values other than market value.

The extent to which this issue arises in other Co-ops is under consideration by the Revenue Commissioners. Should the same circumstances pertain in other Co-ops then the same tax treatment will apply.

Brexit Issues

Questions (115)

Darragh O'Brien

Question:

115. Deputy Darragh O'Brien asked the Minister for Finance the discussions that he has had with his European counterparts in respect of establishing an EU reform fund to protect vulnerable countries from the negative impact of Brexit; and if he will make a statement on the matter. [40559/16]

Written answers

Minister for Finance

Since the referendum outcome, I have met with my EU counterparts at the monthly Ecofin and Eurogroup meetings, most recently at the December meetings which took place on the 5-6 December.  In line with the agreement at EU level, there have been and will be no negotiations with the UK until Article 50 has been triggered.

I have taken the opportunity, in exchanges with EU partners, to underline Ireland's unique relationship with the UK.  As the Deputy will be aware, the key issues for Ireland, associated with the referendum outcome, including our close economic relationship with the UK, have been articulated on numerous occasions by me and other members of the Government.

The Irish Government's position on Brexit was outlined in meetings with the Head of the Commission Taskforce on Brexit in Dublin on 12 October. Close engagement with the Taskforce continues at official level.  In our engagement with the Taskforce we have made them aware that Brexit is already having an impact on the Irish economy, and of the disproportionate consequences posed by Brexit to the Irish economy overall in comparison to other Member States.

In the context of Brexit, it is more important than ever that the EU continues to support economic growth and employment. In this regard, I would point out that the €150 million Agri Cash Flow Support Loan Fund, as announced on Budget Day, is supported by EU Budget and European Investment Fund (EIF) funding. In addition the opening of the new European Investment Bank (EIB) office in Dublin on 12 December will also help steer future EIB investment activity in Ireland, including for SMEs.

Brexit Issues

Questions (116)

Darragh O'Brien

Question:

116. Deputy Darragh O'Brien asked the Minister for Finance if his Department is considering any specific and targeted financial measure to ensure that Brexit does not lead to greater regional imbalance; and if he will make a statement on the matter. [40561/16]

Written answers

Minister for Finance

The UK referendum on EU membership presents an important challenge for the Irish economy, both nationally and at a regional level. I have already introduced a number of actions and measures in response to this challenge.

As the Deputy will be aware, my Department incorporated the potential impact of Brexit into the macroeconomic forecasts that underpinned Budget 2017. My Department also published an in-depth sectoral analysis of the Irish economy and highlighted those with the greatest trade exposure to the UK. As part of this work, regional issues were also highlighted, particularly with respect to the location of employment and enterprise. In light of my Department's sectoral and regional findings I announced a number of measures in the Budget, with a view to getting Ireland "Brexit ready". The detail of these sectoral measures include;

- The retention of the 9 percent VAT rate to assist the hospitality sector.

- A reduced Capital Gains Tax relief to help entrepreneurs and bring the relief more in line with that in operation in the UK.

- An extension of the Foreign Earnings Deduction (FED) until the end of 2020, in order to assist with the diversification of trade into non-traditional export markets for Irish goods and services.

- The Special Assignee Relief Programme (SARP) is also extended until the end of 2020. The extension will provide certainty for foreign direct investment in Ireland, following on from the UK vote to leave the EU.

- The introduction of an income averaging "step-out" in the agriculture sector, to help with the volatility Brexit may bring. In addition to this a €150 million loan fund will be provided jointly by the Strategic Banking Corporation of Ireland and EU Exceptional Adjustment Aid to enable farmers to better manage their cash flow and reduce the cost of borrowing.

- At a macroeconomic level, Budget 2017 sought to build up Ireland's buffers to any fallout from Brexit. This involved setting a new domestic target of a debt to GDP ratio of 45 percent to be reached by the mid-2020s, or thereafter, depending on economic growth, as well as the establishment of a rainy day.

- The measures introduced in Budget 2017 are just the start of a process of getting Ireland Brexit ready. More measures will be implemented as the EU-UK negotiations develop after Article 50 is invoked. As with Budget 2017, these measures will have a regional dimension where appropriate. Indeed, as a key priority in the Programme for a Partnership Government, the Government will shortly publish a new Action Plan for Rural Ireland. The Action Plan will be a whole of Government approach to the challenges facing regional and local communities, including those presented by Brexit.

Banking Sector Regulation

Questions (117)

Michael McGrath

Question:

117. Deputy Michael McGrath asked the Minister for Finance if he will address a matter raised in correspondence (details supplied) concerning a practice apparently used by certain banks; and if he will make a statement on the matter. [40633/16]

Written answers

Minister for Finance

As Minister for Finance, I have no direct function in the relationship between banks and their customers. Notwithstanding the fact that the State is a shareholder in a number of institutions, I must ensure that the banks are run on an independent basis to ensure the value of the banks as assets to the State. I have no role in the day-to-day running of the banks, which is solely the remit for the management and Board of each bank. It would therefore be inappropriate for me to intervene in any particular case. A Relationship Framework has been specified that defines the nature of the relationship between me, as Minister for Finance, and the banks. These Frameworks  can be found at:

http://finance.gov.ie/sites/default/files/Allied-Irish-Banks1.pdf

http://www.finance.gov.ie/what-we-do/banking-financial-services/shareholding-management-unit/permanent-tsb/relationship

http://finance.gov.ie/sites/default/files/Bank-of-Ireland1_0.pdf

Notwithstanding this, it is imperative that every bank licensed to operate in this jurisdiction does so in accordance with all regulatory requirements including codes of conduct. Should the Deputy be concerned that this is not the case in the matter he has raised, he should consider reporting it to the Central Bank of Ireland being the competent authority to investigate such matters.

Brexit Issues

Questions (118)

Michael McGrath

Question:

118. Deputy Michael McGrath asked the Minister for Finance the steps his Department and other State agencies are taking to ensure that Ireland is a beneficiary of Brexit in the area of financial services; if he will set out the strategy designed to ensure this is achieved and provide details of meetings held in this regard; the resources that have been allocated to this objective; and if he will make a statement on the matter. [40637/16]

Written answers

Minister for Finance

Contingency planning for Brexit has been ongoing at all levels of Government well in advance of the UK EU referendum in June 2016. Financial services are frequently identified in any discussion of Brexit.  Ireland has a successful track record of competing for, and winning, global foreign direct investment. One of the key pillars of that success is the growth of the International Financial Services (IFS) sector, in particular over the past 30 years. Ireland is now recognised internationally as a leading global centre for internationally traded financial services.

In March 2015, the Government launched the lFS2020 Strategy, a whole-of-government approach to further driving the growth and development of the IFS sector in Ireland. The decision in May of this year by An Taoiseach to appoint a dedicated Minister of State with specific responsibility for financial services sends a clear and strong signal of the Government's long-established commitment to the further growth and ongoing development of the IFS industry.  Implementation of the IFS2020 Strategy and the annual Action Plans is driven by a public sector High Level Implementation Committee (HLIC). The HLIC, meeting on a quarterly basis, is chaired by Minister of State for Financial Services Eoghan Murphy TD. Minister of State Murphy also chairs quarterly meetings of the IFS2020 Joint Committee, comprising of members of the public sector HLIC and senior IFS industry representatives. Brexit is now a standing agenda item at these quarterly meetings. Furthermore, a cross-governmental financial services group (including the agencies) is also chaired by my Department and all this joined up work ultimately feeds into the Cabinet Committee on Brexit.

Ireland is in a strong position to build on its successful track record and to compete for future mobile investments in the IFS sector. In a post UK EU referendum environment, the Government will continue to implement the IFS2020 Strategy to drive growth in the IFS sector. The Government will continue to promote the attractiveness of Ireland as a location of choice for mobile international investment and for talented people. The IFS2020 Strategy combines long-term strategic thinking with the flexible tools to react to any domestic and international developments occurring over the period. There will be opportunities for Ireland arising from the UK's decision to leave the EU. The Government is keen to maximise those opportunities where possible. The IFS2020 Strategy, the long-term vision for international financial services, was developed and put in place long before the UK decision to leave the EU.  However, it provides a clear framework to maximise any opportunities that might arise from that decision particularly through the annual Action Plans. The annual Action Plans enable a tailored response to deal with these challenges and opportunities as they arise. The IFS2020 Action Plan for 2017 was considered by the Joint Committee in December and will be published in very early 2017, following final consultations with all key public and private sector stakeholders and noting by the Government.

The Governor of the Central Bank has previously indicated that where further resources are necessary due to an expanded universe of regulated and supervised firms, the Bank has the ability to effectively re-prioritise where it needs to meet the increased level of demand and also to increase staff numbers as necessary.

As part of the promotion of Ireland as a location for financial services, a key IFS2020 milestone is the hosting of the second annual European Financial Forum in Dublin Castle on 24th January 2017. Given the result of the UK referendum and the potential implications for the financial services industry, the Forum is an opportune time to bring more than 600 financial services executives and policy makers from around the world to Dublin.  The themes of EFF 2017 will focus on the challenges and opportunities for the European financial system as both a source and a provider of capital. The keynotes and panel sessions will have a focus on Europe relative to the North American and Asian financial systems. 

Over the last number of months, Minister of State Murphy has undertaken two significant visits to Asia and North America, as well as IFS engagements in London. The main purpose of these visits was to promote Ireland as a destination for financial services investment and to launch the IFS Ireland brand in the Asian and North American markets. Minister of State Murphy will continue to promote Ireland overseas as the perfect European location for financial services investment as the IFS2020 Strategy moves into 2017, including during upcoming visits to Beijing and Hong Kong in January 2017.

There is also an IFS2020 Communications sub-group consisting of relevant departments and agencies who develop and promote plans and messaging on Ireland as a location for financial services.  This Comms sub-group will work both with private and public stakeholders to ensure that there is consistent messaging.

Furthermore, Budget 2017 is the latest step to make Ireland "Brexit ready". The measures announced in Budget 2017 help protect Irish businesses from Brexit volatility, enable them to compete internationally, and make Ireland increasingly attractive for investment. Budget 2017 included a number of measures to respond to the challenges of Brexit, to mitigate future risks, and to maximise any opportunities that might arise. These include the reduced capital gains tax to help entrepreneurs, the Foreign Earnings Deduction (FED) extension and amendment, and the extension of the Special Assignee Relief Programme (SARP). More information on these measures is available in the Budget documentation.

Budget 2017 also provides for additional funding for the Department of Jobs, Enterprise and Innovation and the Enterprise Agencies to help them address the challenges and opportunities arising from Brexit. This will help support the enterprise agencies achieve their growth targets across all sectors of the economy, including the IFS2020 target to create 10,000 net new IFS jobs.

Input from all public sector and industry stakeholders in relation to financial services will continue to form a key part of the Brexit contingency planning joined up process.

EU Budget Contribution

Questions (119)

Michael McGrath

Question:

119. Deputy Michael McGrath asked the Minister for Finance his Department's current estimate of Ireland's EU budget contribution for 2015; when he expects this amount to be paid [40639/16]

Written answers

Minister for Finance

Member State contributions to the EU Budget are based upon a formula which includes Traditional Own Resources (customs duties), a VAT-based payment and a residual balancing component paid in accordance with each Member State's share of EU Gross National Income (GNI).

Details on EU Budget payments and public sector receipts are published annually by the Department of Finance in the Budget Statistics bulletin which is available on the Department's website. As outlined in that publication,  in 2015 Ireland contributed €1,952m to the EU budget.

Ireland will have to make a payment to the EU budget as a result of the recent revision to GNI for 2015. Under EU budget rules, GNI data revisions are taken into account in future budget contributions . In this case, the payment associated with 2015 will be paid in mid-2017. The final figure to be paid over will not be known until 2017.

Separately, at the end of 2016 Ireland will make a payment towards the Own Resources Decision (ORD), some of which will be associated with the years 2014 and 2015 for the accounting purposes of the Stability and Growth Pact (SGP).  However, the figure published in the Budget Statistics bulletin is a cash-based figure and will not be impacted by this.

Brexit Issues

Questions (120)

Michael McGrath

Question:

120. Deputy Michael McGrath asked the Minister for Finance the impact he expects Brexit to have on Ireland's annual contribution to the EU budget; and if he will make a statement on the matter. [40640/16]

Written answers

Minister for Finance

Until it formally withdraws from the European Union, the UK remains a full EU Member, with all of its existing rights and obligations including in relation to the EU Budget. Brexit is likely to involve complex discussion on the Multiannual Financial Framework, particularly as the UK is an important net contributor to the EU Budget. Therefore, Brexit will have a significant impact on EU Budget funding and expenditure and may need to be mitigated by either increased contributions from other Member States, reductions in EU funding programmes, or a combination of both.

While my Department has undertaken some broad modelling work to estimate the potential impact of Brexit on our EU budget calculations, this analysis will need to be developed in more detail in the coming period, when the parameters of the budget negotiations are better defined. In particular, a key point will be getting agreement amongst the EU27 on a common approach to the future of the EU Budget.

NAMA Operations

Questions (121)

Michael McGrath

Question:

121. Deputy Michael McGrath asked the Minister for Finance the status of the planned wind-up of NAMA; the details of the portfolio that is remaining; the current estimate of the timeframe and the financial outturn from the wind-up of NAMA; and if he will make a statement on the matter. [40642/16]

Written answers

Minister for Finance

The most recent details on NAMA's remaining portfolio are available in the Agency's quarterly accounts for Q2 of 2016.  This is published on the NAMA website via: https://www.nama.ie/fileadmin/user_upload/NAMA_s_Section_55_Q2_2016.pdf. Page 44 of the report and accounts provides details on NAMA's outstanding loanbook.  I expect to receive NAMA's report and accounts for Q3 of 2016 in the coming week and expect to lay that report before the Oireachtas when the Dáil returns in January.

Regarding the geographic breakdown of the remaining portfolio, I would refer the Deputy to a recent presentation by the NAMA Chairman, Frank Daly, at the The Real Estate Alliance AGM. This presentation is also available on NAMA's website at https://www.nama.ie/fileadmin/user_upload/FRANK_DALY_-_NAMA_CHAIRMAN_REA_PRESENTATION_-_18.11.2016_-_FINAL.pdf .  Pages 4 and 5 of this presentation are particularly relevant to the Deputy's question.

NAMA's recently published Annual Statement for 2017, available on NAMA's website at https://www.nama.ie/fileadmin/user_upload/NAMA_s_Section_53_Annual_Statement_2017.pdf, also sets out the proposed objectives for NAMA for 2017; the proposed nature and scope of activities NAMA plans to undertake; the proposed strategies and policies NAMA intends to implement and the proposed application of NAMA's resources.

Following a redemption of €1bn of NAMA Senior debt on 14 December, NAMA expects to redeem most of its remaining €2.6bn Senior Debt in 2017 and to repay its subordinated debt in March 2020. NAMA will also focus on completing its Docklands and residential funding programmes in the interim period to 2020. NAMA's annual statement provides further insight into the Agency's expectations regarding the timing and quantum of its further debt redemptions, its expected progress in the funding of residential housing delivery and its role in the commercial development of the Dublin Docklands SDZ.

NAMA's most recent projections indicate that, after repayment of senior and subordinated debt, its terminal surplus will range between €1.6 billion and €2.3 billion.

I have no plans to wind down the Agency prior to, or beyond, its current expected timeframe. It is too early to speculate whether NAMA will have made sufficient progress on its various strategies, including its SDZ and residential delivery funding programmes that could warrant consideration a dissolution date other than at 2020 as originally envisaged.

Finally, the Deputy will be aware that, in-mid 2014, my officials produced a report under Section 227 of the NAMA Act, assessing the extent to which NAMA to end 2013 had made progress toward achieving its overall objectives and whether the continuation of NAMA was necessary for the purposes of the Act.  I am required under the NAMA Act to conduct a further Section 227 review of NAMA as of end 2018, to be published in 2019 - one year prior to NAMA's expected dissolution.

Tax Yield

Questions (122)

Michael McGrath

Question:

122. Deputy Michael McGrath asked the Minister for Finance the gross amount of corporation tax paid in each year from 2011 to 2015 by the top ten multinational firms as measured by corporation tax paid in tabular form; the proportion this represents of overall corporation tax paid in each year; and if he will make a statement on the matter. [40644/16]

Written answers

Minister for Finance

I am informed by Revenue that the net Corporation Tax receipts by the top ten companies in each year are as shown in the following table. Also shown is the corresponding proportion this represents of overall Corporation Tax paid. I am advised that information on gross Corporation Tax payments is not readily available but earlier analysis by Revenue shows the share of receipts on a gross basis from the largest ten companies is similar to the net figures provided. I am further advised that the top ten companies are all multinationals.

Year	Corporation Tax from top 10  €m	Share of Corporation Tax from top 10 %
2015	2,798	41
2014	1,728	37
2013	1,551	36
2012	1,414	34
2011	1,378	39

Legal Costs

Questions (123)

Michael McGrath

Question:

123. Deputy Michael McGrath asked the Minister for Finance the amount of fees paid to barristers, senior and junior counsel, by IBRC since the appointment of the special liquidators; the name and amount paid to each recipient; the estimated total professional fees arising from the special liquidation; and if he will make a statement on the matter. [40646/16]

Written answers

Minister for Finance

A summary of the Special Liquidation fees, including legal fees to 31 December 2015 is available on page 61 of the most recent progress update report which is available on the Department of Finance website (http://www.finance.gov.ie/sites/default/files/Progress%20update%20report_31%20Dec%202015_0.pdf).

The information sought in the question is not information held in my Department and I am advised by the Special Liquidators that an updated summary of the Special Liquidation fees, including legal fees, is not readily available at this time. However, the Special Liquidators have informed me that an updated summary of the Special Liquidation fees, including legal fees to 31 December 2016 will be contained in the next progress update report which will be published in H1 2017.

I am further advised by the Special Liquidators that it is not possible for them at this time to confirm or estimate the final fees of the liquidation as there remains a number of tasks in the liquidation to be completed including the on-going management of c. 350 legal cases, the completion of the creditor adjudication process, the work with the Commission of Investigation, the management of the remaining loan book and the realisation of all remaining assets.

Banking Operations

Questions (124)

Michael McGrath

Question:

124. Deputy Michael McGrath asked the Minister for Finance if the Central Bank has a policy on whether bank ATM machines should dispense €10 notes to customers; the practice of retail banks here in relation to dispensing €10 notes; if there is any policy as to whether the use of €20 notes or €50 notes is preferred in which an amount of €100, for example, is required; the breakdown of actual notes dispensed; and if he will make a statement on the matter. [40648/16]

Written answers

Minister for Finance

I am informed by the Central Bank that a recommendation of the National Payments Plan targeted a significant increase in the number of €10 and €20 banknotes dispensed from Irish ATMs, with a view to making lower denomination notes more available to cash users.

Building on the recommendations in the National Payments Plan, the Central Bank has set targets for the banks to achieve in terms of issuance of €10, €20 and €50 notes from ATMs by 2018. These targets were calculated following a study of the requirements of consumers given patterns of cash usage.

The targets are that 6-10% of all notes by volume are to be €10 notes by the end of 2018, 40-45% of all notes by volume are to be €20 notes and 45-50% of all notes by volume are to be €50 notes.  The latest available data, for Q3 2016, on amounts actually dispensed shows that 7% of all notes are €10 notes, 34% of all notes are €20 notes and 59% of all notes are €50 notes.

The Central Bank is working, in co-operation with the commercial banks, towards these targets. This topic is a permanent agenda item at the National Cash Forum which is chaired by the Central Bank, and is also discussed at bilateral meetings with banks by the Central Bank.

The Bank requests regular updates from the commercial banks on their progress towards achieving these targets and continues to challenge them in relation to the number of €10 and €20 banknotes being dispensed in their ATMs.

Insurance Compensation Fund

Questions (125)

Michael McGrath

Question:

125. Deputy Michael McGrath asked the Minister for Finance the progress that has been made in respect of the liquidation of a company (details supplied); if those caught up in outstanding claims are facing losses; the role of the Insurance Compensation Fund; the role of the Motor Insurance Bureau of Ireland; the current estimate of the number and value of outstanding claims; the current estimate of the shortfall; and if he will make a statement on the matter. [40649/16]

Written answers

Minister for Finance

The liquidation of an insurance company is a legally complex process. Setanta is a Maltese incorporated company and therefore, the Setanta liquidation is being carried out under Maltese law.

Progress in the liquidation of Setanta has been awaiting the outcome of legal proceedings in the case of Law Society of Ireland v the Motor Insurers' Bureau of Ireland (MIBI). On 4 September 2015, the High Court held that MIBI's liability under the Motor Insurers' Bureau of Ireland Agreement 2009 extended to situations of insurer insolvency (subject to each individual claim being deemed eligible under the 2009 Agreement). This decision was appealed by the MIBI and the Court of Appeal upheld the High Court decision. The MIBI was granted leave to appeal the decision to the Supreme Court. That appeal was heard before the Supreme Court on 24 and 25 October 2016 and judgement has been reserved.

The Liquidator for Setanta has informed me that:

- As of 30 November 2016, the number of open claims was 1,666.

- The claims reserves position stands at between €87.7 million and €95.2 million. 

- The Liquidator reports that it is proving difficult to settle claims in advance of the outcome of the MIBI appeal, particularly third party claims

- The Liquidator continues to be of the view that he will not be in a position to meet more than 30% of claims

- The Deputy should note that the Insurance Compensation Fund, with the assistance of the Liquidator, has been recently able to make 65% payments totalling €608,085 on the first party damage claims made by Setanta policy holders where they had comprehensive insurance in place.

- The basis for the ICF being able to make these payments in advance of the Supreme Court's ruling is that these being first party damage claims they come within its remit rather than that of MIBI which is responsible for third party claims i.e. claims against Setanta policy holders. 

- In summary therefore, the position in relation to third party motor insurance claims is that they are unlikely to  be processed until after the outcome of the Supreme Court appeal.

- I expect to be able to provide a more accurate update after the legal proceedings are concluded.

Mortgage Data

Questions (126)

Michael McGrath

Question:

126. Deputy Michael McGrath asked the Minister for Finance the number of residential mortgages here that are classified as sub-prime; the number of sub-prime lenders currently operating in the market; the total value of sub-prime mortgages outstanding; the rate of arrears on these mortgages; the actions specific to the sub-prime sector that are being taken to address arrears; and if he will make a statement on the matter. [40652/16]

Written answers

Minister for Finance

The Central Bank has advised me that it is important to note that there is no such regulated category as "sub-prime lender".  However, Retail Credit Firms are authorised to provide credit, in the form of cash loans, directly to individuals (these firms are not licensed to accept deposits).  Some firms authorised in this category are mortgage lenders.  Retail Credit Firms have been subject to regulation by the Central Bank since 1 February 2008.  A register of all Retail Credit Firms is available on the Central Bank website at http://registers.centralbank.ie/DownloadsPage.aspx.  As at 12 December 2016, 18 retail credit firms were subject to regulation by the Central Bank. In light of their activities, Retail Credit Firms are not subject to the same prudential supervisory regime as licensed credit institutions but are subject to the same Consumer Protection framework requirements, including the Central Bank's statutory Consumer Protection Code and the Code of Conduct on Mortgage Arrears ('CCMA').

The Central Bank's Residential Mortgage Arrears and Repossessions Statistics: Q3 2016, which can be viewed at http://www.centralbank.ie/polstats/stats/mortgagearrears/Pages/releases.aspx,  details figures on 'Mortgage Arrears Repossessions and Restructures of Non-Bank Entities' for both PDH and BTL properties.  In this release, the Central Bank further breaks down this group of non-bank entities into "retail credit firms" and "unregulated loan owners".

With respect to actions being taken to address arrears, the Deputy will be aware that the Consumer Protection (Regulation of Credit Servicing Firms) Act, 2015 introduced a regulatory regime for a new type of entity called a 'credit servicing firm'.  Credit Servicing Firms are now subject to the provisions of Irish financial services law that apply to 'regulated financial service providers'. This ensures that relevant borrowers, whose loans are sold to third parties, maintain the same regulatory protections they had prior to the sale, including under the various statutory codes, such as the Consumer Protection Code and the Code of Conduct on Mortgage Arrears.

In conclusion, the Government remains committed to working with the Central Bank to ensure that the CCMA and Consumer Protection Code continues to be relevant, fair and balanced in respect of the legitimate interests of debtors and creditors, all the while promoting the availability of sustainable solutions to address genuine mortgage difficulty.

Financial Services Regulation

Questions (127)

Michael McGrath

Question:

127. Deputy Michael McGrath asked the Minister for Finance if his Department or the Central Bank has a record of the number of commercial loans that have been sold on by the original underwriter and if so, the details; if the Central Bank must be notified when a commercial loan has been sold on; his views on the fact that a commercial loan could be sold on to a competitor of the borrowers; and if he will make a statement on the matter. [40655/16]

Written answers

Minister for Finance

I have been informed by the Central Bank that it does not maintain a record of the number of commercial loans sold on by the original underwriter. Portfolio sales are considered as part of normal supervisory engagement where they are sufficiently material.

However, the Deputy will be aware that legislation and regulations have been implemented by the Oireachtas and Central Bank to protect SMEs when dealing with regulated and unregulated firms.

The Consumer Protection (Regulation of Credit Servicing Firms) Act, 2015 was enacted on 8 July 2015. It was introduced to fill the consumer protection gap where loans were sold by the original lender to an unregulated firm. The 2015 Act introduced a regulatory regime for a new type of entity called a 'credit servicing firm'.  Credit Servicing Firms are now subject to the provisions of Irish financial services law that apply to 'regulated financial service providers'. This ensures that relevant borrowers, whose loans are sold to third parties, maintain the same regulatory protections they had prior to the sale, including under the various statutory codes (such as the Consumer Protection Code, the Code of Conduct on Mortgage Arrears, the Code of Conduct for Business Lending to Small and Medium Enterprises and the Minimum Competency Code) issued by the Central Bank of Ireland.

Under the 2015 Act, therefore, purchasers of loan books must either be regulated by the Central Bank themselves or else the loans must be serviced by a credit servicing firm who is regulated by the Central Bank.  Furthermore, it is important to highlight that the transfer of a loan from one entity to another does not change the terms of the contract or the borrower's rights and obligations under the original contract.

Also, following a review in 2015, the Code of Conduct for Business Lending to Small and Medium Enterprises, has been strengthened in certain areas resulting in the Central Bank (Supervision and Enforcement) Act 2013 (Section 48) (Lending to Small and Medium-Sized Enterprises) Regulations 2015 which came into operation on 1 July 2016. 

Credit Register Establishment

Questions (128)

Michael McGrath

Question:

128. Deputy Michael McGrath asked the Minister for Finance when the central credit register will be fully operational; the steps that have been taken to date in its implementation; the reason for the delay in bringing it forward; and if he will make a statement on the matter. [40658/16]

Written answers

Minister for Finance

As previously indicated, the Central Credit Register (CCR) is being implemented on a phased basis with phase 1 focusing on lending to consumers and phase 2 focusing on lending to businesses.  Data submission by lenders for phase 1 will commence after 30 June 2017.  During the intervening period, technical and operational changes will be implemented by lenders and data quality assurance testing will be carried out.  Approximately 500 lenders will be registered with the CCR during this time in order to commence data submission from 30 June 2017.  A period of time between 30 June 2017 and 31 December 2017 will then be provided to ensure that the data submitted to the CCR is of sufficient quality to allow the CCR match personal and credit information and to be able, subject to data quality assurance, to produce credit reports after 31 December 2017.  The submission of data under phase 2 is currently projected to commence in the second half of 2018.  The primary focus of Central Bank activity on the CCR at this point is to engage with lenders to ensure they can submit data within the required timelines.

Since the enactment of the Credit Reporting Act 2013, the Central Bank has carried out substantial work to develop a robust CCR where the Bank has:

- undertaken a procurement process to select a partner and solutions to support the CCR;

- continuously engaged with representative industry groups to explain its approach and gain an understanding of the likely implications of the CCR for lenders;

- designed the CCR solution and processes in conjunction with CRIF Ireland Ltd;

- published a public consultation paper and Feedback Statement;

- completed a Privacy Impact Assessment;

- following consultation with the Data Protection Commissioner and with my consent, made necessary regulations under the Credit Reporting Act 2013;

- published guidance documents and technical manuals explaining the obligations on lenders.

- The focus of activity now is to engage with lenders to ensure they can submit data within the required timelines.

Corporation Tax Regime

Questions (129)

Michael McGrath

Question:

129. Deputy Michael McGrath asked the Minister for Finance the progress of the independent assessment on Irish corporation tax; when it will be published; if the terms of reference have been refined due to recent developments in Europe and the United States; and if he will make a statement on the matter. [40661/16]

Written answers

Minister for Finance

At Budget time I announced that I was appointing an independent expert, Mr. Seamus Coffey, to undertake a review of the Irish corporation tax code. The terms of reference for the review were published as part of the Budget 2017 documentation. Work has commenced on the matters set out in the terms of the reference.  Furthermore, as outlined during the debate on the Finance Bill, I have also asked Mr Coffey to examine the current strong performance of corporation tax receipts.  While I have not specifically asked Mr Coffey to assess and evaluate the issues arising from Brexit and possible US tax reform, these matters do of course form part of the context in which the review is being undertaken.  The review is to be completed by the end of the second quarter of 2017.

Legislative Programme

Questions (130)

Michael McGrath

Question:

130. Deputy Michael McGrath asked the Minister for Finance when the second Finance Bill is due to be published in 2017; and if he will make a statement on the matter. [40662/16]

Written answers

Minister for Finance

The Deputy will be aware that the passage of Finance Bill 2016 through the Dáil and Seanad has just concluded.  As regards 2017 there will of course be the usual Finance Bill later in the year as part of the Budget process. It is my intention, in the New Year, to consider whether there is merit in the development of an additional Finance Bill during 2017.

NAMA Social Housing Provision

Questions (131)

Michael McGrath

Question:

131. Deputy Michael McGrath asked the Minister for Finance the number of housing units that the National Asset Management Agency has approved and transferred for social housing, by county; and if he will make a statement on the matter. [40663/16]

Written answers

Minister for Finance

I would firstly point out that although NAMA works closely with the Minister for the Environment, Community and Local Government and the Minister of State for Housing and Planning in relation to the delivery of social housing, the Agency is not responsible for approving and transferring housing units for social housing. Rather, NAMA has an established initiative of identifying properties, owned by its debtors and receivers, which may be suitable for social housing requirements. However, confirmation of demand and suitability is a matter for local authorities and is not something in which NAMA has a role.

I am advised that all relevant parties are committed to the maximum possible delivery of residential units under this important initiative. Once demand for a property has been confirmed by a local authority, NAMA facilitates contact and negotiation between its debtor or receiver and the local authority or Approved Housing Body ( AHB ) to acquire the property. Contractual arrangements can take the form of a lease or purchase. In general, purchases are completed by AHBs and the properties acquired are then made available to local authorities under a payment and availability agreement. I am advised that, as of end-September 2016, NAMA had identified 6,893 residential properties as potentially suitable for social housing. Of these, demand has been confirmed by local authorities for over 2,700 properties, of which 2,291 have been delivered for social housing use.

A detailed county by county breakdown is available on the NAMA website: https://www.nama.ie/social-initiatives/social-housing/.

Though NAMA is consistently mindful of identifying properties which may be suitable for social housing, the Deputy will appreciate that the pool of such properties is reducing in line with its wider portfolio.

Negative Equity Mortgages Data

Questions (132)

Michael McGrath

Question:

132. Deputy Michael McGrath asked the Minister for Finance the number of households in negative equity; his views on the implications of this for the wider economy; and if he will make a statement on the matter. [40664/16]

Written answers

Minister for Finance

Negative equity occurs when the price of a property falls below the value of the outstanding mortgage secured on that property. I have been informed by the Central Bank of Ireland that it does not publish a regular series of data on mortgages in negative equity. Neither do officials in my own Department collect such data. The Central Bank's latest Household Credit Market Report, at www.centralbank.ie/publications/Documents/Household%20Credit%20Market%20Report%202016H2.pdf, presents the percentage of loans in negative equity split by default status (Table 7, HCMR H2 2016). These data are for 2015 and do not reflect changes to loan balances and house prices since December 2015. The Central Bank estimates that 15 per cent of PDH loans and 26 per cent of BTL loans were in negative equity at end December 2015 of which 10 per cent of PDH and 14 per cent of BTL loans in negative equity were deemed to be performing.  This represents a decline of 5 per cent in respect of PDH loans and 9 per cent in respect of BTL loans in negative equity since December 2014.

The numbers in negative equity have been reducing and this has important implications for the wider economy such as improving mobility amongst those affected, potential greater spend on home improvements and maintenance, and increased consumption via the wealth effect.

Irish Infrastructure Fund

Questions (133)

Michael McGrath

Question:

133. Deputy Michael McGrath asked the Minister for Finance the number of projects funded by the Irish Infrastructure Fund since its inception, including the nature of such projects and the number of jobs created; and if he will make a statement on the matter. [40665/16]

Written answers

Minister for Finance

I am informed by the Ireland Strategic Investment Fund (ISIF) that it has a commitment of €250 million to the Irish Infrastructure Fund (IIF). The IIF was established by Irish Life Investment Managers, with AMP Capital appointed as the fund's discretionary investment manager. The IIF has to date secured total investor commitments of over €400 million, including the ISIF commitment.

The purpose of the IIF is to invest in infrastructure assets which underpin the Irish economy and the Fund targets investments in economic sectors including transport, energy and utilities. The IIF's objective is to provide long-term investors with a stable return from a combination of income yield as well as capital growth deriving from investments in a substantial portfolio of assets.

The IIF has thus far completed three investments, including:

- acquisition of a controlling stake in a portfolio of wind farms from Viridian Group in 2012.

- acquisition, in 2013, of Towercom, Ireland's largest independent wireless telecoms infrastructure company.

- the July 2015 acquisition of the concession contract to operate and maintain the Convention Centre Dublin with the investment also including a license to build and operate an approximately 330-bed hotel on a site adjacent to The Convention Centre.

The IIF is actively working towards the completion of its next investment. The IIF has continued to strengthen its investment team and now has two members permanently based in Dublin, who are supported by AMP Capital's European infrastructure business in London.

Information on the economic impact of ISIF's investments, including employment, is published on a bi-annual basis.  Due to commercial sensitivities the ISIF does not report on economic impact at individual transaction level, but instead at the aggregate portfolio level. Updated economic impact figures, which are available on the ISIF website, show that as at 30 June 2016, ISIF, through its investment activities, was supporting 18,984 jobs in the Irish economy.