Written Answers Nos. 114 - 127
115. Deputy Thomas Pringle asked the Minister for Finance the status of developments regarding credit union ambition to facilitate financing for social housing, small and medium enterprises and mortgages; and if he will make a statement on the matter. [18477/17]
View answerI am pleased that the credit union sector is considering various proposals to increase its income and develop its business model. My Department has received a number of such proposals from both the Irish League of Credit Unions (ILCU) and from the Credit Union Development Association (CUDA). Proposals from both representative bodies, in relation to the funding of social housing, are at various stages of development. While the Department of Housing, Planning, Community and Local Government is the Department primarily responsible for the formulation and implementation of policy and for the preparation of legislation in relation to housing, any such proposal would require approval of the Registrar of Credit Unions at the Central Bank before it could be implemented.
The Central Bank has informed me that it has received information regarding proposals for credit unions to provide funding for social housing and is currently engaging with the sector on those proposals. It further stated that while it does not comment on specific proposals, such investments could be facilitated by future regulations made by the Central Bank, where appropriate. The Central Bank also stated that it is willing to consider the type of regulations that would be required to facilitate such proposals. However, the Central Bank's key consideration in evaluating such proposals is its statutory mandate to ensure the protection of members' savings by credit unions and to ensure the wellbeing of the sector generally.
Officials from both my Department and the Department of Housing, Planning, Community and Local Government have met with the representative bodies on a number of occasions to examine how credit unions can assist in the area of social housing. Officials from both Departments have also met with the Central Bank. Separately, communication is ongoing between the Department of Housing, Planning, Community and Local Government and my Department.
On 1 January 2016, I commenced the final sections of the Credit Union and Co-operation with Overseas Regulators Act 2012 (2012 Act) following discussions with credit union representative bodies. Following commencement of the legislation, the Central Bank introduced the Credit Union Act 1997 (Regulatory Requirements) Regulations 2016, regarding a number of areas including savings, borrowing, lending, investments and liquidity.
Investment regulations made specific reference to section 43 of the Act and to further classes of investments in which a credit union may invest its funds. The regulations provide that investments in projects of a public nature include, but are not limited to, investments in social housing projects. The Central Bank are currently reviewing the investment regulations for credit unions and on completion of their review will undertake a public consultation in 2017.
Notwithstanding any potential changes that may be made to the regulations, the legislative requirement for credit unions to ensure investments do not involve undue risk to members' savings will remain the overriding factor which must inform all credit union investment decisions.
In relation to small and medium enterprises (SMEs), the Central Bank has informed me that credit unions are permitted to provide commercial loans to their members. Commercial loans are subject to concentration, maturity and large exposure limits as outlined in the 2016 Regulations. In addition, where a credit union is considering granting a commercial loan, a comprehensive business plan and detailed financial projections (supported by evidence based assumptions), appropriate for the scale and complexity of the loan, should be provided and in place before such a loan is granted. This should enable the credit union to ensure that it is satisfied that the borrowing business has the capacity to generate sufficient income to repay the commercial loan. The Central Bank has further informed me that lending to SMEs is a specialist form of lending that requires specific skills and expertise. In general, this type of lending is viewed as high risk which may not be appropriate for all credit unions.
Currently credit unions can and some do provide mortgages to members. These types of loans are subject to certain maturity limits contained in the 2016 Regulations. The 2016 Regulations set out the percentage of a credit union's loan book that can be outstanding for periods exceeding both five years and ten years, as well as limits on the maximum outstanding liability to an individual member. Under the 2016 Regulations credit unions continue to be allowed to lend up to 30% of their loan book over five years and up to 10% of their loan book over 10 years, subject to a maximum maturity of 25 years. In addition, credit unions can apply to the Central Bank for an extension to their longer term lending limits (up to 40% of their loan book over 5 years and up to 15% of their loan book over 10 years). Approval is subject to conditions set by the Central Bank. There are currently 11 credit unions approved to avail of increased longer term lending limits.
The Central Bank informs me that the December 2016 Prudential Return indicates that for the sector overall, total gross loans over 10 years amount to c. 2.7% of total loans in the credit union sector compared to the limit of 10% (and in some cases 15%).
The Central Bank has indicated that while it can see longer term lending, including mortgages, being part of a balanced portfolio of total lending, in their analyses, credit unions need to consider the impact of longer term lending on interest margins, return on assets and on balance sheet structure. The issue of funding longer term lending with short term funding is a challenge for the credit union business model. The Central Bank further informs me that consumer mortgage lending is an activity that has its own unique risk profile, and proposals to become involved in mortgage lending in a significant way must be supported by an evidenced based business case.
The Credit Union Advisory Committee's (CUAC) recent report provides a number of recommendations, one of which is to conduct a full review of lending limits and concentration limits. I have established an Implementation Group which is due to meet for the third time later this month. The Implementation Group is currently assessing each of CUAC's recommendations with a view to implementation as appropriate. Central to its work is ensuring a full examination of lending limits and concentration limits as recommended. I look forward to regular progress reports from the Implementation Group as these recommendations are developed and implemented.
116. Deputy Thomas P. Broughan asked the Minister for Finance when the national economic dialogue will be held in 2017; and if he will make a statement on the matter. [18497/17]
View answerAs part of the budgetary process in 2015 and 2016, a National Economic Dialogue was held, jointly hosted by the Departments of Finance, and Public Expenditure and Reform. A Government decision on whether to hold a National Economic Dialogue this year has not yet been taken but will be considered as part of the ongoing budgetary process for 2017.
117. Deputy Thomas P. Broughan asked the Minister for Finance if his Department will be publishing a report and analysis of the 30 submissions received and published following the consultation process on the sugar-sweetened drinks tax; the timetable for the introduction of the tax; and if he will make a statement on the matter. [18498/17]
View answerIn my 2017 Budget speech, I announced my intention to introduce a tax on sugar-sweetened drinks. At that time I also announced a public consultation process and invited interested parties to make submissions in relation to the form and practical implementation of the tax on sugar-sweetened drinks.
The contents of all of the submissions received in response to the public consultation process are being considered. I do not intend to publish a report on the submissions as they are publicly available, in their entirety, on my Department's website.
It is my intention to introduce the sugar-sweetened drinks tax in April 2018 in order to align it with the introduction of a similar tax in the UK. I expect to announce details of the scope and rate of the tax as part of Budget 2018. I also expect to bring forward the primary legislation which will underpin the tax as part of this year's Finance Bill.
118. Deputy Brendan Griffin asked the Minister for Finance his views on a matter (details supplied). [18507/17]
View answerThe issue in the matter mentioned concerns a VAT registered partnership's desire to deduct VAT on goods acquired by an individual partner rather than by the partnership. I am advised by the Revenue Commissioners that the general rule for deduction of VAT incurred is such that VAT may only be deducted by the accountable person who acquired the goods. Support for such deduction in the form of a valid VAT invoice in the name of the taxable person is required when claiming such a deduction. Such an invoice is not available in the matter mentioned.
I am further advised by Revenue that an official from the Revenue Office in Kerry will make direct contact with the persons concerned to provide further clarity in the issue concerning VAT deductibility by a partnership where the goods are purchased by an individual partner rather than the partnership.
119. Deputy Bobby Aylward asked the Minister for Finance the progress the Government has made in implementing the recommendations made in the Oireachtas Committee on Finance, Public Expenditure and Reform, and Taoiseach insurance report and the Government's motor insurance working group report; and if he will make a statement on the matter. [18546/17]
View answerThe Cost of Insurance Working Group, chaired by Minister of State Eoghan Murphy T.D., finalised its Report on the Cost of Motor Insurance in December 2016 and it was published on 10 January 2017. The Report makes 33 recommendations with 71 associated actions to be carried out in agreed timeframes, set out in an action plan within the Report. The Report including the Action Plan is available on the Department's website at:
http://www.finance.gov.ie/sites/default/files/170110%20Report%20on%20the%20Cost%20of%20Motor%20Insurance%202017.pdf
The Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach conducted its own review of the rising cost of motor insurance and published its report in November 2016. I am of the view that considerable overlaps exist between the two reports. Therefore in implementing the Cost of Insurance Report, the Government will address many of the recommendations contained in the Joint Committee's Report, including in such key areas as:
- Consumer protection e.g., providing breakdown of the calculation/increase in premiums, improving conditions for returning emigrants, etc.
- Enhancing transparency in the claims environment e.g., establishing a National Claims Information Database, improving the quality of data in the Book of Quantum, etc.
- Counteracting uninsured driving and fraud e.g., establishing fully-functional databases in respect of uninsured drivers and insurance fraud, expediting the development of the Master Licence Record, etc.
In this respect, work is well underway by all relevant bodies and stakeholders in implementing the recommendations and it is expected that the Report's 71 actions will be completed by the end of 2018, with 45 due before the end of this year.
My Department will publish its first quarterly progress report on the implementation of the recommendations in the coming weeks. This report will provide a full update on the progress to date on the overall implementation of the Report, with a particular focus on action points due for completion in the first Quarter of 2017. This update will cover actions such as the establishment of the Personal Injuries Commission in January and the issuing of a key aggregated metrics template to insurance undertakings for completion at the end of March.
In addition to the quarterly report, the Minister of State will continue to engage regularly with the Joint Committee to ensure that collaboration in working on these issues continues. In this context, he has made a number of appearances before the Joint Committee, both during its work, and by way of providing an update on progress.
120. Deputy Sean Fleming asked the Minister for Finance his views on the situation for persons who cannot get insurance on their home due to flooding; the actions he is proposing with regard to these cases; and if he will make a statement on the matter. [18632/17]
View answerI am conscious of the difficulties that the absence of flood cover can cause to householders. However, the provision of insurance is a commercial matter for insurance companies and is based on an assessment of the risks they are willing to accept and then ensuring that they have adequate provisioning to meet those risks.
Consequently, neither the Government nor the Central Bank can interfere in the provision or pricing of insurance products or have the power to direct insurance companies to provide flood cover to any specific individuals. This position is reinforced by the EU framework for insurance which 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.
Government policy in relation to flooding is focused on the development of a sustainable, planned and risk-based approach to dealing with flooding problems. This in turn should lead to the increased availability of and lower cost for flood insurance. To achieve this aim, there is a focus on:
- prioritising spending on flood relief measures by the Office of Public Works (OPW) and relevant local authorities,
- development and implementation of plans by the OPW to implement flood relief schemes, and
- improving channels of communication between the OPW and the insurance industry in order to reach a better understanding about the provision of flood cover in marginal areas.
The National Catchment Flood Risk Assessment & Management (CFRAM) Programme entailed a comprehensive assessment of flood risk throughout the country and the development of flood risk management plans for the areas most at risk. Under this Programme, 29 draft Flood Risk Management Plans were published for public consultation with feasible flood prevention measures identified to provide protection to at risk properties in 300 assessed areas. These draft Plans are expected to be finalised in the coming weeks when submissions from the public consultation process have been fully considered. The Government remains committed to funding this programme, as a core element of flood management strategy, over the next several years.
This commitment is underpinned by a significant capital works investment programme with in the region of €250 million spent on flood relief measures over a five year period from 2012 to 2016. The Capital Programme covering the period 2016 to 2021 will see the current annual allocation for flood risk schemes increased from €45 million to €100 million by 2021, representing a total investment of €430 million. These works will be completed on a prioritised basis.
This strategy is also complemented by the Memorandum of Understanding between the OPW and Insurance Ireland, the representative body for insurance companies in Ireland, which provides for the exchange of data in relation to completed flood defence schemes, which should provide a basis for the increased provision of flood insurance in areas where works have been completed. In this regard, the Insurance Ireland/OPW working group, which the Department of Finance attends, now meets on a quarterly basis to support the information flow and improve the understanding of issues between both parties. A further meeting of this working group is scheduled this month.
The most recent Insurance Ireland survey of approximately 85% of the property insurance market in Ireland indicates that of the 16 completed defence schemes, 90% of policies in areas benefitting from permanent flood defences include flood cover, while there has been an increase from 66% to 77% of policies in areas benefitting from demountable defences including flood cover.
Finally, you should be aware that a consumer can make a complaint to the Financial Services Ombudsman in relation to any dealings with a Financial Services or Insurance provider during which they feel they have been unfairly treated. In addition, individuals who are experiencing difficulty in obtaining flood insurance or believe that they are being treated unfairly may contact Insurance Ireland which operates a free Insurance Information Service for those who have queries, complaints or difficulties in relation to insurance.
121. Deputy Carol Nolan asked the Minister for Finance the annual revenue that would be generated if VAT was applied at the standard rate to all private school and higher level student fees; and if he will make a statement on the matter. [18690/17]
View answerThe VAT rating of goods and services is subject to the requirements of EU VAT law with which Irish VAT law must comply. It is not possible to charge VAT on education fees as this is contrary to EU VAT law. Article 132(1)(i) of the EU VAT Directive provides that:
" 1. Member States shall exempt the following transactions:
(i) the provision of children's or young people's education, school or university education, vocational training or retraining, including the supply of services and of goods closely related thereto, by bodies governed by public law having such as their aim or by other organisations recognised by the Member State concerned as having similar objects;"
This compulsory exemption from VAT on educational services is reflected in Irish VAT law.
122. Deputy Joan Burton asked the Minister for Education and Skills if he has received the supplementary tender report regarding a school (details supplied); if final approval has now issued to sign contracts for construction of the new school; when construction will commence; and the construction timetable. [18363/17]
View answerThe Supplementary Tender Report for the project referred to by the Deputy has been approved and subject to no issues arising the project is due to commence construction before the end of this month. Once construction commences it will take approximately 24 months for the project to be completed.
123. Deputy Joan Burton asked the Minister for Education and Skills the precise steps that have been taken to secure accommodation for a school (details supplied) in County Kildare, in view of the fact that it is due to open in 2019. [18364/17]
View answerMaynooth Community College opened in 2014 with an Irish-medium Aonad and it was stated that should the Aonad demonstrate sufficient viability after four years from its date of establishment, a Gaelcholáiste would be established, in a partnership patronage model between Kildare and Wicklow ETB and An Foras Pátrúnachta.
The new schools which will open in 2017 and 2018 to cater for increased demographic demand nationwide were announced in November 2015. As part of that announcement, and in view of the continued support for an independent Gaelcholáiste, it was confirmed that a Gaelcholáiste to serve the North Kildare area will open in 2019, subject to the continued viability of the Irish-medium Aonad at Maynooth Community College.
In the interim, my Department will continue to work closely with the Education and Training Board and An Foras Pátrúnachta in relation to the provision of appropriate accommodation for the establishment of the Gaelcholáiste. Kildare and Wicklow Education and Training Board is currently examining the options for accommodation for the Gaelcoláiste which will involve consideration of the timing and availability of appropriate infrastructure in the Maynooth area.
124. Deputy Joan Burton asked the Minister for Education and Skills the reason for the delay in considering a request for capital funding for a school (details supplied); when the school authorities will receive a substantive response to their application; and if he will make a statement on the matter. [18365/17]
View answerI wish to advise the Deputy that the Patron of the school referred to has withdrawn the application for capital funding.
125. Deputy Joan Burton asked the Minister for Education and Skills if the design team for a school (details supplied) have submitted the stage 2b submission including review arising from changes in public work contracts; and if he will make a statement on the matter. [18366/17]
View answerI can confirm for the Deputy that the school and its design team have not yet submitted the report to my Department.
126. Deputy Joan Burton asked the Minister for Education and Skills if he has received the tender documents and stage 2b documentation for a school (details supplied); and if he will make a statement on the matter. [18367/17]
View answerThe Stage 2b documents for the school referred to by the Deputy are awaited from the school and its Design Team. Upon receipt and review of the Stage 2(b) report my Department will revert to the school with regard to the further progression of the project at that time.
127. Deputy Brendan Howlin asked the Minister for Education and Skills the status of an application for a new school (details supplied) in County Wexford; and if he will make a statement on the matter. [18368/17]
View answerThe Deputy will be aware that a building project for the school in question is included in my Department's 6 Year Construction Programme (2019/21).
In line with the Memorandum of Understanding which formalises the local authorities' part in securing sites for educational use, my Department is working with the relevant Local Authority in relation to identifying and acquiring a suitable site for the school concerned.
When a site has been secured, a project for the school in question will be progressed into the architectural planning process.
