Written Answers Nos. 145-164
145. Deputy Niall Collins asked the Minister for Finance his plans to review a scheme (details attached) in view of the comments of the Ombudsman in this case and in many other similar cases referred to the Ombudsman by this Deputy; and if he will make a statement on the matter. [37758/17]
View answerThe Disabled Drivers and Disabled Passengers Scheme provides relief from VAT and Vehicle Registration Tax, an exemption from motor tax and a grant in respect of fuel expenditure, on the purchase of an adapted car for transport of a permanently and severely disabled person within the terms of the Disabled Drivers and Disabled Passengers (Tax Concessions) Regulations 1994.
The scheme and qualifying criteria were designed specifically for those with severe physical disabilities and are, therefore, necessarily precise. To qualify for the scheme an applicant must be in possession of a primary medical certificate, which can be obtained if an applicant meets one of the following conditions:
- be wholly or almost wholly without the use of both legs;
- be wholly without the use of one leg and almost wholly without the use of the other leg such that the applicant is severely restricted as to movement of the lower limbs;
- be without both hands or without both arms;
- be without one or both legs;
- be wholly or almost wholly without the use of both hands or arms and wholly or almost wholly without the use of one leg; and
- have the medical condition of dwarfism and have serious difficulties of movement of the lower limbs.
After six months an unsuccessful applicant can reapply if there is a deterioration in their condition.
The scheme represents a significant tax expenditure, costing approximately €65 million in taxes forgone and grant payments in 2016. This does not include the revenue forgone to the Local Government Fund in respect of the relief from motor tax provided to members of the scheme.
I recognise the important role that the scheme plays in increasing the mobility of persons with disabilities. However, changing the current criteria to more general mobility criteria would raise the cost of the scheme and any such increases would require a concomitant increase in tax, reduction in public expenditure or increase in the Exchequer deficit.
From time to time representations are received on behalf of individuals who feel they would benefit from the scheme but do not qualify under the criteria. While I have sympathy for these cases, given the scale and scope of the scheme, I have no plans to expand the medical criteria beyond the six currently provided for in the Disabled Drivers and Disabled Passengers (Tax Concessions) Regulations 1994.
146. Deputy Micheál Martin asked the Minister for Finance if he or his officials have met recently with a group (details supplied); and if he will make a statement on the matter. [37806/17]
View answer147. Deputy Micheál Martin asked the Minister for Finance if he has reviewed a Bill (details supplied) published by a group as a proposed solution to the housing crisis; and if he will make a statement on the matter. [37807/17]
View answerI propose to take Questions Nos. 146 and 147 together.
As the Deputy is aware, the National Housing Co-operative Bill 2017 has been initiated in Seanad Éireann and the Bill has also been the subject of consideration by the Oireachtas Committee on Finance, Public Expenditure and Reform and Taoiseach. When I appeared before the Committee on 6 July last in advance of the upcoming July ECOFIN meeting, I was happy to facilitate a request from the Committee Chairman for Department officials to meet with the Right2Homes group who developed the Bill. That meeting subsequently took place on 21 July 2017, with Deputy McGuinness and some of the members of the Right2Homes group in attendance. There was a constructive and useful exchange of views at the meeting but it was also clearly indicated that overall Government position on the Bill was that as set out during the Seanad Second Stage debate.
148. Deputy Micheál Martin asked the Minister for Finance if he will report on the most recent meeting of ECOFIN; and if he will make a statement on the matter. [37808/17]
View answerThe last ECOFIN Council that I attended took place on 11 July 2017 in Brussels. It was the first Council of the Estonian Presidency. The main items discussed are as follows.
Legislative deliberations
Ministers were debriefed on the state of play on the current legislative proposals in the field of financial services.
The Commission presented a proposal regarding mandatory automatic exchange of information in the field of taxation. This proposal seeks to amend the Directive on Administrative Cooperation, which provides for the reporting and exchange of information between national tax authorities. The Commission noted that some countries already have mandatory disclosure rules in place and it was agreed to accord high priority to the matter and to have the necessary technical work commence immediately.
Non-legislative activities
On the non-legislative portion of the agenda, the Estonian Minister presented the Presidency work programme and priorities for the next six months. This is usual at the first Council of a new Presidency. The Minister listed its key priorities being in the area of banking union and capital markets union, taxation issues and EU budget related matters.
Ministers adopted draft Council conclusions on the Commission Mid-Term Review of the Capital Markets Union Action Plan.
Ministers also held an exchange of views and adopted draft Council conclusions on Non-Performing Loans.
149. Deputy Micheál Martin asked the Minister for Finance the number of staff on secondment from the Central Bank; his views on same; and if he will make a statement on the matter. [37809/17]
View answerThe Central Bank is committed to increased participation and influence in international fora and as a result secondments to roles of strategic importance are a key priority. The Bank also attaches importance to secondments as development opportunities.
I am informed that as at 31 August 2017, the Central Bank of Ireland has 75 employees on secondment.
150. Deputy Micheál Martin asked the Minister for Finance his views on the effect the mortgage deposit rules are having on persons' ability to purchase homes; and if he will make a statement on the matter. [37810/17]
View answerThe Central Bank of Ireland, in line with its mandate to safeguard financial stability, has put in place macro-prudential measures for residential mortgage lending. These measures apply proportionate loan-to-value and loan-to-income limits to mortgage lending by regulated financial service providers in the Irish market.
The Central Bank is independent in the formulation and implementation of these macro prudential measures and they are now a permanent feature of the residential mortgage market. The Central Bank advises that they are operating in line with their stated objectives of enhancing the resilience of banks and borrowers to future shocks and reducing the risk of credit house price spirals from developing.
The Central Bank undertook a broad-based review of the overall framework of the mortgage lending measures in 2016, which confirmed that it is effective and that it is contributing to financial and economic stability by reducing the risk of unsustainable lending and borrowing. The Central Bank continuously monitors developments in the housing and credit markets, and it regularly publishes relevant analysis though its Macro-Financial Review and Household Credit Market Report. The Bank has indicated that, having regard to recent data from the Banking Payments Federation Ireland and the Central Statistics Office on residential mortgage activity and overall transactions in the market, it is estimated that the share of home-buyer transactions financed by a mortgage has risen from 60.3 per cent in the year ending 2016q2 to 68.8 per cent in the year ending 2017q2.
In line with its procedures, the Central Bank reviews the calibration of the mortgage lending measures on an annual basis having regard to prevailing market conditions and the objectives of the measures. I am advised that it is expected that this year’s review will culminate in a decision on the appropriate calibration of the measures for 2018 at a meeting of the Central Bank Commission on 28 November next.
151. Deputy Eoin Ó Broin asked the Minister for Finance his views on the practice whereby car insurers charge different premiums on the basis of postcode, resulting in charge variations of hundreds of euro for car owners who live only minutes apart; if this practice is lawful; if not, the actions he will take on the issue; and if he will review the matter to make such practices illegal in view of the fact that they are discriminatory. [37894/17]
View answer186. Deputy John Curran asked the Minister for Finance if his and the cost of insurance working group's attention has been drawn to the significant variations in motor insurance premiums being charged by insurance companies depending on the location in which a person is living in Dublin (details supplied); if the working group will address this practice; and if he will make a statement on the matter. [38189/17]
View answerI propose to take Questions Nos. 151 and 186 together.
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, as these matters are of a commercial nature, and are determined by insurance companies based on an assessment of the risks they are willing to accept. 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. Consequently, I am not in a position to review individual cases in relation to the pricing level or terms or conditions that should be applied.
I am advised that insurers use a combination of rating factors in making their individual decisions on whether to offer cover and what terms to apply. Factors can include the type and age of car, as well as the age, driving experience, claims record and penalty points of the driver, the number of drivers, how the car is used, and the location where it is normally stored etc. My understanding is that insurers do not all use the same combination of rating factors, and as a result prices and availability of cover varies across the market. In addition, insurance companies will price in accordance with their own past claims experience.
The Deputy should note that Insurance Ireland operates a free Insurance Information Service for those who have queries, complaints or difficulties in relation to obtaining insurance. Insurance Ireland can be contacted at feedback@insuranceireland.eu or 01-6761914.
152. Deputy Michael Healy-Rae asked the Minister for Finance if he will address a matter (details supplied) regarding tracker mortgage examinations; and if he will make a statement on the matter. [37911/17]
View answerThe Tracker Mortgage Examination is the largest most complex and significant supervisory review that the Central Bank has undertaken to date in the context of its consumer protection mandate and involved an initial review of more than two million mortgage accounts by lenders to identify the number of "in scope" accounts. The Examination continues to be a priority for the Central Bank.
As set out in its most recent update report on the examination of tracker mortgage-related issues as published last March:- (https://www.centralbank.ie/news-media/press-releases/update-report-tracker-mortgages), the Central Bank invoked its powers under Section 22 of the Central Bank (Supervision and Enforcement) Act to set specific timelines for lenders to complete Phase 2 (the “Review Phase”) of the Examination. In line with those timelines, the Central Bank expects the vast majority of impacted customers to be identified by lenders by end September 2017. However, as the lenders’ reviews are subject to assurance work by the Central Bank, it is possible that additional impacted accounts may be identified post this date. The Central Bank has and continues to challenge lenders through a combination of bilateral engagements and on-site assurance work to ensure that this Review Phase is completed as quickly and accurately as possible. Lenders are currently at varying stages of their reviews and the Bank continues to challenge them to ensure that deadlines for completion are met.
The Central Bank has clearly articulated its expectations of lenders to provide appropriate redress and compensation to all impacted customers in line with prescribed principles for redress developed by the Central Bank. The timeframes for progression of the redress and compensation programmes vary from lender to lender, however, the Central Bank remains focused on challenging lenders to ensure that they are progressing redress and compensation and that impacted customers are treated fairly. Some lenders have already commenced redress and compensation programmes and these programmes, along with the Central Bank’s assurance work, will continue beyond September 2017 for some lenders.
Much of the information requested by the Deputy is lender specific supervisory information. However, I am advised that the Central Bank is not in a position to comment on individual lenders due to confidentiality requirements under Central Bank legislation. Nevertheless, as indicated above, in overall terms the Central Bank published a comprehensive update report in March 2017 and the Central Bank advises that a further update report on the Examination will be issued later in the autumn.
153. Deputy Michael McGrath asked the Minister for Finance the Central Bank policy on banks providing bridging finance to elderly persons wishing to downsize to another property; if his attention has been drawn to the fact that such persons, many of whom have very significant positive equity, have to sell their home before they can purchase a smaller, more suitable property and that this is acting as a deterrent to them proceeding; and if he will make a statement on the matter. [37952/17]
View answerResidential mortgage lending to consumer borrowers, including bridging finance which is provided for a housing purpose, has to comply with the legislative and regulatory provisions which govern such lending, including the relevant provision of the European Union (Consumer Mortgage Credit Agreements) Regulations 2016 and the Consumer Protection Code. However, within this framework it then remains a policy and commercial decision of the Boards and management of individual lenders to decide on the particular type of housing related credit products or agreements they wish to offer to prospective borrowers. Therefore, while the existing legal and regulatory framework does not prevent lenders from offering and providing bridging finance for a housing purpose, the decision on whether or not to assume the particular commercial risk (and the associated potential commercial gain) associated with such lending will be one for the individual lender.
154. Deputy Michael McGrath asked the Minister for Finance further to the changes to the section 110 tax structure introduced in the Finance Act 2016, if property funds that purchase residential and commercial loans from NAMA and banks operating here will no longer be able to avail of this structure in respect of the profits earned on the holding of such loans; and if he will make a statement on the matter. [37955/17]
View answerSection 22 of the Finance Act 2016 made an amendment to section 110 of the Taxes Consolidation Act 1997 to address the concern that some section 110 companies were being used to minimise the Irish tax exposure on Irish property transactions. The core effect of the amendment is to remove the possibility for section 110 companies to use what are known as 'profit participating notes' to sweep Irish property or distressed debt profits out of the company in a way that ensures little or no Irish tax liability arises.
This is to be achieved by, for the purposes of section 110, treating the holding of Irish mortgages as a separate business which will not be entitled to a tax deduction for the coupon on the profit participating note. Therefore, while section 110 companies may still purchase loans, the profits made by the section 110 company on their Irish mortgages will be taxable.
By treating the holding of the Irish mortgages as a separate business, this will ensure the protection of the Irish tax base regarding Irish property transactions, while simultaneously maintaining the section 110 regime, and all the benefits associated with it, for the wider use in de-leveraging by financial institutions.
The amendment does not permit the companies to ‘mark to market’ and applies to profits arising on or after 6 September 2016. Ireland, in both its domestic legislation and its double tax treaties, maintains the right to tax land in the State. Loans which derive their value from land in the State are an interest in land, and so we also maintain the right to tax profits associated with those loans.
155. Deputy Michael McGrath asked the Minister for Finance further to the changes to the section 110 tax structure introduced in the Finance Act 2016, if he will state the definition of a bona fide use of the section 110 tax structure in keeping with the original intention behind the establishment of the structure for securitisation purposes; and if he will make a statement on the matter. [37956/17]
View answerSection 110 is intended to create a tax neutral regime for bona fide securitisation and structured finance purposes. It has been part of our corporation tax code since 1991, with significant amendments in 2003. Securitisation involves the creation of tradeable securities out of an income stream or projected future income stream generated by financial assets. The transaction can involve the use of a special purpose securitisation vehicle to facilitate the transaction and issue the securities.
Securitisation allows banks to raise capital and to share risk, and by providing a repackaging and resale market for corporate debt, it lowers the cost of debt financing.
The section 110 regime was designed to improve Ireland’s offering as a location for the conduct of financial services. It has achieved that broad goal and the financial services industry now makes use of these vehicles as a support to financial intermediation. Such financing is useful for the productive economy as it can underpin the supply of finance to industries and companies in Ireland, Europe and further afield.
Ireland is not unique in having a specific regime for securitisations. The importance of securitisation has been recognised by the European Commission through their work on the Capital Markets Union. This is a European Commission initiative to mobilise capital in Europe. A main objective of which is to build a sustainable securitisation regime across the European Union. The Capital Markets Union specifically states how alternative sources of finance are more widely used in other parts of the world, and the widely held view is that should play a bigger role in providing financing to companies that struggle to get funding, especially SMEs and start-ups.
156. Deputy Paul Murphy asked the Minister for Finance if his attention has been drawn to the fact that houses that have not experienced flooding and are in areas that have not experienced flooding in more than 30 years following works are now being denied flood insurance cover, such as in an area (details supplied); if his attention has been further drawn to the extent of the issue; if he will take measures to have the works carried out in the aforementioned area included on the memorandum of understanding between the OPW and an organisation; and if he will make a statement on the matter. [37977/17]
View answerI am conscious of the difficulties that the absence or withdrawal of flood insurance cover can cause to home owners and businesses alike, and that is one of the reasons the Government has been prioritising investment in flood defences over the last number of years.
However, 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. As Minister for Finance I have responsibility for the development of the legal framework governing financial regulation, and neither I, nor the Central Bank of Ireland, can interfere in the provision or pricing of insurance products or have the power to direct insurance companies to provide flood cover to specific individuals or businesses. 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 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.
Insurance Ireland has informed me that its members, since 1 June 2014, have factored data on all completed flood defence schemes, provided by the OPW, into its assessment of flood risk within these areas. This information has been provided as part of an information sharing arrangement entered into between OPW and Insurance Ireland (Memorandum of Understanding). The nature of this arrangement is such that it should lead to a greater availability of flood cover in previously higher risk areas, and at better prices.
While it is not possible for me to comment in detail on individual cases without the full facts, I am advised by the OPW that work was completed on the River Dodder Tidal Scheme, the details of which have been shared with the Insurance Industry. Work is continuing on the River Dodder phases C, D, & E and details of the defended area will also be shared with Insurance Ireland upon completion in line with the Memorandum of Understanding.
Separately, the Lower Dodder Road was mapped as part of the CFRAM study which identified only a limited risk of flooding at 1% event and no additional flood defences have been proposed.
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.
157. Deputy Joan Burton asked the Minister for Finance if there is a senior official with designated responsibility for Brexit matters in his Department; if so, the grade of the designated official; the funding allocated to the Brexit unit; the cost to date; the anticipated cost; and if he will make a statement on the matter. [37992/17]
View answerThe Assistant Secretary who heads the EU and International Division of my Department has been designated as the lead official in the Department for Brexit matters. A dedicated Brexit Unit within the EU and International Division was established in July 2016 to oversee and coordinate Brexit work across the entire Department and to act as a key liaison point, in particular with the Departments of the Taoiseach and of Foreign Affairs and Trade. There are currently four staff in the dedicated unit which is led at Principal Officer level. Also, an additional staff member has been assigned to the Permanent Representation to the EU in Brussels specifically to deal with Brexit.
We have appointed lead Brexit coordinators at Principal Officer level across all divisions of the Department. The challenges which we face as a result of Brexit are mainstreamed across all divisions of my Department and this is reflected in business planning.
Brexit resourcing has been managed within existing the paybill allocation. We will continue to monitor the resources needed to respond to specific policy challenges on an ongoing basis.
158. Deputy Joan Burton asked the Minister for Finance the number of staff deployed full-time in his Department in respect of Brexit; if there is a designated section or unit to deal with Brexit; and if he will make a statement on the matter. [38008/17]
View answerThe Assistant Secretary who heads the EU and International Division of my Department has been designated as the lead official in the Department for Brexit matters. A dedicated Brexit Unit within the EU and International Division was established in July 2016 to oversee and coordinate Brexit work across the entire Department and to act as a key liaison point, in particular with the Departments of the Taoiseach and of Foreign Affairs and Trade. There are currently four staff in the dedicated unit which is led at Principal Officer level. Also, an additional staff member has been assigned to the Permanent Representation to the EU in Brussels specifically to deal with Brexit.
We have appointed lead Brexit coordinators at Principal Officer level across all divisions of the Department. The challenges which we face as a result of Brexit are mainstreamed across all divisions of my Department and this is reflected in business planning.
Brexit resourcing has been managed within the existing pay bill allocation. We will continue to monitor the resources needed to respond to specific policy challenges on an ongoing basis.
159. Deputy Joan Burton asked the Minister for Finance the level of construction inflation that has been experienced by his Department in the 18 months to September 2017 in respect of construction projects; the way in which he monitors construction inflation and the mechanisms his Department employs to establish this; and if he will make a statement on the matter. [38024/17]
View answerMy Department monitors inflation across the economy on an ongoing basis, including in the construction sector. For example, the National House Construction Cost Index, published by the Department of Housing, Planning, Community and Local Government, provides an indication of labour and material cost developments within the construction industry. A number of construction sector organisations also conduct periodic assessments of construction costs in Ireland. For example, in May of last year, the Society of Chartered Surveyors Ireland (SCSI) published a report The Real Cost of New House Delivery which examined the component costs of housing delivery in the Dublin region.
As part of Rebuilding Ireland, the Action Plan for Housing and Homelessness, detailed studies into construction costs are currently ongoing. A Working Group, chaired by the Department of Housing, Planning, Community and Local Government, has been established to work with industry representatives in order to benchmark housing delivery input costs in Ireland. It is my understanding that the Housing Agency is also co-ordinating an independent review and analysis of delivery costs in Ireland. Both of these studies are due to be completed shortly.
With regards to the construction projects undertaken by my Department in the past 18 months, a project to update fire and electrical systems has recently been completed in offices shared by my Department and the Department of Public Expenditure and Reform. The programme was managed by the Office of Public Works. My Department made a fixed contribution to the total cost of the project.
161. Deputy Joan Burton asked the Minister for Finance the position regarding the rainy day fund, as provided for in the summer economic statement; and if he will make a statement on the matter. [38034/17]
View answerThe Government outlined its position in relation to the rainy day fund (RDF) in the 2017 Summer Economic Statement (SES) which was published in July. The planned contribution to the RDF is now €500 million per annum, beginning in 2019 (on the assumption that the medium term objective is achieved next year). This is down from the €1 billion provisionally set out in the 2016 SES.
I will in due course be sending a consultation paper to the Oireachtas, seeking its views on a number of issues, such as the appropriate size of the fund, replenishment and, of course, the permitted uses of the fund.
163. Deputy Joan Burton asked the Minister for Finance his plans to sell additional stakes in a bank (details supplied); and if he will make a statement on the matter. [38037/17]
View answerAs the Deputy will be aware, as part of the IPO process earlier this year the State sold 28.75% of AIB's ordinary share capital at a price of €4.40 per share recouping over €3.4 billion for the State. The offering was strongly supported by a broad range of international institutional investors as well as Irish retail investors.
Following the IPO, the State's remaining shareholding in AIB is in a legal 'lock-up' period of 180 days. This is standard market practice. I therefore expect no further sale of AIB shares in 2017.
Officials in my Department will continue to monitor the performance of the bank, its share price and equity markets more generally to determine the next sensible opportunity to realise value from our investment. It is important to point out that exiting our full investment in AIB in a measured way that will optimise value, will take a number of years, but I believe that in time we will recoup all of the money we invested in the bank.
Under the policy set out in the 'Programme for a Partnership Government', any further sale of AIB shares contemplated before the end of 2018 would need to be approved by the Government.
164. Deputy Joan Burton asked the Minister for Finance if he will report on his Department’s work with the European Investment Bank in Ireland in respect of infrastructure investment, SME finance and mitigation of the impact of Brexit; and if he will make a statement on the matter. [38039/17]
View answerI met the EIB President, EIB Vice President Andrew McDowell and other representatives of the Bank in Luxembourg on 23-24 May in the second formal meeting of the general EIB Ireland Financing Group. There was a wide ranging discussion on the capital and infrastructural needs of the Irish economy and the key issues that arise in trying to address these needs. This discussion included the limited fiscal space with which the Government must operate, the potential threats posed by Brexit and the assessment of priorities for additional funding that is currently underway as part of the mid-term review of the Capital Plan.
At that meeting, it was agreed that the work of the Group, and its three sub-groups which met on a number of occasions earlier this year, should continue, while a number of specific action points were agreed for intensive follow-up engagement over the coming weeks and months:
- the Irish authorities and EIB are to explore potential financing options for delivering Metro North, drawing on EIB's knowledge and experience of financing similar projects in other countries.
- to engage in exploratory discussions in relation to EIB's knowledge and experience of different user-pay PPP or concession type models for delivering infrastructure projects but without prejudice to decisions on project selection that will only be taken by Government following completion of the mid-term review of the Capital Plan, or the review of policy in relation to the future use of PPPs or concessions that is currently under way as part of the mid-term review.
- to explore, partly in relation to mitigation of the impacts of Brexit on the Irish economy, the potential for EIB to become involved in funding measures to provide access to finance for the enterprise/agriculture sectors.
At the meeting, the EIB indicated that they were currently looking at products to assist Ireland in dealing with the threats of Brexit, especially in the Enterprise and SME sectors. I understand that this work is ongoing and that there is a good degree of engagement by the key stakeholders on exploring the possible mechanisms to deal with this issue.
