Written Answers Nos. 66-79
66. Deputy John Curran asked the Minister for Finance the progress made with regards to the €130 million identified from compliance measures in budget 2017 (details supplied); the outcomes to date for each of the headings; the figure for compliance measures in budget 2018; and if he will make a statement on the matter. [44735/17]
View answerRevenue’s Comprehensive Review of Expenditure 2014 noted that Revenue staffing levels had reduced by 13% since 2008 and that by increasing resources additional revenue yield could be achieved. In recognition of this, the 2015, 2016 and 2017 Budgets provided for an increase of 266 (126, 50 and 90 respectively) in additional staffing resources for Revenue to deal with a wide variety of requirements across audit and compliance functions, debt management functions, LPT, international tax and Brexit. I have again provided for additional staffing in Revenue in this year’s Budget.
Budget 2017 specified a number of compliance measures: amendments in relation to Section 110 and fund changes (projected yield of €50 million), tackling offshore tax evasion (€30 million) and increased resources for Revenue to confront non-compliance (€50 million). It is too early to accurately assess the impact of, or collection under, these headings for 2017. This will not be possible until after the end of the year. However, based on evidence to date, I am advised that Revenue expect the target will be exceeded. This includes €79 million collected from disclosures in relation to offshore assets. Revenue will undertake detailed analysis of the Budget 2017 measures when data are available.
Budget 2018 includes an additional €100 million to be raised from three compliance measures, in relation to employer PAYE compliance (€50 million), eCommerce / online business compliance (€30 million) and tax avoidance and base erosion capacity (€20 million). To support delivery of these measures, in the estimates for 2018 Revenue has been allocated an additional €7m for extra staffing and ICT enhancements.
As noted, Budget 2016 also included similar compliance measures that were projected at the time of the Budget (October 2015) to yield an additional €75 million to the Exchequer in 2016. Revenue has recently published analysis
https://www.revenue.ie/en/corporate/documents/research/budget-2016-compliance-measures.pdf
This confirms the estimates of yield for the measures have been delivered and the target of €75 million exceeded. Conservative estimates show the measures in total yielded between €120 million and €150 million in the year. Revenue received an additional funding allocation of €3 million in 2016 to increase staff resources and assist in the delivery of the compliance measures.
67. Deputy Joan Burton asked the Minister for Finance his plans to sell additional stakes in a bank (details supplied); his further plans to fast track the sale; and if he will make a statement on the matter. [44750/17]
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. Following the IPO, the State's remaining shareholding in AIB is in a legal 'lock-up' period of 180 days which will expire in early December. This is standard market practice.
In addition 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.
There are no plans to 'fast-track' the sale of this asset. 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. However as I've said before, 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.
68. Deputy Joan Burton asked the Minister for Finance the measures his Department is proposing to help SMEs tackle the challenges they face in view of Brexit in particular providing credit for SMEs; and if he will make a statement on the matter. [44751/17]
View answerIn my Budget 2018 Speech, as part of the Government’s overall Brexit strategy, I announced that a €300m Brexit Loan Guarantee Scheme is expected to be launched in March of next year. The Scheme has been developed by the Department of Business, Enterprise and Innovation, the Department of Agriculture, Food and the Marine, and Enterprise Ireland and is supported by the Strategic Banking Corporation of Ireland (SBCI), the European Investment Bank Group and the European Commission. The purpose of the Scheme is to assist Irish SMEs and Small Midcap firms with their working capital needs to allow them to adapt and innovate in response to Brexit.
The Scheme is intended to operate under De Minimis state aid rules and will be supported by State and European guarantees. Loans with flexible and competitive terms will be available to businesses with fewer than 499 employees that are exposed to the impact of Brexit. However, primary producers in the agriculture and fishing sectors will be precluded from the Scheme due to state aid rules.
My colleagues, the Tánaiste and Minister for Business, Enterprise and Innovation and the Minister for Agriculture, Food and the Marine, will provide further details of the Scheme shortly.
As well as the Brexit Loan Guarantee Scheme, Irish SMEs will require support generally to diversify and restructure their businesses. There are already significant Government measures in place to support the financing needs of SMEs and these will of course be available to assist SMEs deal with the effects of Brexit. They include the SBCI, the Supporting SMEs Online Tool, the Credit Guarantee Scheme, the Microenterprise Loan Fund, Local Enterprise Offices and the Credit Review Office.
Viable Irish SMEs can access sustainable, flexible and appropriately priced finance through the SBCI. Since March 2015, to the end of July 2017, the SBCI has provided €855m of funding through its 7 on-lending partners to 21,132 Irish SMEs supporting 106,728 jobs. The SBCI is working to develop a more diverse range of on-lenders and innovative products to meet the evolving requirements of the SME finance market, including mitigating the effects of Brexit.
Advisory supports in relation to business planning, such as those provided by the Local Enterprise Offices and Enterprise Ireland, will be particularly important in assisting SMEs that may be adversely affected due to Brexit and will help raise awareness of both private market and State supports.
69. Deputy Joan Burton asked the Minister for Finance the actions his Department is to take on foot of the CUAC report published by his Department, Viability and Irish Credit Unions, on 19 May 2017; and if he will make a statement on the matter. [44752/17]
View answerI can advise the Deputy that my Department published the Discussion Document prepared by CUAC titled ‘Viability and Irish Credit Unions’ on 19th May 2016. The objective of this research was to assist credit unions and define and measure credit union viability.
In the development of this discussion document CUAC undertook interviews with six credit unions and benefitted from engagement with representatives from the Central Bank, the Irish League of Credit Unions (ILCU) and the Credit Union Development Association (CUDA).
The key message from the discussion paper is that viability can be measured and that it is a function of two things, the surplus generated by the credit union’s business model and the capital position of that credit union.
The Committee, which has a broad range of knowledge and experience on credit union matters, continues to look at topical issues for credit unions with a view to providing advice and timely reports to me.
CUAC also presented its report titled ‘Review of Implementation of the Recommendations in the Commission on Credit Unions Report’, to the then Minister on 29th June 2016. This report was published on my Department’s website in July 2016.
In its review CUAC recommended the establishment of an Implementation Group for a specified period of time. The Implementation Group was established to oversee and monitor implementation of CUAC’s recommendations in a methodical manner and to advise me of progress. To date, the Implementation Group has met seven times. It comprises a representative from ILCU, CUDA, the Credit Union Managers’ Association (CUMA), the National Supervisors Forum (NSF), the Central Bank and a CUAC representative. This broad membership ensures participation and encourages contribution from all credit union perspectives.
I look forward to receiving regular progress reports on implementation of these very important recommendations.
70. Deputy Joan Burton asked the Minister for Finance his Department’s engagement with the public banking investigation being conducted by the Department of Rural and Community Development; and if he will make a statement on the matter. [44754/17]
View answer78. Deputy Joan Burton asked the Minister for Finance if his attention has been drawn to recent publicity regarding an organisation's (details supplied) work here regarding the establishment of a public banking network; if the organisation invited officials from his Department and the Department of Rural and Community Development to participate in a field trip to Germany to examine the public banking network there; the technical assistance the organisation offered the Government in respect of the establishment of a public banking network here; and if he will make a statement on the matter. [44543/17]
View answerI propose to take Questions Nos. 70 and 78 together.
The Programme for a Partnership Government commits the Department of Arts, Heritage, Regional, Rural and Gaeltacht Affairs, now the Department of Rural and Community Development, and the Department of Finance to conduct a thorough investigation of the German Sparkassen model for the development of local public banks that operate within well-defined regions, as well as other models of local public banking.
Officials from both my Department and the Department of Rural and Community Development are working closely to prepare a report of the findings of the investigation of the Sparkassen and other models of local public banking including the Kiwibank model in New Zealand. As the Deputy is aware, the completed report will be presented to my colleague, the Minister for Rural and Community Development, Michael Ring T.D., and myself.
This investigation of local public banking has consisted of engagement with stakeholders and interested parties, including the Savings Banks Foundation for International Cooperation (SBFIC). Officials from the Department of Rural and Community Development and from my Department have met with representatives from SBFIC a number of times. Officials have been provided with a detailed proposal and presentation on the Sparkassen model and its potential implementation in an Irish context by SBFIC.
I understand that the report is being finalised and that I can expect to receive it in the near future. The report will outline the current Irish banking environment, summarise the views provided by respondents to the consultation process conducted as part of this investigation and set out findings in relation to the local public banking model in Ireland. The process of investigating local public banking has been a collaborative effort with my Department working closely with the Department of Rural and Community Development to ensure a thorough and critical investigation of this matter. The purpose of the consultation process and report is to assist the Government in its analysis of local public banking in an Irish context.
71. Deputy Joan Burton asked the Minister for Finance the estimated loss of income to the Exchequer in respect of bogus self-employment which forces low income workers to register as self-employed causing a loss to the Exchequer in income tax, PRSI and USC; and if he will make a statement on the matter. [44755/17]
View answerI am advised that there is no accurate estimate available of the potential scale of the loss to the Exchequer from bogus self employment based on the information available to Revenue.
As the Deputies will be aware, in January 2016, the then Ministers for Finance and Social Protection launched a joint consultation on the ‘Use of Intermediary-type Structures and Self-employment Arrangements’. A total of 23 written responses were received by the consultation deadline of 31 March 2016.
The purpose of the Consultation was to invite submissions from interested parties on possible measures to address the loss to the Exchequer that may arise under 2 scenarios:
(i) where an individual, who would otherwise be an employee, establishes a company to provide his or her services, and
(ii) where an individual, who is dependent on, and under the control of, a single employer in the same manner as an employee, is classified as a self-employed individual.
An interdepartmental working group, comprising officials from the Department of Employment Affairs and Social Protection, the Revenue Commissioners and my Department is currently examining the submissions received. A report on the consultation is being finalised by the working group and is expected to be presented to the Minister for Employment Affairs and Social Protection and myself shortly.
72. Deputy Joan Burton asked the Minister for Finance the progress he has made in the reform of EU fiscal rules in respect of allowing capital investment and the ongoing review of the capital plan; and if he will make a statement on the matter. [44756/17]
View answerThe fiscal rules are designed to promote budgetary discipline and underpin sustainable economic growth. While Ireland's economy is growing and debt is on a downward trajectory, the debt level is still comparably high and caution must be exercised due to the potential of roll-over risk should interest rates increase. We are a small and very open economy in a world that has more risks than usual. Compliance with the fiscal rules underpins the Government’s objective of maintaining sound public finances.
With regard to changing the EU fiscal rules set out in the Stability and Growth Pact, proposals would have to be made by the European Commission in the first instance, and I not aware of such initiatives by the European Commission.
However, as I have stated previously for the Deputy in Parliamentary Question No. 78 of the 18th of May 2017 and number 128 of the 4th of July 2017, the issue of facilitating greater flexibility within the application of the fiscal rules has received significant focus at European level and framed discussions on the establishment of the structural and investment clauses, which were codified by the Commission in November 2015. Specifically these provisions allow for temporary deviations from the required structural budgetary adjustment, subject to strict conditions.
Furthermore, as the Deputy is aware, there is existing flexibility within the expenditure benchmark whereby capital formation increases are smoothed over four years with the result that only one quarter of the increase in public investment must be funded in the first year from within the fiscal space. This provision, which means increases in capital spending for housing and other purposes can be front-loaded within the EU rules, has been utilised in Ireland's budgetary plans.
The Deputy should also be aware that any decision to increase capital expenditure over and above already planned levels would need to balance the danger of potentially over-heating in the economy with the need to address infrastructure priorities and risks such as Brexit.
74. Deputy Joan Burton asked the Minister for Finance the discussions he has had with his ECOFIN colleagues on the common consolidated tax base; the steps he has taken in the interests of protecting Ireland's tax sovereignty; and if he will make a statement on the matter. [44758/17]
View answerThe European Commission's proposal for a Common Consolidated Corporate Tax Base (CCCTB) was published in October 2016 and discussed at the November 2016 ECOFIN meeting where initial impressions of the proposal were exchanged. At the December 2016 ECOFIN, Council Conclusions were approved in respect of the Commission's wider package which included the CCCTB proposal but there was no specific discussion of the proposal at that meeting.
Since my appointment as Minister for Finance, I have attended a number of ECOFIN meetings. CCCTB has not been on the agenda of any of these meetings and was not specifically discussed.
The CCCTB is a complex and detailed proposal and Member States need to analyse fully its potential impact on national tax systems. Member States have begun to discuss and debate the various aspects of the proposal in the relevant tax working parties. Ireland is engaging constructively in these discussions while continuing to assess whether it is in line with our long-term interests.
Member States maintain full sovereignty on tax matters and unanimity is required before any proposal can be agreed.
75. Deputy Bernard J. Durkan asked the Minister for Finance if he is satisfied regarding the ongoing progress of economic recovery; if he has identified particular issues requiring further attention; if he has further satisfied himself that the economy remains well placed to maximise its potential including job creation in the future; and if he will make a statement on the matter. [44728/17]
View answer100. Deputy Bernard J. Durkan asked the Minister for Finance the degree to which the economic situation continues to compete effectively with all others in the EU having particular regard to the situation in the UK; and if he will make a statement on the matter. [45067/17]
View answer102. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which the basic fundamental indicators remain positive and constant for the economy, notwithstanding developments regarding Brexit; and if he will make a statement on the matter. [45069/17]
View answer104. Deputy Bernard J. Durkan asked the Minister for Finance if he continues to remain satisfied regarding the veracity of the main economic indicators in view of the challenges of the future; and if he will make a statement on the matter. [45071/17]
View answerI propose to take Questions Nos. 75, 100, 102 and 104 together.
Recent economic indicators have generally been positive.
Real GDP grew by 5.8 per cent in the second quarter of this year on an annual basis. This follows annual growth of 5.2 per cent in the first quarter.
Strong GDP growth is being confirmed by developments in the labour market. Employment growth remains strong with an annual rate of 2.4 per cent recorded in the second quarter of 2017, representing the creation of over 48,000 additional jobs over the year. The increase in employment remains broad based with gains recorded in 11 of the 14 sectors reported by the CSO. Since the low-point in 2012 there are now an additional 230,000 people in employment.
The continued growth in employment has seen the unemployment rate fall from over 15 per cent in 2012 to 6.1 per cent in September 2017 which is close to the level considered to represent full employment in Ireland.
The strong performance of the labour market is set to continue in the short term. As part of Budget 2018, my Department is projecting that an additional 48,000 jobs will be created next year.
However, there are a number of risks at present including the UK’s decision to exit the EU, related to this the risk of a loss in competitiveness, and the possibility of significant tax reform in the US.
Significant progress has been made in recent years in improving Ireland's competitiveness. The latest figures from the Central Bank of Ireland show that Ireland's real harmonised competitiveness indicator (a widely used measure of competitiveness in Europe) has improved by over 19 per cent between its peak in 2008 and September 2017. However, the sharp appreciation of the euro-sterling rate is posing significant challenges particularly for the traditional manufacturing sector, the tourism sector and areas sensitive to cross-border trade.
These sources of uncertainty highlight the importance of prudent management of the public finances. While Ireland’s debt to GDP ratio has come down considerably in recent years, a significant factor in this has been GDP growth, which can be exaggerated in an Irish context. In response to the well-known limitations with GDP and GNP figures, the CSO has published an alternative measure of economic activity titled modified Gross National Income or GNI*. Using GNI* as the denominator highlights the still elevated levels of debt in the Irish economy, and the importance of sensible budgetary policies. It is also important to focus on competitiveness-oriented policies that improve the resilience of the economy to ensure that we are in a better position to weather any global shocks which materialise.
In summary, I am satisfied that the economic indicators remain stable and that our economic fundamentals are strong, although the level of uncertainty remains elevated. In this regard, it is critical that appropriate polices are implemented and that is what the Government will continue to do.
76. Deputy Mick Wallace asked the Minister for Finance his views on whether the help-to-buy scheme is contributing to rising house prices (details supplied). [33438/17]
View answer90. Deputy Joan Burton asked the Minister for Finance the estimated cost to the Exchequer of the retention of the help-to-buy scheme; the anticipated affect this will have on house price inflation over 2018; and if he will make a statement on the matter. [44793/17]
View answerI propose to take Questions Nos. 76 and 90 together.
The Help to Buy incentive (HTB) is scheduled to end on 31 December 2019. For each of the years 2018 and 2019, the estimated cost of the incentive is €40 million.
As the Deputies will be aware, I published an independent impact assessment of HTB on Budget day. The report was compiled by Indecon Economic Consultants. Based on the results of a number of analytical approaches, the report found that HTB has not, to date, had a measurable effect on house prices. Rather, rising construction and increased employment are among the principal causes of the recent house price rises.
HTB only came into operation on 1 January 2017 and, as recommended in the assessment, my Department will continue to closely monitor the impacts of the scheme.
77. Deputy Joan Burton asked the Minister for Finance the national debt level as calculated in GDP and GNI; the schedule for the repayment of debt due in each of the years 2017 to 2021; and if he will make a statement on the matter. [40353/17]
View answerGeneral Government Debt (GGD) is a measure of the total gross consolidated debt of the State compiled by the Central Statistics Office (CSO). It is the measure used for comparative purposes across the European Union. It is commonly measured as a percentage of Gross Domestic Product (GDP).
Given the Deputy has asked for the debt to be expressed as a percentage of GDP and also as a percentage of Gross National Income (GNI), this response focuses on GGD rather than on the National Debt measure.
The CSO estimates that GGD stood at just over €200 billion at end-2016.
As a percentage of GDP, GGD stood at just under 73 per cent at end-2016.
As a percentage of GNI, GGD stood at 88 per cent at end-2016.
And as a percentage of modified GNI or GNI*– which is the CSOs new metric to size the Irish economy – the ratio at end-2016 was 106 per cent.
A table showing the maturity profile of Government bonds and EU/IMF Programme loans is updated monthly on the website of the National Treasury Management Agency (NTMA). The following table covers the period 2017 – 2021, and reflects the position as at end-September 2017.
The table shows €6.9 billion of loans from the European Financial Stabilisation Mechanism (EFSM) with contractual maturity dates in 2018 and 2021. However the Deputy should be aware that owing to the maturity extensions granted in 2013, it is not expected that Ireland will have to refinance any EFSM loans before 2027.
The Deputy will be aware that I have announced my intention to repay in full the outstanding loans from the IMF together with Swedish and Danish bilateral loans. Early repayment will require agreement from the European lenders, the EFSF and the EFSM, and the UK to waive the proportionate early repayment clauses in the respective loan agreements. The process for securing these waivers is currently under way.
|
Maturity Profile of Irish Government Bonds and EU/IMF Programme Loans at end-September 2017 |
||||
|
€m |
Fixed Rate & Amortising Bonds |
IMF |
Bilaterals* |
EFSM** |
|
2017 |
6,456 |
9 |
|
|
|
2018 |
8,853 |
(21) |
|
3,900 |
|
2019 |
13,702 |
(42) |
1,858 |
|
|
2020 |
18,753 |
(24) |
2,376 |
|
|
2021 |
21 |
2,765 |
733 |
3,000 |
NOTES:
The figures in the table are unaudited and include the effect of currency hedging transactions. Rounding can affect totals.
* Bilateral loans were provided from the United Kingdom, Sweden and Denmark.
** EFSM loans are subject to a seven-year extension. It is not expected that Ireland will have to refinance any of its EFSM loans before 2027. However, the revised maturity dates of individual EFSM loans will only be determined as they approach their original maturity dates.
79. Deputy Joan Burton asked the Minister for Finance if he will report on his meeting with the UK Chancellor, Philip Hammond, on 31 August 2017; and if he will make a statement on the matter. [44544/17]
View answerI met with Chancellor Philip Hammond during his recent visit to Dublin on 31 August 2017. I was glad to have the opportunity to continue our bilateral discussions, following on from my meeting with him on 14 July in London. This is, of course, in addition to our regular contacts at monthly meetings of EU Finance Ministers at ECOFIN.
The meeting provided an opportunity for an exchange of views on the economic outlook and the ongoing cooperation between the UK Treasury and the Department of Finance on a range of economic and financial issues which are of relevance to both countries.
It also provided an opportunity to discuss the generality of Brexit-related issues. In this regard, I recalled that the Irish Government fully respects the unity of the EU27 during negotiations and reiterated to the Chancellor the importance our Government attaches to doing everything possible to make progress in the Brexit negotiations.
