Written Answers Nos 31-50
31. Deputy Mick Wallace asked the Minister for Finance his plans to co-operate with the Minister of Housing, Planning and Local Government with a view to using the remaining land NAMA has control of to build social and affordable housing; if he will direct NAMA to cease selling land it controls under section 14 of the National Asset Management Agency Act 2009; and if he will make a statement on the matter. [21447/18]
View answerIt is important to note that assets often referred to as "NAMA land" or "NAMA properties" are not owned by NAMA. NAMA owns loans. Such property is owned by private persons who owe money to NAMA ("NAMA debtors") and serves as collateral for those amounts owed. All borrowers have the right to maximise the value of the property which secures his/her loan. NAMA cannot force a borrower to take action which would reduce his/her repayment capacity, such as prohibiting the sale of their property. To do so would breach the borrower's property rights protected under Article 43 of the Constitution.
Therefore, I cannot accede to your request to use my powers under the NAMA Act in this instance, as I am advised that such a direction is not one lawfully open to me in the current circumstances.
However, based on Part V planning requirements, it is estimated that up to 720 social housing units were delivered by NAMA since 2014. Under Part V of the Planning and Development Act 2010, 10% of the properties must be provided to local authorities for social and affordable housing. For certain developments, the Part V requirements may have been fulfilled through alternative arrangements at the request of the local authorities concerned.
I would also draw the Deputy's attention to the fact that NAMA has delivered 2,474 units for use as social housing as part of its Social Housing programme, excluding houses which were provided under Part V arrangements. NAMA identified vacant units within its debtors’ stock and offered them to local authorities and approved housing bodies. Where demand was confirmed by local authorities, through the Housing Agency, funding was provided to purchase these properties, and where necessary, complete them in full compliance with all statutory requirements prior to delivery to the housing bodies. To date, NAMA has invested approximately €350 million in remediating, completing and purchasing properties for social housing use. NAMA’s special vehicle, NARPS, purchases suitable units for onward leasing to local authorities and approved housing bodies.
32. Deputy Thomas P. Broughan asked the Minister for Finance if problems with the common applied methodology have been raised at EU level; the response he has received from the Commission and Council of Ministers; and if he will make a statement on the matter. [21381/18]
View answerThe Department continues to use the EU harmonised methodology to estimate the level of potential output as it is the legally binding reference method used by the Commission for assessment of Member State’s compliance with the Stability and Growth Pact. However, to the extent that the harmonised methodology can be characterised as a “one size fits all” approach for estimating potential output, it can produce estimates that are problematic when applied to Ireland.
In this regard, when issues with the methodology manifest themselves, the Department proactively engages with the European Commission to devise solutions that ensure potential output estimates remain plausible. For example, potential output estimates have been insulated from the 2015 GDP and capital stock distortions reported in the 2015 National Income and Expenditure accounts. Similarly, in the context of the Stability Programme Update (SPU) 2018, model adjustments were agreed with the Commission to account for distortions in the 2017 GDP estimate associated with contract manufacturing.
Furthermore, the Department actively contributes at a technical level in Europe through the Output Gap Working Group, which is chaired by a senior Department official, to improve the performance of the harmonised methodology.
Notwithstanding improvements to the methodology, the Department has developed a number of alternative statistical models to assist in its assessment of the medium term growth potential of the Ireland’s economy and its cyclical position over the short term, results of which have been summarised in Chapter 9 of the SPU 2018. This work is in conjunction with the application of the European Commission’s harmonised production function approach. These results, along with other economic indicators, are considered by the Department when assessing the cyclical position of the economy.
33. Deputy Joan Burton asked the Minister for Finance the number of claims pending against the State Claims Agency to date by claim type, category and county in which the claimant is based; if there is transparency between the State Claims Agency and the delegated State authorities regarding the way in which individual cases are being managed; if delegated State authorities are informed of the details on cases that are being taken by the agency; and if he will make a statement on the matter. [21285/18]
View answerI am informed by the State Claims Agency (SCA) that as of 4 May 2018, there were 10,447 active claims recorded on the National Incident Management System (NIMS). NIMS is an IT system which is hosted by the SCA for the HSE, other Healthcare enterprises and Delegated State Authorities, and is used to manage and report on incidents and active claims.
These 10,447 active claims are broken down by incident/hazard category, and include:
- 3,163 related to clinical care;
- 6,586 related to exposure to various types of hazards (i.e. biological, physical and psychological);
- 487 related to crash/collision;
- 202 related to property damage/loss;
- 9 uncategorised, awaiting investigation.
NIMS does not collate data on the county in which claimants are based.
As the Deputy may be aware, the SCA has a statutory remit to manage personal injury claims, including claims in respect of clinical negligence, on behalf of Delegated State Authorities (DSAs), which include the Health Service Executive. When managing cases on behalf of DSAs, the SCA engages with DSAs to carry out investigations and to establish the facts of the cases. The SCA engages with DSAs on an on-going basis throughout a case in this respect, and the SCA provides regular information to DSAs in respect of their claims portfolios.
The SCA is statutorily mandated to determine the claims management strategy on the claims it manages on behalf of DSAs. The SCA's claims management objective is, while acting in the best interest of taxpayers in matters of personal injury and property damage litigation, to act fairly, ethically and compassionately in its dealings with people who have suffered injuries and/or damage and who take legal actions against the State or State bodies, and their families. In cases where the SCA investigation concludes that the relevant State authority bears some or all liability, it seeks to settle claims expeditiously and on fair and reasonable terms, while seeking to in no way exacerbate the suffering of those citizens. If it considers that the State is not liable, the SCA's policy is to defend the claims.
34. Deputy James Browne asked the Minister for Finance the steps he has taken to date and plans to take in preparation for post-Brexit customs checks at ports here specifically Rosslare Europort; and if he will make a statement on the matter. [21404/18]
View answerThe precise customs arrangements that will apply after Brexit in all locations, including Rosslare Europort, will depend on the outcome of negotiations between the EU and UK. Similar to other Government agencies and Departments, Revenue is actively engaged in examining a range of scenarios within the context of the Government’s contingency planning, which is being undertaken within the whole-of-Government framework led by the Department of Foreign Affairs and Trade. I am informed by Revenue that at this juncture it is not possible to assess what specific arrangements would be required in a post Brexit environment and what type or level of customs checks would be required. However, I am advised that Revenue are currently working on their customs IT infrastructure to ensure they may be prepared for an increase in customs declarations should this be required, and I am further advised that this work is progressing well.
35. Deputy Willie Penrose asked the Minister for Finance when the public banking report compiled by his Department and the Department of Rural and Community Development will be published; and if he will make a statement on the matter. [21377/18]
View answer40. Deputy Eamon Ryan asked the Minister for Finance his plans to adopt the Sparkassen model of public banking as presented by an organisation (details supplied); and if he will make a statement on the matter. [21477/18]
View answerI propose to take Questions Nos. 35 and 40 together.
The Programme for a Partnership Government contains a commitment to "thoroughly investigate the German Sparkassen model for the development of local public banks that operate within well-defined regions". My Department, along with the Department of Rural and Community Development, are responsible for fulfilling this commitment.
Local public banking is where a State, or other public body, has ownership of a financial institution. In Germany, local public banks, called Sparkassen, are only permitted to operate in specific geographic regions. The business model of Sparkassen is not to maximise profits, but rather promote economic development and financial inclusion in the particular regional area in which they operate. In terms of SME finance, Sparkassen tend to build close relationships with SMEs in their locality.
The investigation of local public banking has consisted of a consultation process engaging with stakeholders and interested parties. This consultation process was carried out last year by the Department of Rural and Community Development, assisted by the Department of Finance.
Additionally, there has also been detailed consideration of a proposal put forward by Irish Rural Link and the Savings Banks Foundation for International Cooperation (SBFIC), the international development wing of the Sparkassen group. The proposal outlines a potential model of local public banking, based on the German model, in Ireland. There have been a number of meetings between officials in both Departments and representatives from Irish Rural Link and SBFIC.
Officials in my Department and the Department of Community and Rural Development have been working closely together. They have now completed the report on the findings of their investigation and both I, and my colleague, the Minister for Rural and Community Development, Michael Ring T.D., have received this report. We expect to be in a position to bring the joint report on the investigation of local public banking to Government for approval in the coming weeks.
The Deputies may be interested to know that there are already significant Government measures in place to support access to finance by Irish SMEs. These include the Strategic Banking Corporation of Ireland (SBCI), the Supporting SMEs Online Tool, the Microenterprise Loan Fund, Local Enterprise Offices, the Credit Review Office and the Credit and Counter Guarantee Schemes.
Additionally, my Department is working with other Government departments to develop tailored and innovative schemes to meet the evolving needs of Irish SMEs, such as the Agricultural Cashflow Support Loan Scheme and the Brexit Loan Scheme I announced in Budgets 2017 and 2018 respectively.
36. Deputy Thomas P. Broughan asked the Minister for Finance the reason tax revenue was below profile in the first quarter of 2018; if there are difficulties with the tax forecast model which contributed to overestimates of income tax projections in the past; and if he will make a statement on the matter. [21384/18]
View answerTax revenue was below profile by just 1.2 per cent (€141 million) to end-quarter one 2018, contributed to by some small shortfalls across a number of headings. Furthermore, tax revenues to end-March are showing strong year-on-year growth of 3.5 per cent or €401 million.
It is important to point out that it is still too early in the tax collection calendar to discern any firm trends, which in turn underpins the decision to leave this year tax forecast unchanged from Budget 2018 in the Stability Programme Update, which was published last month.
By way of contrast, last year at end-quarter one exchequer tax revenues were 2.4 per cent (€282 million) behind profile, while by end-December 2017 overall tax revenues came in slightly ahead of profile by 0.2 per cent or €116 million.
As part of the continuous efforts to improve the Department’s tax forecasting performance, last year the ESRI and my Department jointly examined the sensitivity of income tax and USC revenues to changes in income. As a result of this work my Department revised the income tax and USC revenue elasticities used in the forecasting process. These new elasticities were used in the forecasts for Budget 2018. At end-March 2018 overall USC receipts closed the quarter on profile, while the 1.7 per cent (€80 million) shortfall in income tax can be attributed to small under-performances in unearned and self-employed income tax revenues.
37. Deputy Richard Boyd Barrett asked the Minister for Finance his plans to establish a minimum effective corporate tax rate; and if he will make a statement on the matter. [21490/18]
View answerOn the matter of the effective corporate tax rate paid by corporations in Ireland, there have been seemingly conflicting figures and methodologies used in reference to Ireland. In April 2014, my Department prepared and presented a report for the Finance Committee to explain figures which are quoted and attributed to Ireland on this matter.
This technical paper, available on the Department of Finance’s website, provides clarity on the matter and to ensure this piece of work was as objective as possible, my Department commissioned an external and independent academic to co-author the paper. Based on data from the Central Statistics Office and Revenue, the report highlighted that since 2003 the effective corporate tax rates on Net Operating Surplus and Taxable Income averaged 10.9% and 10.7% respectively.
While these percentages are lower than the 12.5% headline rate, this can be attributed to the availability of the small number of targeted tax measures that are available in Ireland that may lower the effective rate of corporation tax paid in Ireland.
Furthermore, the Comptroller and Auditor General’s (C&AG) Report Annual Report for 2016 highlighted that 79 of the top 100 companies paid an effective rate of 10% or more, and almost two-thirds paid in excess of 12%. This supports the previous work carried out by my Department, which demonstrated that the effective rate of corporate tax in Ireland is close to the headline rate of 12.5%.
It is important to note that, of the companies which paid less than an effective rate of 10%, in most of these cases the relevant company was in receipt of foreign dividends for which double tax relief was available for taxes incurred in other jurisdictions in respect of that income. Therefore, when foreign taxes are factored in, the rate of tax was substantially higher.
In a number of cases, the effective corporate tax rate was also impacted by R&D tax credit claims. The R and D tax credit is one of the few reliefs we have which may lower the effective rate of corporate tax paid in Ireland. Some other countries have higher headline rates, supplemented by a high number of tax reliefs, which reduce the overall tax paid. In contrast, Ireland’s approach is transparent. We have a competitive headline rate of corporate tax applied to a broad base. Of the small number of incentives we have, these are focused on the creation of additional employment and on areas of innovation.
Further work carried out by Revenue, has identified that the effective rate of tax paid by companies in 2015 was provisionally 9.8%, which was a marginal increase on the 2014 rate of 9.7%. The 2012 and 2013 figures are 10.1%. Again, while these percentages are lower than the 12.5% headline rate, this can be attributed to the small number of targeted tax measures available in Ireland.
On the basis of this extensive analysis, I am satisfied that companies in Ireland are paying the appropriate rate of corporate tax on profits generated by those companies in Ireland.
I and my officials recognise the importance of ensuring effective taxation of multinational companies and the need for internationally agreed solutions to counter aggressive tax planning, base erosion and profit shifting. However, we do not believe these issues can be properly addressed by focussing on a minimum effective level of taxation only. A minimum effective tax would be a fundamental change to our system and would be unprecedented in comparison with other jurisdictions.
38. Deputy Joan Burton asked the Minister for Finance the progress in respect of funds being lodged in the escrow account in respect of the state aid judgment by the European Commission (details supplied); the funds lodged to date; the likely timetable for the lodgement of additional funds to the account; and if he will make a statement on the matter. [21288/18]
View answerThe Government does not accept the Commission’s analysis in the Apple State aid Decision and has lodged an appeal in the European Courts. However, we have always been clear that we are fully committed to ensuring that recovery of the alleged Apple State aid takes place and have committed significant resources to ensuring this is achieved. Given the unprecedented scale of the recovery amount, this has been a complex technical and legal process.
As the Deputy may be aware, on 24 April the Escrow Framework Deed which sets out the detailed legal agreement regarding the recovery of the alleged State aid was signed by me on behalf of the Government and also signed by Apple. This is a significant milestone with regard to the commencement of the recovery of the alleged State aid. This followed recent announcements that the Bank of New York Mellon London Branch has been selected as the preferred tenderer for the provision of escrow agency and custodian services to the fund and Amundi, BlackRock Investment Management (UK) Limited and Goldman Sachs Asset Management International have been selected as preferred tenderers for the provision of investment management services.
The signing of the Escrow Framework Deed now allows for the final processes to be completed including the formal appointment of the Escrow Agent/Custodian and the Investment Managers which in turn activates the process for the collection of the alleged State aid.
It is anticipated that the funds will flow into the escrow account in significant tranches during Q2 and Q3 of 2018 and I expect that the full recovery will be effected by the end of Q3 2018.
39. Deputy Michael McGrath asked the Minister for Finance when the legislation to formally establish the home building finance Ireland scheme will be published; and if he will make a statement on the matter. [21456/18]
View answerAs announced in my Budget speech on 10 October 2017, Home Building Finance Ireland (HBFI) is to be established to provide funding on market terms to viable residential development projects whose owners are experiencing difficulty in obtaining debt funding. Up to €750 million of ISIF funds will be allocated to HBFI to provide funding on market terms and the fund is estimated to have capacity to finance about 6,000 homes in the coming years.
The passage of legislation establishing HBFI is a priority for the Department of Finance. The Government approved the General Scheme of the HBFI Bill on 30 January 2018. Officials in the Department of Finance are actively engaging with the Office of Parliamentary Counsel (OPC) as part of the drafting process. I am informed that the drafting is progressing well and, absent any unforeseen issues, I intend to publish the Bill in the coming weeks.
In parallel to the ongoing work involved in drafting the text of the Bill, officials in my department have been engaging with the European Commission in order to ensure that the establishment and operation of HBFI does not breach EU State aid rules. In order to ensure that HBFI will comply with such rules it is essential that the published Bill provides that HBFI will lend only to commercially viable developments and on market equivalent terms and conditions.
Once published, I am hopeful that the Oireachtas will be in a position to pass the HBFI Bill before the end of the Spring/Summer legislative term, with a view to HBFI commencing operations later in 2018.
41. Deputy Eamon Ryan asked the Minister for Finance the amount the cycle to work scheme costs to run; and if he has carried out a cost-benefit analysis of the scheme. [21478/18]
View answerThe Deputy will recall that the Cycle To Work scheme came into operation on 1 January 2009. The scheme operates on a self-administration basis, and relief is automatically available provided the employer is satisfied that the conditions of their particular scheme meet the requirements of the legislation. There is no notification procedure for employers involved. This approach was taken with the deliberate intention of keeping the scheme simple and reducing administration on the part of employers.
Accordingly, the Revenue Commissioners do not have statistics on the uptake of the scheme therefore I cannot give the Deputy an annual cost.
It should be noted that the purchase of bicycles and associated safety equipment by employers for employees or directors is subject to the normal Revenue audit procedure with the normal obligations on employers to maintain records (e.g. delivery dockets, invoices, payments details, etc.). The employer is also obliged to keep all salary sacrifice agreements entered into between the employer and employees/directors, together with all signed statements from employees/ directors regarding use of the bicycles and safety equipment
It was estimated at the time of the introduction of the scheme that approximately 7,000 employees would avail of it over the first five-year period of its operation, the exemption may apply only once in any five year period in respect of any employee. However anecdotal evidence would suggest that the scheme has been considerably more successful than this and its continuation has been welcomed by the cycle business sector.
While I have not asked my officials to conduct any further specific analysis along the lines set out by the Deputy, I would advise him that all such schemes are reviewed in the context of the annual Budget and Finance Bill process.
42. Deputy Niamh Smyth asked the Minister for Finance the measures that have been taken to meet and engage with insurance companies here regarding excessive premiums being charged to consumers, particularly in counties Cavan and Monaghan. [21169/18]
View answerThe Deputy should note that in my role as Minister for Finance, I am responsible for the development of the legal framework governing financial regulation. Neither I nor the Central Bank can interfere in the pricing of insurance products, as these matters are of a commercial nature, and are determined by insurance companies based on the risks they are willing to accept.
However, it is acknowledged that pricing in the motor insurance sector has been subject to a lot of volatility in recent years, from a point where some premiums appeared to be priced at an unsustainably low level to the more recent experience of large increases.
Indeed, the problem of rising motor insurance premiums was the main impetus for the establishment of the Cost of Insurance Working Group, which is now chaired by the Minister of State for Financial Services and Insurance, Mr. Michael D’Arcy T.D. Its Report on the Cost of Motor Insurance was published in January 2017. The Report makes 33 recommendations with 71 associated actions to be carried out in agreed timeframes, set out within an Action Plan. The Working Group continued its work throughout 2017 and subsequently published the Report on the Cost of Employer and Public Liability Insurance in January 2018.
Stakeholder consultation formed the foundation upon which the Working Group’s two Reports and their recommendations were developed. This consultation process undertaken by the Working Group involved a wide range of stakeholders representing the different voices within this sector, including Insurance Ireland and the major individual motor insurance providers. The impact of excessive premiums being charged to consumers from all over the country was a feature of this engagement process with industry.
In addition, my Department officials regularly raise specific issues affecting consumers across the country during their ongoing engagement with Insurance Ireland, including within a sub-group formed to implement relevant consumer-focused recommendations from the Motor Report.
Furthermore, Minister of State D’Arcy has separately met with representatives from insurance companies and other relevant stakeholders in relation to a number of issues and the problems resulting from high insurance premiums have been discussed during these engagements.
43. Deputy Aindrias Moynihan asked the Minister for Finance the timeframe to implement the report on the cost of employer and public liability insurance; and if he will make a statement on the matter. [21387/18]
View answerThe second phase of the Cost of Insurance Working Group project culminated in the publication on January 25 of the Report on the Cost of Employer and Public Liability Insurance, following its approval by Government. This Report makes 15 recommendations with 29 associated actions to be carried out, detailed in an Action Plan contained in the Report with agreed timelines for implementation.
All 29 actions are scheduled to be implemented before the end of 2019, with 26 due for completion this year. The following numbers of actions are due in each respective quarter:
- Q1 2018: 8 actions
- Q2 2018: 7 actions
- Q3 2018: 4 actions
- Q4 2018: 7 actions
- Q1 2019: 1 action
- Q2 2019: 1 action
- Q4 2019: 1 action (no action is due in Q3 2019)
There is a commitment within the Report that the Working Group will prepare quarterly updates on its progress. Following the four previous such quarterly reports which focused exclusively on the implementation of the Report on the Cost of Motor Insurance, the Fifth Progress Update was published on May 11 and shows that in respect of the eight actions from the Report on Employer and Public Liability Insurance due for completion in Q1 2018, all eight deadlines have been met.
It is appreciated that these eight actions in the main can best be described as stepping stones to the implementation of broader policy initiatives such as, for instance, improving the engagement process between insurers and policyholders with claims submitted against them, and ensuring that enhanced communication between An Garda Síochána and the insurance industry will lead to more effective investigation and prosecution of cases involving insurance fraud. Nevertheless, they are important first steps and I am confident that further significant progress can be made over the coming months.
Accordingly, the Working Group will continue to focus on implementing the recommendations of the Report on the Cost of Employer and Public Liability Insurance, in parallel with implementing those from the 2017 Motor Report. I am hopeful that the cumulative effects of the completion of the two Reports’ recommendations will result in increased stability in the pricing of insurance for businesses and improved availability of liability insurance for all types of bodies.
44. Deputy Richard Boyd Barrett asked the Minister for Finance if he will review corporate tax reliefs; and if he will make a statement on the matter. [21491/18]
View answerAs the Deputy will be aware, a comprehensive review of the Irish Corporate Tax system, undertaken by Mr Seamus Coffey as an independent expert, was published in 2017.
The terms of reference for the Review of Ireland’s Corporation Tax Code included: tax transparency; avoiding preferential treatment; further implementing Ireland’s international commitments; delivering tax certainty; maintaining competitiveness; and maintaining the 12.5% corporation tax rate.
The Review was followed by a public consultation on the review's recommendations and on the implementation of the Anti-Tax Avoidance Directive (ATAD). Implementation of the measures agreed at EU level under the ATAD, which include the introduction of Controlled Foreign Corporation rules, anti-hybrid rules, a new interest limitation ratio, the revision of exit tax provisions and review of the general anti-abuse rule, is a very significant undertaking which will substantially transform the corporate tax system over the coming years.
With regards to targeted tax reliefs, the Irish corporation tax regime contains a small number of specifically targeted tax reliefs. The focus of these reliefs is on the creation of additional employment, as is consistent with current government policy, and on innovation, with a view to generating high value-added economic activity in the country. My Department carries out regular reviews of targeted tax reliefs in line with the Department of Finance’s Tax Expenditure Guidelines published in 2014. For example in the current year, reviews of the 3 Year Start-Up Relief and the Film Relief are in progress.
45. Deputy Joan Burton asked the Minister for Finance the contact he has had with other EU Finance Ministers regarding the proposed EU digital tax; and if he will make a statement on the matter. [21286/18]
View answerThe Deputy will be aware that on 21 March the European Commission published two proposed Directives which seek to tax certain digital activities differently within the EU. One, a ‘temporary’ solution for a 3% levy on turnover from certain digital service activities. The second, "comprehensive solution" requires an overhaul of international taxation, establishing the concept of a "digital permanent establishment", allowing countries taxing rights over the digital business carried out by a company in that country, even where that company has no physical presence there.
Ireland is strongly committed to global tax reform and believes that global solutions are needed to ensure tax is paid by companies where value is created. It is important that we have a system of taxation which is appropriate to meet the challenges and opportunities of a changing world. Therefore I welcomed the opportunity to discuss the proposals with my EU counterparts at the Informal ECOFIN meeting in Sofia on 27-28 April.
There was a healthy debate among my fellow Ministers. While it is clear that there is widespread support for a global solution, Ministers remain divided on the need for independent EU measures, particularly the interim proposal which many Member States see as being flawed. Unanimity is required before any EU tax proposal can be agreed.
I took this opportunity to outline the concerns we have with the proposals. If adopted in their current form, it would result in a significant shift in how corporate tax is paid and may have unanticipated negative consequences for EU MS and companies. Therefore it is important that these proposals are properly considered and analysed.
We need to be careful about introducing novel concepts which could fundamentally alter the model upon which companies are taxed. It is important to be aware of how any unilateral EU measure would be perceived outside of Europe. An EU Digital Services Tax could embolden other jurisdictions to introduce similar measures of their own, jeopardising the likelihood of achieving a global solution.
Ireland will continue to actively engage on these matters with our fellow Member States and at OECD level so that we have a system of international taxation which is appropriate to meet the challenges and opportunities that arise from the digitisation of the economy.
46. Deputy Pearse Doherty asked the Minister for Finance when claimants in relation to a company (details supplied) will receive compensation; the reason there are ongoing delays; and if he will make a statement on the matter. [21435/18]
View answerSetanta Insurance was placed into liquidation by the Malta Financial Services Authority on 30 April 2014. As it was a Maltese incorporated company, the liquidation is being carried out under Maltese law.
The Deputy will be aware that under the Insurance Act 1964, as amended, monies may be paid out of the Insurance Compensation Fund (ICF), with the approval of the High Court, in relation to an insolvent insurer, to meet claims up to a limit of 65% or €825,000 of the claim, whichever is the lesser.
The Deputy will also be aware of my decision in principle that the State will ensure that Setanta third party claimants are compensated in full, which was announced on 30 January. The Department of Finance has received confirmation from the Office of the Attorney General that there are no state-aid or other legal issues with this decision, and has therefore proceeded with the detailed arrangements to implement it. An additional provision to give effect to this decision is being included in the Insurance (Amendment) Bill, which is currently being finalised by my officials in liaison with the Office of Parliamentary Counsel and is expected to be published shortly. Once this is done the likely timeline for payment will become clearer, including the payment of the additional 35% to those who have settled their claims and have already received compensation of 65% of their claim subject to the limit outlined above.
I have also been informed by the Accountant of the Courts of Justice, that the High Court approved his application for payment out of the ICF on the 11 May 2018 in relation to some 403 claims to the value of c €7.6m. These payments will be paid within 15 working days from the date of the order and will be subject to the 65%/€825,000 limit.
It is however important to note that only claims which have been settled can be included in applications to the High Court for payment from the ICF. The process of settling claims is still ongoing and is subject in some cases to complex negotiations between all relevant parties. It is hoped that by the State taking steps to ensure that third party claimants are compensated in full, this will encourage the settlement of all outstanding claims as quickly as possible.
47. Deputy Pearse Doherty asked the Minister for Finance his plans with regard to the creation of a rainy day fund; and if he will make a statement on the matter. [21437/18]
View answerI am pleased to say that the General Scheme of a Rainy Day Bill has been prepared. I have circulated my proposals with a view to bringing them to Government in the coming weeks for a decision on drafting, in parallel with pre-legislative scrutiny.
The Bill will provide the necessary legislative underpinning for the Fund. My intention remains to transfer €1.5 billion from the Ireland Strategic Investment Fund, and to make annual transfers of €500 million per year in each year from 2019 to 2021, as was published last month in the Stability Programme Update.
My discussions with the Budgetary Oversight Committee in January this year have been constructive in formulating the detailed proposals, and I look forward to further positive engagement through the legislative process.
48. Deputy Bernard J. Durkan asked the Minister for Finance the steps he will take to alleviate the serious housing shortage at local authority direct build level; his views on whether in view of market trends that unless the housing crisis is resolved by way of urgent capital intervention and the likelihood is increased, demands for higher wages which in turn will lead to further crises in the future; if an emergency housing programme for local authorities will be approved; his views on the economic benefit of alleviating the pressure which forces persons on lower incomes into rent situations that they cannot afford; and if he will make a statement on the matter. [21451/18]
View answerHousing policy is a matter for the Minister for Housing, Planning and Local Government.
The Government’s primary response to the current issues in the housing market is contained in ‘Rebuilding Ireland: An Action Plan for Housing and Homelessness’. Under Rebuilding Ireland, a total of 33,437 social homes will be built out to 2021. A further 16,566 will be leased or acquired. Increasing supply is key to addressing the current difficulties in the housing market, and the direct construction of homes by Local Authorities is a key component of this. This action is possible due to the provision of significant capital funding. €1.14 billion of capital expenditure will be spent in 2018 and a total of €6 billion will be invested out to 2021. In total, there has been a 145% increase in Exchequer capital funding for new builds and acquisitions since 2016.
In addition to the funding provided to directly build more social homes, Budget 2018 contained a number of initiatives aimed at increasing the overall supply of new homes. An extra €75 million is being provided under the Local Infrastructure Housing Activation Fund (LIHAF), bringing total LIHAF funding to €275 million. When combined with the Local Authority matching contributions, this fund has the potential to provide approximately 5,000 homes by 2021. At Budget 2018, I also introduced measures that will increase the supply of private housing. Home Building Finance Ireland (HBFI) will boost the supply of debt funding to residential development. Utilising up to €750 million from the Irish Strategic Investment Fund, HBFI will fund new housing construction across all regions in the country.
In addition to the initiatives outlined above, the Department of Housing, Planning and Local Government will shortly bring forward proposals in relation to increasing the supply of affordable homes. My Department will be engaging fully with the Department of Housing on these measures. The availability of suitable housing is a crucial component in our ability to attract investment. I will continue to work with all stakeholders across Government and the construction industry to increase the supply of such homes and maintain our international competitiveness.
49. Deputy Richard Boyd Barrett asked the Minister for Finance if a review of the local property tax and its impact on increasing wealth inequality here will be produced; and if he will make a statement on the matter. [21488/18]
View answerAt the outset, I wish to outline Ireland’s position regarding the distribution of wealth. In 2013, the Central Statistics Office conducted the Household Finance and Consumption Survey (HFCS), which provided the first comprehensive data on Irish household wealth.
The net wealth Gini coefficient is a commonly used measure of inequality, where a figure of 100 indicates that one household holds all the wealth and 0 indicates that wealth is evenly divided among all households. This measure, based on the HFCS data, indicates that wealth inequality in Ireland (64) for 2013 is lower than the euro area average (69). In addition, the HFCS results also show that wealth in Ireland is less concentrated at the top of the distribution (i.e. the top 1% of the population) than the euro area average.
The Irish Government is committed to various targets, policies and initiatives to further reduce inequality in Ireland. Firstly, we are committed to further implementation and progress towards our inequality reduction goals within the Programme for Partnership Government, particularly in the context of the budgetary process. Our highly progressive income tax and well targeted welfare systems are notably successful at reducing income inequality. In fact, the most up-to-date OECD data available show that Ireland’s tax and welfare system creates the largest improvement in the equality of income distribution of all OECD countries for which data are available. We are also dedicated to further advancements in the area of limiting tax avoidance, which is evident, for example, through our involvement in the OECD BEPS initiative. Furthermore, additional policy measures such as regular reviews and/or increases of the national minimum wage also support the goal of a more equal income distribution.
The charging structure for the LPT is progressive. The basic rate of 0.18 percent applies up to property values of €1 m with a higher rate of 0.25 percent applying on the portion of value above the €1 m threshold. In addition to the progressive rate structure, and to the extent that better off people tend to own more valuable properties, the LPT is a progressive tax particularly over the life cycles of tax payers.
In January I announced a review of the Local Property Tax (LPT) which is looking in particular at the impact on LPT liabilities of property price developments. The review includes an examination of the outstanding recommendations of the 2015 Thornhill review of the Local Property Tax. A number of these recommendations call for the existing LPT deferral provisions should be continued and be reviewed and revised at frequent intervals in line with movements in the CPI so as to maintain their real value and that the period of relief for income-stressed owner-occupiers who have outstanding mortgages should be extended beyond the end of 2017. In addition there is a recommendation that for owner-occupiers over 80 years of age or those with stated certified long term illnesses and disabilities who are also living alone that consideration be given to raising the eligible income limit for deferrals to €20,000.
It is expected that the review will be completed at the end of August and that the review report will provide a number of policy choices for consideration. The review will be informed by the desirability of achieving relative stability, both over the short and longer terms, in LPT payments of liable persons.
50. Deputy Thomas P. Broughan asked the Minister for Finance when legislation on the rainy day fund will be published; if his Department has completed its examination on the main functions of the proposed €500 million fund; the cases in which this includes a cost-benefit analysis in relation to the deferred public expenditure; and if he will make a statement on the matter. [21625/18]
View answerI expect to bring my proposals for the general scheme of a Rainy Day Fund Bill to Government for decision in the coming weeks. Following the consideration of Government, I would expect to forward the general scheme of the Bill to the Oireachtas for its consideration.
I would hope to progress the Bill quickly, but I am not yet in a position to give a detailed timeline. The principal purpose of the Fund is to mitigate future external economic shocks by setting aside a reserve which can be drawn on in the event of such a shock. It is a prudent measure being taken at a time when our public finances are relatively strong, intended to increase our economic resilience.
Given the unpredictability of economic shocks and the consequential uncertainty as to how the Fund will ultimately be disbursed, it is not possible to prepare a meaningful cost benefit analysis on its ultimate expenditure. However, I would expect the funds to be used as part of voted expenditure. My officials are preparing a regulatory impact analysis which will be published together with the Bill.
