Mick Barry
Question:70. Deputy Mick Barry asked the Minister for Finance the way in which he will respond to the country-specific recommendations from the EU Commission. [30961/18]
View answerWednesday, 11 July 2018
Questions (70, 81)
Paul Murphy
Question:81. Deputy Paul Murphy asked the Minister for Finance his views on the European Commission's country specific recommendations in relation to aggressive tax planning, pension reforms and healthcare; and if he will make a statement on the matter. [30979/18]
View answerOral answers (12 contributions)
On 23 May 2018, the European Commission published recommendations on the 2018 national reform programme of Ireland and delivered a Council opinion on the stability programme of Ireland. Could the Minister comment on the recommendations it made?
I propose to take Questions Nos. 70 and 81 together.
The European Commission published the 2018 country-specific recommendations, CSRs, on 23 May 2018 as part of the European semester process. Similar to last year, Ireland received three recommendations. The first deals with the effectiveness of public finances and expenditure, the reduction of Government debt and broadening the tax base. The second references the implementation of the national development plan and the third addresses productivity growth and the resolution of long-term arrears.
These recommendations were based on the European Commission's country report for Ireland, which was published earlier in March. At the June meeting of the Economic and Finance Affairs Council, my colleagues and I welcomed and approved the publication of the country-specific recommendations, which were subsequently endorsed by the European Council. On Friday, 13 July, the country-specific recommendations will be adopted at the ECOFIN meeting that I will attend. I will bear these recommendations in mind as part of the overall process when preparing budget 2019.
It is important to note that Ireland did not receive a recommendation relating to aggressive tax planning, although it was referenced in the recitals to the country-specific recommendations. We remain committed to implementing the OECD base erosion and profit shifting recommendations and the recommendations of the Coffey review of Ireland's corporation tax code.
Part of the country-specific recommendation dealing with the effectiveness of public finances aimed to address the expected increase in age-related expenditure by increasing the cost-effectiveness of the healthcare system and pursuing the envisaged pension reforms. While healthcare policy is a matter for my colleague, the Minister for Health, my Department works closely with the Department of Health on an ongoing basis. The Departments have also worked closely on longer-term issues such the implementation of an agreement on prices of and access to medicines.
Matters relating to pensions reform are primarily a matter for my colleague, the Minister for Employment Affairs and Social Protection. Nevertheless, it is worth noting that in February, the Government agreed a roadmap for pensions reform. The roadmap takes a holistic view of pension issues and details specific measures presented under six strands to modernise and improve the sustainability of our pension system.
The European Commission report states that existing climate change mitigation efforts will not enable Ireland to achieve its 2020 climate goals domestically. It states that the way in which the Government might deal with this is by buying carbon allocations from other member states. That would indicate that the taxpayers would pay for a subsidy for both industry and agriculture. Does the Minister intend to shell out by buying carbon allocations and if so, how much does he intend to shell out?
The report also says that as it stands, the national mitigation plan offers few new mitigation measures. In other words, it is not up to speed or scratch. What will the Minister say to the Minister for Communications, Climate Action and Environment, Deputy Naughten, about that and what will he ask him to do?
I understand the plan contains a ten-year plan regarding higher capital investment in climate change, plans to modernise our supply of energy and deliver against a climate agenda about which the Deputy has spoken. It is fair to say that meeting the objectives we have will be very challenging but in terms of what we are doing about it, I have supported the Minister, Deputy Naughten, in putting in place a massively increased capital programme. I have put in place plans to increase the supply of public transport across our country. Is the taxpayer paying for that? The answer is "Yes". I would have thought Deputy Barry would be supportive of that.
The Minister's answer is "Yes" to buying carbon credits. I also asked the Minister how much he proposed to spend. He might respond to that.
The report also says that according to the OECD, childcare costs in Ireland relative to wages in 2015 were the highest for lone parents in the EU and the second highest in the Union for couples. It also states that the high cost of childcare can act as a barrier to accessing paid employment, particularly in low-income households, including single parents. That is a far cry from the promise made by a Minister who served in a Government in which the Minister served that there would be Scandinavian-style childcare for Irish parents at this stage. A recent ESRI report found that lone parents are being forced to take up work as a result of changes to the one-parent family payment and have suffered a fall in income. It pinpoints the lack of affordable childcare as one of the two key reasons for this. Is the Minister prepared to be honest with the House and state that Fine Gael clearly does not believe in publicly run, affordable childcare, which would benefit the people who need it?
We will have two short supplementaries from Deputies Michael McGrath and Pearse Doherty.
Mine relates to the third recommendation of the report, which relates to long-term arrears. What the Commission said was very interesting. In identifying solutions, it placed the emphasis on encouraging write-offs of non-recoverable exposures. The practice in Ireland is to sell on loan portfolios. We will be dealing with legislation tomorrow at committee to regulate these funds. What is the Minister doing to encourage write-offs, which is what the Commission is providing for, as opposed to the current strategy of banks, which seems to be to give the write-off to a fund to just sell on blocks of loans by way of loan portfolios?
It is very clear that the Commission is recommending something that Sinn Féin has been putting forward for many years, namely, that the banks must deal with the fact that many households will not be able to pay the full amount on their mortgage and the solution is either repossession or the current position, which involves selling off to vulture funds, which will end up in the same position. The write-off of debt is the norm with business loans but for some reason, banks shy away from that option when it comes to domestic mortgages. Has the Minister had discussions with the chief executive officers, CEOs, of State-owned and controlled banks or where the State has a majority shareholding in the bank about the recommendation from the Commission that banks would pursue a policy of write-off of arrears?
I did not answer the question about the purchase of carbon credits but will do so now, so Deputy Barry should not assume an answer I have not yet given. I have not yet made any decisions about the purchase of carbon credits.
This is something I will have to do with the Minister, Deputy Denis Naughten, in the context of the coming budget.
On the Deputy's point on the affordability of childcare, the Minister for Children and Youth Affairs has brought in the first phase of a scheme of broader subsidies as part of how we further support the development of the childcare sector. She has also put an independent review system in place to see how that feeds into lower pricing.
It is welcome to hear Deputy Mick Barry refer to country-specific recommendations from the European Commission. I thought this was the kind of system he was against but he now appears to see the value in having the Commission make points about our economy's performance. It is welcome and this is similar to the journey made by Deputy Pearse Doherty on the role of fiscal rules in our economy
Deputy Barry will be in government soon.
Deputy McGrath took the shilling and stayed bought, fair play.
On long-term arrears, many of our banks have engaged in a process of reducing the value of mortgage debt. To answer Deputy Pearse Doherty's question, I will meet the CEOs of all the banks before the end of July in the context of setting up the banking standards board for Ireland.