Written Answers Nos. 1-44
12. Deputy Aindrias Moynihan asked the Minister for Finance the status of the implementation of the report on the cost of insurance working group for motor insurance; and if he will make a statement on the matter. [43967/18]
View answer43. Deputy Aindrias Moynihan asked the Minister for Finance the position regarding implementing recommendations of the cost of insurance working group for motor insurance; the number of recommendations which are delayed; his plans to deal with delayed items; and if he will make a statement on the matter. [43968/18]
View answerI propose to take Questions Nos. 12 and 43 together.
The Cost of Insurance Working Group’s Report on the Cost of Motor Insurance was published in January 2017 and makes 33 recommendations with 71 associated actions to be carried out in agreed timeframes, set out in an Action Plan.
In line with the commitment to publish quarterly update reports on the implementation of the recommendations of the Motor Report, the Working Group has published six such updates, most recently on August 30th last. It shows that of the 56 separate applicable deadlines within the Action Plan set to the end of Q2 2018, 44 relate to actions which have been completed. Substantial work has also been undertaken in respect of the nine action points categorised as “ongoing”.
In respect of the 12 actions which were not fully completed by the end of Q2 2018 as scheduled, six relate to legislative issues, while legislation is being considered for another due to a lack of agreement with industry. Two other outstanding actions are related to the same recommendation and require the establishment of the new Office of the Legal Costs Adjudicators, while another is contingent on the development of a register of personal injuries proceedings by the Courts Service. The remaining two actions both relate to Recommendation 26, which requires the approval of both the Minister for Justice and Equality and the Garda Commissioner for potentially far-reaching cooperative mechanisms between Insurance Ireland and An Garda Síochána to be formalised.
It should be recognised that significant progress has been made in respect of the implementation of all 12 of these aforementioned actions, most particularly regarding legislation to establish a new National Claims Information Database. Also, it must be acknowledged that the average cost of motor insurance has been consistently falling since the middle of 2016, with the most recent CSO data (for September 2018) indicating that private motor insurance premiums have decreased by 21.5% since peaking in July 2016.
Finally, it is envisaged that the seventh quarterly update will be completed in the coming weeks. This update will provide details on the implementation of all of the recommendations from both the Motor and Employer/Public Liability Reports, with a particular focus placed upon the seven actions with Q3 2018 deadlines, including three actions from the Report on the Cost of Motor Insurance .
13. Deputy Jonathan O'Brien asked the Minister for Finance the reason no progress was reported on budget day on the merging of PRSI and USC. [44210/18]
View answerI have always been clear that the amalgamation of USC and PRSI is a medium term plan and, as a result, the matter is being progressed on a separate track from the Budget and Finance Bill process.
The Working Group have now completed their work, in line with their terms of reference. Their Report was submitted to me in recent weeks and I am now considering the contents.
The Report addresses a range of options for how amalgamation could be achieved, but also has identified a number of serious challenges that will need to be further considered.
The amalgamation relates to State funds with an estimated combined value of over €7bn per annum, collected from over 2.5 million income earners.
The issue is therefore a complex one that will take time to consider.
Follow-on decisions will be taken in due course and I will make the House aware of these at the appropriate time.
14. Deputy Michael McGrath asked the Minister for Finance if he anticipates legislative changes as a result of the report from the Central Bank on the behaviour and culture of Irish retail banks; if he has had further consultations with the main banks in relation to the tracker mortgage scandal; and if he will make a statement on the matter. [44119/18]
View answerThe Central Bank Section 6A Report on the culture and behaviour of the main retail banks was drafted by the Central Bank in response to my request in November 2017, on foot of the serious cultural failings in banks brought to light in the Tracker Mortgage Examination.
My Department’s analysis of the report found that it is a detailed, qualitative and considered analysis of culture within the banking sector. The report’s recommendations will drive positive changes in terms of wider banking culture, greater delegation of responsibilities, and enhanced accountability. The report importantly focuses on simplifying the taking of sanctions against individuals who fail in their financial sector roles.
As the Deputy will be aware, I have long been on the record as stating that there are cultural failings in the banking sector that must be addressed. I and my colleagues in Government are supportive of measures to change behaviour, operations and organisational culture within the financial sector that will keep the customer at the heart of its operations.
The Central Bank's proposals to enhance individual accountability by way of Conduct Standards for all regulated financial services providers and the individuals working within them; a Senior Executive Accountability Regime (similar to the Senior Managers Regime in the UK); and, enhancements to the current Fitness and Probity Regime are being considered as part of the work of the forthcoming Central Bank (Amendment) Bill. Officials in my Department are engaging with the Central Bank and other stakeholders in order to identify the legislative changes that are required to implement such a customer centric culture and to enhance individual accountability. I intend to bring forward heads of a Bill for approval in Q1 2019.
As part of my regular ongoing engagement with industry I meet with representatives of the main banks, and updates on the Tracker Mortgage Examination form part of the discussion at these meetings. The Central Bank has confirmed that four of the five main lenders are now close to completing their redress and compensation phases. Central Bank enforcement investigations in respect of six of the lenders are continuing, and will consider all possible angles, including potential individual culpability.
15. Deputy Joan Burton asked the Minister for Finance his assessment of the likely impact on the economy of a hard Brexit in March 2019; and if he will make a statement on the matter. [43974/18]
View answerMy Department’s budget forecasts assume, as a central scenario, that the UK will make an ‘orderly’ exit from the EU. This involves a transition period being agreed until the end of 2020, and a free trade agreement being agreed thereafter.
However, I am conscious that the nature of the UK’s exit remains uncertain, and that the risks of a harder Brexit have increased. An assessment of the potential outcomes is included in the Economic and Fiscal Outlook that accompanied Budget 2019 .
In the short-term, a no-deal hard Brexit would have a material impact on Ireland, which would be asymmetric relative to the rest of the EU. The resulting shock would likely lead to market volatility, further sterling depreciation, and disruption to trade with the UK. This would have negative impacts for consumer spending, investment and competitiveness, with potential spillovers to the labour market and public finances. Sectors with strong export ties to the UK, such as agri-food and parts of manufacturing (especially indigenous manufacturing), would be especially exposed, in particular at the regional level.
With regard to the long term impact, joint research by my Department and the ESRI published in 2016 shows that the potential impact of a hard Brexit is significant. The level of GDP would be almost 4 per cent below what it otherwise would have been in a no-Brexit scenario, after ten years. The level of employment in Ireland would be 2 per cent lower, with the unemployment rate nearly 2 percentage points higher.
It is important to stress that the economic models may not fully capture the full impact, given the difficulty in modelling financial market effects, non-tariff barriers and other factors. Therefore, these quantitative effects should be seen as a minimum as opposed to a maximum impact.
The Government is working hard with the EU Taskforce and our EU partners to ensure that an agreement between the EU and the UK is reached. While it is still Government’s view that a ‘no deal’ outcome remains unlikely, we are planning for all scenarios. Budget 2019 continues the process of ensuring that Ireland is in the best possible position to respond to the challenges that Brexit will bring.
16. Deputy Paul Murphy asked the Minister for Finance the cost of the tax breaks to private landlords announced in budget 2019; if the cost benefit analysis of direct investment in public housing has been analysed; and if he will make a statement on the matter. [44224/18]
View answerI announced in the Budget that the amount of interest that may be deducted by landlords in respect of loans used to purchase, improve or repair a residential property will be restored to 100% from 1 January 2019 at an estimated cost of €10 million in the first year and €18 million in a full year.
It is not a new initiative but rather an acceleration of the rate of the restoration of the full value of this relief which was already scheduled to increase to 100% by 2021.
In 2009, the interest deduction for landlords of residential property was restricted in the context of the financial crisis.
In 2018, it is my view that it is timely, given the demand for housing across all sectors, to lift this restriction on the private residential landlords who are an essential feature of a functioning housing market.
Interest payments are generally considered to be legitimate business expenses and by restoring this relief to 100% deductibility on interest payments, it is hoped that the change will discourage private landlords from exiting the rental market as house prices increase.
Further, it has been argued that the existence of a restriction on the profit-making capacity of a business incentivises them to increase income streams - for landlords, this means increasing rent. I am taking action now to remove at least one incentive to increase rents that is within my direct control, at a relatively modest cost of €10 million in 2019 in the interests of all parties in the rented residential market.
Regarding direct investment in public housing, the Government is allocating Exchequer funding of €2.3 billion to housing in Budget 2019. This investment will see the housing needs of almost 27,400 households being met in 2019. An additional 17,600 units will be provided through the Housing Assistance Payment (HAP) and the Rental Accommodation Scheme (RAS).
Beyond 2019, each year will see the housing needs of more households met through build programmes (over 7,000 units in 2020 and almost 9,000 in 2021) and less through the HAP, with published targets decreasing from a peak of 17,000 new units this year to 10,000 in 2021.
This changing mix of social housing support out to 2021 reflects the increase in direct build social housing as the construction sector continues to recover, while also allowing the State to accelerate the delivery of social housing in the short term and grow the long-term social housing stock in a sustainable manner.
18. Deputy Pearse Doherty asked the Minister for Finance when the report he commissioned on bankers’ pay will be completed and published; and if he will make a statement on the matter. [44221/18]
View answerDeputies will be aware that Government policy on banking remuneration has remained unchanged since the financial crisis. Extensive restrictions are in place and from the outset let us be clear these are not simply confined to a handful of senior bankers whose pay is restricted by the €500,000 pay cap (excluding a standard pension contribution). These affect c.23,000 workers across the three banks in which the State has a shareholding. The Policy dictates that variable pay including bonuses and any other fringe benefits including the likes of health insurance and childcare cannot be paid to any staff members from the most junior lowest paid staff to the most senior ranks.
A new regulatory framework has been put in place since the financial crisis across the EU, the economy has returned to near full employment, the remaining banks are profitable again – and in the case of AIB and BOI sustainably so. The State remains the largest shareholder in AIB, BOI & PTSB but following the successful IPO of AIB in June 2017 all three banks are also now on an equal footing with listings on the main market of the Irish and London stock exchanges.
The skill set required in the banking sector is evolving with the greatest demand for staff now in areas such as the digital economy, risk management, legal and compliance. These skills are in demand right across the economy and so the banks are competing for this talent against companies who have more flexible and attractive remuneration structures. Brexit has only made this problem more acute.
In the senior ranks of the banks the substantial disparity in pay levels versus other Irish listed companies or peer banks in Europe is stark and introduces an obvious retention risk particularly in AIB and Bank of Ireland. I also need to be advised if this retention risk and a lack of alignment between the interests of executives and shareholders, undermines the Government's objective of recovering the State’s full investment in the banks.
My department held a full open EU public procurement to select a suitably qualified external consultant to assist the Department of Finance in completing this review of Government policy. On 3 October the specialist advisory division of International Firm Korn Ferry were appointed.
My officials have met with Korn Ferry and already begun a consultation process with the banks, the Financial Services Union as well as a range of investors. I expect the Department to complete the Review before the end of the year and the review itself will be published in Q1 2019.
It is important that we do not prejudge the outcome of the review, It is also important to note irrespective of the outcome of this review, and what advice is given on the reintroduction of variable pay or bonuses, the ‘super tax’, which sees 89% of bonuses being paid back to the State will remain in place via the Finance Act 2011. The power to alter that remains exclusively in the hands of the Oireachtas.
19. Deputy Bríd Smith asked the Minister for Finance if the granting of section 481 status for film productions and his Department's role in sanctioning such production will be examined in view of concerns that budgets have been overestimated to avail of the scheme; the safeguards in place to ensure this does not happen; and if he will make a statement on the matter. [39808/18]
View answer52. Deputy Richard Boyd Barrett asked the Minister for Finance his plans to make adjustments to section 481 film tax relief particularly in view of recent allegations of possible abuses of this relief and concerns that the relief is not generating the quality employment in the film industry that is required under the legislation; and if he will make a statement on the matter. [44228/18]
View answerI propose to take Questions Nos. 19 and 52 together.
Under Section 481, a company which produces a film can claim a payable tax credit of 32% of eligible expenditure, subject to certain limits.
Eligible expenditure is the amount that the producer company spends in Ireland, wholly and exclusively on producing the film. Expenditure outside of Ireland does not qualify for the tax credit. However, where the credit is calculated based on 80% of the total cost of production, Revenue must have regard to the amounts incurred outside of the State as an increased global budget can lead to an increased credit.
Recognising the potential risks presented, the administrative framework of the relief requires that a company’s application for the credit must include:
firstly an auditor’s report detailing the eligible expenditure, the global budget and details of related party transactions, and secondly a solicitor’s letter detailing that they have reviewed the legal agreements and that 68% of the funding has been lodged to the company’s bank account (a requirement prior to Revenue releasing any amounts of the payable tax credit).
Section 481 provides that Revenue may refuse to certify a film if they have reason to believe that the budget, or any part of the budget, is inflated. They may also refuse to certify the film if they are not satisfied with the commercial rationale for the corporate structure used for financing, distribution and other similar activities.
As part of this year’s Finance Bill, I announced that applications under Section 481 will be moved to a self-assessment footing to put the credit inside the normal penalty and prosecution regime where an incorrect claim is made. Further administrative changes are also being made to allow for earlier engagement with production companies in relation to the training requirements that form part of the relief.
In terms of employment, Revenue carries out a comprehensive programme of ‘outdoor’ compliance operations each year across a broad range of economic sectors, including the film industry. Many of the operations are carried out on a multi-agency basis, which can include officials from the Department of Employment Affairs and Social Protection and the Workplace Relations Commission. The primary role of these joint investigation units, JIUs, is to detect non-compliance with tax and duty obligations, which includes non-operation of the PAYE system on foot of bogus self-employment.
20. Deputy Alan Kelly asked the Minister for Finance the timescale for the conclusion of the Credit Union Advisory Committee's work; when it is next to report to him; the outstanding projects to be completed; and if he will make a statement on the matter. [43973/18]
View answerThe Credit Union Advisory Committee (CUAC) is a statutory committee established under section 180 of the Credit Union Act 1997 to advise the Minister for Finance in relation to:
- the improvement of the management of credit unions;
- the protection of the interests of members and creditors of credit unions; and
- other matters relating to credit unions.
Four new appointments were made to CUAC in September, in addition to two continuing members. The new committee met for the first time on 15 October 2018 and is currently considering an indicative work plan for the next few years. It will report to me on progress when this new work plan is in place.
In 2017, an Implementation Group was established to oversee and monitor the implementation of recommendations set out in the CUAC’s “Review of Implementation of the Recommendations in the Commission on Credit Unions Report”, published in 2016.
The group is chaired by my Department and consists of one member from each of the credit union representative bodies – the Irish League of Credit Unions, the Credit Union Development Association, the Credit Union Managers' Association, and the National Supervisors Forum – along with one member from the CUAC and a member from the Central Bank. This broad membership ensures participation and encourages contribution from all credit union perspectives.
The Implementation Group submitted 2 papers to the Central Bank in November 2017 on (1) Lending Limits and Concentration Limits and (2) Consultation and Engagement. The paper on Lending Limits included a number of proposals which, if implemented, could provide for a material increase in long-term lending for those credit unions that would have the capability to do so. These proposals were provided for consideration by the Central Bank in its review of the Credit Union Lending Limits. The Central Bank has just issued a consultation paper regarding its review of the Lending Regulations.
I am expecting the Implementation Group to report to me in December, ahead of the completion of the term of that group, with a status update on all of the recommendations from the CUAC report of 2016 and subsequent CUAC policy papers.
21. Deputy Joan Burton asked the Minister for Finance the progress being made in respect of the establishment of the banking culture board; if his attention has been drawn to the concerns expressed by a union (details supplied) in respect of the manner of the configuration of the board; and if he will make a statement on the matter. [43975/18]
View answerI wish to clarify for the Deputy that the Irish Banking Culture Board is a private initiative from the banking industry in Ireland aimed at rebuilding trust and confidence in the industry following the tracker mortgage scandal, and as such it is not within the remit of my Department nor the Central Bank as regulator.
It is intended that the Irish Banking Culture Board will be an independently led entity to ensure that the industry is focused on the best interests of the customer and leads to a sustainable banking industry that promotes the highest standards of behaviour and professionalism.
I have been informed by representatives of the five main lenders that over the next 6-12 months, the search for an independent Chairperson will be concluded, the wider Board will be appointed, and there will be an initial culture survey and a stakeholder consultation process.
The initiative does not seek to replace or diminish existing regulation and will be run out of a separate entity to the Banking and Payments Federation of Ireland (BPFI) and the banks. The establishment costs and annual running costs will be funded by the retail banks themselves. The Board will not act as a lobbying or representative organisation. It will not act as a regulatory body nor duplicate the work of individual banks or the regulator.
I welcome this initiative by the banks to regain the trust of customers, but it is no substitute for regulation.
To that end, my officials have been working with the Central Bank over the past year on policies to be addressed in a forthcoming Central Bank (Amendment) Bill. As I have already stated, the Government is supportive of measures to enhance individual accountability arising from the Central Bank's culture report recommendations. The Central Bank's proposals to enhance individual accountability include: Conduct Standards for all regulated financial services providers and the individuals working within them; a Senior Executive Accountability Regime; and, enhancements to the current Fitness and Probity Regime. I propose to address the required changes to legislation under the ongoing Central Bank Amendment Bill project. My officials have been engaging with the Central Bank and other stakeholders in that regard and I intend to bring forward heads of a Bill for approval in Q1 2019.
22. Deputy Eamon Scanlon asked the Minister for Finance his plans to introduce a tax incentive to owners of vacant properties to refurbish same provided they are ceded to the local authority for social housing tenants; and if he will make a statement on the matter. [38911/18]
View answerThe Department of Finance Tax Expenditure Guidelines, published in October 2014, sets out guidelines for best practice in ex-ante and ex-post evaluation of tax expenditures and is used by my Department when considering whether or not to introduce a new tax expenditure, or in reviewing an existing measure. These guidelines indicate that tax expenditures should only be used in limited circumstances of demonstrable market failure, and where a tax based incentive is likely to be more efficient than a direct expenditure intervention.
In relation to the particular incentive being proposed by the Deputy, I understand that there is already a targeted direct expenditure measure in operation under the remit of the Minister for Housing, Planning and Local Government, i.e. the Repair and Leasing Scheme.
I am advised that this scheme, developed under Pillar 5 of Rebuilding Ireland, is targeted at owners of vacant properties who cannot afford or access the funding needed to bring their properties up to the required standard for rental property. The scheme provides upfront funding for any works necessary to bring the property up to the required standard, and in return the property owner agrees to lease the dwelling to the local authority to be used as social housing.
In relation to taxation measures which are targeted at increasing the supply of property available in the rented residential sector, as the Deputy may be aware, in 2017 my Department published a report on the Tax and Fiscal Treatment of Rental Accommodation Providers. Ten policy options were put forward in the report, divided into short-term, medium-term and long-term timeframes. Five potential short-term options were identified as measures which could potentially be implemented within 18 months, i.e. within Budgets 2018 and 2019.
In Budget 2018, I introduced one of these measures: deductibility for pre-letting expenditure for previously vacant properties. This option was prioritised as it was specifically designed to encourage an overall increase in housing supply by bringing currently vacant property back into residential use. This measure applies to residential premises which have been vacant for at least 12 months and which are then let after 25 December 2017. The expenditure is allowed as a deduction against rental income from that premises and applies to expenses that would be allowable if they had been incurred while the property was let, such as the cost of repairs, insurance, maintenance and management of the property. The total deduction allowed is capped at €5,000 per vacant premises and the deduction will be clawed-back if the property ceases to be let as a residential premises within four years of the first letting.
Finally, it should be noted that taxation is only one of the policy levers available to the Government through which to boost rental and overall housing supply. Ireland’s past experience with tax incentives in the housing sector strongly suggests the need for a cautionary stance when considering intervention in the rental sector. There are many competing priorities which must be considered when deciding which policy measures to introduce and the rental sector is just one of many other sectors that may require assistance and intervention.
23. Deputy Pearse Doherty asked the Minister for Finance if he will introduce a simplified process by which small and medium-sized enterprises can avail of the research and development tax credit. [44219/18]
View answerThere are no specific provisions for small and medium enterprises (SMEs) in the research and development (R&D) tax credit, and nor are there any restrictions for SMEs wishing to avail of the scheme. It is available to all firms, within the charge to Irish tax, that undertake qualifying R&D activities in the European Economic Area. However I am aware that Revenue issued guidance in February 2017 with the specific aim to reduce the administrative burden for relatively small claims for SMEs and micro-companies.
The administration of the R&D tax credit is a matter for the Revenue Commissioners and I am aware that Revenue participate in a number of initiatives to ensure that the availability of the R&D tax credit, and the activities in respect of which it is available, is communicated to firms of all sizes. For example, Revenue attend and speak at R&D events organised by IRDG, IDA and EI. Revenue has also established the Research & Development (R&D) discussion group which provides a forum for Revenue and representative organisations to raise and address issues affecting the operation of the R&D tax credit.
I would also note that the refundable nature of the R&D tax credit can be particularly attractive to start-up companies or SMEs which are not making profits as the credit can effectively part-fund the R&D activity and act as a valuable source of cash-flow.
Notwithstanding these points, I am aware of proposals that a separate, simplified R&D tax credit be introduced for small companies. In view of the Exchequer cost of the relief such proposals have to be carefully considered. In line with my Department’s Tax Expenditure Guidelines, a full ex-post cost benefit analysis and evaluation of the R&D tax credit is scheduled to be carried out in 2019, and this will include consideration of proposals for alterations to the credit.
24. Deputy Niamh Smyth asked the Minister for Finance the measures he has taken to meet and engage with insurance companies here regarding excessive premiums being charged to consumers, particularly in counties Cavan and Monaghan. [43997/18]
View answer40. Deputy Bobby Aylward asked the Minister for Finance the measures taken to meet and engage with insurance companies here regarding excessive premiums being charged to consumers particularly in counties Carlow and Kilkenny. [40780/18]
View answerI propose to take Questions Nos. 24 and 40 together.
The Minister for Finance is responsible for the development of the legal framework governing financial regulation. Neither he 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 I chair. 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 representative bodies, the major individual motor insurance providers and interest groups. The impact of excessive premiums being charged to consumers from all counties across the country was a feature of this engagement process with industry.
In addition, my 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, I have 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.
25. Deputy Maureen O'Sullivan asked the Minister for Finance if his attention has been drawn to the uncertainty the increased betting duty has caused for small betting shops; and if his attention has been further drawn to the fact that further taxation of online betting as opposed to retailers could have been more justified. [44236/18]
View answerAs announced in the Budget I have increased the rate of betting duty from 1 per cent to 2 per cent for all bookmakers and the rate of betting intermediary duty from 15% to 25% on the commission earned for betting intermediaries. These measures will take effect from 1 January 2019.
The Government’s priority has been to level the playing field by extending the tax to remote bookmakers and betting exchanges. This was achieved in 2015, via the Betting Amendment Act, and I believe it is now timely to increase the rates of betting duty and betting intermediary duty. Some of you here will remember when betting tax was 20% of turnover. In fact, the last time the betting duty rate increased was in 1975. Furthermore, it is also worth pointing out that the standard bookmaker’s licence fee, at €500 for a two year period, is modest and has not increased since 1992. I appreciate the concerns raised by the betting sector following the budget. However, this increase must be seen in the context of the rate being at an all-time low. It is also worth pointing out that VAT generally does not applies to betting services, also there are on-course exemptions from betting duty, and last but not least, the fact that there is a raised public consciousness on the social costs of problem gambling.
I acknowledge that the market has moved towards online betting and this has brought ongoing competitive challenges to smaller independent bookmakers. I acknowledge that advances in technology have challenged existing business models and have changed the structure of many markets, including the betting market. While I have sympathy for small bookmakers I cannot apply the increase to some bookmakers and not others.
26. Deputy Michael McGrath asked the Minister for Finance the steps he is taking to reduce mortgage interest rates; his views on whether interest rates being charged here are reasonable; and if he will make a statement on the matter. [44118/18]
View answerThe level of interest rates being charged in Ireland is an important issue for the Government and the charging of excessive rates on mortgages would not be acceptable. It is also important that Ireland has a healthy commercial banking system that is able to provide finance to customers and has an ability to withstand economic and financial market shocks. This means it must be in a position to generate sustainable profits over the long term to absorb credit losses over the credit cycle while still generating capital.
While we can see that Irish mortgage rates are higher relative to the eurozone average interest rate, there are a number of factors that impact on the level of interest rates. In Ireland, it is unfortunate that the mis-pricing of risks in historical lending continues to be a significant burden, as evidenced by the continued high level of non-performing loans, the prevalence of very low yielding tracker mortgages, and low net interest margins. There is also the issue of reduced competition with fewer banks in the system compared to a decade ago and the largest operators have a significant share of the mortgage market.
The residential mortgage market comprises, amongst other things, fixed interest rate mortgages, loan to value managed variable rate mortgages, trackers and restructured mortgages of various types, etc. Therefore, the residential mortgage market cannot be assessed by only looking at standard variable rate mortgages and any assessment would need to consider the large number of different factors that influence interest rate pricing.
In terms of what I can do as Minister, the European Central Bank sets the monetary policy for the Eurozone as a whole and the Central Bank of Ireland does not have a statutory role in prescribing the rates that mortgage lenders charge on their loans. I too have no statutory function in relation to the commercial decisions made by individual lending institutions, including decisions on the level of interest applicable on mortgage or other financial products offered by banks.
The Central Bank has carried out research, which showed the scope for borrowers to save money by switching mortgages and the Competition and Consumer Protection Commission has launched a mortgage switching tool for consumers that notes the findings of the Central Bank research of cases where borrowers could make savings. I strongly urge consumers to utilise these tools and information to enable them to available of better rates.
I firmly believe that increased competition and making it easier to switch ones mortgage, rather than administrative controls, remain the best way to ensure that retail lending rates are driven down in a sustainable way for the market as a whole but without giving rise to potentially undesirable consequences for the provision of new mortgage lending.
27. Deputy Joan Burton asked the Minister for Finance his views on whether consideration should be given to diverting €1.5 billion of excess funds in the Ireland Strategic Investment Fund to develop the State’s infrastructure further to a report by his Department in advance of budget 2019. [43978/18]
View answerWhile published as part of the Budget 2019 documents on Tuesday 9 October last the Department’s Ireland Strategic Investment Fund (ISIF) Review was concluded in 2017. It was an important input into the Government’s Decisions on the Rainy Day Fund and Home Building Finance Ireland (HBFI) as part of Budget 2018 last year; and on the reallocation of ISIF funds in July 2018 and the establishment of the Land Development Agency (LDA) taken in September 2018.
The Review proposed the reallocation of ISIF funds (i) to support the Rainy Day Fund, and (ii) to address infrastructure constraints; among a number of other recommendations. The recommendation to address infrastructure constraints set out that the investments should be off balance sheet, leverage in private sector co-investment, and be a decision for Government. The Government has identified the increase in housing supply as a key strategic objective that facilitates both off balance sheet treatment and private sector co-investment.
The final Government Decision to refocus ISIF’s investment strategy reflected this review of the ISIF and also the wider challenges facing the State and included the following decisions:-
- Recycling the existing ISIF investment commitments of €4.4 billion and the allocation of €1 billion of ISIF funds to support ISIF’s future role while continuing the double bottom line of a commercial and an economic return;
- Transferring €750 million to support the establishment of Home Building Finance Ireland as had been announced in Budget 2018;
- Transferring €1.5 billion of funds to seed the Rainy Day Fund, also as announced in Budget 2018; and
- Allocating a reserve of €1.25 billion of ISIF funds to stand ready to support the LDA in its housing and other objectives. These funds are to be transferred to the LDA as they are needed to be used for off-balance sheet activities in line with the LDA’s commercial mandate.
The Minister for Housing’s establishment of the LDA will better coordinate State lands for regeneration and development and will support a continued increase in housing supply. The Government has already identified a number of sites through which the LDA can deliver approximately 3,000 homes and there are ongoing discussions with various State bodies in relation to land that could deliver another 7,000 homes.
28. Deputy Robert Troy asked the Minister for Finance his views on spiralling costs in the motor vehicle insurance industry and the negative impacts this is having on commercial and personal users of motor vehicles; and the steps he will take to address this. [38003/18]
View answerThe Deputy should note at the outset 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 provision or 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.
I acknowledge that motor insurance costs have spiralled over the last number of years. This volatility in pricing in fact was the main impetus for the establishment of the Cost of Insurance Working Group. Its Report on the Cost of Motor Insurance was published in 2017 and makes 33 recommendations with 71 associated actions to be carried out in agreed timeframes, set out within an Action Plan. There is a commitment within the Report that the Working Group will prepare quarterly updates on its progress. The sixth such update was published on August 30th . It shows that of the 56 separate applicable deadlines within the Action Plan set to the end of Q2 2018, 44 relate to actions which have been completed. The seventh update will be published in the coming weeks.
I believe that the above work is having the desired impact on pricing. In this regard, it should be pointed out that the most recent CSO/CPI data (for September 2018) indicates that private motor insurance premiums have decreased by 21.5% since peaking in July 2016. There was a drop of 7.9% year-on-year in September 2018, the 18th consecutive month with a year-on-year reduction. I appreciate that these figures represent a broad average but I think it has to be recognised that the overall trend in the price of premiums currently is downward, which is welcome. Nevertheless, I am of course aware that some private and commercial drivers may still be seeing increases, and accept that more work needs to be done.
In conclusion, I am hopeful that with the continuing implementation of the recommendations of the Cost of Insurance Working Group, there will be a further positive impact on pricing over the next 12 months or so.
29. Deputy Brendan Ryan asked the Minister for Finance the discussions he has had in relation to the retention of the 9% VAT rate for the tourism industry; and if he will make a statement on the matter. [37887/18]
View answer35. Deputy Imelda Munster asked the Minister for Finance his plans to raise the VAT rate on hotel rooms; and his views on changing VAT rates in the tourism sector. [37796/18]
View answerI propose to take Questions Nos. 29 and 35 together.
With effect from 1 January 2019, services and goods currently applying at the second reduced VAT rate of 9% will increase to 13.5%, with the exception of newspapers and periodicals and sporting facilities. The VAT rate applying to catering and restaurant supplies, tourist accommodation, cinemas, theatres, museums, historic houses, open farms, amusement parks, hairdressing and horses and greyhounds will increase from 9% to 13.5%.
The 9% VAT rate was introduced as part of the Jobs Initiative from July 2011 to December 2013 and was aimed at boosting tourism and the creation of additional jobs in that sector. The rate was designed to be temporary and the Programme for Partnership Government commitment to maintaining the 9% VAT rate was dependent on prices remaining competitive in the sector.
The recently published economic review of the 9% VAT rate by my Department has shown that there is a decline in competitiveness in the sector and that if the 9% rate were to be increased, this would likely not materially impact demand or employment in the sector. The review further finds that tourism expenditure is more sensitive to income growth and the economic cycle than price changes, which reduces the relevance of the VAT rate applying to the sector. In the context of this analysis, it has been decided to increase the VAT rate to 13.5% for the majority of goods and services currently applying at the 9% rate.
As part of the Budgetary process all views are taken into consideration when deciding on tax policy. With regard to the 9% VAT rate discussions took place with a number of industry representatives who raised the issue of the VAT rate on tourism, including the Irish Hotels Federation, the Irish Tourism Industry Confederation, the Irish Business and Employers Confederation, the Irish Congress of Trade Unions and Social Justice Ireland.
30. Deputy Thomas P. Broughan asked the Minister for Finance if he will report on the proposed structure and aims of the rainy day fund; when the promised national surplus (reserve fund for exceptional contingencies) Bill will be published; and if he will make a statement on the matter. [44143/18]
View answerI am pleased to inform the Deputy that Government on Tuesday approved the text of the National Surplus (Reserve Fund for Exceptional Contingencies) Bill 2018, which will now be published in the coming days. This Bill will provide the legislative underpinning for the Rainy Day Fund, which will be formally known as the National Surplus (Exceptional Contingencies) Reserve Fund.
The Fund is intended to increase the resilience of the economy to external economic shocks by providing a highly liquid fund that can be deployed rapidly in the event of a severe economic downturn. The intention is that the Fund can support economic activity, and mitigate the effects of a severe economic shock.
I look forward to discussing and debating the contents of the Bill at Second Stage in the coming weeks.
31. Deputy Sean Sherlock asked the Minister for Finance the process and details of his most recent appointments to the Credit Union Advisory Committee; the persons nominated to fill the vacancies on the committee; when the committee is scheduled to next report to him; and if he will make a statement on the matter. [43970/18]
View answerThe Credit Union Advisory Committee (CUAC) is a committee established under section 180 of the Credit Union Act 1997. The function of the CUAC is to advise the Minister for Finance and such other persons as I think fit, in relation to the improvement of the management of Credit Unions, the protection of the interests of members and creditors of credit unions and other matters relating to credit unions.
The legislation provides that every person appointed to the CUAC shall be chosen by the Minister for Finance. Under section 180(3) of the 1997 Act, on 25 September, 2018 I appointed four persons to the CUAC for three years to 31 August 2021.
In terms of the process, an advertisement, including an information booklet, was posted on www.stateboards.ie in May of this year seeking expressions of interest for appointment of new members to the CUAC. 36 expressions of interest were received from the Public Appointments Service. In addition to this the Department also had an additional 12 expressions of interest from the previous recruitment process in 2017. In total 48 expressions of interest were considered in the process.
A shortlisting exercise was undertaken to assist in selecting candidates for further consideration, based on requirements as outlined in the advertisement. The shortlisting exercise involved assessing each candidate (based on the information provided) on the following;
- Experience/expertise relevant to credit unions;
- Financial and business expertise;
- Experience of credit union restructuring; and
- Communication and relationship building skills.
Following this exercise 12 candidates were selected to attend an interview conducted by officials from my Department. In order to maintain diversity in the selection process, the interview board included a mix in terms of gender and perspectives. Following the interview process four candidates were selected for appointment to the CUAC. On 25 September, I issued a press release appointing the following new members to the CUAC:
1. Lorraine Corcoran, Director, Afanite
2. Olive McCarthy, Senior Lecturer in University College Cork (UCC)
3. Seamus Newcombe, Chief Executive, Payac Services CLG
4. Diarmaid O’Keeffe, Head of Audit, EisenAmper Ireland
The new members are in addition to two existing members of CUAC, both credit union managers, who have good credit union management and restructuring experience. The new CUAC now consists of six members and provide a good balance with backgrounds in credit union management, restructuring, academia, accounting and financial experience.
I am satisfied that each appointed member of the CUAC has the requisite experience and knowledge of credit union matters and will make a valuable contribution towards dealing with the challenges facing the sector at this important time for the Irish credit union movement.
The new committee met for the first time on 15 October 2018. The Committee is currently considering an indicative work plan for the next few years and will report to me on progress when this is in place.
32. Deputy Pearse Doherty asked the Minister for Finance the progress that has been made in putting in place a strategy for the development of growth for credit unions; and if he will make a statement on the matter. [44217/18]
View answer58. Deputy Michael McGrath asked the Minister for Finance his plans to develop a new strategy for the growth and development of the credit union sector; and if he will make a statement on the matter. [44116/18]
View answerI propose to take Questions Nos. 32 and 58 together.
The Government has a clear policy to support the strategic growth and development of credit unions delivering the comprehensive recommendations set out in the Commission on Credit Unions Report and the Credit Union Advisory Committee (CUAC) report in 2016, both of which involved extensive stakeholder engagement. CUAC remains an important advisor to me on strategic issues facing the sector, and the safety of members' savings and the security of the credit union sector as a whole are priorities for this Government.
Since 2011 my Department has put in place a number of measures to assist the credit union sector. These measures include:
- establishment of the Commission on Credit Unions in 2011;
- publication of the Credit Union and Co-operation with Overseas Regulators Act 2012;
- establishment of the Credit Union Restructuring Board, ReBo, which oversaw 82 restructuring projects involving 156 credit unions during its lifetime: these newly merged credit unions are now better positioned to harness the efficiencies of their increased scale to prudently develop products and services that their members are looking for now, and into the future;
- availability of €250 million for voluntary restructuring of credit unions facilitated by ReBo;
- establishment of a stabilisation levy to support credit unions that are undercapitalised but are otherwise viable; and
- establishment of a Resolution Fund for the resolution of financial instability in, or an imminent serious threat to the financial stability of, a Credit Union, as well as the provision of €250 million in 2011 to meet resolution costs anticipated at the time.
More recently, on the basis of a CUAC recommendation, an Implementation Group was established to oversee and monitor the implementation of the CUAC Report’s recommendations. The group, which meets monthly, is chaired by my Department and consists of one member from each of the representative bodies, one member from the CUAC and a member from the Central Bank. This group is an important forum for key stakeholders in the Credit Union Sector and has submitted papers on long-term lending and consultation and engagement to the Central Bank. The Implementation Group is expected to issue a final report to me in December 2018.
In addition, following consultation with the Credit Union sector, revised regulations for credit unions commenced on 1 March 2018 which make changes to the investment and liquidity requirements and allow for greater diversification of investment income, including provision for up to c. €700 million investment in Tier 3 Approved Housing Bodies via a regulated vehicle.
While there are challenges to returns arising from the low yield environment and low loan to asset ratios, the sector continues to show signs of improvement reflected in growth in new lending, delivering c 35% of all unsecured consumer lending in 2017, a decrease in the level of reported arrears and an increase in reserves. Total assets have increased consistently for many years and currently stand at approximately €17.5 billion.
The Central Bank is due to publish a Consultation Paper in Q4 2018, as part of its review of the current long term lending limits for Credit Unions which may facilitate improvement in loan to asset ratios.
Business model development is another challenge facing the sector and to this end the Central Bank has set up a dedicated Business Model Unit within the Registrar of Credit Unions and has developed initiatives such as the CEO forum to address key constraints to, and enablers for, business model development. Business model development is also a focus of the CUAC, and I have specifically requested the committee to review barriers to and supports for collaborative efforts as well as SME lending, linking with the outcomes of the Local Public Banking report.
This Government recognises the important role of credit unions as a volunteer co-operative movement and its priorities remain the protection of members' savings, the financial stability of credit unions and the sector overall. The Government is determined to continue to support a strengthened and growing credit union movement. Credit unions are member owned and it is these members, with support from their representative bodies, who ultimately are responsible for setting and implementing their own individual strategic plans, with appropriate support from Government, which reflect the diverse nature of credit unions be they urban or rural, large or small, industrial or community.
33. Deputy Pearse Doherty asked the Minister for Finance the number of loan sales by State backed banks he and his predecessor have been notified of and not raised an objection to since February 2016; the value of these sales; and the number of principal dwelling houses included. [44220/18]
View answerThe Deputy will be aware that I, in my role as Minister for Finance, cannot stop loan sales, even by the banks in which the State has a shareholding. The same stipulation applied to my predecessor. Decisions relating to loan sales, including the composition of loans included, are the responsibility of the Board and management of the banks which must be run on an independent and commercial basis. The banks’ independence is protected by Relationship Frameworks which are legally binding documents which the Minister cannot change unilaterally. These frameworks, which are publicly available, were insisted upon by the European Commission to protect competition in the Irish market.
I can confirm that the banks consulted with the Minister for Finance on the following loan sales during the period specified by the Deputy:
AIB:
ROI Sales:
- Project Cypress: Value: c. €0.3bn pre-provision balance sheet amount. The portfolio did not include principle dwelling houses;
- Project Redwood: Value c. €1.1bn pre-provision balance sheet amount. The portfolio did not include principle dwelling houses.
UK Sales:
- Project Rosetta: Value: c. £0.1bn pre-provision balance sheet amount. The portfolio did not include principle dwelling houses;
- Project Pine: Value c. £0.3bn pre-provision balance sheet amount. The portfolio did not include principle dwelling houses
PTSB:
- October 2016 – Sale of Isle of Man Performing UK residential mortgages originated in the Isle of Man with a gross value of c. £212m. No Irish PDH were included.
- November 2016 – Sale of Landsdowne Loan Book UK residential mortgages (pre-dominantly Buy-To-Let) originated in the UK with a gross value of c. UK£2.3bn. No Irish PDH were included
- July 2018 – Sale of Irish non-performing loans (Project Glas) with a gross value of c. €2.1bn and including 7,400 Irish PDH.
34. Deputy Brendan Smith asked the Minister for Finance the estimated loss on an annual basis due to illicit trade in fuel, alcohol and tobacco products from Northern Ireland and elsewhere; and if he will make a statement on the matter. [44173/18]
View answer57. Deputy Brendan Smith asked the Minister for Finance his plans to implement additional measures to counteract cross-Border smuggling and illicit trade in fuel, alcohol and tobacco products; and if he will make a statement on the matter. [44172/18]
View answerI propose to take Questions Nos. 34 and 57 together.
The threat that fuel fraud, the illicit alcohol and illicit tobacco trades pose to legitimate business, to consumers and the Exchequer is clear and I am assured by Revenue that combatting such activity and criminality continues to be a priority for them.
Steps taken by Revenue to combat the illegal fuel trade include the introduction of stringent new supply chain controls and reporting requirements and a rigorous programme of enforcement action. In addition, Revenue in conjunction with the UK Revenue and Customs undertook a joint initiative to introduce a new marker for use in marked fuels, which came into operation from April 2015.
The industry view is that the action taken has been successful in curtailing fuel fraud. I am advised also that Revenue conducted random National Sampling Programmes in 2016 and 2017 to assess the extent of fuel laundering. The programmes each involved nearly one in ten of circa 2,500 holders of auto fuel trader licences and tests of diesel samples taken from the randomly selected traders found no evidence of the new marker in any of them. The results of these sampling are a clear indication that Revenue’s actions have resulted in the near elimination of the selling of laundered products at retail level. A further sampling programme, in 2018, was expanded to include hauliers and other businesses in the transport sector. Analysis from the results of this programme gave rise to three positive detections and investigation towards prosecution is now underway.
Illicit trade in alcohol can occur through the diversion of untaxed alcohol on to the market, through the production of counterfeit alcohol and through smuggling from countries with lower taxes. While there has been little evidence of large-scale illegal activity, as indicated by the low value of seizures in 2017 (€0.91million) when set against the overall value of the alcohol market (€6.1billion), Revenue remains vigilant and takes appropriate action where illicit activity is detected. This action is informed by, inter alia, intelligence on criminal activity and risk-based examination of commercial traffic and stock in retail premises. Key results of this activity include the seizure of almost 200,000 litres of beer, believed to be associated with diversion fraud since September 2017, the uncovering in November 2017 of a large-scale counterfeit vodka production plant processing highly dangerous denatured industrial alcohol and the detention in June 2018 at Dublin Port of a container carrying a quantity of raw alcohol with the capacity to produce over 50,000 litres of illicit alcohol.
36. Deputy John Curran asked the Minister for Finance the progress he is making with the NTMA to establish a funding vehicle capable of facilitating off-balance sheet investment in delivering social and private housing; and if he will make a statement on the matter. [43965/18]
View answerIn line with “Rebuilding Ireland” commitments, the Ireland Strategic Investment Fund (ISIF) and a number of key Government Departments examined the feasibility of establishing a funding vehicle, in conjunction with the private sector to facilitate investment in social and affordable housing.
The objective was to create an 'off-balance sheet' mechanism which could facilitate investment additional to that being provided directly by the State and which would not impact on the General Government Balance. The investment was to take the form of either funding or forward purchasing the delivery of new mixed-tenure residential developments.
While, ISIF has made progress in conjunction with the other stakeholders in the public and private sectors in developing the off balance sheet model, as well as other potential social housing investment opportunities, ultimately it was not possible to overcome the considerable hurdles such as commerciality and balance sheet treatment.
Despite this and as part of Rebuilding Ireland the potential off balance sheet model has now been superseded by the Enhanced Long-Term Social Housing Leasing Scheme launched on 31 January 2018.
The NTMA, as the National Development Finance Agency (NDFA), acted as financial advisor to the Department of Housing, Planning and Local Government in respect of the development of this long-term leasing model, however the NTMA has no role in relation to implementation of the scheme.
My colleague the Minister for Housing informs me that the Enhanced Long Term Social Housing Leasing Scheme is one of a suite of measures introduced under Pillar 2 of “Rebuilding Ireland: An Action Plan for Housing and Homelessness” aimed at private investment in order to deliver social housing at scale.
The scheme, which is managed by the Housing Agency, has a principal objective of encouraging increased private investment in social housing while ensuring that the up-front capital cost is off-balance sheet.
37. Deputy Michael McGrath asked the Minister for Finance the key recommendations of the cost of insurance working group, including the report on employer and public liability, he plans to implement in the next six months; and if he will make a statement on the matter. [44117/18]
View answerAs the Deputy is aware, the Cost of Insurance Working Group undertook an examination of the factors contributing to the cost of insurance in order to identify what short, medium and long-term measures could be introduced to help reduce the cost of insurance for consumers and businesses.
The initial focus of the Working Group was the issue of rising motor insurance premiums and the Report on the Cost of Motor Insurance was published in January 2017, containing 33 recommendations with 71 associated actions.
In its second phase, the Working Group examined the cost of business insurance, in particular employer liability insurance and public liability insurance. This work culminated in the publication in January 2018 of the Report on the Cost of Employer and Public Liability Insurance, with 15 recommendations and 29 associated actions to be carried out.
Both of the primary Reports contain an Action Plan, setting out the agreed timelines for implementation, and also a commitment that the Working Group will prepare quarterly updates on its progress. The Sixth Quarterly Update published in August shows that 58 of the 71 deadlines placed on actions across the two reports to date have been completed. It is envisaged that the next quarterly Progress Update will be completed by the end of October and will be ready for publication on the Department of Finance website shortly after. A particular focus will be placed upon the 7 actions across the two Reports with Q3 2018 deadlines, including the actions from the Report on the Cost of Employer and Public Liability Insurance .
Over the next 6 months, the key recommendations addressed to my Department, which I am hopeful will be implemented are the establishment of the National Claims Information Database, subject to approval by the Oireachtas and the production of further key information reports on motor insurance claims and employer and public liability insurance claims. In addition, I will review the outcome of the CSO feasibility study on collecting price information on the cost of insurance to business.
With regard to the wider recommendations in both reports, I am of course working with my colleagues in Government, in particular the Minister’s for Justice and Equality, to whom a significant proportion of the recommendations in both reports are addressed to. In this regard, it is proposed to use the National Claims Information Database legislation to make important changes to sections 8 and 14 of the Civil Liability and Courts Act 2004.
Another, key area where I hope significant progress will be made is on the implementation of the recommendations of the recently published second report of the Personal Injuries Commission report - in particular the recommendation that this country follows the example of judicial intervention which has occurred in Northern Ireland and in the UK, namely the introduction of Judicial Guidelines for judges in relation to damages for personal injury claims.
Finally, the Deputy should note that the implementation of the Cost of Insurance Working Group’s recommendations remain a priority for this Government. In that context, I, and Minister of State D’Arcy, will continue to work closely with colleagues in Government, as well as other stakeholders, to ensure that the Working Group’s recommendations are implemented in a satisfactory manner and I remain hopeful that there will be a further positive impact on pricing over the next 12 months or so over and above the 21.5% fall which has taken place since July 2016.
38. Deputy Joan Burton asked the Minister for Finance if he will report on his recent meetings with the principals of companies (details supplied); and if he will make a statement on the matter. [43977/18]
View answerAs the Deputy will be aware, I meet with a wide range of public and private representative bodies and companies from time to time, to discuss relevant developments and matters of interest. This engagement with stakeholders is a legitimate and important part of the development of public policy.
The particular meetings to which the Deputy refers, that I and officials in my Department attended, included developments in EU and international tax, in particular the digital tax agenda and the recovery of the alleged state aid.
39. Deputy James Browne asked the Minister for Finance the position regarding life assurance providers rejecting applications based on a mental health condition from which a person has since recovered; and if he will make a statement on the matter. [40656/18]
View answerAs 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 direct insurance companies as to the pricing level that they should apply to particular categories of individuals, nor am I in a position to direct them to provide cover to such individuals.
It is my understanding that insurers use a combination of rating factors in making their individual decisions on whether to offer life assurance cover and what terms to apply. These factors can include age, health, family medical history, occupation and lifestyle. In addition, these may be determined or linked to the length of time with which such a policy may last. Furthermore, 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, and that they will price in accordance with their own past claims experience.
In response to a broadly similar question on 3 October 2018, my officials sought the views of Insurance Ireland. They advised that applicants for any type of life assurance will be asked on the application form detailed health questions and that insurers may request one or more of the following in addition: a report from the applicant’s GP; an independent medical examination; or other medical tests. On the basis of the information provided, the application is considered individually and the decision on whether to offer cover and on what terms depends on the facts of that particular case.
Finally, I would 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.
41. Deputy Shane Cassells asked the Minister for Finance his views on whether the PAYE modernisation scheme will place an unfair burden on small firms and businesses that cannot afford to have a dedicated member of staff to deal with wages on a weekly basis to satisfy the terms of the new scheme and avoid the penalties that will follow from non-compliance with the new system. [42554/18]
View answerThe move to real-time reporting is the most significant change to the PAYE system since its introduction more than fifty years ago. The modernisation programme will bring improved accuracy and transparency for all stakeholders, including employers, employees and Revenue, while also significantly streamlining the entire administration process. To that end, the introduction of PAYE Modernisation by Revenue is both much needed and very welcome.
Since October 2016, when the project was launched, Revenue has worked extensively with all relevant stakeholders in a co-design approach, to ensure the new PAYE Modernisation reporting system reduces the administrative burden on employers to the greatest extent possible. For example, one of Revenue’s key design principles is that employer reporting should be seamlessly integrated into the business’ payroll process. This will minimise the administrative burden on employers and allow their reporting obligations to Revenue to become a by-product of their payroll operation. In addition, the project will lead to the abolition of the current employer reporting obligations via P30, P35, P45, P46 and P60 forms. Revenue has advised me that employers have welcomed the abolition of these forms and the consequential reduction in the administrative burden.
All employers are currently obliged to calculate and make the correct statutory deductions from their employees’ salary payments each time they pay. A significant number of employers, including small and medium employers, use payroll software to run their payroll and that will still be the case when PAYE Modernisation goes live on 1 January 2019. I am aware that Revenue has engaged extensively with the payroll software industry to ensure, as far as possible, that the necessary changes to their systems will be ready on time. Consequently, the processes for these employers before and after 1 January 2019 will be broadly similar.
For employers who do not use payroll software, Revenue is providing an easy-to-use process within the Revenue Online Service (ROS) to capture payroll data for each employee. The process includes data screens that the employer will be obliged to complete for each employee every time a pay-run is completed (normally weekly, fortnightly or monthly). The burden associated with this work will be offset to an extent by the abolition of the previously mentioned forms that operate under the current system. It is also very important to note that there is no change to current PAYE payment dates under the Modernisation programme.
I know that Revenue is very conscious that some employers may experience difficulties in the early phases of PAYE Modernisation and has assured me that it will make every effort to assist where required. For example, the Revenue Employer Helpdesk will have significant additional resources available to it to meet customer demand and officials will be available to visit employers should the need arise. Revenue has also assured me that it is not the intention to impose sanctions such as interest and penalties during the early transitional months where employers do their best to comply. However, Revenue always reserves the right to impose sanctions where there is clear non-engagement with the law.
Finally, while it is a matter for each employer to consider the impact that PAYE Modernisation will have on payroll arrangements and to put steps in place to ensure compliance with the new requirements, I would strongly encourage that they pro-actively engage with the changeover. I would particularly recommend that they review the very detailed PAYE Modernisation material that is available on the Revenue website at www.revenue.ie/pmod174 and that they contact the Revenue Employer Helpdesk at telephone number 01-7383638 if they have any queries or require any clarifications. I would also recommend that employers consult their payroll software providers as a priority to ensure the payroll systems are compatible with the requirements for PAYE Modernisation.
42. Deputy Richard Boyd Barrett asked the Minister for Finance his plans in relation to NAMA and the contribution it could make to delivering public and affordable housing in view of the housing emergency; and if he will make a statement on the matter. [44227/18]
View answerNAMA has a well-established overriding commercial mandate to recoup the best return for the Irish taxpayer. However, that does not mean that NAMA does not carry out activities, such as facilitating the delivery of residential and social housing, which are entirely consistent with its existing purpose and objectives.
NAMA is already making a significant contribution to the supply of housing within the State where it is in a position to do so. NAMA’s residential funding programme, has delivered over 8,000 new residential units since it was announced in 2014 and is committed to facilitating the delivery of 20,000 residential units by 2020. In addition, NAMA has an established policy of identifying to Local Authorities and approved housing bodies, properties within its portfolio which may be suitable for social housing. As of end-of-June 2018, 6,984 such properties have been identified, with demand confirmed for 2,717 and 2,474 delivered or committed. Part of this delivery has been through NAMA’s innovative National Asset Residential Property Services (NARPS) model, which has purchased over 1,300 properties from NAMA debtors and leased them on for social housing.
It is important to recognise that NAMA does not own property, rather, NAMA owns loans secured by property which is owned by its debtors. NAMA, as a lender, cannot force a borrower to take action which would reduce his or her repayment capacity, such as providing a property for social or public housing where that is not the financially optimal course of action for the debtor. To do so would compromise a borrower's capacity to repay his or her debts to NAMA and would constitute a direct breach of the borrower's property rights, protected under Article 43 of the Constitution. I am advised that directing NAMA to act counter to these obligations is not one lawfully open to me in all the current circumstances.
Furthermore, there would be many legislative, balance sheet and State aid implications in repurposing NAMA away from its existing objectives. NAMA was established with a very specific legal mandate, which was approved by the European Commission in 2010. It is important that NAMA’s role is preserved and that it completes its work in line with its original mandate.
44. Deputy Pearse Doherty asked the Minister for Finance his plans to rework the diesel rebate scheme for hauliers in view of the industry’s exposure to Brexit. [44218/18]
View answerI am well aware of the threat Brexit poses to every sector of the economy, including the haulage industry. This week I met with the Irish Road Haulage Association and discussed the implications of Brexit. I can confirm that I will continue to meet with industry and listen to their concerns.
Co-ordination of the whole-of-Government response to Brexit is being taken forward through the cross-Departmental co-ordination structures chaired by the Department of Foreign Affairs and Trade.
This planning provides baseline scenarios for the impact of Brexit across all sectors. This approach is also enabling the modelling of potential responses under different scenarios, such as one where a withdrawal agreement is concluded and where a Free Trade Agreement is the basis for the future relationship between the EU and the UK. My Department is actively engaged in this planning work which has intensified in recent months and is well advanced.
The Government has been clear that it wants the closest possible relationship between the EU and the UK, including on trade, in order to minimise the impact on our trade and economy. The Government is working hard with the EU Taskforce and our EU partners to ensure that an agreement between the EU and the UK is reached.
