Tuesday, 6 Nov 2018

Written Answers Nos. 183-206

Mortgage Interest Relief Application

Questions (183)

Jack Chambers

Question:

183. Deputy Jack Chambers asked the Minister for Finance the changes made to mortgage interest relief for homeowners in budget 2019; and if he will make a statement on the matter. [44958/18]

Written answers

Minister for Finance

The Deputy may be aware that I made no changes to Mortgage Interest Relief for homeowners in Budget 2019.

However, he may also recall that I announced in Budget 2018 that I would extend Mortgage Interest Relief (MIR) for the remaining recipients of the relief on a tapered basis for three years, through to 31st of December 2020. In 2018, recipients of MIR qualified for 75% of the relief that they qualified for in 2017. From January 2019, recipients will qualify for 50% of the relief that they qualified for in 2017.

Without this extension provided for in Budget 2018, each remaining relief holder would have faced a ‘cliff’ where the relief would have ceased entirely in January 2018. The three year extension was put in place to alleviate the potential financial difficulties of this ‘cliff’, and to give the relief holders a transition period to adjust to the cessation of the relief on a phased basis.

My decision in Budget 2018 to extend MIR on a tapered basis for three years balanced the competing objectives of allowing relief holders a transition period to adjust to the withdrawal of relief, while also considering the fairness to mortgage holders who have never held a relief on their mortgage interest, who may also face similar financial challenges in meeting mortgage repayments.

Tax Data

Questions (184, 185)

Pearse Doherty

Question:

184. Deputy Pearse Doherty asked the Minister for Finance the cost of increasing to amounts (details supplied), the standard rate income tax cut off point for a single point; the estimated cost of an equivalent increase for married couples and so on; and if he will make a statement on the matter. [44997/18]

Pearse Doherty

Question:

185. Deputy Pearse Doherty asked the Minister for Finance the estimated cost or revenue raised by proposed measures (details supplied). [44998/18]

Written answers

Minister for Finance

I propose to take Questions Nos. 184 and 185 together.

I am advised by Revenue that the figures requested are as follows:

With regards to 44997/18, to achieve each of the standard cut off rates proposed, the Budget 2019 band must be increased by €4,700, €9,700 and €14,700 respectively.

Single and Widowed or surviving Civil Partner without qualifying child - Current Band €35,300;

Band Increase	Revised Band	First Year Cost €Million	Full Year Cost €Million
€4,700	€40,000	310	358
€9,700	€45,000	568	656
€14,700	€50,000	764	884

Married or in a Civil Partnership, one Spouse or Civil Partners with Income - Current Band €44,300;

Band Increase	Revised Band	First Year Cost €Million	Full Year Cost €Million
€4,700	€49,000	117	140
€9,700	€54,000	226	272
€14,700	€59,000	317	381

Married or in a Civil Partnership, both Spouses or Civil Partners with Income - Current Bands €44,300 for Major Earner and €26,300 for Minor Earner

Band Increase	Revised BandMajor Earner	Revised BandMinor Earner	First Year Cost €Million	Full Year Cost €Million
€4,700	€49,000	€31,000	337	393
€9,700	€54,000	€36,000	626	730
€14,700	€59,000	€41,000	858	1,002

Total Cost of Band Widening

Band Increase	First Year Cost €Million	Full Year Cost €Million
€4,700	764	891
€9,700	1,420	1,658
€14,700	1,940	2,267

The estimates in the tables above have been generated by reference to 2019 incomes, calculated on the basis of actual data for the year 2016, the latest year for which returns are available and adjusted for income, self-employment and employment trends in the interim. They are provisional and may be revised.

Regarding Question 44998/18, I am informed by Revenue that to calculate a combined cost for the proposals described by the Deputy, it is necessary to base all costs and calculations on 2016 tax return data. An exercise was undertaken on 2016 data to break down the gross incomes of taxpayer units to an individualised level and a manual estimation process (outside of Revenue’s usual tax modelling software) was required. As the exercise can only split gross incomes, this estimation process requires certain assumptions to be made in relation to the distribution of credits for the tapering on individual income.

Furthermore, due to the interaction between the Income Tax rates and credits, reliefs and exemptions, it is not possible to accurately identify the yield from introducing a third Income Tax rate to individual incomes. The additional 45% tax rate and increases to the Standard Rate Cut Off outlined are, therefore, costed on a taxpayer unit basis.

-	First year (€m)	Full Year (€m)
Increasing the Standard Rate Cut Off by €6,200* to €40,000 and introducing a 45% tax rate for incomes over €140,000	-599	-666
Yield of tapering credits by 2.5% per €1,000 for individualised gross incomes between €100,000 and €140,000	185	220
Total	-414	-446

-	First year (€m)	Full Year (€m)
Increasing the Standard Rate Cut Off by €11,200* to €45,000 and introducing a 45% tax rate for incomes over €140,000	-1,090	-1,237
Yield of tapering credits by 2.5% per €1,000 for individualised gross incomes between €100,000 and €140,000	185	220
Total	-905	-1,017

-	First year (€m)	Full Year (€m)
Increasing the Standard Rate Cut Off by €16,200* to €50,000 and introducing a 45% tax rate for incomes over €140,000	-1,474	-1,685
Yield of tapering credits by 2.5% per €1,000 for individualised gross incomes between €100,000 and €140,000	185	220
Total	-1,289	-1,465

*The Standard Rate Cut Off for a single earner was €33,800 in 2016.

Where figures are negative, it indicates a cost to the Exchequer and where figures are positive it indicates a yield to the Exchequer.

Revenue Commissioners Reports

Questions (186)

Pearse Doherty

Question:

186. Deputy Pearse Doherty asked the Minister for Finance further to Parliamentary Question No. 203 of 23 October 2018, if he will clarify the nature of the deliberative process mentioned; when this process began; and when it will be concluded. [45006/18]

Written answers

Minister for Finance

I am advised by the Revenue Commissioners that the deliberative process referred to in the reply to Parliamentary Question No. 203 of 23 October 2018 concerns the tax treatment of food supplements.

Following a submission received from the Irish Health Trade Association (IHTA) on this subject, Revenue commenced a review of their guidance in this area which involved the engagement of an expert to advise on the matter and an invitation to the IHTA to make a further submission. The expert report was received in October 2017. Following an analysis of the report and consultations with sector representatives, the matter was brought to the attention of my Department and the Department of Health ahead of the recent Budget with a view to considering policy options that might bring clarity to the food supplement sector.

I have decided not to introduce any legislative changes at this time and I am informed that Revenue will now consider how to proceed on the basis of the existing legislation, including whether any change to their guidance is necessary. When this process is concluded Revenue will publish the expert report. The existing guidance on this matter will continue to apply until such time as Revenue issues revised guidance.

Brexit Issues

Questions (187)

Lisa Chambers

Question:

187. Deputy Lisa Chambers asked the Minister for Finance his views on the recent publication from the Parliamentary Budget Office (details supplied); the reason such sensitivity analysis has not been provided; and if he will make a statement on the matter. [45010/18]

Written answers

Minister for Finance

The Department’s Budget forecasts incorporate, as a central scenario, that the UK will make an ‘orderly’ exit from the EU. This involves a transition period being agreed until end-2020, and a free trade agreement being agreed thereafter. The impact of this scenario is to lower the level of GDP by almost 2 percentage points over the 2021-2023 period relative to a no-Brexit baseline. This feeds through to the fiscal projections underlying the Budget. The macroeconomic forecasts underpinning the Budget were endorsed by the Irish Fiscal Advisory Council as is legally required.

The text on policy strategy in the Economic and Fiscal Outlook, published as part of Budget 2019, is almost entirely about the risk of a disorderly exit and outlines that the policy response should be to enhance the resilience of the economy. Chapter 6 of the same document, on Risk and Sensitivity Analysis, includes Box 5 on alterative Brexit scenarios. This shows that over the medium-term (i.e. after five years) the impact of a disorderly Brexit would be to reduce the level of GDP by around 3¼ percentage points compared with a no-Brexit baseline. It explicitly states that this should be seen as a minimum not a maximum effect.

Using the ESRI’s COSMO model, Budget 2019 also provides a sensitivity analysis to simulate the impact of a 1 per cent deterioration in global demand on our public finances, as measured through the general government balance. This specific external shock could arise through a number of channels, including through Brexit.

The measures introduced in Budget 2019 continue the process of ensuring that Ireland’s economy remains competitive and resilient against the backdrop of heightened uncertainty, including from Brexit. Eliminating the deficit is part of the policy response, as is achieving the Medium-Term Budgetary Objective, the avoidance of pro-cyclical policies, putting the debt-ratio on a downward path and establishing and resourcing the Rainy Day Fund. This is complemented by our longer-term economic strategy for investing in the productive capacity of our economy, especially through Project Ireland 2040.

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.

Banking Sector

Questions (188)

Catherine Murphy

Question:

188. Deputy Catherine Murphy asked the Minister for Finance if his attention has been drawn to the interim accounts of a bank (details supplied) for 2018 that allocated €411 million from the incurred but not reported loan provision to the stage 3 loan provision on 1 January 2018; if none of this €414 million provision was used to write down the value of loans disposed in 2018 including those loans sold to a company; if the €414 million figure does not include any or part of those stage two loans the provisions of which were increased under an accounting IFRS 9 adjustment by €271 million; and if he will make a statement on the matter. [45057/18]

Written answers

Minister for Finance

As the Deputy will be aware, AIB’s financial statements are prepared in line with applicable international accounting standards and are independently audited. I would also note that I have no role in relation to the preparation or audit of the financial statements in any of the publicly quoted banks.

I have however received the following response from AIB:

" On transition to IFRS 9, there was no material change to provisions on impaired loans that were included in credit impaired loans (i.e. Stage 3) on 1 January 2018. As disclosed on Page 112 (Half Year Financial Report). AIB increased impairment provisions by €271m on transition to IFRS 9, and this was primarily driven by non-credit impaired loans (i.e. Stage 1 & 2).

Regarding press coverage on the sale of a loan portfolio, AIB notes:

- The IFRS 9 increase in provisions (Eur 271m) is due to the move to expected lifetime losses under IFRS 9, while the gain on disposal (Eur 140m) is related to the sale of a loan portfolio. These are two separate and unrelated events and AIB is very comfortable with the accounting treatment of these and all related matters.

- The impact of transition to IFRS 9 on the portfolio that was subsequently sold was de minimis. The gain was therefore not related to or as result of transition to IFRS 9.

- AIB’s capital position of 17.9% CET1 fully loaded at September 2018 fully reflects all impacts of the portfolio sale. AIB notes the positive outcome from the EBA stress tests and continuing strong capital generation."

The Deputy may also be aware of the research commentary from Goodbody Stockbrokers on 5 November 2018 which referred to the media article and stated:

"From what we can see the journalist completely mixes up IFRS 9 and the portfolio sale gain, which are two separate and non-related issues. The IFRS 9 increase in provisions is due to move to expected lifetime losses, whilst the gain on disposal was a separate matter and reflects consideration versus net carrying value (with c 40% coverage) and the capital benefit of lower RWAs. We note that AIB took the full IFRS 9 hit to capital on January 1, which saw its capital step down the €271m figure or 50pbs from 17.5% on December 31 to 17.0% on January 1, an outcome also reflected in the EBA stress test starting balance sheet and a treatment used by other banks on IFRS 9 introduction".

Tax Data

Questions (189)

Anne Rabbitte

Question:

189. Deputy Anne Rabbitte asked the Minister for Finance the number of employees that avail of childcare as a benefit-in-kind from their employer. [45109/18]

Written answers

Minister for Finance

I am advised by Revenue that Benefit-In-Kind is declared on tax returns as a total figure rather than by individual benefit type. Therefore there is no basis available to separately compile the numbers of employees availing of childcare as a Benefit in Kind as requested by the Deputy.

Insurance Industry Regulation

Questions (190)

Fiona O'Loughlin

Question:

190. Deputy Fiona O'Loughlin asked the Minister for Finance the measures he is taking to address the practice in the motor insurance industry of unfairly charging excessive premiums for returning emigrants regardless of their driving experience. [45117/18]

Written answers

Minister for Finance

As the Deputy may be aware, in fulfilment of a recommendation from the Report on the Cost of Motor Insurance, a protocol was agreed between Insurance Ireland and the Department of Finance under which insurance companies committed to accepting the driving experience returning emigrants gained while abroad, when the driver has had previous driving experience in Ireland. The guiding principle of the protocol is to ensure that a returning emigrant is not treated any differently to any other driver subject to their ability to demonstrate, and the insurance company to verify, continuous driving experience and the normal acceptance criteria of the company. What this means is that the returning emigrant will not be disadvantaged from spending time abroad. Furthermore, under the protocol, insurance companies will not distinguish between countries on the basis of which side of the road driving takes place therein.

In relation to the implementation of this recommendation, Insurance Ireland submitted a report to the Department in December 2017. This report confirmed that Insurance Ireland members have agreed to publish the wording of the agreed protocol on their company websites and any other forms of social media, in addition to providing training for staff who can work through issues with emigrants before they leave, whilst they are out of the country and when they return to Ireland. The stated intention is “to resolve any issues well before they arise and for the consumer to be aware of the considerations when moving abroad”. The wording of the agreed protocol is also available on the Insurance Ireland website.

The Insurance Ireland report also outlined some sample cases which demonstrate how the rolling-out of the protocol has led to disputed cases being resolved to the benefit of returning emigrants, and provided figures indicating that the number of such cases being processed under the Declined Cases Agreement (DCA) decreased during the first six months of 2017. I understand that the DCA figures subsequently provided in respect of the second half of last year showed that this downward trend continued throughout the remainder of 2017. The next report on the operation of the DCA, outlining the figures for 2018, is due to be submitted to my Department in Q1 2019. Officials will examine the breakdown of the number of cases in the report to determine if the downward trend is continuing.

It is important to highlight that if a returning emigrant believes that they have received a high quote due to an insurance provider not accepting driving experience gained while abroad, they should contact the free Insurance Information Service operated by Insurance Ireland, which can be accessed at [e-mail] or 01-6761820.

Finally, the Deputy should also note that my officials are continuing to monitor the implementation of this recommendation through their regular engagement with Insurance Ireland.

Tax Data

Questions (191)

Róisín Shortall

Question:

191. Deputy Róisín Shortall asked the Minister for Finance the number of recipients of the home carer's tax credit in each of the past three years by dependant type; the number in the past three years by those households receiving the maximum relief under the credit and those receiving some but not the maximum relief under the credit; the cost of the credit in each of the past three years; the projected cost for 2019; the estimated number of households with children that are eligible for but are not in receipt of the credit; and the estimated number of households with children that are not eligible for the credit. [45144/18]

Written answers

Minister for Finance

I am advised by Revenue that the number of taxpayers who received the full and partial value of the Home Carer Tax Credit is set out in the table below for the years 2014 to 2016 (the most recent year for which data are available). It should be noted that married couples and civil partners who are jointly assessed are counted as one taxpayer unit.

Home Carer Tax Credit	2014	2015	2016
Taxpayer units receiving full credit*	69,000	69,200	70,200
Taxpayer units receiving partial credit*	11,800	11,700	15,700
Total taxpayer units*	80,900	80,900	85,900
Cost of credit (€m)	61	61	78

*Numbers rounded to the nearest hundred.

The figures provided represent income earners who utilised at least some of the Home Carer Tax Credit to reduce their income tax liability. The figures do not include the number of potential claimants whose entitlement to other tax credits was sufficient to reduce their tax liability to nil without availing of the Home Carer Tax Credit. Revenue estimates the number of claimants in such a position was 47,000 in 2014, 44,000 in 2015 and 45,000 in 2016. It is not possible to break down the number of recipients of the credit by dependant type as there is no requirement to indicate this information on tax returns.

The projected cost of the Home Carer Tax Credit for 2019 is approximately €115 million. This estimate is provisional and may be revised.

I am also advised by Revenue that it has no information in relation to numbers of cases who have not applied for the credit. However, it should be noted that Revenue staff automatically grant the Home Carer Tax Credit where they identify eligible persons whose circumstances indicate that they would benefit from the credit.

Finally, I am aware that Revenue continues to contact PAYE taxpayers to remind them that there is a four-year time limit for claiming additional tax credits and reliefs. For example, in late 2017 letters issued to all PAYE taxpayers who had not claimed additional credits or reliefs from 2013 to 2017, reminding them that they may be entitled to make a claim on or before 31 December 2017. An additional 291 claims were made for the Home Carer Tax Credit following the issue of this letter. Similar letters will issue this year.

Insurance Industry

Questions (192)

Michael McGrath

Question:

192. Deputy Michael McGrath asked the Minister for Finance the position with regard to insurance companies taking into account a person's previous criminal conviction when deciding to offer home or car insurance; and if he will make a statement on the matter. [45156/18]

Written answers

Minister for Finance

As Minister for Finance, I am responsible for the development of the legal framework governing financial regulation. Neither I nor the Central Bank of Ireland can interfere in the provision or pricing of insurance products, as these matters are of a commercial nature, and are determined by insurance companies based on an assessment of the risks they are willing to accept. This position is reinforced by the EU framework for insurance which expressly prohibits Member States from adopting such rules. Consequently, I am not in a position to direct insurance companies as to the pricing level or terms or conditions that they should apply in respect of particular categories of policyholders.

Notwithstanding this, my officials raised the Deputy’s query with Insurance Ireland, the representative body for the insurance industry in Ireland. On the basis of this enquiry, I have been advised that as an insurance contract includes a duty of utmost good faith on both the insurer and insured, a duty of disclosure of all material facts is required from which insurers will make their underwriting decision on the provision of cover. In general, insurers will use a combination of individual rating factors. Such factors include, but are not limited to age, type of driving licence, engine size, rebuilding cost of property, previous convictions if applicable, etc., but they will vary by insurer depending on the market segments, on which individual insurers focus and the claims experience of individual insurers.

Insurance Ireland also acknowledged that access to and fair treatment by financial services providers is an important part of social inclusion which is mandated by the Consumer Protection Code. It is noted in this regard that the Criminal Justice (Spent Convictions and Certain Disclosures) Act 2016 allows for certain convictions to become spent after a period of time.

In relation to motor insurance specifically, the Deputy is aware of the Declined Cases Agreement (DCA). That agreement is adhered to by all motor insurers in Ireland. It states that if a consumer is unable to secure a quotation on the open market, he or she may be in a position to avail of the Declined Cases Agreement (DCA) process. Under the terms of the DCA, the insurance market will not refuse to provide insurance to an individual seeking insurance if the person has approached at least three insurers and has not been able to obtain cover from them.

Data obtained from Insurance Ireland states that the total number of DCA applications in 2017 was 1,423. In that year, ‘convictions’ was noted 261 times as the primary reason the applicant was declined motor insurance.

There are further details available on the Insurance Ireland website in relation to the DCA, while Insurance Ireland also operates a free Insurance Information Service for those who have queries, complaints or difficulties in relation to obtaining insurance. The relevant contact details are: [e-mail] or [e-mail] or 01-6761914.

Insurance Industry

Questions (193)

Eamon Scanlon

Question:

193. Deputy Eamon Scanlon asked the Minister for Finance if his attention has been drawn to situations in which insurance companies have exaggerated the size of payouts in order to increase premiums; if a taskforce will be established to investigate the increase in premiums; the amount insurance companies paid out in claims between 2015 and to date in 2018; and if he will make a statement on the matter. [45191/18]

Written answers

Minister for Finance

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 insurance sector has been subject to volatility in recent years, from a point where some premiums appeared to be priced at an unsustainably low level in the motor sphere to the more recent experience of large increases across a number of lines.

The problem of rising insurance premiums was the impetus in 2016 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. In both of these Reports the factors as to why insurance costs have increased has been set out, however no evidence was presented that insurance companies were deliberately exaggerating the size of pay-outs in order to increase premiums.

It is clear however from the Working Group’s extensive consultations that there is a lack of transparency around the personal injuries claims environment. A similar view was expressed in the Joint Oireachtas Committee report. Consequently, transparency has been one of the key themes of both the Motor and Employer and Public Liability Reports.

In this context therefore an important step forward is the approval by the Government to publish the Central Bank (National Claims Information Database) Bill 2018. The Bill, which is currently being considered by the Houses of the Oireachtas, when enacted, will enable the Central Bank to publish an annual report using data gathered from the insurance industry to increase transparency on the relationship between insurance premiums and related costs, identifying the factors that drive movements in the price of insurance in the State, the number of claims, as well as providing statistical analyses of the costs associated with settling claims, and importantly understanding the settlement channels used. I am hopeful that with the cooperation of all parties in the Houses, it can be approved expeditiously to have the database in place as soon as possible. It should be noted that the initial focus of the database will be on motor insurance.

With regard to the total amounts companies paid out in claims between 2015 and 2018, the Central Bank has very limited data of this type available to it. This is because with the European-wide transition from Solvency I to Solvency II regulatory regime (in place since 1 January 2016), it no longer produces the annual Insurance Statistics publication, known as the ‘Blue Book’. The tables in the Blue Book were extracted from the Solvency I forms which were completed by the industry and were publicly available (in the Companies Registration Office) and, as these are no longer completed, most of the Blue Book tables cannot be continued in the old format. Furthermore, the underlying data in the Blue Book is now valued on the Solvency II, as opposed to the Solvency I, basis and many of the time series have been broken.

That said however the Central Bank provided my officials with the data below for a previous PQ in July 2018 in relation to motor insurance claims for the years 2013 to 2017. This data includes both private and commercial motor insurance, and excludes the costs associated with the settlement of these claims.

Calendar year	Gross paid claims (€m)
2013	869
2014	932
2015	921
2016	956
2017	953

The Deputy should note that the data reflects the business of insurance undertakings prudentially supervised by the Central Bank of Ireland (6 undertakings) and undertakings operating on a freedom of establishment basis (3 undertakings). It does not however include any data related to insurance undertakings operating in Ireland under freedom to provide services. In addition, these claim amounts do not represent a constant market size and/or share as, for example, the number of vehicles insured by these undertaking will have varied each year. The Central Bank advised at the time that direct comparison of earned premiums to paid claims is not necessarily appropriate, as it is important to also consider the reserves set aside to meet claims that have not yet been settled and/or notified.

Departmental Contracts

Questions (194)

Fergus O'Dowd

Question:

194. Deputy Fergus O'Dowd asked the Minister for Finance if a company (details supplied) has undertaken work within his Department's remit to build or renovate projects over the past ten years; if so, the project name and location; the year in which it was built; if building fire safety inspections have been carried out on the projects since construction; the details of same; and if he will make a statement on the matter. [45200/18]

Written answers

Minister for Finance

In response to the Deputy’s question, OPW provides accommodation for Government Services and manages much of the State’s property portfolio. All office facility and renovation projects related to accommodation provided for staff working in the Department of Finance are managed by the Office of Public Works, which is under the aegis of the Department of Public Expenditure and Reform. I am not aware of the use by OPW of the company in question in relation any works carried out in the buildings previously or currently occupied by staff of my Department.

In relation to the 17 bodies under the aegis of my Department, my understanding is that the particular company has not undertaken work over the past ten years for any of those bodies.

Revenue Commissioners

Questions (195)

James Browne

Question:

195. Deputy James Browne asked the Minister for Finance if the Revenue Commissioners will consider introducing a freephone telephone number; and if he will make a statement on the matter. [45247/18]

Written answers

Minister for Finance

I am advised by Revenue that it receives an average of 2.5 million calls per year and the volumes are such that it would not be cost-effective to provide a freephone telephone service. However, Revenue does keep its telephony infrastructure under constant review to ensure that it delivers the most robust and cost-effective service possible for taxpayers.

Up to recently, the 1890 LoCall service was considered the best option for delivering an effective high-volume telephone service at minimum cost. However, the service does incur additional charges for some customers that are imposed by their telephone service providers and which are outside of Revenue’s control. Revenue made a submission to the Commission for Communications Regulation (ComReg) in 2017 expressing its dissatisfaction at the rates charged by service providers for these 1890 calls and supported ComReg’s proposal that the retail charge applicable should not exceed the retail charge that would apply had the caller used a standard telephone number.

To reduce the cost burden on customers, Revenue launched a new telephony platform on 26 September 2018 that optimises some of the most up to date technology available and which facilitates phone calls using standard telephone numbers that do not incur the range of charges currently applied by service providers to 1890 calls.

On a wider note, I am aware that Revenue has significantly enhanced its range of online services to reduce the need for customer telephone contact. This includes a new website www.revenue.ie which is specifically designed to help customers more easily find the information they are looking for. The information on the website is written in plain language and is easy to find. Revenue has advised me that the feedback to date strongly confirms that the new service is very effective and has been well received by the majority of users.

Tax Code

Questions (196)

Frank O'Rourke

Question:

196. Deputy Frank O'Rourke asked the Minister for Finance if he will reconsider the proposed 100% increase in turnover tax for the bookmaker industry, betting industry or both; if detailed research has been conducted into the impact of such a tax on the viability of the bookmaking industry and the employees that would lose their jobs; if he will consider setting the turnover tax at a lower more equitable rate; and if he will make a statement on the matter. [45264/18]

Written answers

Minister for Finance

As announced in the Budget I have increased the rate of betting duty from 1 per cent to 2 per cent on the turnover of bookmakers and the rate of betting intermediary duty from 15 per cent to 25 per cent on the commission earned by betting intermediaries. These measures will take effect from 1 January 2019 and will help fund public services.

The Government’s priority in recent years has been to level the playing field by extending the betting 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.

It is acknowledged that traditional retail bookmakers face ongoing challenges from the on-line sector. It is a fact that advances in technology have challenged existing business models and have changed the structure of many markets, including the betting market.

However, it is important to note that receipts from traditional bookmakers have remained stable and displayed some year-on-year growth in recent years. Yields from traditional bookmakers have increased from €25.4m in 2013 to €29m in 2017, implying an increase in turnover of about 14% during this period, from €2.54 billion to €2.9 billion. This demonstrates the resilience of traditional bookmakers in the face of ongoing challenges.

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. In the past the tax was 20% of turnover and the last time the rate increased was in 1975. It is also worth pointing out that VAT does not apply to betting services, also there are on-course exemptions from betting duty, that the bookmakers licence fees are low and have not increased since 1992, and last but not least, the fact that there is a raised public consciousness on the social costs of problem gambling.

Accordingly, I do not propose to change the increase provided for in Budget 2019.

Banking Sector

Questions (197)

Catherine Murphy

Question:

197. Deputy Catherine Murphy asked the Minister for Finance the date on which the Central Bank's attention was drawn to the fact that the accounting standard IAS39 was flawed in that it allowed banks to delay the recognition of losses on troubled loans; and if he will make a statement on the matter. [45320/18]

Written answers

Minister for Finance

Regulation (EC) No. 1606/2002 of the European Parliament (the Regulation) requires all listed European companies to prepare their consolidated financial accounts in accordance with EU adopted International Financial Reporting Standards (IFRS) - formerly known as International Accounting Standards (IAS) - for accounting periods commencing on or after 1 January 2005.

IAS 39 (adopted for use in the EU) requires loans to be measured at amortised cost using the effective interest method. It also requires the use of an incurred loss approach for the calculation of impairment provisions on loans resulting in impairment provisions being recognised only when losses are incurred and not before then. Under the incurred loss approach an entity assesses at the end of each reporting period whether there is objective evidence that a loan or group of loans is impaired. IAS 39 states that a loan is impaired and impairment losses are incurred if there is “objective evidence” of impairment as a result of one or more events that occurred after the exposure was created (“the loss event”) and that the loss event has an impact on the estimated future cash flows of the loans and these cash flows can be reliably estimated.

In April 2009 the G20 leaders called on "the accounting standard setters to work urgently with supervisors and regulators to improve standards on valuation and provisioning and achieve a single set of high-quality global accounting standards". In this regard the International Accounting Standards Board (IASB) issued a new accounting standard for Financial Instruments, IFRS 9, which replaces IAS 39. IFRS 9 is applicable for accounting periods starting on or after 1 January 2018. IFRS 9 introduces a new regime for impairment provisioning and imposes an Expected Credit Loss approach to provisioning as opposed to the incurred loss approach that is required by IAS 39.

Financial Services Regulation

Questions (198)

Michael McGrath

Question:

198. Deputy Michael McGrath asked the Minister for Finance the rules that apply with regard to an Irish citizen who spends part of their time here and part of their time abroad outside the European Union wishing to borrow from a financial institution here for home refurbishment works in respect of a house owned by them; and if he will make a statement on the matter. [45326/18]

Written answers

Minister for Finance

The European Communities (Consumer Credit Agreements) Regulations 2010 provide a framework within which lenders in the European Union must operate. The evaluation of a credit application by a lender must include an assessment of the consumer’s creditworthiness on the basis of sufficient information. However, the extension of credit by lenders to potential customers remains a commercial decision for the lender.

If a consumer is unhappy with the service they have received from a regulated financial service provider or with a refusal to provide a service by a regulated financial service provider, they are entitled to make a complaint by writing directly to the firm concerned. The relevant provisions as regards ‘Complaints Resolution’ are contained in Chapter 10 of the Consumer Protection Code 2012, which can be found on the Central Bank's website. If the consumer is not happy with the outcome of their complaint, they can refer the case to the Financial Services and Pensions Ombudsman for investigation.

Credit Union Lending

Questions (199)

Thomas P. Broughan

Question:

199. Deputy Thomas P. Broughan asked the Minister for Finance if he will report on the necessary easing of Central Bank restrictions on the operation of credit unions and on a role for the credit unions to provide mortgage finance to the locked out generation of home buyers; and if he will make a statement on the matter. [45327/18]

Written answers

Minister for Finance

I welcome the publication of the Central Bank’s Consultation on Potential Changes to the Lending Framework for Credit Unions (CP125). Reviewing these Lending Regulations is an important matter for the Sector and one for which I have previously outlined my strong support.

A comprehensive review of the Credit Union Lending Regulations was one of the recommendations from the Credit Union Advisory Committee (CUAC) in its “Review of Implementation of the Recommendations in the Commission on Credit Unions Report” published in June 2016. On foot of this report, an Implementation Group was set up in order to progress the CUAC’s recommendations. This group is chaired by my Department and is comprised 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 – and a member from the Central Bank.

In November 2017 the Implementation Group completed a scoping paper regarding possible amendments to the Lending Regulations. The paper contained a number of proposals for consideration in the Central Bank review of the Credit Union Lending Framework, which could provide for a material increase in long-term lending for those credit unions with the capability to do so. Following the submission of this paper to the Central Bank, I wrote to Governor Lane outlining my strong support for this very important matter being progressed in 2018.

In March 2018 the Central Bank informed Credit Unions that a review of credit union lending limits had commenced, noting that the matter had been highlighted for review in various foras, including through the Implementation Group. To help inform their review, and in order to get individual credit union input, the Central Bank issued a longer term lending questionnaire to Credit Unions in April 2018. The Consultation Paper on Potential Changes to the Lending Framework for Credit Unions (CP125) was published on 24 October.

The proposals contained in CP125 include the removal of the existing lending maturity limits which cap the percentage of credit union lending which may be outstanding for periods of greater than 5 and 10 years and the introduction of concentration limits, on a tiered basis, for home mortgage and commercial loans expressed as a percentage of total assets. The proposed concentration limits would permit all credit unions to undertake combined house and commercial lending of up to 7.5% of total assets, but with a limit of 5% of total assets for either one of the categories.

The consultation paper also proposes that an increased combined concentration limit of 15% of total assets would be available to those credit unions who can demonstrate that they have strong core foundations to undertake additional house and commercial lending including the necessary financial strength, skills, expertise, operational and risk management capability. Prior approval from the Central Bank would be required in order for a credit union to avail of this increased combined concentration limit.

Based on the data supplied in the Consultation Paper, the proposals would allow in the first instance a sectorial capacity of €861m for house loans. To put this figure in context, as per June 2018 Prudential Returns, there is approximately €165m of house loans currently outstanding across the sector. This capacity would increase as Credit Unions are approved for the higher concentration limit. In the case where all Credit Unions with assets greater than €100m were approved for the higher limit, sector capacity could increase to a maximum of c. €1.8bn.

It is important that credit unions who wish to undertake increased house and commercial lending understand the risks involved; and in accordance with section 35(2) of Credit Union Act 1997 the ability of the member to repay the loan should be a primary consideration in the underwriting process for the credit union.

Credit Unions, their representative bodies, and other stakeholders will now have an opportunity to analyse the proposals put forward in CP125 and engage in the Consultation by submitting their views to the Central Bank. The consultation period is open for submissions until 9 January 2019. My officials and I will review the proposed amendments, liaise with the Central Bank and input into the statutory consultation process when it arises.

Insurance Fraud

Questions (200)

Michael Healy-Rae

Question:

200. Deputy Michael Healy-Rae asked the Minister for Finance if he will address a matter (details supplied) regarding bogus insurance claims; and if he will make a statement on the matter. [45404/18]

Written answers

Minister for Finance

As the Deputy will be aware, the Cost of Insurance Working Group’s Reports on the Cost of Motor Insurance and the Cost of Employer and Public Liability Insurance both include measures to tackle fraudulent claims.

The Working Group has reported on the progress of implementing its recommendations each quarter since Q1 2017 in respect of the Motor Report and Q1 2018 in respect of the Employer and Public Liability Report. Each of the six updates produced thus far are available on the Department of Finance’s website, with the seventh report due to be published shortly.

Both of the Working Group’s Reports contain measures targeted at reducing fraud, most of which relate to the Department of Justice and Equality. In the Motor Report, Recommendation 25 called for the establishment of a fully functioning integrated insurance fraud database for industry to detect patterns of fraud, while Recommendation 26 supported exploring the potential for further cooperation between the insurance sector and An Garda Síochána in relation to insurance fraud investigation.

The implementation of Recommendation 25 has been impacted by the application of the General Data Protection Regulation (GDPR) which came into effect from 25 May 2018, and the related Data Protection Act. As a result, Insurance Ireland has undertaken a detailed Data Protection Impact Assessment (DPIA) in relation to matters such as the information currently held on Insurance Link and the specific additional data it is proposed will be shared, plus the additional circumstances under which the data will be shared. The Department of Justice and Equality are currently reviewing that DPIA.

In relation to the establishment of a dedicated Garda insurance fraud unit, Insurance Ireland communicated the outcome of its cost/benefit analysis at the start of July 2018, recommending industry funding of such a unit. Discussions are continuing between relevant officials in the Department of Justice and Equality and An Garda Síochána in this regard. In addition, I understand that the Minister for Justice and Equality met with senior Garda management on 30 August to discuss the proposal. The Minister will receive a proposal from the Garda Commissioner following the Commissioner’s consideration of this recommendation.

In the Report on the Cost of Employer and Public Liability Insurance, Recommendation 13 called for the agreement of a new set of guidelines in respect of the reporting of alleged insurance fraud. The agreed Guidelines for the Reporting of Suspected Fraudulent Insurance Claims by Insurance Entities to An Garda Síochána was released on 1 October. These Guidelines are publically available on the Garda website and a copy has also been sent to relevant bodies who had been involved in the consultation process such as the Self-Insured Taskforce, Irish Public Bodies, Lloyd’s and the State Claims Agency, as well as the Car Rental Council of Ireland. I believe that the Guidelines will assist and provide support to these organisations, as well as insurance companies, when reporting suspected insurance fraud to An Garda Síochána.

A ‘spin-off’ occurrence from the implementation of this recommendation has been a commitment for the Garda National Economic Crime Bureau and Insurance Ireland’s Anti-Fraud Forum to meet on a regular basis in order to discuss and act upon current and ongoing general issues which arise in the area of insurance fraud. This positive development is an opportunity for greater communication and improved processes and it is hoped that it will lead to a better understanding on both sides of the issues arising in the investigation and reporting of fraud.

Other recommendations in the Report on the Cost of Employer and Public Liability Insurance seek the production of reliable statistics in respect of the numbers of complaints, investigations, prosecutions and convictions related to insurance claim fraud, improved notification procedures for potential defendants of personal injury claims submitted against their policy, and stricter enforcement of the requirement for plaintiffs to lodge verifying affidavits within the set timeframe.

Overall, it is intended that the implementation of all the recommendations from the two Reports cumulatively, with the appropriate levels of commitment and cooperation from all relevant stakeholders, can lead to both reduced incentives for, and greater deterrents against, the undertaking of fraudulent insurance-related activities.

Small and Medium Enterprises Supports

Questions (201, 202, 203)

Michael McGrath

Question:

201. Deputy Michael McGrath asked the Minister for Finance his plans in place or the actions he has taken to help support SMEs to embrace card acceptance; and if he will make a statement on the matter. [45406/18]

Michael McGrath

Question:

202. Deputy Michael McGrath asked the Minister for Finance the amount invested to date in promoting digital payment options amongst SMEs; and if he will make a statement on the matter. [45407/18]

Michael McGrath

Question:

203. Deputy Michael McGrath asked the Minister for Finance the steps he has taken to incentivise merchants to accept card payment; the further plans that have been drafted for same; and if he will make a statement on the matter. [45408/18]

Written answers

Minister for Finance

I propose to take Questions Nos. 201 to 203, inclusive, together.

In order to make card acceptance more attractive for retailers, interchange rates were reduced in December 2015. An EU regulation reduced the interchange fee charged to retailers to 30 basis points for credit cards, and Ireland reduced the corresponding fee for domestic consumer debit cards to 10 basis points, giving us one of the lowest rates of interchange fees on debit cards in the EU. Just before that, on 31 October 2015, the transaction limit on contactless payment cards was raised from €15 to €30.

To support these EU and industry changes, Budget 2016 abolished stamp duty charges on debit and cash machine cards. These were replaced with a 12c per transaction charge for withdrawing cash from an ATM, though with a cap set at an annual maximum charge of €2.50 or €5 depending on card type.

The changes made at that time reduced the costs to merchants of accepting card payments and made card usage more attractive, as evidenced by the strong growth in electronic payments generally and debit cards in particular. The latest Central Bank credit and debit card statistical release shows that there were 74 million debit card point-of-sale transactions in September 2018, up 75% on September 2015.

Almost one in three card payments are now contactless, and figures released last week by the Banking and Payments Federation of Ireland show that the quarterly value of contactless card payments exceeded €1 billion for the first time in the second quarter of 2018. The statistics show that consumers are using their cards, and that merchants are accepting card payments to a greater extent than ever.

The Deputy may be aware that my colleague, the Minister for Business, Enterprise and Innovation, Heather Humphreys TD, last month launched a €625,000 pilot scheme for eligible SMEs in the retail sector. The new scheme, to be delivered by Enterprise Ireland, supports retailers to strengthen their online trading capabilities in order to compete internationally, and grants of between €10,000 to €25,000 are available on a matched funding basis to enhance digital capability.

In addition, the Department of the Taoiseach has launched a public consultation on a new National Digital Strategy for Ireland, which aims to map out how we can positively embrace digital advances. The public consultation aims to give the public and interested stakeholders a chance to tell Government what priorities should be addressed in the Strategy, including what supports are needed by businesses to benefit fully from the use of digital technology. That consultation is available on the website of the Department of the Taoiseach until 23 November.

National Payments Plan Implementation

Questions (204, 205)

Michael McGrath

Question:

204. Deputy Michael McGrath asked the Minister for Finance the actions delivered upon in the National Payments Plan 2013; when the steering committee last met; the measures put in place to ensure the continued progress of digital payments here; and if he will make a statement on the matter. [45409/18]

Michael McGrath

Question:

205. Deputy Michael McGrath asked the Minister for Finance the progress made to date on the recommendations included in the National Payments Plan 2013 in each of the years 2013 to 2017 and to date 2018, in tabular form; and if he will make a statement on the matter. [45410/18]

Written answers

Minister for Finance

I propose to take Questions Nos. 204 and 205 together.

The National Payments Plan, intended to modernise Ireland's payment system, was published in 2013 and covered the period up to 2015. It set out a vision for payments, including universal acceptance of electronic forms of payment, robust and reliable payment systems, and migration from cash and cheques to cards and electronic payments. The table below sets out the NPP recommendations and the status of implementation:

Recommendation	Status	Comment
Facilitate interoperability of mobile based payments	Ongoing	Technological developments in recent years have greatly facilitated the development of interoperable mobile based payments and increased the number of solutions available to consumers
Introduce contactless debit cards	Achieved	Banks have issued contactless cards and usage is increasing rapidly
Develop public and private sector e-Payments acceptance plans	Ongoing	E-Day initiative in September 2014
Require taxis to take payment cards	Ongoing	Acceptance by taxis has increased significantly, aided by new technology
Introduce a Standard Bank Account	Achieved	Payment accounts with basic features were introduced in 2016 with the transposition of the Payment Accounts Directive
Progress Social Welfare Payments Strategy	Ongoing	The Department of Employment Affairs and Social Protection has a strategy to implement greater electronic payments
Incentivise the consumer to use e-Payments	Achieved	Stamp duty was reformed in Budget 2016
Incentivise the merchant to accept card payment	Achieved	Reduction in interchange fees together with the introduction of contactless cards have greatly improved the attractiveness of cards for retailers
Phase out stamp duty on debit and pre-paid cards	Achieved	Stamp duty was reformed in Budget 2016
End date for cheque usage between Government and business	Achieved	E-Day implemented in September 2014
Implement bank cheque migration initiatives; re-presentation of unpaid cheques to be stopped; modernise'Client Account' payments practices	Ongoing	Cheque usage has steadily declined. The number of cheques used has halved in less than six years. Per capita cheque usage in Ireland is now 8 a year (compared with 237 e-payments), and usage is falling by 10 per cent a year
Prepare review of the Irish cash cycle	Achieved	Central Bank National Cash Forum regularly reviews
Increase dispensing of €10 notes in ATMs	Achieved	Targets set in NPP met and the Central Bank set additional targets to end-2018
Pilot discontinuing use of 1c/2c coins	Achieved	Following a successful pilot in Wexford in 2013, voluntary rounding was rolled out nationally from October 2015
Ireland to have fully migrated to SEPA	Achieved	Ireland fully migrated to SEPA in 2016, within the regulatory timeline
Support a broad education and support campaign to drive a change in payment habits	Achieved	Industry coordinated a ‘cashless Cork’ initiative. Advertising has contributed to a large rise in electronic payments generally, and contactless payments in particular

Under the National Payments Plan, Ireland made significant progress including full migration to the Single Euro Payments Area (SEPA). Rounding of 1c and 2c coins was rolled out nationally from October 2015 and has been generally welcomed. All of the major banks now issue debit cards, most of them with contactless capability, and the contactless payment limit is now €30. The latest Banking and Payments Federation Payments Monitor shows that in the first half of this year, contactless payments grew by 66% year-on-year in both volume terms and value terms.

In December 2015, interchange rates were reduced to make card acceptance more attractive for retailers. Stamp duty on debit cards was reformed with the effect that stamp duty was removed and replaced with a 12c charge per ATM transaction. The implementation of 'e-Day' by Government in September 2014 – from which time Government Departments, Local Authorities and State Agencies no longer routinely use cheques in their dealings with businesses - resulted in a significant decrease in cheque volumes. The Banking and Payments Federation reports that cheque usage continues to fall, with for the first half of 2018 down 10.3% year-on-year.

The measures recommended under the National Payments Plan were designed to ensure that the payments environment facilitates increased adoption of more efficient payment methods. They should not be seen in isolation. The EU is working to create a single market for payments across the Member States and my Department has led on transposing EU measures on payments. The Payment Accounts Directive was transposed in September 2016 and it ensures access to a payment account with basic features for anyone who does not have a payment account, one of the recommendations contained in the National Payments Plan.

The revised Payment Services Directive (PSD2), transposed in January 2018, further opens the EU payment market for companies offering consumer or business-oriented payment services based on access to payment accounts and ensure a level playing field for both existing and new players.

The Deputy may be interested to know that the Central Bank recently established a forum on retail payments, where payment services providers and payment services users can come together to engage in an open and constructive dialogue with each other in relation to Irish retail payment services generally.

The Deputy may also be interested to know that my Department earlier this year commissioned research to benchmark payments in Ireland, and that I expect to receive a report on this in the coming months.

Mortgage Applications Approvals

Questions (206)

Michael McGrath

Question:

206. Deputy Michael McGrath asked the Minister for Finance if a distinction is made between the different risk profile of the mortgage, for example, a low loan to value mortgage as opposed to a high loan to value mortgage in the context of the risk weighting that applies to mortgages issued by banks; and if he will make a statement on the matter. [45420/18]

Written answers

Minister for Finance

The Central Bank has advised that the risk weights (RWs) assigned to a given exposure depends on the particular approach utilised by the credit institution to calculate RWs for credit risk purposes. These are determined by EU regulation – specifically Regulation (EU) 575/2013, the Capital Requirements Regulation (CRR). This regulation permits credit institutions to use either the Standardised approach or the Internal Rating Based (IRB) Approach for the purposes of allocation of RWs for credit risk purposes.

With regard to the use of the Standardised approach for credit risk, the allocation of the applicable RW will differ depending on whether the exposure in question is secured by residential or commercial real estate.

With respect to exposures secured by residential real estate (or mortgages), in line with the Competent Authority discretion under Article 124(2) CRR, a 35% risk weight is applied to a) owner-occupied housing and b) loans with an LTV of up to 75%. Where these conditions are not met (i.e., buy-to-let or LTV above 75%) loans may attract a 75% RW provided it satisfies the definition of ‘retail exposure’ under Article 123 CRR (otherwise a 100% RW will apply).

In contrast, credit institutions utilising the IRB approach must estimate a probability of default (PD) and a loss given default (LGD) for each mortgage. These parameters are then used to calculate the RW.

Statistical models are used to assign a PD and LGD to each mortgage. These models are essentially “rules” that assign specific PDs/LGDs to mortgages depending on the particular characteristics of each mortgage. Credit institutions analyse the behaviour of customers historically to determine which characteristics (also known as risk drivers) should be included in the model. Each individual credit institution decides which risk drivers to include in their PD and LGD models, which could include customer, mortgage performance and collateral information.

In summary, the relationship between the risk weighting applied to a mortgage and the underlying risk profile depends on whether a credit institution applies the Standardised approach or the IRB approach. The latter approach is more risk sensitive as it assigns risk weights with reference to the relevant underlying characteristics of a mortgage.

The Central Bank has also advised that while it cannot provide confidential information on the IRB models of Single Supervisory Mechanism regulated entities, credit institutions publish certain information on their models and the output of their models (as part of their annual pillar 3 disclosures and annual reports) including average PD, LGD, and RW.