Help-To-Buy Scheme

Questions (120)

Peter Fitzpatrick

Question:

120. Deputy Peter Fitzpatrick asked the Minister for Finance if the help to buy scheme will be extended to March 2020. [30122/19]

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Written answers (Question to Finance)

The Help to Buy incentive (HTB) is scheduled to expire on 31 December 2019. This is provided for in Section 477C of the Taxes Consolidation Act 1997. As is normal practice, the role and operation of the incentive is due to be examined in the context of the forthcoming Budget and Finance Bill process. It would be premature to anticipate the outcome of such an examination.

Mortgage Lending

Questions (121)

Jackie Cahill

Question:

121. Deputy Jackie Cahill asked the Minister for Finance if a mortgage provider can make the age of a house a condition of granting a mortgage to an applicant that qualifies in every other way as a first-time buyer and not a first-time buyer, respectively; and if he will make a statement on the matter. [30172/19]

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Written answers (Question to Finance)

Subject to compliance with all relevant legal and regulatory requirements governing the provision of mortgage credit to consumers (including the requirements in relation to 'Knowing the Consumer and Suitability' and to make a thorough assessment of the consumer's creditworthiness and to calculate the market value of the residential property which will act as security for a mortgage loan), the decision on whether or not to provide mortgage credit to potential customers remains a commercial decision for lenders. Each lender will also have its own individual credit lending policies and lenders will also make their lending decisions in the context of such policies. Therefore, when assessing an application for mortgage credit the lender assesses the borrower's creditworthiness and suitability for the loan and will also take into account other matters as necessary or considered appropriate to the consideration of an application for mortgage credit; this will or could include the value or condition or other relevant matter associated with the property which will act as security for the mortgage loan.

However, if a consumer (including a potential consumer) is concerned or unhappy with how their mortgage application has been dealt with by a firm regulated by the Central Bank, there are clear processes in place in the Consumer Protection Code 2012 for handling complaints and complaints resolution. In addition, where a consumer is not happy with the response received from the regulated firm he/she can escalate his/her complaint to the Financial Services and Pensions Ombudsman (FSPO). The FSPO has the statutory powers to investigate complaints against financial services providers.

Departmental Shareholdings

Questions (122)

Catherine Connolly

Question:

122. Deputy Catherine Connolly asked the Minister for Finance if he will provide details of all entities in which he or his Department hold shares; and if he will make a statement on the matter. [30184/19]

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Written answers (Question to Finance)

The following are Irish companies in which I, as Minister for Finance, am a shareholder:

Allied Irish Bank - 71% of ordinary shares in issue

Bank of Ireland - 14% of ordinary shares in issue

Permanent TSB - 75% of ordinary shares in issue

IBRC – 100% of all preference and ordinary shares

Home Building Finance Ireland – 100% of all shares in issue

Strategic Banking Corporation of Ireland - 100% of all shares in issue

Aer Lingus – One ‘B’ Share

For clarity, it should be noted that the shareholdings in AIB and BOI are part of the Directed Portfolio held within the Irish Strategic Investment Fund under direction from the Minister for Finance.

The following are shareholdings in international bodies under international agreements:

Asian Infrastructure Investment Bank – Irelands Shareholding 0.14%

Asian Development Bank - Irelands Shareholding 0.57%

Council of Europe Development Bank - Irelands Shareholding 0.88%

European Bank for Reconstruction and Development - Irelands Shareholding 0.3%

European Investment Bank - Irelands Shareholding 0.57%

International Bank for Reconstruction and Development - Irelands Shareholding 0.34%

International Development Association - Irelands Voting Power 0.37%

International Finance Corporation - Irelands Shareholding 0.05%

International Common Fund for Commodities - Irelands Shareholding 0.53%

International Monetary Fund – Irelands Quotashare 0.723%

Multilateral Investment Guarantee Agency - Irelands Shareholding 0.4%

The value of Ireland’s shareholding in the European Stability Mechanism and the European Financial Stability Facility are €1,273,188,572 and €452,616 respectively.

Regarding shares held in a personal capacity, the Deputy will be aware that details of registerable interests of Members of the Oireachtas are available on the Oireachtas website at https://www.oireachtas.ie/en/members/register-of-members-interests/

Departmental Contracts Data

Questions (123)

Martin Heydon

Question:

123. Deputy Martin Heydon asked the Minister for Finance the contracts his Department and agencies under his remit are engaged in for the provision of security services; the name of each contractor; the procurement process involved; the duration of each contract; and if he will make a statement on the matter. [30242/19]

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Written answers (Question to Finance)

In response to the Deputy’s question, my Department has not engaged in the contracting of security services in respect of buildings occupied by staff.

12 of the 17 bodies under the aegis of my Department are not engaged in contracts for the provision of security services. These are the Credit Review Office, the Credit Union Advisory Committee, the Credit Union Restructuring Board, the Disabled Drivers Medical Board of Appeal, the Irish Bank Resolution Corporation, the Irish Financial Services Appeals Tribunal, the Irish Fiscal Advisory Council, the National Treasury Management Agency, the National Asset Management Agency, Home Building Finance Ireland, the Strategic Banking Corporation of Ireland and the Tax Appeals Commission.

The offices of the National Treasury Management Agency, the National Asset Management Agency, Home Building Finance Ireland and the Strategic Banking Corporation of Ireland are located in the same building and do not have contracts in place for the provision of security services. In the case of both their current and new premises, building security is provided via the landlord.

Separately, NAMA has contracts in place to provide security for certain lands secured against NAMA loans and details of these contracts are included the attached table.

The Irish Fiscal Advisory Council does not directly contract a security services provider; as part of a shared service agreement, the ESRI provides reception and security services to the Fiscal Council.

Details of the security services contracts for the remaining bodies are in the following table.

Bodies under the remit of the Department of Finance

Contracts for provision of security services

Name of contractor

Procurement process

Duration of contract

Office of Comptroller and Auditor General

Provision of Front of House Services

Synergy Security Solutions

Mini-competition under National Framework Agreement for the provision of Security Services.

24/04/1917 – 30/04/2020.

Possibility of extension for a period or periods of up to 12 months with a maximum of two such extensions.

Provision of security systems maintenance services

The contractor name cannot be disclosed due to the nature of their work in maintaining security systems at the Currency Centre.

Tender between vendors under a Framework Agreement.

4 years

Provision of security management at the Central Bank’s ASP Enquiry

FSH Consulting

Quotation process in accordance with the Central Bank’s procurement policy to 3 firms as the overall value is less than €50,000.

1 year

Central Bank Commission

Provision of static guard services

Aramark

Open Tender (published on e-tenders).

5 years

Alarm Monitoring

McDonald Group Services

1 year

Cloud View Remote CCTV

McDonald Group Services

1 year

ICT – Anti virus software

MJ Flood

1 year

Financial Services and Pensions Ombudsman

ICT – Mimecast

MJ Flood

The value of each contract is below the threshold for the EU procurement rules to apply.  FSPO received quotes from one or more competitive suppliers.

1 year

Investor Compensation Company DAC

The Investor Compensation Company occupies the same premises as the Central Bank. Please refer to Central Bank above.

National Asset Management Agency

Security for certain lands secured against NAMA loans.

K-Tech Security and Property Services

The value of this contract is below the threshold for the EU procurement rules to apply.  NAMA received a competitive quote for the services.

1 year

Office of the Revenue Commissioners

Static security, Opening /Closing service,

Key holding,

Alarm response

Noonan Services Group/Bidvest

Awarded after a mini competition from an OGP Framework.

2 years.

Option of 2 x 12 Month Extensions

Insurance Industry Regulation

Questions (124)

Danny Healy-Rae

Question:

124. Deputy Danny Healy-Rae asked the Minister for Finance the measures which will be taken to address issues (details supplied); and if he will make a statement on the matter. [30262/19]

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Written answers (Question to Finance)

At the outset, the Deputy should note that 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 price or the level of cover to be provided either to consumers or businesses.

However, I acknowledge the general problems faced by many consumers, businesses, community and voluntary groups, in relation to the cost and availability of insurance. I also appreciate that there is some frustration about the perceived pace of reform. Unfortunately, there is no single policy or legislative “silver bullet” to immediately stem or reverse premium price rises. This is because there are many constraints faced by the Government in trying to address this issue in particular the fact that for constitutional reasons, it cannot direct the courts as to the award levels that should be applied and for legal reasons it cannot direct insurance companies as to the pricing level which they should apply in respect of businesses seeking insurance.

However, I wish to re-emphasise how important this issue is for the Government. The Deputy will be aware that the Cost of Insurance Working Group was established in July 2016 and undertook an examination of the factors contributing to the increasing 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, including hoteliers. As part of this exercise, there has been extensive interaction with interested stakeholders, including the body mentioned in the details supplied, and the insurance industry and its representative bodies.

The 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, which are set out in an Action Plan. In January 2018, the Working Group also published the Report on the Cost of Employer and Public Liability Insurance. This Report makes a further 15 Recommendations with 29 associated actions. There has been significant work to date in implementing the recommendations of the two reports, including the following:

- the progression of the Judicial Council Bill in order to implement recommendation of the Personal Injuries Commission regarding award levels in this country, including a judicial recalibration of the existing Book of Quantum guidelines;

- the establishment of the National Claims Information Database in the Central Bank to increase transparency around the future cost of private motor insurance;

- reforms to the Personal Injuries Assessment Board through the Personal Injuries Assessment Board (Amendment) Act 2019;

- commencement of the amendments to Sections 8 and 14 of the Civil Liability and Courts Act 2004 to make it easier for businesses and insurers to challenge cases where fraud or exaggeration is suspected;

- the reform of the Insurance Compensation Fund to provide certainty to policyholders and insurers; and,

- various reforms of how fraud is reported to and dealt with by An Garda Síochána, including increased co-ordination with the insurance industry, as well as the recent decision by the Garda Commissioner to develop a divisional focus on insurance fraud which will be guided by the Garda National Economic Crime Bureau (GNECB) which will also train Gardaí all over the country on investigating insurance fraud, and the recent success under Operation Coatee, which targets insurance-related criminality.

I believe that these reforms are having a significant impact with regard to private motor insurance (CSO figures from May 2019 show that the price of motor insurance is now 24.5% lower than the July 2016 peak). The Government is determined to continue working to ensure that these positive pricing trends can be extended to other forms of insurance, including those relevant to businesses.

With regard to the urgency of setting up the Judicial Council, Minister of State D’Arcy has worked closely with the Minister for Justice and Equality, Mr Charlie Flanagan TD to progress the Judicial Council Bill through the Houses of the Oireachtas as a matter of priority. I am therefore pleased that the Bill was passed by both Houses of the Oireachtas on 9 July, and I expect it will be signed into law by the President shortly. Now that the Bill has been passed, it will be a matter for the Judiciary to put in place the Judicial Council and to establish the Personal Injuries Guidelines Committee. While the Government cannot interfere in their deliberations, I would hope that the Judiciary will recognise the importance of this issue and prioritise it accordingly by targeting an end of year completion date for an initial set of guidelines, which take account of the PIC’s benchmarking report.

With regard to a zero tolerance approach to fraud, I believe that one of the key achievements of the CIWG is increased coordination and cooperation between An Garda Síochána and the insurance industry with regard to tackling fraud. This includes the reporting of suspected fraud, as well as to how that fraud is recorded on the PULSE system. In addition, Garda Commissioner Drew Harris has decided for operational reasons to investigate insurance fraud at the divisional level, rather than establish a centralised insurance investigation unit, which may not be in a position to investigate incidents at a local level to the same extent. I understand that this approach is aligned with a general divisional-focused Garda model and that the Garda National Economic Crime Bureau (GNECB) will guide divisions and provide training in the investigation of insurance fraud. I believe it is important to accept the expert view of the Garda Commissioner in this matter and I understand that An Garda Síochána provided further detail on their approach at the Joint Oireachtas Committee for Finance, Public Expenditure and Reform, and Taoiseach on 9 July. I am confident that this marks a key turning point in how insurance fraud will be investigated by An Garda Síochána in the future. There has also been recent success under Operation Coatee , which targets insurance-related criminality.

With regard to the final point made, there have neem a number of measures already introduced that will improve the Irish claims process, such as reform to PI AB, as well as the amendments to Sections 8 and 14 of the Courts and Civil Liability Act 2004. I believe that a key potential outcome of the recalibration of award levels through Judicial Council Guidelines is that there should be lower and more consistent award levels given. If consistency of awards can be applied in a broad sense, particularly for soft tissue injuries, it should have two very significant effects. The first is that there should be less reason for cases to go to litigation, as the level of awards granted by the courts will be aligned with those provided by PIAB; this in turn should mean a reduction in legal costs; and secondly, a stable claims and awards environment should mean that the reserves put aside by insurers to meet future claims would not have to be regularly adjusted to reflect new developments, such as increases in award levels.

In conclusion, I believe that the level and consistency of awards form a vital part element of our efforts to address the personal injuries claim process and the cost and availability of insurance. I would like to assure the Deputy that the Cost of Insurance Working Group will continue to focus on implementing the recommendations of the Report on the Cost of Employer and Public Liability Insurance in parallel with implementing those from the Report on the Cost of Motor Insurance. I am hopeful that the cumulative effects of the completion of the two Reports’ recommendations will include increased stability in the pricing of insurance for businesses and a more competitive insurance market.

Government Expenditure

Questions (125)

Joan Burton

Question:

125. Deputy Joan Burton asked the Minister for Finance the additional resources for commitment to spending increases or taxation reductions available in budget 2020 if the projected 0.4% GGB surplus was reduced to nil; the estimated impact it would have on the structural deficit and expenditure benchmark; and if he will make a statement on the matter. [30289/19]

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Written answers (Question to Finance)

I can advise the Deputy that the additional resources for commitment to spending increases or taxation reductions available in Budget 2020, if the projected 0.4% General Government Balance surplus was reduced to nil, would be c. €1.2 billion (as outlined in Table 10 of the Stability Programme Update 2019).

The subsequent estimated impact on the structural deficit would be a deterioration of 0.4 percentage points to a minus 0.8 per cent of GDP.

As noted above, a c. €1.2 billion general government surplus is projected for 2020. If this were reduced to nil (i.e. additional expenditure of c. €1.2 billion), it would equate to a breach of the expenditure benchmark by €1 billion given that net fiscal space for 2020 is €0.2 billion (as set out in the Summer Economic Statement 2019 - Annex 1, Table A1).

Summer Economic Statement

Questions (126)

Joan Burton

Question:

126. Deputy Joan Burton asked the Minister for Finance the estimated impact of the €0.5 billion committed to the Rainy Day Fund in 2020 in the SES being used for expenditure would have on the expenditure benchmark and structural deficit; and if he will make a statement on the matter. [30290/19]

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Written answers (Question to Finance)

Annex 1 of the June 2019 Summer Economic Statement (SES) shows the impact on expenditure benchmark compliance of, ceteris paribas, using the €0.5 billion committed to the Rainy Day Fund for additional expenditure; a deviation of €0.3 billion in 2020. In terms of the structural balance, using the Department of Finance’s GDP-based alternative methodology for calculating the output gap, the structural deficit would move from a projected 0.1 per cent of GDP in 2020 to 0.3 per cent.

Both of these estimates are based on an orderly Brexit scenario. However, a disorderly exit cannot be ruled out, with a severe impact on the public finances. For this reason, the SES contains both orderly and disorderly Brexit budgetary scenarios. The Government will decide in September – based on information available at the time - which scenario will form the basis for Budget 2020.

Help-To-Buy Scheme Expenditure

Questions (127)

Joan Burton

Question:

127. Deputy Joan Burton asked the Minister for Finance the cost of the help to buy scheme in 2017, 2018 and to date in 2019; the projected full year cost in 2019; the number of purchases supported in each year and the projected full year numbers for 2019; his plans to extend the scheme; and if he will make a statement on the matter. [30291/19]

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Written answers (Question to Finance)

The Help to Buy incentive (HTB) was announced in Budget 2017 and backdated to apply from 19 Jul 2016.

I am advised by Revenue that the cost of the scheme by each year of its operation is set out in the following table.

Year

Cost (€M)

2019*

35.4

2018

73.2

2017

50.5

2016

18.4

*to 31 May 2019

At the end of 2017, 5,392 HTB claims had been approved, this includes a number of claims in respect of the period 19 July 2016 to 31 December 2016. 4,957 claims were approved in 2018 and 2,388 in the period from 1 January 2019 to 31 May 2019.

HTB is a demand led incentive and, as such, it is not possible to give a precise estimate of cost outturn or claims for 2019.

HTB is scheduled to expire on 31 December 2019. This is provided for in Section 477C of the Taxes Consolidation Act 1997. As is normal practice, the role and operation of the incentive is due to be examined in the context of the forthcoming Budget and Finance Bill process. It would be premature to anticipate the outcome of such an examination.

I am informed by Revenue that the annual Help To Buy (HTB) reports to end 2017 and end 2018 are available on the Revenue website at https://www.revenue.ie/en/corporate/information-about-revenue/statistics/tax-expenditures/htb/htb-yearly.aspx. The latest monthly HTB report can be found on the Revenue website at https://www.revenue.ie/en/corporate/information-about-revenue/statistics/tax-expenditures/htb/htb-monthly.aspx. This report includes the cumulative total of claims and costs to-date under the Scheme.

Budget 2018

Questions (128)

Joan Burton

Question:

128. Deputy Joan Burton asked the Minister for Finance the additional yield in 2018 and the projected yield in 2019 to date from the decision to increase commercial stamp duty by 4% to 6% in budget 2018; if a comparison between the projected yield as forecast in budget 2018 and the outturn and the reason for any difference will be provided; and if he will make a statement on the matter. [30292/19]

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Written answers (Question to Finance)

Budget 2018 in fact provided for the stamp duty on non-residential property to increase from 2 per cent to 6 per cent. It had been reduced to the flat 2 per cent rate in Budget 2012 (with effect from December 2011).

I am advised by Revenue that net receipts of Stamp Duty associated with all types of property for 2018 amounted to approximately €660 million, compared to a target of €785 million. It is tentatively estimated that around €488 million of these receipts related to non-residential property.

While a monthly profile covering Stamp Duty on non-residential property only isn’t prepared, for the full year 2019 receipts are forecast to be €565 million. The forecast for all property (residential and non-residential) is €750 million.

While the 2018 receipts of €660 million do represent a 16% or €124 million shortfall against target, it should also be noted that they represent a €279 million or 73% increase on the 2017 figures.

Based on the information available, it is estimated that the shortfall against target is attributable to a combination of reduced activity in other property categories, as well as a lower than expected yield on the residential side due to the prevalence of the forward purchasing model.

The use of taxation policy instruments have long been recognised as a potential tool to discourage speculative investment in property markets. For example, in the July 2016 IMF Staff paper on Ireland, reference was made to the use of property taxes (either based on capital or market value, or annual rental value) and cyclical transactions taxes as tools that could help dampen the boom phase of a real estate cycle as well as discouraging speculative activity.

The low 2 per cent flat rate that applied to non-residential property transactions for almost 7 years prior to the Budget 2018 increase was introduced at a time when activity levels were very low. It can be viewed as a departure from the much higher rates that had applied over the preceding fourteen years and was justified by the exceptionally difficult market situation and lack of commercial output that applied at the time of its introduction.

With the Commercial Real Estate (CRE) market performing strongly, the disjoint between available yields and overall viability considerations between the residential and commercial sectors, and given the policy desirability of re-balancing construction activity towards residential investment and avoiding overheating in the construction sector, it was appropriate to increase the rate of stamp duty applying to non-residential property to 6 per cent in Budget 2018.

The increase of the non-residential stamp duty rate in Budget 2018 has contributed to a dampening of any potential for overheating in the commercial element of the construction sector and has encouraged a greater focus on increased home building. The measure has therefore contributed to the ongoing balancing and stabilisation of the Irish property market, which has seen an increase in construction in the residential sector and a moderation in price increases in the sector.

Tax Data

Questions (129)

Joan Burton

Question:

129. Deputy Joan Burton asked the Minister for Finance the cost to date of the CGT entrepreneur relief by year and projected cost in 2019 and 2020; if he expects to make future changes to this relief; and if he will make a statement on the matter. [30293/19]

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Written answers (Question to Finance)

It is assumed the Deputy is referring to Capital Gains Tax (CGT) Entrepreneurial Relief as provided for in section 597AA of the Taxes Consolidation Act 1997. This provision was introduced in the Finance Act 2015 and provides relief from Capital Gains Tax for individuals disposing of business investments in certain circumstances.

Statistics on the numbers availing of the Relief, and the cost to the Exchequer, are available at https://www.revenue.ie/en/corporate/information-about-revenue/statistics/tax-expenditures/entrepreneur-relief-statistics.aspx. The most recent year for which data are presently available is 2017.

For the Deputy's convenience, the information available is presented in the following table.

Year

Cost € million

Number Availed

2016

20.4

406

2017

81.8

875

The cost of the relief is dependent on a number of variables, such as the number of individuals availing of the relief at a particular point in time or the potential gain on the disposal of assets. There are therefore a number of factors which impact on take up and in projecting the cost of the scheme for future years and it is therefore difficult to provide costs for 2019 and 2020.

In general, consideration of Capital Gains Tax changes, including any changes to individual CGT reliefs, are undertaken within the annual Budgetary and Finance Bill process. As is normal, the Deputy will appreciate that I cannot comment on any possible changes in advance of the 2020 Budget. In addition, it would be impossible for me to comment on any possible changes in respect of future Budgets.

Departmental Programmes

Questions (130)

Joan Burton

Question:

130. Deputy Joan Burton asked the Minister for Finance the costs to date in 2019 from the key employee engagement programme; the number of persons that have used the scheme to date; and if he will make a statement on the matter. [30294/19]

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Written answers (Question to Finance)

Returns for 2019 will not be filed with Revenue until 2020. In addition, options may be exercised for up to 10 years from the date of grant.

In relation to the cost of the Key Employee Engagement Programme (KEEP) to date, as no exercises of options have taken place to date, there has been no cost to the Exchequer in this regard. KEEP provides for an exemption from income tax, USC and PRSI on any gain realised on the exercise of a qualifying share option. Where share options are exercised, and the shares subsequently sold, the taxpayers involved will be subject to Capital Gains Tax on the disposal. I am advised by Revenue that it is not certain when the first exercises will occur. Generally, a key employee must hold the option for 12 months prior to exercise and therefore 2019 will be the earliest date that individuals are likely exercise their options to acquire shares in the qualifying companies.

I am also advised by Revenue that 10 companies granted qualifying share options under the Key Employee Engagement Programme (KEEP) to 87 employees during 2018 (the first year of the scheme).

The Deputy may also wish to be aware that my Department recently carried out a public consultation process in relation to KEEP (along with other tax incentives which can support to SMEs). The purpose of the consultation process was to provide an opportunity for interested parties to participate in a discussion which is intended to help ensure that KEEP fulfils its role in an efficient and effective manner.