Thursday, 5 Oct 2023

Written Answers Nos. 141-160

Banking Sector

Questions (141, 147)

Jim O'Callaghan

Question:

141. Deputy Jim O'Callaghan asked the Minister for Finance what action he will be taking on the regulation of the provision of cash services; and if he will make a statement on the matter. [43172/23]

Cormac Devlin

Question:

147. Deputy Cormac Devlin asked the Minister for Finance if any changes are planned in regard to the regulation of ATM machines; and if he will make a statement on the matter. [43149/23]

Written answers

Minister for Finance

I propose to take Questions Nos. 141 and 147 together.

The Retail Banking Review, published by my Department in November 2022, concluded that cash, despite a decline in its usage, remains an important element of the payments system and the broader economy and it is essential that cash remains readily available to customers through ATMs and other means across the country. It also concluded that there was still reasonable access to cash at the moment but noted that neither the Minister for Finance, nor the Central Bank, had any powers to ensure this.

Accordingly, the Review recommended that the Department of Finance should develop Access to Cash legislation and prepare heads of a bill in 2023 with the initial objective of developing criteria that would secure access to cash at about the levels prevailing in December 2022 but also provide for such criteria to be amended appropriately in future as and when cash usage declines further.

The key objective is to ensure that evolution of the access to cash infrastructure does not move ahead of society's needs and expectations and that the future evolution is handled in a fair, transparent, and equitable manner.

The Review also called on Department officials to prepare heads of a bill in 2023 to require ATM operators to be authorised and supervised by the Central Bank and to provide the Central Bank with responsibility and powers to protect the resilience of the cash system, including the authorisation and supervision of cash-in-transit (CIT) firms in respect of their cash handling activities and related financial services.

Accordingly, relevant provisions for both ATM operators and CIT firms will feature in the Access to Cash legislation.

Work is well underway by officials in my Department on this important piece of legislation and Heads will be brought to Government before the end of this year to seek approval to draft the Bill and to submit it for pre-legislative scrutiny to the Joint Oireachtas Committee on Finance, Public Expenditure and Reform and the Taoiseach.

Question No. 142 answered with Question No.91.

Cost of Living Issues

Questions (143, 202)

Bernard Durkan

Question:

143. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he remains aware of the needs of the people throughout the country, given the continued challenge of inflation and cost of living increases; the extent to which he can assist in these areas; and if he will make a statement on the matter. [43075/23]

Bernard Durkan

Question:

202. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he continues to monitor cost-of-living increases in the context of the forthcoming budget; the extent to which he remains conscious of the cost of living and price increases affecting people in both rural and urban settings, with a view to addressing these issues in the most realistic and effective ways; and if he will make a statement on the matter. [41344/23]

Written answers

Minister for Finance

I propose to take Questions Nos. 143 and 202 together.

Government has responded swiftly and decisively to the cost of living challenges facing people in both rural and urban settings. Some €12 billion in fiscal supports have been made available aimed at supporting businesses and households most adversely impacted by inflation. The targeted and temporary nature of many of the cost of living supports are an explicit effort to prevent inflationary pressures being compounded by government intervention.

Despite the magnitude of the inflationary pressures we have faced over the last year, the Irish economy has remained resilient. The labour market has performed remarkably strongly, with near record-low levels of unemployment and over 2.6 million people in employment.

Despite some easing in price pressure over recent months, inflation remains persistently high. This persistence is indicative of broad based inflationary pressures and reflects capacity constraints in both our housing and labour markets, which are becoming increasingly binding.

While the economy has shown remarkable resilience during this inflationary period, the Government is acutely aware of the continued adverse impacts of inflation on households and businesses. Government continues to monitor risks to the outlook on an ongoing basis and stands ready to take the necessary steps to mitigate these risks.

As part of Budget 2024 we will ensure that Government policy is again carefully calibrated so as to provide targeted and temporary supports to those who need it most, while also ensuring that we do not add to inflationary pressures.

Tax Code

Questions (144)

Marc Ó Cathasaigh

Question:

144. Deputy Marc Ó Cathasaigh asked the Minister for Finance if, with respect to Annex III of the Reduced VAT Rates Directive (details supplied), his Department is considering the potential implications on lowering the VAT rate applied to bicycles, including electric bicycles, and supply of services relating to the transport of passengers; and if he will make a statement on the matter. [42188/23]

Written answers

Minister for Finance

As the Deputy will be aware, it is a longstanding practice that the Minister for Finance does not comment, in advance of the Budget, on any tax matters that might be the subject of Budget decisions.

However the Deputy should note that Ireland already applies an exemption without deductibility to the transport of passengers which in effect results in a zero VAT rate for consumers.

Banking Sector

Questions (145)

Cormac Devlin

Question:

145. Deputy Cormac Devlin asked the Minister for Finance for an update on the establishment of an interdepartmental mortgage arrears group; and if he will make a statement on the matter. [43148/23]

Written answers

Minister for Finance

On 31 August last, I convened a meeting of banks, non banks and other stakeholders on the importance of supporting mortgage holders at this time. I am very conscious of the impact that rising interest rates are having on mortgage borrowers.

At the meeting, I heard from MABS and the Insolvency Service of Ireland about the increased demand for their services.

Against this backdrop and in light of commitments in the Programme for Government and recent International Monetary Fund (IMF) recommendations, I have tasked officials to review the current mortgage arrears framework and an interdepartmental group has been established to review the mortgage arrears framework.

The Mortgage Arrears Group comprises representation from my Department, the Department of Justice, the Department of Housing, Local Government and Heritage and the Department of Social Protection. The focus of the Group will be to consider the impact of the mortgage arrears framework, the current resolution options across the agencies and bodies and recommend refinements and improvements to better address the economic and social impact of mortgage arrears.

The Mortgage Arrears Group has commenced its work and will report on its review during the second quarter of 2024.

Official Engagements

Questions (146)

Mick Barry

Question:

146. Deputy Mick Barry asked the Minister for Finance to report on his attendance at the National Economic Dialogue. [30627/23]

Written answers

Minister for Finance

As the Deputy will be aware, the eighth National Economic Dialogue took place on June 12th.

The overarching theme of the Dialogue was “The economy in 2030: enabling a sustainable future for all”. The Dialogue provides a forum for participants to engage in an open and inclusive exchange on the competing economic and social goals of the Government, with this year’s Dialogue focussing on the medium to long-term. As in previous years, the Dialogue was structured around plenary sessions, with smaller breakout sessions on specific themes. I chaired a break-out session on “Sustainable public finances & medium-term growth”.

The Dialogue was attended by representatives from community, voluntary and environmental groups, business, unions and the academic community. A number of members of the Select Committee on Budgetary Oversight also contributed to the event.

The Chair’s report and the reports of each of the seven rapporteurs for the breakout sessions are available on www.gov.ie/en/publication/53e74-national-economic-dialogue-2023/.

My opening remarks on the economic and fiscal context are also available at the above link.

The National Economic Dialogue is an invaluable part of our budgetary process. Decisions that have been made in previous budgets have been influenced by previous Dialogues and I have reflected on this year’s discussions during the drafting of Budget 2024 .

Question No. 147 answered with Question No.141.

Housing Policy

Questions (148)

Bernard Durkan

Question:

148. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he can support the affordable housing programme/local authority housing to meet the challenges of an increasing population and its ongoing housing requirements; and if he will make a statement on the matter. [43074/23]

Written answers

Minister for Finance

Housing for All is the Government’s plan to increase the supply of housing to an average of 33,000 per year over the next decade. This includes the delivery of 90,000 social homes, 36,000 affordable homes and 18,000 cost rental homes. Housing for All is supported by an investment package of over €4 billion per annum, through an overall combination of €12 billion in direct Exchequer funding, €3.5 billion in funding through the Land Development Agency and €5 billion funding through the Housing Finance Agency.

There is progress being made on the delivery of public housing. In 2022, there were 7,433 new build social homes delivered, 43 per cent higher than the previous year. The pipeline of social homes is also positive. The latest Social Housing Construction Projects Status Report showed that at the end of Q1 2023, there were 21,274 social homes either on site or at design and tender stage.

We are also seeing progress on increasing housing supply more broadly. In the first half of this year, 14,017 new homes were built, an increase of 6 per cent on the number of new homes that were built in the first half of 2022. In the 12 months to August, construction commenced on 29,565 new homes, the highest number in a 12 month period since May 2022. The increase in housing supply will be key to improving affordability and catering for an increasing population.

Earlier this year, a temporary waiver was introduced on local authority development contributions which will reduce the cost of construction. We also increased the Vacant Property Refurbishment Grant from €30,000 to €50,000 for vacant properties and from 50,000 to €70,000 for derelict properties and extended to cover houses built up to 2007. This will increase the pace at which vacant and derelict properties are renovated for new housing.

I will continue to work with my Cabinet colleagues to increase the supply of homes, both public and private, to cater for the housing needs for our citizens.

Banking Sector

Questions (149)

Alan Farrell

Question:

149. Deputy Alan Farrell asked the Minister for Finance to comment on the increasing number of first-time buyers receiving mortgage approval; and if he will make a statement on the matter. [32907/23]

Written answers

Minister for Finance

The latest data published on 29 September 2023 by the Banking & Payments Federation Ireland (BPFI) for August 2023 shows that a total of 4,534 mortgages were approved in August 2023. First-time buyers (FTBs) were approved for 2,829 mortgages (62.4% of total volume) while mover purchasers accounted for 1,029 (22.7%).

The BPFI noted that first-time buyer (FTB) mortgage approvals grew strongly on a year-on-year basis in August 2023 with volumes up 14.1% to 2,829 and values up 21.8% to €820 million.

The number of mortgages approved fell by 4.5% month-on-month and by 18.2% compared with the same period last year. Mortgages approved in August were valued at €1,302 million – of which FTBs accounted for €820 million (62.9%) and mover purchasers for €346 million (26.5%). The value of mortgage approvals fell by 3.9% month-on-month and fell by 14.2% year-on-year.

FTBs continue to dominate the market with FTB mortgage approval values reaching more than €8.5 billion in the twelve months ending August 2023, while the annualised number of FTB mortgage approvals exceeded 30,000 (30,103) for the first time since 2011. This suggests that the demand for home purchase drawdowns remains very strong.

Tax Code

Questions (150)

Ged Nash

Question:

150. Deputy Ged Nash asked the Minister for Finance if he is concerned at the low number of individuals who pay the domicile levy; if he has any plans to reform the levy; and if he will make a statement on the matter. [43054/23]

Written answers

Minister for Finance

The domicile levy is a levy to be paid annually by individuals who:

• are domiciled in Ireland in the tax year;

• whose world-wide income in the tax year exceeds €1m;

• whose liability to Irish income tax in the tax year is less than €200,000; and

• who owns Irish property on 31 December in the tax year where the market value of that property is greater in value than €5m.

The amount the levy set at is €200,000. Any Irish income tax paid by the relevant person is allowed as a credit in calculating the actual amount due in any year.

The levy was introduced as part of the Finance Act 2010. Its purpose was to ensure that wealthy individuals contributed to the Irish taxation system during a time of economic and fiscal difficulty. For the tax years 2010 and 2011, it was a requirement that the person liable be both an Irish citizen and Irish domiciled. The requirement to be an Irish citizen was removed for the tax year 2012 and later years.

I am advised by Revenue that 13 individuals paid the levy in 2021, raising €1.6 million. I am also advised that between 2019 and 2021, the levy has raised €6.4 million.

The domicile levy interacts with the wider Remittance Basis of Taxation and I intend to carry out a detailed examination and review of this in 2024. This review will include a public consultation, which will be published in the coming months.

Credit Unions

Questions (151)

Brian Stanley

Question:

151. Deputy Brian Stanley asked the Minister for Finance the legislation, Irish or EU, that must change before Irish credit unions are able to avail of the same ECB deposit interest rates as commercial retail banks. [42609/23]

Written answers

Minister for Finance

I thank the Deputy for his question. As this is a matter of Regulation, officials in my Department have liaised with the Central Bank who have provided the following information:

The relevant legislation is the Governing Council of the ECB - Guideline ECB/2014/60, as amended. In order to be an eligible counterparty for Eurosystem monetary policy operations (including access to the Eurosystem’s deposit facility), an institution must meet the eligibility criteria in the relevant legal act adopted by this Guideline.

The relevant provisions have been implemented in Ireland by the Central Bank's Documentation on Monetary Policy Instruments and Procedures (the 'MPIPs'). An applying institution must therefore satisfy all the eligibility criteria set out in Articles 55 and 55a of the MPIPs. The process of becoming a monetary policy counterparty involves an assessment by the Central Bank as to whether an applicant institution meets these criteria. Any such assessment will be conducted in line with harmonised Eurosystem procedures.

In a previous application by a credit union, The Central Bank determined that the regulatory and supervisory framework for credit unions in Ireland was not comparable to the standards required of the Capital Requirements Regulation/ Capital Requirements Directive. This distinction has been by design, with credit unions in Ireland benefiting from a bespoke, tailored and proportionate supervisory regime. Accordingly, the Central Bank has determined that the supervisory regime for Irish credit unions does not satisfy the eligibility criterion in Article 55(b)(iii) of the MPIPs, as they do not consider that the Basel III standards have been implemented into the supervisory regime of credit unions in Ireland in a manner that satisfies this criterion.

It is important to note that the Central Bank does not have discretion in respect of the application of the Eurosystem’s monetary policy eligible counterparties framework (which is applied in a uniform manner by the Eurosystem), nor to grant access to Eurosystem monetary policy operations, including access to the Eurosystem’s deposit facility, outside of this framework.

Tax Reliefs

Questions (152)

Pearse Doherty

Question:

152. Deputy Pearse Doherty asked the Minister for Finance the current status of the disabled drivers and disabled passengers scheme; when the disabled drivers medical board of sppeal will recommence hearings; the number of appeals and request for appeal hearings that have been lodged since November 2021 and his response to the recent annual report of the Ombudsman with respect to same. [43137/23]

Written answers

Minister for Finance

Progress has been made on efforts to convene a new Disabled Drivers Medical Board of Appeals (DDMBA), to secure new hosting arrangements for the DDMBA and to recommence the appeals process.

I have now formally appointed all five members to the new DDMBA. Funding arrangements between the Department of Finance and the Department of Health have been agreed. On this basis the National Rehabilitation Hospital (NRH) has confirmed that they will again host the DDMBA. Preparatory work is underway, that will include due deliberation on how best to clear the backlog. The appeals process will re-commence upon completion of this work. In parallel, my officials are working with the NRH to conclude other conditions for new hosting arrangements, which may continue after the appeals process is again up and running.

I appreciate that it has taken far longer than anticipated to get to this point. With the Department of Health we have had to run four Expression of Interest campaigns over 18 months to source the legislatively required five members. We have also had to re-negotiate new hosting arrangements with the NRH following their withdrawal of services in February 2023.

As of end August 2023 (latest data available) there were 1,079 appeals outstanding.

With respect to my response to the recent annual report of the Ombudsman and his comments that progress in the general area of access to personal transport schemes for people living with a disability has stalled, I would like to say the following.

My Department has oversight of the Disabled Drivers and Disabled Passengers Scheme only. Through the Criteria Sub-Group established by my Department, it has done comprehensive work in highlighting the fact that the Disabled Drivers and Disabled Passengers Scheme (DDS) is no longer fit for purpose. This work, including the paper referenced in the Ombudsman's report, was provided as one set of unpublished inputs into the NDIS Transport Working Group's review of transport and mobility supports for those with a disability including the DDS, chaired by Minister Anne Rabbitte. The final report of the group agreed the Scheme needed to be addressed as a matter of priority. The TWG welcomed the proposal by my Department to replace the DDS with a new vehicular adaptation scheme, as a clear deliverable for the near future.

In relation to the work of replacing the DDS, the Deputy should note that officials from relevant Departments and agencies under the aegis of the Department of the Taoiseach, are meeting to discuss the issues arising from the NDIS report and to map a way forward. My officials are proactively engaging with this work as an important step in considering ways to replace the DDS in the context of broader consideration of holistic, multifaceted and integrated transport and mobility supports for those with a disability.

Finally, it is important to be aware that the Government is committed to providing services for people with disabilities, which will empower them to live their lives, provide greater independence in accessing the services they choose and enhance their ability to tailor the supports required to meet their needs and plan their lives.

Question No. 153 answered with Question No.116.

Question No. 154 answered with Question No.98.

Legislative Programme

Questions (155)

Brian Stanley

Question:

155. Deputy Brian Stanley asked the Minister for Finance when it can be expected to see the Credit Union (Amendment) Bill 2022 completed and enacted. [42608/23]

Written answers

Minister for Finance

I thank the Deputy for his question. The enactment of the Credit Union (Amendment) Bill 2020 is a key priority of Government and as the first substantive credit union legislation since 2012, it will deliver on the Programme for Government commitment to support the growth of the credit union sector. Both Minister Carroll MacNeill and I, are working hard to progress this legislation as quickly as possible.

As the Deputy will be aware, the Bill was published in November 2022. In December 2022 the Bill completed the legislative process in the Seanad and in March 2023 it was introduced in the Dáil.

Since it has been introduced in the Dáil, both Minister Carroll MacNeill and the Department of Finance have engaged extensively with key stakeholders, including the credit union representative bodies and the Central Bank. As a result of this engagement, a number of amendments have been identified and will be brought forward to Committee Stage on October 18th.

However, it is not possible at this stage to confirm an enactment date for the Bill, as this be determined by both the capacity and availability of the Office of the Parliamentary Council (OPC) and the Oireachtas timetable. Both Minister Carroll MacNeill and I are fully committed, and will continue to work hard to get this Bill enacted as quickly as possible.

Fiscal Policy

Questions (156)

Jim O'Callaghan

Question:

156. Deputy Jim O'Callaghan asked the Minister for Finance for an update on the OECD BEPS process; and if he will make a statement on the matter. [43171/23]

Written answers

Minister for Finance

The Government, in October 2021, took the decision to join with almost 140 other jurisdictions in a two-pillared agreement to create a new international tax framework and we intend to follow through on that commitment.

Pillar One seeks to reallocate taxing rights to market jurisdictions through Amount A as well as simplifying transfer pricing rules in certain cases through Amount B.

Pillar Two introduces a minimum effective tax rate of 15% for in scope MNEs, with global revenues over €750m, through the GloBE rules and also provides for the introduction of a treaty based rule, the Subject to Tax Rule, in certain instances where a rate below 9% applies.

The OECD Inclusive Framework published an Outcome Statement in July, outlining the significant progress made towards implementation of the agreement.

The GloBE rules will be implemented in Ireland largely via an EU Directive, the transposition of which will be delivered through domestic legislation published as part of this Autumn's finance bill. A Qualified Domestic Minimum Top-up tax will be legislated for as part of the transposition allowing Ireland to collect any additional top-up tax arising from Pillar Two.

It is not envisaged that Ireland will be exposed to the Subject to Tax Rule element of Pillar Two, the technical negotiation of which has now been finalised.

An Outcome Statement was published by the Inclusive Framework of the OECD on 12 July 2023 setting out the progress made to address the other remaining elements of the Two-Pillar Solution. Amount A of Pillar One will be implemented largely via a Multilateral Convention (MLC). While there are still some open issues, negotiation of the MLC's text is at an advanced stage. The MLC will only come into force when it has been signed and ratified by a critical mass of jurisdictions.

Finalisation of the work on Amount B of Pillar One which should reduce the number of costly disputes, is also progressing.

There are a small number of open issues in relation to both elements of Pillar One and Ireland remain actively engaged in the negotiations to resolve these open issues.

I look forward to completing the implementation of this significant agreement. Our long-standing position is that the international tax system needs to keep pace with changes in how business is now being conducted globally and global implementation of the agreement will bring much needed stability to the international tax framework after the turbulence and uncertainty of recent years.

Defective Building Materials

Questions (157)

Pearse Doherty

Question:

157. Deputy Pearse Doherty asked the Minister for Finance to provide an update on his engagement with the retail banking sector, the Department of Housing, Local Government and Heritage and representative groups of homeowners affected by defective concrete blocks with respect to bridging finance and the significant funding shortfall homeowners face to remediate their homes. [43136/23]

Written answers

Minister for Finance

As the Deputy is aware, the Government response on the MICA issue is led by my colleague, the Minister for Housing, Local Government and Heritage.

I understand from his Department that there has been a number of engagements between his Department and the Banking and Payments Federation (BPFI) on specific issues raised by Defective Concrete Block homeowners.

My Department maintains contact with the BPFI on an on-going basis across a range of issues. At an official level, there is also ongoing engagement on a range of matters, as required, between the Department of Housing, Local Government and Heritage and the Department of Finance.

As Minister for Finance, neither I nor my Department have any role in relation to the commercial decisions of individual regulated entities, such as decisions they may make on applications for credit.

The Government fully understands the importance of this issue in the communities affected by the MICA issue and has responded by putting in place a Scheme of financial support to help affected homeowners. I will continue to work with my Government colleagues, as necessary, to ensure that the Scheme operates effectively and consistently for all affected homeowners who access it.

Tax Code

Questions (158)

Richard Boyd Barrett

Question:

158. Deputy Richard Boyd Barrett asked the Minister for Finance if he is aware that an organisation (details supplied) recently published wealth tax measures that the Government could take that could raise up to €8 billion; if he will announce measures such as this in Budget 2024; and if he will make a statement on the matter. [43153/23]

Written answers

Minister for Finance

I am aware of the Deputy's interest in wealth taxes and the periodic reports published by Oxfam which discuss that concept.

The most recent report by Oxfam International regarding global wealth inequality was produced in January this year. That report, entitled “Survival of the Richest”, proposes new wealth taxes in Ireland and in other jurisdictions.

While I understand the background to calls for a specific wealth tax in Ireland, it is not the case that wealth in Ireland is untaxed, as taxes on wealth are already in place here including Capital Gains Tax, Capital Acquisitions Tax and Local Property Tax. Revenue estimates that these taxes raised over €2.8 billion last year.

The Oxfam report notes that many countries do not have any form of tax on inheritance. As the Deputy is aware, Ireland has a significant inheritance tax regime in place in the form of Capital Acquisitions Tax which is charged (with limited exemptions) at a rate of 33%.

Oxfam's report also notes that “Rates of tax on capital gains – in most countries the most important source of income for the top 1% – are only 18% on average across more than 100 countries .” In contrast to the 18% average cited in the report Ireland taxes capital gains at a rate of 33%, again with limited and targeted exemptions.

Any revenue raised from a new wealth tax may not therefore be additional to the existing forms of wealth taxation, as revenues from those taxes could be affected by the introduction of such a new tax.

In addition to wealth taxes, the Government takes action against inequality through our tax and welfare system. For instance, the strong redistributive role of the Irish tax and welfare system is evident in the range of supports introduced to help mitigate the impact of the Covid-19 pandemic and the series measures designed to limit the impact of the cost of living pressures.

Ireland has one of the most progressive systems of taxes and social transfers of any EU or OECD country, which contributes to the redistribution of income and to the reduction of income inequality.

It is estimated that the top 1 per cent of income earners, those earning in excess of €263,000 will pay 23 per cent of the total income tax and USC collected in 2023. While those earning less than €65,000 which represents the bottom 80 per cent of income earners, will contribute 21 per cent of total income tax and USC receipts.

In conclusion, I can assure the Deputy that all taxes and potential taxation options are kept under constant consideration and it remains a priority of mine to ensure that Ireland maintains its progressive taxation system.

Fiscal Policy

Questions (159)

John Lahart

Question:

159. Deputy John Lahart asked the Minister for Finance if he is considering any measures to leverage the billions in savings accounts held by Irish people into investment opportunities in areas such as State affordable housing vehicles or other investment vehicles directed towards the public good; and if he will make a statement on the matter. [42889/23]

Written answers

Minister for Finance

I take it that the Deputy is referring to funds including those deposited by the public in banks, investment funds and also those lent to the state as part of State Savings.

Through State Savings the citizen is already supporting the State to the tune of c.€20 billion. State Savings Fixed Term products and Prize Bonds are placed in the Central Fund of the Exchequer and used to fund expenditure and investment by the State. They also form part of the National Debt of Ireland.

Well-functioning and well regulated commercial banks are essential to the operation of the economy and deposits from individuals and companies play an important part in the operation of an efficient and effective banking system.

Establishing investment structures to attract individual savings from the pool of existing savings (whether from state savings or the commercial banks) would require careful consideration as to its usefulness, impact and other challenges that would be required to establish such investment structures.

I would say that in terms of the specific area of public expenditure mentioned i.e. housing the reality is that the Government has significantly increased investment in this area in recent years. Under my colleague, the Minister for Housing, the housing capital budget for this year is €2.6 billion, with €7.2 billion allocated towards housing in the past three years. “Housing for All” is backed by the State’s largest ever housing budget, with in excess of €20 billion in funding through the Exchequer, the Land Development Agency and the Housing Finance Agency over a five-year period.

As a result, we are already seeing progress on social housing. In 2022, there were 7,433 new build social homes delivered, the highest level since 1975. The pipeline of public homes is encouraging. At the end of Q1 2023, there were 8,005 social homes on site and 13,269 homes at design and tender stage.

Outside of housing there is a significant public capital programme in place running between 2021 and 2030 which will increase investment across the State.

Economic Policy

Questions (160)

Richard Bruton

Question:

160. Deputy Richard Bruton asked the Minister for Finance how the international economic outlook will bear on Ireland’s economic performance and budgetary strategy; and if he will make a statement on the matter. [43047/23]

Written answers

Minister for Finance

The outlook for the international economy remains subdued, with downside risks to the fore. The OECD, for instance, is projecting global GDP growth of just 3 per cent this year in its most recent forecasts – well below the historical average, and prospects in our key trading partners also remain weak. Moreover, there remains considerable uncertainty surrounding international economic prospects. Core inflation could persist for longer than expected among our key trading partners with the potential for further policy tightening. Meanwhile risks to global trade from potential spill-overs associated with a continued weak Chinese economy and increasing geo-political tensions would further weaken the fragile international outlook.

As a small, open economy, Ireland is particularly exposed to weakening demand among our trading partners with potential implications for Irish exports, GDP and tax revenues. Indeed, in the first half of the year, we have seen subdued GDP growth of just 0.2 per cent, reflecting a softening in Irish exports linked to a weak global economy.

Despite the global slowdown, the domestic economy has proven resilient to date. Nowhere is this more evident than in the labour market, with the unemployment rate remaining around historically low levels at just over 4 per cent for most of this year. Both modified domestic demand – my preferred measure of domestic economic activity – and consumer spending also displayed robust growth of around 1 per cent in the second quarter of this year.

From the perspective of budgetary strategy, the best way in which we can ensure that our economy remains resilient in an uncertain international economic environment is by maintaining our public finances on a sustainable path. Government has adopted a budgetary strategy based on linking core public expenditure growth to the trend nominal growth rate of the economy. Over the medium term this is estimated to be around 5 per cent per year.

In recognition of continuing inflationary pressures, in Budget 2024 net core spending will be allowed to increase by 6.1 per cent next year. This approach strikes the appropriate balance between giving Government the necessary scope to assist with the increased cost of living, while also continuing to invest in our public services and addressing capacity constraints and still ensuring that our public finances remain on a positive trajectory over the medium term.

In conclusion, I am conscious of the need to ensure the continued resilience and competitiveness of the Irish economy. My Department will continue to closely monitor the risks to the international outlook and the Government will respond to risks as required to protect and promote the Irish economy.