Topical Issue Debate

Road Network

Deputy Ray Butler

I thank the Ceann Comhairle for the opportunity to speak today on the preparation plans of local authorities for rural and urban road networks in severe weather conditions.

With the potential onset of severe weather conditions in the weeks and months ahead, I want to raise this matter today in light of a scheme I have become aware of in the UK that I believe could work well here in Ireland. In the UK, provision is made available to local borough councils for an amenity grant, which is allocated to farmers in rural areas to help with gritting rural road networks. Once successful in tendering for this grant, farmers then store banks of sand, grit and gravel on their land for use on the surrounding rural roads in the event of the onset of severe icy and snowy conditions. Payment is made to these farmers in the form of a nominal fee for their assistance in this scheme. These farmers have the responsibility for spreading the grit on all of the rural roads not covered by the borough council directly and in addition, local residents can also access these banks of grit for their own private laneways and surrounding areas, should it be required. This pooling of resources and co-operation among farmers and local residents has worked to the benefit of all in isolated rural areas, in particular, in Scotland where wintry conditions are more prevalent.

In our case, we have seen many hundreds of housing estates spring up during the Celtic Tiger years in rural areas, where planning permission was given by local authorities for these developments. Unfortunately, the vast majority of rural road networks surrounding these estates are not gritted by local authorities, which has resulted in residents being left stranded and unable to leave their homes. This was very evident last year in my constituency, in small townland areas such as Kilmessan which has an approximate population count of 1,000 residents, as well as Kildalkey and Ballivor, to name but a few. Residents in these areas could not leave their homes to attend work, school and college for almost a fortnight because the surrounding roads were not gritted. I make the point that if local authorities see fit to approve planning for housing in rural areas, they should include rural road networks for road gritting as a priority.

Based on the UK model, I urge all local authorities to consider provision of this scheme. I have spoken to farmers in my constituency who certainly impressed upon me that they would be more than willing to participate and provide areas of their land for storage of banks of grit. They also indicated their willingness to use their own machinery to disperse grit on the roads that are not included on the national gritting route. It is also important to note at this point that public transport services still must use these rural road networks and without gritting in place, serious accidents are likely to occur.

As winter progresses and in light of the serious wintry conditions forecast, I hope the UK scheme I outlined will be considered by the Department of the Environment, Community and Local Government. This scheme could provide a workable solution and sustainable support to residents living in rural Ireland who otherwise would be completely imprisoned in their homes in severe weather conditions.

Minister for Transport, Tourism and Sport (Deputy Leo Varadkar)

Within the emergency management framework structure, the lead Department for severe weather is the Department of the Environment, Community and Local Government. Following that Department's review of the overall emergency response to last winter's snow, ice and flooding, 62 recommendations were made impacting on various Departments. Of the recommendations, nine directly affect areas in respect of which responsibility for delivering solutions rests with my Department or agencies.

The development of the resilience planning of my Department and agencies is an ongoing activity with lessons being learned and solutions being developed where feasible in response to specific experiences. The achievements of the transport agencies last year are being used as a base to improve their responses for the future further. As with all emergencies, no two are alike and there is no one size fits all.

Regarding the road network as part of overall transport preparedness, the National Roads Authority, NRA's, draft winter maintenance guidelines were published in October 2010 and provided a comprehensive framework for local authorities to plan standard winter maintenance, including a schedule for severe weather. Local authorities were requested to select routes in their areas for treatment on a priority 1, 2 and 3 basis where all three priorities would be regular winter maintenance routes, namely, some 18,000 km out of our 96,000 km road network, but reverting to priority 2 and-or 1 as a severe weather event extended. Historically, all the three routes constituted regular local winter maintenance practices and the introduction of priority 1 and 2 was to maximise, if required, access to essential routes in the event of prolonged severe weather events.

I understand the Department of the Environment, Community and Local Government recently issued a circular to all local authorities confirming among many matters arrangements to be made locally in terms of grit, salt and sand plans for roads in areas not covered by regular winter maintenance. Local authorities have reviewed the selected priority routes in their areas for treatment on priority 1, 2 and 3 criteria and, building on last year's experiences, are catering for gaps that occurred, particularly in respect of county towns and suburban public transport routes. These routes are already or will shortly be published on local authority websites.

The route selection was supported by the NRA hosting two seminars this year for local authorities. I allocated an additional 10% — €1.25 million — from savings elsewhere within my Department towards the regional and local winter maintenance programme, bringing the total allocation to €11.25 million this year from my Department.

To ensure sufficient availability of rock salt, more than 200,000 tonnes have been procured and delivered and are now in storage around the country in time for the start of the winter season. The NRA was tasked with centrally co-ordinating the procurement of the salt supplies, but also leaving it open to local authorities to purchase additional supplies directly should they so decide. As a result, we will not be placed in the position that we were last year where we were waiting for shipments from the Mediterranean or further afield.

The level of salt will be topped up annually depending on usage to the 200,000 tonne level and has a shelf life of three years. Our salt stock allocations are 100,000 tonnes for use on the national roads network, 60,000 tonnes for regional and local roads and a strategic reserve of 40,000 tonnes for national and priority 1 routes. In addition, the public private partnership, PPP, contractors have made specific provision for their contracted sections of the interurban motorways. Some counties — Meath, Monaghan, and Roscommon — have purchased additional supplies directly. The cost of salt in 2010, including storage, averaged €80 per tonne. The cost of the early purchase-delivery this year averages €62.50 per tonne.

Our public transport companies have agreed with relevant local authorities measures to increase where possible access to those areas and estates on their networks that were inaccessible last winter. My Department's website, www.transport.ie, will continue to act as a portal for the public to access information from our various agencies. This morning, I attended the launch of the “Winter Ready Guide” for use by the public in preparing for this winter. The winter ready booklet, available on www.winterready.ie, gives information on being prepared, providing practical advice for coping during episodes of severe weather, as well as giving contact details of organisations and agencies that can provide guidance and assistance. The booklet was prepared by the Government task force on emergency planning in co-operation with many Departments, including my own.

The main message is simple — be prepared, stay safe and know where to find help should it be necessary. As part of winter ready week, my Department will publish on our website a severe weather transport information guide encompassing website details for our operators with web access and, for those without web access, their customer service telephone details. This guide will be electronically distributed to all media outlets, local authorities, Members of the Oireachtas, members of local authorities, Citizens Information and other outlets for reference purposes.

My reply covers what we are planning to do but, in many ways, does not address the issues raised by the Deputy. In fairness to my Department, his suggestion was not quite covered in the notice he submitted. I would be open to his idea, but it would need to be organised by local authorities, not my Department. Many people living in rural areas, including farmers, did that work voluntarily last year. We would ask people to volunteer, as we are not in a good enough financial position to pay people for this work. Were salt made available, they might agree to spread it on a voluntary basis instead.

Deputy Ray Butler

Much of the issue pertained to insurance. One local authority gave people permission to grit roads whereas another local authority stated people would not be covered. Many local authorities do not have sufficient manpower or machinery, given the cutbacks. My proposal represents a simple way forward. If many people in rural areas knew there were grit and gravel banks available to them, they would make use of them. Many farmers would use their machinery free of charge. Will the Minister consult the local authorities or the Minister for the Environment, Community and Local Government, Deputy Hogan? It is an achievable way forward.

Deputy Leo Varadkar

I will discuss the proposal with my officials and the Minister, Deputy Hogan. Deputy Butler might do the same. It was not his fault, but this issue should have been raised with the Minister's Department rather than mine. His proposal has merit.

Deputy Ray Butler

I thank the Minister.

Public Transport

Deputy Michael P. Kitt

I thank the Ceann Comhairle for allowing me to raise this issue. Some months ago, a €6 million package to do away with roundabouts in Galway was announced, but there was little consultation at the time. I learned much more about the money and the work to be done when I attended a meeting of the joint policing committees of the Galway city and county councils last Monday. I hope the Minister of State will learn about the proposals in respect of Galway. While the idea of getting rid of roundabouts is fine, as are the proposals to get rid of traffic lights and signalling, we should be provided with further details and have more consultation.

Comparisons will be made with Dublin city. The principle is the same, but a comparison in this respect is difficult. There are great opportunities for public transport in Galway as part of the package of measures to be introduced. For example, the provision of extra bus lanes and the role of private buses, matters under the Minister of State's responsibility, must play important parts in the new scheme to get rid of roundabouts.

I am impressed by the frequency of buses in Dublin and the fact that information can be found at bus stops and bus shelters. These elements would be welcome in any town or city.

The Galway public transport feasibility study was funded by the then Department of Transport in 2009 to determine the potential of introducing new transport modes, including bus rapid transit, light rail transit and associated park-and-ride facilities. At last Monday's meeting of the joint policing committees, many references were made to these issues as well to the Galway outer city bypass, the western rail corridor and the Gort-Tuam road. There have been many meetings concerning the Galway public bike scheme. The Dublin bicycle rental scheme has been successful. Studies have been carried out on the number of people using bicycles. In particular, the student populations of Galway's two third level institutions — National University of Ireland, Galway, NUIG, and Galway-Mayo Institute of Technology, GMIT — use bicycles to attend lectures.

I hope the Minister of State will take the proposals made by the city and county councils on board and that we can make progress in developing public transport and alternative transport in the county and city.

Minister of State at the Department of Transport, Tourism and Sport (Deputy Alan Kelly)

I thank the Deputy for the opportunity to address this issue in the House. The Department has been providing funds to local authorities for bus priority green routes and park and ride measures in the four regional cities of Cork, Galway, Limerick and Waterford for a number of years. This programme is now being managed by the National Transport Authority, NTA, on behalf of the Department. It is a matter for the local authorities in each city to prioritise projects and apply for funding each year.

As the Deputy stated, since 2007 funding of approximately €6 million has been provided by the Department for two green routes in Galway city, one on the Dublin Road and the other on Bóthar Uí Eithir and Forster Street and for the Claregalway quality bus corridor, QBC, in County Galway. These are now fully operational.

In addition €2.3 million has been allocated to Galway City Council in 2011 under this programme to advance the Seamus Quirke Road bus corridor scheme and part-fund the Galway transportation unit. This will be the first QBC west of the Corrib in the city. Work on this scheme commenced in late 2010 and Galway City Council expect it will be completed by the end of this year. It will be of great benefit to commuters in Knocknacarra, Barna and other areas on the western side of Galway city, which I know quite well.

As part of the Department's smarter travel funding programme, funds were provided for a greenway walking and cycle route in Galway city. The Fisheries Field project is situated in the heart of Galway city and will revitalise a former under-utilised canal towpath, providing the missing link in a looped greenway of the city centre along its waterways. The greenway will link NUI Galway's internal greenways to the city centre.

With regard to the feasibility study mentioned by the Deputy, in March 2010, Galway City Council published a report entitled Galway Public Transport Feasibility Study. This report set out an analysis of transport issues in Galway city and proposed an overall transport strategy for the city. The recommendations of the study included reconfiguration of the bus network, development of an east-west bus rapid transit system, traffic management measures, transport integration and other measures. The NTA will work with the city council and the other relevant agencies to deliver some of the key components of the transport report, within the funding envelope that will be made available.

The NTA, which is responsible for the licensing of public bus passenger services nationally, recently undertook two reviews of public transport services in Galway city and county. The Galway city area public transport review assessed the existing public transport network, identified gaps in the network and made recommendations for interventions. These recommendations are being considered by the authority for implementation in early 2012. The Dublin to Galway rail service review assessed the service from a customer, operations and business perspective. These recommendations are also being considered by the authority for implementation in early 2012. Much work is being done as a result of both reviews.

With regard to the possible introduction of a bike sharing scheme in Galway city, an initial feasibility study, which I requested on behalf of the Department, was completed earlier this year by the NTA. This report identified that a scheme could be introduced in Galway city but that capital and ongoing operational costs would arise. I am reviewing this matter. I have organised a number of symposiums in the four cities. Two have been completed. I was in Waterford this morning and in Cork earlier in the week. I will be in Galway next Tuesday.

Notwithstanding the current difficult economic situation, I hope to be in a position to retain a budget for public transport measures in the four regional cities for the next five years. I look forward to advancing a number of the projects I outlined for Galway.

Deputy Michael P. Kitt

I thank the Minister of State for his comprehensive reply. What he said with regard to the symposium to be held next Tuesday is very welcome. He also had positive news on the bike sharing scheme which would be of great benefit in Galway. As the Minister of State probably knows, Galway has good potential for these public transport models and modes. However, we have lost some of our air services from Galway Airport and we cannot afford to lose other forms of transport. Galway railway station is in the centre of the city in Eyre Square, and any development of our rail services would be important because of the great access the location of the station allows.

I hope the Minister of State will keep an eye on the work being done on getting rid of roundabouts. The traffic signals, traffic lights and information generally must be computerised and working so people know exactly the location of traffic blockages in Galway. It is a lovely city but the amount of traffic in the city, particularly in the summer, can create difficulties. There was a particular problem last summer because of roadworks. It would be of great benefit to the tourism industry if we had better traffic signal and traffic light systems in the city.

Deputy Alan Kelly

I thank the Deputy for his comments. The symposium on the bike rental scheme will take place in Galway next Tuesday and I will be in attendance. Such a scheme for Galway is very feasible. The symposium intends to deliver on the commitment in the programme for Government and I worked on it when I was in Galway during national cycle week earlier this year. We believe Galway's size would be a natural fit with such a scheme but we must consider how it will be funded. It would be a great endorsement for the city with regard to tourism and would be of benefit given the volume of tourists that visit. I hope it will be a success and this is certainly our aim.

The changes to the roundabouts are an attempt to facilitate more public transport and additional QBCs and greenways. I take on board the Deputy's comments on the two reviews on bus and rail services. I am monitoring progress and I will work with all the agencies involved to facilitate a broader picture for public transport in the city. I keep a very close eye on this and I will continue to monitor it.

Sports Funding

Deputy Aodhán Ó Ríordáin

I appreciate the opportunity to raise the matter of the horse and greyhound fund in the context of overall sports funding and promised legislation on online gambling. Approximately €30 million a year is raised through a levy on gambling in Ireland. Regardless of what one's bet is placed on, the levy goes directly to the horse and greyhound fund under the terms of the Horse and Greyhound Racing Act 2001. This is despite the fact that only 10% of bets placed relate to these two industries. A total of 80% of the fund goes to the horse racing industry and the vast bulk of this is spent on prize money. The prize money on offer in the Republic of Ireland is 60% higher than that in the UK. Also, the chief executive of Horse Racing Ireland received a pre-tax bonus of €57,000 in 2009.

This year, Irish Sports Council funding amounts to €25.6 million for 57 national governing bodies, 32 local sports partnerships and 18 high performance sports. Given our sporting endeavour, next year's Olympic Games and the fact we all enjoy sports so much, one could argue that in the current recession sport is one of the only things keeping communities alive. It keeps children occupied and families entertained and gives us all a lift. This Friday, everybody's eyes will be turned towards Tallinn hoping the Irish soccer team can go halfway towards qualifying for the European Championships.

The Minister for Justice and Equality indicated a levy on online betting will be introduced in spring next year. We believe this could raise approximately €90 million. Can I have a commitment that it will be spent on sports funding? Does the Minister intend to investigate the current funding criteria for the horse and greyhound industry? Has he asked the industry for indications of how the money is spent? Everyone accepts that the horse racing and greyhound industries are of great benefit, are fantastic employers and act as wonderful tourism magnets. At the same time, can we justify a situation where the vast bulk of the funding goes to prize money and the money spent on prize money is 60% higher here than in UK? I also referred to the figures on bonuses for the chief executive of Horse Racing Ireland.

There is inequity in sports funding, with €25 million going to the Sports Council, which looks after so many national governing bodies, local sports partnerships and high performance sports. At the Olympic Games next year we will talk about the performance of our athletes, how they are funded and how well they have performed. Is it justifiable that €25 million of our taxpayers' money goes to that while €30 million of taxpayers' money goes to the horse and greyhound industry? Is it justifiable that 100% of the levy raised on betting in this country goes to an industry when only 10% of the bets placed relate to that industry? If Paddy and Joe put €5 on Manchester United versus Chelsea, the levy raised on the €5 bet goes to the horse and greyhound industry.

Will the proposed levy on online gambling be funnelled back into the sports industry? Can we be assured it will not go in the same manner to the horse and greyhound industry and that it will be more equitably distributed?

Minister for Finance (Deputy Michael Noonan)

Some of the issues raised by Deputy Ó Ríordáin are more appropriate to the Minister for Agriculture, Food and the Marine. I will reply to the matter in respect of a levy on online gambling and we can have a conversation about the other issues.

I am pleased to take this opportunity to speak on the subject of extending the betting duty to remote betting firms, including betting exchanges that offer their services to consumers in the State. Work has been ongoing in the context of the draft betting (amendment) Bill towards widening the tax base in respect of betting duty with the view to extending the duty to remote bookmakers and betting exchanges. This widening of the base has always been regarded as difficult to do from a legal and practical perspective because online and phone betting services are primarily offered by offshore, out-of-State entities.

The main provisions of the betting (amendment) Bill are to amend the Betting Act 1931 with the objective of bringing remote betting, including betting exchanges, within the existing regulatory framework, including measures to enforce the regulatory framework. It provides that any remote bookmakers or betting exchanges that wish to offer their services to consumers in the State must obtain a licence to do so. A condition of that licence will be to pay betting duty or betting intermediary tax in respect of bets accepted that originated in the State.

Betting duty of 1% on turnover has applied to bets placed with traditional bookmakers since 2006. The 2006 legislative provision also moved the liability for the tax from the punter to the bookmaker, the context for this being an attempt to stem the migration of consumers from traditional bookmakers to remote bookmakers. However, the lowering of the rate to 1%, together with a significant reduction in betting activity due to the downturn in the economy and a growing share of bets being placed over the phone or online with offshore non-taxed entities has seen betting duty receipts fall from a high of €54 million in 2007 to an estimated €30 million this year.

Historically, betting receipts have been tied to funding for horseracing through the horseracing and greyhound fund. This fall in betting receipts has widened the gap between the level of Exchequer funding seen as desirable for the sector. Some €57 million has been provided in 2011, along with the receipts from the betting duty. What is now being proposed will allow us to recapture much of the revenue lost to online or remote outlets. The extension of betting duty to remote bookmakers is necessary to ensure, first, that firms that offer their betting services to residents in the State, regardless of what platform is used, are treated equally in terms of the taxation of that activity and, second, that the extension of the betting duty will widen the tax base and protect the Exchequer from the leakage of potential tax revenue.

The Deputy will be aware that what is being prepared by my Department for the provision of a regulatory and licensing regime to enable the taxation of remote betting is an interim solution, pending the outcome of the major overview on the regulation of all gambling in the State being conducted by the Minister for Justice and Equality. In this regard, in July the Government approved proposals from the Minister for Justice and Equality for the preparation of a comprehensive Bill on gambling, which will include, inter alia, the regulation of remote gambling services, including betting services, and provide for the repeal the Betting Act 1931, as amended.

Consequently, the Finance Act 2011 contained measures to allow for the extension of the betting duty to remote bookmakers and betting exchanges, including respective licence fees, which are based on the level of turnover, and annual commission earnings, respectively. The provisions in the Finance Act 2011 are subject to a ministerial commencement order. The provisions in the Finance Act cannot be commenced, however, until the betting (amendment) Bill, which contains the necessary regulatory and licensing provisions, is enacted.

The level of taxation provided for in the Finance Act is 1% on turnover in respect of remote betting firms, the same level that currently applies to their bricks and mortar counterparts. To take account of the particular business model of betting exchanges, a tax on the commission an exchange charges its customers will apply. This is in line with the level of tax elsewhere.

Enforcement and compliance will be a key aspect to the successful regulation and taxation of remote betting firms. That potential difficulties in that regard should not be underestimated, especially with regard to firms that have no presence in the State. However, it is desirable to make such offshore providers subject to the betting tax.

Deputy Aodhán Ó Ríordáin

A cross-departmental response is required. What is the Minister's instinct in respect of the equity of sports funding? The Minister's response shows that €57 million has been provided this year for the horseracing and greyhound fund. No one wants to question the justification of funding for that industry, which is a wonderful industry and one Ireland is famous for. However, how does the Minister square giving €57 million to that industry in the current crisis, in view of the prize fund amounts, with the €25 million given to the Sports Council, which looks after 57 national governing bodies, 32 local sports partnerships and 18 high performing sports? Does the Minister accept there is an anomaly and will he commit to investigating a way in which we can address it?

Deputy Michael Noonan

These are the figures in the Estimate put together by the previous Government in the last budget in December 2010 for 2011. The Minister for Public Expenditure and Reform, Deputy Brendan Howlin, is negotiating with line Departments on the appropriate amount for each head for next year. In that context, he has had discussions with the Minister for Agriculture, Food and the Marine. I am sure discussions included this issue. My responsibility is simply to enact legislation and it is up to the two other Ministers to decide what the expenditure should be. Up to now, the principle was that whatever was raised by the levy went into the fund. There was a shortfall and, instead of the Estimate of €47 million being raised, the fund dropped to €30 million. That was as a result of what happened in 2006, when the then Minister for Finance reduced the levy from 2% to 1% without applying a new tax to the online aspect of the betting industry which was then taking much of the activity. In the last Finance Bill, my predecessor sought to correct this but the correction was subject to separate legislation being brought in for on-line betting. Those sections in the Finance Bill would be implemented subjected to a ministerial order. The on-line betting Bill has not been produced yet and obviously the new Government will have to have sight of it before the issues of principle and detail in it are ratified. I will try to get things done quickly and, if possible, in advance of the budget.

Uncovered Credit Institutions

Deputy Catherine Murphy

I thank the Ceann Comhairle for selecting this topic for discussion. I have come across a number of business people who are trying to sustain the jobs of those they employ in the face of heavy-handed activity by some banks. I wish to focus in particular on banks that are not covered by the guarantee. What can the Minister do about such practices? I will cite examples from my constituency, although this is happening throughout the sector. I spoke to an individual who employs 40 staff in a business that is in its third generation. On a monthly basis, that business is being hauled in and asked to provide figures. The bank's overriding concern is not how sustainable the business is, but how quickly it can get repayments. Some of these banks have an exit strategy which is dominating how they interact with their customers.

The second example is a business that employs in excess of 120 people. Once again, the bank meets them on a monthly basis. In this case it is a collection of businesses run by several family members, but it is one company. They had been doing very well except that they invested in upgrading their properties. As I said, the bank is not covered by the guarantee. They were hauled in and eventually asked to undertake expensive research on what would improve their margins. They were also asked whether, if they invested in something, it would improve the company's sustainability. The outcome was that an investment of €30,000 in some technology would improve things significantly. When they asked the bank for a loan to make the improvement that the bank itself had sought, the bank refused the loan request. They questioned why they were being asked to make that investment in a report when the bank clearly had no intention of providing the funds.

The problem is that the exit strategy of some banks that are not covered by the guarantee has the potential to put many people out of work. I saw ISME's press statement today and, while I would not agreed with all of ISME's views, one can see from its language the frustration the organisation feels on behalf of its membership. ISME is focusing on the bailed-out institutions, but people who have debts with banks that are not covered by the guarantee are in a much more exposed position.

What kind of powers does the Minister for Finance have to deal with these institutions? How can we get a more sensible arrangement that would give viable businesses more time to repay? Some businesses may lose viability because of the pressure being put on them to pay back what is owed more quickly than is possible. The pressure being put on such people is making the situation unsustainable because they are clearly unable to focus on running and developing their businesses due to the pressure from these banks.

Deputy Michael Noonan

I thank Deputy Catherine Murphy for raising this important issue.

I am concerned that customers are not being treated in an even-handed and fair manner by financial institutions. To that end, the Central Bank has introduced three codes of conduct designed to protect customers, both personal and business, in their dealings with such institutions. These are the consumer protection code, the code of conduct on mortgage arrears, and the code of conduct for businesses lending to small and medium-sized businesses.

The consumer protection code is binding on financial institutions authorised, registered or licensed by the Central Bank. It also applies to the provision by financial institutions of services in the State, which are authorised by an equivalent financial regulator in another EU or EEA member state.

The code contains a number of general principles that financial institutions must adhere to in their dealings with all their customers. The requirements imposed on financial institutions under these general principles include: acting honestly fairly and professionally in the best interests of customers; acting with due skill, care and diligence in the best interests of customers; employing effectively the resources and procedures, systems and control checks that are necessary for compliance with the code; seeking information from the customer relevant to the product or services requested; and making full disclosure of all relevant material information, including all charges in a way that seeks to inform the customer.

The code places more detailed requirements on financial institutions when they are dealing with private consumers. These include limiting the number of times a lending institution may contact a consumer, by phone or otherwise, who is in arrears with his or her payments. For the purposes of the code a "consumer" is defined as: a natural person acting outside his or her business, trade or profession; unincorporated bodies such as partnerships, clubs and trusts; incorporated bodies with an annual turnover of €3 million or less in the previous financial year; or a member of a credit union.

The code was recently revised by the Central Bank following detailed consultation with interested parties. The revised code will come into effect next January. The Central Bank considers that the provisions in the code strike the right balance between requiring lenders to engage with customers to encourage them to deal with arrears and with protecting customers who are already stressed from dealing with financial difficulties.

The next code is the code of conduct on mortgage arrears. This code applies to mortgage lending activities with borrowers in respect of their principal private residence in the State. Compliance with the code is mandatory on all mortgage lenders registered with the Central Bank. Lenders must have in place the required systems and trained staff necessary to support the implementation of the code. The code sets out the framework that lenders must adhere to when dealing with borrowers who are in arrears or are in pre-arrears. For the purposes of the code a "pre-arrears" case arises when the borrower contacts the lender stating that he or she is in danger of getting into financial difficulties and/or is concerned about getting into mortgage arrears.

The third code I have mentioned is the code of conduct for business lending to small and medium enterprises. On 4 November last, the Central Bank published a revised version of the code setting out new requirements for lenders when dealing with SMEs in or facing financial difficulties. The SME code revisions build on the Central Bank's ongoing programme of work for protecting the interests of borrowers in or facing arrears. The introduction of the new provisions in the SME code follows a review of the financial difficulties requirements in the existing SME code as part of the Central Bank's commitments under the EU-IMF work programme.

The revised SME code will come into effect from 1 January 2012. A full review of the SME code will be undertaken in 2012. It will provide key stakeholders, including SMEs and their representatives, with an opportunity to engage further in the operation and effectiveness of the code, including the new requirements relating to the treatment of financial difficulties cases.

The House will be aware of the large number of initiatives taken to ensure SMEs are able to get the credit they need. There is a need to ensure credit is only extended to viable businesses that can meet repayment schedules, and it is normal that some businesses are not able to obtain credit, even in good times.

Deputy Catherine Murphy

The phrase that struck me is: "in the best interests of customers". I fully accept a bank is entitled to seek the repayment of the loan taken out but, in the case I outlined, in respect of which there was a requirement to pay for a report in spite of the business concerned having been hard pressed, there was no obligation on the lender to act in the best interest of the company by facilitating investment in technology. One would wonder why the company was put to the expense. This sort of practice puts more pressure on a small business that is really struggling at the margins.

Are complaints about the code monitored? It is only from complaints that we will determine how the code functions for those who feel they are being dealt with inappropriately by a lending institution. The monitoring arrangements will be really important from this perspective. While we may all have anecdotal experience, general feedback would be very useful.

The Minister said there will be an upgraded code in operation from next January. Will there be an examination in the interim of the experience with the existing code? If experience shows there is a deficiency in the new code, I presume it can be modified.

Deputy Michael Noonan

The reason the Central Bank is revising the existing codes is that, having consulted interested parties, it realised they are inadequate. One is operative since 4 November and the other will be operative from January next. The Central Bank normally puts the relevant documentation on its website. I do not know whether these codes are posted but I assume they are and that the Deputy will be able to gain access to them in detail on the website.

The other issue, which is related to the example the Deputy raised, concerns the reason lending institutions are refusing loans to companies that appear to be viable. A case could be referred to the director of credit control. If there is a refusal, the director will examine all the documentation, without any particular cost to the applicant. If he feels the case is one in which credit should have been extended, he contacts the lending institution involved and advises it of his decision. His decision is not binding but there is an agreement with the credit institutions that they honour his recommendation. To date, they have done so. Approximately one third of the cases the director has examined have been reversed. There is, therefore, potential for reversal. The Deputy may be aware of the website of the office of credit control. This office, rather than the codes of practice, seems to be fitting in the case mentioned by her.

Dáil Éireann díospóireacht - Wednesday, 9 Nov 2011