Ceisteanna ar Sonraíodh Uain Dóibh - Priority Questions

Brexit Preparations

Michael McGrath


1. Deputy Michael McGrath asked the Minister for Finance the status of preparedness for all Brexit scenarios from a customs perspective; the steps being taken by his Department and the agencies under his remit; and if he will make a statement on the matter. [7511/19]

My question relates to Brexit and our preparedness for Brexit for all possible scenarios, particularly from a customs perspective. We had an update from the Minister at the Committee on Budgetary Oversight and from the chairman of the Revenue Commissioners at the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach within the past three weeks. We are now just six weeks away from a potentially cliff-edge hard Brexit. I am looking for an update to the House on the state of preparedness from a customs perspective.

The continued efficient flow of legitimate trade through Ireland's ports and airports is a key priority for the Government. In this regard, the Revenue Commissioners have undertaken significant preparations to date, with work intensifying in recent months. With resource requirements, the Revenue Commissioners determine that an additional 600 staff will be required to manage the impact of Brexit. Those staff are to be deployed on a phased basis up to the end of December 2020. It is estimated that approximately half the staff will be assigned to import and export trade facilitation activities and half to national divisions that will be engaged in trade facilitation, customs control and oversight activities, including at specific trade or case level. I am advised that Revenue has accelerated and expanded their recruitment and training schedules to meet the 29 March deadline, and will deliver the target of 400 additional staff in place by that point. The balancing complement of additional staff will be recruited during the rest of the year.

During 2018, the Revenue Commissioners chaired an interdepartmental group that was established to consider the adequacy of port and airport infrastructure and facilities post Brexit. The group considered both the central case and no-deal scenarios. Infrastructure requirements were necessary at Dublin Port, Rosslare Europort and Dublin Airport. Intensive work is under way to have the infrastructure in place by 29 March and this work is now being led by the Office of Public Works. Significant work has happened to upgrade our IT systems to have advanced systems in place. I am assured by Revenue that their IT systems will have the required capacity to manage the increased transaction levels which are anticipated in a no-deal scenario, and this will be in place by 29 March.

Allied to this work, Revenue have undertaken significant trader engagement by working closely with businesses, trade and representative bodies.

I thank the Minister for his reply. Will he confirm the number of additional staff Revenue has in place right now? He said that by the end of March, 400 staff are expected to be in place but six weeks out from Brexit can he confirm how many of them are in place? There will be a training requirement taking several weeks.

It remains a major concern that so many SMEs are not prepared for Brexit. The chairman of Revenue told us that they estimate some 70,000 Irish SMEs traded with the UK in 2017. We have had survey after survey telling us that many of them, regrettably, have not taken significant steps to prepare for what could be an enormous challenge. Perhaps the Minister could address that point in his response. Will he acknowledge that much of the work with regard to our ports is not significantly advanced, that they are not going to be ready and that this will be the reality as of the end of March?

On the first of the Deputy's three points, I do not have the information available on how many staff have been recruited. I will be able to get that information quickly and I will share it with him.

The second question was on engagement with traders. It is fair to say that many businesses still have a lot of work that needs to be done quickly in the case of a no-deal scenario. The Revenue Commissioners have now engaged with 85,000 traders, including 70,000 businesses in the SME sector.

The Deputy is also concerned about the readiness of our ports and airports in a no-deal scenario. We have done a significant amount to be as ready as we can. The Government made decisions on the planning processes that would be needed to deliver this. We know what needs to be done with regard to Rosslare Port, Dublin Port and Dublin Airport and we are doing all that can be done to ensure the right level of infrastructure is in place to deal with a no-deal risk.

I am aware of the correspondence that Revenue has sent to SMEs setting out the issues involved for them. This is a good opportunity for the Minister to give his perspective as to where things currently stand overall with Brexit. What is his sense of the likelihood of a no-deal scenario? We have discussed our preparedness as a country for that terrible scenario but, as the overall guardian of the economy at this point in time, what is his perspective on the overall likelihood of a deal being done with regard to an extension to Article 50, or the worst of all cases a crash-out Brexit on 29 March? Will he update the House on that issue?

My assessment of the likelihood of a no-deal scenario is that it is a clear and distinct risk we are now planning for. In the past week, I met the Revenue Commissioners, the National Treasury Management Agency, NTMA, and the Central Bank to review where we are from a preparedness point of view, with a particular focus on how we will respond to challenges for the State, to our financial position and financial markets regulation. I am satisfied that all that can be done in those areas has now happened. I am not in a position where I can be a commentator on this, as the Deputy will appreciate, because I am a participant.

I know that all will be done inside the parameters the Government has laid out to look to secure an agreement, but we clearly have a difficult period ahead in seeing whether that agreement can be secured.

EU Directives

Pearse Doherty


2. Deputy Pearse Doherty asked the Minister for Finance if Ireland will oppose the legislative package of the European Commission, which includes the non-performing loans directive. [7513/19]

Some of us are doing our best to defeat the vulture culture at home, but there is a danger that this EU directive will take the disastrous Irish experience and enshrine it as best practice throughout the European Union. My Sinn Féin colleague, Matt Carthy, MEP, has been ringing the alarm bells on this throughout Europe, but where does the Irish Government stand on the European Commission's proposal regarding the non-performing loans directive?

As the Deputy and Mr. Carthy, MEP, will be aware, the legislative package of the Commission and its objectives seek ways in which we can create a safer and more stable and resilient financial sector. Part of this was the implementation of revised capital requirements for banks under the capital requirements directive and the capital requirements regulation. This aspect of the package of measures, known as CRD IV, includes stronger prudential requirements for banks, ensuring they are adequately capitalised and less susceptible to liquidity issues.

Another part was the proposed directive on credit servicers, credit purchasers and the recovery of collateral.

It now appears likely that part of the directive dealing with collateral called "advanced extrajudicial collateral enforcement" will be separated out from the directive and considered at a later point.

The remaining part of the directive under active consideration would impose authorisation requirements on credit servicers similar to those imposed by the consumer protection Act 2015. It also provides that credit purchasers must appoint an authorised credit servicer to service their credit. Unlike the consumer protection Act 2018, it does not require such credit purchasers to be regulated or authorised by the Central Bank.

The directive is being considered at working group level in Brussels and final agreement has not been reached. My officials will represent our legislative stance, whereby the owners of credit, as well as the credit servicing firms, are regulated.

It is fair to say we did not agree with the directive as initially drafted and have sought multiple amendments to it. As we are further down the road with this experience, we are now working hard to secure changes to the proposed text.

The issue of requiring the banks to hold additional capital for losses they may incur is one we support, but I wish to focus on the pro-vulture part of this directive. The best option for the Irish people - indeed, working people throughout Europe - is to throw out this proposal. Failing that, massive change is needed to ensure that any type of consumer protection, or indeed human rights protection, is weaved into it. The proposal represents the EU at its worst. It is simply about the needs of capital, and to hell with the ordinary people. This Parliament supported my No Consent, No Sale Bill, which represents an approach that has consumer protection, not bank protection, at its heart, its core. In Brussels speak, the directive is about establishing a second market for loan sales. In normal speak, this means making it easier and even more attractive for banks to sell mortgages or their loans to the vultures. As Mr. Carthy, MEP, has said, the directive amounts to a second bailout and is the wrong policy.

There is also a question of sovereignty because the directive throws a pro-vulture blanket across Europe. The Minister may be comfortable with this but we in Sinn Féin will resist it.

Finally, and I want the Minister's specific views on this, the proposal will also empower banks to seize customers' collateral through out-of-court recovery mechanisms and will result in borrowers, including mortgage holders, being pursued more aggressively by vulture funds and debt collectors. Is the Minister looking to oppose or seriously amend this?

The only culture I am interested in seeing develop throughout Europe is one that builds on what we have had in Ireland, where we have seen really important and significant progress in dealing with the issues of mortgage arrears and distressed debt, taking account of the huge trauma and difficulty it causes to citizens. Of course, what I will not hear from Deputy Doherty is the fact that we now approach the 20th quarter in which we have seen a decline in mortgage arrears. I will not hear from him that we now have another decrease in the number of accounts that are in arrears, including in long-term arrears.

As for this text and the debate that has taken place on it in ECOFIN and the Eurogroup to date, I have made clear that we need to be very careful that we do not put in place a text that leads to consequences that could be very difficult for those who are in very distressed situations. I am well aware of the experiences we have had in Ireland of this. I have been in the middle of this for the past 18 months and I am working hard through my officials to amend this text to look to get it to a better place.

It is very difficult to take the Minister seriously when he says he is defending Ireland's interest when it comes to this issue because we know from past and very recent experience, and we know today, Valentine's Day, that the Minister is a vulture lover, as indeed are the rest of his Cabinet. He has sat on his hands and facilitated banks in which the Department has the majority shareholding selling off performing loans to the vultures and has thrown them to the mercy of those vultures.

The Minister did not answer the question I asked him. Going into the detail of this package of directives, there is, for example, a proposal for out-of-court recovery mechanisms. This means that vultures would in future be allowed to bypass the court system to repossess more aggressively the homes and properties of those who fall into arrears or who are finding it difficult to pay the entire sums of their mortgages at that point in time. This Minister and this Government have standing in this regard. We have heard previous Ministers say they believe vultures are a good thing. They opposed my legislation, which, thankfully, has passed Second Stage in the Dáil and is now on Committee Stage, and which will allow borrowers to determine themselves whether they support the sale of their loans to the vultures.

Will the Minister answer the specific question I put to him earlier? Is he opposed to the idea of out-of-court recovery mechanisms for vultures to secure collateral without going through the courts system? Is the Government seeking amendments to this? Will the Minister oppose it at European level or continue in his approach as a vulture lover?

Of all the Deputies I thought were going to mention Valentine's Day to me, I did not have Deputy Doherty at the top of the list. His card has not arrived to me yet, nor indeed has a card from anyone else, but the day is but young.

As for all the charges the Deputy has put to me, I point back to the balance we have sought to secure, which the Deputy will never acknowledge, of trying to protect the interest of homeowners in significant difficulty; the fact that we have made great progress in doing this in recent years; the work of the Insolvency Service of Ireland; and the effect of the personal insolvency legislation we have in place. We will never hear any acknowledgement of this from Deputy Doherty. I will acknowledge the concerns or worries that are there but the Deputy will never acknowledge progress that has been made.

To respond to the specific questions the Deputy put to me, I will not outline now what my negotiation approach will be in respect of this text. I am mindful, however, of the points the Deputy has raised because I have seen the difficulties this issue has created in Ireland and I do not want to see the worst difficulties we have faced develop elsewhere. I am very cautious about non-court or non-legal ways of dealing with these issues becoming the norm.

Corporation Tax

Michael McGrath


3. Deputy Michael McGrath asked the Minister for Finance if an independent assessment will be commissioned on the sustainability of Ireland's corporation tax receipts for the period 2020 to 2030, inclusive, in view of the rapid growth in corporation tax receipts and the concentration of those receipts; and if he will make a statement on the matter. [7512/19]

This question asks the Minister to commission a new independent assessment of the sustainability of Ireland's corporation tax receipts. As he well knows, we have had a boom in corporation tax receipts in recent years, but there are very serious questions about the sustainability of those receipts as part of the public finances at this time. I will come back in a moment and speak about the Coffey report of a number of years ago. This is a very direct question. We need to now carry out a new independent assessment to see how secure and stable this vitally important stream of revenue is.

There has been a very significant increase in our corporation tax receipts. This is an area on which there will be growing focus in the next few years because of change that is very likely in the global tax landscape.

Whether it be the work that is taking place in the OECD or changes that we may see as a result of global trade, it will be increasingly important that we form a new view regarding the sustainability of the receipts into the medium term.

On the direct question put by the Deputy, I want to find a way by which we can form a new view relating to the sustainability of these receipts. I need to reflect on how we can do this given the role of the Irish Fiscal Advisory Council and the work done by Mr. Seamus Coffey on this area. I am working on the best way to achieve sustainability in receipts and would welcome the Deputy's views.

It is important to look at what exactly Mr. Coffey said in his report in mid-2017, namely that “although it is impossible to be definitive, and the volatility in receipts will remain, the level-shift increase in Corporation Tax receipts seen in 2015 can be expected to be sustainable over the medium term to 2020.”

In 2015 we collected €6.9 billion in corporation tax receipts, an increase of over €2 billion on the previous year. Since then, the figure has risen to €10.4 billion, therefore receipts have increased by 50% since 2015. Last year we collected 22% more than anticipated, which was nearly €2 billion more than we expected. Receipts were €2.2 billion or 27% more than the previous year. The scale of increase since 2015 is quite spectacular. There must be caveats on any assessment - there will be assumptions, it is difficult to forecast this revenue stream - but there is now a key risk for the public finances in making permanent expenditure commitments on the back of what could prove to be a transitory, volatile and temporary tax receipt.

Mr. Coffey made his comments after a shift in corporation tax yield. As the Deputy will know well, between 2012 and 2014 corporation tax receipts came in at about €4 billion to €4.5 billion. Between 2015 and 2016 they moved between €6.8 billion and €7.3 billion. Across that two year period, there was a structural change in the level of corporation tax receipts. Mr. Coffey formed his views in the aftermath of that shift in tax yield.

To be fair, Deputy Michael McGrath and his party abstained on this unlike other parties which favour broadening the base in abstract but oppose every measure relating to how we do so. That is why we made a change in the VAT rate in the hospitality service sector. It is why we made the changes in stamp duty on commercial property. I am aware of this risk but as I have told the Deputy on other occasions, I have yet to face any Deputy in this House who argues that I should spend less. It is my job to manage that balance. I am aware of the risk and will figure out if there is a way by which we can address the need for the review that the Deputy has made this morning.

I reiterate that receipts in 2018 were 50% higher than in 2015, which was the period examined, which underlines the need for this review. What I hear from the Minister is that he accepts the principle of a review of the sustainability of the corporation tax receipts. I welcome that. It is progress. Fianna Fáil is very happy to engage with the Minister on this issue. The review should be external to the Department of Finance, by which I mean no disrespect to the Minister's officials. We should try to work together to agree on terms of reference. The Minister should consult with bodies such as the ESRI and, indeed, the Irish Fiscal Advisory Council, on the best way to go about this. It does not need to be a very expensive external professional services firm. There is probably expertise in the State's ambit and we should consult with those bodies on precisely what we need to examine. However, I take it that the Minister accepts such a review in principle and I am offering to work with him and others to frame it and work through the best way of conducting such a review as it is a crucial question for the future of our economy and future prudent budgetary management.

I accept, as I have before, the principle of the need to do this. The Deputy raised it with me some weeks ago at the Committee on Finance, Public Expenditure and Reform, and Taoiseach. On the kinds of pressures and challenges that could develop in the coming period, I can see developments which might strengthen our position regarding corporation tax and can see developments that may also challenge that. On things that might benefit our position relating to corporation tax in the future, I can see that the policy stability maintained by my party and that of Deputy McGrath around rate and the ability to determine the debate and our determination to protect that amidst all the other changes now taking place in corporate tax policy in other countries could offer the potential for the progress we have made in corporation tax receipts being sustained into the future. As against that, in recent years we have seen a very strong performance in key corporate sectors in the global economy. Some of those are now experiencing challenges and we can see a shift in the tone of global trade. For all of those reasons, particularly when 2020 will be shortly upon us, I think we should examine the objective to which the Deputy referred and I will be happy to work with him on how best to do this.

Departmental Consultations

Mattie McGrath


4. Deputy Mattie McGrath asked the Minister for Finance the expenditure details for all consultancy or audit services provided to his Department by a company (details supplied) from 2015 to 2018 and to date in 2019; and if he will make a statement on the matter. [7562/19]

There is great concern, and growing awareness, at the huge sums paid by Government Departments to outside firms. This question relates to PricewaterhouseCooper, PwC. I am asking the Minister to state how much that company has received from the Minister's Department between 2015 and 2018 and this year to date.

My Department engaged PricewaterhouseCooper, PWC, on one occasion between 2015 up to and including today’s date in 2019. The gross cost of this engagement was €73,031.25.

The purpose of the engagement was to carry out a money laundering and terrorist financing national risk assessment. The aim of this assessment was to identify, understand and assess the money laundering and terrorist financing risks faced by Ireland. The findings of the national risk assessment have been used to inform the development and enhancement of Ireland’s anti-money laundering and counter terrorist financing framework.

My Department publishes details of consultancy expenditure on its website on a quarterly basis.

Last year, before any of the recent farce relating to the national children's hospital came to full public prominence, I submitted a parliamentary question to the Minister and his other Department, the Department of Public Expenditure and Reform. I was genuinely surprised to find that in one year alone, 2018, the Department spent €3.5 million on consultancy firms. According to that answer, PwC received €44,500 and now the Minister is telling me that it is €73,000. There is a disparity when it comes to getting the correct answer to parliamentary questions. The Minister said it was €73,000, but the previous answer said it was €44,000, and that figure was for what the Department described as operational support and strategic advisory consultancy. Will the Minister accept that when the public hears these kinds of sums being thrown around for private consultancy firms it does nothing to persuade people that any meaningful value for money takes place at all?

Will the Minister also explain why there appears to be a huge overlap in relation to work being undertaken by different consultancy firms, in case the Minister thinks that I am picking on PwC, which I am not? For example, last year, the Department of Public Expenditure and Reform paid Gartner €182,000 for advisory services. It also paid Horizon Energy €230,000. What is all this money for? What is the Department getting for this sort of money?

I do not think that the Deputy even listened to my answer.

I stood up and said that we have employed this company once between 2015 and today. This company has been employed for us on a single occasion. Instead the Deputy stands up and bases an answer on what he would like to hear-----

-----rather than the information I gave the Deputy. This company, across the time period to which I was asked to refer, has been used on a single occasion by my Department.

The Deputy will stand up day after day and lambaste the ability and competence of my officials to perform their work. When they seek to gain external support for the delivery of their duties, he lambastes that too. I reiterate my answer that the Deputy either ignored or chose not to hear a moment ago, namely, that the company was employed on one occasion by my Department in the period to which he referred.

The Minister is the one who is lambasting. External firms are being paid and he stated that his Departments are not able to carry out a review. Surely, one of his officials could do it. Can they not add? In reply to a parliamentary question last year, the Minister informed me that it cost €44,500, yet he is now saying it was approximately €73,000. There is a disparity of €30,000. Who is codding whom? The Department has spin doctors and everything else. I am not seeking any answers but rather the facts. I am quoting from a reply to a parliamentary question. There is an overlap of companies among multiple Departments which the Minister has not explained. Thankfully, the public are able to watch and scrutinise the debate.

Will the Minister indicate whether PwC has played any other consulting roles in respect of the children's hospital apart from the review which is under way and which costs €450,000? PwC has been engaged but that was not included in the Minister's reply. I am sure that the price has been agreed but given that the terms of reference have been extended, will the cost increase? The firm has no expertise in construction or what we wish to find out. It is merely papering over the cracks. The Minister is the one who is lambasting and covering things up through the use of spin doctors and everything else.

When the Deputy does not like my reply to him, he makes up what he thinks I said and uses that as the basis of his answer. At what point did I lambaste the competency of my officials in my answer? I made the point that the Deputy is the one who lambastes and that when we need specialist help in certain areas, we must acquire that help for the best value available.

I reiterate my answer to the Deputy, although I accept that he is disappointed by it. We have employed the company in question once and I have told the Deputy the cost. If there is a discrepancy between the answer we gave in the past and the answer I am giving now, it could be driven by two factors, namely, the possible difference between the period to which the answer refers and the period the Deputy raised, or the Deputy might be referring to another Department. Either way, if there is a gap between the answers, I will reconcile them and supply the information to the House.

There is a gap between the figures of €44,500 and €73,000. It is a lot of money to ordinary Joe Soaps, although it might not be a lot to the Minister, his plethora of advisers or his competent officials. The Department employs external agencies and officials, but the Minister has provided alarming sums. He said the Department employed PwC only once. If he had said it employed the firm twice, perhaps he would have wriggle room. He stated that it was once in that period, however, and quoted a figure of €73,000, yet I was given a figure of €44,500. That is real money to ordinary taxpayers. This is an example of the Minister's flippant answers and the activities of the spin doctors the Department employs to try to pull the wool over people's eyes. We want transparency, openness and accountability but there is not a shred of that in the Department, as has been blatantly proven over and over again, not least in the case of the children's hospital fiasco.

I am not here to lambaste people; I am here for the truth. I represent the people of County Tipperary and the ordinary people throughout the country who struggle every day to pay their taxes. Meanwhile, the Government spends money like confetti at a wedding or snuff at a wake, as though it is all right because it can be blown away. Before the debate, I attended a meeting of the Joint Committee on Business, Enterprise and Innovation, which is considering scheduling time next week to debate the Revised Estimates thanks to this mess, or black hole, of a children's hospital. I am not accusing anyone of anything. Rather, I am seeking straight answers from the Minister but I am not getting them.

The Deputy rarely stands up without making an accusation against somebody. To which Department is he referring?

The Minister's Departments. He has two of them but perhaps he cannot manage them both.

Which Department? The Deputy should answer the question.

The Minister should answer the question. I have asked my question. I refer to the Minister's Departments.

Am I correct in stating that the Deputy is referring to the Department of Public Expenditure and Reform?

I refer to the Minister's Departments.

Even this brief exchange might provide an explanation for the two different figures. The Deputy may be referring to another Department and not the Department of Finance. Notwithstanding the Deputy's references to confetti and snuff, I also represent and serve ordinary people and I am aware of the concerns they have about the use of taxpayers' money.

As stated, the Deputy will be disappointed to hear that the company has been employed only once by us and that it was for good work that needed to be done. If there is any difference between the figures I previously shared with the Deputy and the current figures, I will explain the reason to the House. I thank the Deputy for bringing it to my attention, even though I suspect he might be referring to another Department.