I wish everybody an enjoyable and productive day. Looking at the company I am in this morning, I am sure Deputies will stick to the time limits and I will have no difficulties.
Ceisteanna ar Sonraíodh Uain Dóibh - Priority Questions
23. Deputy Michael McGrath asked the Minister for Finance his plans to manage the risk posed to the public finances and the wider economy in view of the Irish Fiscal Advisory Council's recent warning that our dependence on corporation tax receipts means we are over-reliant on this volatile stream of income; and if he will make a statement on the matter. [25705/19]
In its recent report on corporation tax, the Irish Fiscal Advisory Council, IFAC, highlighted the volatile nature of corporation tax receipts. There has been a massive increase in the quantum of such receipts in recent years. Our dependence on this level of corporation tax receipts is posing a significant risk to the public finances and the wider economy. What are the Minister's plans to manage that risk?
I am not complacent regarding the risks posed by the increasing share of corporation tax within overall taxation revenues. Along with officials in the Department of Finance, I have identified this risk on several occasions, most recently in the April stability programme update and the Department's annual taxation report. The sharp increase in corporation tax is a notable development in recent years. There are a number of other concerns, including the concentration of receipts within a smaller group of firms. A shock to the corporate tax base cannot be discounted, particularly in light of change and uncertainty in the international policy environment. Sector-specific shocks could reduce corporate profitability with adverse implications for future corporation tax receipts. As I have outlined previously, it is imperative that we ensure increases in public expenditure, particularly current expenditure, are sustainable and are not financed by potentially transient revenue streams. I would like to mention four steps we have taken in this context. A contribution of €500 million is being made to the rainy day fund that has been set up for 2019. We made an effort in this year's budget to broaden our tax base by reversing the temporary tax reduction in the hospitality and service sector. I have an ongoing commitment to seeking to find ways of reducing our national debt via windfall gains. We are aiming to deliver a surplus of 0.2% of our national income this year, and I hope to move to a higher surplus next year. The question of how we can manage this better in the future is an ongoing policy matter. In next week's summer economic statement, I will look at analysing the level of risk further and I will propose options to the Oireachtas for debate across the year regarding how this issue can be managed on a year-to-year basis.
I thank the Minister for his reply, most of which entailed an outline from his perspective of what has been done to date. I would like to know what new measures he intends to implement in light of the IFAC report. He has said he will outline some of his options in next week's summer economic statement. Can he give us a sense of what he is considering? Can he give a sense of his response to IFAC's key recommendation in respect of corporation tax, which was that a prudence account should be established and used to warehouse excess corporation tax receipts above a certain threshold to enable such receipts to be passed to the rainy day fund or used to pay down debt?
Does the Minister have a view on the council's observation that somewhere between €3 billion to €6 billion of the €10.4 billion in receipts last year from corporation tax could be considered "excess" or outside the normal economic cycle? What is the view of the Minister and his Department on that quite startling conclusion?
In acknowledging what we need to do and given the scale of risk that could develop, it is always worthwhile saying what we have already done. There are two different parts to what I am going to do in further dealing with the matter. First, we will put in place a process that the Deputy in particular has called for to see if we can form a better view regarding the sustainability of current receipts. I emphasise that this will be particularly complex in light of the discussions under way in the Organisation for Economic Co-operation and Development, OECD, regarding the global environment for this tax. Second, I will be looking at benchmarks for how current expenditure can be better managed in future outside the existing fiscal rules proposed by the European Union. Across the coming years, we need to have different benchmarks for how expenditure is managed. I am examining the so-called prudence account but I must establish the benefits of creating a new account or a subset of the rainy day fund, given that the intention of the rainy day fund is to have a location for excess receipts in the first place.
Will the Minister respond to the fiscal council's conclusion on the amount of receipts that could be considered excess? It does not matter which of the three spokespersons on finance is sitting in the Minister's chair when the Irish Fiscal Advisory Council has made the assertion that somewhere approaching 57% of last year's corporation tax receipts could be considered excess. If those receipts disappear, we will have a very large problem because of the huge hole in public finances. What is the early assessment from the Minister and his Department on the conclusion? Is the council accurate in stating that quantum of receipts collected last year cannot be relied on, in essence?
I welcome the Minister's comments on having some form of a review on the sustainability of receipts. It is a key point and I have called for it. Has the Minister carried out any early assessment of the likely impact on our receipts of the emerging changes from the international tax environment, particularly the changes the OECD is now likely to propose that will have an impact on Ireland?
The council indicates that between €3 billion and €6 billion could be considered "excess" and this is the reason I want to put in place a new process to form a view on the sustainability of current receipts. This leads to the Deputy's point on whether we have been able to form a view on the risk that could be posed to our receipts due to the different proposals being considered by the OECD. It is currently too early in the process of the work being done by the OECD to be able to provide an answer on that. We will be in a better place to form a view on the matter by the middle of next year. There are two proposed pillars, one of which relates to a minimum effective global tax rate, with the other relating to the allocation of taxing rights. Where we stand from a revenue perspective will depend on the detail of those two proposals and if a mixture of both is delivered. At this point it is too early to give a view on the trade-offs between increased tax revenue being generated based on where value is located versus the risk of any taxing rights moving to larger markets.
24. Deputy Pearse Doherty asked the Minister for Finance his plans to increase the threshold for entry to the higher rate of tax to €50,000; the estimated cost of this measure; and if he will make a statement on the matter. [25823/19]
It is now six months since the Taoiseach at the Fine Gael Ard-Fheis pledged to increase the threshold to €50,000 for people entering the higher rate of tax. For a couple this would be €100,000. The package is estimated to cost anywhere between €2.3 billion and €3 billion, and the Taoiseach has committed to doing it within five years. Given the discussion we have just had on the volatility and vulnerability of corporation tax receipts and climate change agenda, is the Minister for Finance still certain that type of commitment to deliver this over five years can be fulfilled? The climate change report is uncosted but it will need significant spending. Will the process of delivering on the commitment begin in this year's budget?
Ireland has one of the most progressive personal income tax systems in the world, which plays a crucial role in the process of income redistribution along with our social welfare system. Our redistributive tax system has been acknowledged internationally by both the International Monetary Fund and the OECD. However, it is the Government’s position that workers start to pay too high a rate of income tax at too low an income level. We cannot hope to remain competitive if someone on a relatively low income and who decides to work a few hours overtime has nearly half that extra money taken in tax. Therefore, in last year’s budget I once again increased the entry point to the higher rate of income tax for all earners by €750 and reduced the third rate of universal social charge from 4.75% to 4.5%. The impact of these changes is that the top marginal rate on incomes up to €70,000 has been reduced to 48.5% and fewer people on incomes around the national average will have any income subject to the 40% rate of income tax. This is steady progress in reducing the income tax burden for low and middle income earners.
As I have stated on a number of occasions, I plan to continue this progress in the coming years within available resources by concentrating on increasing the level at which workers pay the higher rate of income tax. An increase to the standard rate cut-off point would cost €460 million per annum over five years. The implementation of such a change would need to be delivered year on year to take account of our economy's performance. This would have positive consequences for businesses and jobs in the domestic economy and I am committed to measures that positively benefit workers while also keeping the tax base broad.
I thank the Minister for his answer but it is unclear so I will reiterate my question. A clear commitment was given by the Taoiseach in front of all the television cameras, although I am not sure if he discussed it with the Minister before making it to the people watching at home. The commitment is clear and it is to increase the threshold to €50,000 within five years. It would mean that what the Minister did in last year's budget would need to accelerate significantly each year over the next five years. As has been pointed out, this would equate to approximately €2.5 billion of tax forgone to the State when we all know there is much pressure on public services, housing, health areas like home care packages and the cost of childcare and insurance, etc. There is no doubt that tax cuts would benefit some people but there are other pressures. In addition, the Irish Fiscal Advisory Council has indicated that between €3 billion and €6 billion cannot be relied on and it is above economic activity in the State in the medium term. A serious plan has been made out on the climate change agenda with no costing but it will no doubt require a serious investment in the next and every other budget if we are to meet targets.
Will the Minister indicate if the commitment is as clear as the Taoiseach outlined to increase the threshold to €50,000 within five years? For a married couple the threshold would be up to €100,000. Does the Minister believe it is affordable and we can give those kinds of tax cuts?
I reaffirm what the Taoiseach said, which is that if the economy continues to grow, the resources will be there to make a change like that. We can look at the funding generated each year through the non-indexation of the tax code, with approximately €500 million made available to do tax reform and reduction. As the Deputy knows, we are looking to move the tax thresholds in line with income growth.
What happens in the approaching budget will depend on the negotiations I have with Deputy Michael McGrath and Fianna Fáil. Up to this point we have been able to make progress on changes in the universal social charge and the standard rate cut-off point, both of which have been progressive and are affordable.
I can answer the Deputy's question. The Taoiseach made clear that as long as resources are available within the economy, and our economy is growing, it is possible to make progress towards reducing the standard rate cut-off point every year.
We are all familiar with the election posters about abolishing the USC but it has not been abolished. The thresholds have been increased and the rates cut but it still brings in an amount in excess of €4 billion. It has not been abolished.
The reality is that if the Government goes ahead with this type of package, which amounts to approximately €3 billion over a five-year period, it will be taking resources from other areas which badly need them. The Government has plans for economic growth in the next year. Even when we park the potential consequences of Brexit and the issues of climate change, the money is not there to provide for the types of services that we need. Given the demands that exist for home care packages, infrastructure development and other needs in our economy, that type of tax-cutting agenda in a single area is simply not possible within a five-year period. Can the Minister clarify whether he was involved in the discussions before the Taoiseach made that announcement?
I was involved in all of the discussions about this, as one would expect me to be on any of the discussions about income tax policy or broader tax policy. The Deputy is correct to say that there are many competing pressures on the Exchequer currently but in many areas of public expenditure levels of expenditure and recruitment are equal to those in the pre-crisis period and in some case ahead of those levels. When I look at the trends within our economy I see that if we do not move our tax structure in line with income growth, a situation will develop whereby more low-income earners will end up paying the higher rate of income tax. This is why I believe this is a targeted, focused change. Resources are available and I will be taking account of Brexit. I will talk to the House about a disorderly Brexit and other scenarios next week. I restate that all of our commitments from a tax point of view and otherwise depend on an economy that is performing well, a degree of economic growth and, as long as that is there, I believe it is possible, year after year, to make progress on this objective.
25. Deputy Michael McGrath asked the Minister for Finance the priority measures he is putting in place to tackle the growing insurance crisis facing businesses, charities, community groups, sporting clubs and others nationally; and if he will make a statement on the matter. [25706/19]
This question relates to the ongoing insurance crisis. I do not need to tell the Minister or the Minister of State about the impact that rising insurance costs are having on businesses throughout this country. It is not only businesses that are affected but sports clubs, community groups, festivals and a whole range of other organisations nationwide. With just three weeks left after this one before the end of the current Dáil session, what are the priority measures that the Government intends to get over the line with a view to bringing about improvements and changes to the environment for insurance in this country?
I thank the Deputy for his question. As he is aware, going back to the cost of insurance motor report in 2017 and the report on employer's liability and public liability insurance in 2018, the pathways are clear for what we must do. Last year, we did the Insurance (Amendment) Bill, the Personal Injuries Assessment Board (Amendment) Bill and the national claims information database.
I assume the Deputy's question is addressed to the Judicial Council Bill. It will be before the Seanad tomorrow. I hope and expect it will conclude all Stages in the Seanad tomorrow and come back before the Dáil next week so this crucial piece of legislation can be concluded before the end of the session. I have asked for an early signature motion so that the Judicial Council can be formed. The crucial piece of this will be the establishment of a personal injury committee from the Judiciary to review the guidelines and the levels of awards.
I hope the Judiciary will do its work in a quick and efficient manner. The Personal Injuries Commission report suggested that the levels of award in Ireland are out of kilter with those in England and Wales. That report stated that awards here are 4.4 times the level they are in England and Wales. The Department of Finance has done work that shows the level of awards in Ireland is five times those in England and Wales. The Personal Injuries Assessment Board has done work which shows the level of awards here is four times that in England and Wales. Ireland's awards are between 4.4 and five times as large as those in England and Wales.
The Law Reform Commission has started doing important work on the hard question of whether or not this House has the authority to cap or limit awards. I do not have the answer yet but we will examine the matter after the report of the Law Reform Commission.
I thank the Minister of State for his reply. It seems that the Government has pinned all its hopes on the Judicial Council as the best vehicle to revise downwards the award levels. I must ask what if it does not work. I welcome the fact that the Bill is likely to pass both Houses by the summer recess, that is important, but beyond that it will be passed to the Judiciary and there is no timeline at that end. The Minister of State said he hopes the process will be concluded later this year. It may not be. We have not heard that from the Judiciary.
What if the Bill does not work? What if the council does not revise award levels downwards to bring us into line with other international comparators in the manner the Minister of State has described? That is a concern. What if the Bill is drawn up in a manner that is too loose, meaning that judges must have regard to these new guidelines but are not bound by them? What are the alternative options? What are options B and C to deal with this? We have a real crisis. Businesses are closing. We have hitched our wagon to the Judicial Council Bill but, once it passes through this House, we will have no further control over it and that is a real concern.
I share the Deputy's concern. We have hitched our wagon to this pathway because it was agreed with the Personal Injuries Commission and former President of the High Court, Mr. Justice Nicholas Kearns. Everybody has been, and is, on board.
The Deputy's point is correct. The schedule I have highlighted and outlined in my timeline and I cannot ensure implementation within it. If we can do our work quickly and efficiently, I see no reason why the Judiciary cannot do likewise. The Law Reform Commission will then report and we can liaise with the Attorney General based on that information.
Option C is that we may require a referendum to give this House the authority to cap awards. That is not a pathway I am eager to travel. The best and correct pathway is the one that has been agreed with the Judiciary. It is my timeline that I am highlighting. It will be a matter for the Judiciary. I do not want a clash between the Oireachtas and Judiciary because I do not see the purpose of that. Too much time and energy has been spent in such a manner rather than following what we believe is the correct pathway. That pathway is through the Judicial Council Bill, the establishment of a committee and a review of the guidelines in line with the Personal Injuries Commission report which took into consideration Court of Appeal awards and those in the UK.
I welcome the candour and openness of the Minister of State on the issue. From a Fianna Fáil perspective, it is important that the option of a referendum is kept on the table. We are going down this road of the Judicial Council Bill and we all hope it will result in the change that we believe necessary but, if it does not, we must look at alternatives. We will wait to see what the Law Reform Commission comes back with but there is also the option of a referendum which is a live option that should be left on the table.
On a related issue, I ask the Minister of State for his view on the fact that Insurance Ireland, a representative body, continues essentially to own and control some key databases, particularly Insurance Link, which contains much important, market-sensitive data about claims history which is used by industry participants to cross-check information that has been provided to them by policy holders and claimants. I ask that notwithstanding and without prejudice to the European Commission investigation which is ongoing and will take an undefined period of time. Is it appropriate, in the view of the Minister of State, that the industry owns and controls data that are vital to having a healthy, competitive insurance industry in this country? It is beyond the time when the State should take control of such data. I would welcome the views of the Minister of State on the issue.
I want to highlight that I do not think a referendum is the correct direction of travel; it is the last option rather than something we are eager to do.
As the Deputy is aware, the national claims information database is the correct structure to put the spotlight on the data for the insurance sector. With the change to the Solvency II rules, we did not have the data. Insurance Link is owned by the insurance sector and the sector provides the information to Insurance Ireland, which is then provided with a cross-referencing of companies within the structure. I want to see us moving from the national claims information database for motor insurance and getting the information out as quickly as possible. We need to move immediately to employers' liability and public liability, which is the correct structure. The information is held by the Central Bank-----
That is at the aggregate level. Are the data the industry controls specific to individual claimants?
I note the Deputy's question. The challenge we have with the GDPR is over who owns the data and how they are shared. I am not sure that it is appropriate for anybody else to receive the data.
I have to move on. I do not like interrupting anybody but if I do not hold Members to the time, other people will not get an opportunity to put their questions.
VAT Rate Increases
Following another great performance on TV3 last night, this question is from Deputy Michael Healy-Rae. The Deputy has 30 seconds.
26. Deputy Michael Healy-Rae asked the Minister for Finance if a survey will be undertaken of the hospitality sector before a decision is made on retaining the 13% VAT rate in view of the effect on business to date. [25794/19]
The Government made a decision to increase VAT on the hospitality sector and said it would review it and that it would work with and engage with the organisations representing all aspects of the tourism sector. In light of statistics and what we know of the effect of the rate, can the Minister look at the situation again and keep the promise he made?
The second reduced 9% VAT rate was introduced on a temporary basis as part of the jobs initiative from July 2011 to December 2013 and was aimed at boosting tourism and the creation of additional jobs in that sector. The rate was designed to be temporary, but was maintained in subsequent budgets. In 2016, in A Programme for a Partnership Government, we committed to maintaining the 9% VAT rate. I decided in budget 2018 not to make any change to the 9% VAT rate. However, I accepted that the rate must be subject to analysis. In this context, I asked my Department to undertake a comprehensive study of all aspects of the 9% VAT rate ahead of budget 2019.
The review in question was published by my Department in July 2018, in order to better inform my decision-making.
The review found that tourism expenditure was more sensitive to income growth and the economic cycle than price changes. The economy is currently performing well, with high levels of employment and strong demand in the tourism sector. This positive economic outlook means that the income channel of demand is likely to ensure that economic activity within the sector remains strong.
Furthermore, the Revenue Commissioners published a report on the 9% VAT rate in June 2018 which analyses the output and employment impact of the 9% VAT rate using Revenue data. The analysis found an estimated increase in employment of, on average, 1.8 employees for each firm benefiting from the reduced rate. However, beyond the short term, they were unable to distinguish the impact of the rate on employment from the impact of other factors in the economy.
Given the impact of an increase in the VAT rate on the hospitality sector has only recently been reviewed, there does not seem to currently be a case for reviewing the impact of the increase. I will continue to engage with any sectors of our economy and Members of the Oireachtas on issues about which they have a concern.
I will relate the experiences of people on the ground. I come from the county that is probably the tourism capital of Ireland if not the world and Killarney is the tourism capital of Europe if not the world. Places of note in my county include Kenmare, Dingle and the entire Ring of Kerry. All parts of Kerry are deeply involved in tourism and the hospitality sector. On behalf of those places, I wish to highlight the fact that there are businesses that are struggling. In a great town such as Killarney, the figures are back, the businesses are back and the revenues are back. However, family-owned businesses throughout the Ring of Kerry, from the Maharees to Sneem, Castlecove, Waterville and Cahirsiveen, are struggling because they borrowed money to improve their businesses and now they are saying that this rate is having a detrimental effect on them. They are asking the Minister to keep his commitment and look at the matter again.
The Minister may also have a capital of tourism he would like to promote.
I fear that singling out one part of the country would mean I will have to name them all. The recent Central Statistics Office figures for overseas visitors to Ireland show that there was an increase of 6% in the first quarter of this year. In the first 12 weeks of the year, we had more tourists coming to our country than a year ago. I accept the huge effort that goes into running tourism businesses and delivering services across the country but we now have companies, big and small, that are evaluating their performances against the level of performance of a year ago, which was at an all-time high. If there is a decline in business performance against a base that was at an all-time high and the expectation is created that we have to change tax measures in response, we will end up with tax policies that contribute to our economy overheating. If that happens again, the people who will pay the price will be the businesses to which the Deputy refers.
At the end of May, tax from VAT was €392 million ahead of where it was a year ago, which shows that consumption is being maintained, despite the fact that the rate has gone up.
My argument against what the Minister said is factual and soundly based. He stated that previous Ministers reduced the VAT rate as a temporary measure to help the struggling sector at that time. Instead of the Minister indicating that it is a permanent increase and cannot be revisited, I am holding him to account for what he said in this House previously. We devoted 74 days to formulating the programme for Government. I was with the Minister throughout that process. One of the commitments made was to the tourism sector. The Minister's then party leader was deeply and sincerely committed to the sector. I am asking the Minister, the Taoiseach and their Government colleagues to honour their commitment to tourism and to help people, in County Kerry and throughout the country, by saying that they will keep this under scrutiny and are not saying "No" to reducing it at some point.
I acknowledge that the Deputy was in the room for 74 days but, ultimately, he decided not to join.
That is not factual.
It is one thing acknowledging how much time he spent in the room but he decided not to join.
The Minister must not say that on the record of the Dáil. He has to withdraw it.
I am not sure what I said to bring the Deputy to his feet in this way. I am simply pointing to a fact. He decided not to join.
Deputy, please sit down.
I will not let the Minister tell a lie on the record of the Dáil.
Deputy, please sit down.
The Minister cannot tell a lie on the record of the Dáil.
To respond to the question the Deputy put to me-----
Please withdraw the comment.
Sit down, Deputy.
The Minister has to withdraw the comment.
I will give the Minister one minute to withdraw the allegation.
I ask the Deputy to resume his seat. He is wasting other people's time.
I will sit down to give the Minister the chance to withdraw an untrue allegation.
Resume your seat, Deputy.
Withdraw it. I will not allow the Minister to tell a lie on the record of the Dáil. How dare he?
The Deputy should sit down and address the Chair.
I am sorry but-----
No, sit down.
The Minister should withdraw the lie that he stated.
The Deputy is taking valuable time from other Deputies. I ask the Minister to continue.
He should take back the lie.
It is not Deputy Michael Healy-Rae's role to decide what rules I obey. That is the role of the Chair. The Deputy does not set the rules of this House. They are laid down in Standing Orders and overseen by the occupant of the Chair. Given that a moment ago, the Deputy praised the argument that we should stand by the facts, I simply outlined two facts. The Deputy participated in the Government negotiations and he is not a member of the Government. Before I go on to further address the issue he raised regarding VAT, I will put a point to him. I understand that he is a successful businessperson who understands the demands of the balance sheet of a company. If he runs a promotion that is very successful and he sells more of that good at a lower promoted price than he thought he would, would he decide to keep that promotion running forever? That is a principle that every hotel operator or bed and breakfast in the country understands, as I am sure the Deputy does as a small business owner. That same insight applies to how we must manage our national finances. We ended up with a tax base that was too small to fund the needs of our State because that insight was not adhered to. Deputies Michael McGrath and Pearse Doherty and other speakers raised potential risks with regard to corporation tax and Brexit. We cannot recognise the risks and, at the same time, lack the courage to do something about them.
We will move on.
The Minister made an allegation and I am asking him to-----
I ask the Deputy to resume his seat or I will suspend the House.
I will not let the Minister get away with telling a lie.
The Deputy cannot accuse-----
The Minister stated something as if it was a fact.
Will the Deputy allow me to speak?
The Acting Chairman is not providing me with a chance to respond.
The Deputy should resume his seat.
How can he tell a lie on the record of the Dáil? Can anyone come into this House and tell a lie? He said something as if it was a fact when it was not.
I will have to suspend the House if the Deputy does not resume his seat.
I am very sorry but I want the Minister to withdraw the lie.
There is no point in being sorry.
The Minister said something as if it was a fact when it is not true.
Will the Deputy resume his seat?
I am very sorry but will the Minister withdraw the lie? He cannot say something that is untrue.
There is no point in saying sorry to me. Will the Deputy resume his seat?
What did the Minister say?
I will tell the Deputy exactly what he said. He said that I chose not to participate in Government. One cannot participate if one is not asked to do so. The Minister can understand that. It is like someone asking a girl out to dance. If she says "No", he cannot force her to go to a dance with him. I was not asked to the dance so how can the Minister come in here and say something as if it was a fact and think that he will get away with it? That is not fair, honest or decent. The Minister said something that is a lie. It is not true and I am not going to-----
Will the Deputy resume his seat?
-----have an allegation made about me as if I did something wrong. I ask the Minister on the record of the House to withdraw the lie that he put before the House.
I am left with no option but to suspend the House.
We will move on to-----
I would like to make a point of clarification for the Minister for Finance and the House. During the negotiations on the programme for Government, the then leader of the Fine Gael Party, Deputy Enda Kenny, called me into a room in which-----
We must move on.
I am making a clarification. In that room, the Fine Gael leader stated to me that it would be good if I were a Minister in a future Government that he would put together. I said that he was not in a position to do anything like that as he had not yet spoken to Fianna Fáil, and that it could be discussed at another time. The programme for Government was then developed and the Minister was involved in all of that. Deputy Enda Kenny spoke to Fianna Fáil and the confidence and supply agreement was put together. The incoming Taoiseach never picked up the phone to ring me when he was appointing his Ministers and Ministers of State. As I have said on Radio Kerry, I never got a phone call. That is the truth.
I am moving on.
I am just clarifying a matter. That is the truth and the Minister's statement was factually incorrect.
I have allowed the Deputy to clarify the matter. Deputy Catherine Murphy is waiting to ask her question.
That is all I wanted to say. I appreciate the opportunity to clarify and I apologise to my colleagues for the delay this has caused. The Acting Chairman cannot allow the Minister to tell a lie.
I am moving on to Question No. 27. I apologise to Deputy Catherine Murphy for the delay.
27. Deputy Catherine Murphy asked the Minister for Finance his plans to establish a committee of inspection in respect of IBRC; his plans to include on that committee independent non-departmental officials and external persons with the appropriate expertise; if he envisages a role for the Comptroller and Auditor General in this process; and if he will make a statement on the matter. [25813/19]
This question relates to the Irish Bank Resolution Corporation, IBRC, the combination of Anglo Irish Bank and Irish Nationwide Building Society, and how the special liquidation is supervised. It is supervised in the Department of Finance and I am seeking the Minister's views on establishing a committee of inspection into IBRC to increase transparency and accountability.
It is important for me to set out the role of a committee of inspection in an ordinary liquidation and the legislative and factual context of the special liquidation of IBRC. The Irish Bank Resolution Corporation Act of 2013 specifically disapplied a number of provisions in the Companies Act 1963 insofar as they applied to the liquidation of IBRC, including those relating to committees of inspection. In the liquidation of IBRC, the Act conferred supervision of the liquidation to the Minister for Finance and provided the Minister with special powers in overseeing the liquidation of IBRC. In an ordinary liquidation, a committee of inspection grants the creditors of the company oversight of the liquidation as well as a say in the decisions of a liquidator regarding the liquidation. Under the Companies Act, there is no role for non-creditors of a company to participate in a committee of inspection. In the case of IBRC, at the point of liquidation the make-up of a committee of inspection would likely have included representatives of the National Treasury Management Agency, NTMA, the National Asset Management Agency, NAMA, and other unsecured creditors of the bank, potentially including employees and subordinated bondholders. It is important to note that the special liquidators have recently announced that all outstanding subordinated unsecured creditor claims and unsecured creditor interest claims will be paid in full. As such, the expectation is that the only remaining creditor in the liquidation of IBRC will be the State, as the sole shareholder of the entity. Furthermore, the option remains open to any creditor of IBRC to apply to the High Court to determine any question arising in the winding up of IBRC, including the manner in which liquidations have occurred. I have been advised that no such determinations have been made.
I remember the night in February 2013, as will the Minister, when we were presented with a Bill at 10 o'clock or 11 o'clock at night. We hardly had time to read it and it passed all Stages by 5 o'clock the following morning. Clearly, this issue and other issues were not afforded the kind of scrutiny they would otherwise have been given because the legislation had to be enacted before the markets opened the following morning.
This did not receive the attention it needed to receive. Given that it is the State - the people - that is carrying this, we are really talking about the limits on public services and about extra taxation. The Minister probably knows this better than anybody else. People have every right to see how assets are disposed of. I find it unsatisfactory that there is not more transparency associated with the disposal of the assets and that the supervision is within the Department. The Minister is clearly saying he is not minded to change or establish a committee of inspection.
The Deputy is correct on that. I take her point that the legislation was passed at great speed. I remember the night very well and the circumstances. I do not have any plans to establish a committee of inspection in regard to the liquidation. I am satisfied it has happened in an entirely appropriate way, in accordance with the law and the legislation passed. As the Deputy is aware, a report is issued to provide the House with an update on the liquidation status of IBRC. The special liquidators have now published their sixth report on this to try to provide as much transparency as possible on what is a very significant issue. If the Deputy outlines the areas where she believes there is no transparency, it might give me an opportunity to respond on them.
In many ways, it is a matter of how it is interrogated. For example, there is a fundamental difference between this and the handling of NAMA, where the Comptroller and Auditor General has a role. There are staff from the Office of the Comptroller and Auditor General embedded in NAMA. There is a degree of transparency regarding asset disposal owing to interrogation by a committee of the Dáil. The process is not as satisfactory in regard to IBRC and the detail required. This is not to say the assets are not disposed of entirely appropriately and are resulting in the best possible yield but the transparency is missing. This represents an error in how the legislation was framed.
Where I differ from the Deputy is in my belief that the progress reports issued by the liquidator have tried to get the balance right in terms of providing transparency and information to the House and also in terms of completing a liquidation that was and is immensely important to the financial progress of our State.
As the Deputy knows, the various progress reports published have, at different times, provided an update on the liquidation and provided information on the sale of loans, the cashflow associated with the sales of loans, the fees incurred as part of the liquidation, and the kind of work that still remains to be done. As the liquidation stands, there are approximately 93 legal cases outstanding. The reports published have provided an update to the House on work under way. Through the Committee of Public Accounts, for example, officials in my Department have been subjected to scrutiny over the status of the liquidation.