Dáil Éireann Debate, Wednesday - 23 June 2004
6 Mr. Sherlock asked the Minister for Finance the number of special savings investment scheme accounts opened at the latest date for which figures are available; the average amount of savings per investor per month; if, on the basis of any such figures, his Department can now give a definite figure for likely cost to the Exchequer of the special savings investment scheme; and if he will make a statement on the matter. [18609/04]
Amharc ar fhreagraI am informed by the Revenue Commissioners that based on the analysis of the 2003 returns and declarations furnished to date by all qualifying savings managers, the total number of active accounts at 31 December 2003 was 1,113,317 and the average monthly subscription at that date was €165. Revisions may be necessary if amendments are received at a later date.
As indicated in replies to previous questions, it is not possible to give a definitive answer on the eventual cost of the scheme as it is subject to a number of variables such as whether participants die, withdraw from the scheme or vary their monthly contributions. The cost of the scheme in 2003 was €531.9 million. If the current average monthly payment for the first five months of 2004 continues for a full year the annual cost in 2004 would be approximately €540 million. This, however, is not a conclusive figure, and the final figure may be different if account holders change their monthly contributions. The total gross cost over the period of the scheme will be reduced by the exit tax to be received at the end.
I think it is the Minister's plan to release this €14 billion or thereabouts into the account just in time for the next general election. Does he have any plans to promote the sensible use of that money? Women who worked in the home and who have not sufficient pension or social insurance contributions might transfer some of these savings to an appropriate pension for later years. Will the Minister encourage other people who have not had an opportunity to adequately save for their retirement to use the funds? It is a €500 million Exchequer bonus to around 1.5 million people. Many of them are ordinary PAYE people but many of them are also very wealthy people who do not need any largesse from this Government.
Is the Minister making any plans? Fianna Fáil now has to accept the statement of the Minister for Justice, Equality and Law Reform, Deputy McDowell, that inequality is the Progressive Democrats stance in this Government and that it is good for us. Has the Minister any proposals to promote the sensible use of this bonanza when it is released in time for the general election?
I know I have great foresight and Deputies on both sides of the House attest to that every day before they eat their cornflakes. I announced this scheme in February 2001 on the publication of the Finance Bill for that year. That was at least 15 months before the elections in 2002. Deputies now want to believe that I was so brilliant and far-sighted that not alone would I anticipate the 2002 election results, but that I had a plan that would come on stream before the following election. I am willing to accept plaudits and kudos from everyone but the Deputies are going too far in giving me this credit. I am known for my modesty, but even I find this flattery too much.
It might have something to do with the leadership succession stakes.
Deputy Burton claimed this scheme favours the rich. There are more than 1.1 million people participating in the scheme. When the Revenue Commissioners compared this with revenue income distribution tables for the tax year 1999-2000, 45% of account holders had an income of less than €20,000, 42% of account holders had an income in the medium range of €20,000 to €50,000, and only 13% of account holders earned more than €50,000. This was published in the papers and I am sure the Deputy will be interested to know that. It disproves the point made by the custodians of the left that this favours the rich. In fact, very rich people did not bother their barney to get into the scheme at all, as we can well imagine. The scheme has been well subscribed. I have no plans at this stage on policy options when the scheme comes to fruition, but the scheme is designed to encourage people to save and it has done so.
Is the Minister or his Department carrying out any assessment of the impact of the release of this scale of money becoming available to account holders in a short period? Some estimate that €17 billion will become available, which is around 15% of GNP. Is he concerned about the impact on prices at the time? If people go out and spend on imported products it might affect the balance of payments. Will he carry out an assessment so that we can make prudent decisions? We could perhaps channel money into pension provisions such as PRSAs or into other areas. It should be done on the basis of objective assessment of the options and the possible risks.
The recent estimate by the Irish Insurance Federation gave a figure of about €15 billion to be released at that time. That figure assumes a capital growth of 15%, which seems a little bit high. Irrespective of that, it is impossible to know exactly at this stage but there will be a substantial amount of money. My Department will look at the impact on the economy at that stage. However, the purpose of this scheme was to encourage people back into saving.
The Insurance Federation will have a particular angle about all this and will want to encourage the Minister to go down a particular road which will benefit certain products. Part of the research done for the organisation, which was carried out by Lansdowne Market Research, gave indications on what account holders were intending to do at this stage. It found that 8% of account holders indicated that they would spend their funds immediately, 11% stated they would spend some of it immediately and the rest later, 22% stated they would spend some immediately and save or reinvest the rest, 16% stated they would save or reinvest it all, and 9% indicated that they would put some or all of it in a pension plan for use at retirement.
In an opinion poll, 16% of those polled claimed they would vote for Royston Brady in the European elections.
The Deputy has taken the words out of my mouth. I am so glad of the reception I got when I introduced the scheme. I did detailed research so that people would avail of it and yet I got abuse from all sides of the House. I am glad to note that the Irish people totally ignored it and did the sensible thing, as the Government anticipated they would. They will be equally as smart when they get the money in their pockets.
