Written Answers Nos. 83-93
83. Deputy Peter Mathews asked the Minister for Finance his plans to give consideration to those who live in privately managed estates and are paying management fees and now have to pay the local property tax; and if he will make a statement on the matter. [14464/13]
Amharc ar fhreagraThe Government agreed with the recommendation of the “Thornhill Group” (the inter-Departmental Group, chaired by Dr Don Thornhill, which considered the structures and modalities of a property tax) that a universal liability to the Local Property Tax should apply to all owners of residential property with a limited number of exemptions. Limiting the exemptions available allows the rate to be kept low for those liable persons who do not qualify for an exemption. The Finance (Local Property Tax) Act 2012 provides for a number of specific exemptions from the charge as well as the possibility of deferring the charge in certain cases of hardship.
A requirement to pay management fees is not relevant in determining liability. Accordingly, whilst those who are liable for management fees to property management companies may be exempt from LPT for another reason, or may be entitled to avail of a deferral arrangement under the provisions contained in the legislation, there is no specific exemption for the payment of management fees. I have no plans to introduce such an exemption.
I am informed by the Revenue Commissioners that Local Property Tax (LPT) is a self-assessment tax so in the first instance it is a matter for the property owner to calculate the tax due based on his or her assessment of the market value of the property. Liability to management fees and the scale of the fees due would be one of the factors that a property owner would take into account in valuing their property.
Revenue from the Local Property Tax will accrue to local authorities and will support the provision of local services. Local authorities provide a broad range of services in the public realm which benefit the wider community and the proper functioning of which are important for the wellbeing of every community and household. These include fire and emergency services; road maintenance and cleaning; street lighting; spatial and development planning and other similar services; regulatory and inspection functions and business support services, as well as libraries, parks, and other recreation and cultural public amenities.
84. Deputy Sean Fleming asked the Minister for Finance the progress made within his Department on phasing out the use of lo-call 1890 numbers that can be extremely expensive when dialled from mobile telephones and introducing 076 number, which are generally included in tariff bundles provided by most mobile network operators and are charged at the same rate as national calls, in view of the fact that the number of mobile telephones exceed the number of landlines; and if he will make a statement on the matter. [14484/13]
Amharc ar fhreagraIn response to the Deputy’s question the CMOD Division of the Department of Public Expenditure and Reform provides ICT and telephony services to my Department on a shared services basis. In 2011, CMOD reached an agreement with ComReg to assign a specific block of 200,000 076 numbers to the public service, which it now manages and allocates. Additionally, CMOD architected the Government Networks infrastructure to accept and deliver 076 numbers to anywhere in the country. It also issued a detailed Advisory Note to public bodies explaining how 1890 LoCall numbers work and the charges associated with them, the issues this can have for mobile phone users, how the 076 number range works and how it provides cost savings for both customers and public bodies. It advised public bodies to move to 076 numbers as soon as possible. While both Departments use one shared LoCall 1890 number to facilitate landline calls from outside the Dublin dial-code area, it has also implemented a number of 076 numbers for use from both mobile and landlines for a range of services and units.
85. Deputy Sean Fleming asked the Minister for Finance if he has considered the use of, or implemented, integrated voice response systems in his Department's phone systems or in the phone systems of agencies within his remit; if the staff and salary cost savings which might arise have been assessed; and if he will make a statement on the matter. [14500/13]
Amharc ar fhreagraIn relation to my Department, the use all technologies including integrated or interactive voice response (IVR) systems have been examined. The decision taken has been not to use the IVR systems because the nature of the work does not lend itself well to an IVR-based approach. Bodies under the aegis of my Department have provided me with the following information.
Office of the Revenue Commissioners
I am advised by the Revenue Commissioners that they have successfully deployed a large number of interactive voice recognition (IVR) systems within their operations. In particular, an IVR system was put in place for Revenue’s PAYE 1890 telephone service as part of a comprehensive upgrade implemented over the period 2004/2005. The PAYE 1890 service has the highest volume of telephone contacts handled by Revenue and in 2011 some 1.23 million calls were answered on the service. Shortly after the PAYE 1890 deployment, the Collector General’s 1890 telephone system was also re-configured with a similar IVR system to PAYE. Some 228,000 calls were handled through the Collector General’s 1890 telephone service in 2011.
The particular IVR system deployed by Revenue on its PAYE and Collector General’s telephone services is a very sophisticated system in that, in the first instance, a caller is asked to speak their PPS Number or Business Number into the IVR which then captures the number. By collecting the caller’s PPS or Business Number, the call can be routed to the correct Division directly and the Revenue person handling the call is presented on their computer screen with key tax and other information about the caller at the same time that the call is passed to them to answer. The voice capture technology behind the system is highly sophisticated as it manages to gather both the numeric and alpha characters that constitute PPS and Business Numbers within the one message string.
I am further advised that an additional feature of this IVR system is that it facilitates a range of self-service options that the caller can use to get certain services without human intervention, including for example a facility to request the most popular PAYE forms and leaflets or, to request a statement of account in the case of a business. In these cases, the form or statement of account requested is posted to the address associated with the PPS or Business Number that has been collected from the caller via the voice recognition system.
I am advised that Revenue is constantly reviewing developments with regard to IVR systems and other trends in telecommunications with the objective of making the taxpayer’s experience with their telephone services as smooth and efficient as possible and, in seeking to optimise any process efficiencies. In that regard, I understand that the various services and options available to callers that underpin the PAYE 1890 IVR system were re-vamped during 2012 and have been successfully implemented.
In the past four to five years, IVR systems have also been implemented at telephone switch level in a number of Revenue offices around the country. While the PPS number capture is not a feature of these facilities, they provide callers with a list of options to choose from and the call is directed to the desk of a Revenue staff member who will have the specific knowledge required to deal with the particular query. In these offices, because calls are routed directly to staff members, a switch operator is not required to manage the flow of calls. An IVR system has recently been deployed on Revenue’s Local Property Tax Helpline, and, as a matter of policy, Revenue will deploy IVR in its customer facing telephone systems where opportunities arise.
I am advised by the Revenue Commissioners that since their major IVR developments have been in place for a number of years, they are not in position to provide the information sought in relation to staff and salary cost savings. However, the Commissioners are satisfied that savings have been achieved from the use of IVR systems and they have also facilitated significant process efficiencies
ReBo (Credit Union Restructuring Board)
The Credit Union Restructuring Board have advised me that voice response systems are available on their phone systems, and that the salary costs savings have not been assessed.
National Treasury Management Agency
The phone system currently in operation within the NTMA has the ability to provide voice activated automation. Voice automation systems are best used where a specific and repeatable service is required e.g. information delivery. As the NTMA does not in its day to day business activities provide these types of services it does not normally use this feature of the system. However, the NTMA has used automated messaging as part of the Eligible Liability Guarantee (ELG) helpline established to answer queries from the public following the liquidation of IBRC and again following the Minister for Finance’s announcement of the ending of the ELG for all new liabilities from 28 March 2013.
The Financial Services Ombudsman’s Bureau
The Financial Services Ombudsman’s Bureau do not have an integrated Voice Response System and they have no plans to install one in the near future.
Office of The Comptroller and Auditor General
The Office of the Comptroller and Auditor General has not implemented such a system as it is not considered that there is sufficient need for it nor would savings arise.
86. Deputy Andrew Doyle asked the Minister for Finance if he received a copy of the Being Young and Irish – Take Charge of Change report from the Office of the President, Áras an Uachtaráin as part of President Higgins's series of seminars with young persons here which took place in Dublin, Galway, Monaghan and Cork in 2012; if he has noted the Take Charge of Change declaration made by the participants; the steps he has taken arising out of the report’s findings in order to achieve young person’s vision for Ireland; and if he will make a statement on the matter. [14530/13]
Amharc ar fhreagraI can confirm I received a copy of the Being Young and Irish-Take Charge of Change report from the Office of the President. I was very impressed by this report as I am a firm believer in the importance of projects which involve Ireland’s youth. I would like to commend President Higgins on this wonderful initiative. I have taken note of the nine most prominent areas of concern to young people today in this report namely: Employment, Enterprise, Social Security, Concern with Economy, Political reform, Education, Equality, Involve young people, Be positive, Health, Community and civil society, Identity as Irish.
From a Department of Finance point of view we are actively taking steps in relation to the first issue i.e. to improve employment growth. As the Deputy is aware Ireland’s youth unemployment rate is unacceptably high. In an effort to reduce this figure (along with Ireland’s overall unemployment rate) we are driving cross Government initiatives as outlined in the 2013 Action Plan for Jobs.
From my Department’s perspective, the material related to Access to Finance is of particular importance. SMEs will be a key driver of growth and job creation across the country and access to credit and financing is essential for them to trade, to grow and to create jobs. Through intensive engagement with SMEs and the banks we have identified a range of measures that tackle the challenges related to SME credit.
By end 2013, new Government schemes totalling almost €2.5 billion in new lending to business will be in place: €850 million of the National Pensions Reserve Fund for the SME sector, €700 million seed and venture capital scheme, €450 million credit guarantee scheme, €225 million development capital scheme, €120 million second call under Innovation Fund Ireland, €90 million microfinance scheme.
Furthermore, the plan put in place new structures to better monitor bank lending to business: €4 billion in lending to businesses by each of the pillar banks (AIB & BoI), extra staff for the Credit Review Office, which overturns over half of the bank refusal decisions which are appealed to it, more comprehensive progress reports on SME lending by banks to my Department. I have asked one of the public interest directors in each of the pillar banks to have specific reporting responsibility on SME lending. As part of Budget 2013, I announced a 10 point plan for SMEs which includes several measures aimed at improving their credit situation.
Businesses also need greater choice in sourcing finance, and should be able to rely, not only on conventional loans from banks, but on other, often non-bank funding sources. My officials are using the opportunity of the Irish Presidency to actively investigate non-bank funding sources with our European colleagues and I have put this issue on the Agenda for the informal Ecofin that will take place in Dublin in April.
In addition to targeting improvements in credit conditions, my Department is also actively involved in assisting job growth through initiatives in the Construction, Agri-Food, Financial Services, Tourism and Aviation sectors. All of these initiatives will support job creation and offer opportunities for young people seeking employment.
On Thursday, 7 March, the Department of Finance published its Review of 2012. In this review there are numerous references to initiatives which my Department has driven. Goal 1 from our Statement of Strategy aims at providing ‘A resilient Irish economy founded on sustainable and balanced growth and leading to significant increases in employment numbers’. Section 4 in the review looks solely at the measures taken in relation to this goal.
87. Deputy Jerry Buttimer asked the Minister for Finance the supports available to assist first-time buyers in purchasing a home and in view of the increased presence of cash buyers in the market, often making it more difficult for first-time buyers to purchase a home, if he will consider new supports to assist first-time buyers; and if he will make a statement on the matter. [14542/13]
Amharc ar fhreagraThe IBF/PWC Mortgage Market profile shows new mortgage lending in Q4 2012 at close to €1 billion and that first time buyers are approximately 60% of this lending, by value and volume. By definition, the mortgage market profile does not include cash buyers but the proportion of mortgages going to first time buyers has increased significantly since 2008. The Deputy may also be aware that first time buyers who purchase a residential property between 1 January and 31 December 2013 are exempt from local property tax until the end of 2016. There is also an exemption from local property tax up to the end of 2016 where a new or previously unoccupied home is purchased from a builder or developer between 1 January 2013 and 31 October 2016. These measures should provide assistance to first time buyers following the ending of mortgage interest relief from income tax.
Given the current fragile state of the public finances, I am not in position to introduce new supports for first time buyers.
88. Deputy Maureen O'Sullivan asked the Minister for Finance the reason he intends targeting rank-and-file bank workers' pay and not senior management with disproportionately high salaries and in receipt of bonuses; the way he justifies the workers' cuts if the Mercer report suggests these cuts would only yield savings of €70 million across all three remaining State-supported institutions while AIB reports a €1.2 billion loss for the first half of 2012, Permanent TSB reporting a loss of €500 million for the first half of 2012, and Bank of Ireland reporting preliminary annual losses for 2012 of €1.8 billion; if his attention has been drawn to the fact that the cuts would have little effect on profitability; and if he will make a statement on the matter. [14555/13]
Amharc ar fhreagra89. Deputy Jack Wall asked the Minister for Finance his views on a submission (details supplied) regarding payroll cuts; the actions he will take to address the concerns raised; and if he will make a statement on the matter. [14563/13]
Amharc ar fhreagra100. Deputy Michael Healy-Rae asked the Minister for Finance his views on correspondence (details supplied) regarding payroll cuts; and if he will make a statement on the matter. [14583/13]
Amharc ar fhreagra101. Deputy Finian McGrath asked the Minister for Finance his views on correspondence (details supplied) regarding payroll cuts. [14603/13]
Amharc ar fhreagraI propose to take Questions Nos. 88, 89, 100 and 101 together.
When publishing the Review of Remuneration Practices and Frameworks at the Covered Institutions, on 12 March 2013, I indicated that the Government had formed the view that with the remaining covered institutions still incurring losses it was an inescapable conclusion that the cost base of the institutions needs to be reduced further. This is essential if they are to return to profitability, be in a position to support the economy and repay the State’s investment through a return to private ownership.
On behalf of the Government, I have now directed the banks to come up with plans as to how they intend to address this issue in a manner that can help meet the State’s objectives. I expect the value of those plans to mean a saving of 6% - 10% of total remuneration costs, through reductions in payroll and pension benefits, new working arrangements and structures that deliver efficiency gains.
This point is reinforced in the correspondence supplied by the Deputies where it is asserted that even a target reduction of 6% to 10% in remuneration will not by itself impact significantly on losses now occurring at the covered institutions. If appropriate action is not taken on this front in a timely manner then bank workers will be facing much more unpalatable measures than now proposed. Tackling the cost base is of course only one of many goals that need to be achieved but combined with other measures will deliver the required results.
I would point out in this context that redundancies at the covered institutions have been achieved to date on a voluntary basis on negotiated terms. The effect on employee entitlements arising out of the liquidation of IBRC will serve as a sharp reminder to all sides of the fraught environment in which the banks and the country are operating
I, and the Government, acknowledge that the sacrifices and changes made by bank employees to date at all levels and recognise that this has been achieved without major industrial unrest in what is a critically important sector. However, it can never be forgotten by management and employees of these banks – both past and present – that without enormous cost to Irish taxpayers these institutions would not have survived and that this needs to be borne in mind during future discussions. If remuneration costs are to be reduced with the aim of a return to profitability then sacrifices at all employee levels will be required.
90. Deputy Pearse Doherty asked the Minister for Finance further to the recent statement by the National Asset Management Agency that it had sold €22 million of Irish residential property with its 80:20 deferred payment initiative, if he will confirm the overall value of the 80:20 mortgages that have been extended to buyers of such property and the overall value of sales which have not involved the 80:20 mortgage. [14570/13]
Amharc ar fhreagraAs the Deputy will be aware the mortgages under the 80/20 Deferred Payment Initiative are provided by Bank of Ireland, AIB through its subsidiary EBS, and Permanent TSB the details of which are not made available to NAMA. However, I am advised by NAMA that of the houses available under the scheme 60% were acquired using the deferred payment mortgage through one of the participating banks the balance were acquired mainly by cash buyers.
91. Deputy Pearse Doherty asked the Minister for Finance further to Parliamentary Question No. 207 of 22 May 2012, if he will provide a breakdown of the stock of Irish residential housing in the National Asset Management Agency portfolio, showing the number of units rented and vacant, and showing the number of units being offered for sale and for rent. [14571/13]
Amharc ar fhreagraI am advised by NAMA that it is continuing to carry out extensive analysis of data on residential property under the control of its debtors and receivers and expects to be in a position to publish the findings from this analysis in its 2012 Annual Report. At this stage in its analysis, NAMA advises that some 10,000 properties securing its loans are currently rented and are generating an annual rental income in excess of €100 million; a further 4,000 vacant houses and apartments have been made available through the Department of the Environment, Community and Local Government for social housing; and a further 400 properties have been made available for sale under the Agency’s 80/20 Deferred Payment Initiative, which the Agency plans to extend up to a maximum of 750 properties.
NAMA advises that to date sales have been agreed on 120 of the properties included under the 80/20 Initiative. NAMA also advises that in the time required by local authorities to assess and confirm demand for properties identified as being available for social housing, over 750 have been sold or privately let by their owners or, on their behalf, by duly appointed receivers. NAMA advises that the strategy for any given residential property depends on the detail of the asset disposal and asset management plans that have been agreed with individual debtors and receivers and that these plans are subject to on-going review. NAMA advises that the NAMA Board’s policy is that all assets are ultimately intended for sale. NAMA advises that it is not in the business of encouraging its debtors to stockpile assets but that actual sales depend on the level of demand in particular markets segments and on the availability of finance. NAMA further advises that it must also seek to ensure that its debtors do not offer for sale a volume of assets in excess of the current absorption capacity of the market.
92. Deputy Pearse Doherty asked the Minister for Finance the fees payable to the joint lead managers, Barclays, Danske Bank, Davy, Goldman Sachs International, HSBC and Nomura, which have been mandated by the National Treasury Management Agency in respect of a recently announced issue of a March 2023 bond. [14572/13]
Amharc ar fhreagraIreland successfully issued a new €5 billion benchmark bond on 13 March at a yield of 4.15%. This sale was the National Treasury Management Agency’s (NTMA) first new 10-year issuance since January 2010 when €5 billion of the October 2020 bond was issued at a yield of 5.091%. The NTMA recognises seventeen Primary Dealers in Irish Government Bonds all of which are members of, and regulated by, the Irish Stock Exchange. Primary Dealers have obligations with respect to market-making in Irish Government bonds, an essential role in the provision of liquidity to investors. Primary Dealers have bidding obligations in respect of bond and Treasury Bill issuance by auction. They also advise the NTMA with respect to issuance and assist with the marketing process as well as producing research designed to assist investors.
The NTMA chose six of the Primary Dealers, Barclays, Danske Bank, Davy, Goldman Sachs International, HSBC and Nomura to be joint lead managers having significant roles in the new ten-year bond sale whilst the other eleven Primary Dealers were co-leads in the syndicate with lesser roles.
The NTMA has advised that the fee payable to the syndicate of banks was 0.175% of the nominal debt issued. This is the standard fee for the issue of bonds of a ten year maturity by syndication in the euro area sovereign bond market and is also, for example, the fee paid by the European Investment Bank, which has a ‘AAA’ credit rating, for its ten-year bond issuance. Based on the €5 billion issued, the total fee was €8.75 million. Of this amount 89 per cent is split evenly between the six joint-lead managers, with the remaining 11 per cent divided equally between the other eleven co-lead banks. The fee represents an annualised cost of 0.02 per cent over the life of the bond.
It is important to emphasise that the team of Primary Dealers chosen to manage the transaction assisted in building a strong order book, with some 400 investors submitting bids, including fund managers, banks, pension funds and insurance companies. The total bids received amounted to some €13 billion. This clearly demonstrates that Ireland has regained access to the international debt markets. The size of the order book and the broad investor interest is a strong signal of confidence in Ireland.
93. Deputy Pearse Doherty asked the Minister for Finance if he will account for the premium yield paid by the National Treasury Management Agency on its recent €5 billion issuance of ten-year bonds when compared with the yield on the existing 2020 bond. [14573/13]
Amharc ar fhreagraIreland successfully issued a new €5 billion benchmark bond on 13 March at a yield of 4.15%. This sale was the National Treasury Management Agency’s (NTMA) first new 10-year issuance since January 2010 when €5 billion of the October 2020 bond was issued at a yield of 5.091%. The issue yield of 4.15% represented the fair value price for a bond maturing in 2023 relative to the yields at which the existing 2020 and 2025 bonds were trading at on 13 March, that is 3.68% and 4.45% respectively. I am advised by the NTMA that a premium was not paid relative to that fair value price. It is normally the case that a new issue premium is required for multi-billions issues but the strong demand for this bond resulted in a zero premium.
There was broad investor interest in the issue with some 400 investors submitting bids, including fund managers, banks, pension funds and insurance companies. Some 18 per cent was taken up by domestic investors and 82 per cent by overseas investors.
