Written Answers Nos. 32 - 40
32. Deputy Sandra McLellan asked the Minister for Finance if he will release the report on Irish Nationwide Building Society of 2009; and if this report will be made available to any banking inquiry. [41521/13]
Amharc ar fhreagraI am advised that a number of reports on INBS have been produced by Ernst and Young and McCann FitzGerald at the request of the INBS Board. Copies of all of these reports have been provided to the Central Bank of Ireland under the terms of a protocol for limited disclosure agreed between the parties to preserve legal privilege over the material. A report was also provided to the Gardaí in this regard. Copies of these reports will be made available to any banking inquiry where necessary. However, I have been advised that given the on-going nature of the investigations by the Authorities, including in particular the investigation being conducted under the Central Bank’s Administrative Sanctions Procedure into historic lending practices at INBS, as well as internal considerations within the bank, the report cannot legally be published at this time. Publication of the report may be considered when the Central Bank proceedings are concluded or when any Garda investigation has been finalised (or any proceedings arising from such investigation concluded).
33. Deputy Kevin Humphreys asked the Minister for Finance if he will confirm that the position of chief economist in his Department was first advertised in June 2012 and then re-advertised in July 2013; if the position has been filled yet; the number of applications for the position that came from Ireland and the number from abroad for both those application periods; the reason the position was not filled in 2012; if applicants from abroad who are called to interview are allowed travelling expenses; when will the position be filled; and if he is concerned that it will be difficult to attract applications to other jobs in his Department that have been recently advertised, particularly for young economics graduates when applicants would be unaware as to whom they may be working under which may deter high quality candidates from applying; and if he will make a statement on the matter. [41294/13]
Amharc ar fhreagraWhen the position of Chief Economist in my Department was first advertised in June 2012, a suitable candidate was identified, and following negotiations, a contract offer was made. However, the candidate subsequently withdrew from the competition for personal reasons. Accordingly, the position was re-advertised in July 2013. On the basis that the current recruitment campaign is still active, I am not in a position to release details of the applicants or of the process, until the campaign has been concluded and the Chief Economist is in place. I can inform the Deputy that following a shortlisting process, a number of candidates will shortly proceed to the next level of the TLAC process (interview), and it is expected that the successful candidate for the post of Chief Economist will be identified within a matter of weeks.
My Department has successfully recruited ten high quality economics graduates since 2012, and more recently a further two more senior level Economists have also been recruited. Graduates continue to show great interest in working in my Department, and my Human Resources staff are actively engaged with the Public Appointments Service (PAS) on the current Administrative Officer graduate recruitment campaign. This campaign includes an Economics sub-panel, from which further appointments to my Department will be made in due course.
35. Deputy Pearse Doherty asked the Minister for Finance if he will provide an update on the case of Newbridge Credit Union. [41516/13]
Amharc ar fhreagra46. Deputy Clare Daly asked the Minister for Finance the role of the Central Bank in appointing a special manager to Newbridge Credit Union; his views on whether it is appropriate that to date no detailed reasons have been given to the members for the appointment of the special manager. [41301/13]
Amharc ar fhreagraI propose to take Questions Nos. 35 and 46 together.
The decision to apply to the High Court for the appointment of a Special Manager is a matter for the Governor of the Central Bank, following consultation with me as Minister for Finance. On 13 January 2012, the Central Bank of Ireland secured a High Court Order for the appointment of a Special Manager to Newbridge Credit Union. Further High Court applications were made to extend the term of appointment of the Special Manager, the latest being in June 2013, and High Court Orders were secured for a 6 month extension period on each occasion.
The Special Manager appointment was made because of Central Bank concerns in relation to the high level of loan losses incurred by the credit union, which impacted on the level of its reserves. There were also concerns about some of the lending made, which went beyond the traditional type of lending normally provided by credit unions. This action was taken to strengthen Newbridge Credit Union, protect members’ savings and ensure that Newbridge Credit Union can continue to operate effectively, providing financial services to the local community.
The Central Bank is responsible for the regulation and supervision of credit unions. That role includes the implementation of resolution action, where required. The Central Bank undertook a process under the Central Bank and Credit Institutions (Resolution) Act 2011, involving the examination of possible combinations with other credit unions. As part of this process, Naas Credit Union submitted a proposal to the Central Bank, setting out the basis upon which Naas Credit Union would be prepared to combine with Newbridge.
At the request of the Governor of the Central Bank, I have confirmed that I am prepared, in principle, to support the proposal. However, the proposal remains subject to amongst other things due diligence, completion of relevant documentation, Naas Credit Union board approval, regulatory consideration and High Court approval. I expect that these steps will be completed expeditiously and that the Naas/Newbridge combination will be finalised by the end of this year. This will necessitate a significant capital investment of taxpayers’ funds into Newbridge Credit Union to cover the losses at Newbridge and to ensure the protection of members’ savings and the stability of Newbridge into the future. The successful combination of these credit unions is considered the best way to ensure the continuity of credit union services for members in Newbridge.
I met with the Newbridge Action Group on 19 September. Following that meeting, the agreed next steps were for the Newbridge Action Group to submit its proposal to me expeditiously. Once received, I have agreed to communicate that proposal to the Central Bank with a view to a meeting between the Central Bank and the Group. As yet no proposal has been received from the Newbridge Action Group. I should also clarify that contrary to media reports no specific amount for the cost of the combination was mentioned by me to the action group.
36. Deputy Sandra McLellan asked the Minister for Finance if will work with the Central Bank of Ireland to agree a definition of a strategic defaulter in relation to mortgages. [41507/13]
Amharc ar fhreagraI have been informed by the Central Bank that it has not defined the concept of "strategic default". However, the Central Bank has defined the concept of ‘cooperation’ within the Code of Conduct on Mortgage Arrears, CCMA, which applies to all mortgage providers in the State. Mortgage holders in arrears but who are deemed to be "co-operating" with their institution are provided additional protection from their lender.
There is no information available to my Department on the scale of mortgage holders who have the clear capacity to meet their mortgage, and other financial commitments, but are refusing to do so. Such an issue is one that can only be resolved by creditors and their debtors. The standard financial statement, SFS, and the relevant provisions of the CCMA provide a framework to allow the resolution of a debt secured on a primary residence. The Personal Insolvency Act also provides a legal framework to allow debtors and creditors to resolve positions of insolvency and over indebtedness in a fair way for all parties having regard to the insolvency of the debtor. However, if creditors are of the view that a person has the clear capacity to meet their financial obligations but is refusing to do so, then the legal process and the Courts are at the disposal of such creditors to enforce the debt contracts of solvent debtors.
37. Deputy Mary Lou McDonald asked the Minister for Finance if he will release the letter of 19 November 2010 from Jean-Claude Trichet; and if this letter will be made available to any banking inquiry. [41520/13]
Amharc ar fhreagraThe position remains as I outlined in my replies to Parliamentary Questions Nos. 155 of 28 June 2011, and 125 of 18 July 2013. While the immediate crisis that this Government inherited when it took office has been averted, it remains important for relationships between institutions to be developed and sustained, in order to allow for confidential negotiations to take place, especially on particularly sensitive issues. This is particularly the case in relation to the Irish authorities dealing with the ECB. It is normal practice for states to protect the confidentiality of these discussions, and in fact is usually enshrined in the rules of association of institutions.
Indeed, this is reflected in the Freedom of Information Act, which provides for exemptions for records relating to, for example, information received in confidence, commercially sensitive information and the financial and economic interests of the state in sections 24, 26 and 31. These factors counterbalance the public interest, protecting the ability of the Government when negotiating or deliberating on matters of national importance. It is considered that release of the correspondence sought would impact on the integrity and viability of the decision-making process to a significant degree without a countervailing benefit to the public, and would prejudice our relationship with the ECB.
Any request which may be received from the recently announced banking enquiry will be considered taking account of the above considerations and also the terms of reference of the enquiry.
38. Deputy Billy Timmins asked the Minister for Finance the number of inspection audits carried out at each of the banks, AIB, Bank of Ireland, Ulster Bank and Permanent TSB by the Central Bank inspection team in the past 18 months; the average number of audit-inspection staff on the audit-inspection visitation teams; and if he will make a statement on the matter. [41484/13]
Amharc ar fhreagraI am advised by the Central Bank that information on the Prudential Supervision Engagement Process conducted of credit institutions in 2012 is available on Page 37 of the Central Bank Annual Report 2012 (an extract from which is shown in the following table below. The Central Bank conducts continuous supervision of these high impact institutions and this consists of review work across all risk categories including credit, liquidity, market risk, operational risk, governance, capital and conduct. I am advised by the Central Bank that it is unable to provide a breakdown of these inspections by each bank.
Table 1 - Prudential Supervision Engagement Process 2012
|
PRISM ENGAGEMENTS |
Banking |
|
Full Risk Assessment (SREP) |
10 |
|
Risk Governance Panels |
7 |
|
Meeting with Chief Executive Officer (CEO) |
52 |
|
Meeting with Chief Financial Officer (CFO) |
41 |
|
Meeting with Chief Risk Officer (CRO) |
44 |
|
Meetings with Chairman |
25 |
|
Meetings with Senior Non-Executive Directors (NEDs) |
28 |
|
Meetings with Internal Auditor |
22 |
|
Meetings with External Auditor |
17 |
|
Board Meeting Attendance |
16 |
|
Attendance at Board Committees |
34 |
|
Meetings with other Senior Management |
84 |
|
Other On-Site Meetings |
43 |
|
Meetings with Board Independent Non-Executive Directors (INEDs) |
20 |
|
Meetings with Group NEDs |
10 |
|
Meetings with Compliance Officer |
8 |
|
Other Reviews - non-PRISM |
4 |
|
Financial Risk Review (FRR) |
20 |
|
Other (not incl. FRR meetings) |
102 |
|
Total |
587 |
39. Deputy John Halligan asked the Minister for Finance if he will introduce measures in budget 2014 to increase the tax contribution of highly profitable corporations through the introduction of a minimum effective corporation tax rate by closing off loopholes which facilitate aggressive tax avoidance by some corporations; and if he will make a statement on the matter. [41474/13]
Amharc ar fhreagraIn a number of answers to previous Parliamentary Questions on this issue I have repeatedly advised that there is no agreed international methodology for calculating the ‘effective rate’ of corporation tax. With that in mind, I am unsure as to the premise of the Deputy's question which seems to imply that Ireland has an "effective rate" that is significantly lower than our 12.5% rate. All companies resident in Ireland are chargeable to corporation tax at the 12.5% rate on the profits that are generated from their trading activities in Ireland. A higher 25% rate applies in respect of investment, rental and other non-trading profits. Chargeable capital gains are taxable at the capital gains tax rate of 33%.
I am aware of media reports which refer to the ways that some multinational companies structure their international tax affairs to minimise their tax costs and I understand that some of these reports have suggested that some companies in multinational groups pay Irish corporation tax at rates that are lower than 12.5%. At this point it is important to state clearly that such companies are not paying a low rate of Irish tax – as already stated all companies in Ireland pay the standard 12.5% rate on their profits which are generated in Ireland. The reports concerned appear to have incorrectly attributed to Ireland profits that represent the return due to assets in other jurisdictions, owned by group companies that are not resident in Ireland.
The profits charged in Ireland fully reflect the functions, assets and risks located here by a multinational group. The payments to the non-resident company represent the required remuneration of intellectual property assets funded and owned outside the State and its tax payments are properly reduced in these circumstances by reference to expenditure incurred for the purpose of its trade. Ireland cannot expect to receive or retain the remuneration of these assets.
The ability of multinational entities to lower their world-wide rates of tax using international structures reflects the global context in which Ireland and indeed all countries operate. Differences arise in the legal and tax systems between countries. International tax-planning takes account of these differences in national systems and rules. The most effective way to deal with such arrangements is for countries to work together to examine these structures and to consider how international rules can be amended to ensure fair levels of taxation. In this regard, Ireland is participating in projects at EU and OECD level which aim to address these issues.
40. Deputy Seán Crowe asked the Minister for Finance the reason the growth prediction from his Department for 2013 has decreased each year in the stability programme update from 2011 to 2013. [41515/13]
Amharc ar fhreagraAll economic forecasts are conditional forecasts - they are based upon assumptions for key inputs such as demand in export markets and exchange rates etc. When these assumptions change, projections will, by definition, change. Economic developments in Ireland’s main trading partners - in particular the UK and the euro area - have underperformed international forecasters’ expectations in recent years. This has contributed strongly to the downward revisions in GDP growth carried out by all domestic forecasters in recent years, including my Department. This is one of the main factors necessitating the downward revision to the 2013 forecasts in each of the Stability Programme Updates. It is also worth pointing out that forecasts are based on estimated outturns for key variables, such as GDP, which themselves are subject to revision.
