Joe Higgins
Ceist:168. Deputy Joe Higgins asked the Minister for Finance the total of the national debt; and the amount of the total debt accounted for by loans from the troika agencies. [23247/14]
Amharc ar fhreagraNational Debt
Ceisteanna (168)
Freagraí scríofa
General Government debt is the standard measure of Government debt used for comparative purposes throughout the European Union. At the end of 2013, general Government debt stood at an estimated €202.9 billion or 123.7 per cent of GDP. A breakdown of the composition of general Government debt is available on page 17 of Ireland's Stability Programme April 2014 Update. The breakdown shows that of the €202.9 billion general Government debt at end-2013, loans provided under the EU/IMF Programme accounted for just under €67 billion or one third of the overall total.
VAT Exemptions
Ceisteanna (169)
Éamon Ó Cuív
Ceist:169. Deputy Éamon Ó Cuív asked the Minister for Finance if it is possible, under national legislation, to exempt from VAT the purchase of mountain rescue equipment for voluntary groups in a similar way to the exemption for water rescue equipment; if such an exemption would be a national competence or an EU competence; and if he will make a statement on the matter. [23255/14]
Amharc ar fhreagraFreagraí scríofa
VAT law is governed by the EU VAT Directive, with which Irish VAT law must comply. The EU VAT Directive makes specific provision under Articles 148 and 169, for a zero rate of VAT to apply to the supply of vessels for rescue or assistance at sea. Irish VAT law transposed this provision in 1978 by providing that the zero rate of VAT apply to the supply of large vessels used for sea rescue. In addition, a VAT Refund Order for the purchase of smaller sea rescue vessels was introduced from 1985, and extended in 2013 to apply to vessels for inland water rescue. Irish VAT law does not provide for an exemption from VAT on supplies or purchases of mountain rescue equipment as this is not provided for under the EU VAT Directive.
Question No. 170 answered with Question No. 83.
Mortgage Schemes
Ceisteanna (171)
Eoghan Murphy
Ceist:171. Deputy Eoghan Murphy asked the Minister for Finance if he has considered proposals for restructuring lending practices in the mortgage market whereby mortgage lending would be calculated in terms of the average value of a house over a fixed period, say 20 years, for which the money is being borrowed, rather than calculating the loan in terms of the present-day value of the house which may not reflect the longer-term value of the asset. [23321/14]
Amharc ar fhreagraFreagraí scríofa
The decision on the approval of a mortgage for a borrower is a commercial decision for the lending institution concerned. It is important that each lending institution is allowed to properly and independently assess the risks that it is considering when deciding whether to approve a loan.
The Central Bank of Ireland (CBI) has advised me that Chapter 5 of its Consumer Protection Code contains provisions relating to assessing suitability and affordability of credit, including for example, a provision which obliges lenders to carry out an assessment of affordability to ascertain the personal consumer's likely ability to repay the debt over the duration of the agreement. The affordability assessment must include, inter alia, a test on the basis of a 2% interest rate increase, at a minimum, above the interest rate offered to the personal consumer.
The Central Bank of Ireland does not comment on the commercial decisions or policies of regulated entities. However, the Central Bank (Supervision and Enforcement) Act 2013 was passed last year and enhances the Central Bank's regulatory powers, drawing on the lessons of the recent past. It strengthens the ability of the Central Bank to impose and supervise compliance with regulatory requirements and to undertake timely prudential interventions. The Act also provides the Central Bank with greater access to information and analysis and underpins the credible enforcement of Irish financial services legislation in line with international best practice.
My Department is committed, under the 'Construction 2020' strategy, to examine international best practice and develop proposals for additional models of mortgage financing in Ireland, to ensure sustainable levels of mortgage lending in the medium term, and report to the Cabinet Committee on Mortgage Arrears and Credit Availability in November 2014. In the first instance the concept of a mortgage insurance scheme will be examined. The objective of any scheme would be to ensure adequate availability of mortgage finance on affordable terms for new completions, particularly for 'First Time Buyers'. In doing so I would aim to provide the certainty needed to support greater levels of investment in new housing, with the associated benefits for the construction sector and ultimately for the consumer. Once this examination has been completed and presented to me I will consider the next steps.
Disabled Drivers and Passengers Scheme
Ceisteanna (172)
Michael Healy-Rae
Ceist:172. Deputy Michael Healy-Rae asked the Minister for Finance the position regarding a refund of VRT in respect of a person (details supplied) in County Kerry; and if he will make a statement on the matter. [23338/14]
Amharc ar fhreagraFreagraí scríofa
I am advised by the Revenue Commissioners that the relevant legislation governing the Drivers & Passengers with Disabilities Scheme is contained in Section 134(3) of the Finance Act 1992 (as amended) and Statutory Instrument No: 353 of 1994 (Disabled Drivers and Disabled Passengers (Tax Concessions) Regulations, 1994.
Where a family member of a person with a disability purchases a qualifying used vehicle under the scheme, the residual VRT and VAT borne in respect of the purchase and adaptation of the vehicle may be repaid to that person subject to the limits set out in the legislation. The maximum tax relief due to a family member in respect of any vehicle is €15,875. Any tax repayment on a used vehicle is confined to the residual tax that is remaining in the vehicle at the time of purchase and which had not already been repaid to a previous beneficiary. Where full relief has been obtained in respect of a vehicle, or the prescribed VRT /VAT repayment limits have been reached, and it is subsequently purchased (as a used vehicle) by another applicant under the scheme, it may still qualify for repayment of excise duty on fuel and for Motor Tax Exemption.
The invoice relating to the vehicle purchased was dated 6th December 2011. It was subsequently established during a telephone conversation with the person (details supplied) that for personal reasons she did not receive possession of or pay for the vehicle until March 2012. The previous owner of the vehicle had benefited from tax relief on the vehicle under the scheme to the value of €11,792 and on this basis the person (details supplied) received a repayment of €4,083 being the maximum tax amount due in respect of the vehicle. The person (details supplied) submitted correspondence to Revenue's Central Repayments Office (CRO) on 18th June 2012 requesting an explanation of the repayment received. The issue was clarified in a response issued on 21st June 2012 and further clarified during a telephone conversation on 7th September 2012.
It is Revenue's clear understanding arising from details of telephone conversations with the person (details supplied) and her spouse, that the vehicle was in fact purchased in March 2012. However, if the person in question did in fact pay for and take possession of the vehicle in December 2011, as suggested by the Deputy in the details he supplied with this question, then the person should contact Maire A Nic an tSaoi in the CRO (direct line 047-62137). Relevant proofs of payment (e.g. bank statement, paid cheque) and change of ownership in 2011 (e.g. evidence of change of insurance) should be forwarded to the CRO, to facilitate reconsideration of the application.
The administration of the scheme was reviewed during 2011 to ensure that all applications, without exception, would be dealt with in accordance with the legislation. Revenue met with representatives of the Irish Wheelchair Association and the Disabled Drivers Association of Ireland in November 2011 and briefed both organisations on the outcome of the review. There were no actual changes to the legislation.
Tax Credits
Ceisteanna (173)
Jack Wall
Ceist:173. Deputy Jack Wall asked the Minister for Finance if a person (details supplied) in County Kildare is entitled to the one-parent tax credit; and if he will make a statement on the matter. [23341/14]
Amharc ar fhreagraFreagraí scríofa
I have been advised by the Revenue Commissioners that the person concerned has submitted a claim for one parent family credit for the tax year 2010. This claim has been allowed and a PAYE Balancing Statement (P21), including the tax credit issued to the person concerned on 9 March 2011.
The Revenue Commissioners further advise that they have no record of a claim for one parent family credit for any subsequent year. They have written to the person concerned on the matter enclosing the relevant claim forms.
Disabled Drivers and Passengers Scheme
Ceisteanna (174)
Seán Kyne
Ceist:174. Deputy Seán Kyne asked the Minister for Finance if he will in the context of the European Court of Justice ruling of April 2013 which will see an end to the excise relief on the fuel element of the disabled drivers and disabled passengers scheme in December of this year, provide an update on the work to establish a new grant scheme for drivers or passengers with disabilities; and if he will make a statement on the matter. [23347/14]
Amharc ar fhreagraFreagraí scríofa
As the Deputy is aware in April 2013 the European Court of Justice ruled that the excise relief on fuel element of the Disabled Drivers and Disabled Passengers Scheme is incompatible with the EU Energy Tax Directive. My Department has informed the European Commission of my intention to remove the excise relief element of the scheme at the end of 2014 and replace it with a fuel grant scheme in 2015. The European Commission and has raised no objections.
Officials from my Department have been engaging with other Departments and the Revenue Commissioners in order to examine all the legislative, financing and payment implications of a new fuel grant scheme. I have instructed my officials to design the new grant scheme in such a way to provide as seamless a transition as possible between the two schemes.
When all the details of the new scheme have been worked out and finalised, the members of the Disabled Drivers and Disabled Passengers Scheme will be informed.
Disabled Drivers and Passengers Scheme
Ceisteanna (175)
Seán Kyne
Ceist:175. Deputy Seán Kyne asked the Minister for Finance if consideration will be given to increasing the maximum rebate allowance, currently at €9,500, to assist persons with mobility issues, such as wheelchair users, with the purchase of vehicles, particularly as the rebate has not been increased for a significant number of years; and if he will make a statement on the matter. [23351/14]
Amharc ar fhreagraFreagraí scríofa
The Disabled Drivers and Disabled Passengers (Tax Concessions) Scheme provides relief from VAT and Vehicle Registration Tax (up to a maximum of €9,525 for a driver with a disability, and a maximum of €15,875 for a passenger with a disability) on the purchase of a car adapted for the transport of a person with specific severe and permanent physical disabilities, to those who meet certain disability criteria. In addition, relief is provided in respect of excise duty on fuel up to a limit of 2,728 litres per twelve month period. Finally, an exemption from Motor Tax is provided for vehicles purchases under the Scheme.
The VAT, VRT and fuel excise relief of the Scheme costs approximately 44 million euros per year. As the Deputy will appreciate, in these difficult times and with the overarching requirement to restore the national finances, I am satisfied that I have been able to maintain the Scheme at its current levels. While all tax reliefs are considered annually in the context of the Budget and Finance Bill process, I do not have any plans to increase the level of the relief.
Strategic Banking Corporation of Ireland
Ceisteanna (176)
Seán Kyne
Ceist:176. Deputy Seán Kyne asked the Minister for Finance if it is envisaged that the Strategic Banking Corporation of Ireland will be available to local authorities and other regional organisations to assist in leveraging finance for small to medium-scale infrastructure projects; and if he will make a statement on the matter. [23356/14]
Amharc ar fhreagraFreagraí scríofa
As the Deputy will be aware, the Government on Thursday 22 May 2014 announced that over €500 million in additional credit will be made available to Irish SMEs through the establishment of the Strategic Banking Corporation of Ireland (SBCI).
The SBCI is a new company and it is intended that it will be initially financed by the German Promotional Bank KfW, the European Investment Bank (EIB) and the directed portfolio of the Ireland Strategic Investment Fund (ISIF). The involvement of KfW follows directly from discussion between the Taoiseach and Chancellor Merkel following Ireland's successful exit from the EU/IMF Programme on finding ways to reinforce Ireland's economic recovery.
Credit is the lifeblood of all businesses and SMEs will now be able to access loans of greater duration, with enhanced terms and potentially at a lower cost facilitated by the SBCI and its on-lending partners. Augmenting the SME credit landscape in Ireland, the SBCI will encourage greater competition in the SME lending sector, promoting economic growth and job creation in this key sector of our economy. The Government will be prioritising the passage of the required legislation through the Houses of the Oireachtas and I expect the SBCI to be facilitating lending before the end of this year.
The SBCI will be concentrating on the provision of credit to SMEs in its initial phase of operation. It is envisaged that its role will grow over time.
Economic Competitiveness
Ceisteanna (177)
Bernard Durkan
Ceist:177. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which this economy continues to remain competitive when compared with other competing jurisdictions within the EU and without; and if he will make a statement on the matter. [23404/14]
Amharc ar fhreagraFreagraí scríofa
Substantial progress has been made in improving Ireland's competitiveness in recent years. The real Harmonised Competitiveness Indicator (HCI) measures the trade weighted exchange rate for Ireland, adjusted for relative price developments in trading partners. From mid-2008 to end-2013 Ireland's real HCI fell by 15 per cent, indicating a significant improvement in competitiveness over the period and leaves Irish-based firms better equipped to compete internationally.
In addition, relatively low consumer price inflation over the last five years has meant that Irish price levels have converged considerably toward the euro area. For instance, annual HICP inflation in Ireland has been below that of the euro area average for every year since 2009. This trend has continued this year, with inflation for each of the first four months of this year coming in below the comparable rate in the euro area.
With the US and the UK being Ireland's biggest trading partners outside the euro area, fluctuations in the value of the euro against the US dollar and Sterling have a particular impact on Ireland's competitiveness. However, policy measures in these trading partners, such as those that stimulate domestic demand, can have the effect of depressing their currencies which in turn can prove positive for Ireland, often outweighing any competiveness losses.
My Department expects inflationary pressure to remain relatively muted this year with the recovery in domestic demand unlikely to result in the emergency of any significant domestic price pressures given the amount of spare capacity in the economy.
In terms of the GDP deflator, which accounts for price changes in all components of demand and so is the broadest measure of price developments in the economy, my Department is projecting an increase of 0.5 per cent this year. This reflects that the terms of trade effect is expected to be negative this year due partly to recent exchange rate developments.
Credit Availability
Ceisteanna (178, 185)
Bernard Durkan
Ceist:178. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he continues to receive indications from the banking sector regarding the availability of credit throughout the domestic market; if any particular issues have arisen which might indicate a lack of interest in lending by some institutions; the steps required to address this issue; and if he will make a statement on the matter. [23405/14]
Amharc ar fhreagraBernard Durkan
Ceist:185. Deputy Bernard J. Durkan asked the Minister for Finance the degree to which Government policy towards assisting small and medium-sized enterprises by way of enhanced lending for working capital or other purposes has been successful to date; and if he will make a statement on the matter. [23413/14]
Amharc ar fhreagraFreagraí scríofa
I propose to take Questions Nos. 178 and 185 together.
As the Deputy is aware, as part of the 2011 recapitalisation exercise, the Government imposed SME lending targets on AIB and Bank of Ireland for the three calendar years, 2011 to 2013. Each bank was required to sanction lending of at least €3 billion in 2011, €3.5 billion last year and €4 billion in 2013 for new or increased credit facilities to SMEs. Both banks have achieved their 2011 and 2012 targets. I am informed that both banks sanctioned circa €4bn in lending in 2013.
Having completed a process of deleveraging, both AIB and Bank of Ireland are now concentrating on growing their balance sheets. In this context, both banks recognise the need to increase business lending in the period up to 2016, including lending for working capital purposes, and have put on record their commitment to the SME sector. Although the targets were a useful policy intervention, the focus now needs to shift towards the collation and examination, on a monthly basis, of more granular data on the funding of the activities of SMEs from both AIB and Bank of Ireland, the wider banking sector and increasingly the non-bank funding sector. This focus is further underpinned by the commitments contained in the "Access to Finance" chapter in Action Plan for Jobs 2014. I recently wrote to the banks with a view to ensuring their continued commitment to work closely with my Department in faciliatating a positive business environment in which SMEs can prosper and contribute to economic growth, in addition to maintaining and increasing jobs in this vital sector. In addition, AIB and Bank of Ireland meet my officials on a quarterly basis to keep them abreast of issues pertaining to the SME sector, both in the area of SME lending and distressed SME borrowers.
Last week the Taoiseach announced the establishment of the Strategic Investment Banking Corporation (SBCI). The Government will be prioritising the passage of the enabling legislation through the Houses of the Oireachtas with a view to completion by the summer recess. In the initial phase of its existence the objective of the SBCI will be to improve the availability of credit to the SME sector. To achieve this, the SBCI will operate as a higher tier lender, providing funds to on-lending institutions. On-lending institutions will include Irish commercial banks and could also include foreign banks, specialist funds and other finance houses engaged in lending activities. Credit is the lifeblood of all businesses and SMEs will now be able to access loans of greater duration, with enhanced terms and potentially at a lower cost facilitated by the SBCI and its on-lending partners. This will promote greater competition in the SME lending sector, will encourage economic growth and job creation in this key sector of our economy. I expect the SBCI to be facilitating lending before the end of the year.
Economic Data
Ceisteanna (179)
Bernard Durkan
Ceist:179. Deputy Bernard J. Durkan asked the Minister for Finance the degree to which he and his Department continue to monitor the performance of all Government Departments and State or semi-State agencies with a view to maximisation of their contribution toward economic recovery; and if he will make a statement on the matter. [23406/14]
Amharc ar fhreagraFreagraí scríofa
The Government's Medium-term Economic Strategy (MTES) provides an overarching high-level integrated whole-of-Government framework to drive and facilitate the development of appropriate sectoral and horizontal policies which will be refined to take account of the MTES. Monitoring/implementation arrangements for the MTES are under consideration at present. This year we have begun the process of combining our former troika management team with our MTES team to create an Economic Development and Growth Office.
Implementation of the Action Plan for Jobs, which sets out the Government's strategy in relation to getting Ireland back to work is overseen by the Cabinet Committee on Economic Recovery and Jobs. The Action Plan for Jobs is a key component of the Government's response to the unemployment crisis and is a whole of government, multi-annual initiative which mobilises all Government Departments to work towards the objective of supporting job creation. The Department of Finance was actively involved in the compilation of the most recent plan for 2014 and monitors the implementation of actions for which it is responsible.
Following Ireland's exit from the IMF/ECB/European Commission Programme in December 2013, Ireland is now subject to post programme surveillance which is co-ordinated by my Department. This will involve twice yearly review missions. This has been a long standing feature of IMF programmes. In the case of the EU, this surveillance is part of the wider governance changes that have been put in place for all euro area Member States, which include the EU Semester, the six-pack and the two-pack regulations, to improve the way the euro area functions. Post programme surveillance includes an examination of the financial sector, fiscal and expenditure policy as well as the implementation of identified structural reforms across various areas of Government.
The Department of Public Expenditure and Reform has a very significant responsibility for all Departmental expenditure matters and the general performance of Departments.
Bank Charges
Ceisteanna (180)
Bernard Durkan
Ceist:180. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which bank charges in this country are comparable with those that exist in other EU jurisdictions; and if he will make a statement on the matter. [23407/14]
Amharc ar fhreagraFreagraí scríofa
The Programme Documents (the Memorandum of Understanding on Specific Economic Policy Conditionality and the Memorandum of Economic and Financial Policies) agreed following the 10th Review of the EU-IMF Programme of Financial Support include a commitment to carry out an assessment of banks' fee income by end-December 2013 as follows:
The authorities will assess banks' fee income relative to peers in selected other jurisdictions. Based on this assessment they will complete an external review of the regulation of bank fees.
The Department of Finance undertook this assessment and review. Part of the review process involved comparing bank charges in Ireland with those in other EU jurisdictions. In this regard the review found that:
- net fee and commission income divided by average assets in Irish banks was well below the average of their peers,
- net fee and commission are lower in the Irish banks than in their European peers relative to net interest income,
The review concluded that it would not be appropriate to repeal Section 149 of the Consumer Credit Act 1995 at this point in time. The lack of competition in the banking sector means that the removal of section 149 would give unfettered price setting power to the incumbent banks. This issue should be revisited when competition in the banking sector has improved significantly.
However, as part of the conditions under which the Irish banks received state aid, Ireland made various 'sectoral commitments' to the European Commission in order to promote competition in the Irish banking sector. Among these commitments, Section 1.1 (b) of the approved State Aid for Bank of Ireland states: "Legislation will be enacted that will provide that Section 149 of the Consumer Credit Act, 1995 regarding price regulation and fees will not be applied to new entrants in their first 3 years of commencing business in Ireland". This exemption was provided for under the Central Bank Supervision and Enforcement Act 2013.
In addition, the review conducted by the Department of Finance made a number of recommendations with regard to the process of assessing notifications under Section 149. The Central Bank of Ireland recently confirmed that it had begun to implement these recommendations. A copy of the report is available on the Department of Finance website.
Question No. 181 answered with Question No. 29.
House Prices
Ceisteanna (182)
Bernard Durkan
Ceist:182. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he and his Department have noted house price inflation; if such a trend is likely to cause economic disruption; and if he will make a statement on the matter. [23410/14]
Amharc ar fhreagraFreagraí scríofa
My Department continues to monitor developments in the property and construction sectors to ensure that the property market makes an appropriate contribution to wider economic performance.
When assessing the recent pick-up in house prices it is important to remember that residential property prices fell by just over 50 per cent from peak-to-trough and residential property prices nationally are still 47 per cent lower than at their highest level in September 2007. While much of the recent attention has focused on the Dublin market, prices in the capital are currently close to 50 per cent lower than at their peak in early 2007. It is against this background that the recent appreciation in house prices must be assessed.
In addition, it should also be noted that there are indications that a large percentage of residential property transactions are currently taking the form of cash purchases and mortgage lending is still at a small fraction of pre-crisis levels. Figures from the Irish Banking Federation show that the value of mortgage lending for house purchase in 2013 stood at €2.4 billion, or just 8 per cent of the value of mortgage lending in 2006.
While the demand for housing is a function of a number of economic and demographic factors, it is clear that current levels of housing output are running below estimates of medium- to long-run requirements as, for example projected by the ESRI and others, based on underlying demographics and other factors.
Therefore, and as outlined in the Medium-Term Economic Strategy and Construction 2020 - a strategy for a renewed construction sector, the Government is working to address the challenges in the property and construction sectors. This includes the development of an overall strategic approach to housing supply, identifying and implementing further improvements in the planning process to facilitate appropriate development, and seeking to improve financing options for development and mortgage provision.
Economic Data
Ceisteanna (183)
Bernard Durkan
Ceist:183. Deputy Bernard J. Durkan asked the Minister for Finance his views regarding the performance of all aspects of the economy in the post bailout period; if he has in mind any corrective measures; and if he will make a statement on the matter. [23411/14]
Amharc ar fhreagraFreagraí scríofa
Provisional figures show that GDP fell slightly last year as inter alia headwinds associated with patent-expiry in the pharma-chem sector depressed output and exports. By contrast, domestic demand stabilised and returned to growth in the second half of the year. The recovery in domestic demand helps explain the very strong labour market performance last year where employment growth outperformed expectations.
There is now growing evidence that recovery is gaining momentum. Activity is improving in most of Ireland's key export markets, which should support the exporting sectors. While patent expiry will continue to weigh on exports this year, available evidence suggests that the impact will not be as large as was the case last year. On the domestic front, the investment cycle has clearly turned, while strong employment growth, together with improving confidence, should support an increase in personal spending. Against this general background, my Department is projecting GDP to increase by 2.1 per cent this year (GNP by 2.7 per cent).
My Department expects that the pace of GDP growth will accelerate in 2015 and beyond, as the output gap closes and the pace of growth reverts to its estimated trend rate of 3.5 per cent. Employment is set to expand by around 2 per cent per annum with unemployment falling to 8 per cent by 2018.
The Government's Medium-Term Economic Strategy sets out the approach for jobs-rich economic growth over the period to the end of this decade. This involves a three pillar approach. Firstly, the Government is conscious that there remains scope for further improvements in competitiveness, including through structural reforms. These include targeted tax policy changes to stimulate activity in key sectors of the economy. The Action Plan for Jobs and Pathways to Work initiatives set out the Government's strategy for generating employment and engaging with the unemployed. In addition, the Government is working to ensure that sufficient credit is forthcoming in order to finance economic recovery. Finally, the Government recognises that sustainable public finances are a necessary condition for economic recovery. The immediate fiscal policy objective, therefore, remains the correction of the excessive deficit by next year. Thereafter, fiscal policy will be set in line with the requirement to move towards Ireland's medium-term budgetary objective, which is for a balanced budget in structural terms.
Any measures required in order to achieve the correction of the excessive deficit by next year will be announced in the Budget in October and will be based on the most up-to-date economic and fiscal data available at that time.