Written Answers Nos. 72-80
72. Deputy Finian McGrath asked the Minister for Finance his views on correspondence (details supplied) regarding the proposed changes to the regulation of community-based credit unions; and if he will make a statement on the matter. [8685/15]
Amharc ar fhreagraAs Minister for Finance, my role is to ensure that the legal framework for credit unions is appropriate for the effective operation and supervision of credit unions.
The Registrar of Credit Unions at the Central Bank is the independent regulator for credit unions. Within her independent regulatory discretion, the Registrar acts to support the prudential soundness of individual credit unions, to maintain sector stability and to protect the savings of credit union members.
On 27 November 2014, the Central Bank issued a consultation paper CP88 entitled 'Consultation on Regulations for Credit Unions on commencement of the remaining sections of the 2012 Act'. The Central Bank has provided a 3 month consultation process to provide an opportunity for stakeholders to set out their views across a range of issues, with a closing date for submissions of 27 February 2015. Following review of all submissions received the Central Bank has informed me that a feedback statement outlining the information received, the Central Bank's response and the final regulations for credit unions will then be published. All submissions received will be published on the Central Bank's website.[1] I am satisfied that the safety of members savings and the security of the credit union sector as a whole are central to any actions taken by the Registrar of Credit Unions.
The draft lending regulations set out in CP88 define the categories of lending a credit union can undertake but do not limit credit unions to charging interest rates based on the category of lending i.e. a credit union may charge different interest rates for loans within the same category of lending. Under the draft lending regulations where a credit union is providing home improvement loans these may be provided as personal loans or as house loans. Where such a loan is provided as a house loan the credit union must hold the first legal charge secured on the property. However, where such a loan is provided as a personal loan there is not a requirement to hold the first legal charge secured on the property.
The Commission on Credit Unions recommended the restructuring of the sector and on foot of this recommendation the Credit Union Restructuring Board, ReBo, was established. Restructuring is currently being carried out on a voluntary, incentivised and time-bound basis in line with the Commission recommendation. While restructuring can be used by credit unions as a means of addressing current weaknesses or as a business strategy for credit unions that wish to achieve the scale necessary to develop a more sophisticated business model, it is recognised that restructuring will not apply to all credit unions and that some credit unions will continue to operate on a stand-alone basis.
While the Government recognises the important role of credit unions as a volunteer co-operative movement in this country, it is vital that measures implemented will ensure a viable credit union sector into the future.
[1] http://www.centralbank.ie/regulation/industry-sectors/credit-unions/Pages/Communications.aspx#Fit
73. Deputy Michael McGrath asked the Minister for Finance , using records available to his Department and the Central Bank of Ireland, if he will provide details, for each financial institution with a banking licence, separate from the number and book value of residential and buy-to-let mortgages sold between 2010 to date in 2015; if he will identify the purchaser of the mortgage book in each case; if he will confirm, in each case, whether the purchaser is a regulated entity here; and if he will make a statement on the matter. [8701/15]
Amharc ar fhreagraI am informed by the Central Bank of Ireland that where regulated financial institutions sell part, or all, of their mortgage book to another regulated financial institution, the same protections apply to borrowers, including the CCMA and the Consumer Protection Code. Any agent acting on behalf of a regulated lender must comply with the requirements of Irish financial services law and failure to do so may result in the Central Bank imposing penalties on the regulated lender concerned.
I am also informed by the Central Bank that it has also communicated to firms its preference that the outcome of any sale of mortgage books by regulated entities would ensure continuity of borrower protections under Codes and also that the purchaser would have relevant policies and procedures, systems and control checks to appropriately manage a mortgage loan book.
In relation to the sale or transfer of loan books to third parties, Provision 3.11 of the 2012 Consumer Protection Code requires that regulated entities subject to that Code notify the Central Bank immediately where they intend to transfer all or part of their regulated activities to another regulated entity. In general however, the Central Bank has no role in approving the sale or transfer of loan books to third parties, and it has no data available at this time on the number and book value of such sales or transfers for the period requested. In addition, by virtue of an exemption in Part V of the Central Bank Act 1997, an unregulated entity to whom a cash loan is transferred by a regulated entity is not currently subject to Central Bank supervision under the Consumer Protection Code and CCMA.
However, I understand that most purchasers of loan books have stated they are voluntarily complying with the Codes. Of course voluntary compliance is not enforceable. In order to ensure that consumers maintain these protections, the Government committed in March 2014 to bringing forward legislation to protect consumers whose loans are sold to unregulated entities.
The Consumer Protection (Regulation of Credit Servicing Firms) Bill 2015 was published in January and second stage of the Bill was taken in the Dáil on 4 February. Since then, my officials have been in contact with the Central Bank and with the Office of the Attorney General to further progress the legislation. It remains my intention to ensure that borrowers whose loans are sold by a regulated entity to a currently unregulated entity maintain the same protections as they had prior to the sale. The Bill will continue its progress through the legislative process and I look forward to further discussion of the Bill at Committee Stage.
In relation to the data requested by the Deputy, I said in PQ 42363 on 5 November last that information from company announcements in the public domain would suggest that between 8,000 and 10,000 mortgages in total have been sold to unregulated entities in recent years. Since then, I understand that approximately 6,000 mortgages were sold by IBRC.
74. Deputy Michael McGrath asked the Minister for Finance if he, or officials from his Department, have had discussions with Ministers in the Stormont Executive, or their officials, regarding the proposal to cut the corporation tax rate in Northern Ireland; if he will state whether an assessment has taken place of the impact of a cut in the Northern Ireland corporation tax rate on the economy in the Republic; and if he will make a statement on the matter. [8702/15]
Amharc ar fhreagraI can advise the Deputy that neither I, nor my officials, have had discussions with Ministers or officials in the Stormont Executive in relation to the proposal to cut the corporate tax rate in Northern Ireland. Such an issue is a matter for the Stormont and UK Governments.
While a formal assessment has not been carried out in relation to the possible impact of a cut in the Northern Ireland corporation tax rate on the economy in the Republic, it is well known that Ireland is a supporter of fair tax competition and the OECD has consistently stated that low corporation tax rates combined with a broad base is the best way to encourage economic growth while still maintaining tax revenues. That is what we have being doing for many years and what we will continue to do.
The 12.5% rate is a central pillar of our taxation system but it is important to remember that attracting foreign direct investment and stimulating growth is about much more than just having a competitive tax rate. As I have stated many times, the Irish system is built upon the 3 Rs and while rate is a key feature, the other two Rs of regime and reputation are equally important in shaping a competitive taxation landscape.
Ireland would be fully supportive of any measures which would make the Island of Ireland, as a whole, more competitive but a low stable corporate tax rate is only one piece in the competitiveness jigsaw. A reform of the Northern Ireland corporation tax rate has the potential to generate benefits on both parts of the island.
75. Deputy Michael McGrath asked the Minister for Finance the amount of additional capital required by Permanent TSB, arising from the recent European Central Bank stress tests; the steps the bank, he and his officials are undertaking to address the shortfall; and if he will make a statement on the matter. [8703/15]
Amharc ar fhreagraThe Comprehensive Assessment Adverse Stress Test result announced in October 2014 identified a capital shortfall of €855 million. As a consequence the bank has submitted a Capital Plan to the SSM, which outlines how the bank intends to meet the capital shortfall. Much of the shortfall has been met through performance in 2014 and deleverage of assets in 2014. The remaining shortfall will require the bank to raise capital, including equity capital, from private sources before 26 July 2015, diluting the State's shareholding. Details of the capital raise, including quantum and structure, will be finalised and publicised in due course .
I am of the view that the best way to protect the value of the State's shareholding is to ensure Permanent TSB is well prepared, that it conducts a comprehensive and competitive exercise to raise the capital with appropriate legal and financial advice, and that the State has meaningful oversight and involvement in the process. Officials from my Shareholding Management Unit and our financial advisers, JP Morgan Cazenove, are well placed to fulfil this role and are engaging with the bank on important aspects of the capital raise on a regular basis.
76. Deputy Michael McGrath asked the Minister for Finance the number of debtors the National Asset Management Agency, NAMA, had on its books when all the loans were transferred; the number of debtors and the book value of loans that remain on the agency's books; the number of debtors the agency has concluded a final deal with; the number of such deals that involve balances owed to the agency being ultimately written off; and if he will make a statement on the matter. [8704/15]
Amharc ar fhreagraNAMA originally paid €31.8 billion to acquire a €74 billion loan book, comprising of 779 debtor connections. I am informed that as at 30 September 2014, in accordance with NAMA's most recent published accounts, the carrying value of NAMA's loans amounted to €14.6 billion, comprising 670 debtor connections. Of the 109 debtor connections that have reached a final agreement with NAMA, 62 relate to debtor connections whose loans were sold and 47 to debtor connections where NAMA has concluded a final settlement agreement directly with the debtor connections resulting in no remaining par debt being owed to NAMA. As at 30 September 2014, of the original €74 billion par debt acquired, the total amount of debt compromised or written off by NAMA as part of such final settlement agreements is €0.3 billion. This debt is written off when all the assets are disposed of and there is no further financial recourse available. NAMA will, as in previous annual reports, include, as part of its 2014 Annual Report and Financial Statements which are expected to be published in May 2015, a full reconciliation of the movement of its loans and receivables balance, including all debt written off.
77. Deputy Terence Flanagan asked the Minister for Finance his views on house prices in Dublin and the new mortgage rules introduced by the Central Bank of Ireland recently; and if he will make a statement on the matter. [8706/15]
Amharc ar fhreagraI am aware of recent price dynamics in the residential property prices in Dublin, which according to the CSO, have risen by 22 per cent in the 12 months to December 2014. However, in the last two months there are tentative indications of a moderation in price growth in Dublin; the monthly rate of property price growth was -0.1 per cent in November and was 0.3 per cent in December. This compares to an average monthly growth rate of close to 3 per cent in the six months prior to November 2014.
The Government recognises that the main driver of house price growth in Dublin is a shortage in the supply of housing to meet growing demand. Under Construction 2020 Strategy: A Strategy for A Renewed Construction Sector, the Government has set out its strategy to address the issues that are impeding a fully functioning construction and property market. My Department along with other relevant Departments and bodies, is involved in a range of actions as part of the Strategy which addresses among other issues housing supply, planning issues, sustainable development financing, sustainable mortgage lending, as well as addressing legacy issues associated with the property bubble.
The recently introduced macro prudential residential mortgage lending rules by the Central Bank are one of a number of instruments at the Central Bank's disposal to strengthen the resilience of the banking system and the household sector against sudden house price changes. To the extent that the new regulations contribute to sustainable mortgage credit lending and affect buyers' price expectations, this may contribute to a lowering of the current growth rate of property prices in Dublin.
78. Deputy Terence Flanagan asked the Minister for Finance his views on tax breaks lost for those who purchased hotels in 2009 and the scrapping of tax reliefs in 2015; and if he will make a statement on the matter. [8715/15]
Amharc ar fhreagraIt is understood that the Deputy is referring to measures, introduced in section 17 of the Finance Act 2012, intended to reduce the legacy of property reliefs in line with Government policy to develop a fairer tax code. These measures followed an Economic Impact Assessment undertaken by my Department of provisions, introduced in Finance Act 2011, which were never commenced and which have been repealed. In providing a cut-off point in 2015, when introducing these provisions, I allowed time for persons affected to take steps to minimize the impact on them.
The provisions of section 17 (now contained in Chapter 4A of Part 12 of the Taxes Consolidation Act 1997) apply only to the various accelerated property and area-based capital allowance schemes. The ordinary industrial buildings allowance or the wear and tear allowance for plant and machinery are unaffected. Additionally, these measures apply solely to passive investors. Persons who are actively engaged in their respective trades are not affected. With effect from the beginning of 2015 any unused accelerated capital allowances, which are carried forward beyond the tax life of the expenditure on the building or structure to which they relate, are immediately lost. This essentially means that if the tax life has ended at any time up to the end of 2014, then the unused allowances are lost in 2015. On the other hand if the tax life is due to end later than 2014, the allowances are lost after the end of the tax life of the expenditure.
Capital allowances for expenditure incurred on the construction of hotels are long standing and have been available at various rates over the years. Subject to transitional arrangements, expenditure incurred up to 31 July 2008 on the construction of a hotel could qualify for accelerated capital allowances at a rate of 15% per annum for the first 6 years and 10% in year 7. For expenditure incurred after 31 July 2008, or where the transitional arrangements were not met, the ordinary rate of 4% per annum over 25 years applies. The provisions of Chapter 4A of Part 12 of the Taxes Consolidation Act 1997 only apply to expenditure which qualifies for the accelerated rate of capital allowances of 15% for 6 years and 10% in year 7 and only where the allowances are being claimed by a passive investor. The tax life of expenditure on a hotel which qualified for accelerated capital allowances was 7 years from first use of the building.
The Government understands the importance of the hotel industry and has extended the 9% rate of VAT for the hospitality sector and extended the Employment and Investment Incentive to include hotels, guest houses and self-catering accommodation in recent Budgets.
79. Deputy Catherine Murphy asked the Minister for Finance if he will provide a copy of the relationship framework which governed the interactions between his Department and the former management and board of the Irish Bank Resolution Corporation, IBRC, prior to its liquidation; if he will indicate the precise financial thresholds under the framework which would have triggered mandatory consultation in advance of a transaction and-or disposal; if he will provide a list of all instances where such consultation took place and the sums involved; and if he will make a statement on the matter. [8718/15]
Amharc ar fhreagraA copy of the Relationship Framework (including the Operational Protocol), which governed interactions between me, as Minister for Finance, and Irish Bank Resolution Corporation can be found on the Department of Finance website through the below link:
http://www.finance.gov.ie/sites/default/files/Relationship%20Framework%20incorporating%20Operational%20Protocol.pdf
Paragraph 4 of the Operational Protocol for the Relationship Framework in respect of Irish Bank Resolution Corporation contains the consent/consultation procedure between the Bank and I, as Minister for Finance.
Paragraph 4 of the Operational Protocol states that, "For the purposes of paragraph 14 of the Relationship Framework, the Bank shall consult with the Minister in accordance with the Consent/Consultation Procedure in respect of any proposed decision or action that is within the Ordinary Course of Business but which:
4.1 is likely to have an adverse impact on total regulatory capital of the Bank of greater than €100 million;
4.2 is an actual or potential acquisition, investment or disposal (or series of related transactions) and the total purchase price, investment or proceeds individually or in aggregate could exceed €100 million; or
4.3 is a realisation, reorganisation, restructuring or other transaction or event and it is likely to have an adverse impact on the total equity of the Bank of greater than €100 million."
The Relationship Framework outlines the instances in which Irish Bank Resolution Corporation was required to gain consent from me or consult with me, as Minister for Finance, and these instances went beyond individual transactions and/or disposals; they also included consent for board approvals, management appointments and litigation matters. In total, there were 29 instances where the Bank required Ministerial consent or consultation but given customer confidentiality in certain instances and on-going litigation in other instances, I am unable to provide further detail on the individual instances where Ministerial consent or consideration was required.
80. Deputy Denis Naughten asked the Minister for Public Expenditure and Reform the total cost of each by-election to the current Dáil; and if he will make a statement on the matter. [8485/15]
Amharc ar fhreagraThere have been six by-elections to the current Dáil which are listed in the table below together with the estimated costs, where available. Three of the by-elections were held on the same day as another election event in that constituency and, therefore, the by-election costs reflect savings from a sharing of people and facilities. There were also savings in the cost of free postage for candidates for the Dublin West 2014 and Longford-Westmeath 2014 by-elections as, where possible, one item of election material was sent to each household in the constituency rather than to each person on the Electoral Register.
The final costs of the Dublin South and Roscommon / South-Leitrim are not available as final accounts from Returning Officers are not due until six months after the election.
|
By-Election |
Estimated Cost |
Note: |
|
Dublin West 2011 |
€424,500 |
Held with Presidential Election |
|
Meath-East 2013 |
€472,900 |
# |
|
Dublin West 2014 |
€276,900 |
Held with Euro and Local Elections |
|
Longford-Westmeath 2014 |
€401,700 |
Held with Euro and Local Elections |
|
Dublin South 2014 |
Not available |
Accounts to be finalised 6 mths after the election |
|
Roscommon / South-Leitrim 2014 |
Not available |
Accounts to be finalised 6 mths after the election |
