Written Answers Nos. 56-66
56. Deputy Eric Byrne asked the Minister for Finance if he will provide an explanation of the way an insurance company can suddenly deem an area to be a flood area without notice, and subsequently refuse to make home insurance cover available; the way the said insurance company can also refuse to provide cover for home contents, as well as risks including fire, theft, and so on; and if he will make a statement on the matter. [17983/15]
Amharc ar fhreagraThe provision of flood cover is a commercial matter for insurance companies, which is based on an assessment of the risks they are accepting and the need to make adequate provisioning to meet these risks. As a matter of course, insurance companies carry out reviews of the risks against which they are prepared to insure and sometimes make decisions to discontinue certain types of cover which they consider high risk. Insurance Ireland has indicated that 98% of policyholders have household insurance which includes flood cover.
In order to help those who have been affected by flooding, Government policy aims to address the underlying problem through appropriate remedial works where this is economically feasible. The Office of Public Works is committed to alleviating the impact of flooding through the provision of defences as well as a comprehensive assessment of flood risk throughout the country and development of flood risk management plans for the areas most at risk under the National Catchment Flood Risk Assessment & Management (CFRAM) Programme. This commitment is underpinned by a significant capital works investment programme on flood relief measures. Works are completed on a prioritised basis. Once these works are completed the availability of flood insurance in affected areas would be expected to increase.
The OPW and Insurance Ireland have agreed a Memorandum of Understanding on a sustainable system of information sharing in relation to completed flood alleviation schemes. The outcome of this arrangement, which came into effect in June 2014, is that the insurance industry will have a much greater level of information and understanding of the extent of the protection provided by completed OPW flood defence works and will therefore be in a position to reflect this in assessing the provision of flood insurance to householders in areas where works have been completed. The arrangements set out in the Memorandum represent an ongoing process which, over time, should lead to an improvement in the availability of flood insurance cover.
The OPW and the Department of Finance will continue contact with Insurance Ireland to review the operation of the Memorandum of Understanding.
In cases where individuals are experiencing difficulty in obtaining flood insurance and believe that they are being treated unfairly it is open to them to contact Insurance Ireland which operates a free Insurance Information Service for those who have queries, complaints or difficulties in relation to insurance. Their service can be contacted at (01) 6761914 or by email at info@insuranceireland.eu
57. Deputy Tom Fleming asked the Minister for Finance if he will reduce the figure taken by the controversial pension levy, which was imposed on pension schemes of persons who are saving for a rainy day, and was designed as a fund for job creation, which he promised would be ended by December 2014 and then again at the end of 2015; and if he will make a statement on the matter. [17989/15]
Amharc ar fhreagraThe pension fund levy was introduced in 2011 to fund the Jobs Initiative, which has been very successful in both helping to create and to maintain employment in this economy. The levy applied at a rate of 0.6% for the years 2011 to 2014. An additional levy of 0.15% applied for 2014, bringing the aggregate to 0.75% in that year; the rate of 0.15% applies for this year. In accordance with the provisions in section 125B of the Stamp Duties Consolidation Act 1999, the stamp duty levy on pension fund assets will end after 2015.
58. Deputy Michael Healy-Rae asked the Minister for Finance the reason persons who are involved with a case in a family court cannot claim money back on the legal fees spent, but if it was a criminal case, the money could be claimed back; and if he will make a statement on the matter. [18034/15]
Amharc ar fhreagraI am informed by the Revenue Commissioners that there is no provision in tax law under which an individual can claim a tax deduction in respect of legal fees incurred in family law or criminal cases.
For the sake of completeness, I wish to inform you that, in certain circumstances, Revenue will not seek to impose a tax charge where an employer pays legal fees on behalf of a director or employee in connection with:
(a) an investigation or disciplinary procedure instigated by the employer, or
(b) an action taken by the director or employee seeking compensation for loss of office or employment or, for example, for breaches of employment law by the employer.
The Deputy's question may relate to the availability of legal aid, which is primarily a matter for my colleague, the Minister for Justice and Equality.
59. Deputy Michael Healy-Rae asked the Minister for Finance his views on correspondence (details supplied) regarding return of oil movements returns; and if he will make a statement on the matter. [18035/15]
Amharc ar fhreagraI am advised by the Revenue Commissioners that they have instituted a comprehensive strategy to tackle fuel laundering, through enhanced supply chain controls, the acquisition of a more effective fuel marker and continued robust enforcement action. The supply chain controls are designed to make it difficult for fuel criminals to source marked fuel for laundering and to get laundered product onto the market. Under these controls, all mineral oil traders and each premises or place used by them, must be licensed by Revenue. A licensed mineral oil trader is obliged to make a monthly return (the ROM1) to Revenue of all fuel transactions at the premises or place licensed and this data is analyzed by Revenue to identify suspicious patterns and anomalies in the supply chain. To allow effective and timely analysis of the large volumes of data contained in the returns, the ROM1 must be submitted electronically, in a format specified by Revenue.
The Commissioners inform me that, in exceptional cases, a licensed mineral oil trader may apply to them for approval to submit his or her ROM1 return in paper format. These applications are determined on the basis of whether the trader can show that he or she could not reasonably be expected to have the capacity to make the return by electronic means. The trader has the right to appeal to the Appeal Commissioners against a refusal by Revenue to make an exception in any particular case.
60. Deputy Bernard J. Durkan asked the Minister for Finance if it is expected to introduce guidelines to encourage lending institutions intent on family home repossession to observe the need to accommodate borrowers by way of restructuring where family illness or circumstances outside their control has affected their ability to make full payment, and particularly where borrowers have consistently been making payments to the best of their ability, notwithstanding the lenders' insistence with current criteria, in view of the fact that the lending institutions originally granted the facility; and if he will make a statement on the matter. [18036/15]
Amharc ar fhreagraAs the Deputy is aware, the Government has put in place a broad strategy to address the problem of mortgage arrears and family home repossessions. A central pillar of this strategy in ensuring fair treatment of borrowers in arrears is the Code of Conduct on Mortgage Arrears (CCMA). The Code was first published in 2009 and has been updated on a number of occasions since. The CCMA sought to deliver on the following established principles:
1. Ensure the appropriate resolution of each borrower's arrears situation;
2. Ensure that lenders deal with borrowers in a fair and transparent manner;
3. Support and facilitate meaningful engagement between lenders and borrowers; and
4. Ensure borrower awareness of the benefits of cooperating with their lender and the consequences of not cooperating.
I am informed by the Central Bank that the CCMA applies to all regulated mortgage lenders operating in the State when dealing with borrowers facing or in mortgage arrears on their primary residence, including any mortgage lending activities outsourced by these lenders.
The CCMA provides a strong consumer protection framework to ensure that borrowers struggling to keep up mortgage repayments are treated in a fair and transparent manner by their lender, and that long-term resolution is sought by lenders with each of their borrowers. All cases must be handled sympathetically and positively by the lender, with the objective at all times of assisting the borrower to meet his/her mortgage obligations. A lender may only commence legal proceedings for repossession where it has made every reasonable effort under the Code to agree an alternative repayment arrangement with the borrower or his/her nominated representative and the specific timeframes set out in the Code have been adhered to or the borrower has been classified as not co-operating.
Where a borrower engages with his lender with a view to putting in place a restructure arrangement to address his/her mortgage arrears situation, repossession of the family home should only be considered as a last resort. The Central Bank's most recent quarterly release on Residential Mortgage arrears and Repossessions (Q4 2014) indicates that almost 115,000 restructure arrangements have been put in place up to the end of December and of these almost 85% were deemed to be meeting the terms of their arrangement. This shows that active engagement can deliver positive results and in the majority of cases will enable a borrower in mortgage distress to remain in his/her family home.
Many borrowers can also find solutions through the options offered by the Insolvency Service of Ireland and Government will ensure that the personal insolvency process is as fair and effective as possible and that the objectives as set out in the original Personal Insolvency Act are realised as much as possible. My colleague, the Minister for Justice and Equality, and her officials are actively preparing amendments to the legislative framework for personal insolvency aimed at enabling Government's objectives in this regard to be met and allowing more people in distressed debt to access the available mechanisms than has been the case to date.
The effective management of mortgage arrears is, however, an area that remains under continuous review. More and concerted action can be undertaken by the banks to assist customers in arrears and, as the Taoiseach has previously announced, the Government is considering a range of options to support the existing framework and to improve the update of personal insolvency solutions.
61. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which this economy remains competitive, as compared with other eurozone and non-eurozone European Union member states; and if he will make a statement on the matter. [18037/15]
Amharc ar fhreagraSubstantial progress has been made in improving Ireland's competitiveness in recent years.
There has been a significant improvement in Ireland's economy-wide cost competitiveness. From the European Commission's most recent spring forecasts, it can be estimated that nominal unit labour costs in Ireland fell by nearly 8 percent between 2008 and 2014. This compares with an increase of 12 per cent in the UK and 8 per cent in the euro area over the same time period.
In addition, relatively low consumer price inflation over the last number of years has contributed to the improvement in Ireland's competitiveness because Irish price levels have fallen considerably relative to those of our euro area peers. For instance, annual HICP inflation in Ireland has been below that of the euro area average for every year since 2009.
The European Central Bank's Expanded Asset Purchase Programme (EAPP) which began on 9 March, has been associated with a depreciation of the euro in recent months. With the US and the UK being Ireland's biggest trading partners outside the euro area, a depreciation of the euro against the dollar and sterling have a particularly positive impact on Ireland's competitiveness and therefore the export potential of firms in Ireland. The real Harmonised Competitiveness Indicator (HCI) measures the trade weighted exchange rate for Ireland, adjusted for relative price developments in trading partners. Between April 2008 and March 2015 Ireland's real HCI fell by over 23 per cent, indicating a significant improvement in competitiveness over the period.
The gains in Irish competitiveness achieved since 2008 have been hard-won through productivity improvements, wage and price moderation. It is important that this competitiveness is preserved and continues to support growth. In this regard we must be cognisant that favourable exchange rate movements and gains from the fall in oil prices may unwind in the future. Therefore we need to stay focused on continuing to improve Ireland's competitiveness through other channels such as wage and productivity improvements.
62. Deputy Bernard J. Durkan asked the Minister for Finance the degree to which all economic indicators have been stress tested, to verify the extent to which this economy remains on recovery and a sound economic development course; and if he will make a statement on the matter. [18038/15]
Amharc ar fhreagraMy Department analyses all economic indicators continuously throughout the year to provide up-to-date policy advice and to produce the economic forecasts that underpin the Budget and Stability Programme Update.
In general, recent indicators have been positive, indicating that the recovery is gaining momentum and becoming more broad based.
First estimates of economic activity for 2014 show that annual GDP increased by 4.8 per cent while GNP rose by 5.2 per cent. Encouragingly, domestic demand made its first positive contribution to growth since the crisis began with consumption increasing by 1.1 per cent in 2014 compared to 2013 and investment up 11.3 per cent over the same period. Exports rose by 12.6 per cent annually with imports rising by 13.2 per cent.
The economic recovery is perhaps most clearly evident in the labour market where we have now had nine successive quarters of solid employment growth. As a result, the unemployment rate has fallen 5 percentage points since its peak in early 2012.
High frequency data relating to 2015 have also been encouraging:
- Consumer spending has been strong in Q1 2015 with retail sales up by almost 9 per cent year on year. Core sales (excluding motor trades) were up close to 5 per cent over the same period.
- Investment is also growing with both building/construction and machinery/equipment spending on a rising path. Recovery in the construction sector continued in March with the Purchasing Managers' Index for the sector recording its nineteenth successive month of expansion.
- These encouraging macroeconomic data are mirrored in the total taxation receipts which are up strongly in the first four months of the year.
My Department published its latest macroeconomic forecasts in April with the Stability Programme Update 2015. GDP is expected to expand by 4.0 per cent in 2015 and by 3.8 per cent in 2016. Over the remainder of the decade, Departmental estimates indicate that the economy has the capacity to grow by around 3-3¼ per cent per annum. These forecasts reflect the latest economic indicators and demonstrate that a sustained recovery is under way.
63. Deputy Bernard J. Durkan asked the Minister for Finance if consideration remains to be given to the raising of specific Government bonds to fund particular areas where infrastructural deficits have been identified; and if he will make a statement on the matter. [18039/15]
Amharc ar fhreagraThe proceeds of all borrowings by the Exchequer, as well as tax revenues, non-tax revenues and other receipts are lodged to the Exchequer account at the Central Bank of Ireland to fund on-going Government expenditure.
The National Treasury Management Agency (NTMA) has advised that project-specific bonds issued by the State which are linked to a specific project and which are serviced and repaid from the Exchequer in the same way as standard Government bonds, may be of limited interest to investors as they would be concerned about a relative lack of liquidity. Investors in project-specific bonds would require higher yields than standard Government bonds to reflect the lower liquidity. Such project-specific bonds, if issued by Government, would be on the Government's balance sheet.
However in the case of a Public Private Partnership (PPP), where the State selects a private consortium to Design, Build, Finance & Operate State infrastructure, that private consortium can issue project-specific bonds. Such bond issuance may be deemed to be outside of General Government provided that the necessary risks are contractually transferred to the private sector in line with Eurostat rules. The latter type bonds are considered by investors to carry significantly more risk than standard Government issued bonds and consequently require higher yields to reflect the risk profile. The National Development Finance Agency (NDFA) has advised that there is currently a strong supply of funders/investors for PPP projects.
I am happy to confirm that the Government remains committed to exploring alternative means of financing capital projects. The NDFA is charged with advising on the optimal means of financing the costs of all public investment projects over €20 million in order to achieve value for money, including the €2.25 billion stimulus package announced by the Government in July 2012. NDFA continues to facilitate securing funding for both PPPs and non-PPP capital projects from a wide range of sources including domestic and international banks, institutional investors and supranational organisations such as the European Investment Bank and the Council of Europe Development Bank.
64. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he remains satisfied that he and his Department have identified most, or all, of any likely obstacles to continued, consistent economic development over the next five years; and if he will make a statement on the matter. [18040/15]
Amharc ar fhreagraMy Department consistently monitors risks and obstacles to economic development over the short- to medium-term. The identification of potential obstacles is essential in the context of economic and fiscal forecasting.
This year, my Department expects the economy to grow by 4 per cent and to grow by 3.8 per cent next year. Over the medium term, the economy can probably grow by around 3-3¼ per cent per annum on a sustainable basis. Achieving these growth rates is contingent upon many factors including trading partner growth, continued improvements in competitiveness, sustainable public finances, access to credit, etc.
We have no control over some of these, but we do over others. As set out in the Spring Economic Statement (SES), the Government is using all policy instruments available to ensure continued improvements in competitiveness, sustainable public finances and improved access to credit. So we are putting in place the framework conditions to help ensure medium-term growth rates of around 3-3¼ per cent per annum are achieved.
But of course there are risks, and in this context the Stability Programme Update (published alongside the SES) sets out a number of potential risks to continued economic development. Quantitative estimates of the impact of particular risks emerging are also provided.
A broader array of risks will be set out in the forthcoming National Risk Assessment 2015. Its purpose is to identify the risks which Ireland faces and therefore ensure appropriate prevention and mitigation measures are in place.
65. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which total national debt as a percentage of gross domestic product has remained constant, or has fluctuated, over the past three years; and if he will make a statement on the matter. [18041/15]
Amharc ar fhreagraAs per the Deputy's request debt as a percentage of GDP for the past three years can be outlined as follows:
|
2012 |
2013 |
2014 |
|
|
National debt (€m) |
137,632 |
173,947 |
182,310 |
|
General government debt (€m) |
210,238 |
215,328 |
203,319 |
|
GDP (€m) |
172,755 |
174,791 |
185,412 |
|
National debt (% GDP) |
79.7 |
99.5 |
98.3 |
|
General government debt (%GDP) |
121.7 |
123.2 |
109.7 |
Source: Central Statistics Office (CSO)
It should be noted that National Debt is the net debt incurred by the Exchequer after taking account of cash and other financial assets while General Government Debt (GGD) is a measure of the total gross consolidated debt of the State compiled by the Central Statistics Office (CSO). This is the measure used for comparative purposes across the European Union.
As per the recently published 'Stability Programme Update 2015' the debt to GDP ratio is expected to have peaked in 2013 and has continued on a downward trajectory since this date.
The Deputy should also be made aware that the aforementioned figures are published on the CSO website.
66. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which house property prices continue to impact negatively or positively on the economy in general; and if he will make a statement on the matter. [18042/15]
Amharc ar fhreagraAccording to the Central Statistics Office, national residential property prices increased by 16.8 per cent over the 12 months to March. Looking at more recent trends, prices decreased by 0.9 per cent in the first quarter of 2015, although the latest figures for March indicated a monthly price increase of 0.9 per cent. It is too soon to say whether the recent developments in prices represent a break from the property price inflation pattern exhibited over the past two years.
Rising residential property prices can impact on the economy through a number of channels.
The current situation is one where housing supply has not yet responded commensurately to the increase in demand in urban areas, the latter driven by underlying demographic factors and by the economic recovery. In this context, an increase in residential property prices can be expected to lead to an increase in the supply of new housing to the market. An increase in property prices improves the profitability of construction and should encourage developers to construct new housing, resulting in an increase in the level of supply. There is some evidence to show that housing supply is beginning to respond. Over the last year over 11,000 housing units were completed nationally representing more than a 30 per cent increase over the previous year.
Furthermore, rising property prices add to market liquidity as owners and investors bring second hand properties to the market. A more liquid property market should help support individuals' mobility within the economy.
Residential property price increases are also relevant in alleviating the extent of negative equity and household over-indebtedness. The reduction in negative equity should improve mobility amongst those affected, further supporting the economy's recovery. In addition, increasing property prices may lead to an increase in consumption though a wealth effect.
Rising property valuations also have a direct impact on our bank investments. To the extent that they feed through positively to impairment provisions, it further strengthens the banks' capital positions and consequently improves the valuation of the State's shareholdings. In addition rising values can also assist the credit channel through the provision of stronger collateral.
On the other hand, excessive property price increases could adversely affect the affordability of accommodation. This could restrict individuals' mobility and harm our economic competitiveness. In light of this, a return to affordability levels seen at the peak of the property bubble would be unwelcome.
As the Deputy will be aware, it is Government policy to tackle the impediments and barriers to housing supply which should contribute to a reduction in property price pressures. Construction 2020 sets out the Government's strategy for addressing issues in the property and construction sectors. The strategy involves ensuring that any critical bottlenecks impeding the sector in meeting residential and commercial demand are addressed. It incorporates 75 time-bound actions encompassing the development of an overall strategic approach to housing supply, identifying and implementing further improvements in the planning process, and seeking to improve financing options for development and mortgage provision. This work is complemented by the Social Housing Strategy which was launched last November. This Strategy aims to provide more than 35,000 new homes to meet social housing needs by 2020 and to deliver up to 75,000 units of long term accommodation through local authority housing support schemes for tenants.
