Wednesday, 18 May 2016

Written Answers Nos. 33-53

Visa Applications

Ceisteanna (33)

Thomas Byrne

Ceist:

33. Deputy Thomas Byrne asked the Tánaiste and Minister for Justice and Equality the status of an application by a person (details supplied) for a D type long stay visa. [10881/16]

Freagraí scríofa

Tánaiste and Minister for Justice and Equality

I am informed by officials in the Irish Naturalisation and Immigration Service (INIS) of my Department that an application for a 'join family' visa from the person referred to by the Deputy was received in the Visa Office, Dublin on 19 April, 2016. I am further advised that 'join family' visa applications, where the sponsor is an Irish national, can be expected to be dealt with within 6 months of receipt of all the required documentation as set out in the Family Reunification Policy Document published on 1 January, 2014. This business target reflects the detailed assessment that is required to be carried out in relation to applications for family reunification. Applications are processed in order of date received in the Dublin Visa Office.

The Deputy may wish to note that queries in relation to the status of individual immigration cases may be made directly to the INIS by e-mail using the Oireachtas Mail facility which has been specifically established for this purpose. This service enables up to date information on such cases to be obtained without the need to seek information by way of the Parliamentary Questions process. The Deputy may consider using the e-mail service except in cases where the response from the INIS is, in the Deputy’s view, inadequate or too long awaited.

In addition, applicants may themselves e-mail queries directly to INIS ([e-mail]).

Deportation Orders

Ceisteanna (34)

Bernard Durkan

Ceist:

34. Deputy Bernard J. Durkan asked the Tánaiste and Minister for Justice and Equality to revoke a deportation order in the case of a person (details supplied); and if she will make a statement on the matter. [10885/16]

Freagraí scríofa

Tánaiste and Minister for Justice and Equality

I am advised by the Irish Naturalisation and Immigration Service (INIS) of my Department that the person concerned is the subject of a Deportation Order made on 25 May 2011.

Representations were received from the person's legal representative, to request the Minister to use her discretion, pursuant to Section 3 (11) of the Immigration Act 1999 (as amended), to revoke the Deportation Order. The Deputy might wish to note that any such decision will be to 'affirm' or to 'revoke' the existing Deportation Order. In the mean-time, the Deportation Order remains valid and in place.

Queries in relation to the status of individual immigration cases may be made directly to the INIS of my Department by e-mail using the Oireachtas Mail facility which has been specifically established for this purpose. This service enables up to date information on such cases to be obtained without the need to seek information by way of the Parliamentary Questions process. The Deputy may consider using the e-mail service except in cases where the response from the INIS is, in the Deputy’s view, inadequate or too long awaited.

Judicial Council Legislation

Ceisteanna (35)

Michael McGrath

Ceist:

35. Deputy Michael McGrath asked the Tánaiste and Minister for Justice and Equality if she will establish a judicial council with lay representation; if she will provide an effective mechanism for dealing with complaints against judges; and if she will make a statement on the matter. [10889/16]

Freagraí scríofa

Tánaiste and Minister for Justice and Equality

Legislation is being drafted to provide for the establishment of a Judicial Council. It is intended that the key functions of that Council would encompass the maintenance and promotion of excellence in the exercise by judges of their judicial function and of high standards of conduct among judges.

The model, which will of course be subject to consideration and approval by Government in the context of the publication of the Bill in due course, provides for lay membership on the Judicial Conduct Committee which is a key component being established under the Bill and which will be responsible for facilitating the investigation of allegations of judicial misconduct. The proposed legislation also envisages the creation of a number of Committees to support the Judicial Council in areas, for example, such as continuing education and professional development and these Committees may provide an opportunity for participation by persons who are not judges but who do have appropriate expertise and experience in the relevant subject matter.

Work on the drafting of the Bill continues in conjunction with the Office of the Attorney General, and my Department is working closely with that Office to bring that work to a timely conclusion.

Residency Permits

Ceisteanna (36)

Bernard Durkan

Ceist:

36. Deputy Bernard J. Durkan asked the Tánaiste and Minister for Justice and Equality the status of an application by a person (details supplied) for residency status and eligibility for naturalisation; and if she will make a statement on the matter. [10904/16]

Freagraí scríofa

Tánaiste and Minister for Justice and Equality

I am advised by the Irish Naturalisation and Immigration Service (INIS) of my Department that the person concerned has been granted permission to remain in the State for a three year period following the consideration of their case under Section 3 (6) of the Immigration Act 1999 (as amended). This decision was conveyed in writing to them by letter dated 15th March, 2016.

It will be open to the person concerned to apply to the Citizenship Section of my Department for a Certificate of Naturalisation when they are in a position to meet the lawful residency criteria applicable to the lodgement of such applications. Details on the criteria to be met by persons lodging such applications are available from my Department's Website (www.justice.ie).

Queries in relation to the status of individual immigration cases may be made directly to the INIS of my Department by e-mail using the Oireachtas Mail facility which has been specifically established for this purpose. This service enables up to date information on such cases to be obtained without the need to seek information by way of the Parliamentary Questions process. The Deputy may consider using the e-mail service except in cases where the response from the INIS is, in the Deputy’s view, inadequate or too long awaited.

Tax Credits

Ceisteanna (37)

Dara Calleary

Ceist:

37. Deputy Dara Calleary asked the Minister for Finance if an unmarried but co-habiting father or mother who is returning to the workforce can claim tax credit allowances in respect of their children; and if he will make a statement on the matter. [10820/16]

Freagraí scríofa

Minister for Finance

There is no general tax credit in respect of the care of a child available to cohabiting parents, whether married or unmarried, returning to the workforce.

The Deputy will be aware that childcare is often a consideration for a parent returning to work, particularly in the case of the second parent. The Early Childhood Care and Education Programme, which is operated by my colleague, the Minister for Children and Youth Affairs, Dr. Katherine Zappone T.D., provides a free pre-school programme for children. This programme was extended in Budget 2016 to apply to children from the age of 3. In addition to the learning and development opportunities for the children, this scheme also reduces childcare costs for parents, facilitating greater workforce participation.

In the Programme for a Partnership Government there are a number of measures aimed to support parents and children. These include supporting the introduction of a robust model for subsidised high quality childcare for children aged 9-36 months in order for children and families to truly reap the benefits of greater investment, in line with the OECD recommendation that the best way to achieve affordability and quality at the same time is through subsidised childcare places.

The Government is committed to developing targeted supports to reduce childcare costs, broaden parental choice and increase supports for stay at home parents.

Mortgage Interest Rates

Ceisteanna (38, 42, 51)

Catherine Murphy

Ceist:

38. Deputy Catherine Murphy asked the Minister for Finance in view of recent cuts to mortgage interest rates, the steps he intends to take to ensure equitable treatment of customers of majority State owned banks such as a bank (details supplied); how he proposes to address excessive standard variable rates; and if he will make a statement on the matter. [10717/16]

Seán Haughey

Ceist:

42. Deputy Seán Haughey asked the Minister for Finance to ensure that persons on existing variable interest rate mortgages can receive reductions in their interest rates; and if he will make a statement on the matter. [10789/16]

Bernard Durkan

Ceist:

51. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which banking charges and interest rates here are in accord with those applicable throughout the eurozone; and if he will make a statement on the matter. [10845/16]

Freagraí scríofa

Minister for Finance

I propose to take Questions Nos. 38, 42 and 51 together.

In relation to mortgage interest rates, the Programme for Government makes it clear that it is not ethically acceptable for Irish banks to charge excessive interest rates on standard variable rate customers. The Government has committed to take all necessary action to tackle high variable interest rates; including through establishing a new code of conduct for switching mortgage provider, administered by the Central Bank and the development of a new, easy-to-use standardised and dedicated switching form. We will also request the Competition and Consumer Protection Commission to work with the Central Bank to set out the options for the Government in terms of market structure, legislation and regulation to lower the cost of secured mortgage lending and improve the degree of competition and consumer protection. These are Year 1 Actions in the programme.

I do accept that variable mortgage rates remain above Euro area norms and I think that it clear that there is broad agreement in this House that we would like to see these rates reduced. Central Bank research on the influences on Standard Variable Mortgage Pricing in Ireland published last year identified three main reasons for higher rates in Ireland. First, the pricing of loans needs to reflect credit risks. In Ireland these risks are elevated due to high levels of non-performing loans and the lengthy and uncertain process around collateral recovery. Second, competition is weak. This is not unrelated to credit risks since high credit risk deters new players from entering the market. Third, bank profitability is still constrained by legacy issues. Profitability is essential to ensure banks build up adequate capital buffers to meet increasing regulatory requirements and to withstand future adverse shocks.

I think that it is fair to say that there have been considerable movements in the mortgage offerings of the Irish banks in the last twelve months since my meetings with the banks. As recently as last week, two banks made additional reductions to their mortgage offerings. There has also been media speculation on the entry of another new mortgage provider into the market and the additional competition should help to put further pressure on the existing banks to reduce their rates. This is a vivid illustration of the effectiveness of the Government's policy, that competition is the best way to put pressure on the banks to reduce rates.

In relation to other charges, under Section 149 of the Consumer Credit Act, 1995 (as amended), credit institutions must submit a notification to the Central Bank for approval if they wish to introduce any new customer charge or increase any existing customer charge, for certain services. A notification made under Section 149 may include multiple charges and, having considered and robustly challenged the proposed charge(s) under the assessment criteria, the proposed charges may be rejected, approved at lower levels than requested by the credit institution or approved in full. Credit institutions are legally bound to comply with Letters of Direction, which set out the maximum amount the credit institution is allowed to charge for the relevant service. Credit institutions are free to impose any pricing differentials for the service up to the permitted maximum and are free to waive fees at their discretion.

My Department published a report on the review of the regulation of bank fees and charges in December 2013. This contains a detailed description of the process by which the Central Bank makes decisions on whether or not to approve proposed charges. It is available on my Department's website at www.finance.gov.ie. Among the key findings of the review was that while fee and commission income has become a more important source of income to the banks in recent years, net fee and commission income in Irish banks was well below the average of their European peers.

Tobacco Smuggling

Ceisteanna (39)

Thomas P. Broughan

Ceist:

39. Deputy Thomas P. Broughan asked the Minister for Finance the number of persons the Revenue Commissioners prosecuted for the offence of tobacco and cigarette smuggling in the years 2015 and 2016 to-date; the number of prosecutions currently ongoing; and if he will make a statement on the matter. [10723/16]

Freagraí scríofa

Minister for Finance

I am advised by Revenue that there were 40 convictions in respect of tobacco and cigarette smuggling in 2015. There were 8 convictions during the first 4 months of 2016. Currently, there are 81 tobacco and cigarette smuggling prosecution cases ongoing, at various stages in the prosecution process.

Fines of €65,150 were imposed in 2015 for tobacco and cigarette smuggling, and €11,000 for the period to end of April 2016.

Tax Reliefs Application

Ceisteanna (40)

Michael McGrath

Ceist:

40. Deputy Michael McGrath asked the Minister for Finance if he will apply proposed changes to capital gains tax entrepreneurship relief, as outlined in the programme for Government, to newly established businesses only or also to existing businesses; if it is important to provide clarity in this regard to entrepreneurs who are considering establishing businesses; and if he will make a statement on the matter. [10751/16]

Freagraí scríofa

Minister for Finance

The details of proposals for changes to this relief have not been finalised. They will be developed as part of the Budget and Finance Bill process and will be subject to Dáil scrutiny. It may be worth noting, however, that the relief as introduced in Finance Act 2015 is not restricted to new businesses.

Fuel Traders Licences

Ceisteanna (41)

Brendan Griffin

Ceist:

41. Deputy Brendan Griffin asked the Minister for Finance to link the petrol excise licence fees to the quantity of fuel sold thereby protecting the viability of smaller rural filling stations; and if he will make a statement on the matter. [10784/16]

Freagraí scríofa

Minister for Finance

I am informed by Revenue that the requirement that traders dealing in road fuels hold a licence has been in place many years and that an additional requirement for a licence for traders dealing in marked mineral oil was introduced in 2012. This new marked mineral oil licensing requirement was introduced in response to the threat posed to the exchequer and to legitimate business by fuel laundering and is part of a range of supply-chain control measures designed to address this problem. At the time of their introduction there was extensive consultation with industry representatives and they remain very supportive of the measures implemented to tackle fraud and protect compliant business from unfair competition from illicit operators. The measures that I introduced and the action taken by Revenue have been very successful in limiting the availability of marked fuel for laundering and in limiting access to the market for laundered fuel.

The licence fee for an auto-fuel trader's licence and for a marked fuel trader's licence is a flat rate excise duty of €250 in each case. This licence fee is not excessive and is comparable to other excise licence fees. I don't propose to change the licence fee to link it to the quantity of fuel sold.

Question No. 42 answered with Question No. 38.

Tax Forms

Ceisteanna (43)

Michael McGrath

Ceist:

43. Deputy Michael McGrath asked the Minister for Finance the years for which the Revenue Commissioners holds P60s for a person (details supplied) and which could be supplied to that person. [10802/16]

Freagraí scríofa

Minister for Finance

I am advised by Revenue that they do not issue or hold P60s for anyone. A P60 is issued by a person's employer at the end of each year.

While Revenue does hold details of pay and tax as returned to them on the P35 Return from employers, I am advised that, in the case of the person concerned, Revenue has no such details as it appears the person concerned was self-employed.

If the person wishes to discuss this further or has evidence of any employment, he can contact Mr Eugene Larkin, at [phone] who will assist him in the matter.

Pension Provisions

Ceisteanna (44)

Michael McGrath

Ceist:

44. Deputy Michael McGrath asked the Minister for Finance to clarify the circumstances a person can access funds in an approved minimum retirement fund prior to reaching 75 years of age; if he will clarify the application of the Revenue Commissioner's triviality clause in this regard; and if he will make a statement on the matter. [10803/16]

Freagraí scríofa

Minister for Finance

By way of background, an individual in a defined contribution pension savings arrangement (whether an occupational pension scheme or a personal pension) has the option of putting the funds accumulated under this arrangement into an Approved Retirement Fund (ARF) on retirement. Where such an individual is under the age of 75 at the time of exercising this option and does not meet the condition of having a minimum guaranteed pension income for life of €12,700 per annum, he or she is required to set aside an amount of €63,500 (or the remainder of the pension fund if less than €63,500 after taking a retirement lump sum). These funds are set aside by investing in an Approved Minimum Retirement Fund (AMRF) or by the purchase of an annuity.

An AMRF owner has the option of using some, or all, of the funds in AMRF to purchase an annuity at any time prior to attaining the age of 75.

The purpose of the AMRF is to ensure that an individual, without the minimum guaranteed pension income for life, has a nest-egg to provide for the latter years of his or her retirement.

With effect from 2015, an AMRF owner may draw down up to 4% of the value of the fund assets on one occasion annually until he or she either meets the guaranteed pension income requirement or attains the age of 75, at which point, the AMRF automatically becomes an ARF and any remaining funds can be drawn down at the beneficial owner s discretion.

In general, drawdowns from AMRFs (and ARFs) are subject to income tax, PRSI (up to age 66) and USC.

The 4% annual draw down arrangement was introduced by Finance Act 2014 and replaced the facility that existed previously, whereby an AMRF owner could draw down the accrued income and gains of the AMRF (subject to tax) as and when they wished. This change was prompted by a concern to give all AMRF owners access to a more certain level of annual income from their AMRF, rather than the uncertainty that dependence on investment performance had given rise to heretofore. This is particularly important for those individuals whose AMRF constitutes a significant part of their retirement funds.

I am advised by the Revenue Commissioners that under the trivial pension rules, full commutation of a pension under an occupational pension scheme may take place if the aggregate benefits payable to an employee under the scheme (and any other scheme linked to the same employment) do not exceed the value of a pension of €330 per annum. This treatment is also available to holders of small retirement annuity contracts (RACs) and Personal Retirement Savings Accounts (PRSAs).

I am further advised that, as an alternative to the above, where, after taking the retirement lump sum, the remaining fund available to an individual for the provision of pension benefits is less than €20,000, the Commissioners have no objection to the payment of a once-off pension. The amount of retirement benefits from all sources must be taken into account for the purposes of calculating the €20,000 limit, and this option applies equally to the holders of RACs and PRSAs.

In effect, this means that those with relatively small pension pots at retirement who do not satisfy the guaranteed pension income condition required for ARF access, are not required to invest the pension pot in an AMRF or purchase an annuity with it, but can instead draw it down in full, subject to appropriate tax.   

Stability Programme Data

Ceisteanna (45)

Bernard Durkan

Ceist:

45. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he remains satisfied regarding the stability of the economy with particular reference to possible negative external factors; if he has in mind any particular initiatives in the event of Brexit; and if he will make a statement on the matter. [10839/16]

Freagraí scríofa

Minister for Finance

The Stability Programme Update (SPU), published last month following its submission to the European Commission, sets out my Department's assessment of the economic outlook to 2021 together with a detailed assessment of risks. My Department expects the economy to grow by 4.9 per cent this year, by 3.9 per cent next year and by 3.25 per cent on average over the remainder of the forecast horizon out to 2021.

The SPU also notes that, while the outlook for the next 18 months is relatively benign, internationally the level of uncertainty is higher than at any stage since the height of the financial crisis

There is, in particular, heightened uncertainty regarding the near-term prospects for many Emerging Market Economies (EMEs), including China. EMEs have been an important growth engine in recent years, and while Ireland's direct trade exposure remains relatively small, the Irish economy would be exposed to a more generalised slowdown in the world economy.

A more disruptive international environment could generate significant headwinds for the Irish economy. This underlines the need to maintain prudent fiscal policies, keep expenditure under control, remain competitive and it is why I have consistently reiterated my commitment to Ireland's corporate tax regime.

On the upcoming UK referendum on EU membership, as has been clearly articulated, the UK's continued membership of the Union is a matter of strategic importance for the Government. In this regard, Government Departments, including my own, have been working on this matter for some time. Under the Department of Finance/Economic and Social Research Institute (ESRI) research programme agreement, my Department commissioned research to be undertaken on scoping the potential economic implications on Ireland of a change in the EU/UK relationship. The research was published on 5 November 2015 and is an important contribution to understanding the potential issues arising. My Department, and other Government Departments, are continuing our assessment of all the issues involved in protecting Ireland's interests and we are continuing to explore the potential risks and to plan accordingly in the period up to 23 June 2016.

Pension Provisions

Ceisteanna (46)

Bernard Durkan

Ceist:

46. Deputy Bernard J. Durkan asked the Minister for Finance if consideration will be given to lifting restrictions on retirement pension funds currently restricted unless the pensioner has access to a separate pension of €12,700 per annum; and if he will make a statement on the matter. [10840/16]

Freagraí scríofa

Minister for Finance

Before Finance Act 1999 people with defined contribution pension savings had no option but to buy a pension income (called an annuity) with their savings after taking the allowable tax-free retirement lump sum. Changes since then have given people more choices for what to do with their pension savings. This is called the flexible options at retirement regime. These choices include taking a cash payment, subject to income tax, investing in an approved retirement fund (ARF) or investing in an approved minimum retirement fund (AMRF).

Until he or she is 75, a person can only take the whole amount of their savings as cash or put it in an ARF if he or she has a guaranteed pension income of €12,700 or more. If these conditions are not met then he or she can buy an annuity or put a certain amount of the funds, called the "set aside" amount into an AMRF. The maximum "set-aside" is €63,500 or the remaining value of the pension funds, after taking the tax-free retirement lump sum, if less than €63,500.

The funds in an AMRF can be used at any time, in full or in part, to buy an annuity. This includes the option to buy an annuity which is large enough to give the owner a guaranteed income of more than €12,700. If the owner does this he or she will then have access to the rest of the funds, as their AMRF then converts into and ARF with discretionary access to the funds, subject to tax at their marginal rate.

The purpose of the AMRF is to ensure that a person without the minimum guaranteed pension income for life has a pension "safety net" to provide for the latter years of his or her retirement. However, every year to age 75, the owner of an AMRF can access 4% of the funds in the AMRF.

If an individual meets the requirements to be able to access the full amount of the funds in an AMRF and chooses to do so then it is taxable in the hands of the recipient as income for the tax year in which it is paid.

I do not currently have any plans to remove the requirements which apply before a person can have increased access to the funds in an AMRF or transfer them to an ARF. These provisions, along with other taxation measures, are however kept under review.

Economic Growth

Ceisteanna (47)

Bernard Durkan

Ceist:

47. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he expects this economy to maintain positive performance over the next five years; if he anticipates any corrective measures arising from external factors; and if he will make a statement on the matter. [10841/16]

Freagraí scríofa

Minister for Finance

I propose to take Questions Nos. 47 and 53 together.

In general, I am greatly encouraged by recent data illustrating the positive performance of the Irish economy. Ireland's recovery is now firmly established and the Irish economy is growing at the fastest rate in Europe - with growth of 7.8 per cent recorded in 2015. In the Stability Programme Update or SPU, published at the end of April, my Department forecast that the economy would grow by 4.9 per cent in 2016, by 3.9 per cent in 2017, and by 3.25 per cent on average over the remainder of the forecast horizon out to 2021.

Crucially, domestic demand made a strong positive contribution to growth in 2015 with consumption increasing by 3.5 per cent in 2015 and investment up by 28 per cent. This is important as domestic sectors are both jobs-rich and tax-rich. The external sector is also showing continuing signs of growth, with exports increasing by 13.8 per cent in 2015. The competitiveness gains achieved since 2008 have been the result of productivity improvements and wage and price moderation. It is important that these gains are maintained through active policy management, to support continued growth through both foreign direct and indigenous investment.

The recovery is most clearly evident in the labour market where we have now seen thirteen successive quarters of employment growth. Employment grew by 2.6 per cent in 2015, equivalent to 50,000 new jobs. The monthly unemployment rate fell to 8.4 per cent in April, down from almost 10 per cent a year earlier. The unemployment rate is now at the lowest level since 2008.

The positive outlook for Ireland's economic prospects is shared by the 3 major credit ratings agencies. Following Moody's upgrade to an A rating, all 3 have now given an A-Grade to Ireland's sovereign debt.

Nevertheless, the SPU highlights that there are several sources of uncertainty at present. In particular, a more disruptive international environment could generate significant headwinds for the Irish economy.

This uncertainty highlights the importance of prudent management of the public finances and of competitiveness-oriented policies that would help the Irish economy to weather any global economic downturn that may emerge.

In summary, subject to a supportive external environment, I am confident that the positive economic performance will be maintained over the medium term. However, this is critically contingent upon implementing appropriate polices. That is what the Government intends to do. 

Loan Books Purchasers

Ceisteanna (48)

Bernard Durkan

Ceist:

48. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he can ensure compliance with full banking Irish and European regulations by the purchasers of distressed or other loan books from the banking sector; and if he will make a statement on the matter. [10842/16]

Freagraí scríofa

Minister for Finance

The Deputy will be aware that the Consumer Protection (Regulation of Credit Servicing Firms) Act, 2015 was enacted on 8 July 2015. It was introduced to fill the consumer protection gap where loans were sold by the original lender to an unregulated firm. The 2015 Act introduced a regulatory regime for a new type of entity called a 'credit servicing firm'. Credit Servicing Firms are now subject to the provisions of Irish financial services law that apply to 'regulated financial service providers'. This ensures that relevant borrowers, whose loans are sold to third parties, maintain the same regulatory protections they had prior to the sale, including under the various statutory codes (such as the Consumer Protection Code, Code of Conduct on Mortgage Arrears, Code of Conduct for Business Lending to Small and Medium Enterprises and the Minimum Competency Code) issued by the Central Bank of Ireland and the Central Bank (Supervision and Enforcement) Act 2013 (Section 48) (Lending to Small and Medium-Sized Enterprises) Regulations 2015 which comes into operation on 1 July 2016.

Under the Act, purchasers of loan books must either be regulated by the Central Bank themselves or else the loans must be serviced by a credit servicing firm who is regulated by the Central Bank. In addition to compliance with Central Bank codes of conduct, credit servicing firms will have to demonstrate to the Central Bank that they have robust governance and adequate resources to ensure compliance, agreements with loan owners that enable the credit servicing firm to fully comply with its obligations under Irish financial services legislation and adequate and effective control of loan servicing in the State to enable Central Bank oversight. 

Construction Sector Strategy

Ceisteanna (49)

Bernard Durkan

Ceist:

49. Deputy Bernard J. Durkan asked the Minister for Finance the steps he will take to incentivise the construction sector in a way that benefits the consumer with particular reference to first time house builders or purchasers; and if he will make a statement on the matter. [10843/16]

Freagraí scríofa

Minister for Finance

The recovery in the economy and the increase in the number of people at work has significantly contributed to an increased level of demand for housing.

While there is evidence of a pick-up in housing supply, it is still far from the level necessary to meet demand. From my perspective, a number of measures have been implemented to help address the underlying problems, either directly by myself or by some of the agencies that come under the auspices of my Department. One example is the Ireland Strategic Investment Fund (ISIF) €500 million joint venture (Activate Capital) to make funding available to the house building sector. I also introduced an increased deduction for mortgage interest relief for landlords that commit to the provision of rental accommodation, for a minimum of three year, for tenants receiving social housing supports. NAMA has also committed to support the delivery of up to 20,000 residential units by the end of 2020.

However, more needs to be done given the housing supply shortage.

To restore the housing market to a sustainable equilibrium, this Government has set an ambitious target, in the Programme for Government, of ensuring that 25,000 additional new houses are built each year by 2020. To achieve this target the Government has committed to implement a number of policy actions designed to help address the outstanding bottlenecks in the housing and construction sector and restore supply to the optimal level.  

As regards first time buyers, the Government is cognisant of the particular difficulties facing this group. The Programme for Government, therefore, contains a number of policy proposals designed to support first time buyers such as the proposal to work with the Central Bank, as part of its review of the mortgage lending rules, to develop a new "Help to Buy" scheme.

Small and Medium Enterprises Supports

Ceisteanna (50, 55)

Bernard Durkan

Ceist:

50. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he expects to encourage the banking sector to meet the requirements of small and medium sized industry, the retail or commercial sector; and if he will make a statement on the matter. [10844/16]

Bernard Durkan

Ceist:

55. Deputy Bernard J. Durkan asked the Minister for Finance the degree to which his Department monitors the working capital requirements of the various manufacturing and services sectors on an ongoing basis with a view to identifying particular deficiencies; if a decision has been made to address specific areas arising therefrom; and if he will make a statement on the matter. [10849/16]

Freagraí scríofa

Minister for Finance

I propose to take Questions Nos. 50 and 55 together.

As the Deputy is aware, small and medium sized businesses play a central role in the sustainable recovery of the Irish economy. To facilitate this, Government policy is focused on ensuring that all viable SMEs from every sector have access to an appropriate supply of credit from a diverse range of bank and non-bank sources. Officials from my Department regularly meet representatives from the Small Firms Association, Irish Small and Medium Enterprises Association and Chambers Ireland to discuss issues around access to finance and these engagements help inform the development of policy on SME credit and lending.

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, including lending to the SME sector. My Department collates and examines, on a monthly basis, 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. In addition, AIB and Bank of Ireland meet my officials, and those of the Credit Review Office, on a quarterly basis to keep them abreast of issues pertaining to the SME sector. This facilitates the Department and the Credit Review Office in monitoring progress against agreed annual SME lending plans and ensuring that new lending to SMEs continues to increase as a percentage of total sanctioned lending. 

My Department has been involved in a range of initiatives to encourage access to credit for small and medium sized businesses. The SME State Bodies Group provides a forum for the development and implementation of policy measures to enhance SMEs' access to a stable and appropriate supply of finance.

Some of the main policies introduced to encourage access to credit for small and medium businesses include:

- The Supporting SMEs Online Tool, a cross-government initiative, was launched in May 2014. On answering 8 simple questions, the small business will receive a list of available Government supports. The Supporting SMEs Online Tool is available at www.supportingsmes.ie.

- The Strategic Banking Corporation of Ireland has been established as a means of ensuring that SMEs are provided with sufficient finance for growth. The Strategic Banking Corporation of Ireland (SBCI) is an initiative designed to increase the availability of funding to SMEs at a lower cost and on more flexible terms than have recently been available on the Irish Market. The SBCI does not lend directly to SMEs. It uses a network of lending partners known as 'on lenders' to make its funds available to SMEs. More information on the SBCI can be found on www.sbci.gov.ie.

- The Credit Guarantee Scheme encourages additional lending to small businesses by offering a partial Government guarantee to banks against losses on qualifying loans to eligible SMEs.

- The Microenterprise Loan Fund, administered by Microfinance Ireland, provides support in the form of loans for up to €25,000, available to start-up, newly established, or growing micro enterprises employing less than 10 people, with viable business propositions. Microfinance Ireland works in partnership with the Local Enterprise Offices nationally to administer this fund (www.microfinanceireland.ie).

- The Credit Review Office helps SME or Farm borrowers who have had an application for credit of up to €3 million declined or reduced by the main banks, and who feel that they have a viable business proposition. They also examine cases where borrowers feel that the terms and conditions of their existing loan, or a new loan offer, are unfairly onerous or have been unreasonably changed to their detriment. This is a strictly confidential process between the business, the Credit Review Office and the bank. The Credit Reviewer and his team have overturned more than 50% of the refusals that have been appealed to the Office.  Further details are available at www.creditreview.ie.

The Government remains committed to the SME sector, as reflected in the recently published Programme for a Partnership Government, and sees it as a key engine of ongoing economic growth. Consequently, my Department and the Credit Review Office, working with the other relevant Departments and Agencies, will continue to monitor the availability of both bank and non-bank credit on both a macro and sectoral basis in order to ensure that sufficient access to finance is available to facilitate participants in the SME sector to reach their full potential in terms of growth and employment generation. In this context, the Action Plan for Jobs 2016 includes a dedicated chapter and associated integrated set of actions to support the financing for growth in the SME sector.

In terms of monitoring the requirements for SMEs, the Department of Finance facilitates the biannual SME Credit Demand Survey. The most recent survey, covering the period April-September 2015, shows that 85% of SME credit applications, excluding pending applications, were approved. Working capital requirements were provided as the main reason for applying for bank finance with 48% of respondents stating that they required finance for working capital. When asked about sources of finance for working capital, internal funds/retained earnings were the main finance source of working capital with 63% of working capital coming from this source. Further results from the survey can be found at www.finance.gov.ie. Results from October 2015 to March 2016 are expected shortly.

Question No. 51 answered with Question No. 38.

Banking Sector

Ceisteanna (52)

Bernard Durkan

Ceist:

52. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he remains satisfied that the lending sector continues to facilitate borrowers who have mortgage or other arrears and that arrangements continue to be entered into to facilitate their needs in a way that is sustainable to the borrower and not only to the lender; and if he will make a statement on the matter. [10846/16]

Freagraí scríofa

Minister for Finance

This Government is very committed to dealing with mortgage arrears and providing support for borrowers that find themselves in that situation. This is evidenced by the range of commitments contained in the Programme for A Partnership Government which will provide renewed impetus for dealing with the issue particularly for those borrowers in long-term arrears.  

The most recent Central Bank figures show that to date over 120,000 restructures have been put in place which reinforces the fact that engagement between borrowers and lenders works. At end 2015, 86.4% of restructured PDH accounts were deemed to be meeting the terms of their arrangement. In addition the most recent figures published by my Department for end March 2016 show that PDH mortgage accounts in arrears are down 20% since March 2015.

As part of the Mortgage Arrears Resolution Process (MARP) framework the completion of affordability assessments is a key step. In this regard a lender must examine each case on its individual merits and it must base its assessment on the full circumstances of the borrower, including, inter alia, the borrower's current repayment capacity. In order to determine which options for alternative repayment arrangements are viable in each particular case, a lender must explore all of the options for alternative repayment arrangements that they offer. The Code also requires lenders to review an alternative repayment arrangement at appropriate intervals for the type and duration of the arrangement. The lender must also carry out a review of an alternative repayment arrangement at any time, if requested by the borrower.

The Code of Conduct on Mortgage Arrears (CCMA) is a key part of the Central Bank's mortgage arrears framework. It is designed to provide appropriate and effective consumer protection measures and to ensure that borrowers are treated in a fair and transparent manner. The CCMA sets out requirements for all mortgage lenders dealing with borrowers in arrears or pre-arrears. It provides a strong consumer protection framework to ensure that borrowers struggling to keep up mortgage repayments are treated in a fair and transparent way by their lender and that long term resolution is sought by lenders with each of their borrowers.

The CCMA also requires lenders to have an appeals process in place to enable a borrower appeal a decision by a lender, including where the borrower is not willing to enter into an alternative repayment arrangement or where the lender declines to offer an alternative repayment arrangement. The appeals procedure must inform the borrower of his/her right to refer the matter to the Financial Services Ombudsman. The CCMA also provides that, at the borrower's request and with the borrower's written consent, the lender must liaise with a third party to act on his/her behalf in relation to his/her arrears situation.  

Question No. 53 answered with Question No. 47.