Pearse Doherty
Ceist:31. Deputy Pearse Doherty asked the Minister for Finance the legislative and regulatory steps he will implement to tackle inordinate motor insurance prices. [27535/16]
Amharc ar fhreagraMotor Insurance Regulation
Ceisteanna (31)
Freagraí scríofa
The provision of insurance cover and the price at which it is offered is a commercial matter for insurance companies and is based on an assessment of the risks they are willing to accept and adequate provisioning to meet those risks. The Minister for Finance is responsible for the development of the legal framework governing financial regulation. The EU framework expressly prohibits Member States from adopting rules which require insurance companies to obtain prior approval of the pricing or terms and conditions of insurance products.
While the provision and pricing of insurance policies is a commercial matter for insurance companies, this does not preclude the Government from introducing measures which may lead to a better claims environment and reduce costs. The Cost of Insurance Working Group, which I chair, is undertaking a review of the factors which are influencing the increased cost of motor insurance. This is a complex matter to address and it involves a number of Government Departments, State Bodies and private sector organisations.
The Working Group brings together all the relevant Departments and Offices involved with the process. Its objective is to identify immediate and longer term measures which can address increasing costs, while bearing in mind the need to maintain a stable insurance sector.
The core areas to be examined by the Working Group in this first phase are the motor insurance sector generally, at present and in recent years; the effects of legal costs and litigation processes on insurance costs; the current claims compensation arrangements and the cost of claims; insurance data and information; the impact of accident rates; the impact of unlawful activity on the insurance sector; and other market issues
Because the issue of the cost of insurance is complex and in order to get to the heart of these issues as soon as possible, I have established four subgroups to review them in detail. Chairs have been appointed to these sub-groups and work has commenced. The subgroups are meeting weekly and their outputs are feeding into the meetings of the Working Group.
By the end of October the Working Group will provide the Minister for Finance with an update report which will set out the priority actions required. From November to December the Working Group will then develop an action plan to enable the relevant Government Departments/Offices to commence the implementation of these priority actions. Any proposed measures will be contained in this action plan. In this regard, I will be consulting regularly with Government colleagues.
Question No. 32 answered with Question No. 10.
Ireland Strategic Investment Fund Investments
Ceisteanna (33)
Michael McGrath
Ceist:33. Deputy Michael McGrath asked the Minister for Finance if he is satisfied with the mandate of the Ireland Strategic Investment Fund; if he would like to see greater investments being made; his plans to introduce changes to the fund; and if he will make a statement on the matter. [27550/16]
Amharc ar fhreagraFreagraí scríofa
The Ireland Strategic Investment Fund (ISIF) was established in December 2014. Given ISIF's new and unique mandate as a sovereign development fund, and because of the uncertainty regarding the investment opportunities in Ireland, it was agreed that a formal review of the ISIF investment strategy would take place after 18 months. This was to allow for a sufficient period of time having elapsed before considering the operations and impact of the Fund.
The investment strategy review will play an important role in examining the performance and impact of ISIF. The review includes an appraisal of the success of ISIF's mandate to date and will involve interactions with both my Department and the Department of Public Expenditure and Reform as part of the review process. The NTMA (ISIF) inform me that preparatory work in respect of the review has commenced and the review itself is due for completion by year end.
I am sure the Deputy shares my view that ISIF's 'double bottom line' mandate - to invest on a commercial basis in a manner designed to support economic activity and employment in Ireland represents a unique strategic opportunity for the Ireland. That mandate is designed to ensure that ISIF's investment generates a return, attracts investors and recycles funds. Whilst not wanting in any way to pre-empt the review that is currently underway, I am greatly encouraged by the quality and impact on the Irish economy of it's investments. ISIF has built up momentum already, including through its future pipeline.
ISIF has already committed €2.4 billion and it acts as a catalyst for other investors to invest in Irish projects. Its ability to attract co-investment from the private sector means that €5.8 bn of total investment has been committed to date.
It is apparent from the investments already in the public domain that, as envisaged at inception, ISIF is utilising its unique investment characteristics scale, long-term perspective and flexibility - to target high economic value investment in Ireland in a way that other funds cannot. This, along with the fact that the proceeds of ISIF investment unlike State spending can be recycled again and again to support future economic activity in Ireland, illustrates the potential that the ISIF model offers, and which ISIF is currently delivering on.
Interest Rates
Ceisteanna (34)
Pearse Doherty
Ceist:34. Deputy Pearse Doherty asked the Minister for Finance the status of his engagement with the State-backed banks and other banks to achieve a reduction in the standard variable rates for mortgages; and if he will make a statement on the matter. [27538/16]
Amharc ar fhreagraFreagraí scríofa
The issue of standard variable mortgage rates is a significant one for this Government and it has made it clear that it is not acceptable for lenders to charge excessive rates on such mortgages. The Programme for a Partnership Government, therefore, has set out a range of measures which seek to provide for greater transparency and competition in the mortgage market. These actions include establishing a new code of conduct for switching mortgage provider, which will be administered by the Central Bank, and the development of a new, easy-to-use standardised and dedicated mortgage switching form.
In addition, the Government will 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 to improve the degree of competition and consumer protection. Also the recent transposition of the Mortgage Credit Directive, which is intended to develop a more pan European mortgage market consistent with a high level of consumer protection, into Irish law should help contribute to this process over the medium term. The primary objective of this approach by Government, therefore, is to develop an overall banking policy that encourages more entrants and a vibrant banking sector with real competition in order to provide more choice to mortgage holders but without giving rise to potential negative consequences that could impact on the supply of residential mortgage credit.
I had a series of formal meetings with the main mortgage lenders last year where I outlined the Government's opinion that the standard variable rate being charged, to both existing and new Irish mortgage customers, was too high. The banks have since reviewed their rates and subsequently reduced them which has been evidenced in the latest Central Bank statistical release on retail interest rates for July 2016. Nevertheless, this is a policy area that the Government will keep under active review in our ongoing engagement with mortgage lenders and in implementing the Programme for Government.
Property Tax Rate
Ceisteanna (35)
Richard Boyd Barrett
Ceist:35. Deputy Richard Boyd Barrett asked the Minister for Finance if he will change the requirement of local authorities to make a decision on the rate of local property tax by the end of September each year in advance of the local authorities receiving information regarding the other moneys that will be available to them from central government; and if he will make a statement on the matter. [27592/16]
Amharc ar fhreagraFreagraí scríofa
Section 20 of the Finance (Local Property Tax) Act 2012 (as amended) allows a Local Authority to increase or decrease the basic rate of Local Property Tax (LPT) by up to 15% in respect of residential properties situated within their respective areas.
Regulations made in 2014 by the Minister for Housing, Planning, Community and Local Government specify certain procedures that must be followed in relation to when and how a Local Authority can change the basic rate of LPT and the period for which the new rate can apply. Such procedures involve engaging in a public consultation and passing a special resolution at a meeting of the elected council members.
A Local Authority that has passed a special resolution to vary the rate of LPT must notify Revenue of its decision by 30 September (preceding year) to allow appropriate time to arrange timely implementation of the changes. Any slippage in implementing the changes could result in incorrect notices issuing to property owners and/or incorrect phased payment mandates operating from the beginning of the due year.
To ensure all notifications and payment mandates are correctly calculated and issued on a timely basis, the latest date by which Revenue must complete the necessary adjustments is early October. This is the reason that the 30 September deadline in respect of the Local Authority notifications is so important for the efficient administration of LPT.
The scale of the task for Revenue in calculating varied rate changes for some Local Authorities while maintaining the basic rate for others within such a short period of time is very considerable. The task includes ensuring the calculations are correct for over 1.9 million properties, which includes issuing written notifications in respect of approximately 800,000 properties, ensuring correct deductions in respect of almost 360,000 Direct Debit mandates and 220,000 Deduction at Source salary or pension instructions and setting up correct mandates for almost 350,000 Single Debit Authority payments.
Given the scale of the LPT case base and the number of Local Authorities that exercise their right to vary the base rate each year (14 in 2015 and 11 in 2016), Revenue has confirmed that any further narrowing of the 30 September deadline would have adverse implications for the ongoing efficient administration of LPT.
At my request Dr Don Thornhill carried out a review of the operation of the Local Property Tax in 2015. Following the receipt of Dr Thornhill's report, a number of measures arising from the recommendations in the Report were implemented in the Finance (Local Property Tax) (Amendment) Act 2015, including the deferral of the revaluation process to 2019. My Department will be considering issues relating to the implementation of the remaining recommendations in Dr Thornhill's Report. The issue raised by the Deputy can be considered further in that context.
Departmental Expenditure
Ceisteanna (36)
Richard Boyd Barrett
Ceist:36. Deputy Richard Boyd Barrett asked the Minister for Finance the amount of money his Department expects to spend on appealing the European Commission's decision on a company (details supplied); and if he will make a statement on the matter. [27591/16]
Amharc ar fhreagraFreagraí scríofa
This is a legal process that could take several more years to conclude. It is therefore not possible to provide a comprehensive estimate of expected further expenses at this time. As it is an important issue for the State, the case will continue to be appropriately resourced.
Climate Change Policy
Ceisteanna (37)
Thomas Pringle
Ceist:37. Deputy Thomas Pringle asked the Minister for Finance the way he is responding to the commitment, taking into account the Paris Agreement which commits the states to making finance flows consistent with a pathway towards low emissions and climate resilient development; if he will consult with the Minister for Communications, Climate Action and Environment in the upcoming review of the investment strategy of the Ireland Strategic Investment Fund in this context; and if he will make a statement on the matter. [27545/16]
Amharc ar fhreagraFreagraí scríofa
My Department is participating, in accordance with its functions, in a whole-of-Government approach led by the Minister for Communications, Climate Action and Environment, to develop and articulate Ireland's policy position under the United Nations Framework Convention on Climate Change. This includes implementation of the Paris agreement. Article 2 of the Agreement includes a broad commitment to make finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development. Parties to the agreement will be expected to collectively develop a series of measures to meet this objective. The Paris Agreement itself, was signed by the EU and all its Member States, including Ireland, in April this year but has yet to come into force.
In relation to the ISIF investment strategy, the National Treasury Management Agency (Amendment) Act 2014, which established ISIF on a statutory basis, provides that ISIF shall review its investment strategy after 18 months of operation. The Act provides that, in reviewing its investment strategy, ISIF shall consult with the Minister for Finance and the Minister for Public Expenditure and Reform. The Act also provides that the Minister for Finance may consult with other Government Ministers, including the Minister for Communications, Climate Action and Energy, as appropriate.
The ISIF investment strategy states that ISIF's energy allocation will include a significant element of renewables investment. In that light, ISIF has been seeking investments that are consistent with broader Government policy and, in particular, with the theme of decarbonisation. ISIF has a close working relationship with the Department of Communications, Climate Action & Environment and is committed to investing in the energy sector in a manner that is consistent with the State's commitment to make the transition to a low carbon, climate resilient and sustainable economy.
Departmental Legal Cases
Ceisteanna (38)
Michael McGrath
Ceist:38. Deputy Michael McGrath asked the Minister for Finance the status of the State's preparations for the submission of an appeal to the European Courts against the European Commission's ruling concerning a company (details supplied) ; his plans for the escrow account which will hold the funds pending the outcome of the appeal; and if he will make a statement on the matter. [27548/16]
Amharc ar fhreagraFreagraí scríofa
The Government has authorised me to arrange for annulment proceedings to be brought before the General Court of the European Union in the Apple State case.
The Attorney General has been requested to prepare the legal grounds in support of those proceedings and to take all other steps incidental to the conduct of those proceedings.
Ireland has two months and 10 days to lodge its appeal.
Notwithstanding the right of appeal, Ireland is legally obliged to recover the alleged state aid from Apple in the interim. My officials are engaging with the Commission as part of this recovery process. As the amounts are subject to legal proceedings, the sums may be placed in a ring-fenced escrow account, pending the outcome of the European Court process.
State Aid
Ceisteanna (39)
Bernard Durkan
Ceist:39. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he and his Department continue to examine the implications in respect of the European Commission’s decision to impose responsibility on this jurisdiction for the collection of taxes on income earned in other jurisdictions by multinational corporations with interests here; if it is recognised that this decision is clearly intent on dissuading foreign direct investment here, is in breach of EU treaties and, together with Brexit, will have a devastating effect on employment here; and if he will make a statement on the matter. [27623/16]
Amharc ar fhreagraFreagraí scríofa
On 30 August 2016, the European Commission issued a negative decision in the Apple State Aid case.
The Government profoundly disagrees with the Commission's analysis and will now challenge the decision before the European Courts. Ireland did not give favourable tax treatment to Apple. Ireland does not do deals with taxpayers.
No other companies are covered by the European Commission decision or the recovery order. The European Commission has explicitly stated that "this decision does not call into question Ireland's general tax system or its corporate tax rate".
However, the decision creates uncertainty for business and foreign direct investment in the European economy, both in its novel interpretation of longstanding rules and their unfair retroactive application.
The Government's appeal is therefore necessary to defend the integrity of our tax system; to provide tax certainty to business; and to challenge the encroachment of EU state aid rules into the sovereign Member State competence of taxation.
The Commission has stated that the amount of unpaid taxes to be recovered by the Irish authorities would be reduced if other countries were to require Apple to pay more taxes on the profits recorded by Apple Sales International and Apple Operations Europe for this period; and the amount of unpaid taxes to be recovered by the Irish authorities would also be reduced if the US authorities were to require Apple to pay larger amounts of money to their US parent company for this period to finance research and development efforts.
This illustrates the contradiction at the heart of the European Commission's decision. While requiring Ireland to recover the tax sums, the Commission is also acknowledging that the sums may in fact be taxable in other jurisdictions.
Mortgage Arrears Proposals
Ceisteanna (40)
Pearse Doherty
Ceist:40. Deputy Pearse Doherty asked the Minister for Finance the progress on the programme for Government commitments on tackling mortgage arrears; and if he will make a statement on the matter. [27539/16]
Amharc ar fhreagraFreagraí scríofa
The Deputy will be aware of the publication in July of the Action Plan for Housing and Homelessness by the Minister for Housing, Planning, Community and Local Government. This Action Plan sets out how the Government plans to meet the challenging commitments made in the Programme for a Partnership Government in respect of dealing with homelessness, including how it will address the high level of mortgages currently in arrears. Implementation of this plan is being overseen by the Cabinet Committee on Housing and Homelessness.
One action on mortgage arrears relates to a commitment to work with the Central Bank to amend the Code of Conduct on Mortgage Arrears. I have written to the Governor of the Central Bank in this regard to request that an assessment be undertaken of the range of available sustainable restructure solutions offered by banks and non-bank entities. I have asked that this assessment should consider in particular how the available options may impact on the distressed borrower's capacity to remain in their primary residence. Other actions to support the position of borrowers in arrears and to adjust the legal framework are being advanced separately by the Department of Social Protection and the Department of Justice and Equality.
The Deputy may have seen the latest Central Bank statistical bulletin on residential mortgage arrears, published on 13th September, which presents data to end-June 2016. This release shows the continuing improvement in the level of mortgage accounts with associated arrears, for example, 89 per cent of PDH mortgage accounts have no mortgage arrears. It is very welcome that the numbers in mortgage arrears have continued to decline across the various maturity categories and those in arrears for more than two years have declined for the fourth consecutive quarter. However, there are still large numbers with long-term arrears, despite the various borrower supports that have been put in place. Therefore, it is important that we now concentrate our efforts to ensure that those who remain in arrears engage with their lender to resolve their difficulties. I understand that this will be a major focus for the Mortgage Arrears Resolution Service, being established on foot of the Action Plan for Housing and Homelessness. I am hopeful that this new service will be instrumental in addressing and resolving those remaining cases in mortgage arrears.
Question No. 41 answered with Question No. 19.
Small and Medium Enterprises Supports
Ceisteanna (42)
Joan Burton
Ceist:42. Deputy Joan Burton asked the Minister for Finance if his attention has been drawn to the study carried out for a pilot local public bank to be established along the lines of the Sparkassen in Germany; his proposals to enable the establishment of such a local public bank, in line with the commitment in the programme for Government to investigate the German Sparkassen model for the development of local public banks that operate within well defined regions; and if he will make a statement on the matter. [27544/16]
Amharc ar fhreagraFreagraí scríofa
In 2015, the Sparkassenstiftung für Internationale Kooperation (Savings Banks Foundation for International Cooperation - SBFIC), with the support of the Public Banking Forum of Ireland, submitted a proposal to the Department of Finance regarding the development of a local public banking system in Ireland. At that time, the proposal was considered in detail by officials in my Department and there was engagement with Sparkassenstiftung für Internationale Kooperation, the Public Banking Forum of Ireland and Irish Rural Link on the issue.
Local or public Banks, such as Sparkassen in Germany, focus on the needs of SMEs in their catchment area rather than profit maximisation. This is very similar to the business model of the Strategic Banking Corporation of Ireland. It is encouraging to note that to the end of June 2016, €347 million has been lent through the SBCI to 8,619 SMEs across Ireland in a wide variety of sectors and all regions. Additionally, the Government has to date delivered a number of initiatives that already support increased access to finance for SMEs such as: the Supporting SMEs Online Tool, the Credit Guarantee Scheme, Microenterprise Loan Fund, Local Enterprise Offices and the Credit Review Office. Given the significant SME supports that have already been put in place by the Government to support SME financing it was not clear, when my Department considered the proposal, how local public banks could create a distinct product offering that would avoid replicating both regional and national supports that are already available.
The current Programme for Government contains a commitment to investigate the German Sparkassen model for the development of local public banks that operate within well-defined regions and the Department of Arts, Heritage, Regional, Rural and Gaeltacht Affairs (DAHRRG) are the lead department in respect of this commitment. As the department with primary responsibility for this matter, they are now tasked with considering the issue further within the parameters of the Programme for Government.