Written Answers Nos 56-73
56. Deputy Paul Murphy asked the Minister for Finance his plans to publish the advice from a company (details supplied) that his Department commissioned regarding a case; and if he will make a statement on the matter. [10026/17]
Amharc ar fhreagraThe Apple State Aid case is a priority matter for the State.
Detailed and comprehensive responses were provided to the Commission demonstrating that the appropriate amount of Irish tax was charged in accordance with the relevant legislation, that no selective advantage was given and that there was no State Aid.
This case has involved a significant degree of legal and technical complexity, and additional expertise has been engaged where required.
The Government does not accept the Commission's analysis in the Final Decision which was published in December 2016 and we have lodged an application with the General Court of the European Union to annul the whole Decision.
A summary of our legal arguments has been published and is available on my Department's website.
As this is clearly a legal matter, it will not be possible to comment any further on the detail of the European Commission Decision or the annulment application, or to publish any documents associated with the Commission Decision and the annulment application.
57. Deputy Thomas P. Broughan asked the Minister for Finance his plans for banks (details supplied) in 2017; and if he will make a statement on the matter. [9540/17]
Amharc ar fhreagraThe position of the Government in relation to the State's shareholdings in the banking sector is very clear. These were investments the State had to make during the banking crisis, and it is the Government's intention that the State will exit these investments in a measured and careful manner which ultimately recovers the maximum amount of money for the Irish taxpayer.
In relation to AIB, I have previously indicated that an IPO is the optimal route to recouping value from our investment with the earliest possible IPO window being the second quarter of 2017. Indeed officials in my Department along with our independent financial adviser, Rothschild, have done considerable preparatory work in this regard. In December of last year, following a competitive procurement process, three firms were appointed to act as joint global co-ordinators to lead a selling syndicate in preparation for a possible IPO. These firms have been appointed for an 18 month period and additional firms will be appointed to fill out the syndicate at an appropriate future date. The appointment of these firms as advisers does not signal any intention or obligation for us to proceed with a transaction, which will be subject to a number of factors, including favourable market conditions. AIB is due to publish its 2016 financial results on Thursday 2 March 2017 and we will assess the market reaction.
In relation to PTSB, officials in my Department continue to keep potential disposal strategies in relation to that investment under review. However, clearly AIB remains our immediate priority given its size.
58. Deputy Catherine Murphy asked the Minister for Finance further to Parliamentary Question No. 80 of 19 January 2017, the way in which his Department would have been impacted upon; the costs associated with the legal advice his Department received; and if he will make a statement on the matter. [10042/17]
Amharc ar fhreagraWhile the legal action referred to in parliamentary question number 80 of 19 January 2017 was against the bank referred to in the same question and not against the Department of Finance, pleadings in this case, which were delivered by the Bank, were considered by officials in my Department and by the Attorney General's office.
It was also important for officials in my Department to be kept informed of developments in this case given that the bank referred to in parliamentary question number 80 of 19 January 2017 had been nationalised prior to the commencement of the legal action referred to in the same question.
A negative outcome for the Bank referred to in parliamentary question number 80 of 19 January 2017 in this case would have been, by association, a negative outcome for the State given that the Bank referred to had already been nationalised.
The legal costs incurred by my Department relating to this action are included in the schedule of consultancy and other costs (including legal costs) for this period which is available on the Department of Finance's website (www.finance.gov.ie/sites/default/files/14-04-07%20Copy%20of%20Consultancy%20Schedule%20for%20website.pdf). However, the specific breakdown of the costs incurred by the Department of Finance in relation to this matter are confidential.
59. Deputy Michael McGrath asked the Minister for Finance the status of the work of the implementation group concerning the recommendations of the credit union advisory committee report; and if he will make a statement on the matter. [9991/17]
Amharc ar fhreagraOne recommendation of the Credit Union Advisory Committee (CUAC) in the Review of Implementation of the Recommendations in the Commission on Credit Unions Report (the Report) was that an Implementation Group be established for a specified period of time to oversee and monitor implementation of those recommendations in a methodical manner and to advise the Minister for Finance on progress.
Publication of the Report in July 2016 was just the beginning of the process. From September 2016 onwards CUAC continued working to enable a coherent implementation plan be devised. The Department has been working closely with CUAC.
In line with CUAC's recommendations, the Department invited one nominee from each of the stakeholder groups. The Implementation Group consists of a representative from each of the following: Irish League of Credit Unions; Credit Union Development Association; Credit Union Managers' Association; National Supervisors Forum; and the Central Bank. The Implementation Group also has a CUAC representative and is chaired by the Department. This broad membership will ensure participation and contribution from all credit union perspectives.
The Implementation Group held its inaugural meeting on Monday 20 February 2017 and was also attended by all CUAC members. It is intended that each CUAC recommendation will be addressed separately with a view to implementation at the appropriate time. Meetings will continue on a monthly basis with the next meeting scheduled for late March 2017. The term of the Implementation Group is for one year which may be extended at the discretion of the Minister. I look forward to receiving regular progress reports on the implementation of these important recommendations.
60. Deputy Mick Wallace asked the Minister for Finance if he will initiate an external review of NAMA's legal department, further to evidence given at the Committee of Public Accounts concerning non-disclosure agreements; and if he will make a statement on the matter. [10010/17]
Amharc ar fhreagraTo my knowledge, the discussions at the Public Accounts Committee ("PAC") focused on potential "technical breaches" of a non-disclosure agreement by third parties.
I expect that all of the testimony provided to the PAC, including these discussions regarding non-disclosure agreements, is being considered by the PAC as works to produce its upcoming report.
It is important that we receive the report of the Public Accounts Committee on Project Eagle and consider any further information this report may bring to light, the findings it presents and the evidence substantiating such findings.
This Government and many Deputies, including the PAC Chairman, are aligned in the understanding that the imminent PAC report will be invaluable in assessing our next steps. We should consider and debate the contents and findings carefully before establishing the terms of reference for any such Commission of Investigation. There may well be questions currently being suggested for a Commission of Investigation which will be adequately covered off by the PAC report. There may also be findings supported by evidence which warrant further investigation.
We must ensure that any Commission of Investigation has specific terms of reference supported by evidence to justify its establishment. Commissions of Investigation can prove to be expensive and time consuming but serve an important purpose when other avenues of justice are not appropriate and when they are properly established on the basis of evidence to support their terms of reference.
It is appropriate that we wait until we have had the opportunity to consider the PAC's report and its findings on this matter, if any, before we discuss the merits, if any, of including an examination of potential "technical breaches" of an NDA within the terms of reference of a Commission of Investigation.
61. Deputy Joan Burton asked the Minister for Finance the studies the Revenue Commissioners have taken to identify possible customs posts on the Border, North and South; the locations that have been examined for these posts; and if he will make a statement on the matter. [9982/17]
Amharc ar fhreagraThe Government's position in relation to the border with Northern Ireland in the context of BREXIT is very clear and has been articulated by the Taoiseach on several occasions. Continued freedom of movement, absence of a hard border, and minimal impact on business and trade are key objectives. The Government is clear that any manifestation of a hard border would have very negative consequences. A key priority is to ensure the continued free flow of trade on the island and the need to avoid a hard border.
62. Deputy Mick Wallace asked the Minister for Finance if the figure of €10 million for a commission of investigation into NAMA changed or altered in any way following the release of the 2017 Revised Estimates, which included estimates for a relevant commission of investigation; and if he will make a statement on the matter. [10009/17]
Amharc ar fhreagraI am advised that any reference to an allocation for commissions of investigation in the 2017 revised estimates does not relate to a commission of investigation into NAMA or Project Eagle. A commission of investigation into NAMA's Project Eagle has not been established and would not receive an appropriate budget allocation until such time as this occurs.
63. Deputy Paul Murphy asked the Minister for Finance if he will report on the sale of Project Cypress by a bank (details supplied); his views on the impact of the sale on tenants of the bank's buy-to-let properties; and if he will make a statement on the matter. [10028/17]
Amharc ar fhreagraAs the Deputy is aware significant progress has been made across the Irish banking sector in reducing the level of non-performing loans (NPLs) since the financial crisis. Despite this progress, the level of NPLs in Ireland remains well above the European average. Hence the Single Supervisory Mechanism (SSM), as the regulator for larger banks, has tasked the management and board of each institution with developing and implementing a strategy to address this challenge. This challenge will have to be met whether or not the State has a shareholding in the bank concerned.
In relation to Project Cypress, AIB has informed me that a process is underway to sell a portfolio of non-performing BTL (buy-to-let) loans on properties which were in the main acquired as investments. It does not include PDH (private dwelling home) mortgages as has been suggested in some quarters. The portfolio is still being assembled but is expected to consist of a mix of borrowers including some who are in receivership where the property is vacant and so the disposal of the loan will facilitate the return of the property into productive use, and other borrowers who are either unsustainable or uncooperative where they are renting the property but failing to pass some or all of the rent to the bank to service their loan obligations.
As the Deputy is aware in situations where there is a tenant in place their rights are not impacted by the sales process and are ultimately protected under the relevant tenancy laws, as such a tenant will avail of the same rights irrespective of whether the loan is owned by AIB or a third party.
64. Deputy Michael McGrath asked the Minister for Finance the current estimate of the fiscal space available in budget 2018 net of the carry forward effects from budget 2017 and all known demographic pressures. [9993/17]
Amharc ar fhreagraThe current estimate of the net fiscal space available for 2018 is €1.2 billion. This figure was set out in the documentation that accompanied Budget 2017 last October.
This estimate is consistent with compliance with Ireland's obligations under the fiscal rules, namely the expenditure benchmark pillar of the preventive arm of the Stability and Growth Pact. According to this metric, fiscal space is calculated as the potential growth rate of the economy (10-year average) less an appropriate margin which takes into account the fact that we have not yet achieved our medium term budgetary objective of a structural deficit of 0.5 per cent of GDP.
The fiscal space projections in the Budget are based on a number of moving parts (GDP deflator, reference rates for potential growth, etc.) set each year by the European Commission. In addition, the value for general government expenditure produced by the Central Statistics Office is an integral part of the calculation. Given all these moving parts, I want to stress that the figures, as always, are work-in-progress estimates and will evolve over time.
The next estimate of the net fiscal space for 2018 will be set out in the Stability Programme 2017 Update and / or the Summer Economic Statement 2017.
With regard to the carryover effect of tax measures outlined in Budget 2017, these will absorb some €172.5 million of the available €1.2 billion net fiscal space for 2018. As detailed in the Expenditure Report 2017, published by the Department of Public Expenditure and Reform, there is an estimated carryover into 2018 of approximately €0.5 billion arising from certain increases in Departmental expenditure included in the Budget Estimates for 2017.
I would point out that the spending review, scheduled to be carried out in advance of Budget 2018, will among other issues, consider the policy options for meeting the additional cost arising in 2018 of the Budget 2017 expenditure measures.
65. Deputy Michael McGrath asked the Minister for Finance the status of the implementation of the motor insurance compensation framework announced by his Department in July 2016. [9992/17]
Amharc ar fhreagraThe Report of the Review of the Framework for Motor Insurance Compensation in Ireland was published on 22 July. As you are aware, this review was carried out jointly by the Department of Finance and the Department of Transport, Tourism and Sport and was approved by Government on 19 July. Since the publication of the report, work has commenced on the implementation of its recommendations, including amendments to the Insurance Acts. The necessary consultations with various stakeholders, including industry are ongoing. It is expected that a legislative proposal will be brought to Government for approval in the coming months.
Some of the key recommendations contained in the report are:
- That coverage of the Insurance Compensation Fund will be extended to include third party motor insurance claims in the event of a liquidation of an insurer. The level of cover from the Insurance Compensation Fund for third party motor insurance claims will be increased from 65% to 100% in line with that currently provided by the Motor Insurers' Bureau of Ireland.
- The increased coverage of the Insurance Compensation Fund will be funded by a direct contribution to the Insurance Compensation Fund from the motor insurance industry. While the Review indicated that this would come via the Motor Insurers' Bureau of Ireland, to the value of 35% of the third party motor insurance claims, further discussions are ongoing with industry about options for alternative funding arrangements which would provide greater predictability about their financial exposure.
Additionally, the recommendation that the provisions contained in section 78A of the Road Traffic Act 1961, requiring insurers to supply details to the Minister for Transport, Tourism and Sport, be amended to provide greater clarity on what is meant by the term "details", was implemented by section 30 of the Road Traffic Act 2016. This Act has yet to be commenced.
This report when fully implemented will provide greater certainty in relation to the operation of the insurance compensation framework and it should ensure speedier payments and a simplification of the claims procedure.
66. Deputy Richard Boyd Barrett asked the Minister for Finance his plans to deal with discriminatory practices by motor insurance companies against particular categories of drivers in terms of the setting of premiums; and if he will make a statement on the matter. [10036/17]
Amharc ar fhreagra71. Deputy Richard Boyd Barrett asked the Minister for Finance his plans to deal with discriminatory practices by motor insurance companies against young persons, elderly persons, taxi drivers and those with older cars in terms of the setting of premiums; and if he will make a statement on the matter. [10037/17]
Amharc ar fhreagraI propose to take Questions Nos. 66 and 71 together.
It is important to note that neither I nor the Central Bank of Ireland can direct insurers to provide cover to a particular category of drivers at a particular price as this is a matter of a commercial nature and would be contrary to EU rules.
In providing motor insurance, insurers adopt a risk based approach to determining premiums. In simple terms, they look at an application and make a determination of what the likelihood of a claim is and price accordingly. Their previous claims history will heavily influence their decisions in this area. Consequently, if a company has had a significant level of claims from a particular age group, then this will be reflected in how they price such a group of people in the future.
Amongst the risk factors insurers look at are the age of the driver, the age of the car and how the car is used, as well as the location of risk, driving history, vehicle details (e.g. engine size), medical conditions, etc. Using these factors, some people will be priced at higher levels because they are considered to represent higher risks. I do not believe that this can be described as a discriminatory practice as it simply reflects the nature of how insurance operates.
In relation to taxi drivers, for instance, their time spent on the road makes them a much higher risk for an insurance company compared with a person who drives a short distance to work every day. This higher risk is also likely to be reflected in an insurer's claims experience, though obviously this will differ from company to company.
However, I do accept that it is possible for the State to play a role in helping to stabilise the market and deal with factors contributing to the cost of insurance. Consequently, I established the Cost of Insurance Working Group. Its Report was approved by Cabinet on January 10 2017, and subsequently published. It contains 33 recommendations and 71 actions which are detailed in an action plan contained in the Report with agreed timelines for implementation. Work on implementing these recommendations is under way.
While there is no single simple solution to effect a reduction in the cost of insurance, when taken cumulatively, the implementation of these actions can deliver fairer premiums for consumers including young persons, older persons, taxi drivers and those driving older vehicles without unnecessary delay.
67. Deputy Noel Rock asked the Minister for Finance the amount currently earned in taxation on interest from crowdfunding loans to small and medium enterprises; and if he will make a statement on the matter. [10039/17]
Amharc ar fhreagraI am informed by Revenue that it is not possible to provide the information sought by the Deputy concerning the current yield to the Exchequer from the taxation of investment earnings from crowd-funding loans to small and medium enterprises. Income Tax returns do not seek the information required to enable this data to be separately identified.
68. Deputy Paul Murphy asked the Minister for Finance his reasoning for his reported opposition to country to country reporting proposals; and if he will make a statement on the matter. [10027/17]
Amharc ar fhreagraIn Finance Act 2015, Ireland introduced Country by Country reporting in line with the OECD Base Erosion and Profit Shifting (BEPS) Action 13 recommendation. I also agreed a Directive with my fellow European Finance Ministers last year which required all EU Member States to introduce similar rules. The first reports will be filed with the Revenue Commissioners by the end of this year and these reports will be exchanged with other tax authorities around the world through EU and OECD mechanisms.
A Commission proposal for an EU Directive on public country by country reporting which involves changes to the Accounting Directive is currently being debated by Member States. It is therefore being dealt with by my colleague, the Minister for Jobs, Enterprise and Innovation.
Speaking at a recent Conference, I noted that the Commission proposal goes against the consensus reached in the OECD BEPS process that the real value of country by country reports is to enable tax authorities to see what is really happening and to carry out more informed audits and assessments. I also noted, that it is important that a consistent global approach is taken on this issue.
69. Deputy Mick Wallace asked the Minister for Finance if he will reassess the role given to NAMA to address the current housing crisis; if consideration will be given to suspending the NAMA plan to build 20,000 houses by 2020; and if he will make a statement on the matter. [10012/17]
Amharc ar fhreagraNAMA was established as an independent commercial body to operate under the direction of its Board of Directors, in accordance with the NAMA Act. Under Section 10 of the NAMA Act, NAMA is mandated to act in a commercial manner to obtain the best financial return for the State. As such, NAMA's dealings with its debtors, as well as the management, funding and sale of assets are all commercial decisions taken with consideration of NAMA's commercial obligations.
The Deputy will be aware that I, as Minister for Finance, have no role in respect of NAMA's implementation of its strategy through such commercial decisions. These are matters for the NAMA Board in accordance with its statutory independent commercial mandate.
In October 2015, the NAMA Board set an objective to facilitate the delivery of 20,000 residential units by YE2020, primarily in the Greater Dublin area, on a commercial and value maximising basis. The Deputy's question incorrectly suggests that NAMA was given this role. NAMA was not given this role. This is a commercial initiative that the NAMA Board has undertaken in an effort to maximise the recovery on NAMA's loans. So when the Deputy asks me to reassess the role given to NAMA, I have no role in reassessing their residential funding programme.
I also would like to clarify the terminology used in the Deputy's question. NAMA is not planning to build houses. NAMA's intention is to provide funding on commercial terms to its debtors and receivers to facilitate their delivery of residential units on sites securing NAMA's loans. NAMA only intends to extend funding to NAMA debtors and receivers on commercial arm's-length terms where there is an expectation that such funding will enhance NAMA's recovery on the loan. NAMA requires that the projected return resulting from the provision of additional funding must be the value maximising strategy for the asset and this is fully in accordance with Section 10 of the NAMA Act. NAMA's actions also must be in line with market norms so as not to create any distortion in the market. This means NAMA will facilitate the development of only those sites that are commercially viable and where site development will deliver a better recovery than the sale of the undeveloped site and all funding will be provided on market terms. The development locations reflect key demand and commercial viability. In line with its commercial mandate, NAMA will continuously review the programme to ensure funding is provided only where this is the value maximising option in line with its commercial mandate.
I am supportive of the NAMA Board's decision to make this very substantial contribution, on a commercial basis, to the increased supply of new homes. In fact, my Department's Section 227 review of NAMA published in July 2014 contained a recommendation that NAMA preserve the capacity to consider such a strategy as the commercial logic of such an initiative became clear.
Through this initiative, NAMA will continue to maximise its return to the Irish State and taxpayer, currently projected to be in the region of €2.3 bn when it completes its work, whilst also contributing to increased housing supply.
70. Deputy Clare Daly asked the Minister for Finance his plans to resource and equip the Financial Services Ombudsman to the extent that the office has the capacity to provide a dedicated advice and assistance service to persons to help them articulate their complaint and is a service that a person could also refer to in the course of the complaint for further guidance, in view of the fact that the absence of such a service puts many persons with complaints at a substantial disadvantage. [9880/17]
Amharc ar fhreagraThe Financial Services Ombudsman (FSO) legislation provides for an independent, impartial investigation and resolution of disputes between consumers and financial service providers. The FSO was established to provide an alternative to the Courts for consumers who have unresolved disputes with a financial service provider. Subject only to an appeal to the High Court, a Finding of the FSO in respect of a complaint is legally binding on all parties.
The Financial Services Ombudsman's Bureau (FSOB) provides a dedicated information service, which handles both phone and e-mail enquiries. This service provides assistance on how to access the FSOB's services and to initiate a complaint. The FSO website also acts as an important point of information for service users.
In order to simplify the complaints process and to make it easier for a consumer to articulate their complaint and to have their complaints resolved through informal means, the FSO adopted a new model of Dispute Resolution in February 2016. This new model involves considerably more interaction with the parties. The emphasis is on utilising mediation to resolve complaints. This is a faster and simpler method for resolving disputes and complaints. I understand that the FSO dispute resolution team also provides information and assistance as required to ensure the consumer is well-informed and best-equipped to engage with the services being offered.
If these early interventions do not resolve the complaint, parties have the option of having it independently investigated and adjudicated by the FSO and a legally binding finding issued. This, of necessity, is a more formal and lengthier process. During this process, the Investigation Service usually writes to the Financial Service Provider (FSP) setting out a series of lengthy, detailed and probing questions which are based on the specific issues which the consumer has raised, but goes beyond this by also asking a series of questions about the FSP's conduct in relation to the FSO legislation and to their obligations under consumer protection legislation. This assists the articulation of the complaint on behalf of the consumer.
Because the FSO issues findings that are legally binding on the parties, it would be incompatible with fair procedures for the FSO to also provide dedicated advice and assistance to a party to a complaint. However, I understand that the consumer can avail of guidance from the office in relation to the processes at any point in their interaction with the FSO.
72. Deputy Ruth Coppinger asked the Minister for Finance if, in view of the public support for the Apollo House occupation, he will support making all remaining suitable NAMA lands available for social and affordable housing and allocating NAMA’s cash reserves towards the provision of social and affordable housing. [2177/17]
Amharc ar fhreagraThe Deputy will be aware on January 3, 2017 I received an open letter from the Home Sweet Home Group asking the same question the Deputy has posed here. That letter is available at the following location: http://tinyurl.com/h7zdsvl.
On 25 January 2017, I responded to the Home Sweet Home Group letter to inform them why their proposals were, for a number of reasons, not possible. As the Deputy has proposed a very similar suggestion in her question, I provide a link to the Department of Finance website containing my full response: www.finance.gov.ie/what-we-do/banking-financial-services/letter-minister-home-sweet-home-.
73. Deputy Mick Wallace asked the Minister for Finance his plans to fill the one remaining position on the NAMA board under section 19 of the NAMA Act 2009, with due consideration for the expertise and experience listed in section 19; and if he will make a statement on the matter. [10011/17]
Amharc ar fhreagraUnder Section 19 the NAMA Act 2009, the NAMA Board is to consist of nine members - the NAMA Chairman, the CEO of NAMA (ex-officio), the CEO of the NTMA (ex-officio), and six ordinary members. There are currently seven members on the NAMA Board and there are, in fact, two vacancies for ordinary members. NAMA has had at least one vacancy on the board since October 2011. The current two vacant seats have arisen as a result of departures from the board in December 2013 and January 2014.
When I appeared before the Public Accounts Committee on 6 October 2016, I stated that the current make up of the Board is sufficient as long as there is the appropriate range of competencies across the Board. I also stated that it can be difficult to secure the appropriate candidates and I would not fill a vacancy with a makeweight appointment. That remains my position today. The Deputy will be aware that I meet with the Chairman of NAMA on a regular basis to discuss any relevant matters. In addition, my officials have monthly meetings with NAMA where Board vacancies are discussed as appropriate.
A key consideration for any appointment process is ensuring the most opportune time to attract the most qualified candidates. In this regard, the Deputy will be very much aware that, over the past 2 years, there has been significant interest in the 2014 sale of NAMA's Northern Ireland loan book. The NAMA Board's independent commercial decision to sanction the sale of the portfolio has been publically debated in both parliamentary and media circles. With this in mind, I am advised that it would be challenging to attract suitable candidates to the posts whilst such public discourse continues. However, I, and my officials, will continue to monitor the situation.
