Written Answers Nos. 36-56
37. Deputy Jonathan O'Brien asked the Minister for Finance the steps he will take to ensure the cost of insurance working group schedule does not slip further; and if he will make a statement on the matter. [50881/17]
Amharc ar fhreagraThe Cost of Insurance Working Group – which is now chaired by Minister of State Mr. Michael D’Arcy T.D. – published its Report on the Cost of Motor Insurance on 10 January 2017. The Report made 33 recommendations with 71 associated actions to be carried out in agreed timeframes, set out in an action plan within the Report.
It is envisaged that the implementation of all the recommendations cumulatively, with the appropriate levels of commitment and cooperation from all relevant stakeholders, will achieve the objective of delivering fairer premiums for consumers. In this regard, it should be noted that the most recent CSO data (for October) indicates that private motor insurance premiums have reduced by 15.2% from their peak last July. While the CSO statistics indicate a greater degree of stability on an overall basis, these figures represent a broad average and therefore there are many people who may still be seeing increases. However, I am hopeful that this greater stability in pricing will be maintained with the result that overall premiums should continue to fall from the very high levels of last year.
Work is ongoing on the implementation of the recommendations by the relevant Government Departments and Agencies and there is a commitment within the Report that the Working Group will prepare quarterly updates on its progress to track the timely and effective implementation of the required actions.
The third such update was published on the Department’s website on 23 October 2017 and shows the progress to date on the overall implementation of the recommendations. In total, 32 actions were due for completion in the first three quarters of the year and 29 of those actions have been completed, with substantial work undertaken in respect of the nine action points categorised as “ongoing”.
Updates on the state of play of the three outstanding actions are provided in the third progress report. While it is inevitable that some recommendations will take longer to implement than envisaged at the time when the Report was written, I am satisfied that in overall terms the recommendations of the Report are being implemented in a timely fashion and the responsible bodies are working hard to meet their deadlines.
Separately, you should note that the drafting phase of the Cost of Insurance Working Group’s Report on Employer Liability and Public Liability Insurance is nearing completion and I anticipate that it will be submitted to me for approval by the end of the year, with its subsequent publication in January following approval by Government.
38. Deputy Clare Daly asked the Minister for Finance further to Parliamentary Question No. 17 of 24 October 2017, the progress of his examination; if an appropriate framework is in place, to allow persons a simple and effective route to resolve complaints in regard to financial service providers; and if he will make a statement on the matter. [50802/17]
Amharc ar fhreagraFollowing the conclusion of my meetings with the CEOs of the main banks on the tracker mortgage issue, I issued a statement setting out the position and the next steps I expected to be taken towards resolution of this issue. I have asked the Governor of the Central Bank to provide me with a progress report by around mid-December on whether each of the banks have made acceptable and sufficient progress in line with their commitments. I have also mandated the Central Bank under section 6A of the Central Bank Act 1942 to prepare a report for me on the current cultures and behaviours and the associated risks in the retail banks today and the actions that may be taken to ensure that banks prioritise customer interests in the future.
The outcome of these reports will feed into my examination of possible further changes to the framework for the protection of consumers of financial services. I would also welcome any proposals that the Deputy may have in this regard.
39. Deputy Thomas P. Broughan asked the Minister for Finance if he will report to Dáil Éireann on Ireland's contribution to the EU budget in 2017; the likely trends in this expenditure in each of the years 2018 to 2021; the preparations his Department is making to provide for the impact of Brexit on this area of expenditure; and if he will make a statement on the matter. [47227/17]
Amharc ar fhreagraMy Department currently forecasts that Ireland's contribution to the EU budget will be c €2,020 million in 2017, €2,650 million in 2018, €2,675 million in 2019 and €2,750 million in 2020. It is worth noting that these forecasts are contingent on a number of variables, including the size of the overall EU budget and other EU budget operational developments which will only emerge as the year progresses. As a result all forecasts will be monitored and updated on an ongoing basis as new information becomes available.
In relation to Brexit, as the Deputy will be aware, negotiations are currently on-going. Therefore, as you can appreciate, it would not be appropriate for me to discuss those negotiations in detail at this point. Ireland wants a financial settlement reached in a fair and transparent manner on the basis of an agreed, objective methodology, that enables a positive future relationship between the EU and the UK and which reflects the UK's legal and budgetary commitments under the Multiannual Financial Framework (MFF).
While my Department currently forecasts Ireland's contributions to the EU budget for 2021 to be €2,775 million, this figure is used primarily for illustrative purposes. It should also be noted that the 2021 forecast falls outside the current Multiannual Financial Framework and as such, should be treated with caution. Contribution estimates will be updated on an ongoing basis as new information becomes available.
40. Deputy Robert Troy asked the Minister for Finance the rationale for redesignation of vehicles for VRT purposes from category B (commercial) to category A (passenger) in the Finance Act 2017; and if he will make a statement on the matter. [50723/17]
Amharc ar fhreagraI am informed by Revenue that the re-categorisation of certain vehicles from category B to category A is to ensure that a particular class of vehicles that are designed and used primarily for the carriage of passengers are taxed as such and that there is a level playing field in the taxation of passenger vehicles.
Over the past three years there has been a significant increase in the number of registrations of vehicles designed for the carriage of four or more persons and with minimal goods carrying capacity. As these vehicles could achieve classification as vehicles for the carriage of goods (N1) under the EU vehicle classification system they were automatically classified as category B for VRT purposes. The amendment in the Finance Bill 2017 corrects this anomaly.
Vehicles which have a passenger capacity of 4 or more persons but which have the cargo area in a separate compartment to the passenger compartment will continue to be charged at the VRT rate of 13.3% as will genuine goods vehicles with one row of seating and the remainder of the space available for the carriage of goods.
41. Deputy Martin Heydon asked the Minister for Finance the status of the review of tracker mortgage complaints particularly for mortgage holders that have been waiting months for an update and a review; and if he will make a statement on the matter. [50887/17]
Amharc ar fhreagraAs per the Central Bank’s Tracker Mortgage Examination status update of 17 October last, approximately 13,000 impacted accounts have been identified as at end September through the Examination, the majority of whom will receive their redress and compensation before the end of the year. Prior to the Examination, the Central Bank ensured a further 7,100 cases involving tracker mortgage issues were rectified and remedied.
Given the size and complexity of the task, the Examination is taking time to complete. Lenders are at varying stages, and are being challenged by the Central Bank where the Bank is not satisfied with a lender's review or redress and compensation proposals. All relevant lenders have now provided Phase 2 Reports to the Central Bank. However, the Central Bank’s assurance work is ongoing and it is expected that additional impacted accounts will be identified as this work progresses.
Some lenders have commenced payment of redress and compensation to impacted customers. The Central Bank expects that all remaining lenders will have implemented their redress and compensation programmes by the end of the year, with the vast majority of impacted customers receiving their redress and compensation by then.
The Central Bank’s consistent priority remains to ensure that lenders identify all customers affected by their unacceptable failings and pay appropriate redress and compensation. The Central Bank will continue to pursue lenders accordingly, in line with the Framework for the Examination (https://www.centralbank.ie/docs/default-source/consumer-hub-library/tracker-issues/appendix1-framework-conducting-tracker-mortgage-examination.pdf?sfvrsn=4 .). The Central Bank will provide a further update in the progress report that will be submitted to me in mid-December.
42. Deputy Brendan Smith asked the Minister for Finance his plans to introduce additional measures to deal with the cross border smuggling of illicit products such as tobacco and diesel; and if he will make a statement on the matter. [50800/17]
Amharc ar fhreagraThe serious threat that fuel fraud and the illicit tobacco trade pose to legitimate business, to consumers and the Exchequer is recognised and I am advised by Revenue that tackling this criminal activity has been one of its priorities over recent years.
Revenue’s comprehensive strategy for combatting the illegal fuel trade has included the introduction of stringent new supply chain controls and reporting requirements for fuel transactions, to minimise the scope for fraud. It also included a rigorous programme of enforcement action, underpinned by legislative changes that have been introduced over a number of Finance Acts to strengthen Revenue’s powers for dealing with fraud of this nature. In addition, Revenue and HM Revenue and Customs in the United Kingdom undertook a joint initiative to find a new fiscal marker for use in marked fuels, which was introduced in Ireland and the United Kingdom from the beginning of April 2015.
I understand that the industry view is that the measures implemented to date have been successful in significantly curtailing fuel fraud in Ireland. This view is supported by a significant increase in tax revenues from road diesel over the past three years. I am also advised that Revenue conducted a National Random Sampling Programme in January 2016, with a view to obtaining an updated picture of the extent of the fuel laundering problem. The programme involved selecting a random sample comprising nearly one in every ten of the 2,500 holders of Auto Fuel Trader Licences (any trader that produces, sells, deals in, or keeps for sale or delivery road diesel is legally obliged to hold such a licence). Road diesel samples were taken from all traders in the programme and tested for the presence of the new marker. No evidence of the new marker was found in any of the samples tested. The random sampling programme was repeated in January 2017 and, again, no evidence of the marker was found. This provides very persuasive evidence that the strategy undertaken in recent years has been successful in addressing and significantly curtailing the laundering problem.
Action is taken against all aspects of the illegal tobacco trade and includes a range of measures to identify and target persons engaged in the supply or sale of illicit products, with a view to seizing the illicit products and prosecuting those involved. Revenue’s multifaceted strategy encompasses, also, ongoing analysis of the nature and extent of the problem, extensive cooperation (including the development and sharing of intelligence) on a national, EU and international basis, use of analytics and detection technologies and optimising the deployment of resources.
A combination of risk analysis, profiling and intelligence and the screening of cargo, vehicles, baggage and postal packages contribute to the effectiveness of Revenue’s goal of intercepting the supply of illicit tobacco products. Revenue also target the illicit trade at post-importation level by carrying out intelligence-based operations and random checks at retail outlets, markets and private and commercial premises.
In addition, and as in the case of fuel, action has been taken through Finance Acts over recent years to ensure that Revenue has the statutory powers necessary for undertaking its important work against the illegal tobacco trade.
In terms of assessing the overall performance in tackling the illegal tobacco trade, a reliable measure is provided by the annual surveys of illegal tobacco products carried out by IPSOS/MRBI for Revenue and the National Tobacco Control Office of the Health Services Executive. The survey in 2016 found that 10% of cigarette packs encountered in the course of the project were illicit, down from the levels of 15% and 13% found in 2011 and 2012 respectively.
Revenue works closely with An Garda Síochána in acting against fuel and tobacco fraud, and the relevant authorities in the State also work closely with their counterparts in Northern Ireland, through cross-border enforcement groups, to target the organised crime groups responsible for a large proportion of this criminal activity. This work is being supported and facilitated by the setting up in 2016, within the framework of “A Fresh Start: the Stormont Agreement and Implementation Plan”, of a Joint Agency Task Force, which includes Revenue as well as An Garda Síochána and their Northern Ireland counterparts. Revenue also works in close cooperation with the relevant authorities in other jurisdictions, the European Anti-Fraud Office, and other international bodies and agencies in the ongoing programmes of action at international level to combat both the illicit fuel and tobacco trades.
I am satisfied that Revenue’s work against fuel fraud and the illicit tobacco trade has achieved a considerable level of success, and I am assured that action in these areas will continue to be given high priority. In addition, I assure the Deputy that I will give careful consideration to any further proposals for legislative change that may be brought forward by Revenue to enhance its capacity to deal effectively with fraud and criminality in these areas.
43. Deputy Pearse Doherty asked the Minister for Finance if his attention has been drawn to the growing number of older persons who find themselves facing a choice between huge increases in premia or a loss of value in their life cover due to the whole-of-life policies; and if he will make a statement on the matter. [50884/17]
Amharc ar fhreagraAt the outset, it is important to note that as Minister for Finance, I am responsible for the development of the legal framework governing financial regulation. Therefore, neither I nor the Central Bank of Ireland can interfere in the provision or pricing of insurance products, as these matters are of a commercial nature, and are determined by insurance companies based on an assessment of the risks they are willing to accept. This position is reinforced by the EU framework for insurance which 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.
Consequently there is no role for my Department or the Central Bank in any post-sale reviews on whole-of-life policies. These are an individual matter for each insurance company and may differ from policy to policy.
In order however to provide as full a perspective on this issue, I sought the views of the Central Bank about the nature and working of this type of insurance product. It advised that they are designed to provide consumers with life cover for their whole life. As long as the policy holder makes regular payments and the payments are sufficient to maintain the chosen benefits, this type of cover will pay a lump sum on the death of the policy holder.
The regular payment into the plan covers the cost of providing the benefits chosen on the plan. In the early years the payments are higher than the cost of the policy holder’s benefits with the extra money paid going into the plan fund. However, protection benefits get more expensive as policy holders get older with the result that payments into the plan begin to equal the cost of the chosen benefits. In the later years of reviewable protection plans, the cost of the benefits increases significantly, and in order to keep the level of benefits at the current level of payments, the difference is made up from the plan fund.
In order to see if the consumer’s regular payment plus any fund that has been built up is enough to cover their chosen benefits for their reviewable protection plan, an insurance company carries out regular reviews of these plans (the period in which these are completed can be 5 years, 6 years, 10 or 12 years depending on the product). During a review the insurance company may find that the consumer’s current level of payments is enough to maintain the level of cover that the consumer wants. However, the insurance company may also find that the current level of payments is not enough to maintain the level of cover desired by the consumer, thus explaining why a number of people are finding that their premiums are increasing.
44. Deputy Thomas P. Broughan asked the Minister for Finance the levels of expenditure on national debt interest payments in 2017; the projections for this expenditure in each of the years 2018 to 2021; the provision his Department has made for refinancing large tranches of national debt in the same period; and if he will make a statement on the matter. [47229/17]
Amharc ar fhreagraEstimates of National Debt interest expenditure for the period 2017 – 2021 were published by my Department at the time of Budget 2018, in Table A4 on page 47 of the Economic and Fiscal Outlook document.
Those estimates forecast that National Debt interest expenditure will be €6.1 billion in both 2017 and 2018, then falling to €5.9 billion in 2019, with subsequent falls to €5.7 billion in 2020 and €5 billion in 2021. These forecasts continue the trend of falling National Debt interest expenditure which has been observed over recent years.
The interest estimates are point-in-time estimates, reflecting the position as at the end of the third quarter of 2017. The estimates are based on prudent assumptions. Naturally, those estimates which are further out in the forecast horizon are particularly tentative. Updated estimates will be published next spring in the Stability Programme Update 2018.
As regards the refinancing requirement in coming years, the Deputy will be aware that significant steps have been taken in recent times to reduce that requirement and also to reduce the debt service burden.
In September I announced plans to repay early and in full the remaining IMF loan – which has an outstanding balance of circa €4.5 billion – as well as the bilateral loans from Denmark and Sweden – which have a combined outstanding balance of €1 billion. The Deputy will note the important approval of the European Financial Stability Fund (EFSF) to this proposal on Monday of this week.
This follows early repayments to the IMF of just over €18 billion between December 2014 and March 2015 which discharged IMF principal repayment obligations that were originally to fall due from July 2015 to January 2021.
Upon completion of the further early repayment, the full €22.5 billion loan from the IMF, as well as the €1 billion in loans from Denmark and Sweden will have been repaid ahead of schedule.
The NTMA continues to pre-fund ahead of future obligations and to build up significant cash and liquid asset balances. These balances stood at almost €15 billion at end-October.
The NTMA has also executed bilateral bond switches – redeeming early shorter-term bonds in exchange for longer-term bonds – and has reduced the 2018 – 2020 bond refinancing requirement by over €3.5 billion.
I am satisfied that the Exchequer is in a healthy position to fund the refinancing requirement over the coming years.
45. Deputy Robert Troy asked the Minister for Finance his plans to extend the benefit-in-kind exemption for three years for electric cars to ensure confidence for persons deciding to purchase cars. [50722/17]
Amharc ar fhreagraThe Finance Bill provides for a 0% rate of benefit-in-kind on electric vehicles in support of the climate action strategy set out in Ireland’s National Mitigation Plan. To further support this measure I am exempting electricity used in the workplace for charging vehicles from benefit-in-kind.
I addressed this issue during the debates on the Finance Bill when I stated that while the 0% benefit-in-kind relief is provided for an initial period of one year, it is my intention that it will remain in place for a longer period of time - a minimum of 3 to 5 years - sufficient to incentivise the uptake of electric vehicles.
A comprehensive review of benefit-in-kind on vehicles will take place in 2018, to inform decisions for Budget 2019, including how best to implement longer term 0% benefit-in-kind relief for electric vehicles.
46. Deputy Michael McGrath asked the Minister for Finance his views on developing a public banking model here similar to the model (details supplied) in Germany; and if he will make a statement on the matter. [50799/17]
Amharc ar fhreagraAs the Deputy will be aware, the Programme for Government commits the Government to "thoroughly investigate the German Sparkassen model for the development of local public banks that operate within well-defined regions". My Department and the Department of Arts, Heritage, Regional, Rural and Gaeltacht Affairs, now the Department of Community and Rural Development, are the Departments responsible for fulfilling this commitment.
Local public banking is where a state, or other public body, has ownership of a financial institution. In Germany, Sparkassen (local public banks) operate in specified regions and their aim is not profit maximisation but rather promoting the interest of the public stakeholder, economic development and financial inclusion. Irish Rural link and SBFIC suggested a similar ethos for Irish local public banks in their proposal.
The investigation of local public banking has consisted of a consultation process with stakeholders and interested parties. It has also included an analysis of a detailed proposal for a possible model of local public baking in Ireland. This proposal was put forward by Irish Rural Link and the Savings Banks Foundation for International Cooperation (SBFIC), the international development wing of the Sparkassen group. There have been a number of meetings between their representatives and my officials.
Officials in my Department have been working jointly the Department of Community and Rural Development in order to prepare a report of the investigation of local public banking. This report will outline the current banking environment in Ireland, describe the Sparkassen business model, analyse a proposal for local public banking in Ireland, summarise the view of respondents to the public consultation process and set out findings in relation to the potential for a local public banking model in Ireland.
The purpose of the consultation process and report is to assist the Government in its analysis of local public banking in an Irish context. The report is currently being finalised and I expect to receive it imminently. Along with my colleague, Minister for Rural and Community Development, Michael Ring T.D., I will bring the report to Government, for approval. I would like to advise the Deputy that I expect we will be in a position to do so before Christmas.
47. Deputy Pearse Doherty asked the Minister for Finance his plans for legislation to set a cap on the interest rate that can be charged by moneylenders; and if he will make a statement on the matter. [50883/17]
Amharc ar fhreagraAs the Deputy will be aware, the Consumer Credit Act 1995, the legislation under which moneylenders are licensed, does not provide for an interest rate cap. Nor do the European Communities (Consumer Credit Agreements) Regulations 2010. Therefore, the Central Bank has no statutory power to impose a market wide cap on rates. Any legislative proposals in this regard would have to be careful to achieve an overall reduction in the cost of credit and ensure that it did not have unintended consequences in terms of financial exclusion.
Under the Consumer Credit Act 1995, the Central Bank may refuse to grant a moneylenders licence if it is of the opinion that the cost of credit to be charged is excessive. The rates currently charged by licensed moneylenders have remained largely unchanged since the Central Bank took over the regulation of the sector from the Office of the Director of Consumer Affairs in 2003. Since that time the Central Bank has not permitted any increase to the maximum APR charged within the sector nor has it licensed any moneylender to provide a ‘pay-day loan’ service such as exist in other jurisdictions.
The Central Bank’s public register of licensed moneylenders is available on its website at http://registers.centralbank.ie/DownloadsPage.aspx and lists the maximum permitted APR and associated cost of credit permitted for each licensed moneylender.
The Deputy will be aware of the Personal Microcredit Scheme, which is providing simple microloans to credit union members and helping to combat the use of moneylenders.
I understand that 112 credit unions are now in a position to offer the ‘It Makes Sense Loan’ as they are fully set up to use the Household Budget Scheme operated by An Post.
48. Deputy Niamh Smyth asked the Minister for Finance if he will address the diminution of banking services in rural Ireland; and if he will make a statement on the matter. [50715/17]
Amharc ar fhreagraI should stress at the outset that the Irish Government has no formal role in the commercial decisions of the banks as to their future business model and whether or not they will close particular branches.
The Deputy will no doubt appreciate that the provision of services by banks, including the location of branches, is a commercial decision for the Boards and management of the institutions.
That said, I expect that any bank closing branches will do everything that it can to mitigate the impacts of the branch closures on local communities, including technology and the use of alternative means of service delivery. I also expect that the bank will ensure that customers are kept informed about developments and provided with the appropriate assistance to move branches, switch to other banks and avail of alternative means of accessing financial services. The Central Bank will also have a role in ensuring that consumer protection rules are followed.
The Deputy may be interested to hear that An Post are providing a new current account service, the An Post Smart Account to the public. This offers a number of features to its account holders. Consumers can apply for an account online or in any Smart Account Post Office.
The Deputy will be aware of the Strategic Banking Corporation of Ireland (SBCI) whose mission is to deliver to Irish SMEs effective financial supports that address failures in the Irish credit market, while driving competition and innovation and ensuring the efficient use of available EU resources.
The SBCI does not engage in direct lending. It utilises an on-lending model, making finance available through partner finance providers known as on-lenders.
The SBCI began lending in March 2015. To the end of June 2017, €855 million of SBCI funding has been provided to 21,132 Irish SMEs, supporting 106,728 jobs. This represents an increase of 57% in SBCI lending since the end of December 2016. The interest rate on SBCI loans is 1.15% lower than the average market interest rate on loans to SMEs. Of specific relevance to this question is that 85% of SBCI loans are to SMEs based outside of Dublin.
49. Deputy Bernard J. Durkan asked the Minister for Finance the degree to which he and his Department have identified and prepared for the economic impact of Brexit; his plans to put in place measures to offset the most serious challenges presented; if he expects to have all such measures in place in time; and if he will make a statement on the matter. [50832/17]
Amharc ar fhreagraThe Department of Finance has been assessing and preparing for the impact of a UK exit from the European Union since well before the referendum on 23 June 2016, with this work now intensified.
The challenges which we face as a result of Brexit are mainstreamed across all divisions of my Department and are reflected in business planning. The Department’s macro-economic forecasts take into account the economic impacts of Brexit. In addition, the Department has been to the fore in producing and funding a number of Brexit-related studies, both before and since the UK's referendum decision, including:
- 'Scoping the Possible Economic Implications of Brexit on Ireland' - Scoping study of scenarios for the future relationship between the UK and the EU. Published under the Department of Finance-ESRI research programme in November 2015;
- ‘An Exposure Analysis of Sectors of the Irish Economy’. An in-depth analysis of the possible sectoral and regional impacts of Brexit arising from Ireland's trade relationship with the UK, published by Department of Finance, October 2016 (Updated March 2017);
- 'Modelling the Medium to Long Term Potential Macroeconomic Impact of Brexit on Ireland' - Published under the Department of Finance-ESRI research programme in November 2016, which modelled the medium to long term macroeconomic impact of Brexit under a number of scenarios, including a hard Brexit whereby trade between the EU and UK reverts to WTO tariffs; and
- ‘Trade Exposures of Sectors of the Irish Economy in a European Context’ – An analysis of trade exposure to the UK in comparison to other EU Member States, published by Department of Finance, September 2017;
It is clear from the Department’s published research that the potential impact of Brexit on the Irish economy is significant. The Department of Finance preparations are ongoing and continue to examine all possible scenarios and challenges, and are a key input into the whole of Government approach.
The best and most immediate policy under the Government's control to counter the likely negative economic impacts of Brexit is to prudently manage the public finances in order to ensure that Ireland's economy continues to remain competitive in the face of future economic headwinds.
The Government has taken a number of important steps to prepare our economy for the challenges of Brexit, including in Budgets 2017 and 2018, the Action Plan for Jobs, our Trade and Investment Strategy and the preparation of a new 10-year Capital Plan. On the fiscal side, the Government has continued its policy focus of enhancing the resilience of our public finances to any Brexit-related shock. Specifically, it is projected that Ireland will achieve its medium-term budgetary objective of a balanced budget next year. Linked to this, over the forecast horizon, it is projected that the General Government Debt-to-GDP ratio will continue on a downward trajectory, reaching the Stability and Growth Pact (SGP) 60 per cent threshold in the early part of the next decade and continuing to improve thereafter. Whilst not complacent to potential challenges, including our currently elevated debt level, these developments will help provide fiscal capacity in the event of Brexit. Complementing this, Budget 2018 further established the ‘Rainy Day Fund’, which provides a further counter-cyclical buffer, and represents an important measure to strengthen the shock absorption capacity of the national finances to such external risks.
Budget 2018 also announced further measures to prepare Ireland’s economy for the significant challenges ahead. These measures include: a doubling of capital investment between 2015 to 2021 - boosting the growth potential of the economy; improving the competitiveness of our personal tax system - through income tax reform; introducing a Key Employment Engagement Programme (KEEP) – a new incentive to attract key employees; a new €300 million Loan Guarantee Scheme for Brexit-impacted business and a complementary €25 million Agriculture Brexit Loan Scheme – targeted at enhancing the competitiveness of the businesses most exposed to Brexit; the retention of the 9% VAT rate in the hospitality sector to reduce the impact of currency volatility in the wake of the UK’s decision; and a doubling of additional Brexit-related staff in state agencies.
Additionally, the Government’s strategy to mitigate the impact of Brexit includes fully exploiting the opportunities arising. With regard to the Financial Services sector, Brexit will provide opportunities for Ireland to increase its share of financial services based inward investment. In that regard, Minister of State Michael D’Arcy T.D. has responsibility for Financial Services, including the implementation of the IFS2020 Strategy for driving growth in the financial services sector.
The Department of Finance will continue to carry out the necessary research, analysis and consultations, and to develop policy advice in the context of Brexit.
50. Deputy Pearse Doherty asked the Minister for Finance the grounds on which the increase in commercial stamp duty will be sustainable; the expected revenue achieved; and if he will make a statement on the matter. [50882/17]
Amharc ar fhreagraBudget 2018 includes a change to the rate of Stamp Duty on non-residential property from 2% to 6%, projected to raise €376 million in 2018. This is based on estimates in Revenue’s Pre-Budget Ready Reckoner, which showed the effect of a 0.5% increase in the rate on non-residential property, a €47 million increase in yield – this is multiplied up to €94 million for 1% increase, or €376 million for a 4% increase.
I am advised by Revenue that the yield projection for 2018 is based on receipts for previous years, combined with an ongoing assessment of expected receipts by the end of the current year (2017) and for next year (2018) as well as impacts of earlier policy changes. This process includes assessment of significant once-off transactions that positively increased 2016 receipts but are not expected to reoccur on a regular basis. Failure to account for these once-off transactions would have led to a higher estimate for 2018, therefore the estimate should be considered as conservative and prudent.
Following Budget 2018, Revenue has updated the Ready Reckoner to a Post-Budget basis, taking account of budgetary changes and revised growth forecasts (from the Department of Finance) for 2018. The Post-Budget Ready Reckoner indicates that each 0.5% increase in the rate of Stamp Duty on non-residential property (from the new rate of 6%) is now estimated to raise €49 million.
It is expected that total Stamp Duty receipts from non-residential property will be around €600 million in 2018.
It should be noted the estimates make an assumption of no behavioural change. In the absence of precise and accurate forecasts for transaction volumes in 2018, basing receipts on 2016/2017 levels and trends is the most reasonable option. The estimate also assumes current exemptions and other reliefs remain unchanged.
I am advised by Revenue that adjusting for possible once-off transactions in 2016, receipts in the three year period 2014 to 2016 were quite stable and Revenue's assessment is that it seems reasonable to expect this level of activity is sustainable and for it to continue.
51. Deputy Joan Burton asked the Minister for Finance the estimated number of accounts affected by the tracker mortgage scandal; and if he will make a statement on the matter. [50718/17]
Amharc ar fhreagraThe Central Bank has advised that as at the end of September 2017, 13,000 impacted accounts had been identified by lenders in the course of the Tracker Mortgage Examination. Lenders' overall reviews are subject to ongoing assurance work and vigorous challenge by the Central Bank.
The 13,000 impacted accounts figure will increase in light of recent decisions by certain lenders to include previously disputed cases in the Examination. As the Central Bank progresses its assurance work and other lenders are similarly challenged this number may increase further.
It should also be noted that this figure of 13,000 impacted accounts does not include a further 7,100 impacted accounts which were resolved in the pre-Examination period.
The Central Bank will continue to provide public updates as the phased Examination progresses to conclusion, including a report to myself in mid-December.
52. Deputy Thomas P. Broughan asked the Minister for Finance further to Parliamentary Question No.123 of 14 November 2017, the measures he is taking to address this difference; and if he will make a statement on the matter. [50721/17]
Amharc ar fhreagraThe Deputy is correct in stating that according to the latest data published by the CSO, average weekly earnings grew by 2.2 per cent on an annual basis in the second quarter of 2017, compared with annual rent inflation of 6.6 per cent. In an earlier response to the Deputy I clearly laid out the measures the Government is taking to address this difference.
The fundamental issue with the housing market in Ireland today is lack of supply. This applies to the rental market specifically and to the residential property market more generally. To address this, the Government's housing strategy, Rebuilding Ireland - Action Plan for Housing and Homelessness, adopts a whole of government response with 84 actionable measures across five key pillars and aims to increase overall housing supply by 25,000 new homes every year by 2020. The measures set out in the Action Plan aim to stimulate supply by streamlining the planning system, removing infrastructure blockages and supporting the delivery of affordable housing for both first time buyers and purchasers of family homes. This increase in supply should lead to reduced inflationary pressure in both the owner occupier and rental market.
More recently, the Government has been engaged in a review of Rebuilding Ireland, in order to assess its impact and consider additional actions to address issues with supply in the housing market. Further to this, in Budget 2018 an additional €500 million was allocated to build an additional 3,000 social housing units by 2021. Furthermore, funding of €750 million from the Ireland Strategic Investment Fund (ISIF) is being made available to a new vehicle - Home Building Finance Ireland – to boost the supply of debt funding to residential development. These measures are intended to increase the supply of both private and social residential properties and thus ease inflationary pressures in the market, which in turn will help to address the difference in wage and rental inflation.
The Government has also sought to specifically address rent inflation through the introduction of Rent Pressure Zones (RPZ). These measures have been introduced to address inflation in rental prices within designated areas. There are signs that this measure, as well as government initiatives more broadly, are beginning to have a moderating impact on rental prices. For example, in Dublin the rate of increase in the second quarter of 2017 (5.8 per cent) is at its lowest since the second quarter of 2013. The Government will continue to closely monitor developments in rental sector and the housing market more generally.
53. Deputy Brendan Howlin asked the Minister for Finance the role his Department had in Ireland's bid for the European Banking Authority and his engagements with other European leaders on Ireland's bid. [50203/17]
Amharc ar fhreagraOn Monday the 20th of November, Ministers from the 27 EU member States decided where to locate the European Banking Authority (EBA) and the European Medicines Agency (EMA) when the UK leaves the Union. Both processes were closely contested with 8 countries in the running for the EBA and 19 for the EMA. The decision on both Agencies came down to the drawing of lots and in the end Paris was confirmed as the new host of the EBA and Amsterdam as the host for the EMA.
Ireland submitted two credible bids to host either the EMA or the EBA which were regarded by other Member States and the EU Commission, as strong. In addition Ireland was seen as one of the locations that would be least disruptive to the important work of the two agencies and to their staff and families as they relocated.
Since the Government’s declaration of our bid to host the EBA, the officials in my Department have worked intensively to promote Ireland as the location of choice for the EBA. They engaged with relevant stakeholders, including meetings with the EBA and the European Commission, to highlight the benefits of relocating the Authority to Ireland.
The Department of Finance produced the bid document and the brochure that promoted Dublin as a location for the EBA. These documents were based on criteria put forward by the President of the European Commission and President of the European Council. IDA Ireland assisted on the property dimensions of the bid while a range of other Departments also contributed.
My officials also collaborated with their colleagues in the Department of Health and the Department of Foreign Affairs and Trade to coordinate Ireland’s offers to host the EBA and the EMA.
During the process of building support for our EBA we engaged with all Member States. This involved a number of Ministerial visits to capitals including Minister of State D’Arcy visiting nine Member States in late September. I, along with other Ministers and officials from the Department of Finance and the Department of Foreign Affairs & Trade, also met with counterparts on the margins of meetings held in Europe and elsewhere. Contact was also made through our Embassy network as well as with the relevant foreign embassies in Dublin.
This was a highly competitive process and to get to the final round was a major achievement and to have it be decided by the drawing of lots was disappointing. However, our strong performance in the process and our engagement has enhanced Ireland’s reputation in the EU and it has helped strengthen our ties and relationships across a range of Member States.
54. Deputy Clare Daly asked the Minister for Finance if he has satisfied himself that the Central Bank is sufficiently empowered to identify all persons affected by the tracker mortgage scandal as part of its investigation of same in view of the recent revelation that an additional 6,000 persons had been overcharged by a bank (details supplied) 18 months after the commencement of Phase 2 of the investigation which requires banks to identify persons impacted by the scandal. [50803/17]
Amharc ar fhreagraAs set out in its Tracker Mortgage Examination status update report of 17 October last, the Central Bank advised that assurance work completed to that point raised concerns that two lenders may have failed to identify populations of impacted customer or failed to recognise that certain customers have been impacted by their failures. The Central Bank was of the view that some of these customers were in fact impacted and accordingly entitled to redress and compensation. As per the Central Bank’s statement of 9 November 2017, Bank of Ireland will now include previously disputed groups of customers in the Tracker Examination for redress and compensation.
The Central Bank, with the assistance of its panel of experts, continues to evaluate the Phase 2 Reports submitted by lenders. The primary focus of this ongoing assurance work is on customers whom lenders have deemed not impacted and it involves challenging the findings of lenders’ reviews through robust engagement in the form of on-site inspections, the review of relevant materials and a substantial number of meetings with lenders. As the Central Bank progresses its assurance work, other lenders will be similarly challenged.
The Examination continues to be a priority for the Central Bank and the Bank will continue to challenge lenders in respect of the conduct of the Examination. The Central Bank will consider appropriate supervisory action, up to and including enforcement action, where necessary.
In addition, as Minister for Finance, I have mandated the Central Bank under section 6A of the Central Bank Act 1942 to prepare a report on:
- the current culture and behaviour and the associated risks in the retail banks; and
- the actions that may be taken to ensure that banks prioritise customer interests in the future.
On foot of this report, the Government will determine whether any additional legislative and regulatory changes are needed that would enhance accountability in the banks to ensure customer interests are prioritised.
55. Deputy Michael McGrath asked the Minister for Finance the progress made in setting up the escrow account for the money owed by a company (details supplied); when it will be established; when the Commission's decision against the State for the delay in collecting money from the company will be heard by the European Court of Justice; the scope that is there for the Commission to revoke its decision against the State if money is subsequently collected from the company; and if he will make a statement on the matter. [50797/17]
Amharc ar fhreagraIreland has never accepted the Commission’s analysis in the Apple State aid Decision.
However, we have always been clear that the Government is fully committed to ensuring that recovery of the alleged Apple State aid takes place without delay and has committed significant resources to ensuring this is achieved.
Irish officials and experts have been engaged in intensive work to ensure that the State complies with all its recovery obligations as soon as possible, and have been in constant contact with the European Commission and Apple on all aspects of this process for over a year.
Ireland has made significant progress on this complex issue and is close to the establishment of an escrow fund in compliance with all relevant Irish constitutional and European Union law. Given the scale and bespoke nature of such a fund, the precise terms are subject to confidential and commercially sensitive deliberations and I will not be drawn into a public commitment on timeframes as that could undermine the Irish negotiation position – save to say that it will take place as soon as possible.
The announcement of the intention to launch infringement proceedings against Ireland is a wholly unnecessary step by the Commission, in an area where they are afforded a broad level of discretion and they therefore should use their power responsibly.
No fines will occur to Ireland on foot of infringement proceedings under Article 108(2) of the Treaty of the Functioning of the European Union. Assuming the Commission are able to successfully convince the European Court of Justice that Ireland has not made sufficient progress on recovery, the result is a declaration from the Court that Ireland has not complied with our treaty obligations. This is something that the Government takes very seriously and we will do everything in our power to defend such action.
Fines may occur on foot of a second court action taken by the Commission, for Ireland’s failure to have complied with a judgement of the European Court of Justice under Article 260(2) of the Treaty. The level of fines is at the discretion of the court – and the purpose behind them is to ensure that Member States takes their Treaty obligation seriously.
The Government has been very clear will we fully respect the rule of law in the European Union and has spent over €1m specifically to ensure that we comply with the recovery obligation. We will continue to take all necessary steps to ensure that the need for such action and the levelling of such fines does not arise.
56. Deputy Brendan Smith asked the Minister for Finance the outcome of discussions his Department and the Revenue Commissioners have had with their counterparts in Northern Ireland and Britain in relation to the need to minimise to the greatest extent possible the adverse impacts of Brexit and to ensure the continuation of the existing co-operation between the statutory agencies North and South; and if he will make a statement on the matter. [50801/17]
Amharc ar fhreagraThe Government’s priorities on Brexit are clear, minimising impact on trade and the economy, protecting the Northern Ireland Peace Process, maintaining the Common Travel Area and influencing the future of the European Union.
The Government’s position remains that there can be no hard border on the island of Ireland – the border must remain invisible.
Work at Cabinet level is being prepared through cross-Departmental coordination structures. These represent a frequent and active channel through which all relevant Departments are providing their research, analysis and overall policy input to the Government’s wider response to Brexit, including its priorities for the ongoing Article 50 negotiations between the EU and the UK.
As the outcome of the negotiations is not yet known, an important focus of the planning and preparation being undertaken through these structures is on deepening the Government’s analysis and understanding of the exact consequences for Ireland of a range of different possible scenarios.
Parallel to this work, ongoing cooperation between Ireland and Great Britain continues as demonstrated by my meetings with UK Chancellor Hammond and at official level with the Treasury this year.
In addition, I am informed by Revenue that the long-standing co-operation they enjoy with HMRC colleagues in Northern Ireland and Great Britain continues. This involves regular interaction between operational staff, and occasional meetings up to and including Board level, on issues of mutual concern.
