Written Answers Nos. 77-99
77. Deputy Richard Boyd Barrett asked the Minister for Finance the way in which Home Building Finance Ireland, HBFI, will contribute to delivering more affordable housing stock; and if he will make a statement on the matter. [13950/18]
Amharc ar fhreagraAs announced in my Budget speech on 10 October 2017, Home Building Finance Ireland (HBFI) is to be established to provide funding on market terms to viable residential development projects whose owners are experiencing difficulty in obtaining debt funding. Up to €750 million of ISIF funds will be allocated to HBFI to provide funding on market terms and the fund is estimated to have capacity to finance about 6,000 homes in the coming years.
HBFI will not be directly involved in development – its role would be solely as a commercial lender and therefore will not have any role in designing the housing mix contained in the schemes it funds. HBFI will provide lending on commercial, market-equivalent terms and conditions. This approach would be akin to a bank or private equity investor. As such HBFI will not have targets in relation to social or affordable housing but will provide a significant contribution to supporting the delivery of additional supply of all types of residential housing in the coming years.
While no specific criteria regarding the pricing of HBFI funded developments are envisaged increasing the level of housing output will increase the affordability of housing more generally, which in turn also will have a positive effect on our ability to provide social housing. For example, any residential developments funded by HBFI will be subject to the same planning and regulatory requirements as all other developments. This includes policies relating to Part V of the Planning and Development Act 2000 and as such, it is expected that a minimum of 10% of the anticipated output of this investment by HBFI will become available for social housing through this statutory mechanism over this period.
Though HBFI is intended to be a debt funder for private residential projects, I can assure the Deputy that this Government is equally determined to tackle the issue of housing affordability. In January the Minister for Housing, Planning and Local Government made a number of additional announcements in this regard including the launch of the Rebuilding Ireland Home Loan and a new Affordable Purchase Scheme each of which should make a contribution to delivering homes that are more affordable for potential buyers.
78. Deputy Pearse Doherty asked the Minister for Finance the cost to date of the decision to appeal a matter (details supplied); and when the appeal will be heard. [13652/18]
Amharc ar fhreagraIreland has never accepted the Commission’s analysis in the Apple State aid Decision and is challenging the Commission's decision before the European Courts.
Notwithstanding this, the Government is committed to complying with the binding legal obligations the Commission’s Final Decision places on Ireland. The Irish authorities have engaged fully with the Commission throughout the State aid investigation. This involved a significant degree of legal and technical complexity, and additional expertise has been engaged where required.
The appeal takes the form of an application to the General Court of the European Union (GCEU), asking it to annul the Commission’s Final Decision.
The Attorney General prepared the legal grounds in support of the annulment proceedings and the application was lodged in the GCEU in 2016. As is normal practice, a summary of these have been published in the Official Journal of the European Union. They were also published on the Department of Finance’s website in December 2016.
The case has been granted priority status and is progressing through the various stages of private written proceedings before the GCEU. It is at the discretion of the Court to determine if there will be oral proceedings, either in public or in private. It will likely be several years before the matter is ultimately settled by the European Courts.
Over the past four years approximately €5.7 million (including VAT) has been paid in total, of which approximately €3 million relates to the recovery process. This includes all legal costs, consultancy fees and other associated costs. These fees have been paid by the Department of Finance, Revenue Commissioners, NTMA, Central Bank of Ireland, Attorney General's Office and Chief State Solicitor's Office. As this is an important issue for the State, the case will continue to be resourced as appropriate.
79. Deputy Brian Stanley asked the Minister for Finance if he has met with representatives from the motor insurance industry with regard to the refusal to insure motor vehicles over ten years of age; and if he will make a statement on the matter. [13640/18]
Amharc ar fhreagraI am aware of the concerns raised by the Deputy and have considerable sympathy for them.
However, as I outlined in my response to question 5785/18 on this matter, 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, I am not in a position to direct insurance companies as to the pricing level or terms or conditions that they should apply in respect of particular categories of drivers or vehicles.
I understand that insurers use a combination of rating factors in making their individual decisions on whether to offer cover and what terms to apply. I understand that these include the age and type of the vehicle, as well as the age of the driver, the relevant claims record and driving experience, the number of drivers, how the car is used, etc. Insurers do not all use the same combination of rating factors, and as a result prices and availability of cover varies across the market. In addition, insurance companies will price in accordance with their own past claims experience, meaning that in relation to the age of a vehicle and the availability of cover, different insurance companies will use different age thresholds.
As promised in the aforementioned PQ, my officials as part of their regular engagement with Insurance Ireland have discussed this matter in greater detail. While there have been no further developments to date on this matter, the Deputy should note that I have asked my officials to try and gather more information on this issue and to also continue to engage with Insurance Ireland on it.
80. Deputy Alan Kelly asked the Minister for Finance if his attention has been drawn to a study (details supplied) concerning the use of section 110 tax relief in the IFSC; the actions he plans to take on foot of the study; and if he will make a statement on the matter. [13620/18]
Amharc ar fhreagraSection 110 is intended to create a tax neutral regime for bona-fide securitisation and structured finance purposes. It has been part of our corporation tax code since 1991, with significant amendments in 2003. Securitisation involves the creation of tradeable securities out of an income stream or projected future income stream generated by financial assets. The transaction can involve the use of a special purpose securitisation vehicle to facilitate the transaction and issue the securities.
Securitisation allows banks to raise capital and to share risk, and by providing a repackaging and resale market for corporate debt, it lowers the cost of debt financing.
The section 110 regime was designed to improve Ireland’s offering as a location for the conduct of financial services. It has achieved that broad goal and the financial services industry now makes use of these vehicles as a support to financial intermediation. Such financing is useful for the productive economy as it can underpin the supply of finance to industries and companies in Ireland, Europe and further afield.
Ireland is not unique in having a specific regime for securitisations. The importance of securitisation has been recognised by the European Commission through their work on the Capital Markets Union. This is a European Commission initiative to mobilise capital in Europe. A main objective of which is to build a sustainable securitisation regime across the European Union. The Capital Markets Union specifically states how alternative sources of finance are more widely used in other parts of the world, and the widely held view is that should play a bigger role in providing financing to companies that struggle to get funding, especially SMEs and start-ups.
In relation to the study mentioned, I am not in a position to comment on individual taxpayers.
81. Deputy Paul Murphy asked the Minister for Finance his views on the latest report of the cost of insurance working group; if the role of profit of the insurance industry in increasing premiums has been considered; and if he will make a statement on the matter. [13660/18]
Amharc ar fhreagraAs Minister for Finance, I am responsible for the development of the legal framework governing financial regulation. Neither I, nor the Central Bank of Ireland, have the power to direct insurance companies on the pricing of insurance products. Indeed, the EU framework for insurance 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. 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 latest Cost of Insurance Working Group Report on the Cost of Employer and Public Liability Insurance builds on the recommendations and actions set down in the Motor Report with a particular focus on increasing transparency, reviewing the level of damages in personal injury cases and improving the personal injuries litigation framework. In broad terms, one of the main objectives of both Reports is to try and address the issue of consistency of award levels, through adherence to the Book of Quantum, no matter where an award is made. If such a consistency of awards is applied in a broad sense, particularly for soft tissue injuries, it will have two very significant effects: (i) there will be less reason for cases to go to litigation, as the level of awards granted by the courts will be aligned in general with those provided by PIAB; this in turn should mean a reduction in legal costs and (ii) a stable claims and awards environment will mean that the reserves put aside by insurers to meet future claims do not have to be regularly adjusted to reflect new developments, such as increases in award levels.
Finally, while I have no doubt that higher premiums have been a contributory factor to the recent return to profitability of some companies, this has followed a number of years where in some instances significant losses have occurred. What we need is a more stable market from both a pricing and profit perspective rather than the volatility we have had in recent years. In this regard, I believe that the implementation of the Cost of Insurance Working Group’s Reports will help ensure that the insurance sector is stable and consistent, making it more attractive to new entrants, resulting in more competition and more affordable prices.
82. Deputy Brendan Smith asked the Minister for Finance his plans to introduce additional measures to deal with cross-Border illegal trading in products such as fuels and tobacco; and if he will make a statement on the matter. [13920/18]
Amharc ar fhreagra120. Deputy Brendan Smith asked the Minister for Finance his plans to introduce additional measures to counteract illegal trading in goods such as tobacco and fuels; if such measures will be introduced in co-operation with the authorities in Northern Ireland; and if he will make a statement on the matter. [13923/18]
Amharc ar fhreagraI propose to take Questions Nos. 82 and 120 together.
The 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 such criminal activity has been one of their priorities over recent years.
Revenue’s strategy for combatting the illegal fuel trade has included the introduction of stringent supply chain controls and reporting requirements for fuel transactions to minimise the scope for fraud. It also included a programme of enforcement action, underpinned by legislative changes including a “reckless trading” provision under excise law for oil traders, that have been introduced over a number of Finance Acts, to strengthen Revenue’s powers for dealing with this kind of fraud. In addition, Revenue and HM Revenue and Customs in the United Kingdom undertook a joint initiative to introduce from the beginning of April 2015, in Ireland and the United Kingdom, a new fiscal marker for use in marked fuels.
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 in recent years. I am also advised that Revenue conducted National Random Sampling Programmes in 2016, 2017 and 2018 with a view to obtaining an updated picture of the extent of the fuel laundering problem. The programmes 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 marker introduced in 2015. In all three years, no evidence of this marker was found in any of the samples tested. This constitutes persuasive evidence that the strategy undertaken in recent years has resulted in the near elimination of selling of laundered product at retail level. The available evidence to date indicates that Accutrace cannot be laundered by conventional methods.
I am advised by Revenue that while the effectiveness of the measures introduced over the last few years is very welcome as is and the very positive outcome of the collaboration with HMRC, Revenue is not complacent and is mindful of the resourcefulness of those involved in criminality in the fuel trade. Revenue remains vigilant and ready to respond to any new developments in this area.
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 ongoing analysis of the nature and extent of the problem, the use of analytics and detection technologies, optimising the deployment of resources and extensive cooperation (including the development and sharing of intelligence) on a national, EU and international basis.
A combination of risk analysis, profiling and intelligence and the risk based 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 targets the illicit trade in tobacco at post-importation level by carrying out intelligence-based operations and random checks at retail outlets, markets and private and commercial premises. Action has also 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.
I would like to take this opportunity to congratulate Revenue, who in a joint operation with An Garda Síochána, as part of the Joint Agency Task Force, last week closed down an illicit commercial cigarette factory in Jenkinstown, Co. Louth. I understand from Revenue that this was the first time a commercial illicit cigarette production plant was discovered in the State and the factory was in full operation when Revenue officers and the Armed Support Unit of An Garda Síochána entered the premises. Revenue officers found more than 60 tonnes of tobacco, all the pre-cursor components for the manufacture of cigarettes, and approximately 25 million cigarettes ready for distribution. This was a sophisticated self-contained operation with machinery capable of producing 250,000 illicit cigarettes per hour and pre-processing, processing and packaging facilities, along with living quarters.
In assessing the overall effectiveness 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 2017 found that 13% of cigarette packs encountered in the course of the project were illicit. This figure is slightly up from the levels of 12% and 10% reported in 2015 and 2016 respectively but is nevertheless lower than in earlier years.
Revenue works closely with an 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, in 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 a high priority. In addition, I can say to the Deputy that I will give careful consideration to any further proposals for legislative change that may be brought forward by Revenue to enhance their capacity to deal effectively with fraud and criminality in these areas.
83. Deputy Brendan Howlin asked the Minister for Finance the economic impact assessments his Department has commissioned on Brexit. [5754/18]
Amharc ar fhreagraMy 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. In addition, regular updates of my Department’s macroeconomic forecasts take account of the impact of Brexit. Published and commissioned Brexit-related studies by my Department include:
- 'Scoping the Possible Economic Implications of Brexit on Ireland' – A 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 in 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; 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 the Department of Finance in September 2017.
The results in these studies show that the potential impact of Brexit on the Irish economy will be significant. Estimates from the macroeconomic modelling work with the ESRI project that, ten years after Brexit, in a WTO environment the level of Irish output could be as much as 3.8 per cent below a baseline of what it otherwise would have been. Projections by Copenhagen Economics, on behalf of the Department of Business Enterprise and Innovation, which my officials inputted into, suggest that the impacts could be higher if the EU and UK significantly diverge from one another in terms of regulatory standards.
Of course these projections are on a no policy change basis. However, with the future trade path between the UK and EU still unknown, it is crucially important that we prepare our economy for the challenges ahead.
In this context, the Government has already taken a number of important steps including in Budgets 2017 and 2018, the Action Plan for Jobs, Ireland Connected, our Trade and Investment Strategy, and the preparation of a new 10-year Capital Plan. The best way to deal with the uncertainties arising from Brexit is to continue the Government’s competitiveness oriented policies and prudent management of the public finances.
84. Deputy Aindrias Moynihan asked the Minister for Finance the timeframe to implement the report on the cost of employer and public liability insurance; and if he will make a statement on the matter. [13651/18]
Amharc ar fhreagraThe second phase of the Cost of Insurance Working Group project culminated in the publication on January 25th of the Report on the Cost of Employer and Public Liability Insurance, following its approval by Government. This new Report makes 15 recommendations with 29 associated actions to be carried out, detailed in an Action Plan contained in the Report with agreed timelines for implementation.
All 29 actions are scheduled to be implemented before the end of 2019, with 26 due for completion this year. The following numbers of actions are due in each respective quarter:
- Q1 2018: 8 actions
- Q2 2018: 7 actions
- Q3 2018: 4 actions
- Q4 2018: 7 actions
- Q1 2019: 1 action
- Q2 2019: 1 action
- Q4 2019: 1 action (no action is due in Q3 2019)
The recommendations, covering three main themes, include actions to:
- Increase Transparency: enhance levels of transparency and improve data sharing and collection processes,
- Review the level of damages in personal injury cases: request that the Law Reform Commission undertake a detailed analysis of the possibility of developing constitutionally sound legislation to delimit or cap the amounts of damages which a court may award in respect of some or all categories of personal injuries, and
- Improve the personal injuries litigation framework: through a number of measures, including:
1. ensuring potential defendants are notified in sufficient time that an incident has occurred in relation to which a claim is going to be made against their policy;
2. tackling fraudulent and exaggerated claims; and ensuring suitable training and information supports are available to the Judiciary to assist in the fair and consistent assessment and awarding of damages in personal injury cases.
The Working Group will focus during 2018 on carrying out the recommendations of the Report on the Cost of Employer and Public Liability Insurance in parallel with the continuing implementation of the 2017 Report on the Cost of Motor Insurance. I am hopeful that the cumulative effect of the completion of the two reports’ recommendations will be increased stability in the pricing of insurance for businesses and improved availability of liability insurance for all types of bodies.
85. Deputy Brian Stanley asked the Minister for Finance the engagement from his Department with insurance companies on the refusal of motor insurers and the excessive loading of insurance to young persons and those in retirement age; and if he will make a statement on the matter. [13639/18]
Amharc ar fhreagraAs Minister for Finance, I am responsible for the development of the legal framework governing financial regulation. 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, I am not in a position to direct insurance companies as to the pricing level or terms or conditions that they should apply in respect of particular categories of drivers or vehicles.
However, I am aware of the issue raised by the Deputy. I have received representations to the effect that some policyholders, like younger or older drivers, are continuing to experience increases in their insurance premiums in spite of the fact that prices are generally in decline, while there also have also been a number of Parliamentary Questions tabled on the topic.
With regard to older drivers in particular, Minister of State D’Arcy has written to Insurance Ireland. No formal response has been received to date, however in discussions between officials and Insurance Ireland, they indicated that they had not discerned a particular trend from enquiries received through its helpline in relation to this topic.
Insurance Ireland has also pointed out that in making their individual decisions on whether to offer cover and what terms to apply, insurers will, aside from the driver’s age, use a combination of other rating factors, which include the age and type of the vehicle, the relevant claims record and driving experience, the number of drivers, how the car is used, etc. Insurance Ireland has also advised that insurers do not all use the same combination of rating factors, and as a result prices and availability of cover varies across the market. In addition to the above factors, insurance companies will price in accordance with their own overall past claims experience. Unfortunately, particularly in relation to younger drivers this has not always been positive.
Finally, I would recommend drivers who are quoted increased premiums to consult the Competition and Consumer Protection Commission website, which has an informative section regarding the purchase of car insurance generally. One of the key tips listed to help cut costs is to “shop around” and “always get quotes from several insurance providers when you need to get or renew insurance”.
86. Deputy Willie Penrose asked the Minister for Finance the work being undertaken by his Department to implement the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach's recommendation that credit unions be able to lend to affordable housing bodies and local authorities; and if he will make a statement on the matter. [13624/18]
Amharc ar fhreagra97. Deputy Alan Kelly asked the Minister for Finance if his Department is examining an amendment to the Credit Union and Co-operation with Overseas Regulators Act 2012 to allow credit unions lend to affordable housing bodies and local authorities as recommended by the Joint Oireachtas Committee on Finance, Public Expenditure and Reform, and Taoiseach; and if he will make a statement on the matter. [13619/18]
Amharc ar fhreagraI propose to take Questions Nos. 86 and 97 together.
The common bond restrictions limit the potential for credit unions to lend to housing bodies and local authorities, either directly or on a syndicated basis.
As previously set out in my reply to parliamentary question No. 55 for written answer on 22nd February 2018, the Credit Union and Co-Operation with Overseas Regulators Act 2012 introduced changes to the Credit Union Act, 1997 (the 1997 Act). Since 1 January 2016, section 43 of the 1997 Act provides that the Central Bank may prescribe investments in which a credit union may invest its funds.
The Central Bank undertook a review of the investment framework for credit unions in 2017. This review resulted in the publication of Consultation Paper 109 (CP109) which consulted on potential changes to the investment framework for credit unions. One of the proposals in CP109 was that credit unions be permitted to provide funding for the provision of social housing to Tier 3 Approved Housing Bodies (AHBs).
Submissions to CP109 were broadly supportive of credit unions providing funding to Tier 3 AHBs. Taking account of the feedback provided to CP109, amended regulations commenced on 1 March 2018 which permit credit unions to provide funding to Tier 3 AHBs for the provision of social housing. The maximum permitted investment amount per credit union is 50% of regulatory reserves where a credit union has total assets of at least €100 million and 25% of regulatory reserves for all other credit unions. These limits may facilitate a combined sector investment in Tier 3 AHBs of close to €700 million.
The Central Bank is open to considering further investment proposals. Where the Central Bank receives detailed proposals which can demonstrate that an investment could fall within the appropriate risk profile for credit union investments, it will consider further amendments to the investment regulations to facilitate such investments in the future.
The Central Bank has committed to undertaking and publishing analysis of credit union sector investments, two years post commencement of the amending investment regulations for credit unions, to assess and analyse the actual impact which the changes to the investment regulations have had.
87. Deputy Catherine Murphy asked the Minister for Finance if his Department has engaged with the special liquidator of IBRC regarding the release of internal documents by a former official of the bank (details supplied); and if he will make a statement on the matter. [11060/18]
Amharc ar fhreagra95. Deputy Catherine Murphy asked the Minister for Finance if his attention has been drawn to the circumstances which allowed a person (details supplied) to furnish internal IBRC documents to a further person (details supplied) regarding the conduct of a person (details supplied) on matters pertaining to the IBRC's treatment of a debtor; and if he will make a statement on the matter. [11099/18]
Amharc ar fhreagra107. Deputy Catherine Murphy asked the Minister for Finance if he has engaged with the special liquidator of IBRC regarding the release of internal bank documents by a former bank official to a former debtor of the bank (details supplied); and if he will make a statement on the matter. [11031/18]
Amharc ar fhreagra115. Deputy Catherine Murphy asked the Minister for Finance the circumstances which led to a former official of a bank (details supplied) making allegations against another person and furnishing internal IBRC documents to a further person for use in a legal case being pursued; and if he will make a statement on the matter. [11110/18]
Amharc ar fhreagra210. Deputy Catherine Murphy asked the Minister for Finance if his Department has engaged with the special liquidator of IBRC regarding the release of internal IBRC documents by a former IBRC official (details supplied) to a former debtor of the bank; and if he will make a statement on the matter. [14247/18]
Amharc ar fhreagraI propose to take Questions Nos. 87, 95, 107, 115, 178 and 210 together.
I am advised by the Special Liquidators of IBRC that, having obtained information that a former employee of IBRC may have had documentation in his possession which belonged to IBRC, their legal advisors engaged in correspondence with the former employee to get details of what documentation was in his possession and the circumstances surrounding same. They sought and obtained an undertaking that such documentation has now been returned and that the former employee has no further documentation in his possession relating to IBRC.
The Special Liquidators further advised that they are not in a position to comment on the circumstances which led the former employee to provide an affidavit in the legal case. The Special Liquidators have however sought a further undertaking from the former employee that he will not provide any confidential information to any third party without seeking the consent of the Special Liquidators in advance. The Special Liquidators have confirmed that they are considering the matter further with their legal advisors.
88. Deputy Niamh Smyth asked the Minister for Finance his plans to assist persons faced with increases in the cost of motor insurance; and if he will make a statement on the matter. [11008/18]
Amharc ar fhreagraThe Deputy should note that in my role as Minister for Finance I am responsible for the development of the legal framework governing financial regulation. Neither I nor the Central Bank can interfere in the pricing of insurance products, as these matters are of a commercial nature, and are determined by insurance companies based on the risks they are willing to accept.
However, it is acknowledged that pricing in the motor insurance sector has been subject to a lot of volatility in recent years, from a point where some premiums appeared to be priced at an unsustainably low level to the more recent experience of large increases.
Indeed, the problem of rising motor insurance premiums was the main impetus for the establishment of the Cost of Insurance Working Group. Its Report on the Cost of Motor Insurance was published in January 2017. The Report makes 33 recommendations with 71 associated actions to be carried out in agreed timeframes, set out within an Action Plan.
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. The fourth such update was published on 20 February and shows that of the 46 separate deadlines set during 2017 within the Action Plan, 39 have been met. Substantial work has also been undertaken in respect of the nine action points categorised as “ongoing”.
It should be noted that the most recent CSO data (for February 2018) indicates that private motor insurance premiums have decreased by 18.1% since peaking in July 2016. While the CSO statistics indicate a greater degree of stability on an overall basis, these figures represent a broad average and therefore I appreciate many people may still be seeing increases. However, I am hopeful that the improved stability in pricing will be maintained and that premiums should continue to fall from the very high levels of mid-2016.
Finally, I would recommend drivers who are quoted increased premiums to consult the Competition and Consumer Protection Commission website, which has an informative section regarding the purchase of car insurance generally. One of the key tips listed to help cut costs is to “shop around” and “always get quotes from several insurance providers when you need to get or renew insurance”.
89. Deputy Michael Moynihan asked the Minister for Finance if his Department is planning the way in which a soft border would work on the Border if the EU requires same when the UK exits the customs union. [4562/18]
Amharc ar fhreagra187. Deputy Micheál Martin asked the Minister for Finance if his Department is planning the way in which a soft border would work if the EU requires same when the UK exits the customs union. [4559/18]
Amharc ar fhreagraI propose to take Questions Nos. 89 and 187 together.
In the context of the UK’s withdrawal from the European Union, the EU has made clear that in light of the unique circumstances on the island of Ireland, flexible and imaginative solutions will be required, including with the aim of avoiding a hard border, while simultaneously respecting the integrity of the Union legal order. This approach is reflected in the draft Withdrawal Agreement and its Protocol on Ireland and Northern Ireland.
The Government has been clear that our preference is to avoid a hard border through the wider EU-UK future relationship agreement, or through specific solutions and we are also committed to exploring specific solutions to be proposed by the UK, if necessary. At the same time, and should it prove necessary, there is now the necessary legal provision to implement the backstop of maintaining full alignment in Northern Ireland with those rules of the Single Market and Customs Union necessary to protect North South cooperation and to avoid a hard border.
On 19 March 2019 the UK agreed that a backstop solution for the border will form part of the legal text of the Withdrawal Agreement. The UK has also agreed that all the issues identified in the EU text will be addressed to deliver a legally sound solution for the border.
Prime Minister May confirmed these agreements in her letter to President Tusk, in addition to reiterating the UK's commitment to agreements reached last December on protecting the Good Friday Agreement in all its parts and the gains of the peace process, including the overarching guarantee on avoiding a hard border.
Like all Government agencies, the Revenue Commissioners are actively engaged in examining a range of scenarios in order to support Ireland's objectives. However, the precise customs arrangements that will apply after Brexit will depend on the outcome of negotiations between the EU and UK.
90. Deputy Michael McGrath asked the Minister for Finance when he expects the escrow account to be set up with regard to a matter (details supplied); when he expects the company concerned to start paying into the escrow account; and if he will make a statement on the matter. [13647/18]
Amharc ar fhreagraWhile the Government has never accepted the Commission’s analysis in the Apple State aid decision, we have always been clear that we are fully committed to ensuring that recovery of the alleged State aid takes place without delay and has committed significant resources to ensuring that this is achieved as quickly as possible.
Significant progress has been made on this complex issue and the establishment of an escrow fund in compliance with all Irish and Constitutional law is closer to completion. Following a competitive tender process, the Bank of New York Mellon, London Branch has been selected as Preferred Tenderer for the provision of escrow agency and custodian services. In addition, the Department of Finance announced on 23rd March that following a competitive tender process, Amundi, BlackRock Investment Management (UK) Limited and Goldman Sachs Asset Management International have been selected as preferred tenderers for the provision of investment management services.
Over the coming weeks, the National Treasury Management Agency (NTMA), which is conducting the procurement process on behalf of the Minister for Finance, and Apple will be working with the preferred tenderers to finalise contracts.
Officials and experts from across the State have been engaged in intensive work to ensure that Ireland complies with all its recovery obligations as soon as possible. It is expected that payment into the escrow account will commence from Q2 2018.
91. Deputy Paul Murphy asked the Minister for Finance the contacts he has had with the European Central Bank in relation to the regulation of the banks' number of distressed mortgages; and if he will make a statement on the matter. [13663/18]
Amharc ar fhreagraAs the Deputy is aware Non-performing loans (NPL's) remain at an elevated level across the European banking system and addressing this issue is one of the key priorities for the Single Supervisory Mechanism (SSM). The reduction of NPL's is also being given high priority at EU level with the Commission announcing their "Action Plan to Tackle Non-Performing Loans in Europe" in July 2017. The action plan calls upon various institutions including the Commission to take appropriate measures to further address the challenges of high NPL ratios in Europe.
In Ireland significant progress has been made across the banking sector in reducing the level of NPLs since the financial crisis. Despite this progress, the level of NPLs in the sector remains well above the European average of c.5% (of gross loans). Hence in recent years the SSM has tasked the management and board of each institution with developing and implementing a strategy to address this challenge.
Progress to date in reducing NPL's has been primarily achieved by customers engaging directly with their banks and agreeing a sustainable restructure which provides the customer with an achievable path out of arrears. However in recent times, loan sales as a last resort have also been a feature of the deleveraging process. This would be in cases where meaningful engagement has not been forthcoming or affordability is not evident and in recognition of the fact that the end of the road has been reached and achieving an acceptable NPL ratio will not be possible without loan sales.
I have indicated recently that officials in my Department met with staff of the SSM at the highest level on two occasions in the past year and they outlined the background and history to the restructuring effort in Ireland and the progress the Irish banks have made in dealing with NPLs. Officials have also been involved in the various European committees and working groups that have been looking at this issue in recent times. Finally there was also regular and extensive contact between my officials and the ECB over the years of the external assistance programme.
92. Deputy Paul Murphy asked the Minister for Finance his views on mortgage write-downs for mortgage holders in view of the willingness of a bank (details supplied) to offer a discount on loans it transfers to vulture funds; and if he will make a statement on the matter. [13664/18]
Amharc ar fhreagraAs the Deputy is aware Non-performing loans (NPL's) remain at an elevated level across the European banking system and addressing this issue is one of the key priorities for the Single Supervisory Mechanism (SSM). The reduction of NPL's is also being given high priority at EU level with the Commission announcing their "Action Plan to Tackle Non-Performing Loans in Europe" in July 2017. The action plan calls upon various institutions including the Commission to take appropriate measures to further address the challenges of high NPL ratios in Europe.
In Ireland significant progress has been made across the banking sector in reducing the level of NPLs since the financial crisis. Despite this progress, the level of NPLs in the sector remains well above the European average of c.5% (of gross loans). Hence in recent years the SSM has tasked the management and board of each institution with developing and implementing a strategy to address this challenge.
Progress to date in reducing NPL's has been primarily achieved by customers engaging directly with their banks and agreeing a sustainable restructure which provides the customer with an achievable path out of arrears. As part of the CCMA’s Mortgage Arrears Resolution Process (MARP) each bank has developed a suite of forbearance treatments and resolution strategies. Such treatment strategies include arrears capitalisation, reduced payments, split mortgages and voluntary sale for loss which may involve an element of debt write off.
There is no ‘one size fits all’ approach to restructuring mortgages and clearly each borrower’s solution is tailored to their own personal circumstances and is anchored in an assessment as to their level of affordability. It is also not for me as Minister to determine how bank's should design and implement their impairment and write-off policies. But in each case the core objectives remains the same that is to ensure that arrears solutions are sustainable in the long term and that they comply with the spirit and the letter of all regulatory requirements.
However in recent times, loan sales as a last resort have also been a feature of the deleveraging process. This would be in cases where meaningful engagement has not been forthcoming or affordability is not evident and in recognition of the fact that the end of the road has been reached and achieving an acceptable NPL ratio will not be possible without loan sales.
93. Deputy Niamh Smyth asked the Minister for Finance his plans to address the diminution of banking services in rural Ireland; and if he will make a statement on the matter. [11007/18]
Amharc ar fhreagraI should stress at the outset that the 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 aware 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 December 2017, SBCI supported funding of €925m has been provided to 22,928 SMEs supporting 119,533 jobs. Of specific relevance to this question is that over 85% of SBCI supported lending has gone to SMEs based outside Dublin.
94. Deputy Pearse Doherty asked the Minister for Finance his views on the concerns of the Central Bank that cash buyers such as international funds are putting home ownership beyond the reach of families; and his plans from a tax point of view to level the playing field. [13654/18]
Amharc ar fhreagraIn the 2016 Finance Act, my predecessor introduced provisions to address concerns raised in both the media and the Dáil regarding the use of section 110 companies and certain Irish collective investment vehicles by international investors to minimise their tax payments on Irish property transactions.
Section 22, Finance Act 2016 made certain changes to the taxation of qualifying companies, within the meaning of section 110 Taxes Consolidation Act 1997. The changes related to the taxation of profits which were derived from Irish land and buildings. Those changes took effect from 6 September 2016.
The 2016 Finance Act provided for the introduction of the Irish Real Estate Fund or IREF. The legislation was introduced to address concerns raised regarding the use of collective investment vehicles by non-resident investors to invest in Irish property. IREFs must deduct a 20% withholding tax on certain property distributions to non-resident investors.
A Real Estate Investment Trust or REIT is a quoted company, used as a collective investment vehicle to hold rental property. A REIT is exempt from corporation tax on qualifying income and gains from rental property, subject to a high profit distribution requirement to. A REIT provides the same after-tax returns to investors as direct investment in rental property, by eliminating the double layer of taxation at corporate and shareholder level which would otherwise apply.
I believe that the taxation regimes remain appropriate for these entities. The REIT regime is designed to prevent a double layer of taxation and the IREF regime is designed to protect the State's taxing rights over property, neither of these are favourable tax regimes.
My Department continues to monitor developments in the housing market, including residential property prices, on an ongoing basis. The current inflationary pressure in the residential market reflects an insufficient supply response to meet the current demographic demand for housing. To address this imbalance the outstanding bottlenecks in the housing market need to be tackled.
96. Deputy Joan Burton asked the Minister for Finance the discussions he has had with financial institutions off-loading their description of distressed mortgage loans; his views on the decision by a bank (details supplied) to not appear before the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach on 27 February 2018; and if he will make a statement on the matter. [13672/18]
Amharc ar fhreagra175. Deputy Joan Burton asked the Minister for Finance the discussions he has had with financial institutions regarding-off loading their description of distressed mortgage loans; his views on the decision by a bank (details supplied) to not appear before the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach on 27 February 2018; and if he will make a statement on the matter. [13665/18]
Amharc ar fhreagraI propose to take Questions Nos. 96 and 175 together.
As part of their regular engagement with the banks in which the State has a shareholding, officials in my Department discuss a wide range of topics, including loan sales. For example, in the case of Project Glas, the recently announced project announced by PTSB to sell a portfolio of NPLs, officials were first briefed by the bank on the timing of the sale, and potential composition of the portfolio, in the week commencing 15th January. Officials in turn, briefed me on the matter on 19th January.
In addition to the regular engagement Department officials have with the banks, I myself have met recently with senior officials of some of the Irish retail domestic banks and intend holding similar meetings with the remaining banks in due course. At these meetings, loan sales were discussed, where relevant. The Deputy will be aware in this regard, that it is not appropriate for me to put any more facts into the public domain, over and above what the banks themselves have disclosed, as I must respect commercial confidentiality and stock exchange disclosure rules.
For clarity, I should highlight for the Deputy that I cannot stop loan sales, even by the banks in which the State has a shareholding. These decisions are the responsibility of the Board and management of the banks which must be run on an independent and commercial basis. The banks’ independence is protected by Relationship Frameworks, which are legally binding documents that I cannot change unilaterally. These frameworks were insisted upon by the European Commission to protect competition in the Irish market. Loan sales do not require my consent, though the banks are required to formally consult with me. In the case of the current PTSB loan sale process, the bank has not yet consulted with me but will do so in due course.
The Deputy has asked me to comment on my views on the decision by PTSB not to appear before the Oireachtas Committee on Finance, Public Expenditure and Reform, and Taoiseach on 27th February. In its response to the Committee, the bank highlighted that it would not be appropriate for its executives to attend a meeting on the original date proposed, as the bank was in a "closed period" ahead of the publication of its annual results on 14th March. However, the bank did state it was agreeable to meeting with the Committee on an alternative date and this meeting subsequently took place on 22nd March. Under the circumstances, my view is that the bank’s approach to the Committee’s request for a meeting was not unreasonable.
98. Deputy James Browne asked the Minister for Finance the steps his Department and the Revenue Commissioners will seek to avoid disruption to Irish Sea movements under duty suspension between here and Great Britain post-Brexit; and if he will make a statement on the matter. [11012/18]
Amharc ar fhreagraThe Government’s position remains clear - it wishes for the closest possible relationship between the EU and the UK, post Brexit. This is in line with the European Council Guidelines agreed on 23 March, which reaffirmed the EU’s desire to establish a close partnership with the UK in the future. The Government and its EU partners agree that any future agreement must have the correct balance of rights and obligations, and that the integrity of the Single Market must be preserved. This is in Ireland’s interests as membership of the Single Market is a core element of our economic strategy. Nevertheless, it is still our view that any EU-UK future relationship agreement should be comprehensive and ambitious and as wide as possible in its scope.
The text of the Withdrawal Agreement will include the legal terms for the transitional arrangements, which are hugely important for Ireland in giving certainty to individuals and businesses. We welcome that the EU has proposed that the whole of the EU acquis will apply during the transition, which means that the status quo will be preserved with the aim of avoiding any gaps or disruption between the UK leaving the EU and when a future relationship agreement enters into force, we further welcome the UK’s agreement to an orderly transition and consider this as an important step for Irish business.
EU excise rules apply to the trade in alcohol, tobacco and mineral oil products. Such excisable goods move at present across the EU under a controlled messaging and confirmation system that is shared by all EU member states, known as the EU excise movement and control system. This system is in place to monitor and record the movement of excisable goods while duty is suspended, and to ensure that the correct amount of excise duty is paid when excise goods are released anywhere in the EU for consumption.
The future arrangements that will apply to cross border movements of excisable goods will depend on the outcome of discussion on the future relationship between the EU and the UK. In accordance with EU rules, it will technically be the case that if such an agreement does not provide for UK participation in the EU Excise Movement Control System, importers of excisable goods will still have the facility to import such goods from the UK with payment of excise duty suspended until the goods are released from the importer’s excise warehouse.
99. Deputy Stephen S. Donnelly asked the Minister for Finance if he has discussed the impact on Ireland and other EU member states of planned changes to taxation in the USA. [5421/18]
Amharc ar fhreagraAs the Deputy is aware, US tax reform legislation was agreed shortly before Christmas last year. This is the most substantial change to the US tax code in 30 years. Companies and Governments around the world are now fully analysing what are very complex changes. Naturally, this is of great interest to Ireland given the large volume of US investment here. Consequently, my officials and our Embassy in the US, have been and continue to engage with business and others to fully understand the potential impacts of the changes in the US. We have also been engaging at EU level with other member states and the EU Commission on the implications for European trade with the US.
However, much of the detail of the proposed changes remains to be clarified in US IRS and Treasury Regulations yet to be published, and questions remain particularly regarding the compatibilitity of some aspects of the reforms with WTO rules and other international obligations.
I should mention that the US measures regarding deemed repatriation means that the United States is calling in its taxes. Companies will be required to pay hundreds of billions of dollars in tax liabilities, dating back to 1986. This is a vindication of what Ireland has been saying for many years. Though others have called on Ireland to claim these taxes, we have always been clear on what was Irish and what was not. Importantly, the deemed repatriation draws a line under the lingering controversy surrounding untaxed international profits.
While we remain alert and reponsive to any changes in the US and international tax environment, it is clear that Ireland’s access to the European market is, and will remain, a key factor in attracting FDI from the US and elsewhere. Global business, from the US or elsewhere, will always want to have operations in the EU, and Ireland will remain very competitive and attractive as an EU location to invest in and from which to do business.
