Thursday, 19 Apr 2018

Written Answers Nos. 115-125

Fiscal Data

Ceisteanna (115)

Barry Cowen

Ceist:

115. Deputy Barry Cowen asked the Minister for Finance further to Parliamentary Question No. 74 of 30 November 2017, if the portion of the Exchequer capital spending in 2019, 2020 and 2021 as per Table 3.1 is in addition to that previously allocated and so would not be accounted for in the net fiscal space referenced (details supplied); the adjusted net fiscal space for each of the three years accounting for the Exchequer spending in Table 3.1; and if he will make a statement on the matter. [17150/18]

Freagraí scríofa

Minister for Finance

Apart from the net increase explained in the following table, the Exchequer gross voted allocations in Table 3.1 of the National Development Plan (NDP) are consistent with previous allocations as per Table 8 in the Economic and Fiscal outlook document for Budget 2018, when account is taken of the technical adjustments arising from the passing of the Water Services Act 2017.  A key element of these technical adjustments was that domestic water services provided by Irish Water are funded through voted expenditure.  So for 2018, the change in capital allocations from €5.3bn to €5.8bn was €500m as set out on page three of the Revised Estimates for Public Services 2018. 

As these are simply reallocations of the source of funding of capital expenditure, with no resulting increase in overall general government expenditure, this has no impact on the general government balance. 

As there was no change to general government expenditure, there was no impact on fiscal space for 2018.

This change also carries through to 2019, 2020 and 2021. Further to this, the NDP announced four funds which will begin operating from 2019.  These are the Rural, Urban, Innovation and Climate Action Funds.

The funds will be partly covered by an unallocated capital reserve in the first instance, leaving an additional cost, which will both pre-commit unallocated fiscal space and worsen the Exchequer Borrowing Requirement (EBR).

The net nominal EBR increase resulting from the three funds is set out in the last row of the following table.

New Funds, € millions	2019	2020	2021
Rural	55	80	80
Urban	100	120	150
Innovation	20	30	40
TOTAL	175	230	270
Less Capital Reserve	-98	-136	-94
Net Increase	77	94	176

As the Climate Action Fund, set out in the following table, will be funded from the National Oil Reserves Agency (NORA) levy, it will have no impact on Voted Expenditure or the EBR.

€ millions	2019	2020	2021
Climate Action Fund	20	30	40

In calculating the impact on net fiscal space under the Expenditure Benchmark, it is assumed that both the Urban and Rural Funds will be recorded as gross fixed capital formation (i.e. subject to ‘capital smoothing’ over four years) and that the Innovation and Climate Action Funds will be treated as capital grants (i.e. not smoothed). A further assumption is that the funding from the capital reserve will offset the Rural and Urban Funds.

Should the operation of the funds change these assumptions then the figures that follow will need to be amended.  

The cost, in fiscal space terms, of the four funds is therefore:

€ millions	2019	2020	2021
Fiscal space used	54	36	54

While updated estimates of fiscal space will be published in the Summer Economic Statement 2018, I have repeatedly said that budgetary policy will be framed in the context of what is right for the economy, what is sustainable and not by what is legally allowed.  The Government will not repeat the budgetary mistakes of the past.

Departmental Schemes

Ceisteanna (116)

Dara Calleary

Ceist:

116. Deputy Dara Calleary asked the Minister for Finance his plans to reintroduce the vehicle scrappage scheme. [17169/18]

Freagraí scríofa

Minister for Finance

The Deputy will be aware that a vehicle scrappage scheme was previously in place from January 2010 to June 2011. From January 2010 and December 2010, Vehicle Registration Tax (VRT) relief of up to €1,500 was provided where a car of 10 years or older was scrapped and a new car in CO2 emissions bands A or B was purchased. A reduced VRT relief of €1,250 was in place between January 2011 and June 2011.

I have no plans to reintroduce such a vehicle scrappage scheme. With approximately 75% of new cars registered for VRT purposes being in CO2 emissions bands A1-A4, and EU Regulations requiring vehicle manufacturers to progressively reduce the average CO2 emissions of their vehicles, I am satisfied that there will be further progress towards achieving a lower-emissions profile of vehicles in Ireland.

EU Budget Contribution

Ceisteanna (117)

Charlie McConalogue

Ceist:

117. Deputy Charlie McConalogue asked the Minister for Finance if he will address a matter (details supplied) relating to an increase in the overall contribution to the EU budget as a percentage of GDP. [17278/18]

Freagraí scríofa

Minister for Finance

As the Deputy may be aware, the European Commission is yet to publish its proposal on the post-2020 Multiannual Financial Framework (MFF), which is due to be released in early May. Once the proposal has been published, officials from across all Departments will study it in-detail to assess its implications for Ireland. The MFF will then be subject to intense negotiations over the subsequent 12-24 months; once a final agreement is reached we will have a clearer understanding of the impacts on Ireland.

In addition, given the UK’s current status as one of the largest net contributors to the EU Budget, Brexit will have a significant impact on EU Budget funding and expenditure and may need to be mitigated by either increased contributions from other Member States, reductions in EU funding programmes, or a combination of both. However, as the Deputy will appreciate, Brexit negotiations are currently on-going, therefore, it would not be appropriate for me to discuss those negotiations or the potential impact on Ireland's net contribution to the EU Budget in detail at this point.

Financial Services Regulation

Ceisteanna (118, 121, 122, 123, 127)

Billy Kelleher

Ceist:

118. Deputy Billy Kelleher asked the Minister for Finance his views on the policy of applying the Central Bank’s consumer protection code to personal contract plans (details supplied). [17316/18]

Michael McGrath

Ceist:

121. Deputy Michael McGrath asked the Minister for Finance his views on the recent reports from the Central Bank and the Competition and Consumer Protection Commission on personal contract plans; the steps he has taken to date with regard to the plans; his plans in this regard; and if he will make a statement on the matter. [17251/18]

Michael McGrath

Ceist:

122. Deputy Michael McGrath asked the Minister for Finance his views on whether the consumer protection code should be applied to personal contract plans as recommended by the Competition and Consumer Protection Commission; when he plans to make such changes; and if he will make a statement on the matter. [17252/18]

Michael McGrath

Ceist:

123. Deputy Michael McGrath asked the Minister for Finance if the Central Bank will publish data on personal contract plans on a regular basis; and if he will make a statement on the matter. [17253/18]

Michael McGrath

Ceist:

127. Deputy Michael McGrath asked the Minister for Finance his plans to review the Consumer Credit Act 1995; and the timeframe for such a review to ensure its suitability for new forms of car finance as recommended by the CCPC. [17296/18]

Freagraí scríofa

Minister for Finance

I propose to take Questions Nos. 118, 121 to 123, inclusive, and 127 together.

As the Deputy will be aware Personal Contract Plans (PCP) are a form of Hire Purchase and both the Central Bank and the Competition and Consumer Protection Commission (CCPC) have certain functions and legal powers in relation to the provision of hire-purchase agreements. In the State PCP finance is underwritten by standard financial institutions, manufacturer banks, and special purpose institutions which exclusively offer motor finance.

The Competition and Consumer Protection Commission (CCPC) undertook the first comprehensive study of the Personal Contract Plans (PCP) market in the State. As part of its study the CCPC issued detailed questionnaires to all the financial institutions that underwrite PCP finance in the State. This allowed the CCPC to compile, for the first time, primary data relating to the number and value of PCP finance contracts issued. The report was published on the 6 March 2018 and is available at www.ccpc.ie.

The Deputy may also be aware that an Economic Letter on this area was published by the Central Bank on 28 March. This provides further comprehensive data on the PCP market in Ireland, where at the end 2017 PCP finance accounted for 43%(€1.2 billion) of car-related bank debt. The Economic Letter is available at www.centralbank.ie.

My officials will examine these publications and give careful consideration to what actions, if any, would be appropriate.

The Central Bank has informed me that the Bank publishes car finance data, which contains information on PCP contract numbers and PCP lending amounts. These data are contained in Table A.19 of the Credit and Banking Statistics. Data are currently available for the period between 2012 and December 2017. I understand that the Central Bank is currently developing a regular publication and reporting of this which will begin in Q3 2018.

On the issue more generally, the Central Bank regulates financial services institutions as set out under legislation but does not regulate individual financial products. Under current legislation (Consumer Credit Act 1995), the CCPC has responsibility for authorising and supervising the credit intermediaries which typically sell PCP contracts to consumers, including garages and retailers. The CCPC provides licenses to credit intermediaries and keeps an online list of credit intermediaries holding a valid authorisation which is available on the CCPC website www.ccpc.ie.

The CCPC also deals with complaints about the advertising of Credit Agreements, issuing Pawnbrokers licenses and the advertising of car finance on credit intermediary websites and in the media. The CCPC’s remit is limited to authorisation, as opposed to having a regulatory role for PCPs. It also has a specific statutory remit to provide personal finance information and education to assist consumers.

My Department continues to keep financial legislation relating to consumer protection under review to ensure consumers are protected. However, the Consumer Credit Act 1995 and the CCPC itself both come under the aegis of my colleague the Minister for Business, Enterprise and Innovation.

Stamp Duty

Ceisteanna (119)

Michael Fitzmaurice

Ceist:

119. Deputy Michael Fitzmaurice asked the Minister for Finance his plans to address issues (details supplied) relating to the sale of land; and if he will make a statement on the matter. [17176/18]

Freagraí scríofa

Minister for Finance

I assume the Deputy is referring to the stamp duty farm consolidation relief which was introduced in Finance Act 2017, and which provides for a reduced rate of stamp duty on certain farm consolidation transactions. This measure is subject to a commencement order after a full consideration of any administrative or EU state-aid requirements.

For the relief to operate, there must be both a sale and a purchase of land within a period of 24 months of each other. Where other qualifying conditions are satisfied, stamp duty will be paid only to the extent that the value of the land that is purchased exceeds the value of the land that is sold. A reduced rate of 1% will be charged on the excess, if any, of the purchase value. If the sale takes place before the purchase, then relief will be given at the time of purchase. However, if the purchase takes place first, then stamp duty will have to be paid but can subsequently be refunded when the sale takes place.

A number of qualifying conditions must be satisfied before the relief can apply. The most important condition is that Teagasc must issue a certificate stating that a sale and purchase or an exchange of farmland was made for farm consolidation purposes. This is the certificate that is currently required in relation to the capital gains tax relief available on farm consolidations. The criteria to be used by Teagasc for this purpose and the information to be supplied to Teagasc are contained in guidelines published by the Minister for Agriculture, Food and the Marine.

A purchaser of farmland must retain ownership of the farmland for a period of five years and must use the land for farming. Where any part of the land is disposed of before the end of this five-year holding period, the stamp duty relieved can subsequently be recovered by Revenue, or partly recovered as appropriate.

The measure will apply to all transactions which took place after on or after 1 January 2018 and on or before 31 December 2020, so farmers who consolidate their holdings prior to the commencement of the relief, but within those dates, will still be eligible.

Tax Agreements

Ceisteanna (120)

Noel Rock

Ceist:

120. Deputy Noel Rock asked the Minister for Finance the status of discussions with the Brazilian authorities to remove Ireland from a blacklist of tax havens; and if he will make a statement on the matter. [17246/18]

Freagraí scríofa

Minister for Finance

The Irish Government was deeply disappointed by Brazilian Federal Revenue Service's decision to include Ireland on the List of Countries with Favoured Taxation and Tax Regimes. Inclusion on the list fundamentally misrepresents Ireland and the Irish tax system.  

Ireland's interaction with Brazil on this important issue is being led by the Irish Ambassador to Brazil.  Department of Finance officials and officials from the Revenue Commissioners continue to be actively engage in supporting the Irish Ambassador to Brazil in our efforts to seek Ireland's removal from the List.  Officials from the Department of Finance have met with their Brazilian counterparts to address any concerns the Brazilian authorities have.

In addition, Minister of State Joe McHugh TD travelled to Brazil as part of the “Promote Ireland” Programme for St Patrick’s Day. Minister McHugh engaged directly with the Head of the Brazilian Revenue Service in a meeting specific to this matter.

Arising from the meeting the fundamental issue remains that Ireland’s 12.5% headline rate was at odds with existing Brazilian tax legislation (which sets a 17% threshold) which means that Ireland will remain on the list, regardless that Ireland is fully compliant with all international best practices in the areas of tax transparency and exchange of information and are one of only 22 jurisdictions to be ranked as fully Compliant by the Global Forum on Transparency and Exchange of Information for Tax Purposes. Furthermore, research by the OECD and others point to the importance of low corporation tax rates to encourage economic growth.

Questions Nos. 121 to 123, inclusive, answered with Question No. 118.

Banking Sector Regulation

Ceisteanna (124, 125)

Michael McGrath

Ceist:

124. Deputy Michael McGrath asked the Minister for Finance if he has examined a report (details supplied) on a group in the UK; his views on the report; his views on whether the report applies to all parts of the group including the group's Irish subsidiaries; his further views on whether the practices of the group here were dictated by or consistent with the practices undertaken in the UK; and if he will make a statement on the matter. [17254/18]

Michael McGrath

Ceist:

125. Deputy Michael McGrath asked the Minister for Finance if the Central Bank accepts a company's (details supplied) report in the UK on a group; if the Central Bank further accepts that the report applies to all of the group including its branch here; and if he will make a statement on the matter. [17255/18]

Freagraí scríofa

Minister for Finance

I propose to take Questions Nos. 124 and 125 together.

As the deputy is aware the Central Bank of Ireland is responsible for the regulation of the financial services sector. The Central Bank has confirmed that it continues to have ongoing engagement with the UK Financial Conduct Authority in relation to Ulster Bank Global Restructuring Group (GRG). However it is not in a position to comment on the specifics of such engagement. While the Central Bank cannot comment on individual interactions with regulated entities, the Central Bank has and continues to engage with Ulster Bank Ireland DAC (UBI) in relation to this matter.

In November 2016, Royal Bank of Scotland (RBS) announced a complaints process and refund of complex fees for SME customers in GRG and indicated publicly that “A customer is in-scope for the new complaints process if they were a small or medium sized enterprise under the control of GRG in the United Kingdom or Republic of Ireland between 1 January 2008 and 31 December 2013”.

In line with its risk-based supervisory approach, the Central Bank has been and continues to monitor all relevant issues as they arise from a system perspective. The Central Bank will continue to monitor this matter and will be overseeing complaints received by UBI for any issues arising particularly in the context of SME Code compliance.

The protection of SME customers is a priority for the Central Bank. The Central Bank published SME Lending Regulations in 2015, which replaced the SME Code (originally introduced in 2009 and updated in 2012). The SME Lending Regulations are designed to facilitate access to credit, promote fairness and transparency in the manner in which regulated entities deal with SME borrowers and provide a framework within which they deal with financial difficulty cases. They provide key protections to SME customers including requirements relating to applications for credit, provision of information, dealing with SMEs in arrears and financial difficulties, appeals and handling complaints.

If a consumer is concerned or unhappy with how they have been dealt with by a firm regulated by the Central Bank, there are clear processes in place in the Regulations for handling complaints. The Central Bank encourages consumers who are dissatisfied with their experience of financial products or services to ensure that they communicate their complaint directly to their financial services provider. This ensures that their complaint receives the protections provided by the Regulations.