Written Answers Nos. 210-228
210. Deputy Michael McGrath asked the Minister for Finance if his Department or the Revenue Commissioners have an estimate of the refund of tax that may be due to persons arising from a recent High Court decision relating to the dwelling house exemption; and if he will make a statement on the matter. [1112/19]
Amharc ar fhreagraI am advised by Revenue that it is a qualifying condition of the dwelling house exemption that a person inheriting a dwelling house cannot have an interest in another dwelling house at the date of the inheritance. A recent High Court judgement held that a person inheriting a dwelling house cannot have a beneficial interest in a dwelling house forming part of the residue of an estate until the assets for distribution have been ascertained; that is, on a later date than the date of the inheritance.
The facts of the relevant case were that an individual had inherited more than one dwelling house from the same disponer and both dwelling houses formed part of the residue of the estate. The judge held that the individual did not have a beneficial interest in either of the dwelling houses at the date of the inheritance and qualifies for the exemption. Revenue have issued revised guidance on foot of the judgement to clarify that a dwelling house forming part of the residue of an estate is not to be taken into account in determining whether a successor has an interest in another dwelling house at the date of an inheritance.
Due to the nature of the information supplied on the capital acquisitions tax return it is not possible to provide an estimate as requested by the Deputy. Having regard to the specific circumstances of the case concerned, however, Revenue does not anticipate that many beneficiaries will be affected by this judgement.
211. Deputy Michael McGrath asked the Minister for Finance the estimated number of income tax units on emergency tax; the corresponding data for the same period in 2018; the impact of PAYE modernisation on the numbers; and if he will make a statement on the matter. [1113/19]
Amharc ar fhreagraI am advised by Revenue that emergency tax should only apply in limited circumstances under PAYE Modernisation. These circumstances typically occur where an employee has not provided a valid Personal Public Service Number (PPSN) to an employer or where it is an employee’s first employment in the State. Also, in very rare circumstances emergency tax could apply because an employee’s tax record needs to be updated, which could prevent Revenue from issuing a ‘Revenue Payroll Notification’ (RPN). The RPN is the mechanism through which Revenue provides employers with real-time information in respect of employees’ tax credit and rate band entitlements.
Revenue has confirmed that by 11 January 2019, employers had successfully submitted pay and statutory deduction details in respect of over 1.54m employees under the new PAYE Modernisation arrangements. Of these, approximately 23,000 (1.5%) individuals were reported as being on emergency tax. It is not possible to directly compare this figure with the 2018 tax year because employers were not previously required to provide information on instances where emergency tax was applied.
Revenue has further advised me that from analysis of the submissions received to date, it is clear that some employers are unnecessarily operating emergency tax in respect of employees where an RPN is available. However, the analysis also confirms that many employers who incorrectly operated emergency tax in their first payroll run of the year have since corrected the error and applied the correct details to their employees’ second week’s earnings and refunded any overpayments.
Revenue has assured me that it will continue to very actively monitor PAYE Modernisation payroll submissions and will make direct contact with employers who appear not to be operating the system properly to assist them rectifying any errors made. Revenue also expects that the numbers of employees being placed on emergency tax will decrease further once the system beds down and employers become used to operating on a real-time basis.
Finally, I wish to commend Revenue for the successful launch of PAYE Modernisation and the seamless integration of the new real-time reporting arrangements into employers’ payroll systems.
212. Deputy John Brassil asked the Minister for Finance the number of new customs officers that will be assigned to each port and airport as a consequence of Brexit; the number expected to be in place in each port and airport by 29 March 2019, in tabular form; and if he will make a statement on the matter. [1158/19]
Amharc ar fhreagraI am advised by Revenue that they will require an additional 600 staff as a result of Brexit. This is based on the central case scenario of an orderly withdrawal, to include a transition period to the end of 2020, followed by an agreed future trading relationship between the EU and the UK.
The Government approved the phased recruitment of 600 Revenue staff in September of last year. Budget 2019 provided Revenue with a provision for 270 staff, of the total of 600, for Brexit during 2019. These staff are primarily required for trade facilitation.
Revenue has advised that plans are well advanced to have 200 of the 270 additional staff, across a number of functions, trained and in place by 29 March 2019. Of these 200 additional staff, 142 will be assigned to the ports and airports and will be working on a 24 hour/7-day basis.
The following table provides the breakdown of the number of additional staff who will be in place in Dublin Port, Dublin Airport and Rosslare Port by 29 March 2019:
|
Additional Staff |
Total |
|
Dublin Port |
81 |
|
Dublin Airport |
41 |
|
Rosslare Port |
20 |
The above additional staff will bring the total Revenue staff in Dublin Port to approximately 160, Dublin Airport to approximately 160 and Rosslare Port to approximately 40 by 29 March 2019.
In the event of the UK leaving without an agreement accelerated recruitment of the remaining 330 staff will be required during 2019. It is intended to manage this by way of internal, interdepartmental and open recruitment. In addition Revenue will also redeploy existing Revenue staff, if necessary.
213. Deputy Michael McGrath asked the Minister for Finance if the Central Bank makes it compulsory as part of its licensing requirements for investment firms and pension providers to be part of the investor compensation scheme; the number of investment firms or pension providers that are operating here which are not part of the scheme; if they are part of a compensation scheme in other jurisdictions; and if he will make a statement on the matter. [1171/19]
Amharc ar fhreagra215. Deputy Michael McGrath asked the Minister for Finance if auto enrolment were to be implemented under the Strawman proposal, if these pensions would be covered by the investor compensation scheme if one of the operators of the scheme fails; if not, the compensation scheme which will be available for customers in such an instance in which a pension provider fails; and if he will make a statement on the matter. [1173/19]
Amharc ar fhreagra216. Deputy Michael McGrath asked the Minister for Finance the types of pensions covered by the investor compensation scheme; if it is just personal retirement savings accounts and approved retirement funds; the compensation scheme available if a pension provider fails and the pension fund is an occupational pension fund; and if he will make a statement on the matter. [1174/19]
Amharc ar fhreagraI propose to take Questions Nos. 213, 215 and 216 together.
The Investor Compensation Company DAC (ICCL) is an independent body set up in accordance with the Investor Compensation Act, 1998 (the Act). The ICCL is Ireland’s statutory ‘fund of last resort’ for customers of authorised investment firms.
I am informed by the Central Bank that membership of the investor compensation scheme is mandatory for the following categories of authorised investment firms as defined in the Act:
- MiFID investment firms;
- Investment business firms authorised in accordance with the Investment Intermediaries Act, 1995;
- Credit Institutions licenced in accordance with section 9 of the Central Bank Act of 1971;
- Insurance intermediaries;
- UCITS Management Company authorised to provide Individual Portfolio Management services;
- AIF Management Company authorised to provide Individual Portfolio Management services.
There are currently 3,410 authorised investment firms that are in scope for the purposes of the Act.
The coverage of the ICCL is set out in the Act. The Act prescribes that the ICCL shall pay compensation to clients of the aforementioned categories of investment firms (“compensation obligation”). The compensation obligation of the ICCL is restricted to “eligible clients”, in essence clients, that are not defined in the Act as excluded investors, such as professional and institutional investors, including among others a pension or retirement fund.
In respect of eligible clients’ investments, the compensation obligation relates to eligible client money held, and, eligible client investment instruments held, administered and managed in connection with the provision of certain investment services, that the failed investment firm is unable to return to the eligible investor in accordance with legal and contractual conditions applicable. The compensation obligation is limited to 90% of the eligible investors’ net loss, subject to a maximum compensatable payment of €20,000 per eligible investor.
The investment instruments that are eligible for compensation under the Act are set out in section 2 of the Investment Intermediaries Act, 1995 (IIA) and Schedule 1 Part 3 of the European Union (Markets in Financial Instruments) Regulations 2017 (MiFID).
It is apparent from the investment instruments referred to in section 2 of the IIA that Personal Retirement Savings Accounts are listed and therefore in-scope, subject to all other elements of the compensation obligation being satisfied in accordance with the Act.
An Approved Retirement Fund is not a defined investment instrument within the scope of the Act and the compensation obligation, if any, would need to be considered, on a case-by-case basis, by an Administrator appointed in accordance with the provisions of the Act to validate claims received from clients of the relevant failed firm.
Occupational pension policy is a matter for the Department of Employment Affairs and Social Protection (DEASP) and is underpinned by the Pensions Act 1990 (PA). I am advised by DEASP that the PA provides certain protections to members of an occupational pension scheme in the event of the insolvency of their employer.
Specifically S48A of the PA provides a liability in law for the Minister for Finance to make payments of certain certified amounts to the trustees of an occupational pension scheme where the resources of the scheme are not sufficient to discharge liabilities in relation to certain benefits. In order to be eligible for such a payment, there must be a double insolvency of both the employer and the pension scheme.
Section 48A operates in the event of the wind up of a pension scheme, where both the employer and the scheme are insolvent at the date of wind up, and the scheme has insufficient funds to meet the liabilities of a scheme in respect of benefits referred to in S48(1AB) paragraphs (b), (c), and (d) of the PA, the Minister for Finance will provide monies from the Exchequer to fund the shortfall. The shortfall being 50% of the benefits, and where the annual amount is €12,000 or less, 100% of the benefits.
Regarding the proposed implementation of an Auto-Enrolment scheme, my colleague the Minister for Employment Affairs and Social Protection has primary responsibility in this area. However, I have been informed that the detailed evidence building and consultation required to deliver an automatic enrolment system is now being undertaken over an initial project planning phase. This will include an investigation of the potential organisational models for delivery and the likely costs involved.
Until this work is complete and a preferred model chosen, it would not be possible to confirm the specific operational structure and design characteristics of automatic enrolment.
214. Deputy Michael McGrath asked the Minister for Finance the number of individual investors here who are deemed to be eligible investors under the Investor Compensation Act 1998; if the Central Bank publishes such data; and if he will make a statement on the matter. [1172/19]
Amharc ar fhreagraThe Investor Compensation Company DAC (ICCL) is an independent body established in accordance with the Investor Compensation Act 1998.
The ICCL is Ireland’s statutory ‘fund of last resort’ for the clients of authorised investment firms.
The Act prescribes that the ICCL shall pay compensation to clients of specified categories of investment firms where a firm is unable to meet its financial obligations to those clients. The compensation obligation of the ICCL is restricted to “eligible clients”, who are clients which don't fall under the definition of professional or institutional investors.
There are currently 3,410 authorised investment firms that are in scope for the purposes of the Act.
In respect of eligible clients’ investments, the compensation obligation relates to eligible client money held and eligible client investment instruments held, administered and managed in connection with the provision of certain investment services, that the failed investment firm is unable to return to the eligible investor in accordance with legal and contractual conditions applicable.
The compensation obligation is limited to 90% of the eligible investors’ net loss, subject to a maximum compensation payment of €20,000 per eligible investor.
Neither the ICCL nor the Central Bank of Ireland collect information on the number of eligible investors under the Act.
217. Deputy Catherine Murphy asked the Minister for Finance further to Parliamentary Question No. 146 of 18 December 2018, if the National Treasury Management Agency will provide a breakdown of all discretionary performance related payments in tabular form (details supplied); the highest discretionary performance related payments made to a single employee in each of the years 2006 to 2012; and if he will make a statement on the matter. [1179/19]
Amharc ar fhreagraThe response to the deputy is set out in the table.
|
Year |
Total discretionary performance-related payments |
Number of Benefitting Employees |
Highest discretionary performance-related payments to an individual |
|
2006 |
€2,807,229 |
116 |
€377,000 |
|
2007 |
€3,165,551 |
138 |
€403,000 |
|
2008 |
€3,459,751 |
161 |
€395,500 |
|
2009 |
€2,751,361 |
167 |
€200,000 |
|
2010 |
€1,981,760 |
258 |
€40,000 |
|
2011 |
€62,610 |
5 |
€30,000 |
|
2012 |
€43,100 |
6 |
€25,000 |
Note -
- In respect of the years 2006-2010, the details provided have been compiled by the NTMA following the retrieval and review of available historical hardcopy documentation.
- Details of the total amount paid in discretionary performance related pay along with the number of staff in receipt of these payments have been published in the NTMA Annual Report for the years 2010 to 2017 (the NTMA’s most recent Annual Report).
218. Deputy Michael McGrath asked the Minister for Finance if he has submitted feedback on the EU roadmap for more efficient law making in the field of taxation and identification of areas for a move to qualified majority voting; if so, the status of this feedback; his views on the proposals outlined in the roadmap specifically those proposals to end unanimity when it comes to taxation matters; and if he will make a statement on the matter. [1193/19]
Amharc ar fhreagraThe European Commission recently published a Roadmap document titled 'Taxation - more efficient EU law-making procedure' which is seeking the views of members of the public and is open until 17th January 2019. It is aimed at seeking the views of the general public rather than the Member States.
I am aware that a European Commission Communication paper is due to be published shortly on a potential move to qualified majority voting in the area of taxation.
I firmly believe that the current unanimity based voting procedure is the most appropriate voting system in the area of taxation. Indeed, over the last 4 years, 21 Taxation initiatives have been agreed by Member States unanimously. This includes important Directives on VAT, administrative co-operation, Anti-Tax-Avoidance and also the EU list of non-cooperative tax jurisdictions. This illustrates that the requirement for unanimity is not preventing significant agreements from being reached.
The European Treaties are clear on how tax decisions are to be taken and Ireland’s tax sovereignty is an important issue for Irish citizens. I do not support any change to existing EU voting rights on taxation.
219. Deputy Fiona O'Loughlin asked the Minister for Finance the status of the work of NAMA; the expected surplus to be returned to the State; the way in which the surplus to date will be used; the date the agency will be wound up; and if he will make a statement on the matter. [1254/19]
Amharc ar fhreagraI wish to advise the Deputy that it is expected that NAMA will substantially complete its work by 2020/2021 and that, over those two years, the Agency expects that a surplus, currently projected to be €3.5bn, will be available for return to the State.
NAMA announced in October 2017 that it had redeemed all of its €30.2bn in Senior Debt which was guaranteed by the State and since April 2018 it has commenced the redemption of its €1.6bn in subordinated debt. However, notwithstanding the successful achievement of repaying the State’s contingent liability, three years ahead of schedule, there is still a significant body of work yet to be completed by NAMA.
While it is currently estimated that NAMA will return a surplus in the region of €3.5bn to the Exchequer, this surplus has yet to fully crystallise. It is important to note that realisation of this surplus depends on the success of NAMA's ongoing deleveraging, its Dublin Docklands SDZ programme and residential funding programme. These activities must be completed for the expected surplus to be earned.
NAMA was mandated in late 2009 to deal expeditiously with its acquired loan portfolio and to extract best value from that portfolio. NAMA has been extremely successful in achieving this mandate and has now entered into the final phase of this work. NAMA continues to de-risk its positions so that by 2020, the real estate and financial assets supported by NAMA funding will comprise a relatively small portfolio of liquid commercial and residential exposures. Active consideration is underway regarding NAMA’s end of life strategy and the maximisation of the return of any surplus to the State in respect of these remaining assets.
As the Deputy will be aware, NAMA was established with a very specific legal mandate, which was approved by the European Commission in 2010. It is important that NAMA’s role is preserved and that it completes its work in line with its original mandate.
As per section 60(2) of the NAMA Act 2009, NAMA may use surplus funds to redeem and cancel its senior and subordinated debt. Surplus funds may only be returned to the Central Fund once NAMA's debt has been redeemed in full in 2020.
Any NAMA surplus paid, while Exchequer positive, will not impact the general government balance, in line with EUROSTAT rules. It will be a decision for the Government as to how any surplus returned by NAMA will be utilised within the framework of the fiscal rules. However, the intention has always been to use such receipts from the resolution of the financial sector crisis to pay down our national debt and reduce our debt servicing costs.
220. Deputy Fiona O'Loughlin asked the Minister for Finance if he has commissioned an impact assessment of the increase in VAT from 9% to 13.5% in respect of hotels, restaurants, hairdressing and other activities; the expected increase in revenues in each of the categories in 2019; and if he will make a statement on the matter. [1255/19]
Amharc ar fhreagraA “Review of the 9% VAT rate: Analysis of Economic and Sectoral Developments” was published by my Department in July 2018, in order to better inform any decision in relation to the 9% reduced rate going forward. In addition to assessing the relevance, cost, value-for-money, and impact to date of the 9% VAT rate, the Review also looks at the estimated impact on the relevant sectors were the rate to be increased.
The Review found that tourism expenditure is more sensitive to income growth and the economic cycle than price changes. The economy is currently performing well, with high levels of employment and strong demand in the tourism sector. Growth is also expected to continue in the medium term. This positive economic outlook means that the income channel of demand is likely to ensure that economic activity within the 9% rate sector remains strong. The Review concludes that the VAT rating applied to the tourism sector should not greatly impact demand or employment in the sector. The Budget decision to increase the VAT rate was made following this analysis.
With regard to the expected increase in Exchequer revenues in 2019 as a result of the Budget change, this is estimated to be €466 million. The VAT rate increase in tourist accommodation is expected to yield €235m in 2019, restaurants are expected to yield €191m, hairdressing is estimated to yield €27m in 2019, bloodstock sales is expected to yield €7m and cinemas and shows are estimated to yield €6m in 2019.
222. Deputy Fiona O'Loughlin asked the Minister for Finance the status of a review of the help-to-buy scheme; and if he will make a statement on the matter. [1257/19]
Amharc ar fhreagraLast year, I commissioned an independent Cost Benefit Analysis (CBA) of the Help to Buy (HTB) incentive. Following a competitive tender process, Indecon International Economic Consultants were appointed to carry out this analysis. The report of the CBA was published at Budget time in the Department of Finance Report on Tax Expenditures and is available on my Department’s website.
In brief, the report found as follows:
- Prices: While there may have been a very small increase in prices attributable to the introduction of the incentive, the primary driver of house prices remains the continued misalignment between demand and supply.
- Supply: The evidence suggests that following the introduction of the incentive there was a marked increase in supply which can be attributed in part to HTB.
- Affordability: The analysis also finds that availability of HTB has reduced the time to save for all claimants and improved the overall affordability of housing for these individuals.
- Benefit/Cost Ratio: The analysis finds a benefit-cost ratio of 1.28 indicating a moderate positive effect for the incentive but note that if the price of new HTB units was to increase due to the incentive, the net benefit would be reduced.
The incentive is due to expire at the end of the current year and will be subject to decision in the context of Budget 2020.
223. Deputy David Cullinane asked the Minister for Finance if he is satisfied that information (details supplied) regarding the sale price of certain apartments in Dublin in 2018 supplied by the Revenue Commissioners to the Property Services Regulatory Authority is correct; and if he will make a statement on the matter. [1288/19]
Amharc ar fhreagraI am advised by Revenue that the information regarding the sale price of the apartments in question was sourced directly from self-assessed Stamp Duty returns which were filed electronically by taxpayers or their representatives through Revenue’s Online Service (ROS).
Revenue has also advised me that the transfer of information to the Property Services Regulatory Authority (PSRA) is an automated process that directly feeds from one IT system to the other. It is sometimes the case that the information provided on the electronic Stamp Duty return is not completed correctly by the filer, for example apartment addresses within a block, and because of this the sales price information displayed on the Residential Property Price Register may appear to be incorrect.
Regarding the properties in question, Revenue has confirmed to me that it will examine the individual Stamp Duty returns, and will make direct contact with the filers where the information appears incorrect to advise on any necessary amendments. Where a return is amended, the Residential Property Price Register will automatically update within a few days.
Finally, I am aware that Revenue has published a very useful Help Guide on its website at www.revenue.ie/en/online-services/support/documents/help-guides/stamp-duty/completing-a-return-online.pdf to assist people in completing Stamp Duty returns, which the Deputy may find helpful. I am also advised that the PSRA provides guidance on its website on how to interpret information held on the Residential Property Price Register.
224. Deputy Michael McGrath asked the Minister for Finance when he expects EU approval will be secured to implement the regional uplift aspect of the film tax relief provided for in the Finance Act 2018; and if he will make a statement on the matter. [1328/19]
Amharc ar fhreagra225. Deputy Michael McGrath asked the Minister for Finance if efforts will be made to support the inclusion of Cork city and county in the regional uplift aspect of the film tax relief provided for in the Finance Act 2018; and if he will make a statement on the matter. [1329/19]
Amharc ar fhreagraI propose to take Questions Nos. 224 and 225 together.
Section 481 TCA 1997 provides a 32% payable credit for eligible expenditure on film production in Ireland. It is available to Irish and international film production companies that are resident in the State or in an EEA State and carry on business in the State through a branch or subsidiary.
In addition to extending the credit's end date from 2020 to 2024, Finance Bill 2018 provided for a short-term, tapered regional uplift, commencing at 5%, for productions being made in areas designated under the State aid regional guidelines. The regional uplift will be introduced subject to State aid approval.
The regional uplift will be phased out on a tiered basis with 5% available in years 1 and 2, 3% in year 3, 2% in year 4, and reducing to 0% from year 5 on. The purpose of the regional uplift is to support the development of new, local pools of talent in areas outside the current main production hubs and to support the geographic spread of the audio-visual sector.
In considering whether the regional film development uplift applies, the Minister for Culture, Heritage and the Gaeltacht shall have regard to the following factors -
i. whether the production of the film is substantially undertaken in an assisted region;
ii. whether there is limited availability of individuals with suitable experience or training who habitually reside within a 45 kilometre radius of the place of production to provide services, and
iii. in respect of the areas of expertise where there is limited availability, the company provides training for individuals that habitually reside within that 45 kilometre radius.
The regions availing of the uplift will currently be limited to areas in Ireland sanctioned to receive regional aid under the EU regional aid guidelines.
The EU Regional Aid Guidelines (RAGS) allow each Member State to provide enhanced rates of State aid in the least economically developed areas of each country. This enables the State’s enterprise development agencies to grant State aid, at enhanced rates, to businesses in order to support new investment and new employment in productive projects in Ireland's most disadvantaged regions.
Ireland’s regional aid map was sanctioned by the EU in 2014. In accordance with the map, the regions unable to avail of the uplift are Dublin, Cork and the Mid-East generally, i.e. Kildare, Meath and Wicklow. (Exceptions in the mid-east which can receive regional aid assistance are Kells, Athy and Arklow.) The uplift is subject to State aid approval. My officials are currently in the process of notifying the aid with the European Commission. As I advised during Report stage of the Finance Bill process, should it transpire through conversations with the Commission that the geographic regions able to avail of the uplift can be amended, the inclusion of Cork city and county in may be something we can consider.
I would also like to advise the Deputy the process of notifying the EU of the regional uplift has begun but it is currently not possible to give a definitive timeline as to when this process will be completed.
226. Deputy Fiona O'Loughlin asked the Minister for Finance the extent to which he can intercede with the EU institutions in view of the need to clear the way for an emergency local authority and affordable housing programme; and if he will make a statement on the matter. [1365/19]
Amharc ar fhreagraThe fiscal rules to which Ireland is subject have direct application through a number of EU regulations and through the Fiscal Responsibility Act 2012. Any change to these regulations would have to follow the normal EU approach, beginning with a proposal from the Commission before consideration by Member States and the European Parliament.
The fiscal rules provide some scope for flexibility, where temporary deviations from the required budgetary adjustment are permitted, subject to strict conditions. There are also certain more explicit flexibility provisions within the rules. For instance, to facilitate public investment, increases in capital expenditure are smoothed over a four-year period, where only one-quarter of the increase is taken into account in the first year.
The rules also allow for deviations in the event of specific unforeseen circumstances – to date this has primarily been employed by several Member States in respect of costs relating to the refugee crisis – and to finance structural reforms that improve the long-term sustainability of the economy.
The Government has been clear that the provision of affordable housing is a top priority. The Rebuilding Ireland Action Plan outlines the Government’s strategy for tackling housing issues. According to the latest estimates, 63,727 housing solutions were delivered under Rebuilding Ireland, by the third quarter of 2018. In addition, last September, along with my colleague the Minister for Housing, Planning and Local Government, I signed the Establishment order for the Land Development Agency. The Agency will work to better coordinate State lands for regeneration and development in partnership with land-owning State bodies.
Finally, a wide range of housing measures were announced in Budget 2019, which provides a €2.3 billion investment in housing this year. This represents a 25 per cent increase on 2018, and is the most the State has ever spent on housing. Budget 2019 provides a further increase of €30 million for homelessness services, bringing the total allocation for 2019 to €146 million.
227. Deputy Fiona O'Loughlin asked the Minister for Finance the measures he has taken to meet and engage with insurance companies here regarding excessive premiums being charged to consumers particularly in County Kildare; and if he will make a statement on the matter. [1366/19]
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 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 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, particularly in relation to motor insurance.
Indeed, the problem of rising motor insurance premiums was the main impetus for the establishment of the Cost of Insurance Working Group, which the Minister of State with responsibility for insurance, Michael D’Arcy T.D., chairs. Its Report on the Cost of Motor Insurance was published in January 2017 and makes 33 recommendations with 71 associated actions to be carried out in agreed timeframes, set out within an Action Plan. The Working Group continued its work throughout 2017 and subsequently published the Report on the Cost of Employer and Public Liability Insurance in January 2018.
Stakeholder consultation formed the foundation upon which the Working Group’s two Reports and their recommendations were developed. This consultation process undertaken by the Working Group involved a wide range of stakeholders representing the different voices within this sector, including representative bodies, the major individual motor insurance providers and interest groups. The impact of excessive premiums being charged to consumers from all counties across the country was a feature of this engagement process with industry.
In addition, my officials regularly raise specific issues affecting consumers across the country during their ongoing engagement with Insurance Ireland, including within a sub-group formed to implement relevant consumer-focused recommendations from the Motor Report.
Furthermore, Minister of State D’Arcy, has separately met with representatives from insurance companies and other relevant stakeholders in relation to a number of issues and the problems resulting from high insurance premiums have been discussed during these engagements.
Quarterly progress updates on the implementation of the Reports have provided more detailed information on the implementation of each of the recommendations and actions. The seventh quarterly update was published in November 2018 and is available on the Department’s website, within “The Cost of Insurance Working Group” sub-section of the main “Insurance” section. Officials in my Department are currently working with the relevant stakeholders to prepare the update for the Fourth Quarter of 2018.
Finally, it should be noted that the most recent CSO data (for November 2018) indicates that private motor insurance premiums have decreased by 22.7% since peaking in July 2016. There was a drop of 7.6% year-on-year in November.
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 premiums should continue to fall from the very high levels of mid-2016.
228. Deputy Fiona O'Loughlin asked the Minister for Finance the extent to which he remains satisfied that the economy remains competitive in all aspects; and if he will make a statement on the matter. [1367/19]
Amharc ar fhreagraThe improvement in Ireland’s competitiveness has been at the cornerstone of the recovery in the Irish economy. Since 2008, the Central Bank’s real harmonised competitiveness indicator has improved by approximately 21 per cent.
The restoration of Irish competitiveness has been hard-won through improvements in productivity, wages and price moderation. It is important that this competitiveness is preserved and continues to facilitate sustainable economic growth.
Importantly for Ireland’s competitiveness, the robust growth in the economy has not yet given rise to inflationary pressure. For the first eleven months of the year, inflation as measured by the Harmonised Index of Consumer Prices (HICP) averaged just 0.7 per cent on an annual basis, this follows five consecutive years in which inflation has been below 1 per cent.
In the coming years, the domestic economy is expected to act as a primary driver of growth. In this context, we must remain cognisant of the potential upward pressure this will place on both prices and wages, which could give rise to a loss of competitiveness.
As highlighted in Budget 2019, our economy will also face a number of external risks in the years ahead. These risks primarily relate to a more adverse-than-expected outcome from Brexit, a rise in protectionism and a faster than expected normalisation of monetary policy.
As a number of these factors are beyond our control the best way we can mitigate against these risks is through prudent budgetary policy, careful management of the public finances and by focusing on competitiveness-oriented policies. That is what the Government has done and will continue to do going forward.
