Written Answers Nos. 25-48
25. Deputy Joan Burton asked the Minister for Finance the most recent figures available for tax payments that are six months and one year in arrears; the highest amount in arrears for each tax heading; the amount of taxes outstanding as of 31 January 2019; and the amount he deems to be unrecoverable. [7364/19]
Amharc ar fhreagraI am advised by Revenue that the total amount of tax debt at 31 January 2019 is €4,318m. However, this figure includes €3,235m of debt that is under appeal with the Tax Appeals Commission and €114m of Insolvency Debt, which is not available to Revenue to collect.
The remaining €969m is regarded as a more accurate indicator of actual debt that is available to Revenue for collection. The breakdown of this amount includes €410m that is outstanding for less than 6 months, €87m that is outstanding for between six months and 12 months and €472m that is outstanding for longer than 12 months.
Due to the requirement to protect taxpayer confidentiality, it is not possible for Revenue to provide information on the ‘highest amount in arrears for each tax heading’ as requested by the Deputy. Revenue has however provided me with additional detailed tabular analysis of the debt available for collection position, which I am happy to provide to the Deputy.
Debt Available for Collection €m
|
Age of Debt |
IT |
DIRT |
CT |
CGT |
PAYE |
PRSI |
USC |
RCT |
VAT |
CAT |
ELEVY |
ATT |
Total |
|
1 Year and Over |
€207 |
€0 |
€13 |
€31 |
€21 |
€31 |
€5 |
€7 |
€135 |
€22 |
€0 |
€0 |
€472 |
|
6 Months and Over |
€228 |
€0 |
€15 |
€34 |
€31 |
€42 |
€7 |
€8 |
€171 |
€24 |
€0 |
€0 |
€559 |
|
< 6 Months |
€119 |
€0 |
€22 |
€19 |
€52 |
€62 |
€10 |
€2 |
€90 |
€35 |
€0 |
€0 |
€410 |
Debt Available for Collection €m
|
Year |
IT |
DIRT |
CT |
CGT |
PAYE |
PRSI |
USC |
RCT |
VAT |
CAT |
ELEVY |
ATT |
Total |
|
Over 10 Years |
€24 |
€0 |
€1 |
€7 |
€4 |
€6 |
€0 |
€3 |
€19 |
€0 |
€0 |
€0 |
€65 |
|
9-10 Years |
€3 |
€0 |
€0 |
€1 |
€0 |
€0 |
€0 |
€0 |
€3 |
€0 |
€0 |
€0 |
€8 |
|
8-9 Years |
€9 |
€0 |
€0 |
€5 |
€1 |
€1 |
€0 |
€0 |
€7 |
€2 |
€0 |
€0 |
€25 |
|
7-8 Years |
€9 |
€0 |
€0 |
€2 |
€1 |
€2 |
€0 |
€0 |
€8 |
€1 |
€0 |
€0 |
€22 |
|
6-7 Years |
€11 |
€0 |
€0 |
€2 |
€1 |
€2 |
€0 |
€0 |
€9 |
€1 |
€0 |
€0 |
€26 |
|
5-6 Years |
€15 |
€0 |
€4 |
€2 |
€1 |
€2 |
€0 |
€0 |
€11 |
€1 |
€0 |
€0 |
€37 |
|
4-5 Years |
€28 |
€0 |
€2 |
€2 |
€2 |
€3 |
€1 |
€0 |
€12 |
€2 |
€0 |
€0 |
€51 |
|
3-4 Years |
€34 |
€0 |
€2 |
€2 |
€3 |
€4 |
€1 |
€0 |
€15 |
€3 |
€0 |
€0 |
€64 |
|
2-3 Years |
€30 |
€0 |
€1 |
€5 |
€3 |
€4 |
€1 |
€0 |
€19 |
€4 |
€0 |
€0 |
€67 |
|
1-2 Years |
€44 |
€0 |
€3 |
€3 |
€6 |
€7 |
€2 |
€1 |
€33 |
€10 |
€0 |
€0 |
€109 |
|
6-12 Months |
€21 |
€0 |
€2 |
€2 |
€9 |
€12 |
€2 |
€1 |
€35 |
€2 |
€0 |
€0 |
€87 |
|
3-6 Months |
€46 |
€0 |
€10 |
€3 |
€3 |
€1 |
€1 |
€2 |
€40 |
€5 |
€0 |
€0 |
€110 |
|
2-3 Months |
€55 |
€0 |
€2 |
€7 |
€1 |
€1 |
€0 |
€0 |
€14 |
€26 |
€0 |
€0 |
€108 |
|
1-2 Months |
€8 |
€0 |
€5 |
€2 |
€3 |
€2 |
€1 |
€0 |
€25 |
€2 |
€0 |
€0 |
€48 |
|
Under 1 Month |
€10 |
€0 |
€5 |
€6 |
€45 |
€58 |
€8 |
€0 |
€10 |
€2 |
€0 |
€0 |
€145 |
|
Totals |
€347 |
€0 |
€37 |
€52 |
€83 |
€105 |
€17 |
€10 |
€260 |
€59 |
€0 |
€0 |
€969 |
Note – Total columns may not tot due to rounding
26. Deputy Maurice Quinlivan asked the Minister for Finance if he will request the Revenue Commissioners to protect the flat rate expenses for lower paid workers such as shop assistants, due to cease in 2020. [7277/19]
Amharc ar fhreagraThe Deputy will be aware that the administration of the tax code is exclusively a matter for Revenue. Section 101 Ministers and Secretaries (Amendment) Act 2011 specifically provides that the Revenue Commissioners are independent in the performance of their functions under, or for the purposes of, tax laws. Consequently, I am precluded from giving any direction or instruction to Revenue in this regard. Any changes in practice to the Flat Rate Expense (FRE) regime are a matter for Revenue.
I am advised by Revenue that it is not intended to further review the FRE categories already identified as not meeting the statutory requirement for tax deduction set out in section 114 Taxes Consolidation Act 1997. The purpose of the FRE review is to ensure that the expenses granted to each employment category remain justified and appropriate to modern day employments and work practices. Each category will be examined separately in light of the legislative requirements. Only those categories which meet the criteria for deduction in the legislation will be in a position to retain a FRE. It is intended to have the review completed for all categories by the end of 2019.
Revenue has confirmed there is no change to the implementation date of 1 January 2020 for any changes that may be made to the FRE regime, to ensure the changes do not impact on any specific group earlier than the rest.
27. Deputy Pearse Doherty asked the Minister for Finance his plans to extend the help-to-buy scheme for properties bought after 2019; and the cost of the scheme to date. [7343/19]
Amharc ar fhreagraAs the Deputy may be aware, section 477C of the Taxes Consolidation Act 1997 provides that the Help to Buy incentive (HTB) will expire on 31 December 2019.
As of 31 January 2019, Revenue received 23,517 applications for HTB and 10,618 claims had been made, of which 10,107 had been approved. The total estimated cost to the Exchequer of these verified claims is €147 million, of which €18.2 million represents retrospective claims (home purchases and self-builds in the period 19 July to 31 December 2016.
HTB has been subject to two formal reviews since its introduction, both carried out by Indecon Economic Consultants. The most recent of these, published in October 2018, concluded 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.
As would be normal, the role of the incentive will be examined in the context of the forthcoming Budget and Finance Bill process. It would be premature at this point to anticipate the outcome of that examination.
29. Deputy Joan Burton asked the Minister for Finance if he has undertaken an economic evaluation of wage levels here and the affordability of rent and house purchases; and if he will make a statement on the matter. [7363/19]
Amharc ar fhreagraMy Department continues to monitor developments in the property market, including trends in prices and rents, on an ongoing basis. The Department uses many different sources to analyse the market, including its own research and analysis. In relation to affordability, the most recent and comprehensive work in this area was carried out by the ESRI in cooperation with the Department of Housing, Planning and Local Government. The report titled ‘Exploring affordability in the Irish housing market’, found that affordability pressures are not universal and are most acute in the private rented sector, those living in the Greater Dublin Area and those on low incomes.
Ireland’s strong economic growth has allowed average wages to show consistent year-on-year growth since the beginning of 2016, with growth picking up in strength through 2017 and 2018. The most recent data available show the average weekly wage grew by 3.2% year-on-year in the third quarter of 2018. Although such growth rates are relatively high, the pace of inflation in the private rented and owner-occupier sectors over recent years has, unfortunately, been higher. Residential property prices increased by 7.1 per cent in the year to November 2018. The latest data from the RTB show that rents rose by 7.5 per cent year-on year in the third quarter of 2018.
The long-term solution to increasing affordability is to increase the supply of appropriate housing, including social, affordable and private housing. In response to this challenge - and in addition to the measures being implemented under ‘Rebuilding Ireland’ - Budget 2019 contained initiatives aimed at increasing the supply of new homes. In 2019, a total capital investment of €1.4 billion will be made in housing. Some €310 million over three years will be made available for delivery of affordable homes through the Serviced Sites Fund (SSF). Further, my colleague the Minister for Housing, Planning and Local Government, who has primary responsibility for housing policy, has brought forward a number of programmes to tackle the issue of affordability, including an affordable purchase scheme and a new cost rental programme.
The Department of Finance will continue to monitor developments in the housing sector in the context of increasing affordability and maintaining our competitiveness.
30. Deputy Mick Wallace asked the Minister for Finance if he envisages NAMA and NTMA staff being seconded to the Land Development Agency; if he has discussed same with the Minister for Housing, Planning and Local Government, the interim CEO of the Land Development Agency and the chairman and CEO of NAMA; and if he will make a statement on the matter. [7354/19]
Amharc ar fhreagraI can confirm that, following a request from the Minister for Housing, Planning and Local Government last June, the NTMA agreed to the secondment of three staff members to the LDA on a temporary basis to assist with the establishment of that Agency. Neither I nor the Department of Finance have had any further discussions with any of the parties listed in relation to any further secondments of staff to the LDA.
The Land Development Agency (LDA) was established on 13 September 2018 by way of Establishment Order under the Local Government Services (Corporate Bodies) Act 1971. The Agency is a commercial State body and national centre of expertise, working with and supporting local authorities, public bodies and other interests, to harness public lands as catalysts to stimulate regeneration and wider investment and to achieve compact, sustainable growth, with a particular emphasis on complex regeneration projects and the provision of affordable housing. In line with its mandate, the LDA will retain experienced staff with extensive skills and experience in project management, finance, planning, development, law and procurement and will provide professional services to master-plan key sites/areas for development in key urban areas, in partnership with local authorities and other state bodies.
A general scheme of a Bill to establish the LDA on a primary legislative footing is expected to be published in the coming weeks, with pre-legislative scrutiny to follow shortly thereafter in parallel with the drafting of the Bill. On enactment, a permanent Chairperson and Board will be appointed.
31. Deputy Maureen O'Sullivan asked the Minister for Finance his views on whether there is a fairer way to class various products for VAT rather than standardised rates, which can be subject to changes that make significant differences to certain industries; and if he will make a statement on the matter. [7356/19]
Amharc ar fhreagraThe VAT rating of goods and services is subject to EU VAT law, with which Irish VAT law must comply. In general, the VAT Directive provides that all goods and services must be charged to VAT at the standard rate unless they fall within particular categories of goods and services specified in the VAT Directive. VAT rating is determined on the basis of particular goods and services, not by goods or services as a whole.
Under existing VAT rating rules, Member States must apply a standard VAT rate of at least 15% and may apply up to two reduced VAT rates of 5% or more to a set list of socially inclined goods and services. Member States may also retain historic VAT treatment that applied before 1 January 1991, including the application of a zero rate or a rate below 5%.
Ireland operates a standard VAT rate of 23%, reduced VAT rates of 13.5% and 9%, and historically applies the zero rate and a super-reduced rate of 4.8%.
On 18 January 2018 the European Commission published a proposal on the Simplification of VAT rates, which allows greater freedom for Member States in setting VAT rates in line with the move to the definitive destination based system of VAT. The proposal will be discussed at European Council and must be agreed unanimously by all Member States before being adopted. It is expected that discussions on the proposal will be robust and it is likely that the final agreed text will be the subject of many compromised amendments.
32. Deputy Mick Wallace asked the Minister for Finance his views on the fact that multiple NAMA transactions since 2010 may have been in breach of section 172 of the NAMA Act; if he or NAMA has had engagement with An Garda Síochána or the DPP regarding their ongoing investigation into one specific transaction concerning a section 172 breach; and if he will make a statement on the matter. [7355/19]
Amharc ar fhreagraI am advised that Section 172(3) of the NAMA Act is a legal provision preventing any interest in property held as security for loans acquired by NAMA from being sold back to defaulting debtors, or persons acting on behalf of defaulting debtors. NAMA has a policy of obtaining written confirmation from purchasers of NAMA-secured assets confirming that they are in compliance with Section 172(3) of the NAMA Act and it is a criminal offence for a purchaser to make a statutory declaration which is false or misleading in this respect.
I am not aware that multiple NAMA transactions since 2010 may have been in breach of Section 172(3) of the NAMA Act. I am advised that, to date, there have been two investigations into alleged breaches of Section 172(3) of the NAMA Act 2009, neither of which has resulted in a prosecution.
I am advised that NAMA has carried out two investigations into alleged breaches of Section 172(3) of the NAMA Act 2009. In relation to one of these alleged breaches, I am advised that NAMA has concluded its investigations and is satisfied that no breach has occurred. I am advised that NAMA is aware that An Garda Síochána is separately investigating the other alleged breach. Criminal investigations are a matter for An Garda Síochána and the DPP and to date, their investigations have not resulted in a prosecution.
I wish to advise the Deputy that neither I nor the Department of Finance have had any engagement with An Garda Síochána or the DPP in relation to their on-going investigation. As the Deputy will be aware, the DPP is entirely independent in carrying out her functions and neither I nor the Department of Finance are privy to her decisions. It would not be appropriate for me to question or query any action taken by the DPP in relation to these proceedings.
33. Deputy Michael McGrath asked the Minister for Finance the position regarding the failure of a company (details supplied); the number of households that have been impacted by the withdrawal of latent defect insurance; and if he will make a statement on the matter. [7367/19]
Amharc ar fhreagraThe Central Bank has advised my Department that it was notified by the Danish Financial Supervisory Authority ("Danish FSA") on 7 March 2018 that it (Danish FSA) had ordered Alpha Insurance A/S (“Alpha”) to cease writing new business including renewal of existing contracts and business with immediate effect. The Central Bank was further notified on 9 May 2018 by the Danish FSA that the liquidators of the insurance company Alpha had filed a petition for bankruptcy.
The Central Bank has also indicated that as Alpha is a Danish-based insurance firm, it is subject to prudential supervision by the Danish FSA, and therefore the Central Bank had no role in this decision. It has also informed my Department that Alpha was selling non-life insurance policies in Ireland through the broker network on a freedom of services basis and that it also operated in Denmark, France, Germany, Greece, Italy, Norway, Spain and the United Kingdom.
The insolvency administrator has provided updated figures to the Central Bank as of December 2018 on the latent defects policies. Present figures stand at 1,617 policies, 1,163 of which are currently with the homeowner (these policies were transferred from the developer to the homeowner following completion of the build). The remaining 454 policies were on houses that were not finished and therefore the policy had not transferred to a homeowner at the time of the liquidation i.e. the policy remained with the developer.
The claims handler (BCR Legal Group Limited) confirmed to the Central Bank that its representative CRL wrote to the developers who had purchased these latent defects policies, on two occasions, to advise that Alpha had been placed in bankruptcy, that polices would be cancelled from 11 August 2018 and to request details of the owner of the properties insured under these policies. BCR subsequently wrote to all homeowners affected by the liquidation of Alpha, following receipt of their details from the developers, to advise that as Alpha had gone into liquidation, their latent defects policies had been terminated and that they should consider replacing this policy. BCR also provided these homeowners with an information sheet from the liquidators.
It should be noted that the Danish liquidator of Alpha continues to provide country-specific updates of the latent defects policies on https://alphagroup.dk. The Central Bank of Ireland has also published information in relation to Alpha, which it will update if further information becomes available.
34. Deputy Willie Penrose asked the Minister for Finance if he has considered the need for special tax incentives to allow small businesses to establish in areas outside of the main cities. [52144/18]
Amharc ar fhreagraThe Deputy will be aware that a range of measures have been introduced or extended in recent years to support small businesses, both small incorporated businesses and individuals established in sole trades or partnerships.
These include measures such as: the introduction of, and subsequent increases to, the Earned Income Credit; the Start Up Refunds for Entrepreneurs (SURE) scheme; the three-year start-up relief for small companies; and the certification scheme for small companies using the Knowledge Development Box.
Any potential tax incentives designed specifically to benefit small businesses establishing outside the main cities would require consideration of State aid implications. As the Deputy will be aware, State aid becomes a concern when making any change which would provide a benefit to any targeted cohort of taxpayers, for example based on their size, regional location or other factors.
However I would note that measures relevant to the farming sector are predominately relevant to businesses established outside the main cities, and the Deputy will be aware of the range of supports available to this sector.
It must also be considered whether a tax expenditure would be the appropriate policy tool through which to provide support for new small businesses. Tax reliefs or incentives are primarily relevant to profit-making businesses with potential tax liabilities, whereas new small businesses may often be loss-making in their early establishment phases. Direct expenditure supports such as grants, innovation vouchers and Enterprise Ireland funds are potentially more effective policy tools in this area.
35. Deputy Michael Moynihan asked the Minister for Finance if he met with colleagues before the recent tax cut announcements were made. [49445/18]
Amharc ar fhreagraGovernment policy is to keep the tax and revenue base broad, while reducing the rate of tax on work and some other activities to achieve specific social and economic objectives, such as full employment, more housing and urban and rural regeneration. This is set out in the Government Programme.
In September last year, at an event organised by IBEC, I indicated that looking beyond Budget 2019, if economic circumstances allow, we would continue to reduce the tax burden on middle-income earners by increasing the standard rate cut-off point over a number of Budgets to a level that is competitive with our neighbouring jurisdictions.
The Government position is that workers start to pay too high a rate of income tax at too low an income level. We cannot hope to remain competitive if someone on a relatively low income and who decides to work a few hours overtime has nearly half that extra money taken in tax. Such a position informed my approach in the last two Budgets where, on each occasion, I increased the level of the standard rate band. The impact is that fewer people on incomes around the national average have any income subject to the 40% rate of income tax than would otherwise have been the case.
Overall, therefore, the policy of widening the standard rate band is not a new one.
As I have stated on many occasions, we plan to continue this progress in the coming years within available resources, to make sure that Ireland remains competitive.
36. Deputy Bernard J. Durkan asked the Minister for Finance if he has identified issues likely to impact negatively on the competitiveness of the economy; if so, the corrective measures he has put in place; and if he will make a statement on the matter. [7347/19]
Amharc ar fhreagra67. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he monitors the competitiveness of the economy; the degree to which challenges thereto have been identified; the corrective action in relation to same; and if he will make a statement on the matter. [7617/19]
Amharc ar fhreagraI propose to take Questions Nos. 36 and 67 together.
Improvements in Ireland’s competitiveness have been central to 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 competitiveness has been hard-won through improvements in productivity, along with wage and price moderation. Over the medium term, the domestic economy is expected to act as the primary driver of growth. In this context, we must remain cognisant of the potential upward pressure this will place on both prices and wages, that could give rise to a loss of competitiveness.
Importantly, the robust economic growth in recent years has not yet given rise to significant inflationary pressures. In December 2018, annual inflation as measured by the Harmonised Index of Consumer Prices was at just 0.8 per cent, having averaged 0.7 per cent throughout 2018. This follows five consecutive years of inflation below 1 per cent. Although price pressures have emerged in both the housing and the rental markets, this reflects the undersupply of housing over the last number of years, rather than evidence of over-heating pressures.
In terms of domestic risks, while the baseline projections assume that some moderate overheating pressures will emerge over the medium-term, particularly in the context of the expected increase in housing output, these pressures could be more significant than expected with the potential to generate imbalances over the coming years and impact on competitiveness.
As I outlined in Budget 2019, our economy is also facing a number of external risks. 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. There is also continuing evidence of a slowdown in global growth, as has been recently reported by the IMF and the European Commission.
As many of the risks we are facing are external and thus beyond our control, the best way we can mitigate against them is through prudent budgetary policy, careful management of the public finances and by focusing on competitiveness-oriented policies, particularly those that increase productivity. Through the National Development Plan in particular, we are investing significantly to address the bottlenecks to growth which emerged of late, such as the need for residential development and public infrastructure investment. This should ensure that our economy remains competitive and avoid the build-up of bottlenecks that could limit our growth potential.
37. Deputy Pearse Doherty asked the Minister for Finance if he is satisfied that progress is being made by the working group on the cost of insurance in the areas of public liability insurance, such as for marts or child play centres. [7345/19]
Amharc ar fhreagra48. Deputy Robert Troy asked the Minister for Finance the measures he is taking to address the perceived spiralling cost of insurance for the leisure industry. [7340/19]
Amharc ar fhreagra62. Deputy Robert Troy asked the Minister for Finance the steps he is taking to help alleviate the cost of insurance on the leisure industry; and his views on whether insurance price rises within the sector have become highly inflated. [7457/19]
Amharc ar fhreagraI propose to take Questions Nos. 37, 48 and 62 together.
At the outset I wish to emphasise that I am very aware of the financial strain which the cost of insurance is placing upon businesses, and on some sectors in particular.
As part of the Cost of Insurance Working Group’s (CIWG) formal consultation process, there was engagement between the CIWG and representatives from different industries, including both the agricultural and leisure sectors, while more recently, Minister of State D’Arcy, who chairs the CIWG, has met with representatives of those operating play centres. From these engagements, it would appear that the main difficulty in these sectors is a lack of capacity in the market which I understand has been driven to some degree by the overall claims level in these sectors.
In determining their willingness to enter into or remain in a particular sector of the market, insurers will generally make an assessment of what they consider the overall risk to be. Therefore, part of their assessment of what premium level to charge, or whether to offer cover will be based on what they consider the general likely trend for claims in the sector will be, based on their overall past experience.
The Deputy should note that as Minister for Finance, I am responsible for the development of the legal framework governing financial regulation and 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. Therefore I cannot compel insurers to provide cover to businesses such as play centres or marts.
The above said however, it was recognised with the establishment of the Cost of Insurance Working Group (CIWG) that the environment within which insurers conduct their business can be better shaped, in order to make the Irish insurance market a more competitive one and also make it more attractive for new entrants. In this regard, the initial focus of the Working Group was the issue of rising motor insurance premiums and the Report on the Cost of Motor Insurance was published in January 2017.
The second phase of the CIWG, under the Chairmanship of the Minister of State for Financial Services and Insurance, Mr. Michael D’Arcy TD, culminated in the issuing of the Report on the Cost of Employer and Public Liability Insurance in January 2018. It makes 15 recommendations with 29 associated actions, detailed in an Action Plan with agreed timelines for implementation.
The most recent Progress Update was published last November and shows that 18 of the 19 actions points arising up to end of Q3 2018 have been completed.
It is envisaged that the next quarterly Progress Update will issue by the end of this month and I understand that the vast majority of the total of 26 action points which were due for completion during 2018 overall have been done. I am confident that any outstanding action points will be completed in the coming months, along with the three remaining action points with deadlines set for various quarters throughout 2019.
The actions implemented to date cut across a number of different areas and include:
- The publication of by An Garda Síochána of the “Guidelines for the Reporting of Suspected Fraudulent Insurance Claims by Insurance Entities to An Garda Síochána”
- The Law Reform Commission confirming that the subject of caps on damages for personal injuries litigation is included in its draft Fifth Programme of Law Reform
- Sections 8 & 14 of the Civil Liability and Courts Act 2004 have been amended to ensure defendants are appropriately notified of a claim having been submitted against their policy and to make it easier for businesses and insurers to challenge cases where fraud or exaggeration is suspected, respectively
- An Garda Síochána commencing the collection of statistics under the new “insurance fraud” category which has been added to the PULSE system
- The Courts Service confirming that they will publish a more detailed breakdown of awards in personal injury cases in its Annual Reports.
Finally, I would like to assure the Deputy that the CIWG will continue to focus on implementing the recommendations of the Report on the Cost of Employer and Public Liability Insurance in parallel with implementing those from the Report on the Cost of Motor Insurance. I am hopeful that the cumulative effects of the completion of the two Reports’ recommendations will include increased stability in the pricing of insurance for businesses such as play centres and marts as well as a more competitive insurance market.
38. Deputy Michael McGrath asked the Minister for Finance the key recommendations of the cost of insurance working group, including the report on employer and public liability, he plans to implement in the next six months; and if he will make a statement on the matter. [7369/19]
Amharc ar fhreagraThe most recent Progress Update in respect of the Cost of Insurance Working Group project, published last November, shows that of the total number of 78 separate relevant deadlines within the Action Plans of the Report on the Cost of Motor Insurance and the Report on the Cost of Employer and Public Liability Insurance up to the end of Q3 2018, 63 relate to actions which have been completed.
It is envisaged that the next quarterly Progress Update will issue by the end of this month and concentrate in particular on outlining the definitive position in relation to all of the 33 recommendations from the Motor Report as the last of the deadlines within its Action Plan passed at the end of 2018.
In respect of the EL/PL Report, the vast majority of the total of 26 action points which were due for completion during 2018 overall have been done. I am confident that any outstanding action points will be completed in the coming months, along with the three remaining action points with deadlines set for various quarters throughout 2019.
The upcoming Progress Update will also include an additional section providing the up-to-date status in respect of relevant recommendations from the two reports issued by the Personal Injuries Commission.
Some of the key actions and recommendations which I hope will be implemented over the next six months include:
- Personal Injuries Assessment Board (Amendment) (No. 2) Bill 2018 to conclude its passage through both Houses of the Oireachtas
- The Law Reform Commission to formally commence its examination of the possibility of capping levels of damages for personal injury actions
- The National Claims Information Database to be fully functioning following the recent commencement of the relevant Act
- Progress in relation to the proposal to establish an improved insurance fraud investigative capacity within the Garda National Economic Crime Bureau and further fruitful co-operation between the insurance industry and Gardaí
- Publication of Key Information Report on employer and public liability insurance claims
- Progress in relation to delivering interim guidelines relating to appropriate general damages award levels for the prioritised soft tissue/whiplash injury category.
Overall, the Deputy can rest assured that the Cost of Insurance Working Group will keep its focus on putting into place all of its proposed measures in order to improve the insurance market for businesses and consumers alike.
39. Deputy Thomas P. Broughan asked the Minister for Finance his plans to introduce legislation on regulations for the large shadow banking sector here; and if he will make a statement on the matter. [7156/19]
Amharc ar fhreagra"Shadow banking" is a term used to describe bank-like activities that take place outside the traditional banking sector. It is also commonly referred to internationally as non-bank financial intermediation or market-based finance.
According to the recently published Financial Stability Board’s Global Monitoring Report on Non-Bank Financial Intermediation 2018, as at the end of 2017 the assets of the non-bank financial intermediation sector operating in Ireland was estimated at €2.3 trillion. The shadow banking system, as defined by the Financial Stability Board (FSB) is composed of a number of sub-sectors and is made up mainly of investment funds, special purpose entities and credit derivative holdings.
I have been informed by the Central Bank of Ireland that the largest component of the Irish-domiciled shadow banking sector is collective investment vehicles (investment funds). Investment Funds are subject to an extensive set of EU body rules in the form of the Undertakings for Collective Investment in Transferable Securities (UCITS) Directive and the Alternative Investment Fund Managers (AIFM) Directive. These are supplemented by domestic Irish requirements under Central Bank regulations and rules.
The Central Bank is an active participant on Ireland’s behalf in the international debate on shadow banking. This includes participating in the Financial Stability Board's global non-bank financial intermediation monitoring exercise and the international policy debate in IOSCO and the ESRB.
The Bank has also informed me that the global package of regulatory reforms since the crisis, including the relevant non-bank elements, has been an appropriate response to the vulnerabilities in the system that the crisis exposed.
These reforms include the Financial Stability Board's global monitoring framework to identify non-bank financial intermediation risks; addressing liquidity mismatches and the build-up of leverage in investment funds; reforms in the EU in relation to money market funds; the movement towards central clearing of derivative transactions and facilitating the standardisation of securitisation.
Finally, my officials will continue to monitor and participate in discussions on regulatory reform in the financial sector at the various groups and committee at EU level and advise me accordingly on developments. With the large amount of European regulatory frameworks that have come into place within the last number of years that has a significant part of the Irish non-bank financial intermediation within its scope, there are no plans currently to introduce specific domestic legislation on this issue at this point.
40. Deputy Billy Kelleher asked the Minister for Finance his plans to reduce the perceived excessive sums awarded for whiplash compensation claims in view of the latest Personal Injuries Assessment Board data. [4566/19]
Amharc ar fhreagraOne of the key areas raised by various stakeholders to the Cost of Insurance Working Group is the level of awards in this country for soft tissue injuries compared with the UK in particular. In addition to the award levels as the Deputy will be aware there can also be significant costs over and above such awards including legal, medical and other costs. Data from the Department of Finance’s Motor Key Information Reports suggested such costs can be up to 40% of the award level provided in cases involving litigation.
As a result the Working Group established the Personal Injuries Commission (PIC) and commissioned it to carry out a benchmarking exercise of award levels in other countries amongst other things. It reported in September 2018 and concluded that soft tissue injuries are significantly higher than in the UK and recommended that action be taken to address this disparity through the establishment of the Judicial Council. It recommended that this body would become responsible for preparing the guidelines on personal injury award levels, and would replace the Book of Quantum. In doing this the PIC believes that the Judicial Council will, in compiling the guidelines, take account of the jurisprudence of the Court of Appeal and the results of its benchmarking exercise etc. However as legislation is required to establish this body, the PIC recommended that an interim judicial council be put in place initially to commence this process.
As responsibility for the Judicial Council legislation, and any interim solution rests with the Minister for Justice and Equality, Charlie Flanagan TD, Minister of State D’Arcy recently wrote to him to express his views on the matter. In this correspondence, he has requested that Minister Flanagan engage with the judiciary to seek their agreement to convene an interim Judicial Council with the purposes of preparing guidelines for appropriate general damages for various types of personal injury, as recommended by the PIC. It is hoped that if there was a significant move in this area, it could have an impact on insurance pricing and could also help attract new entrants into the market.
Finally, I would emphasise the importance the Government places on continuing to tackle the problem of the high cost of insurance and that it remains a priority for it. I will continue to engage with my colleagues in particular the Minister for Justice and Equality on the broader law reform aspects of this very important project.
41. Deputy Niamh Smyth asked the Minister for Finance the status of his plans to deal with the rising cost of business insurance; and if he will make a statement on the matter. [7276/19]
Amharc ar fhreagraAs the Deputy is aware, the second phase of the Cost of Insurance Working Group (CIWG) project culminated in the publication in January 2018 of the Report on the Cost of Employer and Public Liability Insurance. The Report makes 15 recommendations with 29 associated actions, detailed in an Action Plan with agreed timelines for implementation.
The most recent Progress Update was published last November and shows that 18 of the 19 actions points arising up to end of Q3 2018 have been completed.
It is envisaged that the next quarterly Progress Update will issue by the end of this month and the vast majority of the total of 26 action points which were due for completion during 2018 overall have been done. I am confident that any outstanding action points will be completed in the coming months, along with the three remaining action points with deadlines set for various quarters throughout 2019.
The actions implemented to date cut across a number of different areas and include:
- The publication of by An Garda Síochána of the “Guidelines for the Reporting of Suspected Fraudulent Insurance Claims by Insurance Entities to An Garda Síochána”
- The Law Reform Commission confirming that the subject of caps on damages for personal injuries litigation is included in its draft Fifth Programme of Law Reform
- Sections 8 & 14 of the Civil Liability and Courts Act 2004 have been amended to ensure defendants are appropriately notified of a claim having been submitted against their policy and to make it easier for businesses and insurers to challenge cases where fraud or exaggeration is suspected, respectively
- An Garda Síochána commencing the collection of statistics under the new “insurance fraud” category which has been added to the PULSE system
- The Courts Service confirming that it will publish a more detailed breakdown of awards in personal injury cases in its Annual Reports
Finally, I would like to assure the Deputy that the CIWG will continue to focus on implementing the recommendations of the Report on the Cost of Employer and Public Liability Insurance in parallel with implementing those from the Report on the Cost of Motor Insurance. I am hopeful that the cumulative effects of the completion of the two Reports’ recommendations will include increased stability in the pricing of insurance for businesses and a more competitive insurance market.
42. Deputy Michael Moynihan asked the Minister for Finance if his officials meet the Irish Fiscal Advisory Council on a regular basis. [49136/18]
Amharc ar fhreagraUnder the Fiscal Responsibility Act 2012 (the Act), the Irish Fiscal Advisory Council (IFAC) has been assigned the monitoring and assessment functions required of an independent national fiscal institution under the Treaty on Stability, Co-ordination and Governance in the Economic and Monetary Union. The Act establishes the Fiscal Advisory Council and assigns to it responsibility for examining and reporting on the appropriateness of the fiscal stance in Ireland.
One of its functions under the Act involves IFAC providing an independent assessment of the official macroeconomic forecasts of the Department of Finance. This is the so-called ‘endorsement function’ which requires that IFAC “endorse, as it considers appropriate, the macroeconomic forecasts prepared by the Department of Finance on which the Budget and Stability Programme will be based”.
As part of this process, my officials meet with both the IFAC Secretariat and the IFAC Council on a formal and structured basis in preparation of the forecasts that underpin the Stability Programme Update and the Budget each year. These engagements are outlined in the Memorandum of Understanding (MoU) between the Department of Finance and IFAC which is updated annually and published on my Department’s and IFAC’s websites.
Following the forecast endorsement process, Departmental officials and the IFAC secretariat meet to review the implementation of the process. In addition, officials from my Department and IFAC also engage in regular technical dialogue to ensure that the IFAC Secretariat and Council have a full understanding of the Department’s forecasting methodologies and process.
Furthermore, as one of the bodies under the aegis of the Department of Finance, my officials have occasional interaction with IFAC in accordance with its governing legislation and central regulation on routine administrative matters including staffing matters, finances and various ad hoc queries.
44. Deputy Timmy Dooley asked the Minister for Finance the measures that will be introduced in order to mitigate the regressive impact of an increased carbon tax; if he will publish a report on the measures required; and if he will make a statement on the matter. [3371/19]
Amharc ar fhreagraDecisions in relation to the carbon tax take place as part of the annual budgetary process and decisions on any measures which have the purpose of mitigating the impact of relatively high fuel prices also take place as part of the annual budgetary process.
The Energy and Environmental Taxes paper prepared annually for the Tax Strategy Group contains analysis on the carbon tax to help inform budget decisions. The Tax Strategy Group papers are available to read on the Department of Finance website.
The Deputy will also be aware that the Joint Oireachtas Committee on Climate Action is currently considering the report and recommendations of the Citizens Assembly regarding measures to tackle climate change, including in relation to the carbon tax. The final report of the Committee is expected to be published soon and this will be taken into consideration as part of the budgetary process surrounding any potential changes to the carbon tax rate.
45. Deputy Jan O'Sullivan asked the Minister for Finance the progress being made in matching the capacity of credit unions to lend to small businesses with the needs of those businesses to obtain credit in the context of the proposal on lending to SMEs from the Irish League of Credit Unions in 2016 and the report on public banking; and if he will make a statement on the matter. [50416/18]
Amharc ar fhreagraThis Government recognises the important role of credit unions as a volunteer co-operative movement. The Government is also committed to encouraging greater competition in the banking sector and supporting better access to banking and financial services across the country.
As the Deputy will be aware, in line with Programme for a Partnership Government commitments my Department and the Department of Rural and Community Development published a joint report on “Local Public Banking in Ireland” in July of last year. While the Report concluded that, for a number of reasons, there is not a compelling case for the State to establish a new local public banking system in Ireland, as proposed, the Government does recognise a number of positive aspects underlying the concept of community banking generally, including access to finance for SMEs and supporting local communities and economies.
Indeed, many of the objectives of community banking align with Government policy and supports that have already been put in place. Additionally the network infrastructure, ethos and many of the objectives envisaged by community banking are already represented by the Credit Union sector in Ireland and I believe that Credit Unions are well placed to develop to meet any local public banking needs not currently being provided.
One of the areas which Credit Unions need to develop, if they are to fulfil the full role envisaged by community banking, does indeed relate to SME financing. Credit Unions currently have ample capacity to engage in more SME lending. While Credit Union lending to SMEs grew from €77 million as of September 2017 to €93 million as of September 2018 – a 20% increase year on year – the current lending regulations allow capacity for SME lending of up to c.€900 million.
Separately, following on from the Local Public Banking Report my Department has arranged for an independent evaluation to be carried out in order to consider how the objectives of community banking and how the local provision of banking and financial services could be furthered in Ireland through other delivery mechanisms. One of these potential delivery mechanisms is the credit union sector. Following a competitive tender process, I can confirm that Indecon has been appointed as the consultants to carry out the independent evaluation. They will also establish and conduct a stakeholder forum on community banking and the local provision of banking and financial services.
Credit union stakeholders were consulted in advance in relation to the Local Public Banking Report. Credit unions have also been consulted by the Central Bank in relation to changes to credit union lending regulations, including changes related to SME lending, which will be completed during 2019 and the investment regulations which were amended in 2018.
I hosted a Credit Union event last week, which was attended by Credit Union stakeholders including the representative bodies, at which I outlined my support for, and belief in, the Credit Union sector's potential to meet any community banking needs. Achieving this potential will require credit unions to develop their capacity and to collaborate effectively though shared service structures to ensure they can deliver services in a timely and cost effective manner. In this regard I welcome the initiatives currently underway.
47. Deputy Michael McGrath asked the Minister for Finance his assessment of Ireland’s preparedness for all Brexit scenarios; and if he will make a statement on the matter. [7371/19]
Amharc ar fhreagraThe Government is fully aware of the complexity of the situation and Brexit, in whatever form it takes, will have a negative economic impact on Ireland. Regrettably the UK are leaving the EU and that means that some things are going to change. Planning for this change has been taking place on a whole-of-Government basis since before the UK referendum and the Government has been preparing for every eventuality and have been taking the necessary measures to implement actions to mitigate the risks, as far as is possible.
While ratification of the Withdrawal Agreement is still the Government's preferred outcome, it has also put in place a series of measures, both nationally and in conjunction with the EU, in preparation for the possibility that the UK fails to agree a deal for its departure from the EU on 29 March 2019. Given the proximity of the date of Brexit, contingency planning has now moved to taking actions to mitigate the risks of a no deal Brexit, without prejudice to the Government’s priority of finalising the ratification of the Withdrawal Agreement. The Government’s Contingency Action Plan, published on 19 December 2018, sets out comprehensive, whole of Government approach on no deal planning.
As Minister for Finance, my objective is to protect the economic and financial interests of the State and to support the work of the Revenue Commissioners so as to minimise the Brexit disruption to trade, to the greatest extent possible.
Indeed, the Department of Finance has been to the forefront in assessing the impact of Brexit on our economy - commissioning joint research with the ESRI on the issue, including before the referendum. What is clear from this research and other studies is that the harder the Brexit the more negative the impact on Ireland. The Department and the ESRI are currently preparing a more comprehensive update of their original work and the results will be published later this quarter. A no deal Brexit is the worst possible outcome and would not be in the interests of the UK, Ireland or the EU, and dealing with it would be an exercise in damage limitation.
My Department is working within the whole-of-Government approach and is coordinating closely with its agencies who are developing and implementing plans and measures to protect our economy. All are engaging closely in the overall whole-of-Government preparations, and are confident that they have put appropriate contingency measures in place to do everything possible to limit the inevitable disruption to consumers and trade, in the event of a no deal Brexit.
The Central Bank has statutory responsibility for financial stability and has been focused on Brexit since before the UK referendum. It is working closely with financial services firms to ensure that they have contingency plans in place for end March 2019, and that they are adequately prepared to cope with the possible effects of Brexit, with as little disruption for consumers as possible.
In relation to funding the State, the NTMA’s strategy continues to take account of the market dislocation risks posed by Brexit. The Exchequer’s funding position is strong.
Within Revenue, there is a very significant programme of work that has been ongoing in terms of ICT, staffing and engagement across the country with the business community to ensure that the Revenue Commissioners are prepared to facilitate the efficient movement of legitimate trade to the maximum extent possible in a no deal scenario.
At a general level, the Government has already taken significant actions to get Ireland Brexit ready. Since the UK referendum, all of our national Budgets have been framed to prepare for the challenge of Brexit with dedicated measures announced in Budgets 2017, 2018 and 2019. This is supported by long-term planning through the National Development Plan and the National Planning Framework which will provide significant investment in Ireland’s public capital infrastructure. The Government is also providing dedicated loan funds for affected businesses.
The Government is also developing the additional physical infrastructure needed at ports and airports, in order to ensure that East-West trade continues to move as smoothly as possible. At Dublin and Rosslare Ports, sites suitable for temporary infrastructure have been identified and refurbishment work has commenced. At the same time, plans are advanced for the development of permanent infrastructure in both Ports.
The Government published the General Scheme for the Miscellaneous Provisions (Withdrawal of the United Kingdom from the European Union on 29 March 2019) Bill, on 24 January. The draft Scheme focuses on those areas that need to be addressed urgently and immediately through primary legislation to protect our citizens and to support the economy, enterprise and jobs, particularly in key economic sectors. The Government intend to publish the full text of the Omnibus Bill on 22 February, and to work closely with all Members of the Oireachtas so that it will be enacted by 29 March.
For my own Department, I am proposing legislation in three areas. These seek to ensure continuity for business and citizens in relation to access to certain taxation reliefs and allowances in income tax, capital tax, corporation tax and stamp duty, the retention of a number of anti-avoidance provisions and allow for the introduction of postponed accounting for VAT in order to alleviate cash flow impacts for business, as well as amendments which will cover continuity for the settlement of trading in Irish equities and contract continuity for Irish insurance policyholders.
Finally, Ireland is also continuing to work on preparedness and contingency planning as part of the EU27 with the full support of the European Commission and other seriously affected Member States.
The European Commission published a contingency action plan on 13 November 2018 and a further contingency communication on 19 December 2018. These contained guidance on Commission planning for Brexit and outlined their approach in key areas. The European Commission has tabled a number of legal acts to be adopted in the context of its contingency planning for a no deal scenario. The Commission’s contingency action plan emphasises that it stands ready to engage with the Member States that will be most affected by a no deal withdrawal and expressly states that “the Commission will support Ireland in finding solutions addressing the specific challenges of Irish businesses”.
Whatever the outcome of the Brexit process, Ireland will remain in the EU with all the stability and certainty that membership brings.
