Questions Nos. 23 to 31, inclusive, answered orally.

Carbon Tax Collection

Ceisteanna (32)

Brian Stanley

Ceist:

32. Deputy Brian Stanley asked the Minister for Finance his plans to refund taxpayers paying the existing level of carbon tax on a progressive basis; and if he will make a statement on the matter. [25533/19]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

It is a longstanding practice of the Minister for Finance not to comment in advance of the Budget on any tax matters that might be the subject of Budget decisions. Having said that, the Deputy will be aware that the Climate Action Plan 2019, published on Monday last, provided a commitment to assess a Carbon Tax trajectory of at least €80 per tonne by 2030, having regard to considerations on the social and economic impacts. 

The carbon tax is currently set at €20 per tonne of CO2 emitted.  As such, carbon commodities with a heavier carbon content have a higher carbon tax charge.  The carbon tax (VAT inclusive) for commonly used commodities is as follows:

Petrol

5.64 cent per litre

Diesel

6.56 cent per litre

Coal

€2.40 per 40 kilo bag

Peat

52 cents per 12.5 Kilo bale

Kerosene

5.76 cent per litre

Carbon tax receipts in 2018 were €431 million. Carbon tax receipts are remitted to the Exchequer.  Hypothecation is not a feature of the Irish tax system in general as it reduces the flexibility of the Government to prioritise and allocate funds as necessary at a particular time, constraining expenditure decisions and potentially distorting the allocation of resources, which can result in reduced value for money and sub-optimal outcomes.

Nevertheless, the Joint Oireachtas Committee on Climate Action recommended that hypothecation of carbon tax revenues be considered and to this end my Department launched a public consultation on the options for use of revenues raised from increases in the carbon tax. The options include use of revenue to address fuel poverty as well as a so called “tax and dividend” scheme. The consultation is open until the 28 June 2019 and can be accessed on the Department's website. The feedback from the consultation will help to inform future carbon tax policy options. 

As the Deputy will be aware, there are existing schemes in place which help those who may be in fuel poverty. These include the National Fuel Allowance and the provision of home insulation grants and free upgrades from the Sustainable Energy Authority of Ireland. Consideration of all options relating to carbon tax policy, including possible ring-fencing of revenue for specific purposes is ongoing and will be reviewed by the Tax Strategy Group in July.

NAMA Operations

Ceisteanna (33)

Michael McGrath

Ceist:

33. Deputy Michael McGrath asked the Minister for Finance the way in which he plans to use the projected surplus from NAMA; when the agency will wind-up; and if he will make a statement on the matter. [25496/19]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

As part of its Annual Report for 2018, NAMA recently revised its projected surplus to be returned to the State to €4 billion. The realisation of this surplus depends on the success of NAMA’s ongoing deleveraging and completion of its Dublin Docklands SDZ and residential funding programmes.

Surplus funds may only be returned to the Central Fund once NAMA's debt has been redeemed in full, which is expected to be 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 at that time. 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.

As the expected date for NAMA’s redemption of its debt approaches, there is a possibility that a small number of loans may not be resolved by 2021 due to ongoing litigation that is largely outside NAMA’s control. In addition, there is a possibility that NAMA may also be left with a small residual loan portfolio where best value for the State may not be achieved through sale or disposal before the end of 2021. Such assets are currently expected to represent less than 1% of NAMA’s original portfolio.

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. These considerations will be examined in my forthcoming Section 227 Review into NAMA’s achievement of its objectives which is due to be finalised shortly. I intend to use the publication of this review to make a decision as to how to best wind down NAMA in the context of the need to ensure that the State extracts maximum value from any residual assets remaining after 2020/2021.

Insurance Costs

Ceisteanna (34, 35, 37)

Fiona O'Loughlin

Ceist:

34. Deputy Fiona O'Loughlin asked the Minister for Finance if he is working with owners of childcare facilities to find solutions to the ongoing insurance crisis; the actions he will take to address the matter; and the timeline for changes on same. [22603/19]

Amharc ar fhreagra

Jan O'Sullivan

Ceist:

35. Deputy Jan O'Sullivan asked the Minister for Finance the discussions his Department has had with representatives of the insurance industry to address the closure and threatened closure of indigenous companies due to the cost of insurance and in some cases the inability of companies to secure insurance cover; and if he will make a statement on the matter. [20509/19]

Amharc ar fhreagra

John Brady

Ceist:

37. Deputy John Brady asked the Minister for Finance the way in which he plans to tackle insurance costs for businesses which run various outdoor activities; and if he will make a statement on the matter. [25357/19]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

I propose to take Questions Nos. 34, 35 and 37 together.

I am very conscious of the difficulties being experienced as a result of the cost and availability of insurance to certain types of businesses. Whilst at both political and departmental level there has been considerable engagement with the different business stakeholders including for instance play centres, representatives, the  owners of childcare facilities have not been in touch directly with my Department nor the Cost of Insurance of Insurance Working Group for a meeting to discuss insurance problems that they may be encountering.  

Unfortunately, there is no single policy or legislative “silver bullet” to immediately stem or reverse these trends, either in the case of individual types of businesses such as childcare operators or businesses that run outdoor activities, or for businesses generally.  This is because there are many constraints faced by the Government in trying to address this issue in particular the fact that for constitutional reasons, it cannot direct the courts as to the award levels that should be applied and for legal reasons it cannot direct insurance companies as to the as to the price or the level of cover to be provided to consumers or businesses as these matters are of a commercial nature, and are determined by insurance companies based on the risks they are willing to accept.  

I consider it therefore important that the Cost of Insurance Working Group (CIWG) continues to implement the 33 recommendations from the 2017 Report on the Cost of Motor Insurance and the 15 recommendations from the 2018 Report on the Cost of Employer and Public Liability Insurance. This is necessary in order to ensure that the necessary reforms, in particular with regard to bringing the levels of damages awarded in this country more in line with those awarded in other jurisdictions, through the development of new Personal Injury Judicial Guidelines following the enactment of the Judicial Council Bill.  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.

Finally, I believe that the CIWG’s reforms are already having a significant impact with regard to private motor insurance (CSO figures from May 2019 show that the price of motor insurance is now 24.5% lower than the July 2016 peak).  The Government is determined to continue working to ensure that these positive pricing trends can be extended to other forms of insurance, including those relevant to businesses. 

Code of Conduct on Mortgage Arrears

Question No. 37 answered with Question No. 34.

Ceisteanna (36)

David Cullinane

Ceist:

36. Deputy David Cullinane asked the Minister for Finance if the code of conduct on mortgage arrears of the Central Bank will be placed on a legislative basis in order that it can be admitted in court proceedings; and if he will make a statement on the matter. [25523/19]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

As I have mentioned on many occasions, the Central Bank Code of Conduct on Mortgage Arrears (the CCMA) is a statutory code issued under Section 117 of the Central Bank Act 1989. It clearly states in the CCMA that its provisions are legally binding on regulated entities, and the Central Bank has the power to administer sanctions on regulated entities for a contravention of the CCMA under Part IIIC of the Central Bank Act 1942.

In the judgment of the Supreme Court in May 2015 in Irish Life and Permanent plc v Dunne, the Court held that a breach of the moratorium provision in the CCMA would be fatal to a lender’s legal entitlement to possession because allowing an application for possession where there was a breach of the moratorium provision of the CCMA would, in effect, be tantamount to a court acting in aid of the actions of a lender which were unlawful. However, with respect to the other provisions of the CCMA, the judge held that there was nothing in section 117 of the Central Bank Act 1989 or the CCMA itself suggesting that the courts are required to assess in detail the compliance or otherwise by a regulated entity.

In relation to matters that can be taken into account during court proceedings, the Department of Justice & Equality's Land and Conveyancing Law Reform (Amendment) Bill 2019 addresses this issue. The Bill’s key objective is to provide further protections for homeowners in mortgage arrears who are facing the risk of repossession proceedings in respect of their homes.  It extends the scope of the Land and Conveyancing Act 2013 to cases where an insolvency solution to a borrower’s mortgage arrears is not, for whatever reason, available.

The Bill is scheduled for Committee Stage this week.

The measures provided for in the Bill will prove to be an important addition to the suite of Government measures to protect those in mortgage arrears who are facing the prospect of court proceedings for repossessions of their homes.  It is also important to acknowledge that the Bill received widespread support last month, when Second Stage was taken.

Question No. 37 answered with Question No. 34.

Mortgage Book Sales

Ceisteanna (38)

Joan Burton

Ceist:

38. Deputy Joan Burton asked the Minister for Finance his views on State-owned banks selling non-performing loan books to vulture funds; and if he will make a statement on the matter. [25320/19]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

The Deputy will be aware that the reduction in the level of non-performing loans, or NPLs, across European banks is a major priority for the banking regulator, the SSM. The Irish banks have made huge progress in this regard since the height of the crisis. According to the Central Bank of Ireland, the average NPL ratio of the domestic Irish banks was 8.5 % in December 2018, falling from 13.8% a year earlier and from greater than 30% at peak in 2013. In volume terms, NPLs in the domestic Irish banks have now fallen by €67.3 billion, or 88%, from peak in 2013. A major contributor to this has been the almost 127,000 mortgage restructures that are currently in place. 

Despite this progress, the NPL ratios at the Irish banks remain at an elevated level and are above the European average of under 4% and further work is required by the banks to address this.

It is important to reiterate that the protections in place for all borrowers before a sale remain unchanged. For example, Start Mortgages and Pepper, the firms who were involved in the Glas and Glenbeigh loan sales transacted by PTSB in 2018, are both regulated by the Central Bank of Ireland. When dealing with borrowers, these firms are required to comply with the Consumer Protection Code and the Code of Conduct on Mortgage Arrears. Furthermore, assurances have been given that the terms of a restructure agreed before these sales took place will continue to be honoured.

In addition, in 2018 I asked the Central Bank to carry out a review of the CCMA to ensure it remains as effective as possible. The result of this review was published last October and it is encouraging to note that the key findings included confirmation that for borrowers who engaged with the process, the CCMA is working effectively as it is intended in the context of the sale of loans by regulated lenders.

Finally, I wish to highlight that I cannot stop loan sales, even by the banks in which the State has a shareholding. These decisions are the responsibility of the Board and management of the banks which must be run on an independent and commercial basis. The banks’ independence is protected by Relationship Frameworks, which are legally binding documents that I cannot change unilaterally.

Brexit Data

Ceisteanna (39)

Éamon Ó Cuív

Ceist:

39. Deputy Éamon Ó Cuív asked the Minister for Finance if his Department has carried out an assessment on the likely net contribution Ireland will have to pay to EU institutions each year after Brexit; if this will be a consideration in the framing of budget 2020; and if he will make a statement on the matter. [25233/19]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

Given that the UK represents one of the largest net contributors to the EU budget, Brexit is likely to have a significant impact on the contributions of all Member States, including Ireland’s. The exact impact will dependent on the nature of the final agreement between the EU and the UK regarding its involvement with the EU budget post-Brexit.

Under the Withdrawal Agreement between the EU and UK, the UK had agreed to continue to pay into the EU budget for the remaining years of the current MFF, as if it was still a member. This would result in no additional impact on Ireland’s contributions or receipts up to the end of the current Multiannual Financial Framework (MFF) in December 2020.

However, if that Withdrawal Agreement is not concluded and there is a no-deal Brexit, the impacts on the EU budget will need to be clarified. Under this scenario the UK would need to clarify its intentions regarding whether it still intended to continue making payments towards the current MFF.

The European Commission has proposed a number of legislative proposals to prepare for the UK's withdrawal. The EU-level measures are summarised in the European Commission’s fourth Brexit Preparedness Communication of 10 April 2019 and includes a measure for the 2019 EU budget, which establishes a legal basis for the UK to continue to both make payments into the EU budget and to access receipts from it for the year 2019. This framework seeks to minimise any unnecessary disruption for beneficiaries of EU spending programmes at the time of withdrawal.

If the UK decided not to continue with EU budget payments, then both the Commission and Member States would need to consider the most appropriate way forward. However, the gap would need to be mitigated by either increased contributions from other Member States, reductions in EU funding programmes, or a combination of both.

My Department monitors and analyses the potential impact of Brexit on our EU budget contributions on an ongoing basis. This analysis is based on the best information and data available at the time in question. As a result, for Budget 2020, my Department will be updating its forecasts in the run up to Budget day.

It should be noted, that the Commission’s proposal for the next MFF 2021-2027 (published, May 2018) is based on the UK no longer contributing to the EU budget, and as such, incorporates the impact of Brexit.

 As you can appreciate, I don't want to engage in speculation, given the sensitivity around Brexit.

Insurance Industry

Ceisteanna (40)

Richard Boyd Barrett

Ceist:

40. Deputy Richard Boyd Barrett asked the Minister for Finance if he will consider a State regulated insurance company in view of the recent report of profits in the insurance industry increasing by 1,300%; and if he will make a statement on the matter. [25588/19]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

At the outset, I would like to put on record that I share the same concern as the Deputy in relation to the recent reporting of the large profits of insurers for 2017 at a time when many small businesses are struggling to get cover in the first place, or to get it at a reasonable price.  I consider the current position unacceptable and I have made this very clear to Insurance Ireland when I met them recently.  I believe they need to show a greater willingness to broaden their risk horizons and to begin to price their products in a way which recognises the general progress being made to address the cost of insurance problem.

It is important to acknowledge however that this is a difficult issue to resolve for any Government because of the constraints it faces in particular the fact that for constitutional reasons, it cannot direct the courts as to the award levels that should be applied and for legal reasons it cannot direct insurance companies as to the pricing level which they should apply in respect of businesses seeking insurance.

That said however through the work of the Cost of Insurance Working Group, significant progress has been made in beginning to transform the landscape within which insurers operate. This is reflected in the fact that with regard to private motor insurance (CSO figures from May 2019 show that the price of motor insurance is now 24.5% lower than the July 2016 peak) and I am determined to continue working to ensure that these positive pricing trends can be extended to other forms of insurance, including those relevant in this case.

In relation to your specific query about considering the establishment of a State regulated insurance company, it is important to be aware that any such company would be required to comply with the same prudential rules as private companies, thereby meaning that the cost of that insurance would still have to reflect the risk involved. My concern therefore with such a proposal is that it would simply compound the existing ‘cherry picking’ of risk within the market by insurers. This in turn could ultimately decrease competition in the  market over the longer term, as some insurers may stop insuring particular risks completely if there is a view that a State company is willing to insure these risks instead, particularly those lines of business that are considered to be unprofitable. 

In addition, there is no reason to believe that the State would be any better at managing this risk than private insurance companies, and as a result there potentially could be a large financial exposure to the State if significant losses were incurred.

In view of these issues, I am not convinced that State intervention of the type proposed would be a solution to the current problem regarding the cost or availability of insurance.  Instead, I think that we need to continue to implement the recommendations of both reports of the Cost of Insurance Working Group (CIWG).