Departmental Properties

Ceisteanna (56)

Pat Deering

Ceist:

56. Deputy Pat Deering asked the Taoiseach and Minister for Defence the number of houses owned by his Department in counties Cork, Limerick and Dublin. [39096/19]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Defence)

My Department is compiling the data requested by the Deputy and I will arrange to have same forwarded as soon as available

Defence Forces Reports

Ceisteanna (57)

Martin Heydon

Ceist:

57. Deputy Martin Heydon asked the Taoiseach and Minister for Defence the status of the feasibility study on the proposed peace and leadership institute for the Curragh; when it will be published; and if he will make a statement on the matter. [39179/19]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Defence)

The White Paper on Defence includes a commitment to evaluate the potential development of a new Institute for Peace Support and Leadership Training at the Defence Forces Training Centre in the Curragh and in this regard a formal feasibility study was undertaken. An interim report was presented to the project steering group in November 2018, and a final report is expected to be finalised in Q4 2019, which will inform the next steps to be taken.

Departmental Bodies Reports

Ceisteanna (58)

Seán Crowe

Ceist:

58. Deputy Seán Crowe asked the Tánaiste and Minister for Foreign Affairs and Trade if the minutes of the first working meeting of the business and human rights implementation group that took place on 3 April 2019 will be published on the website of his Department in view of the fact that the minutes of the inaugural meeting of the group in January 2019 are available on the website. [39130/19]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Foreign)

The minutes of the 3 April 2019 meeting of the Business and Human Rights Implementation Group will be published on my Department's website when they have been approved by the Implementation Group at its next meeting, which is scheduled for 9 October 2019.

Northern Ireland

Ceisteanna (59)

Brendan Smith

Ceist:

59. Deputy Brendan Smith asked the Tánaiste and Minister for Foreign Affairs and Trade the plans to resume talks with the Secretary of State for Northern Ireland and the political parties in Northern Ireland regarding the need to have the Northern Ireland Assembly and Executive restored; and if he will make a statement on the matter. [39220/19]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Foreign)

The continuing absence of the power-sharing Executive and Assembly in Northern Ireland and the North South Ministerial Council is of grave concern for the Government, as it is for the British Government.

I have engaged extensively with the Secretary of State for Northern Ireland throughout the latest talks process, to encourage the parties to reach an accommodation. I continued this engagement over the summer months and I remain in regular and ongoing contact with Secretary of State Smith, meeting most recently last week, to work to secure agreement between the parties to get all of the institutions of the Agreement up and running again.

All five political parties have engaged constructively in the talks process with that objective over the last number of months. Progress has been made across a range of important issues. However, some key outstanding issues remain and finding final agreement on these issues will require genuine and courageous dialogue and leadership by the party leaders in Northern Ireland.

The awful murder of Lyra McKee and the outpouring of public feeling that followed demands a serious response at political level. People want the devolved power-sharing institutions up and running again to represent their interests and deal with the issues and challenges that Northern Ireland faces at present, not least the difficulties raised by the UK exit from the European Union. The functioning of the North South Ministerial Council is also urgently required, to bring together the Executive and the Government to oversee and develop co-operation on the island, and as a vital part of the Good Friday Agreement.

In this context, the political parties, in particular the two largest parties, must live up to their responsibilities and be open to fair and workable compromises on the small number of outstanding issues, to secure the overall interests of people in Northern Ireland and to protect and operate the institutions of the Good Friday Agreement again.

This will be difficult, but the two Governments believe that this can, and must, be achieved. Accordingly, the Government will continue to do everything possible to support continuing engagement and progress in discussions between the political parties, working with the UK Government in any scenario, as co-guarantors of the Good Friday Agreement.

Mortgage Book Sales

Ceisteanna (60)

Richard Boyd Barrett

Ceist:

60. Deputy Richard Boyd Barrett asked the Minister for Finance the reason he continues to allow banks that are majority owned by the State to sell and transfer mortgages to so-called vulture funds which in turn causes huge anxiety and worry to the mortgage holders; his plans to stop this practice; and if he will make a statement on the matter. [39110/19]

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 7.0% at end-June 2019 having stood at more than 30% at peak in 2013. In volume terms, NPLs in the domestic Irish banks have now fallen by €70.2 billion (82%), from peak in 2013. A major contributor to this has been the almost 109,000 mortgage restructures that are currently in place.

Despite this progress, more work is required before the NPL ratios at the Irish banks reach the European average of under 4%.

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 involved in the loan sales transacted by PTSB since 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.

Budget Submissions

Ceisteanna (61)

Willie Penrose

Ceist:

61. Deputy Willie Penrose asked the Minister for Finance if he received a submission from as association (details supplied) in relation to the necessity of putting in place a pilot training programme in 2020 as the commencement of a modern and sustainable continuous professional programme for all private agricultural consultants and advisers here; if the matter will be given consideration; and if he will make a statement on the matter. [39113/19]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

My department has so far received in excess of 250 Pre-Budget Submissions from a wide range of groups and individuals. These are being considered by the relevant officials in the context of Budget and Finance Bill preparation.

I can confirm that a submission from the Association referred to has been received. However, as the Deputy will be aware, it is not the practice of the Minister for Finance to discuss the details of measures which may be under consideration as part of the Budget and Finance Bill.

Carbon Tax Implementation

Ceisteanna (62)

Willie Penrose

Ceist:

62. Deputy Willie Penrose asked the Minister for Finance if he will review a proposal (details supplied) from a haulage operator that deals with the issue of carbon taxes and the necessity to ensure that climate change issues are tackled in a planned way; and if he will make a statement on the matter. [39152/19]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

As the Deputy will be aware, 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.

Ministerial Meetings

Ceisteanna (63)

Michael McGrath

Ceist:

63. Deputy Michael McGrath asked the Minister for Finance the date, location and purpose of all meetings he and the Minister of State with responsibility for financial services have attended in the lifetime of the Government with insurance companies, insurance brokers or representative bodies in the insurance industry; and if he will make a statement on the matter. [39159/19]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

I wish to advise the Deputy that due to the level of detail being requested in the question, it is not possible to provide acurately the information sought in the time available for reply. I have therefore instructed my officials to contact the Deputy's office with a view to providing the information requested, where possible, through alternative means.

Economic Growth

Ceisteanna (64)

Bernard Durkan

Ceist:

64. Deputy Bernard J. Durkan asked the Minister for Finance the degree to which the economic fundamentals remain positive at present, notwithstanding the approach of Brexit; and if he will make a statement on the matter. [39162/19]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

On the back of another strong year for the economy in 2018, growth in the first half of this year has moderated but remains positive with GDP growth of 6 ½ percent in year-on-year terms. Indeed as a barometer of how well our economy is performing, there is no story more positive than the one emanating from our labour market. The strong growth in employment over the last number of years has continued into this year, with total employment increasing by 63,100 (+2.8 per cent) in the first half of 2019. As a result, there are now 2.3 million people at work in Ireland.

Since the publication of my Department’s last set of macroeconomic projections published as part of the Stability Programme Update (SPU) 2019, the possibility that the UK will leave the EU without a deal has increased substantially. To reflect this, for budgetary purposes, the Government has decided to base Budget 2020 on the assumption of a 'no-deal' Brexit. As part of Budget 2020 my Department will publish updated macroeconomic forecasts which will be based on the assumption that the UK leaves the EU without a deal.

My Department and the Economic and Social Research Institute (ESRI) recently published an updated model-based assessment of the economic impacts of a no-deal Brexit on the Irish economy. The research found that in aggregate terms compared to a scenario in which the UK did not leave the EU the level of GDP would be 3 per cent lower after 5 years. Despite the negative impact of no-deal Brexit, the Irish economy is still expected to grow but at a slower pace as a consequence of Brexit.

As we chart our way forward through the uncertain times ahead, careful management of the public finances is needed. Indeed the best way to mitigate the risks facing that we face is to improve the resilience of the economy through competitiveness orientated policies and prudent management of the public finances.

Economic Growth

Ceisteanna (65)

Bernard Durkan

Ceist:

65. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which economic growth here compares with other countries throughout the European Union with particular reference to the eurozone; and if he will make a statement on the matter. [39163/19]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

As published in the Stability Programme Update 2019, my Department has forecast GDP growth of 3.9 per cent this year and 3.3 per cent in 2020. This growth is expected to be broad based, with both domestic demand and net exports making positive contributions. Indeed, modified domestic demand is forecast to grow by 4.0 per cent this year and by 3.3 per cent next year.

Indeed as a barometer of how well our economy is performing, there is no story more positive than the one emanating from our labour market. The strong growth in employment over the last number of years has continued into this year, with total employment increasing by 45,000 (+2.0 per cent) in the year to Q2 2019. As a result, there are now 2.3 million people at work in Ireland.

As part of Budget 2020 my Department will publish updated forecasts next month.

In an EU context, Ireland remains one of the fastest growing Member States. The strong growth and performance seen in our economy is also clearly illustrated by a comparison with the performance of our main trading partners – the Euro Area, the UK and the US.

For the Euro Area the European Commission is forecasting growth of 1.2 per cent this year, and 1.4 per cent next year. The GDP forecast for the EU28 is for growth of 1.4 per cent in 2019 and 1.6 per cent in 2020. This represents a significant slowdown from the growth rates seen in 2015-2017.

The performance of individual Member States is diverging with some areas (e.g. Central and Eastern Europe, Malta, and Ireland) expanding faster than others (e.g. Italy, Germany).

For the UK, modest GDP growth of 1.3 per cent is expected this year and 1.4 per cent next year, based on a technical assumption of status quo in terms of trading relations between the EU27 and the UK.

The US economy continues to benefit from several tailwinds, supporting GDP growth of 2.6 per cent is expected this year, although this is expected to moderate to 1.9 per cent in 2020 as fiscal stimulus unwinds.

In common with Ireland, there has been a recovery in employment growth in all our main export markets – though at a more modest pace – with a corresponding reduction in unemployment.

Brexit Supports

Ceisteanna (66)

Bernard Durkan

Ceist:

66. Deputy Bernard J. Durkan asked the Minister for Finance if he has identified particularly vulnerable sectors for specific assistance in the wake of Brexit; and if he will make a statement on the matter. [39165/19]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

The Department of Finance has been to the forefront in assessing the impact of Brexit on our economy, commissioning and publishing a number of studies, both before and following the referendum. In addition, regular updates of my Department’s Macro-Economic forecasts take account of the impact of Brexit.

The UK is one of Ireland’s most important trading partners. In 2017 the Department of Finance published a paper on trade exposures[1] which shows that relative to other EU Member States, Irish exports are substantially more exposed to the UK in a number of goods sectors.

The top five most exposed included the Irish agri-food sub-sectors Cereals, Vegetables and Fruit, and Live Animal products. In services, Ireland is in the upper range of the most exposed EU Member States, particularly in Financial Services.

The paper also finds that the share of exports going to the UK has increased in a number of sectors over the past 15 years, including the agri-food sector, contrary to the trend decline in the importance of the UK as export destination for overall Irish exports.

The most recent Contingency Action Plan was published in July set out in detail the Government’s analysis of the risks and impacts of a no deal outcome across 26 key areas. It underlines that Brexit will have profound and highly disruptive implications for Ireland, and sets out in detail the short-term risks associated with that.

Maintaining the closest possible trading relationship between the EU and the UK is therefore one of the Government’s key Brexit priorities. The Government will continue to work to improve the business environment – to make it more competitive, to assist exporters to diversify markets, and to provide better infrastructure.

Longer-term, we need to mitigate against the potential of regulatory divergence between the UK and EU standards given its potential implications for trade, investment and the competitiveness of our businesses. We will therefore be working to minimise this impact and to ensure a level playing field.

Since the referendum result in 2016, we have been taking steps to build up the resilience of the economy so that we have the capacity to deal with adverse economic shocks. This includes building up our fiscal buffers – by balancing our books and reducing our debt burden - and establishing the Rainy Day Fund.

The Government is continuing to work to prepare our economy for the challenges of Brexit, including through the Ireland Connected Trade and Investment Strategy, the Future Jobs Ireland Strategy and the 10-year National Development Plan. In addition, recent budgets have introduced specific initiatives, such as loan supports for agri-businesses, aimed at supporting those businesses most affected by Brexit. The Brexit Loan Scheme assists firms to adapt and innovate in response to Brexit, to restructure their cost bases and give them the opportunity to diversify into other markets thereby reducing their exposure to the UK. The Future Growth Loan Scheme provides a longer-term scheme facility of up to €300m to support strategic capital investment for a post-Brexit environment by business at competitive rates.

The Government has also stepped up engagement with stakeholders across all sectors through targeted events and media campaigns aimed at getting both business and citizens Brexit ready. Our planning at home and at the EU level for all possible outcomes has increased and will continue to intensify.

[1] Department of Finance (2017) Trade Exposures of Sectors of the Irish Economy in a European Context.

Brexit Preparations

Ceisteanna (67)

Bernard Durkan

Ceist:

67. Deputy Bernard J. Durkan asked the Minister for Finance the steps he has taken or is likely to take to address issues of an economic nature which may need attention with the onset of Brexit; and if he will make a statement on the matter. [39166/19]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

Since the referendum result in 2016, we have been taking steps to build up the resilience of the economy so that we have the capacity to deal with adverse economic shocks. This includes building up our fiscal buffers – by balancing our books, reducing our debt burden, and establishing the Rainy Day Fund.

The Government is continuing to work to prepare our economy for the challenges of Brexit, including through the Ireland Connected Trade and Investment Strategy, the Future Jobs Ireland Strategy and the 10-year National Development Plan.

In addition, recent budgets have introduced specific initiatives, such as loan supports for agri-businesses, aimed at supporting those businesses most affected by Brexit. The Brexit Loan Scheme assists firms to adapt and innovate in response to Brexit, to restructure their cost bases and give them the opportunity to diversify into other markets thereby reducing their exposure to the UK. The Future Growth Loan Scheme provides a longer-term scheme facility of up to €300m to support strategic capital investment for a post-Brexit environment by business at competitive rates.

Further, the Government has decided that Budget 2020 will be prepared on the assumption of a no deal Brexit in October. The approach being adopted for Budget 2020 involves a twin-track approach, namely:

- Funding services and making progress on particular policy areas; and

- Supporting sectors and regions most exposed to Brexit related disruption.

In a ‘no deal’ scenario, the Government will make the resources available to support those in need, and to introduce timely, targeted and temporary supports to the sectors of the economy most exposed to the impact of a no-deal Brexit.

While the precise impact will be difficult to estimate, this could lead to a deficit of the order of 0.5 to 1.5 per cent of GDP for 2020.

And while there is no doubt that this would be a significant fiscal setback, it is also important to place it in the context of our recent strong performance in restoring the public finances – for example moving from a 2% deficit in 2015 to balance last year while meeting the demands of a society recovering from nearly a decade of crisis.

As well as preparing for Budget 2020, priority areas will include additional infrastructure for ports and airports, and further Government Brexit communications including an intensified engagement programme by Revenue.

The Government has also stepped up engagement with stakeholders across all sectors through targeted events and media campaigns aimed at getting both business and citizens Brexit ready. Our planning at home and at the EU level for all possible outcomes has increased and will continue to intensify.

Brexit Preparations

Ceisteanna (68)

Bernard Durkan

Ceist:

68. Deputy Bernard J. Durkan asked the Minister for Finance if he remains satisfied that the economy here is sufficiently soundly based to withstand the impact of Brexit; the emergency proposals in this regard; and if he will make a statement on the matter. [39167/19]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

Since the referendum result in 2016, we have been taking steps to build up the resilience of the economy so that we have the capacity to deal with adverse economic shocks. This includes building up our fiscal buffers – by balancing our books, reducing our debt burden, and establishing the Rainy Day Fund.

Overall our economy is in good shape and is expected to grow this year and next. Modified domestic demand, an underlying measure of growth in the economy, grew by 4.5 per cent for 2018 as a whole. One of the best barometers of the health in the economy is the labour market. The strong growth in employment over the last number of years has continued into this year, with total employment increasing by 45,000 (+2.0 per cent) in the year to Q2 2019. As a result, there are now 2.3 million people at work in Ireland.

The Government is continuing to work to prepare our economy for the challenges of Brexit, including through the Ireland Connected Trade and Investment Strategy, the Future Jobs Ireland Strategy and the 10-year National Development Plan.

In addition, recent budgets have introduced specific initiatives, such as loan supports for agri-businesses, aimed at supporting those businesses most affected by Brexit. The Brexit Loan Scheme assists firms to adapt and innovate in response to Brexit, to restructure their cost bases and give them the opportunity to diversify into other markets thereby reducing their exposure to the UK. The Future Growth Loan Scheme provides a longer-term scheme facility of up to €300m to support strategic capital investment for a post-Brexit environment by business at competitive rates.

Further, the Government has decided that Budget 2020 will be prepared on the assumption of a no deal Brexit in October. The approach being adopted for Budget 2020 involves a twin-track approach, namely:

- Funding services and making progress on particular policy areas; and

- Supporting sectors and regions most exposed to Brexit related disruption.

In a ‘no deal’ scenario, the Government will make the resources available to support those in need, and to introduce timely, targeted and temporary supports to the sectors of the economy most exposed to the impact of a no-deal Brexit.

While the precise impact will be difficult to estimate, this could lead to a deficit of the order of 0.5 to 1.5 per cent of GDP for 2020.

And while there is no doubt that this would be a significant fiscal setback, it is also important to place it in the context of our recent strong performance in restoring the public finances – for example moving from a 2% deficit in 2015 to balance last year while meeting the demands of a society recovering from nearly a decade of the crisis.

As well as preparing for Budget 2020, priority areas will include additional infrastructure for ports and airports, and further Government Brexit communications including an intensified engagement programme by Revenue.

The Government has also stepped up engagement with stakeholders across all sectors through targeted events and media campaigns aimed at getting both business and citizens Brexit ready. Our planning at home and at the EU level for all possible outcomes has increased and will continue to intensify.

Insurance Costs

Ceisteanna (69)

Bernard Durkan

Ceist:

69. Deputy Bernard J. Durkan asked the Minister for Finance if reference can be made to comparisons with other jurisdictions in Europe in respect of insurance costs here with a view to ensuring the competitiveness of the economy; and if he will make a statement on the matter. [39168/19]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

The Irish insurance sector is diverse, comprising life, non-life and reinsurance firms providing a range of products and operating across a number of geographical markets. As Minister for Finance, I am responsible for the development of the legal framework governing financial regulation of the sector. This framework is mainly governed by the EU Solvency II Directive, which provides for three ways in which an insurance undertaking can operate within the Irish market.

These are to:

- establish a head office in Ireland (authorised by Central Bank of Ireland);

- establish a branch in Ireland through Freedom of Establishment (FOE); or

- operate on a Freedom of Services basis (FOS), i.e. conduct business in Ireland from another country.

It should be noted that there are companies operating in each of these channels in the Irish insurance market. The Solvency II framework is designed to allow for a level playing field across the European Union for insurers, not only in terms of access to markets within the EU, but also with regard to the level of supervision and regulation. Therefore, it plays an essential role in facilitating competition in the insurance sector across the EU. It also 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.

With regard to comparing insurance costs across jurisdictions in Europe, Insurance Europe, the European (re)insurance federation, produces reports on an on-going basis regarding the insurance industry across Europe. For example, the European Insurance in Figures (2017 data) and the European Motor Insurance Markets, both published in early 2019, contain some useful comparative information in respect of insurance up to 2017. The European Insurance — Key Facts published in October 2018, graphs the average premium level across European countries for a variety of insurance products for the year 2017. The varying levels of premiums across Europe is accounted for by a wide range of regulatory, risk and economic factors which differ across European jurisdictions (as noted on p. 16 of the European Motor Insurance Markets).

For example, other factors that may influence an insurance company’s decision to operate or not in a particular country, could include the number of personal injury claims made, the level of awards granted, and the legal costs and time associated with settling/defending claims in that country. In this regard, there has been some sectors of our economy such as the leisure, adventure and hospitality sectors where insurance cover has either become unavailable or prohibitively expensive. Indeed, I understand that in recent meetings between Minister of State for Financial Services and Insurance, Michael D’Arcy TD, and a number of UK insurers/underwriters in London who have recently left the Irish insurance market, the reasons above were mentioned as to why they had made this decision. Therefore, for these parts of the market, there is undoubtedly an issue around its attractiveness and this consequently has impacted on competitiveness.

Consequently, in order to create a more competitive environment, the Government is focussing on implementing the recommendations of the Cost of Insurance Working Group (CIWG) including those of the second Personal Injuries Commission (PIC) Report which concluded that soft tissue injuries are significantly higher here than in England and Wales (4.4 times) and recommended that action be taken to address this disparity through the establishment of the Judicial Council. The recently enacted Judicial Council Act 2019 provides for the establishment of this Council, which will allow for the recalibration, by the Judiciary, of award levels for personal injuries. It is now a matter for the Judiciary to establish the Judicial Council and the subsequent Personal Injuries Guidelines Committee. While the Government cannot interfere in their deliberations due to the constitutional separation of powers, it is my hope that the Judiciary will recognise the importance of this issue and will prioritise it accordingly by completing a first set of guidelines, which take account of the PIC’s benchmarking report, as soon as possible. At the same time, the Law Reform Commission (LRC) has begun a detailed analysis of the possibility of developing constitutionally sound legislation to delimit or cap the amounts of damages, which a court may award in respect of some or all categories of personal injuries, as part of its Fifth Programme of Law Reform.

I believe that the creation and implementation of the Personal Injuries guidelines by the Judiciary will result in the lowering of award levels. As importantly, I believe it should lead to a greater consistency in award levels for injuries of the same type. This therefore should mean that there will be less of an incentive for a person to litigate, as they should not be getting any more from a court award than a PIAB award, which in turn should have a significant impact on legal costs. In summary, I believe that over time the clearest signal that these changes are working is when there is an increase in the number of PIAB cases being accepted by claimants particularly for minor and moderate injuries. In addition, I believe that the cumulative effects of the completion of the CIWG recommendations will include greater stability in the pricing of insurance for consumers and businesses and a more competitive insurance market overall.

Economic Policy

Ceisteanna (70)

Bernard Durkan

Ceist:

70. Deputy Bernard J. Durkan asked the Minister for Finance the degree to which he can forecast economic prospects over the next five years in view of the variety of potential challenges globally; and if he will make a statement on the matter. [39169/19]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

The period of robust economic growth has continued this year. GDP growth of 6 ½ per cent in the first half of the year and the relatively low rate of unemployment which stands at just over 5 per cent support this assessment. However it is also clear that there are dark clouds on the horizon, with the external environment continuing to deteriorate, and the risk of an adverse shock to the economy - for instance through a disorderly Brexit – rising all the time.

The macroeconomic projections published at Stability Programme Update (SPU) 2019 were based on the assumption the UK will leave the EU with a deal and that a transition ‘status quo’ period would be agreed that extends or replicates existing frameworks until end-2020. However, since the publication of SPU the possibility that the UK will leave the EU without a deal has increased substantially. To reflect this, for budgetary purposes, the Government has decided to base Budget 2020 on the assumption of a 'no-deal' Brexit.

In order to quantify the effects of a disorderly Brexit, my Department and the Economic and Social Research Institute (ESRI) recently published an updated model-based assessment of the economic impacts. The report found that in aggregate terms compared to a scenario in which the UK did not leave the EU the level of GDP would be 3 per cent lower after 5 years. The impact is expected to be greatest in the first year which is primarily explained by higher trade costs with the UK reducing the level of overall trade and short run disruption due to uncertainty.

Despite these impacts, the Irish economy is still expected to grow but at a slower pace as a consequence of Brexit. As part of Budget 2020 my Department will publish updated macroeconomic forecasts which will be based on the assumption that the UK leaves the EU without a deal.

Of course Brexit isn’t the only risk faced by the economy. As a small open economy Ireland is particularly exposed to a slowdown in growth in key export markets, with a loss of momentum particularly evident in both the euro area and the UK in recent quarters.

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.

VAT Rate Application

Ceisteanna (71)

Jonathan O'Brien

Ceist:

71. Deputy Jonathan O'Brien asked the Minister for Finance the estimated cost of reducing to 0% the VAT applied to sport and leisure activities; and if he will make a statement on the matter. [39246/19]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

I am advised by Revenue that the VAT rating of goods and services is subject to EU VAT law, with which Irish VAT law must comply. EU VAT law allows Member States to retain certain zero rates for goods and services which were expressly covered in their national VAT legislation on 1 January 1991.

As there was no such legislative provision for sport and leisure activities in place on 1 January 1991 there is no discretion under the Directive for Ireland to introduce a zero rate of VAT to the supply of sport and leisure activities.

Insurance Costs

Ceisteanna (72)

Jonathan O'Brien

Ceist:

72. Deputy Jonathan O'Brien asked the Minister for Finance the progress made and steps to be taken to reduce the cost of insurance for sports and leisure bodies; and if he will make a statement on the matter. [39247/19]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

I am aware of the issues facing many sports and leisure bodies when it comes to the affordability and availability of insurance. Unfortunately, neither I, nor the Central Bank of Ireland, can compel any insurer to provide cover or to provide it at a particular price. This position is reinforced by the EU framework for insurance which expressly prohibits Member States from adopting rules which require insurance companies to obtain prior approval of the pricing or terms and conditions of insurance products. Consequently, the Government cannot direct insurance companies to cover certain types of risk, such as that related to sports and leisure bodies. A further constraint is the fact that for constitutional reasons, Government cannot direct the courts as to the award levels that should be applied. In summary, therefore there is unfortunately no quick fix solution to this matter.

That is not to say, that this issue remains a priority for the Government. The Cost of Insurance Working Group (CIWG), which was established in July 2016, and which produced two reports, is continuing to work to implement the recommendations of the Cost of Motor Insurance Report and the Cost of Employer and Public Liability Insurance Report. Its most recent Progress Update, the Ninth, was published in July 2019 and shows that the vast majority of recommendations and actions due by Q2 2019 have been completed. To that end, the key achievements to date from the two reports, including the following:

- The establishment of the Personal Injuries Commission and the publication of its two reports, which included a benchmarking of award levels between Ireland and other jurisdictions for the first time. This showed that award levels for soft tissue injuries in Ireland were 4.4 times higher than in England and Wales;

- The enactment of the Judicial Council Act 2019, in July which provides for the establishment of a Personal Injuries Guidelines Committee. It is now a matter for the Judiciary to put in place the Judicial Council and to operationalise the Personal Injuries Guidelines Committee, which will introduce new guidelines to replace the Book of Quantum. While the Government cannot interfere in their deliberations, I would hope that the Judiciary will recognise the importance of this issue and prioritise it accordingly;

- The commencement and prioritisation by the Law Reform Commission (LRC) of its work to undertake a detailed analysis of the possibility of developing constitutionally sound legislation to delimit or cap the amounts of damages which a court may award in respect of some or all categories of personal injuries, as part of its Fifth Programme of Law Reform;

- The establishment of the National Claims Information Database in the Central Bank to increase transparency around the future cost of private motor insurance. The Bank is due to make its first report by the end of 2019, and will also make recommendations to me regarding potentially expanding its scope to include employer and public liability insurance;

- Reforms to the Personal Injuries Assessment Board through the Personal Injuries Assessment Board (Amendment) Act 2019 to strengthen the powers of PIAB around compliance with its procedures;

- Commencement of the amendments to Sections 8 and 14 of the Civil Liability and Courts Act 2004 to align the timeframes by which claims should be notified to businesses with GDPR time limits on the keeping of CCTV footage to make it easier for businesses and insurers to challenge cases where fraud or exaggeration is suspected;

- Various reforms of how fraud is reported to and dealt with by An Garda Síochána, including increased co-ordination with the insurance industry, as well as the recent decision by the Garda Commissioner to develop a divisional focus on insurance fraud which will be guided by the Garda National Economic Crime Bureau (GNECB) which will also train Gardaí all over the country on investigating insurance fraud, and the recent success under Operation Coatee, which targets insurance-related criminality.

I believe that these reforms are having a significant impact with regard to private motor insurance (CSO figures from August 2019 show that the price of motor insurance is now 24% 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, particularly those relevant to sports and leisure bodies.

I believe it is important to emphasise that the single most essential challenge which must be overcome if there is to be a sustainable reduction in insurance costs is to bring the levels of personal injury damages awarded in this country more in line with those awarded in other jurisdictions, and the establishment of the Judicial Council in the coming months is very important in this regard.

In conclusion, I would like to assure the Deputies that important reforms are taking place and that I am confident that if the level of awards are reduced as a results of the operationalisation of the Personal Injuries Guidelines Committee, then the issues that are being experienced by sports and leisure bodies should recede.

Carbon Tax Yield

Ceisteanna (73)

Catherine Murphy

Ceist:

73. Deputy Catherine Murphy asked the Minister for Finance the amount collected to date in carbon tax; the methods of dispersing the revenue generated from the tax; the purposes for which the revenue collected from the tax has been used for the past five years; and if he will make a statement on the matter. [39251/19]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

The total annual net receipts from carbon tax are set out in the following table.

Year

Total Net Receipts

2010

223,084,537

2011

298,231,058

2012

353,954,210

2013

388,376,990

2014

385,361,885

2015

418,996,237

2016

430,247,558

2017

419,603,362

2018

431,131,923

Total

3,348,987,760

Carbon tax receipts to end August 2019 were approximately €281,800,000, some €20 million (6.8%) behind forecast.

To date the revenue from carbon tax has been remitted to the central fund and therefore used to fund public services.

Corporation Tax Regime

Ceisteanna (74)

Michael McGrath

Ceist:

74. Deputy Michael McGrath asked the Minister for Finance the expected tax yield from expanding transfer pricing rules to the SME sector; the number of Irish SMEs that could potentially be impacted by this move; the number of employees working for these SMEs; if the data is available; the reason put forward as to the reason the rules should be extended to SMEs; and if he will make a statement on the matter. [39260/19]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

Ireland's Corporation Tax Roadmap includes a commitment to amend Ireland's transfer pricing regime in Finance Bill 2019. This commitment stems from recommendations made in the Review of Ireland’s Corporation Tax Code by Mr Seamus Coffey.

One of the recommendations in that Review is that consideration be given to extending transfer pricing rules to SMEs, having regard to whether the associated burden of keeping transfer pricing documentation would be proportional to the risks of transfer mispricing occurring.

As part of the process of updating Ireland's transfer pricing rules, my Department recently published Ireland’s Transfer Pricing Rules Feedback Statement to enable consultation with stakeholders on the approach I propose to take to meeting the commitments made in this area.

Being mindful of not imposing an undue administrative burden on SMEs, the Feedback Statement signals a proposed approach towards how transfer pricing rules could be applied to SMEs. That approach proposes that smaller enterprises will not be required to provide any transfer pricing documentation and that medium enterprises will only be required to provide simplified transfer pricing documentation in respect of very material cross border transactions with associated persons. I believe that this would strike an appropriate balance between the risk of mispricing and the compliance burden imposed.

Application of transfer pricing rules to SMEs, but with relaxed documentation requirements, is consistent with the approach adopted in many other OECD countries. Also, of note, where the associated person who is the other party to the transaction is located in a country which has transfer pricing rules, it is likely that there is already a requirement for the group to prepare transfer pricing documentation in relation to the transaction in that other country. Therefore, providing transfer pricing documentation in Ireland may not be a significant burden for many medium enterprises.

The Feedback Statement also proposes that the provisions for SMEs would not be commenced at the same time as the rest of the transfer pricing provisions. The rationale behind this approach is to ensure that SMEs do not face any additional compliance burden next year given other uncertainties faced by business at this time. This will have the added benefit of providing a window to allow SMEs to fully consider and understand how the application of transfer pricing rules could impact them and prepare for that eventuality.

I am advised by Revenue that it is unable to provide exact figures for the number of Irish SMEs that could be impacted by transfer pricing rules. However, Revenue estimate that approximately 1,500 companies from over 50 groups could be brought within the scope of the new rules when they eventually come into effect for SMEs. Revenue advise that it does not have estimated figures available for the number of employees working for SMEs that could potentially come within the scope of transfer pricing rules. Given that it is not intended to commence the extension of transfer pricing rules to SMEs in 2020, there are no immediate impacts on the tax yield as a result.

Mortgage Data

Ceisteanna (75)

Michael McGrath

Ceist:

75. Deputy Michael McGrath asked the Minister for Finance the number of mortgage switches undertaken each year since 2003 and the associated value of those mortgage switches in tabular form; the work completed by his Department to make mortgage switching easier for the customer; the tangible measures being taken in that regard; the physical signatures that are required when it comes to mortgage switching under section 10 of the Electronic Commerce Act 2000; if he has reviewed this Act with a view to making mortgage switching easier for the customer by making electronic signatures available; and if he will make a statement on the matter. [39261/19]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

Data provided by the Central Bank indicates that mortgage switching (defined, for the purposes of this response, as loans issued by one lender to refinance an existing mortgage with another lender) in Ireland peaked in 2006, when approximately 27,000 mortgages switched provider.

Between 2009 and 2014, switching decreased significantly, reflecting subdued lending activity in the overall Irish market at that time. From 2015 onwards, the number and value of switcher loans has increased and, in 2017, just under 5,400 mortgages switched provider.

The number and value of mortgage switches from 2003-2018 is detailed as follows in tabular form.

Year

Value €m

Re-mortgages

2003

1,775

14,247

2004

2,737

18,121

2005

5,038

25,944

2006

6,067

26,565

2007

6,675

25,937

2008

5,295

21,374

2009

1,130

5,774

2010

461

2,722

2011

174

1,137

2012

64

455

2013

51

292

2014

100

503

2015

319

1,433

2016

524

2,438

2017

703

3,070

2018

1,242

5,377

As part of a range of competition measures agreed with the European Commission under their respective EU-Restructuring plans, AIB and Permanent TSB were required to provide funding for a public awareness campaign to raise awareness and promote customer switching. A total of €1.8 million is committed as part of the restructuring of the banks. There is no cost to the taxpayer in relation to this public awareness campaign.

The Department of Finance oversaw a contract for the provision of research, design and media buy services for a public awareness and customer switching campaign in retail banking markets. This campaign has focused on encouraging people to compare financial products such as current accounts, credit cards and mortgages and directed them to the website www.switchyourbank.ie which provides information on how to switch. The campaign has run on a variety of media channels, including TV, radio and digital. Of the overall budget for the public awareness campaign of €1.8 million, over €1.5m has been spent to date. The Department of Finance is currently in consultation with the European Commission regarding how the remaining funds will be spent.

Section 10(1) (b) of the Electronic Commerce Act 2000 excludes “the law governing the manner in which an interest in real property (including a leasehold interest in such property) may be created, acquired, disposed of or registered, other than contracts (whether or not under seal) for the creation, acquisition or disposal of such interests,”.

Subsections (2) and (3) of section 10 provide, however, that the scope of the Act may be extended to excluded areas or subjects by means of regulations made by the Minister for Communications, Climate Act and Environment where the Minister is of the opinion that:

“(a) technology has advanced to such an extent, and access to it is so widely available, or

(b) adequate procedures and practices have developed in public registration or other services, so as to warrant such action, or

(c) the public interest so requires,”

The Minister for Communications, Climate Act and Environment must consult with Ministers who have a sufficient interest or responsibility in relation to the area or subject being considered.