18. Deputy Brendan Howlin asked the Taoiseach if he will report on progress on the Climate Action Plan 2019; and the role of his Department in the delivery of same. [45465/19]Amharc ar fhreagra
Written Answers Nos. 1-60
Questions Nos. 1 to 12, inclusive, answered orally.
Questions Nos. 13 to 17, inclusive, resubmitted.
Questions Nos. 19 to 27, inclusive, resubmitted.
Questions Nos. 28 to 38, inclusive, answered orally.
18. Deputy Brendan Howlin asked the Taoiseach if he will report on progress on the Climate Action Plan 2019; and the role of his Department in the delivery of same. [45465/19]Amharc ar fhreagra
The Climate Action Plan 2019: To Tackle Climate Breakdown was published on 17 June 2019. The Plan contains 183 actions, broken down into 619 individual steps, which Ireland needs to implement to meet our EU 2030 targets and achieve our longer-term low carbon transition objective.
Delivering such an integrated set of actions requires a deep level of collaboration across Government.
The Plan outlines significant new governance structures to ensure that climate policy is implemented. This includes the establishment of the Climate Action Delivery Board within my Department to hold each department and public body accountable for the delivery of actions set out in the Plan.
A Climate Action Unit has also been set up in my Department to support the Climate Action Delivery Board and the Cabinet Committee on the Environment to monitor and drive implementation of the Plan.
There is a strong focus on accountability in the Climate Action Plan including a commitment to publish progress reports quarterly, the first of which was launched on 31 October.
The First Progress Report shows that 85% of the actions due for delivery in Quarter 2 and 3 of this year have been delivered, incorporating 149 measures across sectors. Accountability for the delivery of the remaining 27 delayed items will be pursued in forthcoming quarters.
Key milestones delivered to date under the Climate Action Plan include:
- A new scheme for 1,200 on-street public charge points for electric vehicles, led by local authorities;
- A climate action focused budget, with a commitment to increase the price of carbon to €80 per tonne in 2030, and ring-fencing its proceeds for climate action and delivering a Just Transition;
- A Climate Action Delivery Board established, led by the Department of an Taoiseach;
- A retrofitting model taskforce established to deliver our new national retrofitting plan;
- Climate Change Advisory Council advice accepted to ban all new oil exploration off Irish coastal waters;
- First Luas tram extension delivered;
- New requirements to ensure that all new homes are Nearly Zero Energy Buildings (NZEB) standard;
- A Local Authority Climate Action Charter signed with 31 local authorities;
- Commitment to a Just Transition Plan, with €31m secured in Budget 2020 for new measures; and
- New rules for public procurement, meaning €12bn of state investment each year will be invested sustainably.
39. Deputy Aindrias Moynihan asked the Minister for Finance the status of the review into the application of VAT onto food supplements; his plans regarding implementing the recommendations of the review; and if he will make a statement on the matter. [46677/19]Amharc ar fhreagra
58. Deputy Fiona O'Loughlin asked the Minister for Finance the status of VAT on food supplements; and if he will make a statement on the matter. [46566/19]Amharc ar fhreagra
59. Deputy James Browne asked the Minister for Finance the position regarding the VAT treatment by the Revenue Commissioners of health foods; and if he will make a statement on the matter. [46049/19]Amharc ar fhreagra
60. Deputy Bobby Aylward asked the Minister for Finance his plans to apply a 23% VAT rate to food supplements; and if he will make a statement on the matter. [46685/19]Amharc ar fhreagra
I propose to take Questions Nos. 39 and 58 to 60, inclusive, together.
Food supplement products are subject to the standard rate of VAT (23%). Shortly after the introduction of VAT, Revenue allowed the zero rate to be applied to certain food supplement products (vitamins, minerals and fish oils). This concessionary approach expanded as the market developed over the years and resulted in the zero rating by Revenue of further similar products, including products other than vitamins, minerals and fish oils.
Following complaints from the Irish Health Trade Association (IHTA), Revenue conducted a comprehensive review of the VAT treatment of food supplement products. Based on an expert report and its own legal analysis, Revenue concluded that the status quo was no longer sustainable and issued new guidance in December 2018 which removed the concessionary zero rating of various food supplement products with effect from 1 March 2019.
Following representation from Deputies and from the industry, I wrote to Revenue outlining my plans to examine the policy and legislative options for the taxation of food supplement products in the context of Finance Bill 2019. Revenue responded by delaying the withdrawal of its concessionary zero rating of the food supplement products concerned. This allowed time for my Department to carry out a public consultation on the taxation of food supplement products.
Based on this consultation, I introduced a provision in this year’s Finance Bill applying the reduced rate of VAT (13.5%) to food supplements from 1 January 2020. In the absence of this provision the standard VAT rate of 23% would apply to food supplements, including those that had been concessionally zero rated previously.
It is important to clarify that certain products will not be impacted by the legislative change. Foods for specific groups such as infant and follow-on formulae and infant foods, foods for special medical purposes and specially formulated foods will continue to be zero rated as they are well established and defined categories of food. Fortified foods, such as yoghurts and cereals fortified with vitamins and minerals, will also continue to be zero rated as they are food.
Folic acid, vitamin and mineral products which are licenced or authorised as medicines by the Health Products Regulatory Authority will continue to be zero rated under a different VAT provision for human oral medicines.
40. Deputy Pearse Doherty asked the Minister for Finance if he will engage with the Central Bank over the use of dual pricing by the insurance industry; and the measures he will take to ensure semi-State companies, such as An Post, do not practice dual pricing. [46690/19]Amharc ar fhreagra
75. Deputy Imelda Munster asked the Minister for Finance if her attention has been drawn to the practice and prevalence of dual pricing in the insurance market and its effect on consumers; and if he will make a statement on the matter. [41218/19]Amharc ar fhreagra
I propose to take Questions Nos. 40 and 75 together.
At the outset, the Deputies should note that the Minister for Finance is responsible for the development of the legal framework governing financial regulation. Neither I, the Minister for Finance, 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. However, as the Deputy is aware, in my role as the Minister of State for Financial Services and Insurance, I have raised the issue of dual pricing with the Central Bank at a recent meeting and sought their views. In response, the Central Bank has confirmed that they will undertake a review of price optimisation, which includes the practice of dual pricing, as this has been identified as a potential consumer risk by the Central Bank in its sectoral risk assessment of the insurance sector.
I understand that the first step of this review will be a comprehensive data gathering and analysis exercise to determine the scale and prevalence of price optimisation across the insurance sector and its precise effects on consumer groups. I also understand that the Central Bank intends to engage with key stakeholders, most notably the Competition and Consumer Protection Commission, on the terms of reference of this review and on the nature and scope of any potential remedies. It is the Central Bank’s intention that the data gathering exercise will inform its views on any legal, supervisory and policy measures that may be required – but any such interventions will need to be carefully considered.
I would agree with the Central Bank’s assessment of the complexity of this issue and that we will need to carefully consider any potential remedies, as to do so may improve matters for certain consumers while at the same time impact negatively on other consumers. I do not think we are at the point of making conclusions on this issue and I will await the views of the Bank in this regard.
Finally, the Deputies should note that the insurance business linked to An Post operates as a wholly owned subsidiary of An Post and is regulated by the Central Bank of Ireland. Like other insurance companies, I cannot direct or interfere in the commercial decisions that it makes in relation to pricing or coverage.
41. Deputy Aindrias Moynihan asked the Minister for Finance the measures he is taking to tackle the cost of public liability insurance for businesses; the measures he will introduce to deal with false or exaggerated claims against businesses; and if he will make a statement on the matter. [46676/19]Amharc ar fhreagra
While neither I, nor the Central Bank of Ireland, can interfere in the provision or pricing of insurance products, the Government, through the work of the Cost of Insurance Working Group (CIWG) Reports, has identified the key problems that need to be addressed if we are to significantly reduce the cost of business insurance.
In this regard, the work of the Personal Injuries Commission (PIC) has been of critical importance. It found that the level of awards here for soft tissue injuries were 4.4 times higher than England and Wales. Such a discrepancy is in my view unjustified and needs to be addressed as a matter of urgency. It recommended that the Judiciary should be made responsible for recalibrating award levels.
With the passage of the Judicial Council Act, I am confident that the Judiciary will prioritise this recalibration exercise and that they will take account of the PIC’s findings. I would also note that the Law Reform Commission is currently undertaking a detailed analysis as to whether we could establish constitutionally sound legislation to cap or limit the amount of damages a court may award. It is due to report back next year.
In respect of measures to address false or exaggerated claims, the Personal Injuries Assessment Board (Amendment) Act 2019, strengthens the powers of PIAB around compliance with its procedures, and amendments to Sections 8 and 14 of the Civil Liability and Courts Act 2004, make it easier for businesses and insurers to challenge cases where fraud or exaggeration is suspected. There have also been various reforms of how fraud is reported to and dealt with by An Garda Síochána, including increased co-ordination with the insurance industry. In addition, 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, which will also train Gardaí all over the country on investigating insurance fraud is an important step forward.
In conclusion, I would like to assure the Deputy that important reforms are taking place and that I am confident that if the level of awards are reduced then the insurance cost and coverage issues that are being experienced by businesses should recede.
42. Deputy Peadar Tóibín asked the Minister for Finance the details of each State infrastructure project that is in development or is due for completion in 2019 in which it is in excess of the budget assigned to the project for its current stage to date. [39522/19]Amharc ar fhreagra
I can confirm that the Department of Finance has no state infrastructure projects that are in development or are due for completion in 2019.
43. Deputy Richard Boyd Barrett asked the Minister for Finance the way in which he can justify continuing very significant tax breaks to the very highest earners through schemes such as the special assignee relief programme, SARP, and the key employee engagement programme, KEEP, in view of the significant and growing wealth and income inequalities in society; and if he will make a statement on the matter. [46678/19]Amharc ar fhreagra
The Special Assignee Relief Programme (SARP) is designed to help reduce the cost to employers of assigning skilled individuals in their companies from abroad to take up positions in the Irish-based operations of their employer or an associated company, thereby facilitating the creation of jobs and the development and expansion of businesses in Ireland.
Earlier this year, I commissioned an independent review of the scheme which was carried out by Indecon Economic Consultants. In their report, Indecon confirmed to me the strong policy rationale for the continued relevance of SARP to the Irish economy.
Ireland’s enterprise policy is based on export-led growth; Foreign Direct Investment has been and continues to be an integral part of Ireland’s economic development. The existence of an incentive like SARP is an acknowledgement that we are competing on a global basis for highly skilled and mobile executives. The competition for this talent is intense, particularly for the types of skills required to facilitate the development and expansion of businesses in Ireland.
The existence of similar (and indeed more attractive) special assignee type tax reliefs in a number of competitor jurisdictions creates a market failure that would not be addressed if not for the continued existence of SARP.
The benefits of SARP, aside from enhancing our international competitiveness, are detailed clearly in the Indecon report and they include:
- Increased employment and retention of staff within SARP companies;
- Associated additional investment in the economy of the order of €25 million;
- Additional Corporation Tax receipts;
- Additional PAYE receipts; and
- R&D spillover activity.
The Indecon report also highlights the following data regarding companies that availed of SARP for the year 2017:
- they paid over €2.5 billion in corporation tax;
- they employed over 155,00 individuals; and,
- they paid over €1.9 billion in PAYE taxes.
On the basis of these findings, and in the interests of providing certainty for potential beneficiary firms, I am providing for the extension of SARP in Finance Bill 2019 until 31 December 2022 from the current sunset date of 31 December 2020.
More generally in relation to SARP, there is of course a balance to be struck between the principle of horizontal equity within the tax system and the need to compete internationally for highly skilled and mobile personnel. In this regard, and in order to seek to ensure that the appropriate balance is maintained, the issue is kept under regular review through detailed examinations of the type just recently carried out by Indecon.
The ‘Key Employee Engagement Programme’ (KEEP) was introduced in Budget 2018 and has the objective of supporting SMEs in Ireland in competing with larger enterprises to recruit and retain key employees. Smaller and/or younger companies with growth potential may not have the cash resources available to offer comparable salary packages to those offered by large, established businesses. However, where the employee believes in the growth potential of the firm, and by extension the potential for the company shares to increase in value, remuneration in the form of share options may improve the attractiveness of the SME employment offer.
International research has shown that Employee Financial Participation can be effective in fostering partnership and increasing competitiveness and in helping companies to attract and retain staff in a competitive international labour market. Improved competiveness of companies supports the creation and maintenance of employment, and this in turn supports economic growth which benefits the economy as a whole.
Finance Bill 2019 provides for a number of enhancements to the KEEP scheme which are primarily aimed at improving the accessibility of the scheme to SMEs, and allowing more flexible and family-friendly working arrangements to qualify under the scheme.
44. Deputy Brian Stanley asked the Minister for Finance when the car insurance premium levy will be terminated. [46265/19]Amharc ar fhreagra
At the outset, you should note that there are no plans to discontinue the existing insurance premium levies and contributions which are on both motor and non-motor insurance premiums. It is important to understand that these payments serve different purposes and some have been in place for some time: The levies and contributions are as follows:
The Motor Insurers Insolvency Compensation Fund (MIIC Fund) commenced on 1 December 2018 and was introduced by the Insurance Amendment Act 2018. This is a contribution equivalent to 2% of gross motor premiums and is being provided by motor insurers in order to finance the gap between what the ICF used pay to third party claimants (65%) and the amount which the Motor Insurers Bureau of Ireland pays in respect of victims of uninsured and untraceable drivers (100% of claim as general rule). This is not considered a levy as the decision rests with the insurance companies as to how they finance this contribution, i.e. either through absorbing it or passing it onto consumers.
The contribution rate is subject to an annual review by the Minister and may be varied between 0 and 3% depending on factors such as the amount held in the MIIC Fund and the likelihood of a call on that Fund. In a steady state, this contribution is likely to be required for a period of 8 to 9 years.
The second contribution that impacts motor premium is the Insurance Compensation Fund (ICF) levy. This levy was in place from 1984 to 1992 and was reintroduced in January 2012. It currently applies at a rate of 2% of all gross premium income and its purpose is to repay the Exchequer for funding the administration of Quinn Insurance. As there is still a significant amount owing to the State, the levy is likely to be applied for another 10 years or so. The balance on the loan provided by the Minister to the ICF was €800.6m at 31 December 2018.
Finally, the Deputy may wish to note that there is a stamp duty on non-life insurance premiums that was introduced in 1982. The rate of stamp duty when introduced was 1%, rising to 2% in 1993 and further increased to 3% in the 2009 Supplementary Budget. This stamp duty on non-life insurance premiums forms a part of general stamp duty receipts and is paid into the Central Fund along with other tax receipts.
45. Deputy John Curran asked the Minister for Finance the number of packets and parcels containing illegal drugs detected by the Revenue Commissioners going through the postal service in each of the years 2016 to 2018 and to date 2019; the value of the seizures; if prosecutions resulted from the detections; and if he will make a statement on the matter. [46585/19]Amharc ar fhreagra
I am advised by Revenue that the number of seizures of drugs going through the postal services in the years 2016 – 2018 and to-date in 2019 (*31/10/19), the volume and the value of those seizures is as set out in the following table:
Number of seizures
2019 (to 31 October)
I am assured by Revenue that combating the smuggling/importation of controlled drugs into this jurisdiction is, and will continue to be, a priority. Revenue's work against drugs crime is extensive and multifaceted and is kept under constant review to ensure that it makes the most effective contribution possible to dealing with this societal problem, in the overall framework of the Government’s National Drugs Strategy 2017-2025.
I am advised also that prosecutions for offences in relation to controlled drugs are, by agreement, between Revenue and An Garda Síochána, undertaken by An Garda Síochána.
46. Deputy Joan Burton asked the Minister for Finance his views on the poor level of consumer protection for mortgagors here; and if he will make a statement on the matter. [46548/19]Amharc ar fhreagra
The consumer protection regulatory framework includes a number of very important measures to protect consumers who are taking out a mortgage, and it seeks to ensure that lenders are transparent and fair in all their dealings with borrowers and that borrowers are protected from the beginning to the end of the mortgage life cycle.
This financial services framework includes protections under the Central Bank Consumer Protection Code 2012, the European Union (Consumer Mortgage Credit Agreements) Regulations 2016, the Consumer Credit Act 1995 and the Central Bank Code of Conduct on Mortgage Arrears.
The Consumer Protection Code provides that a regulated entity must act honestly, fairly and professionally in the best interests of its customers and the integrity of the market, and must make full disclosure of all relevant material information in a way that seeks to inform the customer. It also imposes ‘Knowing the Consumer and Suitability’ requirements on lenders. Lenders are required to assess affordability of credit and the suitability of a product or service based on the individual circumstances of each borrower.
The European Union (Consumer Mortgage Credit Agreements) Regulations 2016 transposed the provisions of the Mortgage Credit Directive into Irish law and provide a framework within which all lenders that provide mortgage credit to consumers in the European Union must operate. The Regulations set out further requirements to protect mortgage borrowers, including requirements in respect of provision of standardised information to consumers and the requirement to carry out creditworthiness assessments. Furthermore, the Regulations provide that a lender is not to provide residential mortgage credit to a consumer unless the assessment indicates that the borrower is likely to be in a position to meet his/her obligations in the manner required by the credit agreement.
The Consumer Credit Act 1995 also includes requirements for housing loans, including buy-to-let mortgages. Under the Act, there are provisions in relation to insurance and duties on lenders to supply documentation and information on a mortgage loan.
The Code of Conduct on Mortgage Arrears applies to all regulated mortgage lenders and credit servicing firms operating in the State when dealing with borrowers facing or in mortgage arrears on their primary residence. It provides a strong consumer protection framework to ensure that borrowers struggling to keep up mortgage repayments are treated in a fair and transparent way by their lender and that long term resolution is sought by lenders with each of their borrowers.
Overall, therefore, there is a robust consumer protection regulatory framework governing the provision and operation of mortgage agreements.
Question No. 48 answered with Question No. 35.
47. Deputy Richard Boyd Barrett asked the Minister for Finance his views on whether the local property tax is likely to become increasingly problematic and regressive due to its link to the property market conditions. [46681/19]Amharc ar fhreagra
The basis for calculation of the Local Property Tax (LPT) was examined comprehensively in the 2012 report of the Inter-departmental Group on the Design of a LPT. The report advocated the use of market value of residential properties as the basis of assessment and this recommendation was accepted by the Government. The Design Group considered that under a market value approach applied to housing, the market value of a residential property would be related to the characteristics of the building itself, the site on which it was located and the features and amenities of the neighbourhood. There would be a relationship between the market value of a house and benefits to the owners in terms of enjoyment of the amenity value of the property. The charging structure for LPT is progressive. The basic rate of 0.18 percent applies up to property values of €1 million with a higher rate of 0.25 percent applying on the portion of value above the €1 million threshold.
The Inter-departmental LPT Review Group which reported to me earlier this year was conscious of the potential effects of significant changes in LPT liability on individual households and how progressive these might be. Considerable work was done by the Review Group on the estimated impact of changes in property values including a Distributional Impact Analysis. The Distributional Impact Analysis using the ESRI SWITCH Model (Simulating Welfare and Income Tax Changes) tax and benefit micro-simulation model, was used to compare the impact which the proposed reform scenarios would have on household incomes relative to an indicative benchmark position where the property value increases but there is no change in the LPT rate charged. The results indicate that all scenarios were progressive rather than regressive to varying degrees (see pages 74-77 of LPT review report https://assets.gov.ie/7465/91ccbd3ddc97461898211710e2d7ec55.pdf).
I referred the Review Report to the Budgetary Oversight Committee which has issued its Scrutiny Report on the matter. With this input, I will now reflect on how best to proceed and give effect to changes to the LPT based on the policy objectives I consider should underpin the tax. These are
- Protection of the overall yield
- Relative stability in household liabilities with modest and affordable increases should they arise
- Integration of new properties into the LPT base
- Maintenance of the tax base with a small number of exemptions, and
- Upholding the progressivity of the tax.
Question No. 50 answered with Question No. 33.
49. Deputy Thomas P. Broughan asked the Minister for Finance his views on the rise in the amount of taxation assessments in dispute at the Tax Appeals Commission. [45807/19]Amharc ar fhreagra
The Tax Appeals Commission (TAC) was established on 21st March 2016, taking over from the former Office of the Appeal Commissioners. Since its establishment, staffing at the Commission has grown from two Commissioners and four administrative staff, to five Commissioners and twenty three administrative staff at various grades as of end-October 2019.
I am advised by the TAC that there were 3,401 open appeals on 31 October, 2019. I am also advised that it is difficult for the TAC to provide a fully accurate quantum figure due to the nature of tax disputes; however at 31 October, 2019 the TAC recorded an estimated quantum of approximately €3.7 billion. Of this amount, €2.5 billion is comprised in 10 appeals, five of which were received by the TAC in the last week of December 2018.
Some appeals cannot be progressed when the Commission has to await the outcome of court proceedings. For example, a stay may have been placed on the progression of the appeals by the TAC by Order of the High Court, Court of Appeal or Supreme Court. Of the 10 highest-value appeals before the TAC, two appeals with a combined value of €1.67 billion are currently stayed by Court Order and cannot be progressed by the TAC until the stays are lifted.
Factors which have contributed to the development of a backlog of appeals include:
1. the Commission inheriting a substantial number of legacy appeals on establishment and,
2. the process for appeals changed on establishment, resulting in appeals now being notified to the Commission in the first instance, rather than to Revenue.
Due to the growing backlog and requests for extra resources, I commissioned an independent review of the workload and operations of the Commission in 2018.
The review was conducted by Niamh O’Donoghue, a former Secretary General of the Department of Social Protection, and examined the governance structures, workload and operations of the Commission. The resulting report was published on Budget Day last year and is available at the following link - www.budget.gov.ie/Budgets/2019/Documents/18.%20Independent%20review%20of%20the%20workload%20and%20operations%20of%20the%20Tax%20Appeals%20Commission.pdf.
I expressed my full support for the recommendations. Work on implementation is ongoing both in the Department and the TAC. The following actions have taken place to date:
- A near doubling of the Commission’s budget for 2019 to accommodate the recommendations of the review. This budget has been maintained for 2020.
- The authorisation of the appointment of three additional Temporary Appeal Commissioners, two of whom took up their appointments in September with a further Commissioner to commence in January.
- The recommended additional administrative and technical posts were sanctioned and recruitment for these posts is nearing completion.
- Enhanced regular contact between the Commission and the Department on governance matters and corporate supports is taking place, and
- An administration working group meets regularly to address any issues arising between the Commissioners and Revenue in relation to the administration of appeals.
The Finance (Tax Appeals and Prospectus Regulation) Bill 2019 is currently progressing in the Dáil. This Bill will enable progression of another key recommendation of the review, the appointment of a Chairperson.
While a backlog of appeals remains, the additional budget and resources should allow the TAC to make progress in addressing the current backlog. I expect the overall number of appeals on hand, and consequently the quantum of tax under appeal, to begin to decrease steadily over time.
51. Deputy Barry Cowen asked the Minister for Finance if the NTMA will be able to refinance debt in 2020 as planned in the event of a no-deal Brexit; and if he will make a statement on the matter. [39613/19]Amharc ar fhreagra
The NTMA’s bond funding programme for the year is now complete. Over the course of 2019 a total of €14.4bn of benchmark bond funding was raised. This funding was completed at a weighted average yield of 0.9% and a weighted average maturity of over 16 years. A further €0.4bn was issued by way of a new inflation linked bond maturing in 2045 and a 100-year note maturing in 2119. This brings total long-term funding for the year to close to €15bn.
I am informed by the National Treasury Management Agency that it is confident its prudent approach to the Exchequer’s funding requirement means it can meet the Exchequer’s funding needs, irrespective of the risks – such as a no-deal Brexit – that might emerge.
The pre-funding strategy of the NTMA in recent years means the Exchequer is in a strong position ahead of the upcoming debt maturities. The NTMA expects to hold cash balances of approximately €15bn at year-end. This will leave it well positioned to meet medium/long-term debt maturities totalling €19bn in 2020.
There are two benchmark bond maturities in 2020, one in April and the second in October. These bonds have outstanding balances currently of €10.6bn and €6.5bn respectively. In addition there are four £0.4bn tranches of the UK Bilateral loan maturing in 2020. So in total there is approximately €19bn of maturing medium/long-term debt next year.
In terms of contingency planning for Brexit, the NTMA constantly monitors developments in the bond markets. Ireland’s debt dynamics continue to improve and debt servicing costs are declining. The Exchequer’s funding position is strong due to the activities of the NTMA in recent years, and refinancing needs for next year have been significantly reduced through active debt management. The NTMA has completed its bond funding programme for the year and expects the Exchequer to have approximately €15bn in cash balances leaving it well positioned heading into 2020.
Question No. 53 answered with Question No. 38.
52. Deputy Pearse Doherty asked the Minister for Finance the amount of legal fees, and the companies and firms to which the fees have been paid, disaggregated by amount of fees paid to each firm, in the appeal case regarding the 2016 ruling by the Competition Commissioner on illegal state aid in respect of a company (details supplied); and if he will make a statement on the matter. [46687/19]Amharc ar fhreagra
Ireland has never accepted the Commission’s analysis in the Apple State aid Decision and is challenging the Commission's decision before the European Courts.
An application to annul the Commission Decision was lodged with the General Court of the European Union. The case was granted priority status and the confidential written proceedings have taken place in private over the last number of years. The oral hearing took place in the General Court of the European Union on 17th and 18th September. The timing of the judgement is entirely at the discretion of the Court. However it will most likely be several years before the case is ultimately concluded.
Ireland fully respects the judicial process and as can be expected, throughout this process Ireland has robustly defended its position. An overview of the main arguments made has been placed on my Department's website. As this is the subject of ongoing legal proceedings I cannot comment further on the State's legal case.
Notwithstanding our position that there was no State aid granted, the Irish authorities have engaged fully with the European Commission throughout the State aid investigation, including in relation to the legal obligation to recover the alleged aid. This involved the complex process of the establishment of an escrow fund in compliance with all relevant Irish constitutional and European Union law requirements.
Over the past seven years approximately €7.5 million (including VAT) has been paid for external services relating to the case, of which approximately €3.9 million relates to the recovery process. This includes all legal costs, consultancy fees and other associated costs. These fees have been paid by the Department of Finance, Revenue Commissioners, NTMA, Central Bank of Ireland, Attorney General’s Office and Chief State Solicitor’s Office.
The cost of legal fees is lower than the total cost as other fees are not included, such as in relation to translation services.
There are five companies covered by your question regarding the legal fees and the companies and firms to which the fees have been paid, and the totals paid to date to each of these, inclusive of VAT, are approximately as follows:
- William Fry: €3.2 million
- McCann Fitzgerald: €523,000
- PWC: €611,000
- Baker McKenzie: €148,000
- Hogan Lovells: €3,900
For completeness, the total paid to external Counsel engaged is approximately €2.8 million. As the Deputy will be aware, while I previously provided detail of payments made to individual Counsel, I am not now in a position to provide such details arising from legal advices provided to my Department.
I would also say that it is not possible to determine future costs of the case. However, as it is an important matter for the State, the case will continue to be resourced as appropriate.
54. Deputy Willie Penrose asked the Minister for Finance if his attention has been drawn to a report by an organisation (details supplied) which states that moving to a cashless society mainly benefits banks and card issuers and will lead to financial and social exclusion; his plans to ensure consumers have a continued non-discriminatory right to use cash; and if he will make a statement on the matter. [46553/19]Amharc ar fhreagra
My officials were aware of the publication of this report. This report presents the case that consumers should have a right to access and use cash alongside electronic and innovative means of payment, and analyses the possible consequences for consumers of the total disappearance of cash.
The report makes a number of recommendations concerning the acceptance of cash by physical traders, the availability of ATMs within Member States, charges imposed on consumers when using ATMs, and the promotion of cashback in shops.
Earlier this year I launched a study benchmarking Ireland’s payment industry, which was commissioned by my Department in 2018. This study found that, notwithstanding a significant increase in the take-up of electronic payments, cash remains a vital part of the Irish payment system. The study also concluded that a fully cashless society would not be an appropriate objective.
In relation to the specific recommendations set out in the report referred to by the Deputy, the quarterly Payments Monitor published by the Banking and Payments Federation of Ireland shows that while the volume of ATM withdrawals has remained stable in recent years, the value of cash withdrawn from ATMs has recently been growing and is up 5.7 per cent year-on-year in the first quarter of 2019.
The report finds that cashback in shops is currently only common practice in 11 EU Member States and recommends that it be promoted. Ireland, of course, is one of those 11 Member States, with cashback a long and well-established practice in this jurisdiction.
There certainly has been a notable increase in the use of electronic payments, particularly in contactless payments, over the last decade. In recent years there is also evidence of greater financial inclusion. The CSO Household Budget Survey Data shows that the proportion of households with access to a current account in Ireland has increased significantly. The EU Payment Account Directive, transposed in 2016, makes it easier for consumers who do not have a payment account to open one, whatever their personal financial situation.
My officials will continue to monitor developments in the area of payments.
55. Deputy Michael McGrath asked the Minister for Finance the role he envisages for NAMA in the period ahead; when he expects the agency to wind up; and if he will make a statement on the matter. [46672/19]Amharc ar fhreagra
NAMA held remaining debtor loans with a fair value of €1.73 billion at the end of Q2 2019. Much of NAMA’s remaining portfolio is secured by low-value, granular assets and realisation of these assets continues to require patient and extensive work on the part of NAMA.
In July 2019, I published the second Section 227 Review under the NAMA Act 2009 where NAMA estimated that it expects to hold a residual loan book with a carrying value of c.€300 million by the end of 2021. Much of these residual assets are either subject to ongoing legal proceedings or are secured by residential development sites that have the potential to deliver a significant value uplift beyond 2021.
On foot of the Section 227 review I have recommended that NAMA be allowed additional time to work through this residual loan portfolio to enable the Agency to maximise the value of this residual portfolio in the interest of the taxpayer and best fulfil its commercial obligations under Section 10 of the NAMA Act. To this end I have requested that NAMA submit a detailed wind-down plan for its ultimate dissolution to the Minister for Finance by the end of 2021, and its operations shall not continue past end-December 2025 at the latest.
It is not expected that NAMA’s extension will impact upon the timeline for the transfer of its expected €4bn surplus in the coming years.
56. Deputy Michael McGrath asked the Minister for Finance if his Department has carried out an economic impact assessment of the draft withdrawal agreement agreed in October 2019 between the European Union and the UK Government; and if he will make a statement on the matter. [46673/19]Amharc ar fhreagra
Budget 2020, including the macroeconomic outlook which underpins it, was based on the prudent assumption that the UK would leave the EU on 31 October without an agreement. The macroeconomic outlook is set out in the Economic and Fiscal Outlook published with Budget 2020. This included, at Box 4, an assessment of the macroeconomic outlook that would apply in the event of an agreed exit by the UK at end October.
The Withdrawal Agreement endorsed by the European Council, will now require ratification by the European Parliament and the UK Parliament. Pending ratification of the deal, it is not possible to say if the outlook will be different to that set out in Budget 2020.
If the Withdrawal Agreement is ratified, the UK will enter a transition period until at least the end of 2020. In this situation the outlook would be broadly similar to that set out in Table 4 (Box 4) in the Economic and Fiscal Outlook 2020. This shows that, in the event of an agreed exit, GDP growth is forecast to be 3.1 per cent in 2020, with employment growth projected at 1.7 per cent next year and the unemployment rate expected to be 5.1 per cent.
The revised Political Declaration envisages an ambitious trading relationship for goods on the basis of a Free Trade Agreement, but until there is greater clarity on the post-transition relationship there is likely to be continued uncertainty, particularly with respect to private sector investment. My Department has been in contact with the ESRI on the economic impact of the revised Withdrawal Agreement and Political Declaration on the future relationship. I am satisfied that the existing analysis in the joint research by the Department of Finance and ESRI, published in March this year, broadly captures the range of possible future relationships. The analysis included a free trade agreement (of which there could be many forms), and a trading relationship under World Trade Organisation (WTO) frameworks. The impacts of these were modelled and estimated in the joint research which was published in March this year.
Under these scenarios, over the medium-term (i.e. 5 years) the level of GDP would be of the order of between 1.9 and 3.3 per cent lower, respectively, compared to a situation where the UK remains in the EU. The negative impacts will be most severely felt in those sectors with strong export ties to the UK market – such as the agri-food, manufacturing and tourism sectors and also SMEs generally – along with their suppliers. The impact will be particularly noticeable outside the main cities.
My Department will continue to monitor developments with respect to the ratification of the Withdrawal Agreement, and the future relationship with the UK, and will update the macroeconomic and fiscal projections to take account of any developments in the Spring of next year at the latest.
Questions Nos. 58 to 60, inclusive, answered with Question No. 39.
57. Deputy Pearse Doherty asked the Minister for Finance the way in which the industrial funding levy on credit unions will be applied in the coming years; if he will consider exempting credit unions from the levy in view of their social impact; and if he will make a statement on the matter. [46689/19]Amharc ar fhreagra
Since 2004, the amount of the levy payable by a credit union has been capped at a rate of 0.01 per cent of its total assets as at 30 September of the previous year. The balance of regulatory costs has been funded by the Central Bank in accordance with the provisions of the Central Bank Act, 1942 (as amended). The cost of regulating the credit union sector has increased over recent years with the emergence of the necessity to increase the intensity of supervision of this sector. Given that total assets of the sector have remained relatively static, this has resulted in a significant reduction in the proportion of the total cost of funding provided by the sector as a whole. In 2018, the credit union sector contributed €1.7 million (circa 9 per cent of the total costs incurred in regulating the sector).
Earlier this year, I approved the Central Bank request to recover 50 per cent of credit union costs on a phased basis, starting with a 20 per cent recovery rate for the 2019 levy, which will be levied on an arrears basis in 2020, moving to 35 per cent in 2020 (levied in 2021) and to 50 per cent in 2021 (levied in 2022). In response to the Central Bank's request I also recommended that credit union contributions should not increase beyond the 50 per cent target until:
a. The levy trajectory has reached the planned 50 per cent rate, at which time the impact on the viability of the sector will be better understood; and
b. A public consultation regarding increasing the levy rate for credit unions beyond 50 per cent is undertaken, which would include a regulatory impact assessment of such a change on the sector.
In contrast to this, recovery rates in 2018 for all other industry categories ranged from 65 per cent to 100 per cent, and the Central Bank intends to increase all to 100 per cent funding over the next number of years.
Exemptions from levies result in a burden on the tax payer through state subvention. Given that all other financial services sectors are at, or moving towards, 100% recovery, the move towards 50 per cent in respect of credit unions, with further increases at that time being subject to consultation and Ministerial approval, is measured and takes account of the role that credit unions play in Irish society.
The Deputy might also wish to note that the Department of Finance, in collaboration with the Central Bank, held a public consultation on potential changes to the Credit Institutions Resolution Fund Levy. Following this review I announced on 1 October 2019 a reduction in the levy rate which will result in a reduction of €4 million per annum from €9 million in 2019 to €5 million from 2020, or 44 per cent reduction.
As Minister for Finance I have also reduced the Stabilisation Scheme Levy materially and since 2017 no further levies have been charged by the Credit Union Restructuring Board (ReBo). I have also committed to a further review of the Stabilisation Scheme in 2020.