Written Answers Nos. 272-292
272. Deputy John Brady asked the Minister for Finance if he uses an application on his official Government telephone; if so, if he has the disappearing messages setting activated on the application; and if he will make a statement on the matter. [9959/22]
Amharc ar fhreagraI would like to advise the Deputy that I do not use the WhatsApp application to conduct Government or official communications.
I can confirm that I do use the ‘disappearing messages’ setting in a limited capacity on my phone.
273. Deputy Matt Shanahan asked the Minister for Finance further to correspondence from a person (details supplied), the tax recommendations he is proposing with respect to fixed-rate pensions, which in many cases have fallen in value significantly, versus the cost of living since they were awarded; if he will make a specific alteration to the tax treatment of such pensions in order that they may track and reflect the present consumer price index rate; and if he will make a statement on the matter. [10015/22]
Amharc ar fhreagraIn terms of the tax treatment of supplementary pensions, Ireland operates an Exempt, Exempt, Tax (EET) system. This is a similar system to that operated in the majority of OECD countries and means that contributions to pensions are exempted from income tax (subject to age-related percentage and income limitations), pension fund gains are exempted from income tax but income from pension drawdown is taxed.
Overall, the policy objective for tax relief on pension contributions is to encourage individuals to save for retirement, to meet a target level of supplementary pension coverage and an income replacement target, and to assist in preventing an over reliance of State support for people in later life.
In my view, we should seek to make overall progress in the area of pension provision in a manner that is comprehensive and surefooted. That broad approach is what has informed recent action in this area including the Roadmap for Pensions Reform 2018-2023 which, in turn, led to the work of the Interdepartmental Pensions Reform and Taxation Group and the separate work of the Pensions Commission. Indeed, the Commission on Taxation and Welfare has also been charged with considering the output from the Pensions Commission regarding sustainability and eligibility issues in respect of State Pension arrangements.
To answer the Deputy’s specific question, the performance of private pension funds is primarily a commercial matter and contingent on market circumstances and external factors.
As regards the pension fund levy, this levy was introduced in 2011 in the wake of the financial crash and at a time when the economy was in serious difficulties. Something had to be done to preserve and boost jobs and it is an unavoidable fact that difficult economic situations require hard and very often unpopular decisions. All sectors of the economy had to contribute to the recovery plan and the levy was designed to claw back a small amount of the very generous tax reliefs that those contributing to pension arrangements had benefitted from over many years.
The levy went to fund the tax reductions and expenditure measures introduced in the Jobs Initiative, including lowering the VAT rate for the tourism sector to 9%. The levy was successful and did its job as reflected in the increased activity and employment in that sector.
The value of the funds raised by way of the levies have been used to protect and create jobs and this has helped to support the improving financial and economic position of the State. Taxpayers who may have ultimately borne the impact of the levy will have since benefitted from tax reductions in the last number of Budgets, including the substantial income tax package announced as part of Budget 2022.
275. Deputy Eoin Ó Broin asked the Minister for Finance if 13.5% VAT can be reclaimed on retrofit costs for homeowners; and if not, the reason. [10030/22]
Amharc ar fhreagraI am advised by Revenue that the VAT rating of goods and services is subject to the requirements of the EU VAT Directive with which Irish VAT law must comply. Under the EU VAT Directive and Irish VAT legislation the supply of building materials is liable to VAT at the standard rate, currently 23%. Member states are not permitted to apply a VAT rate lower than the standard rate to building materials. By way of special derogation from the general rule, however, Ireland is permitted to continue to apply a reduced rate, currently 13.5%, to the supply of ready-to-pour concrete and certain concrete blocks but this reduced rate cannot be reduced below 12%.
Construction services that consist of the "renovation and repairing of private dwellings, excluding materials which account for a significant part of the value of the service supplied" can benefit from the reduced rate of VAT, currently 13.5%. This means that where a building contractor carries out home improvements and the materials cost does not exceed two-thirds of the cost of the improvements then the reduced rate of 13.5% applies to the total construction service. A consequence of this is that a VAT registered building contractor will generally be entitled to recover VAT at the 23% standard rate on most building materials purchased while the contractor is only liable to charge VAT at the 13.5% reduced rate on the total supply (including the materials and the labour elements of the job) to the homeowner. The difference in rates between the 23% input VAT and the 13.5% output VAT should normally be reflected in the VAT-inclusive cost to the homeowner.
On the suggestion of a VAT compensation mechanism for homeowners, I am advised by Revenue that this is generally contrary to the operation of VAT. It is for this reason that Ireland has not introduced any new VAT refund orders since the 1980’s and any changes to VAT refunds since then have been either by EU requirement or making minor changes to existing orders.
The Deputy will be aware that Government is committed to the delivery of a National Retrofit Plan, approving a package of supports to make it easier and more affordable for homeowners to undertake home energy upgrades, for warmer, healthier and more comfortable homes, with lower energy bills. The measures address barriers to undertaking energy upgrades (retrofits) reported by homeowners and those working in the industry.
The changes represent an important step in delivery of the National Retrofit Plan, which identifies a range of measures aimed at driving demand for retrofit, expanding the size and capacity of the supply chain, as well as making retrofits more affordable.
276. Deputy Bernard J. Durkan asked the Minister for Finance if he will engage with the Central Bank and the main banks now operating in this jurisdiction with a view to ensuring the availability of home mortgages on an equal basis to residents throughout the rest of the European Union with particular reference to the need to observe the single market in terms of availability and interest costs; and if he will make a statement on the matter. [10031/22]
Amharc ar fhreagra277. Deputy Bernard J. Durkan asked the Minister for Finance the way the average cost of a home loan here compares with the least expensive throughout the European Union; and if he will make a statement on the matter. [10032/22]
Amharc ar fhreagra280. Deputy Bernard J. Durkan asked the Minister for Finance if he is satisfied that Irish banks are adequately meeting the requirements of home borrowers; and if he will make a statement on the matter. [10035/22]
Amharc ar fhreagraI propose to take Questions Nos. 276, 277 and 280 together.
As Minister for Finance I cannot determine the lending policies of individual banks, including where they decide to offer residential mortgages and the interest rates they charge for such loans. However, it should be noted that any bank authorised in an EU Member State is permitted to offer mortgages to Irish consumers if they wish to.
In terms of Irish banks adequately meeting the requirements of home borrowers, the Central Bank has advised that the volume of new mortgage agreements from Irish resident banks amounted to €955 million in December 2021, the same amount as December 2020. It also represents a 13 per cent increase compared with November 2021. Separately BPFI data indicates that in overall terms, almost €10.5bn in new mortgage lending was drawn down in 2021, the highest level of annual lending since 2008. More than half of this lending was drawn down by first time buyers.
More generally, there is also an increasing range of diversity of mortgage products now available to consumers, with different mortgage lenders seeking to focus on or be more competitive in a particular part of the market. Also new entrants have recently come into the market and a number of lenders now offer very long term fixed mortgage interest rate products to consumers.
Furthermore, some lenders are offering “green” mortgages at competitive rates to customers who intend to apply for a mortgage to buy a property with a high energy efficient rating or to improve a property by bringing it up to a high energy efficient rating.
I am aware that the general level of new lending interest rates in Ireland are higher than is the case in many other European countries. However, the price lenders charge for their loans is a commercial matter for individual lenders. Despite this, it should also be noted that recent trends indicate that certain mortgage rates have been falling in Ireland. For example, the interest rates on new mortgages (excluding renegotiations) have fallen from 4.05% in December 2014 to 2.69% in December 2021.
The Central Bank has advised that caution should be used in making direct comparisons, given that cash back offers and mortgage fees are features of some markets, and will alter the overall cost of credit for a mortgage borrower relative to that reported in interest rate statistics.
Irish mortgage and other loans can have different characteristics from those offered in other countries. For example, many Irish banks include incentives such as cash back offers, which reduce the effective Irish mortgage interest rate. Also Irish mortgages are generally not subject to upfront fees which are typically charged by banks in some other EU jurisdictions.
There are also a number of important factors which will likely influence the interest rates charged on Irish mortgages. These include for example operational costs, certain structural factors as referenced above (such as incentives offered), as well as the fact that pricing will reflect:
- credit risk and capital requirements which in Ireland are elevated due to historical loss experience;
- the level of non-performing loans which is higher in Ireland relative to other European banks (as provisioning and capital requirements are higher for these loans to reflect their higher risk and this in turn results in higher credit and capital costs for the Irish banks); and
- higher cost-to-income ratios which has been a characteristic of the Irish banking sector in recent years.
In relation to the availability of mortgages, while competition issues generally are primarily a matter for the Competition and Consumer Protection Commission, competitive pressures in the banking sector can clearly have an effect on the functioning of the financial system and the on the quality and price of credit and other banking services provided to customers.
The Irish retail banking system is relatively concentrated by international standards and the recent decisions by some banks to leave the Irish market will further impact on this. However, against this as noted above some new lenders have entered the market and are playing a greater role in the provision of new mortgage lending. Even in a concentrated banking system such as that in place in recent years, price competition is possible, particularly in a growing economy and trends show that interest rates in Ireland have been falling in recent years, providing benefit to consumers.
However, I fully appreciate that enhanced sustainable competition in the credit and banking market more generally will be of benefit to consumers and other borrowers. Accordingly, the review of the retail banking market which is now underway in my Department will assess various aspects of the banking market and will consider options to encourage greater competition in the credit and banking market, including possible options to develop the mortgage market.
278. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which Ireland along with the rest of the European Union can formulate a plan to counter the inflationary tendencies currently in train; and if he will make a statement on the matter. [10033/22]
Amharc ar fhreagra279. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he and his colleagues in the Eurozone can combat seriously inflation affecting Ireland and other European countries; and if he will make a statement on the matter. [10034/22]
Amharc ar fhreagra283. Deputy Bernard J. Durkan asked the Minister for Finance if current inflation rates across Europe and including Ireland can be combatted by way of a Europe-wide response; and if he will make a statement on the matter. [10038/22]
Amharc ar fhreagra284. Deputy Bernard J. Durkan asked the Minister for Finance if he and his colleagues across Europe are aware of the danger of current inflationary trends which could have a dramatic and negative effect on all economies; if a formula has been examined with a view to combatting the issue; and if he will make a statement on the matter. [10039/22]
Amharc ar fhreagraI propose to take Questions Nos. 278, 279, 283 and 284 together.
At both the ECOFIN and Eurogroup meetings, my fellow Ministers and I work alongside the European Commission and the European Central Bank to take stock of the latest economic situation, including inflation developments throughout the EU.
The latest Eurostat estimates point to euro area annual inflation of 5.1 per cent in January. This was largely driven by energy inflation, which increased by an estimated 29 per cent. Pandemic-related effects, such as the impact of temporary VAT reductions, and technical factors, such as measurement issues, added further volatility. Core inflation – which strips out energy and non-processed food inflation – was 2.5 per cent in January.
HICP inflation moderated slightly from 5.7 per cent to 5.0 per cent in Ireland in the same period.
The latest figures point to inflation, including energy prices, remaining high over the near-term, before gradually easing later this year. The ECB projects inflation to average 3.2 per cent this year but to decline to rates of 1.8 per cent in both 2023 and 2024. Both the Commission and the ECB are confident that elevated inflation is largely linked to temporary factors, including supply-side constraints and the recovery in demand as our economies reopen.
As the Deputy is aware, the ECB is an independent institution with a mandate to maintain price stability, defined as around 2 per cent over the medium-term. The ECB currently expects inflation to fall slightly below 2 per cent by end-2022.
That said, energy prices can entail wide-ranging consequences for inflation and raise costs for businesses and families. In recognition of these potential social impacts, many Member States have introduced targeted measures to protect vulnerable households from energy poverty.
Ireland is one of these Member States. In framing Budget 2022, I was conscious of these cost of living pressures and announced a range of measures including targeted social welfare initiatives. Last week, Minister McGrath and I announced a suite of further supports to aid households and to target the main underlying problem – higher energy prices. This is in addition to the electricity credit for households announced late last year.
In addition, at an EU level, the Commission has issued a Communication on Tackling Rising Energy Prices, and the matter was discussed at various Council configurations. The Communication emphasises the broad nature of the impact and policy response.
In short, my fellow Finance Ministers and I all agree that this is an important issue and that we need to continue closely monitoring inflation and energy price developments and the potential implications for our economies.
281. Deputy Bernard J. Durkan asked the Minister for Finance if he accepts that the going price for newly built houses becomes the base line for determining the next phase of development thereby carrying and contributing to house cost inflation; and if he will make a statement on the matter. [10036/22]
Amharc ar fhreagra282. Deputy Bernard J. Durkan asked the Minister for Finance the deterrents that might be introduced to prevent the situation by which a newly built house when placed on the market predetermines the inflated price of the next phase of any development; if he has a proposal to combat such inflation; and if he will make a statement on the matter. [10037/22]
Amharc ar fhreagraI propose to take Questions Nos. 281 and 282 together.
My Department continues to monitor all aspects of the property market, including the rate of property price inflation, on an ongoing basis. According to the most recent figures released by the Central Statistics Office, the national Residential Property Price Index increased by 14.4 per cent in the year to December 2021. The price of new homes also increased by 5.1 per cent between Q4 2020 and Q4 2021.
The "going price" of a house is determined by the cost of construction and the dynamics of housing demand and supply. The high levels of property price inflation seen recently are likely a reflection of an undersupply of homes in the market and the release of savings built up during public health restrictions.
The Government’s primary response to mitigating residential price inflation is to increase supply. Recent data give encouragement that the target for delivery of new homes for 2022 under Housing for All will be met and very likely exceeded. During 2021, over 30,700 new homes were commenced, the highest since 2008. In addition, planning permission was granted for the construction of 39,077 new units in the 12 months to end-September 2021.
In addition to increasing the supply of homes in general, more work needs to be done to increase the supply of social and affordable homes. In Budget 2022, €4 billion was allocated towards housing, including capital funding of €2.58 billion, a large element of which will be used to deliver 9,200 new social homes. The vast bulk of this will be delivered through new-build, with a limited, targeted acquisition programme.
Housing for All also targets the delivery of 54,000 affordable homes for purchase or rent and over 90,000 social homes by 2030, which will make a real difference in improving affordability for our citizens.
In Budget 2022, I also extended the Help to Buy scheme which is a key support for first-time buyers who wish to purchase a new home.
All of these measures testify to the need to take a multi-faceted approach to increase the supply of new housing and I will continue to work closely with my Government colleagues to ensure these targets are delivered.
285. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which his Department continues to evaluate the causes of inflation in this jurisdiction; and if he will make a statement on the matter. [10040/22]
Amharc ar fhreagraConsumer price inflation picked up sharply over the second half of last year and by December was running at a multi-decade high of 5.7 per cent. While the annual rate of inflation moderated to 5 per cent in January, this reflects seasonal patterns, including post-Christmas sales rather than an easing of inflation more generally. Almost every advanced country in the world is in the same position, with the inflation rate reaching a record high of 5.1 per cent in the euro area in January.
Both domestic and external factors can explain this uptick in inflation. On the external front, the rise in wholesale energy prices is the key contributor and reflects the rapid rebound in global demand. Global supply chain disruptions including the availability of inputs, including timber and semi-conductors, and transport bottlenecks have also added to inflationary pressures.
Domestically, the speed and strength of the economic recovery has led to a mismatch between demand and supply and put upward pressure on prices. Brexit and the reversal of the temporary VAT cut since September are likely to have been additional factors, with regulations affecting the minimum price of alcohol contributing to inflation in January.
At the time of Budget 2022, my Department forecast headline inflation of 2¼ per cent for this year. Due to energy price spikes since the Budget, there will be some upside to this projection, with inflation of around 4 per cent or more based on current energy price projections now more likely. Nevertheless, inflation is expected to ease over the course of this year as some of the temporary drivers fade, demand stabilises and supply catches up. Updated projections will be published with the Stability Programme Update in April.
However, the possibility that these price dynamics prove more persistent cannot be ruled out, with the likelihood of second round effects increasing the longer this period of high inflation lasts. The higher inflation environment has brought about an earlier than expected shift in monetary policy. In the euro area, market participants are now pricing in two interest rate increases this year; these come on top of the ending of the Pandemic Emergency Purchase Programme next month. The net effect of this monetary policy shift is expected to be higher sovereign borrowing costs. In light of these risks, my Department will continue to closely monitor inflation over the coming months.
286. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which insurance costs in Ireland compare with such costs across Europe; and if he will make a statement on the matter. [10041/22]
Amharc ar fhreagraIt is my understanding that it is difficult to obtain reliable data to compare the cost of insurance here to that in other European jurisdictions. I am informed that international organisations, such as the OECD and Eurostat, do not publish comparative data on the cost of insurance between countries. Eurostat publishes Harmonised Index of Consumer Prices (HICP) data with regard to insurance, but this only provides a comparison of the rate of inflation for different types of insurance such as motor and travel insurance. Accordingly, it is not possible to compare the underlying cost of each insurance type. In addition, this does not include a comparative index for the price of insurance to businesses. In any event, any international comparisons based on price alone would not take into account relevant factors such as the various regulatory environments and liability systems in place in different jurisdictions.
However, increased availability of data in relation to insurance, and understanding the factors that influence insurance costs, is important. In this regard, the National Claims Information Database (NCID) is unique in Europe in terms of the transparency it provides into the Irish insurance sector. To date, the Central Bank has published NCID reports on private motor insurance and employers’ liability, public liability and commercial property insurance. These contain a wealth of information regarding the key insurance markets for consumers and businesses, including data on claims costs and average earned premiums.
The NCID is continually looking to improve the transparency and insight that can be provided through these reports, and each data collection has been amended to include more information. As such, I believe that it will continue to serve a vital role in helping us to understand the impact of market developments on insurance costs into the future. In addition, over time the NCID should enable stakeholders to assess the impact of the wide range of Government reforms already undertaken to improve the affordability of insurance, and will enable us to better-tailor any future measures to increase the competitiveness of this sector.
Finally, I would note that according to the latest CSO Consumer Price Index for January 2022, the price of motor insurance decreased by a further 9.3 per cent year-on-year. This is especially of note in light of the 5 per cent rise in the general price level over the corresponding period. As such, it is my hope that consistent implementation of measures under the current reform agenda will help to maintain this downward trend, while also improving the affordability of other types of insurance for businesses, community and voluntary groups.
287. Deputy Bernard J. Durkan asked the Minister for Finance the degree to which he continues to monitor activities in financial circles post-Brexit with a view to ensuring that financial services in Ireland are not in any way disadvantaged as a result of Brexit; and if he will make a statement on the matter. [10042/22]
Amharc ar fhreagraOver the past few years, my Department has worked closely with the Central Bank of Ireland and the National Treasury Management Agency (NTMA) to limit the impact of key identified risks in the Irish financial system and to ensure that the sector was adequately prepared for the possible effects of Brexit. My Department, the Central Bank and the NTMA continue to monitor developments and activities in the financial sector in accordance with their respective responsibilities.
The nature, scale and complexity of Ireland’s international financial services sector is changing in a number of ways as a result of firms relocating within the single market, and the sector is broader and more diverse with more firms carrying out a greater range of regulated activities than at any time. The full impact of Brexit for Ireland’s international financial services sector may not be fully evident for some years.
The Government and various state agencies, in partnership with the sector, will continue to implement ‘Ireland for Finance’, the strategy for the development of Ireland’s international financial services sector to 2025, and are working to fully capture any opportunities for inward investment that emerge through promoting Ireland’s strengths as a leading financial services centre.
At the launch of the Ireland for Finance Action Plan for 2022, Minister of State Fleming announced that the Department of Finance will be carrying out a mid-term update of the strategy to maintain the growth of the international financial services sector. The review will run alongside the implementation of the 2022 Action Plan, will inform the prioritisation of work and strategic direction in the future while building on the success achieved to date.
288. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which the economy of Ireland remains competitive in comparison with all other European Union countries; and if he will make a statement on the matter. [10043/22]
Amharc ar fhreagraIreland’s economic recovery has been remarkable. The most recent data for modified domestic demand – the best measure of domestic economic activity – showed continued growth, with domestic activity surpassing its pre-pandemic level. While the domestic economy is rapidly bouncing back, external trade has bolstered the Irish economy throughout the crisis.
The exports of the multinational sector in Ireland proved highly resilient during the pandemic, and MNCs supported the Irish economy via employment and taxes. Importantly this growth is now becoming more broadly balanced with the indigenous traded sector rebounding strongly last year. The economies of our major trading partners, including the EU, are also recovering, creating a supportive external environment for Ireland’s trade going forward.
I am very conscious of the contribution Ireland’s exports make to the economy, and the need to maintain our competitive advantage on the international stage. The Irish modified current account, which strips out the distorting effects of globalisation, is also in a very strong position and is expected to remain in surplus over the medium term. The 2021 IMD World Competitiveness Yearbook ranked Ireland as the 6th most competitive country in the EU and the 13th most competitive country in the world.
The strong recovery in the economy has helped drive the recovery in the labour market, with 2.5 million now in employment and the Covid-19 adjusted unemployment rate falling from a peak of 31.5 per cent in April 2020 to 7.8 per cent in January 2022.
Against this positive economic backdrop we cannot become complacent and we must remain cognisant of the challenges to our competitiveness both now and into the future. As the economy approaches full employment, wage pressures are likely to emerge which could in turn feed through to persistent inflationary pressure. Indeed, shortages are already emerging in certain sectors.
The international outlook remains a source of continued uncertainty and I am acutely aware of the risks this poses. There is expected to be a negative implication for Irish trade once the UK fully implements the trade provisions of the Trade and Cooperation Agreement. Beyond Brexit, Ireland, as a small open economy, remains particularly exposed to global risks, including a worsening in the epidemiological situation, persistent supply side bottlenecks, energy price shocks, global inflationary pressure and rising geopolitical tension. My Department will continue to monitor the risks to Ireland’s competitiveness closely, and this Government will respond to them as required to protect and promote the Irish economy.
289. Deputy Bernard J. Durkan asked the Minister for Finance the degree to which Ireland remains attractive to foreign direct investment; and if he will make a statement on the matter. [10044/22]
Amharc ar fhreagraThe Covid-19 crisis presented an unprecedented challenge to businesses around the world, as well as to the domestic economy. Ireland’s economic recovery has been remarkable, and both the domestic economy and our external environment have improved markedly since the onset of the pandemic.
Over the course of the crisis, Ireland’s FDI base has shown incredible resilience. Inward FDI flows to Ireland amounted to almost a fifth of GDP in 2020, placing Ireland’s inward flows as the second highest in the EU, according to the OECD. The IDA results for 2021 suggest that FDI in Ireland remains strong, with the highest increase in FDI employment in a single year recorded.
The competitiveness of the Irish economy is internationally recognised. The 2021 IMD World Competitiveness Yearbook ranked Ireland as the 6th most competitive country in the EU and the 13th most competitive country in the world. This provides a strong foundation on which Ireland can build in coming years.
With the economic recovery progressing rapidly, FDI investment will play a crucial role in helping ensure a strong and sustainable economy going forward. Despite the disruption to the global FDI landscape caused by the pandemic, Ireland remains an attractive location for foreign direct investment. Foreign companies continue to recognise and value Ireland’s unique competitive advantages, namely our track record as an innovative and stable home to global business, our talented and flexible workforce, and our hard-won reputation as a pro-enterprise jurisdiction.
290. Deputy Bernard J. Durkan asked the Minister for Finance the degree to which he and his Department can continue to influence and co-ordinate fiscal matters in such a way as to support and encourage growth and stability in the economy of Ireland; and if he will make a statement on the matter. [10045/22]
Amharc ar fhreagraAs the Deputy is aware, fiscal policy operates at many levels, but the Government’s over-arching budgetary policy aims to pursue a counter-cyclical strategy, in order to support both economic growth and stability. Reflecting this approach, the Government allowed public indebtedness to rise over the last two years in order to mitigate the economic fallout of the pandemic. This was the appropriate counter-cyclical strategy, with budgetary supports helping to cushion the negative economic impact of the necessary public health restrictions. In turn, the prudent management of the public finances in the years preceding the pandemic helped build the budgetary space to allow such an approach. However, as we look beyond the pandemic, we need to once again balance the books over the economic cycle and put the debt ratio on a downward path, in order to maintain the sustainability of the public finances in the future.
To this end, in last year’s Summer Economic Statement, the Government set out a pathway consistent with investing in our economy and society while, at the same time, reducing the budgetary deficit over time. Our medium-term budgetary strategy is now anchored to an expenditure rule. Under this rule core expenditure growth, that is, excluding Covid-related expenditure, is fixed at just over 5 per cent per year. This is in line with the economy’s estimated trend growth rate and will allow significant investment while at the same time stabilising the public finances.
As the Deputy will be aware, the public finances out-performed our expectations last year with a deficit of around 4 per cent of GNI* recorded, around half the level we expected it would be last spring. Most of this improvement was due to better than forecast revenue receipts, and the directing of this additional revenue to deficit reduction. A continuation of this prudent approach coupled with the phased exiting of Covid-related supports, will mean that the economic recovery will help restore balance to the fiscal accounts over the short-term. In addition, the Department’s medium-term economic projections envisage a return to reasonably strong economic growth in the coming years.
Nevertheless, there are a number of medium-to-long-term fiscal challenges already identifiable on the horizon. Amongst these are the challenges to the public finances posed by the so-called ‘dual transitions’ to a digital and green economy, as well as the expected ageing of the population over the coming decades. The window of opportunity to address these challenges is rapidly closing. Policy intervention will be require to mitigate the inevitable implications of ageing demographics, and the dual transitions, otherwise we risk putting the public finances on an unsustainable trajectory over the medium-to-long-term. At the same time, our revenue streams will be affected by the possibility of lower corporation tax receipts.
291. Deputy Bernard J. Durkan asked the Minister for Finance the extent and the degree to which he and his mMinisterial colleagues throughout the European Union continue to co-ordinate efforts in the fight against Brexit; if extra measures are being considered; and if he will make a statement on the matter. [10046/22]
Amharc ar fhreagraMy colleagues across the European Union and I remain alert to the challenges and the potential economic impacts arising from Brexit. As one of the most affected Member States, I pay particular attention to the effective implementation of the EU-UK Trade and Cooperation Agreement (TCA) and to the Withdrawal Agreement, which includes the Protocol on Ireland and Northern Ireland. Across the EU, solidarity with Ireland in respect of Brexit remains steadfast. The Member States support the Commission's approach in engaging and responding to genuine concerns from people and businesses in Northern Ireland.
It is also important that we continue to prepare for any unforeseen consequences over the coming period. The Government remains focused on protecting our economic and financial interests, and will continue to work to minimise the disruption that Brexit will have on the economy and peoples’ livelihood to the greatest extent possible.
The Government has dedicated substantial resources to preparing for Brexit and the systems in place are working well. We have invested significantly in new infrastructure, systems and staff, and continue to engage intensively with stakeholders and to provide a range of financial, upskilling and advisory supports for impacted sectors and businesses.
Ireland will be the largest beneficiary from the Brexit Adjustment Reserve (BAR), the aim of which is to provide financial support to the most affected Member States, regions and sectors to deal with the adverse consequences of Brexit. Ireland is to receive €1.165 billion from the BAR, and the payment of the first tranche of €361.5 million was received in mid-December 2021. Funding will be directed at areas such as enterprise supports; supports for the agri-food and fisheries sectors, reskilling and retraining; and checks and controls at our ports and airports.
292. Deputy Brendan Griffin asked the Minister for Finance if insurance companies will end the practice of not quoting customers with open claims for three years; and if he will make a statement on the matter. [10098/22]
Amharc ar fhreagraAs Minister for Finance, I am responsible for the development of the legal framework governing regulation of the insurance sector. Neither I, nor the Central Bank of Ireland, can direct the pricing or provision of insurance products, as this is a commercial matter which individual companies assess on a case-by-case basis. This position is reinforced by the EU Single Market framework for insurance (the Solvency II Directive) which expressly prohibits Member States from doing so. Consequently, I am not in a position to direct insurance companies as to how they price their policies or what terms and conditions they apply in those policies, nor can I direct insurance companies to provide cover to specific individuals or businesses.
It is my understanding that there is no standard approach from insurers when it comes to offering quotations on the open market. Insurers rely on their individual risk and underwriting criteria, and they review such scenarios on a case-by-case basis. It is understood from Insurance Ireland that, generally speaking, if a claim is pending/outstanding, regardless of fault, there is a reluctance from prospective insurers in the market to provide a quotation. In general terms this means that the consumer will stay with their incumbent insurer until the claim is settled.
According to Insurance Ireland, one of the reasons for this is that getting up-to-date information on the status of the open claim can be challenging, as there is no definite length of time to settle an insurance claim, especially with regard to personal injury claims. Furthermore the potential claim settlement amount could be outside the individual insurers risk acceptance criteria. Insurance Ireland has advised that there are usually specialist brokers in the market who may source capacity for consumers with open or pending claims, but the nature of the premium is often higher to reflect the risk.
Finally, it may interest the Deputy to know that Insurance Ireland operates a free Insurance Information Service for those who have queries, complaints or difficulties in relation to obtaining insurance cover. This can be accessed at: feedback@insuranceireland.eu.
