Written Answers Nos 30-39
30. Deputy Derek Keating asked the Minister for Finance his views on the achievements that his Department has realised since he presented Budget 2011/2012 regarding the economic circumstances he inherited; if he will outline his policies which will ensure that recovery is achieved from our current economic circumstances; and if he will make a statement on the matter. [1770/13]
View answerThis Government took office in March 2011 inheriting an economy that had not seen growth since 2007 and with most of the key macroeconomic indicators in negative territory. Employment was in decline while unemployment was still rising. This Government immediately set out about putting the economy on the path to recovery and outlined a number of priorities aimed at fixing our broken banking system, restoring order to our public finances, regaining and enhancing our international competitiveness, supporting the protection and creation of jobs, reforming our system of public administration, and rebuilding Ireland’s reputation on the international stage. These priorities have been to the centre of Government policies introduced including the Jobs Initiative in May 2011, the first budget of this Government, Budget 2012 on 6th December 2011, the launch of the Action Plan for Jobs in February 2012 and our second budget last month.
Since taking office, the economy returned to growth for the first time in three years in 2011 and a second successive year of positive growth was recorded last year. Encouragingly there are signs of a stabilisation of domestic demand in the second half of last year, and there is some evidence that confidence appears to be improving.
Looking to this year, it is fair to say that the external environment in which the Irish economy operates remains challenging. Despite this, the outlook for 2013 is for a further modest expansion of economic activity, with GDP currently expected to increase by 1.5 per cent in real terms.
In terms of the public finances, 2012 was a successful year. We continued to meet our targets under the EU/IMF programme and successfully re-engaged with the international bond markets, where the yields on Irish Government bonds have fallen sharply.
A return to sustainable growth will require continued efforts to restore order to the public finances and for this year we are targeting a further improvement in the fiscal deficit, which is on course to be below 3 per cent of GDP by 2015. We will also need further improvements in our competitiveness and a banking sector capable of supporting real economic activity. These are the areas in which government policy is focused and will underpin our economic recovery.
31. Deputy Barry Cowen asked the Minister for Finance his plans to schedule regular meetings with the public interest directors of the covered banks; and if he will make a statement on the matter. [2004/13]
View answerPublic interest directors do not have a formal reporting relationship to the Minister or to the Department of Finance and as yet I have no plans to schedule regular meetings specifically with the public interest directors of the covered banks. However, I did meet with directors of the Boards of AIB, Bank of Ireland and PTSB last week at which 5 public interest directors were present. The Deputy should also be aware that officials from my Department meet with representatives of the various banks on a regular basis – including a monthly management meeting with each covered institution at which the CEO would usually attend. Department officials have held a meeting with AIB on the 14th January, will meet BOI today the 17th January and PTSB on the 31st January. Some directors from the various banks will be in attendance at these meetings. As Minister for Finance, I am strongly committed to ensuring that the boards of the covered institutions act at all times in a manner fully consistent with key public interest objectives for the banking sector.
As I have stated many times before, the primary duty and responsibility of the public interest directors as well as all the other directors is to ensure that the institution on whose board they serve is run properly and appropriately. The responsibility of public interest directors under company law is to the institution on whose board they serve.
The legal position is that any director appointed to the board of the covered institutions whether under the Credit Institutions (Financial Support) Scheme 2008 or otherwise is subject to the requirements of company law in relation to the discharge of their responsibilities as a company director. As such, the director is legally bound to act in what he or she believes are the interests of the separate legal entity that is the institution itself. These are the directors so called fiduciary responsibilities. To address the scope for actual and perceived conflicts between the fiduciary duties of the directors of financial institutions under company law and the wider public interest in circumstances where those institutions have received huge financial support from the State, legal clarity, not just to the role of the public interest director but to that of the entire boards of those institutions, was provided under Section 48 of the Credit Institutions (Stabilisation) Act 2010. It provides that the overriding duty of directors of the covered institutions relates to the public interest as set out in the Act.
32. Deputy Charlie McConalogue asked the Minister for Finance if he expects the National Assets Management Agency to be in a position to provide additional social housing in 2013; and if he will make a statement on the matter. [2019/13]
View answerThe Deputy may wish to consider my response to a parliamentary question from Deputy Barry Cowen on 13th December 2012, which deals with this matter in some detail. NAMA advises that it has identified 3,879 residential properties controlled by its debtors and receivers as being available for social housing provision. This represents a very substantial contribution by NAMA in the context of the limited number of available residential properties in Ireland controlled by its debtors and receivers and the range of policy measures being adopted by this Government to meet demand for social housing provision.
The onus for determining the suitability for social housing of the units identified by NAMA rests, in the first instance, with the local authorities, which assess, in conjunction with the Housing Agency, the demand for identified houses and apartments by reference to criteria including the avoidance of undue segregation in housing within specific developments and areas. Once local authorities have confirmed demand for units, the Approved Housing Bodies (AHBs) are, through the Housing Agency, asked to confirm and progress their interest in leasing or purchasing the units.
I am advised that to date demand has been confirmed by the local authorities for 1,517 of the properties that NAMA has made available. Another 799 properties are being evaluated bringing the overall total that may be deemed suitable to 2,316 potentially. The local authorities have confirmed that there is no demand in respect of 982 of the properties. I am advised by NAMA that, in the time required by local authorities to assess and confirm demand for units, 652 properties have been sold or privately let by their owners or duly appointed receivers.
Of the properties for which demand has been confirmed, 203 units have been delivered for social housing to date under the initiative, contract terms have been signed or agreed in respect of a further 65 properties and negotiations are at an advanced stage in relation to the majority of the remaining units.
I am advised by NAMA that once demand has been confirmed for units and contracts signed there is no impediment to the early delivery of properties by its debtors and receivers for social housing. I am further advised by NAMA that it has established a Special Purpose Vehicle (SPV) to acquire units from its debtors and receivers where necessary to speed up their direct leasing to housing authorities. NAMA advises that once the AHBs have confirmed their demand for and contracted to lease properties it will be in a position to make them available through the SPV.
NAMA is working very closely with the Minister for the Environment, Community and Local Government and the Minister of State for Housing and Planning in relation to this very important initiative and all parties are committed to the maximum possible delivery of residential units in 2013. The Deputy will appreciate that the housing authorities have a key role in this regard and the Housing Agency is working very closely with these bodies to facilitate delivery of units. However, the pace at which units are delivered is not controlled by NAMA and I am satisfied that NAMA has brought the initiative as far as it can at this point in time.
33. Deputy Alan Farrell asked the Minister for Finance if there is a liaison facility in place in the National Assets Management Agency for homeowners of properties owned by developers who are under the remit of NAMA in order to resolve ongoing issues of health and safety requirements in these developments; and if he will make a statement on the matter. [1767/13]
View answerAs the Deputy is aware, NAMA has acquired loans from five participating institutions and is not the owner of properties nor is it involved in the day-to-day management of properties. The Agency’s role is, like a bank, that of a secured lender. Other than properties that have been enforced, all of which are listed on NAMA’s website and which are managed by the appointed receivers/administrators, properties continue to be managed by their existing owners or their professional managers/agents. NAMA takes a very close interest in their efficient management and sale with a view to maximum loan repayment in order to protect the position of the taxpayer. In this respect, the existing legal owners or, in the case of enforcement, the duly appointed receivers/administrators are responsible for the efficient management of properties. NAMA requires that its debtors and receivers comply with highest standards in the management of properties, including compliance with all statutory and planning obligations. Queries relating to individual properties should, in this context, be addressed to the existing legal owners or appointed insolvency practitioners. However, NAMA, through its email address, info@nama.ie, facilitates members of the public who wish to notify purchaser interest or raise issues of concern in respect of properties that form security for its loans. It should be noted that, while NAMA is prohibited from disclosing the identity of debtors and details of their properties, the Agency advises that it ensures that debtors are aware of any potential purchaser interest or other issues that have been raised in respect to their properties.
The Deputy will also be aware that NAMA has established a dedicated email address to facilitate members of the Oireachtas in raising issues of concern to their constituents and that it has addressed a large number of such queries from TDs and Senators.
On the general issue, the Deputy may be aware that NAMA is fully engaged in both the formulation and implementation of public policy aimed at addressing the issue of unfinished housing estates. NAMA is actively represented on the National Co-ordination Committee established to oversee action on unfinished estates and has funded, through its debtors and receivers, the cost of urgent remedial work to address health and safety and other requirements. In terms of the exposure of NAMA debtors and receivers to unfinished housing estates, NAMA advises that of the 243 estates categorised as the most problematic from a public safety perspective, Category 4 estates, 29 or 12% are controlled by its debtors and receivers and 150 or 10% of Category 3 estates are controlled by its debtors and receivers.
34. Deputy Clare Daly asked the Minister for Finance if he will confirm that according to his own projections that there will a 0% increase in the net level of unemployment by the end of 2013 and that even if his projections are realised unemployment will drop by in the region of 2% by the end of 2015; if he will respond to the projections of the Nevin institute that unemployment may even rise over that period; and if he will make a statement on the matter. [1987/13]
View answer49. Deputy Joan Collins asked the Minister for Finance if he will confirm that according to his Department's own projections that there will a 0% increase in the net level of unemployment by the end of 2013 and that even if his projections are realised unemployment will drop by in the region of 2% by the end of 2015; if he will respond to the projections of the Nevin institute that unemployment may even rise over that period; and if he will make a statement on the matter. [1989/13]
View answerI propose to take Questions Nos. 34 and 49 together.
The Department’s most recent forecasts, as published on Budget Day, are for employment growth of 0.2 per cent in 2013. The pace of employment growth is projected to pick-up thereafter, with the result that unemployment is expected to fall to just over 13 per cent by the end of 2015. These forecasts are broadly in line with those of other institutions, with the IMF forecasting an unemployment rate of 13.4 per cent in 2015, while the consensus of the private sector, published in December, is for an unemployment rate of 12.5 per cent by end-2015.
The Nevin Institute’s forecasts are predicated on the assumption of average GDP growth of 0.9 per cent between 2012 and 2015, which is significantly lower than the growth forecasted by both the Department (2.0 per cent) and other forecasters. For instance, the IMF is projecting annual average growth of 1.6 per cent over the period, while the private sector consensus is forcasting average growth of 2.0 per cent over the period.
While unemployment remains stubbornly high, recent trends seem to suggest that some stabilisation has now taken place, with the seasonally adjusted standardised rate at 14.6 per cent in December, having fallen from a peak of 15.0 per cent in February. The Government remains committed to tackling the unacceptably high level of unemployment persisting in Ireland today and creating and sustaining jobs continues to be our main priority. A number of measures were introduced in Budget 2013 to assist in this regard, including several initiative designed to lend support to Ireland’s job-rich SMEs.
However, efforts to address the current employment levels do not stop at Budget 2013. As the Deputy will be aware, I attended the Cabinet Meeting for Jobs today, in which my fellow Ministers and I set forth our respective Department’s proposals to improve the climate for employment growth as part of the Action Plan for Jobs. On the back of this, the Government plans to introduce policy initiatives which will further aid the creation of employment and complement measures previously introduced, such as the VAT reduction for the tourist industry, which research published by my Department indicates has already contributed to employment growth in the accommodation and food services sector.
35. Deputy Catherine Murphy asked the Minister for Finance if a detailed regulatory impact assessment was made in advance of the introduction of the local property tax; if so, if it will be made available; and if he will make a statement on the matter. [1933/13]
View answerThe Local Property Tax was legislated for by way of The Finance (Local Property Tax) Bill 2012. Paragraph 2.20 of the revised Regulatory Impact Assessment guidelines, published in June 2009 and available athttp://www.taoiseach.gov.ie/eng/Publications/Publications_Archive/Publications_2011/Revised_RIA_Guidelines_June_2009.pdf, states that it is not compulsory to apply a regulatory impact assessment to a Finance Bill. In addition, paragraph 2.21 of the guidelines states: the publication of a RIA may not be appropriate in the case of tax law/ regulations or the imposition of charges because of their sensitivity and the need to guard against possible evasion or avoidance.
The inter-Departmental group, chaired by Dr Don Thornhill, which considered the design of a property tax (the ‘Thornhill Group’) and reported to the Minister for the Environment, Community and Local Government, consulted and received submissions from a number of interested parties during its deliberations. The names of the bodies and individuals who made submissions are contained in an Appendix to the report, which is available at http://www.environ.ie/en/PublicationsDocuments/FileDownLoad,31669,en.Pdf.
36. Deputy Kevin Humphreys asked the Minister for Finance if, following the deal provided to Greece by the European Central Bank, wherein ECB profits on Greek bond holdings from the Securities Market Programme and previously the National Central bank investment portfolio will be returned to Greece, he will be seeking a similar arrangement for Ireland; and if he will make a statement on the matter. [1768/13]
View answer50. Deputy Kevin Humphreys asked the Minister for Finance the analysis if any that has taken place within his Department, the National Treasury Management Agency or Central Bank of Ireland on the savings that Ireland could make on its outstanding sovereign debt if it was to retire the holdings of the European Central Bank at the price at which they acquired it in the secondary market meaning the ECB would forego future coupon and capital gains; if no analysis has taken place if he will direct his staff and agencies under his control to engage in such an exercise; his views on whether it is appropriate for the ECB to distribute profits made on its holdings of Irish sovereign debt to other Eurozone Central Banks; and if he will make a statement on the matter. [1769/13]
View answerI propose to take Questions Nos. 36 and 50 together.
The recently agreed package of measures for Greece is designed to help put its economy on a path to sustainable growth and its domestic finances on a sound footing. This package was agreed in the context of the statement by Euro Area Heads of State or Government that the scale of the Greek problem is so large that it requires special attention.
In this regard, on November 26th euro zone finance ministers agreed to partly reschedule Greece's debt, and offer several other measures to alleviate the country’s financial burden. Taken together, these actions are expected to cut Greece's debt by up to 20 percentage points of GDP by 2020. This will bring its debt to GDP level to 124% in 2020, and a debt to GDP level of below 110% is targeted for 2022.
The measures agreed include:
- a debt buyback of bonds held by private investors;
- a reduction of 100 basis points (bp) in the interest rate on the Greek loan facility. Other program countries, such as Ireland, are not required to participate while they are in programs;
- the guarantee commitment fee on EFSF loans, amounting to 10 basis points per annum, is to be cancelled;
- maturities will be extended to 30 years, an increase of 15 years;
- interest payments on EFSF loans will be deferred for 10 years; and,
- the SMP measure: Member States will pass on to Greece's segregated account, an amount equivalent to the income on the Securities Market Programme (SMP) portfolio accruing to their national central bank as from budget year 2013. Again Member States under a full financial assistance programme are not required to participate in this scheme for the period in which they receive financial assistance.
The last of these, the SMP measure, involves a transfer of an accounting profit, but does not involve any retirement of debt by Greece.
It is important to note that the concessions that have been agreed are specific to Greece and are accompanied by significant additional conditionality. In Ireland on the other hand we have entered the final year of our programme. As such our focus is on making a successful exit from the programme.
Ireland is meeting its programme targets, our economy is growing, unemployment is stabilising, yields on our government bonds have fallen considerably, confidence is returning and we have successfully re-entered the international financial markets.
In line with the EU Heads of State or Government commitments in June, discussions are also underway to further improve the sustainability Ireland’s programme. These discussions include our continuing interaction with the EU, the ECB and the IMF (the Troika) on exiting the programme and issues related to our banking debt, including the restructuring of the promissory note.
Ireland’s needs, as a country exiting a programme, are very different to those of Greece. We are however examining the Greek package to see if aspects of it offer any possible benefit to Ireland, particularly in the context of our programme exit.
My officials, along with those of the NTMA and the Central Bank, are continuing to work to improve our success in terms of sustainable market financing. In this context the overall burden and the cost of servicing the outstanding stock of debt is closely monitored, particularly so by the National Treasury Management Agency, and they regularly advise me on this matter.
