Written Answers Nos. 233-258
233. Deputy Louise O'Reilly asked the Minister for Finance further to Parliamentary Question No. 188 of 1 December 2022, if a retail business displaying a sign stating that cash is not accepted or "card payments only" constitutes "a business specifying payment must be in a form other than cash", and therefore allows a shop to refuse payments in cash; and if he will make a statement on the matter. [11097/23]
View answerThe consumer’s right to use cash as a means of payment is based in contract law in Ireland. In this context, where a business places no restrictions on the means of payment it is prepared to accept, it must accept cash as legal tender when offered by a customer to settle a debt that has arisen.
If a business specifies payment must be in a form other than cash, the customer cannot subsequently claim a legal right to pay in cash. This can be achieved by, for example, placing a sign stating, “cash not accepted” or “card payment only” at the store entrance or check out area.
The Deputy should also be aware that one of the recommendations of the Retail Banking Review was that the Department of Finance should lead on the preparation of a new National Payments Strategy to be completed in 2024.
The National Payments Strategy will set out a roadmap for the future evolution of the entire payments system, taking account of developments in digital payments, the use of cheques and other issues, and guide how future changes should be made to the legislative Access to Cash criteria. The Strategy should be informed by, and aligned with, the retail payment strategies of both the EU Commission and the Eurosystem. The Strategy should also consider and consult on whether:
- To legislate pre-emptively to give the Minister for Finance the power to require certain classes of firms, sectors or sub-sectors to accept or facilitate (to an appropriate level) the acceptance of cash; and;
- If it should be Government policy that public bodies should accept or facilitate the acceptance of cash for the payment of goods, services, taxes, levies, fees or charges.
235. Deputy Jim O'Callaghan asked the Minister for Finance whether the terms of the settlement entered into by the special liquidators of IBRC with a company (details supplied) can be disclosed; and if he will make a statement on the matter. [11144/23]
View answerI am advised by the Special Liquidators of IBRC that as a consequence of a mediation which took place on 23 January 2023, IBRC and EY agreed to settle the proceedings on confidential terms, without admission of liability. It was agreed that the proceedings will be discontinued by the Special Liquidators with no further order. The terms of the settlement are confidential and their disclosure is the subject of a contractual restriction.
237. Deputy Mick Barry asked the Minister for Finance if he will consider legislation to provide the right for people to pay for goods and services in cash; and if he will make a statement on the matter. [11170/23]
View answerThe Retail Banking Review, published in November 2022,recommended that the Department of Finance should develop Access to Cash legislation and prepare heads of a bill in 2023.
The Review also called on Department officials to prepare heads of a bill in 2023 to require ATM operators to be authorised and supervised by the Central Bank and to provide the Central Bank with responsibility and powers to protect the resilience of the cash system including the authorisation and supervision of cash-in-transit firms in respect of their cash handling activities and related financial services.
It is my intention to fully honour this commitment and this work is now underway by officials in my Department. It is intended that one piece of legislation will be drafted for all three recommendations on access to cash.
Following consultation with the Central Bank and other stakeholders, the Department will establish what the appropriate levels of access to cash are to ensure that any further evolution of the cash infrastructure will be managed in a fair, orderly, transparent and equitable manner for all stakeholders.
The Retail Banking Review also recommended that the Department should lead on the preparation of a new National Payments Strategy (NPS) to be ready in 2024. Preparatory work to implement this is now underway. The NPS will set out a roadmap for the future evolution of the entire payments system, taking account of developments in digital payments, cash usage and how future changes should be made to the legislative criteria relating to Access to Cash.
It will also consider if legislation should be introduced to require certain firms or sectors to accept, or facilitate the acceptance of, cash; and if it should be policy to require the public service to accept, or facilitate the acceptance of, cash.
238. Deputy Paul Kehoe asked the Minister for Finance if his Department will review the tax treatment of rental income received by landowners and farmers who rent to those connected to them; if his Department has considered a more equitable system to allow extended farm families avail of the income tax relief; and if he will make a statement on the matter. [11176/23]
View answerSection 664 of the Taxes Consolidation Act 1997 provides relief from income tax for certain income from long-term leasing. The relief is available, subject to a maximum limit, where farm land is leased to a qualifying lessee for a period of five years or more. In order to qualify as a qualifying lessee for the purpose of the relief, the lessee must not be connected with the lessor, or with any of the lessors if there is more than one. The rules for establishing whether or not persons are connected are laid down by Section 10 of the Taxes Consolidation Act 1997 which sets out that a lessor is not entitled to relief where the land is let to family members or family members of their spouse or civil partner.
The restriction on leases between connected persons is intended to prevent the misuse of the exemption. In addition, allowing relief in cases where the land was leased to connected persons could delay succession or lead to the fragmentation of holdings.
It should be noted that the connected party restriction has applied since the introduction of the relief over 30 years ago and I have no plans at present to alter the restriction.
However, as with all such reliefs, my Department regularly reviews tax expenditure measures. Proposals for change are dealt with in the context of the annual Budget and Finance Bill process.
239. Deputy Pauline Tully asked the Minister for Finance the amount of VRT paid on vehicles imported from Britain that have been modified for a person with a disability in 2018, 2019, 2020, 2021 and 2022, in tabular form; and if he will make a statement on the matter. [11182/23]
View answer240. Deputy Pauline Tully asked the Minister for Finance the estimated cost of waiving VRT on vehicles imported by primary medical card holders who need to purchase an adapted vehicle; and if he will make a statement on the matter. [11183/23]
View answer241. Deputy Pauline Tully asked the Minister for Finance the average cost of VRT on a wheelchair adapted vehicle imported from Britain; and if he will make a statement on the matter. [11185/23]
View answerI propose to take Questions Nos. 239 to 241, inclusive, together.
I am informed by Revenue that the Drivers and Passengers with Disabilities (DPD) scheme provides for repayment or remission of VAT and Vehicle Registration Tax (VRT) up to a certain limit on the purchase of an adapted vehicle for the transport of a person with specific severe and permanent physical disabilities.
The table below provides information on the total VRT liability, the amount of VRT refunded, and the net VRT liability paid on used vehicles imported from Britain that have been modified for use by a person with a disability in 2018, 2019, 2020, 2021 and 2022. Typically, between 96% and 99% of all such vehicles qualified for the full exemption of VRT in any given year.
|
Year |
Number of qualifying Vehicles |
VRT Liability €m |
VRT refunded €m |
VRT Paid€m |
|
2022 |
318 |
2.244 |
2.187 |
0.057 |
|
2021 |
305 |
1.921 |
1.876 |
0.045 |
|
2020 |
286 |
1.537 |
1.534 |
0.003 |
|
2019 |
379 |
1.73 |
1.72 |
0.01 |
|
2018 |
316 |
1.364 |
1.343 |
0.021 |
In response to PQ 11183, I am informed by Revenue that it is not possible, based on the information available on tax returns, to estimate the cost of extending the scheme or changing the eligibility criteria. Any such estimate would require details of the proposed wider criteria and the potential level of additional uptake on the scheme.
In response to PQ 11185, I am informed by Revenue that the average cost of VRT on a used disability adapted vehicle imported from Britain, based on the most recently available data, is €6,700, prior to any repayment. The VRT charged is a function of factors such as the age of the vehicle on importation and its emissions. The VRT liability applied to these vehicles ranges from €2,000 to €28,000 for these used imports. The reliefs available under the DPD scheme for VRT and VAT ranges from €10,000 to €22,000 for qualifying registrations.
242. Deputy Pauline Tully asked the Minister for Finance if the Disabled Drivers Medical Board of Appeal has been re-established; and if he will make a statement on the matter. [11186/23]
View answer243. Deputy Pauline Tully asked the Minister for Finance the number of people currently on the waiting list for the Disabled Drivers Medical Board of Appeal; and if he will make a statement on the matter. [11187/23]
View answer259. Deputy Bernard J. Durkan asked the Minister for Finance if he will provide an update in respect of when the issue regarding primary medical certificates will be resolved in order to facilitate those whose cases are in abeyance for some time in the first instance, and to meet the requirements of persons with disabilities who have mobility problems; and if he will make a statement on the matter. [11568/23]
View answerI propose to take Questions Nos. 242, 243 and 259 together.
As the Deputy is aware the previous members of the DDMBA resigned effective from 30th November 2021. Since then two Expression of Interest campaigns have been held, seeking suitable candidates for the Board. The Department of Health has led on all actions and tasks with respect to the Expression of Interest Campaigns. Department of Finance officials have provided support to the Department of Health in this matter.
The first campaign closed on 29th April. As there were insufficient suitable candidates arising from the first campaign, a second round was issued with a closing date of 5th July 2022. Five members are legislatively required for a functional Board with a quorum of three needed for any appeal hearing. Two other candidates were recently nominated by the Minister for Health. All five candidates have now successfully completed Garda Vetting.
I had hoped that I could finalise these appointments and recommence the work of DDMBA in the next few weeks. However, the National Rehabilitation Hospital (NRH) has recently indicated that it wishes to cease its involvement with the scheme, and as its facilities and secretarial service, which are funded by my Department, are integral to the operation of the DDMBA, it may take time to put in place feasible and appropriate alternative arrangements to enable the appeals process to re-commence.
However, you should be aware that assessments for the primary medical certificate, by the HSE, are continuing to take place. In this regard, an important point to make is that even though there has been no appeal mechanism since the previous Board resigned, applicants who have been deemed not to have met one of the six eligibility criteria required for a PMC are entitled to request another PMC assessment six months after an unsuccessful PMC assessment.
Finally, as of 31st December 2022, there are currently 759 people awaiting an appeal hearing with 382 of those dating back to 2021 and the remaining 377 people applying for an appeal in 2022.
244. Deputy Peadar Tóibín asked the Minister for Finance if it has been brought to his attention that Irish grocery price inflation hit a new record of 16.3% in February 2023. [9819/23]
View answerOver the past year, Ireland has experienced a broad-based and decades-high surge in inflationary pressures. The key driver of these pressures has been Russia’s war in Ukraine and Putin’s weaponisation of gas supplies. This has driven a sharp rise in energy prices across the world economy with Europe at the epicentre of the energy price shock. Spillover effects from higher energy prices have also been felt in other sectors such as food (via higher fuel and fertiliser costs) and consumer goods (via higher energy inputs), with non-energy or ‘core’ inflation also picking up over the course of last year.
Consumer price (HICP) inflation peaked at around 9½ per cent in Ireland last summer and averaged just over 8 per cent over the course of the year. These levels of inflation have not been seen in many decades, with an average annual rate of inflation of around ½ per cent recorded across the previous ten years. Almost every advanced economy is in a similar position, with euro area inflation reaching an average of just under 8 ½ per cent last year.
Incoming data suggest that inflation has begun to moderate in recent months. The prices of oil and non-energy commodities have retreated from the highs reached in the immediate aftermath of Russia’s invasion of Ukraine. The easing in wholesale energy and commodity markets over the past months supports the idea that inflation has now peaked and is on a downward trajectory. While inflation in Ireland remained elevated at 8 per cent in February, this marks a decline of around 1.5 percentage points from last summer’s peak.
Notably, according to the CSO’s Consumer Price Inflation release for February, food and non-alcoholic beverages prices were up 13.4 per cent on an annual basis and up 1.2 per cent on a monthly basis. This represents the highest annual rate on record and reflects the continued inflationary pressures faced by households.
Government has responded swiftly and decisively to the cost of living challenge to date. Budget 2023 was a cost of living budget focused on progressive and targeted measures to ease the impact of inflation without adding further inflationary pressures in the economy. Over recent weeks the Government has announced further cost of living supports amounting to around €1.3 billion, including a range of taxation and expenditure measures.
My department continues to closely monitor inflationary developments on a regular basis and will publish updated inflation forecasts alongside the Stability Programme Update in April.
245. Deputy Mairéad Farrell asked the Minister for Finance if the renter's credit introduced in Budget 2023 is in the baseline and a recurring measure going forward; and if he will make a statement on the matter. [11213/23]
View answerThe €500 rent tax credit introduced in Budget 2023 will be available until 2025, at an estimated cost of €200 million per year.
In 2023 renters can claim the relief in respect of rent paid in both 2023 and in 2022. This is reflected in my Department’s fiscal projections, which incorporate a €400 million impact from the rental credit for 2023 and €200 million thereafter until 2025.
246. Deputy Róisín Shortall asked the Minister for Finance when the Revenue Commissioners' public office on Cathedral Street, Dublin 1 will reopen to the public again as a walk-in public service without appointment necessary; if the public inquiry telephone numbers are now available again as normal; and if he will make a statement on the matter. [11256/23]
View answerI am advised by Revenue that the operating structures of its public offices are constantly under review to ensure that taxpayers can avail of assistance as needed. Revenue’s provision of a full range of online, secure, and easy to use services, including an online communication channel, for taxpayers to manage their tax affairs, largely removes any requirement to attend public offices.
For taxpayers who, for a variety of reasons, may not have access to the online services, Revenue offers extensive support across its various telephone helplines and a full service for queries being received through the postal system. To supplement those services, the appointment service allows customers to schedule either a virtual or in person appointment at a time that suits them, eliminating queue waiting times that are a feature of any “walk in” service. In person appointments are available at the Revenue offices in Dublin, Cork, Galway and Limerick and can be arranged by calling the Appointment Helpline on 01 738 36 60, from 9.30am to 1.30pm, Monday to Friday.
The PAYE Helpline operates from 9.30am to 1.30pm, Monday to Friday. Analysis of PAYE taxpayer phone activity indicates that most phone contacts are received during the morning with much reduced demand in the afternoon and these opening hours ensure that the service is there to meet demand while also making adequate resources available to provide timely replies to queries received through the increasing online channel and through the post. Revenue’s PAYE service is currently answering on average 3,200 calls and responding to 6,000 items of correspondence per day.
The current deployment of resources and the model of both the PAYE phone service and our online service reflects both demand levels from PAYE taxpayers and the need to provide an efficient and cost-effective service. Revenue continuously reviews its service channels and deploys its resources on an agile basis to meet demand.
247. Deputy Carol Nolan asked the Minister for Finance if his Department supports the use of gender-neutral pronouns in the drafting of legislation or policies initiated by or originating in his Department; and if he will make a statement on the matter. [11270/23]
View answerThe drafting of legislation is undertaken by Office of the Parliamentary Counsel to the Government, within the Attorney General’s Office, on the instructions of Government Departments, including the Department of Finance. The final text as enacted is, of course, ultimately a matter for the Oireachtas.
The drafting of legislation takes place in the context of section 18 of the Interpretation Act 2005. Section 18(b) provides that “a word importing the masculine gender shall be read as also importing the feminine gender” and, for legislation passed or made after 22 December 1993, “a word importing the feminine gender shall be read as also importing the masculine gender”. Of course, this rule only applies “except in so far as the contrary intention appears”. Despite this general rule of interpretation, it is the general practice of the Office of the Parliamentary Counsel to the Government to use gender neutral language in drafting legislation, and my Department is supportive of this policy.
248. Deputy Pearse Doherty asked the Minister for Finance further to Parliamentary Question No. 234 of 28 February 2023, if the introduction of provisions to require reimbursement from payment service providers to victims of authorised push payment fraud domestically would contravene the revised Payment Service Directive (PSD2), given the response provided to the question did not clarify the issue. [11308/23]
View answerAs I outlined in my reply to Parliamentary Question No. 234 of 28 February 2023, PSD2 is a maximum harmonisation directive and this means that Member States may not introduce new provisions beyond those laid down in the Directive when transposing it. In addition, it follows that such provisions elsewhere should not contravene PSD2.
I also outlined that PSD2 did not directly deal with the issue of authorised push payment fraud.
However, the introduction of domestic legislation requiring reimbursement from payment service providers to victims of authorised push payment fraud could lead to unintended consequences and introduce impediments into the payment system, causing roadblocks for ordinary users. While preventing fraud is a priority, it is important that any action taken to solve this issue must be considered within the wider European context given the complexities of the issue.
An additional complication is that fraud of the nature described by the Deputy does not fall easily under any one heading: there is no one categorisation of push payment fraud.
While the requirement for strong customer authentication (SCA) prevents some types of fraud, push payment fraud is usually a fraud that involves a level of social engineering where victims are manipulated into making real-time payments to fraudsters. The fraudster may trick the victim into believing that they are bank employees, employees of other businesses, a friend etc. These type of frauds are called cyber-enabled frauds.
The European Commission are currently undertaking a review of PSD2, which is expected to cover a wide variety of areas related to the Directive, including the issue of authorised push payment fraud.
As part of its review, the European Commission issued a call for advice to the European Banking Authority (EBA) and the matter of authorised push payment fraud/social engineering was addressed. The EBA in their response outlined that they have “identified the increased risk of social engineering fraud as an area where further improvements in the legal framework are needed to address the increase of fraudulent transactions, in particular authorised push payment fraud where fraudsters use social engineering scams (i.e. phishing) in combination with more sophisticated online attacks”.
In their response, the EBA proposes that the any revised PSD2 should introduce a combination of measures that could have a positive effect and further mitigate these types of risks. The measures could include
- The introduction of specific requirements in the Directive on educational and awareness programs for applicable risks;
- Incentivising payment service providers (PSPs) to invest in more efficient transaction monitoring mechanisms by covering payment transactions that have been authorised by the payer under manipulation of the fraudster within the scope of unauthorised payment transactions; and
- Facilitating the exchange of information between PSPs in relation to known cases of fraud, specific fraudsters and accounts used to carry out fraud.
Officials from my Department have been engaging with the Commission’s review on areas of Irish interest, including the prevention of fraud. It is likely that when the review is complete the Commission will bring forward a proposal for a new Directive (PSD3).
249. Deputy Jennifer Murnane O'Connor asked the Minister for Finance the number of County Carlow businesses that have applied for assistance under the temporary business energy support scheme to date; the number of them that have been successful; the estimated value or worth of the support to date for businesses in County Carlow; and if he will make a statement on the matter. [11311/23]
View answerThe Temporary Business Energy Support Scheme (TBESS) was introduced to support qualifying businesses with increases in their electricity or natural gas costs over the winter months.
Details of the scheme are set out in Finance Act 2022. The scheme provides support to qualifying businesses in respect of energy costs relating to the period from 1 September 2022 to 30 April 2023. However, subject to State aid approval, this period is to be extended to cover energy costs up to 31 May 2023. It is available to tax compliant businesses carrying on a trade or profession the profits of which are chargeable to tax under Case I or Case II of Schedule D where they meet the eligibility criteria.
The TBESS operates by reference to bills for the metered supply of natural gas and electricity. It is available to eligible businesses whose average unit price of electricity or gas for the relevant billing period has increased by a certain percentage as compared with the average unit gas or electricity price in the corresponding reference period in the previous year. Currently the relevant percentage is 50% however, as recently announced, and subject to State aid approval, this percentage is to be reduced to 30% on a retrospective basis, which will allow more businesses to qualify. Amounts payable under the TBESS are calculated based on a percentage of the increase in an electricity or natural gas bill as compared to a bill amount in a corresponding reference period in the previous year. Currently, the payment is based on 40% of the increase however, subject to State aid approval, this is to be raised to 50% for claim periods from 1 March 2023.
Revenue publishes detailed statistical reports in relation to the TBESS which are updated on a weekly basis. These reports are available on Revenue’s website. The registrations and claims for County Carlow as of 1 March 2023 are as follows:
|
County |
Registrations |
Approved Claims |
Value of Approved Claims (€m) |
|
Carlow |
367 |
338 |
0.79 |
251. Deputy Alan Dillon asked the Minister for Finance the measures he intends taking to expand the eligibility for the temporary business energy support scheme; and if he will make a statement on the matter. [9226/23]
View answerThe Temporary Business Energy Support Scheme (TBESS) was introduced to support qualifying businesses with increases in their electricity or natural gas costs over the winter months.
TBESS is provided for in Sections 100 to 102 of the Finance Act 2022. The scheme is administered by Revenue and initially provided support to qualifying businesses in respect of energy costs relating to the period from 1 September 2022 to 28 February 2023. The scheme operates by reference to bills for the metered supply of electricity and natural gas through electricity accounts or gas connections identified by a businesses own Meter Point Reference Number (MPRN) or Gas Point Reference Number (GPRN). It provides for a cash payment to qualifying businesses impacted by the unprecedented increase in energy costs resulting from the military aggression by Russia in Ukraine. The scheme is subject to State aid approval under the European Commission’s Temporary Crisis Framework for State Aid measures to support the economy following the aggression against Ukraine by Russia (TCF).
I have announced a number of significant enhancements to the scheme so that additional businesses can benefit from this vital support.
The scheme was originally due to expire on 28 February 2023. While the Government confirmed its decision to extend the scheme to 31 May 2023, pending introduction of necessary legislation to make this change, and to facilitate the continuation of the scheme in the meantime, I have exercised the power contained in section 100 of the Finance Act 2022 to extend the scheme to 30 April 2023. I also exercised the power to increase the monthly limit on aid under the scheme to €15,000 per trade or profession, subject to an overall cap of €45,000 in cases where a business is carried on from more than one location. The increased caps apply from 1 March 2023.
In addition, there will be further amendments to the scheme, which will be made via legislation and are subject to State aid approval as they go beyond what is allowed in the Finance Act 2022.
The additional proposed enhancements include:
- extending the scheme to 31 May 2023 with an option to further extend to 31 July 2023
- reducing, with effect from 1 September 2022, the energy cost threshold for qualification for the scheme from a 50% increase in electricity or gas average unit price to a 30% increase
- increasing, from 1 March 2023 the level of relief from 40% to 50% of eligible costs
- extension of the time limit for making a claim under the scheme to 31 July 2023.
Revenue publishes detailed statistical reports in relation to the TBESS which are updated on a weekly basis. These reports are available on Revenue’s website. As of 1 March 2023 25,423 businesses have registered for the scheme, 23,833 claims have been approved with a value of €51.65 million.
252. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he and his Department continue to monitor economic progress with a view to ensuring that inflation continues to be curbed and that the reduction in inflation is passed on to the consumer by way of lower prices; and if he will make a statement on the matter. [6897/23]
View answerConsumer price (HICP) inflation picked up sharply over the past year, with average annual inflation of just over 8 per cent recorded in 2022, compared with around ½ per cent over the past decade on average. Almost every advanced economy is in a similar position, with euro area inflation reaching an average of just under 8½ per cent last year. The primary driver of global inflationary pressures has been the war in Ukraine, which induced a sharp rise in energy, food, and other commodity prices. Spillover effects from higher energy prices have also been felt in other sectors such as food and consumer goods, with non-energy or ‘core’ inflation also picking up over the last year.
While inflation in Ireland remained elevated at 8 per cent in February, this marks a decline of around 1½ percentage points from 9½ per cent in October. The recent decline in inflation has been primarily driven by an easing in wholesale energy markets. These latest developments support the idea that inflation has now peaked and is on a downward trajectory.
Due to the recent easing of wholesale energy prices, inflation this year is now expected to be lower than anticipated at Budget time. However, as gas prices are not expected to return to their long run average levels in the medium term, the price level consumers face will remain elevated, and the rate of inflation is likely to remain well above the 2 per cent rate that is consistent with price stability for some time. Furthermore, due to continued energy supply concerns there remains significant uncertainty around the outlook for inflation.
The Government is aware of the impacts of rising prices on households and firms. Budget 2023 was a cost of living budget focused on mitigating inflationary pressures. Budget 2023 included a total package of €11 billion, of which €4.1 billion consisted of one-off cost of living measures which took effect from the final quarter of last year. This was on top of some €3 billion in costs of living measures introduced earlier in the year. Over recent weeks, the Government has announced further measures amounting to around €1.3 billion, including a range of taxation and expenditure measures. This approach balances the need to provide necessary fiscal support to households and firms while avoiding a situation in which the Government’s response becomes part of the inflation problem.
My Department will continue to closely monitor inflationary development over the coming months and will publish updated inflation forecasts as part of the Stability Programme Update in April.
253. Deputy Bernard J. Durkan asked the Minister for Finance when it is likely that measures to reduce inflation will be passed on to the consumers; and if he will make a statement on the matter. [6898/23]
View answerConsumer price (HICP) inflation picked up sharply over the past year, with average annual inflation of just over 8 per cent recorded in 2022. This compares with average inflation of around ½ per cent over the preceding decade. Almost every advanced economy is in the same position, with euro area inflation averaging around 8½ per cent last year.
The key driver of global inflationary pressures over the past year has been the sharp rise in energy, food and other commodity prices as a result of the war in Ukraine. Spillover effects from higher energy prices have also been felt in other sectors such as food (via higher fuel and fertiliser costs) and consumer goods (via higher energy inputs), with non-energy inflation also picking up last year.
On a positive note, the recent easing in wholesale energy markets suggests that inflation has now peaked and is on a downward trajectory. While inflation remained elevated at 8 per cent in February, this marks a decline of over 1½ percentage points from the peak of 9.6 per cent recorded last summer, and the more recent 9.4 per cent recorded in October. At the time of Budget 2023, the Department forecast average annual inflation of just over 7 per cent for this year. However, due to the recent easing of wholesale energy prices, inflation this year is now expected to be lower than anticipated. Despite this easing, however, the price level consumers face will remain elevated. Furthermore, the pathway back to more ‘normal’ rates of inflation remains uncertain and may not be smooth.
The Government is acutely aware of the impact of rising prices on households and firms. That is why Budget 2023 focused on mitigating inflationary pressures. Budget 2023 included a total package of €11 billion, of which €4.1 billion consisted of one-off cost of living measures which took effect from the final quarter of last year. This built upon a suite of policy interventions already in place prior to the Budget amounting to €3 billion. Additionally, the Government, last month, announced further supports amounting to around €1.3 billion, including both taxation and expenditure measures. The one-off or temporary nature of these measures balances the need to provide timely and targeted fiscal support to the most vulnerable households while, at the same time, avoiding adding to inflationary pressures.
My Department will continue to monitor inflationary developments closely over the coming months and publish updated inflation forecasts as part of the Stability Programme Update in April.
255. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he can continue to take measures to control the cost of living without contributing to inflation; and if he will make a statement on the matter. [11564/23]
View answer263. Deputy Bernard J. Durkan asked the Minister for Finance the steps that might be taken to alleviate price increases with consequent inflation affecting consumers throughout the country at large; and if he will make a statement on the matter. [11572/23]
View answerI propose to take Questions Nos. 255 and 263 together.
Consumer price (HICP) inflation picked up sharply over the past year, with average annual inflation of just over 8 per cent recorded in 2022. This compares with average inflation of around ½ per cent over the preceding decade. Almost every advanced economy is in the same position, with euro area inflation averaging around 8½ per cent last year.
The key driver of global inflationary pressures over the past year has been the sharp rise in energy, food and other commodity prices as a result of the war in Ukraine. Spillover effects from higher energy prices have also been felt in other sectors such as food (via higher fuel and fertiliser costs) and consumer goods (via higher energy inputs), with non-energy inflation also picking up last year.
On a positive note, the recent easing in wholesale energy markets suggests that inflation has now peaked and is on a downward trajectory. While inflation remained elevated at 8 per cent in February, this marks a decline of over 1½ percentage points from the peak of 9.6 per cent recorded last summer and the more recent 9.4 per cent recorded in October. At the time of Budget 2023, the Department forecast average annual inflation of just over 7 per cent for this year. However, due to the recent easing of wholesale energy prices, inflation this year is now expected to be lower than anticipated. Despite this easing, however, the price level consumers face will remain elevated. Furthermore, the pathway back to more ‘normal’ rates of inflation remains uncertain and may not be smooth.
The Government is acutely aware of the impact of rising prices on households and firms and has provided around €12 billion in cost of living supports to date. Budget 2023 included €4.1 billion in one-off cost of living measures which took effect from the final quarter of last year. This built upon a suite of policy interventions already in place prior to the Budget amounting to €3 billion. Additionally, the Government, last month, announced further supports amounting to around €1.3 billion, including both taxation and expenditure measures. The one-off or temporary nature of these measures balances the need to provide timely and targeted fiscal support to the most vulnerable households while, at the same time, avoiding adding to inflationary pressures.
However, it is essential that Government strikes the appropriate balance between assisting where we can today and ensuring we are prepared to meet the challenge that we know are ahead. Nevertheless, my Department will continue to monitor inflationary developments closely over the coming months and publish updated inflation forecasts as part of the Stability Programme Update in April.
256. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he and his Department continues to examine the contributory factors to inflation; the extent to which each and any can be controlled; if he will outline any trends likely to emerge in this regard; and if he will make a statement on the matter. [11565/23]
View answerOver the past year, almost every advanced economy has had to grapple with the effects of multi-decade high levels of inflation, driven by the surge in global energy prices. In Ireland average annual inflation stood at just over 8 per cent for 2022 as a whole, significantly higher than the ½ per cent average rate of inflation recorded for the previous decade. This has had a significant impact on all facets of our economy. Spillover price pressures from higher energy prices have become evident in other sectors apart from energy, such as food (via higher fuel and fertiliser costs) and consumer goods (via higher energy inputs). Indeed, non-energy inflation stood at 5.8 per cent in February 2023.
A positive development is the recent easing in wholesale energy markets which suggests that inflation has now peaked and is on a downward trajectory. While inflation remained elevated at 8 per cent in February, this represents a decline of over 1½ percentage points from the peak of 9.6 per cent recorded last summer, and the more recent 9.4 per cent recorded in October. At the time of Budget 2023, the Department forecast average annual inflation of just over 7 per cent for this year. However, due to the recent easing of wholesale energy prices, inflation this year is now expected to be lower than previously anticipated. Despite this easing, however, the price level consumers face will remain elevated.
Furthermore, the pathway back to the 2 per cent target rate of inflation remains uncertain and may not be smooth.
The Government recognises the impact of rising prices on households and firms and has provided a total of around €12 billion in cost of living supports to date. Budget 2023 was a “cost of living” Budget, primarily focused on mitigating inflationary pressures. Budget 2023 included a total package of €11 billion, of which €4.1 billion consisted of one-off cost of living measures which took effect from the fourth quarter of last year, with the €7 billion in permanent measures also containing a large cost of living element. This built upon a number of policy interventions already in place prior to the Budget which amounted to €3 billion. Additionally, the Government, last month, announced further supports amounting to around €1.3 billion, including both taxation and expenditure measures. The one-off or temporary nature of these measures balances the need to provide timely and targeted fiscal support to the most vulnerable households while, at the same time, avoiding adding to inflationary pressures.
My Department will continue to monitor inflationary developments closely over the coming months and publish updated inflation forecasts as part of the Stability Programme Update in April.
257. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which this country’s economy continues to compete with other European economies inside and outside the Eurozone; and if he will make a statement on the matter. [11566/23]
View answer260. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he remains satisfied regarding this country’s economic growth trends, with particular reference to the need to compete with other European countries in terms of stability and growth; and if he will make a statement on the matter. [11569/23]
View answerI propose to take Questions Nos. 257 and 260 together.
Ireland is currently facing many of the same economic headwinds as the wider European economy. Over the past year, almost every advanced economy has had to grapple with the effects of multi-decade high inflation, driven by the surge in global energy prices.
In Ireland average annual inflation stood at just over 8 per cent for 2022 as a whole, significantly higher than the ½ per cent inflation recorded for the previous decade. The elevated level of inflation has had a real impact on households and businesses, with weak economic activity in the domestic economy in the second half of last year.
Against this backdrop, growth in the domestic economy is expected to remain subdued this year as inflationary pressures continue to erode household incomes and weigh on consumer spending, albeit with inflation expected to fall over the year. However, the Irish economy has proven resilient and Ireland is facing into this year from a relatively strong economic position. Indeed, the number of people in employment was recorded at over 2½ million in the fourth quarter of last year, a record level, while the unemployment rate stood at just 4.3 per cent in February – close to the lowest on record. Furthermore, emerging international data suggests that the outlook for the global economy may not be as pessimistic as had originally been thought.
Although projected growth in MDD - my preferred domestic indicator - for this year is low compared to non-Covid years, it compares favourably with our European peers. For 2023, the European Commission recently forecast GDP growth of 0.9 per cent and 0.8 per cent for the Euro area and the EU respectively and the IMF has forecast GDP to fall by -0.6 per cent in the UK.
My Department will update its macroeconomic forecasts as part of the Stability Programme Update next month.
258. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which employment in Ireland’s international financial services has increased since 2021; the trends emerging in this regard; and if he will make a statement on the matter. [11567/23]
View answerThe current estimate from the enterprise agencies IDA Ireland and Enterprise Ireland is that direct employment in the international financial services sector stood at around 56,000 at the end of 2022. This is an increase of over 3,000 in the numbers employed compared to the end of 2021. In addition to these high-value jobs, there are many more thousands of people who are employed indirectly in professional services for which the international financial services sector generates a demand.
Ireland for Finance is the whole-of-Government strategy for the further development of Ireland’s international financial services sector. The Update to Ireland for Finance was launched in October 2022 and its vision is for Ireland to continue to be a top-tier location of choice for specialist international financial services and to enhance and protect our future competitiveness. The employment target of the updated strategy is to achieve a further net increase of 5,000 people in direct employment in the international financial services sector (above the target set out in the previous iteration of the Ireland for Finance strategy). This target applies for the period of the updated strategy, from January 2023 to December 2026.
The Government continues, through the IDA and other agencies, to promote the attractiveness of Ireland as a global location of choice for specialised international financial services, building on our strengths in talent, technology, innovation, excellent client service, stable and consistent policymaking and an open economy while also focusing on capturing on new opportunities in a changing market and embracing the highest forms of governance.
The nature, scale and complexity of Ireland’s international financial services sector is changing and will continue to change in a number of ways as a result of the financial services investments won in recent years, including both firms relocating from the UK following Brexit and firms looking to set up operations in the EU for the first time. The industry in Ireland has become broader and more diverse with more firms carrying out a greater range of regulated activities than at any time.
Despite the risks from current geopolitical changes, the Government believes that Foreign Direct Investment opportunities for Ireland will be on-going, however, investment will be hard won, and it will require continuing whole-of-Government support and private sector participation.
The role of our various indigenous firms in strengthening the financial services sector should also be noted. In the past, several Irish-based firms have achieved unicorn status with a valuation of $1 billion, demonstrating that Ireland is a location to grow and develop a business. Jobs in this sector have continued to grow since 2021. It is essential that we focus on strengthening the competitive position of our indigenous businesses to ensure they remain a key employer in the Irish market and can expand into new markets.
