Stephen Donnelly (Wicklow, Social Democrats) | Oireachtas source

Thank you. I have a few questions which I will rattle through now and then the witnesses can address them. The first is on the Anglo Irish Bank promissory note which I believe has budgetary implications. The Central Bank has taken a different payment schedule to the minimum that was agreed or the profile that was negotiated on the night it was voted through. I appreciate that the witnesses will not have the figures with them today but I ask them to supply to the committee the figures showing the minimum profile that was agreed as part of the Anglo Irish Bank promissory note deal in terms of €500 million per year that had to be sold off and so forth as well as figures on what the Central Bank has actually done. My understanding is that it has been turned into sovereign debt significantly ahead of requirement. I also ask the witness to provide the committee with data on the implications for the fiscal space if Ireland were to take the decision to pause these payments.

I pose my second question in the context of the vulture funds and the decision that has been taken to close down the section 110 status they are using to avoid paying taxes on economic activity and profits generated on such activity in Ireland. I know the Central Bank has written a paper on shadow banking and has raised various concerns because, as Deputy Boyd Barrett said earlier, nobody really knows what is going on. Neither the Central Bank nor anyone else knows the risks. We do not really know what is happening in the shadow banking world. The Central Bank is beginning to collect data on the special purpose vehicles, SPVs, but obviously there is a whole other piece to it which the bank, as I understand it, has not even started looking at as it is currently focused on trying to get its head around the SPV area.

One very serious area of potential tax avoidance, again on economic activity entirely within Ireland, is the real estate investment trusts, REITs. I am being told that while local landlords are paying an awful lot of tax on rental income, which is subject to PRSI, USC and so forth, some REITs are using similar tax avoidance mechanisms essentially to offshore all their profits. I imagine this is something the Central Bank has an opinion on, certainly within the context of its examination of the shadow banking sector. Does the Central Bank have a view on this? Is it something the bank is looking at and can it advise this committee on it? I and my colleagues will be looking for data on the projected impact of closing down the vulture fund loopholes on the fiscal space. I would like to know if the Central Bank has a view on the same question for the REITs.

My third question is on lending rates in Ireland. The commercial sector is paying significantly more for loans here than in Germany or France. The banks have told the finance committee in previous years that this was because of their own costs of lending and that the margin that Irish banks are making is no higher than anywhere else. If lending rates can be brought down, I imagine we will see significantly more private sector investment, economic growth and job creation.

Does the Central Bank have a view on how the State can help the commercial banks reduce their average costs of capital so they can pass on those reductions to businesses in Ireland for lending?

I will finish with a technical question. Dr. Fagan referred at some length to the new calculation and to the fact that we try to understand what is going on in the Irish economy. GDP is "C+I+G+(X - M)". We are using "C", consumer spending; some of "I", commercial investment minus aircraft leasing and intangible assets; and "G". So "C+I+G" is there with "I" adjusted. If I understand correctly, the bank has taken out the "(X-M)" bit, which is net exports. That makes sense to me if they are multinational net exports because they do not necessarily reflect what is happening in the real economy in Ireland. Why has the bank taken out "(X-M)" for the indigenous sector? It seems that this piece is a legitimate area for consideration for real economic activity in Ireland.