Brendan Howlin (Wexford, Labour)

I move:

That, pursuant to Standing Order 177, Standing Order 131 is modified to permit an instruction to the Committee on the Ministers and Secretaries (Amendment) Bill 2011, that it has power to make provision in the Bill to provide for a new Part 5 comprised of two provisions:

- to deem members of staff of the National Treasury Management Agency assigned to perform functions in the Department of Finance to be officers of the Minister for Finance for certain purposes;

- to provide for the independence of the Revenue Commissioners in the performance of certain of their functions; and

- to make necessary consequential amendments to the Long Title.

The motion relates to proposed additions to the Ministers and Secretaries (Amendment) Bill 2011. I thank the Opposition spokespersons for their co-operation in this matter. The additional provisions provide, first, for members of staff of the National Treasury Management Agency, NTMA, assigned to the Department of Finance to be deemed officers of the Minister for Finance for certain purposes and, second, for the independence of the Revenue Commissioners in the performance of certain of their functions.

In regard to the NTMA, it is proposed to insert the following text into the Bill as a Committee Stage amendment:

For the purposes only of any principle or rule of law relating to the performance of the functions of a Minister of the Government, any member of staff of the National Treasury Management Agency for the time being assigned to perform functions in the Department of Finance shall, notwithstanding section 7(4) of the National Treasury Management Agency Act 1990, be deemed to be an officer of the Minister for Finance.

The purpose of the amendment is to clarify the legal status of staff of the NTMA who will shortly be assigned on loan to the Department of Finance. As these staff remain employees of the agency and will not be civil servants during the period of their assignment, there is a need to ensure there will be no legal ambiguity about their ability to perform functions on behalf of the Minister.

The NTMA has played a key role in developing and managing the Government's proposals in tackling the banking crisis. In March 2010 the previous Government delegated a number of important banking system functions of the Minister for Finance to the NTMA. This led to the establishment of the NTMA banking unit to deal with the very significant banking sector challenges facing the State. It has now been decided that the NTMA banking unit should be assigned on loan to the Department of Finance to work more closely with the Minister for Finance, departmental staff, etc. in developing policies and measures to deal with the ongoing banking crisis. A memorandum of understanding to this effect between the Department and the NTMA is being finalised.

In his statement on banking made to this House on 31 March the Minister for Finance outlined a major restructuring of the banking system. He also announced a major reorganisation of the way the Government formulated its banking policy and how it interacted with the banks. The statement specifically provided for the creation of a more integrated decision-making structure among all relevant Departments and agencies with banking responsibilities. It also provided for the enhancement of the capacity of the Department of Finance in the area of banking policy and for ensuring the Department had appropriate policy responsibilities and financial market and banking expertise to advise the Government on potential systemic threats and measures to address them.

The Government is committed to creating a more integrated, streamlined decision-making structure among all relevant Departments and State agencies in dealing with the financial crisis. The assignment of the NTMA banking unit to the Department of Finance forms a central part of this process. The NTMA banking unit contains highly skilled and capable people. It is responsible for a range of matters such as, for example, leading discussions on behalf of the Minister for Finance with senior management of the covered credit institutions on issues related to capital requirements and the restructuring of the banking system; project managing the capital injections into the covered institutions, including the appropriate timing and structures for any capital injections; overseeing the day-to-day legal, regulatory and corporate finance issues that arise in each of the institutions related to the ongoing restructuring of the system, and participating in negotiations with the European Union and the IMF on the terms of the programme of financial support for Ireland. The staff concerned will continue to perform these functions while with the Department but will now have a much closer involvement in the ongoing development of policy and decisions on banking and much closer interaction with the Minister and, where appropriate, the Central Bank. These NTMA staff will be required to carry out various functions on behalf of the Minister.

Deputies will appreciate the importance of addressing legal uncertainty or ambiguity regarding the status of the NTMA staff and their authority to act on behalf of the Minister for Finance. All Members will be aware that the restructuring of the banking system involves complex legal issues and already has led to a number of challenges in the courts. Accordingly, while the proposed amendment is outside the scope of the Ministers and Secretaries (Amendment) Bill 2011 which deals exclusively with the establishment of the new Department of Public Expenditure and Reform, the Government considers it to be appropriate and essential that these amendments be now included in the legislation. I was asked by the Minister to include them because they are regarded as urgent and this was the most suitable vehicle to ensure their early enactment.

The motion also seeks to introduce an amendment to the Bill on Committee Stage to place on a statutory basis the independence of the Revenue Commissioners in the exercise of their statutory functions under the various taxation and customs enactments. The amendment will give effect to the recommendations made in the report of the Tribunal into Payments to Politicians and Related Matters, better known as the Moriarty tribunal, which recommends that the principle or convention of the independence of the Revenue Commissioners be placed on the more robust status of a legislative provision. The Government has accepted and intends to enact this recommendation.

The proposed provision consists of two elements. First, it consists of a clear and unambiguous statement to the effect that the Revenue Commissioners are independent in the performance of their functions under the various taxation and customs enactments. Second, the provision will ensure that neither article 9 of the Revenue Commissioners Order 1923 nor section 9(3) of the Ministers and Secretaries Act 1924 can apply to the Revenue Commissioners in the performance of their functions under the various taxation and customs enactments. Currently, both provisions require the commissioners to obey all orders and instructions given to them by the Minister for Finance. The proposed provision will do no more that place on a statutory basis what is, in fact, the current long-standing practice in this area stretching back to the establishment of the Revenue Commissioners. Moreover, the changes will not apply to Civil Service regulation issues such as pay, conditions of service and other similar matters. Obviously, given my function, I was anxious to ensure no agency would be independent in determining its pay rates and that such determination would be supervised.

At this stage it might be useful to provide some background information on this issue. The Board of Commissioners known as the Revenue Commissioners was established by the Revenue Commissioners Order 1923 to exercise in the State all the functions which were on 6 December 1921 exercisable in the State by the United Kingdom Commissioners of Inland Revenue and the United Kingdom Commissioners of Customs and Excise. The order was made by the Executive Council of Saorstát Éireann under section 7 of the Adaptation of Enactments Act 1922. Article 9 of the Revenue Commissioners Order 1923 provides:

The Revenue Commissioners shall in the exercise of their powers be subject to the control of the Minister for Finance and shall obey all orders and instructions which may be issued to them in that behalf by the Minister for Finance.

This provision, on the face of it, appears to firmly place the Revenue Commissioners under the authority of the Minister for Finance as respects all their functions, including the application of taxation legislation by the commissioners to individual taxpayers. However, it was never intended that the provision should extend to giving authority to the Minister to interfere in individual cases. The then President of the Executive Council, Mr. W. T. Cosgrave, spoke in Dáil Éireann in the course of the debate on the Revenue Commissioners Order. On 20 February 1923 he stated at col. 1487, vol. 2 of the Official Report:

In [article] 9 it is pointed out that "The Revenue Commissioners shall in the exercise of their duty be subject to the control of the Minister for Finance, and shall obey all orders and instructions which may be issued to them in that behalf by the Minister for Finance". In that connection I wish to draw the attention of the Dáil to the fact that in this clause the control of the Minister for Finance will extend to Civil Service matters, but will not affect the computation of any individual as to his liability to any tax.

On the basis of this and other statements made during the years reaffirming the principle of the independence of the Revenue Commissioners in their dealings with the tax affairs of any individual, that principle has acquired the status of a long-standing convention and practice.

Section 9 of the Ministers and Secretaries Act 1924 contains, in subsection (3), a provision that replicates in large measure Article 9 of the Revenue Commissioners Order 1923 and also places the Revenue Commissioners under the direction and control of the Minister for Finance. As the provision largely replicates the provisions of Article 9 of the Revenue Commissioners Order 1923, the relationship between the two provisions is somewhat unclear. However, to provide certainty, it is proposed to modify this provision, as well as Article 9 of the Revenue Commissioners Order 1923, to avoid any doubt as to extent of the independence of the commissioners, as intended by the Government, in their dealings with individual taxpayers.

The Moriarty tribunal's terms of reference, in subparagraph (m), referred to a possible recommendation "for maintaining the independence of the Revenue Commissioners in the performance of their functions while at the same time ensuring the greatest degree of openness and accountability in that regard that is consistent with the right to privacy of compliant taxpayers". In his report Mr. Justice Moriarty acknowledges that the principle of the independence of the Revenue Commissioners in the exercise of their statutory functions regarding the application of taxation and customs legislation has been recognised and observed by all Governments since the establishment of the commissioners and that it now has the status of a long-standing convention. However, Mr. Justice Moriarty went on to make the point that the independence of the Revenue Commissioners is critical to maintaining the integrity of the taxation system and that there should not be any room for doubt in relation to the equal treatment of all taxpayers, or the freedom of the Revenue Commissioners from any political influence or interference in the discharge of their taxation functions. On this basis Mr. Justice Moriarty recommended, "that an amending statutory provision would be appropriate in order to elevate the principle or convention of the independence of the Revenue Commissioners to the more robust status of legislative provision".

As I have stated, the amendment will only apply as respects the Revenue Commissioners performing their functions under the various taxation and customs enactments. The provision has no impact on the relationship of the Revenue Commissioners to Ministers in terms of Civil Service regulation, pay, conditions of employment or other similar matters. The Revenue Commissioners will also remain responsible to the Minister for Finance as respects the overall administration of the taxation and customs systems and will continue to provide advice and support on budgetary and tax and customs legislative matters.

Having regard to the importance placed on this issue by Mr. Justice Moriarty and his recommendation that the long-standing convention be placed on a statutory basis, the Government believes that while the proposed amendment is outside the scope of the Ministers and Secretaries (Amendment) Bill 2011, it is appropriate and essential that the amendment be now included in the Bill. The reasons for this are, first, that the Ministers and Secretaries Act is the appropriate legislative home in which to include a high level statement setting out the relationship of the Revenue Commissioners with the Government; second, given the importance placed on this issue by Mr. Justice Moriarty in terms of the integrity of our taxation systems, the equal treatment of all taxpayers, and the freedom of the Revenue Commissioners from political influence or interference in the discharge of their functions, it is essential that the matter be dealt with at the earliest possible time. For those reason I hope the House will support the inclusion of these two amendments on Committee Stage to be dealt with later in the day.

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