At the outset, Deputies will understand that the Minister for Finance is constrained about what he can disclose to the House in respect of a competitive sales process in regard to the sale currently under way in respect of Quinn Insurance Limited, including the participation of any party to that process. It is important to keep in mind that responsibility for the sales process is a matter for the joint administrators who were appointed by the High Court. The administrators are currently deciding on a preferred bidder with a view to entering into detailed discussions with them to seek to conclude an agreement on the sale of Quinn Insurance Limited. It is important in that context that the confidentiality of the process is respected and that we remain careful in our debate to ensure the fair process and the commercial nature of the transaction are respected.
Deputies will be aware that the Minister for Finance has responsibility for the development of the legal framework governing financial regulation. The day to day responsibility for the supervision of financial institutions, however, is a matter for the Central Bank, which is statutorily independent in the exercise of its regulatory functions. It was in this independent capacity that the Central Bank, then the Financial Regulator, applied to the High Court to have Quinn Insurance Limited placed in administration.
For the benefit of the House, it made its decision because it had a number of concerns in respect of the financial position of the company, the manner in which it was being managed, and its inability to comply with supervisory regulation. These concerns included an ongoing breach of the Central Bank-imposed solvency ratios; the discovery of guarantees, through unregulated property subsidiaries, to senior lenders - a syndicate of banks led by Barclays and a number of bondholders - over insurance company assets which the Central Bank was unaware of until March 2010 and which had the potential to significantly increase its solvency shortfall; and the manner in which the business was being managed raised governance and accountability questions about the internal control mechanisms as well as the accounting and administration procedures and practices within the company.
The appointment of the joint administrators, pursuant to the Insurance (No 2) Act 1983, to take over the management of Quinn Insurance Limited was taken in the best interests of the firm’s policyholders to allow the firm to remain open for business and to continue to be run as a going concern with a view to placing it on an ongoing sound commercial and financial footing.
From the outset the joint administrators have concentrated on fulfilling this agenda and one of their main aims is to ensure that the value of the business was maintained in order to make it as attractive as possible to potential buyers. A key factor here was the reopening of the profitable parts of the UK business.
In response to a detailed case from the joint administrators, the Central Bank, in the first instance, allowed Quinn Insurance Limited, QIL, to reopen private motor insurance business by the end of April. As part of its consideration, the bank considered the information provided by the administrators in regard to key improvements in the company’s underwriting model and significant strengthening of its pricing structure. It also consulted closely with the UK Financial Services Authority. Later on, the administrators also sought to have the commercial lines of business in the UK re-opened. However, the Central Bank decided in September that such a move would not be appropriate as QIL would require additional capital which it currently does not have.
The next significant step was the appointment by the High Court on 3 June 2010 of advisers on any prospective sale of Quinn Insurance Limited at the request of the joint administrators. The advisers, on behalf of the joint administrators, issued an information memorandum on 27 August 2010 on the sale of the company to interested parties which set out a two stage process for selecting a purchaser. The first stage required the submission of a non-binding indicative proposal by Friday, 17 September 2010.
The Minister for Finance understands that following evaluation by the advisers and the joint administrators of the above mentioned proposals, a limited number of prospective purchasers were shortlisted by the administrators to participate in phase two of the sale process. They have conducted further due diligence, including the consideration of the necessary commercial information, enabling them to make a final bid.
The joint administrators are currently considering the final bids. In doing this the Deputies should note that the administrators are working to find a solution that addresses the issue of putting the company back on a sound commercial and financial footing. As part of that process their role is to assess bids which will protect the interests of policyholders and which will enable the company to continue to operate as a going concern. The retention and protection of employment is another important element of the administrators’ responsibilities subject, as always, to their statutory responsibilities.
Once a preferred bidder is chosen the administrators will enter into detailed discussions with them to seek to conclude an agreement. The Minister for Finance understands that the administrators wish to conclude a sale transaction as soon as possible.
As the Deputies will know, the final decision of the joint administrators is subject to the approval of the High Court. It is important to be clear that neither the Minister for Finance nor the Government has any input or influence over the administration process, including any decision on the sale of the company. It should be noted, however, that he is very conscious of the employment implications of any decision made by the joint administrators in regard to the sale of Quinn Insurance Limited and is keen that as many jobs as possible are safeguarded as part of this process. However, the Minister is of the view that it is inappropriate to speculate as to what may happen in regard to jobs before any decision is made on the sale of the company.
Nevertheless, the Deputies will be aware that last year, in response to the developments in Quinn Insurance and its impact on the employees’ jobs, the Minister, Deputy Batt O’Keeffe, established an inter-agency team comprising Enterprise Ireland, FÁS, IDA Ireland, the relevant county enterprise boards and the Department of Social Protection. The group meets regularly under the chairmanship of Dan Flinter.
The Minister, Deputy O’Keeffe, considers that the inter-agency team has been an effective solution to co-ordinate the activities of the relevant Departments, State development agencies and county enterprise boards in order to support employment opportunities for the people concerned.
The Government continues to monitor the position on employment and the Quinn Group generally. That is why the outcome of the sales process is important in putting the company back on a sound commercial and financial footing. This is the best way of protecting jobs and the wider interests of the taxpayer.
]]>Under section 10 of the Local Government (Financial Provisions) Act 1978, the Minister may, with the consent of the Minister for Finance, issue a direction in writing to a local authority to limit the ARV. Such a direction must be issued before the adoption by the authority of an estimate of expenses relating to the local financial year specified in the direction. In the period 1999 to 2002, the then Minister for the Environment and Local Government directed local authorities to limit increases to a percentage of the previous year’s ARV. Rates were increasing during this period and it was intended at the time that the cap would help ensure the right balance was struck between meeting the financial needs of local authorities and providing that the rates demand on the business sector was not excessive. In subsequent years it was left to local authorities to determine the appropriate ARV, having regard to their individual circumstances.
Local authorities appreciate these are difficult economic times for many businesses. They have taken a number of initiatives to promote and support enterprise and economic development generally, including the establishment of business support units or equivalent arrangements in each county and city council. Costs continue to be rigorously examined to maximise efficiencies which, in turn, impact positively on business. Since taking office the Minister has consistently urged local authorities to exercise restraint in setting rates to support competitiveness in the economy, nationally and locally, and protect the interests of communities. A significant number of local authorities decreased their ARV for 2010 while the majority kept the same rate as 2009. The Minister expects to see continued restraint by the sector in 2011.
Some 29% of local authority income is raised locally from commercial rates. Being heavily dependent on this and other locally raised charges, it is to the credit of local authorities that they have continued to minimise the impact on the business sector in terms of increased rates and local charges at a time when Exchequer funding is decreasing. A decrease of 50% in rates income would be very significant for all local authorities. It would result in locally provided services which many of us take for granted being severely curtailed or the shortfall in income having to be made up by increased charges elsewhere. A reduction of this nature is simply not feasible if we expect our local authorities to continue to provide the necessary local services such as water, waste, road maintenance and public lighting. These services are essential in aiding economic renewal and the proper functioning of local communities.
While it would not be practicable therefore, to issue a direction along the lines suggested, the Minister will continue to impress upon local authorities the need to intensify measures to enhance efficiency with a view to minimising charges for business. It is the intention that as further local sources of income are realised, local authorities will be required to rebalance the impact of commercial rates on the business sector in line with increasing revenues from other sources.
I sympathise very much as somebody who has been in the retail sector and has been the victim — I used that word advisedly — of very heavy rate hikes. It is important that we get the balance right. I will bring the Senator’s comments to the Minister and perhaps this can be raised again under another format.
]]>Water is everybody’s issue. It knows no boundaries. The amount we have invested in water services during our time in office - more than €500 million - has been outstanding. Even the Deputies across the floor must allow that this has been a massive investment.
The €19.4 million we have obtained for the main drainage schemes and water services in Carlow has been a major boost to the second smallest county in Ireland, and I thank the Minister for that. Carlow has been flooding for more than 100 years, and when this work is done we will be able to say goodbye to flooding once and for all. When I was a member of Carlow County Council and there was a problem with the Troyswood water treatment plant in Kilkenny, there was not a squeak out of the Fine Gael councillors. It was I, a councillor from a neighbouring county, who took a petition to the European Parliament to make sure the citizens of Kilkenny would have clean water.
]]>The Council provides a forum where immigrants can speak directly to me regarding their experience of integration in Ireland and assist me in better-informed policymaking by identifying issues and bringing them to attention. Inaugural meetings of the Ministerial Council on Integration have been held in all the regional fora of the Council. Following the completion of the inaugural meetings of the Ministerial Council, it is my intention to convene a formal meeting of the standing Cross-Departmental Group on Integration in the near future.
In accordance with the policy of mainstreaming of services for migrants, primary responsibility for the delivery of services rests with the relevant service providers and Government agencies at both central and local level. My Office engages with these bodies (and with relevant non-governmental organisations) on an ongoing basis with regard to issues relating to the integration of migrants. Issues which have been raised at the Ministerial Council are brought to the attention of the appropriate bodies.
]]>My Department’s equality and rights agencies have been given adequate funding to continue their core work next year. The Equality Tribunal has been given a 9% increase. The allocations for the Equality Authority and Irish Human Rights Commission will allow them to continue promoting and researching issues of equality and human rights.
Supports for women have been protected, with full funding for the Equality for Women measure being maintained. This funding stream helps women throughout the country to access new opportunities for employment, training and enterprise, which is vital at this difficult economic time. The national women’s organisations will receive combined funding of over €500,000 next year.
Funding of initiatives to support the Traveller Community has been reduced by 4% on the 2010 allocation. However, it is expected that this reduction can be met from administrative savings. My Department will continue to support interagency working through the City and County Development Boards and the work of the National Traveller Monitoring and Advisory Committee. I also envisage continued funds for mediation and related initiatives, especially in the light of serious situations which have arisen around the country in recent years. Funding will also be provided for positive communications measures such as Traveller Pride Week, in line with a commitment in Towards 2016 from all of the social partners to give ’concentrated attention ’ to achieving progress on Traveller issues, including ’...measures to improve communication between Travellers and the general population’.
A combined allocation of €5.8m for the Office of the Minister for Integration and the European Refugee Fund will facilitate the continuation of measures to promote the integration of legally resident immigrants (including the Ministerial Council on Migrant Integration and grants to local authorities, sporting bodies, etc), as well as the funding of projects under the European Refugee Fund and the European Fund for the Integration of Third-Country Nationals. In fact, the provision in these subheads is very close to the likely outturn in 2010.
A further priority will be the advancement of the implementation of the National Disability Strategy, with a provision of €7.499m made for this sector in 2011.
]]>Funding for the Traveller Policy Division forms part of the Equality Monitoring/Consultative Committees subhead. The portion of this subhead allocated to the Traveller Policy Division for the past three years is as follows:
2008 - €1.010m
2009 - €826,000
2010 - €417,600
Of this funding, €860,000 was drawn down in 2008 and €763,000 was drawn down in 2009. The Deputy will appreciate that I am not yet in a position to give a final figure for 2010. However, I am informed by officials in my Department that it is expected that the majority of the funds allocated will be drawn down this year.
In addition, an allocation of €1.4m in dormant accounts funding was approved for Traveller projects, to be drawn down over the period 2009/2010. Of this allocation, a balance of €496,044 remains to be drawn down.
I am informed that the savings I have outlined were primarily as a result of slower than anticipated drawdown of funds for local projects administered by Pobal and also a reduction of 8% in Pobal administration fees.
My Department’s Traveller Policy Division is responsible for coordinating policy in relation to Travellers. Funding from this Division is used principally to support interagency working through the City and County Development Boards and the work of the National Traveller Monitoring and Advisory Committee. Funding support for local projects is administered by Pobal through the Traveller Interagency Fund.
The Traveller Policy Division also funds mediation and related initiatives, especially in the light of certain serious situations which have arisen around the country in recent years. Funding is also provided for positive communications measures such as Traveller Pride Week, in line with a commitment in Towards 2016 from all of the social partners to give “concentrated attention” to achieving progress on Traveller issues, including “...measures to improve communication between Travellers and the general population”.
]]>These savings for 2011 will be achieved by greatly enhanced control measures, as mentioned by the Minister; proactive labour activation initiatives, including the introduction of a brand new community work placement programme called Tús, operated by the Department of Social Protection; structural reform measures designed to deliver more effective income and housing supports in a sustainable way; and reductions in rates of payment.
I want to outline the supports being fully maintained at current levels to provide reassurance for those who had been concerned that their payments might be cut. Similar to last year we have been able to maintain at current levels pensions and other payments made to people aged over 66 years. These include payments for pensioners’ dependent spouses aged under 66 years. This means that approximately 490,000 people aged 66 years and over are being fully protected in the budget. Extra allowances paid to pensioners who live alone and those aged over 80 years will continue at current rates.
The Minister for Social Protection has preserved welfare supports for pensioners generally as all pensioners are entitled to a minimum level of guaranteed support by the State. For many pensioners, social welfare pensions, be they contributory or non-contributory, are their only source of income and most of them do not have an ability to earn. Pensioners who can afford to pay towards economic recovery will contribute through changes in the taxation system which were announced last week by my colleague, the Minister for Finance.
A number of valuable other payments have also been maintained. These benefit not only pensioners but also people with disabilities, carers and all those on low incomes, regardless of age. They include the household benefits package, which includes the free television licence, electricity-gas allowance and telephone allowance, as well as the fuel allowance and the free travel scheme.
The half rate carer’s allowance scheme and the extra payment for caring for more than one person are retained, as is the respite care grant at its current value of €1,700 per annum. The half rate illness benefit and jobseeker’s benefit payments for widows or lone parents will also remain. The current payment arrangements for lone parents and people with a disability who participate in community employment schemes are being retained without change. The family income supplement scheme which benefits lower income families with children is also unchanged.
Bearing in mind the recent bad weather, the Minister is also providing for a special once-off additional two weeks fuel allowance payment worth €40. This will be made to most recipients in the next two weeks, with the remainder receiving the payment in early January.
Unfortunately, as Senators are well aware, in this budget it will be necessary to introduce a rate reduction in working age payments from January 2011 to produce the necessary savings required in 2011. Whereas there have been some increases in inflation in recent months, consumer prices are back at April 2007 levels and we have managed to maintain the payment rates for all aged 25 to 66 in 2011 at rates higher than those paid in that year. No reduction is being made to the qualified child rate which will remain at current levels. In addition, the reduced rate of €100 per week for jobseeker’s allowance recipients aged under 21 is also unchanged. Accordingly, the weekly rates of payment to those aged under 66 are being reduced by €8 per week or an average of 4.1%. Increases for qualified adults on working age schemes are being reduced proportionately. This will bring the personal rates of jobseeker’s payments, one parent family payment, illness benefit and associated schemes in 2011 to €188 per week or €2.20 per week in excess of the rate which applied in 2007.
Even taking into account the reductions that were applied in 2010 and 2011, this Government has delivered unprecedented increases in welfare rates since 2004. Over that period, jobseeker’s payments, disability allowance and one-parent family payments have increased by 39.5% while the cost of living has increased by 11.8%. The Government appreciates that reductions in rates will be difficult for people but we also know that if action is not taken now, we risk putting social welfare payments at greater risk in future.
Much has been said and written on the reductions in the blind pension, invalidity pension, disability allowance and widows’ and widowers’ pensions as well as carers’ payments. In this context I must point out that to exempt all these recipients from the rate reduction would have meant exempting approximately a further 260,000 people. The effect of this to achieve the same savings would be to have required a cut of €11 per week in a jobseeker’s personal payments and €18.30 per week for a couple. It must be remembered that people on disability allowance are also entitled to the full household benefits package, free travel pass and companion free travel pass where appropriate. These are worth approximately €20 per week. Disability allowance, blind pension and invalidity pension are paid to more than 150,000 people.
On supports for children, between 2000 and 2010 the monthly rates of payment for child benefit increased from just €53.96 for the first child and €71.11 for the third and subsequent children to €150 and €187 respectively. In the same period, overall expenditure on child benefit grew from just €638 million to approximately €2.2 billion per year. As a result, approximately 10.6% of gross social welfare spending in 2010 went on child benefit. This Government is proud to have been able to deliver such significant increases in payments to families when the resources were available. In the current economic environment, however, we simply cannot afford to keep spending at the same level as we did when our tax revenue was much higher. In that context, we have decided to reduce overall spending on child benefit. In considering the various options for making savings in this area we were conscious that the payment could be an important source of income for all families for different reasons. Accordingly, the Government has decided against withdrawing child benefit completely from any family.
From January the lower rate of child benefit paid in respect of the first and second child will be reduced by €10 to €140 per child per month. The payment for the third child is being reduced by €20 to €167 per month, while the payment for the fourth child and subsequent children is being reduced by €10 to €177 per month. While I appreciate that cuts to child benefit will be difficult for some families, it should be recognised that the payment will still be very generous compared with payments in other countries and that the Government is making a substantial contribution towards child care provision, including the continuation of a free preschool year. The qualified child increase payable with welfare payments is fully maintained. The domiciliary care allowance paid to parents and guardians of certain children under 16 years who are ill or have a disability is also unaffected, while family income supplement and the back to school clothing and footwear allowance are unchanged.
Some questions were raised about multiple births. I confirm that additional benefit and grants for multiple births will continue to be paid. The rate of child benefit payable in respect of triplets remains at twice the normal levels. The level of child benefit support in 2011 for a family with triplets will be €894 per month or €10,728 per annum. The special grants payable at birth and at ages four and 12 years are unchanged at €635 per child.
Many Senators referred to efforts to control social welfare fraud. Welfare fraud is theft. It is a serious crime and the Department of Social Protection is doing everything it can to crack down on those who abuse the system. More than 600 staff are working in areas related to control of fraud and abuse of the welfare system. Between January and the end of October this year more than 585,000 individual claims were reviewed. When high risks are identified, targeted control measures are taken to reduce the risk of fraud and abuse of the system. For example, certification has been introduced for child benefit claims from non-Irish nationals and other customer segments in schemes where a high risk has been identified.
]]>In advance of consideration of that report by, in the first instance, the Tánaiste and Minister for Education and Skills and, subsequently, by the Government, the Deputy will appreciate that comment by me would not be appropriate. I encourage members of the public and organisations with an interest in these matters to make their views known to the commission.
]]>Cigarette smuggling has serious adverse implications for Government revenues and the measures adopted in recent years to protect public health by reducing smoking. The Government is committed to tackling this illicit trade and ensuring those involved in it are detected and punished. Combating cigarette smuggling is a priority for the Revenue Commissioners which employs a multi-faceted strategy to deal with the problem. This includes ongoing analysis of the nature and extent of the problem; the sharing of intelligence on a national, EU and international basis; ongoing review of operational policies; development of analytics; deployment of detection technologies such as scanners, and optimum deployment of resources, both at points of importation and within the country, to intercept the smuggled product and detect and prosecute those involved.
An illustration of what this means in practice is the nationwide tobacco operation launched by the Revenue Commissioners in July which concentrated additional resources at ports, airports and various retail points to identify illicit tobacco products. This led to 561 seizures, totalling almost 14 million cigarettes, in a two-week period. A further intensive operation of this kind has recently taken place and more are planned. These intensive operations complement the normal ongoing level of detection and enforcement activities. A high level internal group in the Revenue Commissioners, chaired at commissioner level, works to ensure performance in tackling this illegal trade is optimised.
It is essential that this important work is underpinned by a scheme of penalties that ensures those prosecuted and convicted of tobacco-related offences can be punished in a way that reflects the seriousness of their actions. The Department of Finance, in conjunction with the Revenue Commissioners, keeps the penalties that apply to these offences under review on an ongoing basis. Substantially increased penalties were introduced in the Finance Act 2010. The principal provision under which tobacco-related prosecutions are taken is section 119 of the Finance Act 2001, as amended, dealing with the evasion or attempted evasion of excise duty. Following the stronger penalties introduced in the Finance Act 2010, where a person is convicted following prosecution on indictment, the Circuit Court can impose a fine not exceeding €126,970. However, if the value of the goods involved in the offence is greater than €250,000, the court can impose a fine not exceeding three times their value. If, for example, the goods concerned were valued at €300,000, it would be open to the judge to impose a fine of up to €900,000. The section also provides for imprisonment for a term of up to five years which can be imposed either instead of or in addition to a fine. It also allows for summary prosecution in the District Court. In that event, a fine of €5,000 can be imposed on conviction. There is provision also for a term of imprisonment not exceeding 12 months.
Certain tobacco-related offences, specifically those relating to breaches of tobacco stamp requirements, fall to be prosecuted under section 78 of the Finance Act 2005. In these cases a person convicted on prosecution on indictment can be fined up to €126,970. There is provision also for a term of imprisonment not exceeding five years. The penalties on summary conviction are the same as those under section 119 of the 2001 Act. There is also a procedure under which prosecutions taken on indictment can be dealt with summarily, in accordance with the Criminal Procedure Act 1967, where the accused person pleads guilty and the Director of Public Prosecutions consents. Following the changes introduced by the Finance Act 2010, the court may impose a fine of €5,000 in such cases and may also imprison the convicted person for a term not exceeding 12 months.
The Minister is satisfied, therefore, that the revised fines introduced in the 2010 Finance Act allow for the imposition of penalties commensurate with the seriousness of the offences connected with smuggling and trading of illicit cigarettes and other tobacco products. While he does not consider that any further increase in the level of the fines is required, the situation will be reviewed regularly.
Senators will appreciate that the punishment to be imposed in a particular case is a matter for the courts, having regard to all the relevant circumstances. There have been 128 convictions to the end of November this year, of which a total of 90 were for smuggling and the total amount of fines imposed was €45,780. The other 38 convictions were in respect of the selling of unstamped tobacco products and, in total, fines of €103,250 were imposed. In addition, 20 terms of imprisonment were imposed, 12 of which were suspended.
In addition to the various penalties the courts may impose, the Revenue Commissioners may seize any illicit cigarettes detected. To the end of last month, more than 167 million cigarettes, with an estimated retail value of in excess of €70 million, have been seized this year. Revenue is also empowered to seize vehicles used to convey illicit cigarettes and 122 vehicles had been seized up to the end of November. As I have outlined, the level of penalties in the legislation is strong; however, the average level of penalties being imposed is considerably lower than that provided for in law.
The Minister trusts that the information provided will help to clarify the position on the level of penalties provided for for the smuggling of cigarettes and the illegal sale of tobacco products.
]]>In respect of amendment No. 5, the opening, closing or maintenance of postal infrastructure, such as post offices, are commercial matters for the management of the postal service provider concerned. The provision of post offices is not affected by the directive and the requirement to open postal services to competition. An Post’s responsibility, pursuant to the Postal and Telecommunications Services Act 1983, to provide counter services for the company’s own and Government business is not being amended by the Bill. The vast majority of post offices are operated by postmasters under commercial contracts with An Post. The closure of individual post offices is a contractual matter between An Post and the individual postmaster in question. Post offices are only closed when An Post has been unsuccessful in recruiting a postmaster to fill a particular vacancy.
It is not proposed to accept amendment No. 6, which relates to the closure of a post box or similar access point. In respect of a designated universal service provider, section 16(10) of the Bill provides that ComReg may, following a public consultation process, direct such a provider for the purpose of ensuring that the density of access points and the provision of points of contact for users with the universal postal service provider, take account of the reasonable needs of postal service users. ComReg already has this direction making power under the current regulations and section 16 (10) restates this in primary legislation.
For commercial postal service providers other than the designated universal postal service provider, establishing or removing access points to their networks are purely commercial decisions.
]]>In the context of safeguarding the interests of users, the general terms and conditions, including the terms and procedures for dealing with consumers, under which An Post as a designated universal postal service provider, or any other designated provider, provides universal services, must be approved by ComReg. Charges for postal services not within the scope of universal service are not subject to ComReg’s oversight.
In addition, Recital (34) of the first postal services directive states that Directive 93/13/EEC on unfair terms in consumer contracts applies to postal services. Oversight by ComReg gives the operator a practicable defence to any claims that even where its terms and conditions are not negotiated with its consumers, they are unfair and therefore unenforceable. Such protection is especially needed where users have no bargaining power.
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