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Select Committee on Finance, Public Expenditure and Reform, and Taoiseach: Finance (European Stability Mechanism and Single Resolution Fund) Bill 2021: Committee Stage (25 Nov 2021)

Paschal Donohoe: Yes, but the people who would be involved in making the decisions in this regard would be very much aware of that as a risk. We are talking about a member state government and a finance minister negotiating to secure additional funding in a time of crisis. In such a case the negotiation to which I referred earlier would look to strike the best possible balance between getting the member...

Select Committee on Finance, Public Expenditure and Reform, and Taoiseach: Finance (European Stability Mechanism and Single Resolution Fund) Bill 2021: Committee Stage (25 Nov 2021)

Paschal Donohoe: I never said that would happen. I said this was a negotiated outcome and other countries would be involved and I pointed to the acknowledgement that there is conditionality. I never, in any of my statements, said this would be guided by altruism alone and purely the interests of one country. This is a negotiated outcome, as I have said repeatedly in my presentation. The reason is that...

Select Committee on Finance, Public Expenditure and Reform, and Taoiseach: Finance (European Stability Mechanism and Single Resolution Fund) Bill 2021: Committee Stage (25 Nov 2021)

Paschal Donohoe: I will get a note on that now. I ask the committee to bear with me. The conditionality involved, at a bare minimum, is the obvious point that the SRF, including the share of the ESM funding the SRF, is funded by contributions banks make. That is a profound difference from where we were a decade ago. However, if the Deputy takes me through his other questions, I will see-----

Select Committee on Finance, Public Expenditure and Reform, and Taoiseach: Finance (European Stability Mechanism and Single Resolution Fund) Bill 2021: Committee Stage (25 Nov 2021)

Paschal Donohoe: If there is any facet of it that I need to share with the Deputy, it will come to me in a moment. However, the key feature of how we would deal with banks is that all of this would happen after bondholders had been bailed in and in fairness to the Deputy, he made that point earlier. I ask him to bear with me for a moment.

Select Committee on Finance, Public Expenditure and Reform, and Taoiseach: Finance (European Stability Mechanism and Single Resolution Fund) Bill 2021: Committee Stage (25 Nov 2021)

Paschal Donohoe: I did, and I believe this is a good, balanced outcome for all of us. The progress we made in ensuring the SRF and ESM are funded by banks rather than the taxpayer was a massive step forward. The key piece of conditionality in this is, as I explained, that the money that goes into ESM - the share of the ESM that is relevant to this - and to the SRF is a contribution from the banking sector....

Select Committee on Finance, Public Expenditure and Reform, and Taoiseach: Finance (European Stability Mechanism and Single Resolution Fund) Bill 2021: Committee Stage (25 Nov 2021)

Paschal Donohoe: It is there. I will explain why. It is there because the bondholders at this point will be bearing a cost that they have not borne before. That is the difference. The Deputy is wrong in what he says about the taxpayer funding the operation of the ESM. In these situations it will also be banks through lending to the ESM that will be contributing to the operation of the ESM in backing up...

Select Committee on Finance, Public Expenditure and Reform, and Taoiseach: Finance (European Stability Mechanism and Single Resolution Fund) Bill 2021: Committee Stage (25 Nov 2021)

Paschal Donohoe: No, the ESM will lend to the SRF. The ESM will also-----

Select Committee on Finance, Public Expenditure and Reform, and Taoiseach: Finance (European Stability Mechanism and Single Resolution Fund) Bill 2021: Committee Stage (25 Nov 2021)

Paschal Donohoe: No, to be clear, the ESM will be putting funding into the SRF but in these situations the ESM would also seek to access funding and loans from the banking sector.

Select Committee on Finance, Public Expenditure and Reform, and Taoiseach: Finance (European Stability Mechanism and Single Resolution Fund) Bill 2021: Committee Stage (25 Nov 2021)

Paschal Donohoe: Yes, that is correct.

Select Committee on Finance, Public Expenditure and Reform, and Taoiseach: Finance (European Stability Mechanism and Single Resolution Fund) Bill 2021: Committee Stage (25 Nov 2021)

Paschal Donohoe: In situations such as that, the ESM would play a role and would also use its funds to do that. In those situations, the ESM will also look for funding from the banking sector itself. The Deputy asked me earlier about the contribution that Ireland will make to the operation of this. Over time, it will be €815 million.

Select Committee on Finance, Public Expenditure and Reform, and Taoiseach: Finance (European Stability Mechanism and Single Resolution Fund) Bill 2021: Committee Stage (25 Nov 2021)

Paschal Donohoe: To be completely clear, in that situation loans from the backstop itself are repaid by contributions from the European banking sector. In addition to repayments that are funded by banking sector contributions, the single resolution mechanism regulation sets out a series of conditions which limit the risk to which the fund, and thereby the backstop, could be exposed. A contribution from the...

Select Committee on Finance, Public Expenditure and Reform, and Taoiseach: Finance (European Stability Mechanism and Single Resolution Fund) Bill 2021: Committee Stage (25 Nov 2021)

Paschal Donohoe: That would only happen if every one of the safeguards before getting to that point did not work.

Select Committee on Finance, Public Expenditure and Reform, and Taoiseach: Finance (European Stability Mechanism and Single Resolution Fund) Bill 2021: Committee Stage (25 Nov 2021)

Paschal Donohoe: Sorry, the Deputy is cutting over me. I did not at any point cut over the Deputy. That would only happen if every other safeguard before that was not big enough. Does the Deputy accept that?

Select Committee on Finance, Public Expenditure and Reform, and Taoiseach: Finance (European Stability Mechanism and Single Resolution Fund) Bill 2021: Committee Stage (25 Nov 2021)

Paschal Donohoe: If the ESM were to lend that money to the SRF, the ESM would get that money back at a point in the future because it would be a loan. Where I differ from the Deputy is that the issue of conditionality has less relevance here. In the circumstances in which the lending between the ESM and SRF happens, by that point so much action would have taken place that would have had a profound impact on...

Select Committee on Finance, Public Expenditure and Reform, and Taoiseach: Finance (European Stability Mechanism and Single Resolution Fund) Bill 2021: Committee Stage (25 Nov 2021)

Paschal Donohoe: I disagree with the analysis put forward by the Deputy. This is a piece of legislation that seeks to protect the taxpayer and support and help countries when they are in situations of financial and economic difficulty. In the absence of the credit lines proposed here, countries could find themselves in even tougher and more difficult economic circumstances. Yes, there is conditionality...

Select Committee on Finance, Public Expenditure and Reform, and Taoiseach: Finance (European Stability Mechanism and Single Resolution Fund) Bill 2021: Committee Stage (25 Nov 2021)

Paschal Donohoe: No, thank you.

Written Answers — Department of Finance: Tax Data (24 Nov 2021)

Paschal Donohoe: I propose to take Questions Nos. 58 to 63, inclusive, together. I assume the Deputy is referring to Vehicle Registration Tax (VRT). VRT is paid at the time that a vehicle is registered in the State. It is not possible to provide the requested breakdown as the rate of VRT is determined by a vehicle’s CO2 and NOx emissions, not engine size. Revenue’s website have a VRT calculator...

Written Answers — Department of Finance: Horse Racing Industry (24 Nov 2021)

Paschal Donohoe: It is important to point out that neither I nor the Central Bank have any role in the pricing or provision of insurance products, and that this is a commercial matter which individual providers assess on a case-by-case basis. Government cannot instruct a company to provide insurance cover in any circumstance; this position is reinforced by the EU Single Market framework for insurance (the...

Written Answers — Department of Finance: Legislative Measures (24 Nov 2021)

Paschal Donohoe: Finance Bill 2021 introduces the ‘Residential Zoned Land Tax’ into the Taxes Consolidation Act 1997, giving effect to a measure I announced on Budget day. This measure is part of the suite of measures included in the ‘Housing for All’ Strategy, which was published by the Government in September 2021. The Residential Zoned Land Tax is designed to prompt...

Written Answers — Department of Finance: Departmental Staff (24 Nov 2021)

Paschal Donohoe: I wish to inform the Deputy, that since 2011 there was one staff member in the Department of Finance who had their employment terminated, due to breaches of Departmental and Civil Service standards and professional misconduct.