Bernard Durkan (Kildare North, Fine Gael)
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Question 182: To ask the Minister for Finance if action has been taken or is contemplated to improve the competitiveness of the economy through the financial and banking services; and if he will make a statement on the matter. [22291/08]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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Competitiveness is a very broad topic and many factors contribute to national competitiveness. However, since the Deputy has specifically referred to the banking and financial sector, I might focus on that sector in this reply. I am satisfied that my Department has actively sought to improve the competitiveness of the Irish economy through the financial sector in Ireland. It has done this by recognising market conditions and responding accordingly. This is demonstrated through timely transposition of EU Directives relating to the capital requirements of credit institutions, investment funds, asset covered securities, etc.

I would also point out that the financial and banking services sector in Ireland operates under a modern and up to date legislative framework and tax environment which is focused on the realities of international finance and the requirements of international best practice. Ireland's corporate tax system is clear and deliberately transparent through maintaining a low general corporation tax rate of 12.5%. A system of full exchange of information, positive rates of tax and 44 tax treaties is also in place.

The Irish financial and banking services industry is also supported by a strong and credible regulatory system. The principles-led regulatory system maintains the highest standards and recognises the importance of being responsive and accessible to initiatives supporting the development of the sector. Indeed, the Deputy may be aware that recent assessments by reputable international bodies such as the IMF and the OECD have confirmed that the Irish system of financial regulation complies with best international practice.

As regards the funds side of the financial services sector, Ireland has become a major international funds jurisdiction, with links into the funds industry worldwide. In addition to becoming a major location for the domicile of investment funds, Ireland has also developed a strong niche activity in servicing non-domiciled funds here, providing back-office administrative services to such funds. In terms of the competitiveness of the banking sector in Ireland, there has been good progress since the 2005 report of the Competition Authority on competition in the banking sector. It issued 25 recommendations directed largely at the industry, its representative bodies, the Financial Regulator and Central Bank.

Points addressed for the attention of the Minister for Finance included the issues of stamp duty, the regulation of banking charges and the question of improvements in the area of cheques and mortgages. Measures had already been taken, through the Finance Act 2005, to eliminate a double stamp duty charge on switching of financial cards. The stamp duty charge on financial cards was recently reduced in Budget 2008. These measures along with measures introduced by the Financial Regulator and the industry, such as the introduction of a switching code for both personal customers and the business sector, have increased competition in the Irish banking sector. The Financial Regulator has also proactively informed consumers on types of banking products available and cost comparisons between them. Other factors that have increased competition include new entrants that have entered the Irish market in recent years. All of these factors will ultimately benefit consumers through increased choice, innovative products, lower prices and better service.

By way of concluding, Ireland is a small open economy and we must compete in the global economy. We must look at our competitiveness and make sure that we take the actions necessary to ensure that we are competitive in the future. The financial sector plays a pivotal role in the economy in terms of recycling savings and thus providing the credit for investment and economic activity generally. I can assure the Deputy that my Department is proactive in seeking to ensure the competitiveness of the banking and financial services sector.