Written answers
Tuesday, 16 July 2013
Department of Finance
Programme for Government Implementation
Billy Kelleher (Cork North Central, Fianna Fail)
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251. To ask the Minister for Finance if he will provide in tabular form the commitments in the Programme for Government under his remit; if the commitment has been met or is in the process of being met; the estimated time for same; and if he will make a statement on the matter. [34680/13]
Michael Noonan (Limerick City, Fine Gael)
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The Programme for Government contains 53 commitments within the remit of the Department of Finance and significant progress has been made in implementing these commitments: 30 commitments have been implemented, 15 are on-going or underway, one is a matter for the independent Fiscal Council, two are a matter for the Department of Public Expenditure and Reform, while 5 are under review or cannot be introduced in the manner in which they are stated in the Programme for Government. I would note that the commitments identified as on track are well advanced. The Department of the Taoiseach published the Programme for Government Annual Report 2013 which outlined progress for all Programme for Government Commitments to March and is available at www.taoiseach.gov.ie . Since the publication of that report there has been further progress in a number of areas including the extension of the maximum weighted average maturities on our EFSF and EFSM loans by up to 7 years, the introduction of the Property Tax on the 1st July 2013 and continuing augmentation of the skill set of the Department.
The timeline for delivery of the commitments is over the lifetime of the Government.
The following table sets out all Programme for Government commitments assigned to the Department of Finance, and the current status of each commitment:
| Commitment | Status |
|---|---|
| We will seek a reduced interest rate as part of a credible re-commitment to reducing Government deficits to ensure sustainability of our public finances. | Achieved |
| We will re-commit to structural reforms required to accelerate growth, job creation and debt sustainability. | D/PER |
| We will attach the utmost priority to avoiding further down-grades to our sovereign credit rating by setting further capital spend by the State on bank recapitalisation at a level that is consistent with national debt sustainability. | Achieved |
| In this regard, we will defer further recapitalisation of the banks until the solvency stress tests are complete and known to the new Government. Earlier recapitalisation in advance of publication of the stress tests will not contribute to market stability and confidence. | Achieved |
| We remain committed to a smaller banking system that reduces its reliance on funding from the Irish and European Central Banks and volatile market sources. In order, however, to limit further calls on the State to cover bank losses from distressed asset sales, bank de-leveraging must be paced to match the return of more normal market conditions and demand for bank assets. | In progress |
| As an interim measure, we will seek to replace emergency lending to our banks with medium-term, affordable, official financing in a way that can restore confidence among other potential lenders in the liquidity position of our banks. | Achieved |
| We will end further asset transfers to NAMA, which are unlikely to improve market confidence in either the banks or the State. | Achieved |
| We will ensure that an adequate pool of credit is available to fund small and medium-sized businesses in the real economy during the re-structuring and down-sizing programme. | In progress |
| We will introduce a comprehensive special resolution regime for dealing with bank insolvencies. | Achieved |
| The Government accepts that enabling provisions in legislation may be necessary to extend the scope of bank liability restructuring to include unsecured, unguaranteed senior bonds. | Review |
| The new Government will seek to dispose of the public stakes in the banks as soon as possible at the best possible return to the taxpayer. | In progress |
| We will create an integrated decision making structure among all relevant State Departments and Agencies to replace the current fragmented approach of State bodies in dealing with the financial crisis. | Achieved |
| The new Government will re-structure bank boards and replace directors who presided over failed lending practices. We will ensure that the regulator has sufficient powers of pre-approval of bank directors and senior executives. To expedite this change-over we will openly construct a pool of globally experienced financial services managers and directors to be inserted into key executive and non-executive positions in banks receiving taxpayer support. | Achieved |
| We will insist on the highest standards of transparency in the operation of NAMA, on reduction in the costs associated with the operation of NAMA, and that decision-making in NAMA does not delay the restoration of the Irish property market. | In progress |
| Once the banking sector has been restored and is functioning effectively, we will introduce a bank levy based on the size of a bank's liabilities (other than shareholder capital). | Review |
| We recognise the important role of Credit Unions as a volunteer co-operative movement and the distinction between them and other types of financial institutions. In Government, we will establish a Commission to review the future of the credit union movement and make recommendations in relation to the most effective regulatory structure for Credit Unions, taking into account their not-for-profit mandate, their volunteer ethos and community focus, while paying due regard to the need to fully protect depositors savings and financial stability. | Achieved |
| We support the future development of the IFSC as a source of future employment growth, subject to appropriate regulation. We will establish a taskforce on the future of the financial services sector to maximise employment opportunities in financial services for staff leaving employment as a result of downsizing. | In progress |
| We will ensure that the investigations into failures in the banking system are adequately resourced. | D/PER |
| All remuneration schemes at banks subject to state support will undergo a fundamental review to ensure an alignment of interest between banks, their staff and the taxpayer. | Achieved |
| Cut the 13.5% rate of VAT to 12% up to end 2013 | Achieved |
| We will exempt from VAT service companies that export more than 90% of their output. | Not being pursued |
| Subject to a cost benefit analysis, we will amend the RD tax credit regime to make it more attractive and accessible to smaller businesses, in the following ways: companies with RD expenditures of under €100,000 will be entitled to full tax credit on those entire expenditures as opposed to just the increment over the base year, with marginal relief for companies with expenditure just over €100,000, we will allow companies to offset the RD credit against employers. PRSI as an alternative to corporation tax, to cut down on red tape in the applications process, companies in receipt of a Research, Technology and Innovation (RTI) grant from one of the development agencies will be automatically deemed as entitled to the RD tax credit. | In progress |
| We will direct the Revenue Commissioners to examine the feasibility of introducing - on a revenue neutral basis - a Single Business Tax for micro enterprises (with a turnover of less than €75,000 per annum) to replace all the existing taxes on sole traders and small businesses to cut compliance costs and make starting a business much less daunting. | Review |
| We will create a Strategic Investment Bank that will become a provider of finance to large capital projects, a conduit for venture capital and a lender to SMEs. | In progress |
| The Government will put in place a parallel, commercially-financed investment programme in key networks of the economy to support demand and employment in the short-term, and to provide the basis for sustainable, export-led jobs and growth for the next generation. Streamlined and restructured semi-States will make significant additional investments, over and above current plans, over the next four years in “next generation” infrastructures in energy, broadband, forestry and water. These investments - and the accompanying semi-state restructuring process - will be financed and pro-actively managed by a New Economy and Recovery Authority (NewERA), which will absorb the National Pension Reserve Commission. | In progress |
| We believe it is appropriate, in order to enhance international credibility, to stick to the aggregate adjustment as set out in the National Recovery Plan for the combined period 20112012. | Achieved |
| In preparation for Budget 2013, we will review progress on deficit reduction, and draw up a plan which will achieve the objective of reaching the 3% of GDP target for the General Government Deficit by the target date of 2015. | Achieved |
| Should Ireland succeed in obtaining a lower interest rate on its loans, this should be offset against the aggregate adjustment required over the term of the programme. | Achieved |
| We believe that achieving the 3% of GDP deficit target should be seen as an intermediate step in the process of restoring the public finances, and that further reductions in the general government deficit as a share of national income will be required thereafter | In progress |
| As part of our fiscal strategy the new Government will: Keep the corporate tax rate at 12.5% | Achieved |
| Maintain the current rates of income tax together with bands and credits. We will not increase the top marginal rates of taxes on income. | Achieved |
| We will reduce, cap or abolish property tax reliefs and other tax shelters which benefit very high income earners. | Achieved |
| We will also ensure the implementation of a minimum effective tax rate of 30% for very high earners. | Achieved |
| Consider, arising from the previous Government's deal with the IMF, various options for a site valuation tax. Any site valuation tax must take into account the significant number of households in mortgage distress and provide local government with a reliable stream of revenue | Achieved (As per Government decision to introduce Local Property Tax) |
| We will limit the top rate of VAT to 23% | Achieved |
| We will review the Universal Social Charge | Achieved |
| We will ensure that tax exiles make a fair contribution to the Exchequer | Achieved |
| We will establish an independent Fiscal Advisory Council (FAC), separated from fiscal decision-makers in government, that would undertake official fiscal macroeconomic projections and monitoring. Its functions would include identifying and advising on cyclical and counter-cyclical fiscal policies and structural deficits; the cyclical or temporary nature of particular revenues; and the need to maintain an appropriate and effective tax base. The Fiscal Advisory Council will be independent of Government and will report to the Dáil and the public. | Achieved |
| The modelling assumptions and inputs of the Fiscal Advisory Council will, as far as possible, be open to public scrutiny and its outputs would be freely available to external bodies, including in particular, the opposition parties. | Matter for the Fiscal Council |
| We will open up the Budget process to the full glare of public scrutiny in a way that restores confidence and stability by exposing and cutting failing programmes and pork barrel politics. | In progress |
| We will reform the Department of Finance by bringing in new leadership and skills to restore its capacity and credibility in financial and macroeconomic management. Specifically, we will make an external appointment of an economist of international repute to head up the Department's Budget and Economic Policy division. | In progress (New leadership in place) (Recruitment process underway for Chief Economist) |
| We will bring new talent and skills into the Department of Finance. | Achieved (Ongoing) |
| Tax incentives for private hospital developments will cease. | Achieved |
| Increasing mortgage interest relief to 30% for First Time Buyers in 2004-08 (from the current sliding scale of 20% to 25% depending on the year the mortgage was taken out), financed in part by bringing forward the abolition of relief for new buyers from June 2011. | Achieved |
| Directing any mortgage provider in receipt of State support to present Government with a plan of how intends to cut its costs, over and above existing plans, in a fair manner by a sufficient amount to forego a 25 basis point increase on their variable rate mortgage. | Achieved |
| Introducing a two year moratorium on repossessions of modest family homes where a family makes an honest effort to pay their mortgage. | In progress (Policies in respect of Mortgage Arrears in progress) |
| We will ensure that the Central Bank and the Financial Regulator supervise credit institutions' mortgage lending practices comprehensively and intensively. | In progress (whilst respecting the independence of Central Bank and Financial Regulator) |
| Where credit institutions fail to adequately control mortgage lending risks, the Central Bank will impose loan-to-value ceilings on mortgages, caps on loan-to income multiples, limits on the term of new mortgages, and more rigorous procedures for verifying borrowers' incomes. | In progress |
| Increase the penalty for tobacco smuggling for commercial purposes and provide robust detection measures to counteract such smuggling. | Achieved |
| Seek to combat drug supplies at source by providing x-ray scanners at major ports; greater patrols along coastline and increasing presence of Customs officers at smaller airports. | Review |
| Tightly regulate moneylenders. | Achieved |
| We will accelerate Capital Allowances on software purchases against income tax and corporation profits tax from 8 to 3 years subject to a cost benefit analysis. | In progress |
| We will exempt farm diesel from further increases in the carbon tax. | Achieved |
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