Christopher O'Sullivan (Cork South West, Fianna Fail)
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60. To ask the Minister for Finance the main policy achievements and initiatives undertaken by his Department during 2021; and his main priorities for 2022. [62194/21]

Paschal Donohoe (Dublin Central, Fine Gael)
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The Department of Finance has undertaken a range of initiatives across the various divisions during 2021, many of which were in response to the ongoing Covid-19 pandemic which has had such a disruptive impact on our economy and national finances.

Economics

From an economic policy perspective, the main achievements and initiatives in 2021 were the Stability Programme Update, the Summer Economic Statement, the National Economic Dialogue and Budget 2022. Similarly, in 2022, the Stability Programme Update, the Summer Economic Statement and the National Economic Dialogue will be the main economic policy priorities along with Budget 2023.

Taxation

The main achievements and initiatives in taxation policy in 2021 include preparation of the annual Finance Bill which gives legislative effect to the budget and other necessary tax changes; it is currently progressing through the Oireachtas. In September, 14 Tax Strategy Group papers were published on various options for policy changes across the main tax heads and social welfare areas. For the first time, a paper on Equality Budgeting from a Tax perspective was published as part of the Budget documentation.

In July, the Finance (Covid-19 and Miscellaneous Provisions) Act 2021 gave legislative effect to some of the actions agreed by the Government as part of the Economic Recovery Plan.These included the extension of key Covid supports, the Employment Wage Subsidy Scheme (EWSS), the Covid Restrictions Support Scheme (CRSS) and the tax debt warehousing scheme. A new additional business support scheme (Business Resumption Support Scheme) was implemented in September, and the temporarily reduced rate of VAT of 9% to Hospitality and Tourism related goods and services was extended.

The EWSS and CRSS will be extended into 2022 within the Finance Bill in response to evolving public health restrictions.

The Department actively participated in the development, and commenced implementation of, the Housing for All Strategy. A Residential Zoned Land Tax is being introduced in Finance Bill 2021 to address hoarding of land. It is an annual tax that will apply from 2024 at a rate of 3% of the market value of land that is zoned as suitable for residential development and that has access to all of the necessary services. The Finance (Covid-19 and Miscellaneous Provisions) Act 2021 also provided legislative underpinning to the provisions on stamp duty for multiple purchases that were introduced by financial resolution in May 2021.

A Review of the Employment Investment Incentive Scheme was undertaken leading to certain policy changes brought forward in Budget 2022 and Finance Bill 2021. A new tax credit was developed to support the digital games sector. A complete review of the local property tax was undertaken with important reforms of the tax successfully implemented in the Finance (Local Property Tax) (Amendment) Act 2021, enacted in July. This delivers on the Programme for Government commitments in relation to Local Property Tax.

Ireland became a signatory to the historic international agreement at the OECD to reform the international tax rules to address the challenges arising from the digitalisation of the global economy. Other key achievements included the transposition of the EU Anti-Tax Avoidance Directives. Legislative provisions were also made for the exchange of information on digital platforms (DAC7), and the Authorised OECD Approach to transfer pricing of branches.

The main taxation priorities in 2022 will be examination in the Annual Tax Strategy Group of various options for tax policy changes across the main tax heads and social welfare issues; preparation of Budget 2023 and Finance Bill 2022; consideration of findings and recommendations of the Commission on Taxation and Welfare; publication and progression of the Taxation and Certain Other Matters (International Mutual Assistance) Bill; managing a proposed review of the issue of share-based remuneration; continued Implementation of the Department’s actions under the Housing for All Strategy including the collection of data on vacancy levels in residential properties with a view to introducing a Vacant Property Tax, and managing the planned review of the Help-to-Buy scheme as announced in the Budget.

Other priorities include the implementation of the OECD Pillar 2 agreement on minimum corporate taxation; continuing technical work at the OECD including the development and transposition of the Pillar 1 agreement and the development and publication of Ireland’s first Tax Treaty Policy.

In line with the Programme for Government, my Department will continue work to incorporate equality considerations in a more structured way in tax policy formulation and assessment.

With regard to future direction of taxation and welfare policy, the Commission on Taxation and Welfare was established this year. As set out in the Programme for Government, the Commission has been established to independently consider how best the taxation and welfare systems can support economic activity and promote increased employment and prosperity. The Commission is expected to submit a report to the Minister for Finance no later than 1 July 2022.

EU and International Engagement

In my role as President of Eurogroup, I have worked throughout 2021 with my European colleagues to maintain the consensus on a supportive fiscal stance and coordinated policies across the euro area, which has driven a stronger than forecasted economic recovery.

My Department was closely involved in the preparation of Ireland’s Recovery and Resilience Plan, working with the Department of Public Expenditure and Reform and the Department of An Taoiseach. The Plan was submitted to the European Commission on 28 May 2021 and it was formally adopted by ECOFIN in September. This paves the way for Ireland to begin implementing the agreed suite of 25 reform and investment projects, and subsequently to begin drawing down the approximately €989million in grant funding. My Department will continue to manage overall policy in relation to the Recovery and Resilience Facility at EU level.

My Department was also responsible for managing Ireland’s participation in the European instrument for temporary Support to mitigate Unemployment Risks in an Emergency (SURE) loan scheme, to protect jobs and workers in the context of Covid-19. The €100 billion SURE instrument allows the Commission borrow on financial markets to finance loans to Member States, allowing Member States to benefit from the EU’s strong credit rating (AAA) and low borrowing costs.

In cooperation with the Department of Public Expenditure & Reform, my Department assisted in negotiations on the Brexit Adjustment Reserve (BAR), which provides financing to Member States and sectors that are worst affected by the UK’s withdrawal from the EU. Of the €5 billion fund, Ireland is set to receive approximately €1.165 billion. The European Commission adopted its decision to allocate the pre-financing on 6th December 2021, with disbursement due before the end of the year.

The 2021 European Semester cycle was significantly impacted by the introduction of the Recovery and Resilience Facility. While this impact is likely to continue until 2026 as Member States implement their individual Recovery and Resilience Plans, my Department welcomes the return to some of the core Semester activities in 2022, such as the production of Country Reports, updated country specific recommendations, and the implementation of the Macroeconomic Imbalances Procedure. My Department will continue to manage the return to a more normal European Semester process by representing Irish interests at ECOFIN and its preparatory bodies in 2022.

In the area of EU Banking, the main policy achievements and initiatives undertaken in 2021 are an agreement on the introduction of the Common Backstop to the European Stability Mechanism and the termination of the Loan Facility Agreement along with related reforms. The Finance (European Stability Mechanism and Single Resolution Fund) Act was signed into law on 9th December 2021. This legislation provides the required Oireachtas approval to ratify Amending Agreements to two existing intergovernmental agreements, the European Stability Mechanism Treaty and the Single Resolution Fund Intergovernmental Agreement.

The priorities for 2022 include progressing the Banking Union discussions under the French Presidency; continuing to strengthen the regime of bank supervision, and completing any necessary work arising from ongoing discussions on the implementation of the Basel III proposals.

Banking

On domestic banking policy, the Retail Banking Review was initiated and its main priority for 2022 will be presentation of the draft report of the Review to me in November 2022. The General Scheme of the Central Bank (Individual Accountability Framework) Bill, a commitment of the Programme for Government, was approved by Government and published on my Department's website in July 2021. My officials are working closely with the Office of the Parliamentary Counsel on the drafting of the Bill, which it is hoped can be published in Q1 2022.

A draft statutory instrument implementing the EU Crowdfunding Regulation is expected to come into effect by year end. My Department will continue to work with the Central Bank in 2022 as regards ongoing implementation of the Crowdfunding Regulation. Part 3 and sections 28, 29 and 31 of the Counterfeiting Act 2021 were commenced in July 2021, providing for the enforcement of the two EU Regulations and an ECB Decision regarding the protection of the euro against counterfeiting.

Statutory Instruments 417 and 418 of 2021 amended the Cross Border Payments Regulations and the Payment Services Regulations to reflect the codification of the EU Cross Border Payments Regulations and its amending Regulations; Statutory Instrument 460 of 2021 was signed into law authorising An Post to provide account information services; the European Council general approach on the Digital Operational Resilience Act was agreed, and transposition was completed of the Covered Bonds Directive, Directive (EU) 2019/2162, through 3 Statutory Instruments namely, S.I. 485 of 2021, SI. 486 of 2021 and S.I. 576 of 2021.

Also in domestic banking policy in 2021, publications included the Irish Sovereign Green Bond Allocation Reports in respect of the years 2020 and 2021; Irish Sovereign Green Bond Eligible Green Projects Impact Report in respect of the years 2019 and 2020; the National Treasury Management Agency (Amendment) Act 2014 (Designated Bodies) Order 2021, and the National Treasury Management Agency (Amendment) Act 2014 (Commencement) Order 2021. The General Scheme of the Consumer Credit (Amendment) Bill and the Moneylending Policy Proposals report were also published in 2021. The final phase of the process to replace Irish Water’s commercial debt with State debt was completed.

Climate Finance

In the areas of climate and engagement with international financial institutions, achievements this year included successful engagement at virtual IMF-World Bank Spring and Annual Meetings; completion of the IMF Article IV mission; drafting the Bretton Woods Agreements (Amendment) Bill 2021; integrating Department of Finance policy into the Ireland and EU negotiation strategy for COP26; implementation of sustainable finance measures under Ireland for Finance 2021 Action Plan.

In July, Department officials and members of the European Investment Bank (EIB) Ireland team hosted a number of EIB-Ireland Financing sub-group meetings to enhance engagement between the EIB and key Departments. My Department effectively engaged on the Climate Action Plan 2021 and on the International Coalition of Finance Ministers for Climate Action.

The main priorities of the Department of Finance in driving the climate agenda in 2022 will be engagement at the IMF/WB Spring and Annual Meetings; IMF Article IV review; IMF 16th Review of Quotas; participation in the whole of Government development of the 2nd Sustainable Development Goals (SDG) National Implementation Plan and preparations for an SDG Voluntary National Review. Publication and progression of the Bretton Woods Agreements (Amendment) Bill 2021 through the Oireachtas will be a priority in 2022, as well as implementation of relevant actions under the National Sustainable Finance Roadmap.

Financial Services

On the financial services agenda, the Action Plan for Insurance Reform sets out 66 actions across several departmental policy areas, including that of my Department, which aim to improve the cost and availability of insurance. In terms of responsibilities of my Department, key achievements in 2021 include the creation a new Office to Promote Competition in the Insurance Market; the expansion of the National Claims Information Database to gather data on employers’ and public liability insurance, and the publication of the first report on this subject; publication of the Final Report of the Central Bank’s Review of Differential Pricing in the Motor and Home Insurance Markets, and publication of the General Scheme of the Insurance (Miscellaneous Provision) Bill. Priorities for 2022 include progressing the Insurance (Miscellaneous Provisions) Bill, which aims to address further insurance-related issues beyond the remit of the Action Plan.

Regarding pensions policy in 2021, ongoing implementation of the Interdepartmental Pension Reform Tax Group (IDPRTG) report is underway, including through Finance Bill measures. These are the abolition of the Approved Minimum Retirement Fund; the inclusion of the Approved Retirement Funds option for death-in-service, and removal of the 15-year rule on transfers from an occupational pension scheme to a Personal Retirement Savings Accounts. Looking to 2022, priorities will be to continue further implementation of the IDPRTG recommendations for next year’s Finance Bill; transposition of the Pan-European Personal Pension Product Regulation, and input on the development of the Auto-Enrolment system.

In March 2021, my Department supported the successful migration of Ireland’s securities settlement system from the UK to Belgium. This complex project was led by industry in response to Brexit and saw over €100 billion worth of securities migrated. The Investment Limited Partnerships (Amendment) Act 2020 was commenced on February 1st 2021. The Act enhances the transparency of Ireland's fund vehicles, reduces potential for money laundering and ensures the highest standard of international requirements are applied. The main priority for 2022 is the promotion of Ireland’s economic and financial policy interests at EU and international fora during negotiations, particularly relating to the recently published European Commission Capital Markets Union legislative package.

In 2021, the main achievements on anti-money laundering policy are establishment of an Interdepartmental Working Group to examine the manner in which United Nations and European Union Restrictive Measures (sanctions) are implemented and enforced in Ireland; strengthened terms of reference for the Anti-Money Laundering Steering Committee; introduction of a registration & supervision regime for virtual assets service providers for Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) purposes; development of the first (non-published) Annual Report from the Anti-Money Laundering Steering Committee, and co-leading a Financial Action Task Force (FATF) Project examining links between Money Laundering and Environmental Crime alongside international colleagues. In 2022, priorities will include publication of the sectoral Risk Assessment on Trust or Company Service Providers, and development of proposals for an Irish single body on AML/CFT/sanctions.

The Ireland for FinanceAction Plan 2021 was launched on 10^thFebruary 2021, the eve of the European Financial Forum which is Ireland’s showcase event in relation to our international financial services offering. Implementation of the Plan remains broadly on track and highlights include the hosting of the European Financial Forum in 2022, establishing the Fintech Steering Group and the launch of Ireland’s first National Sustainable Finance Roadmap. Priorities for 2022 include the launch of the Ireland for FinanceAction Plan 2022 and a mid-point update of the Ireland forFinancestrategy.

Employee Engagement

My Department has continued to maintain business continuity throughout the ongoing Covid-19 pandemic; continued access to the ICT infrastructure for staff working from home has been facilitated. This has allowed the Department to meet its business priorities and objectives and to continue to support the Government, its citizens and businesses.

A key policy in 2022 will be the development of the Department’s Blended Working Policy. Preparatory work was undertaken in 2021 by way of a survey of the Senior Management Group and wider staff consultation in a series of Open Forums. The policy is expected to be in place by April 2022, but this is contingent on central agreement of the Civil Service Blended Working Framework which will act as a template for the development of a policy, tailored to the business needs of my Department.