Patrick Fannin
From: Fiachra Quinlan
Categories: Red Category
Hello,
Please find attached advance briefing in relation to our Secretary General’s appearance at the committee next week. Hard copy together with a letter from the Secretary General to follow tomorrow as will a list of officials attending with the Secretary General.
Opening statement will be sent over next week.
Thanks,
Fiachra
Fiachra Quinlan Finance Officer
—— An Roinn Airgeadais Department of Finance
Tithe an Rialtais, Sráid Mhuirfean Uachtarach, Baile Átha Cliath 2, D02 R583 Government Buildings, Upper Merrion Street, Dublin 2, D02 R583 —— T 01 604 5591 www.finance.gov.ie
www.finance.gov.ie
—— Tá an fhaisnéis atá sa ríomhphost seo (agus in aon cheangaltáin) faoi rún agus is don fhaighteoir/do na faighteoirí beartaithe é agus é/iad sin amháin. Mura tusa an faighteoir beartaithe, níor cheart duit an teachtaireacht seo ná aon chuid di a úsáid, a nochtadh, a chóipeáil, a dháileadh ná a choinneáil. Sa chás gur trí earráid a fuair tú an ríomhphost seo, tabhair fógra dom láithreach faoi sin agus scrios gach cóip den ríomhphost seo ó do ríomhchóra(i)s. Tabhair faoi deara go bhféadfaidh an ríomhphost seo agus aon fhreagra air bheith faoi réir iarraidh ar a eisiúint de bhun an Achta um Shaoráil Faisnéise
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1 An Roinn Airgeadais Department of Finance
Pat Fannin, Committee Secretariat Committee of Public Accounts, Leinster House Dublin 2
24 May 2019
Re: Advance briefing material for our meeting next Thursday, 30 May 2019
Dear Pat,
Please find attached herewith an advance briefing for my meeting with the committee next week. In accordance with your request, this briefing covers the following agenda items
• Vote 7 Appropriation Account 2017 • Chapter 1 - Exchequer Financial Outturn • Chapter 22 - Irish Fiscal Advisory Council • Finance Accounts 2017 • A list of independent or internal reports relating to reviews, examinations, or audits in relation to Corporate Governance and internal financial controls as requested by the committee
We have also provided a substantial amount of Departmental output data in keeping with the performance budgeting objectives.
I will be accompanied by John McCarthy - Assistant Secretary and Chief Economist, Gary Tobin - Assistant Secretary Banking Division, Mary McSharry - Head of Corporate Affairs, and Fiachra Quinlan - Finance Officer.
A copy of my opening statement will issue to you early next week.
Please revert if you require anything further.
Yours sincerely,
Derek Moran Secretary General
Tithe an Rialtais F6n I Tel: 353 1 676 757 1 Govern ment Bu ildings Sraid Mh uirfea n Uacht Faes I Fax: 353 1 678 9936 Upper Merrion Street Baile Atha Cliath 2 Glao Aitiuil I LoCall : 1890 66 1 o 1O Dublin 2 002 R583, Eire http://www.finance.gov.i e 0 02 R583, Ire land
Vote 7 Office of the Minister for Finance 2017 Appropriation Accounts
PAC: 30 May 2019
Prepared by the Finance Unit, Department of Finance www.gov.ie/finance
Vote 7: Office of the Minister for Finance
Contents
Summary of Recent Financials 3 Synopsis of Departmental Targets and Outputs 2017 4 Chapter 1: Exchequer financial outturn for 2017 10 Chapter 22: Irish Fiscal Advisory Council 21 Finance Accounts 2017 25 Corporate Governance and Internal Financial Controls 41
—— 2 Vote 7: Office of the Minister for Finance
Summary of Recent Financials
Vote 7 – Office of the Minister for 2017 Estimate 2017 Outturn Variance Finance €000 €000
Current 38,531 33,654 (4,877)
Capital 2,274 320 (1,954)
Gross Total 40,805 33,974 (6,831)
Appropriations-in-Aid (1,335) (1,440) 105
Net Vote 39,470 32,534 (6,936)
The 2017 Gross Estimate was €40.805m (€39.470m net of A-in-As).
The Department also carried over €0.227m from 2016’s Capital Allocation, meaning its profiled gross budgeted expenditure for the year was €41.032m (€39.697m net of A-in-A’s).
Gross spend of €33.97m at year end was €7.06m (17.2%) under the budget profile of €41.03m. Appropriations-in-Aid collected surpassed budget by €0.105m, which resulted in a surplus to surrender of €7.16m.
The surplus to be surrendered is summarised as follows:
Paybill was €0.6m under budget. This was due to attrition and slower than anticipated recruitment. Capital funding of €2.2m was returned. This was due to unforeseen delays, outside of the Department’s control, in implementing planned capital projects. Administrative Non-Pay costs accounted for €0.6m of the surplus. There were savings across four of the five administrative subheads. There was an underspend of €0.55m in the Disabled Drivers Fuel Grant Scheme. Due to the nature of the scheme, some variance from year-to-year is to be expected. Consultancies accounted for €3m of the surplus being surrendered. The extent of costs associated with some aspects of the ongoing shareholding work of the Department can be difficult to predict, since it is very much driven by the defence of legal cases and the timing of these in the courts. The Department must be adequately resourced to enable the efficient continuation of its policies without the requirement to return to the Oireachtas for supplementary estimates but, equally, the Department will seek to minimise costs where possible and subject to achieving the best outturn for the State. Appropriations-in-Aid collected surpassed budget by €0.1m.
—— 3 Vote 7: Office of the Minister for Finance
Synopsis of Departmental Targets and Outputs 2017
Programme A: Economic and Fiscal Policy Public Service Activity 2017 Key Outputs Achieved
Develop and implement Produced and coordinated Budget 2018. strategies at EU/Euro Published Finance Act 2017 area level and Tax Strategy Group 2017 papers published in advance of internationally in relation Budget 2018. to economic, fiscal and Published The White Paper: Estimates of Receipts and financial policy Expenditure for the year ending 31 December 2018 formulation. Developed tax options for Budget within the EU semester framework. Manage the Department’s Delivered a growth friendly taxation policy that supports a external relationships by stable and broad tax base by timely implementation of our building a network of international commitments on tax reform relevant contacts through Annual Report on Tax Expenditures, incorporating outcomes Ireland’s embassies and of certain Tax Expenditure & Tax Related Reviews 2018 consulates, developing Provided economic analysis of policy options including relationships with other taxation strategies for Budget 2018. Treasuries and Finance Published a report on the issues regarding the introduction of Ministries, coordinating a Vacant Residential Property Tax. EU policy, and developing Published a Review of Ireland’s Corporation Tax Code. our links with International Ongoing Irish representation at OECD/EU regarding Financial Institutions international tax matters and the influence of tax policy (IMF, World Bank, EIB making at EU and OECD level and other multilateral Agreement of EU Directives on Anti-Tax Avoidance, development banks). Exchange of Tax Information and Tax Dispute Resolution. Development of proposals to enhance the competitiveness of Manage continuing post Ireland's corporation tax offering in a way that provides programme processes certainty to business while meeting international standards. including programme Joint Compilation with Central Statistics Office of Excessive funding conditions and Deficit Procedure Returns manage membership of Exchequer Borrowing Requirement / Exchequer Taxation Euro area funding Profiles mechanisms (ESM, EFSF Fiscal Monitor published as a single document on a monthly & Euro Area (Greek) Loan basis from January 2017 Facility) and EFSM Monthly Exchequer Returns / Quarterly Exchequer Returns issues. published
—— 4 Vote 7: Office of the Minister for Finance
Support the Minister for Stability Programme Update 2017 and Summer Economic Finance in his Statement 2017 published with multi-annual debt forecasts. international Continued to develop assessment of economic and financial engagements. impacts of Brexit as part of the whole-of-Government approach, including the development of strategies to mitigate Provision of advice on risk and to exploit opportunities in relation to financial budgetary policy to services. Supported the development of negotiating restore and maintain the approaches that protect Ireland’s economic and financial sustainability of the public interests. finances in accordance Strategically manage Brexit agenda especially in the lead up with the parameters to the European Council in March 2018 agreed by Government, Managed and advanced Ireland’s interests at EU Council and formulation and formations and their preparatory committees to ensure production of the annual positive national outcomes. Budget and multi-annual Continued Ireland’s effective participation in EU fora budgetary forecasts, - Eurogroup, ECOFIN and EU working groups monitoring Exchequer Further developed the Department’s strategy on international returns and non-tax and EU alliances and ensure that these relationships can be revenue, forecasting tax drawn on to advance national objectives. receipts and analysing the Led on the analysis, policy coherence and response on the impact of policy options Future of Economic and Monetary Union debate. on Government finances o Develop Department position on the completion of and for interaction with Economic and Monetary Union and provide the Fiscal Council. appropriate advice to Ministers(s) and Taoiseach in advance of Euro Summit (March 2018) Provision of advice on Advanced the framework for an effective EU strategy within equitable taxation policy, the context of enhanced EU economic policy coordination. focused on generating o Formulate and communicate Department response to resources to finance the 2017 country-specific recommendations (CSRs) Government as part of the European Semester process. programmes, promoting Contributed to the development of Irish interests in the EU competitiveness and Budget which reflects our new status as a net contributor. assisting the achievement o Prepare Ireland’s negotiation position for the next of Government objectives MFF (Commission proposal due in May 2018) in various policy areas; Managed continuing post-programme strategy and processes Deliver annual Finance including programme funding conditions. Bill; Production of annual o 8th PPS/M Review: Manage Ireland’s approach to Budget approval process by EU (ongoing in Q1) o Prepare for the 9th PPS/M review (ongoing) Provision of advice on Discharged Duties as a Director of the ESM and EFSF economic policy to restore
—— 5 Vote 7: Office of the Minister for Finance
economic and Deliver the Department’s statutory EU commitments to the employment growth, Oireachtas by submitting Six-Monthly Reports, Information micro and macro- Notes on Commission proposals as requested and by ensuring economic analysis and the timely transposition of EU Directives. forecasting and Assessment of economic and financial impacts of Brexit as developing a strategy for part of the whole-of-Government approach, including the the Irish economy across development of strategies to mitigate risk and to exploit all sectors and the opportunities in relation to financial services. economic analysis of Manage the early repayment of the full outstanding IMF loan Department policies. facility and the bilateral loans from Sweden and Denmark. Provision of economic Managed membership of Euro Area funding mechanisms analysis and briefings to (ESM, EFSF & Euro Area (Greek) Loan Facility and EFSM the public. issues. Supported increased housing delivery through the provision of appropriate evidence and data as well as policy input and advice.
Programme B: Banking and Financial Services Policy Public Service Activity 2017 Key Outputs Achieved
Manage legislation on Transposition of Payment Services Directive (PSD2) financial services, and on Transposition of EU Directorate – ranking of unsecured debt the regulation of the instruments in insolvency hierarchy. financial services sector, Review of Equity Finance for SMEs (final review March 2018) manage the development Report on the Investigation of Local Public Banking in Ireland of EU policy and (brought to Government before being published in June 2018) legislation for the financial Transpositions of EU legislation completed in 2017 included: services sector, including o Securities Financing Transactions Regulation (SFTR) the transposition of EU o the Packaged Retail and Insurance Based directives; manage Investment Products) Regulations (PRIIPs) international financial o Markets in Financial Instruments (MiFID II/MIFIR)); services and relations o Information Accompanying Transfers of Funds) with the Central Bank. Regulations Transparency Directive (S.I.336/2017) completed Enhanced communication 29 Statutory Instruments signed in the area of Financial with external Sanctions stakeholders. FATF mutual evaluation report on Ireland published in Representing the September 2017, assessing compliance with anti-money Department of Finance’s laundering and counter terrorist financing standards
—— 6 Vote 7: Office of the Minister for Finance
interest in matters General Schemes of four Bills published during 2017: concerning how the State o Investment Limited Partnership Act 1994 & Irish can finance its priorities Collective Asset-Management Vehicle Amendment over the coming years. Bill (July 2017) This includes working with o MiFID Bill (July 2017) the relevant departments o Insurance (Amendment) Bill (July 2017) and agencies to optimise o Central Bank (National Claims Information Database) financing structures for Bill (December 2017) the State’s investment Report on the Cost of Motor Insurance published in January and financing activities, 2017. and in particular, liaison First Motor Insurance Key Information Report published July. with the NTMA, NPRF Successful IPO of AIB in June 2017, raising €3.4 billion and EIB. Act as the Monitored engagement of Irish banks with the Central Bank’s Department point of Tracker Mortgage Examination contact and challenge for Drafting of the Heads of the Credit Union Restructuring Board investments (other than Dissolution Bill approved by Government banks) managed by 100% of senior debt redeemed by NAMA. NewEra or the NPRF. Home Building Finance Ireland (HBFI) announced in Budget 2018 Statement Develop and implement Second 25% interim dividend announced by Special strategies for the banking Liquidators, bringing cumulative interim dividend for sector in Ireland and unsecured creditors to 50%. stability in the financial Joined the Asian Infrastructural Investment Bank (AIIB) and sector, policies relating to secured an Advisor position in the Euro Area Constituency. the provision of credit in Appointment of Alternate Executive Director to Ireland’s IMF the economy, addressing Constituency. distressed mortgages and EIB/Ireland Funding Working Groups led to funding of €1bn difficulties with personal for 2017. and small/medium Successful IMF Article IV process in May and reflection of any business debt. policy concerns in published Report. Highlighted and safeguarded Ireland’s policy interests in the Manage strategies to IMF 15th General Review of Quotas and Review of Quota deliver a functioning Formula. banking system and for Influenced EU negotiations to secure an affordable and the on-going realistic emissions target in respect of the EU 2030 Climate management of the package for the non-ETS sectors. State’s investments in a Secured Green Climate Fund (GCF) representation and number of bank engaged effectively with the GCF to further Irish policy institutions. Manage the objectives. Minister’s interests in
—— 7 Vote 7: Office of the Minister for Finance
relation to the oversight of Supported developments on funding of Limerick 2030, which NAMA. was approved for lending of €80m in 2018 from both the Council of Europe Development Bank (CEB) and the EIB Manage the reform of the Publication of Action Plan 2017 under the Government’s credit union sector. Strategy for Ireland’s International Financial Services Sector (IFS2020). In 2017, 2000 jobs were created under the Strategy. Hosted 2nd European Financial Forum in January 2017. IFS2020 Action Plan 2017 adapted to provide a Brexit strategy. Brexit International Financial Services Forum held in April 2017 and a regional forum held in November. Legislation to amalgamate the Financial Services Ombudsman and the Pensions Ombudsman into the Financial Services and Pensions Ombudsman passed through the Houses of the Oireachtas.
Programme C: Provision of Shared Services Public Service Activity 2017 Key Outputs Achieved
Provision of a bank A strategic, transparent and comprehensive risk and clearing/funding service to compliance framework in place. Departments. The overall Risk Management Framework is set out in the governance document first published in 2016 (updated in Provision of Accounting, November 2017) and consists of a risk team, risk committee Budgeting and Financial and risk owners (line divisions) within the Department. Reporting Services to the There is also a more detailed Framework and Procedures Department of Finance, Manual for the Department of Finance (March 2017) and the the Department of Public system is operating. An electronic risk register has been Expenditure and Reform rolled out and is in use throughout the Department since early and certain clients. 2017. The Compliance Framework to fulfil the commitment of the Implement a Human Civil Service Reform agenda is completed and is operational. Resources strategy. The Department has contributed to the National Risk Assessment (NRA) steering group. The work of the steering Developing the group feeds into the drafting of the NRA by the Department of Department’s Risk An Taoiseach. Management Framework Completed all transactions for Accounts Payable, Accounts and Policy, internal and Receivable and General Ledger for D/Finance, D/PER, Office
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external risk management of Government Procurement, Superannuation and Retired and risk assessment of Allowances, Secret Service and National Shared Services policy initiatives, Office including funding of all weekly and fortnightly salaries overseeing the upkeep and Travel and Subsistence Payments. and improvement of the Furnished Revenue Commissioners with all relevant statutory Department’s risk register returns. and providing evaluation Furnished D/BEI with all relevant PPI returns. and advice on the most Completed all transactions for the Exchequer and arranged important risks faced by for the publication of the monthly Exchequer Statement and the Department. the corresponding Finance Accounts for the year. Completed the accounts for the following Funds/Accounts: Ensure greater alignment o Credit Union Fund Account of/improve current flows o Credit Institutions ELG Scheme Account of information within, to o Local Loans Fund Account and from the Department o Ireland/US Educational Fund Account and add to efficiency o State Property, Miscellaneous Deposits Account Sundry Department wide. Moneys Account Land Bond Account Intestate Estates Account Social Insurance Investment Fund Account Hep Liaise with the Attorney C Special Account Hep C Reparation Account Travellers General’s Office and Protection Fund external legal advisers as The National Economic Dialogue was held on 28-29 June required and implement a 2017. compliance function. During 2017 the Department processed c.3,300 Parliamentary Questions, c.345 Freedom of Information requests, and c.3,100 Ministerial representations.
—— 9 Vote 7: Office of the Minister for Finance
Chapter 1: Exchequer financial outturn for 2017
1. TAX RECEIPT PERFORMA NCE IN 2017 • In 2017 total taxes of €50.7 billion were collected, up 0.2 per cent (€116 million) against projection. Taxes were up 6.0 per cent (€2.9 billion) year-on-year.
• In relation to income tax, which is the largest tax-head, the performance in 2017 was solid with receipts finishing the year just 1.2 per cent or €236 million below profile. Importantly, the key income tax component, i.e. PAYE income tax (which accounts for c.65 per cent or €13.1 billion of total income tax receipts) closed the year exactly on target, which equates to strong annual growth of 9.0 per cent or €1,085 million and reflects a buoyant labour market. In addition, overall USC receipts closed the year on target, up €3 million or 0.1 per cent. This performance represents an annual increase of 4.4 per cent or €840 million.
• Corporation tax receipts in 2017 of €8.2 billion were €0.5 billion (6.3 per cent) above the Budget 2017 forecast.
• VAT returns saw a strong 7.1 per cent annual increase in 2017, and came in broadly in line with profile (under by just 0.5 per cent or €72 million) with total receipts of €13.3 billion collected.
• The other major consumption tax heading - Excises which are volume-driven – came in just below profile for the year, down by 1.0 per cent (€60 million) with the total collected at €5.9 billion. This represented a 3.7 per cent (€214 million year-on-year increase).
• Stamp Duties of €1.2 billion were collected last year. This represents a flat year-on-year performance on this heading (small increase of €10 million or 0.8 per cent) and was 9.8 per cent (€131 million) below expectations.
• CGT recorded an overall surplus for the year of €116 million (16.4 per cent) against profile. This represents flat year-on-year growth of €4 million or 0.5 per cent.
• CAT finished the year with total receipts of €460 million collected, an over-performance of €19 million (4.4 per cent) against target.
—— 10 Vote 7: Office of the Minister for Finance
2. CONCENTRATION OF CORPORATE TAX RECEIP TS • Following the 2015 ‘level shift’ in Corporation Tax receipts, revenues for 2017 were €8.2 billion. This represents an 11.6 per cent year-on-year increase.
• For 2017 Corporation Taxes account for just c.16 per cent of all Exchequer tax revenues, this is within the previous pre-crisis range from such receipts. It is important to point out that income tax and VAT still account for around two-thirds of the overall Exchequer tax yield.
• Corporation tax receipts are highly concentrated in Ireland, with approximately 80 per cent of receipts received in 2017 from the multi-national sector. The share provided by the “Top 10” tax paying companies has risen from 37 per cent in 2016 to 39 per cent in 2017.
• As a country that has been consistently successful in attracting leading multi-nationals to locate here and given Ireland’s level of integration with the global economy, it is not surprising that our corporation tax base has become concentrated.
• However, the Department of Finance is fully aware of the concentration issue and has highlighted this concern on many occasions as a risk.
INTERNATIONAL COMPAR ISON • Using comparative OECD data, Ireland’s 2016 corporation tax receipts represented 11.5 per cent of total taxes. Other countries with a similar share were the Slovak Republic 11.6 per cent; Luxembourg 12.2 per cent; Switzerland 10.8 per cent and the Czech Republic 10.6 per cent.
• Given many OECD states generally collect more tax than Ireland (particularly social security contributions), corporation tax receipts as a share of GNI*/GDP might be a more appropriate comparator. Accordingly, Ireland’s corporation tax receipts as a per cent of GNI* was 4.2 per cent. Other countries with a similar share (of GDP) were the Slovak Republic 3.8 per cent; Luxembourg 4.5 per cent; and the New Zealand 4.7 per cent.
• Finally, it is important to point out that Ireland is now subject to the fiscal rules under the Preventive Arm of the SGP. This means that government expenditure policy should be decoupled from reliance on cyclical or windfall tax revenues.
—— 11 Vote 7: Office of the Minister for Finance
3. TAX RECEIPT PERFO RMANCE IN 2018 • Tax revenues of €55.6 billion were collected in 2018, an increase of 8.3 per cent or €4.3 billion on 2017. It is also worth pointing out that all major tax-heads displayed annual growth with the exception of Excise. Furthermore, tax revenues closed the year 2.6 per cent or €1.4 billion ahead of target. It should be noted however, that the bulk of this over-performance was due to corporation tax, dealt with in further detail below.
• Income tax receipts at end-December of €21.2 billion were recorded. This represents strong year-on-year growth of €1.2 billion (6.2 per cent) and is broadly in-line with profile, below by just 0.9 per cent (€203 million).
• VAT finished the year ahead of target by 1.0 per cent or €144 million with total receipts of €14.2 billion collected. In year-on-year terms, this heading is showing strong growth of 7.0 per cent or €931 million.
• Corporation Tax receipts of €10.4 billion came in €1.9 billion (22.1 per cent) ahead of target for the year as a whole. In annual terms, receipts grew by €2.2 billion (26.6 per cent) in 2018 reflecting, in part, higher levels of corporate profitability in the economy, as well as some one-off increases due, inter-alia to the IFRS 15 accounting changes. This means that corporation tax now holds its largest ever share of overall taxes (18.7 per cent). This places a growing a reliance on a small number of tax payers which in turn increases the fiscal risk to the Exchequer.
• Excise duties of €5.4 billion were collected to end-December 2018. This represents a €402 million (6.9 per cent) under-performance against profile. This can be attributed to the continued legacy effect of 2017 frontloading of tobacco stock in anticipation of the introduction of plain packaging last year. However, this was to some degree anticipated with the annual forecast revised downwards by circa €200 million in Budget 2019.
• Stamp duty receipts in 2018 amounted to €1.5 billion, up 20.7 per cent or €249 million in year-on-year terms, but were 13 per cent or €217 million below profile.
• Capital Gains Tax receipts of €994 million recorded an overall surplus for the year of €149 million (17.6 per cent) against profile. This represents year-on-year growth of 20.2 per cent
• Capital Acquisition Tax receipts have been reasonably strong, up €52 million or 11.2 per cent against target, which represents an annual increase of 13.7 per cent.
• Motor Tax receipts of €977 million finished the year broadly in line with profile (below by just €8 million or 0.9%).
—— 12 Vote 7: Office of the Minister for Finance
• Customs receipts of €333 million finished the year €12 million or 3.6 per cent below target, and flat in year-on-year terms (up 0.5 per cent).
4. TAX RECEIPT PER FORMANCE IN 2019 YEA R T O D AT E At end-April 2019, €15,571 million in tax revenue was collected. This is broadly in line with profile (below by just 0.2 per cent or €26 million), and up 5.7 per cent or €833 million on the same period last year. This represents a strong year-on-year performance, in-line with nominal GDP growth. Combined non-tax revenue and capital resources were €1,475 million, bringing total Exchequer revenues to €17,046 million, which represents a 7.4 per cent or €1,169 million annual increase.
Direct Taxes
• In cumulative terms, to end-April Income Tax receipts of €6,965 million were up €429 million or 6.6 per cent, year-on-year. This represents a deficit against target of €173 million or 2.4 per cent. The shortfall is primarily due to lower than expected receipts for the unearned and self-employed sources of income recorded earlier in the year.
• Reflecting positive labour market developments, PAYE was on target to end-April, showing strong year-on-year growth of 7.8 per cent (€381 million). USC receipts were also broadly in line with expectations.
• Corporation Tax receipts of €468 million, on a cumulative basis, finished the period €157 million ahead of target, albeit only 4.5 per cent of annual receipts are profiled for this period.
• For April Corporation Tax finished the month below target by €110 million. This was due to larger than anticipated repayments which were about €140 million ahead of target.
Indirect Taxes
• Cumulatively, receipts under this heading amount to €4,992 million, coming in below profile by €191 million. This is due to the repayments in April which is a VAT non-due month. This represents growth of 3.0 per cent or €147 million in annual terms.
• Net April VAT receipts amounted to €6 million, which represents a shortfall against target of €169 million. This was mainly due to un-profiled repayments. Overall in the year to date, repayments amount to €1,891 million, €218 million ahead of the Revenue’s target.
• Excise Duty finished the month €112 million or 23.3 per cent ahead of target. In cumulative terms, excise duties of €1,967 million at end-April, were up €142 million (7.8
—— 13 Vote 7: Office of the Minister for Finance
per cent) against profile. This performance can be mainly traced to a recovery in tobacco receipts. Clearances of cigarettes to the end of April are up nearly tenfold on the same period in 2018. This base effect is due to extremely low clearances in the early months of 2018. This arises from stockpiling in 2017 due to the introduction of tobacco-related health measures.
Capital Taxes
• In cumulative terms, Stamp Duty receipts of €428 million at end-April, were down €34 million against profile, but up 6.6 per cent or €26 million in year-on-year terms. Receipts for April amounted to €104 million, which represents a €10 million shortfall against target, but up 3.7 per cent or €4 million when compared to April 2018.
• Capital Gains Tax receipts for the month amounted to €16 million, which represents a €6 million surplus against the monthly target. Cumulative receipts of €191 million are now up 19.4 per cent on profile and up €40 million in year-on year terms.
• Capital Acquisitions Tax in April was €4 million short against target. Looking at the position in the year-to-date, receipts of €63 million are now 2.7 per cent ahead of target.
Other Taxes
• €90 million was collected in Motor Tax receipts in April, up €6 million against profile.
• Customs receipts of €16 million were collected in April, coming in below profile by €12 million. Cumulative receipts of €106 million are up €7 million or 6.6 per cent in year-on- year terms.
5. VOTED EXPENDITURE PERFORMANCE FOR 2017 • Total net voted expenditure for 2017, at €46,413 million, was €2,395 million (5.2 per cent) higher in year-on-year terms and €140 million (0.3 per cent) above profile.
• Net voted current expenditure of €42,087 million for 2017, was 0.2 per cent or €99 million above profile and €2,002 million (5.0 per cent) higher in year-on-year terms.
• Net voted capital expenditure for 2017 of €4,326 million, was 1.0 per cent (€41 million) above profile, which equates to a year-on-year increase of 10.0 per cent or €394 million.
• Gross voted expenditure of €58,525 million for the year was €29 million above profile.
—— 14 Vote 7: Office of the Minister for Finance
6. VOTED EXPENDITURE PERFORMANCE FOR 2018 • Total gross expenditure for 2018 amounted to €62,979 million. This is (7.5 per cent) or €4,392 million higher than the outturn for 2017 and €1,214 million ahead of profile.
• The gross voted expenditure outturn is broadly in line with the estimated amount for 2018 included in Expenditure Report 2019 published on Budget day, which set out Supplementary Estimates for Health, Education, Justice and Housing.
• Total net voted expenditure for 2018, at €50,280 million finished the year €645 million or 1.3 per cent above profile and up €3,867 million (8.3 per cent) in year-on-year terms. After taking account of the Supplementary Estimates and Further Revised Estimates net voted expenditure, excluding Departmental balances, was €642 million below the aggregate amount of €50,923 million voted by the Dáil for 2018.
• Net voted current expenditure at €44,454 million for 2018, was 1.2 per cent or €540 million above profile. This increase was accommodated within the Further Revised Estimates and the Supplementary Estimates agreed by the Dáil in December.
• Net current expenditure is €2,286 million ahead year-on-year and up 1.2 per cent or €540 million on profile while net capital expenditure is 36.5 per cent or €1,581 million higher than the same period in 2017 and up 1.8 per cent or €104 million on profile.
• Gross current expenditure of €15 billion by Health was €625 million (4.2 per cent) ahead of profile and €1,118 million (7.8 per cent) higher than the outturn for 2017. Net current expenditure of €15 billion is €631 million ahead of profile and was up €1,126 million (8.1 per cent) in year-on-year terms. This is reflective of the additional allocation provided to this sector as part of the annual budgetary process and was set out in the 2019 Expenditure report.
• Gross current expenditure by the Employment Affairs and Social Protection Vote of €20 billion is ahead of profile by €297 million (1.5 per cent) and is €363 million (1.8 per cent) ahead of expenditure at the end of December last year. Net current expenditure of €10.7 billion is ahead of profile by €109 million and reflects the Government decision to provide a Christmas Bonus of 100 per cent of the normal weekly pension or benefit payment.
• Gross current expenditure of €2.5 billion in the Justice Group of Votes is €101m (4.1 per cent) ahead of profile and net current expenditure of €2.3 billion is €70 million (3.2 per cent) ahead of profile. Taking into account the Supplementary Estimate on the
—— 15 Vote 7: Office of the Minister for Finance
Garda Vote, net spending on the Garda Vote is €3.4m under profile for 2018, with Garda pay showing a saving against the revised profile of €7 million.
• Net capital expenditure in the Department of Housing, Planning and Local Government is €143m ahead of profile and reflects the Government decision to provide additional funding to this department primarily to support homelessness services and to fund the cost of cleaning up storm damage.
7. VOTED EXPENDITURE PERFORMANCE TO END - AP R I L 2 0 1 9 • Total gross voted expenditure of €20,247 million to end-April was €146 million (0.7 per cent) below profile. This is €1,031 million (5.4 per cent) ahead on the same period in 2018.
• Gross voted current expenditure of €18,823 million is €143 million or (0.8 per cent) below profile and up by €740 million (4.1 per cent) in year-on-year terms, and gross voted capital expenditure of €1,424 million is €3 million (0.2 per cent) below profile and up by €291 million (25.7 per cent) year-on-year.
• Total net voted expenditure to end-April 2019, at €16,244 million, was €154 million or 0.9 per cent below profile but up €817 million or 5.3 per cent in year-on-year terms.
• Net voted current expenditure at €14,806 million to end-April, was €151 million or 1.0 per cent below profile but €531million or 3.7 per cent higher in year-on-year terms.
• The Department of Health Vote Group is running €19 million or 0.4 per cent behind profile.
• The Department of Housing, Planning and Local Government Vote Group is running €22 million or 2.7 per cent behind profile. This is largely due to delays in drawing down payments by Irish Water. This is the first year in which the new funding arrangements for Irish Water are in place, with all Irish Water expenditure, both current and capital, in respect of domestic water services now being funded from voted expenditure. It is anticipated that these drawdowns will be completed in the coming months bringing expenditure back in line with profile.
• Net voted capital expenditure at end-April amounted to €1,417 million, which was €3 million (0.2 per cent) below profile. This represents a year-on-year increase of €287 million or 25.3 per cent.
—— 16 Vote 7: Office of the Minister for Finance
• Gross capital expenditure in the Department of Housing, Planning and Local Government is €30m, or 9.8 per cent, ahead of profile with the Local Authority Housing programme running at €64m ahead of profile at end-April.
BUDGETARY REFORM MEA SURES • In recent years, considerable reforms have been implemented to Ireland’s budgetary framework. The new approach is intended to permit a more open budgetary process, allow stronger dialogue with the Dáil on key elements and facilitate the continued central role of Government in the development of budgetary proposals, consistent with the maintenance of stable public finances.
• The annual budget process now involves a number of elements, staring with publication of the Spring/Summer Economic Statement. This Statement sets out the broad parameters for macroeconomic growth and the fiscal outlook and constraints over the medium term. The macro-fiscal outlook is based on SPU forecasts, published in April.
• This is followed by a National Economic Dialogue in June/July. The dialogue is an important element of the budgetary framework and its objective is to facilitate an open and inclusive exchange on the competing economic and social priorities facing the Government.
• Also in July, the Mid-Year Expenditure Report is published. This Report presents the baseline for Departmental expenditure and provides the starting point for examination of budgetary priorities by the Oireachtas.
• A further development in the reformed Budget process is the circulation in July by the Department of Finance of Tax Strategy Papers to the relevant sectoral Oireachtas Committees. The Tax Strategy Group is made up of representatives from various Government Departments and political advisors. The Tax Strategy Papers set out existing measures across all tax heads, contain issues for discussion and costed options for tax changes, taking Programme for Government commitments into account.
• To enhance the role of the Oireachtas in the Budget process, the Select Committee on Budgetary Oversight was established in July 2016. The role of the Committee is to review the macro-economic and fiscal issues that form part of the Budget considerations. The establishment of the Parliamentary Budget Office is also aimed at facilitating the Oireachtas in engaging with the Budget process. The Office was established in 2017 as an independent specialist unit within the Houses of the Oireachtas Service. The role of the Office is to provide independent, impartial information, analysis and advice to the Houses of the Oireachtas. The Houses of the
—— 17 Vote 7: Office of the Minister for Finance
Oireachtas Commission Act 2018 set the Parliamentary Budget Office on a statutory basis.
• The Performance Budgeting initiative continues to evolve, and now incorporates the Public Service Performance Report. First published at end Q1 2017, the Report aims to strengthen focus on what is being delivered with public funds. This report, providing timely quantitative performance data aims to help to enhance the focus on performance and delivery by presenting relevant performance indicators in a dedicated, focused document. The 2018 Public Service Performance Report was published in May 2019.
• On foot of a Programme for Government commitment to developing a process of budget and policy proofing as a means of advancing equality, reducing poverty and strengthening economic and social rights, REV 2018 saw the roll-out of a pilot programme of Equality Budgeting. The initial focus was on gender, and as the Minister announced on Budget Day last October, the programme will be expanded in 2019 to include other dimensions of equality including poverty, socioeconomic inequality and disability. Nine Departments provided equality-related performance targets in REV 2019 and progress on these targets will be reported on in the Public Service Performance Report.
• Underpinning the focus on sustainable spending is the Spending Review process. 2017 saw the first in a series of rolling, selective reviews, which will cover the totality of Government spending over a three year period to 2019. This allows an examination of existing spending programmes to assess their effectiveness in meeting policy objectives and to identify scope for re-allocating expenditure to meet expenditure priorities. The first year of the review resulted in the publication of over 20 papers, examining a wide range of policy areas, providing a robust evidence base for Estimates 2018 discussions. In 2018, the involvement of policy Departments was enhanced and a greater role was taken by the Irish Government Economic and Evaluation Service. A further 30 papers were produced as part of Spending Review 2018, covering a diverse range of topics. The third and final year of the new Spending Review process is now underway. The aim in 2019 is to build on the output of the first two years and further reinforce the more structured and systematic means of analysing spending focusing on an assessment of efficiency, effectiveness and sustainability.
—— 18 Vote 7: Office of the Minister for Finance
End-December 2017 - Analysis of Taxation Receipts
Performance against Profile - Cumulative Performance against Profile - Monthly End-December End-December Excess / Excess / Excess / Excess / December 2017 December 2017 Exchequer Tax Receipts 2017 Outturn 2017 Target Shortfall Shortfall Shortfall Shortfall Outturn €m Target €m €m €m €m % €m % Income Tax (including USC) 20,009 20,245 -236 -1.2% 1,726 1,711 15 0.9% VAT 13,303 13,375 -72 -0.5% 80 117 -37 -31.8% Corporation Tax 8,201 7,715 486 6.3% 548 458 90 19.7% Excise 5,925 5,985 -60 -1.0% 353 529 -175 -33.2% Stamps 1,204 1,335 -131 -9.8% 137 156 -19 -12.3% Capital Gains Tax 826 710 116 16.4% 539 462 77 16.7% Capital Acquisitions Tax 460 440 19 4.4% 15 21 -6 -29.8% Customs 331 355 -24 -6.7% 28 28 0 1.4% Levies 0 0 0 - 0 0 0 - Local Property Tax 477 460 17 3.6% 43 43 0 0.4% Unallocated Tax Deposits 0 0 0 - -21 0 -21 - Total 50,737 50,620 116 0.2% 3,449 3,525 -76 -2.2%
Year-on-Year Performance - Cumulative Year-on-Year Performance - Monthly End-December End-December Y-on-Y Y-on-Y December 2017 December 2016 Y-on-Y Y-on-Y Exchequer Tax Receipts 2017 Outturn 2016 Outturn Change €m Change % Outturn €m Outturn €m Change €m Change % €m €m Income Tax (including USC) 20,009 19,169 840 4.4% 1,726 1,624 102 6.3% VAT 13,303 12,420 883 7.1% 80 109 -29 -26.5% Corporation Tax 8,201 7,351 850 11.6% 548 289 259 89.5% Excise 5,925 5,711 214 3.7% 353 431 -78 -18.2% Stamps 1,204 1,194 10 0.8% 137 140 -3 -1.9% Capital Gains Tax 826 822 4 0.5% 539 567 -27 -4.8% Capital Acquisitions Tax 460 415 44 10.7% 15 18 -3 -17.1% Customs 331 318 13 4.2% 28 22 6 25.4% Levies 0 0 0 - 0 0 0 - Local Property Tax 477 463 13 2.8% 43 42 1 2.0% Unallocated Tax Deposits 0 0 0 - -21 -62 42 -66.7% Total 50,737 47,864 2,872 6.0% 3,449 3,180 269 8.5% Note: Rounding may affect totals
—— 19 Vote 7: Office of the Minister for Finance
—— 20 Vote 7: Office of the Minister for Finance
Chapter 22: Irish Fiscal Advisory Council
1. ESTABLISHMENT AND FU NCTIONS OF THE IFAC The Irish Fiscal Advisory Council (IFAC) is an independent statutory body which was established by the Government on an administrative basis in July 2011. This was done as part of a wider agenda of reform of Ireland’s budgetary architecture, under the Programme for Government 2011 and the EU/IMF Programme of Financial Support for Ireland. The Fiscal Responsibility Act 2012 established the Council on a statutory basis on the 31st of December 2012 whilst also legislating for the implementation of national and EU fiscal rules.
Further EU regulations (EU Regs. 472 & 473 of 2013, commonly called the ‘Two-Pack’ Regulation) required Ireland to have its national medium-term fiscal plans and proposed budgets assessed by an independent body prior to submission to the Dáíl. It was decided that the IFAC would be an appropriate body to undertake the required assessments. The passing of the Ministers and Secretaries (Amendment) Act, 2013 in July 2013 resulted in IFAC being assigned the role of the independent body that would endorse, as it considers appropriate, the macroeconomic forecasts produced by the Department of Finance, upon which Budgets and Stability Programme updates are based. The process of this additional function is outlined in the Memorandum of Understanding between the Council and the Department of Finance.
The full mandate of the IFAC is:
To endorse, as it considers appropriate, the macroeconomic forecasts prepared by the Department of Finance upon which the Budget and Stability Programme Updates (SPU) are based; To assess the official forecasts produced by the Department of Finance; To assess Government compliance with the Budgetary Rule as set out in the Fiscal Responsibility Act, 2012; To assess whether the fiscal stance of the Government in each Budget and SPU is conducive to prudent economic and budgetary management, including with reference to the provisions of the Stability and Growth Pact (SGP).
IFAC’s responsibilities have been assigned on a statutory basis under the relevant legislation, and as such, these functions cannot be revised or modified, unless by way of further legislative amendment (i.e: IFAC cannot be asked to do anything other than what is already legislated for in the relevant Acts).
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2. ASSESSMENTS BY THE C OUNCIL OF ECONOMIC F ORECASTS The IFAC is required to produce a Fiscal Assessment Report (FAR) at least once a year but in practice has produced two reports per annum, one following the SPU and one following the Budget. The IFAC also produces other publications, including Pre-Budget Statements each year and an Ex-Post Assessment of Compliance with the Domestic Budgetary Rule as well as a number of Analytical Notes and Working Papers.
During the passage of the Fiscal Responsibility Act 2012, the Minister for Finance agreed to reply substantively to these biannual Fiscal Assessment Reports published in June and November each year. Although the Minister is not required to respond formally to the other material produced by the Council, all publications are reviewed and given due consideration by the Department. The Minister formally responded to the most recent Fiscal Assessment Report (November 2018) on 23 January 2019 and this has been published on the Department’s website.
IFAC Fiscal Assessment Report – November 2018
The Department of Finance published its most recent macroeconomic forecasts as part of Budget 2019. These forecasts were endorsed by the Irish Fiscal Advisory Council in their Fiscal Assessment Report of November 2018. In this report, the Council endorsed the Budget 2019 macroeconomic forecasts for 2018 and 2019 produced by the Department, which show that the Irish economy is expected to maintain its recent strong growth. The Council noted that this favourable performance is part of a cyclical recovery that has been ongoing for about five years.
The Council noted that the Department’s estimates of potential output and the cyclical position of the economy, suggest that the Irish economy is currently operating close to potential, and that economic growth will outstrip the sustainable rate of around 3 per cent over coming years, leading to upward price pressures. This implies upside risk to the near-term forecasts, but could lead to the realisation of downside risks over the longer term. The strong reliance on highly concentrated foreign-owned activities as well as the possible underestimation of the impacts that Brexit may have on the Irish economy, are both highlighted as significant risks to Ireland.
In terms of Methodology behind the Budget 2019 Forecasts, the Council say that it is satisfied that the Department’s approach to demand-side forecasting broadly conforms to that of other forecasting agencies. Overall, the Council note that in recent years, the Department’s in-year forecasts and those made one year ahead have been relatively accurate. Amongst the key points made were:
—— 22 Vote 7: Office of the Minister for Finance
Macroeconomic Forecasts • The Council endorsed the macroeconomic forecasts for 2018 and 2019 and welcomed the publication, as part of Budget 2019, of the Department’s estimates of potential output and the cyclical position of the economy, which suggest that the economy is operating at close to potential. • The most significant downside risks to the forecasts identified by the Council include the strong reliance on highly concentrated foreign-owned activities as well as the possible underestimation of the impacts that Brexit may have on the Irish economy.
Fiscal Assessments 2018 • The Council asserted that “additional expenditure increases introduced in 2018 were not conducive to prudent economic and budgetary management”. The report concluded that there has been a failure to address a pattern of overspending that means “pro-cyclical policy mistakes of the past are being repeated”.
2019 • According to IFAC, Budget 2019 included an upward revision of approximately €0.35 billion to the planned Budget Day package, which could lead to a risk of further slippage reoccurring in future.
2020 – 2023 • The Council assessed the Government plans for 2020-2023 as unrealistic, lacking in credibility and without a clear anchor for the public finances over the medium term. This is because plans have been predicated on technical assumptions for ‘flat’ Departmental ceilings in the later years. According to the Council, a more likely scenario is that spending will increase at a faster pace than originally envisaged, meaning the Budget surpluses that are currently being predicted are unlikely to be achieved.
IFAC’s assessment of Ireland’s Fiscal Compliance The Council highlighted the possibility of non-compliance with the fiscal rules this year and next. However, the European Commission who is the final arbiter assessed Budget 2019 to be fully compliant with the fiscal rules. The Commission verified that we will maintain a balanced budgetary position in 2019 and projected that we would achieve our Medium- Term Budgetary Objective (MTO) in 2018 and 2019. On this basis, the overall opinion of the Commission is that the Draft Budgetary Plan 2019 for Ireland is compliant with the EU fiscal rules.
—— 23 Vote 7: Office of the Minister for Finance
3. STRUCTURE OF THE COUNCIL In terms of structure, the IFAC consists of five Members appointed for four-year terms. As the appointments were staggered, three of the five positions, including that of Chair, were due for renewal by the end of this year (2019), with the first arising in March 2019. A competitive process, managed through the Public Appointments Service (PAS) was initiated and Professor Michael McMahon of Oxford University was appointed to the Board of the Council on foot of this competition, on 18th April 2019. A further vacancy will arise in December this year, with the completion of Michael Tutty’s second term as member of the Board. Separately, the Chair of the Council, Seamus Coffey will be due to complete his first term as member this December also.
4. ANNUAL BUDGET O F THE COUNCIL The Council is funded from the Central Fund (Exchequer). The Council’s governing legislation, the Fiscal Responsibility Act, 2012 sets out the terms of its funding. Annual budgets are subject to a current ceiling of €800,000 adjusted by the annual percentage change in the Harmonised Index of Consumer Prices (HICP). The Council determines its budget within this ceiling. According to the CSO’s HICP figure for 2018, the Council were advised in January this year that their maximum available funding for 2019 would be €829,114. This was based on the 2018 expenditure ceiling of €822,534.
5. THE ACCOUNTS OF T H E C O U N C I L Section 10 of the Fiscal Responsibility Act, 2012 requires that the Council keep ‘all proper and usual accounts of receipts and expenditure’ and that these must be submitted by the Council to the Comptroller and Auditor General for audit. A copy of any accounts audited by the C&AG shall then be given to the Minister for review and laying before each House of the Oireachtas. This has been done each year since the establishment of the Council in 2012. The Council’s Financial Statement for 2017, along with a copy of the C&AG’s Report were submitted to the Minister on 28 September 2018 and a copy was laid before each House of the Oireachtas on 1 October 2018, in line with the requirements under the FRA 2012.
—— 24 Vote 7: Office of the Minister for Finance
Finance Accounts 2017
Item 2016 2017 Explanation/Any notable change from 2016 Current Receipts: €000 €000
Tax Revenue p.15 47,864,486 50,736,543 • At end-December €50,737 million was collected in tax revenue, 0.2% (€116 million) ahead of profile and up 6.0% (€2,872 million) in 2016. • Income tax in cumulative terms for 2017 were marginally below profile, by 1.2% (€236 million) and 4.4% (€840 million) higher in year-on-year terms. This shortfall was chiefly due to lower than expected receipts from the self-employed and unearned income elements of income tax. Importantly the key income tax component (PAYE) closed the year exactly on-target which equates to annual growth of 9.0% or €1,085 million. • VAT receipts were up 7.1% y-on-y and broadly in line with target, down by just 0.5% (€72 million). • Corporation tax receipts were 6.3% (€486 million) higher than expected at €8,201 million and up 11.6% (€850 million) year-on-year. • Excise duties of €5,925 million at end-December, were €60 million (1.0%) below target but were up €214 million (3.7%) in year-on-year terms. • Stamp duties of €1,204 million were €131 million or 9.8% below the original profile, but in line with the revised target of €1,200 million. In y-on-y terms receipts were flat, up €10 million or 0.8%. • Receipts from CAT for the year were €19 million (4.4%) above profile and up €44 million (10.7%) year- on-year. • Local property tax receipts in 2017 were €477 million, up €17 million (4.4%) on profile. • CGT receipts of €826m exceeded the target by €116 million (16.4%). • Customs receipts amounted to €331 million, which was 6.7% below target.
Non-Tax Current 3,103,103 2,864,888 Revenue: p.16 Central Bank Surplus 1,799,871 1,836,225 The Bank’s surplus income is made up of its profit, less depreciation and appropriation of profit to its General p16 Reserve and its Superannuation Reserve. The Bank may retain up to a maximum of 20% of its annual profit.
National Lottery 218,957 226,751 These figures relate to transfers from the National Lottery Fund to the Central Fund. Surplus p16
—— 25 Vote 7: Office of the Minister for Finance
Royalties p16 280 682 This is a royalty paid by PSE Kinsale Energy Ltd and is determined principally by the quantity of gas delivered to Gas Networks Ireland and the prices paid for it and these vary from year to year.
Income from Credit 47,234 12,205 Following a Government decision on 26 February 2013, the Minister for Finance announced the ending of Institutions p16 the ELG Scheme for new liabilities from midnight 28 March 2013. The liabilities were automatically covered by the ELG Scheme in accordance with its terms and conditions until the date of maturity of the liability (subject to a maximum of 5 years from 28 March 2013). As the liabilities matured, the resulting fees paid to the Central Fund diminished and this was built into budgetary forecasting.
Interest received on 2,627 679 Greek Loan - €460,820.10, FEOGA funding loan - €178,520.55, Local Loans – €39,735.77. The differences loans p16 are due primarily to interest rate changes, the timing of borrowings requirements and timing of repayments.
Share Dividends p16 268,802 323,742 This item relates to the dividends paid to the Central Fund by commercial state bodies.
2016 2017 State Agency €000 €000 Irish Aviation Authority 7,430 9,248 Electricity Supply Board 82,165 109,968 Bord na Móna 3,763 2,331 Dublin Port Company 10,912 11,712 Coillte Teoranta 7,200 8,000 Port of Cork Company 673 693 Dublin Airport Authority 18,300 29,100 Eirgrid Dividend 3,500 4,000 Shannon Foynes 200 250 Ervia 134,659 148,440 TOTAL 268,802 323,742
(a) Explanation of the variation between receipts in 2016 and 2017 In the case of each of the commercial state bodies under the aegis of DCCAE the dividend rate is paid as a proportion of the net profit at year end. Net profits for each of the companies vary from year to year depending on financial performance. There were “special” dividends from Ervia in 2017 arising from the disposal of State Assets.
—— 26 Vote 7: Office of the Minister for Finance
Receipts collected by Government Departments and Offices
2016 2017 The vast majority of these items are one off on a yearly basis so there is no comparative reason €000 €000 available for variances which may occur on a year to year basis.
Agriculture, Food and 205 3,010 The variation between 2016 and 2017 relates to a receipt of €2,930,083.36 related to overpayments to the the Marine (DAFM) EU which was lodged in January 2017. p16
Culture, Heritage and - 4 This was a one off receipt for the repayment of Gaeltacht Loans Schemes of €4,133.54 the Gaeltacht p16
Communications, 148,757 119,613 The decrease in receipts between 2016 and 2017 is due to Comreg licensing activity and the inclusion of Climate Action and Carbon auction receipts due to the transfer of functions from the former DCELG in 2016. Environment p16
Defence p16 1,894 - In 2016 there was a receipt of unspent grant aid by the Irish Red Cross.
Education and Skills 965 3,936 The variation in receipts between 2016 and 2017 related to two large receipts from Irish Research Council p16 for the refund of sums paid for postgrad and postdoctoral students received in 2017.
Housing, Planning, 11,804 1,072 The reason for the large variance between 2016 and 2017 receipts is due to €11,803,764 in Carbon Credits Community and Local received in 2016 under the Emissions Trading Scheme. Government p16
Finance p17 55 76 The level of receipts varies from year to year
Children and Youth 8,389 1,130 These receipts relate to unspent money by Pobal for childcare and can vary from year to year. Affairs p17
Business, Enterprise 530 559 The variances between 2016 and 2017 receipt level arose on foot of differing receipts from sales and and Innovation p17 investments year on year. Amounts of excess grants and own resource income differs each year. Most of the 2017 receipts related to a refund of money unused by Enterprise Ireland.
Justice & Equality p17 12,801 12,932 The bulk of the figures here relate to Exchequer Fines, Courts Motor Fines and Garda On the Spot Fines.
—— 27 Vote 7: Office of the Minister for Finance
Receipts collected by Government Departments and Offices (continued):
2016 2017
€000 €000
National Gallery of 5 - In 2016 there was a receipt of money owed back to the Exchequer after the NGI vote ceased in 2015. Ireland p17
Property Registration 57,917 61,756 The increase between 2016 and 2017 is due to a higher level of activity in the property market where the Authority p17 level of transactions lodged to the Property Registration Authority increased.
Office of the Director 23 4 The amount of receipts each year varies on the number of cases before the courts in a given year. of Public Prosecutions p17
Office of Public Works 1,715 - In 2016 there were receipt relating to closing balances on dormant suspense accounts. There were no p17 receipts in 2017.
Office of the - 40 The receipt in 2017 relates to a settlement contribution in connection to High Court costs. Ombudsman p17
Office of the Revenue 1,667 1,180 Receipts here relate to the Forfeiture of Cash (Criminal Justice Act 94 S39) and OLAF (European Anti-Fraud Commissioners p17 Office) JTI Agreement receipts. This relate to monies forfeited under Section 38 of the Criminal Justice Act and the outcome from court proceedings can vary from year to year.
Public Expenditure 37 10 The amount of receipts each year varies. and Reform p17
Employment Affairs 25 29 It is impossible to predict the amount of money that will be received each year in respect of anonymous and Social Protection receipts, witness expenses and Pension Board fines. p17
Transport, Tourism 642 478 The Road Safety Authority pension contribution is the consistent source of receipts in the Department of and Sport p17 Transport and can vary from year to year.
—— 28 Vote 7: Office of the Minister for Finance
Other Receipts - 2016 2017 Current €000 €000
Monies received under 1,460 1,525 These receipts vary from year to year. various Acts p17
Voluntary salary and 243 82 President and some recipients of Ministerial pensions and these vary from year to year. pension surrenders p17
Pension Levy p18 13,472 12,361 This is primarily comprised of Pension Related Deduction in respect of the CBoI, NTMA, NAMA and Houses of the Oireachtas.
NTMA Public Service 219 213 This is Public Service Pension Reductions in respect of NTMA pensioners. Pension p18
Receipts from 401 234 These amounts represent the repayment of special loans made by Ireland (and other EU Member States) to European Investment African, Caribbean and Pacific (ACP) States during the early years of the Convention of Lomé. These loans Bank p18 are managed by the European Investment Bank (EIB). Loans to ACP countries during the later years of the Convention of Lomé were made by the EIB and guaranteed by the Member States.
Nursing Home Support 14,136 14,258 Section 26 of the Nursing Home Support Scheme Act 2009 provides that the Revenue Commissioners will Scheme p18 collect any monies advanced to long term care recipients for their care cost and that all monies collected are to be paid into the Central Fund. This collection of funds commenced in 2011. This can vary year on year.
Receipts from Local 317,900 230,000 This figure represents the receipts in from the Local Government Fund. The Local Government Act, 1998, Government Fund p18 as amended by the Local Government Reform Act, 2014 provided for a transfer of up to €600m from the Local Government Fund to the Central Fund upon a request from the Minister for Finance made before the end of each relevant year. From 2018, the LGF gets LPT receipts form Revenue with Motor Tax receipts switched to the Exchequer.
Interest on Contingent 160,438 - This payment represented the interest received on the Ministers Contingent Capital Notes in AIB, and Capital Notes in Banks PTSB. These carry a fixed mandatory interest rate of 10% of the issue price per annum, payable annually. p18 They were repaid in 2016.
—— 29 Vote 7: Office of the Minister for Finance
Other Receipts - 2016 2017 Current €000 €000
Miscellaneous p18 9,632 102 This figure records, amongst other items, amounts of money gifted or forfeited to the State. Conscience Money: €1,701 Other Miscellaneous: €62,136.06 Forfeited Election Expense: €2,500 Gift to State: €25,000 State witness expenses: €27,066.43
2016 2017 Current Payments €000 €000
Voted Issues p19-21 40,066,460 41,968,348 Represents the issues for annual spend under voted Estimates. The Accounting Officer of each Vote is answerable.
Other Service of 6,844,914 6,226,925 The Accounting Officer of the NTMA is accountable for this. National Debt p12,36
Capital Services 10 (142) The Capital Services Redemption Account (CSRA) is used to record the payment of an annual annuity Redemption Account designed to amortise borrowing for voted capital under Section 22 of the Finance Act, 1950 as well as p12, 56 certain payments and receipts connected with debt serving transactions authorised by statute. It was effectively abolished by the Finance Act, 2014. The NTMA is accountable for the CSRA.
Payments to political 38,633 41,760 Payments charged to the Central Fund in respect of Annuities and Pensions of former Constitutional, and constitutional Ministerial and Judicial Office Holders. DPER instructs in relation to these payments. office holders p12, p22 FOI Previously the amounts of pension paid to ex Ministers were published on the DoF website alongside the Finance Accounts. In recent years DPER would have supplied the data from the PSSC. For 2017 DPER refused to supply data citing the GDPR. The absence of the data was noted by a newspaper. There was an attempt to lodge an FOI with this Department but it was withdrawn when we pointed out that we had no data to release. The request was to be rerouted to DPER. However, we have dealt with an FOI re the consideration given to the publication of the data.
—— 30 Vote 7: Office of the Minister for Finance
Current Payments 2016 2017 (continued) €000 €000
Payments to EU 2,022,828 2,016,213 2016 2017 Budget p23 €000 €000 VAT 252,109 261,758 GNI 1,320,647 1,469,615 Customs Duties 279,507 284,840 Own Resources Payment for 170,565 - 2016 & 2017 Total 2,022,828 2,016,213 The VAT and GNI related payments are made on the basis of forecast estimates. Adjustments are made in subsequent years, as the estimates are revised, leading to a mixture of additional payments and/or refunds relating to several years. In addition to adjustments made in respect of previous years' contributions, a number of adjustments may be made to Member States' payments in the course of the budget year following the adoption of any Supplementary Amending Budgets. Contained within the GNI related figure are payments towards rebates for certain Member States.
—— 31 Vote 7: Office of the Minister for Finance
Other Non-Voted 675,033 652,269 Expenditure p24
Houses of the 113,553 109,488 Costs of running the Oireachtas. DPER has policy responsibility in this area. Oireachtas Commission Act 2003 p24
Annual allowances to 7,215 7,629 The allowance is paid to the parliamentary leader of a qualifying party in relation to expenses arising from parliamentary leaders the parliamentary activities, including research, of the party. The allowance may not be used in respect of of qualifying parties election expenses. DPER has responsibility for the calculation of the figures and these are paid on p24 instruction from the said Department.
Payments to qualifying 5,755 5,964 DPER has responsibility for the calculation of the figures and these are paid on instruction from the parties under the said Department. Electoral Acts p24
Payments to 869 1,025 The allowance is paid to Independent TD and Senators in relation to expenses arising from the Independents under parliamentary activities, including research. The allowance may not be used in respect of election expenses. Section 1 of DPER has responsibility for the calculation of the figures and these are paid on instruction from the Oireachtas (Ministerial said Department. and Parliamentary Offices) (Amendment) Act 2001 p24
Returning Officers 14,962 582 Expenditure increases or decreases depending on the number elections or referendums held in the year. expenses under the DPER instructs in relation to these payments. DPER also now check the accounts of the Returning Electoral acts p24 Officers.
Election expenses of 2,667 61 The Electoral (Amendment) Act, 1998 provides for the reimbursement of election expenses for candidates Candidates under the in a Dáil general election or a by-election. Again, the variance in the expenses are related to the number of Electoral Acts p24 election events that took place in 2016. DPER instructs in relation to these payments.
Election Postal 14,145 - The Electoral Act 1992 provides that each candidate at Dáil Elections may send postage, which is free of Charges p24 charge, relevant to the elections. DPER instructs in relation to these payments.
—— 32 Vote 7: Office of the Minister for Finance
Other Non-Voted Expenditure (continued)
Payments to 23,490 24,570 Brief Explanation International This relates to Ireland’s contribution to the various replenishments of the International Development Development Association (IDA), the concessional lending arm of the World Bank Group. Association p24 • Ireland’s commitment to the IDA 16 replenishment of €90m is being paid on a phased basis over 9 years from 2012, of which the fifth instalment amounting to €10,530,000 was paid in 2017. • Ireland commitment to the IDA 17 replenishment of €90m is to be paid on a phased basis over 9 years from 2015. The third instalment of €14,040,000 was paid in 2017. • Ireland’s contributions to IDA are accountable as part of our Overseas Development Aid (ODA) programme and count towards the attainment of the UN target for ODA of 0.7% of GNP. Variances Year-on-Year The payments to IDA vary from year to year depending on the commitments and the scheduling of amounts to be paid. The following sets out the payments under each replenishment in recent and future years; €000 2013 2014 2015 2016 2017 2018 2019
IDA 15 0 0 0 0 0 0
IDA 16 11,070 16,020 14,580 12,960 10,530 8,100 6,485
IDA 17 6,030 10,530 14,040 11,070 10,710
TOTAL 11,070 16,020 20,610 23,490 24,570 19,170 17,195
Development Banks 3,320 4,339 Variances Year-on-Year Act, 2005 Asian Ireland is contributing to the ADF-XI. The total contribution will amount to €20m of which the first annual Development Fund instalment of €1,020,000 was paid in 2013. Two payments of €3,020,000 and €1,319,200 were made in p24 2017.
Council of Europe 11 11 Ireland joined the CEDB on 30 November 2004 under the Council of Europe Development Bank Act 2004. Development Bank As part of the obligations of membership, Ireland contributes to the Budget of the Partial Agreement of the p24 Bank. Article 10 of the Financial Regulations of the Council of Europe state that each State’s contribution will be calculated by the method decided upon by the Committee of Ministers.
—— 33 Vote 7: Office of the Minister for Finance
Other Non-Voted Expenditure (continued)
Payments to PSE 2,275 2,926 Under a 1959 agreement, Marathon (renamed PSE Kinsale in 2009, following acquisition by Petronas) is Kinsale Energy Ltd. entitled to a remittance when its tax, rent and royalty payments are greater than 40% of its net income but p24 subject to a maximum of the tax it paid.
Pre-Vesting day 34 33 Since 2005 additional liabilities have come to light in respect of a certain limited group of pre-vesting day pensions for Eircom pensioners. These are former employees of the old Department of Posts and Telegraphs in departmental plc p24 grades who had retired on pension before the establishment of An Post and Telecom Éireann in 1984. The liabilities arise because a rule regarding the calculation of their pension increases was overturned based on advice received from the Office of the Attorney General. An Post and Eircom have been involved in an exercise to review and revise the pension increases that should have applied. It was agreed that both companies would be reimbursed for any additional costs to them arising from this exercise. DPER instructs in relation to these payments.
Central Bank Coin - 4,405 Under Section 14A of the Economic and Monetary Act 1998, where the net proceeds of coin issue, together Issue p24 with expenses, result in a net cost to the Central Bank, the Minister reimburses the difference to the bank as was the case in 2017
Pension Insolvency 5,663 5,671 These are the ongoing payments to pensioners accepted into the Pension Insolvency Payments Scheme Payments Scheme (PIPS) under Section 22 of the Social Welfare and Pensions Act, 2009. Associated capital receipts are (PIPS) p25 recorded in Statement 1.2
Payments to DSP 13,107 4,497 The Government accepted a mediation settlement in relation to Waterford Crystal pensions (scheme and under Sec. 48(b) of the company are insolvent) and introduced amending legislation. Compensation payments were made to the pensions Act, 1990 deferred pensioners and there are ongoing pension payments - both charged to the Central Fund. Dept. of p25 Social Protection has policy responsibility in relation to this.
—— 34 Vote 7: Office of the Minister for Finance
Other Non-Voted Expenditure (continued)
Payments Under 4,179 57 In December 2009 the Government introduced a new guarantee scheme to follow the Credit Institutions Credit Institutions (Financial Support) Scheme 2008 to provide for the guarantee of bank liabilities beyond 29 September 2010 (Financial Support) Act – the Credit Institutions (Eligible Liabilities Guarantee) Scheme 2009. The Minister for Finance appointed 2008 p25 the NTMA as the ELG Scheme Operator. As a result of the appointment of a Special Liquidator to IBRC on 7 February 2013, derivative counterparties terminated their outstanding derivative transactions with Irish Bank Resolution Corporation. In cases where any negative derivative valuations were not already covered by collateral at the date of termination, counterparties are entitled to submit a claim for any shortfall under the Deed of Guarantee. In March 2013 the Government delegated to the NTMA the functions of verifying claims for payment in respect of the Deed of Guarantee made by the Minister for Finance on 29 November 2010 and for paying out amounts due and payable under the deed of Guarantee. Variation between 2016 and 2017 payments reflects the wind-down of the scheme.
Transfer of monies 463,175 480,440 In 2014 and subsequent years, Local Property Tax receipts are collected by the Revenue Commissioners equivalent to LPT and deposited into the Central Fund. The Minister for Finance then paid into the Local Government Fund an collected to Local amount equivalent to the local property tax paid into the Central Fund during that year, in accordance with Government Fund p25 section 157 of the Finance (Local Property Tax) Act, 2012. From January 2018 LPT is paid to the Local Government Fund and motor tax (previously paid to the Local Government) is remitted to the Central Fund.
Irish Fiscal Advisory 613 571 The Fiscal Responsibility Act, 2012 provided for a ceiling of €800,000 for the Fiscal Council in 2012. This Council p25 sum is to be adjusted by the annual percentage change in the Harmonised Index of Consumer Prices published by the Central Statistics Office for each subsequent year.
Balance on Current 1,319,711 2,696,058 Account p11
—— 35 Vote 7: Office of the Minister for Finance
Capital Receipts
Other Loans Repaid 2,143,790 1,020,976 Department Loan To / Details Loans Repaid p26 2017 €000
Agriculture, FEOGA Guarantee - this is the repayment of funds advanced for 770,000 Food and the CAP payments to farmers pending reimbursement by the EU the Marine Commission. Finance Insurance Compensation Fund - loans provided to the Insurance 70,000 Compensation Fund to deal with situations of financial obligations where insurance company is liquidated/enters into administration. While ultimately the costs are borne by the industry the upfront cash requirement is met via an advance from the Central Fund. Finance Advances to PMG Supply Account under section 3 of Appropriation 180,500 Act, 2017 to fund bank accounts for salaries and pensions payable from Votes as well as Social Welfare payments early in the new year. Office of Local Loans Fund - repayment of loans given in the past to local 476 Public authorities e.g. for housing related purposes. Works 1,020,976
EU Receipts p12 68,661 9,352 The European Regional Development Fund aims to strengthen economic and social cohesion in the European Union by correcting the imbalances in the regions. The ERDF finances (See underlying Productive investment to create and safeguard sustainable jobs; amounts on p31 of the accounts) Investment in infrastructure which contributes to increasing economic potential and local development; and employment initiatives and the activities of small and medium-sized enterprises; In the case of Exchequer funded programmes aided by ERDF, the related gross expenditure is generally provided in the Departmental Votes and the corresponding EU receipts are paid into the Central Fund as a capital receipt.
—— 36 Vote 7: Office of the Minister for Finance
Other Capital 1,877,092 3,744,613 The vast majority of these items are once off on a yearly basis so there is no comparative reason Receipts: p12, 16, 17, available for variances which may occur on a year to year basis – some detail is below 18
NTMA Carbon Fund 423 431 In 2017 the Carbon Fund received a reimbursement of €430,728.56 from the Dept of Environment, Act 2007 p16 Community and Local Government and this was repaid to the Exchequer.
Agriculture p16 - 9,478 Overpayments recouped from farmers under schemes disallowed by the European Commission
Education and Skills - 20 This receipt in 2017 was from Solas for the sale of assets. p16
Housing, Planning, - 3,396 These receipts are made up of unspent money by Pobal and refunds under the Capital Assistance Scheme Community and Local from various Local Authorities. Government p16
Children and Youth 2,663 1,289 This relates to the refund of money from Pobal on childcare projects. Affairs p17
Business, Enterprise 2 - In 2016 there were receipts from Enterprise Ireland of unused Funds provided from the Vote. There were and Innovation p17 no receipts in 2017
Office of Public Works 2,626 - There were receipts in 2016 for the closure of OPW dormant suspense accounts. There were no receipts in p17 2017.
Transport, Tourism 618 2,596 These were receipts in 2017 from the European Commission in respect of the pre-financing for the City and Sport p17 Centre re-signalling.
Sale of AIB Shares - 3,433,962 This represents the sale of 29% of the State’s shareholdings in the AIB Bank following an initial public offering p18 in June 2017.
Sale of Contingent 1,600,000 - The Contingent Capital Note was issued by AIB in July 2011 with a five year maturity date and 10% annual Capital Notes in AIB interest coupon in return for a cash payment from the Exchequer of €1.6 billion. This was repaid in full in 2016. p15
—— 37 Vote 7: Office of the Minister for Finance
IBRC Unsecured 270,559 289,320 In December 2016, the Joint Special Liquidators of the IBRC announced a first dividend of 25% to all admitted Creditors Payment unsecured creditors of the IBRC. This represents the State’s proceeds from the dividend in relation to the p18 Dept of Finance.
Miscellaneous p18 201 4,391 In 2016 these receipts were in relation to PIPS pensioners. In 2017 the main receipt was from Galway County Council for the refund of a HFA loan of €4,386,342.00.
—— 38 Vote 7: Office of the Minister for Finance
Capital Payments
Voted Issues p19, 20, 3,919,450 4,322,576 Issues for Voted capital spend –The Accounting Officer of each vote is accountable for the expenditure on 21 his/her Vote.
Loans Issued p26 2,320,500 963,210 2016 2017 €000 €000 FEOGA 770,000 740,000
These are the funds advanced to DAFM to meet the CAP payments to farmers, etc. pending reimbursement by the EU Commission.
Loans for Salary Advances 180,500 193,210,000
Due to the unavailability of banking systems on 1 Jan 2017 and 1 Jan 2018, advances were required from the Central Fund in December 2016 and December 2017 to enable the PMG Supply A/C fund commercial banks in respect of salaries due on 1 and 2 January of each year and in 2017 Social Welfare payments up to the 5th January 2018. The advances were repaid in January 2017 and January 2018 respectively.
Loan to An Post - 30,000,000
Under Section 29 of the Telecommunications Act 1983, the Minister for Finance made available a loan facility of €30m to the An Post Board for capital works as part of An Post’s Strategic Plan.
Loan to Social Insurance Fund 1,370,000 -
Up to and including 2016, loans were provided each month from the Central Fund to the Social Insurance Fund for cash flow purposes and repaid by the end of the month. Due to the improved liquidity of the SIF there is no longer a requirement for the loan facility.
TOTAL 2,320,500 963,210
—— 39 Vote 7: Office of the Minister for Finance
Investment in Int’l 3,612 8,310 Asian Development Bank €1,046,197.36, Asian Infrastructure Investment Bank €4,533,077.50 Bodies p30 Bretton Woods Agreement Acts 1957-1999 €2,730,776.79 (World Bank drawdown for Bio Carbon Fund)
Share Capital 270,000 Acquired in Companies p13, p27
Irish Water p27 270,000 The provision by the Government of €270 million capital for 2017 is in line with Irish Water’s Business Plan 2015-2021. The payment was made by way of equity contribution resulting in the allocation of €270 million of B shares (540 shares in total) of €0.01 each, to be split between both the Minister for Finance and the Minister for Housing, Planning, Community and Local Government.
Other Payments: 184,033 1,029 Capital p13, p32
Insurance Acts p32 1 - These payments arise due to expenditure incurred by the Department of Jobs, Enterprise and Innovation. They comprise legal costs incurred in the recovery of old Export Credit debt.
Carbon Fund Act,2007 - 1,029 NTMA activity in purchasing carbon credits under the Kyoto protocol and domestic legislation. p32
Capital Contribution to 184,000 - There was no payment made to Irish Water under Section 37 of the Water Services (No. 2) Act, 2013. Irish Water under the Water Services (No.2) Act 2013 p32
Convention of Lomé 32 - Act, 1976 p32
Deficit on Capital (2,338,043) (790,184) Account p12
Total Exchequer (1,018,332) 1,905,874 Deficit p12
—— 40 Vote 7: Office of the Minister for Finance
Corporate Governance and Internal Financial Controls
The following is a list of independent and internal corporate reports relating to reviews, examinations or audits in relation to corporate governance or internal financial controls.
Author Title Date
Internal Audit Audit for Arrangements for Motor and Signed off January 2019 Unit, Department Property Tax Accounting of Finance Audit of HR Arrangements for Signed off April 2019 Interaction with the NSSO
Audit of Non-ICT Business Continuity Signed off March 2018
Audit of GDPR Review Signed off September 2018
Audit of Review of Implementation of Signed off December 2018 Compliance Framework
Audit of Compliance with Bodies under Signed off December 2017 the Aegis Policy
Audit of Record Management (incl. Signed off April 2017 Implementation of eDocs)
Audit of Grant Management Signed off June 2017
Audit of Central Fund Management Signed off August 2017
Corporate Affairs Department of Finance Governance The Department’s Unit, Department Framework Governance Framework of Finance was first published in 2015, following a review by the Executive Board and consultation with staff. It is reviewed as necessary, and at least on an annual basis, to ensure it remains current and reflects best practice. The current version was published in September 2018.
—— 41
Tithe an Rialtas. Sráid Mhuirfean Uacht, Baile Átha Cliath 2, D02 R583, Éire Government Buildings, Upper Merrion Street, Dublin 2, D02 R583, Ireland
T:+353 1 676 7571 @IRLDeptFinance www.gov.ie/finance
—— 42