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Annual Report 2018

Prepared by the Department of Finance

finance.gov.ie

2018 ANNUAL REPORT

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CONTENTS >

Department of Finance | Report 2018

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5 Executive Summary

5 Section 1: Strategic Goals

46 Section 2: Achieving a Higher Performing Department

54 Section 3: Appendices

7 GOAL 1

A sustainable macroeconomic environment and sound public finances

24 GOAL 2

A balanced and equitable economy enabled

by a vibrant, secure and well-

regulated financial sector

7 Objective 1

Balanced and sustainable pace of economic growth that contributes to a social economy

24 Objective 1

A supportive environment for enterprise and employment

11 Objective 2

Sound public finances that comply with the fiscal rules

27 Objective 2

Conditions to support housing delivery and growth in household income and wealth

12 Objective 3

Protecting and advancing Ireland’s position in the EU and internationally

28 Objective 3

Equitable access to governmental services that underpin long term sustainable growth

14 Objective 4

Reduction in public and private indebtedness

29 Objective 4

A well-regulated, effectively supervised, competitive and more stable financial services sector that protects consumer interests

16 Objective 5

Market access on favourable terms

35 Objective 5

Continuing development of Ireland as a location of choice for investment for international foreign financial services firms

. 18 Objective 6

Sustainable, growth-friendly, efficient and equitable tax system

37 Objective 6

Ensure the taxpayers’ investment in the domestic banks is fully recouped

20 Objective 7

Enhanced international tax reputation including corporate taxation

41

Objective 7

Availability of sustainable credit union, bank & non-bank funding sources to extend recovery into the domestic economy and to respond to the needs of a changing economy 23 Objective 8

Increased number of linkages between domestic and foreign-owned sectors

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SECTION 1 >


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Executive Summary Following the appointment of the Minister for Finance and Public Expenditure and

Reform, Paschal Donohoe T.D., in June 2017, a new Statement of Strategy 2017-

2020 was prepared for the Department and published in January 2018. The Strategy

Statement sets out the overarching goals for the Department and the key objectives in

achieving them. The Public Service Management Act 1997, requires a report to be

presented annually to the Minister on progress in meeting the objectives set out in the

strategy statement.

Our Mission The Department’s mission is to manage Government finances and play a central role

in the achievement of the Government’s economic and social goals having regard to

the Programme for a Partnership Government. In this way we will play a leadership

role in the improvement of the standard of living of all Irish citizens.

Strategic Goals In pursuing our mission, the Department is working for the period 2017 to 2020

towards achieving the following Strategic Goals:

A sustainable macroeconomic environment and sound public finances.

A balanced and equitable economy enabled by a vibrant, secure and well-regulated financial sector. In 2018, the Department made significant progress on achieving the goals in the

Statement of Strategy 2017-2020. This Annual Report outlines the main

achievements and developments during 2018 to advance the Department of

Finance’s objectives.

The Department’s performance is measured on an annual basis against the key

outputs and performance indicators outlined in the Statement of Strategy 2017 - 2020.

These are presented in the following sections of this report.

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2


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GOAL 1 | A Sustainable Macroeconomic

Environment and Sound Public Finances

OBJECTIVE 1

BALANCED AND SUSTAINABLE PACE OF ECONOMIC

GROWTH THAT CONTRIBUTES TO A SOCIAL

ECONOMY

National Accounts data shows that the economy continued to grow

solidly in 2018, with Gross Domestic Product (GDP) growing by 8.2 per

cent, on an annual basis, for 2018 as a whole. While the headline GDP

figure has been heavily influenced by the multinational sector, a broader

range of measures, including those that strip out some of the larger

distortions (e.g. modified and underlying domestic demand1), along with

labour market developments and tax receipts, confirm that the economy

continues to perform strongly.

Following a recovery driven by the export sector, domestic activity is

now making a significant contribution to growth. For 2018, modified

domestic demand, which adjusts the headline measure of domestic

demand for the distortionary effects of globalisation, made a strong

contribution to the growth (+4.7 per cent y-o-y).

While the outlook for the Irish economy remains positive, short-term

risks are firmly tilted to the downside. This mainly reflects the increased

possibility that the UK leaves the EU without a withdrawal agreement in

place, alongside a slowdown in global growth and ongoing trade

tensions.

1 Modified domestic demand excludes leased aircraft and foreign-owned IP assets. Underlying domestic demand excludes all aircraft and intangible assets.


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Q4

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GDP and Modified Domestic Demand

GDP (y-o-y % change) Modified Domestic Demand (y-o-y % change)

Economic Activity Metrics

2018 y-on-y %

change

GDP 8.2%

Modified Domestic Demand 4.7%

Underlying Domestic Demand 5.3%

Consumer Spending 3.4%

Total Exports 10.4%

Employment 2.9%

Earnings 3.3%


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Sustainable Development Goals

In September 2015, 193 UN Member Countries including Ireland

adopted the Sustainable Development Goals (SDGs) which consist of

169 targets around 17 high level goals (see overleaf for full list of goals).

The SDGs are a global blueprint for collective progress to a more

prosperous and sustainable world by 2030. The SDGs are applicable

to all countries, developed and developing, and action is required for

their implementation both domestically and internationally.

Ireland is committed to implementing the SDGs and published its first

SDG National Implementation Plan 2018-2020 in July 2018. The whole-

of-Government approach to implementation of the SDGs means all

Ministers are responsible for implementing the SDGs related to their

functions. The Department of Finance has been assigned responsibility

for a number of goals and sub-targets, spanning from promoting

inclusive economic growth to building partnerships for sustainable

development. The Department of Finance will continue existing work in

these areas, with a view to increasingly mainstreaming the SDGs into

relevant policies.

Internationally, the Department of Finance manages Ireland’s

relationship with a number of International Financial Institutions (IFIs),

including the IMF, the World Bank Group and several regional

Development Banks. These institutions will play a central role in the

global partnership necessary to achieve the SDGs. Through our

financial contributions and our active policy engagement in support of

the SDGs at each institution, we will aim to ensure that there is both the

finance and the expertise available to support developing countries in

achieving sustainable economic growth and tackling global challenges

such as climate change. In 2018, the Department took a step towards

increasing Ireland’s impact in this area by successfully progressing

legislation which will enable our membership of the African

Development Bank in 2019.


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The Sustainable Development Goals:

*Goals for which the Department of Finance has responsibility for

specific sub-targets.

Goal 1 End poverty in all its forms everywhere*

Goal 2 End hunger, achieve food security and improved nutrition and promote sustainable agriculture

Goal 3 Ensure healthy lives and promote well-being for all at all

ages*

Goal 4 Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all

Goal 5 Achieve gender equality and empower all women and girls

Goal 6 Ensure availability and sustainable management of water

and sanitation for all

Goal 7 Ensure access to affordable, reliable, sustainable and

modern energy for all

Goal 8 Promote sustained, inclusive and sustainable economic

growth, full and productive employment and decent work for all*

Goal 9 Build resilient infrastructure, promote inclusive and

sustainable industrialization and foster innovation*

Goal 10 Reduce inequality within and among countries*

Goal 11 Make cities and human settlements inclusive, safe, resilient

and sustainable

Goal 12 Ensure sustainable consumption and production patterns

Goal 13 Take urgent action to combat climate change and its

impacts*

Goal 14 Conserve and sustainably use the oceans, seas and marine resources for sustainable development

Goal 15 Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss*

Goal 16 Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels

Goal 17 Strengthen the means of implementation and revitalize the global partnership for sustainable development*


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OBJECTIVE 2

SOUND PUBLIC FINANCES THAT COMPLY WITH THE

FISCAL RULES

Irish public finances are subject to the requirements of the preventive

arm of the Stability and Growth Pact (the Pact). It requires Ireland to

Make sufficient progress towards Ireland’s country- specific

medium term budgetary objective (MTO)

Remain at the MTO once it has been achieved.

Alongside the balanced budget rule, the complementary ‘expenditure

benchmark’ limits the growth in public expenditure.

Based on the forecasts in Budget 2019, Ireland broadly complied with

the requirements of the balanced budget rule in 2018. Regarding the

expenditure benchmark pillar for the same period, our forecasts show

us to be broadly compliant albeit with a deviation below the threshold

deemed to be significant.

In 2019, the Budget forecasts technical achievement of the MTO and

over-compliance with the expenditure benchmark.

Separately, in November 2018, the European Commission published

its opinion on Ireland’s Draft Budgetary Plan, finding it to be compliant

with the requirements under the Stability and Growth Pact for 2019. The

opinion indicates that we will fully achieve our MTO in both 2018 and

2019.

Overall Exchequer Performance

In terms of the Exchequer outturn for 2018, for the first time in over a

decade, our public finances are balanced in cash terms. Underpinned

by a strong 2018 tax revenue performance, the Exchequer recorded a

€0.1 billion balance, the first underlying surplus since 2006.

VAT Rate on Tourism

The reversion of the 9 per cent Vat rate back to 13.5 per cent complies

with the European Semester Country Recommendation for Ireland to

broaden the tax base.


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OBJECTIVE 3

PROTECTING AND ADVANCING IRELAND’S POSITION

IN THE EU AND INTERNATIONALLY

The Department manages the development and implementation of

strategies at EU/Euro area level and internationally in relation to

economic, fiscal and financial policy formulation. An important element

is international outreach and it engages with the Department of Foreign

Affairs and Trade and the Embassy network to ensure that the Minister

and Department are fully appraised of EU and international

developments.

Detailed work is continuing to prepare for the UK’s exit from the EU

within the whole of Government structures overseen by Department of

the Taoiseach and the Department of Foreign Affairs and Trade. The

challenges of Brexit are mainstreamed into the Department’s work

across all divisions. A dedicated Brexit Unit within the EU and

International Division of the Department, established in July 2016,

oversees and coordinates this work. Brexit issues are also addressed

on a cross departmental basis, at senior management level through the

EU Strategy Committee that reports to the Department’s Executive

Board. The Department has also appointed lead Brexit coordinators at

Principal Officer level across all divisions.

The Department continues to take a leading role in the negotiations on

the post-2020 Multiannual Financial Framework (MFF) – the seven year

framework from 2021-2027 on the EU Budget.

The International Relations Unit provides support to the Minister and

senior officials in the Department on international issues and

coordinates with Irish Missions in the EU and around the world on a

range of issues. In 2018, two Euro Summit meetings of Euro area

Leaders were held to discuss the progress made on the Economic and

Monetary Union (EMU). The EU Strategy Unit manages the

Department’s response to issues raised at EU level, particularly in

relation to the future of EMU.

The Department also has a number of officials based in Ireland’s

Permanent Representation to the EU in Brussels, Ireland’s Permanent

Representation to the OECD and the Embassy of Ireland in Berlin.


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Membership of the African Development Bank

Ireland’s membership application to the African Development Bank

(AfDB) and African Development Fund (AfDF) continues to be

progressed with the enactment of the enabling legislation, the Finance

(African Development (Bank and Fund) and Miscellaneous Provisions)

Act 2018, in December 2018. This legislation serves to facilitate our

membership of the AfDB and AfDF through providing for Dáil approval

of the agreement establishing the AfDB and the agreement establishing

the AfDF.

The African Development Bank (AfDB) Group is a regional multilateral

development finance institution, which is focused on reducing poverty,

improving living conditions for Africans and mobilizing resources for the

continent’s economic and social development. Ireland’s application for

membership is primarily informed by the objective to strengthen our ties

with the African region. In addition to complementing our existing

development relationship in Africa, membership would also be

consistent with the priorities set out in the recently launched Global

Ireland 2025 Initiative, notably the ambition to double the scope and

impact of Ireland’s global footprint across the next 7 years. It is

expected that Ireland’s membership will be finalised in Q3 2019.


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OBJECTIVE 4

REDUCTION IN PUBLIC AND PRIVATE INDEBTEDNESS

Public Debt

The public debt ratio has fallen considerably since the peak of just

below 120 per cent of GDP in 2012, particularly so following the step-

change in 2015 when GDP increased significantly due to the statistical

treatment of activity by multinational companies located in Ireland.

Based on recent forecasts, Ireland is on track to bring the debt-to-GDP

ratio close to the 60 per cent threshold by the end of 2019.

Modified GNI (GNI*) is an alternative measure of economic activity in

Ireland that strips out part of the distortions arising in the multinational

sector. Measured on this basis, the debt ratio remains at around 100

per cent; thus, while debt remains manageable in Ireland, it is crucial

that the burden of debt is reduced further.

In light of this, Government reiterated its intention, in Budget 2019, to

use any windfall receipts to reduce public debt.

0.0

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40.0

60.0

80.0

100.0

120.0

140.0

160.0

180.0

2010 2011 2012 2013 2014 2015 2016 2017 2018

General Government debt to GDP and GNI*

General Government Debt-to-GDP General Government Debt-to-GNI*


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Private Debt

The Central Bank Residential Mortgage Arrears & Repossessions

Statistics for Quarters 1 to 4 2018, show that the number of accounts

for Principal Dwelling Houses (PDH) in arrears fell further in 2018,

marking the twenty-first consecutive quarter of decline. At end

December 2018, there were 63,246 accounts in arrears out of a total

stock of 728,168.

The number of accounts in arrears for more than 720 days continues to

decline, albeit by a small amount. At end December 2018, the number

of accounts in arrears over 720 days constitutes 44% of all accounts in

arrears.

A total of 4,251 new restructure arrangements were agreed during Quarter 4 of 2018, bringing the total number of new restructures agreed in 2018 to 22,171. This illustrates how important it is for customers to engage with their bank to try and come to a workable agreement.

Mortgage Accounts in Arrears over 90 days (PDH) – September 2009 – December 2018

Source: Central Bank


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OBJECTIVE 5

MARKET ACCESS ON FAVOURABLE TERMS

NTMA

The NTMA conducted gross borrowing of €17.5 billion during 2018 over three syndications and six bond auctions. The six bond auctions in 2018 included five dual bond issuances. €11 billion of the €17.5 billion total was raised through the syndicated sales of three new benchmark bonds. The 10-year benchmark bond issuance in January continued the practice of a syndicated issuance early in the year. In October, the third of the syndications saw the NTMA issue Ireland’s first Green Bond, raising a total of €3 billion of 12-year debt at a yield of 1.399 per cent. This is part of the NTMA’s strategy to diversify issuance and access a new base of investors. Some 95 per cent of the deal was distributed to non-Irish investors, with increased demand attracted from the three established European centres for green investment: France, the Netherlands, and the Nordic region. Throughout the year, the NTMA continued to pre-fund ahead of future obligations and to build up significant cash and liquid asset balances. Cash balances at the end of 2018 stood at circa €15 billion. The NTMA’s ability to issue debt throughout the year demonstrates strong investor appetite for Irish bonds. This demand is supported by favourable market conditions along with our strong public finances, good growth prospects and stable and positive outlook.

EU – IMF Post Programme surveillance/monitoring review

missions successfully completed

In 2018, the EU conducted two Post Programme Surveillance reviews of Ireland. During the reviews, meetings took place between officials from the Department of Finance, Department of Public Expenditure and Reform, the Central Bank and the NTMA and those of the European Commission and the European Central Bank (ECB). The European Stability Mechanism (ESM) also attended the EU missions as part of their Early Warning System. The IMF participated in the second review on foot of a staff visit. EU staff reports were published for both missions following the completion of a review process at EU level. Both reviews were successfully completed and reinforced the commitment to stabilise the public finances and to ensure delivery of the highest quality of public services, growing the economy and getting people back to work. The conclusion of the reviews further reassured investors that Irelands economic rebound is now firmly established. Ireland’s capacity to repay its loans remains strong.


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IMF Article IV

The periodic IMF Article IV consultation is a requirement for IMF members, providing a medium to long-term perspective on the progress of the economy. Ireland’s 2018 consultation took place in May and involved a small team of IMF staff visiting Ireland for discussions with the Minister for Finance, Public Expenditure and Reform, the Governor of the Central Bank, senior officials and a broad range of public and private sector bodies. The review provides an important outside perspective on the progress of Ireland’s economy and the challenges faced by policymakers. The IMF’s report found that Ireland’s economy continues to grow at a pace well above the EU average and is approaching full employment. They also noted that banks have continued to improve their resilience to shocks. The report outlines that the outlook is expected to remain favourable, although significant external risks, in particular Brexit and an escalation in global protectionism, will pose challenges.


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OBJECTIVE 6

SUSTAINABLE, GROWTH-FRIENDLY, EFFICIENT AND

EQUITABLE TAX SYSTEM

Finance Act 2018

The 2018 Finance Act gave legal effect to the range of taxation measures announced in Budget 2019. The Act provided for the increase in the 9 per cent VAT rate to 13.5 per cent on tourism activity with effect from 1 January 2019. A Capital Acquisitions Tax (CAT) anti-avoidance measure was introduced to prevent the misuse of trusts in respect of the inheritance of dwelling houses. The Act provided for the renewal of the three existing stock relief measures for a further three years, and an extension of the income averaging measure to farms with off-farm trading income As part of Ireland’s commitment to implementing the Anti-Tax Avoidance Directive (ATAD), the Act introduced a new ATAD compliant exit tax and Controlled Foreign Company (CFC) rules. The exit tax will apply to unrealised capital gains where companies migrate or transfer assets offshore such that the assets leave the scope of Irish tax. The rate for the new ATAD compliant exit tax is set at 12.5 per cent. CFC rules are an anti-abuse measure, designed to prevent the diversion of profits to offshore entities (the CFCs) in low- or no-tax jurisdictions. CFC rules are traditionally a feature of territorial tax regimes. As Ireland has a worldwide tax regime, CFC rules have not previously been a feature of the Irish corporate tax regime The Act extended Section 481 of the Taxes Consolidation Act 1997 (Film Tax Credit) from an end date of 31 December 2020 to 31 December 2024. A new time-bound, tapered regional uplift for productions taking place in certain regions was also introduced. This will be in place for 4 years and is subject to State aid approval. The Act also provided for the extension of the three-year start-up relief for small companies. The Act introduced a new Accelerated Capital Allowances (ACA) scheme for Gas Vehicles and refuelling equipment and amended and commenced the ACA scheme for employer-provided Fitness Centres and Childcare Facilities originally introduced in Finance Act 2017. These schemes shall, respectively, assist government objectives in encouraging environmentally friendly initiatives and enhancing employee well-being. The Act also provided for changes to the Key Employee Engagement Programme (KEEP), relief for investment on corporate trades including the Employment and Investment incentive and the Special Assignee Relief Programme. In addition, it provided for the exemption from taxation of some 40 social welfare payments to address the tax treatment of means-tested social welfare payments in light of increased Revenue capacity to collect tax on such payments arising from the PAYE modernisation initiative.


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Vacant Residential Property Taxation

An independent consultant’s study of the Taxation of Vacant Residential Property was commissioned which presents a detailed evidence-based assessment of vacancy rates in areas in which the demand for housing is most acute. This assessment suggests that the vacancy rate in these areas is significantly lower than the national average and has fallen in recent years. The review report suggests that the vacancy rate is likely to continue to fall due to market developments. The report does not recommend the introduction of a residential vacant property tax at this time, as it would not be an effective response to deal with the housing shortages. The consultant’s view is that the very low vacancy rates in the areas of greatest demand for housing, particularly in terms of medium-term vacancy, indicate that the potential for a vacant property tax to increase housing supply is limited and could represent a distraction from the need to significantly accelerate the building of new social housing, affordable housing and the facilitation of other housing supply.

Local Property Tax Review

A report has recently been published on the review of the Local Property Tax (LPT), looking in particular at the impact on LPT liabilities of property price developments. The review made a number of recommendations, including an examination of the outstanding recommendations of the 2015 Thornhill review of the LPT. The review examined the impact of house price movements under a series of scenarios involving different rate and tax band structures. However, against a background of significant but geographically uneven increases in residential property prices, it proved impossible to ensure relative stability for all taxpayers in their LPT liabilities and that any increases should be modest and affordable. The Minister’s deferral of revaluation until November 2020 provides time and space for the Budgetary Oversight Committee to consider the report of the inter-departmental review.


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OBJECTIVE 7

ENHANCED INTERNATIONAL TAX REPUTATION

INCLUDING CORPORATE TAXATION

OECD Base Erosion & Profit Shifting

The Department has continued to actively engage with the OECD Base Erosion & Profit Shifting (BEPS) project. The BEPS Inclusive Framework has been created to provide a forum for countries both in the OECD and beyond to work together on this important task. Ireland has taken a number of steps towards implementing the BEPS recommendations and the Corporation Tax Roadmap, which was published in September 2018, sets out the actions Ireland has taken in recent years in addressing the challenges arising from the changing international tax environment and outlines Ireland’s commitment to strengthen the corporation tax system. Ireland was among the first countries to sign the OECD BEPS multilateral instrument (MLI) in June 2017, and completed the legislative process for ratification in Finance Act 2018. In January 2019, Ireland became the 19th jurisdiction to complete the MLI process.

Ireland’s Engagement on EU and International Tax Reform

Ireland agreed the sixth iteration of the Directive on Administrative Cooperation (DAC6), which came into effect in July 2018. This builds on recommendations made in OECD BEPS Action 12 Report, and requires Member States to introduce a common mandatory disclosure regime by 1 January 2020 and to share all reports received with each other. Ireland is one of only three EU Member States to have an existing mandatory reporting regime in place but has committed to make any necessary changes to our mandatory disclosure regime to ensure we fully implement DAC6 by the end of 2019. Throughout 2018, Ireland has engaged at both EU and OECD level with a view to finding solutions to the tax challenges arising from the digitalisation of the economy. This work is ongoing and Ireland’s consistent position has been that whatever is ultimately agreed must be done at a global level if it is to be sustainable. In this regard, Ireland is supportive of the work at OECD level and has contributed to a series of reports in 2018 which have outlined approaches to finding a lasting solution which is fair to all. The Maltese and Irish Tax authorities signed a Competent Authority Agreement at the end of 2018 which, once it comes into effect, will prevent the bilateral tax treaty being used to facilitate the aggressive tax planning structure referred to as the ‘Single Malt’.


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Ratification of the OECD Multilateral Instrument

Ireland has completed the ratification of the OECD Multilateral Convention to Implement Tax Treaty Related Measures to prevent BEPS (Multilateral Instrument). The Finance Act 2018 contained a provision to enable the State take the remaining necessary steps to ratify the BEPS Multilateral Instrument. The instrument of ratification was deposited with the OECD before the end of January 2019. The BEPS Multilateral Instrument provides a method for countries to update the application of their existing treaties to ensure the highest standards are met in respect of BEPS implementation. The most important changes to Ireland’s treaties under the Multilateral Instrument are the introduction of strong anti-avoidance rules that should prevent treaty benefits being claimed inappropriately. It will modify the application of the majority of Ireland’s double taxation treaties to ensure that they are compliant with the recommendations of the OECD BEPS project.

Review of 9% VAT Rate

A review of the 9 per cent VAT rate by the Department of Finance was published on the Department’s website on 31 July 2018, coinciding with the publication of the Tax Strategy Papers. Addressing, among other areas, input costs, tourism revenue, and foregone tax revenue, the review finds that tourism expenditure is more sensitive to income growth and fluctuations in the economic cycle than changes in price, which reduces the relevance of the VAT rate that applies to the sector. Furthermore, the review also highlights an issue of price competitiveness, and that due to the factors outlined, any increase in the 9 per cent VAT rate is not likely to have a material impact on demand or employment in the sector. In the context of this analysis, it was decided in Budget 2019 to increase the 9 per cent VAT rate on tourism activities to 13.5 per cent with effect from 1 January 2019. Finance Act 2018 gave effect to this change. The VAT rate applying to catering and restaurant supplies, tourist accommodation, cinemas, theatres, museums, historic houses, open farms, amusement parks, hairdressing and horses and greyhounds increased from 9 per cent to 13.5 per cent.

Ireland’s Corporation Tax Roadmap

‘Ireland’s Corporation Tax Roadmap’ was published by the Department of Finance in September 2018. The Roadmap takes stock of the changing international tax environment, and outlines the actions Ireland has taken in recent years and sets out commitments for further action, including ongoing work on the implementation of the Anti-Tax Avoidance Directives and the recommendations of the Coffey Review.

Deposit Interest Retention Tax and Life Assurance Exit

Tax

A review comparing financial products subject to Deposit Interest Retention Tax (DIRT) and Life Assurance Exit Tax (LAET) was prepared and externally published. This review compared the treatment of such financial products on their tax treatment, product features and fees/charges.


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State Aid

The recovery of the alleged State Aid in the Apple case was effected in September 2018.

2018 Tax Expenditures Report

The fourth annual Report on Tax Expenditures was published in October 2018. The report sets out in tabular form the tax expenditures that have been in effect since the previous such report. It also incorporates five reviews on tax matters that were completed during the previous twelve months:

Progress Implementation Update of the Agri-taxation Review 2014

The Independent (Indecon) evaluation of the Employment and Investment Incentive (EII) and Start-Up Refunds for Entrepreneurs (SURE)

Review of the Application of Stamp Duty to the Stocks and Marketable Securities of Irish Incorporated Companies

A Cost Benefit Analysis of Section 481 of the TCA 1997 (Relief for investment in films)

Indecon Ex-Post Cost-Benefit Analysis of the Help to Buy Incentive

Separately, a review of Section 486C (three year start-up relief for new

companies) was also published in October 2018.


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OBJECTIVE 8

INCREASED NUMBER OF LINKAGES BETWEEN

DOMESTIC AND FOREIGN-OWNED SECTORS

Increasing the number of linkages between domestic and foreign-owned sectors has a crucial role in maximising spillovers from high productivity foreign multinationals present in Ireland. The lead Department on this is the Department of Business, Enterprise and Innovation (DBEI), who have overall responsibility for enterprise policy. From a macroeconomic perspective, the outcome we are seeking is improving productivity of domestic firms and sectors, while DBEI is responsible for the policy input of increasing linkages amongst firms to achieve this outcome. Productivity growth figures for the Foreign-dominated sectors (defined as sectors where multinational turnover exceeds 85 per cent of total turnover in that sector) and the Domestic & Other sector are now published separately by the CSO. Productivity for the Domestic & Other sector has shown a positive trend over the period 2000-2017, with an average growth rate of 2.2 per cent. This may be indicative of improvements in linkages between the domestic and the high productivity foreign-owned sectors over time.

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Productivity Growth in Domestic & Other Sectors

Productivity Growth Linear (Productivity Growth)


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GOAL 2 | A Balanced and Equitable Economy

Enabled by a Vibrant, Secure and Well-

Regulated Financial Sector

OBJECTIVE 1

A SUPPORTIVE ENVIRONMENT FOR ENTERPRISE

AND EMPLOYMENT

Supporting SMEs

The Strategic Banking Corporation of Ireland (SBCI) began its activities in March 2015, making over €1 billion of appropriately priced, flexible funding available to SMEs, to be delivered through on-lenders. To the end of December 2018, the total amount of SBCI supported lending activity was €900 million to 21,783 Irish SMEs supporting 141,658 jobs. Under the SBCI’s risk sharing schemes, €152 million has been drawn down by 4,278 SMEs supporting 6,572 jobs. The SBCI launched the Brexit Loan Scheme in March 2018 which is to provide working capital supports to SMEs to enable them to adapt their businesses and innovate in response to the challenges posed by Brexit. A Future Growth Loan Scheme has also been developed to provide long term financing for strategic investment in the absence of the availability of financing for businesses of more than seven years. To end 2018, the Credit Review Office (CRO) overturned over 50 per cent of bank declines with recommendations for over €53.5 million in credit being made available to SMEs and farms helping to protect and create 3,725 jobs. Over 20,150 businesses and entrepreneurs used the Government’s Supporting SMEs Online Tool in 2018, with over 98 percent of them using the Online Tool for the first time. The campaign is a cross- governmental initiative developed to help small businesses and entrepreneurs learn the full range of potential Government supports available to them.


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Employment Growth

Ireland’s recovery from the economic crisis can be seen clearly in the growth in employment numbers. The most recent statistics from the CSO’s Labour Force Survey show that the total number of people at work in Ireland reached 2,281,300 in the fourth quarter of 2018, which is the highest number on record. This continues the positive trend in employment growth since 2012 which has been driven by growth in full-time employment and broad-based growth across economic sectors.

While there has been welcome growth in total employment, the parallel increase in the overall population over recent years means there remains some room for improvement in the employment rate (the proportion of the 15-64 year-old population in employment), as well as the participation rate. Despite consistent growth since 2012, the employment rate among the working age population (age 15-64) of 68.7 per cent for 2018 remains below the previous peak of 71.7 per cent (annual average in 2007). Similarly the participation rate of 62.2 per cent for 2018 remains well below the pre-crisis peak of 66.6 per cent (annual average in 2007).

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('0

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Productivity Growth

Productivity growth is one of the most important indicators of economic progress in the long run. Data from the OECD Productivity Database shows that in recent years Ireland had one of the highest levels of labour productivity, as measured by GDP per hour worked, among OECD countries. Even on a GNI or GNI* basis, which strips out some of the impacts of the foreign owned sector, labour productivity in Ireland remains above the OECD average and above the levels in the UK and Japan.

However, the rate of growth in Ireland’s productivity has slowed since the mid-2000s (although the level shift in GDP in 2015 masks this somewhat). This slowdown is consistent with the trend decline in productivity growth experienced by advanced economies globally, a phenomenon that predates the economic crisis.


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OBJECTIVE 2

CONDITIONS TO SUPPORT HOUSING DELIVERY AND

GROWTH IN HOUSEHOLD INCOME AND WEALTH

The Government has actively supported growth in household income by reducing the tax burden on low and middle income earners in the last five Budgets, such that the maximum marginal tax rate experienced by such individuals is 48.5 per cent from 1 January 2019. Budget 2019 introduced a package of personal tax reliefs centred on a reduction to the third rate of USC from 4.75 per cent 4.5 per cent. This will reduce the marginal tax rate for incomes up to €70,044 to 48.5 per cent, comprised of 40 per cent income tax, 4.5 per cent USC and 4 per cent PRSI. The ceiling of the second USC rate band of 2 per cent was increased from €19,372 to €19,874. Furthermore, in Budget 2019, the standard rate bands were increased by €750 to €35,300 for a single person and to €44,300 for a married person, raising the point at which an income earner begins to pay the higher rate of income tax. The Earned Income Credit introduced in Budget 2016 was further increased from €1,150 to €1,350 in Budget 2019. This credit is available to the self-employed with earned income who do not have access to the PAYE credit. An increase in the Home Carer Tax Credit from €1,200 to €1,500 was also announced in Budget 2019 to improve supports to families where one spouse works primarily in the home to care for children or other dependents. The Government introduced a number of measures in Budget 2019 to support housing delivery. This included the acceleration in the return to 100 per cent deductibility by landlords of interest paid in respect of loans used to purchase, improve or repair a residential property with effect from 1 January 2019.

Home Building Finance Ireland (HBFI) HBFI was established in late 2018 to address the shortfall in the supply

of housing in the State. HBFI’s objective is to deliver 7,500 new homes

across the country by providing debt financing to small and medium

sized builders with commercially viable sites for residential

development. HBFI commenced lending operations in early 2019 and

will utilise a €750 million investment from the Irish Strategic Investment

Fund to achieve its goals.


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OBJECTIVE 3

EQUITABLE ACCESS TO GOVERNMENTAL SERVICES

THAT UNDERPIN LONG TERM SUSTAINABLE

GROWTH

Markets in Financial Instruments Directive

The Markets in Financial Instruments Act 2018 was used to make some amendments to the Financial Services and Pensions Ombudsman Act 2017 to allow the Ombudsman to investigate complaints about "long-term financial services" which do not have a fixed duration. The 2018 Act also amended the Credit Reporting Act 2013 to include reporting on hire purchase.

Anti-Money Laundering and Counter Terrorist Financing

Combating Money Laundering and Terrorist Financing (ML/TF) is a whole of economy endeavour, involving both state and non-state bodies. The overall ML/TF compliance regime is kept under review by the Anti-Money Laundering Steering Committee, a cross government committee, under the chairmanship of the Department of Finance. The 4th Anti-Money Laundering Directive was largely transposed into Irish law by the Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Act 2018. The 5th Anti-Money Laundering Directive entered into force in July 2018, with a transposition deadline of January 2020 for the general provisions of the Directive. The Directive sets out a number of additional measures to further strengthen the AML/CFT frameworks of EU Member States and increases the transparency of financial and other transactions. Specifically, Articles 30 and 31 of the Directive include provisions for the establishment of Central Registers of Beneficial ownership for corporate/ other legal entities and for Trusts by January and March 2020 respectively. Article 32(a) also provides for the establishment of centralised bank and payment account registers, and of safe-deposit boxes held by credit institutions. The Department of Finance is leading on the transposition of these articles, and is working with the Department of Justice and Equality in relation to the overall transposition of this Directive.


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OBJECTIVE 4

A WELL-REGULATED, EFFECTIVELY SUPERVISED,

COMPETITIVE AND MORE STABLE FINANCIAL

SERVICES SECTOR THAT PROTECTS CONSUMER

INTERESTS

Consumer Protection (Regulation of Credit Servicing

Firms) Bill 2018

The Consumer Protection (Regulation of Credit Servicing Firms) Act 2018 was passed and came into operation on 21 January 2019. This requires that loan owners and people directing strategy or taking key decisions in relation to credit be authorized and regulated by the Central Bank.

Irelands Engagement with EU Financial services

Proposals

The Capital Markets Union (CMU) is an EU initiative which aims to deepen and further integrate the capital markets of EU member states implemented through a Commission action plan. The majority of the actions are focused on shifting financial intermediation towards capital markets and breaking down barriers to cross-border investments. Minister Donohoe and his Lithuanian counterpart co-authored a paper on CMU which was co-signed by the Nordic-Baltic Finance Ministers in July 2018 calling for the prioritisation of those parts of the CMU Action Plan with the largest impact, greatest support and that could be delivered within the lifetime of this Commission and Parliament. The Markets in Financial Instruments Directive (MiFID 2) is the cornerstone of EU financial markets legislation covering the regulation of investment services providers. MiFID 2 was transposed into Irish law via Regulations in August 2017 and entered into application from January 2018. The MiFID Bill 2018 was enacted in 2018 to provide in primary law for criminal sanctions and penalties in respect of serious infringements outlined in MiFID 2. A general approach was agreed at the Council of the EU on the Investment Firm Review package in January 2019 with trilogues currently under way. Ireland has been a strong supporter of this proposal which aims to provide for a more proportionate prudential regime for non-systemic investment firms. The EU Regulation on money market funds (MMF Regulation) was agreed in 2017 and will apply to all MMFs, (UCITS or alternative investment funds). Existing MMFs have until 21 January 2019 to comply, whereas new MMFs created after 21 July 2018 must comply from inception. The Minister signed a Statutory Instrument to implement the Regulation in July 2018.


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An EU Regulation on Securitisations was agreed in 2017 and applies from 1 January 2019. The Regulation lays down common rules on securitisation and creates a European framework for simple, transparent and standardised (STS) securitisations. The Minister has signed a statutory instrument to implement the Regulation, the deadline for which was December 2018. The Insurance Distribution Directive (IDD) was agreed in 2016 and had a transposition deadline of July 2018. The purpose of IDD is to further enhance consumer protection and ensure a level playing field by extending the scope of the directive to include all sales of insurance products. IDD was transposed into national law in June 2018 and applies to industry from 1 October 2018.

Equity markets

Due to changes in the global private equity market in both structure and relevant European legislation, there is a need to update the Investment Limited Partnership (ILP) Act 1994. This objective has been included in the IFS2020 Action Plan which commits to developing amendments to the Investment Limited Partnership Act 1994 to make the structure more attractive to fund managers. The Minister obtained approval from the Government for the preparation of Heads of Bill in 2017. The Bill was published on 18 June 2019 and will proceed through the following stages of the legislative process over the coming months.

Central Securities Depositories

Ireland is the only Member State in the European Union that does not have a domestic Central Securities Depository (CSD). The Irish market has relied upon a UK based CSD, Euroclear UK & Ireland (EUI) for the past 20 years. Since the decision of the United Kingdom to leave the European Union, the Department has been engaging on a regular basis with the European Commission on this issue. In December 2018, the Commission adopted a decision granting equivalence to UK CSDs that allows the Irish market to continue to provide services into the EU for up to 24 months in the event of a No-deal Brexit. Along with the proposed legislative amendments to the Irish Settlement Finality Regulations to designate EUI as a third country operator, this will allow the current settlement system to operate until March 2021. It also allows time for the longer term transition of settlement operations for the Irish market to Euroclear Bank Belgium. The Department and the Central Bank of Ireland been very active with the market participants, Euronext Dublin (the Irish Stock Exchange) and other interested parties in terms of advancing a long-term solution.

Pensions

The Government is committed to reforming the area of pension

provision and pension savings in Ireland and this work involves a

number of Government Departments, including the Department of

Finance, Department of Public Expenditure and Reform and the

Department of Employment Affairs and Social Protection.


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The Government published A Roadmap for Pensions Reform 2018-

2023 in February 2018 which takes a holistic view of pension issues

and details specific measures presented under six strands. While

implementation of the Roadmap is primarily a matter for the Minister for

and Department of Employment Affairs and Social Protection, the

Pensions Unit of the Department of Finance contributes to this work and

chairs the Interdepartmental Pensions Reform and Taxation Group

(IDPRTG), which is tasked with the implementation of a number of

actions arising from the Roadmap for Pensions Reform 2018-2023.

The Department held a public consultation on IDPRTG actions on

supplementary pension reform which concluded in October 2018 and is

due to report to the Minister in 2019

Insurance

The Cost of Insurance Working Group

The Cost of Insurance Working Group was established in 2016, to examine the factors contributing to the increasing cost of insurance and to identify measures to reduce this cost, taking account of the requirement that we maintain a financially stable insurance sector. The policy objective is to deliver fairer premiums for consumers. The Working Group is chaired by Minister of State Michael D’Arcy TD and brings together all the relevant Departments and Offices involved with the process. Since 2016, the Group has carried out a major review of the sector through the Cost of Insurance Working Group. Two reports have been produced, namely the Report on the Cost of Motor Insurance and the Report on the Cost of Employer and Public Liability Insurance. The primary purpose of both these reports has been to determine the factors behind the rising cost of personal and business insurance and to make a series of recommendations to try to address this problem. Over the course of 2018, the Department worked to ensure that relevant recommendations and actions from both reports have been implemented. The last of the deadlines within the Action Plan of the Report on the Cost of Motor Insurance passed at the end of 2018. 29 of the 33 recommendations have either been completed, are categorised as “ongoing” and in respect of which work is continuing, or have been concluded in so far as the direct involvement of the Working Group is concerned. As regards the Report on the Cost of Employer and Public Liability Insurance, 24 out of the 26 actions points due by the end of Q4 2018 have been achieved while it is expected that the two outstanding 2018 action points will be finished during the first half of this year. The Department’s main role now is to ensure that the remaining recommendations of both Reports to be implemented are progressed expeditiously by the relevant Departments. Achievements to note during 2018 include the enactment of the Central Bank (National Claims Information Database) Act 2018 and the Insurance (Amendment) Act 2018 as well as the publication of the Personal Injuries Commission’s second and final report. In addition, CSO data at the end of 2018 showed a reduction of 22 per cent in motor insurance premiums from their peak of July 2016, indicating an improved stability in pricing from the high levels of mid-2016.


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Insurance Compensation Fund (ICF)

The purpose of the ICF is to provide a certain minimum level of protection for non-life policyholders/third party claimants where an insurance company goes into liquidation. It is a host based scheme, in other words, it only covers risk in the State whether it is written by an Irish authorised insurer or one authorised elsewhere in the EU A joint review of the motor insurance compensation framework was completed by the Department of Finance and the Department of Transport in 2016. The key recommendations on coverage and funding have been implemented via the Insurance (Amendment) Act 2018. The Insurance (Amendment) Act 2018 increases the level of insurance compensation fund coverage for all future third party motor claims from its current 65 per cent level to 100 per cent2 in order to bring it into line with the compensation levels paid out by the Motor Insurer’s Bureau of Ireland (MIBI). This additional coverage will be financed by the motor insurance industry through the establishment of an ex-ante fund into which industry will make regular contributions. The Act also provides for the retrospective compensation of 100 per cent of third-party claims in respect of Setanta and Enterprise which are currently under liquidation, and were outside the scope of the 2016 review.

FATF3 Mutual Evaluation Review

In a seven to ten year cycle, the FATF organises mutual evaluation reviews (MERs) of its member countries’ AML/CFT systems. This involves an in-depth examination of the legal, regulatory and operational measures in place and the effectiveness of the country's AML/CFT framework. Ireland’s most recent FATF MER was conducted in 2016 and this evaluation found that “Ireland has a sound and substantially effective regime to tackle money laundering and terrorist financing”. Irish competent authorities follow a risk-based approach in the supervision of their respective sectors and have established good cooperation with financial institutions and designated non-financial businesses and professions. Coordination, cooperation and the use of financial intelligence are strong points of the Irish AML/CFT framework. The Department, in its capacity as chair of the Government’s Anti-Money Laundering Steering Committee (AMLSC) and head of the Irish delegation to the FATF, lead and manage the peer review process. Ireland is now in the process of enhanced review by the FATF which means that we will have regular follow-up reporting requirements over the coming years. Our first report was provided to FATF in August 2018 in advance of the FATF plenary in October 2018. This is the first of three reports prior to a more detailed follow-up assessment after five years.

2 Coverage of the ICF will increase from 65% to 100% for personal injuries and to

€1,220,000 per claim for property. 3 Financial Action Task Force (FATF) is an inter-governmental body founded in 1989 and based in Paris, which sets standards to assist its 37 member countries to combat money laundering and terrorist financing activities. Ireland has been a member since 1991.


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National Risk Assessment

A National Assessment of Ireland’s Money Laundering and Terrorist Financing risks was published in 2016 and updated in early 2018. It found three sectors are at high risk of ML/TF - Retail Banking, Money Remittance Firms and Bureau de Change. These sectors are under the supervision of the Central Bank of Ireland.

Financial sanctions on oppressive regimes

During 2018, the Minister signed 42 statutory instruments giving effect to some 65 EU Regulations made in 2018 imposing financial sanctions on oppressive regimes.

Stabilisation Scheme for Credit Unions

In October 2018, the Minister for Finance signed the Stabilisation Levy Regulations 2018. Under the Regulations, credit unions were required to pay a stabilisation levy contribution in 2018. This stabilisation levy will be used to build up a Stabilisation Fund for credit unions. The Minister has made the Regulations under Section 59(3) of the Credit Union and Co-operation with Overseas Regulators Act, 2012. In line with the Stabilisation Levy review carried out in 2017, the levy continued at the lowered rate of 0.017 per cent (previously 0.022 per cent) and is still scheduled to meet the original target of €30 million over a ten year period due to growth in assets for the sector. The Minister for Finance has committed to a review of the levy again after three years before the introduction of the 2021 levy.


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Credit Unions In June 2016, the Credit Union Advisory Committee (CUAC) finalised a review, completed at the request of the Minister for Finance, of the Implementation of the Recommendations set out in the Report of the Commission on Credit Unions. This report provides an in-depth analysis of the sector. Its recommendations are based on that analysis and on the views of a range of stakeholders, thus ensuring a balanced report providing focused and effective recommendations. From September 2016 onwards, CUAC continued working to enable a coherent implementation plan be devised and the Department worked closely with CUAC on this. An Implementation Group was set up in 2017 and consists of one representative from each of the following: Irish League of Credit Unions; Credit Union Development Association; Credit Union Managers' Association; National Supervisors Forum; and the Central Bank. The Implementation Group also has a CUAC representative and is chaired by the Department of Finance. The Implementation Group worked through each of the recommendations in the CUAC Report and finalised its own Final Report in December 2018. In addition to assessing the implementation of the CUAC’s recommendations, the Final Report contains some forward looking sections, including a 2019 Roadmap. This roadmap highlights the many positive developments in the Credit Union movement currently underway or expected in 2019. In October 2018, the Central Bank published a Consultation Paper on Potential Changes to the Lending Framework for Credit Unions (CP125). This Consultation Paper came on foot of a scoping paper submitted by the Implementation Group to the Central Bank in November 2017 regarding possible amendments to the Lending Regulations. The paper contained a number of proposals for consideration in the Central Bank review of the Credit Union Lending Framework, which could provide for a material increase in long-term lending for those credit unions with the capability to do so.

Competitiveness in Financial Services

The Department of Finance continues to implement a public awareness campaign to raise awareness and promote customer switching of financial products. This campaign is funded, in its entirety, by AIB and PTSB, as part of a range of competition measures agreed with the European Commission. Phase 2 of the campaign in early 2018 targeted credit card switching at the time that post-Christmas bills arrive.


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OBJECTIVE 5

CONTINUING DEVELOPMENT OF IRELAND AS A

LOCATION OF CHOICE FOR INVESTMENT FOR

INTERNATIONAL FOREIGN FINANCIAL SERVICES

FIRMS

IFS2020

In March 2015, the Government launched IFS2020 – a Strategy for Ireland’s International Financial Services (IFS) Sector 2015-2020. IFS2020 is a whole of Government action-oriented strategy jointly developed between the public sector and industry, setting out a clear vision for Ireland to be the global location of choice for specialist international financial services, building on our strengths in talent, technology, innovation and excellent client service. The Strategy has a strong regional focus, reflective of the approximate one-third of IFS employment outside Dublin. The IFS2020 Action Plan for 2018 contained a suite of 43 specific measures, all of which were achieved by end 2018. At the end of 2018, there are almost 44,000 people directly employed in the IFS sector, a growth of over 25 per cent since the launch of the Strategy. A key element of the Strategy is the annual European Financial Forum (EFF). The third annual EFF was held in Dublin Castle in January 2018. Michael D’Arcy TD, Minister of State for Financial Services and Insurance at the Department of Finance, is responsible for the implementation of the IFS2020 Strategy. Minister of State D’Arcy chairs the quarterly meetings of the IFS2020 Joint Committee (composed of public and private sector IFS stakeholders). Four quarterly meetings were held in 2018. The 2018 Action Plan continues to provide a clear framework to maximize opportunities in the IFS sector including those arising from Brexit. It is fully integrated into the wider cross-Government Brexit contingency planning. In the 2018 Action Plan, Minister of State D’Arcy has identified six priority areas for 2018-Investment Limited Partnership Legislation; Sustainable and Green Finance; Regional Measures; Skills and Development; Aviation Finance and Financial Market Infrastructure. Since the UK decision to leave the EU in June 2016, both the then Minister of State, Eoghan Murphy and Minister of State D’Arcy have undertaken a number of overseas engagements to promote Ireland’s IFS sector. IFS2020 Action Plan 2019 was launched in 2019 on the eve of the EFF 2019 by Minister D’Arcy. Much preparation work was also completed in 2018 on a successor to the IFS2020 Strategy to be launched shortly thereafter.


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Availability of Commercial Property

The development of the Dublin Docklands Strategic Development Zone (SDZ) is a priority for NAMA which initially held an interest in 75 per cent of the 22 hectares of developable land in the SDZ. Sites under the control of NAMA-appointed receivers and investment partners have the potential to deliver 4.2m sq. ft. of commercial space and about 2,200 residential units. Delivery is being managed on a site-by-site basis, with NAMA providing funding, entering into joint ventures and de-risking exposures, all with the objective of maximising the return for the taxpayer in accordance with NAMA’s commercial risk/return strategy. Key achievements at Year End 2018 are as follows:

• Construction completed on c.983,000 sq. ft. of commercial space and 162 residential units

• Construction commenced on sites expected to deliver c.1.66m sq. ft. of commercial (mainly Grade A office) space and 444 residential units

• Planning permission granted for another 87,000 sq. ft. of commercial development

• Sites, capable of delivering 1.5m sq. ft. of commercial space and 1,577 residential units, have been sold

Residential Funding

NAMA is also facilitating, on a strictly commercial and value maximising basis, increased residential delivery in the greater Dublin area and in other locations where residential development is commercially viable on land owned by its debtors. An estimated 9,700 units were completed by end-2018 by NAMA debtors and receivers with NAMA funding. Construction has also proceeded on sites which will ultimately deliver another c.3,000 units. Another 6,400 units have planning permission and applications had been lodged or will be lodged within 12 months for another 8,500 units. In addition to these residential units that are directly facilitated through NAMA funding, it is estimated that over 3,400 homes have been delivered on sites for which NAMA had funded planning permission, legal costs, holding costs or enabling works but with which NAMA is no longer involved. Home Building Finance Ireland ('HBFI') was established in late 2018 to address the shortfall in the supply of housing in the State. HBFI’s objective is to deliver 7,500 new homes across the country by providing debt financing to small and medium sized builders with commercially viable sites for residential development. HBFI will commence lending operations in early 2019.


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OBJECTIVE 6

ENSURE THE TAXPAYERS’ INVESTMENT IN THE

DOMESTIC BANKS IS FULLY RECOUPED

The Department, through the Shareholding and Financial Advisory Division, manages the State’s remaining investments in the banking sector. Government policy is to sell down these investments and to recover all the money that was invested in AIB, Bank of Ireland and PTSB. The Department continuously monitors the performance of the banks and market developments with a view to providing options to the Minister to monetise these investments. However, during 2018 there was a restriction contained in the Programme for Government on further sales of AIB shares. The Department is currently in the final stages of delivering an analysis of Government policy on bank remuneration. This report, produced in association with international consultancy firm Korn Ferry, will examine the impact of the substantial disparity in pay levels versus other Irish listed companies or peer banks in Europe on the banks’ ability to attract and retain talent in the market. In addition, the report will consider if this retention risk and a lack of alignment between the interests of executives and shareholders undermines the Government's objective of recovering the State’s full investment in the banks. During 2018, the Department also initiated a process to replace retired Ministerial nominees to the boards of the three banks based on the State’s shareholdings rather than the previous public interest regime. These directors will have expertise to continue to support the process of recouping the taxpayer’s investment in the bank.


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AIB

On the 1st March 2019, the bank released its annual results for 2018 showing a fifth straight year of profitability. Highlights included continued loan book growth, significant reductions in impaired loans and a stable cost base. The 2018 results also included a 42 per cent increase in the proposed ordinary dividend to shareholders of €461 million of which the State will receive its 71 per cent share. The Department manages the relationship with AIB through the arrangements laid out in the Relationship Framework (which is available on the Department’s website). Monitoring of activities such as the volume of new loans, levels of impaired assets, and personnel management takes place continually and issues are discussed and addressed with senior management on a regular basis.


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Bank of Ireland

Following the sale of its debt investments in 2013, the State’s remaining investment in Bank of Ireland is its 14 per cent equity stake. The Department monitors its performance through regular engagement as set out under the Relationship Framework with the bank (which is available on the Department’s website), as well as wider analysis of sector and market developments. Bank of Ireland returned to profitability in 2014 and has remained profitable since. Other key highlights over this period have been a material increase in new lending, a significant reduction in the stock of Non-Performing Loans (NPLs), and strong growth in capital. A key activity for the bank was its Capital Markets Day (CMD) hosted in June 2018 which included a set of financial targets covering profitability, efficiency, capital, and dividend policy. Underpinning these targets were loan book growth, doubling of returns in the UK, and delivery of a significant transformation programme including the replacement of the bank’s core business platform. The bank’s 2018 full year results, which were announced on 25th February 2019, showed early progress in meeting these targets. The proposed dividend announced by the bank as part of the results announcement was €174m (2017: €124m) of which the State will receive its 14 per cent share.

Permanent TSB

Since the State’s investment of €4 billion in Permanent TSB in 2011-12, €1.9 billion has been recouped by way of disposal proceeds comprising the sale of Irish Life, the re-IPO of the bank, and the redemption of the Contingent Capital Note. In addition, €0.8 billion has been received in the form of income on investments, and liability guarantee fees. The State’s remaining investment in the bank is its 75 per cent equity stake. Following its return to profitability in 2017, Permanent TSB showed further progress in this regard with underlying profits of €94 million for full year 2018 (2017: €65m). The bank continued to increase its market share for new mortgages to 15.1 per cent in 2018 from 12.6 per cent in 2017 and 9.1 per cent in 2016. The most noteworthy achievement by the bank in 2018 was the significant progress made in reducing its Non-Performing Loan (NPL) ratio. In addition to organic measures, the bank also transacted two major loan sales which, in aggregate, reduced NPLs by around €3.4 billion. The NPL ratio at end-December 2018 stood at 10 per cent having started the year at 26 per cent. The Department monitors the bank’s performance through regular engagement, as set out under the Relationship Framework.


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NAMA

After having redeemed €30.2 billion of its government guaranteed senior debt in 2017, NAMA commenced repaying its subordinated debt of €1.6 billion in 2018. By year end 2018, NAMA had redeemed over €500 million of subordinated debt, leaving €1.1 billion outstanding which NAMA expects to redeem by March 2020. NAMA revised upwards the surplus that it expects to generate by the time it completes its work, and repays all its financial obligation to €3.5 billion.

IBRC

The most recent progress update report on the special liquidation of IBRC was published in May 2019 giving a comprehensive overview of the work completed to date. It is available on the Department of Finance website. The asset realisation work stream of the Special Liquidation of IBRC is largely complete. To date, loans with a par value of c. €22 billion have been prepared, brought to the market and sold. There remains a loan book with a par value of c. €3.5 billion which the Special Liquidators continue to manage. As at year-end 2018, the Special Liquidators had a cash balance of c. €1.6 billion on hand which will ultimately be available for distribution to creditors. In December 2018, the Special Liquidators commenced payment of the final dividend of 50 per cent to all admitted unsecured creditors of IBRC. This payment represents the final instalment of the principal owed to this class of creditors, which includes the State, as at the date of the liquidation of IBRC in February 2013. These payments from the Joint Special Liquidators to the State, as the largest unsecured creditor, will improve the exchequer borrowing requirement as the funds received will increase the cash balances of the Central Fund and thereby reduce the required level of borrowing. It is the expectation of the Special Liquidators that there will be further funds recoverable to the State following repayment of other creditors, including subordinated bondholders, however this is subject to change depending on future events which are outside of their control. There remains a number of tasks in the liquidation to be completed including the on-going management of c. 120 legal cases, the completion of the creditor adjudication process, management of the remaining loan book, the realisation of all remaining assets and the completion of various projects.


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OBJECTIVE 7

AVAILABILITY OF SUSTAINABLE CREDIT UNION,

BANK & NON-BANK FUNDING SOURCES TO EXTEND

RECOVERY INTO THE DOMESTIC ECONOMY AND TO

RESPOND TO THE NEEDS OF A CHANGING

ECONOMY

Strategic Banking Corporation of Ireland (SBCI)

The SBCI has been Ireland’s national promotional institution since it was established in September 2014. The SBCI’s role as a national promotional institution is to focus on delivering effective financial supports to Irish SMEs, facilitating the availability of appropriate and flexible finance to Irish small businesses, and encouraging competition and innovation in the SME finance market. To the end of December 2018, the total amount of SBCI supported lending, including lending under its risk-sharing guarantee schemes, was €1,052,000 to 26,061 Irish SMEs supporting 148,230 jobs. The SMEs who received finance are from all economic and business sectors and have a wide geographical spread with the majority of them based outside of Dublin. The SBCI now has six on-lending partners in total, comprising three bank and three non-bank finance providers. The SBCI is continuing to develop innovative products to meet the needs of Irish SMEs. The SBCI has diversified its business model to include the use of risk sharing schemes and the provision of guarantees, and the use of EU Financial Instruments to optimise the funding available to Irish SMEs. The SBCI launched the €300 million Brexit Loan Scheme in March 2018 which is to provide working capital supports to SMEs to enable them to adapt their businesses and innovate in response to the challenges posed by Brexit. A Future Growth Loan Scheme has also been developed to provide long term financing of 8 – 10 years for strategic investment in the absence of the availability of financing for businesses of more than seven years. The SBCI is working to develop a more diverse range of on-lenders and innovative products to meet the evolving needs of the SME finance market and contribute to a competitive and sustainable economy.


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Regulation of Crowdfunding

Crowdfunding is currently an unregulated industry in Ireland. It represents a potentially useful source of non-bank finance for Irish SMEs. In his Budget 2019 speech, the Minister for Finance announced that the Department of Finance will begin work, in conjunction with the Central Bank of Ireland, on the national regulation of crowdfunding in Ireland. Regulation is intended to support the competitiveness and growth of the Irish crowdfunding industry. With regulation, crowdfunding has the potential to play an important role in broadening competition in the SME finance market beyond the banking system which is a key priority in terms of access for finance for SMEs. Regulation will also ensure that sufficient consumer protections are in place for non-sophisticated or non-professional investors and that such investors have all of the relevant information and are made aware of the risks involved in investing via crowdfunding. The potential benefits of crowdfunding have been recognised at a European level with regulation forthcoming. It is intended that the Irish regulation will be aligned to the European.

ISIF

At end-2018, the Ireland Strategic Investment Fund, managed by the NTMA, had committed €3.8 billion to investments in Ireland marking an increase of €400 million during 2018. When combined with third-party capital (€6.6 billion), Ireland Strategic Investment Fund-backed companies, projects and funds have attracted total investment commitments amounting to €10.4 billion in Ireland. The Government approved a refocused investment strategy for ISIF during 2018 following a Department of Finance review conducted in collaboration with ISIF. ISIF investment Strategy 2.0, which was launched on 1 February 2019, refocuses ISIF investments on supporting Project Ireland 2040, and particularly in five priority areas: indigenous industry, regional development, sectors that are impacted by Brexit, projects to address climate change, and the continuation of housing investments, primarily those focused on mass market residential units.

Action Plan 2018 - Credit Unions

Sector Overview

The credit union sector provides a material proportion of consumer

lending in Ireland, with a market share in this segment of c. 34 per cent,

and has the capacity to grow lending to SMEs and the mortgage

market, within regulatory limits. As at December 2018, there were 266

credit unions in Ireland with c. €17.7 billion of assets in aggregate, and

€4.7 billion of loans outstanding, an increase in loans of 7 per cent y-o-

y, 96 per cent of which was consumer lending. The sector has also seen

growth in SME & Mortgage Lending with €99m in commercial loans

outstanding at December 2018 and €173m in house loans, increases

of 25 per cent and 13 per cent y-o-y respectively.


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Credit Union Advisory Committee (CUAC)

CUAC was established to advise the Minister on the improvement in

the management of credit unions, the protection of the interests of

members and creditors of credit unions and other matters relating to

credit unions.

In 2018, three members of the CUAC finished their terms and were

replaced by four new members. On appointing these new members, the

Minister requested that in addition to a focus on business model

development as the biggest issue facing the sector, the CUAC

specifically look at (1) barriers to and supports for collaborative efforts

(2) SME lending, linking with the outcomes of the Local Public Banking

report. The Minister also asked the Committee to look at “people”

aspects of the sector including the varied issues impacting directors,

managers, staff and volunteers, an area which wasn't focused on in the

last CUAC report as the new governance regime had not yet bedded

down.

CUAC Report Implementation Group

During 2017 and 2018, the work of CUAC was supported by an

Implementation Group chaired by the Department of Finance which was

tasked with implementation of the recommendations of the CUAC

report published in July 2016. In 2018, the Implementation Group

continued to work through each of the recommendations in the CUAC

Report, as well as three policy papers published by the CUAC and

submitted to the Implementation Group in late 2017.

In December 2018, the Implementation Group submitted a paper on

Tiered Regulation to the Central Bank. The Implementation Group’s

conclusion on Tiered Regulation is that given developments in the

sector, tiering within Regulations may be more appropriate at this time,

and that Tiered Regulation could be revisited again in future if

necessary. The CUAC agree with this approach.

The Implementation Group also published its own Final Report in early

January 2019. In addition to assessing the implementation of the

CUAC’s recommendations, the Final Report contains some forward

looking sections, including a 2019 Roadmap. This roadmap highlights

the many positive developments in the Credit Union movement

currently underway or expected in 2019.


44

Regulatory Developments

In 2018, following a public consultation on investment regulations for

credit unions in 2017 (CP109), the Central Bank introduced in March

2018 a revised investment framework which provides for additional

investment classes that credit unions are permitted to invest in,

including investment in Approved Housing Bodies. The amended

investment regulations will allow credit unions to invest over €700

million within certain parameters in Tier 3 Approved Housing Bodies.

In October 2018, the Central Bank also published a consultation on the

lending framework for Credit Unions (CP125). This consultation comes

on foot of a scoping paper submitted to the Central Bank by the

Implementation Group in November 2017 which set out proposals for

consideration in any review by the Central Bank of the lending

regulations for Credit Unions.

Financial Inclusion - Personal Micro Credit Scheme

As at December 2018, approximately 111 credit unions had signed up

to the Personal Micro Credit Scheme which was established by the

Department of Employment Affairs and Social Protection and which is

aimed at moving people in the wider local community away from the

use of high cost moneylenders and providing an alternative, legitimate

and low cost personal loan scheme. Credit unions are offering 'It Makes

Sense' loans, at reasonable rates, to people struggling to get credit

elsewhere.

European Investment Bank (EIB)

The closer cooperation between Ireland and the European Investment

Bank, facilitated by the EIB-Ireland Financing Groups and the Bank’s

permanent office in Dublin, continued to be in evidence with

announcements of loans across a wide variety of sectors in 2018. There

was a welcome focus on renewable energy and investment in

education. In addition, the European Investment Fund (part of the EIB

Group), working together with the SBCI, the Department of Agriculture,

Food and the Marine and the Department of Business, Enterprise and

Innovation created the Future Group Scheme which will leverage up to

€300 million to small and medium size businesses in Ireland to facilitate

longer term strategic investment.

In total, the EIB Group lent nearly €1 billion to the Irish state and Irish

companies in 2018 and included lending in the transport, health,

education and renewable energy sectors. This follows on from over

€1billion in loans involving the EIB Group in 2017 and maintains the

increased levels of engagement by the EIB Group since the start of Irish

operations in 1973.


45

SECTION 2 >


46

Achieving a Higher Performing Department At the end of December 2018, there was a total work force of 332 staff based in Dublin, Tullamore, Europe and the USA. This workforce is made up of permanent and seconded staff whose mix contribute to a valuable sharing of knowledge and skills transfer. In 2018, the Department welcomed in 52 new entrants. Throughout 2018, the Department seconded in and out a number of staff to further the expertise within the Department. This recruitment builds on the 2017 intake and shows that the Department has developed a capacity for fast paced innovation and change by adopting a work force plan that has attracted top talent, enhancing our existing knowledge and skills to achieve the Department’s objectives. The Department published its HR Business Strategy 2016-2019 in late 2016. Increased integration between Human Resource Management (HRM) and business strategy is one of the most important demands that are placed upon modern strategic HRM. In line with achieving the strategic goals of the Department and to further the professionalism of the wide range of HR services provided to management and staff, the following are the five central and top level components of the HR Business Strategy: Leadership, Organisational Structure and Workforce Planning, Organisational Learning and Development, People Management and Employee Engagement.

Continual Learning and Development The Department understands the importance of learning and development, both for the organisation and our people, and promotes and invests in lifelong learning for staff at all levels. The Department invests in our staff’s development and facilitates a range of learning from leadership, coaching and mentoring, people management and training in both soft and technical skills as well supporting academic and professional courses. The Department’s efforts in Learning and Development were recognised by professional bodies such as the Irish Institute of Training and Development (IITD) and the Chartered Institute of Personnel and Development (CIPD). In 2017, the Department won the IITD Award 2017 for Best Learning and Development Organisation (Medium Category). The Department was also Shortlisted in the IITD 2018 Awards. The Department was Shortlisted and Runner Up in the CIPD Awards in 2017 and again in January 2018 for our Employee Empowerment and Trust Initiatives. These awards recognise the Learning Culture within the Department and how it is driven by the Executive Board. In 2018, the Department ran a total of 124 training initiatives which were attended by 750 staff (cumulative total). The training and courses offered to staff ranged widely from training on leadership, performance management, soft skills, mentoring as well as professional and IT skills training.


47

In 2018, 41 staff participated in the Refund of Fees Scheme. The Department is cognisant of the need for targeted learning and in 2018, the Department rolled out four In-house programmes. The Diploma in Financial Services and the Diploma in Project Management were attended by 15 and 11 staff respectively. The Department launched two further In-house programmes, the revised Diploma in Tax Policy and Practice organised with the Institute of Taxation which was attended by 20 staff and our new Certificate in Economics which was launched as part of the HR Business Plan 2017. This was a joint venture with our colleagues in the Department of Public Expenditure and Reform and was organised with the Institute of Public Administration, 12 staff from the Department participated. Since 2017, 14 Unconscious Bias Workshops were offered to staff to supplement their leadership skills and raise their levels of self-awareness in the workplace. In 2018, the Department organised a further 6 Unconscious Bias workshop sessions which brings the total to 226 staff in attendance. The Predictive Index (PI) has been supported by the Executive Board and the Department has been offering PI analysis across all divisions using a top down approach to increase the level of self-awareness for staff and provide insights and feedback to help optimise the performance and potential of staff, teams and the Department. In total, over 100 serving staff have completed the Predictive Index. The Department continues to work with the Civil Service Graduate Programme in developing our Administrative Officers (AOs) while it also engages with its Business Partners and OneLearning, the Learning Shared Services Centre for the Civil Service, through Workshops, procurement groups and evaluation of training. Since the launch of OneLearning in 2017 (Action 9 of the Civil Service Renewal Plan), 60 training initiatives have been made available to all Departments across the Civil Service and is continuing to expand its offerings under the training elements of Leadership, Management, Information Technology, Innovation and Change and Interpersonal and Communication. In 2018, the OneLearning suite of programmes offered a total of 60 training initiatives and the Department of Finance had 160 staff in attendance across 48 training programmes. Our L&D initiatives, such as the four In-house programmes, in conjunction with the OneLearning suite of training programmes, continue to develop staff knowledge. The Joint Research Programme on Macro Economy, Taxation and Banking between the Department, the Economic & Social Research Institute and the Revenue Commissioners entered its fourth year in 2018. The Programme has undertaken and published research on a range of macroeconomic, banking and taxation topics. Key outputs from 2018 include publications on the elasticity of taxable income, an analysis of VAT elasticities and work on the excess burden of taxation. Research into post-crisis developments in mortgage arrears, and SME investment patterns was also produced. Work was also published on modelling the economic and environmental impacts of carbon tax increases, the calculation of fiscal multipliers, and estimating knowledge spill-overs from multinationals to domestic firms.


48

Separately, the Department published further research on Brexit, along with new research on productivity and Ireland’s output gap. An economic review of the 9 per cent VAT rate was published in July 2018. Some of the Department’s research along with projects from the ESRI research programme were presented at the Department’s Annual Policy Conference in March which coincided with the launch of the 2018 OECD Economic Survey on Ireland. During the year, the Department’s economic research output was shortlisted for awards by the Foundation for Fiscal Studies and the Civil Service Excellence and Innovation Awards. 2018 marked the fifth year of the Department of Finance Economic Policy Competition. The competition allows Third Level students to submit their policy proposition, based on sound economic analysis, with the winner of the competition being offered a summer internship within the Department. A student from UCD was the winner of the competition in 2018 and completed an internship in the Economic Division of the Department.

Employee Engagement In 2017, an Employee Engagement Survey for all staff in the Civil Service was conducted. This survey aims to see what people think of their Department and the Civil Service in general. The Department had a 98 percent completion rate for this survey, up from 76 percent and was the joint highest in the Civil Service. The Departmental report indicated a positive movement in the areas examined, Well-being is high at 75 per cent as well as Employee Engagement at 74 per cent. The Department experienced improvements across all four categories; Employee Engagement up 5 per cent; Commitment to the Organisation up 9 per cent; Well-being up 1 per cent and Coping with Change up 3 per cent. The Department scored equal to or higher than the Civil Service average in all four categories. The Department’s attrition rate in the period January –December 2018 was 4.3 per cent. The attrition rate includes staff who have left the Department and the Civil Service permanently. The Department’s turnover rate for 2018 was 17.5 per cent, this

includes staff who were promoted/transferred from the Department to

other Civil Service Departments/Offices. The Department’s sick leave

average for 2018 (Jan-Dec) was 2.7 per cent which is below the Civil

Service average.

Investment and Focus on Performance Improvement The Department continues to review and develop business plans for

every divisional area. This feeds into the goal setting at individual level

through the integrated Business Planning Process and Performance

Management and Development System (PMDS).


49

Workforce Planning The Executive Board examines in detail the goals and priorities of the Department and develops a resource plan from these considerations. In February 2018, the resource plan was updated and this involved an analysis of the skills, qualifications and experience of the existing work force, allocating these staff across the organisational structure and identifying gaps by grade, skill and qualifications in each of the Department’s divisions. During this process, detailed division by division, area by area and grade by grade resource demands are identified, discussed and agreed.

Organisation Structure The Department’s structure is organised into a number of

Divisions/Units supported by corporate functions. In order to ensure that

it is fit to deliver on its objectives, the Department continues to place its

organisation structure under review. Continuous evolvement of internal

working arrangements, business continuity and working methods are

reflected in the Department’s Corporate Governance Framework which

is reviewed on an annual basis.

Civil Service Renewal

The Department is actively engaged with the ongoing programme of

change in the Civil Service which seeks to build capacity to respond to

existing and future challenges and improve the performance of the Civil

Service and its staff. The Civil Service Renewal Plan, published in 2014,

outlines a vision for the Civil Service and practical changes that will

create a more unified, professional, responsive, open and accountable

Civil Service, providing a world-class service to the State and to the

people of Ireland.

The Departments of Finance and Public Expenditure and Reform hosted the National Economic Dialogue (NED) in June 2018 to facilitate an exchange among relevant stakeholders on how best to sustain and strengthen the economic recovery in the interests of all, while taking account of the competing economic and social priorities within the limited fiscal space. This event and the Tax and Economics Policy Conference were just some of the events held under the Civil Service Renewal Plan’s objective of hosting Open Policy debates. Our Department was shortlisted in 2018 as part of the Civil Service Excellence and Innovation Awards in the Excellence in Policy category for a paper entitled “Patterns of Firm Level Productivity in Ireland”.

Strategy In January 2018, the Department published a new Statement of

Strategy for the period 2017‐2020. The Strategy sets out the Department's mission and goals over the period with an emphasis on strategies to develop and encourage growth across the economy. The Department’s business planning process considers the challenges facing the Department in setting objectives and performance measures, budgeting and estimates, risk management, organisational capacity/capability review, workforce planning and individual performance and development.


50

Governance The Department agreed a new Risk management framework in 2017,

updating existing risk guidelines and structures in place. As part of this

update, the Department also developed a new electronic Risk Register

to enable more efficient and effective management of Risk. The risk

management framework plays an important role in good corporate

governance, facilitating the identification, assessment and mitigation of

risks and determines the parameters for escalation of risk for further

examination. The Department is currently undertaking a review of the

Risk Management Framework to further improve the structures in place.

During 2018, the Department answered c.2,933 Parliamentary

Questions and processed 389 Freedom of Information requests.

In line with reporting requirements under Section 22 of the Protected Disclosures Act, 2014, there was one protected disclosure made to the Department in 2018. This is being addressed in line with provisions made under the Protected Disclosures Act, 2014. Section 42 of the Irish Human Rights and Equality Commission Act

2014 places a positive duty on public sector bodies to have regard to

the need to eliminate discrimination, promote equality, and protect

human rights, in our daily work. Specifically in this Department this is

evident in our strategic planning processes, annual review of the

Governance Framework, ongoing training offered by HR (Unconscious

Bias training delivered during 2018, for example) and in assessing

impacts as part of our policy development.

Quality Customer Service Published in May 2018, the Customer Action Plan for 2018-2020 outlines the Department of Finance’s commitment to the Principles of Quality Customer Service and our determination to continue to provide the highest quality of service to all our customers. In 2018, the Department continued to monitor progress on the Customer Action Plan.

ICT In 2018, the Office of the Government Chief Information Officer (OGCIO) continued to provide ICT services to the Department. The Department continued to invest in ICT systems, software and infrastructure to facilitate more modern, efficient work practices and communications. A key focus has been the automation of certain processes and to ensure better knowledge-sharing and information management in the Department. Investment continued in the roll out of Build-to-Share Systems including the introduction of eCorrespondence and the upgrade of eSubmissions. The Department also continued to invest in and monitor ICT security and controls, including data management, cybersecurity, to safeguard institutional data and information and to protect and uphold vital Department processes. The Department’s overall ICT focus continues to be on building and maintaining a robust ICT infrastructure, ensuring quality data and information governance throughout the Department and maintaining managed and secure ICT processes and controls. The Department aims to continually increase ICT consolidation and integration to support the strategic objectives of the Public Sector ICT Strategy.


51

Websites and Social Media The Department’s website www.finance.gov.ie provides information about the Department’s work, policy initiatives, press releases, publications and public consultations. The website had over 470,000 visitors in 2018. The website will shortly move over to the new Government site www.gov.ie. The Budget site www.budget.gov.ie provided a live video stream of the Minister for Finance and Public Expenditure and Reform’s Financial Statement and Estimates Statement to the Dáil on Budget Day. The site also contains a wide range of information on Budget 2019, the Finance Act, the National Economic Dialogue, and previous Budgets. The Department has increased its social media presence with over

16,000 followers on Twitter and is now also using LinkedIn as part of

our improved communications strategy.

The Department’s Social Media Policy was launched in early 2019.

Facilities The Department continues its commitment to provide environmentally

safe, secure and productive facilities for staff whilst proactively

managing the conservation and curation of historic buildings under its

management and control. The Department’s main building received a

Highly Commended Award at the RIAI Architecture Awards 2018 in the

Conservation / Restoration award category.

The current programme of works includes discrete elements such as

the roof replacement works in the Department’s main building (a

protected structure that is over 100 years old), which commenced in

August 2018 and is due to be completed in March 2019. In addition,

OPW are in the final stages of security upgrade works on the external

CCTV system covering the whole of the Government Buildings campus.

Divisional staff of the Department were relocated on schedule in the

second half of June 2018, to new open-plan offices in Miesian Plaza,

Lower Baggot Street. These offices are in a ‘green’ building which is

highly energy-efficient and has been showcased by the Irish Green

Building Council for its sustainable design.

The main facility (Government Buildings South Block) was open to the

public for the second time for Culture Night 2018 and, in addition

Government Buildings South Block participated in Open House Dublin

2018. Given the level of public interest shown, it is intended to continue

the Department’s involvement in these events going forward.


52

Progress on Third Irish Language Scheme 2018-2021

Sample Commitments under Scheme End-2021 2018

Press releases to be made in available in Irish 35% 25%

Create greater social media presence in Irish language Ongoing

Respond to Irish language press queries in Irish Ongoing*

Increase the level of information and official documents published

bilingually Ongoing

Maintain navigable function in both official languages on website and

bilingual static content depending on language selection

Increased Irish language content on the Departmental website and on

the Intranet including dedicated Irish language section Ongoing

Undertake language reviews including assessment of competency in

Irish language Ongoing

Identify staff who can deal with telephone queries in Irish and indicate

those in staff directory Ongoing

Provision of sample Irish language messages to all staff for out-of-

office email and telephone messages

Promotion of Irish language Scheme and classes via induction seminars

Communication of Irish language information through internal

communications including the Departmental newsletter Ongoing

Advise on Irish language translation service

Advise on Irish language classes and training including support via

post-entry education refund of fees scheme and the OneLearning

Centre

Facilitate staff attending Irish classes in and outside office hours

Provision of Irish language resources to staff Ongoing

Maintenance of log of Irish language correspondence Ongoing

Promotion of Irish language cultural initiatives and events and

organisation of Irish language based events within the Department

Designated Irish language Officer

Review and monitor progress of third Irish language Scheme Ongoing

Produce Irish language leaflet on services in Irish Ongoing

Third Irish language Scheme 2018-2021 commenced on introduction in February 2018

*No press queries have been received in Irish


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SECTION 3 >

Appendix A

Appendix B

Appendix C


54

Appendices

Appendix A

Department of Finance 2018 Publications

Publication Publication Date

Fiscal Monitor - December 2017 January 2018

Monthly Economic Bulletin – January 2018 January 2018

Annual Taxation Report – January 2018 January 2018

g Credit Union Advisory Committee Policy Paper Publications – December 2017

January 2018

Statement of Strategy 2017–2020 January 2018

Feedback Paper on the Regulation of Crowdfunding in Ireland January 2018

Report on the Cost of Employer and Public Liability Insurance January 2018

IFS2020 Action Plan 2018 January 2018

Report on the use of intermediary-type structures and self-employment arrangements: Implications for Social Insurance and Tax Revenues

January 2018

Fiscal Monitor – January 2018 February 2018

Financial Stability Group Meeting No. 8 6th November 2017 February 2018

Monthly Economic Bulletin – February 2018 February 2018

Exchequer Tax Revenue Profile 2018 February 2018

Housing and Property Sector Chartpack – February 2018 February 2018

Cost of Insurance Working Group Report on the Cost of Motor Insurance – Fourth Progress Update Q4 2017

February 2018

Language Scheme 2018–2021 February 2018

Ireland and others – paper setting out their shared views and values to create a stronger Economic and Monetary Union (EMU)

March 2018

Fiscal Monitor – February 2018 March 2018

SME Credit Demand Survey April - September 2017 March 2018

Monthly Economic Bulletin – March 2018 March 2018

OECD Economic Surveys Ireland March 2018 March 2018

Patterns of Firm Level Productivity in Ireland – March 2018

March 2018

IFS2020 Review of Access to Equity Finance Mapping Review Paper March 2018

Exchequer Borrowing Requirement Profiles – March 2018 March 2018

Discussion Paper: Virtual Currencies and Blockchain Technology – March 2018

March 2018

Public Debt Sustainability in Ireland – the case of Ireland March 2018

Brexit: Analysis of Import Exposures in an EU Context – March 2018 March 2018

Fiscal Monitor – March 2018 April 2018

IFS2020 Q4 2017 Progress Report April 2018

Stability Programme Update 2018 April 2018

Monthly Economic Bulletin – April 2018 April 2018

Fiscal Monitor – April 2018 May 2018

GDP and Modified GNI – Explanatory Note, May 2018 May 2018


55

Second Motor Insurance key Information Report May 2018 May 2018

Fifth Progress Update – Cost of Insurance Working Group May 2018

Publication of the Report on the Administration of the Insurance Compensation Fund 2017

May 2018

IFS2020 Q1 2018 Progress Report May 2018

Evaluation of the Department of Finance’s Macroeconomic and Fiscal Forecasts 2013-2016

May 2018

Monthly Economic Bulletin May 2018 May 2018

Department of Finance Quality Customer Service Charter and Action Plan – May 2018

May 2018

Fifth Progress Update received from the Special Liquidators of IBRC May 2018

Information Note – Credit Union Levies & Charges June 2018

Home Building Finance Ireland Bill June 2018

Summer Economic Statement 2018 June 2018

National Economic Dialogue 2018 Programme June 2018

Monthly Economic Bulletin June 2018 June 2018

Local Public Banking in Ireland July 2018

Ireland’s participation in the IMF and World Bank Annual Report 2017 July 2018

Capital Markets Union – Shared views of the Finance Ministers from Denmark, Estonia, Finland, Ireland, Latvia, Lithuania, Sweden, and The Netherlands.

July 2018

Statistical issues in a highly globalised economy – implications for policy

formulation in Ireland

July 2018

Monthly Economic Bulletin July 2018 July 2018

Finance Accounts 2017 July 2018

Review of the 9% VAT rate Analysis of Economic and Sectoral Developments

July 2018

Housing and Property Sector Chartpack – July 2018 August 2018

SME Credit Demand Survey October 2017 – March 2018 August 2018

Cost of Insurance Working Group Sixth Quarterly Progress Update August 2018

Monthly Economic Bulletin August 2018 August 2018

Annual Report on Public Debt in Ireland September 2018

Ireland’s Corporation Tax Roadmap September 2018

ATAD Implementation Controlled Foreign Company (CFC) Rules – Feedback

Statement

September 2018

Population Ageing and the Public Finances September 2018

IFS2020 Q2 2018 Progress Report September 2018

Vacant Property Tax Indecon Report September 2018

Monthly Economic Bulletin September 2018 September 2018

Fiscal Monitor September 2018 October 2018

White Paper – Estimates of Receipts and Expenditure for Year ending 31

December 2019

October 2018

Budget 2019 – Financial Resolutions October 2018

Indecon Evaluation of EII and SURE October 2018

Ireland’s Draft Budgetary Plan 2019 October 2018

Report on the feasibility of an insurance claim-by-claim register October 2018

Productivity Chartpack – October 2018 October 2018

Contingent liabilities October 2018 October 2018

Review of Regulation of Personal Contract Plans November 2018


56

ESM Reform – Shared views of the Finance Ministers from the Czech Republic, Denmark, Estonia, Finland, Ireland, Latvia, Lithuania, the Netherlands, Sweden and Slovakia

November 2018

Fiscal Monitor October 2018 November 2018

Financial Action Task Force on Higher Risk Countries November 2018

Monthly Economic Bulletin October 2018 November 2018

Analysis of Special Assignee Relief Programme 2016 November 2018

Cost of Insurance Working Group - Seventh Progress Update November 2018

ATAD Implementation – Hybrids and Interest Public Consultation November 2018

Fiscal Monitor November 2018 December 2018

Elasticity of Taxable Income December 2018

The Taxation of DIRT & LAET December 2018

Monthly Economic Bulletin December 2018 December 2018

Contingent Liabilities December 2018 December 2018


57

Appendix B

Legislation Published by Department of Finance in 2018

Quarter 3 Legislation

Insurance (Amendment) Act 2018

Bill Number: 59 of 2018

Bill published: 19 June 2018

as Act Number: 21 of 2018

Date of Signature: 24 July 2018

Quarter 4 Legislation

Markets in Financial Instruments Act 2018


Bill published: 11 April 2018


Date of Signature: 29 October 2018

Home Building Finance Ireland Act 2018


Bill published: 18 June 2018


Date of Signature: 3 December 2018

Finance Act 2018


Bill published: 16 October 2018



Finance (African Development (Bank and Fund) and

Miscellaneous Provisions) Act 2018


Bill published: 26 September 2018



Central Bank (National Claims Information Database)

Act 2018


Bill published: 10 July 2018




58

Appendix C

Acronyms

ACA - Accelerated Capital Allowances EII - Employment and Investment Incentive

AfDB - African Development Bank EMU – Economic and Monetary Union

AfDF - African Development Fund ESM – European Stability Mechanism

AIB - Allied Irish Banks EU – European Union

AMLSC - Anti-Money Laundering Steering Committee EUI - Euroclear UK & Ireland

AO – Administrative Officer FATF - Financial Action Task Force

ATAD - Anti-Tax Avoidance Directive GDP – Gross Domestic Product

BEPS - Base Erosion and Profit Sharing GNI - Gross National Income

BOI – Bank of Ireland HBFI – Home Building Finance Ireland

CAT – Capital Acquisitions Tax HR - Human Resources

CBI – Central Bank of Ireland HRM - Human Resource Management

CCTV - Closed-Circuit Television IBRC – Irish Bank Resolution Corporation

CFC - Controlled Foreign Company ICF - Insurance Compensation Fund

CIPD – Chartered Institute of Personal Development ICT - Information and Communications Technology

CMD - Capital Markets Day IDD - Insurance Distribution Directive

CMU - Capital Markets Union IDPRTG - Interdepartmental Pensions Reform and Taxation Group

CRO – Credit Review Office IFS - International Financial Services

CSD - Central Securities Depository IITD – Irish Institute of Training and Development

CSO - Central Statistics Office ILP - Investment Limited Partnership

CUAC – Credit Union Advisory Committee IMF – International Monetary Fund

DAC – Directive on Administrative Cooperation IPO – Initial Public Offering

DBEI - Department of Business, Enterprise and Innovation

ISIF - Ireland Strategic Investment Fund

DIRT - Deposit Interest Retention Tax KEEP – Key Employee Engagement Programme

EBA - European Banking Authority L&D – Learning and Development

ECB – European Central Bank LAET - Life Assurance Exit Tax

EFF – European Financial Forum LPT - Local Property Tax

EIB – European Investment Bank MERs - Mutual Evaluation Reviews


59

MFF - Multiannual Financial Framework PI - Predictive Index

MIBI - Motor Insurers’ Bureau of Ireland PMDS - Performance Management and Development System

MiFID – Markets in Financial Instruments Directive PRSI – Pay Related Social Insurance

ML/TF - Money Laundering and Terrorist Financing PTSB – Permanent TSB

MLI – Multi Lateral Instrument SBCI - Strategic Banking Corporation of Ireland

MMF - Money Market Funds SDZ – Strategic Development Zone

MTO - Medium Term Budgetary Objective SME – Small to Medium Enterprise

NAMA – National Asset Management Agency STS - Simple, Transparent and Standardised

NPE - Non Performing Exposures SURE - Start-Up Refunds for Entrepreneurs

NPL – Non Performing Loan UCD – University College Dublin

NTMA – National Treasury Management Agency UK – United Kingdom

OECD – Organisation for Economic Co-Operation and Development

USA – United States of America

OGCIO - Office of the Government Chief Information Officer

USC – Universal Social Charge

OPW - Office of Public Works VAT - Value Added Tax

PAYE – Pay As You Earn WTE - Whole Time Equivalent

PDH – Private Dwelling Homes Y-O-Y – Year on Year

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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.finance.gov.ie

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