Wednesday, 7 June 1978
Dáil Eireann Debate
The purpose of this amendment is to raise the income limit for the purpose of the dependent relative allowance to the level of the old age contributory pension. The amendment does this by inserting a new section in the Bill fixing the income limit at £944. This figure effectively incorporates the sum of the maximum of the old age contributory pension payable at the personal rate to persons of 80 years and upwards, which is £886 for 1978-79, and the living alone allowance of £1.10 per week provided for pensioners over 80, that is, £57.20 for 1978-79. At the moment the upper limit is the amount of the maximum old age contributory pension plus the allowance to a pensioner over 80 living alone. The change involved is to increase the amount so as to cover the maximum of the old age contributory pension.
Mr. Colley: : Yes. Although the provision in this is for the figure relevant to this year, of course a change in the figure for the non-contributory pension would lead to an amendment being made to change this figure.
Mr. Colley: : It might be possible to do that, but for many years it was necessary to make this kind of change in relation to the non-contributory pension and within recent times a change was made for an automatic adjustment. Some thought will be given to this next year but it is a new provision and we have to take it as it stands at the moment, as it was done for many years. Thought will be given to a formula that would ensure that there will be an automatic adjustment.
Mr. Cluskey: : The Minister indicated a few moments ago that it is his intention to adjust it according to the increases in the contributory pension. If that is the Minister's intention surely it will be wise to do it automatically now, to put forward an amendment that would allow for the automatic adjustment to keep in line with the Minister's stated intention.
Mr. Colley: : I accept that, but I gave instructions for this amendment only quite recently and this is what came forward. I did not have time to change it, but I agree with the Deputy as to the desirable formula for it.
“(i) where the insurance or contract referred to in subsection (2) was made after the 21st day of May 1953 with any insurance company or friendly society, being a company or society which is registered in the State and managed and controlled therein,  an amount equal to two-thirds of the premium paid by him;
(ii) Where the insurance or contract referred to in subsection (2) was made on or after the 6th day of April 1978 with any insurance company or friendly society, an amount equal to two-thirds of the premium paid by him.”
Section 1 of the Finance Bill, 1978, removes a right that had been there from 21 May 1953, that owners of Irish companies had preference over non-Irish companies for premiums in that one could deduct as an allowance two-thirds of the premium where the policy was with an Irish company as compared with an allowance of one-half of the premium where the policy was with a non-Irish company. In his budget speech or when he was introducing the Finance Bill the Minister said that we would be unable to give preference to Irish companies because of an EEC regulation and that, consequently, as from 2 February he had to reduce the benefit to people who had policies with Irish companies to the same level as that obtaining with regard to non-Irish companies.
I accept that we cannot give differential treatment in favour of people who have policies with Irish companies but I am suggesting in my amendment that instead of reducing the amount from two-thirds of the premium to one-half we should increase to two-thirds the deductions allowed to holders with all insurance companies. This would not differentiate between Irish and non-Irish companies as from 2 February, it would give them the same advantage as that given to those who had taken out insurance policies between 1953 and 1978 and at the same time, it would benefit people who have policies with non-Irish companies in allowing them to make a two-third deduction with regard to their income tax assessment.
Mr. Colley: : As the Deputy has said, it is true that we are obliged not to differentiate between Irish and foreign companies in this matter. It is also true that there are alternative ways of dealing with this question. One is the  method provided in the Bill which effectively reduces the preference in the case of Irish companies to the same level as that obtaining in the case of foreign companies. The other way is that proposed by Deputy Barry in his amendment, to increase the benefit to foreign companies to bring them to the same level as that obtaining for Irish companies.
In making the choice as to which is the better method of doing this, a few things must be borne in mind. First, the position for many years up to 1974 was that the preference existed in favour of Irish companies but the relief was given only at the standard rate of income tax. The scheme operated so successfully that Irish companies now have approximately 60 per cent of the premium income but in 1974 a change was made. I think it was consequential on a change in the income tax structure and its effect was to give relief at marginal rates of tax rather than at the standard rate, as had been the case. The cost of that change was £750,000. If we do what Deputy Barry proposes it would cost at least another £50,000 a year for each succeeding year in addition to the cost in 1974.
Apart from the additional cost I see two objections to this approach. One is that because the relief is given now at the marginal rate rather than the standard rate the effect would be to give what would probably be an over-generous measure of relief, particularly to the higher rate taxpayers as compared to the relief available to them up to 1974. The other objection I see to it is that it is certainly arguable that from the point of view of Irish companies it would be better for them to do what is proposed in the Bill rather than what is proposed in the amendment. If the amendment were accepted it would give a new selling point to the non-Irish companies and would operate to the detriment of Irish companies. For these reasons I do not think the amendment should be accepted.
Mr. M. O'Leary: : Reading the change envisaged here it would appear that the advantages that adhered previously to the Irish companies are being removed, or at least are not  being maintained. The fact that there was an entitlement to a tax deduction of two-thirds of the premium in the case of a policy taken out with an Irish company ensured a better competitive position for those companies but this advantage will be removed by virtue of this section. Is the Minister satisfied that the time has come for this change? Is he satisfied that the Irish companies will not be at a disadvantage? I take his point that a good deal of the market now belongs to Irish companies and that the previous advantages have benefited them to some extent. I should like him to tell us what are the strong reasons that suggest a change in this matter which appears to disimprove the position of Irish companies.
Mr. Colley: : I am afraid it is; as it is we are behind time. A step was taken in this matter a few years ago but we have to do it now. The choice is between what is proposed in the Bill, namely, to reduce the Irish companies to the same level as the non-Irish companies or the alternative as proposed by Deputy Barry, to increase the non-Irish companies to the same level as the Irish companies. For the reasons I have given, I think the preferable course is the one proposed in the Bill. As I have indicated, the Irish companies now hold the major share of the market. The approach of bringing the foreign companies up to the level of the Irish companies rather than the reverse would perhaps provide unnecessary competition for the Irish companies, or at least give an unnecessary selling point to their competitors.
Mr. Horgan: : With regard to the selling point, of course, it is true that if the foreign companies were brought  up to the level of two-thirds they would have a selling point but they will have that anyway as a result of this Bill. They will be able to say that there is no difference now between the amount of tax relief on premiums with Irish and non-Irish companies. There are selling points either way and perhaps there is not a lot of difference in them.
In relation to the effect on the higher income group the House will take note of what the Minister said, that in 1974 a change was made from the situation where premiums paid were only allowable for standard rate of tax to the situation where they were allowable against the marginal rate of tax. It was quite open to the Minister and the Government to change that situation in the Finance Bill, to restore the pre-1974 position and to improve the position of people on lower incomes in relation to the amount of insurance premiums they can claim against tax and the value of such premiums to them in real terms. The Minister and the Government have not done this in the Bill, so it seems they cannot have it both ways. They cannot say that the effect of the amendment would increase the value of the concession to people in the higher income groups while at the same time a remedy for this situation is in their hands.
I was interested in the Minister's estimate of the cost of this proposal: £50,000 on top of the £750,000 which he said the 1974 concessions cost. I have already suggested that he has a remedy in his hands if he is worried about the 1974 concessions, but the £50,000 is absolute peanuts in terms of the premium income for life assurance policies in this country. If we look at the balance sheets of the Irish Life Company alone we would not notice £50,000. I feel sure that the positive incentive which would be maintained for Irish companies by a decision not to worsen their position would more than produce the kind of extra premium income of a margin which would make that £50,000 look quite irrelevant. In the circumstances it seems to be a small amount to pay with a high probability of recovering it some way along the line.
Mr. P. Barry: : The Minister made two points, one of which was the cost, to which Deputy Horgan referred, and the other the selling advantage it might give to non-Irish companies. As Deputy Horgan said, the cost is ludicrous. In a budget of almost £3,000 million, a sum of £50,000 is a grain of sand. I presume that the original idea in giving the advantage to Irish companies was to help them to build up and get into a strong position so that they could compete with foreign companies. I believe they are in that position now after 25 years, particularly as they have 60 per cent of the market. I am sure, whether it is a 50 per cent deuction or a 66? per cent deduction, that they will be well capable of competing with any outside company.
This deduction was allowed originally to encourage people to take out insurance policies because it is a form of saving. Insurance policies are taken out for different reasons but they are all of benefit to the country indirectly, to the person involved immediately and to his or her relatives and family. Anything which diminishes that encouragement to taking out insurance policies is not good. We should continue to encourage—no matter what band of tax they make the deductions at, the marginal or the standard rate— and be seen to encourage as many people as possible to take out insurance policies. They are good for the companies and are extremely helpful for the country. It is also an encouragement for people to look after themselves. The cost of £50,000 is something we should not even be discussing because it is so small. I am very concerned that we should continue to encourage people to take out insurance policies to look after their future.
Mr. T. J. Fitzpatrick: (Cavan-Monaghan): I support the last point made by Deputy Barry, which is a very important one. People should be encouraged to save. It is well known that insurance policies are a form of saving. I believe they are not as profitable as they were. Perhaps inflation has something to do with this. The insurance policy system of saving is a system of saving which one is very  loath to discontinue after one begins it because of the danger of losing what one has already saved or a portion of it. Deputy Barry's proposal would add another incentive to people to adopt this form of saving.
We all know that people liable for income tax will look around to find a legitimate way of avoiding paying it. It is not unheard of for people to look for ways which are not legitimate. They will certainly look for legitimate ways of reducing the burden of income tax. This is a way by which they can do it through relief on insurance premiums. It is of benefit to the individual who takes out the insurance policy and to the nation because it creates saving and employment. This is a very meritorious amendment and, like some other Deputies who spoke, I am surprised to find that the cost involved is a mere £50,000. I believe that would be £50,000 very well spent and I strongly urge the Minister to reconsider the matter and accept the amendment.
Mr. Colley: : We will deal with it on the other amendment. I suppose it is true that the figure of £50,000 is not an enormous sum in the context of a budget. Deputy Horgan is mistaken when he talks of the accounts of the Irish Life Assurance Company and £50,000 in relation to that. Premiums which would be paid to non-Irish companies are involved here, not premiums paid to the Irish Life Company or any other company. We are talking about the additional tax relief in respect of premiums paid to non-Irish companies. Deputies may not recall that when the change was made in 1974, to which I referred it  arose because surtax was being abolished then. It was necessary to make some change to accommodate this tax allowance within the system of income tax then being introduced which involved the abolition of surtax.
The question of reducing the relief in all cases, Irish and non-Irish companies, through the standard rate of tax is not as straightforward as might appear. It would be considerably complicated and I believe it would be very strenuously opposed by the Irish and the non-Irish companies as something which would operate very much to their detriment. In practice, as I said at the beginning, the choice lies between bringing the Irish companies down to the level of relief at present given to foreign companies or bringing the foreign companies up to the level of relief given to Irish companies.
It would be a mistake to imagine that the proposal in the section will have the effect of reducing life business or, alternatively, that the proposal in the amendment will increase life business. I do not think either proposal would be true because insurance business of this kind is now firmly established and steadily growing. What is really at issue here is the question of whether, as I said, you bring the preference in favour of the Irish companies down or the preference in favour of the foreign countries up and for the reasons I have outlined, I believe the best thing to do is what is proposed in the section. I cannot say with any authority that this would be the choice of the Irish companies but I rather suspect it would be. I am not saying I know that because I do not, but I rather suspect that would be the choice. As far as the foreign companies are concerned, they can certainly have no complaint if they are put on the same level as the Irish companies and so I am not convinced of the merits, on balance, of this amendment as against the proposal in the section.
Mr. Cluskey: : Yes, but the reason for the section, the Minister said, is as a result of an EEC directive. Could the Minister tell us what is the date of that directive? The Minister may not have that information.
Mr. Cluskey: : As far as I know, the directive has been in operation for some considerable time and it would be unnecessary, therefore, to comply fully with the directive at this particular point in time. No doubt the people in the EEC would welcome the Minister complying fully with the directive but I do not believe there is any evidence that the EEC would insist on the directive being complied with fully at this point in time. The Minister states that 60 per cent of premiums are now with Irish companies and describes this as the major share. But 60 per cent is not a major share. It is a definite improvement but it is not major and, if the advantage is left with the Irish companies for some further period, undoubtedly that 60 per cent will improve. Would the Minister not agree it would be possible to bring in the directive on a phased basis and that such a basis would be acceptable to the EEC? We have seen many occasions on which other countries have ignored directives over a long period. I am not suggesting the Minister should do that but I am suggesting that he should approach this with the clear objective of giving as much advantage and benefit as possible to the Irish companies.
Mr. McCreevy: : Since the contemplated change was announced in the budget there has been no downturn in the business Irish companies are getting. In The Irish Times on Saturday, 15 April, it was reported that since the February budget companies up to then had experienced a 25 per cent growth in their premium policies and there had been no change in that. They were still experiencing a 25 per cent growth. The point that this change will make no difference in the amount of business Irish companies  are getting is, therefore, a valid one.
There is an EEC directive giving foreign companies the right to set up here. Directive 3/1/A1 refers to an insurance company registered in the state and managed and controlled therein. If a foreign company set up here and a person had taken out a policy with that company between 1953 and February 1978 and the company is managed and controlled in the State will it then be possible for that person to get a two-thirds relief on that premium? Suppose the foreign company bought out an Irish company or a share in it what would be the position with regard to the two-thirds relief? This directive will come into effect this year or the year after and, if that freedom is given to foreign in surance companies, would the Minister clarify what the position will then be?
Deputy Fitzpatrick made a point about the selling of insurance policies. It is a good thing for people to make provision for the future and put some of their savings into an insurance policy against the rainy day. There is the one-sixth of total income rule affecting the total amount of the premium. I think that one-sixth rule was in existence before the introduction of capital gains tax and it may have had a bearing then because there was a good avoidance measure open at that time.
Mr. McCreevy: : This particular rule applies to all insurance companies and perhaps the Minister would now consider allowing people to pay more by way of premium into insurance. That would have a beneficial effect because it would encourage more people to take out insurance policies.
Mr. T. J. Fitzpatrick: (Cavan-Monaghan): It is, of course, understood that we cannot discriminate in favour of Irish companies as against foreign companies and the new section is designed to do away with the advantage enjoyed by Irish companies at the moment. The Minister seems to think Irish companies would prefer a  levelling down of the premium allowance rather than a levelling up. I find it hard to see how that will benefit the insurance market. I do not mean the company now. I mean the market generally because the effect of what the Minister is doing in the Bill is to make life insurance in general less attractive. There can be no doubt about that. At present a person can shop around and, if he opts for an Irish company, he can enjoy a two-thirds premium relief as against a 50 per cent premium relief if he goes for an English company. The fact is that he can get the relief of two-thirds, and that is used and has been used as long as I can remember by the Irish companies in selling their policies.
If life insurance in general is made less attractive, is it not natural to assume the pool of business will contract and become smaller? If the general pool of life insurance business contracts and becomes smaller, surely there will be less of it for the Irish companies. The thing to do is to encourage life insurance because it has merit in its own right. It is a form of protection for the individual and for the family. It is good for the nation in that it encourages and generates savings. Surely we should not do anything which would make life insurance less attractive than it has been over a good many of years. In my respectful opinion, the thing to do is to make it at least as attractive as it was. If we do what Deputy Barry wants the Minister to do, we will make it even more attractive because there will be more generous relief available over a wider range of companies. That is in the interests of the individual, the family and the nation. I really cannot see the Minister's objection to the amendment.
Mr. M. O'Leary: : The Minister said he felt the proposed procedure in the section would have the approval of the companies concerned. Is he satisfied he is correct about their view on the section? Is he satisfied the Irish companies agree with his method of dealing with the EEC directive?
Mr. Colley: : On the last point, I made it clear I was not speaking with  authority with regard to the views of the Irish companies but that I felt this would be their view. It is inevitable that they would prefer to maintain their differential. By definition they would prefer that. Given that the situation has to be changed I believe that, having weighed up the alternatives, they would favour the one in the section rather than the one in the amendment. I repeat I have not got information from the companies to that effect. It seems to be to be almost self-evident that if one were in the position of the Irish companies and had to choose between competitors being able to say: “We are just as good as the Irish companies so far as the tax relief is concerned” or “We can now offer you a considerably enhanced tax relief”, the advantage would lie with the foreign companies in the second one and, therefore, one would prefer the first. I do not know that with certainty.
Mr. Colley: : No, and that is another reason for assuming what is being done in the Bill would be the lesser of two evils from their point of view. I may not have made it clear in what I said about the cost, that the cost is not an annual cost of £50,000. It is an additional cost each year. In other words, £50,000 the first year, £100,000 the second year, £150,000 and so on in each succeeding year.
So far as the loss of tax relief to the tax payer is concerned, a person on standard rate tax on an annual premium of £120 would have £7 a year less in income tax relief under the section. It seems to me that, as compared with the accumulating figure for the Exchequer the position so far as the taxpayer is concerned is not unduly advantageous. The suggestion that the section would operate to reduce life insurance business, which we all agree is a desirable business to encourage, is not well-founded. The point made by Deputy McCreevy with  regard to Irish Life supports that contention.
The position with regard to the EEC is that EEC competition policy requires that there will be no discrimination on the basis of nationality. It is true, as Deputy McCreevy said, that the EEC directive will allow foreign companies to set up in Ireland. As part of this arrangement, the position between foreign and home companies has to be harmonised. We may take it that something has to be done and the net issue is still, as I outlined at the beginning, which is better: to level up or level down? I am still convinced it is better to take the levelling down course rather than levelling up course not only from the point of view of the Exchequer but, I suspect, from the point of view of the Irish companies.
Mr. P. Barry: : Is it not true that an insurance agent who sold a policy to somebody last year will have to tell a customer who comes back and says he wants to take out an exactly similar policy this year that the net cost will be 16 per cent greater than it was last year? Is that not exactly what section 1 of the Finance Bill does?
Mr. Colley: : Look at it the other way. If we accepted the amendment, the agent on behalf of the non-Irish company would be able to put a very positive case for the sale of his goods in regard to the increased benefit which could be obtained by taking out a policy with his company.
Strictly speaking, I suppose, since we are trying to achieve harmonisation between the two we should not distinguish, but I do not think it is any secret that by and large Deputies would wish to ensure that Irish companies were not damaged as a result of what was happening. For the reasons I have mentioned I believe this is the course of least damage to the Irish companies—the one outlined in the section rather than the one in the amendment.
Mr. Cluskey: : The Minister did not deal with the question I asked. As this directive would appear not to be a very recent one, would it be possible to approach this harmonisation on a gradual basis over a period of time and still allow the Irish companies for some future period to have an advantage which, we hope, would increase their share from 60 per cent which is not a major share?
Mr. Colley: : There has been a certain phasing of harmonisation if I may phrase it in that way—and I think it is a fair way to describe it—under the  previous Government. The Irish companies accept that at this point the discrimination must be got rid of. The question is which is the better way to do it. I have not endeavoured to complicate the discussion by going into a number of the complications involved. It is accepted within the life assurance business that the point has been reached where we have to equalise the tax treatment, and the question is which is the better way to do it?
Mr. Cluskey: : I do not know whether the Minister and the Government have made any approach along these lines, but if it is possible to have acceptance by the EEC Commission to have the phasing extended over a further period this would be far more acceptable to the Irish companies. We all accept that there must be harmonisation and that we must comply with directives, but there is a certain flexibility which is allowable and which is acceptable to the EEC. From listening to the Minister I get the impression that this is an avenue which has not been explored at all and that the Government went for harmonisation in one fell swoop. It may be possible to have this brought in over a period of time and this would leave the Irish companies in a favourable position for a further period, would allow them a chance to increase on the 60 per cent of the business which they now have and would do so without antagonising the Commission or having any tensions between the Commission and the Irish Government.
Mr. Colley: : The matter is complicated. I do not want to complicate this discussion any further. What I intended to convey was that there are factors other than the EEC involved in this as a result of which I believe that it is accepted in the life assurance industry that this discrimination must be got rid of now and that the question is which way to do it.
Mr. Cluskey: : It is very difficult for the House to be placed in the position  where the Minister is trying to justify a section of the Bill on the basis of information which he and the insurance companies apparently have but which he is not prepared to share with the House. If there are compelling factors other than the EEC, which is the only one the Minister mentioned, surely the Minister should indicate what they are.
Mr. Colley: : I do not feel at liberty to go into that area, but the Deputy earlier put his finger on something that may be significant when he asked if any representations had been received from the Irish companies about this and I told him there had not been. The House will accept that the absence of such representations will support what I am saying, that it is accepted that harmonisation must be achieved. It seems to be accepted by the Irish companies that of the two courses open the one in the Bill is the more acceptable to them.
Mr. Cluskey: : ——either acceptable or welcomed by insurance companies, Irish or otherwise, does not necessarily mean that it is in the national interest. It does not necessarily mean that it is in the best interests of the people who take out premiums with these companies. That the Irish companies would appear to find it acceptable for some reason other than the one stated by the Minister is not very reassuring. If they have a valid and legitimate reason why they find it acceptable and that it should be done now, we are entitled to know what it is. Obviously the Minister knows what it is.
Mr. Horgan: : To put it mildly, I do not think it would be a good selling point for it to get abroad that a  policy with an Irish company is now going to cost five-and-a-half per cent more than the same policy for a person in the same circumstances would have cost last year, if this section of the Bill is not amended. There are two separate but related points here. There is the psychological point about the sales impact and the fiscal point about the amount of money involved. The Minister clarified the £50,000 reference by suggesting that this would be a rolling sum, that it would be £50,000 a year. On what total premium outflow assumption is the initial £50,000 costs in tax relief terms based? In relation to the rolling nature of this £50,000, if that is going to increase by £50,000 a year, is this based on another assumption about the trend in the market? Does it assume that as a result of this amendment being accepted the Irish share of the market would decrease, remain static or grow at a rate slower than the rate at which it might otherwise be expected to grow? My impression is that the Irish share of the market has been increasing over the years, and I would be glad if the Minister could confirm this. If its growth is strong it seems that there is every reason to hope that it would be able to fight off the challenge posed by the situation that would be created by the amendment.
The Minister has said that he has not received any representations from the Irish companies. To put it mildly, I am surprised, not that he has not received representations, but that he has not made it his business to find out what the Irish companies thought. The Minister himself is a major shareholder in one of the major Irish companies, and one would have thought that with at least one toe in the insurance market he would be in a very good position to take authoritative soundings rather than the nonauthoritative ones with which he has come into the House today.
On the psychological point, rather than having the situation in the amendment, which the Minister has argued might confer a psychological advantage on Irish companies or the situation in the section which confers a psychological advantage on non-Irish  companies, would the Minister consider splitting the difference and establishing a new rate applicable to all premiums of say, three-fifths, so that neither Irish nor non-Irish companies would be able to claim that their position had been either worsened or bettered? There would be simply a new standard rate for relief premiums of three-fifths. It would not be the old non-Irish rate or the old Irish rate: it would be a new rate.
Mr. M. O'Leary: : Regarding submissions from the insurance world, the Minister in his final remarks said that no representations have been received but was not the Irish section of the market informed by the Department of the Minister's intention? Consequently, their lack of representation is due to the impression conveyed to them that the Minister was going ahead in respect of the dictates of what he considered to be the imperatives of the EEC directive. I have been informed to that effect by people in the Irish insurance part of the market.
Mr. Enright: : Regarding the EEC directive, must the changes be implemented immediately or could an effort have been made by the Minister to hold over the proposals for a further period? On 1 February the Minister told the House that the Irish assurance companies have achieved more than 60 per cent of premium income. Would they have achieved this percentage of the Irish market if the benefits that are now being withdrawn had never existed? The Minister mentioned that up to 1953 the proportion of the life assurance business held by Irish companies was only 50 per cent and that in an effort to develop the business the income tax concession was increased from a half to two-thirds. Having regard to the proposed changes is it the Minister's opinion that we will be able to retain our share of the  market or is there a danger of our losing it?
The Minister has told us, too, that the non-Irish companies have invested more than 90 per cent of their Irish liability in our economy. My third question is whether a date beyond that proposed for the change could not have been decided on. I ask this because I am of the opinion that if a date such as 31 December this year had been specified people considering investing in life assurance policies would have opted for an Irish company, first, from the national point of view and, secondly, from the financial point of view. Certainly, I would be influenced in such a situation by those factors.
Mr. T. J. Fitzpatrick: (Cavan-Monaghan): Up to a short time ago this debate proceeded on the basis that the amendment inserted by the Minister in the Finance Bill was simply and solely for the purpose of complying with an EEC directive. It was on that basis that the argument developed but the Minister has stated now that apart from that consideration it was the conviction of the life assurance industry that the differential would have to be abolished. From the Irish point of view it is difficult to understand the necessity for this because the differential has helped build up the Irish part of the market. The Minister should tell us what is the other reason. Has he had discussions with the Irish life assurance industry in that regard? He has told us that he has not received representations from the industry since the Bill was published but did he have discussions with them before the Bill was drafted? Can he tell us also whether the section was included in the Bill as a result of any such discussions or at the request of the life assurance companies? The Minister should let us in on the secret. It is easy to understand the argument for abolishing the differential in order to comply with an EEC directive which lays down that we may not discriminate against other EEC companies and in favour of Irish national companies out before the debate goes further the Minister should give us whatever information he has on the other point.
Mr. Colley: : Without wishing in any way to be discourteous to Deputy Enright, I dealt earlier in the debate with the first two points he raised. The first point was pursued by Deputy Cluskey. Regarding the third point raised by Deputy Enright I do not think it would be acceptable that we should provide a method whereby people could avail themselves, in the way suggested by the Deputy, of forthcoming changes in income tax arrangements so that they would have the remainder of the year in which to take out policies with Irish companies knowing that thereafter the benefits that would accrue to them would be discontinued. That would not be an acceptable form of anticipation.
Regarding the point raised by Deputy Horgan on the estimate of an additional £50,000 each year, I do not have here the basis on which the estimate was made but with due respect I do not consider the point to be relevant. We may accept that the estimate is the best that can be made but it is not relevant to the net issue involved.
I have dealt, too, with the question of EEC requirements. I have outlined the requirements in regard to non-discrimination and to the right of establishment but I have indicated also that there are other factors involved, factors which have not arisen overnight. Some Deputies who have been members of a previous Government either may or may not be aware of what I am talking of but what is involved goes back quite a few years. The fact that I say that it is generally accepted in the insurance industry that the discrimination must be discontinued is bonne out by the lack of representations. When I was in Opposition I received a considerable number of representations from the insurance industry regarding proposals being brought forward in Finance and other Bills but from what has been said it appears that on this occasion the Opposition have not received representations either, all of which goes to prove that it is accepted that the discrimination must be discontinued. The net issue is the question of which is the best way to do this. None of what has been said so far would  lead me to the conclusion that what is proposed in the amendment would be a better way of dealing with it as against what is proposed in the section.
Mr. P. Barry: : Nobody on this side of the House disputes that the discrimination must go but the net issue is the level at which the discrimination should cease to operate. Should it be a level of two-thirds or a level of a half? I do not know what the Minister means when he says that some Deputies who were members of a Government should understand what is involved.
Mr. Horgan: : I want to ask the Minister a simple question in relation to the final point he made. Which is the best way to do it? Which consideration looms largest in his mind, is it the cost consideration or the psychological consideration as a reason for doing it his way?
Mr. Bruton: : It makes it relatively more attractive to invest in non-Irish companies by comparison with the previous situation by making it less attractive to invest in Irish companies. The point I want the Minister to elaborate on is the extent to which these non-Irish companies reinvest the proceeds of their premium income in the Irish economy. Is there a requirement on them, if they receive such premium income from Ireland, to invest it in Ireland? My understanding is there is an EEC proposal—I do not know if it is more than a proposal— that income of this sort derived within an individual member state should be reinvested within that state. If there was to be any removal of discrimination one would wish to ensure that there was a simultaneous requirement on such non-Irish companies who were now being put on an equal footing so far as receipts of income from the Irish economy was concerned and that they would be required to reinvest that money in the Irish economy.
In his budget speech the Minister said that investment in the Irish economy by non-Irish companies now exceeds 90 per cent of their Irish liability. That is not 100 per cent and I think we should aim at 100 per cent. Is there any requirement either in train or in existence in regard to that matter? If investment in the Irish economy by non-Irish companies now exceeds 90 per cent of their Irish liability, what is the equivalent percentage for the Irish companies? Are they investing 90 per cent of their premium income in the Irish economy? If one were to find that non-Irish companies were investing proportionately more of their Irish income in the Irish economy, it would be almost a case for discrimination in  their favour. Before we can adjudicate on the matter we should know where the money is going. It is not enough to know the nationality of the company, it is what they do with their money that is important. Perhaps the Minister could clarify that point.
Mr. T. J. Fitzpatrick: (Cavan-Monaghan): I am sorry if this debate has gone on longer than the Chair thinks it should, but the person to blame for that is the Minister. He introduced a new element into this debate in its latter stages. It is incumbent on the Minister, who is amending the law by reducing the allowance in respect of Irish premiums, to tell the House why he is doing it and to give all the arguments. He has not done that. He proceeded on the basis that it was to comply with an EEC directive. We understand that. Then he went on to say that apart altogether from that EEC directive, and if it were never there, the life insurance industry felt that this discrimination should be abolished. Either there is some substance in that, and the Minister should tell us what it is, or he is imagining things.
I must insist that the Minister tells us what this other argument is which apparently is in his mind, or in somebody's mind, and which is even more powerful than the EEC directive argument. In my view he has not been coming clean with the House. He has not been frank with the House. It is impossible to come to a clear decision on the amendment and the section without having the information which the Minister obviously has and will not give us.
Mr. Enright: : I would like to congratulate the Minister on his choice of phrase. His statement about discriminating against foreign companies is beautifully put. Instead of discriminating against foreign companies this section is taking away an incentive to invest in Irish insurance companies. If one looks at this matter from the point of view of an incentive rather than discrimination one will see the case in a clearer light. The Minister's budget speech was interesting, I would like him to clarify the situation in regard  to total investment by non-Irish companies in the Irish economy. I would like him to tell us approximately and in round figures how much they are investing in the Irish economy. If we have this figure the House will know how much strength and muscle these companies have and what benefit they are to the Irish economy.
I asked why we could not leave this matter over until the end of December this year. The Minister said it would be bad budgetary strategy and so on. I want to know why not. In my view, if we are to encourage people to invest in Irish insurance companies which employ Irish people and reinvest in the Irish economy, an incentive of that nature should have been encouraged.
Mr. Colley: : I am not going to contribute to prolonging this debate unnecessarily by going back over ground that we have dealt with. Deputy Bruton raised a new point. In response I want to tell him that both Irish and non-Irish companies invest the equivalent of over 90 per cent of their Irish liabilities in this country. There is an informal agreement in that regard; there is no statutory obligation.
Mr. P. Barry: : This is a complex Bill and I understand your anxiety, and the Minister's to get the Bill through as quickly as possible, but just for the sake of speed we will not allow points which we think to be relevant——
Mr. P. Barry: : Some of the repetition could be avoided, but this situation has arisen: Deputy Fitzpatrick on two occasions made the same point and Deputy Enright made a point, but though the Minister answered Deputy Enright's point he did not answer Deputy Fitzpatrick.
Mr. T. J. Fitzpatrick: (Cavan-Monaghan): For a long time the debate proceeded on the basis that we were resolving an EEC problem. Then the Minister came in and said that apart from that problem there were other reasons why the insurance industry want this differential removed. I invited him to tell us what those reasons are and, beyond making veiled references to this having gone on for a long time, he refused to do so. I am now challenging the Minister——
Mr. Colley: : I have already made it clear that I do not intend to do so. I have said already that it is not in the national interest that this arrangement should be made public, and I do not propose to go into detail.
Mr. Bruton: : Is the Minister telling us that something which is widely known among everybody with even a passing interest in the insurance business should not be disclosed in this House during the enactment of legislation which affects the Irish insurance industry? Where does this put the position of Parliament?
Mr. Colley: : When the Deputy talks about “friends” I presume he is trying to imply something. The Deputy was in the last Government and if he did not know what this was about, his colleagues did and regarded it as being in the national interest. I do not think it would be in the national interest that I should go into detail about it. The Deputy can accept that or not and he can make all the imputations he likes.
An Leas-Cheann Comhairle: : About ministerial friends and about something being done in respect of ministerial friends. The Chair regards that as an allegation. I said allegations should not be made, and Deputy Barry would agree fully with me.
Mr. T. J. Fitzpatrick: (Cavan-Monaghan): Having sat through the debate I am satisfied that if the Minister had the will and wanted to do it, he could get over the EEC difficulty, and that if he could not get over it totally he could accept the proposal gradually. In view of the importance attached to the matter I do not think I can be blamed if I say I am convinced that the real object is not to get over the EEC difficulty but so that State policy holders of Irish insurance companies will be deprived of this income tax benefit for some other reason and that the Minister will not give us that other reason. That is clear to me and I am suspicious of the whole thing. It is not good enough for the Minister to say that he will not tell us. If this was going on during the period of the last Government and is going on now, the proposal still has the effect of penalising policy holders in Irish companies. This is the net result of the whole thing and I suggest it could be avoided, notwithstanding the EEC directive, if the Minister had the will. He could have it phased out in view of the state of the industry here. This is not the proper way to conduct the business of the House. It is not the way to treat the House or to make a case for putting this into legislation.
Mr. Bruton: : I wish to make two points. The Minister has answered me in relation to the investment of profits  from premiums in the Irish economy to the extent of 90 per cent and he said it is based on an informal agreement and that in return for that agreement he is giving away a statutory benefit available to Irish companies. That seems to me to be a bad exchange. The Minister did not answer me on the question of whether there is an EEC requirement to do this or whether there is one in train.
Mr. Bruton: : It is obviously not the reason although I thought there might be an EEC requirement along those lines. My recollection, having been involved in the insurance industry in my official capacity for two years, is that there is such a requirement coming. I am not sure whether it is in existence now or whether it is only a proposal. I have no recollection from my contact with the insurance industry of the reasons the Minister is putting forward for this proposal. As Parliamentary Secretary I was involved with insurance for two years, along with a number of other matters, and I do not know what the Minister is getting at. It is possible that this may have eluded me. I make those statements in good faith and I am surprised that the Minister is saying that I, and people like me, should know.
Mr. Bruton: : I am the only Member present who had any official responsibility in relation to insurance and I presume the Minister was referring to me. The fact is that the Minister suggested that anybody who had any interest in the insurance industry would know what he was getting at and there was no need for him to explain it. That certainly does not  apply to me and in that case it does not apply to any other Member. I am surprised that the Minister is using this argument because, as I said in an earlier intervention, it is treating the House badly and it indicates a sort of ministerial rather than a parliamentary form of Government coming into effect. One is being asked to accept things on faith from the Minister rather than on the basis of facts and arguments adduced in open debate. That is bad and the Chair, as the guardian of parliamentary privilege, should protect Members of the Opposition from the use of that sort of argument. However, that is a matter for the Chair.
Mr. Bruton: : If the Minister is using an argument of that sort, namely refusing to give information although he says that other people outside the House know it, that to my mind is detrimental to parliamentary privilege. However, I do not wish to pursue that. The Minister has answered my question fully in relation to the investment of the proceeds of the premia by these life companies when he stated that there is an informal agreement and that there is no EEC requirement. He stated that for that he is prepared to trade this statutory protection of Irish companies. I should like to know if there is any requirement in relation to what is known as establishment in the insurance world. Is there any requirement that these non-Irish companies who are now going to be put on a par with the Irish companies must have what is known as an establishment in Ireland? Must they have an established office staff with people who can make all the major decisions within this country? My recollection is that they must. My recollection is that a life assurance directive was adopted which requires them to do this. I should like to know exactly his requirements on the non-Irish companies which will now be put  on a par in relation to the number of staff they must employ here.
I should like to make a point in relation to the argument the Minister adduced that there was an EEC requirement. It seems to me that if there was an EEC requirement it would be for non-discrimination as between member states and not as to non-discrimination between Irish companies and companies from anywhere else in the world. If the Minister wanted to meet an EEC requirement on this matter he would have given the relief then being given to Irish companies to all companies from member states thus leaving American, African, or companies from non-Community states in the original position that EEC companies were in. The fact that the Minister has chosen not to do it that way but to put, by removing a relief from the Irish companies, all-comers on the same basis as Irish companies in the Irish economy suggests that this is not an EEC requirement. It suggests that the EEC factor is minimal. If it was an EEC factor the Minister would have dealt with this matter in a different way. The way the Minister is dealing with this bears out clearly that the Minister's initial argument about the EEC was not a real argument at all. In fact, it was probably a sham. The real argument and the real matter that we have been discussing this morning is something which the Minister is not prepared to disclose to the House.
We could go on repeating that point for another hour but it is manifestly clear that a Minister who comes late into the House and is not prepared to meet arguments from this side with rational arguments and facts is in a very weak position. The point has been clearly made and I hope people outside will take note.
Mr. Enright: : In the course of prepared scripts delivered in the House on 1 February and on 9 May the Minister did not make any reference to the reasons why he was changing the insurance premiums. Why did the Minister not put that on record then? Has he any comment?
Mr. T. J. Fitzpatrick: (Cavan-Monaghan): I resent the statement made by the Minister to the effect that he cannot help it if the Opposition do not know what they are talking about. We asked for information and we are entitled to it. The Minister should come clean to the House on the question of insurance. He is being less than fair to himself and his party by making shielded statements and not explaining them.
With reference to insurance, the House is entitled to know clearly and specifically the Minister's reasons for asking the House to vote an amendment in the law. I have no doubt that that is correct. I have no doubt that the Minister's performance this morning is not in keeping with the best traditions of this House and with recognised parliamentary procedures. He comes in here and tells us that it is for EEC purposes but that there are other more important arguments in favour of doing what he is asking us to do. However, he is not going to tell us and he is going to use his 84 majority to steamroll it through the House.
Mr. Quinn: : Arising out of the Minister's last reply, may I ask him if he, his Government and his officials expect insurance companies who are not in the life assurance business here at present to come in now because of the removal of the discrimination in favour of Irish companies?
Mr. Quinn: : In regard to the informal agreement to which the Minister referred, does that agreement provide for the Minister to reserve the right to review the statutory concession given to such assurance companies if investment drops below a certain level?
Mr. Quinn: : Earlier the Minister made some point about the future being now and now being the future, which I could not follow. The argument presented, as I understand it, was that because life assurance companies which are owned by non-nationals have such a high level of investment —and I would agree that 90 per cent reinvestment of their premiums is a high level—the discrimination between Irish and non-Irish companies should be removed. I am not asking the Minister to reveal the details of the informal agreement, but in the event of a 90 per cent drop has there been any provision made in the informal agreement to take account of that happening in the future?
Mr. Quinn: : I would not have to ask any more questions if the answers were more givish. In the event of the investment dropping, has any indication been given in the informal agreement  that the Minister has reserved the right to take adequate action?
de Valera, Síle.
Fitzpatrick, Tom (Dublin South-Central.)
Haughey, Charles J.
Lalor, Patrick J.
Murphy, Ciarán P.
O Hanlon, Rory.
Wilson, John P.
Woods, Michael J.
Cosgrave, Michael J.
D'Arcy, Michael J.
Donnellan, John F.
Enright, Thomas W.
Fitzpatrick, Tom (Cavan-Monaghan).
|Flanagan, Oliver J.
Murphy, Michael P.
Ryan, John J.
Question declared carried.
Amendment declared lost.
Question proposed: “That section 1, as amended, stand part of the Bill”.
Mr. Horgan: : I wondered whether the Minister was interested in, or had had representations made to him, in relation to the existing total limit of premiums that may be allowable against income tax in respect of various insurance policies. I am sure the House is aware that the present limit of £1,000 in terms of premium income was set in 1974. Since then, as the Minister lost no opportunity to remind us when he was on this side of the House, inflation has been fairly severe in some years. It is a least arguable that that limit needs looking at again in the light of what has happened since. There is a particular aspect of it I mentioned on Second Stage to which, for obvious reasons, the Minister did not have time to reply in detail at that point. Perhaps he would reply to it now in the context of Committee Stage, that is, that some people use life assurance policies as a form of collateral security when buying houses and that the premiums on these can be extremely heavy and come close to using up half, three-quarters or more of their £1,000 allocation.
Would the Minister not seriously consider at this point extending the relief, perhaps by a modest amount, sssin respect of total premiums which come to more than £1,000.
Mr. Colley: : The limitation to which the Deputy refers of £1,000 was introduced in 1974 because, as I indicated earlier, at that time a change was made whereby relief was given at the marginal rate which, up to that, had been at the standard rate. The reason for the limitation given by my predecessor was that because the relief was now at the marginal rate it was necessary to impose this limitation to avoid abuse of the relief then being given, and if there were no such limitation that there would be then over-generous allowances to people who were particularly well off. I cannot object to that principle and do not object to it. As regards the amount involved, no case has been made to me to show that it operates to an unduly restrictive extent and so I have no proposals at present to increase it.
Mr. Horgan: : I would accept that the object of the limitation in 1974 was a just and fair object which was that of reducing the opportunities for tax avoidance. How can it be that something which was just and fair and equitable in 1974 continues to be just, fair and equitable four years later? Objectively, circumstances have changed and while we on this side of the House would insist on a limit for the very reasons that the original limit was introduced in 1974, it seems to be  altogether reasonable that some kind of greater relief should now be given in respect of what has happened to the cost of living and money incomes generally since then.
Mr. M. O'Leary: : Would the Minister consider any reply to the point put by Deputy Horgan? Is he considering any review of that situation?
Mr. Colley: : I have indicated that I do not have any proposals at the moment but, of course, that does not preclude any change in the future.
Mr. Cluskey: : When the previous amendment was being discussed the Minister indicated that some informal agreement had been arrived at between himself and the insurance companies.
Mr. Colley: : I did not say between me and the insurance companies.
Mr. Cluskey: : Between whom and the insurance companies?
Mr. Colley: : The Government of the day.
Mr. Cluskey: : The Government of the day, of which the Minister is the Tánaiste.
Mr. Colley: : I do not mean the Government of this day.
Mr. Cluskey: : This is the day we are discussing.
An Leas-Cheann Comhairle: : We have got rid of the amendment and we discussed that for over an hour on the amendment.
Mr. Cluskey: : With all respect, I am now discussing the section and I am quite within my entitlement to discuss any aspect of the section.
An Leas-Cheann Comhairle: : The Deputy is entitled to discuss any matter relevant to the section but we cannot go back to discuss the amendment all over again.
Mr. Cluskey: : There seems to be some confusion. The whole purpose of discussing amendments and subsequently putting the section is to allow Deputies to make observations  on the section or on any part of the section.
An Leas-Cheann Comhairle: : I have already said that the Deputy is entitled to raise any matter which is relevant to the section.
Mr. Cluskey: : That is all I am doing, so I cannot understand why you are objecting.
An Leas-Cheann Comhairle: : I am not objecting. I said that we were getting back to the amendment, which was discussed for over an hour.
Mr. Cluskey: : I am discussing the section. The Minister stated that an informal agreement had been reached and that the adjustment in the tax rate was not due to the EEC directive but due to the agreement which had been arrived at.
Mr. Colley: : I did not say that. The reference to the informal agreement was in response to a question from Deputy Bruton, speaking from recollection.
Mr. Cluskey: : The informal agreement with the insurance companies dictated the Minister's attitude towards this section of the Bill.
Mr. Colley: : I did not say that.
Mr. Cluskey: : The Minister said when I was in the House that this question, which he described as being in the national interest, was not a result of the EEC directive but was related to an informal agreement with the insurance companies. That was the real purpose of his approach to section 1. By virtue of the fact that the Minister is a member of Fianna Fáil and I and my colleagues are members of the Labour Party, it could be safely assumed that we would not necessarily agree as to what is in the national interest.
Mr. Colley: : That is possible.
Mr. Cluskey: : Not possible but definite. If legislation is being brought before this House and we are being asked to consider it and express our views on it and possibly to vote on it subsequently, surely the House is  entitled to know the nature of the agreement that exists between the Government and the insurance companies. It has a direct bearing, according to the Minister's statement, on his approach in section 1 and it is impossible for Members on this side of the House and the public in general to evaluate what precisely the agreement is and how it could be in the national interest. I understand it has been suggested that there has been a threat by some of the insurance companies to withdraw their investment from Ireland unless——
Mr. Colley: : Who suggested this?
Mr. Cluskey: : That suggestion has been made.
Mr. Colley: : Outside the House?
Mr. Cluskey: : Yes, outside the House, and that it is as a result of this pressure by the insurance companies that the Minister is taking this approach. If that is the case, surely the House and general public are entitled to know that this is the reason why this approach is being taken by the Minister. This raises a far more fundamental question than what is covered in this section. It raises the question of whether companies operating in this country are successful in applying pressures to the Government and dictating the approach which the Government will take towards legislation which is placed before this House. It is extremely important that the Minister should clear up this matter.
Mr. Colley: : Despite what Deputy Cluskey says, the fact is that I did not say that my attitude to this section was dictated by an agreement, informal or otherwise. In response to a question —I think by Deputy Bruton—I indicated that the informal agreement related to the amount of investment in the Irish economy by non-Irish companies. Deputy Cluskey says that there has been some threat by a non-Irish company to withdraw their investments. I am unaware of any such threat.
Mr. Cluskey: : The suggestion has  been made and what I am asking the Minister to do now is to indicate clearly and unequivocally to the House that that is not part of the informal agreement that exists between the Government and the insurance companies.
Mr. Colley: : I am totally unaware of any such suggestion but I would agree fully with Deputy Cluskey that if there were any such suggestion it would be a matter of the gravest import for the people of this country and I now invite Deputy Cluskey to tell the House what details he has of any suggestion, of which I am totally unaware.
Mr. Cluskey: : The Minister has referred to an informal agreement between the insurance companies and the Government. Earlier when discussing the amendment I asked the Minister the date of the EEC directive which was not available at the time, and I asked him if it could be phased. In reply to those suggestions by me when we were discussing the amendment the Minister clearly said that there were factors other than the EEC directive.
He referred to an informal agreement between the insurance companies and the Government. He refused to disclose the precise nature of that agreement and covered the whole thing in the general terms that he considered it to be in the national interest. I do not think one would expect that on all issues I would agree with the Minister's interpretation of the national interest and in a democracy where you have this difference about what is in the national interest the only people who can ultimately decide and who are ultimately entitled to decide are the general public. Surely the House and the public are entitled to make that decision on the basis of all the facts. All I am asking the Minister to do is to inform the House, and the public through the House, of the precise nature of the informal agreement which dictated the approach the Minister is making on this matter in section 1.
Mr. Colley: : The House will have noted that Deputy Cluskey, having said that there was a suggestion outside  the House of a threat of withdrawal of investment in this country by non-Irish companies, a matter which would be of the gravest importance—he said that and I agree with him—I invited him to tell us something about this suggestion of what I am totally unaware. He did not tell us anything. I now invite him again to tell us of this terribly important matter to which he has adverted. Would Deputy Cluskey say if he knows anything of any such suggestion? If so, what does he know? Or, is he making this up out of whole cloth?
Mr. Cluskey: : No.
Mr. Colley: : If he knows, he should tell us.
Mr. Cluskey: : I am extremely glad that the Minister recognises the seriousness——
Mr. Colley: : It would be extremely serious.
Mr. Cluskey: : ——of this fundamental issue. It is so serious that the Minister, who so obviously recognises the fundamental issue involved, will undoubtedly now tell the House the precise terms of the agreement reached between the insurance companies and the Government. We are being asked to vote for or against a measure in the Finance Bill which only this morning the Minister informed the House is not as a result of the EEC directive but as a result of an agreement which has been reached between the Government and the insurance companies.
Mr. Colley: : Of course I have not said that.
Mr. Cluskey: : The Minister has. If that is the case, as the Minister has said it is, surely we can only make a judgment in the light of all the facts. The facts are contained in the terms of the agreement about which apparently we are not going to be informed. Surely that is a fundamental issue in itself.
Mr. Colley: : I have already dealt at considerable length in the discussion on the amendment with the whole question to which Deputy Cluskey is  now referring and I do not propose to go over it again. The section has been published for some time; people interested have been aware of it. I think we have agreed in the House on all sides; there have been no representations about it. But something new has been brought up this morning that was not in the Bill or in anything else, a matter of extreme importance and that is: the Leader of the Labour Party has told the House that there has been a suggestion outside the House of a threat to withdraw investment in this country by non-Irish insurance companies. I have twice invited the Deputy to give the House information about this suggestion of which I am totally unaware and twice he has refused to do so. Finally, I shall give him one further opportunity to do so, so that everybody concerned may draw his own conclusions.
Mr. P. Barry: : A Cheann Comhairle——
Mr. Colley: : Allow Deputy Cluskey to get on his feet.
Mr. P. Barry: : Before he does so, I should like to point out that what is sauce for the Cluskey goose is evidently not sauce for the Colley gander. The Minister says that Deputy Cluskey has twice been invited to enlarge on what he said but the Minister was invited much more often than twice, perhaps 22 times——
Mr. Colley: : And I said I would do so and why. Now, will Deputy Cluskey——
An Leas-Cheann Comhairle: : I have said to Deputy Cluskey that this is complete repetition. For the best part of an hour we discussed on the amendment this question of an informal agreement and we cannot discuss it all over again.
Mr. P. Barry: : I think what Deputy Cluskey——
Mr. Horgan: : We raised it only once——
An Leas-Cheann Comhairle: : We discussed it, Deputy Horgan, certainly while I was in the chair for half an hour.
Mr. Cluskey: : This is an extremely important Bill and there is no way in which we could accept unjustified restrictions on our responsibilities.
An Leas-Cheann Comhairle: : I want to make it clear that the Chair will not curtail the debate in any way but the Chair has a responsibility to see that there is no repetition.
Mr. Horgan: : It seems that certain controversial things have emerged from this discussion. The first is that the EEC directive in relation to this, if it is relevant at all is only relevant in part. There also seems to be an acceptance that an informal agreement arrived at between the Government and the insurance companies is also relevant in part to this section. The Minister has rejected the charge that it dictated his attitude to the section. I am prepared to accept that rebuttal but if it is relevant to the section it is very difficult for us to know how relevant it is unless we know what the agreement contains. The Government have not been so slow to publish details of other agreements. The Minister as far as I am aware, specifically mentioned this agreement in the context of remarks about the investment patterns of companies, non-Irish insurance companies operating in the insurance market in this country.
Mr. Colley: : That is correct.
Mr. Horgan: : We have an agreement between the Government and the insurance companies and it is in the general context of the investment pattern of these insurance companies. It stands to reason that even though we cannot have sight of this agreement or know what it is an agreement involves a quid pro quo and if the insurance companies concerned made some concession or gave some undertaking to the Government the Government and perhaps their successors are involved in some undertakings or concessions to the insurance companies. In itself, that is not necessarily a bad thing and in certain circumstances might even be in the national interest. But what we are talking about here is a trade-off between an informal, unenforceable agreement on the one hand  and a statutory provision of the Finance Bill on the other. That is not equality of bargaining. If there is any good reason that the Minister can tell us as to why this informal agreement which is relevant to the concession being made here should not be incorporated in domestic legislation so as to provide an adequate offset to the benefits which are being conferred on the non-Irish companies here in regard to improving their competitiveness vis-à-vis the Irish companies, he should tell the House.
Mr. Bruton: : I should like to ask the Minister three questions. First, will he state definitely that there is no connection between the provisions of this section and the informal agreement or negotiations entered into under the informal agreement? Did the Minister receive any representations from non-Irish companies for which provision is being made in this section and if so will the Minister state the content of these representations? Did the representations contain any indication as to the contingencies that would flow from the failure of the Government to accede to the representations from the non-Irish companies if such representations were made? Do provisions of this sort in relation to tax relief exist in any other countries with which Irish Life companies are likely to do business? It may well be that in the future the Irish insurance industry will become a major exporter of invisible exports and if it does it is important that it be operated on the same basis in foreign territories as companies based in foreign territories are operating here. Are there any member states of the EEC or any other countries with which Irish Life companies might do business on an export basis, which operate a discriminatory provision in relation to their tax in favour of policies sold by their nationals within their territory? If so, has the Minister insisted that as a prelude to our removing the discrimination with which we favour our companies, other countries immediately remove the discrimination with which they favour theirs. In answering that question I would ask the Minister not to confine himself to the EEC because  the European Economic Community might be prepared to remove any discrimination in favour of their national insurance companies in the tax code. This section removes the discrimination in favour of Irish companies as against all-comers so it is important that any quid pro quo we might get in terms of the statutory provision in other countries in relation to the removal of discrimination in favour of their nationals be not confined to the other eight members of the EEC.
Will the Minister state that there is no connection between the provisions in this section and the informal agreement in relation to investment in the Irish economy or any arrangement or agreement entered into under the informal agreement? Has the Minister received any representations from non-Irish companies in relation to the provisions of this Bill and if so what were these representations and were any contingencies indicated in them as to the consequences that might flow from the failure of the Minister to accede to them? Can the Minister say if the provisions that have existed in Ireland up to the enactment of this section exist in any other states with which Irish life companies might do export business? If they exist the Minister should insist that they be removed at the same time as ours are being removed so that Irish companies can operate on the same basis as other companies.
Mr. Colley: : The answer to Deputy Bruton's third question is that this information is not available and it is not of significance at the moment. If Irish companies develop their business abroad to any appreciable extent and any discrimination of this kind arises whereby reciprocal arrangements will be needed, the matter can be dealt with then. In relation to the Deputy's second question. I have received no such representations, and in relation to his first question I have already dealt with the informal agreement in so far as I am in a position to do so and I do not propose to go any further into that except to draw the attention of the House to two things that have already been adverted to in the course of the debate a number of times. The  informal agreement relates to the amount of investment in the Irish economy by non-Irish companies and the level of that investment is now approximately the same as that of the Irish companies.
Mr. Horgan: : Is the Minister saying that this section is the visible and statutory part of an arrangement of which the other part is non-visible, non-statutory and non-enforceable?
Mr. Colley: : I have not said that.
Mr. Horgan: : Is the Minister saying that there is no relationship between this change in the fiscal situation and the informal agreement? Is this section merely like the visible part of the iceberg with the other nine-tenths of it under the sea?
Mr. Colley: : I have not said either of those things. What I said in that regard is that anything I have to say and can say I have already said and I cannot add to it.
Mr. Horgan: : Is there a relationship between the two?
Mr. Colley: : As I told the Deputy, I cannot add to what I have said. Why are Deputies spending so much time on this matter as they clearly are not really interested in it? If they were they would know what it is all about. Since they do not, the question of whether that story in the paper about the filibuster was true or not is raising its ugly head. The Deputies should consider the implications of it in relation to the rest of the Bill.
Mr. Bruton: : If the Minister were forthcoming in answering questions put to him there would be no need for a long discussion. The lengthy discussion arises because of the Minister's failure to give information, so that Deputies must explore a variety of different possible undisclosed reasons to arrive at the true reason. If the Minister had given a true reason there would be no need for this process of exploration.
In relation to the tax position of Irish Life companies engaged in the export market, the Minister said that he is prepared to remove from Irish  law this discrimination against non-national companies. When I asked if similar discrimination existed in other states the Minister stated that he did not have this information. That is an amazing response from the Minister. The Minister is prepared to remove a benefit in the Irish economy from Irish companies without knowing if other countries are doing the same. It is not impossible for the Minister to find out the answer to this question. There are compendia of international insurance law that can be consulted quite easily. If the Minister or his officials wanted to find out what was the equivalent provision to that contained in section 2 in any other member state he could find out. Why was he not able to answer this question? If he is prepared to grant a concession to non-national companies in the Irish economy, why does he not know if such a concession exists in other countries?
Mr. Colley: : As the Deputy knows from his experience as a Parliamentary Secretary, the question of insurance law and operations between different kinds of insurance companies is one for the Department of Industry, Commerce and Energy. It is not a matter for the Finance Bill which deals with the tax situation.
Mr. Bruton: : My question is confined to the tax treatment of life insurance companies in other countries. Therefore, it is a matter for the Department of Finance, not the Department of Industry, Commerce and Energy.
Mr. Colley: : The activities of Irish companies abroad are a matter for the Department of Industry, Commerce and Energy, as the Deputy knows.
Mr. Bruton: : If the Minister is proposing to remove a tax concession so far as nationals are concerned by comparison with non-nationals, it should be common sense to find out if other countries are doing the same. He should know whether Irish companies abroad will be under the same handicap that the Minister is now removing from non-Irish companies here. Why is the  Minister not able to tell the House if the provision he is proposing exists in other member states of the European Community and in other countries where Irish life companies might be likely to do business? Any Minister for Finance who was proposing to introduce such a change here should know the answer to that question.
Mr. Colley: : I will say this once more. More than anyone else Deputy Bruton should know the position with regard to insurance. In relation to companies issuing policies, where those companies are legally established here or in Britain or who are lawfully carrying on a business in the State, under the latter category of lawfully carrying on a business in the State this matter is governed by the Insurance Act, 1936. That statute is administered by the Department of Industry, Commerce and Energy and in so far as any Irish life company are carrying on business abroad and discover that their business is being affected by tax laws abroad, where reciprocity between that country and Ireland would be of importance in the first instance they would bring their case to the Department of Industry, Commerce and Energy. The Deputy knows that.
Mr. Bruton: : Not necessarily if it was a tax matter.
Mr. Colley: : Of course they would do so. The Deputy should know that much.
Mr. Bruton: : I disagree with the Minister. If one is looking for equivalence in tax matters that will be dealt with by the Department of Finance.
An Leas-Cheann Comhairle: : The Deputy should allow the Minister to reply.
Mr. Bruton: : I am not getting into an inter-departmental wrangle with the Minister. I am not in the Department now.
Mr. Colley: : Obviously the Deputy did not have much to do with insurance when he was Parliamentary Secretary in that Department if he does not know that. If the company concerned came to the Department of Finance  they would be sent to the Department of Industry, Commerce and Energy in order to get that Department's assessment of the situation. No such case has arisen to my knowledge. No representations have been made. This is not surprising having regard to the level of activity of Irish companies abroad. As I indicated a considerable time ago, if that situation develops and if it is necessary to take action in that regard that can be done. The question being raised by the Deputy at the moment is one of pure speculation. It has no relation with reality and I think he knows that.
Mr. Bruton: : I disagree with the Minister——
An Leas-Cheann Comhairle: : The Deputy has repeated his question about four times in the past 15 minutes and the Chair cannot allow this kind of repetition.
Mr. Bruton: : The Minister has not given me an answer.
An Leas-Cheann Comhairle: : The Chair is not responsible for the answers given. The question cannot be repeated time and again.
Mr. Cluskey: : About two hours ago I asked a question but an answer was not available then. I accepted that it was not readily available. Has the Minister ascertained the date of the EEC directive regarding harmonisation.
Mr. Colley: : No.
Mr. Cluskey: : Is it not available in his Department?
Mr. Colley: : I cannot tell the Deputy offhand whether it is available.
Mr. Cluskey: : In view of what has developed since I asked the question, I submit it is important that the House be told the date of the regulation.
Mr. Colley: : I do not think it is of any great relevance. However, there is great relevance in the Deputy's talk about the suggestion of withdrawal and I hope he will give us some details of that important matter. I am awaiting that with bated breath.
Mr. Cluskey: : The Minister is obviously sitting on those benches doing nothing. He has four officials sitting beside him but he has not asked them to get this information. His Department are approximately 200 yards from this House but he has not bothered to find out the answer to a question that was asked in this House two hours ago. It is entirely relevant to this discussion. The question I asked about the date of the directive regarding harmonisation is a fairly basic one and one would expect the Minister to be able to answer it. When I asked the question I accepted that the Minister might not be able to answer it immediately, that he might have had to ask one of his officials to check on the facts. I wonder why he has not done so?
I asked the question originally because it appears the directive has been in existence for some considerable time but there is no pressure from the EEC to implement the harmonisation provision immediately. I asked the Minister if this could be done over a phased period in order to allow Irish companies to retain their favourable position and if this would be acceptable to the EEC Commission. The Minister has told the House that they have a 60 per cent share of the market and they could increase that if they were allowed to continue in their present favourable position. The Minister dismissed the EEC directive, after some discussion, as not being the main issue and he referred to an informal agreement between the insurance companies and the Government which he said was in the national interest. After some further discussion of a protracted nature——
An Leas-Cheann Comhairle: : And a repetitious nature.
Mr. Cluskey: : I accept that but it is very difficult when the Minister refuses to answer a basic question.
An Leas-Cheann Comhairle: : The Chair is not responsible for the Minister's answers. However, it is the the responsibility of the Chair to prevent repetition.
Mr. Cluskey: : If the EEC is not the reason why we should put Irish  companies in an unfavourable position there must be another reason. The reason given by the Minister has been the question of this informal agreement between the insurance companies and the Government. During the morning the Minister also said that the insurance companies had not made representations to his Department. Now I do not know how one defines representation but, if one sits down and hammers out an informal agreement, I think that could justifiably be defined as representation, representation being making the other side aware of what one wants with regard to the outcome of a particular issue. Quite clearly, the provisions in this section detrimental to the interests of Irish companies is as a result of an agreement. If the British companies, or other companies, wanted to be put on a par with Irish companies and there was an informal agreement, then they must have been able to put forward not only some argument but something to back that argument up. I said there have been suggestions outside this House. One of the things that arose was that these companies may have put pressure on the Government by saying they would not maintain their investment here. I have heard these suggestions made informally outside this House. I make no formal charge but a few moments ago the Minister said that part of an informal agreement arrived at was that these companies would maintain a level of investment here and so it is quite clear——
Mr. Colley: : I did not say that at all.
Mr. Cluskey: : The Minister did.
Mr. Colley: : If the Deputy is going to make arguments based on precise words he should listen carefully to what I say. Just because the Deputy did not listen carefully does not mean he may be abusive to me.
Mr. Cluskey: : I took a note of what the Minister said.
Mr. Colley: : Would the Deputy read out his note?
Mr. Cluskey: : What the Minister said was that non-Irish companies would maintain a level of investment.
Mr. Colley: : I did not say that. I said the agreement related to the level of investment by non-Irish companies in the Irish economy. I said Deputies should know that the level of such investment now was the same approximately as that of Irish companies.
Mr. Cluskey: : If there were an informal agreement which stated that harmonisation would come in to the detriment of Irish companies, and this is not being brought in because of any pressure by the EEC, then it is only being brought in because of pressure by the non-Irish companies. The Minister goes on then and tells us that part of the agreement is the level of investment that will be maintained here by non-Irish companies. Surely it is clear that, if that type of discussion took place and that kind of agreement was arrived at, then the other side of the coin is that, if these companies were not put on a par with Irish companies and this section, which is detrimental to Irish companies were not introduced, they would lower their level of investment. I will now pose an extremely important question: are we now in the position that the Minister or his representatives sat down with non-Irish firms, negotiated an agreement detrimental to Irish firms on the basis that these firms were dictating to the Government what form of legislation the Government would introduce based on the level of investment they would maintain in this country?
Mr. T. J. Fitzpatrick: (Cavan-Monaghan): Buy Irish.
Mr. Cluskey: : This is an extremely important question and there is a grave responsibility on the Minister to tell the House in the interests of the country precisely what the terms of this informal agreement were.
Mr. Colley: : Deputy Cluskey is allowing his imagination to run riot. Let me refresh his memory. First, I told Deputy Bruton in reply to a question by him that I received no such representations as he talked about  from non-Irish companies. Secondly, I agree I did not say it specifically, but I certainly implied clearly about an hour or an hour and a half ago, that the informal agreement was made by a previous Government and I now say specifically it was made by a previous Government.
Mr. Cluskey: : And it is being maintained by the Minister.
Mr. Colley: : There was no question, as Deputy Cluskey is now trying to allege, that there were representations on the basis of negotiating an informal agreement. We are talking about something that happened years ago.
Mr. Cluskey: : How many years ago?
Mr. Colley: : I repeat I had no representations and I now ask Deputy Cluskey would he tell the House and the country about this most serious matter he has brought up about suggestions outside the House by non-Irish companies that they would withdraw or reduce their investment in the economy if something or other was not done. I have asked him three times already to do that and so far he has not done it. All he has done is to repeat that there were suggestions outside the House. This is a matter of such grave import the Deputy owes it to the House and the country to tell us who made the suggestions, which companies, what exactly was said.
An Leas-Cheann Comhairle: : The Chair must put the question. Section 1 has gone on since half past ten, almost three hours, and we have heard nothing but repetition. I am asking Deputies to let me put the section.
Mr. T. J. Fitzpatrick: (Cavan-Monaghan): With all due respect, there is one person to blame and that is the Minister.
An Leas-Cheann Comhairle: : If there is repetition there is only one person to blame, namely, the Chair for allowing it. The Chair has no responsibility for ministerial replies but he must deal with repetition.
Mr. T. J. Fitzpatrick: (Cavan-Monaghan): There is no point in the Minister flying into a rage over this  and saying extraneous matters have been brought in and unfounded charges have been made. All this has arisen out of the Minister saying there was an agreement.
Mr. Colley: : Does the Deputy accept this is a serious charge and should be explained?
Mr. T. J. Fitzpatrick: (Cavan-Monaghan): I accept that the Minister told the House he had arguments, which he would not tell the House, but which he said are known to everybody, and when some of them are given he flies into a rage.
Mr. Colley: : Does the Deputy know about this? Tell us about it? Am I the only one who has never heard this threat?
Mr. Cluskey: : The Minister is the only one who knows the facts.
Mr. Colley: : Tell the House and the country the threats.
An Leas-Cheann Comhairle: : Please, only one speaker at a time, and relevant. I will not allow any more repetition. If there is something new, well and good, but I will not listen to all the same things being said over and over again. Deputy Fitzpatrick now on the section.
Mr. T. J. Fitzpatrick: (Cavan-Monaghan): The Chair will not have any repetition from me. The Minister in charge of the Bill came in here to convince the House it should vote in favour of this section. He gave one argument, the EEC argument, in favour of the Bill. He hung his hat on that for about an hour and at the end of that hour he said, apart altogether from the EEC argument in favour, in reply to Deputy Cluskey's argument that he should say what the matter is, there is a bigger and a better and irrefutable argument in favour of this. That argument is that the industry say this differential must go and there is an argument in favour of why it must go. He will not tell the House what that argument is. That is a disgraceful performance. This section has taken all morning to get through the House because of the  Minister's irresponsibility in saying he has an argument but he will not tell the House what it is. He says his argument is known to everybody who is interested in insurance. When Deputies are forced to speculate and give arguments because the Minister will not give them, he flies into a rage and says it is not in the national interest.
Mr. Colley: : So it is speculation now.
Mr. T. J. Fitzpatrick: (Cavan-Monaghan): The Minister says it is speculation.
Mr. Colley: : I thought the Deputy said he was speculating.
Mr. T. J. Fitzpatrick: (Cavan-Monaghan): I did not give any argument.
Mr. Colley: : So it was Deputy Cluskey who made the speculation.
Mr. T. J. Fitzpatrick: (Cavan-Monaghan): I am sticking to a net point and the Minister will not get me off it. The Minister said there is an argument and it is his duty to give that argument to the House. It is wrong of the Minister to ask the House to pass this section in blinkers, blindfolded, and that is what he is doing. The Minister is saying: “I will not give you the argument. I have 84 people behind me and I will steamroll this Bill through the House without giving you the information I have.” We say this information is  necessary to enable us to make up our minds. That is a dangerous line of country and it is a particularly objectionable line to be taken by the deputy leader of a party with a majority of 20 in this House. We should vote against this section and make the Minister behave in a responsible manner.
Mr. Cluskey: : Even at this late stage would the Minister tell the House the nature of the agreement?
An Leas-Cheann Comhairle: : That has come up about 40 times already. I am not responsible for ministerial answers.
Mr. Cluskey: : The Minister is directly responsible for this section.
An Leas-Cheann Comhairle: : I am putting the question.
Mr. Cluskey: : The Chair is now in the process of putting before the democratically elected representatives of the people a section which we cannot accurately judge or assess. The Minister has stated openly that this section was put into the Bill because of an informal agreement but he refuses to tell us the nature of that agreement.
An Leas-Cheann Comhairle: : The Chair has no responsibility for that. This has been repeated time and time again.
Mr. Colley: : It is a simple filibuster.
The Committee divided: Tá, 69; Níl, 37.
Cowen, Bernad. Geoghegan-Quinn, Máire.
Lalor, Patrick J.
de Valera, Síle.
Fitzpatrick, Tom. (Dublin South-Central.)
Fitzsimons, James N.
Fox, Christopher J.
Gallagher, Dennis. Molloy, Robert.
Murphy, Ciarán P.
O'Connor, Timothy C.
Wilson, John P.
Woods, Michael J.
Cosgrave, Michael J.
D'Arcy, Michael J.
Donnellan, John F.
Enright, Thomas W.
Fitzpatrick, Tom. (Cavan-Monaghan).
|Flanagan, Oliver J.
Murphy, Michael P.
Ryan, John J.
Tellers: Tá, Deputies P. Lalor and Briscoe; Níl, Deputies Creed and B. Desmond.
Question declared carried.
Business suspended at 1.35 p.m. and resumed at 2.30 p.m.
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