Download Progress Report on Programme for Government 2007

Progress Report on Programme for Government 2007 – 2012
Department of Finance Response
The Economy
“We will aim to achieve further significant, sustainable growth with our
programme based on an average growth rate of 4.5 per cent”

The economy has now entered more challenging times due a combination of
external and domestic factors. GDP expanded by 6 per cent in 2007, but is
expected to plateau this year, albeit at a very high level. Some slight pick-up in
overall growth is expected for next year, but it is now expected to be 2011
before economic growth is close to its potential of about 4% - assuming a
resumption of favourable external factors.
“We will operate a responsible fiscal policy characterised by broad budget
balance and a declining debt burden.”
“Keep the budget in broad balance and fully within our commitments under the
Stability & Growth Pact.”
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Sound public finances have been critical to Ireland’s success over the last
decade and the Government, despite the emerging scale of the economic and
fiscal and environmental challenges now facing the country, remains
committed to taking the necessary decisions to ensure stability in the public
finances, in order to maintain the right economic and fiscal conditions for
sustainable growth over the medium term
The Government has and will continue to take the necessary actions:
On 8 July 2008 Government announced a range of measures designed to
create the right fiscal conditions for economic growth while protecting the
most vulnerable members of society.
On 3 September 2008 Government announced that it was bringing forward
the date for the presentation of Budget 2009 to 14 October 2008. This
would allow it to give clarity and confidence to investors and taxpayers
alike, and provide a sound basis for economic recovery.
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Budgetary Policy
Set aside a minimum of 1% of GNP per annum to provide for the future pensions of
today’s workers.
Partial pre-funding of future social welfare and public service pension costs has
continued with the annual payment of a statutory 1% of GNP into the National
Pensions Reserve Fund (NPRF). In 2007 €1.62bn was invested in the NPRF, while it
is planned to invest a further €1.69bn in 2008 (of which €845m has already been
invested). The value of the fund at the end-June 2008 was €19,462 million or
approximately 12% of GNP.
Implement a series of significant and sustainable increases in key public services
such as pensions, health and schools.
Spending on public services increased by 14% in nominal terms in 2007 compared to
2006. The Revised Estimates Volume 2008 allows for further increases of 9% this
year. Expenditure on education and healthcare rose by 10% and 15% respectively in
2007, while the Social Welfare Old Age Contributory Pension (OACP) and Old Age
Non-Contributory Pension (OANCP) rates rose by 8% and 10% over the same period.
The Revised Estimates Volume 2008 allows for further rises in education and
healthcare expenditure of 7% and 8% in 2008.
This funding has allowed for our real social welfare rates to increase to among the
highest levels in the EU. The outputs from capital spending have seen real
improvements in citizens’ daily lives. An example being the National Roads
Programme which has made significant improvements in journey times between our
cities and thus reduced costs to businesses.
Keep the overall tax burden low and implement further changes to enhance the
rewards of work while increasing the fairness of the tax system.
In Budget 2008:
 The home carer tax credit was increased from €770 to €900.

The age exemption limits for those aged 65 and over were increased from
€19,000 per annum for a single person and €38,000 per annum for a married
couple, where one or both are aged 65 and over, to €20,000 per annum and
€40,000 per annum respectively.

The incapacitated child credit was increased to €3,660 per annum.

The blind person’s credit was increased from €1,760 single and €3,520
married per annum to €1,830 and €3,660 per annum, respectively.

The widowed person’s credit was increased from €550 to €600 per annum.
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The widowed parent credit was also increased from €3,750 (Year 1), €3,250
(Year 2) , €2,750(Year 3), €2,250 (Year 4), €1,750 (Year 5) to €4,000, €3,500,
€3,000, €2,500 and €2,000 per annum, respectively.
Building The Public Wealth
National Development Plan 2007-2013
Financial Overview
In 2007, expenditure and investment under the NDP came to over €22bn which is
almost exactly what was envisaged. 85% of funding came directly from the
Exchequer with 9.5% accounted for by state bodies, particularly important in the
Economic Infrastructure priority, especially in the Energy, Airports and Ports SubProgrammes.
Regional Development
The NDP set out a strong framework for the continued rollout and implementation of
the National Spatial Strategy, of which a key component is the development of the
nine NSS gateways which will help economic and social development of their
surrounding regions.
All-Island Co-Operation
Substantial progress was made during 2007 and provides a firm basis for mutually
beneficial co-operation in future.
Environmental Sustainability
The NDP encompasses substantial allocations to invest in programmes which will
have a direct impact on promoting environmental sustainability. Considerable
progress has been made in 2007 with €640m invested in public transport to promote a
move away from car dependency to more environmentally sustainable modes of
transport. €49m was invested in initiatives to promote sustainable energy with €637m
invested in enhancing our water services infrastructure. €36m was also invested in
waste management.
Rural Economy
The rural economy has undergone rapid change and ongoing demographic and
economic changes have also had a significant impact. Progress under the NDP during
2007 has been made in the regional and local road network, the commencement of the
Western Rail Corridor, water services and a range of measures to support the
physical, economic and social infrastructure in rural areas including the CLAR,
Community Development, Local Development Social Inclusion, Rural Social
Programmes and various Gaeltacht and Island schemes.
Economic Infrastructure
Improving our economic infrastructure is critical to Ireland’s economic future and
improving the quality of life in this country. Investment in this area during 2007
amounted to €6.27bn and included strong progress in roads, visible public transport
improvements with new trains, Luas tram and line extensions and replacement buses
for Dublin Bus as well as improved Quality Bus Corridors.
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Pier D opened at Dublin Airport and the commencement of Terminal 2 will
significantly improve the capacity of the Airport. Significant progress has been made
on the rollout of the Major Inter-Urban Routes (MIUs) and at end 2007, 313
kilometres of the Major Inter-Urban Routes (out of a total of 738 kilometres) were
open to traffic, 324 kilometres were under construction and 101 kilometres were at
tender stage. This investment will achieve significant time savings for people and
businesses.
Enterprise, Science and Innovation
The NDP has funded investment in indigenous and foreign direct enterprise in
Ireland, Science Technology and Innovation, the tourism sector, the development of
the agriculture and food sector, the marine sector, the development of the rural
economy and the viability of the island and Gaeltacht communities.
The Science, Technology and Innovation Programme (SSTI) covers all research areas
from basic research in the World Class Research Sub-Programme to specialised
research in areas like enterprise, agri-food, marine, the environment, health and geoscience. This investment will improve our international competitiveness and is
particularly important as we move towards increased export led growth.
Human Capital
Education and Training is vital to Ireland’s objective of ensuring its workforce are
among the best in the world and investment under this Priority supported the ongoing
National Skills Strategy and on-going assistance for the up-schilling of the workforce
and supported the participation of those currently outside the workforce as well as
enhancing the quality of education provided in our schools.
Social Infrastructure
This priority funded a wide range of infrastructure to improve the quality of life,
enhance vital social services, promote social inclusion and enhance the administration
of justice. This included investment under the Housing Programme where over 9,000
social housing units and over 3,500 affordable housing units were delivered. Over
€500m was invested in a wide range of health infrastructure including 18 new
admission lounges and the new amalgamated Cork Maternity Hospital. Prison
accommodation was also improved with the refurbishment of 4 child detention
schools, the completion of 9 key court projects and 4 new Garda stations.
Social Inclusion
The NDP funded a massive programme of investment in promoting social inclusion
including Programmes for Children, Older People, People with Disabilities and Local
and Community Development.
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Competitiveness and Innovation
Competitiveness Overview
Our competitiveness determines our ability to trade on international markets. In order
to improve our competitiveness it is necessary to ensure that increases in costs do not
outstrip increases in productivity. In support of this, Government has implemented
policies which are aimed at rewarding both work and enterprise through maintaining a
relatively low tax burden on capital and labour, and improving competition in product
markets and flexibility in the labour market. Furthermore, the continued sustainable
rollout of the National Development Plan remains a key priority for the Government
as a whole, including substantial investment in physical and human capital. These
measures will equip the Irish economy with the skills, infrastructure and operating
environment needed so that we can compete effectively on the world stage.
Continue to enhance the Business Expansion Scheme (BES) and the Seed Capital
Scheme (SCS) following on from changes introduced in Budget 2007.
The Government's commitment to the Business Expansion Scheme and the Seed
Capital Scheme (SCS) continues. Since 1 January 2008, a recycling company can
qualify under the BES and SCS schemes where it has received approval for a grant or
financial assistance from an industrial development agency or County Enterprise
Board, or where it has obtained confirmation from such an agency or board verifying
that it has submitted a business proposal to it and that the activities carried on by the
company are qualifying activities.
We recognise the vital role played by low taxes in our economic success. We
guarantee that the 12.5% rate of corporation tax will remain
The Government's position on our corporate tax regime is unambiguous. It is clearly
stated in the Programme for Government that the 12.5% rate of corporation tax will
remain. Corporate taxation matters are and will remain within the competence of
Member States. Our corporation tax system is protected, in an EU context, by the
principle of unanimity in taxation matters.
We will resolutely oppose any attempt to introduce tax harmonisation within the
European Union, either directly or through technical measures.
We will continue to strongly oppose any attempts to introduce tax harmonisation
within the European Union. We do not see how tax harmonisation could advance
European competitiveness or the Lisbon agenda. However, this stance should not be
misconstrued as one of opposition to European economic policy cooperation. The
Government will continue to engage with the European Commission in a constructive
and positive manner in relation to tax matters.
A Fair Tax System
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Our first priority remains low and middle income earners – therefore our first task
will be to use tax credits and bands to keep low income earners out of the standard
rate band and average earners out of the higher band.
Keep Low Income Earners out of the Standard Rate Band
In Budget 2008 the employee tax credit was increased from €1,760 to €1,830 and the
personal credit was also increased from €1,760 to €1,830. Due to these changes in
Budget 2008, a single PAYE person under 65 will pay no income tax on the first
€18,300 per annum. These changes ensured that the minimum wage (€17,542)
remained well outside the tax net in 2008.
Keep the Average Earners out of the Higher Rate Band
In Budget 2008 the single band was increased by €1,400 to €35,400. The married one
earner band was increased by €1,400 to €44,400 and the married two-earner band was
increased to €70,800 with transferability restricted to €44,400.
The changes have ensured that the average industrial wage for 2008 (estimated at
about €34,000) is placed well outside liability to the higher rate of tax for 2008.
We will introduce measures to further weight VRT and Motor Tax in favour of cars
with lower emissions.
During 2007, a public consultation process on revising the VRT system was carried
out by the Department of Finance. This evidenced broad support for a reorientation
and rebalancing of VRT; and the Minister for Finance announced, in the Budget
Statement on 5 December 2007, his plans to introduce a revised VRT system, based
on CO2 emissions.
The revised system took effect from 1 July 2008. The CO2 emissions of a car have
now replaced engine size as the criterion to determine the VRT rate payable on a car
at point of registration. VRT rates continue to be applied to the Open Market Selling
Price (OMSP) of the car. There are seven CO2 emission bands, with VRT rates
ranging from 14% to 36%, as set out in the table below.
CO2 Emissions Bands
A
B
C
D
E
F
G
gCO2/km
0 - 120g
121 - 140g
141 - 155g
156 - 170g
171 - 190 g
191 - 225g
over 225g
VRT Rates
14%
16%
20%
24%
28%
32%
36%
The revised VRT system also includes specific reliefs for series production hybrid,
flexible fuel and electric cars. From 1 July 2008, pre-existing reliefs for hybrids and
flexible fuel cars were replaced by a relief of up to €2,500 on the VRT payable.
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This should mean that flexible fuel, and especially hybrid, cars with low CO2
emissions will continue to pay around the same, or indeed lower, VRT than they did
under the previous system. In addition, series production electric cars and motorcycles
were completely exempted from liability for VRT from 1 January 2008.
Appropriate fiscal instruments, including a carbon tax levy, will be phased in on a
revenue-neutral basis over the lifetime of this Government.
The carbon tax issue is being examined by the Commission on Taxation which is due
to report by September 2009, at the latest.
Commission on Taxation
In order to review the efficiency and appropriateness of the Irish taxation system,
the Government will establish a new Commission on Taxation. While the
Commission will have a wide remit to consider the structure of the taxation system,
it will be specifically charged with considering and making recommendations on
the following:
 Examine the balance achieved between taxes collected on income, capital
and spending and report on it.
 Review all tax expenditures with a view to recommending the
discontinuation of those that are unjustifiable on cost/benefit grounds;
 Consider options for the future financing of local government;
 In the context of maintaining a strong economy, investigate fiscal measures
to protect and enhance the environment including the introduction of a
carbon tax.
On Thursday 14 February 2008 the then Tánaiste and Minister for Finance announced
the establishment of a Commission on Taxation, fulfilling the commitment in the
Programme for Government to review the structure, efficiency and appropriateness of
the Irish taxation system.
Terms of Reference and Membership
The terms of reference and the membership of the Commission were also announced
on 14 February 2008.
The former Minister for Finance has said that terms of reference of the Commission
were broadly defined, far reaching and allow for consideration of all aspects of the
Irish taxation system and that the work of the Commission will help establish the
framework within which tax policy will be set for the next decade.
The inaugural meeting of the Commission on Taxation took place on Wednesday 5
March 2008.
The Membership of the Commission is drawn from the Social Partners, the
accounting and tax advisory sectors and also includes accomplished people with
environmental and economic expertise and people who have wide experience in
central and local government.
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Report date and Consultation
The Commission is to report to the Minister for Finance not later than 30 September
2009.
In order to help the Commission in its deliberations, an advertisement was placed in
the national press inviting submissions by 23 May 2008 from interested parties. In
addition to that general invitation, they have written to a wide range of public bodies
and private sector organisations that they consider might have a particular interest in
the work of the Commission and may have a valuable contribution to make.
Value Added Tax
The current VAT classifications will be examined with a view to reducing the rate
of VAT applied to certain environmental goods and services from 21% to 13.5%.”
The current VAT classifications have been examined taking into account the growing
range of environmental and renewable energy systems. Limited scope was identified
under the EU VAT Directive in the context of agricultural inputs used in the
production of biofuels. In this regard, Budget 2008 provided, with effect from 1
March 2008, for the application of the reduced VAT rate to the supply of miscanthus
(elephant grass) rhizomes, seeds, bulbs and similar inputs in the bio-energy sector.
The application of reduced rates on a wider scale will require changes at EU level
and, in this regard, Ireland has supported calls from France and the UK for the
preferential treatment of environmentally friendly products and services. The
European Council has invited the Commission, in cooperation with the Member
States, to examine the areas in which economic instruments, including reduced VAT
rates, could help to increase the use of environmentally-friendly goods and energysaving materials. The results of the analysis by the Commission are expected later this
year along with specific proposals and recommendations to be considered by Council.
Supporting Home Ownership While Protecting House Values and Jobs
We will legislate immediately to abolish stamp duty for all first-time buyers and
make this change retrospective for all deeds presented for stamping to the Revenue
Commissioners on or after 30th April 2007.
The Finance (No 2) Act 2007, which was enacted in July 2007, dealt fully with this
commitment.
We will also implement major changes in mortgage interest relief for first-time
buyers and those who bought a house in the past seven years. We will increase in
Budget 2008 the ceiling on mortgage interest relief for first-time buyers and those
who bought a house in the past seven years, from €8,000 to €10,000 for single
people and from €16,000 to €20,000 for couples or widowed persons. As income tax
rates are reduced, we will keep the rate of mortgage interest relief at 20% for all
home owners.
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This commitment was met in Budget 2008 with the ceiling for first-time buyers and
first-time buyers who bought a house in the past seven years, increasing from €8,000
to €10,000 for single people and from €16,000 to €20,000 for married couples or
widowed persons.
Keeping Ireland Working
Keeping taxes on employment low.
A low tax wedge is very important to our economic success as it makes it easier for
employers to take on new employees.
In international terms, the latest OECD data relating to the year 2007 indicate that for
a single worker, married one-earner couple with two children or a married two earner
couple with two children on average earnings, Ireland has the lowest tax wedge in the
EU in all categories and the lowest in the OECD for the married categories. These
figures do not take account of the improvements introduced in Budget 2008.
Small & Medium Enterprises
Continue to enhance the Business Expansion Scheme (BES) and the Seed Capital
Scheme (SCS) following on from changes introduced in Budget 2007.
The Government's commitment to the Business Expansion Scheme and the Seed
Capital Scheme (SCS) continues. Since 1 January 2008, a recycling company can
qualify under the BES and SCS schemes where it has received approval for a grant or
financial assistance from an industrial development agency or County Enterprise
Board, or where it has obtained confirmation from such an agency or board verifying
that it has submitted a business proposal to it and that the activities carried on by the
company are qualifying activities.
Competition and Consumer Protection
Make consumers more aware of their rights through information campaigns and
through the education system
The Financial Regulator seeks to make consumers aware of their rights through its
various publications on the costs, risks and benefits of financial services and through
its personal finance website for consumers www.itsyourmoney.ie.1 It also runs a
helpline for consumers, operates a drop-in centre where one can get personal finance
information and guidance and its runs various public awareness media campaigns. It
visits colleges, work places and attends various events throughout the country.
1
This website, which was re-developed and re-launched by the Financial Regulator in September 2007,
provides extensive information on all aspects of personal finance including cost comparisons.
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The National Steering Group on Financial Education2, which plans to report on its
deliberations later this year, has already developed financial education programmes
for second-level schools.
Keeping Ireland Ahead at the Cutting Edge
Enhance the R&D Tax Credit Scheme
The R&D Tax Credit Scheme was enhanced in both Finance Act 2007 and Finance
Act 2008 as follows:
Budget and Finance Act 2007
Following an examination of the R&D tax credit scheme prior to Budget 2007, the
base year used to measure the increase in expenditure on R&D qualifying under the
tax credit scheme was fixed at 2003 for a further 3 years to 2009. The aim of this was
to provide an additional incentive for increased expenditure on R&D in 2007, 2008
and 2009. The 2003 base year had originally been fixed for the first three years of the
scheme (2004 to 2006) and was due to roll forward to 2004 for the purpose of
calculating the 20% tax credit for 2007.
Also, from 1 January 2007, expenditure by companies on sub-contracting research
and development work to unconnected parties qualifies under the tax credit scheme up
to a limit of 10% of qualifying research and development expenditure incurred by the
company in any one year.
This is in addition to an existing provision under which sums paid by a company
carrying out R&D to a university to carry out R&D for that company will qualify for
the tax credit, provided the amounts paid do not exceed 5% of the expenditure
incurred by the company on R&D.
Budget and Finance Act 2008
Changes were made in Budget 2008 and the Finance Act 2008 in relation to the use of
the base year for expenditure which is used to calculate the qualifying incremental
expenditure on R&D under the tax credit scheme. This base year being fixed at 2003
for a further 4 years to 2013. The change will provide an additional incentive for
increased expenditure on R&D in future years and it will offer more certainty to
industry in relation to the tax credit scheme.
2
This Group is chaired by the Financial Regulator and includes representatives of consumers,
education, financial services industry, in addition to representatives of the Department of Finance and
the Department of Education & Science.
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Social Partnership
Ensuring Value for Money
All capital projects over €30 million will require a full cost benefit analysis in line
with the Department of Finance guidelines of February 2005
The Capital Appraisal Guidelines of February 2005,as amended by the Value for
Money circular of 25th Janaury 2006, require that all capital projects over €30 million
must undergo a full cost benefit analysis.
All expenditure under the NDP 2007-2013 will be subject, as appropriate, to a
robust Value for Money framework. Key elements of this framework include:

NDP Programme Evaluations and Value for Money and Policy Reviews
will be published and submitted to the relevant Select Committees of the
Oireachtas.
The Value for Money and Policy Review initiative was introduced in June 2006,
building on the Expenditure Review Initiative introduced in 1997. The first round of
reviews under the revamped initiative covers the period 2006 - 2008. Some 90
reviews are being carried out by Departments over this period, focussing on
evaluations of significant areas of expenditure and major policy issues. The
arrangements applying to this initiative require that the completed reviews are
published and submitted to the relevant Oireachtas Select Committee for
consideration.
A number of NDP Programme Evaluations are also underway and these will be
published and submitted to the relevant Select Committees of the Oireachtas on
completion.
All Ministers will submit an Annual Output Statement with their Annual Estimates
to the relevant Oireachtas Committee. This will detail target outputs for the
Estimates and the following years’ Statement will set out achievements against
targets. This process will encompass Exchequer funded NDP spending.
All Ministers have submitted an Annual Output Statement with their Annual
Estimates to the relevant Oireachtas Committee. The 2008 round of the Annual
Output Statements now include a report on progress in achieving last year’s output
targets, as well as setting out targets to be achieved with the resources provided in the
year ahead. The Statements are now explicitly taken into account by the Dáil Select
Committees when considering the Estimates for their area.
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Public Sector Procurement Reform
Public sector procurement reform for capital projects will ensure greater price
certainty, more efficient delivery of projects and better value for money. In order to
achieve this objective the following documents have been produced as outputs and are
available on the Department’s website www.constructionprocurement.gov.ie
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Five standard Public Works Contracts
Conditions of Engagement for Consultants (Technical)
Nineteen Model Forms associated with the Contracts
Procurement and Contract Guidance Material
Training Material on the Contracts and the Conditions of
Engagement
Arbitration Rules
An additional Short Contract for Building and Civil Engineering Works for use on
low value projects was introduced on the 3 March 2008 to complement the existing
suite of five Contracts and other documents.
The 12 month phasing in arrangements for the suite of five Public Works Contracts in
section 9 of Department of Finance Circular 33/06 was brought to an end on 13
February 2008 by the Department’s Circular 4/08.
A Model Form of Performance Bond for use on publicly funded projects was agreed
with the Surety Companies supplying the Irish market and it was introduced on 13
February 2008 by Department Circular 04/08.
Also the Department’s Circular 04/08 widened the scope of application of the
Conditions of Engagement to include any technical consultancy service associated
with public sector construction projects.
Public Sector Management
Support the further opening up of management roles to the best qualified
candidates
In accordance with the commitments in Towards 2016, open competitions were
conducted by the Public Appointments Service (PAS) in 2007 for Principal, Assistant
Principal and Higher Executive positions. Twelve people have been appointed to date
from the Principal competition, ten people from the Assistant Principal competition
and eleven from the Higher Executive competition. Since the commencement of the
current programme for Government there have been a total of 15 top level
appointments in the civil service as a result of open competitions including the senior
management grades of Assistant Secretary (13), Deputy Secretary (1) and Chief
Inspector (1). Open competitions for a further five senior management posts are
currently being advertised – four Assistant Secretary posts and the Chief
Medical Officer post in the Department of Health and Children.
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Roll out the new Performance Management and Development System (PMDS)
The Performance Management & Development System (PMDS) provides a
framework for aligning individual and team performance with the goals of the
organisation, through greater clarity in setting objectives and related performance
targets, and for monitoring progress of their achievement. It also provides a context
in which the development needs of jobholders can be addressed. An integrated
PMDS was introduced on a pilot basis in 2006 and went live in 2007. PMDS ratings
are now used in decisions relating to the awarding of increments, assignments to
higher scales, and eligibility for promotion, as well as in addressing
underperformance.
Implement improvements in human resource management which will ensure that
all public servants are helped to develop to the best of their ability
The OECD Review of the Irish Public Service, Towards an Integrated Public Service,
and the report of the Task Force on the Public Service will provide a basis for
carrying forward the improvements in human resource management already put in
place in the context of the Towards 2016 partnership agreement.
Support succession and career planning to ensure a talent pipeline for the future
leadership of the public sector
Following on from the recommendations in the OECD Review of the Irish Public
Service, the Task Force on the Public Service is examining, inter alia, the
contribution which a Senior Public Service could make to an integrated and cohesive
Public Service.
Decentralisation
This Government will:
 Continue to move ahead with decentralisation taking account of the
National Spatial Strategy.
 Ensure that no public servant is obliged to accept decentralisation against
their wishes and that promotion opportunities remain available.
The Decentralisation Implementation Group (DIG) last reported to Government on
the implementation of the entire Programme in September 2007. The Group has
consistently reported to Government that steady progress is being achieved in the
Civil Service elements of the programme.
Progress is evidenced by the following indicators:
Property position – The property programme has been advanced. Property acquisition
negotiations have been completed or significantly advanced in 38 locations. In
addition, the OPW have been very efficient in securing suitable advance or temporary
accommodation in over 20 locations to facilitate early phasing of business units.
Posts relocated outside of Dublin – At end July 2008 decentralising organisations had
established a presence in 38 new locations. Over 2,400 civil and public service posts
have relocated from Dublin.
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Assignments to decentralising posts – In addition to the 2,400 posts that have already
moved a further approximately 1,500 civil servants have been assigned to
decentralising posts. These officials are in the process of transferring to their new
posts or are in their new post being trained in advance of decentralisation to a new
location, as soon as accommodation becomes available. Taking account of both
moves and assignments, almost 50% of the civil service posts are filled by staff with a
commitment to decentralise.
Professional & Technical Staff - The DIG has acknowledged the remaining
challenges in implementing the professional and technical element of the Programme.
The initial focus of negotiations with IMPACT resulted in agreements in relation to
the relocation of specialist posts in the Irish Prison Service and the Department of
Foreign Affairs. During the remainder of 2008, discussions at individual
organisational level will commence in relation to other organisations.
Headquarter moves - The Implementation Group of Secretaries General is currently
finalising a report for Government dealing with the governmental and crossDepartmental issues arising from the need to provide facilities for Minister, Ministers
of State and officials while in Dublin on business.
Decentralisation Implementation Group - The main task undertaken by the DIG over
the last 12 months has been an examination of the feasibility of phased moves by the
State Agencies due to relocate under the Programme. The Group recently submitted a
report outlining the results of their examination to the Government.
Both of these reports will be considered in detail by Government in the autumn.
Further expenditure on the acquisition of accommodation for decentralisation will
await consideration by Government of the two reports mentioned above. In light of
the current Exchequer position, the Government identified some potential capital
savings in the Office of Public Works in respect of decentralisation projects this year.
August 2008 - Decentralisation
Energy
Environmental Sustainability
Maximise energy efficiency and energy savings across the economy with a target of
20% energy savings by 2020 and 33% in the public sector.
Finance Act 2008 introduced a new tax initiative to encourage the use of energy
efficient equipment by companies for their business. This accelerated capital
allowance incentive will allow companies to claim the full cost of specified energy
efficient equipment against their profits in the year of purchase. Expenditure must be
above a certain minimum amount for each of the three classes of technology covered
by the scheme.
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The incentive will be confined to new energy efficient equipment purchased by
companies and it will not apply to equipment that is leased, let or hired.
The incentive, which is subject to EU clearance from a State-aid perspective, will
assist in improving companies’ cost competitiveness and should also lead to a
reduction in overall energy demand and help reduce carbon emissions.
Environment
Climate Change: A Challenge for the Whole World
Continue to use the taxation system to encourage good environmental behaviour
and discourage poor practice: for example, through rebalancing the VRT and
Motor Tax system to reward the purchase of greener cars.
A revised VRT system which rewards the purchase of greener cars through the
incentive of reduced VRT was introduced on 1 July 2008, following a public
consultation which took place during 2007.
Under the new system, the CO2 emissions rating of a car now forms the basis for
calculating VRT liability. Under a new, seven emission-banded system, greener cars
will attract lower rates of VRT (as low as 14% of Open Market Selling Price (OMSP),
compared to the lowest rate of 22.5% of OMSP under the previous VRT system); and
higher polluting cars will attract rates of up to 36% of OMSP (compared to the
previous maximum VRT rate of 30% of OMSP).
The system also retains separate additional reliefs in relation to the purchase of
hybrid, flexible fuel and electric cars. From 1 July, the purchase of a series production
Hybrid or flexible fuel car can attract a relief of up to €2,500 (in addition to benefits
automatically accrued under the new system where the car has a low CO2 emissions
rating); while series production electric cars and motorcycles have been completely
exempted from liability for VRT since 1 January 2008.
Agriculture, Food and Forestry
Supporting our Young Farmers
Continue to offer a range of supports to young farmers entering agriculture including education, taxation measures and direct start-up aid.
Retain stamp duty relief that continues to play an important role in the early handover of farms to the younger generation.
Transfers of farm land to Young Trained Farmers benefit from a Stamp Duty
exemption where the transfer takes place on or before 31 December 2008.
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Marine & Natural Resources
Marine
Complete the work of fleet restructuring, to create a world-class fleet ideally suited
to the stocks, species and sustainable practices of the modern fisheries sector.
Seafood Development will benefit from an investment of €216 million under the
new National Development Plan (NDP). A further €118 million may be made
available over the life of the plan under the Cawley proposals, which will be
available to the sector on the basis of verified progressive change as set out in the
Cawley Report.
Provisions to assist the take-up of the scheme for the decommissioning of fishing
vessels were included in the Finance Act 2008. This was done by granting relief under
the “Retirement Relief” for Capital Gains Tax in respect of compensation payments
made under the decommissioning scheme for fishing. To qualify, the person who
received the compensation payment must have owned and used the fishing vessel for
the period of 6 years and be aged at least 45.
Natural Resources
Encourage investment in oil and gas exploration off the Irish coast and optimise
the value of any oil and gas finds for Ireland.
Section 41 Finance Act 2008 introduced a new Profit Resource Rent Tax (PRRT) for
profits arising from a petroleum lease which follows an exploration licence awarded
by the Minister for Communications, Energy & Natural Resources after 1 January
2007. PRRT of 5%, 10% or 15% will apply depending on the profitability of
petroleum fields. These taxes will be in addition to the 25% corporation tax rate
which currently applies to trading profits from such activities. The new arrangements
strike a balance between encouraging investment in exploration on the one hand and
getting an appropriate return for the exploitation of the State’s resources on the other.
Health
Promoting Good Health
Use the taxation system to promote low alcohol or alcohol-free products.
The 2008 Budget Statement indicated that the Minister for Finance intends to bring
forward measures in relation to lower alcohol beverages in the 2009 Budget. The
matter is being considered in the context of the annual Budgetary cycle.
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Palliative Care
We will ensure that the needs of all people who require palliative care are met
whether this is needed at home, in the community or in a specialised hospice.
Section 26 of Finance Act 2008 provides for a scheme of capital allowances for
capital expenditure incurred on the construction and refurbishment of qualifying
specialist palliative care units.
Relief for eligible capital expenditure incurred will be available at the rate of 15 per
cent per annum in the first six years with 10 per cent in year seven. Eligible
expenditure is net of any grants or other financial assistance received towards
development costs.
Approval from a State-aid perspective is required from the EU Commission.
Therefore, the scheme is subject to a commencement order which will be made when
that approval has been obtained
Better Supports for Older People
Pensions
Seek to develop imaginative proposals in the context of the Green Paper (the
publication of which is a commitment under Towards 2016) and in consultation
with the social partners, to provide an SSIA type scheme in an effort to make
supplementary pension provision more attractive to those on low incomes
Following the publication of the Green Paper on Pensions in October 2007 and a
period of consultation which concluded at the end of May 2008, work is underway in
relation to developing a policy framework for responding to the issues raised. The
issue of an SSIA-type pension scheme for those on lower incomes will be addressed
in that context.
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