Minister’s Brief

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indebtedness, and has implications for monetary policy. In March last year, the ECB began implementing ‘quantitative easing’ (QE1) and adopted additional easing (QE2) in December; additional measures (QE3) were adopted in March this year. Stability Programme Update and Spring Economic Statement The Department publishes two economic forecasts each year, one with the national budget and the other with the Stability Programme Update (SPU), Ireland’s national medium-term fiscal strategy, which is submitted to the European Commission in April. Under the “six-pack”, both forecasts must be endorsed by the Irish Fiscal Advisory Council. The Department will publish a new set of macroeconomic forecasts with the SPU this April. The SPU forecast will take account of the most up-to-date data on the domestic and international economy. Under the new budgetary cycle introduced last year, a Spring Economic Statement (SES) was published alongside the SPU in 2015. The SES, which is not an EU requirement, fulfilled a number of functions including setting out the quantum of fiscal space available for the next Budget. The new Government may wish to take a view on whether to produce a SES, and also on the timing of any such publication. Macroeconomic Imbalances As part of the reforms introduced on a response to the euro area crisis, Member States economic policies are subject to more in-depth surveillance by the European Commission. The Economic Division plays a key role in this. Under the Macroeconomic Imbalances Procedure (MIP), introduced as part of the “sixpack”, the European Commission produces an annual scoreboard of economic imbalances, known as the Alert Mechanism Report (AMR). Based on the 2015 AMR, the Commission undertook a detailed review of Ireland under the MIP which it published in a country report on Ireland this February. The country report placed Ireland in the second lowest out of four categories of imbalances, and recognised that Ireland’s imbalances were largely accumulated in the run-up to or during the crisis and are in the process of unwinding. Supply side Estimates of so-called potential output (the ability of the economy to grow in a ‘balanced’ manner) are crucial, both for medium term economic planning and for the fiscal framework in which we operate. The methodology used on a pan-European basis is problematic for Ireland. This is no longer a theoretical issue – these estimates feed into our Stability and Growth Pact requirements. Essentially we are required to eliminate the structural deficit – in turn measuring the structural deficit relies on estimates of potential output. Page 16 of 184
3.1.2.2 Microeconomic analysis underpinning taxation and other policies and sectoral policy economic analysis Principal Officer: David Hegarty John McCarthy Chief Economist David Hegarty Principal Officer Economic Strategy Jean Acheson Assistant Principal Fiscal Economic Analysis Gavin Murphy Assistant Principal Microeconomic Analysis / Construction Sector Key Points: Taxation Policy Analysis This unit works closely with Tax Policy Division providing economic analysis of tax policy issues and evaluation of tax expenditures. Key projects for 2016 include a review of the R&D Tax Credit and analysis of the distributional impact of Budget 2017. To improve the evidence base on macroeconomic and tax policy issues, a research programme has been agreed with the ESRI. A number of important research outputs will be finalised in 2016 relating to issues such as tax volatility, the relationship between corporate tax policy and FDI and wealth taxation. Housing market/construction sector analysis Given current pressures in the housing market and its importance for the economy, the Department has invested considerable resources in analysing this sector and has contributed to Government policy initiatives including Construction 2020, the Social Housing Strategy and the recent Stabilising Rent and Boosting Supply Package. Housing supply has not responded at a sufficient pace to meet increased demand leading to rising house prices and rents particularly in Dublin and the other cities. A number of inter-related factors are inhibiting housing supply including planning and building regulation issues; a slow transition by the sector to a new debt/equity Page 17 of 184
Page 1 and 2: Minister’s Brief 2016 s Page 1 of
Page 3 and 4: 3.2.1.1 Policies on Mortgage Arrear
Page 5 and 6: 1. Introduction For the purposes of
Page 7 and 8: 2.1 Economic and Fiscal Directorate
Page 9 and 10: 2.2 Finance and Banking Directorate
Page 11 and 12: 3. Detailed Briefing Page 11 of 184
Page 13 and 14: 3.1.2 Economic Division Description
Page 15: Detail: Economic Outlook Pr
Page 19 and 20: changes in the relevant tax base) a
Page 21 and 22: 3.1.2.3 Economic coordination inclu
Page 23 and 24: 3.1.2.4 Budgetary/fiscal policy, go
Page 25 and 26: Assessment of compliance with SGP o
Page 27 and 28: was a deviation from the fiscal rul
Page 29 and 30: tax, followed by personal income ta
Page 31 and 32: Tax Strategy Group - What Does It D
Page 33 and 34: Detail: Income Tax Policy Income Ta
Page 35 and 36: Credit in 2014 - that credit was of
Page 37 and 38: INCOME TAX INCENTIVES Agri-Taxation
Page 39 and 40: Marine taxation In Budget 2016, a r
Page 41 and 42: Detail: Indirect Tax Policy Tax Hea
Page 43 and 44: outcomes, then it was proportionate
Page 45 and 46: More fundamental threats to tobacco
Page 47 and 48: 3.1.3.4 Finance Bill co-ordination,
Page 49 and 50: ise in both equity markets and prop
Page 51 and 52: Tax Head 2007 (€m) 2013 (€m) 20
Page 53 and 54: 3.1.3.5 International taxations, co
Page 56 and 57: fully in line with the new OECD req
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Page 60 and 61: At EU level, the Governance section
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Detail: The EU Strategy Unit manage
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3.1.5.4 International Relations Uni
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3.1.5.5 Permanent Representation of
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3.2 Finance and Banking Directorate
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3.2.1.1 Policies on Mortgage Arrear
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available is €1.8 million. Initia
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3.2.1.2 Policies on Central Bank po
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deemed necessary, it may be prefera
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Detail: Key Initiatives to achieve
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5. Majority of credit requests cont
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3.2.2 Financial Services Division D
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A further group is reviewing the re
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financing would be available to cov
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o Cumulative impact of financial le
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3.2.2.2 National and EU policy and
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Securities The draft EU Prospectus
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In addition a full view of the fina
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"packaging", wrapping or bundling t
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3.2.3 Shareholding Management Unit
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3.2.3.1 State’s Banking Investmen
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3.2.3.2 State’s shareholding in A
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sheet continues to contract, albeit
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3.2.3.4 NAMA Specialist - Declan Re
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Detail: NAMA Background As part of
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3.2.3.5 IBRC (in special liquidatio
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In February 2013 the Irish Bank Res
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3.2.3.6 State’s shareholding in P
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PTSB’s return to profitability ha
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Credit Union Restructuring Board (R
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3.2.3.8 Management of all legal mat
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3.2.4.1 Risk and Financial Stabilit
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• development and maintenance of
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epresented and an Industry Advisory
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3.2.4.1 Management of FoI and PQ pr
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3.2.4.1 Liaison with the Attorney G
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3.2.4.2 Management of the Accountan
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Future Developments The vote accoun
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3.2.5 International Financial Insti
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Key Points: International Monetary
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with the delegation led by Second S
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assistance to the developing world.
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In addition to capital contribution
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would be the Minister for Finance o
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3.3 Corporate Page 165 of 184
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supported by OPW and a number of ex
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3.3.2. Corporate Affairs Descriptio
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member, the Department has a Busine
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ability of both electronic files an
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3.3.3. Human Resources Division Des
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Detail: 1. Organisational Structure
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effectively to improve and deliver
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The Department is currently reviewi
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Erosion of income tax base did not
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Minister’s Brief

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