The Ireland Strategic Investment Fund is a €16.6 billion fund comprising the discretionary portfolio of €8.9 billion and the directed portfolio of €7.7 billion, based on the 2024 annual report. It has a double bottom line mandate to invest on a commercial basis in a manner designed to support economic activity and employment in Ireland. ISIF has complete independence in implementing its investment strategy under the NTMA Acts under an investment committee reporting to the NTMA's board. At year-end of 2024, ISIF held €3.6 million in Israeli sovereign debt, which was 0.07% of its global portfolio. ISIF monitors all of its holdings within its investment portfolio to ensure alignment with its risk profile and investment parameters. Regarding the divestment, ISIF noted yesterday that security tensions have been rising in the Middle East. This posed an increased risk to assets with economic exposure to the region. ISIF's view is that following the escalation of the Israel-Iran conflict in June 2025, the current situation carried materially greater risk. I am advised by ISIF that, given these escalating geopolitical tensions and conflict, it determined that the risk profile of a number of sovereign bond holdings in the region were no longer within its investment parameters. Following this determination, ISIF divested its holdings of sovereign debt issued by Jordan, Egypt and Israel. As a result, the ISIF team has increased the monitoring of its holdings in the region, in particular in relation to the most impacted and neighbouring countries where ISIF currently has exposures. It will continue to monitor them to ensure that investments remain aligned with its investment parameters.
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The key point to emphasise is that ISIF made the decision to divest of these bonds. It no longer holds them. I understand this decision was made over the last number of weeks.
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I will make three points on this. First, ISIF no longer holds these bonds. It divested of them. Second, as the Deputy well knows, ISIF independently decides what shares it is going to hold and what investments it is going to make. It does so in a way that is completely independent of me. Third, I thoroughly refute any suggestion of complicity in the appalling violence being inflicted on the people of Palestine. I wish to make clear my condemnation of what is happening-----
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-----as the Government already has on many different occasions. I emphasise that these bonds are no longer held by ISIF and were sold.
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I thank the Deputy. He is making reference to a G7 statement published on 28 June, adopting a common position on a path forward for the OECD agreement. In that statement, the G7 proposed the side-by-side application of the OECD pillar two system, and the US minimum tax rules, which are now under consideration by the OECD inclusive framework. Since January, the US Administration has set out various concerns regarding aspects of the pillar two rules and has proposed a side-by-side solution under which US-parented groups would be exempt from many aspects of the pillar two rules, in recognition of the existing US minimum-tax rules which such groups are subject to. The G7 statement builds on this approach through the agreement of a common approach among G7 countries around a possible path forward. As part of the G7 understanding, the US also agrees to withdraw section 899 retaliatory measures from the USA reconciliation Bill. These measures threaten tax increases against residents of countries that implement the pillar two rules. It is important to note that the statement represents only the views of these countries and does not put forward any proposals on how a side-by-side system would operate. This approach requires very careful consideration and it remains too early to establish what the implications might be in relation to our tax base or the exchequer. Discussions are progressing on a broader OECD inclusive framework, with a view to a potential agreement over the coming months. We remain engaged in that process.
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The short answer to the Deputy’s question is that this agreement does have consequences for the OECD agreement overall. There are three in particular. The first is what this means for competitiveness of economies and countries that remain fully inside pillar two. The second is how other economies and important stakeholders in the OECD agreement will respond, given the actions that have been taken by the US, and the third issue is how a side-by-side framework will be implemented technically given that so many of these companies, which are large investors and employers in Ireland, need certainty regarding how tax law is executed. Those are three important issues we have to carefully consider. I hope given the G20 discussions that are under way this week and what will happen in the OECD, I will be at a point of being able to give a fuller answer to those questions over time.
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It is possible it could require action at EU level but I cannot give the Deputy a definitive answer to that yet. The reason for that is that what I have seen is the publication of a general agreement on how the US would engage in the OECD framework that raises many questions. At this point in time, I cannot give the Deputy a definitive answer regarding how that agreement will be executed and whether the change would be needed. I believe, just as we entered into the OECD agreement after very careful consideration and taking time to work our way through it, we should also take time to fully understand this agreement and what the consequences of it will be, in conjunction with other stakeholders and partners. As I do that I will of course answer the Deputy's questions and those of the Joint Committee on Finance, Public Expenditure, Public Service Reform and Digitalisation, and Taoiseach on what I accept is a very important policy matter.
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The European Central Bank increased interest rates over the course of 2022 and 2023 as a move to combat excessive inflation. Since the middle of 2024, the ECB has reduced its main official lending rate to 2.15%. While changes by the ECB generally have a direct impact on tracker mortgage rates, reductions by the ECB are only one factor that feed into the commercial decisions made by creditors in relation to other lending rates. Other factors can include the cost of funds, risk levels, contractual terms, creditor status and market competition. As a result, mortgage interest rates can vary between creditors and customers. I appreciate this is a very difficult and sensitive matter for those who have been affected by it and have seen their loan books sold. It is important to indicate to the changes on average there have been on interest rates. At the end of March the average interest rate on outstanding mortgages held by banks was 3.5%, down from 3.67% a year earlier. For the non-bank sector, the average was 4%, down more than half a percentage point from 4.51% a year earlier. For entities in the non-bank sector that do not engage in new lending, the average was 4.57%, down almost a full percentage point from 5.5% a year earlier. These reductions are welcome, and it is expected all mortgage creditors will continue to keep their lending rates under review. It is my clear view that where mortgage rates have in the past increased in line with ECB increases, they should now, in this new interest rate environment, also appropriately adjust downwards. The Central Bank will continue to monitor the level and distribution of interest rates in the mortgage market.
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First, the Deputy referred to me being "a cheerleader". What I said at the time was that the sale of those loan books from those various banks was an important step in the banks regaining financial health, which, in turn, would help them to lend more in the future and contribute to our economy growing. I understood at that point the sensitivity with regard to it. That is why the consumer protection code applies to those whose loans have been sold. The Deputy said that I obstructed legislation. I voted against his legislation, just as he regularly votes against Government legislation, because I did not believe that it would be productive or play a role in dealing with these issues. At the time, I outlined other issues I had with this legislation. The Deputy asked me about how people are affected in different ways. I note that the Cathaoirleach Gníomhach is ringing the bell before we get to the end of our allocated time.
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Is that to encourage us to speak quicker?
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The Cathaoirleach Gníomhach is giving me a forewarning. In the next opportunity, I will do my best to go back to the particular question put to me by Deputy Doherty.
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Again, the Deputy uses the language of obstructionism. I exercised my right in the Dáil. The Deputy has the same right. That is not obstructionism; that is me having to weigh up what I believe the right decision for our economy is overall and the fact that we need banks to be in a position to lend more in the future and invest more within our economy. That is not because I am making the case for a bank or picking the side of a bank-----
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What I am doing is looking at what is right for our economy overall and for all of the households, all-----
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----- of the families-----
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----- and all of the businesses within it,
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I had to consider that in the round.
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The Deputy asked me about those affected. I can give him the information that is available to me this evening, which is that the interest rate for 92% of mortgages held by lending non-banks is 5% or lower. The interest rate for 68% of mortgages held by non-lending non-banks is 5% or lower. While only 68% of mortgages are at 5% or lower, this is an improvement from where we were at the end of 2023. The consumer protection code applies to those affected.
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I am advised by Revenue that it is responsible for implementing customs controls on traffic entering the European Union through Irish ports and airports. This includes customs clearance of goods, the collection of customs duty and associated VAT and the detection, interception and seizure of prohibited and restricted products at points of entry into the State. The Union customs code is the legislation governing customs procedures across the EU, to which Ireland is fully committed. Article 139(2) of the code, which deals with the presentation of goods to customs authorities, provides that goods brought into the EU by sea or air, which remain on board the same means of transport for carriage, must be presented to customs only at the port or airport where they are unloaded or transhipped. However, goods brought into the EU which are unloaded and reloaded onto the same means of transport during its voyage, in order to enable the unloading or loading of other goods, are not required to be presented to customs. In circumstances where military aircraft originating from outside the EU are stopping over at Shannon Airport and no goods are unloaded, other than to allow for other goods to be loaded, there is no entry into the European Union. As such, there is no requirement for customs inspections or customs declarations. Similarly, there is no customs duty or VAT due.
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They are completely different questions. The Deputy asked me whether our customs code is being implemented at Shannon Airport. The unambiguous answer to that question is "Yes". The implementation of that code does not require us to play a checking role on those aircraft.
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It does not matter how many times the Deputy repeats the question; the answer is still the same. We are fully in compliance with our customs code. I have outlined the circumstances in which-----
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We are talking about the Revenue Commissioners here, an authority that has implemented the customs code in this country for many decades, and about an airport that has been very active and very busy throughout its existence. I have explained to the Deputy really clearly the circumstances in which customs inspection is due. The subsections to which he refers do not take the place of the reality I have outlined, which is that goods have to be unloaded in particular circumstances and have to arrive into the EU in a particular way for them to be subjected to the customs code. That does not happen in Shannon Airport with regard to military aircraft and for that reason, our customs code plays no role in the issue to which the Deputy is referring.
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It is, of course, a subject for very legitimate debate regarding other policy domains, but not for customs.
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I thank the Deputy. The answer I have to hand goes through the structure of the local property tax, which Deputy Timmins already knows. I will not take him through that. The issue to which he referred is about the interplay between the amount of revenue a local authority raises in its own jurisdiction and the equalisation fund. I have tried in the various revaluations in which I have been involved - I have now done two - to get to a place where local authorities control and keep more of the revenue they raise. I know there are still policy issues in this regard and areas in which we can improve. I am sure the Deputy will give me his view on those now.
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I understand the Deputy's point. In between the two complex formulae and the spreadsheet I see, which has them on it - I am sure the Deputy is familiar with it - there are a number of local authorities like his own that believe they do not get to keep all of which they raise. The issue, which the Deputy acknowledges in his question, is that if we were to move to a system where all of what a county raises is kept within the local authority raising it, some local authorities would need additional support and intervention directly from the Exchequer to ensure funding they did not lose the funding they had. That would carry a consequence because it would mean funding that we are currently using in local government would have to be moved into that use. I have tried through the two revaluations to make a difference to the issue, which the Deputy acknowledged.
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On the second matter, I am happy to raise it with the Minister for local government, Deputy Browne, and his colleague, the Minister of State, Deputy Cummins, who is also involved in this issue with me. On the first matter, I examined that issue and inquired into it. I was definitively told I could not make that change. The reason is the budget cycle is annual and the budget cycle here is also annual. When I referred to the annual budget cycle in the first part of my answer, I spoke about the budget cycle within the local authority. For that reason, I was told, the decision in relation to the base rate has to be taken each year when budget decisions are made. I pressed that issue because I am aware of the challenges there can be around making that decision. I am afraid that on that issue, I have to give the Deputy a clear answer but not the one he wants.
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