Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

In the commercial market, the capital gains tax incentive that I announced in last year’s budget means that any property bought between now and the end of 2013 will be relieved from capital gains tax if held for at least seven years. I am fully aware that regeneration is necessary in a number of our cities in order to ensure a balanced economic recovery. To date regeneration schemes have failed to encourage private sector investment in the areas most in need so I will examine proposals for a targeted incentive in already identified regeneration areas.

Commercial Property and Real Estate Investment Trusts (REITS)

Initial indications are that the reduction last year of stamp duty from 6% to 2% for commercial property transactions has also helped bring stability to the commercial property sector. Demand for high-quality large office spaces has strengthened in 2012. In order to attract new investment, I will provide for the establishment of real estate investment trusts, REITs, which allow for investors to finance property investment in a risk diversified manner.

NAMA

The introduction of REITs may also assist NAMA in deleveraging its portfolio and allow it to bring more sustainable activity to both the commercial and residential property markets. NAMA is already making €2 billion of funding available over the next four years to complete residential and commercial projects in Ireland. This investment, which is already under way, with some €650 million of advances already approved, is expected to create significant employment in the region of 25,000 jobs in the construction sector and additional jobs in the wider economy. NAMA is also making €2 billion of vendor finance available to prospective purchasers of commercial properties over the same period. These property measures are also designed to create additional jobs in the property and construction sectors.

International Aviation Services

The task forces established to consider what was needed to effect independence for Shannon Airport concluded that there is potential for significant job creation in the aviation sector in Ireland. To facilitate the sector, I will be putting in place measures to facilitate the construction of hangers and ancillary facilities that will be key to attracting additional aviation sector organisations to the country. My Department will also examine, together with the Department of Transport, Tourism and Sport and the Department of Jobs, Enterprise and Innovation, the feasibility of new funding sources for airlines and aircraft financing and leasing companies. Further details should become available shortly. Whereas these measures were proposed by the task forces for the new International Services Centre in Shannon, I am making the measures available to all other airports who wish also to avail of these measures.

Public Finances

Based on the latest information, including the November tax receipts, my Department now projects that the general Government deficit for this year will be 8.2%, comfortably inside the required target of 8.6% under the excessive deficit procedure. The projected deficits for 2013 to 2015 are 7.5%, 5.1% and 2.9%, respectively, all in line with the targets we have to achieve. These deficit projections are based on projected economic growth for GDP in 2013 of 1.5%, rising to 2.5% in 2014 and 2.9% in 2015, as published in the medium term fiscal statement three weeks ago. Total voted and non-voted expenditure will be €69 billion in 2013 and €54.5 billion of this consists of voted public expenditure, as well as expenditure funded by the social insurance fund and the national training fund. The Minister for Public Expenditure and Reform, Deputy Howlin, will present his expenditure report immediately after my statement. The budget and expenditure report includes the €3.5 billion budgetary consolidation required in 2013 to achieve the deficit target. Projected consolidation for 2014 and 2015 of €3.1 billion and €2 billion respectively is unchanged from the figures specified in the medium term fiscal statement, both regarding volume and the split between revenue and expenditure.

The Irish financial crisis could be summarised in the word "debt", consisting of both national debt and personal debt. The Government is committed to dealing with both. Continuing to borrow large amounts to fund our day to day services is simply not sustainable. The reality is that stable public finances are an essential prerequisite to long-term economic growth and job creation. We will only be able to successfully access the markets in the long term if the markets believe we have a credible fiscal strategy and agree that our debt is sustainable.

Dealing with personal debt is also vital. The Central Bank is overseeing the roll-out of a range of options to deal with unsustainable personal and commercial debt. I stress that these measures are focused on unsustainable debt as taxpayers cannot afford to fund blanket debt forgiveness. I welcome that Allied Irish Banks is committed to contacting 1,500 customers per month to work with them to restructure their mortgages.

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