Pearse Doherty (Donegal, Sinn Fein) | Oireachtas source

The Minister said that I did not acknowledge the positive decisions he has taken. He is wrong. I have acknowledged them. I have supported many of the measures brought forward by him in this Bill, some of which I referred to when I was addressing this issue, particularly the previous measure we discussed in terms of the write-off around returning vacant homes into stock. It is unfair of the Minister to suggest that I have not acknowledged some of the positive measures he has introduced. That said, as Minister for Finance and a member of the Cabinet he is responsible, collectively and personally, for the decisions he has taken that have created a homelessness and housing crisis and resulted in house prices escalating at a dramatic rate. I am hearing nothing from the Minister in terms of plans to stop this worsening.

This time last year we heard from the Central Statistics Office, CSO, that house prices had increased by 8% year-on-year. Since then house prices year-on-year have increased by 12%, which is a 50% increase. This equates to an increase of approximately €3,000 to €4,000 per month in the value of the properties, which is putting the purchase of a home beyond the reach of many people. Taking account of current trends property prices will reach peak point in the next two years. This means that at that time house prices in Dublin will be the same as they were in February 2007. How are we going to deal with that? Even if house prices do not hit peak they will still be over-valued. A four bedroom semi-detached house in Dublin costs €440,000. A 12% increase will put that house beyond the help-to-buy scheme because it will be close to or exceed the €500,000 threshold. This is where property prices are now.

The Minister mentioned the issue of the VAT reduction and I responded that it was a daft idea. It was a daft idea. I do not think the Construction Industry Federation, CIF, is daft. It knows exactly what it is doing. Of course, it would have bagged the VAT reduction if it had been agreed. What the CIF did in this regard was a lobbying ploy. It raised the issue at a time when the Minister was reviewing the help-to-buy scheme. When the CIF engaged with the Department of Finance last year the first item on its agenda was the help-to-buy scheme. Because of public pressure and because every economist worth his or her salt is saying the help-to-buy scheme is not working and it is contributing to house price inflation there was speculation that it would be abolished or significantly changed. The response of the CIF was to make an even bigger demand - a daft demand in my view - that it knew would never be realised and Fianna Fáil rowed in behind it, as it has traditionally done in terms of the construction sector. The CIF put a little political pressure on in relation to a demand it did not believe it would get to ensure the first item on its agenda, the help-to-buy scheme, was secure and lo and behold the Minister fell for it hook, line and sinker. When it comes to negotiations one creates demands, all of which one does not expect to be met but help to secure one's main demand. This is as old as day itself. That is what happened. Does the Minister genuinely believe we should be patting him on the back for not giving in to the CIF demand for a VAT rebate? Does he not know he was played? He mentioned he did not agree to it because he could not guarantee it would lead to an increase in supply. He also cannot guarantee the help-to-buy scheme will lead to an increase in supply. I am not the only one saying that: it is also stated in the report. The Minister said that the withdrawal of the VAT scheme would cause problems. The withdrawal of the help-to-buy scheme will also cause problems. The Minister also said that he cannot measure the affect of increases in supply from the VAT rebate because of the lead-in period. The same applies in respect of the help-to-buy scheme. It is due to expire at the end of 2019.

There is no reason this scheme continues. The Minister stated that draw-down is in the region of €300,000. This scheme is available not only in Dublin but across the country. House prices in the west are increasing at a higher rate than in they are in Dublin. House prices in the north west are increasing at a lower rate but still above the 10% rate but those house prices are not at the €400,000 mark. Average house prices in many of those counties are €180,000 or €190,000. The fact that houses eligible under the scheme are in the region of €226,000 to €300,000 means nothing unless the Minister can say that without the scheme house prices would have been cheaper. He cannot say that. It is not possible for him to do so. The help-to-buy scheme does only one thing. I am not saying that the Minister personally is putting money into the pockets of developers. Rather than saying something behind the Minister's back I will say it to his face. This scheme puts money into the pockets of developers. We are supposed to scrutinise measures in terms of their effectiveness. In terms of effectiveness and the help-to-buy scheme the State is transferring valuable resources that could be diverted elsewhere to persons who are purchasing houses but those properties, if in the capital city, are increasing at a rate of €3,000 to €4,000 per month or €30,000 per year, such that benefit of the scheme is lost to them and that money ends up in the property developer's back pocket. The Minister's only argument for the continuation of this scheme is that he did not give in to the developers on the VAT reduction. I thought that the Minister knew what was going on in that regard. I probably believe that the Minister did know what the CIF was doing. I encourage the Minister to talk to people becuase everybody knows what the game plan was in terms of the VAT reduction.

If the Minister for Finance thinks that they were the big guys standing up to the construction sector in this, I am sorry to inform him that he was played on it because the construction sector got exactly what it wanted. The sector got the help-to-buy scheme continued for two years at a time when the Government was wobbling and, from the soundings coming out, it was possibly going to end the scheme or significantly restructure it.