Oireachtas Joint and Select Committees

Tuesday, 5 November 2019

Select Committee on Finance, Public Expenditure and Reform, and Taoiseach

Finance Bill 2019: Committee Stage

Photo of Pearse DohertyPearse Doherty (Donegal, Sinn Fein) | Oireachtas source

That is ridiculous. There is no evidence to suggest that two different metrics are connected. I will read from the Parliamentary Budget Office, PBO, examination in respect of this. It states:

In 2018, at least 56% of HTB claims were above the average house price (€286,931). This poses some risk as schemes which stimulate demand for more expensive properties could put inflationary pressures on property prices.

That is what this scheme does. It puts money into pockets of individuals, some of whom need it to get on to the property ladder and others who do not need it. We know that at least 41% did not need it but that figure will increase because there are people who had a loan-to-value ratio of, for example, 87% who would only have needed a portion of the scheme to benefit. This is about stimulating demand. There is no need to stimulate demand. We have 10,000 people homeless. Thousands upon thousands of people have moved back to live with their families in their childhood bedrooms. In some cases, couples and families have moved back home. There are people who are sofa surfing. Local authority housing waiting lists are bulging. The demand already exists. To suggest that putting money into pockets of individuals who do not need it to get onto the property ladder - in this case we are talking in the region of €40 million - is somehow leading to demand is wrong.

The rationale behind this scheme, and I am trying to figure out if the Minister has moved the goalposts or if we are sticking with this rationale, as was argued at the time by the then Minister, Deputy Noonan, was to assist people to get onto the property ladder and meet the requirements of the Central Bank, which meant that one needed to have 10% of the house purchase price. The rationale was that the State was providing one with 5%. It was to do with the affordability and the rules of the Central Bank at that time. I disagreed with it because as the Parliamentary Budget Office has outlined, increasing that type of demand can put pressure on house prices. It does not matter if more houses are built. If that is the rationale, the argument still exists that people will need assistance to get onto the property ladder. The only way we can combat that is by driving down house prices. The suggestion from others, including the PBO, is that this has gone the other way and put inflationary pressure on house prices, which is making it worse for families.

This scheme was supposed to end. That is written into the law of the land. The Minister cannot finish a scheme. He has the same problem as Fianna Fáil with property schemes. He does not understand when they need to end, and there is no justification to continue it at this point in time when the PBO is asking who is benefiting from it. It is the wealthier in society who are benefiting but why? We can see in terms of the breakdown of the value of houses that they are at the upper end of the scale. This is not a good way of dealing with the housing crisis. It has failed.

If I was a first-time buyer I would be praising the Minister. Who would not want €20,000 at the time when one is making a huge investment? Everybody would want it. They would want €40,000 or €50,000 if they have a Minister for Finance who was willing to write a cheque and hand it over to them but we have a responsibility to balance all the needs of society. The idea of providing this type of support for people who do not need it, which is going contrary to what we need in that it is pushing up house prices and which is concentrated at the higher level of house prices, does not make sense. The Minister needs to end this scheme.

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