Dr. Kieran McQuinn:

On that point, when we said "do no harm", this was in response to certain taxation measures that were being proposed. For instance, the VAT issue was being floated with the potential to give those on the development side a possible reduction in the VAT rates. When we said "do no harm", we were addressing those kinds of specific measures. We produced a quite detailed report going through the various effects as a result. As I stated in my previous contribution, where we clearly believe there must be action on the housing market is on the social housing front. This is one area in which the State could make a significant contribution and there obviously has been the publication of the housing plan during the summer. As I stated, by addressing the social housing side, one can have positive spillover effects on the private sector side. We even went so far as to look back to the noughties and even after the financial crisis had kicked in, in 2007 and 2008, as an economy we still were building approximately 3,500 to 4,000 social housing or public authority housing units at the time. A rough metric would suggest we were spending approximately €1.5 billion on it at the time. We were putting those figures in the public domain to state this is the kind of investment needed to get that number of units up and running on a year-on-year basis. Certainly, that is one specific measure.

The site tax to which Professor Barrett referred is a measure we identified clearly in some research that was published at the tail-end of last year. Basically, we looked across other jurisdictions and tried to identify measures that seemed to have an impact in triggering supply in the housing market and the site tax, particularly in the Danish case, seemed to work quite well. As I understand it, there are proposals to bring in a site tax - in 2019 I believe - and a tax rate of approximately 2% to 3% has been suggested. Our recommendation would have been that this be fast-tracked, where possible, and that the rate be considered and even possibly increased. A site tax certainly is one area that could have a quite significant impact in bringing greater supply on stream.

The Deputy mentioned the issue of the deposit, which of course ties in with the macroprudential measures. First, I should state that I was a central banker for many years and I would state without equivocation that macroprudential policy is of huge importance in an Irish context, particularly given everything we have experienced with the credit bubble that led to the difficulties in the banking sector. Consequently, it is important to have this series of measures in place to prevent us from going back down the route we took in the past. We have, however, in a series of submissions and in a series of papers, suggested that the way in which these measures should be implemented should be considered. That is part of the submission regarding the latest revision of these measures that the Central Bank is undertaking. Our point has been that we believe the measures should have what we call a counter-cyclical dimension to them in how they are implemented. This basically is just following on from what we think is best practice in every other area of major economic policy, be it monetary policy or fiscal policy, namely, that when one is triggering these measures, whether it be the loan-to-value ratio or the loan-to-income ratio, one takes into account the state of the housing market at a point in time. Consequently, one examines things like house prices, supply and the credit levels that are extended in the economy. If, on the basis of one's judgment, one thinks the measures are suggesting the market is in a contractionary phase or is in a downturn, one then may need to ease these measures. Similarly, if one thinks the market is overperforming or that too many houses are being built, one tightens the credit supply. This is a principle we believe should be at the centre of the macroprudential regime. As I stated, it is of huge importance and like any other new policy area, it is important that it gets buy-in from everybody and having that element to it would help and assist in this regard. As I stated, these three areas basically are, broadly speaking, greater involvement on the supply of social housing, a site tax and possibly a counter-cyclical dimension built into the way in which the macroprudential policy measures are being implemented.