Stephen Donnelly (Wicklow, Social Democrats)
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Understandably, we seem to have moved into a conversation on policy rather than the specific amendment. If I could, I will also do the same.

When we went through this with the Minister at the budget oversight committee, he agreed it would be a demand-side policy measure and, in increasing profits to developers of new homes, it would fuel development of new homes, even though it would obviously increase the price. On the day it was introduced in the budget, probably as he was reading it out in the Chamber, prices went up. There is a development a few hundred metres from where I live. Prices there went up within hours of the Budget Statement. This will swallow the entire amount of the relief. I know Deputy Michael McGrath has cited other anecdotal evidence from around the country. It has already done, in limited cases, what Deputy Joan Burton described.

A potential house buyer might have had access to €300,000. They get a free €10,000 from the State from the scheme. Suddenly, the property goes up by €10,000. They are no better off. When we discussed this with the Minister at the budget committee, my sense was that it would take a little bit of time to do this. As Deputy Joan Burton said, maybe the first few first-time buyers might get some sort of help. However, it has happened instantly.

Everyone accepts this scheme is going to drive up the price of new homes. The Minister himself accepted that at the last budgetary committee. It will probably lead to some new homes being built. A supply-side approach would also lead to new homes being built but would drive down the purchase price. One of the lessons we should have learned from the crash, which many people are living through and will for the rest of their lives, is being overleveraged. Increasing house prices is essentially overleveraging people. A fantastic analysis by Senator Elizabeth Warren showed how in the US over the past several decades, the majority of additional household income, which has come about through better technology, better education and women moving from unpaid to paid work, has gone into higher mortgages. They are not living in bigger houses; they are the same houses. The same has happened in Ireland. What the Minister is proposing will make it worse. The first few first-time buyers may get some relief from this scheme. The rest will not because it will be priced in straight away. Indeed, it was being priced in as the Minister was reading it out in the Budget Statement in the Chamber.

It makes everyone else worse off, but particularly the negative equity generation. We have a large cohort of people who bought apartments and small homes between 2004 and 2008. They paid massive stamp duty, property taxes and second home taxes. Many of them ended up accidental landlords. They might have moved out of an apartment to raise kids and are renting it out while they rent somewhere else themselves. They have been hit with massive tax bills as a result. It makes them worse off. Take the example of two couples. One could be first-time buyers in their late 20s and the other could be a negative equity couple as I described. They both could be trying to get the same house. The first-time buyer has no legacy debts, may have no children and, chances are, their household costs are lower. We are giving them free money to buy this house. We are not, however, going to give the free money to the couple beside them in the line, who are in a much worse situation because they have legacy debts and are starting from minus €100,000. Ahead of the measure being introduced, what I and other committee members suggested would happen, happened instantly, thereby making the first-time buyers no better off and, critically, making the negative equity generation, who are stuck, even worse off. It just is not a sensible measure.

It is not like there are not any other options. There are plenty of supply-side options. As the Minister knows, the residual value is going to the owners of the land. It costs approximately €150,000 to build a semi-detached house in Dublin but it sells for €450,000. Up to €300,000 is floating around from the purchase price not going into the cost of build. Some of it goes to the builder's margin but the majority of it is going to whoever owns the land. What we have is not a market failure but a regulatory failure. There is no shortage of bricks, wire, glass or roofing slates.

Let us take a house near here and state it costs €150,000 to build it but someone will pay €450,000 for it and the extra €350,000 will go into the land. In all of the places where there is a high demand for people to live, the zonable land is either constrained or there is no incentive on those who may be hoarding it to develop it for residential use. This policy is ineffective and unfair on that negative equity generation. It will make things worse for most people. We need to incentivise residential development, but there are many available supply side measures, including zoning more land and investing in infrastructure to make that land available for development or applying a tax to zoned land in strategic areas to incentivise development.