Pearse Doherty (Donegal, Sinn Fein)
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The Minister says it is not about adding profits to developers or lining their pockets, but he has to admit that is exactly what it will do. He cannot deny the effect of this section. This section states that they can assume a 125% deduction for certain costs in the construction of apartments, up to €50,000. In many cases in this city, there is a requirement regarding a minimum number of apartments, which is approximately 40 or 50 apartments. A small apartment block of 50 units will allow a developer to make a profit of €2.5 million without paying any tax. That is the definition of lining the pockets of developers. That is the consequence of this section, regardless of whether the Minister wants to admit that was the intention behind it or there was a different intention. The effect of this section is to boost the profit of developers in that regard. There may be other intentions the Minister hopes will materialise regarding this section, but he is making the wrong choice.

When we look at the problem in terms of Fianna Fáil and Fine Gael and the housing crisis, we talk about when the penny will drop. The proposals they continue to have look at issues through the lens of tax reliefs, cuts and so on and so forth. It is a developer-led approach and has resulted in a housing crisis. I made the point yesterday that the crisis did not fall from the sky. It has resulted from the policies Fianna Fáil and Fine Gael have created.

The housing crisis is not just about the shortage of supply, but also about affordability. The Minister talks about apartments, but if we strip out the apartments the LDA or approved housing bodies are purchasing in the city, the vast majority of apartments built in this city over the last number of years – over 90% - have been for the buy-to-let sector, which charges extremely high rents in the city. There is an affordability issue in this regard also. I do not know whether this is part of the Minister’s proposal to end the housing crisis in four years. Is that a Government policy?

Maybe the Minister can elaborate on that. Does he also believe the housing crisis will be ended in the next four years or is he at odds with the Minister, Deputy Browne, on that matter? Maybe the Minister could help us define what the housing crisis is.

On this section, when we look at the resources that are available - the Minister made the point very clearly yesterday about difficult choices, priorities and all the rest - he is asking us to vote for a measure the effect of which will be to boost the profits of the construction industry. That is the answer. It will be interesting to hear the Minister's analysis or the Department's analysis of what the appropriate profit margin is. What is the appropriate profit margin for developers before the Minister would decide they already have enough profit and he is not going to bring forward a tax measure that asks for ordinary taxpayers' money to go into the pockets of developers? Is it 10%, 20% or 30%? Does Fine Gael want property developers to have 35% profit margins? What was the metric used for profit margins? This will have the effect of increasing them. The only way this can result in, as the Minister said, the desired effect in terms of viability, is that property developers will say they are going to do this now because they are going to get more profits as a result of it. The question, which is a genuine one, is: what level of profit is available because this measure would allow for a developer to make 30% profit and still get this tax break? There is no brake in relation to that. They would still be able to get that additional offset that boosts their profits because if they were previously going to get 30% their profit margin will increase as a result of this due to their being able to use the 125% metric.