Richard Bruton (Dublin North Central, Fine Gael)

I congratulate the Leas-Cheann Comhairle on his appointment. It is somewhat ironic that his first action will be to preside over the unnecessary guillotine that is being applied to the Bill. The latter is to some degree a measure of arrogance that has been evident in the Government since its re-election. I again congratulate the Leas-Cheann Comhairle on his election and I look forward to very fair rulings from the Chair during his stewardship.

The origins of the Bill are deeply cynical. It is not six months since the Tánaiste, in his capacity as Minister for Finance, informed those buying houses that reform of the stamp duty code was not justified. Less than four months ago he voted down reforms designed to extend the thresholds at which stamp duty would apply to first-time buyers. Sadly, many first-time buyers took him at his word. I have received e-mails and letters from people who paid stamp duty of between €25,000 and €27,000 before 31 March last, confident in the belief that the Minister for Finance would stand by the word he gave at budget time. This legislation will do nothing to cater for the needs of such people, who feel deeply let down. The Bill is not part of any thought-out Government strategy aimed at helping those who are disadvantaged in the housing market or bringing stability and sustainability to the market. This deeply cynical exercise is an example of the naked political ambition of Fianna Fáil, which wants to stay in power at all costs. Fianna Fáil housing policy has not helped disadvantaged people within the housing market and it has not created a stable market. Where is the equity in the Government's provision in this regard?

The Government is masquerading, like a wolf in sheep's clothing, as the defender of first-time buyers. I am sure the Acting Chairman, Deputy O'Shea, remembers that the Government added €40,000, in effect, to the cost of a house for a first-time buyer. It increased VAT by 1%, added development charges, abolished the first-time buyer's grant and introduced the Part V site cost under the planning Act. This Bill does nothing to alleviate such extra costs, which are being paid by first-time buyers. The only first-time buyer of a new house who will get anything from this legislation is someone who is buying a new house in excess of 125 sq. m. I see no reason the taxpayer should be asked to dish out money to the buyers of such houses. This change is not needed in such cases and cannot be justified. It will do nothing to relieve the burdens faced by many people who are buying homes.

I would like to examine briefly the Government's housing record over the past ten years. House prices have increased by 200% as a result of the Government's mismanagement of the land bank market. The Central Bank, which is not exactly a centre of radical thinking, has claimed that half of the population cannot afford the payments on an average house. The Central Bank is not a left-wing think tank. The Government promised in the national development plan that 11,000 social and affordable houses would be built on foot of public investment on public land. Just 6,000 such houses — barely 50% of the target that was set to benefit the most disadvantaged people in the housing market — have been delivered under the Minister and his colleagues. The so-called Part V provisions were supposed to ensure that one in every five houses built on private land would be a social or affordable house. One in 40 houses built on private land falls into that category, however. Less than 2.5% of houses privately built last year were deemed to be social and affordable houses under the so-called planning provision.

The strategy of the Government in the housing sector has imploded. Public policy is undermining the position of first-time house buyers. The circumstances of people who are forced to rent their homes are little better. Some of the poorest families in the community are forced into the rental market because they cannot afford to buy houses. The princely subsidy they receive from the Minister comes to just €13.85 a week. That is the total subvention paid to people with low incomes who live in rented accommodation. That people who are unemployed get a further subvention is another example of a poverty trap that is built into the Government's housing policy.

It is absolutely and certainly true that stamp duty is an unfair tax. Root and branch reform, rather than the sort of timid changes which are proposed in this legislation, is required in this area. It does not include any thresholds or sliding scales which would link the benefits received to the ability to pay in some way. It breaches the requirement that a tax should be fair and equitable, which is one of the so-called canons of taxation. Perversely, it makes it more difficult for people to move to homes in areas with established schools, health facilities and other amenities. The schools in my constituency are emptying and many facilities in the area are under-used. The extent of the huge tax barrier which prevents people with young families from occupying houses in areas with established facilities has increased from €9,000 to €41,000 in Dublin over the past four years. This perverse tax is damaging our capacity to care for the community efficiently and to use our housing stock effectively. It is facilitating the headlong rush by developers to build houses in greenfield sites, where buyers will not face stamp duty. Those who are living in areas where unsustainable development has taken place are facing long commutes.

Ireland is characterised by its repetition of the worst mistakes of urban sprawl, as seen in the United States. The housing policy that is being pursued by the present Government is dysfunctional. The people who designed the policy have no concept of integrated planning. The manner in which the Government is approaching its housing policy does not reflect any thinking about these important issues.

This unjust tax will continue to apply after today to everyone buying houses who are not first-time buyers. Who are these people? Are they property speculators who are entitled to this quadrupling of their tax bill in the space of four years? They certainly are not. They are not the property speculators or the super rich, although the super rich still have plenty of tax havens. These people are ordinary families who want to buy in a neighbourhood with facilities. They are couples who bought a one-bedroom apartment, now have a family and want to move to a family home. They are older people who might need to trade down because of diminishing capabilities. They cannot run a garden or manage the stairs and want to move. They are people whose relationships have broken up and who need to buy again, but are not deemed to be first-time buyers. These people are being singled out in this Bill for this sort of tax penalty — a quadrupling in the space of four years. These very ordinary people are being charged a total of €41,000 on an average house in Dublin. I see no fairness in that position.

Is this part of some grand strategy to stabilise the housing market? I beg to differ. I will read a quote to the House which is not from some sore-headed Opposition politician:

A strong case can be made that the patterns of settlement, neighbourhood design and density in the past decade are storing up significant social, environmental, budgetary and economic problems in the years to come. Furthermore, this has been occurring in a context in which there are clear, well-defined, feasible alternatives that are sustainable.

The National Economic and Social Council said that — the great and the good of Irish society. It pinpointed the dysfunctional nature of Fianna Fáil housing policy that has been pursued for a decade. Nothing is being done to address that situation. Instead of a proper set of reforms to change the way the housing market operates, we have seen inept interventions which have all had to be abandoned. The 60% "use it or lose it" capital tax introduced by Charlie McCreevy went within a year, while the penal code for investors went within a couple of years. These were inept interventions that did nothing for the housing market.

Over the past decade, Government policy has fostered a chronic imbalance in the housing market. It has created a contrived scarcity of development land, driving the price of development sky high. It has failed to reform a dysfunctional planning system that sees new homes built without schools, public transport and health facilities. It has encouraged unsustainable one-off housing on cheaper land, free from any development levies — the contrary to the sort of policy we should be pursuing to try to create a compact way of living.

The legacy of this policy is clear — excessive house prices, unaffordability, a new poor and a sector bloated by high profitability. The Minister talks about the indication that the housing market is in great shape. It is being driven by house prices that are too high. It is commonly believed that houses are overpriced. The volumes are excessive and unsustainable in the long term and, as Davy noted, in the next two years, we will see house completions go from 95,000 down to 65,000. This will have an impact on Exchequer revenue and employment in the construction sector. These are the indicators of a mismanaged housing market, not a well-managed one, and not surprisingly——

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