Brian Cowen (Laois-Offaly, Fianna Fail)

The Labour Party leader said it would be done as he was coming down in the car from Áras an Uachtaráin. That is how matters progress, how the debate develops and how it all works out in the end.

When he was in the Seanad, Deputy Mansergh made the point on the Finance Bill at the time this issue was raging — he repeated it in recent days — that we need to be careful because issues such as this require to be dealt with in the budgetary context. I am not suggesting we should impose a vow of silence in terms of policy initiatives coming up to elections — they are the reality and it is a democratic debate. If the people want to raise the issue, as they did, we respond. However, while we had a trenchant debate on the matter, none of us can deny there were behavioural consequences as a result of that debate in that an expectation was created, one way or the other, which had the effect of causing some dislocation to the market. It was not the exclusive cause because, obviously, the increase in interest rates has also had a gradual effect in the past couple of years and, in some respects, as I have said, that correction is welcome. However, the debate has had an adverse effect.

I am not sure how we manage this for the future but there is a responsibility on all of us to try to have these debates within a certain period, after which decisions are taken and we move on rather than creating prolonged uncertainty, which has had a detrimental effect in this case. It is not uncertainty from which the building industry need not recover — I do not suggest that is the case. However, I felt that if the initial manifestation of the policy emanating from the opposite side were to operate over a three-year period, it would have a very detrimental effect. In any case, that issue was clarified over a period.

Issues such as this are dealt with by way of resolution on the day of the budget because we want to make sure a new situation applies the next day, whether in the context of excise, stamp duty or any other matter. We do this so people do not speculate on the basis of what it is we are trying to achieve and take an unfair advantage.

The other point is that we must not talk down the economy. We can continue with good, strong growth rates. While we recognise there is no room for complacency, we have a wider responsibility, beyond our party political interests or defending the respective positions which we have trenchantly argued recently, to make sure we do not inject a sentiment into the economic debate that would be a prophecy of doom. We must not worsen a situation which needs to recover by injecting that intangible sentiment. To do so would have an effect because all of us, as public representatives in our local areas and in our areas of responsibility, are in touch with people in the industry in every respect.

When I talk about the industry, I am talking about the 280,000 people who work in it — the tradesmen and workers, not just those who own construction companies or land banks. Almost 14% of our workforce gets up every morning and goes to work in this industry. Not all of them work in the residential sector but it is a very important sector, quite apart from our public works projects, which we intend to increase as a percentage of our overall economic activity in the coming years under the national development plan.

The point is that as this correction takes place, we will move from the high of 90,000 completions. Ten years ago there were 33,000 completions, but last year 93,000 were registered, some of which, approximately 5,000, were an overhang from the previous year. Let us assume there were 88,000 last year and that we move towards approximately 75,000 this year and 70,000 in subsequent years. We need to get the kind of path in terms of housing output that will not have an adverse effect on confidence in the economy generally, that will maintain employment in the residential sector to the greatest extent possible and that will help in the take up of our increased public work programme and capital programmes in all the areas of social and physical infrastructure we see being rolled out year on year. We must ensure we get through this period in a way that reinforces rather than saps confidence in the industry so as to avoid the worst adverse effects a correction may bring.

We all recognise there is a softening in the market and we need to avoid doing anything to make the situation appear worse. I do not suggest anyone here is engaged in that, but sometimes in the heat of debate a situation can be portrayed to the public as being worse than it is or it can be suggested that the situation cannot be corrected quickly so we can move on at a level of activity far greater in historic terms than would have been the average ten or 15 years ago.

It is for this important reason that we have brought forward our proposal. I do not take away from the sincerity of the arguments of the Opposition, nor do I suggest or speculate that the proposal is for other reforms. All matters relating to tax base, revenues and spending plans are part of the budgetary context, which is an annual process. The issue here is to bring certainty to the market and send a clear signal on the plan for the forseeable future, based on the initiatives we are taking. They are targeted at the first-time buyer and by definition are affordable in the overall macro-economic and fiscal framework that was the basis for the proposals we put to the country. The wider, what the Opposition would call more comprehensive but what I would call more scatter-gun, approach that thinks we can deal with every segment of the market in the same way, with a cost of hundreds of millions for 53,000 or 54,000 people annually which would be paid for by 2.15 million other workers, seems to be an approach that would not lend itself to stability or certainty nor enable the correction to take place and reduce the double digit house price inflation that has been a characteristic of our very buoyant and, in recent years, overheated market. The market is now heading towards stability with prices heading back to where they were in August last year. Let us ensure that as a result of the passing of this legislation, the market will take the positive signal it is meant to send and housing output will recover, not back to the record levels of last year, but to a level where we get the soft landing that is in the interest of everybody, including the tens and hundreds of thousands of people who depend on the industry for a livelihood.

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