Michael Noonan (Limerick East, Fine Gael)

——or 4,000 people, if that is the estimate. However, it is a very small and modest proposal in the context of the housing industry and the difficulties faced by many families.

It restores certainty to the market, which will be reflected in some positive trends over the summer months. However, it does nothing fundamental. There is a serious issue facing the Minister as he prepares his next budget. Whatever about the merits of the commission on taxation, he needs to make a serious economic statement in the early autumn giving his view on where the building industry is going. The demand for mortgages in the first half of the year has dropped by 21%. It peaked at over 30% last year. The 21% drop in the demand for mortgages has nothing to do with the former Tánaiste's statements on stamp duty but has to do with rising interest rates. Housing starts for the first part of the year run as follows. In January, year on year, housing starts were down by 17%, in February they were down39%, in March they were down 23%, in April they were up 4% and in May they were down 43%. The 12 month trend shows a drop from approximately 90,000 housing units last year to 60,000 units this year. That is an astronomical drop. However, the demand for social housing is not the same as financial demand. The number of housing starts can drop significantly and, with it, take down the number of affordable and social houses that are statutorily required to be put in place by builders and developers. At the same time, there is an increasing social demand for houses for those who simply cannot afford them. Many builders have priced themselves out of the starter market. With eight interest rate increases of 0.25% each over the past 18 months, and a forecast of three more to follow, affordability is now a major issue.

The contention by many economists that the supply of houses has now met demand is not accurate. The drop in the supply of houses to 60,000 will be close to the financial demand for houses. It will be close to the number of people who can afford to purchase but beyond that there is a huge social demand for houses which will not be met. The number of affordable and social houses being put in place by builders and developers is dropping in proportion to the total number of housing starts this year. The Minister knows that the building and construction sector makes a huge, yet disproportionate, contribution to the wealth of the country and the Minister's revenue flow. I think it is now €3.5 billion or €4 billion, but this measure will not reduce that very much. The number of housing starts will significantly reduce the flow of VAT, income tax and PRSI into the Minister's coffers as soon as the autumn. I wonder what the estimate by the Departments of Finance and the Environment, Heritage and Local Government is of how many people will not commence work this summer in the building industry after the builders' summer holidays. I would be interested to know how many will not go back.

There is also some mismatch in the infrastructural programme. My information is that the National Roads Authority has not given out new contracts yet this year for structural work. The Minister should beef up the national plan by investing heavily in the roll-out of infrastructural work to take up the obvious redundancies that will occur in the house building sector. The Minister knows the issues as well and probably better than any of us, but it is time he produced a reasoned paper on trends early in the autumn. In that way, when we come to debate the budget we will base our arguments on solid facts rather than anecdotal evidence or speculation.

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