Tom Sheahan (Kerry South, Fine Gael)

As a wise man in my parish once said, any man can notice and can spot somebody else's weaknesses, but it takes a great man to acknowledge his own weaknesses. The speculative demand for housing was pointed out to the Government in the Bacon report of June 2000. This is what has brought our economy and our country to its knees, namely the activities of the builders, bankers and the Government. In June 2000 Mr. Bacon said:

These various kinds of speculative demand forestall the movement of the housing market to stability. As this happens, there is a tendency to stimulate further speculative demand and in this way a 'bubble' can develop.

He said that nearly nine years ago.

We are having this debate because of the way the banks carried out their business and the development that took place that created the bubble. Irish banks loan money primarily to Irish builders and property developers to construct commercial developments and housing in Ireland. The types of housing projects or commercial developments entered into were hugely influenced by Government tax policy. Too many holiday homes, hotels and retail developments were constructed and many of these had a negative impact on the communities in which they were built. The property bubble which this created prevented many low and middle income families from acquiring a house. If the bankers were wrong to lend much of this money, the Government must share the blame, as it created the conditions which made it possible.

The question is what we do next. This is not a time to look for someone to blame. If there was wrongdoing in the banking system, those responsible should be brought to account, but that will not solve the problem we now face. The solution must benefit as many ordinary citizens as possible and it cannot be allowed to benefit only the banks and large property developers.

Currently people are afraid to purchase houses because of the negative sentiment being portrayed in the media. I want to make one point, which could help us to move forward from the current position. I would rather not knock everything. The Government should consider giving mortgage interest relief at the top rate for first-time house buyers on loans of up to €400,000. This figure should enable people throughout the country, even in Dublin, to locate a suitable property. This cost would be more than covered by the VAT and other taxes generated.

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