Ciarán Lynch (Cork South Central, Labour) | Oireachtas source

I thank Deputy Ó Cuív for facilitating me by allowing me to speak before Private Members’ business. If a week is a long time in politics, a year is certainly a longer time. This time last year, when we debated the Finance Bill 2013, the projected adjustment to take place this year was put at €2 billion. It was to be achieved through taxation-raising measures, public expenditure reductions and so forth. Twelve months later, we find ourselves in a remarkable place where, for the first time in seven years, we have a recovery budget and are beginning to put money back into people’s pockets. In this budget we saw an increase in spending in a careful and targeted way, taxes cut for low- and middle-income workers and meaningful measures that will boost growth and continue the recovery that is under way.

What do we mean by recovery, however? I understand the frustration of those who have continued to work during the difficult years we have endured since the country’s financial collapse. They have worked but have seen their household incomes diminish during that period. While they hear claims that unemployment is dropping by 1,000 a month and that we are back in the bond markets at rates better than before 2004, along with other positive financial indicators, they do not feel these improvements in their pockets. Recovery really only kicks in when people actually feel it across the private and public sectors. The Government’s job is to ensure that as economic recovery continues, it is felt by all.

In times of financial difficulty, Governments introduce emergency budgets, usually to take money out of people’s pockets. As the recovery proceeds, the Government should consider the introduction of a mini-budget between now and next October to put money back into people’s pockets. Before the budget the Oireachtas Joint Committee on Finance, Public Expenditure and Reform heard several presentations from various agencies, including IBEC, stating that the budget deficit correction actually only needed to be €400 million, but they were not taken seriously. They indicated that money could actually be returned to people. I believe serious consideration needs to be given by the Administration to these proposals.

There is a criticism that the budget was unfair, with an imbalance in benefits between low-paid and high-paid workers. Those who have made this claim have done so either disingenuously or in a selective manner. A person with a child dependant earning around the €12,000 mark, which just comes into the USC area, will also now qualify for family income supplement, another State support. This person will get 60% of the difference between €250 and €504 made up. This will come to another €160 a week that they are actually getting. If one adds this to €250, then one is earning, net, what a salary of €23,000 would bring in. It is disingenuous for people to criticise the changes to the €12,000 USC entry level while not looking at the other ancillary supports and benefits introduced by the Department of Social Protection. We will see an extension of this type of thinking through the work the Tánaiste and Minister for Social Protection is doing on the family assist programme.

At the heart of the financial crisis and meltdown was an unsustainable housing market. As we move towards recovery, we must aim for a normal and sustainable housing market that ensures people can afford to buy homes. Despite the financial crisis and the house price crash, Ireland will continue to be a home-purchasing nation. We must ensure those on average wages can get access to the housing market and can afford to buy homes. Much consideration must be given to the recent announcement by the Governor of the Central Bank, Professor Patrick Honohan, on loan-to-value, LTV, ratios and the requirement of a 20% deposit for a house. There were the obvious knee-jerk reactions in some quarters, which must be resisted. We should have learned from the past. We now have a regulator who represents the opposite of light-touch regulation and whom we must listen to. It also presents an opportunity to examine a new way of having a housing market that favours home purchasers over buy-to-let and corporate investors. Ultimately, the Government must choose; one cannot have a housing market in which the Government is neutral. The difficulty with the 80:20 LTV ratio is that it favours investors. First-time buyers, the very people who sustain a housing market and were locked out of the previous market, which led to its collapse, will have problems meeting an 80:20 ratio requirement as they tend to have high risks. We need to examine new lending practices or a new type of financial product geared towards favouring homeowners. This has been done in other jurisdictions, most notably Canada, which did not have a housing crash. I would like to see the Department of Finance, along with the banks and Financial Regulator, examine a new type of approach to house purchases, one targeted at first-time buyers and which is sustainable and will keep property inflation in line with wages.

Ireland is on the road to recovery, there is no question about that. People need to feel that recovery in their pockets. Despite the biggest economic crash this country has ever faced, we continue to be a home-purchasing nation. For a litmus test of this recovery being real, genuine, long-term, sustainable and - to quote the Minister, Deputy Noonan - to show that we are taking a road less travelled, we need to design a mortgage product to ensure that home-owners are at the preferential end of the housing market.

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