Róisín Shortall (Dublin North West, Social Democrats) | Oireachtas source

The measures in regard to the USC do nothing whatsoever for people on the lowest incomes. Some 750,000 people will get no benefit from the USC measures. In regard to the people who do benefit, a 0.5% cut is something that most people will not notice. At a cost of €335 million, the Government could have done something significant in one of the main areas if it had the vision. Unfortunately, the Government was missing that vision.

There is no doubt the most significant problem facing us is the housing crisis. Unfortunately, the measures in this budget are extremely weak when it comes to housing. The Government introduced two particular measures which I believe are very misplaced in their focus - one is the help-to-buy scheme and the other is tax relief for landlords. Both will undoubtedly further inflate house prices.

The help-to-buy scheme is an utterly regressive scheme. It covers purchases up to €600,000. Why are we subsidising people to buy houses with a value up to €600,000? The message is quite clear: it is yet another regressive measure. The bigger the house one buys, the bigger the subsidy one gets. I thought we were moving away from the idea of regressive budget measures. Under the current Central Bank macro-prudential rules, the income needed to purchase a property of the value in question is closer to that of a Minister of State than a person on an average income. Therefore, is there any case whatsoever for providing a subsidy to people on an income of the level of a Minister of State to buy a house with a value up to €600,000? I would suggest emphatically that this is not the case. I do not know why the Minister is taking this measure.

The Minister for Finance made an extraordinary comment today that I can describe only as gobbledygook economics. In the context of announcing the help-to-buy scheme, he stated:

In all markets supply increases to meet demand and the help-to-buy scheme will increase the demand for newly built houses by assisting first time buyers to put a deposit together. I expect the building industry to meet this additional demand by increasing the supply of new affordable homes.

The problem with housing is that the market has utterly failed. The significant problem the Minister responsible for housing, Deputy Coveney, should be dealing with here today is that housing is not affordable for anybody on an average income. He is doing the exact opposite. He is making housing less affordable. What he is doing is taking steps that will inevitably drive up the price of houses. There is no reason to believe the additional funding he is providing for first-time buyers will do anything but go into the back pockets of builders and developers. The fact of the matter is that first-time buyers, by and large, are competing with other first-time buyers for starter homes. Therefore, if an extra €10,000, €15,000 or €20,000 is being put into the pockets of all first-time buyers, it will inevitably lead to price inflation for all houses in this category. In a climate in which one third of all properties sold this year were bought by property investors, the scheme will serve only to inflate demand artificially, putting further pressure on our limited supply and raising prices out of reach of first-time buyers, whom the Minister is claiming to be assisting.

There were, of course, other steps the Minister could have taken that would have made a significant difference in regard to the affordability of housing. What he should have done was take steps to increase significantly the supply of housing. In the past, a mistake that fuelled the housing bubble was to use tax measures to increase the likelihood of people extending themselves beyond what they could actually afford. Part of the reason the Central Bank introduced the new rules was to ensure this does not happen again. It is quite extraordinary that the Government is introducing a measure that is specifically intended to undermine the actions of the Central Bank.

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