Simon Coveney (Cork South Central, Fine Gael) | Oireachtas source

I wish to share time with Minister of State, Deputy Kyne, and Deputy Michael D'Arcy.

I am please to have an opportunity to contribute on the budget and to clarify a number of issues. A series of comments have been made by a number of Opposition spokespeople both yesterday and today on the housing measures and it is good to have an opportunity to respond to them. This has been a balanced budget. Of course, we would have liked to have done more in many areas but we had to ensure the expenditure committed to by Government was affordable and that we did not go down the road of increasing expenditure in an unsustainable way, which we would regret in a few years. A number of Deputies opposite have claimed credit for the change in emphasis in this budget from previous budgets. There is a clear change of emphasis in the programme for Government as well as in the commitments that we have made in the confidence and supply agreement with Fianna Fáil to try to deliver on improving public services now that the State can afford to do it. These commitments were bought into and decided by Fine Gael. That happens to be consistent with what Fianna Fáil is saying but the idea that Fianna Fáil has decided what the split between expenditure and taxation should be is a nonsense and I say that as someone who was involved in the negotiations. However, I am glad there is basic agreement on the need to spend more on improving public services and to assist people who rely on the State for their income through the many supports available in the education and health sectors and through housing provision and so on. We have very much bought into that change of emphasis.

This is a significant budget from a housing perspective. I have heard what I expected to hear from some Opposition parties. No matter what we do, it will not be enough. Sinn Féin's view seems to be that the State should house everybody and that the sole focus of a budget should be on the provision of social housing. The main focus of my budget should be on the provision of social housing and the provision of affordable housing in the right place but there has to be a balance between what the private sector can deliver and how we can help it to deliver it, and a proactive approach to the State delivering a lot more in terms of social housing need. Expenditure on housing has increased by 50% in this budget. No other Department comes close to such a percentage increase. That is a reflection of the fact that housing and the provision of social housing, in particular, is the No. 1 priority for Government in respect of focused capital expenditure over the next five years. As I have said many times, we are committed to adding 47,000 units to the social housing stock over that period and there needs to be a big move in that direction next year. Yesterday's budget allocation means we will provide more than 21,000 housing solutions for social housing clients through HAP, RAS and so on in 2017.

The issue is delivering on the promise of the rebuilding Ireland programme and putting the resources in place to do that, and delivering through the tax system on what was promised in terms of trying to fix an element of the market that relates to first-time buyers. However, everything we are doing is about driving supply, including getting vacant properties back into use, and getting new homes built for everybody in the market, including first-time buyers who are simply not having homes built for them at the moment. In addressing the housing response in the budget, Members have to address the complete picture, including initiatives such as the funding for the Housing Agency to purchase properties; the repair and lease initiative to get vacant properties back into use; the buy and renew initiative for local authorities and approved housing bodies to get, for example, some of the 40,000 vacant residential properties in Dublin back into use; and the living city initiative to return buildings to use not only for owner-occupiers but also for investors who want rent them into the market. There are multiples examples of areas where we are trying to drive supply by using existing vacant stock and there are multiple examples of measures we are taking to increase the supply of new stock such as a streamlined planning system, new financial models through ISIF, the investment of €200 million in an infrastructure fund to open up sites that are currently unviable because developers cannot afford to pay for the infrastructure as well as develop houses and sell them at prices people are willing to pay, and using public land in a much more strategic way to create partnerships such as that in O'Devaney Gardens, a site that will be transformed over the next two years.

All these things are happening to drive supply. The area that has received most attention is that relating to first-time buyers, which people have focused on in isolation as though it is the only thing we are doing on housing in the budget. Even in isolation it makes sense but added to the other supply measures it also makes sense. Last year, 38,000 houses were sold in Ireland and only 24% of those were purchased by first-time buyers, when the figure should be closer to 55%. Only 2% of those sales were new houses purchased by first-time buyers and that is because first-time buyers' homes are not being built by developers right now. They cannot make a margin on them so they are building higher-value homes and selling half of them to cash buyers. If we do nothing, developers will continue to target areas in the market where they can make margin and first-time buyers, who should make up more than half of the purchasers of new houses, are going to continue to be locked out of the market.

We have spoken to the Central Bank and its rules to make sure the property market does not overheat will continue to apply. However, the real difficulty for first-time buyers in buying a house is in putting together a deposit. If a first-time buyer is lucky enough to be able to afford to take out a mortgage for €300,000, he or she has to raise a deposit of €38,000 while paying significant sums of money on a weekly or monthly basis in the private rental sector. We are targeting a specific segment of the problem for first-time buyers by helping them to put a deposit together. On a €300,000 house, we are giving them an income tax rebate worth €15,000 towards that deposit.

The link between income and the price of a house, at 3.5:1, on which the Central Bank is insisting, remains intact so there are measures to make sure there is no overheating. If we do not intervene, however, we will not see new houses being built for a segment of the market whose participants developers currently believe will not purchase homes because they cannot do it by putting together a mortgage. We are trying to turn notional demand for houses into real demand for houses and to create the ability to pay for them by helping first-time buyers put a deposit together and ultimately get a mortgage to buy a home. We are doing the same for people who want to build their own homes, as long as they are borrowing 80% of the value of that investment and taking out a mortgage. That makes sense.

This is a temporary measure for three years and I call on developers to get on with building houses for first-time buyers as that is a fundamental element of the housing market. More than half of buyers should be first-time buyers but they are not supplying that market at the moment. There is pent-up demand in the first-time buyers' market at the moment and this is a temporary initiative to ensure that those people can now get a mortgage. A lot of people will be able to make the transition from the private rental market into the owner-occupier market if we have enough homes built for them. These measures are modest and make sense. They also back up the multitude of other proposals we have to increase supply, with increased spending by 50% in one year.

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