Catherine Murphy (Kildare North, Social Democrats) | Oireachtas source

It is a little over two weeks since the budget was delivered. One of the main features that was focused on was the help-to-buy scheme, which I described as the help-to-sell scheme in my response to the Budget Statement. The sentiment I expressed turned out to be true because in the immediate aftermath of the scheme's announcement, media reports suggested the price of some new houses jumped by approximately 20%. Across media outlets, we heard many potential first-time buyers say they were terrified the measure would lead to price rises and make an uphill struggle even more difficult. In my local area in Kildare, prices in one development increased on the very evening of the budget.

Despite claims to the contrary from the Minister for Finance, Deputy Noonan, and Minister for Housing, Planning, Community and Local Government, Deputy Coveney, on the floor of the House, it became obvious within hours of the budget that the Central Bank of Ireland had grave concerns about the help-to-buy measure and its potential to impact on the market and undermine the very rules the Central Bank had put in place to try to protect first-time buyers or at least keep prices at a stable level. Both Ministers were adamant that the Central Bank had given them the go-ahead for this measure. Within 48 hours of the much feted measure being announced, it was being rolled back and we see in section 8 of the Bill that it has been altered. These alterations are not sufficient, however. Just yesterday, Davy Stockbrokers revised upwards the growth forecast for prices in the residential housing market. While I acknowledge that this could be driven by a number of factors, the scheme appears to be one of the drivers of this upward revision. Davy Stockbrokers now estimates that property prices will grow by 7% in 2017, due in part to the help-to-buy measure or help-to-sell scheme as I describe it. The net effect of the scheme will be to raise property prices. I ask the Minister of State to explain how higher prices will help first-time buyers to purchase a home.

Even if we ignore the issues of affordability that the measure creates, there is another serious flaw, which is that it splits the market of prospective first-time buyers between those who can afford the new builds that developers are providing and those who seek more affordable options on the second-hand housing market. It is very difficult to see how we can ensure a social and demographic mix with such a policy. I come across many people who are looking for solutions because they are in a home they bought before the crash that is now way too small for their family's needs at this point. It is not that there are not starter homes. In many cases, it is that the wrong people are in the starter homes or too many people are in homes that are too small. The totality of this needs to be looked at.

It is for that reason the Social Democrats will table an amendment to the Bill seeking to remove what we see as a retrograde measure in its entirety. We believe the housing crisis should be tackled, but not by rehearsing failed policies of the past. We had a first-time buyers grant in the past which was simply absorbed into the cost of houses. That was the reason given in this House as to why it was dispensed with. We need to grasp the bull by the horns and tackle the supply at source in the here and now by utilising fiscal measures designed to immediately make thousands of vacant units available as housing options. For example, for every 1% decrease in the vacancy rate, and we have one of the highest vacancy rates in Europe, we would release approximately 5,000 housing units which are immediately available rather than being units that must be built. It is obvious that is where some of the emphasis should have been put.

We also intend to propose the removal of the special assignee relief programme. This is designed to provide a tax relief for those specialists who are deemed deserving of a special tax arrangement by virtue of their expertise. This measure costs the State an average of €20,000 per employee every year and it runs over a period of five years. We believe that if a company believes an employee is specialist enough to warrant such remuneration, then the employer should pay for those costs rather than the State.

There is a principle of equality in the tax system. That issue of equality is one that runs through a number of other areas, and is one I will return to later. Part of the reason that people are not coming to live here or are not staying here is the cost of living, with the cost of housing one of the big contributors. There are a number of things that need to be done in this regard. It is not clear who has responsibility for the land bank that comes under various Departments, State agencies and semi-State agencies. It seems to us this is one thing that prevents the amalgamation of a range of different house types being built, including housing for sale, local authority housing and housing for rent. We feel this is a practical step that should be taken.

Measures in regard to a minimum effective rate of corporation tax are needed. If we need extra Revenue staff, that needs to be implemented to make sure the 12.5% rate is the effective rate. I would welcome the extension of the home improvement tax relief. More can be done on this and we could be more ambitious. With regard to the whole area of climate change, the housing stock is one of the three big areas along with agriculture and transport, to each of which we need to pay attention. The first one, housing, is the more difficult of the three but something ambitious could be done in regard to retrofitting homes. We import a huge amount of oil every year and reducing that would have a positive impact on the economy. The website www.daft.ieundertook an analysis recently which referred to the number of vacant houses available in the country. When it looked again at the figures, there was a significant redundancy rate within the vacant housing stock which is caused primarily by the fact houses are left vacant and allowed to become derelict, without heating and so on. Reducing that vacancy rate may well reduce the redundancy rate.

We believe the housing fund could have been much more ambitious. We rarely come across a situation where ICTU and IBEC both agree but one of the areas they agreed on was the need to expand the capital side of the spend. I know a smoothing effect was used, which is very welcome. However, there needs to be a negotiation at European level, particularly around funds to be spent directly on building houses. There is an emergency fund at European level but house building would not qualify because a natural disaster is required to leverage that fund. However, one could not say this is anything but a disaster and there is no end in sight to what is a major emergency. There is broad support for such a negotiation and it could save a substantial amount of money by reducing the cost of housing and increasing the housing stock. In the rental sector, I am now hearing that people are entering bidding wars in order to rent a house and the amounts being paid have gone through the roof, if the House will pardon the pun, even in the last three or four months.

I referred to land management, which is a big issue. If we are to reduce costs, the scale at which we build is important. The State has a land bank but that does not appear to be co-ordinated. That co-ordination needs to happen as a matter of urgency.

I want to deal with the issue of equality, which is very much a budgetary issue. I remember the day equal pay for equal work happened because I was one of those people who got a bigger pay cheque that day. It is one of those big days in my life that I remember. Essentially, I was sitting beside a man who started the job after me and did the same work but he got paid more than I did. On that day, I got an equal pay packet. What is going on in regard to teachers, nurses and gardaí is wrong. I listened to the Minister this morning. He was pushed over and over again, and asked whether he supported equality of pay for equal work in principle. He ducked and dived and would make no commitment, even in principle. There has to be a response to that.

One cannot have people doing exactly the same job for different amounts of money. Pay restoration is certainly happening but people possibly do not believe it is happening quickly enough. The principle of equal pay for equal work needs to be stated. It needs to be stated clearly in the House that the principle should be applied.

As I stated, there are certain provisions in the Bill that we welcome and there are some very significant ones that we oppose. The issue of housing has been badly handled. Given that it is the number one issue and that it has reached crisis level, that is more than disappointing.

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