Billy Kelleher (Cork North Central, Fianna Fail) | Oireachtas source

I welcome the opportunity to speak on the Finance Bill that will enact the legislative changes announced in the budget itself. At the outset, let us be clear: this was not a very inspiring budget by any stretch of the imagination. It was cautious and safe in the sense that there were no imaginative proposals in it in the context of the challenges we face as a country and society, where we have come from and where we want to go. It lacked creative ambition in many areas. In my ten minutes to contribute, I will concentrate on a few areas.

If we are to be honest with ourselves in this House, the greatest crisis facing Ireland as a country internally is the whole issue of housing and the dysfunctional housing market that is presently in operation. What we are effectively doing is enslaving another generation. During the Celtic tiger, we enslaved people to high mortgages and high house prices. What we are now doing is enslaving a whole generation to renting homes for the foreseeable future. There is nothing in this budget or Finance Bill that gives me any confidence that the housing supply is going to increase quite dramatically in the short and medium term. There are a number of fundamental blockages that have to be addressed. The key issue is supply. There is nothing here that is going to stimulate any form of supply. The announcement of the Minister, Deputy Coveney, of the housing strategy is but that: a strategy. However, I do not see anything in it that will actually put down bricks, blocks and foundations in the short and medium term to address the chronic shortage of housing in this country.

It is not as if Fine Gael has arrived into Government in the last few days. It has been in government for six years and this is its sixth budget. In that time over the last number of years, there was no strategic planning put in place to develop a housing strategy to deal with what was an escalating problem, not just in the last number of months, but for the last number of years. I can remember previously in this House in 2011 and 2012 the great fanfare from the Government benches about how they were going to address all of the ghost estates. They were bringing in bulldozers and knocking the whole lot. What we should have been doing was looking at the demographics and the pressure points that were beginning to show from early 2013 onwards that there was going to be a housing supply shortage and how it was going to create chronic problems for first-time buyers in general.

I will give a few statistics. In Cork, in the first eight months of this year, one of five of the residential properties that were sold was purchased by first-time buyers. In other words, 710 of the 3,643 houses were bought by first-time buyers.

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This is 19.7%. We now have a situation where first-time buyers pay an inordinate amount of money on a monthly basis in rent. If we look at the Dublin market in August, the average rent paid for an average family house in the capital was €1,454. The difficulty we have is that first-time buyers will simply never get on the property market because they are consistently paying out huge sums in rent. They will never be able to secure a house in itself because they will never be able to meet the criteria laid down by the Central Bank. The Central Bank is the only thing acting as a brake at present on escalating house prices. The shortage is there, the demand is there, but access to credit for first-time buyers is now but a pipe dream. There has been some effort in the help to buy scheme. All the help to buy scheme will do is give some people additional money to purchase homes in a market where there are huge shortages of housing stock. All the Government is doing is throwing additional money at a problem to inflate house prices.

We have been around the block too often. The market is completely dysfunctional and nothing has been done in the intervening years since the crash in 2007 to address this issue. We have a €200 million infrastructure assistance fund for local authorities to address the chronic issues of infrastructure deficits in terms of water, sewerage and roads to open up some land for development. Then we go to the other side of the problem, which is our pillar banks. We still have a dysfunctional banking system. The pillar banks are incapable of lending into the development market to allow for the building of houses. Most of the development of housing developments is done by mezzanine finance, where exorbitant rates of interest are paid to try to access finance to build homes. Our pillar banks, which are there by the good grace of the taxpayers who stepped in and supported them, are now washing their hands of what is a national crisis. They are doing nothing to address it in terms of assessing business proposals being put forward by developers and builders to access finance to build homes that first-time buyers need and want. In all of this we have a crisis, and the budget and the Finance Bill have done nothing to address it. I am afraid the housing strategy as announced by the Minister, Deputy Coveney, is but a strategy and in many ways it will have no meaningful impact on the problem itself.

We now have a situation where we have gazumping of rental properties. Recently I came across a situation in Cork where a family made an offer of €1,100 for a rental property but by the time they got back it had increased to €1,350, at which stage the family had to withdraw. This was all in the space of a matter of hours. This is what families face on a continual basis. I cannot see how the housing stock can be increased with the proposals out there, when we have severe blockages in financing developments throughout State. While we tinker around the edges, families struggle on a continuous basis to buy a home or build a home so they can call it their home, as opposed to being in a situation where they are serfs for the rest of their days, paying exorbitant rents to investors.

In the first eight months of the year, of the 3,640 houses sold in Cork one quarter were bought by private investors because they can bring cash to the table. They are the people who can purchase the buildings and houses for sale in the State. This is what is happening. The help to buy scheme is a token effort to pretend the Government is doing something for first-time buyers, but in effect the overall problem is the fact our dysfunctional housing market is just not being addressed. Local authorities simply cannot fund the infrastructure deficits which exist in terms of water, sewerage, roads and other infrastructure, which are important for opening up development sites. Coupled with this problem is the issue of access to finance. Only a few housing schemes are being built and they are coming on the market very slowly. There have been only a couple of hundred in Cork in the past 12 months. I am quite definite that more could be built if some form of finance was made available by our pillar banks, which have washed their hands of assessing any business plan to do with construction. This is a major flaw in the strategy being discussed.

On the broader issue of the budget itself and the Finance Bill, what I found strange was that under our confidence and supply agreement with the Government we were told there would be no surprises in the budget, and by and large there were not any major surprises, but something I found distasteful to say the very least was that the Minister, Deputy Noonan, could bring €200 million out of his back pocket in the days before the budget. We were told the fiscal space available was approximately €1 billion, but when it came to delivering the budget we were told it was €1.2 billion.

On the broader issue of budget itself, independent commentators have said, and I am not taking any credit for this personally, it is a fact that it is the first progressive budget in the past five years. The previous five budgets were regressive. They asked those at the bottom to pay most. I am sure this was the intention, given Fine Gael's announcements during the general election and the campaign it ran for US-style taxes, which effectively are about giving greater tax breaks to those at the top and forcing those at the bottom to pay.

Overall it was an uninspiring budget. The Government is failing miserably on the issue of addressing the chronic shortage of houses for first-time buyers. As I have stated, it is condemning another generation of people who just want to put a roof over their heads and those of their families to years of serfdom, funding investors through exorbitant rents.

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