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

It is timely to have this debate. The Sinn Féin motion notes all the different difficulties associated with the high interest rates in this country and the burden that places on ordinary families trying to provide homes for themselves. That is all very worthwhile and there are a lot of questions to be asked about why our interest rates are so out of line with other European countries.

The motion provides for five key asks and there is no difficulty with a number of them. Sinn Féin calls for the Government to offer hard-pressed families real support and not empty words and that certainly needs to be done in relation to the very high cost of housing. The high cost of housing is having such a massive negative impact on all aspects of people's lives that it is the key failure of this and the last Government. What has been missing from what the Government has been doing, or has been failing to do, in relation to housing is to drive down the cost of housing. That should be the key objective of any housing policy, that is, to drive down the cost of housing. We need much more action from Government in terms of providing real support and not just empty words.

Another two asks are to work with the Central Bank to enhance the supervision of vulture funds in the interest of struggling borrowers, which certainly needs to happen, and to examine the taxation of the banking sector, including the treatment of corporation tax loss relief, which is another area that needs attention.

When it comes to the proposal to reintroduce mortgage interest relief at a level of 30%, I can understand the motivation behind that but we have to reflect on the experience with mortgage interest relief in the past. There is certainly a chequered history in that regard. For a very long period under successive Governments we had a regime where there were property-based tax reliefs or tax breaks and they caused a lot of difficulties and a lot of pain for people, ultimately, because particular reliefs were being given to the construction industry and to developers generally. Of course with a number of those schemes, we paid a very high price for them ultimately.

I will talk about the experience of mortgage interest relief because we know that it existed until 2012 when it was cut off for new mortgage applicants. It was phased out over a long number of years for those who had availed of it and it finally finished in 2016. The effect of mortgage interest relief was to reduce the monthly cost of a mortgage to the borrower, those who were availing of it. It amounted to a transfer of public money in the form of a tax break to individual homeowners who were essentially receiving taxpayer support, but for those who could not afford to buy a home and therefore could not avail of the tax break, they were essentially subsidising those who could.

Mortgage interest relief was given at the borrower's marginal rate of tax and, therefore, those on higher incomes paying the higher marginal rate benefitted more than those on lower incomes. Taking all of this into account, mortgage interest relief is typically considered a regressive measure because it is transferring public funds, including from low-income people, to those who are relatively better off. From that point of view, it is something a lot of left-wing parties generally have difficulty in justifying.

Of course, fiscal sustainability must also be a consideration in any scheme like this. There is an argument that mortgage interest relief creates a kind of false economy, using taxpayer funds to mitigate the effects of Ireland's comparatively high mortgage interest rates and subsidising bank profits in the process. One has to ask whether that is a desirable objective. It it also artificially reducing a household's mortgage interest payments and if the policy is withdrawn, whether due to a change in policy priorities or a shortage of public funds, the tap cannot be suddenly turned off because it risks creating huge mortgage distress. Once it is in place, it is very hard to take away, something which was evident in the long phasing-out period of the policy for those who had been availing of it previously.

In some ways, the situation with the housing assistance payment, HAP, offers a comparison. It started off modest in scale and scope and now it costs €1 billion every year. It supports high rents and this is the difficulty. We must avoid measures that will contribute to the growing cost of mortgages and housing generally. While the temptation is to bring it in on a temporary basis, and this is understandable, it is, in effect, a targeted measure at the upper part of the income wealth distribution. Again, therefore, we would have to regard this as a regressive policy. We should really be looking at other ways of trying to support people who are desperately struggling with the cost of living and to do this in a way that is more targeted.

There are problems with elements of this proposal. It is suggested that it will be done in a timely, targeted and temporary way, that it would be a temporary interest relief to support homeowners facing significant increases in mortgage costs and that mortgage interest relief would be equivalent to 30% of the increased interest costs relative to June 2022, up to a total figure of €1,500. The asks are quite unspecific. There is a strong case for this measure being targeted, but we do not know what is being proposed regarding the targeting of this measure. This is not spelled out. Equally, who should this be targeted at?

This reminds me greatly of what the Government's approach has been to the exceptionally high cost of housing. This has come about as a result of successive Governments. Certainly going back to 2010 and 2011, the provision of housing has been left predominantly to the market. While house prices have increased considerably over that period, at no point has the Government set out to make housing more affordable and to drive down the cost of housing. That is how we make housing more affordable. The measures introduced by the Government, therefore, have been beneficial to individual homeowners in a position to avail of these schemes, including help-to-buy, the first home initiative, also known as the shared equity scheme, and Croí Cónaithe. Those schemes in themselves have not contributed to driving down the cost of housing and making housing more affordable to people across the board. This should be the objective of any policy measure.

We in the Social Democrats have talked about measures that could be introduced by the Government which would actually drive down the cost of housing. It has clearly been the case, though, that Fine Gael did not want to do that for its own particular interests. Sometimes, it feels this way when we look at the kinds of houses advertised in The Irish Times, for example. I looked at a page of them the other day from a well-known estate agent and there was not a single house that cost less than €1.2 million. This was a full page of house advertisements. This is what we are talking about, and the prices went up to €4.5 million. There is a certain cohort of people who maybe feel better about themselves for some reason because their houses have increased substantially in value. Maybe Fine Gael is afraid of upsetting people like that, whereas on a public policy basis the aim should be to make housing more affordable.

The only way we can do that in a sustainable way is to actually drive down the cost of housing. We in the Social Democrats have proposed a number of different measures. The vacant homes tax, for example, could have been done in a realistic way rather than the meaningless way the Government has done it. There could be a tax on investment funds. Affordable homes could be made available by various housing co-operatives that have proven this can be done cheaply on public land. There should also be a land price register and an ownership database. There are, therefore, other ways of doing this but the objective must be not to provide temporary supports which actually fuel the cost of housing. This is my concern regarding mortgage interest relief. We should have a specific policy which is designed to drive down the cost of housing and make people's lives more livable.

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