Jennifer Carroll MacNeill (Dún Laoghaire, Fine Gael) | Oireachtas source

I thank Deputies for the points they raised. I will try to address as many of them as I can. I do not necessarily agree with all the points made but I do see coherent trends among them, including a real and genuine concern around inflation and increasing house prices, and the targeting of supports most effectively. I will try to address all of those concerns.

As the Minister for Finance said earlier, the debate is happening in the context of a significant inflationary environment, albeit 2% lower than it was last year but still 5% ahead of where we should be on the ECB measure and where we would be in any way comfortable. That is creating significant cost-of-living pressure that Deputies are hearing about from their constituents on a day-to-day basis. The Minister has set out the response of the Government, which includes both one-off and permanent measures to try to address that pressure. In the budget last year, €11 billion worth of support was aimed primarily at supporting households through this period of exceptionally high inflation. Before Christmas those on social welfare received a double weekly payment and a Christmas bonus. Lump sum payments were made to people who are in receipt of the fuel allowance, living alone allowance and the working family payment. A €500 once-off payment was made to those receiving the carer's support grant, the disability allowance, the blind pension and the disability pension. A further double child benefit payment was made to approximately 640,000 families. Before Christmas we also had the first in a series of electricity credits, with a second administered last month and a third one planned for March.

A number of permanent cost-of-living measures also came into effect, which some Deputies referenced, such as the increase to the entry point for the higher tax bands and an increase to tax credits. There has also been a general increase in social welfare payments of €12 per week, which came into effect recently. We also created a new rent tax credit of €500 for a qualifying individual or €1,000 for a qualifying couple for both 2022 and 2023. There have also been significant changes to the national childcare scheme.

It is clear the Government understands the inflationary pressures that people are facing and has tried to introduce targeted supports in so far as possible. However, it is not credible to simply go, week on week, to corporation tax receipts. It is important to recognise that we are dependent on what are highly volatile corporation taxes and if what we estimate are windfall taxes are excluded, there was an underlying deficit of approximately €5.25 billion last year. We have to be careful about the management and sustainability of the public finances. We are concerned about the inflationary cycle and, as the Minister said, we have genuine concerns about core inflation. In that context, mortgage interest relief is an unusual measure to try to advance at this time, having regard to the effect it would have. We phased out mortgage interest relief specifically because of its impact on increasing house prices. Mortgage interest relief for principal private residences was phased out, as Deputy Shortall outlined earlier, between 2009 and 2020. The decision to abolish it was taken in the wake of the financial crisis, with the cost of the relief being one of the influencing factors. At its peak, it cost more than €700 million in 2008. As a measure, it also contributed to rising house prices. Research from the Organisation for Economic Co-operation and Development, OECD, found that mortgage interest relief results in higher rather than lower house prices, where housing supply is constrained, as it gives buyers more purchasing power.

In addition, the OECD highlighted significant equity concerns, noting that mortgage interest relief provides greater benefits to high-income households as they are more likely to be homeowners, a point that aligns with the findings of the 2009 Commission on Taxation. That sits against the point of it being a relief targeted at the most vulnerable. All the international research suggests it is not so targeted. Mortgage interest relief has also been found to encourage household indebtedness and is correlated with volatility on the housing market. It is for those reasons that the Commission on Taxation and the OECD recommended limiting or phasing out mortgage interest relief on owner-occupied housing. As has been said, prior to its curtailment and eventual abolition, in 2005, for example, mortgage interest relief benefited best the top two income deciles, which accounted for close to half of the tax foregone through tax relief. It was again highlighted in the 2009 Commission on Taxation report. Mortgage interest relief puts up house prices and benefits the wealthier in the community in the context of the scale of relief available. It simply is not targeted at the most vulnerable, if that is who the Sinn Féin motion is attempting to target.

I am not sure which cohort of borrowers the motion is targeting. Is it targeting all 716,000 mortgage accounts? Is it targeting those on tracker, variable or fixed mortgages? What is the equity position between those situations? In November 2022, more than 93% of new mortgages created were fixed mortgages. Many people who switched to a fixed mortgage may have done so as the interest rate changes were well signalled last year. It is unclear to me in what way it is being targeted. Neither is the costing clear. Deputy Doherty identified a figure of €1,500 annually but no costs were put forward by Sinn Féin until Deputy Stanley, the 11th Sinn Féin speaker on the motion, put forward a figure of approximately €340 million. Perhaps Deputy Doherty will clarify that. It is clear from a straightforward read of the 716,300 primary dwelling mortgage accounts at the end of September 2022 that for each of those to receive a subsidy of €1,500 would cost in the region of €655 million per annum, which is a substantial fund of money. There is no point in Deputy Doherty laughing about this.

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