Neale Richmond (Dublin Rathdown, Fine Gael) | Oireachtas source

I appreciate the opportunity to speak in this lengthy, wide-ranging debate, which has covered a topic that has been a subject of previous Private Members' business. It was a familiar topic to me and Deputy Durkan at meetings of the finance committee over recent years. Unfortunately, Deputy Conway-Walsh and I were not members of the committee at the same time but I appreciate that the arguments made have been made in good faith and are genuine and sincere. I accept the arguments of all Deputies who have come to the House this evening. I do not want it to be underestimated for a moment that the Government of course accepts that the increase in the cost of living, together with the increase in interest rates, will pose serious repayment difficulties for some homeowners. These difficulties can and should be addressed in an open way by both the lender and the borrower. Where proper engagement takes place on both sides, fair solutions can be reached and put in place.

The Government has addressed economic and loan-repayment challenges in recent years, particularly during Brexit and Covid, and we can now address the latest challenges arising from the need to tackle high inflation. The Government is acutely aware that the rising cost of living over the past year has posed significant challenges for households and firms but it has responded swiftly and decisively multiple times. Just this week, on Wednesday, Thursday and Friday, we will see payments of €200 made to people in various social welfare categories. They are really welcome and necessary payments for those most at risk. Overall, €12 billion in direct relief has been made available to counter the effects of inflation and the genuine squeeze from the cost-of-living crisis.

The reintroduction of mortgage interest relief, even on a selective or tailored basis, is likely to involve significant costs and needs to be considered not on an ad hocor one-off basis but in the context of a range of other cost-of-living measures that are and will need to be provided. I do not believe the reintroduction of mortgage interest relief at this time is the appropriate course of action or is in the best interest of all mortgage holders and the State given the potential Exchequer implications and the current high inflationary environment. Research from the OECD has found that mortgage interest relief results in higher house prices where housing supply is constrained because it gives buyers much more purchasing power. The OECD also highlights equity concerns, noting that mortgage interest relief provides greater benefits to high-income households as high-income households are more likely to be homeowners, a point that aligns with the findings of the 2009 Commission on Taxation report. Mortgage interest relief has also been found to encourage household indebtedness and is correlated with volatility in the housing market. It is for these reasons that the OECD has recommended limiting or phasing out mortgage interest relief on owner-occupied housing.

The positive headline surplus figures set out in the recent Stability Programme Update include windfall corporation tax receipts. If these potentially transient receipts are excluded, there is a significant underlying deficit in the public finances. Ireland's public debt is almost a quarter of a trillion euro and remains among the highest in the developed world on a per capitabasis. Ireland is a small open economy where wage growth in excess of other economies erodes our competitiveness and puts future jobs and economic growth at risk. That is the sort of thing that really hurts households. Government policy must therefore strike a balance between providing support when appropriate and ensuring the public finances remain on a sustainable trajectory over the medium term. While the Government has already acted repeatedly and on a significant scale to absorb some of the impact, fiscal policy must remain broadly neutral so as to not add to inflationary pressures. Borrowing costs, including sovereign borrowing costs, are on a rising trajectory, increasing the importance of prudent fiscal policy.

While the measure in the Opposition's motion is a measure on the face of it, and while people talk about moveable figures, we have to consider this in the context of a broader package. Every week, there is a different motion calling for a different package. The costs of all of the packages must ultimately be paid for in some way. We have to ensure that we strike a balance for everyone in the State. That is the difficult responsibility of the Government members, who serve in their offices daily.

We are aware there are supports within the framework of the regulatory system already. The Central Bank is clear that it expects all regulated firms to be ready to assist their customers who are facing mortgage repayment difficulty and also be ready to work with and, where necessary, offer appropriate arrangements to them to enable them to meet their mortgage obligations. This consumer protection regulatory framework is important and is being kept under review. My Department and Government colleagues will work closely with the Central Bank on this.

The Central Bank has informed me that it has engaged with lenders to ensure they have sufficient resources in place to deal adequately with applications for new or switching mortgages and that it expects all lenders to assess switching applications in a fair and prudent manner, irrespective of the borrower's current or past mortgage creditor. This is something the Central Bank will continue to monitor through its supervisory engagement with regulated entities. However, if sustainable agreements cannot be reached within the scope of the Central Bank regulatory and consumer framework, there are other options available to borrowers to address a debt difficulty, including the Money Advice and Budgeting Service, a personal insolvency practitioner, the Abhaile scheme and the personal insolvency arrangements in place. The mortgage-to-rent scheme is also available, and over 2,000 cases in that regard have now been dealt with. Those options available directly in the financial system and more broadly at Government level to fairly deal with mortgage debt should be fully utilised by lenders, in line with the regulations and expectations set out by the Central Bank, and by borrowers experiencing repayment difficulty.

No doubt we will come back to this topic in future Private Members' business or more widely through parliamentary questions or meetings of the finance committee, which I intend to continue to keep an eye on although it is no longer within my brief. However, I fundamentally believe the Government's counter-motion is broad and realistic. That is crucial to the subject of this debate. No party or individual has a monopoly on compassion or empathy for those in mortgage distress or wider society. I fundamentally believe the Government's efforts and measures are realistic and cognisant of the very genuine circumstances and hardship unfortunately being faced by far too many in this State. We will work every day to strive to ease the hardship and provide solutions that will genuinely have an impact and help not only affected individuals but also wider society.

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