Conor Sheehan (Limerick City, Labour)

This was not in either Fianna Fáil's or Fine Gael's manifesto at the general election, nor was it mentioned in the programme for Government. The Government has no mandate for this. This change in the VAT rate for certain costs incurred in the construction of apartment developments might lead to an increase in the development of build-to-rent apartments, provided there is enough demand for these high-rent units. It certainly will not lead to a single additional apartment being built anywhere outside of Dublin and possibly Cork. The Minister said the measures would help address the viability gap. However, this viability gap has not been clearly quantified by Government. If the viability gap still exists, why do the apartment guideline changes that were supposed to address the viability gap not work? If this VAT change is deemed necessary, why is it not targeted at a cost incurred on the development of apartments for affordable rental or purchase? This VAT represents a saving of about €18,000 on a €500,000 apartment. It might marginally improve viability, but it certainly will not do anything for affordability.

Earlier this year, the Minister, Deputy Donohoe, came out on national radio against what he termed Celtic tiger-style tax breaks, which he said had done more harm than good. How is this different from the Celtic tiger tax break? If not, what has changed between what the Minister said then and announced today and why is this measure not time limited? Where is the sunset clause and why is it not tied to output? This should not be a permanent windfall-gains measure if the Government is going to introduce it. The factors that contribute to high apartment costs, which include the cost and availability of finance, land, regulation and so on, are complex. Cash subsidies such as this are not actually going to increase the supply of apartments or make apartments more affordable. Like night follows day, we will be back here again in six months or a year with something else, the next thing that institutional investors and Pat Farrell are looking for. Developers are already getting huge cash subsidies through a variety of schemes. If these cash subsidies have failed to increase construction, why does Government think that this tax break will work?

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