Gerald Nash (Louth, Labour)

I welcome the opportunity to speak on this resolution for a number of reasons. The Labour Party's position on the resolution brought forward on budget night in respect of the proposal to cut VAT for apartment developers was well rehearsed on that night and on Committee Stage of the Finance Bill a couple of short weeks ago. We sought to make the point on budget night and introduced amendments that were, unfortunately, ruled out of order that we are required to comply with the VAT directive. There was an attempt to describe this particular measure as some way in which the Government proposes to address social concerns bedded in an attempt to address social policy issues.

It is a very big stretch to interpret a handout to developers as social policy. How this will contribute to making apartments more plentiful and cheaper for hard-pressed first-time buyers is arguable. There is no evidence whatsoever to suggest that this is going to work in the way in which the Minister and his colleagues have claimed in recent weeks. We drew attention a number of weeks ago to the fact that the way in which the initial resolution was crafted essentially excluded approved housing bodies from benefiting from the measure.

Notwithstanding our opposition, in the context of the debate and discourse that occurred over the past two weeks, it is of course important, if this is a measure the Government wishes to pursue, that it has the widest possible effect. In my constituency, in particular around the Drogheda area, an area with which the Minister will be very familiar, no apartment complex has been built in recent years that has not ended up being purchased at one point or another towards the end of its journey by an approved housing body or local authority. They are mostly purchased by approved housing bodies. They tend to start their journey as private operators for the market and, for a variety of reasons, these projects end up being acquired by approved housing bodies in their entirety. There are reasons for that.

The point has been made by some that there is no market for apartments. I do not accept that. It seems to me to be simply a matter of good business for developers to sell blocks of apartments en masse to approved housing bodies. It makes sense for them to do that rather than engage with individual purchasers unit by unit. The jury is open on why that is the case.

Many of us on this side of the House, as well as commentators since the Finance Bill was published, drew attention on Committee Stage to the fact that approved housing bodies and those who involved themselves in forward funding arrangements were not captured by this proposition. Apparently that is what this new resolution seeks to deal with but it is something of an emergency fix which should have been anticipated.

Moving to the points made by Deputy Doherty on the deadweight effect, there are a number of different problems with this particular resolution and policy. Among those is the deadweight effect that it will inevitably have. As I said, there is no evidence we can rely on at this stage, outside of the say-so of developers, that this will improve supply and, in improving supply, will address affordability issues for purchasers. The deadweight effect of this is something of which we need to be conscious. I support the amendment proposed by Deputy Doherty that there be a report generated by the Department.

We look forward to the advice becoming available. However, when former Minister, Paschal Donohoe, who was developing this proposition, and the Government saw it through, I imagine the advice from the Department was to at the very least tread cautiously on this because of the lack of availability of any evidence whatsoever that this would have the desired effect the Minister said it would have on supply and affordability.

There is no doubt whatsoever that this support will be absorbed by developers. This has been the case time and again. We are dealing with two amendments in this debate. Help to buy is a case in point. From the original Mazars report commissioned by the Department a number of years ago and the advice issued to the then Minister when the scheme was in its infancy, it was very clear that there was a deadweight effect in terms of help to buy.

Those of us on this side of the House said time and again that developers would pocket the difference. That has had an inflationary impact. It is not the only reason house price inflation is such an issue but the help-to-buy scheme has contributed to inflation since its inception. The deadweight effect is very clear. All the evidence shows that the vast majority of people who are accessing this support already had the deposit to obtain their homes. It probably is not responsible for the building of a single home that would not have been built in any case. We expect the same will apply in terms of the impact of the VAT reduction on the development of apartments.

The help-to-buy scheme will continue to cost several hundred million euro between now and the end of 2030. It has been described as giving certainty to first-time buyers and developers. In fact, it gives certainty only to developers that they will absolutely coin it in. It will contribute to house price inflation at a time when we should be doing everything we can to increase supply and ensure the supply that is there is affordable. We would be better served using all the resources we have to introduce genuine affordable housing schemes and backing cost rental, for which there is huge demand, to a degree we are not currently doing. We will oppose these resolutions.

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