Cian O'Callaghan (Dublin Bay North, Social Democrats)

I move amendment No. 24:

In page 64, between lines 4 and 5, to insert the following: “Report on tax expenditures for property developers

42. The Minister shall, within 3 months of the passing of this Act, prepare and lay before Dáil Éireann a report on the fiscal and housing-market effects of tax reliefs and incentives available to property developers, and on alternative approaches to achieving housing-supply objectives without such tax expenditures.”.

The situation with tax expenditure for property developers is that profits in Glenveagh more than doubled in the last year. The CEO of Glenveagh properties saw his salary increase by 80% in 2024 to a whopping €2.7 million. At the same time we see people struggling with the cost of living and more than 5,000 homeless children, yet the prioritisation here is tax expenditure that boosts the profits of developers. The wrong choices are being made here and the wrong priorities. Tá na tosaíochtaí míchearta ag an Rialtas.

We need to have a review of all the tax expenditure. We have had multiple tax expenditures for developers over the years and it is clear they are not working. We are seeing profits increase, house prices and rents increase, and homelessness increase. While these measures are very costly, it would be much better to invest the money directly in more affordable housing rather than measures that boost profits for developers who already have very high profits.

The fact that profit levels in the two publicly listed companies are 20% and 21% and that we see growing tax expenditures that will boost those profits further is completely unjustifiable. The former Minister for Finance, Paschal Donohoe, when pressed on this in the committee, said that further tax expenditure in terms of VAT reduction would lead to an increase in further profits for developers. He was very upfront about that, and that it would not lead to more affordable housing. He said that the way he was going to boost viability was by increasing profits for developers even further, when we know the profits are already at very high levels - 20% and 21%.

The problem with a lot of these tax expenditures as well is that they are not connected with affordability conditions. They are not tied in with making housing more affordable. That is why this review is needed urgently. As the Tánaiste knows, a huge amount has been invested by the Government in housing, through a range of measures, including tax expenditures, but it is clearly not working and we are not getting the value for money that is needed. We are taking an approach that is way out of kilter with other European countries in terms of putting so much into tax expenditures. Most other European countries that are more successful in providing more affordable housing use the money much more directly to help build affordable homes rather than by having indirect tax expenditure measures.

As I am sure the Tánaiste knows, tax expenditure measures should be targeted and very carefully used. When they are too wide, and they go on for too long in any sector, there is a huge amount of deadweight and waste. That applies in the housing sector the same as any other sector. That is simply considered to be, in terms of good governance, a good use of resources. They are considered to be the basics. A very wide approach is being taken by the Government in its approach on housing and tax expenditures. I understand that there is a need for action in this area, but the resources are not being used well.

I recently mentioned to the Tánaiste what the spending review from the Department of public expenditure said about these approaches. It said the tax breaks are priced into what developers bid for land, thereby increasing bidding rates and displacing any savings in costs achieved elsewhere. The reviews done by the Department of public expenditure and reform should be taken seriously by the Government. That is its Department giving it advice about how best to use public resources in this area, and for some reason it is not being taken on board in terms of this measure.

The fact that those kind of spending reviews have not been taking place in the last few years is highly problematic as well. Detailed spending reviews used to be carried out by the Department of public expenditure and reform and then published, but that practice stopped in recent years. That needs to be addressed as well.

As I said already to the Tánaiste in recent days, we have a situation where profits are up, subsidies are up, tax expenditures are up and productivity in the sector is going down, as is the investment in productivity year after year. That is not right and it does not make sense. That should be ringing alarm bells for the Minister in terms of his approach not being the correct one. If that was happening in another sector, he would rightly point it out as being the wrong approach. I urge him to accept this amendment.

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