Derek McDowell (Labour)

There are a couple of separate arguments but they come together to some extent. It was wrong to get rid of the grant, which is not to say I do not accept the Minister's general thesis that the grant was increasing house prices, which it was. However, it was being run into the price in terms of the full repayment over, typically, 20 years. It is correct to say that over 20 years the buyer would be paying €3,000 more than he or she would otherwise have paid. However, it gave him or her extra money at the point of purchase and provided for the deposit on a house or carpets and curtains. It was still of benefit up front, although over time the overall price of the house went up because of it. On balance, it was wrong to get rid of it.

If the Minister's argument is accepted, the same argument applies to mortgage interest relief generally, as I am sure he knows. If people's capacity to repay is increased by subsidising their repayments over the first five years, they are encouraged to get higher mortgages because, typically, first-time buyers mortgage themselves to the maximum possible extent. That, in turn, increases their capacity to buy what is on offer at a given price. If the Minister follows the logic of his own argument, he should be, rather than increasing mortgage relief, looking to abolish it also.

I think I have some idea of how the Minister works in these matters. He ended up extending mortgage interest relief simply because he was obliged to do so or because political circumstances put him in a position where he felt he had no other choice. I would be interested to hear how he differentiates between the two examples given. How can he justify getting rid of the grant while extending mortgage interest relief?