John Gerard Hanafin (Fianna Fail)

I welcome the Tánaiste back to the Oireachtas in both that capacity and as Minister for Finance.

I support the Finance (No. 2) Bill 2007. Comments and speculation in the past few months have undermined the stability of the housing market. I think in particular of one commentator who said there could be a 50% fall in the price of houses. Such a comment would be singularly unhelpful at any time, but is especially so when the fundamentals and stability of our economy are sound. While house prices have risen by 200% over the past ten years, much of the increase is attributable to the economic management of the country and the capacity of people to buy and build homes. Speculation that prices would fall by 50% is completely erroneous. Growth and inflation of 5% have the potential to take care of any difficulty in the marketplace and even allow prices to stabilise. Following the process of stabilisation, house prices will no doubt take off again, as they have done consistently since the foundation of the State. It has been a very good place to invest. Fianna Fáil, in recognition of the need for people to have decent housing, has always supported the construction industry and will continue to do so. That is proper and right for the economy.

The only query hanging over the future success of the economy concerns employment, but in this regard the fundamentals are sound. We continue to have unemployment of less than 4%, which is considered full employment. Government policy ensures we are upskilling to fifth level, attracting industry in the high technology sector and moving forward in the services sector. The Government's commitment, through education, to ensure we have sufficient graduates will ensure the future and will drive the economy towards continued success. Those who deliberately created instability and uncertainty are wholly unhelpful.

The Finance (No. 2) Bill 2007, which addresses the issue of stamp duty reform, has passed through the Dáil and is being considered by the Seanad. Section 1 amends Section 92B of the Stamp Duties Consolidation Act 1999 and provides for the abolition of stamp duty for all owner occupying first-time purchasers of houses and apartments, whether new or second-hand. The change applies to instruments executed on or after 31 March 2007. The section also provides for a refund procedure for persons who, by virtue of this amendment, become entitled retrospectively to relief or additional relief. Such persons will be entitled to claim a repayment of duty paid from the Revenue Commissioners. Section 2 contains the provision relating to short title and construction.

The main elements of the Bill are to exempt from stamp duty all first-time buyers of either new or second-hand houses. This puts all first-time buyers in the same position. The programme for Government provides that the change will apply to deeds presented to the Revenue Commissioners after 30 April 2007. As a result, the Bill has been drafted to provide an exemption for deeds executed on or after 31 March 2007. This is done in recognition of the fact that the stamp duty code allows up to 30 days before a deed must be presented to Revenue. In line with normal requirements people who benefit from the exemption and those who claim refunds in respect of duty already paid will have to confirm that they will live in their houses as their principal private residences and will not receive rent, other than under the rent a room scheme. In the case of new houses under 128 sq. m., all owner occupiers are exempt from stamp duty. In the case of other houses, including particularly second-hand houses, stamp duty is applied for first-time buyers based on the following consideration. Houses up to €317,500 are exempt while the normal rate is up to 5%; those between €317,501 and €381,000 will have stamp duty of 3%, while the normal rate is 6%; those between €381,000 and €635,000 will have stamp duty of 6% while the normal rate is 7.5%; and houses costing more than €635,000 will have stamp duty of 9%, which is the normal rate.

The Bill is the first instalment in the implementation of the programme for Government. It is testament to the good faith of the Government that this is the first promised measure and it will be delivered to the people. The proposals in the Bill are timely, affordable and targeted and will support one of the most important sectors of our economy. It will do all this in a way that directly assists those without any housing equity of their own in their efforts to acquire their first homes.

Home ownership is one of the primary aspirations of the people. It provides a secure environment in which to grow up and grow old. It strengthens communities, improves the environment and provides parents with a valuable asset to pass on to their children. We have always supported home ownership through targeted policy initiatives and these proposed changes mark the continuation of the process of support for first-time buyers.

Having worked in the financial services industry for 17 years, I often wonder why people make exorbitant claims. It is within the capacity of Government to change tax rates or mortgage interest relief, as appropriate. This Government has done so in the past and will continue to support home ownership. That is why I commend the Bill to the House.