Aidan Davitt (Fianna Fail) | Oireachtas source

One of our other Senators hit on the following already this morning. In his budget proposals, the Minister for Housing, Planning and Local Government, Deputy Simon Coveney, got his lines badly wrong as I suggested at the time. He is now reconsidering and redrawing his plan for a tax rebate for first-time buyers. He is on shifting ground. After meeting the Minister this morning, the IPAV released an in-depth survey of the housing market. There are two figures which jumped out at me. The first is that over 92% of homes in the State are second-hand homes. It is not a shocking statistic in that there are not too many new homes being built. The second figure is that 90% of house-sale completions for first-time buyers are in the €100,000 to €350,000 range. The budgetary instruments are devised to stimulate the building industry, but they are ill-judged and will only end in failure. One more year will be wasted in terms of house-building and house starts.

The core problem is the cost of building. As has been outlined many times, the cost of building has increased by 50% over the last number of years due to regulation, new engineering requirements, dezoning and a plethora of other reasons. All new homes must be A-rated, which is a great jump forward in the standard of homes we are going to produce, but the cost of it has been passed directly to the builder. There is no extra benefit for the builder in relation to that requirement. Until we tackle the core cost of building with a lower VAT rate, this problem is not going to disappear. If the Minister introduced a lower VAT rate, it would certainly be tax efficient. The reduced VAT rate in the hotel industry has led to a tourism boom. A reduced tax rate of 9% on goods and services on homes being built would immediately address our housing crisis, boost the State's tax coffers and increase employment. This is going to be the answer. We will have to look at it. We are tinkering around and failing to increase supply. The core issue is the cost of building.