Seán Sherlock (Cork East, Labour)
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Question 62: To ask the Tánaiste and Minister for Finance his views on comments in the OECD's 2008 Economic Survey of Ireland in relation to the housing market here and to falling productivity; and if he will make a statement on the matter. [15613/08]

Brian Cowen (Laois-Offaly, Fianna Fail)
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In general terms, the OECD has long considered that the encouragement of home ownership diverts capital away from more productive uses within the economy. Bearing this is in mind, the main thrust of the OECD's survey on Ireland in relation to housing was that we should gradually reduce the bias towards home ownership in the tax system by either starting to phase out mortgage interest tax relief or by introducing a property or capital gains tax on owner-occupied housing. In this regard, I'd point out that it is the long standing belief held by policy makers in Ireland that home ownership is desirable and that is why successive governments have implemented measures to support home ownership.

I broadly agree with the views of the OECD regarding the need to raise the growth rate of productivity. However, it is important to remember that productivity is still rising but that the rate of increase has slowed somewhat in recent years. This mainly reflects the rising importance of the labour-intensive new house building sector. In this regard, there are a number of policies already in place to help achieve improvements in productivity. The prioritisation of resources towards infrastructure and education under the National Development Plan is perhaps the best example. Other important policies in place to support productivity include the maintenance of a flexible economy with a low burden of tax on capital and labour. Finally, I'd remind the Deputy that in overall terms, the OECD gave a generally positive assessment of the Irish economy and acknowledged its strong fundamentals.