The Minister has failed to indicate whether he is accepting our motion but listening to his approach to this discussion I think it is quite obvious that he is not accepting our motion and intends to oppose it. That is regrettable and the building industry and those employed in it will be greatly disappointed by the Minister's attitude and approach here tonight.
The Fianna Fáil motion suggests measures that could and should be taken by the Minister to ease the crisis in the private sector of the building industry. Consideration of the merits of the proposal can only be justified if one accepts that there is in fact a crisis. The Minister has steadfastly maintained that there is not a crisis in the private house building sector. He has maintained all along that more houses than ever are being built, that more people than ever are employed in the industry and that the building societies have more money than they can lend. We have seen these ministerial statements subsequently denied by the Construction Industry Federation, by the Building Societies Association and the Central Statistics Office records of unemployment in the building industry can be seen as a further denial of the Minister's claim that more people than ever are employed in the industry.
All this adds up to a very confusing situation and the confidence of the investing public in the industry must be further eroded. I suggest that the Minister should have availed of the opportunity presented in this debate to tackle the problem head on. A frank admission of the true position and a programme to remedy the situation could restore much-needed confidence in the industry and would do much for his own credibility, factors which I consider an essential ingredient if we are to pull ourselves out of this depressing situation. Unfortunately, the Minister did not avail of this opportunity tonight. Instead, he has fallen back on the use of selective statistics, statistics which were never devised to monitor the up-to-date progress of the industry.
It is on this that I seriously challenge the Minister's argument. I am sure he will agree that the industry is far too important to the economy to have its future dependent on any political numbers game. There are too many people dependent for their livelihood on the industry and too many anxious to have homes of their own for this matter to be treated in a cavalier fashion. The statistics of completion recorded in the Quarterly Bulletin of Housing Statistics published by the Minister's Department do not record when a house was physically completed. In fact, the records merely show when the final grant was paid on a new house by the Department of Local Government. Builders usually delay weeks and often months before applying for the grants. An inspection must then be made and further delays of weeks and often months are involved. Later the grant is paid.
We do not know the exact time lag. I should like to quote a letter in the Evening Press of 9th January, 1975 when somebody wrote to “The Experts” as follows:
Why has the Local Government grant not been paid on my house in which I have been living for 13 months?
The reply was:
We have been informed that your builder did make application and the grants have been approved and are in the process of being paid.
One might ask is this typical. I would say it is. If this is correct most of the 25,000 houses built in 1973-74 were actually finished during the Fianna Fáil term of office.
I put it another way to the Minister: if new house grants were to be terminated at the end of a financial year he would have to make provision to meet commitments outstanding and I suggest—this would be quite reasonable—that three to four years later he would still be making an allocation in the Estimate to meet outstanding commitments. I have had experience of that type of situation in the Department already and I believe that example could not be challenged.
I suggest that the system of collecting statistics be changed. We in Fianna Fáil are interested in the physical completion and occupation of houses and in the financing of them. As a suggestion, the ESB wire houses when they are completed and ready for occupation which is the last stage in a very long process. Could the ESB supply the Minister with the number of houses that they have connected? I do not know if that could be accepted.
Obviously, there would be faults in that system but it would give an indication, especially in cities, of the number of houses actually completed and occupied. We are anxious to get the true facts. We believe these are required quickly so that action can be taken. The important thing is to have an accurate, up-to-date picture of the real position in the industry at any time. The size and importance of the industry demand that such a service be made available. Corrective action could then be taken by the Minister at a time when such action could help to avoid or alleviate a crisis period.
The Minister said last year that one of the best indicators of the level of activity in the building industry was the amount of cement being purchased. We have accurate figures on cement sales and these indicate a continuous decline in cement sales since 1973. To illustrate that I give some figures showing the changes compared with the same quarters of the previous year. These figures are for the quarters in 1974. In the second quarter sales were down by 1,000 tons on the same quarter in the previous year. In the third quarter sales were down 23,000 tons and in the fourth quarter they were down 19,000 tons. That represents a drop of roughly 5 per cent in overall cement sales.
On the question of employment in the industry I would challenge the selective figures the Minister quoted here this evening. I would quote to the Minister and onto the record of the House—if it has been done already it is worthy of being repeated—a cutting from The Irish Independent of Tuesday, 4th February, 1975. It is an article headed “Building Industry Has Biggest Job Losses” by John Maddock:
More people are unemployed in the building and construction industry than in any other industrial group apart from agriculture, according to figures issued by the Central Statistics Office yesterday.
That would be Monday of this week. The article continues:
The industry showed the biggest increase in the number unemployed for the year ending mid-December— up by 3,280 to 15,572. Of this total 11,475 are in the "general building construction and repair work" sector and the remainder are in the construction and maintenance or roads, bridges and railways category.
That is the truest and most accurate reflection, indicator and barometer we can look to for an accurate picture of activity and the employment position in the building industry. Those figures are quite damning and indicate the large number of persons who have become unemployed in the building industry in recent times.
Most of the building material manufacturers and merchants supplying the trade are on short time at present. Why is this so? If the industry is booming, as the Minister says, why are the unemployment figures the highest we have seen recorded for many years? If this boom exists, as the Minister says, or even if the building industry was holding its own, why is this so? Why are the manufacturers of building materials and merchants supplying the trade on short time? Most of them, the larger ones, are on a three-day week. A number of them have let off staff and, generally, the position is very depressed.
The headlines on the building industry and housebuilding in recent times have listed sites closing down and referred to unsold houses— perhaps completed, according to the Minister's statistics, but not lived in and to builders letting staff go and to large numbers of workers in the building industry being on short time.
Might I quote a principal officer in the housing grants section of the Department of Local Government, who stated at a housing conference in UCD in October last year:
..., the inflow of funds to building societies dropped seriously. This has resulted in reduced loan activity in the housing field and gave rise to concern for the housing programme and for employment in the house-building industry.
That statement was made by that gentleman last October at a time when the Minister was saying that the building societies had more money than they could lend.
I should like now to quote from a news release, a comment by the Construction Industry Federation, of 23rd January, 1975, which said, among other things:
(a) The live register for mid-November, 1974——
I have already given the more up-to-date figures, so there is no need to quote those. But the federation quotes figures showing the high rate of unemployment in the building industry. They have risen higher since, as has been illustrated by my quotation from the newspaper. The federation's comments continue as follows:
(b) The Small Dwellings Acquisition Act loans, which supply the majority of finance for low cost private housing, have not been increased since 1973 from their present levels of £4,500 (loan maximum) and £2,350 (income limit) despite unprecedented inflation.
The construction industry, representing employers in the house-building industry, are expressing concern about the effect on their volume of work caused by the level of the grant. This is the grant we are recommending in our motion should be increased.
The federation's comments continue:
(c) The majority of builders' providers, timber suppliers, house joinery firms, brick-making firms and some of the block-making firms are on a three-day week; in addition, most have let staff go.
That is a statement from a federation concerned about employment in the building industry.
I have referred already to the 5 per cent drop in the sale of cement. Much more significant is the fact that the sales of ready-mix concrete used for foundations are down by approximately 50 per cent compared with last year. From inquiries made, it is clear that the sales of blocks and bricks are down by approximately 20 per cent to 25 per cent on last year, that is, to the private housebuilding sector in the Dublin area. As I have said, reports from the construction industry speak of 2,000 to 3,000 unsold houses. There are no accurate figures available of the number of completed houses lying idle, but one thing is certain: the cash flow position in the building industry constitutes now a serious problem.
Two years ago houses were sold before construction started. The intending purchaser made financial arrangements well in advance of actual completion and the cash flow to the builder often commenced before work on the house had started. It is easy to imagine the financial difficulties of builders who have to carry the cost of financing a house to completion stage until a suitable buyer arrives on the scene. The cost of financing 2,500 completed houses, at an average cost of £7,500 at a 14 per cent interest rate is equal to £2½ million per annum. That is equal to about £217,000 per month. If those houses were idle for say, a period of two months, the cost of building over 50 new houses would have been wasted on interest charges. The builder would legitimately add those increased costs to the overall cost of the house and so we continue on the merry price rise and contribute to further inflation.
Deputy Faulkner has outlined already the main arguments in favour of our motion. I am merely painting in other aspects of the problem in giving the House a full picture. Other speakers after me will deal with other aspects. In general the purpose of our motion is to draw attention to the difficulties at present being experienced in the building industry and to suggest ways of dealing with those difficulties. The Minister's approach has been to deny that the problem exists and then to support that argument with official statistics. In reply to that we say that the statistics are unreliable as an accurate indicator of present-day activity in the industry and that a new system should be devised to record accurate or up-to-the minute progress reports.
I would suggest that the Minister has had the benefit of a committee set up some years ago to meet regularly and record progress in the building industry. That committee, which operates under the aegis of his Department, has representatives from the trade unions, representing the workers involved in the building industry, representatives from the employers' side of the industry, the federation, and representatives from the Department and I understand these groups bring in independent economists and statisticians to work with them. Generally that is the type of personnel that constitutes that committee. In the course of this important debate no reference has been made here by the Minister to the views expressed by that committee on the current position in the industry. I would ask the Minister why? I would consider the views of that committee much more important, more relevant to the present-day position than any statistics the Minister could quote from any source. Yet the concerned views of that important group of persons have not been referred to by the Minister.
I would submit to the Minister that there may be a reason why he has not done so. If this committee has not been disbanded by the Minister, I would suspect that it cannot but be recording to him the depressed state of the private sector of the house construction industry with which we are dealing this evening. They would be a much greater authority than any statistics emanating from the Department, because of the unreliability of the statistics and the fact that they are recording only grants paid which refer to houses which may have been completed and lived in for as much as two to three years. It is well known that this has happened. If the Minister is basing all his arguments on the fact that statistics do not record crisis, the industry is in for a very poor time and we can expect very little action from the Minister to correct or avoid further serious deterioration.
Our motion is specific. In it we refer to the maximum local authority new house loan. This loan was fixed in May, 1973, at £4,500. The gross price of new houses for which loans were made available by all agencies was £6,892 in June, 1973 and, according to my estimate, £9,200 in January, 1975. This increase represents one-third on the average price in those houses during the period mentioned, and to keep pace with this situation we are suggesting that the maximum limit of the loan should be increased also by one-third. Therefore the loan should now be fixed at £6,000.
In May, 1973, the Minister was satisfied with the level of £4,500 but because of inflation and the increased cost of houses, as I have outlined, he can hardly defend the maintaining of the level at the 1973 figure. The building societies as a source of home loans have dried up seriously, and consequently there is greater dependence on local authority loans as they are the only means by which money can be obtained for house purchase. The problem is that the loan is not sufficient to meet the requirements of those purchasing homes—young married couples—and this situation is placing an intolerable burden on them because they must make up the balance by way of bank loans or loans from other financial institutions at interest rates of 16 per cent or 17 per cent. We are opposed to a continuance of this situation. If the Minister was satisfied with the level of £4,500 in 1973, he should be prepared now to increase that amount to £6,000 and in that way restore the level of grant to its real worth.
We request also a 50 per cent increase in the level of new house grants. Speaking at a housing conference in UCD in October the principal officer of the housing grants section of the Department said that in recent years the amount of even the maximum State grant had lost its significance in relation to the spiralling cost of houses. He admitted that local authority grants had lost their significance. During the time the Minister has been in office there has been an unprecedented increase in the cost of housing, but he has made no move to restore the level of the grant. In view of the low level of grants at present it is our opinion that the 50 per cent increase we are advocating would not represent a serious imposition on the Exchequer.
I should like to query the Minister regarding the provisions in the Estimates for public expenditure for 1975. Under the heading of private house grants there is a provision of £5 million for new houses. In 1973-74 the Department provided £6.75 million. In the nine-month financial year of 1974 the amount provided was £4.9 million. One could say that for the nine-months last year almost £5 million was provided and for the 12 months this year only £5 million is being provided. What is the reason for this cutback in the current year? The amount of the grant has remained unchanged and, according to the capital budget, 25,000 houses are to be built in 1975. On that basis the amount for new houses should be £6.75 million. There has been a cutback of £1.75 million in new house grant provision in the Estimate.
It is forecast that the number of grant-aided houses to be built in 1975 will be 16,000 and, given an estimate of £5 million for this purpose, the average grant for a house will be £312.5. In the nine-month year referred to £4.9 million was provided for new houses and the number of grant-aided houses to be built was 12,602. This gave an average grant of £388.8. In the year 1973-74, £6.75 million was provided while the number of grant-aided houses was 17,380, the average amount of the grant being, therefore, £388.4. In the year 1972-73 the average amount of the grant was £383.2. The average amount of the grant appears a little high for the years 1972 to 1974. The average grant for a standard size urban house is £325 and up to £450 in the case of the agricultural grant. Because of the fact that there is an overlap between the years that the grants are paid in instalments, the average figure is higher than the £325 level.
The figure of 16,000 in respect of private grant-aided houses for 1975 is calculated from the capital budget figure of 25,000 less the local authority target of 7,500 and less the 1,500 non-grant houses. If the average grant remains at £388 the number of houses which could be built in 1975, on the basis of the £5 million that has been provided, is 12,837. That is a drop of more than 3,000. There is a big question there to be answered.
Deputy Faulkner referred briefly to this question but the Minister avoided mentioning it in his reply. The State has shortfallen on the amount of money vis-á-vis the targets it has set. I trust that the Minister will make some statement to clarify this situation and to relieve the anxiety in relation to the financing for next year.
If the amount of the grant is increased by 50 per cent, as we suggest, the additional amount required will be £2,500,000 and, according to the Minister's figures, £7,500,000 should be provided. An amount of £7,500,000 is only £750,000 greater than the provision made in 1973-74.
At some stage I should like the Minister to inform the House whether it is not true that the State are collecting more in VAT on building materials than they are paying out by way of new house grants. If that is so, this is a serious position which should be rectified immediately, if not through the abolition of VAT or a change in the rates, then certainly by accepting this motion.
The Minister's approach has been to deny that this problem exists and to support this argument with official statistics. In reply to this we say that the statistics are unreliable as an accurate indicator and we have highlighted the problem in the private housing sector here tonight and on other occasions in the past. We did appreciate the Minister's response to our call for action on those occasions in the past, the £6 million from the banks to the building societies followed by another £5 million in July last. This money was more of an admission of the facts that the difficulties existed than a genuine attempt to solve the problem. The loans, being short-term from the society who lend on a long-term basis, must surely interfere with the allocations of loans by building societies again next year when those loans come to be repaid. However, the fact remains that we got some response to our call to action. We hope our call will not be without some response on this occasion also.
As I said before, we in Fianna Fáil will not play the numbers game with the Minister. We believe in stability, steady increase in output and security of employment. In the November, 1973, Estimate debate I stated that it was possible that the Department statistics could record over 26,000 house completions in 1973-74. In the event, that figure was not reached. Department statistics can record over 26,000 completions in 1974-75. Such figures mean little in an industry where purchasers cannot obtain loans, completed houses lie idle and thousands are unemployed in the construction industry and ancillary trades.
Our motion if implemented will instil confidence, restore cash flow, re-employ the unemployed and give the economy the greatest boost it got since depression set in nearly 12 months ago.
