It is interesting that this Bill should come before us now. It is two years too late. I have remarked on a number of occasions that the economic policy being pursued has failed miserably everywhere it was tried. I cannot understand why the Government did not intervene earlier. I compliment my constituency colleague, the Minister for Finance, on bringing forward this Bill even at this late stage. What amazes me is that the economic philosophy and financial management pursued over the past two years do not measure up to his well-established principles.
Measures were needed to check the spiralling rate of inflation. House prices are rising at an alarming rate and have been for the past number of years. I know it is not the Minister's philosophy to stand idly by but rather to do something about it. Nobody understands why what happened in Britain was allowed to continue happening here unchecked. The Government has decided to intervene at long last. However, instead of providing more houses to deal with the housing shortage it introduced in the market certain corrective measures. I do not believe these proposals will do anything to help those who require a house. The inflationary spiral will continue. There are more people seeking houses now than at any time since the foundation of the State.
One of the false premises on which Government policy has been built is that it was doing relatively well by comparison with the previous year. If we go back ten years local authorities, including Kildare County Council on which the Minister and I were members, could build up to 350 houses in a year. That was reduced to 15 in the bad old times. In 1988, 1989 and 1990 no houses were built. Where it all went wrong was that nobody recognised the demand. With the upturn in the economy, the demand increased and nobody responded. Everyone looked to the previous year. If there was an increase of 100% in the number of local authority houses provided in every local authority area in the years after 1988 it meant nothing because we were way short of what was the norm in the early 1980s.
The Minister has intervened at last, obviously as a result of the alarm concerning the inflation figures. That was on the cards for 18 months and every commentator has spoken about it. The measures introduced by the Minister are an attempt to arrest the spiralling figures. One of the most alarming comments I have heard is that there is a noticeable slow down in the rate of house price increase and that prices have stopped increasing. I do not see any evidence of that. If the analysts have found it they are better than we who are on the ground. House prices are increasing on a daily basis and that will continue to be the position for as long as there are ten people seeking to acquire every house that comes on the market.
Many first time home seekers acquired their house through the local authority loans system. The SDA loan was increased to £50,000 in counties such as Kildare. That would not buy even half a house today. It would make no impact on the market. It is cynical to have such a level of loan. The shared ownership loan is not the best in the world but it is an attempt to address the urgent issue and it has done so to some extent. It is a maximum of £95,000 in Kildare. How many houses can one buy for that? None. One will not even get a look in the door for that amount. I cannot understand why measures have not been introduced that would have an immediate and dramatic impact on those seeking to acquire a house at a reasonable price. The Government is locked into an inflationary position. If the market tumbles we will have negative equity and that will be just as serious as the problem that existed in Britain in the late 1980s. The fact that it happened there has not rung a bell with us. Analysts said it could not happen here because we have ongoing demand but it can happen. If the economy takes a downturn as a result of fuelled inflation arising from spiralling house prices the position will change very quickly.
While I welcome the Bill it is dramatically late. It will not address the issues. It is unfortunate that the Minister must attempt to rescue this matter that has been allowed to drift for the past two years in a way that only those who did not have regard for the marketplace could ignore. The Bacon reports have come and gone. We were told that the first Bacon report was a dramatic attempt to address the problem. It had no impact, good, bad or indifferent. Nobody seemed to realise the real problem was a shortage of available housing to an ever increasing market. It did not even touch on the problem.
If the measures that are being taken now had been taken two years ago there would have been some visible result at this stage. The recent budget was a give-away one. I envy my constituency colleague being in that position. I would have thought wise counsel would have prevailed in Departments and someone at the Cabinet table would have said this was a serious issue that needed to be addressed as it had been allowed to go unchallenged for the past number of years. Those of us who tried to do something about it by raising the matter at various committees, the Committee on Social Affairs, the Committee of Public Accounts and so on, and in other ways and who pinpointed the damage that was being done to the economy were treated with disdain. We were told we did not know what the issue was nor were we au fait with modern economics. However, we were on the ground, meeting our constituents, listening to what people were saying, looking at auctioneers' windows, watching prices rising on a daily basis and listening to our constituents telling us the maximum loan one could get, what the possibility of getting a house was and why people who were on a housing list two years ago are still on it, whether it be a local authority list or a private housing one. The problem is virtually out of control.
This measure is being introduced too late. It could well create further inflation. Once one begins to intervene in the natural market in this way, instead of supplying the market one creates further problems and obstacles. We should remember that we have availed of the open market in Europe and enjoyed dramatic economic benefits as a result. The Single Market meant the removal of tariffs, subsidies and interventions. We paid a high price for that at the beginning, but we availed of the opportunity and our economy has blossomed accordingly. The end will come when we start to reinvent the wheel and to intercept the natural course of the market. That is very dangerous, but it is about to happen. I hope this Bill has some positive impact, but I cannot see it at this stage.
