I move:
That Dáil Éireann:
– noting that, since it took office, the Government has:
– abolished the first-time buyer's grant;
– raised VAT on house purchases;
– presided over a tripling in the price of houses; and
– allowed the numbers awaiting local authority housing to rise to 52,000 households, comprising over 100,000 individuals;
– condemns the failure of the Government to adequately fund local government which will force local authorities to set punitively high development levies which will result in higher prices for new homes, hinder the development of new business and damage the competitiveness of the economy.
The Taoiseach, who has been in office for six and a half years, has led by compromise on virtually every issue at the expense of the electorate. Dealing with all the vested interests was possible when money was available to buy peace but now that reduced spending is the order of the day, Departments and vested interests are no longer getting that to which they became accustomed. There is trouble in paradise. Because the Taoiseach had such a loose rein on what went on, myriad problems exist. This manifests itself in 15 options on issues in the Cabinet rather than any single leadership voice unifying the Government's vision and direction. The lack of co-operation and co-ordination among Cabinet colleagues is reflected in the lack of interdepartmental co-operation on the national spatial strategy, an integrated national poverty strategy, an integrated transport policy and an incomplete picture of the socio-economic reasons for crime, leading to little action to prevent it.
It is a tale of two worlds, one where the Government had a great deal of money from an economic boom and no accountability worries and a second world where there is near stagnation in the economy and in which the Government is aware of the resources it will get. In the latter scenario, any money spent must show a value greater than the alternative uses for the money – or it should. Clearly the Government is not choosing wisely. There is no coherent approach to the major challenges facing Ireland today. There has been almost total failure on the part of Government to implement any coherent approach to the national spatial strategy. Initiatives to ease congestion in Dublin and to rejuvenate depopulated regional towns and areas are non-existent. The promise of decentralising 10,000 civil servants has been a distraction to keep desperate communities from demanding a response from Government. There has been a distinct lack of cohesion in targeting transportation congestion, particularly in Dublin. Individual modes of travel, be they cars, trains or buses have received little of what they want. No overall vision to reduce the wastage caused by traffic jams has been produced.
Money was thrown at the health service as if that alone could make decisions and get value for money. No vision existed to ensure that taxpayers' money was spent wisely. The same is true of local government reform, competitiveness in industry and the housing problem. Departments do things in different ways and, as a result, there is no effective strategy to address the issues.
In the time available to me, there are many things I could say, but I want to deal with the following issues: the Government's complete inability to meet the housing needs of the young population; the scandalous lengthening of waiting lists for local authority housing which has increased to 52,000 households from 39,000 before the Government took office; the starvation of local authorities which, for the second year in a row, have not been granted an increase in funding. The motion which my party has put before the House is an amalgam of all these issues.
From next March, every new home buyer will be faced with the result of the broken promises and the economic mismanagement of this shameful Government. They will be faced with handing over thousands of euro in one of the biggest stealth tax swindles in years, namely development levies. The levies were provided for in the Planning and Development Act 2000. They were designed to allow for flexibility in the type of infrastructure that could be funded under the development contribution scheme.
My party did not oppose this provision when the legislation came before the Oireachtas. We accepted that this country had a First World economy with a Third World infrastructure and something needed to be done. We did not know that the levies would not be used to fund infrastructural development but rather to make up for the shortfall in Government funding for infrastructure. The Government, in all its mealy-mouthed arrogance, has hijacked the scheme to cover up the complete and utter mess it has made of the public finances. The House must make clear its revulsion at this arrogance. The Government has stripped back funding of vital infrastructure and is forcing councils to do its dirty work.
The national development plan is €9 billion over budget and seven years late. The Government has failed to allocate the cash originally committed to the NDP. Let us also be clear in regard to another issue. The incredibly high level of development levies that will be forced on home buyers and businesses was not envisaged when the legislation was being enacted. No Minister stood up to say that a 200m² house might have a development levy of €28,000 slapped on it.
At that time we did not realise quite how bad was the economic situation facing the country. Neither did the voters. We did not realise that, in order to win the election, the Government would mislead the people, spend its way out of trouble and then, with 88 seats in the bag, cut back on services and increase charges. The development levies are the next target.
I will lay before the House the details of the abject failure of this Government to do anything right in the housing area. Before the Government blinds us with meaningless statistics from the Minister of State, Deputy Noel Ahern, let me put the real picture on record. Because of the Government's failure to provide adequately for increasing housing demands, the average price of a new house is €222,000. According to Government figures, the average price of a second-hand house is €267,000. In Dublin, the price of a second-hand house is €367,000. The ESRI puts house price increases at between 15% and 16% in the past year alone. Since the Government came to power, the price of a home has tripled.
Over 100,000 individuals are waiting for a local authority house. Due to the high cost of housing, more than 42,000 people aged over 30 still live with their parents. Some 1,000 students live in hostels. A total of 5,581 people are homeless, which is the greatest shame of all. The Government has responded dismally over the years to this crisis. However, in the past few weeks its response has been disgraceful. According to Fianna Fáil and the Progressive Democrats, the answer to the housing monster that we are faced with is to make housing more expensive.
Next year, new home buyers will face a triple whammy from the Government which will cost them up to €600 million. Last year, we saw the removal of the first-time buyer's grant. With a stroke of his pen, the Minister for Finance robbed thousands of young people of the vital few thousand euro which could offset the crippling cost of buying a house. Fine Gael collected tens of thousands of signatures calling for the grant's restoration, but the Government ignored them. In 2002, the Government single-handedly added 1% to the price of a house when it increased the rate of VAT. From March 2004, new house buyers will be faced with development levies of between €6,000 and €30,000.
The high rate of development levies is not, on its own, the major problem. As local authorities up and down the country calculate the levy they must charge, we face a ticking time bomb whereby councils with a sustained high level of development will be able to charge less than those with a smaller pool of developers from which to draw an income. In other words, richer local authorities will be able to out-price less wealthy councils, and business and investment will be drawn to areas in which development levies are lower.
A picture of the huge variations in development levies which will result in uneven infrastructural development is already emerging. For a new house in County Cork, levies could mean a €4,800 charge and in south Tipperary a €12,200 charge. In Wicklow, a 200 square metre house could incur a €20,000 levy. South Dublin County Council is proposing a €10,000 levy per two bedroom unit while the local authority in Galway city will charge €10,000 for every new unit of accommodation built. In Carlow, commercial development will be levied at €49 per square metre. Carlow Town Council is preparing to charge residential units €2,200 for sanitary services, €2,000 for roads and in excess of €2,100 for recreational facilities. Dublin City Council will raise development contributions from €30 to €100.
How can the Government talk about national development plans and spatial strategies when everything it does, from the Hanly report to development charges, flies in the face of the effort to spread the benefits of the economic boom it inherited? The sum collected in development contributions is likely to be much higher next year than the €122 million collected in 2001. IBEC has said that contributions to Fingal County Council will rise by €37 million while Cork County Council's total will rise by €13 million.
It might be appropriate to quote the Minister for Enterprise, Trade and Employment at this point. In her speech to IBEC on Thursday, 25 March 1999 she stated:
You do not have to be a professor of civil engineering to realise that Ireland has a major infrastructural deficit. That deficit stems from many factors; lack of resources for investment, the slowness of the planning process, a failure to recognise the need for large-scale expenditure. I believe that the private sector must be given a much greater role in this area than ever before.
How can the Minister claim she wants greater private investment in infrastructure when the Government is proposing to slap businesses with a massive levy which will discourage them from making such investments? South Dublin County Council proposes a €75 levy on every square metre of commercial, industrial and retail development. When the Minister spoke of competitiveness previously, many in industry may have allowed themselves a wry smile. Now, they probably cry.
The Chambers of Commerce of Ireland has said the Government's total failure to properly fund local government has created a massive €220 million additional cost to its members. Mr. John Dunne, chief executive of Chambers of Commerce of Ireland said in October that the Government had given local authorities no alternative but to find money through a combination of cutting services and hiking up charges to businesses. He called for a cap in business rates. He said that while his organisation did not favour a cap, the irresponsible attitude of the Government meant absolute boundaries had to be established.
The Government has lost the faith of the people. It has lost the faith of business and it long ago lost the faith of home buyers. In sections 48 and 49 of the Planning and Development Act 2000 we were sold a pup. No one could possibly have imagined that the levies could go so high. Nobody could have thought the Government would be so unscrupulous as to scale back local authority funding to such a degree simply to cover up its pathetic economic mismanagement. The development levies represent another nail in the coffin of Fianna Fáil and the Progressive Democrats. They have conned the electorate too many times. Since taking office six and a half years ago, the Government has claimed it has made Ireland a low tax economy. However, it has become a specialist in introducing stealth taxes in the form of local council levies. These taxes are having a major effect on the competitiveness of business. In the past three years, 10,000 IDA Ireland created jobs have vanished. The increases in stealth taxes will raise costs even more and cause further job losses.
All new commercial developments will be hit by development levies. They will make businesses less competitive, damage people's purchasing power and further damage our economic well-being. While advocating local government reform, the Government has undermined local authorities by putting them in the front line in the raising of new taxes which hit businesses and young people, especially those attempting to purchase a house for the first time. The Government has broken every promise it made before the last election. These latest proposals are a bridge too far.