Dáil Éireann debate -
Tuesday, 25 Nov 2003

Vol. 575 No. 3

Private Members' Business. - Local Government Funding: Motion.

Mr. Allen

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.

Mr. Timmins

I will first deal with a little theory before I discuss the substance of the motion. Private property is the most important institution of social and political integration. Ownership of property creates commitment to the political and legal order and the most important property one can own is a house. Historical evidence indicates that societies with a wide distribution of property ownership, notably in residential housing and land, are more stable and more resistant to upheavals and change. In his book on the Russian revolution, Richard Pipes writes that the French peasant who was a source of instability in the 18th century became a pillar of society in the 19th century as a result of the French revolution. When people are confident that their lands and businesses are legally theirs, their respect for other people's property increases.

In Ireland, even more than in other European countries, home ownership and property rights are emotive issues. We are familiar with Davitt's three f's and our Constitution recognises property rights. The economic fibre of society is based on those rights. The absence of such certainty in many non-European and non-American countries has been the main cause of poverty. In many cases, assets are held without title, and capital cannot be drawn from them. The greatest form of investment in the United States of America is through the remortgaging of property. While this concept of wealth creation is something of which we are almost unaware, it is not unusual for us to use things without understanding how they work. Magnetic compasses were used before a satisfactory theory of magnetism was developed.

One of Ireland's great attractions as an investment centre has been the firmness and certainty of our property rights and the recognition of ownership. I am concerned that we could damage the source of our strength by failing to recognise its importance or even its existence. We take the system for granted. The recognition and implementation of such a system would help to correct the economic failures of poorer countries. These failures have nothing to do with deficiencies of cultural or genetic heritage. While there is no cultural commonality between the Latin Americans and the Russians, since both regions adopted capitalism without capital, or property ownership, they have shared the same political, social and economic problems. Yet in the last decade since both regions went down the road of capitalism without capital – in other words, property ownership – they have shared the same political, social and economic problems, including glaring inequality, underground economies, Mafia, political instability, capital flight and disregard for the law.

These troubles did not originate in the monasteries of the Orthodox Church or along the pathways of the Incas. It is not only Third World countries and former Communist regimes which have suffered these problems. The same was true of the United States in the late 18th century when George Washington complained about the Banditti, who occupied land they did not own, of skimming and disposing of the cream of the country at the expense of the many. I would like to claim the former theory as my own but it is from the works of Hernando de Soto, one of the world's leading innovators in property reform.

The failure of the Government to deal with the housing crisis has caused a major problem in this State. Almost every problem goes back to the failure to provide affordable housing. The Government is attempting to interfere with the Constitution and property rights in what it sees as a populist move designed to give the impression that it is trying to do something. However, it has done nothing to date.

I welcome this motion tabled by our spokesperson, Deputy Allen, which has come about as a result of the controversy that has arisen in recent months and which he has articulated on several occasions, namely, the difficulties of the proposed new levies. I am sure the Minister of State, Deputy Noel Ahern, who regrets his senior colleague is not here, will quote ad nauseam from the debate on the Planning and Development Act 2000.

Deputy Allen hit the nail on the head when he said that when we discussed this Bill we welcomed it, but in the context that local authorities would have an opportunity to raise funding for much needed community facilities. In my contribution to the debate on that Bill on 9 February 2000 I said:

I hope section 47 is used wisely and I look forward to many fine community centres in these areas. I trust the temptation to use the levies collected as a prop, due to a lack of central Government funding, is resisted. The section leaves that open and perhaps there is a case for an amendment to ensure the levies are put into community facilities.

I regret we did not table an amendment because I, like hundreds of thousands of people, believed the Government – much to our detriment. However, we now know differently.

When the housing problem arose as a result of the increase in employment and in population and a decrease in the household numbers, the Government went down the usual path and hired a consultant, Dr. Bacon. He brought forward a set of proposals which the Government implemented. When they did not work, Dr. Bacon brought forward another set of proposals which the Government implemented. They drove rents through the roof and drove billions of pounds out of this country to the south of Spain and to France.

There is an old economic maxim that absence of evidence is not evidence of absence. I could commend the Minister for Finance, a much maligned individual. While I do not have access to Cabinet papers, I would say he was the one person who said we must stop this social engineering, or this madness, and change the policy. Unfortunately, it was too late for many people who were looking to rent a property because Irish people are now investing in central Europe to the detriment of this economy. If one goes to Dublin Airport on a Friday, aeroplanes to the south of France and the south of Spain are full of Irish people who invested abroad.

My county faces a particularly difficult time. Economics is simple and housing is a simple commodity. The law of supply and demand applies, so what does one do when there is a difficulty? One tries to enhance the supply because there is nothing one can do about the demand. The Minister of State, Deputy Noel Ahern, is nodding his head. Maybe he has a different philosophy but everything this Government has done has hindered supply. I disagree with the 20% because it allows the Government to abdicate its responsibility. It should purchase land and build houses for people. Its record on local authority housing is appalling. Some 80% subsidise that 20%.

There is a ‘locals only' policy in Wicklow which the Minister may claim the local authority brought in. It introduced it at the behest of officials in the Department of the Environment, Heritage and Local Government. The policy in Wicklow means that somebody can come from Timbuktu and buy a house in Carlow town ten or 15 miles away from where I live. The Leas-Cheann Comhairle knows it well because he held many clinics there. However, someone from Carlow town cannot buy a house in Wicklow. Indeed, people in Rathvilly, who vote in the constituency of Wicklow, cannot buy a house in Wicklow. Someone from the Philippines, who works in Wicklow for a year, can buy a house in Wicklow but someone who lives down the road cannot. Someone from Dublin cannot buy a house in Kilcoole, which is on the rail line and which is only 15 or 16 miles from Dublin. However, one can drive to Rochfordbridge or to anywhere else in Ireland and buy a house.

The policy in Wicklow is crazy. In the judicial review against Meath County Council, Justice Quirke stated that the policy was flawed, unworkable and that there was no definition for it, yet nothing has been done at central Government level. I feel sorry for the lady holed up in an office somewhere in Dublin through whom every telephone call must go. I would like something to be done about this issue.

On the levies, the Minister went on the 9 o'clock news and stated that people were scaremongering. I have the details and a proposal for a 200 square metre house. The proposed services levy for a 222 square metre house in the countryside in Wicklow is €28,000. The Minister also stated that those who will benefit will be those who will pay. That is not true. Many people who will benefit will pay nothing. Services will improve for me if the water supply is upgraded in my area but I will pay nothing. Many people who will pay will not benefit, particularly those who build houses in the countryside. It is a crazy system and it is inequitable. Counties have suffered from infrastructural deficits in the past. The people do not mind paying tax if it is fair, equitable and transparent.

This levy is being used as a prop for a lack of Government funding. I went out of my way to say it was not associated with benchmarking but maybe I was being too honest. It is indirectly associated with benchmarking because it is one more method of making up for the Government shortfall and one more stealth tax. The reason it is increasing is that the Government is not providing funding.

I spoke about tangible concepts earlier. This is the concept of the hen that lays the golden egg. This Government found the hen but it choked it.

Mr. Durkan

I thank my colleagues for tabling this motion and giving us the opportunity to speak on it. Taking poetic licence from Deputy Timmins, I cite the poem, Eldorado:

"Shadow", said he, "Where can it be

This land of Eldorado?"

The Minister and the Government have discovered Eldorado. Eldorado is the people who do not have homes, the people who have been waiting on housing lists for the last five or six years and the 50,000 plus families in towns and in the countryside who hope to buy a house and who have been deprived of doing so because of the Government's policy. The reason is that the Government is now using homeless people as a means of raising taxes. It is a unique opportunity to take full advantage of the disadvantage of people who are on the housing list, whether to buy or acquire a house from the local authorities.

There are many areas of neglect on which this Government can reflect as it approaches the local elections and the next general election, whenever that is – the sooner, the better. That is the sentiment expressed by every person to whom I have spoken in the past six months. There are few areas to which it did not make promises before the last general election but it promised very little to those in need of a house and, true to its word, it gave them nothing. The Government looked at the €3,800 first-time buyer's grant and took it back. It decided it did not have enough money because it is saving up for the next general election. After all, it must pay for all the promises it hopes to make. To save more money, the Government decided to raise various service charges. Every local authority was given the option either to go under or raise charges. The attitude was double them, to hell with inflation, let us have a good cut at it and take all. Having sat and gazed at that particular pot of gold for a while they looked again, thought there was more and decided to go for it.

Not only were they unhappy with what they got from taking away the new house grant but they then decided to penalise people without a home of their own. They decided that to impose a penalty on people with no home of their own was the right way to solve the problem so that people would become grateful for being allowed to live, subsist or exist.

Deputy Timmins made reference to the peasants in France and various parts of eastern Europe. The way things are heading here, in a few years the Government will do what was done in Europe after the Second World War. It will build a few apartment blocks on the outskirts of towns and villages and hold people in them because it will be easier to control them. It will be able to get all the taxes it wants from them any way it wants in such a situation.

I hate saying this to the Minister of State because I know he is a nice guy at heart. However, I have come to the conclusion that we will have to carry out an exploratory operation to find his heart. All his policies are appalling and punitive. They hit the most vulnerable people in society. At this late stage, will he look into what goes for his heart, and that of his senior colleague, and ask where things are heading? He should ask himself what the young people have done to offend him and why he is doing this to them. Surely it is possible to allow them live life in their own way, improve their circumstances and better themselves as opportunities arise.

The Minister of State is taking those opportunities from them. He is trying to ensure they will never have a home of their own. Unfortunately, I have come to the conclusion that the objective of this Government is that the young population should never be able to aspire to homes of their own. The best they can aspire to is renting a home from some landlord or financial institution because they will never be able to afford one.

About 150,000 people will be the victims of what is proposed by this latest atrocity. Many of those people could build a home of their own if they were allowed. The Government will not build them nor has it any intention of doing so. It has no intention of building but only of saying what it did and how much it spent over the past five or seven years. It gives us a history lesson at every opportunity.

The Minister of State served time on a local authority and I hoped he would have used that experience to good advantage. Instead we have a nonsensical housing scheme. There is a maximum €130,000 shared ownership loan for people to get a home of their own in my constituency. We know there is no chance or possibility of them buying or building a house for that. On countless occasions I have asked the Minister of State to raise this to a realistic level. I am disappointed that he obviously does not intend to do so.

I congratulate my colleagues on giving us the opportunity to speak on this matter by putting down this motion. These Government measures will have long and far-reaching effects which I hope are visited on the Government which perpetrated them.

Mr. O'Dowd

I congratulate Deputy Allen on bringing this motion before the House. It is timely because the effects and impact of these measures are being discussed in council chambers up and down the country. They are also being discussed in the homes of people who have saved for years to buy their own home.

Let us examine the fantastic change in our demographic profile over the past number of years. In the 1970s and 1980s we did not have the same need for housing because many young people did not have jobs but were going abroad. We did not have the same pressure on services or the demand for new homes we have now. Emigration has ended and we now have net immigration. More young people are staying at home and they want to buy their own home.

The effect of this proposed stealth tax will be different for couples, depending on where they live. Cork County Council will charge €5,000 or €6,000 but County Louth will charge perhaps €12,000. There is no equity or fairness in the charge. It is an additional, unfair and unacceptable burden on young couples who want to build their own home. What effect will it have on them? At present, if people are lucky enough to be in the sector of society able to buy their own home, they have borrowed to the hilt. Lending agencies are issuing warnings about the number of maximum 90% mortgages that have been provided to young families and young people starting out in life. This measure will create additional borrowing pressure for young people. It is unacceptable and unfair.

How will people deal with this issue? Perhaps the builder will drop the quality of the house he is building, thereby reducing the cost, but I do not think that will happen in the city of Dublin or in most places I know. If young people cannot borrow more, their parents may give them more. Many more parents will now have to participate in securing or funding mortgages for their sons and daughters.

The other alternative is to move further from the centre of population to find a cheaper house. If we could argue for that or argue that there was some merit in the Government spatial strategy, there would be a case for not imposing extra taxes on people who move where we want them to live. Perhaps we should look at the spatial strategy and designate growth centres around the country. The Government could designate places in which it wants young people to live, such as places on the eastern seaboard or towns not growing in population but with existing infrastructure that is not being used, e.g. main roads with no houses on them and schools with empty classroom places. People would be happy to live in these places if it was made attractive to them to move there.

The Minister of State should examine what merit there is in the national spatial strategy and devise a system whereby people who bought in these areas would not have to pay these taxes. Then he could argue there was some cogency or reality in asking people to live in places where we need more people to reside. However, that is not what he is doing. The effect of this measure will be that the counties of Louth, Meath, Wicklow and Kildare will have more people moving into their villages from the limits of the city. More people will take the daily drive to and from Dublin or pack into the trains and buses.

There is no real thought or construction behind the processes at work here. The Government has just decided it needs money for infrastructure. Everybody agrees with that. However, Government is not looking at the counties or places where there is a developed infrastructure and where people would be glad to live if it was made more attractive for them to do so.

I want to make a point about industry. I understand from the newspapers that the IDA mentions it does not consider County Wicklow attractive for industrial investment. This increased tax on people who want to set up a business where they live will be penal and negative. The Minister of State should consider that there may be merit in looking at areas which might be designated as areas where these charges would not apply. He should examine again where he wants people to work and live.

If the spatial strategy means anything nationally, it means there is a plan regarding what the Government wants to happen. However, what the Government is imposing is a mish-mash. It is putting massive increases on housing costs and giving people no choice. The Minister of State is not encouraging choices which would benefit the economy. This resolution is both worthwhile and important.

Minister of State at the Department of the Environment, Heritage and Local Government (Mr. N. Ahern)

I move amendment No. 1:

To delete all words after "Dáil Éireann" and substitute the following:

–"acknowledges the achievements of the Government in:

– increasing the resources provided to local authorities through the local government fund and through the buoyancy in their income from local sources due to the success of this Government's policies;

– ensuring that local authorities have adequate resources to service the land necessary for development, including industrial, commercial and housing developments;

– ensuring that the cost to the public purse of servicing land for private development is recouped in part from the persons developing that land;

– revising the long-standing system of levying development contributions to help fund local authority infrastructure to ensure it is implemented in a more transparent and consistent way across the country with a new role for the elected members of authorities in overseeing the system;

– focusing on increasing housing supply as the key response to the broad range of housing needs and demand;

– supporting record levels of housing output since 1997 with the prospect of a further record level of housing output being achieved in 2003;

– moderating the rate of house price increases;

and supports the continued action and commitment by the Government to adequately resource the local government system to underpin the continuing development and competitiveness of the economy."

Mr. S. Ryan

On a point of order, how can the Minister of State move that amendment while keeping a straight face?

An Leas-Cheann Comhairle

That is not a point of order.

Mr. Durkan

Deputy Ryan was right to raise a point of order. The Minister of State must have made a great effort to keep a straight face.

Mr. N. Ahern

The Opposition motion condemns the Government's record on the three separate but related areas of local government funding, development contributions and housing. In putting down this motion, the Opposition seems to have little regard for the facts. With certain elements of the media, the Members opposite are trying to scare house purchasers and prospective investors.

Mr. McCormack

They are scared enough.

Mr. N. Ahern

They are assisting a few self-interested players who are happy to make the maximum profit from their developments at public expense.

Mr. McCormack

That is true of the lads on the Government side.

Mr. N. Ahern

The conduct of the Opposition in recent days has been shameful.

Mr. Durkan

If the Minister of State has information about "self-interested players", we would like to hear it.

Mr. N. Ahern

I want to set it right on a few matters so that it can make up its mind.

Mr. Durkan

Most of what we have heard so far is an insult to the poor people of this country.

Mr. N. Ahern

All the Opposition wants is for developers to make more money than they are already making.

Mr. McCormack

The developers are Fianna Fáil lads.

Mr. O'Dowd

What about the Fianna Fáil lads at the Galway Races?

Mr. Durkan

They are found in a tent in Ballybrit.

Mr. N. Ahern

The first part of the motion criticises the Government's position on local government funding. Contrary to what it attempts to suggest, the funding of local government has undergone a transformation in recent years. The Government is more than proud to stand over its performance since it came into office in 1997.

The Local Government Act 1998 reformed the arrangements for the central Government's support of local government. This completely transformed the financial position of the local government sector by giving it a dedicated and buoyant source of income. The establishment of the local government fund, as a ring-fenced source of funding for local government, was the key to this transformation. The fund is financed from the proceeds of motor tax. An Exchequer contribution indexed to the initial amount was provided for in the 1998 Act. The fruits of the rapid advances in the economy since the fund was established have been made directly available to local authorities. The commitment by the Government to fund local government properly is demonstrated by the fact that the Exchequer contribution to the fund since its establishment is €208 million more than the level required by the indexation provision in the 1998 Act. General purpose allocations of over €626 million were made from the fund in 2003.

Mr. Durkan

That is great consolation for those who will have to fork out €25,000 or €30,000 for the privilege of living in a house that is not provided for them.

Mr. N. Ahern

There has been an unprecedented transfer of resources to local authorities to enable them to provide day-to-day services. The buoyancy in the fund has enabled the Minister for the Environment, Heritage and Local Government to increase general purpose grants to local authorities by about 85% since 1997. The fund provided just under €400 million for non-national roads this year. This means that grants for non-national roads have almost doubled since 1997.

A key thrust of the local government reform programme is improving the range and quality of services provided by local authorities for their customers. In many cases, these services are linked to the infrastructure being provided through the national development plan. Local authorities have improved the quality of the water supply and treatment they offer, road maintenance has improved beyond measure in the past ten years, social housing supply is framed to match the sector's needs in a more sensitive manner, social inclusion initiatives have been developed and implemented and better planning and development control has allowed local authorities to respond positively to customers' increased expectations.

Most of my Department's spending flows to local authorities in grants and subsidies. Capital programmes account for over two thirds of the expenditure. I have dealt with the supports which have been provided to the local government sector for current spending, but it would be remiss of me not to remind the House of the rapid and sustained rise in capital grants to local authorities since the Government was elected six years ago. The value, excluding roads, of the Exchequer-funded public capital programme expenditure in the 1997 Estimates for the then Department of the Environment was just over €500 million. According to the 2004 Abridged Estimate for my Department, comparable expenditure will approach €1.6 billion. The funding for the same services has increased from €500 million to €1.6 billion in a few short years. Virtually all this expenditure will be advanced to local authorities for a range of services, which are mainly infrastructural in nature. The largest of the programmes relate to local authority social housing and investment in water and waste water services.

Exchequer capital spending on local authority and social housing was about €214 million in 1997, but similar supports to local authorities will exceed €930 million next year. There has been an increase of over 400% in seven years. Although inflation in the construction industry has been higher than we would have wished, it is still a dramatic increase in real terms. It has resulted in the addition of many more local authority houses to the social housing stock. I will expand on this later. I do not like to hear complaints from people like Deputy Durkan, with whom I have discussed this matter privately. The Department has made funding available to local authorities in recent years. The performance of a number of local authorities is pathetic, however. We are at the end of the four-year multi-annual programme.

Mr. Durkan

The Minister of State has the power to direct them. He can order them.

Mr. N. Ahern

The Deputy, his friends and other people have been on local authorities. I am trying to give the facts. I ask the Deputy and his friends and colleagues at local authority level to make a greater effort at that level. The performance of some local authorities, including Kildare County Council, is pathetic. I think the council is reaching about 60% of its target.

Mr. Durkan

On a point of order—

An Leas-Cheann Comhairle

I am sure it is not going to be a point of order.

Mr. Durkan

Members of the local authority say that everything is laid down by the Minister.

Mr. N. Ahern

Investment in water and waste water services is the other large infrastructural programme with which the Department is concerned. It is the most significant investment programme which relates directly to environmental protection. It builds capacity into the economy to enable economic growth to continue into the future. We invested €190 million in the programme in 1997, but the comparable figure in 2004 is projected at €440 million. This is an increase of over 100%. Other capital programmes assisted by my Department include non-national roads, fire and emergency services, the public library service and urban renewal. All this funding is made available to local authorities, which are not adequately funded according to the Opposition. The local government sector has been increasingly better funded since 1997. The evidence of improved social and economic infrastructure is plain for all to see.

The amount of misinformation about the issue of development contributions has reached unparalleled proportions in recent days. Those whom the Opposition proclaims it is trying to help, first-time buyers, are being frightened.

Mr. McCormack

They are frightened all right.

Mr. N. Ahern

The Opposition should decide what side of the argument it wishes to be on. The Department has received a number of calls from distressed people who want to know if they will have to pay a new charge.

Mr. McCormack

Of course they will have to pay it.

Mr. N. Ahern

They are amazed to hear that what they have read in the press and heard from Opposition Deputies is entirely distorted.

Mr. Durkan

So they will not have to pay at all.

Mr. S. Ryan

They will pay.

Mr. N. Ahern

I want to knock a few myths on the head for the benefit of Opposition Deputies. The first myth is that this is a new charge on first-time buyers. That is totally incorrect. It is the line Deputies have been peddling in trying to frighten and scare people. I do not know what Deputy Ryan is talking about.

Mr. S. Ryan

I did not say anything.

Mr. N. Ahern

I heard the Deputy laughing and saw him smirking.

Mr. S. Ryan

It was not me.

Mr. N. Ahern

It sounded like Deputy Ryan.

Mr. Durkan

Deputy Ryan did not say anything.

Mr. N. Ahern

I have listened for years to him giving out about estates not being finished and builders walking off sites. When we try to do something about the matter, the Deputy is against it.

Mr. S. Ryan

I am in favour of it.

An Leas-Cheann Comhairle

It would be helpful if the Minister of State addressed the Chair.

Mr. McCormack

It would be helpful if the Minister of State told the truth.

Mr. S. Ryan

I am in favour of it.

Mr. N. Ahern

Development charges have been an integral part of the planning system in Ireland since 1964. The charges are not a tax. They allow the local authority to part fund the cost of the infrastructure necessary to facilitate all new developments such as roads, water and sewerage services and other amenities. They apply to all developments, not just houses.

Mr. Durkan

So they do apply.

Mr. N. Ahern

Charging development contributions empowers local authorities to recoup a fraction of the costs to public funds of servicing land for private development. Why should those servicing the land and those making a fortune from development not make a contribution?

Mr. Durkan

What service is the Government providing for the 100,000 people on the housing list?

An Leas-Cheann Comhairle

Please allow the Minister of State to continue without interruption.

Mr. N. Ahern

Without them, servicing new land would become more difficult, with an even greater burden falling on the Exchequer and greater profits for builders. That is the line Deputies are taking. I am amazed that Deputies are concerned that builders might have to suffer a little expense.

Mr. Durkan

Who will pick up the tab?

Mr. N. Ahern

Everybody presumes they will pass on the cost.

Mr. Durkan

Does the Minister of State think the builders will pick it up?

Mr. N. Ahern

Yes, I do. It is right and proper that those making profits from the sale of land should pay for the infrastructure.

Mr. Durkan

If that is what they told the Minister of State, he will hear more about it in Ballybrit.

Mr. N. Ahern

Do Opposition Deputies agree that builders of profitable new businesses, like offices, factories and quarries, should pay at least some of the cost of providing the infrastructure they use? The answer is they should.

Buyers of new houses over the next few weeks and months will not have to pay a new levy to the State because the developer will have already paid the development contribution for the house before building work began.

Mr. Durkan

Now I have heard it all.

Mr. N. Ahern

All the purchaser should, and must, do is ask his or her solicitor to check the planning conditions have been complied with before they sign off on the purchase of the house. New development levies are paid as permissions are given and as work is due to commence.

The second myth is that the development contribution is being imposed by "stealth", the new buzz-word in recent months.

Mr. Durkan

I would use the word "sneak".

Mr. N. Ahern

This is precisely the opposite of what is happening. Under the 1963 Planning Act, development contributions were, until now, imposed by way of manager's order as a condition of planning permission. That system was widely and rightly criticised as being too haphazard, unevenly applied across the country and lacking in transparency. Development interests agree with the principle of paying development contributions but they rightly object to not knowing what they are to pay, how it is calculated and for what they are paying.

Prior to the enactment of the Planning and Development Act 2000, development interests lobbied for the introduction of a new system that would give them certainty about the contributions they would have to pay. Looking at the amounts being collected –€122 million in 2001 and an estimated €150 million in 2002 – it must be acknowledged that some clarity needed to be introduced into the system.

Section 48 of the Planning and Development Act 2000 was brought in to require local authorities to prepare schemes setting out how development contributions would apply in their area. This was designed to bring order to a system which already applies and to introduce a new level of openness. It will ensure that the costs to local authorities of supplying infrastructure and facilities will become evident to developers and the public at large. It will also ensure that developers know in advance what contribution they will have to make towards infrastructure and facilities and what infrastructure and facilities they are funding. Moreover, the new system gives a new role to elected members in determining the level of contribution that would apply. That is important.

We speak a great deal about providing councillors with extra authority. It is also important to note that the new system of applying development contributions was welcomed by all sides of the Oireachtas at the time – I could quote at length from the contributions made by Fine Gael and Labour Deputies who put forward amendments to extend the types of infrastructure that could be funded. They were not only happy with what was contained in the Bill, they wanted to extend and expand it.

Mr. McCormack

That is true, but they did not think it was a substitute for capital expenditure.

Mr. N. Ahern

It is a pity that attitude has not continued. Deputies should not be running scared with misinformation.

The third myth is that all developers will have to pay a set levy in respect of all developments. That is not true. People have mentioned wild figures like €28,000 per house. That is nonsense. Each planning authority has prepared, or is now preparing, its development contribution schemes for final adoption by March next year. The draft schemes must be published and the public consulted. At that point they are submitted to the elected members of each authority for adoption.

The final decision on making a development contribution scheme and setting the levies rests with elected members of the local authority. If councillors want to set a figure of €28,000, they may do so. Given that we all know they will not set a figure anything like that amount, it is beyond me why people continue scaremongering on this issue. This is an important new policy role which presents a challenge for elected members. I hope and expect that local authority councillors from all sides of the political spectrum will take it up and develop it in a proper manner.

It is up to local authorities to balance the overall charges to be levied on new development and the impact that may have against the costs which would otherwise arise to its finances in providing infrastructure to service such development. Why should local authorities and the general taxpayer have to pay for everything and allow developers to continue to make and pocket a fortune? The members have to strike a level of contribution for all types of development that reflects fairly the increased load of that development on local authority infrastructure and facilities while at the same time not discouraging some development or, indeed, not allowing some developers to take advantage of publicly funded infrastructure and make a super-profit at public expense. However, they must ensure that contributions are set at an appropriate rate because without them local authorities will not be able to service land at the necessary rate and this will inevitably impact on the rates of development of all kinds over the next few years. First-time buyers will not thank elected members if they prevent a proper rate of serviced land for housing and restrict supply as a consequence.

The main plank of the Opposition argument is that house prices will suffer a direct increase as a consequence of the new development contribution schemes. That is incorrect. As I pointed out, local authorities have been levying contributions since the implementation of the 1963 Act. When charged by manager's fiat, house prices did not vary in the wild manner claimed by the industry. If builders do hand on these costs, hard questions will have to be asked of the industry about its willingness to pass on costs while maintaining its profits.

The key to house price moderation is supply. The development contribution system is the key to providing the necessary services for land to build houses and the additional facilities which make places worth living and working in. Housing remains at the top of the Government's agenda and a wide range of measures have been taken over the course of our two terms in office to increase housing output to match demand. These include removing infrastructure and planning constraints on residential development, affording greater access to the housing market to first-time buyers and improving affordability for first-time buyers and lower income households.

In recent years, we have witnessed an unprecedented demand for housing, brought about by a number of economic and demographic changes, such as rising disposable incomes, historically low interest rates and changing household formation patterns. These have placed significant pressure on housing supply and house prices. The Government's response is to ensure the continuation of the measures which we initiated in our previous term to increase the supply of housing to meet demand and improve affordability, particularly for first-time buyers, and in that way to seek to bring moderation to house price increases. Therefore, the Government's response has rightly focused on increasing supply, and that is the key. Measures have included increasing investment in the provision of serviced land for housing and more effective use of that land through improved planning guidelines on residential densities.

Our considerable success is reflected in the fact that last year just over 57,000 units were completed. Let us put that in context and examine development over the last ten years. In 1993, around 22,000 houses were built. Going from 22,000 to 57,000 – and, one hopes, over 60,000 this year – is an enormous increase. Ireland is now building at the fastest rate in Europe – close to 15 units per 1,000 population last year, which is an extraordinary achievement. It is not just the highest rate of house construction in the EU in proportion to population but miles ahead of anyone else. We are building at a rate of 15 per 1,000, the UK is at three per thousand and Sweden at one per thousand. Portugal, which is nearest to us, is building at nine per thousand. The positive trend in supply has continued this year, with production for the first six months up 16.5% on the same period last year. Completions in the greater Dublin area were up, and we hope to achieve 60,000 new dwelling units this year, a significant achievement.

The Government continues to be concerned about addressing the issue of affordability. The general improvement in employment and increases in disposable income resulting from economic growth, lower interest rates and tax reductions has assisted many individuals in purchasing their homes and improved affordability for many. Price is one aspect of affordability, but interest and taxation rates and disposable income are all very important. Obviously, houses are still affordable, and just under 50% of new mortgages are still being taken out by first-time buyers. The Government has also implemented a range of targeted measures of direct benefit to first-time buyers. Those include increasing the mortgage interest relief available to first-time buyers in the budget last December—

Mr. S. Ryan

The Government took away the first-time buyer's grant.

Mr. N. Ahern

—by raising the annual ceiling on the amount of interest that can be allowed by over one quarter and extending the period for which the relief is available to seven years. Stamp duty rates have also been rebalanced to favour first-time buyers, including more than doubling the exemption limit. Other measures such as the rent a room scheme have also assisted first-time buyers in gaining a foothold on the property ladder by enabling them to earn rental income exempt from income tax.

The Government decided last year to abolish the first-time buyer's grant. While that was a difficult decision, it was important to refocus the expenditure to meet the needs of low-income groups through targeted measures. The grant had clearly outlived its usefulness as an economic incentive. Indeed, several Members of the Opposition, including Deputy Timmins, who spoke earlier this evening, specifically called for its abolition in the House, in his case in 2001 and again last year, and I am surprised at the hypocrisy of now supporting a motion condemning its abolition. If Deputy Timmins were consistent, he would consider his position.

The Government has also responded to the needs of first-time buyers in other ways, including its continuing commitment to the shared ownership and affordable housing schemes. Activity under those schemes continues to play an increasing role in assisting low-income households to purchase their own homes. The needs of just under 900 households were met in 2002, and around 1,000 houses will be sold under the scheme in 2003. The provisions under Part V of the Planning and Development Act 2000, as amended, are also assisting the delivery of social and affordable housing. In the future, they will be a major source of social and affordable housing. The dividend from that measure has been slow to develop, but it will be significant, probably from next year onwards.

A new affordable housing initiative is also being developed under the Sustaining Progress arrangement with the social partners. In responding to the proposal, the Government is committed to an ambitious scale of delivery of affordable housing for target groups. The announcement in July 2003 of the immediate release of two sites in Dublin, and agreement to a proposal relating to two further sites in Meath and Kildare, is a critical step in both ensuring early delivery of housing under that initiative, and in ensuring that such housing is affordable for the specific target groups. The Government agreed to the immediate release of those lands to ensure that work could begin as a priority in delivering affordable housing at those sites, while work on identifying further sites could make progress over the coming months. The release of those spearhead sites shows the Government's determination to make measurable progress by the mid-term review of Sustaining Progress in the middle of 2004.

Given those measures, together with increases in output in social rented accommodation, the Government should be credited for bringing about real and positive changes in the provision of social and affordable housing. Last year saw the delivery of the highest level of output under the range of social and affordable housing measures for over 15 years. The Government has actively demonstrated its concern to ensure that the broad spectrum of housing needs be met, and from 2000 to 2002, €3.8 billion, or 109%, of the NDP forecast on social and affordable housing measures was spent. That reflects the Government's commitment to meeting the needs of low-income groups.

The Estimates published ten days ago show that total housing provision will increase next year by 5.5% to €1.885 billion in 2004, despite the pressure on the public finances. That is a considerable increase. The 2004 provision includes capital investment of over €1 billion, which will allow for 5,000 starts under the main local authority programme, an increase of 500 on this year, and a further 500 units to commence under area regeneration programmes in such areas as Ballymun. The provision also underpins continuing progress in the voluntary and co-operative housing sector, which has been considerably increasing its contribution. Together, those measures mean that the needs of about 12,500 households will be met this year. That compares well with five or six years ago, when the figure was only about 8,500.

The number of people on the waiting list is 48,000 households rather than any of the other figures that people mention, and sadly, when we take 12,500 from that list each year, others join the queue. At the same time, much progress has been made. It is not fair to compare the figure on the waiting list now with that for five, ten or 15 years ago, since many new categories of people are now eligible for the waiting list who previously were not. I believe that around 30% or 32% of those on waiting lists are now single people. Ten years ago, they would not have been eligible to get on the list unless they were senior citizens. We are not really comparing like with like when we throw around statistics regarding the number on waiting lists.

Ms B. Moynihan-Cronin

It is reality. They are on the list.

Mr. N. Ahern

I concede that they are on the list, but the comparison with ten years ago is not fair. Many of them are in very adequate accommodation. We saw that 60,000 households are on rent allowance.

Ms B. Moynihan-Cronin

They are on the list, and they need a house.

Acting Chairman (Mr. McCormack)

Please allow the Minister of State to finish. He has only one minute remaining.

Mr. N. Ahern

We are introducing new legislation which would give them added protection and better tenancy agreements, and there would be no fear of being evicted so quickly. The Government remains determined to respond effectively to the broad range of housing needs, particularly those of low-income households. Those targeted measures to assist low-income groups and those with special housing needs, together with the broader housing objectives of increasing overall supply, form part of the Government's overall response to meet housing needs. Its performance represents a record of successful support for local authorities, which have never been better funded to carry out their work. It is a record of success in reviewing the planning system to ensure greater transparency and a greater role for the people elected to take responsibility for the future of their area and in delivering housing for every sector of society. For those reasons, I am happy to commend the Government's amendment to the House.

I encourage Deputies to apply pressure at local level because some councils are not delivering. They sought money under the multi-annual programme and received it. However, several councils, including Fingal County Council and its innovative programme, have not spent the money or delivered the houses over the four year programme. I would appreciate Deputies' assistance in applying pressure at local level.

Ms B. Moynihan-Cronin

They cannot afford the land.

Mr. S. Ryan

I wish to share time with Deputy Moynihan-Cronin.

Acting Chairman

Is that agreed? Agreed.

Mr. S. Ryan

I am taken aback by the Minister of State's contribution. I have always taken the line that when a Minister engages in mediabashing, it is obvious he or she is on the run. It is evident from the Minister of State's contribution that this is the case, which gives me no consolation.

I am pleased to make a contribution to the Fine Gael motion on local government. Notwithstanding what the Minister of State said, we have a housing crisis which is damaging individuals, families and communities. In the six years since the Fianna Fáil-Progressive Democrats coalition first took office, the numbers on the housing list have increased by nearly 100%. The list was more than 27,000 when they took office and is about 49,000 now. When those figures are extrapolated, between 100,000 and 130,000 individuals are looking to the State for housing support, which does not include the hundreds of homeless people who are sleeping rough.

Mr. N. Ahern

It does take account of them.

Mr. S. Ryan

At the same time, so-called affordable housing has increased by more than 300%. Couples in relatively good jobs earning two salaries cannot afford to purchase the same type of house which their parents could purchase on just one salary less than 30 years ago. Ireland has one of the highest rates of home ownership in Europe and, in their efforts to buy a house of their own, purchasers are exposing themselves to huge financial risks. I would hate to see the situation should interest rates increase or house prices collapse.

In their efforts to secure a home at a price they can afford, individuals and couples are obliged to live considerable distances from their place of employment, families and friends, thus adding to commuting times and road congestion. It is not beyond the bounds of possibility that a person might leave the midlands at 6.30 a.m. and get home at 8.30 p.m. because he or she cannot afford to buy a house in the greater Dublin area.

In order to secure a house on a mortgage, it is necessary for both partners to work long hours, with huge consequences for family life, child care and family relationships. Notwithstanding these difficulties, many couples are making the choice to purchase a house outside the greater Dublin area with the hope of returning to live closer to work and extended family in the years ahead.

The Minister of State referred to affordability. Unfortunately, there are many people who are not eligible for a local authority house, if one was available, nor can they get a mortgage from the financial institutions or the local authority. That is a major problem. This is the position of an increasing group of people who have been totally disregarded.

There are two local authority housing schemes, namely, the affordable housing scheme and the shared housing scheme. Tonight, I pulled out a report from the National Economic and Social Forum which states that the Government should look at the income limits and loan amounts in regard to affordable housing for people who cannot secure a loan from a financial institution. The report recommends that these be kept under review.

The maximum loan anyone can secure from a local authority is €130,000. This figure has not been reviewed or perhaps the Minister for Finance has refused to increase amount. Eligibility for the mortgage is based on an income of €32,000 for one person or a formula where there are two applicants to bring them up to €80,000. A couple may be over the limit for a council loan, even though it is just €130,000, and may not be able to get a loan from a financial institution either.

We were told by the Department and the Minister of State that the affordable housing scheme under Part V of the Planning and Development Act 2000 would solve the problem. The criterion for affordability under that Act is that if an applicant is required to pay in excess of 35% of their net income by a financial institution, he or she should not have to go down that road, rather they should be entitled to an affordable house from the local authorities under the Act.

Mr. Durkan

That is correct.

Mr. S. Ryan

I cannot accept that a provision enacted in this House is being denied to eligible people because local authorities will not implement it. I brought this to the notice of the Minister of State in recent months. I was told there is a claw-back in the scheme which some of the financial institutions are not happy with. It is not good enough for the State or the Minister of State to say there are problems. He is paid to implement the legislation and he should do so. If there are officials or county managers standing in the way of implementing the legislation, they should be removed. There are people who are entitled to be housed, but they are being denied their rights.

Reference was made to development levies. I introduced a Private Members' Bill a couple of years ago which suggested that the criteria could be extended to allow contributions, other than those in respect of which provision already existed, to be made. In that regard, I had in mind community-based developments or those for community benefit. I have no difficulty with development levies, but what I originally envisaged was a levy of perhaps €1,000 or €1,500 per house which would be put towards the provision of services. I am not prepared to accept that the money from such levies can be used for capital expenditure, benchmarking or anything else. I thank the Fine Gael Party for bringing forward this important motion.

Ms B. Moynihan-Cronin

I welcome the opportunity to contribute to the debate and to support the motion put forward by Fine Gael. There are many issues to be addressed but in view of the time available, I can only deal with a number of them.

Will the Minister, Deputy Cullen, when he contributes to the debate, explain why over 16,000 home buyers are still waiting for their first-time buyer's grant one year after that grant was abolished? People who are committed to purchasing homes need that money now. The Minister of State should not shake his head because I obtained that information in reply to a recent parliamentary question.

Mr. N. Ahern

Have they submitted the paperwork?

Ms B. Moynihan-Cronin

There are enough obstacles in the way of first-time buyers without denying them the measly €3,800 grant that was abolished last year.

Mr. N. Ahern

We are trying to pay them.

Ms B. Moynihan-Cronin

I do not have much time available to me and I did not interrupt anybody.

Mr. N. Ahern

I apologise.

Ms B. Moynihan-Cronin

Having abolished the grant a year ago, it is unbelievable that the Government cannot process these applications in a more speedy manner. There are over 3,000 homes awaiting inspection, but only four additional inspectors have been hired to deal with the backlog.

Following another Book of Estimates which brought bad news for people trying to buy houses and the Minister's assertion that he can build a further 500 homes at a cost of just €66,000 each, it seems clear that the Minister, Deputy Cullen, and his colleagues in Government are becoming increasingly detached from the harsh realities facing people who are being priced out of the housing market. I call on the Minister to speed up the processing of applications for the first-time buyer's grant for the few people who await payment.

The new development levy is being promoted by the Government and, in particular, Fianna Fáil in the House. Like everything else, however, it is not being supported by Fianna Fáil outside the House or at local authority meetings. Cork County Council has voted it down and Kerry County Council will do likewise. As with the Hanly report, the levy is supported in the House and at meetings of the Fianna Fáil parliamentary party, but outside the gates of Leinster House it is a free for all. Everyone is against everything.

Mr. N. Ahern

What do they want?

Ms B. Moynihan-Cronin

When we were in Government, we at least defended whatever proposals we introduced and we did not say one thing in the House and something else outside it.

Mr. N. Ahern

They want the Department to do it for them.

Mr. Allen

They have no backbone.

Ms B. Moynihan-Cronin

I agree with Deputy Allen, they have no backbone.

Section 48 was intended to consolidate existing arrangements for development levies and to allow for such levies to be used for the provision of facilities in local communities. There is nothing wrong with section 48. What is wrong is the way it is being implemented, which will result in first-time buyers having to pay up to €10,000 more for their homes. Local authorities which are starved of finance for capital works and community facilities have latched on to section 48 development levies as a means of building up local funds. The amounts being proposed are far in excess of that which obtained when the levy was first envisaged.

In the absence of any price controls on new housing, these levies will be passed on to purchasers who, in most cases, are first-time buyers. This is the third occasion in one year that first-time buyers have been plundered by the Government. Last November, the first-time buyer's grant was abolished. This was followed by a 1% increase in the cost of building materials. Now we have an further imposition of €10,000 on home buyers in the form of the development levy. In the meantime, the Government has reduced capital gains tax for developers from 40% to 20%. As Deputy Seán Ryan stated, it voted down a Labour Party Bill to cap the price of building land. It seems the Government is determined that developers and land owners can continue to profit, in full, from the housing needs of families and first-time buyers, who have to pay for everything.

In an era when more and more people are finding it increasingly difficult to finance the purchase of a home for themselves, this could be the straw that breaks the camel's back. Many young people might have an opportunity to purchase a site in a rural area but they face obstacles in the planning process which might prevent them, even those who satisfy the requirements of the local needs clause in county development plans, pursuing this route. One cannot but see the imposition of these levies as another attempt to ensure that people will be further burdened if they opt to live in a rural area. If the current trend continues, the denuding of the rural landscape will come to pass. These levies will hasten that process. The Government is expert at introducing stealth taxes and in trying to fool people. The latest attempt should be rejected because ordinary people will carry the burden.

A debate on motor tax preceded this debate. When I heard the Minister's reply to that debate, I was determined to touch on that matter in my contribution. I was fascinated and baffled by the proposal of the Minister, Deputy Cullen, that consultants be paid €750,000 to ascertain the roads throughout the country which require improvement. That is an insult to every county engineer and it is also a complete waste of money. Any county engineer worth his salt could provide the Minister tomorrow morning with a programme of the roads in their county which require improvement. These individuals will not charge him €750,000. There are plenty of rural roads in my constituency which would benefit far more from that €750,000 than would the friends of Fianna Fáil consultants who are going to make money out of this move. The latter will derive far more from the Minister's action than will the people of my constituency, south Kerry, where there are more potholes than money.

I wish now to refer to the cuts in the disabled person's grant that were implemented by the Government.

Mr. N. Ahern

There were no cuts.

Ms B. Moynihan-Cronin

This year, for the first time ever, a limit was imposed on the funding available in County Kerry for grants to people with disabilities and older people to adapt their homes to enable them to move around with greater ease. A letter was sent to Kerry County Council in respect of this matter, but perhaps that did not happen in the case of other councils. The allocation to Kerry County Council in 2003 for the disabled person's and essential repairs grants was capped by the Department of the Environment, Heritage and Local Government. It was 22% less than the amount promised and the county council has had to appeal to the Department to meet its funding commitments and reverse the cut in funding.

Mr. S. Ryan

That is a fact.

Mr. N. Ahern

The council must provide one third funding.

Mr. Allen

How can local authorities do that?

Acting Chairman

Please allow the Deputy to continue.

Ms B. Moynihan-Cronin

Local authorities are not considering applications for the disabled person's grant because they do not have money.

Mr. N. Ahern

That is entirely untrue. Local authorities did not provide one third funding.

Ms B. Moynihan-Cronin

This has nothing to do with the one third funding.

Acting Chairman

The Deputy should address her remarks through the Chair.

Ms B. Moynihan-Cronin

This is a disgrace. A disability Bill has been promised but people with disabilities are denied funding to adapt their houses in order that they can live in comfort. These cutbacks—

Mr. N. Ahern

More money was allocated to Donegal County Council last week.

Ms B. Moynihan-Cronin

We are all responsible for our own counties. Kerry County Council is responsible in regard to finance. However, the amount it received from the Government this year was 22% less than it received last year even though a 44% increase is needed to address disabled person's grant applications alone. The Minister of State should not blame local authorities or county engineers, who cannot inform people what work needs to be done on roads. However, he can pay consultants €750,000 to tell him what to do.

Mr. N. Ahern

I am delighted the Deputy has praised county engineers. That makes a change.

Ms B. Moynihan-Cronin

I will stand up for my county men because they do a good job.

Mr. S. Ryan

We will take over.

Mr. M. Smith

To spend more and borrow more.

Debate adjourned.