Leaders’ Questions

The Central Bank has calculated, on the basis of a range of models, that residential property is now undervalued by between 12% and 26%. In essence, it has indicated that houses people can afford are not moving. This is having a significant impact on the economy, particularly the domestic economy. What is particularly worrying is that banks appear to be doing their best to turn down loan applications from potential buyers. Mortgage brokers all over the State are saying banks are turning away people with immaculate credit histories. People with a clear ability to make repayments on mortgages are still not securing loans. We have seen this already in a different category, namely, loans to small and medium-sized businesses. It is very worrying that only 6,300 first-time buyers were able to get a mortgage in 2011. This was 40% lower than the figure for 2010. Clearly, that is a drag on the economy. It is a very serious issue and of considerable concern.

Essentially, the Central Bank seems to be stating the mortgage market is dead and that nothing is moving. People who want and can afford to purchase their own home are not able to do so because the banks are not lending to them. We all know that the level of mortgage transactions can have a very significant impact on economic activity such as the number of plumbers, painters and carpenters who will be employed, as well as retail activity levels in the hardware and DIY sectors. There is a clear link between what is happening on the retail side and the lack of transactions on the housing side. It seems the banks are failing to provide credit for families who are in a position to purchase houses.

What does the Government intend to do about this? When recapitalisation of the banks took place last July, there was a degree of optimism on the Government side that this would have a significant impact on investor confidence in the wider domestic economy, but this has not happened. Where is there a lack of activity and why is there inertia from a policy perspective?

This is a serious matter affecting everybody in the general economy, as everybody understands. I recall the announcement made by the former leader of a party on this side of the House which led to a complete brake on the movement of houses in the market. As the Deputy is aware, it is not generally the policy of the Government to interfere in the housing market. Let it find its own level. I am aware of the announcement by the Central Bank.

On the banking sector, the general flatness of the indigenous economy and movement in the construction sector generally and the housing market in particular, the Government has reduced stamp duty on all commercial property transfers from 6% to 2%, removed capital gains tax on property held for seven years, raised mortgage interest relief from 15% to 25% for first-time buyers in 2012 which could yield savings of €5,000 per couple and has allowed mortgage interest relief for the next seven years, if residential property is bought in 2012. From speaking to auctioneers, these moves have resulted in some movement but obviously not as strong as one would like.

The indications are that Irish commercial property yields are at historically high levels owing to the fall of 65% in prices. There has been significant foreign interest because of this. I read in one of the newspapers a few weeks ago that there had been movement on €70 million worth of office space in one weekend. The CSO statistics show that the asking price for property remained unchanged in March compared to the position in February. There was a slight increase in parts of this city and the greater Dublin area. There have been reports from estate agents of increased viewing figures for properties, as people decide whether they should trade up or down.

The Economic Management Council held a number of meetings with Bank of Ireland, AIB and Ulster Bank and mortgage lending was one of the key issues which arose. Clearly, the case was made that some people had great difficulty in accessing mortgage credit owing to changed circumstances. Younger people might be employed on contract only and some banks find it difficult to deal with this when approving mortgages. Bank of Ireland set aside €1.5 billion for a mortgage lending fund and reports that it is seeing increased interest among buyers. What we want to know is the scale of mortgages not just approved but also drawn down. AIB has set up a similar fund worth €1 billion and indicated that it could increase if demand increases. Ulster Bank has a dedicated fund and indicated it is willing to increase it if demand increases. As the Minister for Finance pointed out, it would be preferable if the construction industry was playing a proportionately stronger part in the general economy. From speaking to auctioneers directly, there is evidence of increased interest and a slight indication of increased house prices in some parts of Dublin, although they are not anywhere we would like them to be.

The Government will continue to interact regularly with the banks on the programme they have set out and in dealing with issues that arise for people who either cannot obtain mortgage approval or receive it with conditions attached that are too difficult for them to meet. The banks' own programmes are worth €1.5 billion and €1 billion, respectively, while Ulster Bank has stated it will increase its fund if demand increases.

The Taoiseach's answer is very unsatisfactory. It lacks clarity and is somewhat confusing in its presentation. According to the Central Bank, the facts are we have 40% fewer first-time buyers receiving mortgages this year than last year. These are the facts. We cannot articulate that some auctioneer told us he was beginning to see some interest. Only 6,300 were able to secure mortgages in 2011. This is having a very serious impact on the economy. We know that the domestic economy remains flat and nothing that the Government has done in the budget or in recapitalising the banks has had an impact. We should look at the totality of issues-----

A question, please.

Nothing has happened on the issue of mortgage arrears. The issue of personal insolvency is still trundling its way through the legislative process. Nothing has happened in respect of loans to small and medium enterprises. This is stated in official reports at Irish and European level; it is not anecdotal evidence. Now the Central Bank states people with very good records cannot get loans to buy very affordable houses by any model and standard. That smacks of a set of policies that have not been working in the last 12 months. The Taoiseach has indicated a range of measures that were taken.

May we have a question, please?

Clearly, they are not having the desired impact. Will the Government intervene in the context of the Central Bank's report, talk to the banks and ensure there is some activity? On rents, we are doing very well. Mortgage repayments would actually be lower than the rent being charged by landlords in some cases in the domestic market. The domestic economy requires intervention. This is a very simple measure that could be of help in employment creation.

As the Deputy knows full well, intervention in the housing market through various activities was a contributory factor in the country going over the edge. The idea was portrayed that we could continue to provide all the services that the public needed but not pay for them because they would be paid for using the taxes coming in through property speculation. The Deputy states there is no clarity. The Government does not want to run the housing market. I am sure he is not expecting it to intervene-----

I am talking about recapitalisation and what we were told would happen as a result of it.

The Government has reduced stamp duty from 6% to 2% on all commercial properties, removed capital gains tax on property held for seven years and increased mortgage interest relief to 25% for first-time buyers in 2012 and it is to continue it for a period thereafter. We have also had direct meetings with the banks. We received confirmation from Bank of Ireland that it had set aside €1.5 billion for loans on residential properties, from AIB that it had allocated €1 billion, and from Ulster Bank that it was prepared to increase its fund if demand increased. As people become aware that this is a significant year for the purchase of residential properties owing to increased mortgage interest relief, interest is, at least, being expressed. I will not be happy, however, until there is confirmation of the drawing down of mortgages. The Deputy knows that people have had mortgages approved but have not drawn them down, either because of lack of confidence or because such conditions were imposed that they were not able to draw them down.

The economic management council and the Cabinet sub-committee dealing with mortgage arrears and mortgage distress will continue to have this as a priority. We meet regularly about it, on the basis of establishing real progress.

I am not a great defender of the banks but the programmes they have set out, if they can follow them through, are quite constructive. Many of the people who work on the front line in branch offices throughout the country are working hard to re-establish a sense of trust with clients who might be interested in doing business with banks. That is important, in re-orienteering - I mean reorienting - the importance of banks in the general economy.

The reorienteering was in Croke Park

Cork won last Sunday, fair play to them.

Today is May Day. I remind the Labour Party of that.


We would like to hear about May Day. Is the question about May Day, Deputy?

Yes. Éist agus beidh eolas agat, a Cheann Comhairle.

Does Deputy Adams want us to dance around a tree?

It used to be a big day in Moscow.

In Irish mythology, as the Taoiseach knows, this is the beginning of summer. It is a time of transition and of purification. It is also the day when trade unions and working people across the world unite in solidarity and support of workers' rights. In this State, however, Fine Gael, Fianna Fáil and the Labour Party are about the work of austerity and the erosion of workers' rights. The European Trade Union Confederation has rejected austerity and the austerity treaty.

Tá a fhios ag an Taoiseach go gcuirfí austerity and an conradh níos mó brú agus cruatán ar dhaoine atá ag obair agus ar a dteaghlaigh. Ag an am chéana, tá a lán oibrithe gan chearta ar bith.

In Vita Cortex which the Taoiseach visited, Wilson Publishing, Lagan Brick and, in my own constituency, in Vodafone, Diageo and Irish Cement, workers are having their rights trampled upon. In Vita Cortex the workers are on the 138th day of a sit-in.

Tonight, Sinn Féin will bring forward the Protection of Employees (Amendment) Bill 2012. On this May Day, or Lá Bealtaine, which is a time of purification and transition, will the Taoiseach commit the Government to supporting the Bill and to working constructively with Sinn Féin to close the loopholes some employers have used to ride roughshod over the rights of workers?

I met Vita Cortex workers some time ago and the matter was raised in the House on numerous occasions. The workers told me that what they really requested was respect for the long years of committed and diligent service they gave to the firm. I am aware of a number of recommendations that have been made and I understand that even in the past week or ten days, recommendations have been put, without prejudice, that might bring about progress.

This is not the only situation where difficulties have arisen, and continue to arise. The Government is anxious to use all the facilities of the State's machinery to resolve these problems. I am aware of the intervention of the courts in respect of the Vita Cortex workers. Some recommendations have been made there. It is important, not only to have such facilities but that they be seen to work and to bring about successful conclusions.

The Vita Cortex workers have put in an extraordinary campaign. Their comment to me was not the usual one about money. In their case it is about respect. They deserve that.

They also deserve the legal protection of the State, and they do not have that. They deserve the legal protection of the Government, particularly a Government that has a Labour Party component. Tonight's Bill will give the Taoiseach the opportunity to start that process. It would need a suite of Bills to give workers the legal rights to which they are entitled.

I visited many picket lines, including the Vita Cortex protest. I am reminded of the Christy Moore song, "Ordinary Man". People who have given 35 years of service have been told, "Sin é, you are out" and left floundering. Tonight's debate will provide an opportunity for the Government to sign up and support the Bill.

I know he does not mean it, but the Taoiseach occasionally says Sinn Féin never says anything positive. Here is a positive initiative we have taken.

Hold on while we write it down. What is it?

I ask the Taoiseach to sign up to support the Bill. It is very straightforward. I presume Deputy Rabbitte will be bolting out of his hole to support the Bill.

I thank Deputy Adams for his reminder that this is May Day and for his reference to mythology and what it stands for.

The Government has considered the Protection of Employees (Amendment) Bill 2012. This is not the best way forward. For that reason the Government will not support what Sinn Féin has put forward as a simplistic solution to this problem.

I hope Deputy Rabbitte has written down that.

Yesterday, the Government parties launched their fiscal treaty referendum campaign. There appears to be a problem of timing. Parallel to the Government's launch of its campaign, throughout Europe there is a growing clamour for economic growth. Nowhere is this more apparent than in France, where Monsieur Francois Hollande is leading the campaign for growth and has stated, ominously for some, that he will not sign "the fiscal treaty as is". He has also stated emphatically that he will renegotiate that treaty.

My advice to the Taoiseach is this. Other nations throughout Europe are waiting to see the result of the French presidential election, the probable winner is Monsieur Hollande and only three countries have, so far, ratified the treaty. As Ireland's primary interest is now growth, would the Taoiseach not join those forces in a campaign to install growth measures in the treaty, as is being suggested and championed by others in Europe who are likely to be in government this time next week?

Surely Deputy Ross is not going to join Monsieur Hollande.

Deputy Rabbitte will be there beside him.

Deputy Ross is moving around the spectrum.

When it became my privilege to attend EU Heads of Government meetings, it was obvious that the issue missing from the agenda was growth and investment. A number of other leaders, as well as myself, have consistently raised this, and that is now a fixed item on the agenda of every Council meeting. That most recent meeting dealt with youth employment and small and medium enterprises. There will be further reports on those issues at the May and June meetings. It is not for me to interfere in any way with the comments or statements made by political leaders or parties in the final days of a presidential election in France or the election process in Greece which takes place on the same date. I understand a number of regional elections will also take place in Germany on the same date.

The Taoiseach is following the Tánaiste, Deputy Eamon Gilmore, in terms of it being Frankfurt's way or Labour's way.

These parties and candidates are entitled to their views. I have said I welcome any political or government leader in Europe who now joins, as Deputy Shane Ross calls it, in the clamour for growth and investment to be included as a fixed item in the Council agendas. In that sense, he is aware that the treaty was signed by President Sarkozy. An addition to the treaty in respect of growth and investment in job creation and opportunities is one I could support strongly in principle. That does not change the treaty, but an addition focused on growth and investment, depending on the issues involved, is one I could support. Clearly, we have already made known our views on the issues of corporation tax rates and a financial transaction tax. I accept there is a principle involved. I support leaders who join in placing the focus on the need to have investment and growth included in the agenda, but it is not for me to interfere with the statements made by Mr. Hollande, President Sarkozy or anyone else who is conducting his or her own electoral process.

The point I make is that it is not in the treaty and Mr. Hollande wants it to be. The Government is now campaigning for a treaty which may not be relevant in a few weeks time if Mr. Hollande and other leaders get their way. Does the Taoiseach realise that it might be better to defer the referendum, as other nations are deferring ratification in anticipation of or as a precaution against this happening. Otherwise, I suspect we will be jumping the gun.

The issue of growth is possibly more important to this country than to any other nation in Europe. It is even more important now - I remind the Taoiseach that last Friday the Department of Finance finally, after many months of delay, decided to downgrade the growth forecast for the nation from 1.3%, on which it and the Government had stood for many months when nobody else believed it, to 0.7%. The issue of growth is even more important now because the figure is lower and the Department's forecast is lower than 1.3%, the figure on which the budget was based in December.

I remind the Deputy that the Minister for Finance always pointed out that there would be a review of the growth figures as set out. As the Deputy is well aware, these matters are subject to a range of criteria before being finalised. It is also a fact that growth has returned to the economy for the first time in a number of years. The figures for the live register and the Exchequer returns in recent months show a measure of confidence which is heading in the right direction. I will not go as far as others have in the past, but the level of growth is heading in the right direction, despite the scale of the challenges that we face. I agree with the Deputy that growth is absolutely fundamental to what we have to do. That is why the plan set out by the Government and the projections set out by the Minister for Finance are based on growth, opportunity and investment.

I am sure the Deputy has read the stability treaty on many occasions, Article 1 of which aims to strengthen the co-ordination of economic policies and improve the governance of the euro area, thereby supporting the achievement of the European Union's objectives for sustainable growth, employment, competitiveness and social cohesion. That is what the stability treaty is about and the reason the opportunity will present itself on 31 May for the people of the country to make a decision on which road they want to take. A "Yes" vote is one that will offer stability, permanence, guaranteed access to funding, opportunity, investment and jobs.

Where is the investment?

A "No" vote will undermine confidence, cause confusion and be a step into the unknown for many. I do not want the people to make that decision. I want them to send a message of confidence, courage and belief in the eurozone but, more importantly, in the country that the stream of investments will not be damaged in any way and that as a consequence, the best way of dealing with the deficit is to have growth. In order to have growth one must have jobs; in order to have jobs one must have confidence; in order to have confidence one must have investors to make decisions. They are making these decisions week by week, as is perfectly evident to everyone and I do not wish to see this damaged in any way. That is why I urge the people on 31 May to freely acquaint themselves with what the treaty is about. It is about achieving sustainable growth, employment, competitiveness and social cohesion. I am sure everyone, irrespective of his or her political affiliations, can understand this is important for the people and our children.