I move:
That Seanad Éireann condemns the decision of this Government to abolish the first-time buyer's grant, in the light of the crisis in housing affordability and the continuing increase in housing waiting lists, and supports the call by the Irish Congress of Trade Unions to restore the grant forthwith.
The elimination of the grant is first and foremost a devastating blow to the aspirations, still held dear by so many people, of owning their own house. It means that thousands of people who had thought they were in a position to buy a house will either not be able to do so for the foreseeable future or, in some extreme cases, may not be able to do so at all. In doing what it did, in the way it did it, the Government has sent out a clear and unequivocal message to first-time buyers, particularly young people, that they are on their own and it does not care.
The way in which this was defended by the Minister for Finance has particularly stuck in the craw of so many people who were depending on this grant. To say as he did, so casually, that it is only €4,000 anyway, it does not amount to a great deal and was all being pocketed by the builder, demonstrates an insensitivity to the needs of young people which, unfortunately, is typical of him. The fact is that €4,000 is a great deal of money if you do not have a deposit. It is possible that over a period of 20 or 25 years it may add to the price of the house. However, 20 or 25 years is a very long period if your primary concern is with the here and now. It was the here and now which was of primary importance to most people looking to put together the €15,000 or €20,000 that most of them need for a deposit. In that context the €4,000 was extremely important.
The Government has argued that because the grant came a few months later it was not actually part of the deposit. That flies in the face of reality. Very many people, not all by any means, trying to put together a deposit borrowed the €4,000 from friends or family or, in some cases, from lending institutions. I am aware of cases where builders agreed to forgo, for a few months, the amount of the grant and took it on assignment when the money came through from the Department of the Environment and Local Government. It was a very necessary part of the €20,000, approximately, that people needed to buy the cheapest houses available.
The Government has also argued that the grant was introduced as a support for industry and is not needed any longer. To some extent it is right. In the '60s and '70s construction was largely stagnant and the impetus behind the grant, which was introduced by members of Fianna Fáil at the time was to support the building industry and their friends in the construction sector, as they tended to do. It was effective in this. However, over time the grant has become a support for individual purchasers, not for the industry. We must acknowledge this central fact in any debate about the issue.
It has also been argued that the grant discriminates between different types of first-time buyers because it only applied to first-time buyers of new houses. I have been making that point, as have others in Opposition, for some years. It has been clear for some time that the industry itself did not need support and the people who did were particular types of purchasers, specifically first-time buyers. I have always argued that first-time buyers of second-hand houses were equally entitled to the grant and that the exemption from stamp duty, which applies to first-time buyers of new houses, should also be applied in respect of second-hand houses. It is the purchaser we should seek to support, not the industry.
For a number of years the industry has clearly not needed our support – at least, it should not have needed it. When I did leaving certificate economics, back in the 1970s, I was taught that these matters depended upon supply and demand; if the demand was there for something the industry would supply it. However, for the past three, four or five years there has been a huge demand for houses in every sector and the industry has been incapable of or unwilling to supply it. This is the core of the issue. My party and I believe that the industry and the sector have been manipulated deliberately by builders to ensure that supply does not meet demand. That in turn feeds, deliberately and directly, into the super-normal profits which many in the industry have enjoyed in recent years.
The question arises of what the Government's response to this. The Government commissioned a report from Dr. Peter Bacon some years ago. He suggested that it was necessary, in the first instance and at least as a temporary measure, to take investors out of the market, or at least to reverse some of the advantages which they enjoyed. In recent years, the Labour Party supported various measures recommended by Dr. Bacon, such as the abolition of interest relief on borrowings, which was subsequently reversed by the Government. We were in favour of Dr. Bacon's suggestions in relation to capital gains tax and development land, which were ignored by the Government.
I have no problem with people who invest in property, for example those who buy houses as an investment for their retirement, as long as they behave as good landlords. The regulations and standards that have been put in place must be upheld. We need a healthy and vibrant rental sector, but the Irish sector is very small by comparison with European norms.
We must ensure that first-time buyers are not priced out of the market. The first-time buyer's grant was a paltry but important measure which attempted to redress the balance. The Government's decision to abolish the grant has ensured that the balance we were trying to strike has been undone. Investors, who were already enjoying significant benefits, are now enjoying greater benefits still. In the past, houses in new estates in counties Meath and Kildare were bought off the plans by investors, meaning that young couples with hard-earned deposits found that 80% or 90% of the houses had been sold when they tried to purchase one. I do not doubt that we will soon return to such a situation.
Few issues demonstrate the failures of this Government and its immediate predecessor more than housing. The Minister of State, Deputy Noel Ahern, knows as well as I do that it is simply not possible for young people in the part of Dublin we come from to buy houses there when they leave the family home. If two young people are not earning in excess of €50,000 between them, they will not be able to afford the vast majority of houses in the north-east of the city, including the constituency I used to represent in the other House. In such circumstances, young people are obliged to go to counties Meath, Kildare or Westmeath, or further afield, for a few years at least.
What is the Government's policy on housing? The measures recommended by Dr. Bacon were ignored or overturned. The tax on speculation was overturned before it came into existence. Journalists have speculated that part 5 may be revisited. What is the Government's policy in relation to this area? I recall that the Minister of State is on record as supporting part 5, yet we read reports, which have not been contradicted, that the part 5 provisions are to be revisited and may be overturned.
What is the Government's policy in relation to development land? Does the Government acknowledge that something needs to be done about development land? The only known Government policy in this area was when, contrary to all recommendations, it reduced the level of capital gains tax on development land from 40% to 20% to encourage speculation rather than do the opposite.
The Labour Party has put down this motion to voice its view, as well as to give Government Senators, whether they are members of Fianna Fáil or the Progressive Democrats, an opportunity to express their thoughts on this matter. Anybody who has listened to the radio during the last week will have heard many backbench Fianna Fáil Deputies saying that the proposal to abolish the first-time buyer's grant is appalling and awful. Five minutes after they said they were personally opposed to the idea, they made clear that they will vote with the Government nevertheless. I have personal experience of voting against a Government as a Government backbencher and Fianna Fáil Deputies have done likewise in the past. It is possible not to support the Government when one is a representative of a Government party; there is life after doing so, just about. It is possible to hold a conviction strongly enough to give it due expression by opposing it in the lobbies of the Oireachtas. I hope some Government Senators will have sufficient strength of conviction to vote with the Opposition tonight, rather than simply voicing their hostility to the measure in front of the electorate. Government backbenchers have to put up or shut up as regards the first-time buyer's grant.
The abolition of the grant will directly affect thousands of people. Many similarly damaging measures are contained in the fine print of the Estimates, as published last week, and we will have opportunities to discuss such matters in the coming months. The question for this evening in this House and the other House is whether Government Senators and Deputies are willing to stand over the measures introduced by the Minister for Finance, Deputy McCreevy, and the way in which they were introduced.