Finance (No. 2) Bill 2007: Second Stage.

Question proposed: "That the Bill be now read a Second Time."

I wish the outgoing Cathaoirleach well on his retirement and the Acting Chairman, Senator Mary Henry. It has always been a pleasure to come and listen to the contributions of the Upper House, where a far more sedate and intellectual atmosphere pervades.

It is great to see that Members of the university panel have taken time out of their busy schedule to be with us as well.

Thanks to Fianna Fáil.

We are full-time public representatives.

I look forward to the reforms they are anticipating and I hope it is not turkeys voting for Christmas. Anyway, let us look forward to a good representative university panel——

We do not expect any help from the Tánaiste's crowd, anyway.

We are obviously here to ensure the place is alive today. I wish everyone well and hope everything goes well for Members. It is with a sigh of relief I can say this on the far side of an election.

I thank everyone for inviting me to speak on the Finance (No. 2) Bill 2007. This is my fourth time to speak on Finance Bills in this House. Members will recall I first addressed the House in 2005 when I concentrated on reducing the tax burden on low and middle income earners. Later in 2006, I reformed and refocused the structure of investment tax reliefs and set a minimum tax which the well-off must pay. More recently, in my third Bill earlier this year, I sought to ensure that the benefit of strong economic growth is shared by all taxpayers and, in particular, low and middle income earners. I am now implementing a very specific stamp duty reform, as set out in the agreed programme for Government, to exempt all first-time buyers from stamp duty.

I want to take a little time to review where we are now in regard to first-time buyers. In my last budget, I indicated that it was the Government's aim to help first-time buyers directly and substantially, including those who were already paying their first mortgages. I did this by increasing mortgage interest relief for first-time buyers from €4,000 per year for single persons and €8,000 per year for married couples or widowed people, to €8,000 and €16,000 per year, respectively. This measure helped first-time buyers who were already in their first home as well as brand new first-time buyers.

This Bill is the first instalment in the implementation of the agreed programme for Government which will see mortgage interest relief increasing to €10,000 for a single person and €20,000 for married couples or widowed persons. What is more, relief will start at 20%, even after the standard rate of income tax is reduced during the tenure of this Administration. The proposals it contains are timely, affordable and targeted and will support one of the most important sectors of our economy. It will do all this in a way which directly assists those without any housing equity of their own in their efforts to acquire their first home.

Home ownership is one of the primary aspirations of the people of Ireland, it strengthen communities, improves the environment and provides parents with a valuable asset to pass on to their children. As Minister for Finance, I have always supported home ownership through targeted policy initiatives and these proposed changes mark a continuation of a process of support for first-time buyers which I began in my first budget.

The housing market has enjoyed remarkable growth in terms of both output and prices over the past decade or so. We have seen a dramatic increase in the number of homes built in Ireland. In 1996, around 34,000 new homes were built. Last year, that number was more than 90,000. Enormous progress has been made in raising supply to meet very strong demand, which has had a moderating impact on price inflation. I welcome that moderation on social and economic sustainability grounds. I far prefer to see house prices increasing at a modest pace in line with changes in affordability, notwithstanding the slight re-balancing in house prices that has occurred over recent months. It is in everyone's best interest that prices increase at a moderate level that reflects sound Government fundamentals.

I have heard much speculation about the economic outlook in recent times, much of it of a negative variety. I accept there are always risks, but I believe the economy will continue to outperform most of our peers. The residential construction sector is easing back towards more sustainable activity levels. However, it should be noted that commercial property activity remains very strong and that the roll-out of the national development plan will have a positive impact on growth levels, not least in the construction sector. At the same time, the external demand environment, most notably in continental Europe, is brightening and that is something which all exporters will welcome. Certainly, the impact of tighter monetary policy is serving to dampen economic activity, but a moderation of pace should not be mistaken for a substantial and sustained deterioration in our economy's performance.

The economy is set to enjoy strong growth rates over the medium term, albeit at a lower level than enjoyed over the past decade. By accepting that more moderate outlook now, we can make it a reality and enjoy the much talked-of soft landing. It is essential that we adapt our expectations in the property market, in relation to Government spending growth and in the wider economy to that calmer but still positive growth environment. That is the best means by which we can secure our prosperity for the long term. Construction has become an increasingly important sector of the economy in recent years. Within construction, home building accounted for 11.4% of GDP in 2006 compared with 4.6% in 1997. Driven by economic and demographic fundamentals, approximately 570,000 new houses have been built. This is one third of the total national stock. Despite this rapid growth in house building, the stock of houses per head of population is still one of the lowest in the euro area, implying there is still scope for a significant level of house construction. However, the housing market has slowed in recent months, in part due to uncertainty relating to stamp duty.

In introducing this measure to reform stamp duty, I intend both to remove uncertainty from the housing market and reduce the cost of home purchases for first-time buyers in an affordable, economic and sustainable way. This will allow individuals to buy and sell their homes in a more stable market environment and help to restore necessary confidence to the market.

At this stage we can see housing demand levelling with supply and this is reflected in a slowdown in house price increases. This is clear evidence that Government policy is working. With the market stabilising, we must ensure that any changes made are carefully thought through, given the importance of this sector for jobs in every community in Ireland. While leading indicators of future output, such as new house registrations, new housing starts, planning permissions and the number of new mortgages drawn down by first-time buyers, point to a lower level of completions this year, there is consensus that the level of new housing output will decline from last year's record levels. The current market expectation is that there will be approximately 62,000 new housing starts this year, and this is still a very high output by any standard. Underlying demand remains strong and it is supported by demographic developments and the positive economic environment.

In line with these trends, the rate of house price inflation has slowed. The level pertaining to house prices is now the same as that in the middle of 2006. The main factor impacting on the housing market is the rise in interest rates. This is impacting on affordability and hence on the demand for housing. Eight quarter-point increases by the European Central Bank over the past 18 months have doubled the key official interest rate for the euro area from 2% to 4%. However, the key factor to be borne in mind in such circumstances is the amount of income used to service house loans. It may come as a surprise to learn that this has remained relatively static over the past 20 years at between 25% and 30% of income. Affordability has been assisted by improvements in mortgage interest relief and some softening of prices.

While property price increases have moderated, the cumulative increase in house values in recent years puts first-time buyers at a distinct disadvantage. Those who are already on the property ladder have benefited from those increases in value and have built up their own property market equity. First-time buyers do not share in their good fortune and our proposals are designed to help them as they compete with existing owners and investors in the property market.

In effect, the measures for which this Bill makes provision will level the playing field for purchasers by directly helping those who come to the property market without the advantage of the house price appreciation of recent years. It will also level the playing field between new and second-hand houses and widen the choice available to first-time buyers, thus resulting in clear social benefits.

As a result of the existing stamp duty regime, first-time buyers are incentivised to buy new homes which, in many cases, are considerable distances away from their families and support networks. The changes that this Bill proposes will make first-time buyers indifferent between second-hand and new homes and will remove an existing financial obstacle to establishing their own homes in the neighbourhoods and communities in which they grew up. This has obvious and desirable social benefits, which flow directly from the provisions of the Bill.

Leaving aside the equitable and social impacts on the first-time buyer, our proposals are good for the property market as a whole because they will bring an end to the speculation and uncertainty regarding the evolution of policy in this area. In addition, by making these changes retrospective on transactions executed on or after 31 March, which transactions would be presentable to the Revenue Commissioners for stamping by 30 April, we have minimised the potential for market disruption. Where a person who has paid stamp duty becomes entitled to an exemption from that duty when the Bill is enacted, he or she will be entitled to claim a repayment of that duty from the Revenue Commissioners who will, as soon as the Bill is enacted, publish details on how to do so.

I am aware from weekend reports that it has been stated a number of first-time buyers have entered the market to buy expensive houses. However, this must be put in perspective. It is not unexpected that one or two individuals would come to attention by availing of the relief, but that is the exception and it must be considered in the context of the overall benefit to first-time buyers. By contrast, those individuals could have bought a new house under the existing provisions and not have paid any stamp duty. Likewise, they could have acquired a site and built themselves a new house, again without attracting stamp duty liability under the Bill.

Reports also point to certain individuals buying houses as a result of gifts from rich parents. There is nothing unusual about parents passing wealth to children but it must be remembered that a tax liability arises under capital acquisitions tax regulations. Whether the wealth is passed by gift now or inheritance later, there is a single tax-free threshold of approximately €500,000 which is linked to the consumer price index that applies with the excess being taxed at 20%.

The changes being introduced by the Bill provide for a simple exemption which means that regardless of whether or nor the house is new or second-hand, a first-time buyer knows that the question of stamp duty will not be a consideration. More important, the focused nature of this measure means it will not have a destabilising effect on the market.

The Government recognises the importance of the construction industry to the success of the country. It directly employs 280,000 people across the country and many tens of thousands more in related industries. It is a major contributor to the health of the public finances. A strong construction sector is vital to a strong economy and is in everyone's best interests.

It is generally accepted that speculation about stamp duty in recent months has had a negative effect on the market. Such speculation was not of my making and in dealing with the situation as it evolved, I was obliged to handle it in a responsible manner, given the extra attention which is given to comments by a Minister for Finance in this area. The proposals before the House will introduce targeted stamp duty reform aimed at benefiting first-time buyers and they will restore stability and certainty to the market.

The Bill contains two sections. Section 1 provides for exemption for first-time owner-occupying housebuyers and also provides for the repayment of stamp duty where it has already been paid in respect of instruments executed on or after 31 March 2007. Section 2 consists of the Short Title and construction of the Bill.

The Government plans further measures to support those who are about to buy their first homes or have done so in the past number of years. Our policy initiatives are designed to help young people and young families — not just those who are about to buy their first home but all those who have purchased apartments and houses in the past seven years. These initiatives will improve affordability, reduce the burden of higher interest rates and have a positive social impact.

That is nonsense.

In next December's Budget Statement I intend to increase the ceiling of mortgage interest relief for first-time buyers from €8,000 to €10,000 for single people and from €16,000 to €20,000 for couples or widowed people. This will see single first-time buyers receiving up to €167 in mortgage interest relief directly into their bank accounts every month while couples will receive up to €333 each month in relief. As a result of this initiative for first-time buyers, a couple with a joint mortgage of up to €400,000 over 33 years at an interest rate of 5% will be able to claim interest relief at 20% on the full amount of the interest of their loan. In the case of a single person, the upper limit will be €200,000. I have stated that as income taxes are reduced we will keep the rate of mortgage interest relief at 20% for all home owners.

These changes will help young people and families to purchase their home. They will help them meet the repayments and ensure that the mortgage interest burden does not rise as a result of future income tax changes. Our approach is good for certainty, good for affordability, good for society and good for the economy. These changes will make a direct and substantial difference to young people and families as they strive to own their own homes, not just at the time of purchase but during the early years of home-making.

This matter has been fully debated during the general election campaign and proposals made by the Opposition were not affordable, being costed at approximately €600 million and proposing that up to 45,000 or 50,000 would have a collective benefit of that magnitude which would be paid for by 2.15 million other people. This does not suggest a very equitable way of dealing with tax expenditures.

The Government's proposals are in line with its entire policy approach, being both progressive and responsible. They are the right measures for our economy and our society. By targeting first-time buyers immediately and directly, the proposals in this Bill will have an important impact which is socially equitable and at reasonable cost to the Exchequer and which will not cause unnecessary disruption in one of our most important industries.

The reason I am not introducing other types of stamp duty reform at this time is simple, I am doing what the Government said it would do in the programme for Government. I am exempting first-time buyers from stamp duty in respect of all houses, regardless of whether these are new or second-hand and in doing so I am removing uncertainty about the stamp duty regime which may have arisen during the general election campaign. Taken together, the measures in the Bill, combined with the mortgage interest relief measures in my 2007 budget and those proposed for 2008, provide real and tangible benefit to first-time buyers as they seek to purchase a home.

I ask that the House recommend the Bill as published and passed by the Dáil.

I welcome the Minister back to the House and congratulate him on his extra appointment as Tánaiste. We have had a number of discussions about Finance Bills already this year and the House has had a number of financial debates.

The Bill, as proposed, is very disappointing and falls far short of any meaningful reform of stamp duty. The Minister attempted to explain why it is not a full reform of that tax. Over the past ten years, during the tenure of Fianna Fáil and its friends in the Progressive Democrats and a couple of Independent Deputies in its first five years in office, we have witnessed an extraordinary change in the nature of the property market and in the role stamp duty has played in that market. Stamp duty was never intended to be the major revenue generator it has become over the past ten years. The way in which stamp duty is paid is very inequitable and I regret the Government has not used this opportunity to alter significantly the way in which the stamp duty regime is enforced. We have a very complicated system with seven rates, and this Bill could usefully have been used to simplify the stamp duty code.

However, most galling is to hear Government speakers and the Minister continually talk about all they are doing for first-time buyers. In the eight years I have spent in politics as a county councillor and a Member of the Seanad, I have witnessed persistent efforts by Fianna Fáil and its friends in the construction sector to put housing beyond the reach of my generation. The legacy of the past ten years is that many of my friends cannot afford to buy a house. Two or three people, including people with whom I went to college in Waterford, come together to buy a house in Dublin. If that is affordability and the result of the Government's effort to try to help first-time buyers, then it is pretty miserable. This Bill, as proposed and as discussed in the other House last week, is another miserable attempt to try to reform the property tax sector and I cannot support it.

We had a full discussion on stamp duty when the previous Finance Bill was debated in the House and Senator Cox threw a bit of a wobbler, so to speak, that day and attempted to vote against the Government, but that did not happen. On that day, on a previous day in the other House and at budget time, the Minister outlined his stringent objections to any reform of stamp duty. Senator Norris referred to ethics earlier and it is nauseating in the extreme to witness such a U-turn. The Government probably took note of focus group reports and of God knows what else and realised stamp duty was a major issue in the election. However, it certainly sends out a very bad message politically when the deputy prime minister of a country, who was firmly opposed to stamp duty reform six months ago and who expounded in this House and in the other one why there was no necessity to reform it, does a complete volte face and attempts to reform the stamp duty sector. It falls far short of any meaningful reform, is in direct contradiction to what the Minister proposed previously and does no service to politics. The Government did a U-turn during the general election campaign and this Bill falls far short of any meaningful reform of stamp duty.

I would like the Minister to refer the following case when summing up. I have been presented with the case of a first-time buyer who recently purchased a very expensive site. Sites for new houses have become very expensive over the past ten years. Is somebody in such a situation exempt from stamp duty on the cost of the purchase of this site as well as first-time buyers purchasing a new or second-hand home? I ask the Minister to address those circumstances.

The Minister referred to the importance of the construction sector to the economy, which is the only defence of his U-turn on stamp duty over the course of the past couple of months. However, we have become far too dependent on the construction sector. Across large areas of rural Ireland where agriculture is on the decline, construction is the most significant source of employment. We produced 95,000 housing units last year but are projected to produce only 65,000 units this year. Despite the fact that the workforce in the sector cannot withstand a reduction of 30,000 units, the Government has taken no significant action to ameliorate our reliance on the construction sector for employment. I urge the Minister to put his energies in his new term of office into ensuring we do not rely so significantly on the construction industry into the future.

The Bill is also disappointing in its failure to introduce a sliding scale for stamp duty payments. People will still be required to pay stamp duty on the full cost of purchase rather than at a marginal rate above the thresholds. It is an inequitable requirement. It is also regrettable that the Bill fails to facilitate the regeneration of older, more established communities. Older people in large homes in communities which are well served by schools and hospitals may wish to trade down, but will not be encouraged to do so by the Bill. If they were facilitated to buy smaller homes, the effect would be to free up valuable property in more established communities in our cities.

I am very disappointed with the Bill despite the Minister's contention that it deals specifically with the promise set out in the programme for Government. While it achieves that end, stamp duty is a policy area which remains ripe for significant reform. The Minister's proposals represent mere tinkering around the edges. I am therefore unable to support the Bill as it stands.

I welcome the Tánaiste back to the Oireachtas in both that capacity and as Minister for Finance.

I support the Finance (No. 2) Bill 2007. Comments and speculation in the past few months have undermined the stability of the housing market. I think in particular of one commentator who said there could be a 50% fall in the price of houses. Such a comment would be singularly unhelpful at any time, but is especially so when the fundamentals and stability of our economy are sound. While house prices have risen by 200% over the past ten years, much of the increase is attributable to the economic management of the country and the capacity of people to buy and build homes. Speculation that prices would fall by 50% is completely erroneous. Growth and inflation of 5% have the potential to take care of any difficulty in the marketplace and even allow prices to stabilise. Following the process of stabilisation, house prices will no doubt take off again, as they have done consistently since the foundation of the State. It has been a very good place to invest. Fianna Fáil, in recognition of the need for people to have decent housing, has always supported the construction industry and will continue to do so. That is proper and right for the economy.

The only query hanging over the future success of the economy concerns employment, but in this regard the fundamentals are sound. We continue to have unemployment of less than 4%, which is considered full employment. Government policy ensures we are upskilling to fifth level, attracting industry in the high technology sector and moving forward in the services sector. The Government's commitment, through education, to ensure we have sufficient graduates will ensure the future and will drive the economy towards continued success. Those who deliberately created instability and uncertainty are wholly unhelpful.

The Finance (No. 2) Bill 2007, which addresses the issue of stamp duty reform, has passed through the Dáil and is being considered by the Seanad. Section 1 amends Section 92B of the Stamp Duties Consolidation Act 1999 and provides for the abolition of stamp duty for all owner occupying first-time purchasers of houses and apartments, whether new or second-hand. The change applies to instruments executed on or after 31 March 2007. The section also provides for a refund procedure for persons who, by virtue of this amendment, become entitled retrospectively to relief or additional relief. Such persons will be entitled to claim a repayment of duty paid from the Revenue Commissioners. Section 2 contains the provision relating to short title and construction.

The main elements of the Bill are to exempt from stamp duty all first-time buyers of either new or second-hand houses. This puts all first-time buyers in the same position. The programme for Government provides that the change will apply to deeds presented to the Revenue Commissioners after 30 April 2007. As a result, the Bill has been drafted to provide an exemption for deeds executed on or after 31 March 2007. This is done in recognition of the fact that the stamp duty code allows up to 30 days before a deed must be presented to Revenue. In line with normal requirements people who benefit from the exemption and those who claim refunds in respect of duty already paid will have to confirm that they will live in their houses as their principal private residences and will not receive rent, other than under the rent a room scheme. In the case of new houses under 128 sq. m., all owner occupiers are exempt from stamp duty. In the case of other houses, including particularly second-hand houses, stamp duty is applied for first-time buyers based on the following consideration. Houses up to €317,500 are exempt while the normal rate is up to 5%; those between €317,501 and €381,000 will have stamp duty of 3%, while the normal rate is 6%; those between €381,000 and €635,000 will have stamp duty of 6% while the normal rate is 7.5%; and houses costing more than €635,000 will have stamp duty of 9%, which is the normal rate.

The Bill is the first instalment in the implementation of the programme for Government. It is testament to the good faith of the Government that this is the first promised measure and it will be delivered to the people. The proposals in the Bill are timely, affordable and targeted and will support one of the most important sectors of our economy. It will do all this in a way that directly assists those without any housing equity of their own in their efforts to acquire their first homes.

Home ownership is one of the primary aspirations of the people. It provides a secure environment in which to grow up and grow old. It strengthens communities, improves the environment and provides parents with a valuable asset to pass on to their children. We have always supported home ownership through targeted policy initiatives and these proposed changes mark the continuation of the process of support for first-time buyers.

Having worked in the financial services industry for 17 years, I often wonder why people make exorbitant claims. It is within the capacity of Government to change tax rates or mortgage interest relief, as appropriate. This Government has done so in the past and will continue to support home ownership. That is why I commend the Bill to the House.

I wish to share my time with Senators O'Toole and Norris.

Is that agreed? Agreed. How is the Senator's time to be shared?

I will leave it to the Acting Chairman to divide the time equally.

It will be no problem for me as I passed honours mathematics.

Everybody in the House welcomes measures that will assist first-time house buyers. Were there to be a vote on this Bill, I would support it as I believe it attempts to do this. Whether or not it will work is a different matter. I question this for two reasons, one of which the Minister dwelt on in his Second Stage speech.

We have been told for some time, particularly before the election, that one of the reasons for uncertainty in the market is the extraordinary debate surrounding stamp duty and Fianna Fáil's slightly ambivalent attitude to this particular subject. However, in order to remove this uncertainty Fianna Fáil committed itself to the abolition of stamp duty for first-time buyers. The evidence so far is that it has done nothing of the sort. Whereas it may result in lower costs for those purchasing houses for the first time, which in itself is doubtful, it has not removed uncertainty in the housing market. Having listened to this morning's report, to which Senator Hanafin referred, it is obvious that uncertainty in the housing market is worse than ever. It has not been remedied by the abolition of the uncertainty regarding stamp duty, rather it has continued owing to the fact that interest rates have been rising and as a result of economic uncertainty, which is a far bigger issue.

I also question whether money saved by first-time buyers through the abolition of stamp duty will end up in the hands of developers. While people may believe they are paying less because they are not paying stamp duty, they may find the cost involved is the same because house prices will increase by the amount of stamp duty that would have applied. That is a theoretical argument as is the one that stamp duty has penalised people in any way, though this cannot be unproven. I hope the Minister will be able to remedy this and that this legislation will help people rather than promise to help them.

I would like to raise another issue with which I am sure the Minister is familiar. Many of my constituents, and I am sure other Members' constituents, have made very pained representations regarding the selected date of 31 March 2007 which appears to be arbitrary. Backdating the abolition of stamp duty to that date provides great benefit to those who have purchased since then but penalises those who purchased prior to that date, particularly those who purchased after budget day based on the Government's firm stand that it would not alter the stamp duty rules. Many people who believed there would be no change to the stamp duty rules purchased homes after that date. Others believed, as public opinion moved and the Government changed its stance, that the rules would be changed. Those who purchased prior to 31 March 2007 have been unfairly discriminated against and I plead with the Minister to backdate this concession to budget day, when the initial impression was given that there would be no change to the stamp duty rules, despite the assurances of the Progressive Democrats.

I welcome the Minister to the House and I welcome this legislation. I believe the Minister has done a good job.

While I agree with much of what is contained in the Bill, I must take up Senator Ross's final point. I do not mind facing a howling crowd or facing down an argument. However, what I find most difficult to deal with is a telephone call on a Sunday afternoon from an elderly lady in the west of Ireland, with whom I have never met, telling me she voted for me and that I have let her down.

I received a heartfelt letter from a Mr. Ciarán Doyle — I am sure he sent a copy of it to the Minister — which states: "I listened to Minister Brian Cowen in his budget speech and I believed him and I acted on that basis." I believe the Minister was telling the truth at the time. I am not for one moment suggesting he misled the House. On that basis he and his partner did a deal on a house in January and concluded it in the middle of March, thereby missing out on €25,000 by two weeks. Such things happen.

However, this man and his partner acted on the Minister's statement. No matter what date is set on any issue, there will always be somebody on the wrong side of the line. This issue is slightly different in that the people in question acted on the basis of what the Minister said and on the basis of the budget. I am aware that circumstances alter cases, that political exigencies take over and other decisions must be taken. I ask the Minister, however, to give some comfort to the people who lost out by putting their trust and confidence in the Minister's word. It is an important issue for the Minister. I know he would consider it to be so. The man in question and his partner will be paying the guts of €2,000 per month on their house for the next 30 or 35 years and €25,000 would mean a lot to them. I ask the Minister, therefore, to consider what I propose in the amendment I have tabled for the next Stage, which is also included in some of the other amendments, and to backdate this measure to 1 January, the beginning of the tax year, in line with his, the Minister's, commitment. It is not unfair to ask this. I wish the Minister well with the legislation. It is important this is being done because it moves matters forward.

Would it possible to divide the remainder of my time between Senators Quinn and Norris?

There are only two minutes remaining.

I will try to confine my contribution to one minute in order to allow Senator Norris into the debate.

I welcome the Minister. I have one concern in regard to this tax and the effort to do something about it. It relates to the respect we want to have for taxes. If we are to have respect for taxes they must be charged in an equitable manner. Nobody ever seems to be in favour of any tax. However, I was in favour of stamp duty compared to the alternative of rates or property tax. Stamp duty is an avoidable tax in that one does not have to pay it unless one buys a house. That is easy to say, because one must buy a house at some point. I can, therefore, understand the removal of tax in respect of first-time buyers. However, if this tax is to be respected, there should have been a limit so that very wealthy people buying a house worth €3 million, €4 million or €5 million would not benefit to the extent that they now will. There may not be very many such buyers and there may not be much of an effect on the Government coffers.

Are they first-time buyers?

They are first-time buyers, the sons of wealthy people. Last week someone in south Dublin, the son of somebody wealthy, bought a house for some millions of euro. If the tax is to be fair it should apply at a certain level and €500,000 would be an acceptable level at which to apply it. I want our taxes to be highly regarded. However, it does not suggest fairness if the child of somebody who is very wealthy can buy a multi-million euro house and pay no tax whatsoever. The Minister may say that such cases are so few and far between that it is not worth having a tax like that. However, we could have had a limit. It could have been specified that the tax would apply at something like €500,000 and that would have been fair.

The other aspect of this, to which Senator O'Toole also referred, is the difficulty of fixing a date. No matter what date the Minister fixes, somebody will lose out. However, last year the Minister said he was not planning to remove this tax. He has now done so. He should take that into account and recognise the needs of those people who lost out, unfairly I believe, because they bought a house at the wrong time.

I welcome Deputy Cowen to the Seanad and I congratulate him on his reappointment as Minister for Finance. His appointment as Tánaiste is a great honour for him and his family

I welcome this Bill. For too long the ability to get on the first rung of the property ladder has been nearly impossible for all but the lucky few. The Bill will not only alleviate the burden for first time buyers but will also provide them with more options when it comes to buying their first homes. As the Minister stated, home ownership is one of the primary aspirations of Irish people, it strengthens communities and improves the environment. It provides parents with a valuable asset to pass on to their children. It is only natural this Government would want to encourage such positive developments and has therefore decided to implement this stamp duty reform.

At present new houses and apartments with a floor space of less than 125 sq. m. are exempt from stamp duty and are therefore more attractive options for first time buyers, however many of these new houses are found in sprawling developments that lack the necessary amenities such as schools, shops, public transport and child care facilities. Under the current legislation new houses are more attractive to first time buyers because they do not attract stamp duty. Many first time buyers are forced to move away from their families when they buy in new developments. The Government wants to increase the likelihood for first time buyers to buy closer to their own localities.

The unique aspect of the Bill sees the abolition of stamp duty for first time buyers extended to second-hand properties. Therefore, second-hand homes have become equally attractive as new houses to first time buyers. This will allow first time buyers who grew up in well established communities to buy a home nearby without incurring stamp duty. We must also remember that this measure will also benefit those seeking to sell their homes because the market will now include a greater proportion of first time buyers. If older people are looking to downsize, when their children leave home, they can sell their homes in a wider market and in the process free up family homes in established areas.

The Government is committed to supporting home owners. During the past ten years in office it has trebled the housing supply and greatly improved the availability of social and affordable housing. This development in stamp duty reform is yet another demonstration of the Government's commitment to home owners throughout the country. Our promise to help home owners will be reinforced by implementation of the national development plan and the moneys to it. This much needed reform of stamp duty will not only open up the housing market to first time buyers, it will also present house sellers with greater options, further encourage property developers to fully evolve their product and end the uncertainty that has clouded the property market in recent months. I am pleased to accept this Bill

I join other Members in congratulating the Minister on his double appointment, as Tánaiste and on being returned to the all important finance portfolio.

What came across very forcibly to me during the course of the general election campaign — I canvassed in the north west area, comprising nine counties — was the number of houses that were vacant in new housing estates. The Central Statistics Office published a figure in the wake of the publication of the census of population which in its estimation showed that 40% of the houses surveyed during the course of the census did not have any occupants. I thought that was an exaggeration, and that the husband and wife or the partners were out at work when those carrying out the census called.

Having canvassed in six of the nine counties in the north west region I was horrified at the number of gorgeous houses, valued at between €300,000 and €400,000, in huge housing estates which were finished to perfection but did not have any blinds, curtains or occupants. It was not something that occurred in isolated areas but in 200 to 300 exotic private housing estates. That reflects what has happened. We have had a building boom, speculators have built houses and there are houses available but it was inevitable that we would reach saturation point. Undoubtedly, we have gone beyond that point. Many people who speculated and built houses will find themselves in trouble.

The Minister referred to the incremental interest rate increases of 0.25% imposed by the European Central Bank. The increases look small but eight increases of 0.25% amount to an increase of 2%. People who took out a mortgage of €350,000 or €450,000 are now watching their budgets and are engaged in penny pinching. I welcome the stamp duty relief but I agree with Senator Quinn that the money could have been better used if a maximum threshold had been imposed.

Envy is a reality, both in this country and, more generally, in the Celtic tiger economy. I sit in the European Parliament every week and its Members marvel at how the Celtic tiger was created. The various partnership agreements, commencing with the Programme for National Recovery, played a crucial role. However, the Irish economy is currently over-exposed in terms of its dependence on the construction industry. Approximately 280,000 people are employed in the industry. If the boom ends and the bottom falls out of the market, many of those people will have to return to Latvia, Lithuania and Poland. I hope I am wrong and I have no wish to be a prophet of doom but an increasing number of economists are predicting that the economy is in trouble and is facing even stormier waters than appear on the horizon.

I welcome the Bill. Anybody who invested in property or bought homes in the past 40 years did the right thing at the right time. A bungalow costing £5,000 in 1972, which covered furniture, carpeting and everything else, is now valued at €350,000. One need not be an expert to know what was the right thing to do. This was the result of low interest rates, the national understanding begun in 1987 by Charles Haughey and the trade union movement, and the developments of the past ten years. I always advise young couples who come to my clinics that it is better to buy than to rent. It is sensible to encourage them to buy.

What has made Ireland plc the most successful country in Europe over the past number of years has been the immeasurable contribution by the construction industry. A four bedroom house in Mullingar for €305,000 is still good value for money; in fact, it is incredible value. The experts and economists who speak on this issue are probably referring to Dublin 4 and other areas where the price of a house has gone through the roof. Ultimately, we must ask: "What is the alternative?" When I first became a Member of this House, people paid rates and property tax. There was compulsory taxation. A senior citizen living in a house all her life might be paying £4,000 of her £10,000 old age pension. That was wrong and had to be corrected. I am pleased to be a member of a party that changed those difficult times, particularly for our senior citizens.

What is being proposed today will encourage young people to continue to purchase their own homes. It is the right thing to do. There is no better encouragement we can give to our young people than that they should buy their own homes. Many Senators made statements on the construction industry. Every year, the construction industry turns money twice in the economy. It has its own sand, gravel, products and labour. This is money recycled in the Irish economy not once but twice in a year. They are a great group of people for spending and as someone whose family has been involved in retail, I can state their wives are twice as good. The people who really keep the economy going must be encouraged. I do not want to see us return to the bad old days of paying huge rents with nothing at the end of it except real doom and gloom.

It must be a difficult time for people on the Opposition benches because a great deal was achieved during the past ten years.

If I can get back to the Opposition benches, I will be happy.

One must be constructive. It is hoped Senator Phelan will begin a new term in the Seanad and we will be together in this regard.

I am always constructive.

I like to see young people on the right path and pontificating to their colleagues what is the right thing to do. The Bill must be welcomed and I congratulate the Minister on his appointment. In the midlands we are thrilled he was appointed Tánaiste. The midlands is much the richer for having its representative, Deputy Brian Cowen, as Minister for Finance and Tánaiste.

The Bill may not be the be-all and end-all which Members want. However, the budget will take place later in the year. In three months' time, we can use hindsight to consider how this is working and perhaps correct it further.

I thank Senators on all sides of the House for their contributions. How long do I have to respond?

Acting Chairman

As long as the Tánaiste wishes.

I will not delay too long. Senator Phelan misrepresented my position with regard to this matter, which unfortunately occurs all the time. As Minister for Finance, I do not have the luxury of speculating week-in, week-out on television programmes outside of a budgetary context. This was afforded to those in the Opposition with regard to what they wanted to do about stamp duty in the context of the general election.

Government people also.

When speculation arose prior to Christmas, the Government decided to deal with it in the budget not only those prospectively entering the market but also buyers already in the market. The question of doubling mortgage interest relief became a targeted, affordable, equitable and appropriate response in the context of the most benign interest rate regime seen in Ireland in modern economic history, moving from 2% to 4% as a result of eight increases of0.25%. One recalls interest rates of 12%, 15%, 16% and 20% during the 1980s.

I never stated I would do nothing. I stated I would do nothing to disrupt the market.

Hear, hear.

My critique of the Opposition was always that its proposal would disrupt the market. Without going through the entire matter in detail, I will state the problem with the Opposition approach. On the basis it knew the economy was going well and was being well managed, it was an ill-thought out initiative and its origins were in an attempt to win votes on the economy. The Opposition sought to apply a scatter-gun approach to the question of the housing market.

What was the Tánaiste's proposal?

I listened and I will reply to all that was stated. It is important that facts are put on the table.

The Senator is in the Upper House.

I know where I am.

Acting Chairman

The Tánaiste without interruption.

I wish to give my critique of the situation. The Opposition made its suggestion at a time when a necessary correction was taking place with regard to unaffordable housing on the basis of double-digit house price inflation. It is necessary for a sustainable housing market to correct itself. While this correction took place, this proposal was made with a scatter-gun approach to change audit thresholds and make it more beneficial to try to win votes from prospective house purchasers, their parents or other concerned voters.

That is what one calls "brass neck".

These are the facts. It is Senator Phelan's problem if he does not wish to hear them. The Opposition thought this would be a vote winner but it did not work out that way. The reason is that the scattered approach it had would reflate house prices and the benefit would go not to purchasers but to sellers. That was the basic problem. If it was the case that under the stamp duty regime in force, one had authority from one's financial institution to buy a house for €350,000 or €400,000, and if as a result of the Opposition's prospective proposals, €20,000 more was taken out by paying €10,000 or €15,000 less, the purchaser would have made a simple calculation of the market. His price would have gone from €350,000 to €365,000. This was a situation where the seller got the benefit, the Exchequer lost, house prices increased and nothing was done on the affordability question.

When this ill-thought out issue was brought forward, the Opposition said it would improve the stamp duty regime over three years until it got to its final position after three years. That was the proposal launched by Fine Gael and adopted by the Labour Party. Within three or four weeks, they were scampering back to find out what they would do about the basic question of how to bring forward a so-called initiative which got better for the prospective purchaser the longer they stayed out of the market. That was the logical outcome of having a determinate period of three years in which to deal with the issue. I am sure the intention was good and that Fine Gael believed in it. The party argued for it. Those are the facts of the matter as I saw them. With respect, I believe people saw the logic of that argument. The reason I critiqued it so vociferously is that I believed it was the wrong thing to do at a time when the correction was taking place.

This episode pointed up a bigger issue that we need to consider for the future. In our democratic debate it is open to anybody to speak about the need to reform this, that or the other tax as they see fit in general terms. When one argues for stamp duty and capital taxes outside of the budgetary context and cycle, there is speculation and people's behaviour changes on the basis of an expectation of change. The reason we deal with these matters within a budgetary context is that a Minister for Finance can initiate the reform, put forward a financial resolution to the House by midnight and have a new regime in place by the following morning.

This is not a budget.

Exactly. This is not a budget.

Therefore, in what context did the Minister deal with it?

Let me explain. The Senator can come back to me whenever he wishes. I did not initiate this debate. When this debate was initiated in a pre-budgetary context, the Government discussed it and came to a conclusion on it and spoke on it. Within two months, as we headed into an election campaign, the matter ignited again. It ignited in the first quarter of the year within eight weeks of a budget having been completed and a strong signal having been sent. That signal was sent not because of any reluctance on my part but to give people an indication that this was what we were trying to do. Subsequently, the Fine Gael Party brought forward its proposal, the annual effect of which, following full implementation, would be more than €600 million per year, would benefit 50,000 people and would be paid for by 2.15 million people who were not in the market. Where was the equity in that proposal?

Senator Quinn mentioned that people who buy a house for their children costing in excess of €1 million are exempt from stamp duty. The fact is they are liable for gift tax. For any amount over €500,000, one is liable for 20% gift tax. If, as he claims, somebody bought a house for €4 million for a son or daughter, they would pay 20% tax on that sum, in which case they would pay much more in gift tax than in stamp duty.

There is a wider point to be made to the Opposition on that point. In its proposal, it was giving a better deal to everybody, including those who were able to buy houses of that magnitude of price, whether in the new or second-hand market. The benefit of its reform of stamp duty went to 40,000 or 50,000 people. That is what the Opposition was proposing to do. The whole scatter-gun, generalised approach was also unaffordable because of the cost of going through the thresholds. This was proven in the context of budgetary parameters when the Opposition outlined its plans in this area. Suddenly all its figures had gone through the roof.

In response to that situation, on 30 April I introduced a Government proposal stating that if elected we would implement this from that date. The only reason for retrospection is that I needed to make a proposal outside the budgetary context. In the normal course of events if I were dealing with the issue within a budgetary context I would simply stand up on budget day, make the proposal and from that day on we would have our change of regime. It is that principle that I must protect and not the idea that I have provided for retrospection because that is the way I want to do the business. I did it in order to let people know that if Fianna Fáil was returned to office with a mandate commensurate with the support we had and which we hoped and expected to receive with the people's agreement, I would take this specific action.

I am coming into both Houses of the Oireachtas to do specifically what I said I would do, not because I sought this debate but because I wanted to bring finality to the debate and end the damaging speculation that was taking place in the knowledge that my opponents during the general election campaign did not have a clear idea when they would implement the proposal. It moved from a period of three years to a period of one year to a period where Deputy Quinn, a former Minister for Finance, said they would need to be subject to budgetary requirements and the exigencies of the industry on the day, and that no responsible Government could make any such commitment prior to going into government. We then had the Labour Party leader saying that he would have it done before he returned from the Áras with his seal of office. Here were three or four movements on the proposal by the Opposition parties in the period in which they had initiated the proposal.

My position was simple. I said I would do nothing to disrupt the market. I also said I would help first-time buyers who are the only people who have no equity in this market. I also said that if people wanted to see what I would do they should consider what I had done in two of my three previous budgets. In my first budget I increased the threshold at which stamp duty became payable. When I became Minister for Finance the threshold set in 2002 was €190,500, which I raised to €317,500. In the last budget I doubled mortgage interest relief which I saw as the best way to spread the benefit not only to those who were coming into the market with no equity, but also to those who came into a buoyant market in the past seven years. The purpose was to assist those first-time buyers whose major squeeze would be in the first seven years in the hope that they are progressing economically with the improved economy we now have and the increased buoyancy we have achieved.

The Opposition is now suggesting that I said I would do nothing and then did a volte-face. I did no such thing. I did not initiate the debate. At budget time I stated what I believed was the right thing to do, which was what I did. Senators will recall that a debate was taking place prior to that — people are entitled to conduct such a debate. We brought certainty to that position at that time. Subsequently in the context of a general election campaign, in an effort to buy votes, a scattergun, ill-thought out, though well-intentioned approach, I am sure, by Fine Gael, subsequently supported by the Labour Party, was put to the people and subsequently modified on four occasions from the time of its publication to election day at a cost which is at least six, seven or eight times the annual cost of what I am able to provide by bringing stability to the market in the first instance.

Let me say without adding any speculation that in every year's budgetary process it is open to a Minister to consider the best mix of tax and spend policies he or she wishes to pursue based on the relative strength of the economy at a particular time and what room for manoeuvre the Minister may have, given the political commitments as set out in his or her programme for Government. What was new in this case was that as a correction was taking place and with a general election imminent, people decided to play politics with the property market. Those who thought that the scattergun approach of suggesting that as many people as possible would be sorted out regardless of the cost, which would run to hundreds of millions of euro, did not win the argument because it offended people's sense of common sense. People have discernment and can determine the logical, sensible and appropriate response at any time in order to be supportive of a housing market, which is important to us.A number of people have said I have not included a trading down mechanism. However, people in that position have accumulated significant equity in their properties and if they wish to dispose of them, they can move to smaller houses, presumably at a lower cost. They are in a much better position to make that move than young single people or couples who are trying to get on the first rung of the ladder in a buoyant market against a background of increasing interest rates, even though in a historical context the interest rate regime is benign vis-à-vis the position 15 or 20 years ago. At the end of the day, the responsible thing for the Minister for Finance to do was not to enter into that speculation but to give an indication that I would do nothing to disrupt the market, which the proposal before us at the time did, as I suggested. It did not exclusively contribute to where we are now but the uncertainty that erupted as a result of that debate did nothing to help the correction that is taking place. Now that the argument is over and certainty will be restored to the market through the enactment of this legislation, it is incumbent on us all not to continue to suggest the correction under way is something greater than that.

We should encourage positive sentiment about the housing market on the basis that it is not only important for house purchasers but it is also important in an employment context. I support the 280,000 people who go to work in the construction industry every morning. Their families depend on a healthy industry in order that workers can continue to earn a decent living in their own country. In the past, when the State experienced boom and bust, slump and improvement, this cohort of people had to leave our shores and work elsewhere because they could not get a job here. Demand and supply are coming into sync as a result of the increases in prices and housing output. A total of 88,000 houses were built last year whereas 34,000 were built ten years ago and that is a tribute to an industry that has improved and increased its output to meet demand. The fundamentals are right and the demographics are such that demand for housing, even on a per capita basis, has not reached European levels. It must be ensured the market is given time to correct and is not subject to negative sentiment in order that people can maintain equity in their homes. A more sustainable rate of increase in house prices will be achieved to bring stability to the market and to encourage investors and those in the construction industry to build houses on the basis of demand. Housing output will reduce from 88,000 units annually to 65,000, which the Central Bank suggest is sustainable over the medium to long term, and that would still be 80% greater than the output ten years ago. That is a critical build factor in our economy and the public capital programme should arrange for a national development plan commitment on the capital side that would result in Government activity to improve our physical and social infrastructure through additional schools, hospitals and so on increasing as a percentage of GNP. This would make sure overall activity is such that we do not experience a major disaggregation in employment intensity in the industry. That is important and too often when a necessary change takes place, particularly in residential housing, individuals create the worse case scenario, which feeds negatively into market sentiment and deprives people of the opportunity of entering the market on the basis that it is stabilising in a way that was unsustainable previously. We need to be mindful of that.

When reference is made to housing affordability, commentators usually talk about the ratio of house prices to earnings, which has steadily worsened in recent years. However, the ratio is misleading because it does not take account of the impact of several factors such as changes in interest rates, the number of dual income households and the incomes of younger, better educated people tend to be higher. A more accurate picture can be obtained by examining household expenditure and mortgage repayments as a percentage of total net disposable income. According to the latest EBS/DKM affordability index, from June this year, monthly repayments for a first-time buyer working couple on average earnings, as a percentage of net income nationally, was 25% on a 90% percent mortgage, compared to 26.4% at the end of December last year.

The improvements in housing affordability, according to the research, are due to two factors. These are the doubling of mortgage interest relief from January 2007, a Government initiative; and the moderation of house prices, which is the market response to the unsustainable double-digit house price inflation we have seen recently.

The proposed stamp duty reform before the House is a highly-targeted measure that will further support affordability for first-time buyers who, as I have mentioned before, are critically important. They are the lifeblood of an orderly and sustainable housing market. On the basis that people coming into the market are doing so in the numbers one should expect, those in the construction industry can enable a planned and continued build and a continued level of activity. This reinforces Exchequer receipts and employment.

We must be careful not to over-react to the current easing from the very high levels of activity we spoke of in recent years. House prices have fallen back slightly in recent months, although prices still remain above their levels at this time last year. I share the view of most commentators that house price increases in recent years have been underpinned by many factors, including a strong economy, increases in employment and earnings, reductions in taxation and lower interest rates resulting from participation in monetary union.

In its 2006 survey of the Irish economy the OECD noted, based on international comparison, that residential investment internationally is often characterised by a boom-bust cycle. However, in the same analysis, the OECD stated that a soft landing appears the most likely prospect for the Irish housing market. That is the policy objective all of us are agreed on.

I do not mind when people criticise me as that is part of the debate but we should be mindful not to send an overly pessimistic message to the market, the electorate or those wishing to get into the housing market by suggesting an imminent collapse or something which would make people step back from the market again. We have seen enough of that hesitancy, which has a dislocating and unnerving effect, sapping confidence at a time it needs to be reinforced. We should try to consider the matter in a helpful manner.

Senator John Paul Phelan also spoke about site purchases. A gift from parent to daughter or son, if the site value is less than €254,000 and less than one acre, is exempt from stamp duty because it is an inter-family voluntary transfer. Stamp duty is payable on the site mentioned by the Senator, although there is no stamp duty payable on the build. A builder buying a site on which he builds a house for subsequent sale will incur a stamp duty, which is usually passed on to the purchaser anyway, therefore, there is no real difference between both those purchasers.

It is also important to make the point on the canard of people of means being able to buy a house on behalf of their children and being exempt from stamp duty. That is not the case in terms of Exchequer return because we would get it in capital gains tax beyond €500,000 anyway.

With regard to putting a price or size limit on this, it is very important that we get a simple message out to the public in order to steady the situation. The simple message I wish to get out is that all first-time buyers are exempt from stamp duty regardless of what house they buy. That message is important.

What is the precise detail of the Opposition proposal? Can anybody say with accuracy what was intended? We all know, during the heat of debate, when we were totally au fait with the arguments, that we can rattle it off against each other, be it on television, radio or newspapers. It reinforces the point I am making at this remove that there was a need to send a message that was understandable, which would reinforce the market and settle nerves, as people began to wonder what was going on.

The simple message that everyone now knows is that this Government has brought forward a proposal. I am not here to speak about a redesign of the entire stamp duty code, which has been with us for more than 200 years. I am referring to returning stability to a market that was unnerved and dislocated as a result of the speculative nature of the proposals——

The Tánaiste should talk about the reform of stamp duty.

——which were undertaken during the democratic debate but which were outside the budgetary context and which, therefore, reinforced uncertainty rather than brought about clarity.

The clarity that has been achieved — in the context of all first-time buyers — is that only first-time buyers will benefit under targeted approach A. The message in that regard has been received. The second approach is that if one buys a house new or second hand, it is exempt from stamp duty. This is simple, it is understood and it will allow people to get on with their lives.

Not if a person is buying a site.

In respect of people who refer to the wider question of reforming stamp duty, the point is often made about the rate of such duty in other jurisdictions. Such jurisdictions have annualised property taxes and other ways of financing local government. What we have decided to do, quite rightly in my opinion, as regards a strategy for creating employment and ensuring economic growth here, is to reduce taxes on labour and increase those on capital. Since 1997, and under successive Fianna Fáil-led Administrations, the percentage of the tax take from capital taxes has increased from 4.6% to 15.9%. It has, therefore, almost quadrupled. During the same period, we reduced taxes on labour and income in order that we might promote increased employment and ensure the establishment of a business-friendly environment that would foster job creation and allow people to get on with their lives and make a living.

When I hear so-called socialists talking about neoliberal economics——

Is the Tánaiste referring to the Taoiseach?

I am referring to the Labour Party, which supported the proposal of the Senator's party in respect of this matter. The proposal to which I refer would have helped wealthier people. It would not have been progressive and it would not have catered for the needs of those without equity or first-time buyers to the same extent that it would have aided those one the top threshold purchasing houses worth more than €635,000. Those are facts.

They are not facts.

An effort was made to buy the electorate but it failed. The electorate did not buy the proposal because the parties involved could not explain it, because it did not make sense and because they could not answer simple questions. When asked when its reform would be introduced, Fine Gael and Labour indicated they did not know. They also stated it would be introduced over three years. When asked whether the reform would come in the first, second or third budget, the reply was that it would be Deputy Rabbitte's job to decide. When asked if Deputy Rabbitte would be Minister, the answer was "Of course" and when asked what he would do, it was stated the Deputy would have made a decision before he returned from Áras an Uachtarán with his seal of office. The Opposition parties were all over the shop. There was money in the bottom drawer and there was money in the top drawer. It was all over the shop.

Was it in a sock in the hot press?

The people did not buy it because they are not fools. People are discerning and one must appeal to their common sense and to their sense of logic. They knew this proposal meant the longer first-time buyers stayed out of the market, the better off they would be because it would take three years to implement.

What sensible party that knows anything about the dynamics of employment or the building industry and its role in our economy would arrive at such a proposal? We agree that, in the context of our GDP, we have a dependency on the construction industry that is much higher than in other countries. We also accept we must deal with this. However, to suggest we are doing nothing to promote other types of employment is to say the programme on technology, science and innovation——

Nobody suggested that.

——the investment in fourth level education and the reskilling that is going to take place under the national development plan mean nothing. A total of €50 billion——

Is there a time limit on the Tánaiste's contribution of waffle?

——is being provided under the national development plan——

Senators had only eight minutes in which to make their contributions. We have now had 30 minutes of pure nonsense from the Tánaiste.

——to reskill the workforce to ensure those who currently occupy jobs that may not exist in the future will have an opportunity to seek jobs in other areas.

Senator John Phelan is receiving a lesson from the Tánaiste.

The idea that the country is nothing other than a building site——

Who said that?

What the Senator said was——

The Tánaiste is talking through his hat.

——that we are doing nothing——

I did not say the Government is doing nothing. I stated that it is far too dependent——

——to replace jobs and that we are dependent on the construction industry. The record will show that is what he said.

I am merely making the point that we are at a level of economic and social development that requires more investment. We will have a motorway system by the end of 2010, we will build more hospitals and we will be able to continue with the summer works scheme during the coming months now that the schools are closed and the teachers have gone on holidays. Remedial works will be carried out at more than 1,000 schools during the summer at a cost of €120 million. The latter is quite apart from the increased capital programme relating to first, second and third level institutions that is needed to modernise the education system. I could go on at length.

The Minister has gone on at far too much length.

Fine Gael came forward with a proposal.

The Minister said that seven times.

Fine Gael thought it was the silver bullet. It thought that this was the one that would help it win the economic argument.

The silver bullet was Fianna Fáil frightening the people into voting for it in the last weekend before the general election.

The Fine Gael thinking was they would not get the Government parties to talk about the 600,000 jobs they created.

In fairness, the Government did that. I give it credit for that.

They would not get them to talk about economic growth which has been two and a half times the European average. They would not get them to talk about the investment we are seeing, including foreign direct investment, and new jobs. Fine Gael would talk about stamp duty and, in doing so, the people would be greedy, would think they were going to get something and would all run for it. That is the way Fine Gael views the people. People are not fools. They did not buy it. They said: "Good luck. You are not at the races. We are not putting you in charge of a sophisticated modern economy. We are going to re-elect the Government that has brought us thus far."

They did not re-elect the Government.

They re-elected this Government.

The Government lost ten seats and the Opposition gained about 30 seats.

I am glad to say it has been complemented by a Green Party which will also assist us in ensuring our future is a sustainable one that will continue to progress in respect of the solid achievements that have been the hallmark of this Administration over the past decade.

It will. It is interesting that the Minister should mention the Green Party. Did he read its policy?

Order please.

Did he read the Progressive Democrats' policy on stamp duty? We have spent 30 minutes listening to this waffle.

This is a proposal to bring stability to a marketplace which was unnerved by a cack-handed effort by the Opposition to win the general election on an issue the people did not buy because they knew it just did not make sense.

This is the eighth time we have heard this.

Question put and declared carried.

When is it proposed to take Committee Stage?

Is that agreed?

Question, "That Committee Stage be taken now" put and declared carried.