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Seanad Éireann debate -
Tuesday, 3 Jul 2007

Vol. 186 No. 26

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


Recommendations Nos. 1, 3 and 4 are related and may be discussed together by agreement. Is that agreed? Agreed.

I move recommendation No. 1:

In page 3, before section 1, to insert the following new section:

"1.—(1) Section 92B of the Stamp Duties Consolidation Act 1999 is amended—

(a) by substituting the following for subsection (2):

"(2) Stamp duty shall not be chargeable under or by reference to paragraphs (2) to (6A) of the Heading ‘CONVEYANCE or TRANSFER on sale of any property other than stocks or marketable securities or a policy of insurance or a policy of life insurance' or clauses (ii) to (vii) of paragraph (3)(a) of the Heading ‘LEASE’, as the case may be, in Schedule 1 on any instrument to which this section applies.”,

(b) in subsection (3)—

(i) in paragraph (a) by substituting “first time purchaser,” for “first time purchaser, or”,

(ii) in paragraph (b) by substituting “during that period, and” for “during that period.”,


(iii) by inserting the following after paragraph (b):

"(c) any instrument, executed on or after 1 January 2007 and on or before the date of the passing of the Finance (No. 2) Act 2007, that does not contain such a statement as is referred to in paragraph (a) or (b)—

(i) where—

(I) section 92 applies to that instrument, and

(II) the purchaser has complied with, and has undertaken to continue to be bound by, the conditions, liabilities and obligations under section 92 and has satisfied, or, as the case may be, undertaken to be bound by, the conditions (including the condition set out in such a statement as is referred to in paragraph (a) notwithstanding that the said instrument does not contain such a statement), liabilities and obligations referred to in this section,


(ii) where—

(I) had that instrument contained a statement such as is referred to in paragraph (b), such statement would have been true and correct, and

(II) the purchaser has satisfied, or, as the case may be, undertaken to be bound by, the conditions (including the conditions set out in such a statement as is referred to in paragraph (b) notwithstanding that the said instrument does not contain such a statement), liabilities and obligations referred to in this section.”,

(c) in subsection (4)(a) by deleting “the difference between” and “and the amount of duty which was actually charged”,


(d) by inserting the following after subsection (8):

"(9) Where, by virtue of the amendment of this section by the Finance (No. 2) Act 2007, an instrument is one in respect of which stamp duty is not chargeable under or by reference to any of the paragraphs or, as the case may be, clauses referred to in subsection (2), the Commissioners, on a claim being made to them in that behalf and on the conditions set out in subsection (10) being satisfied, shall cancel and repay such duty paid as would not have been charged had this section been so amended before the instrument was executed.

(10) The conditions required by this subsection are that the purchaser (in this subsection referred to as the ‘claimant'), when making a claim for repayment, shall produce to the Commissioners—

(a) the stamped instrument,

(b) a declaration made in writing by the claimant, in such form as the Commissioners may specify, confirming to the satisfaction of the Commissioners that—

(i) where the instrument is one to which this section applies by virtue of paragraph (a) or (b) of subsection (3), the claimant has complied with the conditions, liabilities and obligations under either or both this section and section 92, as the case may be, and has undertaken to continue to be bound by those conditions, liabilities and obligations,

(ii) where the instrument is one to which subsection (3)(c)(i) applies, the claimant has complied with, and has undertaken to continue to be bound by, the conditions, liabilities and obligations under section 92 and has satisfied, or, as the case may be, undertaken to be bound by, the conditions (including the condition set out in such a statement as is referred to in paragraph (a) of that subsection notwithstanding that the said instrument does not contain such a statement), liabilities and obligations referred to in this section, or

(iii) where the instrument is one to which subsection (3)(c)(ii) applies, the claimant has satisfied, or, as the case may be, undertaken to be bound by, the conditions (including the conditions set out in such a statement as is referred to in paragraph (b) of that subsection notwithstanding that the said instrument does not contain such a statement), liabilities and obligations referred to in this section,


(c) such information as the Commissioners may reasonably require for the purposes of this subsection.

(11) A reference in subsection (3)(c) or subsection (10) to the purchaser, shall be construed as including a reference, where there is more than one purchaser, to each and every one of the purchasers.”.

(2) This section applies as respects instruments executed on or after 1 January 2007.",".

Recommendation No. 1 covers the same area as the other two recommendations mentioned by the Cathaoirleach. It seeks to move the retrospection of this legislation back from 31 March to 1 January 2007, which is closest to the date on which the Minister made his comments in the other House. I do not have his comments in front of me but I was in the Chamber at the time and there was certainly a clear inference that there would be no change to the stamp duty regime. I understand Senator O'Toole outlined a case he was presented with. My colleague in the other House, Deputy Bruton, was presented with a number of similar cases involving people who took the Minister at his word when he said there would be no changes in the stamp duty regime, entered into the property market and have found themselves at significant financial disadvantage because of the changes proposed in this Bill and the deadline included in the Bill by the Minister.

The Minister is correct in saying that no matter what deadline one picks, there will always be people on the wrong side of it who will not benefit from it and will in fact be penalised by it. That is happening in this case. It would be fair, equitable and appropriate for the Minister to take this recommendation on board and change the date of retrospection back to a date as close as possible to his budget speech when the confusing comments were made regarding prospective changes to the area of stamp duty.

I thank the Minister for his reply on Second Stage. It was a very interesting outline of the economy as he saw it and it is very important for us in this House to hear these things. I value it. I must always make the point to Ministers that we are on the non-Government side, which is not the Opposition side. These are the Independent benches and we look at the issues as they appear before us. I agree with the Minister's critique on phasing the changeover over three years, as it would only pervert the market. I was the only Member who argued some years ago that the first-time buyer's grant did nothing for first-time buyers. I did not join in the general chorus when the grant was changed. I again welcome the revolutionary proposal to backdate as far as seven years mortgage interest relief.

The Minister claims the buyer will buy to his or her ability. In other words, he or she will examine the overall cost of the house, the purchase price and taxes. He also made the point that the abolition of stamp duty will not necessarily reduce the price of a house as it is factored into it. That is a fair argument. Anyone purchasing a house would factor in the stamp duty when seeking funds.

However, I used that argument previously with various Ministers who did not accept it. For example, I had a long-running argument with the Government on the lack of insulation standards in newly-built houses. The Government's argument was that if insulation standards were introduced, as required by the EU in 1998, it would have added €1,000 to house prices, a large imposition on buyers. My point is that it would not because people would pay for what they can afford and that is the way the market would adjust prices. The logic behind removing stamp duty for first-time buyers is more or less the same as that for better insulation standards putting up house prices.

The Minister compared house prices from last year to this year but did not factor in the differences made with the removal of stamp duty. Taking the Minister's argument that people pay what they reckon is the market value, including the stamp duty, prices have dropped significantly from last year. Last year a house marketed at €390,000 would have cost, with stamp duty applied, €430,000. With the removal of stamp duty for first-time buyers, the house can only be marketed at €390,000. Applying the Minister's argument that people will spend what they can afford, the stamp duty factor must be considered in making a real-time adjustment in house prices between this and last year.

The Minister rightly referred to the Fine Gael Party's proposal as non-progressive. The Minister's proposal is equally non-progressive. While I agree with the general thrust of the Bill's proposals, a progressive tax is one that hits people if they are spending more. This is not a progressive tax.

Will the Minister consider the supply and demand and population factor? What is happening in the private rental market is similar to what happened prior to achieving 80,000 housing units being built annually. Before that, rents were higher than they are currently. The price of apartment rentals in Dublin was higher in 2001 than at present. Within the past seven to eight months rentals have again approached that level.

I should like to hear the Minister's views on this, but I do not believe the housing market will collapse. It cannot collapse. I am looking at an increased population, higher rental costs and a reduction from 80,000 houses per year to what the banks suggest will be around 55,000 or 60,000. I agree with the Minister that the market cannot collapse on that basis.

However, the point made by Fine Gael and by the Minister is about our over-reliance on construction. That is an enormous fear and I should like to hear more from the Minister, perhaps not today, on how this may be counteracted. As he said, the proportion of GDP or GNP dependent on construction is far in excess of what we would be comfortable. We need to hear about plans beyond that. The ESRI is talking about exports of services as one way of dealing with the problem and that is important, as is the issue of retraining.

I agree we should not talk down the economy and I am not one to do that. That does not serve the interests of anyone. The Minister then referred to the budgetary dates. That was the point of my intervention on Second Stage and is the reason for my two amendments proposing to change the date. I should like to again hear the Minister on this. I accept his point that the budgetary changes he announces in December tend to be introduced on 1 January unless some come into force immediately or are to be introduced later. I can also understand mortgage interest relief being back-dated seven years. Assuming I accept all the Minister's arguments relative to the Fine Gael position, why, if he was prepared to move the date back, as he did, and it finally ended up as 1 April, could it not have been scheduled for 1 January? How bad would that have been?

People feel very sore about this. Those people I spoke to feel hard done by. It is different to the "hard done by" that I have had to defend a million times, where people are caught by a date. People are always being caught by a date. In another life, when I was negotiating salary increases which did not come into play until two or three months after somebody might have retired, he or she might ask why they might not have been introduced somewhat earlier. No matter what changes are brought in, people will always be compromised as regards dates.

However, this is different. It is arbitrary when it need not be. It could have been made to fall in line with budgetary requirements. It could have been put into the tax year, on which everything is based. People pay their taxes on the basis of the whole tax year and this, as a tax, is part of the current tax year.

Would the Minister not consider backdating this to 1 January? If he cannot do it today, can he give me some succour in this? Is it an issue that he might consider addressing in his Budget Statement at the end of the year? Is he prepared to look at the cost of this to the State were it to be retrospective to 1 January? I believe it would remove a good deal of hardship for many people. During that period it was probably factored into the prices, so it is not like before 1 January, before the Budget Statement or before the time when the debate on this whole area began, where people knew they would have to pay stamp duty.

Those caught before that debate started do not have the same argument as those caught during the debate for the reasons the Minister gave. He claimed the Opposition had created uncertainty. It was not only the Opposition but the leader of the other party in Government, former Deputy Michael McDowell, who created the uncertainty, in his speech in Malahide. He told us the Government did not need the €3 billion in revenue and that was a major part of the debate. There was great uncertainty but the Minister stood up on budget day and clarified the matter with authority and certainty. His speech was strong and was made with conviction and, having listened to it, I noted it would allow us to know where we were going. I accept I may have misinterpreted the Minister, but it was probably because of his conviction, authority, delivery and certainly that people said he would not move on the issue. The media stated he had taken a strong position on it. Regardless of whether the interpretation was right or wrong, the Minister made no attempt to change it and the interpreters acted in good faith. I ask the Minister to respond in a human way to the problem created for a small number of people as a result of not backdating the measure from 31 March to 1 January. Is it possible for him to reconsider it?

I proposed an amendment to the Order of Business indicating that legislation such as this is important enough to warrant more time for scrutiny in the House. Many Ministers have entered this House and have listened to Senators on various Bills but it is very difficult for Senators to address Second Stage, Committee Stage and Report Stage all in one go. It presents great difficulties for us and disregards the importance of the House. I am in a position to say this because I am not returning to the House. It is not therefore a question of my talking myself up; I am referring to the importance of the House and of allowing sufficient time to address legislation therein in order to ensure it is the best possible legislation for the country. This is the overriding objective of bringing any legislation to the House.

On the recommendations to the Finance (No. 2) Bill, reference was made by Senator O'Toole to backdating the period to which the legislation applies. I have said to the Minister previously that stamp duty on the family home is a tax on the family. It should not be levied on any family home. Not only should it be abolished for first-time buyers of new or second-hand houses, an initiative I recognise and welcome, it should also be abolished in respect of the purchase of all family homes.

As families move from one house to another, as they often do, they must pay stamp duty. A family's first house may cost €400,000, thus incurring a stamp duty liability of €30,000. If that taxpaying family, because of improved financial circumstances or employment prospects, or on foot of having more children, moves to a slightly bigger house of three or four bedrooms, costing €550,000, it must then pay stamp duty of €41,250. If it later moves to another house, perhaps with a view to downsizing, it must pay stamp duty yet again. If, for example, it moves into a four-bedroom house in a very ordinary, nice area of Galway, as are all its areas, it must pay an average of €690,000, incurring stamp duty of €62,100. This liability will not change under the Bill. I refer to average house prices outside Dublin and am therefore not referring to houses in Dublin 4, which could cost €1.5 million. I am talking about ordinary, everyday houses and ordinary, everyday families. All the transactions to which I refer involve a change to another family home rather than participation in the investment market, even though first-time buyer's relief may have been availed of in respect of a new development.

In every housing cycle, people who upgrade or move on often make a contribution in respect of those at the bottom of the ladder buying their first house. This was evident in the housing market in the United Kingdom many years ago and even in Ireland at times. My focus is always on the family and those trading up for family reasons. Such families may be liable for stamp duty of €133,250. I will not be a Member of this House when the Minister is presenting the next Finance Bill but I ask him to consider the question of stamp duty being imposed on the family home. There should be no stamp duty paid where a person buys a replacement house before selling the original house but then completes the sale as that person then has one primary residence on which no stamp duty should be paid.

The Minister said there was no need for such a proposal as the majority of houses are not in the upper echelons of prices at €4 million or €5 million. I do not see the need for a cap because this restricts the market. A family home should be defined as being for the use of a family. The Constitution protects the position of the family and is built on the values of the family. If there is to be any value in society, then the family must be protected and the most important possession for any family is a roof over its head.

The Minister may be concerned that removal of stamp duty from the family home might lead to an increase in house prices. Senator O'Toole made the point that the market now decides the price of houses. There has been a softening in the housing market in the past six to 18 months which has been caused by a softening in demand and as a result of higher interest rates. Every 0.25% added to interest rates has an impact on house buying. This is a market economy and it is the market which will decide the price of houses. Therefore, the removal of stamp duty from all family homes will not suddenly inflate the price of every single house. Investors will still be required to pay stamp duty but those genuine family home buyers moving from one family home to another will be exempt.

Another argument put forward against this recommendation is that people trading up a family home are gaining by the increase in the value of the home between the time they bought the house and when they sell it. The problem with such an argument is that due to the softening of the market, such gains are not apparent now compared with the past eight or ten years, when houses rose in price from €300,000 to €600,000 in two years. Such gains are no longer being made. People trading up out of necessity or out of a desire to have a bigger house to suit their family size are continuing to pay additional tax. I ask the Minister to consider accepting this recommendation.

The cost of repayment of the stamp duty would seem to be affordable this year. I suggest repayment should be backdated to 1 January 2007. This would make a significant and unexpected difference to many people who purchased houses in that first quarter of the year and who believed at the time that there would be no change in stamp duty.

It is a pleasure to have the Minister in the House because he is as always intellectually vigorous and robust although he may be a trifle partisan. It was lovely to hear him making minced meat out of the principal Opposition party but he did it in a selective way——

I ask the Senator to speak to the recommendation.

I am speaking directly to the recommendation. I am conscious of the strict discipline, the Cathaoirleach's firm lash, under which I operate.

As Senator O'Toole said, it was not just the principal Opposition party which created the confusion. Mr. McDowell added to this and the Minister's party is not entirely guiltless in this respect.

In his Budget Statement the Minister stated, "In the current market situation, any stamp duty cuts would more likely than not be incorporated in the sale price and so end up in the pocket of the seller." This sounds like a very clear commitment not to tinker with stamp duty. I note the Minister is shaking his head but he is shaking it so feebly——

What cuts in stamp duty did I subsequently introduce?

But this is what the Minister is now proposing.

There are no cuts.

The Minister is tinkering with the stamp duty.

I am extending an exemption.

Exactly. I am amazed the Minister can make those comments without blushing because his used to be the party which talked about representing the plain people of Ireland.

The Senator is a man who insists on preserving the meaning of the English language.


The Senator should read the sentence again.

We are talking about the plain people of Ireland. I represent them too and perhaps more effectively than the Minister does now because he gave every appearance of giving a commitment that stamp duty would not be removed because it would go into the pockets of the seller. We are not talking about my understanding of it or the Minister's but about the understanding of the people his party claims to represent. I have a desk full of letters from people stating that their whole attitude towards buying was affected by what they understood was a commitment not to do anything about stamp duty, that they bought because they thought nothing would happen and that they are now caught.

Since the Cathaoirleach wishes to keep me within the confines of the recommendations, I would be very happy to second Senator O'Toole's amendments if necessary.

It is not necessary on Committee Stage.

If it is not necessary, I will simply add whatever little moral and intellectual value I have on this issue. I have a sheaf of letters from people who wrote to me stating that they bought on the understanding that they would not benefit by waiting. There is a moral obligation on the Government to backdate this measure to the time of that commitment. The Minister can engage in whatever political readjustments of his sentiment he feels necessary. I have a degree of sympathy for him because I clearly remember what was said in the budget. It may be subject to gloss, interpretation and so forth but I have no doubt where the Minister's heart and mind were at that point. I felt sympathy for him when the Taoiseach popped up at the Ard-Fheis and made mince meat out of his position. I am not alone in that. The Minister may think I am naive and inexpert in the English language——

The Taoiseach never mentioned stamp duty at the Ard-Fheis. The Senator should be accurate.

According to the commentators, he certainly undermined the Minister's position very clearly.

He did not. He never mentioned stamp duty. The Senator should look at the record.

Let us put all that aside and just say the people of Ireland believed they had a commitment. There can be as much wriggle as the Minister likes. I know the Minister's constituency well because my roots are basically in the same bog and I know what people are saying down there. People who were unlucky enough to have bought houses are now faced with this. I am glad the Minister has made this change and I appeal to him to backdate it to the time when the plain people of Ireland, who his party always claims to represent, believed, erroneously or not, that they had a commitment that there would not be a change.

Since the Minister raised all these questions, it would be good to have a full look at this issue although I accept this is not the place for it. It seems to be very unfair with the price of houses now and the fact the banks have lent enormous amounts of money, including 100% loans and so on. The Minister might also look at advertisements. I cannot understand all the conditions because they are written deliberately to confuse people, including all the stuff about repossession. We now face repossessions and negative equity. There have been eight jumps in interest rates over the past two years and there is no doubt that people are in difficulty. Will the Minister look at graduated stamp duty next time? It seems terribly unfair that somebody who pays €300,000 for a house — I do not have the exact figures — does not pay stamp duty but somebody who pays €301,000, pays stamp duty on the lot. People should only pay stamp duty on the difference. It would be very useful if the Minister looked again at this issue.

I am happy to support Senator O'Toole's recommendations. I support them in preference to the Fine Gael one. The Minister was gracious enough to say I had a nodding acquaintance with the English language. The language in which the Fine Gael recommendation is couched is a little lengthy, wordy and represents opaque legalese. While it is very often necessary to use such language in legislation, Senator O'Toole's recommendation is appealing in its clarity, simplicity and relevance to the concerns of a considerable number of people. I understand that it is not possible to appoint a cut-off date which does not severely affect the unfortunate people who are on just the wrong side of it, but the people of Ireland understood they had a commitment.

The Tánaiste is an honourable man — I do not impugn his honour — but the people understood that Fianna Fáil would be resolute and would not tinker in this area. Suddenly, however, the ground was cut from under the financial section of the party and the Tánaiste's Department. The decent, moral and popular policy now would be to backdate the provisions in the Bill in the manner suggested by Senator O'Toole. I appeal to the Tánaiste to adopt that course.

While the construction industry is a very important engine in our society, it is one on which we can be overly dependent. I was very glad to hear the Tánaiste indicate as I came into the House that he will regard it as part of his brief to look into diversification and that we should not be overly dependent on this area. It is not a market that can infinitely expand without dangerous consequences.

I support Senator O'Toole's recommendation which speaks to points I raised on Second Stage. While I do not wish to be repetitive, I must make it clear that the effect of backdating the stamp duty provision to 31 March 2007 will be that some will legitimately feel they have been victimised because they are on the wrong side of the line. During the crucial period between December and May, the debate was not about the relative merits of imposing stamp duty, rather stamp duty became a political football.

While I did not necessarily believe it, Fianna Fáil made a plausible political case when it said a change in the stamp duty regime was not the answer. It contended that any reduction in or abolition of stamp duty would not be in the interests of buyers. The Tánaiste referred to the argument on Second Stage and I suspect it was his former belief that stamp duty was not a tax on the buyer, but on the seller. If the duty were removed, the seller would benefit. It is a difficult argument to explain, especially to buyers, but it carries a certain degree of credibility.

The firmness and resolution of Fianna Fáil in the face of Opposition attacks and the pledges of the Progressive Democrats on changes to stamp duty convinced many that the party was genuine about what it said and that its arguments had some merit. As a direct result, some did not delay buying because they believed stamp duty would remain in place and that they would not be prejudiced if they purchased in the post-budget, pre-election period. They were wrong. Fianna Fáil yielded to pressure from the Opposition and the media and performed a U-turn, albeit a limited one. Some people benefited and others did not. There are those who bought houses in the period in question who believe the Tánaiste's measure and the arbitrary date he has set have cost them between €20,000 and €40,000. They believe it is the Tánaiste's fault because he has done it at the stroke of a pen. They are right.

Retrospection has benefited some people but not others. If retrospection is to apply, in all justice it should benefit all the people who are within this time trap. I appeal to the Minister to reconsider the date and move it back to the date of his Budget Statement, when the impression was given by him and others that the situation would remain the same.

The other worry I and other Members of the House have about this measure is that we are, to a certain extent, wasting our time and that it is futile to propose an amendment at this stage of the electoral and parliamentary cycles. It would be staggering if this or any Minister decided today or tomorrow to accept an amendment to any Bill. We know that. The Government and all politicians have been through a tiring time and they are anxious to go on their summer holidays. Nobody wants to take this measure back to the Dáil, except the Members who support this amendment. However, it is unfair on the people who will suffer as a result of this measure that they should also be victims of the parliamentary timetable. This proposal will not be considered on its merits because the Dáil is about to go into recess, and no Minister will consider accepting amendments which will involve more work for the Dáil. That is unfortunate.

I appreciate that the Minister has come to this House today and has not sent the Minister of State, which he could easily have done, and shown the type of contempt which Members of this House sometimes see from Ministers at this time in the parliamentary timetable. I also appreciate the fact that he has remained for Committee Stage when he was not required to and that he is taking both the Bill and the Seanad seriously. However, the fact that amendments, regardless of their merits, have no chance of being accepted makes a mockery of this debate and of the Seanad.

I thank the Senators for their comments. We made a commitment in response to others creating uncertainty and speculation. I stated my position in the Budget Statement. It should be remembered that in the period before the budget, people were talking about wholesale reform of stamp duty by cutting rates and changing thresholds. That was the context in which the debate was taking place. In fact, at its most extreme, there was a suggestion that we could eliminate stamp duty. However, the debate was about stamp duty reform by cutting rates and extending thresholds. I stated in the Budget Statement that in the current market situation any stamp duty cuts would, more likely than not, be incorporated in the sale price and end up in the pocket of the seller. That was my position. I made that statement on the basis of trying to bring certainty to the situation and answering the case.

I have not brought forward a Bill to cut rates or extend thresholds. If I were to be popular, Senator Norris, or if I were to comply with the stereotype for Fianna Fáil, whose members are depicted as opportunists and political professionals who will do or say anything to get back into office——

If the Minister is pointing his finger at me, I did not say that.

I am referring to the stereotype that is often attributed to the party——

Not by me.

That would be an argument in favour of accepting the Opposition proposal of €600 million at full implementation — whenever it would decide how to implement it — at a minimum of three years for the benefit of 45,000 or 50,000 people to be paid for by 2.15 million other people who were not in the process of buying a house at that time. This is not an equitable situation or a properly thought out proposal. A Minister for Finance does not have the luxury of speculating in this way. He or she must consider all of the issues with regard to how he or she might help by way of taxation.

I respectfully suggest that dealing with the inequity which exists in our PRSI system whereby a millionaire pays the same as a working couple on €48,800 would provide a greater social benefit. A better way of expending tax expenditure would be through tax reform rather than this particularly ill-thought out proposal, however well-intentioned it was. I can give a benign interpretation by suggesting it was well-intentioned when really it was a vote buying attempt by the Opposition to win an economic argument it knew it could not win.

This is Senator O'Toole's amendment.

I will not have my honour impugned in any way in respect of my efforts in this matter.

I will get rid of another canard. The Taoiseach made no reference to stamp duty in his Ard-Fheis speech. The suggestion by anybody that disagreement occurred between the Taoiseach and I on this matter is incorrect.

He did it at the same time on RTE.

Furthermore, as a matter of fact——

The Tánaiste should consult the Internet. Does the Tánaiste state the Taoiseach never did this?

I am giving Senator Norris the facts.

When did the Taoiseach state it?

I have no problem with giving the facts. Senator Norris may contribute after me if he wishes.

As this is Committee Stage, Senator Norris will have an opportunity to reply to the Minister.

Usually Senator Norris is not short in stating what he wishes to state. It is fine that Senator Norris wishes to speak when I speak if it is an intellectual exercise for him. It is not my idea of coming here to debate an issue.

The point is that the Taoiseach and I were in full agreement in response to an irresponsible initiative brought forward by Fine Gael, which was changed within weeks, adopted by the Labour Party and changed subsequently as a joint proposal when entering an election campaign.

I also made the point it is totally irresponsible and a lesson to be learned is not to get engaged in this type of activity outside of a budgetary context precisely for the reason some Members gave. What would have happened after I brought forward the mortgage interest relief proposal last December which intended to extend the benefits to the greatest number possible? It is available for the first seven years for all mortgage holders. If one is in year four, one receives the increased benefit prospectively from the date the change is made for the remaining three years. If one enters the market now one receives the prospective benefit for the next seven years. It is not a backdated proposal. It is an application of new thresholds of mortgage interest relief in respect of a timeframe of seven years available to all mortgage holders if they qualify for the relief as first-time buyers.

I responded to this matter on the basis that I do not believe it was equitable that €600 million of tax expenditure should go to this purpose. Apart from my belief that it would not solve the problem, I find it inequitable in the extreme. I made the following point clearly however people wish to interpret it. I cannot speculate. I made three simple statements. I stated I would do nothing to disrupt the market. This does not mean I would do nothing. In respect of this or any other issue, what the Minister for Finance does depends on the market conditions at any time.

I also stated I would discriminate in favour of first-time buyers and I stated that if people wished to see what I would do they should examine what I did in two of my previous budgets. I do not think it is possible for a Minister of Finance, maintaining the responsibility he has and the sentiment he sends to the market, to be any more explicit than this. I do not accept Senator Norris's statement that I had a slightly ambivalent attitude. At all times I proposed the need to avoid an electioneering exercise which would disrupt the market and have the effect of putting at risk many of the 280,000 people whose families depend on a stable housing market for a working wage.

During times of slump, a cohort of people had to leave this jurisdiction and work and live in other countries to send home a working wage to their families left behind.That was the experience of many building workers' families here for far too long.

Mindful of my responsibilities in this matter I brought clarity to the situation. To develop the point I was making before I was interrupted, if I was seeking to be popular with a scattered approach everyone would be in a piece of the action. I did not do that. I brought forward a carefully calibrated proposal which discriminated in favour of the one cohort of people who have not benefited from increased equity in the property market, therefore meeting the equity requirement. I did so in a way which did not bring about cuts or reforms in stamp duty regime or thresholds or moving along the thresholds, which does not meet the affordability argument of €600 million. I simply extended an exemption to a cohort of people who require our help in the context of what has been a historically buoyant property market. It is an approach that is targeted, equitable and affordable. I cannot legislate for the decisions of people who talk about the market or for every decision made by everybody in the interim.

I was not the creator of this situation although I was intent on bringing it to finality and trying to make sure that this dislocation which has taken place, not only because of rising interest rates but because of the particular level of reckless adventurism in which the Opposition has engaged on an economic issue for the purposes of getting votes in the election. It was not of my making but I said to the people that I was putting before them a proposal which is one-seventh the cost, more equitable and does not dissipate tax expenditures all over the place to meet the sentiment of any editorial board, writer or commentator who conducted a continuing and lengthy campaign against my position on this matter. I did not relent or recede because I believe that what I am doing is right in the circumstances, which were not of my making.

I am being asked because of a perverse interpretation of what I said in the budget that I have subsequently engaged in a reform, in which I said I would not engage. I have not done so. What I am doing is seeking to restore stability to a market in a way which minimises disruption and in a way which is geared towards those who require our assistance in the aftermath of the disruption which has happened. It would be irresponsible of me in the discharge of my responsibilities as Minister for Finance if I did not do so but I have acted within parameters which honour equity, affordability and the basic stance I have taken on this matter. I decry the continuing effort by others to engage in this type of speculation outside the budgetary context. It is irresponsible in the extreme and has resulted in some of the casualties referred to. They do not end there.

I will discharge my responsibilities on the basis of a consistent approach and on accurate reflection of the actions I have taken with everybody fully cognisant of the chronology of events which brought us to this point. That is my point of view. That is what I defend. When I announced this proposal, which I put to the Taoiseach and t which he agreed, it was for the purpose of minimising the time lapse between the announcement by me as Minister for Finance of such a proposal and its enactment so that people would know what they were voting for and would get what I said they would be voting for. It arose as a result of a range of circumstances and a debate which was not of my making. Those are the facts.

All of the chitter-chatter and what has passed for political commentary to the contrary suggesting that the Taoiseach and I are at variance is nonsense. One of the strengths of the Government has been and will continue to be the very close relationship that exists between the Taoiseach and the Minister for Finance, which is a precondition for the effectiveness of any Government regardless of its political make-up or colour. Any suggestion to the contrary, while it will get certain comments has no relevance to how I conduct my affairs as a member of the Government nor would anyone here expect it to have.

Those are the facts and the chronology of events. That is what I said then and the context in which I said it. I am explaining the timing of how I proposed the initiative as a result of the work of others. Mine has been a logical consistent position all along. I have said that the timing for which the benefit derives is prospective from the date on which I announced it. There is no retrospection. Had we not had this series of events one could look forward to a budget in December that would enable me to improve mortgage interest relief further, taking account of the interest regime that has developed and considering what we could do for first-time buyers. However, I will not be left carrying the can for the uncertainty that has been created as a result of this ham-fisted and cack-handed effort to get into Government on the basis of a proposal that made no sense from beginning to end.

Those who must carry that can of responsibility are on the Opposition benches today precisely because they underestimated the good sense and discernment of the people who know a nonsensical issue when they see one and whose sense of equity was offended by the scattergun nature of the proposal in terms of its concept and cack-handed execution, which was never going to happen and would have done untold damage. Whatever about the correction that is taking place at the moment and the need for us to restore stability quickly, one can only think about the damage that would be done to the livelihoods of tens and hundreds of thousands of people in the industry were they allowed upon achieving Government, had they been successful, to then implement such a proposal over a three-year period, which basically indicated to everybody in the market that the longer they stayed out the more benign the stamp duty regime would be and therefore why get involved at all. That is what would have brought about the hard landing.

That is what is happening based on what the Tánaiste is proposing today.

It would have increased the risk. While I do not suggest that my view is unanimous, I suggest that experience and logic is far greater on my side of the argument, as has been proved. When the proposal that came from the Opposition benches was subjected to even the most cursory of scrutiny, people saw the whole mosaic falling apart straightaway. The Bill is my response to that initiative by them. I have taken a responsible position that did not seek to buy votes.

That is rubbish. The Tánaiste has a brass neck.

The sooner people who will be 15 years in Opposition realise this, the better. I have always believed that those who underestimate the intelligence of the people will fall by that sword. The Opposition parties threw them a pup and they threw it back at them. The Opposition parties deserve every bit of it.

I want stability. I do not suggest this is the most reforming measure I have ever introduced or will ever introduce in my political career. However, it seeks to bring clarity and certainty with a simple message. All first-time buyers will not pay stamp duty regardless of what sort of house they buy. That message is understood in the marketplace. As I said earlier — Senator Ross was unavoidably absent at the time — I would ask anybody on the Opposition benches to stand up now and tell me in accurate detail what the Fine Gael proposal was anyway.

I have a recommendation. If the Tánaiste sat down we could get to it.

It was so complicated and inequitable that it offered relief of €40,000, €50,000 and higher to people buying houses of €1 million or more. The better-off the house buyer the better he or she did. The Labour Party backed it up. I pointed out to Deputy Rabbitte that the Opposition parties did not know when they were going to implement it, so before Deputy Bruton got from the drawing board to dealing with the practicality of it Deputy Rabbitte then decided he would have it done before coming back from the Áras, such was the flight of fantasy. The Deputy had a panic attack because his whole budgetary framework went out the door. He thought that money would be found in the bottom drawer of a desk in the Department of Finance to finance it.

Will the Minister deal with the recommendations?

They suggested the €600 million cost for the initial adjustment could be implemented in year one and they set out a macro-economic framework over a three-year period, which immediately undermined their economic credibility completely.

The Minister has not responded to the recommendations.

My macro-economic framework, the Fianna Fáil manifesto and the programme for Government contain a provision to cover the additional cost of this proposal, which is prospective from the date of its announcement and which is retrospective only because the Dáil had been dissolved and enactment of the legislation could happen only at the first available opportunity when the new Dáil met. I will not be held responsible to carry the can for speculative adventurism that backfired on those who thought it would be the silver bullet to get them onto the Government benches.

Is recommendation No. 1 being pressed?

I would like to respond to the Minister's 20 minute blast. A number of recommendations were proposed and the Minister did not deal with the comments made by Members. As usual, he attacked the Opposition. Senator O'Toole put a specific proposal to the Minister, who managed to speak for 20 minutes without referring to it. He has not responded to any comment by Opposition Members.

Following his reply to Second Stage, I did not seek to mention the many contradictions in his contributions subsequent to his opening remarks. However, I cannot let them pass without commenting on them. He regularly referred to the necessity of remaining within the budgetary context. The reason the legislation is before the House is the Minister is not doing so.

This proposal is not consistent with the Minister's Budget Statement.

I am referring to the budgetary context of the programme for Government for the next five years.

This proposal is not within the budgetary context.

It is provided for by this Administration.

Many things are provided for but this does not fall within the budgetary context.

The Senator's problem is Fine Gael did not provide for its proposal.

The Minister then referred to the perverse reading of what he said on budget day. He reiterated the comments himself, which were very straightforward. The clear inference of what he stated was there would not be change and people made decisions on that basis. That is what these recommendations are about.

That is bluster. Where are the cuts?

The Minister should not talk about bluster. We have listened to him for more than an hour and his reply to Second Stage and his remarks on Committee Stage have been absolute bluster.

The Senator continues to misrepresent my position, despite my exposition of detail on it.

The Minister spoke absolute nonsense.

The Minister should stop interrupting and he should speak through the Chair.

That is Senator Phelan's problem.

I was not too happy with aspects of the Opposition proposal.

The Senator did not say that during the election.

I did not. The Minister made many comments before the election about not reforming stamp duty and he was forced to do so by the Taoiseach.

I was not. The Senator continues to misrepresent my position.

The Taoiseach took the political ground from under the Minister when he made the comments to which Senator Norris referred. The Minister might have a very good relationship with the Taoiseach. I do not know what happened in that regard but the Taoiseach stuck his political finger in the air, felt the breeze and decided to address this issue. That is why the Minister is in the House to introduce this change. Despite his continual attacks on the Opposition's proposal and its supposed scattergun approach, we proposed the complete reform of stamp duty. The Minister can legitimately criticise if he has difficulties with the proposal but he should not give out about wholesale reform. His proposal is only tinkering at the edges and, as he stated, stamp duty has served us well for 200 years. The property market in the past ten years has not reflected the intention behind stamp duty. Stamp duty rates are penal and they should be reformed. I make no apology for suggesting that if the property people buy exceeds a specific threshold, they should pay the higher rate of stamp duty only on the amount by which they exceed the threshold. That is fair and equitable and that is provided for in the Fine Gael proposal. It should have been included in the proposals of the Government. Maybe it will be yet and there will be a chance on some other date to really reform stamp duty and its impact on the property sector in this country.

After the Minister slating our proposals, thumbing his nose at them in the budget speech, and everything else that has happened——

They were not in existence at the time of my budget speech.

——prior to his U-turn during the election campaign, he spoke of the people——

The party had not thought them up at that stage.

This is a direct quote from the Minister's last contribution. He spoke of those "who required our help in the context of a buoyant market." If they required the help of the Government, why was it not offered when the Minister made his budget speech, whichever way it was interpreted?

I doubled mortgage interest relief.

The Minister did that, in fairness.

I thank the Senator. That is how I helped them.

Why was the stamp duty reform which is being currently proposed not done in the budget?

That was because I do not agree with the Senator's proposals.

The Minister said these people required help.

I think the proposals are nuts.

Why did the Minister not bring his own proposals?

I do not agree with the Senator's proposals.

Why is the Minister bringing this proposal forward if he does not agree with it?

I have explained why I brought it forward. It is in response to the nonsense the Opposition was going on with.

The nonsense, such as it was——

The people have spoken on this.

——was originated by the man who used to occupy the office the Minister occupies now.

Who is that?

Michael McDowell. The Minister might remember him, although I know he is gone a couple of weeks.

He never occupied my office.

He said stamp duty of €3 billion——

That is another inaccuracy.

The Office of the Tánaiste. He was the Tánaiste, I think.

The Senator is right on that. He has got one thing right today, in fairness.

I might have missed that particular comment. He was the man who initiated the discussion regarding stamp duty. He indicated €3 billion was being collected that we did not need. That introduced a level of uncertainty into the property market and as a result of his proposals, the Opposition brought out proposals of its own. The Minister is perfectly entitled to disagree with them.

I would like to take part in this debate at this point but I am precluded, as I am in the Chair. Perhaps the Senator would stick to the facts.

I am sticking to them, in fairness. I listened to over an hour of an uninterrupted contribution from the Minister. What I am really trying to do is get him to respond to the suggestion of Senator O'Toole.

I will do that in two minutes.

I would like him to respond to the recommendations as proposed.

I will do it in two minutes.

I will be very brief as I am interested to hear what the Minister has to say. First I should say I am not impugning the Minister's honour at all, as he seems very tetchy on that.

I am not.

Indeed he was.

I am not.

I would not have to be a professional physiognomist to read the Minister's face, I can assure him.

I am not. It is just that the Senator gets away with those charges too often.

Not at all, go on out of that. I would not accuse the Minister of consistency anyway because he tried to blackguard me——

Senator Norris.

——from my decent parliamentary interruptions and then he riddled that poor lad——

Senator Norris.

——-with interruptions himself. So I am not expecting consistency from him and we did not get it on the stamp duty issue either.

Senator Norris should defer to the Chair.

I beg your pardon.

I should point out that if the Minister is to make a reply he will need to do so quickly.

Absolutely. We can argue the case any way we want but there is no doubt there was a change of position. The Minister has stated it is reactive but that is not particularly good Government. All we are saying is in justice, and to use a phrase dear to the heart of the Soldiers of Destiny, in fairness, some people were given the impression there would be no changes. There has been a change in the stamp duty regime and people were caught out. It should be backdated to that period.

There is a phrase, "The lady doth protest too much". I think the Minister blustered a little bit too much and I think I touched a bit of a raw nerve. I have no doubt, as a consumer, that the Minister's position was undercut by the Taoiseach, one way or another. Many other political consumers felt exactly the same way.

No matter what I say, one way or another the Senator will hold that view anyway as he clearly does not believe what I have to say about it. That is fair enough and at least we have cleared that up. From the Senator's perspective, he will maintain that myth regardless of what I say. Similarly, my position seems to be misrepresented by the Opposition because that is the only way it can argue the matter. That is fair enough. I thought the idea of coming to the Seanad was to clarify issues rather than people continuing to throw brickbats on the basis that I was in a position I certainly was not in.

We should expect a few red herrings and white elephants.

That is the first point but I will quickly get to another. Everything we have done here is prospective from the date of the announcement. In the normal course of events we would announce this on budget day. That it is prospective is a fundamental. That is the case with all tax changes, which are prospective from the date of the announcement. We were not in a normal situation because we were in the abnormal environment pre-election, and people got into arguments. To stick to the point, I am putting forward a proposal for enactment which is prospective from the date of the announcement. I left it at the shortest possible period in order to avoid any speculation between announcement and enactment. That would have been the case if, as is normally the position, we were dealing with this matter on budget day.

The lesson to be learned, in order to avoid any confusion in the future, is to ensure that these debates take place in a budgetary context so that a Minister of Finance, regardless of his or her political persuasion, who wishes to make changes to the social welfare code, the tax code or whatever may do so from the day of the announcement or from a later date but not retrospectively. For that reason and regardless how well-intentioned they might be, I cannot accept the recommendations from the Senators.

I made the announcement in response to a situation created by others. My announcement was prospective from the date on which it was made — 30 April — and came about as a result of a recommendation from the Revenue Commissioners who state in their guidance notes that deeds must be presented within a month of execution. In technical terms, therefore, the date included in the Bill is 31 March, whereas the political announcement related to 30 April. It is prospective and not retrospective. I cannot, therefore, accept recommendations which seek to introduce a retrospective effect to the announcement I made, which, in the normal course, would have been made and enacted by means of financial resolution on budget day.

As it is now 6 p.m., I am required to put the following question:

That notwithstanding anything in Standing Orders, the Bill is hereby read a Second time; the sections not disposed of are hereby agreed to in Committee; the Title is hereby agreed to in Committee and the Bill is accordingly reported to the House without recommendation; that Fourth Stage is hereby completed and the Bill is hereby received for final consideration; and that the Bill is hereby returned to the Dáil.

Question put and declared carried.