Tomorrow, Ministers are set to gather for a Cabinet committee meeting on housing in a bid to bring new thinking to what is becoming an Irish “permacrisis”.
The Government is under pressure on this issue. As Jennifer Bray writes this weekend, only 30,030 homes were built last year, a long way short of the promised 40,000 homes, which Government figures were promising in the lead up to the general election.
These figures put a frightener on the new Coalition, with Opposition parties accusing the Government of misleading the public with their promises that up to 40,000 homes would materialise.
In this context, new thinking is being sought. That may have been the reason the Taoiseach last week flagged possible changes to the rent pressure zones and also tax incentives to stimulate private sector investment in housing as ways to get more private investment flowing into construction.
The latter idea – whatever the economic rationale – has the capacity to be deeply uncomfortable for the Government, with Labour TD Ciaran Ahern quick to describe the plans as “Fianna Fáil’s Bertie-era tax cuts for developers”.
An unintended consequence is that any talk of potential tax cuts – or, indeed, other proposals – could, in the short-term, create uncertainty in the housing market, prompting builders to hold off for a few months if there were a promise of goodies on the table in the next budget, Bray writes.
She quotes one senior source as describing tax as the “last big lever that we have yet to pull. In the past, we had schemes that were terribly designed and resulted in houses being built in the wrong places”.
The source said any future tax incentives would be more prescriptive and designed in such a way that the right kind of housing would be built in the right place.
Behind this thinking is a growing realisation by the Government that the scale of the issue is simply beyond the resources of State.
The Taoiseach told the Dáil last week he believed a greater balance is needed between State and private sector investment and highlighted figures showing that €20 billion would be needed to get to a situation where 50,000 to 60,000 homes were built every year.
To put this in context, the State has earmarked €6 billion for the housing budget.
As Bray writes: “Financial measures to incentivise the private sector may be seen as politically unpalatable, but their consideration reveals the extent of the government’s frustration about action on that side, but also generally that enough is not being done.”
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