Member revenues rise 6% in Q2 2019
August 22, 2019
Best in Class
September 25, 2019
About HAI
Hardware Association Ireland (HAI) is the national trade association representing hardware, building materials, DIY, homewares and garden at retail, wholesale and manufacturing level. Our members make a valuable contribution to the economy of Ireland. From family run businesses to publicly quoted companies, HAI members serve their local communities competitively, employing over 19,000 people throughout the country. We uniquely represent all levels of the supply chain.
HAI speaks with one consolidated voice and fulfils a unique and vital role in connecting merchants with their suppliers in a non-commercial environment. HAI members play a key role in the construction supply chain, providing an efficient and effective route to market for building material products and a vital source of credit to customers.
We represent more than 400 employers in the industry, and our members operate in one of Ireland’s key economic sectors. New builds, renovations and retrofitting are major barometers of and a contributor to the nation’s economic success.
HAI’s recommendations are composed with the complementary intents of stimulating the economy, active good corporate citizenship and upskilling the sector in a way that is beneficial to the general public, the sector and the economy. Our members operate in every part of the country, many in areas that are just beginning to see an uplift since the recession and many that are particularly exposed to Brexit. The recommendations below represent a window of opportunity to trigger growth in rural areas. We believe that these recommendations will spark economic activity that will add to the public purse, help us meet our carbon-reduction targets and mitigate the impacts of Brexit.
1. Encourage Retrofitting of Homes
There is a groundswell in public opinion towards becoming more eco-friendly as evidenced by recent elections and the most recent Eurobarometer Poll (Spring 2019) (1). Results of the poll evidence that while concern about the environment and climate change has grown throughout the EU – 35% of EU citizens consider it to an important issue- this figure rises to 50% in Ireland. Previously Ireland set a target of 20% reduction in greenhouse gas emissions by 2020. However current forecasts suggest that only a 1% reduction will be delivered. (2). 80% of our homes have a C rating or less. We use 7% more energy than the EU average and 58% more carbon. We require a breakthrough on this. The plan to retrofit 500,000 homes will be enabled by the strategy detailed below. HAI members will be key delivery partners in the implementation of this strategy. In other areas of environmental protection Ireland has an enviable track record – as evidenced by the success of the WEEE scheme, where Ireland is one of the best performers in Europe. The HAI welcomes the recent report of the Climate Action and Tax Strategy Group and its focus on taxation stimulus to encourage retrofitting.
HAI Recommendations:
- Reduce VAT to 9% on all carbon saving products such as Heat Pumps, Insulation, Wood burning stoves (all products as per Energy Saving Credits- Better Energy Homes).
- Introduce a value-based incentive scheme for retrofitting with similar incentives to the HRI scheme. At present most incentives are weighted towards deep retrofitting. Even with current grants the financial outlay for many householders is prohibitive. According to the Property Price Register the average selling price of a second-hand house in many parts of the country is less than €200,000. Currently the Deep Retrofit Grant programme has the aim of an A rated home. This requires an investment by the homeowner of an estimated €30,000. Adjust the grant system such that it will encourage medium-level retrofitting. Target properties with a BER rating of B3 or less. Works to be conducted only by a qualifying contractor who is registered for the scheme and who can demonstrate tax compliance and VAT registration.
- Previously SEAI granted works were practically excluded from the Home Renovation Incentive. To overcome this, we suggest that if an individual receives a an SEAI grant then the total qualifying expenditure (grant + tax exemption) will be reduced by the amount equal to the grant amount – allowing for co-existence with SEAI grants and avoiding duplication of funding. e.g. If a household spends €10,000- The grant may account for €5,000 and the household can claim tax relief on the other €5,000.
- Introduce measurements (KPIs) and targets for retrofitting activity at local government level.
- HAI fully endorses Vincent de Pauls recommendation to “Ensure sufficient funding is available to allow Local Authorities to complete the energy retrofitting of social housing stock and set a target of upgrading all existing stock in the next four years. Cost: allocate €50 million for energy upgrades in 2020”.
2. Home Renovation Incentive (HRI) scheme
HAI strongly encourages the re-introduction of the scheme. We suggest that the scheme has a lifespan of 3 years from January 2020 until 31st December 2022. Statistics from the Revenue show that the scheme has been highly successful.
HAI also suggests that the minimum qualifying spend is €3,000 to encourage small home dwellers, and also to increase the ceiling to €50,000 as an incentive for homeowners to pursue additional home improvement projects. Evidence to-date suggests that the HRI scheme has acted as a strong encouragement for otherwise latent home improvement works, thereby making the scheme effectively cost neutral for the exchequer.
HAI requests that the tax credit be made claimable in the same year as work is completed, with 100% of the claim credited the following tax year (currently spread over the following two fiscal years). This would provide an extra incentive and ensure money is more efficiently circulated back into the economy.
HAI Recommendations:
- Re-introduce and extend the HRI scheme by 36 months.
- Lower the floor of the scheme and increase the ceiling.
- Claim tax credit in same year as work completed and claim credited following year.
3. Stimulate Housebuilding and Renovation of Property
Residential housing remains heavily under supplied and new house build activity subdued. The recent Eurobarometer results show housing to be, by far of greater concern in Ireland than 26 of the 28 EU states. Only Luxembourg is more concerned about housing than us. We welcome the Rebuilding Ireland plan and its ambitious targets; however, we feel the sector needs additional stimulation to encourage new builds and reduce the number of vacant dwellings.
HAI Recommendations:
- Introduce a Derelict Property Renovation scheme (similar to Home Renovation Incentive scheme) for property owners.
- Extend the Help to Buy Incentive Scheme beyond the 31st Dec 2019 deadline to 31st Dec 2021.
- Introduce a Tax incentivised savings scheme for first time purchasers based on the SSIA model.
4. Upskilling the sector.
It is essential that the industry can respond to changing demands.
We support the recommendations in the Construction Industry Federation’s report ‘Demand for Skills in Construction to 2020’ (2). Despite the positive outlook for construction over the medium to long term, a skills shortage could threaten to derail this. In particular, HAI advocates the establishment of a Construction Skills Forum, to monitor progress and address barriers in the education and training system which are impeding the delivery of the required skilled employees. (3)
5. Special Consideration for Timber Industry in Brexit negotiations
Brexit presents challenges across our industry and in particular, to the timber trade. The Irish timber sector contributes €2.6bn and sustains 12,000 full time rural jobs. Over half of Irish sawmills output is exported, and 95% of those exports go to the UK, compared to 41% for food and drink. 90% of panel products produced in Ireland are exported, with two thirds going to the UK. The UK is the biggest importer of wood in Europe and our only logical market for exports. We call on Government to ensure its Brexit strategy takes account of the specific needs and opportunities of the timber industry.
HAI specifically calls on the Government to consider the following actions:
Acknowledging that the impact of the United Kingdom’s exit from the European single market and customs union will be widespread and varied. HAI endorses special consideration for the timber industry in the Irish Government’s Brexit discussions and outlines the following threats to the industry:
Immediate Threats:
• Weakness of Sterling – Every 1 pence movement in Stg costs the industry €3m.
• Banks may not be willing to support investment in the industry due to volatility in our key export market.
• Reduction in demand could lead to job losses in rural areas.
Long term threats:
• Tariffs – we expect sawn timber to carry no tariff and panel products to carry 7%.
• Post Brexit – 0’ adding cost and time.
• One study estimates a 5% increase in costs, this is likely to be considerably higher for timber due to the relatively high volume/value ratio.
• Logistics – non-tariff barriers (customs, labelling, standards, administration).
• Increased administration.
• Customs controls and inspections.
• Technical barriers e.g. standards and labelling.
6. Introduce voucher scheme for winter fuel allowance
HAI urges the introduction of a fuel voucher system under which those currently receiving a winter fuel allowance would be entitled to use a dedicated fuel voucher/smart card to purchase only fuel products from registered and tax compliant retailers and merchant fuel outlets, including many HAI members.
Currently the allowance is paid by way of a cash top up on the recipients’ current payment, which can be spent on anything, not exclusively solid fuel, and from any source of supply without any traceability or recovery for the State. HAI believes that this is an unintended and unnecessary loophole.
The Department of Social Protection has indicated that a total of 410,000 people currently claims €20 in fuel allowance per week (€520 in total during the allowable period), including those in receipt of social welfare and HSE payments. The allowance costs the State €213 million per year. A fuel voucher system would allow the Government to recoup some of this €213 million expenditure through legitimate outlets’ tax returns, ensuring that the money is spent with legitimate suppliers and not those operating in the shadow economy, and ensuring that the payment is fully used, as intended, to help in reducing fuel poverty.
HAI Recommendation:
The introduction of a fuel voucher scheme so that:
- The winter fuel allowance is used as intended.
- Registered and tax compliant fuel merchants are supported.
- Government can recoup some of its €200+ million welfare spend.
HAI believes that the recommendations detailed above are a coherent and right response to the challenges and opportunities that we face. They are both appropriate and pro-social with a particular relevance for much-needed rural regeneration.
HAI is willing to meet to discuss our proposals in more detail. For more information please contact HAI on 01 2980969.
(1) Eurobarometer Spring 2019
(2) Extract from Speech by Minister for Communications, Climate Action and Environment Richard Bruton T.D McGill Summer School July 2019
(3) Demand for Skills in Construction to 2020, CIF/DKM Economic Consultants
