The Budget has been and gone and practically everyone is agreed, there wasn’t a lot in it.
To be absolutely fair to Finance Minister Paschal Donohoe, with all the unknowns around Brexit pre-Budget (and at the time of writing this article) there wasn’t an awful lot of wriggle room for him, as he had to keep his powder dry in case Brexit brings an economic tsunami to Ireland. I do feel there was at least one very big opportunity missed. I cannot understand for reasons economic and political, why the Government didn’t choose to go “Big” on housing.
According to the official budgetary documents that I’ve read the Government is saying that around 21,000 housing units will be built this year. According to those in the know, we need closer to 35,000 houses built for the next number of years. Having spent years practicing as an accountant I can tell that 21,000 is a far, far cry from 35,000.
On the week I wrote this article the Irish State was able to borrow money for a twelve-year term for just over 0.2%. When rates are so low and international funds are so plentiful, the State could borrow, say, €10 billion, this could build 40,000 houses with at least half of the outlay coming back in various taxes (VAT, PAYE etc). Telling the Strategic Investment Fund to invest in houses, as a proxy pension fund, seems like a very obvious idea.
But to get that number of houses built in the short term needs a number of other issues addressed. It needs a far more rigorous enforcement of vacant sites laws, it needs a national commitment to high rise buildings in major city centres and it needs an immediate injection of money into apprenticeship schemes to attract young people into construction. These measures will not cure anything overnight, but if we don’t start now it’ll be a further year down the road before it’s done. And to enforce all of the above may I recommend An Enforcer, or more politely, a Housing Czar.
I’d like if that same Czar would also make some recommendations to the Government on other areas of the construction sector. He or she might tell the Minister that the Budget was too focussed on extensions of schemes such as Help to Buy. Such schemes merely result in increased house pricing and do nothing to address the lack of supply.
A second area for the Czar to advise the Minister for Finance on is something some readers will only have heard of in a historical context, that is bridging finance. When a person sells one house, to buy another, he or she can’t pay for the second home until the legal`s around the first sale are complete. The lack of bridging means everything slows down to a snail’s pace, clogging up the supply chain. Our mythical Czar could advise the Minister that bridging finance would be one small element in unlocking underutilised houses, allowing growing families to move and allow first timers into starter homes.
We are all aware of the need to mind our planet and carbon taxes are a future inevitability. However, it surprised me to hear one opposition spokesman (for he was a man) on radio, post Budget, saying that greater carbon taxes should be levied on bigger companies. It was pointed out to him that the likes of Google, Facebook and Microsoft are already running ‘near to green’ in clean energy usage, this politician then cited one of our larger construction supply companies as targets for his greater carbon tax. Adding extra carbon taxes on construction product producers is a direct tax on housing. This is where a little bit of joined-upthinking might be brought to bear by our heroic Czar. You cannot solve one major crisis by causing another!
Ian Lawlor, Managing Partner, JPA Brenson Lawlor, www.brensonlawlor.ie
This Business Support article featured in the November/December 2019 edition of The Hardware Journal.