Sunday Business Post*

Sunday, 28 September 2014

Page: 9
Circulation: 34322
Area of Clip: 98900mm
Page 1 of 3
Budget building: construction
industry piles on the pressure
The building industry has been
busy lobbying for tax cuts and a
construction-friendly budget,
but there are dissenting voices
Michael Brennan
Political
Correspondent
r
~1 he ongoing budget nego
11 tiations will get serious
this week when senior
ministers finally have
face-to-face meetings
with Public Expenditure
Minister Brendan
Howlin about their
spending estimates.
Until now, it has been their civil servants
who have been doing the tick-tacking.
The big spenders - health minister
Leo Varadkar, social protection minister
Joan Burton and education minister Jan
OSullivan - are all due to lay out their
cases for zero cutbacks and, inmost cases,
extra spending.
But the countrys much-maligned
builders have got there ahead of them
They have been laying the foundations
for a construction-friendly budget for
some time.
The public face of the campaign has
been the Construction Industry Federations
(CIF) director general Tom Parlon,
a gamekeeper-tumed-poacher who was
a Progressive Democrat minister of state
during the height of the property bubble
He has been in and out of Leinster
House lobbying for tax cuts for builders
and more funds for capital projects, as
well as meeting TDs and ministers at
the National Ploughing Championships
last week
Parlon had a meeting with Noonan and
Howlin last week, seeking to have the Vat
rate on building cut from 13.5 per cent to
9 per cent There will be more lobbying
when Tanaiste Joan Burton addresses the
CIF s annual conference this week in the
Aviva Stadium in Dublin.
Although Noonan appears unwilling
to give builders another Vat cut after last
years home renovation scheme, there
are plenty of other measures in the pot
Builders are highly exercised by the
85 per windfall tax on land rezoning
profits, introduced by former environment
minister John Gormley while in
office to remove the incentive for planning
corruption Their argument is that
the tax stops people from selling land for
development and that reducing it would
flush more land into the market.
Minister of State for Planning, Paudie
Coffey, saidhe did not agree with builders'
demands to reduce the 85 per cent tax
rate to 33 per cent
It needs to be looked at so that owners
would be amenable to selling. But youd
be doing well to get it to 50 per cent,
he said.
Coffey is a member of the cabinet
sub-committee on the Construction2020
strategy, which has been meeting regularly
ahead of the budget.
Were going to be prioritising areas
where demand exists. Its not just a question
of building anywhere and everywhere.
We need to bring the construction
sector back to a sustainable level, he said.
Spin versus reality on the
housing crisis
The campaign for a builders budget
has been made easier by the constant
reports of rising house prices, rising rents
and housing shortages. Just last week, the
Society of Chartered Surveyors, which
mainly represents estate agents and auctioneers,
got considerable coverage of
its report warning that there would be a
need for at least 35,000 homes in Dublin
by 2018, but that there was only planning
permission for 26,000. The subtext
seemed to be - snap up those precious
few houses for sale while you still can.
Sound familiar?
But this time there is a strong official
dissenting voice. The Housing Agency
was set up in 2010 as a safeguard against
those in the property industry who were
trying to talk up a crisis.
Housing Agency chairman Conor Skehan
said the current shortage of homes
for sale in Dublin would be over within
two years due to several factors, including
more elderly people downsizing and a
rise in the number of planning permissions.
The homes are in the pipeline. We
know the names of the sites and the
builders. Word has to go out about that,
he said.
He warned house-hunters not to
make fools of themselves by rushing
out to buy on foot of information from
vested interests.
We will be out at every opportunity to
face down people who are trying to panic
people into thinking they are missing the
boat, and pressuring them to buy at too
high a price, he said.
Coffey said that the government would
be basing its decisions on the figures of
the Housing Agency
The Housing Agency is independent
and it has a mix of expertise, he said
The non-transparent budget
While the lobby groups are able to secure
meetings with ministers to influence
the shape of the budget, the entire
deliberative process is hidden from the
public. One of the governments innovations
was to have ministers appearing
before Oireachtas committees to discuss
pre-budget issues. The results so far
have been underwhelming, to say the
least, with very little information provided
Fine Gael Dublin South East TD Eoghan
Murphy has been campaigning for more
transparency around the budget for the
Sunday Business Post*
Sunday, 28 September 2014
Page: 9
Circulation: 34322
Area of Clip: 98900mm
Page 2 of 3
past three years, but to little avail
We still havent moved to the proper
transparent budget process, as in other
European countries. One thing Id be
looking for is a committee dedicated to
the year-round scrutiny of the budget,
he said.
Murphy said it would have been nice
if some of the Comprehensive Spending
Review submissions sent in by government
departments had been published.
He said that all TDs should be able to
debate the different options facing the
government and therefore move away
from the surprise factor.
Budget day should be boring. It
shouldnt be the piece of political theatre
that it is every year.
But ministers and their civil servants
secretly adore being the possessors of the
big budget secret, and show no signs
of giving up their annual thrill.
Rather than encouraging ministers to
debate the budget in public, there are annual
warnings about the need to preserve
the secrecy and stop negotiating over the
airwaves. James Reilly and Joan Burton
used to have their knuckles rapped in the
past This year, Taoiseach Enda Kenny
could not complain when Burton announced
a budget measure - allowing
people to keep a 30 per child social
welfare payment when they return to
work - because she is the Tanaiste. So it
has been Leo Varadkar who been made
an example of - pour encourager les autres.
You reduce your chances of gaining a
result by talking about it in the media,
one government source said.
The government also has to sort out
some promises that it made in last year s
budget which still have not been implemented
Ihe most glaring is the provision
of free GP care for240,000 children under
six, which was supposed to be in place
last July. Labour TD Arthur Spring, who
raised it in the Dail last week, said he
was frustrated that there was now no
timeframe at all
Its one of the things that is brought
up with me by people on the doorsteps,
at creches and in playschools. It would
benefit people of my generation who are
paying exorbitant mortgages and have
had their pay reduced, he said
The scheme has been costed at 37
million, which is a fraction of what the
construction sector may get in this budget.
There will be more money for the
construction of social houses and schools,
after years of cutbacks in the capital budget.
It stood at 8.2 billion in 2009 but
has fallen since then to 3.3 billion - a
59 per cent reduction
Despite the best efforts of builders,
capital spending may never reach boomtime
levels again
But one trick to watch out for on Budget
Day on October 14 is the simultaneous
release of the five-year capital spending
plan It will cover the period up till 2020
- even though the present governments
term ends in 2016.
It is a modem version of Flanna Fails
old trick of having a National Development
Plan containing bucketloads of
projects for delivery over a long period
TDs can tell their constituents that the
long-awaitedroad school or health centre
is on the way. But the reality is that
some of them will never be built
44
Desite the
best efforts of
builders, capital
spending may
neverreach
boom-time
levels again
Sunday Business Post*
Sunday, 28 September 2014
Page: 9
Circulation: 34322
Area of Clip: 98900mm
Page 3 of 3
Brendan Howlin, Minister
for Public Expenditure
Picture: Photocall
From top: Joan Burton,
Minister for Social
Protection; Jan OSullivan,
Minister for Education; and
Leo Varadkar, Minister for
Health