Showing posts with label budget 2007. Show all posts
Showing posts with label budget 2007. Show all posts
Friday, 8 December 2006
Irish car taxes to be more CO2 - weighted
Irish finance minister Brian Cowen has proposed linking annual car taxes more closely to CO2 emissions from 2008 as part of his 2007 budget announcement on Wednesday. Under the proposals, now out for consultation, mandatory car emission labelling would also be introduced. Budget allocations include E270m to a carbon fund to buy credits through the Kyoto Ireland
Thursday, 7 December 2006
Environmental sustainability central to Government economic policy?
This is what the Dept of the Environment said after the Budget speech:
"The comprehensive package of environmental measures contained in the Budget demonstrated that the environment is now at the centre of Government economic policy," stated the Minister for the Environment, Heritage and Local Government, Dick Roche, T.D. (today, 6th December '06). The Minister was commenting on Budget 2007.
"The comprehensive package of environmental measures contained in the Budget demonstrated that the environment is now at the centre of Government economic policy," stated the Minister for the Environment, Heritage and Local Government, Dick Roche, T.D. (today, 6th December '06). The Minister was commenting on Budget 2007.
"We saw today the bringing together of the most comprehensive package of environmental measures ever announced in a Budget. This package cuts across all major economic sectors. It shows that the environment, and in particular Climate Change, is not just an issue for one Government Department but is a matter which extends across the full breadth of Government.
"As we have seen today, sound fiscal management right across the economy has allowed this Government to generate unprecedented resources for improved public services. Likewise a sound approach to environmental and sustainable development will ensure that we protect Ireland's high quality environment, while strengthening the long-term sustainability of the economy.
"That's why today's Budget contains a whole range of environmental measures across transport, agricultural, industrial policy as well as in the area of Environment and Local Government.
"We have never seen a Budget with such a focused approach to the environment:
ü Proposals for linking VRT and the motor tax system to carbon emissions and mandatory carbon emission labelling;
ü A new tax break of 50% VRT relief for electric cars building on last year's initiative on hybrid cars;
ü Abolition of excise duty for kerosene and LPG used in home heating;
ü A commitment to purchase up to €270 million Carbon Credits;
ü A new enhanced Rural Environmental Protection Scheme, including a 15% increase in Forest Premiums (another contribution to our Climate Change objectives) and 17% in REPS payments to assist the implementation of the Nitrates Programme in support of improved water quality;
ü New support for bio-energy crops including (i) New establishment grants for Willow and Miscanthus (Elephant Grass), (ii) a huge increase in support for growing bio-fuel crops – an Exchequer top-up of €80 per hectare on top of the EU support of €45 per hectare, and (iii) new grants for the purchase of harvesting machinery for bio-crops.
ü A continuation of bio-fuels relief.
ü Additional funding, amounting to €20 million between now and 2009, for the very popular Green Homes initiative which support the installation of new energy technologies such as solar panels, bio-mass burners and heat pumps.
ü The extension of the bio-heat scheme for the commercial sector to include the provision of grants for other technologies such as solar panels and an extension of the scheme to community and sports centres at a cost of €4 million in 2007.
ü The introduction of a new pilot scheme by Sustainable Energy Ireland for energy efficiency programmes in the Small and Medium Enterprise sector at a cost of €3 million.
ü Corporation Tax relief for investment in renewable energy is being extended for a further 5 years.
ü Additional Local Government Fund support for certain local authorities for the operational costs of new water services infrastructure – in support of national policy which has seen Ireland's waste water treatment standards surpass 90% from only 25% 6 years ago.
"The broad thrust of the Government's approach to Climate Change is demonstrated in this Budget. Ireland can best meet its Climate Change obligations by working on a wide range of initiatives:
ü Major industry plays its part by the obligations placed on it by the European Emissions Trading System;
ü The Government in turn is taking action across the economy to reduce greenhouse gas emissions elsewhere, for example, through today's incentives for the production of bio-fuel crops, the proposed readjustments to the VRT and Motor Tax system and enhanced Green Home incentives and so on, and
ü Through the long-term commitment to purchase Carbon Credits, allowing Ireland to support clean technology in developing nations while cutting down on global greenhouse gas emissions.
"Approaches must be adopted under all three headings if we are to meet Ireland's green house gas reduction commitments in a sustainable way. Closing down Irish industry or damaging the economy, as the Opposition would have us do, is not a logical option."
"As Minister Cowen stated last year this Government has put in place in a significant number of environmental measures to help put Ireland to the forefront of environmental innovation in Europe.
"This Budget accelerates that process. It lays down an approach, which will ensure that we remain on the path to sustainable development. It shows that we are real about addressing real environmental issue. It shows that this Government is about making sure that our environmental polices work in tandem with our economic success – not against them," concluded Minister Roche.
How green was the budget?
This from The Green Party:
“Securing prosperity for all and ensuring an energy secure economy is what should have been at the heart of this budget. Unfortunately this budget falls short on both of these fronts.
Tax
“On the income tax front, the increase in personal tax credits and bands are long overdue but the gains from these increases mean that we are only now reaching the levels which credits and bands would have reached had they been index-linked from day one.
“The 1 per cent cut in the higher tax rate clearly favours high earners. A single person who earns just over the average industrial wage will only gain approximately €6 per week, whereas a high earner, such as a cabinet minister on €250,000 a year, will gain €50 per week. Consequently, at least half of the workforce will not benefit from this cut. A more progressive move in the current economic climate would have been to increase the standard tax band further.
“The Government also seems to be engaged in something of a confidence trick by introducing a two and a half percent health levy for those earning close to €2000 a week. This means that any claim the PDs might have of achieving something for their constituency is also immediately taken away by this new measure.
“In fact the PDs have very little to crow about in relation to their tax agenda, having been embarrassingly rebuffed on stamp duty where there is only a small €20 million measure on stamp duty on mortgage contracts; a measure that will benefit all house buyers speculators and first time buyers included.
“More imaginative tax cuts, again with direct social and environmental benefits, would have been to lower VAT rates on products and services linked with energy conservation and renewable energy should be restructured and reduced wherever possible.
Housing
“While a welcome short-term response to the housing crisis, it is worth remembering that the increases in mortgage relief were necessary because of this Government’s successive failures regarding the issue of housing price affordability. The increase in the mortgage interest relief is unimaginative and will not help buyers as much as a specific measures proposed by the Green Party, such as relief on stamp duty for older persons who are downsizing and for first time buyers who wish to purchase the property that is being made available as a result of such downsizing
Pensions
“Despite the Government’s promises to present this budget as a ‘grey budget’, the paltry rise in the non-contributory pensions to €200 a month is the minimum of what is required and is only fulfilling previous commitments. Ireland has the lowest spend on pensions across the EU at just 3.6 per cent of GDP, compared to the EU-25 average of 12.5 per cent. This budget represents no solution to the pensions’ crisis, offering no fundamental reforms to the existing system of tax reliefs which is costly and ineffective and provides no incentives for lower earners to invest in private pensions.
Carers
“The measures presented today for carers are long overdue but will not go nearly far enough in addressing the real difficulties faced by full-time carers who cannot access entitlements due to means-testing. Child poverty is rightly prioritised today as an area needing acute attention; the challenge now will be to ensure that that the one third of persons in consistent poverty who are children, are actually lifted out of poverty.
Climate change
“The Stern report has predicted that the costs of combating the effect of climate change are far higher than the cost of preventing it. We should be concentrating on reducing climate change emissions here in Ireland through more investment in renewable energy, public transport and higher building standards.This budget again represents no real solutions to this crisis.
“Instead of facing-up to our responsibilities on emissions, the Government is content to merely buy its way out of the problem. However, even measures which will enable us to do this have suffered unacceptable delays. Out of the €300 million announced for the environment in this budget, €270 million will be spent on purchasing Carbon Credits. Ireland’s failure to meet its Kyoto obligations to reduce greenhouse gas emissions means that two to four million euro will leave the Irish economy every week between 2008 and 2012 to purchase carbon credits. This exemplifies the current Government’s slow and irresponsible approach to climate change and its serious implications.
“The piecemeal efforts such as last year’s biofuels scheme, have suffered from unjustifiable delays in their implementation. The Government must ensure that the small number of new measures announced today on bio-energy crop production must not suffer similar delays. The VRT measures on electric vehicles represent a continuation of current policy, and are unlikely to lead to further take-up. A real response would have been a shift from VRT to excise on mileage which would provide real incentives to the take-up of alternative fuel and would address the environmental cost of driving over vehicle ownership.
“Although it has promised to examine the introduction of a carbon energy tax in the past, this Government has failed to deliver any plans in this area, again in this budget the Government has delayed making any decisions and merely repeated a 2003 commitment to begin examinations in this area. A feasibility study to calculate the cost of administering either a carbon quota or levy system with a few to introducing such a measure should have been conducted when promised.
“While we welcome the extension of the Greener Homes Scheme, even the piloting of a National Home Insulation Programme would have been a small step in the right direction.
“Climate Change proofing should be introduced at all levels of Government. In particular, budget-time offers an ideal opportunity to take stock of our carbon emissions and any missed targets should be accounted for and addressed through budget measures.
Education
“Ireland continues to fall behind most of Europe in its provision of pre-school education. According to findings of recent OECD report, with the exception of Ireland and The Netherlands, most countries provide two years of publicly funded pre-school access from the age of three. Ireland’s childcare costs are among the highest in Europe. The first few years of a child’s life are the most important for its development and this Government has consistently failed in its responsibilities towards early childhood development. Token measures will not address this appalling situation - what is required is free universal pre-school education in the year before school.
“This Government, despite its recent spending announcements, has presided over a situation where Ireland has the second highest class sizes in the OECD. This budget will not see a significant change in this area and the Government will not make good on its commitment to reduce classes for the under-nines. While the measures which target some disadvantaged and special needs children are extremely welcome – if not overdue – the Government’s neglect of this area over the duration of its office, mean that these areas will need continued investment and focus for years to come. Spending on primary level still falls far behind spending on second level and third level education, even though 44 per cent of those in education are in primary school.
Health
“The health service continues to struggle, despite the best efforts of those who work in it. Yesterday there were 240 people lying on trolleys in our hospitals. Waiting times for necessary procedures have not seen the significant cuts that Mary Harney promised when she took office. The Minister also promised to increase the amount of public acute beds in the system, from a position where we have three public beds for every private one, despite the fact that only 50 per cent of people have private health insurance. When will we see the proper priority given to our ailing health service and quality of service provided to all regardless of income?
For a man who has had it all in terms of resources available to him, the Minister for Finance has produced a budget which is less then the sum of its parts. It is not a budget directed at the long term sustainable development of the economy; it is solely directed at the short-term sustainability of this Government.
Saturday, 2 December 2006
Green Party on energy - Pre-budget
“It is imperative for a modern competitive economy to have reliable, secure and competitively priced energy available to it. Long-term actions and decisions regarding the energy sector must also be sustainable from an environmental perspective in order to provide safeguards for future generations.”
Towards 2016
Climate change has become one of the most pressing issues facing both Ireland and the international community. The Stern Report, commissioned by the British Government, has predicted that the cost of combating the effects of climate change are far outweighed by the costs of preventing it. Left unchecked, climate change will undoubtedly plunge the world into economic crisis. Currently, fossil fuels account for 90% of Ireland’s Total Primary Energy Supply (TPES). This year alone saw a rise of 34% in gas prices and nearly 20% in electricity price, placing Ireland amongst the top three most expensive countries for industrial consumers of electricity in Europe. It is projected that Irish energy will continue to grow at 2-3% annually until at least 2020, making it imperative that security and competitiveness of energy is urgently addressed.
While rising energy costs threaten microeconomic competitiveness, Ireland’s failure to meet its Kyoto obligations to reduce greenhouse gas emissions means that €2-4m will leave the Irish economy every week between 2008 and 2012.
In order to ensure, Security of Energy Supply, Environmental Sustainability and Economic Competitiveness, Ireland must develop secure, indigenous clean energy sources. There is significant potential across a wide range of renewable energy sources, which can be developed from a competitive cost base. In addition to providing a more secure and environmentally sustainable supply of energy, an Irish renewables energy industry could provide new markets for Irish farmers and, create tens of thousands of jobs.
The Green Party urges the government to:
1 Reduce the development costs of renewable energy projects, by allowing the individuals engaged to claim a deduction against their income for tax purposes for the costs of these projects.
2 Provide adequate feed-in fixed price support mechanisms for off-shore wind farms, wave tidal and biomass systems.
3 Move towards mandatory percentage requirement for use of biofuels.
4 Increase investment in sustainable energy development and ensure that the allocated EU funding in this area is properly invested.
5 Follow the Danish example in decision-making regarding energy planning, whereby long-term energy targets are agreed on a cross-party basis with mechanisms for mandatory resetting of policies to meet short targets.
Housing and the construction industry
The Green Party is calling for:
1 Incentives towards increasing the energy efficiency in newly-built and existing housing.
2 The institution of a grant for the insulation of all houses and building which receive a grade D or lower rating for energy efficiency.
3 Extra funding, in the form of capital grants, for the development of eco-friendly housing.
Transport energy
79% of oil used in transport goes into private cars and goods vehicles and only 3% into public transport. Despite the announced increase in spending on public transport infrastructure, it has remained at a much lower level than spending on road building.
1 The Government should prioritise investment in public transport over road building to provide Irish people with a proper public transport alternative.
2 Motor tax and VRT should be abolished on a phased basis, over a five year period. The revenue would be recouped by increasing excise duty on fuel, excluding biofuel. This would ensure that the environmental costs of driving, rather than ownership itself, is taxed.
The Green Party: 16/17 Suffol
Towards 2016
Climate change has become one of the most pressing issues facing both Ireland and the international community. The Stern Report, commissioned by the British Government, has predicted that the cost of combating the effects of climate change are far outweighed by the costs of preventing it. Left unchecked, climate change will undoubtedly plunge the world into economic crisis. Currently, fossil fuels account for 90% of Ireland’s Total Primary Energy Supply (TPES). This year alone saw a rise of 34% in gas prices and nearly 20% in electricity price, placing Ireland amongst the top three most expensive countries for industrial consumers of electricity in Europe. It is projected that Irish energy will continue to grow at 2-3% annually until at least 2020, making it imperative that security and competitiveness of energy is urgently addressed.
While rising energy costs threaten microeconomic competitiveness, Ireland’s failure to meet its Kyoto obligations to reduce greenhouse gas emissions means that €2-4m will leave the Irish economy every week between 2008 and 2012.
In order to ensure, Security of Energy Supply, Environmental Sustainability and Economic Competitiveness, Ireland must develop secure, indigenous clean energy sources. There is significant potential across a wide range of renewable energy sources, which can be developed from a competitive cost base. In addition to providing a more secure and environmentally sustainable supply of energy, an Irish renewables energy industry could provide new markets for Irish farmers and, create tens of thousands of jobs.
The Green Party urges the government to:
1 Reduce the development costs of renewable energy projects, by allowing the individuals engaged to claim a deduction against their income for tax purposes for the costs of these projects.
2 Provide adequate feed-in fixed price support mechanisms for off-shore wind farms, wave tidal and biomass systems.
3 Move towards mandatory percentage requirement for use of biofuels.
4 Increase investment in sustainable energy development and ensure that the allocated EU funding in this area is properly invested.
5 Follow the Danish example in decision-making regarding energy planning, whereby long-term energy targets are agreed on a cross-party basis with mechanisms for mandatory resetting of policies to meet short targets.
Housing and the construction industry
The Green Party is calling for:
1 Incentives towards increasing the energy efficiency in newly-built and existing housing.
2 The institution of a grant for the insulation of all houses and building which receive a grade D or lower rating for energy efficiency.
3 Extra funding, in the form of capital grants, for the development of eco-friendly housing.
Transport energy
79% of oil used in transport goes into private cars and goods vehicles and only 3% into public transport. Despite the announced increase in spending on public transport infrastructure, it has remained at a much lower level than spending on road building.
1 The Government should prioritise investment in public transport over road building to provide Irish people with a proper public transport alternative.
2 Motor tax and VRT should be abolished on a phased basis, over a five year period. The revenue would be recouped by increasing excise duty on fuel, excluding biofuel. This would ensure that the environmental costs of driving, rather than ownership itself, is taxed.
The Green Party: 16/17 Suffol
Institute of Professional Auctioneers and Valuers - Pre-budget submission - Useful material on Irish housing
THE CURRENT STATE OF THE HOUSING MARKET
Activity in the housing market remains very buoyant, with strong growth in mortgage credit, house prices and housing completions.
sidential mortgages, starting in September 2005, the annual rate of growth for mortgages stood at 27.1% in August. This is down from a high of 28.1% in March.
In the first 8 months of 2006, mortgages adjusted for securitizations and reclassifications, jumped by €16.2 billion, compared to €12.5 billion in the equivalent period in 2005. Mortgage lending increased by €2 billion during August. Mortgage credit outstanding stood at €115.1 billion at the end of August, equivalent to around 65% of projected GDP in 2006.
Housing completions hit another record high of 80,957 in 2005. However, the true number of completions is closer to 86,000. At the end of 2005 there was a one-off backlog of 5,000 in applications for electricity connections for dwellings that were completed in 2005 but which were not connected until 2006. Accordingly, the completions total in the early months of 2006 would have been exaggerated as these houses completed in 2005 were connected in the first and second quarters of 2006 and became part of the 2006 completions total.
Figures from the Department of the Environment, Heritage & Local Government show that in the first 8 months of 2006, completions totaled 58,613. This represents an increase of 22.8% on the corresponding period in 2005. It now appears clear that completions in 2006 will be around 90,000. Such a total would mean that since 2000, over 425,000 houses will have been built in Ireland. The rate of house building currently stands at 21 per thousand of the population, compared to less than 5 in the EU.
010,00020,00030,00040,00050,00060,00070,00080,00090,000199019921994199619982000200220042006fHOUSE COMPLETIONS
SOURCE: Department of the Environment, Heritage & Local Government
Against a background of rising interest rates and strong housing supply, there is now some evidence emerging that the housing market is showing greater signs of stability, suggesting that the forces of demand and supply are now approaching a situation of equilibrium. This would be very desirable. House prices nationally are likely to increase by around 12% in 2006 and growth of around 5% looks likely in 2007. The housing market now appears to be on the way to achieving a soft landing. This would be the most desirable outcome because, given the inordinate dependence of the Irish economy on residential housing activity, a hard landing for the housing market would cause serious economic difficulties. Consequently, it is incumbent on policymakers to facilitate a soft landing for the market.
HOUSING RELATED ISSUES FOR BUDGET 2007
Residential housing market activity is now making a very significant contribution to the Irish economy through its direct and indirect employment creation, through its direct and indirect impact on tax revenues and through its wealth effect on consumer confidence and spending. Any significant downward correction to the market either in terms of completions or more importantly prices would have a very negative effect on the overall health and stability of the economy.
Any housing related measures in Budget 2007 should seek to alleviate the growing pressures on first-time buyers in particular and also to preserve the overall stability of the market.
FIRST-TIME BUYERS
While activity in the housing market remains very strong there are some grounds for caution. In the face of rising interest rates, affordability is starting to come under pressure, particularly for first-time buyers. Every 0.25% increase in mortgage rates adds around €15 to a €100,000 mortgage. The latest data from the Department of the Environment, Heritage & Local Government show that in the second quarter of 2006 the average mortgage nationally stood at almost €210,000.
The latest data on housing affordability from EBS/DKM does indicate that affordability is deteriorating. In October 2006, this index estimates that nationally, mortgage holders required 29.6% of net income to meet net mortgage repayments. This is up from 22.6% in July 2005. For first time buyers the percentage has increased from 19.8% to 26.2%, and in Dublin the percentage for first-time buyers has jumped from 29.2% to 38.4%. With interest rates set to rise further, housing affordability will continue to deteriorate.
There are a number of ways that the Government could alleviate the growing pressures on first time buyers.
STAMP DUTIES
First-time buyers are exempt from stamp duty on a new home which they will live in for 5 years and which is no greater than 125 square metres in size. In Budget 2005, first-time buyers purchasing a second-hand house to live in were made exempt from stamp duty up to a price of €317,500.
A 3% rate is applied to houses between €317,501 and €381,000. A 6% rate is applied to houses priced between €381,001 and €635,000, and a 9% rate is applied to houses priced above €635,000. Unfairly, for houses priced above €317,500, the various stamp duty rates are applied to the full price and not just the component above the exemption limit.
These stamp duties place an enormous burden on first-time buyers who are already struggling with the high price of houses and the consequent size of the mortgage. They cannot borrow on their mortgage to pay the stamp duty bill, so it imposes a major financial burden on them. The problems are particularly pronounced in areas where house prices are particularly high, such as in Dublin.
Radical changes are necessary in this stamp duty regime.
Stamp duties for first-time buyers should be abolished altogether. The stamp duty regime is distorting the purchasers’ house buying decisions and is forcing them to buy smaller houses and in locations that necessitate a socially damaging and expensive commute.
From a cost point of view, such a move would be easily financed in an environment where the exchequer finances are in such a strong position. It is estimated that €945 million is taken in by the Department of Finance on stamp duties relating to residential housing transactions. First-time buyers account for around €70 million of this tax take. The €70 million paid by first-time buyers is insignificant in the context of total tax revenues, but is a very significant amount of money for first-time buyers.
For non-first time buyers, the various thresholds should be indexed every year in line with projected house price inflation.
The proposed measures would help first-time buyers get on the housing ladder and would alleviate some financial pressures. Furthermore, first-time buyers would get greater access to the second hand market. This would alleviate some of the commuting problems for first-time buyers.
One of the dangers in any changes to the stamp duty regime is that it could just add to house price inflation, thereby offsetting the benefits of the stamp duty change. The risks of this happening at this juncture are lessening as the market appears to be approaching supply-demand equilibrium and there is now greater purchaser price resistance in evidence than for quite some time.
ENCOURAGING GREATER MOBILITY
A properly functioning housing and rental market is essential for mobility of labour. Labour mobility is in turn essential for balanced regional economic development. Availability of rental property and greater housing turnover are essential to encourage workers to move around for work, either within or between countries. Research has shown that workers will become more mobile if there is a supply of affordable rental properties and if housing transaction costs are moderate. The current Irish stamp duty regime is penal and acts as a serious disincentive to turnover of housing. The reduction in Capital Gains Tax from 40% to 20% increased the turnover of capital assets, improved economic efficiency and resulted in a higher tax take under this heading. An across the board reduction in stamp duties on residential property could have a similar effect, by leading to older people trading down and freeing up larger properties for younger families. The current stamp duty regime acts as a major disincentive to trading down and consequently undermines mobility.
The increased activity resulting from a restructuring of the stamp duty regime should ensure that the tax take would be maintained and, if carefully chosen, a lower rate of stamp duties could actually result in an increased tax take.
IPAV proposes the following rates and threshold replace those currently in use:
Up to €250,000 Nil
From €250,001 - €500,000 3%
From €500,001 - €1,000,000 5%
In excess of €1,000,001 6%
In addition, for non first-time buyers, the various thresholds should be indexed every year in line with projected house price inflation.
MORTGAGE INTEREST RELIEF
For financially stretched first-time buyers the mortgage interest relief regime is not adequate.
At the moment the maximum amount of interest allowable at the standard tax rate for a single first-time buyer is €4,000 and €8,000 for a married couple. Consequently, it is possible for a single first-time buyer to get relief up to a maximum of €66.66 per month (€133.33 for a couple), which works out at a maximum of €800 per year for a single first-time buyer for the first 7 years of the mortgage. Thereafter the annual saving falls back to €508 euro. Given the size and increased burden of mortgages for first-time buyers, this relief is totally inadequate.
A doubling of mortgage interest relief for first-time buyers would help alleviate the financial distress caused by rising interest rates and rising house prices. Given that the benefits would be spread over a number of years, it would not result in acceleration in house price inflation. A commitment should also be given to index mortgage interest relief for all mortgage holders in line with projected house price inflation.
RENT A ROOM SCHEME
Where a room in a person’s principal private residence is let as residential accommodation, gross annual income of up to €7,620 is exempt from tax and does not affect an individual’s entitlement to mortgage interest relief or Capital Gains Tax exemption for a principal private residence.
The introduction of the rent a room scheme is a very effective method of keeping costs down when a first home is purchased and also facilitates the purchase of a bigger home than originally intended. It is a very positive scheme for cash strapped first-time buyers.
The tax exemption under this scheme should now be doubled to give further much needed financial assistance to first-time buyers. 14
Activity in the housing market remains very buoyant, with strong growth in mortgage credit, house prices and housing completions.
sidential mortgages, starting in September 2005, the annual rate of growth for mortgages stood at 27.1% in August. This is down from a high of 28.1% in March.
In the first 8 months of 2006, mortgages adjusted for securitizations and reclassifications, jumped by €16.2 billion, compared to €12.5 billion in the equivalent period in 2005. Mortgage lending increased by €2 billion during August. Mortgage credit outstanding stood at €115.1 billion at the end of August, equivalent to around 65% of projected GDP in 2006.
Housing completions hit another record high of 80,957 in 2005. However, the true number of completions is closer to 86,000. At the end of 2005 there was a one-off backlog of 5,000 in applications for electricity connections for dwellings that were completed in 2005 but which were not connected until 2006. Accordingly, the completions total in the early months of 2006 would have been exaggerated as these houses completed in 2005 were connected in the first and second quarters of 2006 and became part of the 2006 completions total.
Figures from the Department of the Environment, Heritage & Local Government show that in the first 8 months of 2006, completions totaled 58,613. This represents an increase of 22.8% on the corresponding period in 2005. It now appears clear that completions in 2006 will be around 90,000. Such a total would mean that since 2000, over 425,000 houses will have been built in Ireland. The rate of house building currently stands at 21 per thousand of the population, compared to less than 5 in the EU.
010,00020,00030,00040,00050,00060,00070,00080,00090,000199019921994199619982000200220042006fHOUSE COMPLETIONS
SOURCE: Department of the Environment, Heritage & Local Government
Against a background of rising interest rates and strong housing supply, there is now some evidence emerging that the housing market is showing greater signs of stability, suggesting that the forces of demand and supply are now approaching a situation of equilibrium. This would be very desirable. House prices nationally are likely to increase by around 12% in 2006 and growth of around 5% looks likely in 2007. The housing market now appears to be on the way to achieving a soft landing. This would be the most desirable outcome because, given the inordinate dependence of the Irish economy on residential housing activity, a hard landing for the housing market would cause serious economic difficulties. Consequently, it is incumbent on policymakers to facilitate a soft landing for the market.
HOUSING RELATED ISSUES FOR BUDGET 2007
Residential housing market activity is now making a very significant contribution to the Irish economy through its direct and indirect employment creation, through its direct and indirect impact on tax revenues and through its wealth effect on consumer confidence and spending. Any significant downward correction to the market either in terms of completions or more importantly prices would have a very negative effect on the overall health and stability of the economy.
Any housing related measures in Budget 2007 should seek to alleviate the growing pressures on first-time buyers in particular and also to preserve the overall stability of the market.
FIRST-TIME BUYERS
While activity in the housing market remains very strong there are some grounds for caution. In the face of rising interest rates, affordability is starting to come under pressure, particularly for first-time buyers. Every 0.25% increase in mortgage rates adds around €15 to a €100,000 mortgage. The latest data from the Department of the Environment, Heritage & Local Government show that in the second quarter of 2006 the average mortgage nationally stood at almost €210,000.
The latest data on housing affordability from EBS/DKM does indicate that affordability is deteriorating. In October 2006, this index estimates that nationally, mortgage holders required 29.6% of net income to meet net mortgage repayments. This is up from 22.6% in July 2005. For first time buyers the percentage has increased from 19.8% to 26.2%, and in Dublin the percentage for first-time buyers has jumped from 29.2% to 38.4%. With interest rates set to rise further, housing affordability will continue to deteriorate.
There are a number of ways that the Government could alleviate the growing pressures on first time buyers.
STAMP DUTIES
First-time buyers are exempt from stamp duty on a new home which they will live in for 5 years and which is no greater than 125 square metres in size. In Budget 2005, first-time buyers purchasing a second-hand house to live in were made exempt from stamp duty up to a price of €317,500.
A 3% rate is applied to houses between €317,501 and €381,000. A 6% rate is applied to houses priced between €381,001 and €635,000, and a 9% rate is applied to houses priced above €635,000. Unfairly, for houses priced above €317,500, the various stamp duty rates are applied to the full price and not just the component above the exemption limit.
These stamp duties place an enormous burden on first-time buyers who are already struggling with the high price of houses and the consequent size of the mortgage. They cannot borrow on their mortgage to pay the stamp duty bill, so it imposes a major financial burden on them. The problems are particularly pronounced in areas where house prices are particularly high, such as in Dublin.
Radical changes are necessary in this stamp duty regime.
Stamp duties for first-time buyers should be abolished altogether. The stamp duty regime is distorting the purchasers’ house buying decisions and is forcing them to buy smaller houses and in locations that necessitate a socially damaging and expensive commute.
From a cost point of view, such a move would be easily financed in an environment where the exchequer finances are in such a strong position. It is estimated that €945 million is taken in by the Department of Finance on stamp duties relating to residential housing transactions. First-time buyers account for around €70 million of this tax take. The €70 million paid by first-time buyers is insignificant in the context of total tax revenues, but is a very significant amount of money for first-time buyers.
For non-first time buyers, the various thresholds should be indexed every year in line with projected house price inflation.
The proposed measures would help first-time buyers get on the housing ladder and would alleviate some financial pressures. Furthermore, first-time buyers would get greater access to the second hand market. This would alleviate some of the commuting problems for first-time buyers.
One of the dangers in any changes to the stamp duty regime is that it could just add to house price inflation, thereby offsetting the benefits of the stamp duty change. The risks of this happening at this juncture are lessening as the market appears to be approaching supply-demand equilibrium and there is now greater purchaser price resistance in evidence than for quite some time.
ENCOURAGING GREATER MOBILITY
A properly functioning housing and rental market is essential for mobility of labour. Labour mobility is in turn essential for balanced regional economic development. Availability of rental property and greater housing turnover are essential to encourage workers to move around for work, either within or between countries. Research has shown that workers will become more mobile if there is a supply of affordable rental properties and if housing transaction costs are moderate. The current Irish stamp duty regime is penal and acts as a serious disincentive to turnover of housing. The reduction in Capital Gains Tax from 40% to 20% increased the turnover of capital assets, improved economic efficiency and resulted in a higher tax take under this heading. An across the board reduction in stamp duties on residential property could have a similar effect, by leading to older people trading down and freeing up larger properties for younger families. The current stamp duty regime acts as a major disincentive to trading down and consequently undermines mobility.
The increased activity resulting from a restructuring of the stamp duty regime should ensure that the tax take would be maintained and, if carefully chosen, a lower rate of stamp duties could actually result in an increased tax take.
IPAV proposes the following rates and threshold replace those currently in use:
Up to €250,000 Nil
From €250,001 - €500,000 3%
From €500,001 - €1,000,000 5%
In excess of €1,000,001 6%
In addition, for non first-time buyers, the various thresholds should be indexed every year in line with projected house price inflation.
MORTGAGE INTEREST RELIEF
For financially stretched first-time buyers the mortgage interest relief regime is not adequate.
At the moment the maximum amount of interest allowable at the standard tax rate for a single first-time buyer is €4,000 and €8,000 for a married couple. Consequently, it is possible for a single first-time buyer to get relief up to a maximum of €66.66 per month (€133.33 for a couple), which works out at a maximum of €800 per year for a single first-time buyer for the first 7 years of the mortgage. Thereafter the annual saving falls back to €508 euro. Given the size and increased burden of mortgages for first-time buyers, this relief is totally inadequate.
A doubling of mortgage interest relief for first-time buyers would help alleviate the financial distress caused by rising interest rates and rising house prices. Given that the benefits would be spread over a number of years, it would not result in acceleration in house price inflation. A commitment should also be given to index mortgage interest relief for all mortgage holders in line with projected house price inflation.
RENT A ROOM SCHEME
Where a room in a person’s principal private residence is let as residential accommodation, gross annual income of up to €7,620 is exempt from tax and does not affect an individual’s entitlement to mortgage interest relief or Capital Gains Tax exemption for a principal private residence.
The introduction of the rent a room scheme is a very effective method of keeping costs down when a first home is purchased and also facilitates the purchase of a bigger home than originally intended. It is a very positive scheme for cash strapped first-time buyers.
The tax exemption under this scheme should now be doubled to give further much needed financial assistance to first-time buyers. 14
Budget 2007 – ‘Towards Sustainability’
Budget 2007 – ‘Towards Sustainability’
Comhar the Sustainable Development Council (SDC) has made proposals in regard to the content and modalities of the forthcoming National Development Plan 2007-13 in which we emphasised the importance of ensuring that our quality of life in general, and in regard to environmental and social domains in particular, is protected and enhanced. We have done this in the knowledge that quality of life, and high quality generally, are central to our ability to complete globally. If we achieve sustained quality of life, broadly defined, we will also achieve a competitive economy. Our food and tourism industries, our ability to attract and retain highly skilled people in all sectors, depends fundamentally on the perception and the reality that Ireland is a high quality country in all respects.
Fiscal decisions are the key shapers of economic, social and environmental performance. If the signals at this level do not actively promote sustainable behaviour, no amount of rhetoric or programmes in other areas will be effective.
We hope that Budget 2007 will be an important step in advancing quality of life and in giving shape to the medium term quality of life objectives in the National Development Plan; our recommendations are framed in this context.
We support Minister Cowen’s view that enhanced support for those most vulnerable should be a particular focus of this budget.
Comhar SDC Recommendations
A. Carbon proof all new fiscal measures to ensure that they do not incentivise a rise in greenhouse gas emissions and other pressures on the environment, and ideally encourage reduction.
Benefits
The idea is to simultaneously advance economic and social development, and reduce pressure on the environment. This will improve quality of life, reduce our exposure to potentially large bills for overshooting our Kyoto commitment in regard to greenhouse gasses, other emissions (we face demanding ceilings under the National Emissions Ceiling Directive) and conservation of biodiversity where compliance with the Biodiversity and Water Framework Directives pose major challenges.
The proposals that follow are in this spirit.
B. Change the growth trajectory of fuel use and carbon emissions in the transport sector – adjusting taxes to move towards a fuel and carbon efficient car fleet.
The Irish road transport sector is the main source of growth in greenhouse gas emissions. Unless this trajectory can be modified, it will be impossible for us to contribute usefully to the abatement of greenhouse gasses and to reduce vulnerability to imported oil. There are many facets to changing the trajectory, including congestion prices, which manage demand on roads to the point that it flows freely and busses can operate effectively, more clustering of households and jobs in the vicinity of public transport nodes so high quality cost-effective and frequent mobility services can be provided. However, one key to moving quickly to make our new fleet more fuel and environmentally efficient is to change the taxes we pay to buy and operate a car.
The EU Commission has proposed that vehicle taxes in the European Union be restructured on the basis of CO2 emissions as soon as possible . While holding revenue from vehicle taxes constant and therefore not affecting public revenues, this can provide an incentive to consumers to shift their purchase preferences to low-carbon emitting vehicles. Rather than the current system of assigning vehicle tax rates by engine size, tax rates should be determined by the CO2 emissions produced by the vehicle. CO2 emissions bands with associated vehicle tax rates should be established, which in turn should be aligned with car labelling to improve consumer information and lead to further CO2 emissions reductions. It is important that vehicles be taxed by CO2 emissions performance rather than any particular technology, which is currently the case with the VRT reduction for hybrid and flexi-fuel vehicles, so that the best vehicle performance is incentivised and there is no market distortion. We have estimated the CO2–differentiated VRT and motor tax rates that could provide CO2 emissions reductions with the current (2005) vehicle stock in Ireland yet remain revenue neutral .
The Comhar SDC Proposal
Table 1: Proposed revised vehicle tax rates by CO2 emissions bands and resulting CO2 emissions reductions.
CO2 emissions band (gms CO2 per km) VRT rate (%) Motor tax (€/annum) Vehicle stock (2005) New vehicles (2005) CO2 change (Mt/yr)
0-100 0 0 0 0 0
101-120 10 50 0 0 0
121-135 18 80 196273 13021 2.72
136-150 20 200 296677 22615 0.82
151-165 25 300 595096 58956 0.72
166-185 30 500 319296 54254 -1.79
186-225 40 800 219310 11569 -3.83
226-above 45 1100 34830 2407 -0.14
Total 1661482 162822 -1.53
Notes:
1. Estimated vehicle tax revenue (VRT + motor tax) from passenger cars in 2005 = €1.73 billion
2. Estimated revenue from new CO2 –differentiated vehicle taxes = €1.77 billion.
3. Assumed elasticity of CO2 emissions intensity of the fleet with respect to vehicle taxes
-0.11 .
4. Vehicle emissions and number data from Fergal O’Leary (EPSSU, Sustainable Energy Ireland) are gratefully acknowledged.
The results presented in Table 1 show the reduction of CO2 emissions achieved, based on the current vehicle fleet in Ireland. It is clear that there are significant gains that can be made by restructuring the vehicle tax system to a CO2 emissions basis. This measure is designed to be revenue neutral – i.e. the revenue to the Exchequer remains the same as before.
Benefits
We will reduce annual greenhouse gas emissions by in the order of 1.5 million tonnes of CO2. The costs of buying commitments in the CDM market to make up our Greenhouse Gas overshoot are in the order of €15-19 per tonne CO2. Applying an average cost per tonne of €17 to 1 million tonnes savings (conservative estimate) achieved by this measure over the five Kyoto period years yields a saving to the Exchequer of €85 million. This policy is consistent with the polluter pays principle; if we do not do it, because the general tax payer will have to make up the deficit by buying credits on the international market, those who do not drive at all, or who drive carbon efficient vehicles, will end up subsidising those who drive large CO2 emitters. There may also be collateral benefits in regard to reduction of NOx emissions, and reduced average vehicle size in the form of gains in regard to use of road and parking space, accident fatalities etc. However, we have not yet done the research to identify whether they exist, and if so, what is their magnitude.
C. If stamp duty is to be reduced, such reduction should be contingent on meeting the highest energy efficiency standard, as validated by independently validated labelling via the implementation of the Energy Performance in Buildings Directive (EPBD).
Who would benefit from stamp duty reduction depends largely on the ‘tightness’ of the market. In Greater Dublin, where demand pressures continue to be intense, a reduction is likely to mainly accrue to the seller – reduction in stamp duty will show up in the form of a higher price for the seller. Where there is less demand pressure relative to supply, more of the gain will be passed back to the buyer in the form of lower prices. In neither case does the wider community capture any gain. If however, the reduction is used to stimulate demand for highly energy efficient buildings – e.g. with ‘A’ ratings as validated via EPBD, there will also be a dividend to society.
Benefits
The purchaser wins by occupying a house with lowered operating costs and higher comfort. The wider community wins by reduced greenhouse gas and other emissions – and the associated bills - and reduced vulnerability to oil and (especially) natural gas imports.
D. Creation of a Sustainable Development Fund (SDF) to finance projects and activities that advance competitiveness, reduce pressure on environment, and support social cohesion.
Examples of what we have in mind could include:
• Towns and villages that have been bypassed by Motorways have an opportunity to create a high quality environment and economy where walking, cycling are easy and safe, where key built and natural features are conserved, social spaces for business and social interaction can be recreated, where new businesses, child care and other socially relted services can be incubated and enterprise fostered.
• Cutaway bogs have an opportunity to: create a combination of wetlands rich in biodiversity and wildlife that reduce flooding potential, well interpreted to highlight contribution to education and tourism; cultivated land where bio-energy and other crops are grown, linked to village and town developments that foster associated enterprise and highlight the history and future contribution of these areas.
• Coastal communities need to diversity their economies and their social life to be less dependent on declining marine fish stocks, find new growth areas for their enterprise, develop new marine and tourism related skills and at the same time enhance the protection of biodiversity and landscapes.
• A sustainable energy zone, where all activity is characterised by exceptional levels of renewable energy use, and energy efficiency, all provided so as to make no net contribution to global warming - i.e. carbon neutral.
The ideal projects would involve a combination of local and national government, private enterprise and local community engagement and support, all professionally and coherently managed. Projects would be selected competitively by independent assessment, based on credible estimates of the net social, economic and environmental impact, the quality of the plan and of the individuals and organisations involved, and the ability to continue indefinitely after the initial investment injection.
The SDF would be a core part of the National Development Plan; Budget 2007 would provide start up funds to support the development of high quality proposals. Those chosen would commence implementation in 2008 and thereafter.
Benefits
Most of the interesting challenges and opportunities in regard to sustainability involve integrated and joined up thinking, involving a range of institutions, stakeholders and departments. But joined up government is not one of our national strengths – interdepartmental committees are well known as graveyards of serious imagination, focus and execution. This Fund would allow us to begin to harvest these opportunities. By the end of the NDP 2007-13, Ireland would be criss-crossed by a diverse range of integrated sustainable development projects that would demonstrate how key stakeholders can come together to meet ambitious shared objectives, there would be substantial gains in enterprise creation and reduced greenhouse gas emissions, biodiversity would be enhanced, and social life would be improved. Businesses that specialise in eco-efficiency construction and services would be fostered as this market developed and matured
E. All government investments and other purchases should encourage sustainability objectives.
What we have in mind includes the following:
a. All publicly funded and leased buildings – housing, education, health and office - should meet the highest standards of energy and resource efficiency and use of renewables. Sustainable Energy Ireland’s demonstration programmes for housing and the public sector show that we can achieve a 20-40 per cent gain in energy efficiency with proven methods. Use of water and other resources should be metered and monitored with a view to ensuring lack of waste, and biodiversity and nature conservation should characterise all development.
b. All government owned vehicles should meet a demanding standard of energy and carbon efficiency, and travel payments to public servants for official travel in their own vehicles should differentially favour fuel and carbon efficiency, and provide a premium for travel by public transport.
Benefits
Unless government leads by its own actions, it is difficult to expect others to follow. The demonstration and credibility effects will be important in transforming overall performance. The costs of operating and maintaining public buildings in the future will be reduced, and this will help maintain services and quality when budgetary pressures intensify in the future. Carbon emissions and the associated bills for ‘overshooting’ will be reduced, as will dependence on imported oil and gas.
F. Supporting Innovation and the Knowledge Society.
Innovation gives us choices that did not exist before. It needs to be embedded as a cultural norm if Ireland is to maintain its economic robustness and do so in fashions that reduce environmental pressure and enhances social cohesion. Every government and sectoral programme needs a fund to support the development of critical mass in delivering high quality R&D and companies need to be incentivised to sharply increase their activity. The EPA-administered R&D programme needs to be expanded to address gaps in capacity to assess sustainability performance and foster technologies and management systems that reduce pressures on environmental endowments. Specifically, R&D addressed to helping Ireland adapt to climate change, and to lead in technologies addressed to both adaptation and abatement will provide a platform for action and for new business.
Benefits
A continuing innovation dividend characterised by quality is essential if Irish entrepreneurs are to succeed in a global economy. It will not be possible to reduce pressure on environment without cost-reducing innovation, and this is also essential if climate change and other environmental and social objectives are to be met.
Comhar the Sustainable Development Council (SDC) has made proposals in regard to the content and modalities of the forthcoming National Development Plan 2007-13 in which we emphasised the importance of ensuring that our quality of life in general, and in regard to environmental and social domains in particular, is protected and enhanced. We have done this in the knowledge that quality of life, and high quality generally, are central to our ability to complete globally. If we achieve sustained quality of life, broadly defined, we will also achieve a competitive economy. Our food and tourism industries, our ability to attract and retain highly skilled people in all sectors, depends fundamentally on the perception and the reality that Ireland is a high quality country in all respects.
Fiscal decisions are the key shapers of economic, social and environmental performance. If the signals at this level do not actively promote sustainable behaviour, no amount of rhetoric or programmes in other areas will be effective.
We hope that Budget 2007 will be an important step in advancing quality of life and in giving shape to the medium term quality of life objectives in the National Development Plan; our recommendations are framed in this context.
We support Minister Cowen’s view that enhanced support for those most vulnerable should be a particular focus of this budget.
Comhar SDC Recommendations
A. Carbon proof all new fiscal measures to ensure that they do not incentivise a rise in greenhouse gas emissions and other pressures on the environment, and ideally encourage reduction.
Benefits
The idea is to simultaneously advance economic and social development, and reduce pressure on the environment. This will improve quality of life, reduce our exposure to potentially large bills for overshooting our Kyoto commitment in regard to greenhouse gasses, other emissions (we face demanding ceilings under the National Emissions Ceiling Directive) and conservation of biodiversity where compliance with the Biodiversity and Water Framework Directives pose major challenges.
The proposals that follow are in this spirit.
B. Change the growth trajectory of fuel use and carbon emissions in the transport sector – adjusting taxes to move towards a fuel and carbon efficient car fleet.
The Irish road transport sector is the main source of growth in greenhouse gas emissions. Unless this trajectory can be modified, it will be impossible for us to contribute usefully to the abatement of greenhouse gasses and to reduce vulnerability to imported oil. There are many facets to changing the trajectory, including congestion prices, which manage demand on roads to the point that it flows freely and busses can operate effectively, more clustering of households and jobs in the vicinity of public transport nodes so high quality cost-effective and frequent mobility services can be provided. However, one key to moving quickly to make our new fleet more fuel and environmentally efficient is to change the taxes we pay to buy and operate a car.
The EU Commission has proposed that vehicle taxes in the European Union be restructured on the basis of CO2 emissions as soon as possible . While holding revenue from vehicle taxes constant and therefore not affecting public revenues, this can provide an incentive to consumers to shift their purchase preferences to low-carbon emitting vehicles. Rather than the current system of assigning vehicle tax rates by engine size, tax rates should be determined by the CO2 emissions produced by the vehicle. CO2 emissions bands with associated vehicle tax rates should be established, which in turn should be aligned with car labelling to improve consumer information and lead to further CO2 emissions reductions. It is important that vehicles be taxed by CO2 emissions performance rather than any particular technology, which is currently the case with the VRT reduction for hybrid and flexi-fuel vehicles, so that the best vehicle performance is incentivised and there is no market distortion. We have estimated the CO2–differentiated VRT and motor tax rates that could provide CO2 emissions reductions with the current (2005) vehicle stock in Ireland yet remain revenue neutral .
The Comhar SDC Proposal
Table 1: Proposed revised vehicle tax rates by CO2 emissions bands and resulting CO2 emissions reductions.
CO2 emissions band (gms CO2 per km) VRT rate (%) Motor tax (€/annum) Vehicle stock (2005) New vehicles (2005) CO2 change (Mt/yr)
0-100 0 0 0 0 0
101-120 10 50 0 0 0
121-135 18 80 196273 13021 2.72
136-150 20 200 296677 22615 0.82
151-165 25 300 595096 58956 0.72
166-185 30 500 319296 54254 -1.79
186-225 40 800 219310 11569 -3.83
226-above 45 1100 34830 2407 -0.14
Total 1661482 162822 -1.53
Notes:
1. Estimated vehicle tax revenue (VRT + motor tax) from passenger cars in 2005 = €1.73 billion
2. Estimated revenue from new CO2 –differentiated vehicle taxes = €1.77 billion.
3. Assumed elasticity of CO2 emissions intensity of the fleet with respect to vehicle taxes
-0.11 .
4. Vehicle emissions and number data from Fergal O’Leary (EPSSU, Sustainable Energy Ireland) are gratefully acknowledged.
The results presented in Table 1 show the reduction of CO2 emissions achieved, based on the current vehicle fleet in Ireland. It is clear that there are significant gains that can be made by restructuring the vehicle tax system to a CO2 emissions basis. This measure is designed to be revenue neutral – i.e. the revenue to the Exchequer remains the same as before.
Benefits
We will reduce annual greenhouse gas emissions by in the order of 1.5 million tonnes of CO2. The costs of buying commitments in the CDM market to make up our Greenhouse Gas overshoot are in the order of €15-19 per tonne CO2. Applying an average cost per tonne of €17 to 1 million tonnes savings (conservative estimate) achieved by this measure over the five Kyoto period years yields a saving to the Exchequer of €85 million. This policy is consistent with the polluter pays principle; if we do not do it, because the general tax payer will have to make up the deficit by buying credits on the international market, those who do not drive at all, or who drive carbon efficient vehicles, will end up subsidising those who drive large CO2 emitters. There may also be collateral benefits in regard to reduction of NOx emissions, and reduced average vehicle size in the form of gains in regard to use of road and parking space, accident fatalities etc. However, we have not yet done the research to identify whether they exist, and if so, what is their magnitude.
C. If stamp duty is to be reduced, such reduction should be contingent on meeting the highest energy efficiency standard, as validated by independently validated labelling via the implementation of the Energy Performance in Buildings Directive (EPBD).
Who would benefit from stamp duty reduction depends largely on the ‘tightness’ of the market. In Greater Dublin, where demand pressures continue to be intense, a reduction is likely to mainly accrue to the seller – reduction in stamp duty will show up in the form of a higher price for the seller. Where there is less demand pressure relative to supply, more of the gain will be passed back to the buyer in the form of lower prices. In neither case does the wider community capture any gain. If however, the reduction is used to stimulate demand for highly energy efficient buildings – e.g. with ‘A’ ratings as validated via EPBD, there will also be a dividend to society.
Benefits
The purchaser wins by occupying a house with lowered operating costs and higher comfort. The wider community wins by reduced greenhouse gas and other emissions – and the associated bills - and reduced vulnerability to oil and (especially) natural gas imports.
D. Creation of a Sustainable Development Fund (SDF) to finance projects and activities that advance competitiveness, reduce pressure on environment, and support social cohesion.
Examples of what we have in mind could include:
• Towns and villages that have been bypassed by Motorways have an opportunity to create a high quality environment and economy where walking, cycling are easy and safe, where key built and natural features are conserved, social spaces for business and social interaction can be recreated, where new businesses, child care and other socially relted services can be incubated and enterprise fostered.
• Cutaway bogs have an opportunity to: create a combination of wetlands rich in biodiversity and wildlife that reduce flooding potential, well interpreted to highlight contribution to education and tourism; cultivated land where bio-energy and other crops are grown, linked to village and town developments that foster associated enterprise and highlight the history and future contribution of these areas.
• Coastal communities need to diversity their economies and their social life to be less dependent on declining marine fish stocks, find new growth areas for their enterprise, develop new marine and tourism related skills and at the same time enhance the protection of biodiversity and landscapes.
• A sustainable energy zone, where all activity is characterised by exceptional levels of renewable energy use, and energy efficiency, all provided so as to make no net contribution to global warming - i.e. carbon neutral.
The ideal projects would involve a combination of local and national government, private enterprise and local community engagement and support, all professionally and coherently managed. Projects would be selected competitively by independent assessment, based on credible estimates of the net social, economic and environmental impact, the quality of the plan and of the individuals and organisations involved, and the ability to continue indefinitely after the initial investment injection.
The SDF would be a core part of the National Development Plan; Budget 2007 would provide start up funds to support the development of high quality proposals. Those chosen would commence implementation in 2008 and thereafter.
Benefits
Most of the interesting challenges and opportunities in regard to sustainability involve integrated and joined up thinking, involving a range of institutions, stakeholders and departments. But joined up government is not one of our national strengths – interdepartmental committees are well known as graveyards of serious imagination, focus and execution. This Fund would allow us to begin to harvest these opportunities. By the end of the NDP 2007-13, Ireland would be criss-crossed by a diverse range of integrated sustainable development projects that would demonstrate how key stakeholders can come together to meet ambitious shared objectives, there would be substantial gains in enterprise creation and reduced greenhouse gas emissions, biodiversity would be enhanced, and social life would be improved. Businesses that specialise in eco-efficiency construction and services would be fostered as this market developed and matured
E. All government investments and other purchases should encourage sustainability objectives.
What we have in mind includes the following:
a. All publicly funded and leased buildings – housing, education, health and office - should meet the highest standards of energy and resource efficiency and use of renewables. Sustainable Energy Ireland’s demonstration programmes for housing and the public sector show that we can achieve a 20-40 per cent gain in energy efficiency with proven methods. Use of water and other resources should be metered and monitored with a view to ensuring lack of waste, and biodiversity and nature conservation should characterise all development.
b. All government owned vehicles should meet a demanding standard of energy and carbon efficiency, and travel payments to public servants for official travel in their own vehicles should differentially favour fuel and carbon efficiency, and provide a premium for travel by public transport.
Benefits
Unless government leads by its own actions, it is difficult to expect others to follow. The demonstration and credibility effects will be important in transforming overall performance. The costs of operating and maintaining public buildings in the future will be reduced, and this will help maintain services and quality when budgetary pressures intensify in the future. Carbon emissions and the associated bills for ‘overshooting’ will be reduced, as will dependence on imported oil and gas.
F. Supporting Innovation and the Knowledge Society.
Innovation gives us choices that did not exist before. It needs to be embedded as a cultural norm if Ireland is to maintain its economic robustness and do so in fashions that reduce environmental pressure and enhances social cohesion. Every government and sectoral programme needs a fund to support the development of critical mass in delivering high quality R&D and companies need to be incentivised to sharply increase their activity. The EPA-administered R&D programme needs to be expanded to address gaps in capacity to assess sustainability performance and foster technologies and management systems that reduce pressures on environmental endowments. Specifically, R&D addressed to helping Ireland adapt to climate change, and to lead in technologies addressed to both adaptation and abatement will provide a platform for action and for new business.
Benefits
A continuing innovation dividend characterised by quality is essential if Irish entrepreneurs are to succeed in a global economy. It will not be possible to reduce pressure on environment without cost-reducing innovation, and this is also essential if climate change and other environmental and social objectives are to be met.
Budget 2007
The Government of Ireland's Budget for 2007 will be presented by the Minister for Finance Brian Cowen T.D., on Wednesday, December 6th, 2006.
The Governing Council of the European Central Bank (ECB) will meet on the following day and is expected that its key interest rate will be raised to 3.5% - a 75% rise in 12 months.
Irish inflation is expected to exceed 4% per annum and with a property boom providing Cowen with an average of a €100,000 in taxes from every housing unit built in the State in addition to billions in stamp duty on other transactions, there will be a bonanza to soften up disgruntled voters, months before a general election that has to be held by June 2007.
The Governing Council of the European Central Bank (ECB) will meet on the following day and is expected that its key interest rate will be raised to 3.5% - a 75% rise in 12 months.
Irish inflation is expected to exceed 4% per annum and with a property boom providing Cowen with an average of a €100,000 in taxes from every housing unit built in the State in addition to billions in stamp duty on other transactions, there will be a bonanza to soften up disgruntled voters, months before a general election that has to be held by June 2007.
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