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
Saturday, 2 December 2006
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.
Economist: Stamp-duty cut could push up house prices
IIB Bank's chief economist is warning Minister for Finance Brian Cowen not to make any dramatic changes to the stamp-duty regime in next week's Budget.
The Government currently takes in almost €3.5bn from the tax every year.
Mr Cowen is coming under increasing pressure to reduce the duty for first-time buyers in order to ease the huge cost involved in buying a house.
However, IIB Bank's Austin Hughes says this could actually push up house prices as buyers would probably use the money saved to pay more for the house in the first place.
"Unless there is a greater supply of housing, the likelihood is that they will bid against each other and the price of houses will increase," he says.
The Government currently takes in almost €3.5bn from the tax every year.
Mr Cowen is coming under increasing pressure to reduce the duty for first-time buyers in order to ease the huge cost involved in buying a house.
However, IIB Bank's Austin Hughes says this could actually push up house prices as buyers would probably use the money saved to pay more for the house in the first place.
"Unless there is a greater supply of housing, the likelihood is that they will bid against each other and the price of houses will increase," he says.
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.
Noel Ahern reacts to the calls of charities
Mr. Noel Ahern T.D., Minister for Housing and Urban Renewal today, 28th November 2006, announced the allocation of an additional €30,000 in funding towards the administrative and general expenses of a number of organisations and bodies who provide information, research or representative services in the housing area. This amount is in addition to €1,610,000 previously approved bringing the total allocation for 2006 to €1,640,000. This funding will assist such organisations in the delivery of their housing objectives. The Grant in Aid allocations represent an increase of more than 6% over last years funding.
There are currently in the region of 19,000 units of accommodation being managed by approved voluntary housing bodies. In 2005, 1,350 units of accommodation were provided by the sector bringing the total number of units provided for the period 2003 to 2005 to 4,582.
Under Department of the Environment, Heritage and Local Government Voluntary Housing Capital Funding Schemes, approved voluntary housing organisations provide accommodation for renting to certain categories of tenants such as homeless persons, elderly persons, persons with disabilities and families on the housing authority waiting list. Voluntary and co-operative housing bodies play an increasingly important role in the provision of rental accommodation and the overall response to national housing needs. The additional funding announced today, together with that allocated in August, will further assist the voluntary and co-operative bodies in providing effective programmes to deliver on needs.
There are currently in the region of 19,000 units of accommodation being managed by approved voluntary housing bodies. In 2005, 1,350 units of accommodation were provided by the sector bringing the total number of units provided for the period 2003 to 2005 to 4,582.
Under Department of the Environment, Heritage and Local Government Voluntary Housing Capital Funding Schemes, approved voluntary housing organisations provide accommodation for renting to certain categories of tenants such as homeless persons, elderly persons, persons with disabilities and families on the housing authority waiting list. Voluntary and co-operative housing bodies play an increasingly important role in the provision of rental accommodation and the overall response to national housing needs. The additional funding announced today, together with that allocated in August, will further assist the voluntary and co-operative bodies in providing effective programmes to deliver on needs.
Planning for housing in Budget 2006
Budget Estimates Disappointing for People on Housing Waiting Lists, says Threshold Chairperson
Threshold Chairperson, Aideen Hayden, has expressed concern that the Government's budget estimates announced today do not make sufficient provision to address the housing crisis. Funding for local authority and voluntary housing will increase by just €107 million to €1.27 billion in 2007, roughly a 10% increase. When housing inflation and land costs are taken into account, this figure probably represents a 'holding position'.
The Government's own think tank, the National Economic and Social Council (NESC), describes the current housing crisis as "a major national challenge which bears comparison with other great challenges that Ireland has faced and met in the past half century." NESC recommended in 2004 that an additional 73,000 houses for people in need be provided between 2005 and 2012, to bring the total stock to 200,000 dwellings. The figure of 200,000 units was based on projected increases in the Irish population and the limited responses to existing social housing needs. NESC also pointed out that an estimated capital investment of €1.4 billion a year would be required to achieve a net increase of 73,000 units.
But with almost 44,000 households currently on waiting lists, Threshold believes that the 2007 budget estimates for social housing do not go far enough. Today's announcement of €1.27 billion falls short of the NESC estimate of €1.4 billion and will not deliver the 10,000 houses needed to address the housing crisis in 2007. With estimates of €1 billion in 2005, the Department of Environment, Heritage and Local Government delivered only 6,477 social houses; so the maximum number of houses that could be delivered with €1.27 billion in 2007 is about 8,000 units. The budget estimate for social housing flies in the face of NESC's advice and at best represents a standstill.
Threshold welcomed the commitment in the social partnership deal 'Towards 2016' to provide 27,000 new social housing units by 2009 as a positive step towards meeting the NESC target (although 1,000 of these units are to be in the rented sector). Clearly the targets set out in Towards 2016 are also not going to be met on the basis of the estimates furnished. This represents a disappointing departure on a commitment so recently signed off.
Threshold Chairperson, Aideen Hayden, has expressed concern that the Government's budget estimates announced today do not make sufficient provision to address the housing crisis. Funding for local authority and voluntary housing will increase by just €107 million to €1.27 billion in 2007, roughly a 10% increase. When housing inflation and land costs are taken into account, this figure probably represents a 'holding position'.
The Government's own think tank, the National Economic and Social Council (NESC), describes the current housing crisis as "a major national challenge which bears comparison with other great challenges that Ireland has faced and met in the past half century." NESC recommended in 2004 that an additional 73,000 houses for people in need be provided between 2005 and 2012, to bring the total stock to 200,000 dwellings. The figure of 200,000 units was based on projected increases in the Irish population and the limited responses to existing social housing needs. NESC also pointed out that an estimated capital investment of €1.4 billion a year would be required to achieve a net increase of 73,000 units.
But with almost 44,000 households currently on waiting lists, Threshold believes that the 2007 budget estimates for social housing do not go far enough. Today's announcement of €1.27 billion falls short of the NESC estimate of €1.4 billion and will not deliver the 10,000 houses needed to address the housing crisis in 2007. With estimates of €1 billion in 2005, the Department of Environment, Heritage and Local Government delivered only 6,477 social houses; so the maximum number of houses that could be delivered with €1.27 billion in 2007 is about 8,000 units. The budget estimate for social housing flies in the face of NESC's advice and at best represents a standstill.
Threshold welcomed the commitment in the social partnership deal 'Towards 2016' to provide 27,000 new social housing units by 2009 as a positive step towards meeting the NESC target (although 1,000 of these units are to be in the rented sector). Clearly the targets set out in Towards 2016 are also not going to be met on the basis of the estimates furnished. This represents a disappointing departure on a commitment so recently signed off.
Irish Planning Institute
Big night in Wicklow Town last night where Deirdre Scully of the Irish Planning Institute launched a festive night at bps planning consultants. Among the planners in attendance were planners from Dublin City Council, South Dublin County Council, Dun Laoghaire-Rathdown County Council and a number of private planning firms.
Thanks to all who came.
Thanks to all who came.
Subscribe to:
Posts (Atom)