The SCSI’s pre-Budget submission calls for joined-up thinking from Government to address the housing crisis, infrastructure deficits, fire safety and land transfer.
It’s often useful to review previous reports and submissions made by the SCSI over the years to see how accurate and insightful our recommendations and calls for change were at that time, and how the current economic and sectoral landscape has changed since. So, before we began to draft the Society’s pre-Budget submission 2018, I reviewed our submission from 2013. In the context of our current housing crisis, with over 100,000 people on the social housing waiting list, only 16,000 residential units being constructed (with a demand for 35,000), and with property prices rising, in some cases, at double digit growth, it was useful to be reminded that SCSI members predicted housing supply constraints over four years ago. Disappointingly, it’s frustrating to see the crisis get progressively worse, in spite of raising concerns and calling for action repeatedly over the following years. Four years later, the housing crisis is the principal issue addressed in this year’s SCSI submission. At the heart of any authoritative and reliable decision-making process, access to real-time, accurate and consolidated data is imperative. The SCSI is calling on the Government to invest in our future through the funding of joined-up, data-gathering projects so that our built environment can become a lot more predictable. This will aid those in senior positions to make the right calls in relation to planning, density, transport, housing types, affordability, tenure balance and lifestyle, and to create an environment fit for future generations. Sadly, this has been lacking and Ireland is displaying symptoms of post-recessional doldrums, which require immediate attention. Predictability is a recipe for any stable and functioning property or construction market, and this is something that Ireland has never had, which is evident in our volatile boom–bust cycles. The recently published Central Statistics Office (CSO) and GeoDirectory vacant housing statistics show discrepancies, and this can lead to obvious confusion regarding the true nature of the problem (Figure 1). Reliance on ESB connections to establish house completions has also recently been shown to give a highly inaccurate overestimation at a time when reliable supply data is vital.
Housing is still the single biggest issue facing our society and SCSI members are very vocal that to adequately address the supply issue, the Government needs to tackle the underlying costs of constructing homes. The SCSI reiterates that this could be done by reducing VAT from 13.5% to 0% for houses being delivered to the market at an affordable range up to €300,000 (nuanced by location), by introducing access to more affordable development finance, and by increasing the supply of development land to the market by reducing capital gains tax (CGT) for a defined period.
FIGURE 1: CSO and GeoDirectory figures in vacant housing in Ireland are wildly contradictory.
Recent reports suggest that the amount of ‘fiscal space’, i.e., the amount of revenue available to Government following a combination of tax cuts or spending increases, is just €300 million for 2018. This might sound like a lot, but in the context of overall Government expenditure of €58bn, this represents just 0.005% of total expenditure. During the recessionary years, Ireland underinvested in capital spending and the National Competitiveness Council recently highlighted this as a growing concern; Ireland needs to increase funding to remain competitive and to continue to attract investment. The SCSI’s pre-Budget submission 2018 calls on the Government to continue to increase capital investment and return to medium-term budgeting, as this provides clarity and certainty for businesses to tender for public works programmes.
The SCSI recommends that the Government continues to monitor the administration of public works tendering, to ensure that the process is rigorous, but not so administratively burdensome that it excludes small businesses or new entrants into the Irish construction sector.
Regional Ireland is still lagging behind with poor internet connectivity. The National Broadband Plan is a vital strategy to deliver upon the objective for all-Ireland web connectivity. The SCSI recommends that this strategy is supported in the Budget, to ensure that businesses everywhere have access to high-speed broadband to take full advantage of technological innovation and support economic growth more evenly around the country.
The SCSI recently called for a high-level review of all apartment blocks built during the boom years to identify potential safety issues. There have been some high-profile reports in the media in recent times where building defects were uncovered, and the Government is urged to be cognisant of this issue in the context of setting Budget 2018. Following the recent tragic events in Grenfell Tower in London, this is a priority issue for our policymakers, as apartment development will be one of the key factors in alleviating the housing crisis in our cities.
Of course, Brexit is the concerning factor that has the potential to affect many of Ireland’s economic metrics, such as housing supply, competitiveness and exports. In the final agreement when the UK leaves the EU single market, tariff rates on food and agricultural products need to be at 0% or at minimal rates. It is accepted that agriculture is the sector most exposed to the effects of Brexit and every effort should be made to mitigate or reduce these risks. Agriculture is heavily reliant on the EU Single Farm Payment and the inter-generational transfer of land is one that should be promoted so that the industry can move to a more sustainable and cost-effective model in preparation of the review of the Common Agricultural Policy in 2020, which is likely to be less supportive of Irish farming.
Members have highlighted many taxation barriers preventing the transaction of farmland. For example, the CGT rate is currently at 33%, which can result in a substantial tax liability. The SCSI recommends that this rate is reduced to 20% to allow or incentivise those landowners that have retired from farming, or have no desire to farm, to dispose of land to the market, so that younger farmers with ambitions to set up a viable commercial enterprise are provided with every opportunity to do so.
To read the SCSI’s pre-Budget submission in full, go to www.scsi.ie.
Edward McAuley BSc (Hons) Surv
Manager, Professional Groups, Regions & Standards, SCSI