If the Gov­ern­ment wants to solve the hous­ing cri­sis it has to get build­ing

Bray People - - OPINION -

WITH ev­ery pass­ing week the hous­ing cri­sis in Ire­land con­tin­ues to worsen with more and more fam­i­lies join­ing hous­ing lists as the prices of the few avail­able homes con­tin­ues to soar. To date, the Gov­ern­ment’s re­sponse to the grow­ing cri­sis has been woe­fully in­ad­e­quate and has failed to deal with the root causes of the steadily wors­en­ing prob­lem.

Mea­sures like the failed Help to Buy scheme have done lit­tle more than pour fuel on the fire and there isn’t any sign of in­no­va­tion or brav­ery from those tasked with find­ing a so­lu­tion to the cur­rent quandary.

At the mo­ment Leo Varad­kar’s Fine Gael – who ap­pear to be in full elec­tion mode de­spite the fact that a trip to the polls seems un­likely to hap­pen any­time soon – are all about tax cuts as they des­per­ately try to court the coun­try’s fa­mous ‘squeezed mid­dle’.

Doubt­less many thou­sands of hard pressed fam­i­lies would wel­come a cut in their taxes but any move to lower taxes would prob­a­bly cause more prob­lems than it would solve.

One of the most ba­sic tenets of mod­ern eco­nomics – as was ad­vo­cated dur­ing the Great De­pres­sion – is that gov­ern­ments should save dur­ing a boom and spend in a re­ces­sion.

This is pre­cisely what the Gov­ern­ment needs to do now if we are to find a way out of our cur­rent predica­ment.

While Dublin may be boom­ing, the rest of the coun­try – par­tic­u­larly ru­ral ar­eas – re­mains mired in the eco­nomic dol­drums.

The prop­erty mar­ket was the mo­tor that drove Ire­land’s boom and while we cer­tainly don’t want to re­turn to the lu­natic ex­cesses of that pe­riod we need to get the prop­erty sec­tor back on track.

At the mo­ment, de­spite phe­nom­e­nal de­mand for homes, there is very lit­tle ac­tiv­ity in the build­ing sec­tor. This has to change.

A ma­jor fac­tor in this lack of sup­ply is the Gov­ern­ment’s core pol­icy on deal­ing with the so­cial hous­ing cri­sis.

Rather than build­ing homes the Gov­ern­ment’s pol­icy re­lies mainly on buy­ing or rent­ing ex­ist­ing prop­er­ties to add to its so­cial hous­ing stock. This un­for­tu­nate pol­icy has had a num­ber of dis­as­trous side ef­fects.

It has helped ar­ti­fi­cially in­flate prices while cur­tail­ing sup­ply to pri­vate buy­ers and renters. This in turn means that peo­ple who can­not find or af­ford a home to buy or rent – as a re­sult of Gov­ern­ment in­ter­fer­ence in the mar­ket – are them­selves forced onto the hous­ing lists, mak­ing the prob­lem even worse.

Put very sim­ply, Ire­land needs more houses. Lots of them, both pri­vate and so­cial.

The Gov­ern­ment needs to for­get about tax cuts, get its wal­let out and start build­ing. If tax in­cen­tives are to be in­tro­duced they should be used to en­cour­age builders back into the mar­ket.

In­come tax cuts are un­likely to re­sult in any great spend­ing splurge as most peo­ple would prob­a­bly use the ex­tra cash to pay off debt. By con­trast, build­ing so­cial hous­ing and en­cour­ag­ing builders can not only help solve the hous­ing cri­sis it can help get the whole econ­omy back on track.

Tax cuts are po­lit­i­cally at­trac­tive but they’ll do lit­tle good in the long run. What money we have can be far bet­ter spent.

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