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Budget Statement 2018 (Continued)

Tuesday, 10 October 2017

Dáil Éireann Debate
Vol. 960 No. 1

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(Speaker Continuing)

[Deputy Paschal Donohoe: Information on Paschal Donohoe Zoom on Paschal Donohoe] When combined with the local authority matching contribution, this fund has the potential to provide approximately 5,000 more homes at more affordable levels by 2021.

Addressing the Financing of Housing Development

  We must, however, also make it easier to get funds, build homes and house families and I am, therefore, announcing a significant intervention. I am making up to €750 million of the Ireland Strategic Investment Fund, ISIF, available for commercial investment in housing finance. The funds announced will be made available to a new vehicle to be known as Home Building Finance Ireland, or HBFI for short. It will increase the availability of debt funding on market terms to commercially viable residential development projects whose landowners want to build homes. To get up and running quickly, it will draw on the extensive skill and expertise in residential development funding that currently resides in NAMA. ISIF and NAMA are already supporting the commercial delivery of 30,000 homes and apartments up to 2021 and these additional funds have the potential to fund the construction of an additional 6,000 homes. This initiative, which will have no impact on the ongoing wind-down of NAMA, will be designed to avoid distortion of the market and to comply with state aid rules. Work is under way on enabling legislation to effect these proposals and I look forward to the co-operation of the House on this matter.

The Property Market

  Stamp duty on non-residential property was lowered to 2% in 2011 to get the commercial property market moving again. It worked and now that the market is performing strongly, the time is right to focus resources elsewhere. Accordingly, I am increasing the level of stamp duty on commercial property transactions from 2% to 6% with effect from midnight tonight. This new rate is still well below the maximum rate of 9% charged between 2002 and 2008.

  However, in relation to commercial land purchased for the development of housing, I intend to introduce a stamp duty refund scheme because of the housing supply challenge. The refund will be subject to certain conditions, including a requirement that developers will have to commence the relevant development within 30 months of the land purchase. Details of my proposal on this and all the other tax measures I am announcing today will be set out in the Finance Bill.

  I also wish to signal some proposed changes to the vacant site levy. Taking account of house price and rent inflation since the level of the levy was first set in 2015, and now the clear urgency to see more strategic, serviced sites in and around our cities and towns brought forward for development to provide much-needed homes, the Government, has decided to more than double the current 3% levy rate that applies in the first year to 7% in the second and subsequent years. What this means in practical terms is that any owner of a vacant site on the register who does not develop their land in 2018 will pay the 3% levy in 2019 and then become liable to the increased rate of 7% from 1 January 2019. If they continue to hoard their land in 2019, they will pay 7% in 2020, resulting in an effective vacant site levy of 10% per cent over the previous two years. The message to vacant site owners is clear – to have their levy lifted, they need to get on with developing their lands urgently.

  I am reducing the seven year period over which owners must retain qualifying assets to enjoy full relief from capital gains tax to four years. This will reduce any impact it may have on limiting the supply of development land available for sale. In order to encourage owners of vacant residential property to bring that property into the rental market for a minimum of four years, I am introducing a new, time-limited deduction for pre-letting expenses.

  Mortgage interest relief for home owners ceased for new borrowers with effect from 2013. The relief that remained in effect for property owners who took out qualifying loans between 2004 and 2012 is scheduled to cease at the end of this year. However, it was stated in the programme for Government, and confirmed in last year’s budget, that it would be tapered out to 2020 for the remaining recipients. In line with that commitment, I am confirming today that this tapered extension will take the form of the continuation of 75% of the existing relief into 2018, 50% in 2019 and 25% in 2020.

Building a Better Health Service

  A good health service is vital to the success of any country. Spending on our health services is already at record levels and Irish health care spend per capita is already over 30% higher than the OECD average, but I know that our health service needs further improvement. Today, I am announcing an increase of €685 million in the allocation for the Department of Health. This brings total funding to almost €15.3 billion for 2018, reflecting an almost 5% increase. Securing value for money is now an absolute requirement that must be delivered to maximise the impact of these resources. The allocation includes an additional 1,800 staff aimed at a range of front-line services across the acute, mental health, disability, primary and community care sectors.

Deputy Finian McGrath: Information on Finian McGrath Zoom on Finian McGrath Hear, hear.

Deputy Paschal Donohoe: Information on Paschal Donohoe Zoom on Paschal Donohoe Some €90 million is being allocated to roll out a new access plan which will ensure that patients can avail of the medical care they need in the most appropriate setting for them. This will particularly benefit our most vulnerable patients as we enter the approaching winter. As part of the access plan, a total allocation of €55 million has been provided for the National Treatment Purchase Fund, almost trebling the amount allocated in last year’s budget.

The budget will also provide for a reduction in prescription charges for all medical card holders aged under 70 from €2.50 per item to €2 per item with a consequent reduction in the monthly cap from €25 to €20. It also allows for a reduction in the threshold for the drugs payment scheme from €144 to €134.

Deputy Finian McGrath: Information on Finian McGrath Zoom on Finian McGrath Hear, hear.

Deputy Paschal Donohoe: Information on Paschal Donohoe Zoom on Paschal Donohoe Some €40 million is being provided for primary care developments, which will allow a number of initiatives to go ahead. In particular, the Government looks forward to further progress in relation to the GP contract and we hope agreement can be reached on the introduction of additional services throughout 2018.

  I also acknowledge that continued investment in primary care, including further GP contractual developments, will require a multi-annual approach. That is why, with regard to the capital envelope, an additional €471 million has been made available to cover the period 2018 to 2021. This represents, on average, an additional €120 million each year. It will allow for investment in critical infrastructure, including the delivery of the national children’s hospital and many investments in primary and community care schemes. Further details will be provided by the Minister for Health later today.

  Improving health services, however, is only one of the ways in which we can make a healthier Ireland happen. With this in mind, I am increasing excise duty on a pack of 20 cigarettes by 50 cent, with a pro rata increase on other tobacco products. This will bring the price of cigarettes in the most popular price category to €12.

  Furthermore, in line with the commitment made in the programme for Government, my predecessor announced his intention to introduce a tax on sugar-sweetened drinks following the completion of an extensive public consultation process.

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