sunday business post 28 09 2014

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Sunday Business Post*

Sunday, 28 September 2014

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Circulation: 34322

Area of Clip: 98900mm

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Budget building: constructionindustry piles on the pressureThebuilding industry has beenbusy lobbying for tax cuts and a

construction-friendly budget,but there are dissenting voices

Michael BrennanPoliticalCorrespondent

r~1 he ongoing budget nego

11tiations will get seriousthis week when seniorministers finally haveface-to-face meetingswith Public Expenditure

Minister BrendanHowlin about their

spending estimates.Until now, it has been their civil servants

who have been doing the tick-tacking.The big spenders - health minister

Leo Varadkar, social protection minister

Joan Burton and education minister JanOSullivan - are all due to lay out theircases for zero cutbacks and, inmost cases,extra spending.

But the countrys much-malignedbuilders have got there ahead of themThey have been laying the foundationsfor a construction-friendly budget forsome time.

The public face of the campaign hasbeen the Construction Industry Federations

(CIF) director general Tom Parlon,

a gamekeeper-tumed-poacher who wasa Progressive Democrat minister of stateduring the height of the property bubble

He has been in and out of LeinsterHouse lobbying for tax cuts for buildersand more funds for capital projects, aswell as meeting TDs and ministers atthe National Ploughing Championshipslast week

Parlon had a meeting with Noonan andHowlin last week, seeking to have the Vat

rate on building cut from 13.5 per cent to9 per cent There will be more lobbyingwhen Tanaiste Joan Burton addresses theCIF s annual conference this week in theAviva Stadium in Dublin.

Although Noonan appears unwillingto give builders another Vat cut after lastyears home renovation scheme, thereare plenty of other measures in the pot

Builders are highly exercised by the85 per windfall tax on land rezoningprofits, introduced by former environment

minister John Gormley while inoffice to remove the incentive for planning

corruption Their argument is thatthe tax stops people from selling land fordevelopment and that reducing it wouldflush more land into the market.

Minister of State for Planning, PaudieCoffey,saidhe did not agree with builders'demands to reduce the 85 per cent taxrate to 33 per cent

It needs to be looked at so that ownerswould be amenable to selling. But youdbe doing well to get it to 50 per cent,he said.

Coffey is a member of the cabinet

sub-committee on the Construction2020strategy, which has been meeting regularly

ahead of the budget.Were going to be prioritising areas

where demand exists. Its not just a questionof building anywhere and everywhere.

We need to bring the constructionsector back to a sustainable level, he said.

Spin versus reality on thehousing crisisThe campaign for a builders budgethas been made easier by the constantreports of rising house prices, rising rentsand housing shortages. Just last week, the

Society of Chartered Surveyors, whichmainly represents estate agents and auctioneers,

got considerable coverage ofits report warning that there would be aneed for at least 35,000 homes in Dublinby 2018, but that there was only planning

permission for 26,000. The subtext

seemed to be - snap up those preciousfew houses for sale while you still can.Sound familiar?

But this time there is a strong officialdissenting voice. The Housing Agencywas set up in 2010 as a safeguard againstthose in the property industry who weretrying to talk up a crisis.

Housing Agency chairman Conor Skehansaid the current shortage of homes

for sale in Dublin would be over withintwo years due to several factors, including

more elderly people downsizing and arise in the number of planning permissions.

The homes are in the pipeline. Weknow the names of the sites and thebuilders. Word has to go out about that, he said.

He warned house-hunters not tomake fools of themselves by rushingout to buy on foot of information fromvested interests.

We will be out at every opportunity toface down people who are trying to panicpeople into thinking they are missing theboat, and pressuring them to buy at too

high a price, he said.

Coffey said that the government wouldbe basing its decisions on the figures ofthe Housing Agency

The Housing Agency is independentand it has a mix of expertise, he said

The non-transparent budgetWhile the lobby groups are able to secure

meetings with ministers to influencethe shape of the budget, the entire

deliberative process is hidden from thepublic. One of the governments innovations

was to have ministers appearingbefore Oireachtas committees to discusspre-budget issues. The results so farhave been underwhelming, to say theleast, with very little information provided

Fine Gael Dublin South East TD EoghanMurphy has been campaigning for moretransparency around the budget for the


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past three years, but to little availWe still havent moved to the proper

transparent budget process, as in otherEuropean countries. One thing Id belooking for is a committee dedicated to

the year-round scrutiny of the budget, he said.

Murphy said it would have been niceif some of the Comprehensive SpendingReview submissions sent in by government

departments had been published.He said that all TDs should be able todebate the different options facing the

government and therefore move awayfrom the surprise factor.

Budget day should be boring. Itshouldnt be the piece of political theatrethat it is every year.

But ministers and their civil servants

secretly adore being the possessors of thebig budget secret, and show no signsof giving up their annual thrill.

Rather than encouraging ministers todebate the budget in public, there are annual

warnings about the need to preservethe secrecy and stop negotiating over the

airwaves. James Reilly and Joan Burtonused to have their knuckles rapped in thepast This year, Taoiseach Enda Kennycould not complain when Burton announced

a budget measure - allowingpeople to keep a 30 per child socialwelfare payment when they return towork - because she is the Tanaiste. So it

has been Leo Varadkar who been madean example of - pour encourager lesautres.

You reduce your chances of gaining aresult by talking about it in the media,one government source said.

The government also has to sort outsome promises that it made in last yearsbudget which still have not been implemented

Ihe most glaring is the provisionof free GP care for240,000 children undersix, which was supposed to be in placelast July. Labour TD Arthur Spring, whoraised it in the Dail last week, said he

was frustrated that there was now notimeframe at all

Its one of the things that is broughtup with me by people on the doorsteps,

at creches and in playschools. It wouldbenefit people of my generation who are

paying exorbitant mortgages and havehad their pay reduced, he said

The scheme has been costed at 37million, which is a fraction of what the

construction sector may get in this budget.There will be more money for the

construction of social houses and schools,after years of cutbacks in the capital budget.

It stood at 8.2 billion in 2009 buthas fallen since then to 3.3 billion - a59 per cent reduction

Despite the best efforts of builders,capital spending may never reach boomtime

levels againBut one trick to watch out for on Budget

Day on October 14 is the simultaneousrelease of the five-year capital spendingplan It will cover the period up till 2020- even though the present governmentsterm ends in 2016.

It is a modem version of Flanna Failsold trick of having a National Development

Plan containing bucketloads ofprojects for delivery over a long periodTDs can tell their constituents that thelong-awaitedroad school or health centre

is on the way. But the reality is thatsome of them will never be built

44Desite thebest efforts ofbuilders, capitalspending mayneverreachboom-timelevels again


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Brendan Howlin, Minister

for Public Expenditure

Picture: PhotocallFrom top: Joan Burton,

Minister for Social

Protection; Jan OSullivan,

Minister for Education; and

Leo Varadkar, Minister for

Health

sunday business post 28 09 2014

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