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The Apple Tax Money will fix the problem.
That, in eight words, might sum up the entirety of the intellectual energy visible in the Irish General Election campaign as it relates to a housing crisis that – per a new report yesterday – has average rents in the capital city now exceeding €2,400 monthly.
The Labour Party’s solution – functionally identical to that of People before Profit – is to use the Apple Tax Money to nationalise the construction sector and set up a national construction company – presumably one as efficient as everything else the Government does. We’d like our housing built as efficiently as the health service is run, thank you very much.
Fine Gael, not to be outdone, would use the Apple Tax Money to extend its housing supports scheme. It would pour this money into its “help to buy” scheme – essentially giving purchasers some cash to help them afford the extortionate prices in the market. This is of course actually a bonanza for developers and builders – since giving two potential buyers extra money is just a way of allowing them to bid prices up further. Instead of being limited to a budget of, say, €350k, some people will now be able to spend more. Prices will rise as a result.
And then the Apple Tax Money will run out. That is not conjecture, but fact. The main party of government would like to spend a windfall tax on current spending to inflate the housing market – just three months after the leader of that party announced that this is precisely what it would not do.
But, as Pat Rabbitte once said, perhaps this is the kind of thing you say during an election campaign.
Now, the country could be having a real debate about housing. Housing, after all, is fundamentally a debate about resource allocation, which is a central function of Government. The problem is that our politicians are unwilling or unable to ask big questions about resource allocation when it comes to housing.
The first question in that debate is a simple question which our politicians refuse to ask: How many people must we provide homes for? Asking that question means talking about immigration, which means it cannot be put on the table because to do so would mean talking about limits on immigration which would – to use the common parlance – play into the hands of the far-right.
The second question is about whether existing housing policy has worked. Have rent caps worked, or have they discouraged people from putting properties on the market? Have rents risen or fallen? We cannot ask that question because it would mean countenancing the possibility that an approach to housing backed by all parties has fundamentally failed and doing so during an election campaign.
The third question is about planning reform: How many homes might have been built in Ireland in recent years but for planning objections and delayed planning permissions? We cannot ask that question because to do so might upset some local residents who are objectors, and cost votes. So that solution is off the table for discussion during an election
The fourth question is about building standards. The Green Party have insisted that Ireland only build expensive, energy efficient homes with layers of insulation in order to protect the climate. These homes are more expensive and take longer to build. At the same time we have driven energy prices up. This question cannot be asked because to ask it would risk slaughtering the sacred cow of climate change policy, and that cannot happen during an election.
The fifth question is about taxation and incentives to build, and whether there’s an argument for dramatically reducing the tax on developers to encourage more investors – national and international – into the Irish home construction market. But that would mean becoming the party of tax breaks for developers, and we can’t do that during an election.
And so, what are we left with? The Apple Tax Money and whatever other pennies the country can find down the back of your couch (not their own – yours) to toss at the problem.
It should by now be patently obvious to anybody with a brain that the Irish Housing problem is not, primarily, a problem driven by that single transferable Irish political excuse, the lack of resources.
It is instead driven by a simple dynamic: Our housing policy drives up demand through immigration and help to buy schemes, while suppressing supply with a byzantine planning process and an unwillingness to openly favour developers and landlords in the marketplace.
When you drive up demand and drive down supply – which are the twin aims of Irish policy – you end up with prices soaring through the roof. This is a basic law of economics which has been unchanged throughout human history.
The problem is that neither politician nor voter has any interest in addressing those problems. So the Apple Tax Money will have to do. Until it runs out, which it will.
It would all make you want to scream, if I’m honest.
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