Stamp duty not the only issue

It's happening already

It's happening already. The undeclared election is well on the way to doing what all recent campaigns have done: getting hung up on relatively marginal issues while ignoring far bigger ones, writes Fintan O'Toole.

So far, debate has focused on the reform or the abolition of stamp duty. It is a classic example of the way a topic is both over-simplified and given a prominence out of all proportion to its real significance. This happens because it interests people who have clout. Meanwhile questions, even in the area of housing policy, which are far more crucial to far greater numbers of people, barely get a look in.

The debate on stamp duty is simplistic because it has concentrated on how much to cut the tax and when to do it, not on the broader consequences. Shortly before last December's budget, that well-known hotbed of bleeding-heart pinko ideology, Davy Stockbrokers, pointed out that there are questions of social equity to be taken into the equation. It drew attention to the fact that stamp duty last year contributed €2.7 billion to the exchequer. Its abolition would probably have little medium-term effect on house prices, except to take the revenue from the State's coffers and put it into the pockets of developers and property-owners. "It may," said Davys, "amount to an inequitable cash transfer from the Government to vendors and developers."

Isn't there something a little odd about our political discourse when it's left to stockbrokers to raise the question of social justice?

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In the absence of any other kind of residential property tax, there is a case for being cautious (as Brian Cowen, to his credit, has been so far) about radical reductions in stamp duty which, let's remember, is not paid by owner-occupiers of new houses or of smaller second-hand houses. Yet whether or not there is a case for reform, there are at least four issues in relation to housing that are, on any objective assessment, far more urgent.

The first is the cost of building land. The cost of the site for an Irish house or apartment is typically about 40 per cent of the overall cost, compared with less than half that in most developed countries. The way of tackling this has been obvious since the Kenny report of 1973: price development land at 25 per cent above the rate for agricultural land. A few years ago, the All-Party Committee on the Constitution scotched the oft-repeated excuse for not doing this: that it would infringe on the constitutional right to private property.

Doing so would have a huge impact on the second key issue: affordability. Local authority estimates show that about a third of the new households formed over the lifetime of the outgoing Government cannot afford to buy a home. This is unsurprising.

In 1994, the average price of a new home was 4.2 times the size of the average industrial wage. By June 2005, it was over nine times higher, and in Dublin it was almost 12 times higher. As a result, the number of people in housing need - 106,000 households made up of 250,000 people, according to PJ Drudy and Michael Punch in Out of Reach: Inequalities in the Irish Housing System- is far greater than the number directly affected by any possible changes in stamp duty.

These people have to deal with the third obvious and urgent problem of housing policy: the exploitation of vulnerable tenants by unscrupulous landlords. The overall position of tenants has improved in recent years, but there is a large group of people - those with little financial clout - who continue to be fleeced.

Almost a third of rental accommodation inspected each year by local authorities is found to be sub-standard. Not only is legal enforcement scandalously rare, but in many cases the State itself is actually paying the rent through supplementary welfare allowances.

The fourth area of housing policy that ought to be a major political issue is the catastrophic failure of the Government's spatial strategy.

The basic policy requirement of integrating housing development with jobs and transport is further from being met now than it was when the strategy was unveiled in 2002.

As the Irish Planning Institute's president pointed out last week, population growth in counties with supposed "gateway" cities and towns has actually been slower than in some counties without them. Villages have continued to decline, while only a pathetic 4 per cent of the population growth since 2002 has happened in the five main cities. We continue, in other words, to build houses in the wrong places for people to live a sustainable lifestyle.

It would be easy to think of many more areas of housing policy - poor provision for Travellers and people with disabilities, the Government's rowing back on its commitments to social housing - that make more difference to more people's lives than stamp duty does.

But these kinds of issues are complicated (spatial strategy), threaten the interests of very wealthy developers (controlling the cost of land) or primarily concern people who are relatively powerless (sub-standard flats).

Talking about them would, moreover, suggest that the election might actually be about real change, and we couldn't have that, could we?