Housing market still out of control
What is it about the big political and social problems afflicting
society that the solution is obvious to ordinary mortals but
seems incomprehensible to the Leinster House establishment and
the expert consultants they hire?
Dublin Government Environment minister Noel Dempsey acted quickly
last week on the findings made by Peter Bacon and Associates in
their Economic Assessment of Recent House Price Developments.
Dempsey's package of changes in tax relief, planning guidelines
and stamp duty will have some effect on dampening house prices
but it is doubtful as to whether they can stem the 83% increase
in house prices over the last eight years.
This is because the Dublin Government have not faced up to
reality of what is actually happening in the state's housing
market. The housing market is in a crisis and that this is the
downside of free markets and the Celtic Tiger economy.
So let's put the housing market in its proper context. House
prices are increasing out of proportion to the rest of the
economy because:
Successive Dublin Governments have not built enough local
authority houses, pushing low income families into the private
housing market and increasing prices at the low end of the
market;
Irish banks have been shown to be willing to break their own
guidelines when lending money thus increasing the cost of
mortgages and house prices;
Property developers have been buying building land at
increasingly higher prices and pushing up house prices;
Builders have been increasing house prices on their developments
with prices increasing hugely between the first and last phases
of developments;
Rents have increased and now many people in this sector cannot
afford rental accommodation.
The outcome of all of this is that home owners face the prospect
of negative equity where they will be saddled with huge mortgages
while the value of their houses could fall. In Britain during the
early 1990s the end of the housing boom led to a spate of
repossessions with families falling back on local authorities for
housing.
Last week's expert report and the government action plan did not
tackle any of these realities. The housing market is still out of
control. Developers, builders and bankers are still profiteering.
The Dublin Government must act because in the long run it is they
and we taxpayers who will carry the costs.
Bankers tout credit unions to EU
You have to hand it to the Irish Bankers' Federation (IBF). Not
content with representing Irish commercial banks who collectively
are one of the most pampered and powerful vested interests in
Ireland they are now looking for the EU to weigh in on the side
of Goliath against Irish credit unions.
The IBF are calling for credit unions to be taxed in the same
manner as retail banks. The IBF claims that there isn't a level
playing field in the Irish banking sector.
The position of the IBF was made forcefully by their spokesperson
Jim Bardon. He said, ``Our position has always been that if credit
unions want the power of banks they should be treated like
banks''.
The IBF's complaint has been made to the European's Union's
Competition Directorate. They are claiming that the favourable
taxation treatment of credit unions is a form of ``state aid''. At
present credit union members are not liable for DIRT tax on their
dividends from savings.
Frank Lynch, President of the Irish League of Credit Unions
(ILCU) criticised the IBF complaint. ``The submission attempts to
undermine the operating principles of credit unions by applying
banking regulations to a social, not for profit organisation''.
ILCU spokesperson Grace Perrott told An Phoblacht that ``If the
banks want a level playing field then let them play on the credit
unions' [playing field] where profits are given back to
customers, where the level of interest is limited by law, where
membership is restricted.''
Somehow such a scenario is not what the IBF had in mind. It is
interesting to note though that the hugely profitable banking
sector finds the 533 credit unions and their two million plus
members such a challenge. The credit union movement only exists
because so many people and their families were overlooked by the
mainstream banking sector. Now it seems the chickens have come
home to roost.
Donegal tops jobless league
New statistics recorded during the 1996 census and released last
week show Donegal has the highest unemployment rate in the 26
Counties. Joblessness in Donegal stood at 22%, followed closely
by the county borough areas of Limerick at 21%. Cork also
registered 21%. Next highest was Dublin and Waterford at 19%.
Sinn Fein Vice President Pat Doherty said that when you
considered the figures in the context that the number of
IDA-backed companies and jobs in the Northwest fell in 1997 it
showed conclusively that ``there is an urgent need for a policy
initiative involving all arms of the state which will create a
programme of affirmative action to correct the imbalances
inflicted on the Northwest by partition and the complacency of
successive governments and their industrial development
agencies''.
Concrete results
Bean King Tony O'Reilly's huge salary at Heinz and his various
other global investments are often the source of comment in An
Phoblacht's Workers In Struggle page. How nice it is to read then
that some of his executives at Independent Newspapers are also
enjoying six figure salaries and wage increases that their own
workers can only aspire to.
The 10 executive directors received a total of £3.7 million last
year compared to £2.26 million paid in 1996 when there were nine
such directors. The average payment to directors increased by 37%
form £251,000 to £344,000.
Other recipients of substantial wage increases in 1997 were
Readymix's six executive directors who average salaries increased
by 25% catapulting them into the six figure salary league. The
six concrete thinkers took home an average of £100,833 in 1997.
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