Republican News · Thursday 30 April 1998

[An Phoblacht]

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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