Irish property market is textbook case of how NOT to manage an economy

The mire in which successive Fianna Fáil Government’s policies, particularly in relying on property, have left us can begin to be remedied by putting in place an €11 billion investment programme that will deliver 100,000 jobs over four years, Fine Gael Environment Spokesman, Phil Hogan TD said.

The Fine Gael Environment Spokesman made his comments in Killarney while addressing the AGM of the Institute of Professional Auctioneers and Valuers.

“What happened in the last five years to the property market will, I believe, in time come to be seen of a textbook case of how not to manage an economy. However, the causes go far deeper with the failure of banking systems and the absolute disaster of overall Government policies leaving Ireland at our most perilous state since the 1930’s.

“The banking industry needs to be restructured with the issue of toxic assets reviewed. However, NAMA is not the way forward. I believe that the current NAMA model will lead to a bonanza for accountants and lawyers, maybe even for some auctioneers as they battle to maximise for their clients the value of assets being bought by NAMA. Fine Gael would rather see a system where the good performing loans are taken out into new banks and the existing banks have the responsibility of cleaning up their own mess.

“The fundamental requirement for the economy is to free up bank balance sheets to get lending flowing again. The Fine Gael plan will do that and will get credit flowing again.

“However, this is nowhere near enough to turn around our economy. We need to regain that spirit of innovation, build competitiveness and renew our infrastructure. And we need a jobs package. Fine Gael has spelled out how to do this in our Rebuilding Ireland document.

“In it we outline an investment of €11 billion over the next four years. And as a by-product of this investment there will be 100,000 jobs created in the short-term across the country. The funding of this investment would be done on a commercial basis so there would be no increase in the National Debt. We estimate that €11bn could be invested from a combination of the National Pension Fund, the European Central bank and a Consumer Bond. It beats an investment in bank shares.

“This upgrade of our infrastructure would increase our competitiveness, reduce our dependence on energy imports and create a cleaner environment. We will establish a new State holding Company – NewERA. The ownership of a wide range of existing and new State companies involved in energy, transport and communications will be vested in NewERA. Among the existing state companies that will be moved under NewERA will be the ESB, Eirgrid, An Post, Bord Gais, Bord na Mona, Coillte and the Metropolitan Area Networks (MANS). Some of these may be sold off as they become less essential to our economic well being nationally. So these could be sold off to fund further investment and development.

“In case you are bothered about bureaucracy, NewERA will be a holding Company and will employ less than 100 people. 100,000 new jobs will turn the tide of despair and hopelessness. €11 billion will create real investment and competitiveness.

“It is in everyone’s interest to get the property market moving again. At its peak, the investment market was worth €3 billion this year we will be lucky to reach €300 million. Through reform, dealing with the problem of oversupply and funding from banks we believe this can begin to happen. At the very least a VAT cut on the 13% rate needs to be implemented as this would, on average, reduce the prices of new houses by 10%.”