The controversial 10 per cent levy on concrete products announced in the budget will not be abandoned, Taoiseach Micheál Martin has said, noting the decision had been made by Government last November against the backdrop of “an enormous outlay” by taxpayers to help people affected by building defects.
The Taoiseach was speaking after he addressed an OECD rural development conference in Co Cavan where his Cabinet colleague, Minister for Social Protection Minister Heather Humphreys also insisted that the Government was standing over the levy.
Asked whether the levy might be postponed given the widespread concern that it would add to construction costs during a severe housing crisis, Mr Martin said that while the budget had been announced just this week the decision was made last year.
“That decision was actually taken around November when a memo was brought to government in respect of the mica issue,” he said.
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[ Concrete block levy will be passed on to customers, small construction firm warnsOpens in new window ]
The cost of dealing with faults arising from the use of building materials mica and pyrite “and now also the defective apartments” would range from €4.5 billion to €6 billion.
“The Government felt that, something like what happened with insurance in the past, that the sector would have to make some contribution to that enormous bill the taxpayer has to face, necessarily, to make sure that people can have a home to live in and have the defects remedied and renovated”, he said. “That is the context behind it”.
Mr Martin said the details of the levy would “be fleshed out” in the forthcoming Finance bill .
The precise impact of the levy “from what the department is saying is, is quite low, in respect of potential impact on eventual house prices”, he insisted.
The Taoiseach did not accept that the levy would actually increase the rebuilding costs for those affected by mica.
“The resources we will be allocating to the mica situation will be truly comprehensive right across the board,” he said.
[ Government backbenchers raise concerns about concrete levyOpens in new window ]
Ms Humphreys reiterated the levy had been agreed last November. “It was part of the redress scheme for the mica. It is something that has been agreed and as the Taoiseach has outlined this is a decision that Government has made and we are standing over that,” she said.
Earlier, Tánaiste Leo Varadkar defended the levy amid Opposition criticism in the Dáil, saying the cost of defective housing “should fall at least in part” on the construction sector.
Mr Varadkar said “it’s going to cost hundreds of millions if not billions of euros” to repair mica housing defects for some 8,000 families. He said they also needed to do something to assist apartment owners also impacted by defective construction.
He said they had to find a way to recoup some of the cost and it was not fair that taxpayers should pay all of it.
There had been suggestions of other methods to do this including putting a levy on the profits of the construction industry but they would “pass that on and increase their prices to their profits and compensate themselves for the levy.
“So no matter what we do, when you decide to socialise the cost of something, the cost has to be borne in the round.”
[ Budget concrete levy concerns raised at Fine Gael parliamentary party meetingOpens in new window ]
He was responding to Social Democrats housing spokesman Cian O’Callaghan who called for the Government to abandon “this unfair levy”.
Mr O’Callaghan’s criticism follows complaints about the proposed levy by a number of Government backbenchers in Fianna Fáil and Fine Gael, and its potential impact on the price of housing.
Raising the issue during Leaders’ Questions in the Dáil the Social Democrats TD said the plan to impose the levy would make high cost housing “even more unaffordable” and would increase the price of a home by up to €4,000.
He asked “on what planet does this make sense? Does the Government really propose to place the cost of shoddy building work defects in materials on to the shoulders of people who are struggling to buy a home?”
Mr O’Callaghan also queried why the Government has not “directly pursued those responsible for construction defects”.
He added some quarries “producing defective materials still being allowed to operate” and defective materials are continuing to be used in the building of homes. He asked why this was being allowed and if the Government would “abandon your plans to impose this unfair levy”.
The Tánaiste said he had heard suggestions or allegations that such quarries were still operating. If that was the case it would have to be dealt with. “But the relevant authorities will need the evidence of that. And I’m not sure if that’s being provided to the relevant authorities.
“And obviously, as you know, any criminal prosecutions are not a matter for Government.”
He said the Government was open to suggestions on how to deal with the cost of dealing with defective construction but it would have to be paid for somehow.
A scheme is being developed to fund the repair of up to 100,000 apartments affected by defective Celtic-tiger era construction, with an average cost of €20,000 per apartment. Minister for Housing Darragh O’Brien said it would require specific legislation.
The concrete levy, which is due to come into effect from next April, is estimated to produce €80 million a year.
But Independent TD Sean Canney said that the Government will continue to have to provide for defective housing repairs into the future until it introduces effective building controls.
Labour leader Ivana Bacik said dealing with defective construction should not be done in such a way that it will “just pass on costs to those seeking to buy”.
Meanwhile, Minister for Finance Paschal Donohoe said he was “aware of the different feedback in relation to [the concrete levy], which of course you’ll always consider – but the key point behind the levy still does stand”.
He added: “It’s a really important part of the argument that I’ve made about the levy and its role in Budget 2023... What we need to do is [to] spend more and make big, very regular, recurring commitments [and] also ensure that we have the tax coming in to pay for it.”
