Labour warns FG on home seizures
Meath by-election battle ground for reposessions and the property tax
Published 10/03/2013 | 07:09
SOCIAL Protection Minister Joan Burton has publicly slapped down the Department of Finance's Secretary General John Moran, whose incendiary comments on repossessions have sparked deep divisions within Government.
Speaking to the Sunday Independent, Ms Burton voiced the anger within Labour ranks toward Mr Moran and insisted that a wave of repossessions "will not be allowed to happen".
However, in a clear sign of deep divisions within Government, junior finance minister Brian Hayes strongly defended Mr Moran, who, he said was "simply telling the truth".
"It (repossession) is an extreme option," said Mr Hayes, "the last option, but we cannot have recovery without the stick of dealing with people who are in houses they can no longer afford.
"Mr Moran did not mince his words, he told the truth.
How refreshing it is to have a senior civil servant willing to speak as directly as he did." Another senior FG minister echoed Mr Hayes' comments, saying: "You can upset a lot of people with the truth. What Mr Moran said was insensitive to people worried about losing their homes or investments — but that is not the same as saying that it wasn't true." Several Fine Gael backbenchers also came to Mr Moran's defence, saying he was simply "stating the facts".
Meanwhile, FF leader Micheal Martin accused the Government of "fake anger" in its criticism of Mr Moran, who, he said, was "merely repeating government policy".
None of this is good for the main government party, just as the crucial Meath East by-election campaign gets into full swing.
Amid fears that voter anger could lead to a protest vote against the Government, householders will this week begin to learn how much they have to pay in property tax.
The Sunday Independent has learned that Michael Noonan is facing a fresh challenge to the tax in the form of new legislation from rebel TDs in his own party.
The amendment proposed by Fine Gael rebels is aimed at "significantly altering" the terms of the tax from January 1, 2014 in order to ease the burden of the tax on Dublin homeowners.
But Labour's main concerns centre around the issue of repossessions. Based on Mr Moran's comments, the way will be paved for more than 3,600 repossessions of family homes a year. Current rates of repossession in Ireland show there were just under 300 properties seized last year.
Mr Moran bluntly told the PAC last week that the repossession rate in Ireland was 0.25 per cent, compared with 3 per cent in the UK and 5 per cent in the US. "Maybe we will move to those levels," said Mr Moran.
But the prospect of a wave of thousands of repossessions has now led Ms Burton to issue her sharp rebuke.
"The core objective of this Government's policies is to maintain people in their family homes and I confidently predict this is what will happen," she told the Sunday Independent. She said the objective of any arrears process was to "restore discretionary income to those between the ages of 35 and 50 who are major drivers of economic activity".
David Hall, of the Irish Mortgage Holders' Association, said that in the absence of a coherent debt-management system and a workable insolvency plan, the Government should not be threatening people with repossession.
He said: "Mr Moran should have more sense. Everyone keeps comparing our rate of repossessions with the UK and the US. We are not the same as either. We don't have 'jingle mail'." (The practice of returning house keys to the lender and walking away.) Trevor Grant, of the Association of Expert Mortgage Advisers, told this newspaper: "The increase in arrears is not at all surprising, given that borrowers have been in distress with their finances for five years at this stage. Savings, redundancy payments and the potential option of borrowing from family members have been exhausted." Siptu leader Jack O'Connor said on Friday that calls for repossessions of homes on which there are mortgage defaults were barbaric and reprehensible. He called on the Government "to come up with better solutions to the mortgage crisis than reverting to tactics of colonial lackeys".
Writing in today's Sunday Independent, UCD economist Colm McCarthy says it is clear that banks and other lending institutions have been showing "excessive indulgence" to strategic defaulters — those choosing not to pay their mortgage, even though they can afford to, because they believe a deal on debt forgiveness is coming down the line.
"Strategic defaulting is not victimless at all. The banks are (mostly) owned by the State, so the cost, if the strategic defaulters get away with it, falls on the taxpayers at large," Mr McCarthy writes.
In a second challenge to government unity, Dublin Fine Gael TDs are set to bring forward legislation to amend the terms of the tax in order to "ensure some element of fairness".
The bill amendment, to be brought by Eoghan Murphy with the support of his urban colleagues, is to seek: That 80 per cent of the money raised remains in the locality where it was raised, up from the 65 per cent rate proposed by Noonan.
* Councils should be given powers immediately to amend the rates being charged from January 1 2014, rather than from 2016 as proposed under the bill.
* A requirement on the State to detail to people exactly how their taxes, including now this property tax, are being spent every year.
Speaking to this newspaper, Mr Murphy said: "There is an awful lot wrong with this tax, which is really a social charge.
"We are insisting that more of the money stays where it is collected and also that the councils get the power to amend the rate much sooner than is proposed." Other Dublin TDs, including Olivia Mitchell and Mary Mitchell O'Connor, are actively seeking ways to alter the tax, branding it a "gross injustice" on the people of Dublin.
Peter Mathews (Dublin South) called for the Government to "dare to be courageous and bring in a supplementary budget that would park the property tax".
Kildare North TD Anthony Lawlor said that more than 65 per cent of the tax should be retained locally. He added: "People who pay for something like to identify where that money goes." And Longford backbencher James Bannon said: "From the moment a property tax was mooted, it was implicit that while it had to be introduced, it would be fair.
"The outcry from all parts of the country indicates that this is not the case."