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Irish Budget 2024: Too little, too late?

With the Sinn Féin juggernaut rolling toward a general election, has it been too little, too late for the coalition when it comes to housing? Andrew Smith, Associate Director, Strategic Communications, poses this question and examines the Irish coalition Government’s efforts on housing.

With Budget 2020 informally labelled the ‘Brexit Budget’, in a nod to the United Kingdom’s departure from the EU, and subsequent budgets largely concerned with pandemic response and the significant capital expenditure associated with Covid-19, Budget 2024 was potentially seen as a return to more ‘business as usual’. Indeed, many within the corridors of the Departments of Finance and Public Expenditure and Leinster House, in particular, may have been looking towards Budget 2024 as the one which would set them up for upcoming elections in the face of a rising Sinn Féin. 

Of course, there’s no such thing as a free lunch, and events in Ukraine have had other plans, showcasing the never-ending reach of geopolitical incidents to our shores.

The Government finds itself in a strange position – almost more money than it knows what to appropriately do with given the backdrop of rising inflation, a stuttering tech sector, and a global tax regime barreling our way. Highest employment on record, healthy household savings, steady consumer spend, record corporate tax receipts – metrics any developed nation would, quite literally, pay for. The shackles still appear to be in place, albeit loosely if this week’s Budget 2024 predictions are anything to go by. 

Many economic commentators have advocated for staying in line with spending increases outlined in 2021. That target has been 5% per year and, were it not for events elsewhere, the 2024 Finance Bill could have been the one where forgiveness was offered if the shackles were really shook off. 

The general consensus is that Minister Michael McGrath will this week announce a spending increase around the 6% mark, in response to a cost-of-living crisis which, even through ten successive rate increases from the European Central Bank, hasn’t been contained. What then of housing, likely to be the key point of conflict in elections to come?

The Government has steadily ramped up housing expenditure. Several budgets in recent years have alluded to ‘record’ spending when it comes to housing: €5.2 billion in Budget 2021, €5.5 billion in Budget 2022, and €6.3 billion in Budget 2023. 

This is where it gets particularly difficult for the Government. Successive capital expenditure increases aimed at, arguably, the most pressing concern in the country and the results have been questionable to say the least. A rental system which is under unprecedented pressure, record homelessness figures, housing completions nowhere near what has been flagged as a minimum requirement for our current and future demand, and a tight secondhand market for those who fall outside of any available Government supports. 

The Government will point towards the dark days of 2020 and 2021 where progress was naturally stalled, and this is a fair point, although the aforementioned groups will most certainly despair with that narrative. The opinion polls are worth noting here as well, in particular the move of the ABC1s toward Sinn Féin. Both younger and older voters are now feeling the impact of a housing crisis, and Sinn Féin’s alternative budget proposal announced this week brings it much closer to the centre in terms of economic policy while still keeping housing as their core focus to reach voters.

There is pressing concern on a number of fronts. Front and centre to the minds of coalition politicians around the country will be the election beat. Knocking on doors for the local elections in summer 2024 and a potential national election later in the year will make for uncomfortable interactions – interactions which will be echoed through the ballot boxes. 

Another aspect likely keeping those who occupy the Department of Housing, Local Government and Heritage in Custom House Quay up at night will be the sheer stubbornness of the housing sector. Interestingly, ‘Housing’ was only added to this dedicated department in 2016, perhaps reflecting years of misspent youth. That department, now with Minister Darragh O’Brien at the helm, has had some serious political heavyweights in recent years: Simon Coveney and Eoghan Murphy when housing was included, and the likes of Phil Hogan, Dick Roche and Éamon Ó Cuiv when the housing remit was under Local Government. In the years since the global financial crash, housing has grown to be the one area which Government simply cannot get on top of.

The new Planning and Development Bill, is seeking to rectify that. There is certainly promise. Talk to most private sector developers, whether they are delivering 1,500 or 15 homes per year, and the issue which comes up most is generally a collection of ‘red tape’, ‘the system’, or ‘the process’. Organisations, private and public, have a genuine desire to build homes and fix the underlining problem of supply. But sometimes it is with a hand tied behind their back.

The new Large Scale Residential Development planning process, as well as a revamped An Bord Pleanála in the shape of An Coimisiún Pleanála, may potentially address some of the procedural issues. But the red tape is real, and just last week the Construction Industry Federation estimated around 70,000 homes are caught up between Judicial Reviews and An Bord Pleanála. While Judicial Reviews are being somewhat tackled in the Planning and Development Bill 2023, logic dictates that loopholes will be found.

So, another record budget for housing and a potential feeling of more of the same. There won’t be a coalition politician in the country who hasn’t looked at recent polls with some fear, and the Government now face a very short window to show progress before they’re knocking on doors. This is a familiar place to be in, but the days of swapping between two parties, with an odd, smaller, coalition partner thrown in are over. 

Money where your mouth is springs to mind – but has the clock run out?

Andrew Smith is an Associate Director with Turley’s Strategic Communications team in Dublin. For more information, please get in touch with him here. 

9 October 2023