Concrete block levy will offset cost of mica redress scheme – Tanaiste

The Tanaiste has ruled out abandoning the Government’s new concrete block levy.

Leo Varadkar said the multimillion-euro cost of the mica problem has to be recouped in some way and the taxpayer should not have to cover all of the cost.

A levy on concrete blocks, pouring concrete and certain other concrete products was announced in Tuesday’s Budget by the Finance Minister.

He said it aims to offset the “significant cost” of the redress scheme agreed earlier this year for homeowners who have been affected by the issue of defective products used in the building of their properties.

The levy is set to raise 80 million euro annually.

It will be applied from April 3 at a rate of 10%.

Mr Varadkar said: “It’s going to cost hundreds of millions, if not billions of euros, to repair the homes affected by mica and we need to do that for those 7,000 or 8,000 families affected.

“We’re also going to need to do something to help people who live in apartments that are defective too.

“There is no quarry or two quarries that are going to come up with that kind of money, so we need to find a way to recoup some of the cost.

“It’s not fair that the taxpayer should cover all of the cost. And we believe that the cost should fall at least in part on the industry.”

He dismissed suggestion from members of the opposition that a levy should be placed on the profits of the construction industry, not on concrete products.

“I’ve heard this suggestion of putting an additional levy on the profits of the construction industry – that would be passed on too,” Mr Varadkar said.

“They would increase their prices to increase their profits to 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 by society.”

The Tanaiste made the remarks during Leaders’ Questions in the Dail on Thursday in response to Social Democrats TD Cian O’Callaghan, who asked why the Government is not directly pursuing those who were responsible for construction defects.

Meanwhile, Taoiseach Micheal Martin said the decision to levy concrete blocks was taken last year.

Speaking in Co Cavan on Thursday, Mr Martin said: “The budget has just been announced three or four days ago, that decision was actually taken around November when the memo was brought to Government in respect of the mica issue.”

He said the total cost of the mica and pyrite scheme, as well the defective apartments, could amount to six billion euro.

Mr Martin continued: “The Government felt that, somewhat like happened in insurance in the past, that the sector would have to make some contribution to that enormous bill that the taxpayer has to face.

“Necessarily to make sure that people can have a have a home to live in and have the defects remedied and renovated and that’s the context behind it.

“The details of it will be fleshed out in the forthcoming Finance Bill.”

While it is a levy on the sector, there are concerns that the cost will be passed on to the public who want to build a home.

Mr Martin defended the levy, saying the reasons behind it are “serious”.

He added: “It’s an enormous outlay that the Government has undertaken on behalf of taxpayers to help people in very difficult situations.

“I think sectors have to realise that good practice must prevail right across sectors.

“Government is putting enormous support into subsidising housing, particularly through the variety of affordable housing schemes, from local authorities to Land Development Agency, to help to buy, to the First Home Shared Equity Scheme.

“The Government is not slow in terms of providing enormous resources to bring down the costs for people to make housing more affordable.

“The precise impact of this, from what the department are saying, is quite low in respect of potential impacts on eventual house prices. But that’s the basis behind the decision.”

He also rejected suggestions that it will affect mica families while rebuilding their homes.

Earlier in the Dail, Mr O’Callaghan described it as “grossly unfair” that the Government would seek to put the burden of construction defects on to people who are struggling to buy a home.

“You’ve decided to introduce a levy on concrete blocks that will add a further 3,000 to 4,000 euro to the price of a home,” Mr O’Callaghan said.

“What planet does this make sense?

“Does the Government really propose to place the cost of shoddy building work and defective materials on to the shoulders of people who are struggling to buy a home?”