08 October, 2013

Incentivising construction? Be careful what you wish for

Looks like it might be back to the bad old days if the rumours about scrapping or reducing the 80pc rezoning tax introduced by the last Government is anything to go by.

If this does happen it’ll be back to the nods, winks, brown envelopes and the occasional headlock for any councillor  who plays the green card in the Council Chamber.

Removing this tax would be a betrayal of all the lessons learned about bad planning during the boom years. It would mean a return to the bad old days of land speculation and councillor-led rezoning. The rezoning tax as it is currently enacted in the NAMA legislation implemented the 1973 Kenny Report on Building Land. It would be foolish to dilute this legislation.

Rezoning contributed significantly to the pyramid scheme of land rezoning and inappropriate development that led to the collapse of Irish banks. The last thing we need is a return to the bad old days of boom-bust planning and development. This is in danger of occurring if the windfall tax introduced by the Green Party through the NAMA legislation is dropped. 

Tax incentives have been proposed for certain works to existing buildings in Limerick and Waterford City, and this scheme is awaiting EU approval. This proposal if implemented carefully could encourage employment in refurbishing older buildings. However  It would be crazy  if the  Government were to drop the land rezoning tax,  as this is the first defence against the inappropriate rezoning of greenfield lands.

Rezoning more land in Dublin or elsewhere does not make sense. Currently there’s 2,500 hectares of land zoned for housing in the four Dublin Counties. This could provide space for 130,000 housing units at fairly modest housing densities of fifty units per hectare. To put things in perspective, this would provide homes for a quarter of a million people. Anyone who suggests we need to encourage more rezoning is mad as a fish and needs a reality check. Sure, there’s a problem in getting banks to lend, but that’s a very different issue from proper planning.

Those houses? They're on the road out from Castlemaine to Dingle. If you squint you might see the tumbleweed. The trees have probably grown a bit since the last time I looked, but I haven't seen much sign life there.