Department officials and Central Bank advised McGrath not to introduced mortgage relief in Budget

[Brendan Burgess]

Department of Finance officials and Central Bank strongly advised against mortgage relief package in budget

Minister for Finance was told the policy could worsen housing supply issues

www.irishtimes.com

Minister for Finance Michael McGrath was strongly advised by officials in his department and the Central Bank not to introduce any mortgage interest relief measures in this year’s budget.

He was told there was no “evidence base” to support any general measure, that it could worsen housing supply issues, would give rise to deadweight, and have the potential to be extremely costly.

...

One of the submissions said: “As previously advised the department is strongly of the view that the mortgage interest relief is not the best policy approach as it is directly contrary to the monetary policy stance, could further increase or prolong high inflation, runs counter to established international research and gives rise to deadweight.”
Its analysis had also found that among those most likely to benefit were people who had long benefited from low tracker rates, who were aged over 50, and owed less on average than other borrowers. The Central Bank said the department should try to find a solution through the social welfare system instead so that the people in most financial difficulty could benefit.

 

[Dr Strangelove]

He was told there was no “evidence base” to support any general measure,

In fairness the budget measure was not a general measure.

It is time-limited, capped, and limited to mortgage-holders who experienced an increase in rates.

 

[Harvard]

Department of Finance officials and Central Bank strongly advised against mortgage relief package in budget

Minister for Finance was told the policy could worsen housing supply issues

www.irishtimes.com

Minister for Finance Michael McGrath was strongly advised by officials in his department and the Central Bank not to introduce any mortgage interest relief measures in this year’s budget.

He was told there was no “evidence base” to support any general measure, that it could worsen housing supply issues, would give rise to deadweight, and have the potential to be extremely costly.

...

One of the submissions said: “As previously advised the department is strongly of the view that the mortgage interest relief is not the best policy approach as it is directly contrary to the monetary policy stance, could further increase or prolong high inflation, runs counter to established international research and gives rise to deadweight.”
Its analysis had also found that among those most likely to benefit were people who had long benefited from low tracker rates, who were aged over 50, and owed less on average than other borrowers. The Central Bank said the department should try to find a solution through the social welfare system instead so that the people in most financial difficulty could benefit.

As we say in Cork it was like throwing coal into Suttons in a lot of cases giving a break to those that certainly didn't need it and doing little to help those on vulture trackers.

Reminded of the type of stuff FF did in budgets under Bertie.

 

[Gordon Gekko]

These think-tanks don’t have Sinn Fein coming at them over the hill combined with a largely naive electorate.

Part of politics is about pacifying eejits with selection boxes so you can get a chance to do good work.

 

[Brendan Burgess]

it was like throwing coal into Suttons

That is a great expression

 

[CorkHome2022]

Not only that but the people calling for help for Vulture Prisoners did not factor in that no sooner was this put into the budget and the Vultures raised their rates again , the taxpayer picks up the tab , the Vultures are laughing and the Vulture Prisoners are no better off .

 

[WizardDr]

Neither DoF nor CBI would be noted consumer enthusiasts.

The vulture debacle being a case in point and both these organs are silent on that ballsup.

Mr Burgess would also be unenthusiastic but then anybody paying a tracker would be grateful.

We still have not seen the restoration of health costs at marginal tax rates.

 

[Harvard]

Can't disagree with this.

Central Bank cautioned against mortgage interest relief

The Central Bank told the Department of Finance a scheme for mortgage interest relief would almost exclusively benefit homeowners aged over 40 who were the least likely to have challenges paying back their home loan.

www.rte.ie

 

[Brendan Burgess]

The more I read about Budget stuff like this, the more convinced I am that our economic management strategy should be taken out of the hands of politicians who make short-term self-serving decisions.

Let some sort of independent expert group set the Budget parameters and let the government of the day manage within that. (That is what the Troika did and it was our best period of economic management.)

So they could have brought in this tax relief, but they would have had to fund it by cutting expenditure somewhere else or raising taxes.

Brendan

 

[Harvard]

The more I read about Budget stuff like this, the more convinced I am that our economic management strategy should be taken out of the hands of politicians who make short-term self-serving decisions.

Let some sort of independent expert group set the Budget parameters and let the government of the day manage within that. (That is what the Troika did and it was our best period of economic management.)

So they could have brought in this tax relief, but they would have had to fund it by cutting expenditure somewhere else or raising taxes.

Brendan

It's as populist a move as the SSIA's back in the day. There isn't much point in having the likes of the central bank, the fiscal advisory council and other bodies offer advice if we still end up with this sort of thing. I'm actually surprised at Mc Grath as minister given he often spoke about the need to balance the books at budget time etc. and then comes out with this.