Rebuilding Our Future

Hardware Association Ireland (HAI) began compiling our recommendations in March. It was clear at the beginning of the Covid-19 pandemic that our sector would suffer and that the true cost would not be known for a long time. However, our “Rebuilding Our Future” plan for Government, synopsised here, will go a long way in securing the resurgence of our sector into the future. In the coming weeks and months Hardware Association Ireland will engage strongly with the new Government in securing support for these proposals which have been developed by the board of HAI.

The future of the sector, and the economy in general is far from certain. Not only are we experiencing the aftershocks of Covid-19, the precarious nature of the Brexit talks are threatening economic recovery.

Ireland today is in need of economic growth, more and better housing, decisive reductions to our carbon emissions, a fairer deal for first time buyers and more people back at work.

There are four key recommendations. The first two focus on upgrading our existing housing stock, the third on supporting those buying a home and the fourth addresses the key area of re-skilling and upskilling the sector.

“Rebuilding our Future” aims to restore our economic growth and continue our journey towards making Ireland better for all of us.

This document has been reviewed by Dr Ronan Lyons, Assistant Professor of Economics at Trinity College Dublin. We thank Dr. Lyons for reviewing the report and making a number of helpful suggestions. HAI would also like to thank Colm O’Callaghan and Sinead Lew of PwC for their expert guidance.

Recommendation 1: Home Renovation Incentive (HRI) scheme for Renovations

  • Re-introduce and extend the HRI scheme by 36 months.
  • Lower the floor of the scheme and increase the ceiling.
  • Claim tax credit in same year as work completed with claim credited the following year.

HAI recommends the Home Renovation Incentive Scheme as the business model to deliver the strategy because:

  • It works – it has a proven track record
  • It is a core competence of key Government agencies
  • It is fast and effective – it lets money flow and flow immediately throughout the economy, and throughout the country.
  • It will help restore consumer confidence and encourage sensible and local spending
  • It is labour intensive and will grow employment.
  • It will make it cheaper for first time buyers to buy and upgrade older houses

Recommendation 2: Home Renovation Incentive (HRI) scheme – for Energy Retrofitting of Homes

HAI proposes the Home Renovation Incentive scheme as the model to deliver the extensive home energy retrofitting programme required to reduce our carbon emissions and upgrade the housing stock.

  • Reduce VAT to 9% on all carbon saving products such as heat pumps, insulation, wood burning stoves (all products as per Energy Saving Credits- Better Energy Homes).
  • Introduce a value-based incentive scheme for retrofitting with similar incentives to the HRI scheme. Adjust the grant system such that it will incentivise households with a C and D rating to attain a B rating. Works to be conducted only by a qualifying contractor who is registered for the scheme and can demonstrate tax compliance and VAT registration.
  • Previously SEAI granted works were practically excluded from the Home Renovation Incentive. To overcome this, we suggest an alignment of both.
  • Introduce measurements (KPIs) and targets for retrofitting activity at local government level.
  • Local Property Tax – lower the LPT for those who carry out an energy retrofit on their property that results in an improvement in the BER rating.
  • Capital Gains Tax on the sale of rental properties. Lessen the capital gains tax on the sale of rental properties from 33% to 20%. This to be applied to those who carry out a retrofit resulting in a BER improvement two years prior to the sale. This will encourage retrofitting, make the property more saleable and help unlock much-needed supply to the housing market.
  • HAI fully endorses St. Vincent DePaul’s recommendation to “Ensure sufficient funding is available to allow Local Authorities to complete the energy retrofitting of social housing stock and set a target of upgrading all existing stock in the next four years.

Cost: allocate €50 million for energy upgrades in 2020”. If ever there was a time for this it is now.

Encouraging greater energy efficiency in our homes will help restore confidence, inject cash into the economy and create thousands of sustainable green jobs.

It will also enhance our energy security by decreasing our dependence on imported fuel. And, it will decrease our carbon footprint.

Recommendation: Support for those Buying a Home

  • Continue with the Help to Buy Scheme
  • Include second-hand homes in the Help to Buy Incentive Scheme.
  • Adjust bank exceptions. Typically, banks make exceptions in terms of deposits/income in 20% of cases of mortgage applications. Usually this is used up by quarter 3.
  • Either increase to 33% to the end of 2021

Or:

  • Have a year round calculation of exemptions, and not a calendar-year one. This would prevent the ‘spending’ of exemptions by banks in Q1 each year.

Recommendation: Upskilling the sector and Re-skilling New Employees

It is essential that the industry can respond to changing demands. Up to the onset of Covid-19 growth in the sector was hindered by a shortage of skilled workers.

Today, with so many people out of work, there is a potential pool of new workers. A cohort of those currently out of work are unlikely to return to their previous careers, at least in the short to medium term. Some will need to be re-skilled to adapt to the needs of the economy.

  • We support the recommendations in the Construction Industry Federation’s report ‘Demand for Skills in Construction’. Despite the positive outlook for construction over the medium to long term, a skills shortage could threaten to derail this. In particular, HAI advocates the establishment of a Construction Skills Forum, to monitor progress and address barriers in the education and training system which are impeding the delivery of the required skilled employees.
  • HAI recommends a double deduction on tax for training for companies who upskill and train staff in renewable and clean energy products.

HAI believes that the recommendations detailed above are a coherent and right response to the challenges and opportunities that we face. They are both appropriate and pro-social with a particular relevance for much-needed regeneration throughout the country.

For a full version go to www.hardwareassociation.ie