32nd Dáil -
Dáil Diary No 1- 29th March 2016.
Last week the Dáil opened for one day, Tuesday March 22nd, and I got the opportunity to speak for the ten minutes on the housing crisis in Ireland today. For 5 years, the last Government failed to deal with a problem that continued to worsen every day of the lifetime of the Fine Gael / Labour Government. Just like the Fianna Fail/ Green government before them, they were happy to pursue a neoliberal agenda which prioritises the interests of the Financial Institutions and Big Business., and not the interest of the people of Ireland, whose living standards were eroded by Austerity. Hence, the low priority given to the peoples need for quality, affordable housing. While their 'Keep the Recovery Going' line came a cropper in the election, as little more than 20% experienced it, the biggest achievement of the Fine Gael / Labour Government was how it managed political spin and controlled the mainstream media, locally and nationally, which happens to have a vested interest in the status quo and neoliberalism. Here’s my ten minute Dáil contribution. -
"I also want to avoid repeating what we have been saying here for the past five years and I want to look at what we should do now. We should learn from our mistakes over the past five years. I remember on 15 January 2014 having a serious argument with the Minister for Finance about inviting and encouraging the investment funds to avail of huge tracts of property in Ireland, having to pay no tax on it, no tax on their profits on the rental and no capital gains if they stayed for seven years. It was a crazy arrangement.
The idea that we now have a professional landlord and that everything will be cleaned up and it will be great for everybody does not make much sense if a person cannot afford to pay this new fancy landlord who is charging 40% more than was being charged before. The price has gone off the Richter scale. There are huge problems in every sector of housing and there are huge challenges for the next Government. We have to get over the idea that the State should not build local authority social housing. Doing this is a challenge. I noticed only two weeks ago that the British Shadow Chancellor recommended that Britain should now take a five-year exit from putting infrastructure money on the books and making it subject to the usual fiscal rules. Germany and France broke that rule in the past and got away with it. We need to borrow money on the markets at 1% and invest in local authority social housing. It is imperative that we do it and we should not have to use PPPs and pay 15% to do it. That is 15 times the money and it does not make sense. If Europe turned us down, given that we have a housing emergency, it would mean Europe just does not care about us anymore. It would not make any sense.
The private sector had been driven out of the market by NAMA and the banks conducting fire sales of assets and sites for less than half their value. One can say that no one knew the value of the assets. We have had that debate here several times but things do have value. A house has the value of what it cost to put there on the day it is sold. NAMA has been selling property for less than half what it costs to build on that particular day. That, for my money, is bad business and I do not see how the State could have allowed it to happen. How in God's name did the Government allow Project Arrow to be sold last December by NAMA? Residential units in the Republic of Ireland were sold for peanuts. The only ones winning are the investment funds. The Irish people are paying the balance of the money that is missing and then the investment funds chase the individuals concerned for a second whammy. One could not make it up.
Let us say the EU gives us permission to break the fiscal rules for a five-year period. Will the next Government then be prepared to borrow in the region of €8 billion or €10 billion to invest in local authority social housing and how should we best go about it?
We have not got enough time to discuss the ins and outs of it but regarding Part V and the question of 10% versus 20%, I do not agree with Fianna Fáil's point. We will get nobody to build if we take 20% of units off them. I do not think they understand how the system works because when the builder provides Part V units, he gets only the agricultural land value for his site. If he pays in the region of €100,000 per unit for it, he loses that. If he loses it on 10%, fair enough, but if it is on 20%, we will not get him to build at all. I suggest that we need the State to buy out 20% of it from the builder. The Central Bank rules are solid. The idea that people would have to come up with 20% of the money to buy their house is not the craziest notion in the world and there would be fewer people running into trouble. However, it places a new obligation on the State to provide housing. We need to provide quality State housing and not ghettos, and there has to be a whole new way of thinking about how we build them, in terms of whether the will be fit for families. We have never built apartments in this country that were fit for families. The legislation before Christmas reducing the quality of the unit in order to entice the private sector in is not what is required. That was an own goal and is a crazy way to go. It will not help matters. That was not the big factor keeping the private sector out of the market.
We have to take a whole new approach. For starters, if the Central Bank rule is to stick, and I think it should, social housing will have to come to about 30%, up from between 10% and 15% over the years. I would argue that every development that goes up in Ireland today should have 30% social housing. The builder would provide 10% of it and the State would buy out 20% of it because we want to stop ghettoisation. This idea of building huge blocks of units that are all social is nonsense; it has not worked. We need to get away from that and we have to look at the type of unit we are building because we cannot cover the country in concrete.
We will have to go down the apartment route for living space, for the long term rather than, as it is at present, for transitory purposes. People cannot raise a family in an apartment block in Ireland today; it just does not work.
If the State is prepared to borrow money at an affordable price and challenge Europe so that we can borrow money at a rate of 1%, the State would be able to go out there and build units, and buy 20% of all private developments where there was already a 10% social provision. As a kick-start, the 20,000 units that NAMA is supposed to provide, which are currently 90% private and 10% social, should be 50:50.
The biggest problem facing housing today is unaffordability. People will not be able to buy the apartments or houses that NAMA intends to build for the private sector. They say there will be an average selling price of €300,000. How many of those who are in trouble today with regard to keeping a roof over their heads will get the money to buy a unit for €300,000? Bugger all. Therefore, these units are not for those who most need them. It is outrageous that private housing will outnumber social housing by nine to one on land that the Irish people already own, which is NAMA's land.
At present, nobody in the private sector wants to build in Ireland. The banks would not even finance it. If I had a site tomorrow and I got planning permission for it, I would not get funding from a bank in Ireland for it because it is not attractive enough for banks. I recall that when the Government came to office five years ago it stated that it would set up a State investment bank that could do these things. Let the next Government do it. We need a functioning State investment bank that will lend to people to build.
The other matter I wanted to raise with the Minister, on which I argued tooth and nail in here with him and the Minister of State, Paudie Coffey, is land-banking. My God. How big a problem is this? It is crazy that the Minister has refused to do anything about it. His vacant site levy was a joke. A person who owned land and who had borrowed money for it did not have to pay the levy at all, and if he put a few horses on it, it was not even vacant. It was an absolute joke of an effort to deal with the issue of land-banking. Will the next Government have the appetite to do it? It is a no-brainer. It drives the cost of land up to an unbelievable degree. They are building three-bedroom houses 20 km from here today that will sell for €345,000. I can tell the Minister that if he travels 20 km outside any city in Italy, he can buy a house for less than half of that.
Is the Minister aware that if a house is sold in Ireland today for €300,000, more than 50% of this ends up in the State coffers? The high price of housing in Ireland has suited the State. It has not suited the Irish people. We need the next Government to take an honest approach to every aspect of housing."