Phil Hogan (Carlow-Kilkenny, Fine Gael) | Oireachtas source

I welcome the opportunity to discuss the report with the committee and to provide an update to it on the progress being made on the implementation of the report's recommendations. Many homeowners affected by pyrite have been waiting for a considerable period and without success to date for a resolution. The purchase of a home is likely to be the largest investment most people make in their lives. One has a justifiable expectation that one's home will be a place of enjoyment for oneself and one's family for many years. If serious problems arise, they should be dealt with promptly and efficiently by those considered responsible, be they materials suppliers, builders, developers, guarantee companies or insurance companies. For homeowners affected by pyrite, living in their homes has not turned out to be the enjoyable experience they had hoped for. In many cases, they rightly feel let down by those parties whom they believed would provide effective solutions in the event of problems. Cognisant of the long period that many homeowners have been waiting for a solution and the lack of engagement by responsible parties in providing such solutions, I established the pyrite panel in September 2011, with the remit of exploring options for a solution to the problem of pyrite in private housing. The comprehensive report that the panel submitted to me in late June 2012 contains 24 interrelated recommendations and provides me and the stakeholders with the framework for a resolution to the pyrite problem.

I acknowledge the excellent work undertaken by the pyrite panel on producing a carefully researched and balanced report, which I understand has been generally well received. The recommendations fall into two broad categories, the first of which deals with current pyrite problems and the suggested immediate and comprehensive solutions. The second aims to ensure that the risk of similar problems will be minimised. A number of the recommendations in the report pointed to the need for constructive engagement by stakeholders in providing solutions for homeowners and to the important role of the State in driving this engagement. The panel expressed its disappointment that stakeholders had not, up to that point, engaged with homeowners in seeking a resolution to the pyrite problem. I agree with the view expressed by the panel that while the State is not responsible for the pyrite problem, it has a pivotal role in assisting and co-ordinating the provision of the necessary infrastructure that will provide the remediation of pyrite-damaged dwellings where no other option is available to homeowners.

When I published the report in July, I indicated that my preferred approach to dealing with the problem was for the stakeholders to work with me in finding solutions for affected homeowners. This included, in particular, sourcing the necessary funds to meet the cost of remediation works. However, I also made it clear at the time, and have reiterated on a number of occasions, that in the absence of buy-in from the stakeholders, I would impose a solution along the lines recommended in the report in regard to the establishment of a resolution board funded by a mandatory levy on the construction-quarrying sector and the related insurance sector.

Following the receipt of the pyrite report I met the Construction Industry Federation, the Irish Concrete Federation, HomeBond, the Irish Banking Federation and the Irish insurance Federation in early July. I outlined to them the key role I believe they should play in providing a resolution for homeowners. I encouraged them to engage with one another with a view to developing a collective response and I set a deadline, the end of September, for the submission of their proposals. All the stakeholders came back to me by the deadline with individual responses. While all of them outlined, in varying levels of detail, how they envisaged the pirate problem being resolved and, in some cases, how they might participate in a resolution process, they did not submit any definitive proposals at the time that individually or collectively would see stakeholders providing a voluntary solution for homeowners. While I was disappointed that the responses were not more positive, there were nevertheless some positive elements in the detailed responses. The offer to participation actively and engage in any structure that might be established to make progress on the pyrite issue was welcome. Conscious of the time for which homeowners have been awaiting a solution to the pirate problem, I asked my Department to finalise arrangements and terms of reference to permit the establishment of the proposed resolution board, as recommended by the pyrite panel. My preference is that all of the main stakeholders should engage with the proposed resolution board.

Building on the positive elements of the stakeholders' earlier responses and other positive soundings received, I again wrote to the organisations, on 31 October, enclosing the terms of reference for the proposed resolution board. I asked them to give further urgent consideration to their positions and to respond not later than 9 November. I have received responses from all the stakeholders. In addition, the Department met a number of the organisations over the past two weeks and further meetings are scheduled for this week. This continuing engagement is worthwhile and I would not continue with it if I believed otherwise. Everyone is now engaged for the first time with my officials with a view to achieving an agreed solution. However, if the discussions fail or prove unsuccessful in the coming days, I will proceed immediately to seek the permission of the Government to impose the levy. I intend that final decisions in regard to the proposed resolution board and its funding be made in the coming days.

I repeat I am conscious of the time that has been spent in bringing this matter to a successful and speedy conclusion. However, many homeowners have been obliged to endure living with the consequences of this problem for far too long and I am determined that there will be no unnecessary delays on my part in putting in place the structure and funding to provide for a resolution.

The focus of the pyrite debate is on providing solutions for homeowners who have no options open to them to get their homes remediated. However, it is important to acknowledge that a sizeable number of dwellings have been and continue to be remediated under various remediation processes. In a number of instances, responsible builders are directly undertaking remediation works. Moreover, remediation work is also being undertaken under structural defects insurance and other types of insurance, as well as on foot of arbitration and mediation processes. I welcome this progress and believe it is the route that should have been embraced long before now by other responsible stakeholders. In the preparation of this report, the panel consulted widely and met more than 40 groups from a broad range of backgrounds including homeowners, industry, academia, professional bodies, banks, insurance providers, local authorities and individuals who have a particular expertise in dealing with pyrite. It has also received a number of submissions from various groups, which I understand the panel also considered.

I now wish to address a number of issues in the pyrite report which have been the subject of some debate, including the perceived lack of adequate regulations on or knowledge of pyrite prior to 2007 and the number of suspected dwellings affected by pyrite, as well as the methodology recommended for the categorisation of dwellings to prioritise remediation works. The pyrite panel compared the guidance on hardcore materials in the building regulations in Ireland with those in the United Kingdom and Canada and concluded that the Irish building regulations compared favourably with those of the aforementioned two countries and that the guidance was reflective of the knowledge and experience in Ireland at that time. Some people have made the point that while the regulations may have been comparable with other jurisdictions, the lack of enforcement by building control authorities was a major contributory factor in the pyrite problem. The panel concluded that on balance, it would not have been reasonable to expect the unprecedented issue of pyrite in hardcore to be identified by building control officers during normal inspections. The extent of knowledge of pyrite in Ireland prior to 2007 has been raised by a number of people, who have suggested there was knowledge of the problem of pyrite since the 1970s, and a number of academic papers have been quoted to support this view. However, having considered the matter and consulted with various professional groups, the panel concluded there was only a limited knowledge of pyrite prior to 2007 and there was only passing reference to it in third-level engineering courses here in Ireland. Pyrite problems in Canada, which came to public attention there in the late 1990s, are often quoted as a reason there should have been awareness of the pyrite problem in Ireland. However, the Canadian problem only came to light here consequent to the manifestation of pyrite problems in Ireland. Damage to a hospital in Cardiff in the 1970s was also alluded to in discussions. However, this damage was a result of ground heaving. The natural bedrock had high concentrations of pyrite and once exposed, the pyrite began to oxidise and the associated expansion caused cracking and uplift of the hospital built thereon. In that case, the pyrite problems arose from pyrite in the bedrock itself and not in the infill, as is the case in Ireland.

The pyrite panel undertook a desktop study in conjunction with stakeholder consultation to establish facts in respect of the potential exposure to pyritic problems. The information was gathered from a number of sources including local authorities, structural guarantee providers, representatives of homeowners, private builders, construction professionals and public representatives. Moreover, it was cross-referenced to verify, as far as practicable, its validity. The estimated number of dwellings that may be affected by pyrite is significantly lower than the speculative figures in the public domain. No substantive basis of which I am aware has been put forward for the figures of 60,000 to 70,000 dwellings, which have been quoted by various sources as having been affected. The estimate of 74 estates with 12,250 ground-floor dwellings arrived at by the pyrite panel is supported by a robust methodology that has been set out clearly in the report. These figures represent the position as of March 2012 and based on the methodology used by the panel to arrive at the figures and taking account of the rate of presentation to date in Ireland, I am confident they represent a fairly good and accurate picture of potential future exposure. The figure of approximately 850 dwellings which the pyrite panel concluded are in need of immediate remediation is an indicative figure only. The panel used the information it had collected to give an estimate of the possible distribution of ground-floor dwellings across the three classifications of red, amber and green. However, it should be noted that the inclusion of a dwelling among the 850 I mentioned does not necessarily mean the dwelling has been confirmed as having reactive pyrite in the hardcore or as having pyritic heave, or both, and its inclusion will have no bearing on access to remediation.

I am aware there is some concern about the methodology recommended by the pyrite panel for the categorisation of dwellings to determine priorities for remediation works. However, I believe it would be unreasonable to expect dwellings not exhibiting damage to be remediated solely on the basis that there is pyrite in the hardcore. This position is supported in the High Court judgment of Mr. Justice Charleton in the case of James Elliott Construction Limited v.Irish Asphalt Limited, which now is under appeal to the Supreme Court. The remediation of dwellings is an expensive and disruptive process and I agree with the panel that it would be unreasonable to remediate dwellings if they are not exhibiting pyrite-related damage. However, the recommendation is made on the basis of a system being in place to repair such dwellings if and when they exhibit such damage in the future. I wish to assure affected homeowners that the waiting they have been obliged to endure for far too long is coming to an end. I have made substantial progress in recent days in respect of the financial institutions in particular and am determined that the structures and funding to provide for the remediation of pyrite-damaged dwellings will be put in place as quickly as possible.