Mr. Edmund Honohan:

I thank the Cathaoirleach. Undergraduates and, indeed, graduates always start with demand and supply. There are demand and supply curves in the housing market. The supply curve is flat at the moment with no additional houses coming on stream. The demand curve is hopping. In a situation like this, the market regulates by price and the prices we are being quoted in all parts of the market are well in excess of what can be afforded by the economy. We have to have regard to the fact that competitiveness is impacted by the price of housing and accommodation and that is a matter of importance to the public generally.

The housing market can be split into five portions and not three portions, starting with the homeless. There are two homeless groups. We have the group that was traditionally referred to as vagrants - people who live on the street. We know from previous studies that they have various problems. They even have problems feeling comfortable in accommodation that is provided for them but they, nevertheless, are a group that needs to be catered for and we cannot lose sight of that. I am not sure whether any proposal for regulating market prices will make a difference to them because they have no money. The second homeless cohort is people who have become homeless by virtue of some domestic problem or an increase in rent by a landlord. They find themselves unable to secure alternative accommodation because they are not on the housing list.

There are two groups at the other end of the spectrum - the private owner-occupier and buy-to-let investors - with which public policy does not concern itself. These are people who can afford to buy houses or to become landlords. The group we have traditionally dealt with as candidates for public housing is in the middle. The size of this group is almost impossible to predict. The first task of the committee should be to find out the views of local authorities in terms of how many people are looking for public housing, not just today but in five, ten or 15 years' time. We went through a rose tinted period when sub-prime mortgages swept up people who could not afford a full mortgage to buy a house. It is this group, primarily, which is falling back into the public housing subset.

The market rations by price but when the market fails, the State should regulate. That is a classic case for regulation and intervention by the State at all levels of the market and in whichever way is constitutionally permissible. What I am suggesting here seems to me to be quite obvious. It is the big bang approach. We need a big bang in finding property for the public housing and subsidised housing sector, which includes the affordable housing sector. That is a small group of people whose housing needs may be met by funding them with some State aid, perhaps part ownership arrangements, so they can part acquire a property. In general terms, subsidised housing is the part of the housing market which has been shrinking over the past 15 or 20 years. There is a reason for that. Government policy has shifted towards allowing the private market and private financiers to provide for our residential housing needs. We do not have to go back too far to remember the section 23s, section 27s and other tax expenditure mechanisms for providing for housing. In their time, they were a good idea and one wonders what the cities of Dublin or Cork would be like if they had not been in place at that time. Nevertheless, it was a conscious decision on the part of Governments and local governments at the time to invite on board the private sector and allow it to finance and take over the provision of housing. The Part V proposal, which was a slight attempt to row back on that, was watered down.

We have a language problem. There is an old joke about America and England being two societies that are not in agreement on the same language. I cannot remember the phrase. We have a problem that politicians and lawyers seem to have a difference in how they interpret things. It is understandable - lawyers tend to focus very clearly on the wording of a document or piece of paper and politicians tend to veer towards cliché. One example of that is Article 40.3, which refers to an unjust attack. It is not a political article but one that was drawn up at the time the Constitution was enacted. Politicians look at that and say it means any attack and therefore must be unjust. We all understand what an attack is - an interference or something aggressive and negative. The lawyers look at it in a different way. They say it means an attack which is unjust or one that is not capable of justification. The attack is, quite clearly, an interference and a delimiting of some right but there may be a justification for it. The word unjust means the lawyer will ask where the justice is. The lawyers also look at the question of reasonableness and ask what the reasonable approach to take is. I will give an example. When the NAMA legislation was challenged, the court was asked to rule on the constitutionality of the taking in by NAMA of all the bad loans from the private banks. The court said "It is only where the policy position adopted by the Oireachtas is one which could not reasonably be said to be required to achieve the end in question, that the legislation will be found to be inconsistent with the Constitution." A politician will read that and say that if it was not reasonable, the Supreme Court would tell us to take it away, shred it and do it again. That is not what it means. It means that the policy position adopted is one which could not reasonably be said to be required.

That means "could not" on any basis of rationality and that there was no possible way in which one could see how the policy objective could be achieved by the measure that was being adopted. It is not that it was reasonable - that is not the phrase. It means it is capable of being reasoned and capable of having a rational basis.

Headnotes are quite useful for politicians who want to see what the law means. The headnote in the same case states that, in determining the limits of what might be constitutionally permissible - we are getting close to the nub here - the interpretation of legislation and how the legislation, properly interpreted, was to be applied to the facts of any individual case was a matter for the courts, which had a significant role. However, the headnote also states it was important to note the limitations of that role and that it was not the function of the court to consider whether measures were the best or even a good solution to the problem which such measures sought to address.

This essentially means that the decision by the Oireachtas as to how to tackle an area which requires being tackled in the public interest is a decision which will be respected by the Supreme Court. I know it can be difficult for people to understand how we can spend so much time in courts arguing about the minutiae of the legislation but, at the end of the day, what the Oireachtas does not seem to understand is that the courts spend most of this time trying to interpret what the Oireachtas meant to say. It is the intention of Parliament which is the paramount consideration in interpreting what the Oireachtas says.

Occasionally, one gets an insight into what the judges themselves think about policy. I will give the committee an insight into that through a quote from Professor Kenna's book, Housing Law, Rights and Policy, published in 2011. The foreword, written by Ms Justice Mary Laffoy of the Supreme Court, is quite interesting. She points out that, in chapter 17, the contemporary challenges are identified, such as stricter criteria for borrowers of housing loans, negative equity and so forth. She also makes the point that the author's observations at the end of paragraph 17-07, outlining the roles which the law can play in the housing arena, set out a useful marker as to the approach which might be adopted in relation to meeting these challenges. Therefore, we now have a judge actually crossing the line and saying this is the sort of policy area which we might find interesting.

Paragraph 17-07 of Professor Kenna's book states:

Law can play two roles within the housing arena. Firstly, it can reflect the market reality of housing as a commodity and support the contemporary housing system, such as it is, dominated by the market. Irish housing law has acted primarily, and in some areas exclusively, to underpin and bolster this housing market system. Secondly, law can be a source of autonomous values that can temper the market and structure it in different ways. It can draw on the reservoir of international jurisprudence, rights, and principles to inform and creatively expand the conceptual framework of housing law, rights and policy.

Far from the judges being anxious to stop everything and to say, "This is our area of expertise", they are in fact trying to breathe life into the often sterile or cliché-ridden documentation which emerges from the Oireachtas. One of the reasons that we often feel the courts have a firm grasp on this and will not let go of it is that the Oireachtas tends to enact legislation which gives the discretion to the courts. Oireachtas Members tend to feel, if they have a difficult area, that, on a case-by-case basis, they should give discretion to the courts to do something. I can tell the committee, from behind the scenes, that the judges tear their hair out and say: "How are we to tackle this? We have been given a discretion but no guidelines as to how to operate it." We have to try to fill in the gaps and work out what it is that may be of some use in providing, if one likes, guidelines for the judges in dealing with such matters.

With regard to judicialization, the 2009 Law Reform Commission report on debt said we should try to depart from the judicialization of insolvency. Here we are now, as I understand it, with a new proposal to interpose another layer of judges into the housing market and the area of mortgage arrears.

The problem is not the law. The law is there. The problem is actually giving the judges the authority to change the law and apply a different set of guidelines. If a lawyer or judge gets an instruction from the Oireachtas that reads "consider in his discretion whether or not a person should be dispossessed of his property", he or she will say, "I can't make bricks without straw and the first piece of straw I have to use is the presumption of constitutionality, and I have to presume that I am not supposed to "unjustly attack" the owner's rights." Therefore, at that level, they are immediately told that they have the right to be sympathetic to the home owner but do not have the right to actually afford him any rights.

Again, I am going on too long. However, it is of interest to note that, at the time, just before the Oireachtas made its decision, Mr. de Valera said:

In future, the Legislature will have to look after the public interest, as it is doing today. Are we going to shackle the Legislature in the future in a way in which it is not shackled today, and in which it would be most unwise to shackle it? We are providing for that freedom of action to work in the public interest and to safeguard the public interest in the future which the Legislature has today - that and no more ... I think the Legislature ought to be enabled in its own judgment to decide [what the public interest consists of] and not the courts.

It is clear to me that when the phrase "the public interest" is used in the Constitution, it was the intention of those who drafted it and those who adopted it - namely, the public - that the public interest was a matter for the public to determine via its representatives in the Oireachtas. I quoted a judgment - I think it was by Mrs. Justice Denham - that said it was quite clear that it was within the competence of the Oireachtas to make that decision - in other words, to decide what is in the public interest and what the objective is, in the public interest, which justifies the interference with property rights.

Then one comes back to the simple question, "What interference?" What interference might be legitimate and what interference might not be legitimate? Where is the dividing line? Oireachtas Members say, "We just don't know where the dividing line is. If, therefore, somebody tells us there is a possibility we might stray across the dividing line, we better not go there at all." That is not the way Dev intended it. He intended that the public interest be promoted and secured by proactive legislation. Of course, he is dead now, so I do not know. That general approach to human rights and the limitation of human rights is echoed today in the European Convention on Human Rights, which takes a very similar approach. It says that we must give the member state or the Government participating, the signatory Government, a considerable amount of latitude in how they operate their own jurisprudence or jurisdiction regarding matters of public interest.

Even in America the jurisprudence is the same, that is, what is called in America "eminent domain", the idea that the state can step in and say, "Hold on a second, that area of property can now be taken into state ownership because there is a public interest in securing a better outcome for the public." That is the objective which US federal and state governments have acknowledged since time immemorial, and yet we find people saying, "Gosh, the American vulture funds wouldn't be too happy about this." They are used to it. They have dealt with it before. They take the good and the bad. That is how it operates.