Ruth Coppinger (Dublin West, Anti-Austerity Alliance) | Oireachtas source

I want to tease out why a fund that was a pension reserve fund that was paid for by the public has now become the Ireland Strategic Investment Fund. We are being told that it cannot really be used for social housing and I am trying to tease out, for people who watch the proceedings of the Committee on Housing and Homelessness, why that is the case.

The Ireland Strategic Investment Fund, ISIF, is required to have a commercial return, which was a political decision of the last Government and not the EU. Does this mean that the ISIF is required to make a particular percentage profit on every investment it makes? Is it laid down anywhere in legislation, or is it just policy, that this fund is precluded from involvement in direct build of social or affordable housing? Many of the projects referenced are private housing projects that do not focus on social or affordable housing provision, which point I will elaborate on further later.

People are mystified. There is supposed to be consensus that the most strategic need in this country right now is housing yet the Strategic Investment Fund is not being utilised for housing provision. During the passage through the Dáil of the National Treasury Management Agency Bill, the then Socialist Party tabled amendments to it to the effect that housing be included in the list of projects, the response to which from the then Minister of State, Deputy Fergus O'Dowd - who is now sitting to my left - was that this could not be done unless the projects were being undertaken by way of public private partnership or were non-State projects. Other parties disagreed and voted in favour of the amendments. This issue needs to be teased out.

My point is that political decisions were taken two years ago and this fund is now being disbursed but nothing is being spent on social housing provision. There is €4.5 billion remaining of the fund. Theoretically, how many social houses could be built with that €4.5 billion if the brief of the ISIF and the NTMA was changed by political decision made by a majority of the Dáil? It is laughable to hear Deputy Cowen asking the NTMA officials to raise this issue with the Government. It is for the Dáil to make these decisions. The people involved are supposed to adhere to the decisions of the elected representatives of this country. No offence, but most of the staff from the National Treasury Management Agency are from a banking background. It is for the Dáil or this committee to instruct the NTMA what to do.

Through the use of direct labour, which means the middle man or private company that is to be paid the profit would be cut out, and the large-scale economies which we heard about from the Housing Agency, including bulk buy of baths, showers and so on, theoretically a house could be built at a cost of €100,000. Many of the houses required are two-bedroom or one-bedroom units. In my estimation 50,000 social or affordable homes could be built through the Ireland Strategic Investment Fund if the majority of the current Dáil voted in favour of doing that.

Reference was made to three housing initiatives in which the NTMA is involved, two of which are Activate Capital to which the NTMA has provided €325 million of taxpayers' money and Ardstone Capital to which it has provided €25 million. The CEO of Activate Capital is, by coincidence, the former Allied Irish Banks and Ulster Bank executive who appeared before the banking inquiry and its chairperson is Mr. Dan O'Connor, former chairman of Allied Irish Banks. These points are relevant. These are people who recklessly gambled huge amounts of money. Ulster Bank had to be bailed out by the UK taxpayer to the tune of €15 billion. We all know that the truth about the solvency of Allied Irish Banks had to be dragged from its officials. Yet, the NTMA believes it is fine that these institutions are involved in spending the Strategic Investment Fund. Did they not have any pause for thought in that regard?

One of the first deals in relation to Activate Capital, of which I am aware because it relates to a development in my constituency, involves Sean Reilly of McGarrell Reilly, who is one of the Anglo Maple 10, now back in business having been bailed out by NAMA. It is nice to see him back on his feet having had his loans written down by €153 million. McGarrell Reilly is currently building houses in Hansfield SDZ, which land was designated as a strategic development zone to fast-track housing but it is a private housing development with, possibly, 10% designated as social housing. The cost of a two-bedroom house in that development increased recently from €220,000 to €240,000. This is how this public fund is being used, with all the same old developers involved. I would welcome a comment on that issue.

On the off-balance sheet debate, during the establishment of the National Treasury Management Agency, we were informed that the latter's funds could not be used for social housing. As I said earlier, that was an Irish political decision. There is no international rule which prevents the use of NTMA funding for social housing. Two years on, we are still being told that this elusive off-balance sheet model is being developed. Where is that happening? As mentioned by other speakers, such as Deputy Ó Broin earlier and Ms Michelle Norris of the Housing Finance Agency in a lecture last week, public private partnerships are being recategorised. It is impossible to fit in with the off-balance sheet model if one is working on the basis of existing revenue. In Britain, all housing agency debt is being classed as state debt. The Department of Finance, in a letter to the Minister in respect of its new funding models, has stated that no new model would be capable of meeting this off-balance sheet mirage. Mr. Palmer indicated in his introductory remarks that additional revenue would have to be raised in order to pay for the extra spending. That is the only thing we can do. If people are to continue to operate on the basis of the existing cake rather than a larger one, then, on the basis of EU fiscal strait jacket to which this Government and others signed up, it will be impossible to fund the provision of social and affordable housing in this country.

Would the witnesses support the introduction of a housing tax of, for example, 3% on a property worth over a million and an increase in the rate of corporation tax or, at least, the application of the 12.5% rate in this area, to fund social housing provision? Do they agree that there are many projects that could be paid for by way of increased taxes on wealth in this country? The remainder of the funding available to the NTMA plus the €28 billion cash reserves that NAMA has could also be used to build housing. There are other ways this could be done but they must include revenue raising measures if we are to comply with EU rules.