Mr. Brian O'Gorman:

As I stated, the decision of the CSO was based on three grounds: risk, financing and contractual arrangements with the Government. There are significant grounds on which to challenge the CSO conclusions in terms of risk transfer and contractual arrangements. Changes are needed to the financing aspect in order to be able to reclassify. We need changes in historic debt. We developed several schemes with 100% grant funding from the State, such as the capital loan and subsidy scheme, CLSS, and the capital assistance scheme, CAS, which is still in existence. There are 100% grant-funded schemes on-balance sheet and a mechanism will have to be found to refinance them off-balance sheet.

We currently provide debt finance funding. Most of our lending comes through the Housing and Finance Agency, which is part of government, with the Minister, Deputy Eoghan Murphy, appointing members of its board and so on. Most of the larger AHBs are currently actively working to source alternative sources of finance and are talking to banks, pension funds, credit unions and other funders in that regard. I sympathise with the committee because this is a hugely technical issue, the full implications of which we are all grappling with because we are not absolutely sure what they will be. We have commissioned additional consultants, economists and so on to consider the implications and ramifications of it and how we might get over them. We will provide that information to the committee.

Mr. McManus also alluded to the possibility that a special case is being made of Ireland in this regard. Some of the grounds relied upon by the CSO in its decision making, such as the tie-in with nominations, did not cause an issue in the case of the United Kingdom. All our tenants are taken from local authority housing lists. The local authority is the independent body that maintains the waiting list and there is that level of governance and oversight in order that we are not involved with the waiting lists. We make the tenancies available and the local authority nominates tenants. That is a good principle of good governance and oversight. An almost identical process occurs in the United Kingdom but was never mentioned in terms of bringing them on-balance sheet. There seems to be an inconsistency in how these judgments and decisions are made, which leads us to believe that there is much subjectivity about the reliance placed on different elements of it.

There is a challenge on the risk transfer and the contractual arrangements. We accept that we will have to make changes in the financing regime and will be able to do so with the help of the Departments of Finance and Housing, Planning and Local Government. We are confident that will be possible if the motivation to do so exists and, as Mr. McManus made clear, the Government clearly states it wants AHBs off balance sheet such that we are outside government but accountable to the Government.