Eoin Ó Broin (Dublin Mid West, Sinn Fein) | Oireachtas source

I move amendment No. 3:

In page 7, line 25, to delete "State." and substitute the following:

"State, and

(iii) prioritise builders who have financially viable development proposals but who are unable to access sufficient finance.".

While I know it is not the fault or responsibility of anyone in this room, I have had a very long conversation with the Ceann Comhairle's office on the amendments and I notify the committee there is a strong likelihood we will be submitting slightly revised amendments in respect of amendments Nos. 2, 4 and 6 that will not fall into the same difficulty on Report Stage.

The section and all the amendments I had wanted to submit, but particularly the one I have been able to formally move, cut to the heart of this particular proposal. When Home Building Finance Ireland, HBFI, was first announced many of us thought it had the potential to be very useful but only if it met a certain set of criteria. For the Government simply to put €750 million of taxpayers' money, albeit through the Strategic Investment Fund, into the available pool of lending for viable builders in and of itself was not sufficient to justify such a large amount of expenditure and we believe certain conditions should certainly be explored on Committee Stage. For example, the idea that this fund should target builders, particularly small and medium sized builders, who have viable projects but have genuine difficulty accessing finance, particularly the cocktail of bank and mezzanine finance, would be an eminently sensible idea because they would need the finance and, therefore, this would assist construction. Likewise, a corollary of that is that if the Government was simply to make this available to any builder who is viable, it would not add any additionality and, for us, that is a crucial issue.

A second issue is that of affordability. While that was not included in the Minister's budget day speech last year, if the Government is going to release that level of borrowing and potentially double the €750 million in terms of its leveraged addition from the private market, that money could have huge benefits in terms of delivering genuinely affordable homes. The Government is quite confused about affordability but affordability is defined, in the first instance, by the Central Bank. It is related to people's income, for example, if one is buying a house it might be three and a half times one's gross salary. We know the households who are locked out of the purchase market are, for example, households whose gross income ranges between €45,000 and €75,000. Three and a half times those households' gross income tells us the amount they are potentially able to borrow minus their deposit. If we were to target this measure at those people locked out of the market elsewhere in terms of assisting the delivery of homes within that price range, that would be hugely beneficial. The problem is that neither of those two criteria is included in this measure. There was a suggestion at an earlier stage that this measure might breach EU state aid rules but, following our conversation with the Minister of State's officials, if the Government was to model this in a similar way to the Rebuilding Ireland home finance loan and was to have the same type of eligibility criteria, it would clearly get over the state aid rule issues. It seems to be a question of whether the Government wants to do those two things.

Amendment No. 3, which is one of our four or five amendments that have been permitted, basically provides that the only people who should be getting this finance are builders who have viable projects but cannot get finance elsewhere. If builders can get finance elsewhere, they should not be borrowing this money. That seems to be pretty straightforward and, on that basis, this is an amendment that is particularly important to making this funding sensible.

I want to make one other comparison. Deputy Cowen will recall we a discussion in the housing committee on the local infrastructure housing activation fund, LIHAF, which provides for €200 million, and there will also be a second round of it. We were told that fund would have two purposes, namely, to get some infrastructure funding to developers who cannot access that finance to unlock their development and to get an affordability dividend. What we have seen in the first tranche of contracts signed is that almost none of the developers who got that money needed it. It has been admitted by the Department that the vast majority of those developments would have happened any way. The figures from the Department show that there is virtually no affordability dividend in terms of providing homes at a purchase price available for people with gross incomes of between €45,000 and €75,000.

If we do not insist on those kinds of conditions being built into this legislation, we will have another debacle, as we have had with the housing infrastructure activation fund, except on a much bigger scale. We would be putting €750 million into the market and we will not get any additionality in terms of supply and we will not get affordability. I urge the Minister of State between now and Report Stage to think through with his officials how we can we target this fund in a way that meets those two criteria. I know his officials will tell him, if they have not done so already, that this is what the intention of the lenders will be when they meet people, but I would much prefer if that was copperfastened into the legislation so that it would not be discretionary but mandatory in terms of the lending from this facility.