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

My only disagreement with Deputy Richard Boyd Barrett is that, unlike LIHAF, this is not a giveaway to builders. Importantly, it is a loan facility, on which there is a commercial rate of return. Therefore, it will profit from these loans. My concern is not about that matter; rather, it is about whether this is the most appropriate use of the money in trying to tackle the housing crisis.

I wish to address the state aid concerns. The Rebuilding Ireland home loan is a different type of loan, but it still has to comply with state aid rules. Applicants must indicate refusals or insufficient offers from other lending institutions. That will allow them to access not only this product but a product that carries a much better interest rate, a fixed rate of 2% or 2.5% for the term of the loan. That is how it avoids state aid rules. No one has explained to me how we could not had have a similar facility for this initiative if that is what the Government wanted to do.

There seems to be a contradiction in the Minister of State's argument. On the one hand, he is telling us that the Government wants to focus on small and medium-sized builders who are having difficulty in accessing commercial finance. He is right about the cost of mezzanine finance crippling them. It is as great an issue in Dublin as it is outside it, albeit for smaller developments. On the other hand, the Minister of State is telling us that the Government cannot lock it into the legislation for fear of being in breach of state aid rules. That makes no sense. Either the initiative is targeting those builders or it is not.

My worry is not academic, as this is already happening with LIHAF. We were told that it was only for builders who could not access infrastructural funding from commercial banks to unlock their developments. Things would be built that would not be if LIHAF was not in place. Cherrywood is a good example of what is happening in that developers with no shortage of access to infrastructural funding are accessing considerable amounts of LIHAF funding, but that money is not unlocking a development that would not have happened otherwise. Nothing the Minister of State has described would prevent such an eventuality with this fund, even if that is not the intention or focus. Unless we say this finance is for the purpose of unlocking developments only, there is no guarantee the money could not end up with a developer who would have built the houses anyway.

The issues of viability and affordability are important. I accept that, on the basis of what is in front of us, the initiative will reduce the cost of mezzanine finance, but that will not make the homes in the areas where affordability is a problem any more affordable. The small reduction in the overall sale price of a home arising from the decrease in the cost of financing will not make a difference. While the financing cost of the average home price of €320,000 or €340,000 might be €10,000 or €20,000, the cost of land, development fees and developer's profits are pushing up the price. I do not see how the Government can prevent this fund from ending up with people who do not need it. The Minister of State might ask why they would apply for it, but the experience of LIHAF suggests they will. I do not see why the Government would release such a large amount of money without some guarantee of affordability, at least for some of the loans.

The Minister of State will not agree with me on Committee Stage, but he and his officials must examine this issue before Report Stage. If we could ensure some of the loan finance will get to projects that will make homes available for purchase to people across the State on incomes of between €45,000 and €75,000, it would be a much better use of the money than what is being proposed. I will not get into a long discussion back and forth with the Minister of State, as we will return to this matter on Report Stage, but I urge him to consider my suggestion before then.