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

My questions follow on from Deputy Boyd Barrett's.

I thank the delegations for their presentations and acknowledge the very useful work the Society of Chartered Surveyors Ireland does in its cost of construction reports which are very valuable. While we have the Department's reports, it says something that it was the SCSI that produced the reports on houses and apartments well before any Government agency.

I do not want to have an ideological discussion with the NDFA on public private partnerships; I would like to get some facts. One of the great tragedies is that while the presentations are very useful, they do not give us the facts we need as a committee to try to answer some of the very legitimate questions raised by Deputy Boyd Barrett. Part of the problem is the great mysterious thing called the public sector benchmark. The way in which this exercise takes place is that qualified officials from the Department and local authorities in the case of the PPP bundles determine what it would cost the public sector to do this work. It is then locked away in secret and neither elected members of councils nor the Oireachtas is allowed to see it, but when tenders come in, they are compared against it to see whether we are getting value for money. My concern is that until I see how the NDFA does it, I am not convinced it can capture the reality of what happens.

If I am tendering for a PPP bundle such as bundle one, I must look at what it would cost to build, that is, labour and materials. I must bring my own finance, which is probably more expensive than public sector finance from the Housing Finance Agency or other sources. I must factor in maintenance costs of the property over a 25-year period, which is a tricky business. There is, therefore, an element of risk which is factored into the costs. I must then make my premium.

Anyone who knows anything about local authority delivery of housing knows that at no stage does it secure full cost recovery of the unit over 25 years. It does not, for example, receive a monthly payment from anyone that covers the cost of building, finance, management and maintenance and it certainly does not receive a premium. One of the reasons the social housing stock is in urgent need of regeneration after about 25 or 30 years is that the public sector does not have these availability agreements. How much detailed information can the NDFA give us, for example, on the public sector benchmark for the first bundle of 500 PPPs?

How can the National Development Finance Agency, NDFA, assure us, in the absence of being able to see that comparison ourselves, that we are really comparing like with like in the benchmarking exercise? Can the witnesses tell us the cost per unit of that first 500 bundle? The reason I am asking that is, even on the construction end, we know the average cost according to the Department of Housing, Planning and Local Government for social housing output at the moment is €200,000. The Department of Public Expenditure and Reform has a slightly different figure of €216,000. Local elected councillors are being asked to approve planning permissions and Oireachtas Members are being asked to consent to this without knowing the actual cost. When we asked for those costs before the first tender was awarded, we were told we could not have them for reasons of commercial sensitivity. I assume we can now have the bundle 1 cost, or is that still a problem? Can the National Development Finance Agency respond on that?

If the witnesses cannot give us the cost, or the unit cost, can they at least confirm some of the additional costs that the private sector requires to cover the additional cost of finance and the risk factor in terms of projecting maintenance cost and the additional premium? Of course that means it will be more expensive. Can the witnesses at least tell us it is not like for like and there are additional costs there?

I have two other concerns. The NDFA gave us two slides, which are very helpful, and they show that, from conception to tenanting, it is a four-year process. Local authorities are bad but they are nowhere near that bad. It is now down to about two to two and a half years from conception to tenanting. The NTMA has lots of experience of PPPs in other Government sectors, whether with water or schools or whatever, so is this always going to be four years? Can this be reduced? When will it be reduced? We are all putting lots of pressure on the Department on Housing, Planning and Local Government and the local authorities to reduce their 12 to 18-month approval and tendering process below that.

Then there are the contractual issues. These are 25-year contractual arrangements. They are very complex legal agreements. There is substantial evidence from Britain about how the use of these complex contracts for urban regeneration and social housing has led to lots of difficulties, as we have seen with Carillion and the beginnings of that here. How does the NDFA's model factor in those less tangible risks and can it convince us that it has done any learning from the failure of many of these public private partnerships and regeneration projects in Britain, which have ended up costing the taxpayer substantially more than was originally agreed?

I have a brief question for the chartered surveyors. One of the really interesting things that emerged from the Department and Housing Agency reports, which came after the report of the Society of Chartered Surveyors Ireland, is that, on the one hand, the Housing Agency report tell us that the cost of construction is about in line with European norms, which is a really useful bit of data to get. On the other hand, the Department's report confirmed my reading of the chartered surveyors' reports, particularly the apartment reports, that it is simply not possible, given the all-in development costs that we have just outlined, for the private sector to deliver houses, but particularly apartments, for people on incomes up to €75,000, in line with the Central Bank's mortgage lending rules. Do the witnesses agree with that analysis? Am I wrong in that? Is that what the facts tell us? If so, do we have to start relying less on the private sector, with all of those complex costs, to deliver housing for that sector of workers? Does the chartered surveyors' research and the two Government reports, that I am sure they have studied, make the case that, for affordable housing for modest income families, it is a public sector-led model, whatever about who is involved, that will really deliver housing for working families within that income bracket?