Mr. Sean O'Connor:

I am a surveyor by trade so I have been in housing and construction for 35 years. It is clear that the solution to the housing crisis is to build more affordable and social housing because too many people are being housed in the private sector and it is having an inflationary effect on rents. There is an increasing trend where developers are building to sell to institutional investors to rent and we compete with those institutional investors to buy blocks of flats for social housing, and we get a lot of flak for it, but our intention is to buy them and rent them as social housing.

There is a capacity issue in the construction sector in Ireland. After the big crash, a number of big firms are not there anymore. Some have been reincarnated as smaller operators but banking finance is still a problem for a lot of firms. There is definitely a skills and labour shortage that is feeding through to prices. I do not know what we do about that. Developers are usually focused on the short term. They build and they go. It is becoming even more short term because there are not necessarily a lot of sites being built for owner-occupiers to buy into. They are selling to investors, hundreds of units at a time. They are targeting one buyer and they go. They are not focused on the long term. They are not building to place make and to stay. As a housing association or local authority, that is what they do.

One quite radical solution that probably needs to be looked at is that local authorities go back to direct building so they are not relying on the private sector, not contracting out and have their own direct labour organisations build the houses, not to maintain the houses. There is not enough work being done on training and apprenticeships in Ireland. That needs to happen. A key thing would be to combine that with off-site manufacturing, where homes are built in controlled conditions in factories and are transported to houses. We have three sites at the moment with Modern Homes Ireland, an organisation based in Cavan, and 80% of the homes are made in the factory and transported to the site. Our biggest site is in Ardee and has 102 homes. They are going up in half the time of a traditional build. They are not as labour intensive. The only pressure we have is the factory is now exporting to England. They are not just catering for the home market.

Taxes were mentioned. As an association, we pay VAT and, as part of our funding, the Exchequer provides VAT. It gives with one hand. It is madness, and adds to the inflationary effect.

There is a reliance on the private sector. I would like to see more done by local authorities and our sector. A worrying trend concerns the enhanced leasing scheme in that developers have no track record of building to stay or manage housing, not even private housing, and yet the State seems to be looking at that sector to deliver through enhanced leasing and to manage social housing. There is nothing wrong with profit, but profiteering is happening now. It can be seen with some of the companies who are buying up housing at scale.

I would like to see a more mature debate about funding because I think pension funds are a big solution to Ireland's problem - not vulture funds, but pension funds, where they are matching pension liabilities. We are talking to a number of pension funds, some Irish, some not, and some union funds which want to invest in social housing. They want ethical investment. There is no vehicle there. There is a private lease for small landlords. There is now an enhanced lease for developer-led landlords. There needs to be an investor lease, where they just put the money in and retreat and look to councils or associations to look after the property. The pension funds do not even have an interest in the property. Many of them do not want the property, so the points Dr. Hearne was making about the value for money are very valid.

We currently source money from the Housing Finance Agency, HFA, and pillar banks in Ireland and we have shown that we can bring in very substantial pension funds, the biggest of which is a $1 trillion American pension fund that has been established for more than 100 years. It is cheaper than us taking 25 year fixed money from the Housing Finance Agency. On a scheme of 100 units, it would probably save the State more than €5 million over a 25 year term. No State equity is required. It just pays the yield as a percentage of the capital is deployed, typically in a range of 3% to 5% a year. These funds are not interested in rent inflation. The only indexing they want is European harmonised inflation, typically around 1% a year. Critically, they do not want the property at the end. For a number of them, it is part of the ethical arrangement that it has to continue as social housing in perpetuity. Our problem has been-----