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

I thank the witnesses for the answers. In response to Mr. Phillips, my question was not so much about the quality of PII's relationship with the Department, because we would hope it is the way he described, as it should be with all external bodies, it was more specifically about whether in those conversations there had been a discussion of the contingency plans to try to deal with some of the risk we are talking about. While it is very important for us all to monitor those risks and be aware of the sliding scale of risk, the real question then is for those Departments and Ministers who have responsibility as to what contingency plans they are putting in place.

With respect to what Mr. FitzGerald said about land, there are two concerns. There is a growing body of work around housing by land economists that would suggest that increasing the supply of land would not do anything to reduce the cost. Because land is always finite, the cost is more determined by the availability of finance and the desire of finance to seek out certain kinds of secure investments. Therefore, we could significantly increase the zoning of land and have the opposite effect, that one would start to push up the cost of land because speculative investment would get involved. Is there evidence to counter that view that is now held by many economists?

Like Senator Boyhan, I am in South Dublin County Council and we have more than enough residentially zoned land to meet current and future housing need as projected under the census targets. That is both public and private land. In fact, if we were to accede to zoning more land in that local authority area it would be contrary to Government policy, which is about trying to focus residential development back into town and city centres, for all sorts of very positive reasons. I am not against zoning land if there is a credible argument for it, in particular to boost housing supply, but I would caution against it.

Is there a concern about the Land Development Agency, given that the Government's main vehicle for addressing the need for finance by the small and medium sized builder, namely, Home Building Finance Ireland, is still delayed and we have not seen any lending from it? That does seem to be the primary policy response.

I wish to refer again to the two studies of construction and development costs by the Society of Chartered Surveyors Ireland. In the second one about apartments, it identified a suite of policy measures which it believes the Government should consider to reduce costs. If we were to introduce all of those, namely, reducing car parking, reducing apartment size, reducing development levies and VAT, reducing the cost of finance and reducing the cost of land, it still would not fix the viability gap that the society identified in terms of the overall development costs of apartments, and providing homes at affordable prices for working families. When I hear people talk about reducing VAT I would be more than open to supporting it if I thought it would genuinely reduce the cost of units. However, in the very best case scenario, it might take €10,000 or €12,000 or €18,000 at the very most off the cost of a residential unit in Dublin, one which is already costing between €320,000 and €340,000. It does not improve its affordability for the working families that are locked out of private sector purchasing at the moment. There is also no legally enforceable way of ensuring the developer passes that on. One cannot give a VAT reduction under EU law to houses of a certain price. One can only do it, for example, for a new house rather than a second hand house.

In this committee we look at all of the proposals, but I have still not heard how we deal with the situation other than how we tackle, for example, the cost of land. Unlike Senator Boyhan, I am more than happy to waive development levies if that is knocked off the purchase price of a house and somebody can buy a genuinely affordable home. That is what happened with Ó Cualann in Poppintree and it was part of the cocktail of financing that made those homes affordable, but those homes were being sold at €170,000 to €225,000, so it is in that context that I think there is a public good to be got in return. I would have lots of sympathy with Senator Boyhan if it was being said that the development levies were to be knocked off a house that is €320,000 because one is only knocking €12,000 off the cost of the house and one is not getting any public good in return. More work needs to be done by the likes of the witnesses who are advocating cost reductions because when one looks at the detail of them, I am not convinced they stack up.

Help-to-buy is the same. A more generous interpretation of the scheme in the Indecon report states the jury is out on whether it has contributed to house price inflation. Even from this report, we know at least 60% of those who availed of the scheme did not need it. They already had deposits and were already buying houses at a price that they did not need the 5% tax refund. I am not convinced from the limited evidence available, as it is a relatively new scheme, that it contributes to affordability for those who need it or it has not contributed to house price inflation which is a concern.