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

It is important that the committee is clear on two key elements of why the Bill is structured like this. It is structured as a commercial, independent entity with 60% of the units to be sale on the open market, because that is the only way one can get it off-balance sheet. We just need to be clear about that. We are talking about an investment over 20 years of between €40 billion and €60 billion to deliver that quantity of houses. I accept a portion of those will be bought back by the State for social housing. Given what we know about the failure of Irish Water to get off-balance sheet and the difficulties of approved housing bodies, unless this entity is sufficiently independent in its investment decisions, rent setting and price setting, and unless a majority of its output is for the open market, that will not be off-balance sheet. This leads to the fundamental contradiction or tension in the development end of the legislation. This goes back to a point Ms Graham made when she talked about the optimal use. Optimal use depends on what it is that one is trying to do. If one is trying to meet sociable and affordable housing need, then one would not use this vehicle because it requires one to reduce the amount of social and affordable housing that is deliverable on public land in order to get it off-balance sheet and be independent. However, it is optimal use if one is talking about it from a commercial or off-balance sheet level. My first question for Ms Graham is one I asked previously but it was overlooked. Why is there no statutory obligation included in the legislation for the delivery of social and affordable homes? That just seems to me to be such a glaring omission. I am not even talking about a percentage or a target because those things can vary, but it seems absolutely incredible that in the first instance, that statutory obligation is not there.

What does Ms Graham mean by optimal use? She used the phrase twice when I asked her about it. What does the Department or Government mean by optimal use? It is important that we understand what direction this is going in. I asked a question about conflict between the commercial requirements of the designated activity companies and Government policy and nobody answered it, but it is a real issue. This was a constant problem with NAMA, where NAMA in its aims and objectives had to contribute to the social and economic development of the State, as this does, but it had in section 10 a clear, commercial obligation to get the best return for the State. When Deputies and local communities were trying to get NAMA to release assets for the social and economic development of the State, it could not, because there was a conflict. For example, to go back to the memorandum, what the witnesses are essentially saying is that nobody will see the memorandum until after the legislation is passed. Is there a memorandum with the LDA, as it is currently constituted? Is the memorandum of the newly constituted DAC going to be the same? A number of witnesses said there would be a shareholder's expectation letter from the Minister, but I presume once one sets up an independent designated activity company, notwithstanding the fact that the legislation says it must have due regard to Government legislation, if it wants to make a commercial decision, it will be able to make that commercial decision irrespective of what the Government policy is. NAMA was continually accused of acting in ways that were not in the public interest. I am interested in the views of the witnesses on that.

The development model is really crucial. We will not get enough time to scrutinise the Bill today but we should come back to it. In some senses, the cynic in me thinks the Government was very smart in letting the development at Shanganagh go ahead, because it allows the witnesses to talk about a development that is so atypical of what it is going to do that it takes the hard edge off the problems with the joint venture and other mechanisms.

The crucial point is that there are two ways of delivering affordable homes, which is to return to Deputy Casey's absolutely correct point about land. There is the Ó Cualann model, where a not-for-profit entity comes in and says that this is the economic cost of building the unit. All other main costs of development are waived in one form or another, as they do not apply to Ó Cualann. The unit can be delivered and be sold for between €175,000 to €250,000. The other one is the joint venture model. I have a great amount of experience from Kilcarbery in my own constituency and I know the details of what is on the table with O'Devaney. What happens in that model is a private developer is asked to come in and give us a market price for the delivery of the unit, not the economic cost for the building of the unit, but the market price. On the basis of the figures we have from Dublin City Council the market price that Bartra is currently proposing for similar types of units to the ones we have in Poppintree is €477,000. There will be something of a discount, but Bartra will still get paid approximately €380,000 for that unit. There will then be a shed load of serviced sites funding that will come in, again subsidised to the developer although the State gets an equity stake in the property, to bring it down to €310,000. This is not affordable for the vast majority of people who are being targeted by the affordable purchase scheme.

There is a huge risk in allowing the joint venture model, or variants of it, to be the driving force of this, because not only would there be a reduction in respect of social and affordable housing to 40%, with 10% social housing on public land, but it will also run the risk of the actual price of the affordable units being too high for many of the categories of households that Government policy wants to target, or the rents will be too high for many of the households because of the cost recovery requirements. I would like to hear more reassurance from the witnesses as to how this development model is going to deliver rental properties in Dublin for €700 to €900, which is a third of the take-home pay of the people the Government says it wants to assist, which is between €38,000 and €75,000 for social housing; or houses for sale below €250,000, which is the price point one needs for the Rebuilding Ireland home loan which is being offered.

The other thing we have not got our heads around at all yet is-----