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

As somebody who started out as a sceptic of the proposition in front of us, given everything I have heard in these meetings, I am probably now an outright opponent of the scheme as it is currently proposed. The bit of this project which I like, the active land management, will be far weaker than we need. The part with which I was always uncomfortable, that is, the residential development, is probably worse than I thought it was going to be. I will keep an open mind as we go through the legislative process but I want to be upfront about that. A broad range of people raised significant concerns, most of which have not been addressed in any detail by either the Department or the Land Development Agency today.

Mr. Coleman says the Land Development Agency has been set up as a commercial entity to allow it to operate countercyclically. The opposite is the case. The point of countercyclical interventions is that at a time when the market dries up, in a recession when there is an investment strike by private investors, then State bodies which are reliant on borrowing or rainy day funds directly intervene as non-market operators counter to the cycles of the market. In my estimation, a disadvantage of setting the LDA up as a designated activity company is that it will be cyclical. After the first tranche of investment by the Ireland Strategic Investment Fund, the LDA will be dependent on accessing market finance and investment and market operators. It will fall foul of recessions and slumps when they come.

This will also dramatically undermine the ability of the State to deliver the volume of social and affordable housing that is needed. To keep it off balance sheet, one has to have a majority of units, whether it is 60% or not, as open market price commercial units. We are using public land and a majority of the units will not be for social and affordable housing. At a core level, my view is, and everything I have heard to date suggests, that it will not do the things I genuinely believe Mr. Coleman wants it to do. I am not in any questioning his desire to do what he is saying. I just do not see how it will work. There are two contradictory things in what he keeps tells the committee. On one hand, 40% is a minimum and he hopes to increase it. On the other hand, as Mr. Coleman rightly points out at the end of his presentation, the more one increases the percentage of social and affordable housing, the less one has open market sale houses, and the more liability will be on the State. I will question Mr. Coleman's €45 billion figure in a second. In some senses, he is telling us something that we want to hear, which is that there will be more social and affordable housing. At the same time, he is telling us why that will not really be possible outside of a small number of peripheral projects at the outset.

The figure of €45 billion is not correct. That is for all units but the State is not in the business of building units to sell at open market prices. It funds social and affordable housing. If 40% is the rough benchmark, the Land Development Agency will only deliver 60,000 social and affordable homes over the lifetime of the Land Development Agency. On the basis of Mr. Coleman's calculations, that is a capital investment of €18 billion, or €900 million a year, which is eminently possible for the State. I know it is rough stuff, but the LDA is pricing its units at €300,000. The State currently delivers good quality two and three-bedroom homes at an average price of €216,000. Mr. Coleman is coming to the committee and giving us figures which are back-of-the-envelope calculations. I know it is hard to predict cost over 20 years but it would be better not to give us figures that just are not accurate than to give them.

If I was asked by a councillor in Dún Laoghaire-Rathdown for my advice with regard to section 183, I would say that the first question is to ask what would be the added value of the LDA becoming involved. The purpose of the LDA is to try to access land that cannot currently be used for housing, including land held by the HSE, transport companies or whatever. If lands are held by the Housing Agency and local authorities, they and the Department can develop it now, as they are on Enniskerry Road and elsewhere. Involving another layer of bureaucracy makes this much more complicated. What added value can the LDA bring to Shanganagh that Dún Laoghaire-Rathdown County Council, with its very competent staff and with advice from the Housing Agency and Department, cannot deliver today? I do not get the value of involving the LDA in residential projects that should be progressing already and in a sense are only being delayed because the land cannot be transferred until the LDA is set up on a statutory footing.

I welcome Ms Graham's comment to the effect that there will be a structured engagement. That is important because, as we know from NAMA, these are tricky and complex areas of EU law. Will she indicate when that will happen? Why did some level of engagement not happen in the context of the general scheme? On an issue as tricky as this, I would have thought that the earlier the engagement started, the better it would have been. Ms Graham talked about the general scheme separating economic and non-economic areas of activity, which is true. From my limited understanding of state aid law, that is not the distinction that matters. The distinction that matters is between services of economic interest, which are fully commercial, and services of general economic interest, which are more public services. In order to not fall foul of or to get exemptions under state aid rules, those two activities have to be kept separate, yet here we are, creating an entity that will mix services of economic interest and those of general economic interest, such as commercial, open-market-price homes and social and affordable homes that are in some way subsidised by the State. Are our guests concerned about that mix? Has there been a discussion in the Department about how to separate those two or whether there is a need to separate those two elements? From my limited knowledge of these issues, if one does not find a way of successfully separating those, one could fall foul of state aid rules and therefore not be able to achieve the off balance sheet status that is sought.

My biggest concern with the legislation is the limited compulsory purchase order powers that it seems will be introduced at some point, whether when we get the Bill or later. NAMA was given very limited compulsory purchase order powers for small strips of land which are often called ransom strips, to gain access to other developments. Those would clearly be helpful to have. I would have thought that if the LDA sits down with the HSE, Dublin Bus or a port authority to negotiate a transfer, while it does not have the ability to threaten to issue a compulsory purchase order for a large parcel of land, it will not get very far in those negotiations or it will have a very weak hand with regard to the eventual outcome. Will our guests provide more information on the kind of compulsory purchase orders that they hope to see catered for in the Bill? Can they give any reassurance that there will be broader powers than those that NAMA has, which would clearly not be sufficient for active land management? I agree with Mr. Coleman that we desperately need active land management in the State.

The price at which the LDA acquires the land from public agencies is an issue. Land can have one of three values. It can have the original book value for which the public authority bought it, it could have the existing use value for whatever purpose the land is currently zoned or planned for and if the land is not currently zoned or planned for commercial residential development, it could have a full market value. The ability of the LDA to do its job well means that, inasmuch as possible, it has to try to acquire land at the first or second of those values if possible. To comply with state aid rules and to ensure that the LDA, as a commercial operator, does not have an economic advantage over other commercial operators, it will have to buy the land at full market price. If the LDA, as a statutory agency, buys Donnybrook Garage, for example, at anything less than full market price, many developers will queue up and ask why it is getting the land for an amount below the market price they would have paid. If the LDA has to pay the full market price, it has to ask if that is what it is trying to do. Does that not go back to inflating land values or limit the LDA's ability to deliver genuinely affordable units because it has to factor in the full market land value to the prices of homes to buy or to rent on the affordable side?

To return to the matter of social and affordable housing, the Economic and Social Research Institute and National Economic and Social Council are reputable bodies that are not radical hotbeds of socialist thinking or critics of the Government. They are mainstream bodies funded by the State to provide expert advice to the witnesses. It was clear from what they were saying that the quantum of social and affordable housing being proposed here is nowhere close to enough. Both indicated, on the basis of substantial bodies of evidence, that it has to be much more than that. I am not reassured by the language being used that 40% is a minimum.

What we really need to see is what the full scope of this will deliver for the needs that are there.

In terms of the land from the Housing Agency, will Mr. Coleman confirm whether this will be transferred before the LDA becomes a statutory body or after? If it is transferred after, will the Housing Agency still have the ability to insist on covenants of use, as it currently does, for the lands it transfers to other bodies? Does the ability of the Housing Agency to constrain what happens with that land change if the LDA is a full statutory body?

I know it is not Mr. Coleman’s responsibility but a Government policy area. However, we keep on talking about affordable housing to buy or rent. The only examples of this under way are developments in Enniskerry Road and O'Devaney Gardens. In the main, they are not affordable for households earning between €35,000 and €75,000. If we want to deliver homes to rent for between €1,200 to €1,600 a month, or homes to buy at €320,000, that may not be affordable for the cohort locked out of the private market. My main concern is that, ultimately, the market will set the price for so much of it. This means that we will end up with many developments like O'Devaney Gardens rather than Poppintree in Ballymun. Is there anything that Mr. Coleman can tell the committee that will convince us otherwise? Will we all be here several years from now complaining that, while the LDA built homes, they are not accessible for those households above the thresholds for social housing and below €50,000 for single households or €75,000 for couples? That is who that housing must be accessible for.