Ms Orla Hegarty:

To clarify the Dublin City Council housing provision, I am basing my breakdown on the housing needs demand assessment that was done by the Department of Housing, Local Government and Heritage, as well as the affordable criteria that the Department published. That is to state that effectively the affordable housing scheme is a subsidy that goes between the market price and the amount that people can borrow. At the sales price rates that are in Dublin now, when you remove the subsidy available and divide the rest by what a mortgage can achieve, you are effectively looking at households earning over €80,000 in order to have the mortgage to get them to the level where the affordability subsidy will bring them up to market prices. I would stand over the figure I gave on that. The affordable housing that is planned for Dublin will be very heavily subsidised, probably in the region of €100,000 or €150,000 per unit. Depending on whether it is on public or private land, in the majority of cases it will effectively be a second mortgage for those homeowners on that scheme into the future.

On some of the other costs, I would not say that they are minimised. They are real costs. VAT, professional fees and so on are real costs.

Changing methods of building or materials would be the wrong way to go at it. Reducing standards in the short term just creates a long-term problem. There is a lot that the State could do around procurement. If the Senator looks at some of the material costs she just quoted, the price people are paying is a factor of industry capacity in some ways. If you are looking at 200 windows or bathroom suites for a housing development you will get one price and if you are looking for 2,000 you might skip the queue and get a better price. The State is in a position to look at procuring building materials at scale, particularly components, the vast majority of which are imported. I am thinking of things such as bathroom or kitchen fittings, windows, doors or heating systems and those kinds of high-value items that could be procured at scale and possibly standardised in some housing schemes. You are effectively being a smarter buyer rather than somebody buying low quality. That is a better way to look at it. That is not something that has been considered. Given that the State is looking at a high level of provision in the coming years, it is in a very good position to do deals across Europe on procurement of materials because it would be guaranteeing a supply chain to producers and would likely get good prices because it would be de-risking that industry for the producer in that country into the future. That is one small suggestion of what could be done.

On the cost of risk and uncertainty, it is very difficult to say what percentage it represents.

In preparation for today I spoke to four people directly involved in delivery: one in a local authority, one in private practice, one in an approved housing body, AHB, and one in a co-operative. Some of my comments are drawn from some of their level of involvement at the moment. When people in construction talk about risk, it is multiple factors but it comes down to the fact that if people are asked to price work and to commit to that price in a construction contract, which is generally over quite a considerable time of maybe one, two or more years, they need to make an assessment of market conditions in the future. They need to make an assessment of whether they can get subcontractors to do the work and at what price, whether there will be delays on materials and whether there will be difficulties in the supply chain. Much of that pricing and risk is a factor of the terms under which they are being asked to sign a contract. When people, particularly in the public sector, are being asked to take on a lot of risk for price certainty, which has been the policy in public procurement for about the last 15 years, they must allow enough in their price now that they will not put themselves out of business during the course of the contract and then be able to meet those contract terms. If that risk is managed better, and in construction that means there is more latitude in the contract for negotiating risk as it arises rather that allocating it at the beginning, keener prices will be achieved. The more likely a contractor is to be able to renegotiate if there are particular difficulties, material changes or inflation in the future, the keener the price will be at the beginning. However, that is not how most public contracts are set up at the moment.