Ms Orla Hegarty:

It is part of the larger policy context that I mentioned, in that the construction industry has not been supported to recover. At this meeting, we have heard the words "builder" and "developer" being used interchangeably. That speaks to people's confusion around this issue. Building and development are different businesses. When the State goes to procure a school extension, hospital extension or new library, it does not approach a developer. It approaches a builder. Builders do not have to get finance. They build under a contract, are given a specific set of instructions, there are mechanisms for price variations in materials and there are mechanisms for delays. Builders are paid monthly as long as they deliver and the work is done as instructed, meaning that they do not have to finance anything beyond their own equipment and overheads. That is how the State procures buildings everywhere except in housing. In housing, it supports the speculative development sector. This is a policy decision to seek cost certainty and outsource to developers. Developers take on finance for the development, may not be paid until the end or over a long number of years, and have control over quality, which is why we have had quality issues in the past. Often, they also control what they deliver, where they deliver it and into which market. This means that there is a great deal of uncertainty at State level about what it gets back from a housing programme, given that it cannot control the development.

This over-reliance on developers rather than builders means that the State is paying high finance costs. This has to be questioned, which relates to my suggestion of a full economic analysis. To my knowledge, there has not been an economic analysis of Housing for All to examine even simple matters like the cost of finance under these various mechanisms, all of which have the intention of outsourcing to the development sector and supporting the property sector rather than the construction sector, which are two different sectors, to recover.

As the committee will have heard from the ICSH, there is significant complexity in the funding mechanisms and approval processes, all of which is adding delays. Instead of having a year-long approval process through the Department of Housing, Local Government and Heritage, it would be much better to give the people at the coalface in the approved housing bodies and local authorities who know the mechanisms of construction delivery a contingency of 10% or 15%, approve the process and let them manage it. By delaying for six months, there is probably tender inflation of 10% on some of these jobs, yet we are getting no extra quality for that increase.

We need to draw a clear distinction between builders and developers. Builders will be available under good contract terms. The problem that builders have currently is that the contract terms transfer too much risk and there is too much uncertainty in that. Let us have more clarity around risk allocation and better mechanisms for managing risk through the contracts. I think-----