Darragh O'Brien (Dublin Fingal, Fianna Fail) | Oireachtas source

I will keep my contribution relatively brief, particularly as quite a lot is happening today. I welcome the opportunity to be with the select committee to discuss the Supplementary Estimate for 2023. I am joined by Marguerite Ryan, assistant secretary, corporate and business support, and Sinead Kehoe, finance officer. They will be assisting us this afternoon.

In February, I met with the committee and discussed the 2023 Estimate for my Department in the round. I again thank the members for their engagement at that meeting. I will keep these remarks as brief as I can in the interests of time.

The Estimate I set before the committee in February detailed the Department's budget for this year and totalled more than €5.9 billion for year's end, comprising €2.8 billion in current funding and €3.5 billion in capital funding. This was supplemented by €340 million in capital carryover from 2022. Additionally, my Department's housing programmes have benefited this year from non-Exchequer funding of €168 million made available from the proceeds of the local property tax. This represents a substantial element of the overall Government expenditure in 2023 and is instrumental in funding core areas of activity under the remit of my Department, particularly housing, water, local government and heritage.

The Supplementary Estimate before the committee today covers substantive and additional funding and a reallocation of funding within my Department's existing resources. Briefly, the substantive elements of the Supplementary Estimate include €113 million in programme A, housing, and €33.2 million in programme C, local government. The technical elements of the Supplementary Estimate include €339 million for programme A, housing, and €21 million for programme F, heritage, for the National Parks and Wildlife Service, NPWS.

I will go into these allocations in a little bit more detail. Regarding the housing element, budget 2023 has made significant funding available for housing delivery in line with the targets set out in Housing for All. Following the very challenging situation during Covid-19 and the new challenges around cost delivery that emerged in 2022, I assure members that my Department continues to work very closely with delivery partners to increase delivery in 2023, and beyond, in all other areas of expenditure as well.

For the information of the committee, because the members may not have seen that the commencement notices for October 2023 were published at 2 p.m., we had 2,624 new homes commenced in October, an increase of 42.5% on October 2022. This means just over 26,500 homes were commenced in the first ten months of this year, which is a record. This speaks to the progress being made with regard to the initiatives the Government has brought forward on housing delivery.

In April, we approved a package of new measures to address the housing supply shortage and to supplement the actions of the Housing for All policy. These measures, along with the existing and amended measures, impact capital and current expenditure. They are providing the necessary drivers and resources to continue to increase housing output. Two examples, which I am sure we will go into in further detail, are the secure tenancy affordable rental, STAR, investment scheme and the significant changes we made to the cost-rent equity loan, CREL, scheme. This latter scheme has seen a significant increase in applications and this is also one of the reasons for this Supplementary Estimate and the reallocation of funds.

There are very clear indications that we are going to meet our housing target for 2023 and actually exceed it. However, while the supply is ramping up, we still have the more immediate issue of provision for the most vulnerable in our society, those who do not have a home at all and who are being supported by the State in emergency accommodation. While progressing the long-term goal of having a sustainable housing supply to address our housing needs is crucially important, we must also ensure we have the resources in place to look after those who do not have a home and are in homeless emergency accommodation. This is a large part of this Supplementary Estimate.

The housing element of this Supplementary Estimate is focused on substantive additional funding, as I mentioned, for accommodation for homelessness and for the social housing current expenditure programme, SHCEP. Additional supply is being supported through the reallocation of funds to the capital assistance scheme, CAS, in respect of Traveller accommodation, where I am glad to see additional funding is required because the capital provided here is being expended again this year, private housing grants and the Housing Agency land acquisition fund, which has been incredibly successful and helps us to build our future land bank. On voids and planned maintenance, there is additional funding for the CREL scheme and the new STAR investment scheme I mentioned already.

I provided an advance briefing for members through my Department in respect of each of these aspects. As a result, I am not going to go into each element in the opening statement, but I will focus on a few areas in particular. The main priority area is, obviously, homelessness. Funding under section 10 of the Housing Act 1988 is essential to ensure that local authorities are in a position to deliver critical services to households experiencing homelessness. The vast majority of local authority expenditure is on the provision of emergency accommodation, but a range of other essential services are also provided through Housing First supports, homeless prevention day services, supports to households and emergency accommodation and tenancy sustainment measures. The increased expenditure in the context of section 10 is mainly driven by the increased spending on providing emergency accommodation, which, in turn, is driven by the increased cost of accommodation and the increase in the numbers of people being supported.

As already noted, the Department is focused on accelerating social and affordable housing supply through a combination of new builds together with some targeted acquisitions and leasing supports. In the shorter term, however, we must ensure that all who require shelter receive it and this expenditure will fund this essential accommodation.

Turning to CAS, this important funding programme is one of the main sources in the Department's Vote to fund approved housing bodies, AHBs, to provide for the construction and acquisition of homes for priority categories and also support delivery in emerging areas of housing need and the provision of emergency accommodation for single homeless individuals. As a result of very strong activity in the year to date, additional funding of €80 million is being reallocated from within the housing capital programme and this will assist with approximately 800 units of accommodation being delivered this year. The existing pipeline of approved CAS construction projects is very strong for 2024 and 2025.

Last year, the members of the committee will recall that I secured approval to introduce the Housing for All land acquisition fund, and we allocated €125 million to the Housing Agency to establish that fund. This was about building up our land banks and it is specifically focused on social housing. As I mentioned at the start, there has been very strong engagement on this measure, with sites valued at €85 million having been approved for site acquisition and sites valued at approximately €35 million now being evaluated for acquisition. It is also encouraging to see that the fund has approved sites for development by approved housing bodies. We also wanted to ensure this happened, and, so far, this will deliver 500 new-build homes.

The provision of sites for AHBs under a longer-term leasing model is important to ensure local authorities can direct the types and locations of homes being delivered by AHBs in a greater collaboration between the AHBs and the local authorities. The Housing Agency has indicated to me that all the funds allocated in that context will be fully committed in the first quarter of next year. This will be within a matter of a few months. In light of the performance of the fund to date in addressing local authority land requirements, and in some instances, quite a severe deficit of development land, in addition to supporting the strategic objective of increasing AHB construction, from the ground up, I have approved the allocation of an additional €114 million to the land acquisition fund to continue activity in 2024.

Very importantly, to continue to broaden the scope of the fund, €50 million of that will be for affordable housing delivery. On the cost-rental equity loan, members will know that I recently approved more than €424 million since 1 November to support the delivery of more than 1,650 cost-rental homes by AHBs. These are large, significant developments. The increase in the number of cost-rental home approvals shows that the changes we made to the cost-rental equity loan in the summer of this year are having the desired effect. Taking into account the additional applications coming in every week and the ones that we recently approved, with the increased crowdfunding and extending accelerated crowdfunding, additional funding of €60 million is required this year to deal with that increased demand to ensure these cost-rental homes are delivered. That is a very good thing. The majority of the crowdfunded delivery in Drogheda is targeted towards December. Increased funding will be required to allow for increased delivery of cost-rental homes this year, 2023, and to increase the delivery pipeline between 2024 and 2026.

I was very pleased to launch the new initiative of the secure tenancy affordable rental, STAR, investment scheme, during the summer, which is a key action in the updated Housing for All plan. Increased supply of cost-rental units at scale is crucial to improve the conditions in the housing rental market. It is a very popular form of tenure and it has been oversubscribed substantially for every development that we have advertised. That shows the demand that is there and we have got to try to meet it. That was the purpose of bringing in STAR as well. The scheme aims to bring forward cost-rental units at rent levels that are more affordable, a minimum of 25% below market value with secure tenure, in the main for 50 years, and sometimes longer. The scheme will assist eligible households in the private rental sector that are unable to attain housing in current market conditions and are experiencing acute affordability pressures in the private rental sector, particularly in urban areas and in cities. As this measure is new and because it was not provided for earlier on this year, a technical Supplementary Estimate is required to fund what we will spend on STAR this year. I am estimating that to be €60 million. We have 20 applications in under the scheme, which came in just at the end of July. We have four or five schemes that have moved to the next stage, which will be fully approved, and we expect drawdown in that regard this year.

Turning quickly to the local government element to the Supplementary Estimate, it is focused mainly on key areas to support local authorities in delivering the critical services they provide at a local level and across each of the areas of local government. I am confident and content that the additional funding will provide much needed support to local authorities to enable them to continue to deliver their services for the remainder of this year. As members know, the country has experienced higher than normal periods of rainfall from early July, saturating the ground throughout the country. Rivers are also at high levels and following three particular storms that all members will be aware of - Babet, Ciarán and Debi – to date, much of the country has experienced some level of localised flooding. The most acute flooding has been in the south, east and west. Members will be aware that the Departments of Social Protection and Enterprise, Trade and Employment provide funds for homeowners and for businesses for the effect of flooding. There is no specific line item for local government to assist it in the additional costs that local authorities bear and have borne because of these weather events. An estimated figure of €12 million is sought to meet the exceptional unbudgeted costs of the local authorities most severely impacted. That is based on the widespread nature and scale of the damage to date.

I will refer to a couple of specifics. I welcome the transfer of Shannon Heritage sites from the Shannon Group to Limerick City and County Council and to Clare County Council. That has happened over 2022 and 2023 and it is good that they are directly back under the control of the local authorities. I am pleased to support these transfers, which will secure the future of these important sites and realise their full potential, as well as complementing and augmenting the tourism offering in the mid-west region. Members will see in the briefing that there is additional funding provided for those specific sites, including King John's Castle in Limerick.

I will explain stranded costs. The Supplementary Estimate will provide funding towards water sector transformation costs in 2024. This transformation represents significant reform of our water services. As members know, our objective here is to deliver a world-class publicly owned water services authority. We are on course to deliver that. Progress is being made and a very significant milestone was reached this year when we concluded agreement with the unions on water transformation - a single publicly owned utility under Uisce Éireann. We are seeing the transfer of plans happening right across the country. I thank the unions for their very constructive engagement on this process that I was directly involved in. It is good to be able to see us move forward with this. By 2026, effectively, Uisce Éireann will have assumed full responsibility for water services delivery. That is why we are here speaking about stranded costs this afternoon. The majority of these costs relate to water services, central management charges, CMCs, for which local authorities will have no source of funding. It is essential to ensure their budgets are balanced and they can provide the services. In 2024, we will continue to fund payroll costs for those staff. The CMCs are central corporate costs. They relate to HR, finance, IT and buildings and they cannot be directly related to a particular service. They form a very significant part of the delivery of services. CMCs are embedded in local authority budgets for 2024. Other stranded costs relate to staff who currently work less than 50% of their time on water services and are not eligible to transfer to Uisce Éireann.

I briefly want to mention retained fire services. As members will see, this year we are seeking to provide an additional €8 million for local authorities to fund the first phase of the implementation of the Workplace Relations Commission, WRC, agreement that will support much needed improvements to work-life balance and pay for retained firefighters and for retained fire services right across the country. I directed the management board of the National Directorate for Fire and Emergency Management to review the delivery and the sustainability of the local authority retained fire services, with a particular emphasis on recruitment of new personnel and retention of existing personnel by improving the pay and conditions and work-life balance that I mentioned. The Government has always recognised the challenges in this space and that is why I sought the report and recommendations on the retained fire services and why I immediately got to work with the Department on these recommendations. There was intensive consultation between my Department, the Local Government Management Agency, and, importantly, the union representatives over the summer. Thankfully, we are now in a position to move forward with better pay and conditions, as I always said I would do. I will continue to advocate for additional advances in the national pay talks. Because we were implementing those improvements in this year, there will be approximately €8 million worth of additional costs. Approximately €28 million will be provided for next year as well.

I will conclude by referring to the heritage elements of the Supplementary Estimate. The aim of the programme is to conserve and manage Ireland's heritage for the benefit of current and future generations. The investment, through the 2023 Estimate, will allow us to accelerate planned investment, particularly in the area of strategic land purchases and to support visitor services, the removal of invasive species and nature conservation work in all of Ireland's 78 national park and nature reserve locations, as outlined in the strategic plan.

Of particular note was the purchase of the 552 acre world heritage lands at Dowth Hall and demesne, including Netterville, in County Meath. The purchase of that is falling entirely in the 2023 costs, so we must provide for it in this year. That was an opportunity that could not be missed. It is only the seventh national park in the country, and the first in the north east of the country, the Brú na Bóinne National Park, which is very significant.

In 2023, we completed several major projects. There is an additional €21 million for heritage in that space, not all of it is for that purchase but a sizeable portion of it, approximately €11 million, is provided for it in this year's accounts. We have completed other projects, including car parking facilities at major parks, restoration work on many buildings, including the restoration of famine cottages in Wild Nephin National Park, the work on the glasshouses at Muckross House, and the general repairs and maintenance of trails and facilities that arise from poor weather conditions.

The supplementary allocation will allow for strategic investment in building and improving our capacity, with significant benefits arising from initiatives such as providing and improving staff facilities and updating our ageing fleet of vehicles.

I have tried to keep my remarks as brief as possible while covering the main points of the Supplementary Estimate. Of course, I will be happy to deal with matters that members wish to raise. If we do not have the answers today, which I expect we will have, we will certainly revert to committee members. I thank members for their time and attention.