Paschal Donohoe (Dublin Central, Fine Gael)

I thank the three Deputies for the contributions they have made. First, the reason I am proposing the section to the committee today is because of my view that this will lead to more apartments being built. If we look at the apartment trends we saw develop across last year, we have seen that the number of new apartments that are being commenced and completed is going in the wrong direction. If we are going to, and I believe we can, significantly shift the number of new homes that are being built within our country and do that in an upward direction, we have to build more apartments. We are also aware of the viability challenge with regard to new apartments being even more acute than it is with regard to the delivery of houses. That is why we are bringing forward this measure - I will address the issue of targeting in a moment - that is focused on apartments and on trying to address the viability issues that exist with regard to apartments.

The whole purpose of doing this is not to add to the profitability of anybody who is involved in delivering apartments. It is to put in place a measure that we think gives us the best chance of trying to lead to more apartments being built. It is not about lining the pockets of developers. It is not about trying to support a small number of people involved in the delivery of apartments and their profits and their earnings. It is about trying to lead to more apartments being built in Ireland and, in particular, in our larger cities across the coming years. That is why we are bringing forward this measure.

With regard to what has been said about two listed companies, just to link that back to the comments that were made about productivity, it is also the case that if we look at the Irish economy and the number of large companies involved in the delivery of homes, we have a smaller number of large construction companies involved in delivery of those homes, and in recent years many of those companies have been pretty focused on the delivery of houses. What we now need to do is change the construction mix over time to complement the delivery of new houses to lead to more apartments being built.

The real challenge we face is that no matter what the State does, and I will come on to the role of the State in a moment, we need the private sector to be delivering more homes than it is delivering at the moment. It is just not possible for the State and the Government to build every home in our country, as we all know. We need the private sector to be delivering more than it is delivering at the moment. If I look at the different analyses that have been done with regard to this, including by my own Department, they indicate that if we are going to get to a point that we are delivering 50,000 homes per year, we need the private sector in different ways to be committing around €20 billion to get to that point. We are not at that point. We are a long way away from it, and that €20 billion is going to need to play a role in the delivery of more apartments than it is at the moment.

When it comes to the role of the State and what the Government is doing at the moment, it is worth emphasising to the committee that the funding available to the Department of Housing, Local Government and Heritage over the next number of years is, after the NDP, €35.9 billion. The majority of that funding will go against the delivery of more homes and infrastructure that is needed to deliver more homes.

The national development plan and the recent decisions we have made have now resulted in an additional allocation of €15.5 billion to the Department of housing to directly or indirectly support the delivery of more homes. This measure, which is supporting the private sector, is complemented by the large amount of additional funding in capital that the State will be using to directly or indirectly build more homes in the time ahead.

In relation to linking this to an affordability measure, we already have many different measures and policies available to support the delivery of more affordable homes within our State. If we were to bring forward a measure like this, which would also be an affordability measure, logically, it could not be a viability measure at the same time. It cannot be both. At the moment, the great challenge we have is that we are just not building enough apartments. A measure like this is designed to deliver some support to try to deliver more apartments in the times ahead.

I have a few points regarding the critique of this section’s targeting. It is capped at up to 125% of certain construction costs. We have listed what those construction costs are. The main way in which we are aiming to make this a targeted measure is that it is against the construction of apartments as opposed to all construction within our State. That makes it a very different measure to other measures we have had in the past.

In respect of the Deputy’s point on productivity, we need to increase the productivity of the housing sector, but we have other measures that are being worked on in that regard. All the different measures that the Department of housing is working on with regard to building information technology, supporting off-site construction and training and apprenticeships in this area are happening anyway. One point I would argue when it comes to productivity is that the growth in productivity within the sector, with the private sector playing a role in that, is related to the fact that we have very few large construction companies within our country at the moment. The reality that we will need to confront in the time ahead is whether we can do two things, namely, can we grow productivity in all companies involved in construction – we want to work with all of them to do it - and are we capable of delivering the additional housing that we want to deliver when we have a relatively low number of large companies involved in doing that? It is a challenge. If you compare us to the UK or other European jurisdictions, they have a larger number of large companies involved in doing that than we do. Over time, this will become a capacity constraint we will hit against.

Deputy Nash asked whether there was a deadweight risk with this. That risk exists with many taxation decisions that we make, to be truthful. The Deputy will know that already. I believe that it is a risk that is manageable in the context of the scale of growth needed in apartment commencements in the time ahead. While no measure is without risk - I am keenly aware of that - the steps that we have taken to cap it and to focus on certain construction expenses, as well as the fact that it is not made available for all forms of home construction within our State but rather solely apartment construction, are reasonable and credible efforts to ensure that this measure is ring-fenced and those risks are managed.