Dr. Michelle Norris:

We were able to re-finance our loan book because of one-off relatively unusual circumstances. We had an additional €20 million that we had no need to make provision for in our loan book and we made it available to the Government. We do not set policy and therefore we made it available to the Government for purposes at its discretion.

Deputy Nash raised a question about the capacity of the sector. We need to differentiate between the capacity of the sector to continue to manage existing houses and to develop more housing schemes and draw down loan finance. As other contributors have remarked, the sector is very fragmented. There are 500 organisations and a large proportion, approximately half of the stock, is owned by small properly voluntary organisations with no paid staff. Most of them have had their dwellings funded by Government grants. They provide a valuable service, in particular providing housing for elderly people etc. This saves the State a great deal of money in other areas. Do they have the capacity to negotiate complex loan agreements and carry out future development using that vehicle? Probably not. Perhaps they could have in some cases with additional support from organisations such as the Housing Finance Agency or if local authorities encouraged groups of them to come together to draw loan finance collectively. There is an argument for the State to continue to fund them because the costs to the State are low and the savings to the State that they realise are high. It is a valuable community service.

The second issue relates to the capacity of the housing association sector to use finance from borrowing from ourselves or from commercial lenders. I am more concerned about this issue. Currently, we have €500 million available for lending but relatively little has been drawn down. The vast bulk of the finance we have lent has been drawn down by the Clúid Housing Association, which is by far the most active developer in the sector. We have actively tried to encourage associations to apply to us but only a relatively small number have been forthcoming. This is something I am personally disappointed about. We need to actively try to encourage associations to come forward to us with borrowing proposals and we would be interested to listen to them.

Reference was made to upskilling associations to take advantage of our finance.

That is an issue which should be relatively easily addressed.

There is also an issue about the size of organisations and the type of skills one would expect in larger organisations. There are a couple of large housing associations in Ireland, such as Clúid, but they are relatively few. I would take the view that there may be potential for encouraging new players to come on board in the housing association area and to provide housing association dwellings. There are, for instance, some very large charitable bodies established in Ireland which run very large services but which do not provide housing. They could be encouraged to get involved in the area. In continental Europe, local authorities have separate what are called arm's length organisations which could get involved in the area. At this stage, and in view of the scale of housing need and the fact there is significant opportunity in the market for housing associations to get very good value, there may be a need to think outside the box and to encourage other organisations to get involved in the provision of housing.

I refer to the system of, and arrangements for, regulation. As Mr. Ó Lionáin mentioned, the proposed voluntary code of governance takes into account the different sizes of organisations and whether they have paid staff and expertise. That is appropriate because it is neither fair nor realistic to impose the same level of regulation on a small parish committee that provides one scheme of housing for elderly people as that to which one would expect an organisation like Clúid to adhere. The Housing Finance Agency has made it clear in its submission on the voluntary code of governance to the Department that for very large organisations which have received substantial State funding in the past - the types of organisations we would expect to be able to avail of private sector borrowing - a mandatory independent regulatory system is appropriate.