Ms Orla Hegarty:

I would like to respond to three points. The Deputy mentioned the tensions between social objectives and commercial requirements. I alluded to the broader cost of some of these developments. Mr. O'Connor has just mentioned the land in Skerries as an example. Skerries barely meets the requirement that a town have a population of 10,000 people to be eligible. Building 250 houses will raise the population by nearly 10%. If one looks at the site purely from a commercial perspective, there is obviously development potential. However, road and rail infrastructure to Skerries is already at capacity, while drainage and water supply services are under pressure. It is the antithesis of the national development plan to provide more housing in a commuter town 30 km from Dublin if there is not the capacity on public transport. If the objective of the LDA is achieving consolidated growth, many of the towns appear to be repeating some of the mistakes of the past. They are commuter towns, developed at low densities, within reach of Dublin. There are broader issues in respect of the tensions between policy objectives and the broader costs of extending schools, widening roads and increasing capacity on public transport. They may not be reflected on the balance sheet of the LDA, but they will be in the costs to other Government agencies.

My second point is related to open market rates. It does not come from the Bill but from other policy statements made in this area. My reading of the situation is that the figure is 90% for market rate housing, of which 30% will come at a discount on the market rate. The Planning and Development Act 2000 specifically refers to affordable housing being made available at the cost of providing it. The situation is the same in respect of Part V social housing. The redefining is a recent development which comes from the United Kingdom. Effectively, it is the case that the figure will be 90% for market rate housing, of which 30% of which will come at a discount on the market rate, with the cost, one presumes, being subsidised by the other units in some way.

My third point is that this will make everything vulnerable to market pressures. If 90% of the deal or joint venture is based on the sale price for the 90% of houses that will be sold at market rates, it is vulnerable to a market in which we have no control over the sale prices of houses. They are subject to many external and internal pressures. There could be an external economic shock that will knock 10% to 15% off the cost of housing. This is not within our control, yet a deal will be linked with anticipated market sale prices. That is where I see a high risk of failure. Even when deals are made - they are a long way out and will involve a lot of money - if there is a shock to market prices for any reason such as a rise in interest rates or some other factor, these large propositions will be at risk. It goes back to the question of future liabilities. There is provision for other financial instruments to allow the LDA to raise finance for these developments and get involved in joint ventures. People do not realise that, when developing and getting involved in procurement at that level, the site is compromised as soon as the deal is signed. As we have seen in the case of the national children's hospital and other infrastructural projects, one cannot reverse out of such agreements.

The site is already used, the deal is bought into. There are potentially very open liabilities here on these sites. If it is 90% dependent on market rates for housing and the State is getting into very large transactions, it is potentially very risky.