Oireachtas Joint and Select Committees
Thursday, 3 June 2021
Select Committee on Housing, Planning and Local Government
Land Development Agency Bill 2021: Committee Stage (Resumed)
I move amendment No. 58:
In page 11, between lines 23 and 24, to insert the following: “(4) Any such directive shall have regard to any City or County Development Plan, Local Area Plan, or any other statutory plan made by a local authority.”.
I move amendment No. 59:
In page 11, line 25, to delete “the Agency” and substitute “local authorities”.
I will not waste much time on this group of amendments. They are just making the point about the Land Development Agency, LDA, stripping local authorities of their functions. It is part of our wider and interconnected critique of this entire Bill in that we think that is precisely what the Land Development Agency is doing. It is stripping local authorities of functions they should have. The Government is committed to this and, as I was saying at the previous meeting, I am on quite a losing streak with my amendments, as are many of the Opposition. They are out of scope unless we can convince the Government the Land Development Agency is fundamentally misconceived, which it appears we cannot. I will make that point and probably withdraw these amendments.
I will move amendments Nos. 60, 64, 66 and 69. These amendments are technical provisions in section 8, so that the review of the achievement of purposes of the Act that apply to the LDA will also apply to subsidiary designated activity companies, DACs. They are also being inserted to provide clarity and certainty that these provisions will apply also to any of its subsidiaries. It was always the intention of this legislation, when it was being drafted, that references to the LDA would refer also to a subsidiary designated activity company. For the avoidance of doubt, I will move these amendments.
I will address amendments Nos. 59, 63, 65 and 68. Will I keep going and address all the amendments?
Amendment No. 61 is a straightforward amendment. It has been drafted by the Association of Irish Local Government. It is one of a group of amendments it sent to all Deputies on the committee urging them to support them.
It is very straightforward. It is an attempt to have a greater level of transparency and accountability. The Minister of State will see from the amendment that it requires the agency to furnish an annual report, both to the Minister and the relevant Oireachtas committee, regarding progress towards achieving the aims the Government is setting out for the LDA. As we have seen with other State agencies, the lack of annual reports, or substantial delays in their publication, means there is not the level of transparency and accountability that is required.
This is even more so the case when one is structuring an organisation like this as a designated activity company that has the cover of commercial sensitivity in terms of FOI and parliamentary questions. The requirement to publish a detailed annual report and to make it available not just to the Minister but also to the relevant Oireachtas committee is eminently sensible. I hope all members of the committee can support the amendment.
My amendment, No. 62, is very similar to amendment No. 61. The wording is slightly different but the aim is the same, which is to ensure that the review of the achievement of the purposes of the Act by the LDA and its subsidiaries would be on an annual basis rather than every five years. This is a new agency and it is important, in the context of transparency and accountability, to make sure that it does what is set out for it under the legislation and to do that every five years would be insufficient. That is once every half a decade. A lot can happen in that time, so it is important that the review would happen on an annual basis. That is the purpose of the amendment.
I will first address Amendments Nos. 59, 63, 65 and 68, as tabled by Deputies Boyd Barrett, Gino Kenny, Paul Murphy, Bríd Smith and Barry. These amendments seek to substitute references to the LDA in this section for local authorities. I am opposing them because the proposal is not relevant to the Bill.
Section 8 provides that the Minister can at any stage require the LDA to report to him or her on the LDA's progress in achieving the purposes of the legislation. In addition, the LDA will be required to report to the Minister on its progress on a periodic basis, with the first report due in 2024. As the purposes of this Bill directly relate the LDA and its functions, it is necessary for the agency to compile this report and would not be applicable for local authorities to carry out this role.
I will also address amendment No. 61, as jointly tabled by Deputies Ó Broin and Gould and amendment No. 62, as tabled by Deputy Cian O'Callaghan. Amendments Nos. 61 and 62 seek to substitute the provision in section 8 that the report that the LDA is required to submit to the Minister on the achievement of the purposes of the Act should be prepared annually instead of every five years. While I understand the intention behind the proposed amendment, I am opposing these amendments, as the provision for an annual report is already included at section 47. In addition, the acquisition and development of land can take a period of time so it is not appropriate that this report is done on an annual basis. It should be noted that the report by the LDA specified in section 8(2) is required by 31 March 2024 and every five years thereafter will be laid before each House of the Oireachtas. In addition, under section 8, the Minister can at any stage require the LDA to report to him or her on the LDA's progress in achieving the purposes of the Bill. In addition, the LDA will be required to report to the Minister on its progress on a periodic basis, with the first report due in 2024.
Under section 47, the LDA is already required to furnish the Minster with an annual report by 30 June each year. This annual report will be drafted in line with the provisions of the code of practice for the governance of State bodies. As the provision at section 47 already requires the LDA to publish an annual report the report furnished under section 8 is appropriately requested every five years.
I wish to respond to the Minister of State and to speak to amendment No. 70 because it is in this group and then we can proceed. I am genuinely surprised by the Minister of State's response because, on the one hand, he seems to be saying that there is a provision elsewhere in the Bill for annual reports, but the provision that there would be an initial annual report and then a report every five years seems to contradict that. Perhaps he could explain the position because it could be the case that I do not understand the relationship between the two relevant sections of the Bill.
I find it incredible that anybody would be against the publication of an annual report by any State agency, commercial or non-commercial, that is going to be spending substantial sums of taxpayers' money and engaging in substantial land and residential property deals with other State agencies and potentially with commercial actors, depending on what happens. That is surprising given all the difficulties we have had, for example, with NAMA, and the lack of accountability and transparency and subsequently the very significant charges that deals were done without the adequate level of attention to the public interest. We only get access to that information when it comes to light several years later, either in the Comptroller and Auditor General's look-back report or through good investigative journalism. Surely, if the Government wants the public to have confidence in this new agency, the publication of an annual report and the maximum level of transparency would be a good thing.
Amendment No. 70 relates to a requirement for the Minister to put in the public domain information regarding directions to the agency within 30 days of those directions, as opposed to "as soon as practicable", which is the wording in the Bill. Again, the public and Opposition and backbench Government Deputies need to have access to the maximum level of information about the operations of this agency to protect the public interest. That is our job, and I can see no reason for the Minister of State to oppose that amendment either.
It is important to distinguish between the two different provisions of this Bill. There is a provision for an annual report, which I support. There is no issue with that. In this section, we are talking about the review-----
There are two particular sections, one of which provides for an annual report. I do not have any issue with that, it is fine. The section I am seeking to amend relates to the review of the achievement of the purposes of the legislation. The review is required every five years. I do not think the timeframe is adequate, it should be done on an annual basis. If the Minister considers an annual review is too frequent and it is every two years, I could probably live with that, but as it is a new agency an annual review would ensure that the LDA is operating in compliance with the purposes of the legislation. The reason I am tabling the amendment is that it is a good, sensible measure. To be clear, the Bill allows for an annual report. That side of it is fine, but every five years for the review of the achievement of the purposes of the legislation is far too infrequent, especially given that the agency is new.
I want to avoid any doubt in terms of the conflation of two different issues. The aim of the annual report is to ensure that the agency is accountable in terms of its actions and operations. Its performance in the context of the achievement of the objectives outlined in the legislation is outlined in the five-year report. Other State agencies have also introduced timescales to reflect their activities. The role of the LDA is to acquire sites and deliver the construction of homes and a significantly lengthy period is required to carry out the work. A five-year timescale has been deemed appropriate to best reflect how the agency is performing in terms of the Act considering the timescale required to deliver on these sites. Everyone on this committee knows the job is challenging. The Bill also provides for the Minister to request a report at any time on how the agency is adhering to its objectives.
Amendment No. 70 seeks to replace the timeline of "as soon as practicable" at section 8(6) for a timeline of "within 30 days". I am opposing amendment No. 70, as the current timeline is appropriate for such matters. Section 8 provides that the Minister can at any stage require the LDA to report to him or her on the its progress in achieving the purposes of the legislation.
In addition, the LDA would be required to report to the Minister on its progress periodically. The first report is due in 2024. Subsection (6) relates to the giving of directions by the Minister to the agency following a review of a report received under the section. The Minister shall cause copies of any direction given under this section, as currently drafted, to be laid before each House of the Oireachtas as soon as practicable after the direction is given or action taken. It is normal, as part of the governance of State agencies, that the Minister can issue a direction to an agency. These directions will generally relate to the implementation of Government policy. The LDA is required to comply with any direction issued under this section . The proposed amendment seeks to provide that the Minister shall cause copies of any direction given under this section to be laid before the Houses of the Oireachtas within 20 days of the direction given or action taken. I am opposing the amendment and allowing for ministerial directions to be laid as soon as practicable, as is appropriate for this section.
We would aim towards 30 days. That is when the Houses of the Oireachtas would give a direction in terms of a regulation laid before it or a direction for the Minister. That is explicitly what we would aim for.
I move amendment No. 61:
In page 11, to delete lines 27 and 28 and substitute the following: "(2) The Agency shall furnish an annual report to the Minister and the relevant Oireachtas Committee regarding progress towards achieving the purposes of this Act.".
I move amendment No. 71:
In page 13, to delete lines 5 and 6 and substitute "establish a non-commercial semi-state agency.".
I have two amendments in this grouping, Nos. 71 and 74, which I will discuss together. Amendment No. 71 is one of the most fundamental amendments my colleague Deputy Gould and I have tabled. It is to make the case for a land development agency, if such an entity is to exist, that is a non-commercial semi-State body. The original proposition on the LDA, as announced, by Fine Gael in 2018, was to have an off-balance-sheet vehicle because it did not want its borrowings and expenditure to be State borrowings and expenditure. Fine Gael wanted to set it up as a commercial semi-State body using the DAC model. As we know, to secure off-balance-sheet status under EUROSTAT, a majority of a body's activities have to be on the open market. That is why, when the LDA was originally announced, 60% of the homes it was to deliver were to be sold at open market prices, with a social housing proportion of only 10% and an affordable housing proportion of 30%, as members will remember.
One of the significant changes in this Bill is that the proportions of 10% and 30% and the 60% for open market sale are gone. Deputy Darragh O'Brien, as Minister, has repeatedly told us he wants a majority of the homes on LDA land to be social and affordable. He has been quite coy about what the proportion of unaffordable, open market priced homes would be, particularly on sites such as St. Kevin's in Cork and on the Dundrum Central site, but there will be open market sales. The LDA is going to remain on balance sheet for some time, however. If, as we know, 100%, 90% or 60% of the homes in the first round of projects are to be social and affordable, the transactions cannot be off balance sheet. Therefore, all the agency's borrowings and expenditure will be on the general government balance sheet.
There is no reason, therefore, for it to be a commercial semi-State body. One of the great advantages of making it a commercial semi-State body is borrowings. It will be able to get the advantageous State borrowing rates which are much cheaper than private borrowings. That is the case with Irish Water. One of the great values of that entity, for all of its historical problems, is that it is on balance sheet. It also provides for greater transparency and accountability.
To repeat a point I made in the previous meeting, if I want information about what a local authority is spending on land or housing, that information is available to me. It is fully transparent. Once one uses a commercial semi-State body, because of the application of the Companies Act, commercial sensitivity applies. Significant volumes of information about spending and borrowing are redacted and transparency is greatly diminished. That was one of the many problems with the National Asset Management Agency, NAMA, and using public private partnerships being as a mechanism for delivery of social housing. I will not rehearse my arguments on why we should not take that approach. However, I am strongly of the view that if we are to have a State agency, it should be a non-commercial State agency which accesses cheaper government borrowing and provides full transparency on its borrowings and expenditure so the public has full visibility on its activities.
In a similar vein, our amendment proposes that the LDA be a public agency rather than a commercial entity, as envisaged in the Government's Bill. It is noteworthy that the Economic and Social Research Institute, ESRI, appears to have moved over to the socialist position on housing policy, on which I commend it. It may give the Government pause for thought on its misguided approach to resolving the housing crisis and its determination, through the Land Development Agency Bill, to involve private investment vehicles in trying to resolve the housing crisis. The ESRI, it would appear, differs with the Government and concurs with the views of the left in that what we should do is have direct State investment. It is suggesting we should be borrowing between €4 billion and €7 billion per year to invest directly in delivering public and affordable housing. It is suggesting we could develop 18,000 public and affordable units per year, a figure remarkably similar to the one in People Before Profit's proposal on dealing with the housing crisis.
The Government, in responding to us and others on the left with a similar policy, such as Sinn Féin and the Social Democrats, regularly dismisses it as fanciful. It now seems the ESRI does not think it is fanciful. The ESRI points out, as we have repeatedly done over many years, that the net cost to the State would reduce over time because the State could progressively reduce the huge waste of money being spent on housing assistance payments, HAP, and leasing arrangements if it directly invested, upfront and big time, in its own public and affordable housing stock. Over time, it would reduce the huge outgoings on HAP and leasing payments.
It is in that context that we are saying the LDA should be a purely public agency. It should not be a commercial agency in any shape or form and should not involve private finance or capital. There is no need to do that, as the ESRI points out. If the Government has not listened to us in recent years, it may listen to the ESRI which is echoing our view that what we need is for the State to directly provide its own public and affordable housing building programme. It also needs to scale up and double the current level of investment, as the ESRI suggests. It is in that context that it makes sense for the agency to be purely public.
I thank members for their contributions. I will address amendments Nos. 71 and 74, as jointly tabled by Deputies Eoin Ó Broin and Thomas Gould, and amendments Nos. 72 and 73, as jointly tabled by Deputies Richard Boyd Barrett, Gino Kelly, Paul Murphy, Bríd Smith and Mick Barry.
Amendments Nos. 71 and 72 seek to replace and provide that the LDA will be established as a public non-commercial State agency instead of a designated activity company, DAC, as provided for.
Amendments Nos. 73 and 74 seek to delete some or all of subsections 2, 3 and 4 of section 11. Subsections 2, 3 and 4 concern the naming of the agency, the disapplication of certain provisions of the Companies Act and provide for the agency to be independent in the performance of its functions.
Section 11 provides for the formation of the Land Development Agency as a designated activity company limited by shares, under the Companies Act. The LDA will be a commercial semi-State body and will be independent in the performance of its functions. Subsections 2 and 3 concern the naming of the agency and the disapplication of certain provisions of the Companies Act. I am opposing this amendment because all three of these subsections are integral to section 11. Deletion of these subsections would cause the section to only refer to the establishment of a DAC and would delete any reference to the naming of this DAC.
I am opposing these amendments because the Government has decided the LDA will be a commercial State company and there would be a significant cost to the Exchequer if these amendments were accepted. The Bill has been drafted on the basis that all provisions have been carefully considered and drafted to ensure the LDA can work commercially. Subsections 2, 3 and 4 are integral to section 11 and their deletion would cause this section to only refer to the establishment of a DAC and would delete any reference to the name of the DAC and its being independent in the performance of its functions.
The LDA is being established as a designated activity company. As a DAC, the LDA will be able to receive investment funding from the Ireland Strategic Investment Fund, ISIF, through its share capitalisation. The initial shareholding in the LDA will be €100 million, with the Minister of Public Expenditure and Reform holding shares with a value of €99 million and the Minister for Housing holding shares of €1 million. Deputy Boyd Barrett can clearly see it is a publicly-owned company. There is no ambiguity or doubt surrounding that.
On a number of other points raised by Deputies, the independent adjudication of EUROSTAT is that the State should make LDA expenditure off balance sheet. The Government's intention is that this expenditure would not be permanently on balance sheet. For this reason, we are trying pave the way to achieve that. We know the scale of the challenge ahead in terms of the capital that has to be raised to deliver housing in this State. The LDA is a key actor in that delivery. We know the high thresholds that will apply as regards affordability rates and we want to see almost 100% affordability achieved in the Dublin area. That is important.
Notwithstanding members' views, a number of semi-State agencies are fully publicly-owned and the new agency will not be any different. I also remind members that the fiscal rules, which are currently suspended, may be reintroduced in future. The State and the new agency must have the capacity to operate in a countercyclical manner to ensure they can deliver housing at scale, which our citizens so badly need and deserve.
I thank the Minister of State for his response. He indicated that establishing the Land Development Agency as a non-commercial semi-State body would create a considerable expense on the Exchequer. Every single euro the LDA acquires through the ISIF or borrowing and every euro it spends for the next number of years is on balance sheet. That is the current position.
If it is the intention of the Government to honour the commitment given by the Minister for Housing, Local Government and Heritage, Deputy O'Brien, that the majority of homes on LDA sites will be social and affordable, getting this funding off balance sheet will not be possible.
The Minister of State is completely correct that this is a matter for the CSO, in the first instance, and then EUROSTAT to decide if a vehicle is on or off balance sheet. We know the bar that EUROSTAT sets for such a decision because in the very significant EUROSTAT decision on Irish Water, the five points it outlined as to why Irish Water would be on balance sheet are all very clearly in evidence here, in that the majority of the activity of the LDA, as promised by the Minister, will be non-commercial, that is, providing sociable and affordable housing. The system for allocating those homes will be nominations through the local authorities for the social housing but also for the purchase of the affordable element. The board's policies, particularly the requirement to abide by Government policy and direction, are enshrined in this legislation. It is virtually impossible to see how the LDA can come off balance sheet unless - this is a very important point that the Minister of State made – it is in order to satisfy the core requirement of the market corporation test of EUROSTAT by providing that a majority of the residential units on LDA land are sold at commercial open market prices. I do not dispute the Minister’s view and I know it is Fine Gael’s desire for the LDA to be off balance sheet. However, if the Minister wants to achieve this, the only way he can do so is if, in the round, 60% of the homes the LDA delivers will be sold at open market prices, which we know are eminently unaffordable.
Given that the majority of the LDA activity is going to be in Dublin, the Government cannot, on the one hand, promise that up to a majority of the homes in Dublin will be social and affordable while, on the other hand, saying that it wants the LDA to be off balance sheet. This is a crucial issue and I understand the LDA itself is quite concerned about this because it is not understand how its target of 150,000 homes, as promised by the then Taoiseach and current Tánaiste, Deputy Leo Varadkar, and the then Ministers, Deputy Donohoe, and Mr. Eoghan Murphy, back in 2018 is going to be achieved if the agency is not off balance sheet. The LDA does not see how it is going to be off balance sheet if the promise of the Minister that the majority of the homes will be social and affordable is to met.
This response by the Minister of State exposes a fundamental flaw in how the Government is dealing with this matter. It shows the deeply confused nature of this legislation and the different promises of Fianna Fáil and Fine Gael as to what the LDA will deliver. On that basis, I am pressing this amendment because it would be cheaper and more efficient to have a centralised housing agency on balance sheet as a non-commercial semi-State body and borrowing, exactly as Deputy Boyd Barrett stated and as recommended by the ESRI today, at historically low rates to provide the volume of public homes that we need. As I said, this exposes the fundamental flaw of this entire enterprise and on that basis, this amendment is even more valid than it was before.
I would like the Minister of State to respond directly to the point I made and, more to the point, to what the ESRI has said today. It is directly challenging the logic behind the Government’s approach, as embodied in the Land Development Agency Bill. The Government’s obsession with public private partnerships and involving private investment, as well as the knock-on consequences of all of that in having to operate on a commercial basis, leads then to the requirement to sell some of the housing at full market price. All of this is being justified on the basis that we have to keep the LDA off balance sheet, we do not want to inflate Government debt and so forth. The ESRI is directly challenging that logic. The Minister of State should respond to the point.
I add to that the point I made about the huge cost we are incurring annually, which continues to grow, through leasing and HAPs arrangements because we are not building enough of our own stock of public housing. In the case of the LDA, we will not maximise the potential we have on our own land to deliver our own stock of public housing because the Government insists that some of it will have to be sold privately at market prices and so on. It is, therefore, limiting the ability of the public land bank to develop public housing which can then wean us off the extortionate annual cost of the rental accommodation scheme, RAS, and HAP arrangements, which are required to substitute for the failure of the State to develop on a sufficient scale its own stock of public housing. The Minister of State should also respond to that point.
The ESRI report today is highly significant, not least because the ESRI is an independent, mainstream and very well established centrist think tank. The game is up now for the Government and it can no longer ignore the very clear and strong calls for public investment along the lines of what the ESRI and the rest of us have been saying for a long number of years. The Government can no longer dismiss that argument.
On the on balance sheet versus off balance sheet argument put forward in respect of the LDA, Deputy Ó Broin is correct that the LDA is going to be on balance sheet for the foreseeable future. There is no question about that. The question that arises is whether the EU fiscal rules and orthodoxy will still exist by the time the LDA is possibly off balance sheet. Those rules belong to a previous era and mainstream economists no longer subscribe to that fiscal orthodoxy. That said, even if mainstream thinkers still subscribed to it, there is a very strong case, given the housing emergency we have, for breaking those rules, if needs be.
The idea that we would, because of the orthodoxy of the EU fiscal rules, perpetuate circumstances in which more than 8,000 people are living in emergency accommodation and 120,000 people are on housing waiting lists or in insecure HAP tenancies is utterly unacceptable. Bearing in mind that European Union member states are engaging in serious breaches of the rule of law, involving breaches of fundamental democratic rights, human rights, press freedom and attacks on the LGBTI+ community, all without proper sanction, the idea that the European Union would sanction Ireland for investing in public housing in the middle of an emergency crisis while turning a blind eye to all of those breaches of the rule of law and democratic rights is not in any way credible.
The Centre for Housing Law, Rights and Policy in NUI Galway has produced very good research on EU state aid rules and cost rental housing. It very clearly put forward the legal case that a legitimate case can be made under EU state aid rules to support interventions in housing to address housing market failure. We very clearly have housing market failure. We do not need today’s ESRI report to know that. The case for public investment is overwhelming and the use of the outdated and previously mainstream EU fiscal orthodoxy, which some of us have never supported, as an excuse is a red herring. Will members of this Government be the last people in Europe defending those rules? Everybody else has moved on from them?
I have to forgive Deputy Boyd Barrett because he was not present for the entire debate on this Bill and the pre-legislative scrutiny of the Affordable Housing Bill. However, I am not sure what part of those two Bills he does not understand. The core direction of both is to ensure there is a legislative basis for significant delivery of public housing by the State on land that we own.
The Minister in the Dáil has said that in places like Dublin, 100% of the units will be social and affordable. The use of open market sales to subsidise or reduce housing investment on the site is therefore not Government policy. The Minister has said that very clearly in the course of this debate. This Bill allows the LDA to establish DAC subsidiaries to deliver affordable housing and public housing. The Affordable Housing Bill allows for council-led affordable housing on council land. As late as this morning the Secretary General of the Department confirmed that the €500 million we spend on HAP needs to be phased out because it is better value for money for us to spend capital money on the delivery of housing. In many ways all the last few contributions re-fight an argument that was settled in the general election. The State is back in the business of building houses, we are going to do it on a massive scale, and the Housing for All programme we will see in the summer will, I believe, do exactly what the ESRI wants us to do, which is to increase significantly the capital spending on this. I really welcome the ESRI's report this morning. It is really important and I think it will allow for the aggressive delivery of the legislation that Opposition parties are opposing.
It is as simple as this. The Minister and the Government have to recognise this now. It is unbelievable that we are listening this morning to comments from Government Deputies who do not accept the facts. My colleague, Deputy Ó Broin, our party and other parties on the left have been calling for a massive housebuilding programme for some time. That is the only thing that can solve the housing crisis. What we have in the LDA Bill and the Affordable Housing Bill does not go anywhere near far enough to deliver the houses we need. The Government parties of Fianna Fáil, Fine Gael and the Green Party do not realise this. Is it that they do not realise it or that they do not accept that their policies are wrong and will not deliver the housing we need? The housing crisis did not start today or yesterday. We have been in this for ten years. We know that the only way out of it is to build houses.
Deputy McAuliffe talked about how we spend €500 million a year on HAP. It is unbelievable that that is a Government strategy to try to deal with the housing crisis-----
-----because a HAP property is not proper social housing. There is no guarantee of tenure. People have no confidence in the HAP scheme but when there is nothing else there they have to use it. It would be a lot better for both the State and the people trapped in this housing emergency for us to spend that €500 million. Instead of giving it to landlords and making them rich, we should be spending that money and building houses. That is what I have been looking for, it is what Deputy Ó Broin has been looking for and it is the only way out of this.
Sorry. I cannot have members speaking across other members. Raise your hands and speak through the Chair, please. I also ask members to stick directly to the amendment before us as much as possible. We have a lot to get through. Sorry, Deputy Gould. Please continue.
Thank you, Chairman. I will be brief. We are in the middle of a housing emergency. We are the committee that has oversight over housing. It seems simple to me that if we do not build houses as quickly as we possibly can, the emergency will continue to get worse. That is why we are tabling amendments. Deputy McAuliffe made a comment about the State being back into building houses. In Cork city the State is building no houses. Cork City Council is getting private developers to build estates that it is then purchasing off them to deliver them. Where I live in Gurranabraher and where I come from in Knocknaheeny the estates were directly built by the local authorities with funding from central government. That is what we need to get back to now: actually building houses ourselves. I will not hold up the meeting any more, but that is the only way to tackle the housing emergency.
Sorry, Deputy Boyd Barrett. I will let you back in briefly - this will be your third time in on this point - but I will go to Deputy Flaherty first. He had his hand up first. Then we will go the Minister of State and then to Deputy Ó Broin to press the amendment if he so wishes. We really need to stick to the points before us, members. I really would appreciate your co-operation on that.
Deputy Boyd Barrett will be glad to hear that I will be very brief so he will be back in in a minute. I think everybody here welcomes the ESRI report. We all agree we need to put money into housing, but the reality is that we have the LDA Bill and the Affordable Housing Bill. That is the mechanism to resolve the housing issues we have, backed up by increased investment by the Government. This committee can become very polarised but I think everybody here agrees that we need to solve the housing crisis. The LDA Bill and the Affordable Housing Bill are two key mechanisms in that, but I agree with and support what the ESRI says in that we need additional investment.
Sure, and I apologise for coming in. I just thought it would be important to respond to Deputy McAuliffe's point. The point is that we should legislate in line with Government policy. If the new policy of the Government is the direct provision of public housing, as Deputy McAuliffe says, and for 100% public and affordable housing on public land, let us first acknowledge that that is a departure from the initial conception of the LDA. The problem is that the legislation is in line with the old policy. The actual detail of the legislation is not in line with the policy Deputy McAuliffe is articulating; it is in line with the old policy. Critically, this centres on the amendments we are now discussing. If what we are trying to do is deliver public and affordable housing on public land, why set up the agency to do this as a commercial company rather than a public agency? The two things do not go together. I am afraid verbal commitments from the Government that it is in favour of what we are arguing for, what the ESRI is now arguing for and what Deputy McAuliffe says the Government is now in favour of do not tally with what is in this Bill. What this Bill is about is setting up a commercial entity that is allowed - and this legislation facilitates this - to enter into commercial arrangements with private investment vehicles.
Deputy Boyd Barrett, you have made that point and I do not want to get into repetitive arguments. I also do not want to get back into political to-and-fro between members of the committee. I will ask the Minister of State to respond to some of the comments that were made and to try to answer some of those questions and then ask Deputy Ó Broin to press the amendment if he so wishes.
I will do my best. I thank the members again for all their genuine and valuable contributions. I understand where each and every one is coming from. I note members saying the fiscal rules may not be here at some point in the future. Unfortunately, I cannot operate that scratch card type of economics whereby you have a crystal ball before you and you make predictions and put legislation through that affects citizens based on that. My job is to try to put through the best Bill we can put through that will deliver the largest scale of social and affordable housing in this State. I remind members that the affordable percentages are not limits; they are a minimum target. That is the first key thing. The Minister, Deputy Darragh O'Brien, has been very clear that in Dublin he expects the delivery mechanism through the LDA to result in 100% affordable housing. With the previous Government it was 30%. Again, that was not a limit but a minimum. I remind members that through Part V we have the increase to 20%. There seems to be a huge misunderstanding on the committee as to how EUROSTAT and the CSO compile or accredit what is off balance sheet and what is not.
Affordability is not a metric for any agency that is off balance sheet. The metric is whether it can wash its face and how it carries out its business. The LDA, like Coillte and other semi-State companies, will carry out its business by project managing with local authorities. The affordability criteria are set in stone for public lands. There will be a minimum of 50% social and affordable housing, with prices reduced by 20% under Part 5. That gives the LDA capacity and it will project manage with local authorities. The cost-rental element will be 30% below cost rents.
Anyone in this committee who suggests that, notwithstanding the massive economic challenges this State faces and the requirement to build 350,000 houses for citizens over the next decade at a probable cost of €100 billion, the State can shoulder the full cost in future and we should not have a semi-State agency that can deliver housing units countercyclically, regardless of how stressed the State is, is living in fantasy land. We have to provide the maximum number of affordable housing units. The Minister has said it is his intention to deliver 100% affordable housing in Dublin.
I remind Members that these figures are minimum rates, not targets. We have to have an honest and open debate on how to deliver these affordable houses our citizens badly need. I also remind members that the LDA is a publicly-owned semi-State company. I hope that will allay concerns.
With regard to the ESRI report on the challenge the State faces, the Department has a record budget for delivering housing. There is no point in muddying the waters by saying affordability is a criterion applied by EUROSTAT. It is not.
I have listened to the Minister of State for several minutes and all I heard out of his mouth, again and again, were the words “affordable housing”. How will the Government address affordable housing when there has been a 37% increase in the cost of materials coming into this country since 1 January? That increase is due to the 2040 plan brought in by the Government in 2018. The Government refused to accept an amendment by the Rural Independent Group on this two weeks ago. Nobody in this country will be able to get affordable housing because that Bill was not amended. We now have a shortage of housing, not only in built-up areas, a 37% increase in material costs and a lack of contractors to do the work.
The Minister of State says he will deliver affordable housing. He gave a rough costing of €100 billion. What he is saying is not accurate. I have been in construction all my life. I see the changes daily. There are ships on the seas carrying materials that are being bid for by different countries and the highest bidder gets those ships into port.
Brexit has caused a massive problem in our ports, with goods held up for the last three weeks. The costs are caused by what is happening in the ports and one section not talking to the other. The Government is causing a bigger problem. To get affordable housing we have to get equipment and materials into the country and we must have the right number of people available to build it. The 2040 plan has caused a 40% to 50% hike in prices for housing. The Government has caused a problem in local authorities with the number of planning applications coming in at the moment. I have 70 applications for housing on my books. I am getting phone calls daily on a programme introduced by a Fine Gael-led Government in 2018, which has led to a 37% increase in costs. Nothing will be affordable in this country until the Government simplifies things for the rest of the country.
We have agreed to have a committee meeting on construction costs, based on the ESRI report published today. I expect to have that session shortly. We will engage with the Construction Industry Federation on that. That might answer the Deputy's question, if that is acceptable to him.
I move amendment No. 72:
In page 13, line 5, to delete “a DAC limited by shares conforming to the conditions laid down in this Act” and substitute “a public agency to be known as the Land Development Agency”.
There was discussion on amendments Nos. 83 and 86 and I think the Minister indicated he would be accepting or coming back to No. 83 on Report Stage. Will Deputy O'Callaghan please clarify the position as I was not chairing the meeting at the time?
The Minister said he would accept amendment No. 83 and include No. 86 with it. I assume he will do that on Report Stage. I am happy to withdraw the amendment on that basis but I reserve the right to introduce it if the Minister does not accept it along with amendment No. 86. My understanding is the Minister is going to bring in an amendment to reflect amendments Nos. 83 and 86 on Report Stage.
For clarity, I ask that Deputy O'Callaghan would withdraw amendment No. 83 on the understanding the Minister is going to address it and amendment No. 86 on Report Stage. Deputy O'Callaghan has the right to reintroduce the amendments.
We agreed to withdraw amendment No. 91 on the basis that the Minister said he would look at bringing something back on Report Stage. We reserve the right to reintroduce the amendment then if he does not.
To be helpful, I was chairing the committee when the amendments grouped with No. 93 were discussed. Deputy O'Callaghan attempted to move Deputy Pringle's amendment at that time because Deputy Pringle was not here. We agreed that the amendment would not be moved at that time but that, when it came time for No. 93 to be debated, a member of Deputy Pringle's group could move his amendment. I wanted to remind the committee of that as I was in the Chair and a different set of clerks was attending that session. Am I right in saying that Deputy O'Donoghue is a member of Deputy Pringle's group?
I move amendment No. 95:
In page 15, line 18, after “authority” to insert “, subject to approval of a majority of the elected members,”.
I do not have the grouping list here. In which grouping is this amendment?
I move amendment No. 102:
In page 16, line 25, to delete “by the Minister” and substitute “through the public appointments process”.
Section 15 of the Bill relates to the board of the agency. I am strongly of the view that all appointments to the board, whether of the chair or of other members, should be made through the public appointments process. This is a discussion we had frequently with the previous Government and ordinarily we were told that, even though the appointment is made by the Minister, it is intended that the public appointments process be used. The difficulty, however, is that, unless this process is explicitly required by the legislation, the process for public appointments may be bypassed. In fact, if I understand correctly, that happened recently in respect of some appointments made by the Minister, Deputy Ryan, to the Climate Change Advisory Council. We have a public appointments process for a reason, which is to ensure that there can be no political patronage or cronyism, and nor can there be a perception of such patronage or cronyism.
I am therefore strongly of the view that all such appointments to State boards, whether they be the boards of commercial or non-commercial agencies, should be made through that process.
I thank Deputy Ó Broin for his amendments. The Government has two amendments in this grouping, Nos. 103 and 105. These amendments are technical amendments to provide that the appointment of the board and chair of the board will be subject to the consent of the Minister for Public Expenditure and Reform. The provision as currently drafted provides that the Minister appoints individuals to these roles and these amendments bring these provisions in line with similar provisions for other commercial State bodies by ensuring that the Minister for Public Expenditure and Reform, as shareholder, also consents to them.
I would remind Deputies that all appointees to the board, including the chair, will be recruited through the State boards process and in line with the code of practice for the governance of State bodies. The Public Appointments Service is currently running a competition to appoint the chair of the Land Development Agency and I hope that this process will be completed shortly.
I will address now address amendments Nos. 102 and 104, which have been tabled jointly by Deputy Ó Broin and Deputy Gould. Amendments Nos. 102 and 104 seek to amend a provision in section 15 to the effect that all members of the LDA board and the chair are to be appointed by the Minister and to substitute for this a provision to the effect that appointments are to be made through the State boards appointment process.
I am opposed to this amendment as it will be the case that all appointments to the board of the LDA will be carried out through the State boards process. This is in line with the code of practice for the governance of State boards. As is standard, the Public Appointments Service will run all LDA board competitions, in partnership with the New Economy and Recovery Authority, NewERA. Shortlisted candidates will be presented to the Minister for consideration. As I said, the appointment of the chair is currently going through this process.
It is clear that we have to abide by the code of practice. It is a robust document. Any changes that would have to be made to it if we were to accept this amendment to the legislation would necessitate a whole range of changes to different Acts as we would be adopting the principle that Acts would be changed each time. We want one robust document for public appointments and we have one. The document is really satisfactory. There is nothing like action. The appointment of the chairperson is currently going through the process.
As I expected, the Minister of State has given exactly the same rote response as his counterparts gave when we discussed these matters in respect of earlier legislation. The difficulty is that, unless this is legally required under the Act rather than being advised in a voluntary code of practice to which the Government adheres, a Minister can make direct appointments, bypassing the public appointments process. In many instances, including during the term of this Government, Ministers have done just that. I used the recent appointments to the Climate Change Advisory Council as a case in point. I fully accept what the Minister of State has said with regard to the code of practice. In general, the Government does use the Public Appointments Service, but it does not always do so. There should be no circumstances in which a Minister, regardless of who he or she is, can bypass that process. This caused enormous controversy in previous governments. Ministers appointed people who were widely believed to be politically aligned with the general thinking of those Ministers to significant State boards despite the fact that the code of practice which the Minister of State has outlined was in place at that stage. I refer not only to the previous Government but the Government before that, when Fine Gael was in government with Labour.
I do not accept the argument that making the use of the public appointments process legally required creates complications. It is a simple amendment which would prevent a Minister from making a direct appointment. All of our parties agree that not only do we want to end cronyism, but that we want to end the perception of cronyism. The best way to do so is to make sure that no Minister can make an appointment outside of the public appointments process. I will be pressing the amendment.