Oireachtas Joint and Select Committees

Thursday, 10 June 2021

Select Committee on Housing, Planning and Local Government

Land Development Agency Bill 2021: Committee Stage (Resumed)

SECTION 15

Photo of Steven MatthewsSteven Matthews (Wicklow, Green Party)
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I welcome committee members and the Minister of State at the Department of Housing, Local Government and Heritage, Deputy Malcolm Noonan. We will recommence with amendment No. 106. Amendments Nos. 106, 116 and 117 are related and may be discussed together.

Photo of Malcolm NoonanMalcolm Noonan (Carlow-Kilkenny, Green Party)
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I move amendment No. 106:

In page 16, line 27, to delete “members” and substitute “directors”.

These are technical amendments regarding the directors of the board and the role of the chief executive of the Land Development Agency as a director of the board. They do not change the intent of the existing provisions.

Amendment No. 106 changes the word "member" to "director" in section 15(3). This is purely for consistency to ensure that there is no confusion between a member or a director. A member is a director of the board but for consistency throughout the Bill it has been decided to only refer to the term "director".

Amendments Nos. 116 and 117 change the word "member" to "director" and "director" to "Chairperson" in section 16(7). In line with other commercial State bodies, the chief executive of the Land Development Agency will be a director of the board but will not be the chairperson. This is for governance reasons. This amendment will provide certainty that the LDA chief executive is a full ex officiodirector of the board for the purposes of matters such as quorums for board meetings.

Amendment agreed to.

Amendment No. 107 not moved.

Photo of Steven MatthewsSteven Matthews (Wicklow, Green Party)
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Amendments Nos. 108 to 115, inclusive, are related are may be discussed together. Amendments Nos. 110 and 111 are physical alternatives to amendment No. 109.

Photo of Eoin Ó BroinEoin Ó Broin (Dublin Mid West, Sinn Fein)
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I move amendment No. 108:

In page 16, line 37, after “to” to insert “land management, land economics, sustainable land use,”.

I will speak to all amendments in my group to try to expedite them. My colleague, Deputy Thomas Gould, is in the building and is trying to log in to the meeting but is having technical difficulties. Perhaps that can be recorded until he gets in.

This all relates to section 15, which provides for the board of the agency. I will go through each of my amendments in the group one by one.

In the section dealing with the competencies of the members of the board, it seems odd that there is no requirement to have competencies in land management, land economics and sustainable land use given that according to the Government, one of the primary functions of this agency is active land management. Therefore, it is essential that there be board members with those very specialised skills that often necessitate university qualifications as well as work experience. That is the purpose of amendment No. 108.

Amendment No. 109 concerns section 15(6). It says that one of the requirements is for people to have experience of delivery of housing and goes on to say "which may include the delivery of social and affordable housing.". I am worried about the word "may" given that the Government is saying that the primary function of the agency is to deliver affordable housing and a portion of social housing. Therefore, I do not see why the word "may" is included. A comprehensive knowledge of social and affordable housing delivery should be an essential criterion.

Likewise, amendment No. 110 seeks a requirement to have knowledge of homeless services and homelessness prevention in those areas. There is constant discussion about the need to ensure boards have greater diversity in terms of gender and ethnic and cultural origins. Therefore, amendment No. 113 attempts to place a requirement into this section so that the Minister would have to have adequate regard for those.

Amendment No. 114 is a key amendment that aims to ensure that no member of the board has a conflicting financial interest in respect of the use of land for social and affordable housing by way of a mandatory self-declaration. Again, this is such an eminently sensible thing. Given that this will be a designated activities company and that even when it is subject to FOI, so much of the intricate detail of its dealings in land and residential development will be redacted, such a mandatory self-declaration is crucial.

My last amendment in this section requires the Minister to lay a report on the directors before the Oireachtas no less than 30 days after the appointment of the board. Again, this is something we have often called for when there have been changes to boards that come under the remit of the Minister so that there is full transparency and the Oireachtas, the media and the wider public know the people who have been appointed are and the basis for appointing them to such an important body, including their qualifications and work experience.

Photo of Duncan SmithDuncan Smith (Dublin Fingal, Labour)
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I tabled amendment No. 112 to try to make the board of the agency as strong as possible and as weighted as possible towards people with experience in affordable housing, local authorities and approved housing bodies. I would be interested in hearing the Minister of State's response. This amendment is a pretty reasonable ask and we see no strong reason it should be opposed. In fact, it is something the Minister of State should welcome.

Photo of Steven MatthewsSteven Matthews (Wicklow, Green Party)
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Amendment No. 110, which we are also discussing, is in the names of Deputy Boyd Barrett and other Deputies. Is anyone from the group present to discuss it? I invite the Minister of State to respond to those amendments, including amendment No. 110.

Photo of Malcolm NoonanMalcolm Noonan (Carlow-Kilkenny, Green Party)
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I will address amendments Nos. 108, 109, 111, 114 and 115, as jointly tabled by Deputies Ó Broin and Gould. I will also deal with amendment No. 110 tabled by Deputies Richard Boyd Barrett, Gino Kenny, Paul Murphy, Bríd Smith and Mick Barry and amendment No. 112 tabled by Deputy Duncan Smith.

Amendments Nos. 108 to 111, inclusive, seek to include additional provisions in section 15 regarding the experience or qualifications of persons to be appointed as directors of the board in respect of experience in land management, land economics, sustainable land use, delivery of housing, public and affordable housing and homelessness services and homeless prevention. I am opposing these amendments as I believe that this section as drafted has sufficient provisions to cover what is intended by these proposals. As currently drafted, subsection 6 provides that the Minister will appoint to the board persons with "satisfactory experience, competence or qualifications in relation to construction, delivery of housing, which may include delivery of social and affordable housing, finance, and corporate governance." I believe the current text is sufficiently broad to encompass the criteria proposed and does not require amending. Additionally, both the code of practice for the governance of State bodies and the guidelines on appointments to State boards advise that the chair of the board should be consulted with to determine skills that are required for new board members. In addition, the programme for Government provides that the LDA board should include a cross spectrum of housing, financial, governance and other independent experts needed to fulfil its remit and I am fully committed to ensuring that this happens.

Amendment No. 112 seeks to insert a new provision after subsection 6 to provide that among the board there would be at least one person who is a director or employee of a registered charity engaged in the delivery of social and affordable housing and one person who is a nominee of the General Council of County Councils and the Association of Municipal Authorities of Ireland, acting jointly. I am opposing this amendment as it is not usual practice for commercial State boards to be obliged under legislation to have nominees from specific sectors to be appointed to the board. The process for the appointment of board members will be open and transparent carried out through normal State boards procedures and it will be open for representatives of these bodies to put their names forward for consideration. Additionally, both the code of practice for the governance of State bodies and the guidelines on appointments to State boards advise that the chair of the board should be consulted with to determine skills that are required for new board members.

Amendment No. 113 seeks to insert further text into subsection 7, which provides for the Minister to endeavour to ensure the board has an equitable balance of men and women. I am opposing this amendment as I believe that the State board appointments process adequately covers the need to ensure diversity on all State boards. Both the code of practice for the governance of State bodies and the guidelines on appointments to State boards advise that the diversity of existing board members should be considered when approving new appointments to a State board. This includes all forms of diversity, including gender and racial diversity. As a consideration of diversity is explicitly stated in both sets of guidelines that will apply to the LDA, it is not necessary for a provision for diversity on the board to be included in the legislation. I am committed to ensuring that there will be an equitable balance of women and men on the LDA board.

Amendment No. 114 seeks to amend section 15 by inserting a new subsection to provide that members of the board shall self-declare if they have any conflicting financial interests relating to the usage of land for social and affordable housing. I am opposing this amendment as this is already covered by the code of practice for the governance of State bodies, which provides that the boards of all State bodies should should have procedures in place to monitor and manage potential conflicts of interest of board members and management. The code of practice will apply to the board of the LDA. I do not consider it necessary to put an additional provision into this legislation as it is already adequately covered by the code.

Amendment No. 115 seeks to amend section 15 by inserting a new subsection to provide that the Minister shall lay a report on the appointment of the board before the Houses of the Oireachtas and the relevant Oireachtas committee. I am opposing this amendment as I do not consider it necessary. 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 standard, the Public Appointments Service will run all LDA board competitions in partnership with the New Economy and Recovery Authority, NewERA, and shortlisted candidates will be presented to the Minister for consideration. Furthermore, details of all board appointments for the LDA and indeed other State bodies are publicly available on stateboards.ieand will also be available on the LDA's website.

Photo of Eoin Ó BroinEoin Ó Broin (Dublin Mid West, Sinn Fein)
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While I am not surprised by the script the Minister of State has been given to read out in response, it is always disappointing when what can be considered friendly amendments in the spirit of the Bill are simply rejected. I refer to the amendments not only in my name and that of Deputy Gould but also those in Deputy Duncan Smith's name. These are attempts to strengthen the legislation. I am always wary when we are told we do not need to be specific about something because it is captured in the generality of the Bill. We all know from practice that once a Bill is passed, if something is not specified the chances of it happening are lower.

The idea that there would not be a requirement for land expertise, for example, strikes me as bizarre, as do the other cases. The difficulty with a code of practice is it is a code, not a legal requirement. Given the volumes of money and land, particularly valuable public land, that will be moving through this agency, the idea that it would not be good to have a more stringent protection against conflicts of interest, not least because of how small this country is and how narrow our business, commercial and housing interests are, I am surprised. I suspect that if I were able to read the Minister of State's mind as he was reading the Civil Service script, he might not necessarily have agreed with everything he was reading out, but we will have to deal with that in some other way. His position is unfortunate and I will press the amendments.

Photo of Duncan SmithDuncan Smith (Dublin Fingal, Labour)
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I echo what Deputy Ó Broin said. We are going through something similar at the Select Committee on Environment and Climate Action, whereby no amendments are being accepted. It will lead to a bad faith atmosphere when the Bill returns to the Dáil, and that does not need to be the case. Some pride is taken in the strength of Committee Stage when debating legislation in the House but when this happens on important legislation such as the carbon reduction Bill and the Bill before us, it is not good for politics, for the strengthening of legislation or for working together when we can work together. I will press the amendment but, as I am not a member of the committee, I will not call a vote.

Amendment put and declared lost.

Photo of Eoin Ó BroinEoin Ó Broin (Dublin Mid West, Sinn Fein)
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I move amendment No. 109:

In page 16, lines 37 and 38, to delete “delivery of housing, which may include”.

Amendment put and declared lost.

Amendment No. 110 not moved.

Photo of Eoin Ó BroinEoin Ó Broin (Dublin Mid West, Sinn Fein)
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I move amendment No. 111:

In page 16, line 38, after “housing,” where it secondly occurs to insert “homelessness services and homeless prevention”.

Amendment put and declared lost.

Photo of Duncan SmithDuncan Smith (Dublin Fingal, Labour)
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I move amendment No. 112:

In page 16, between lines 39 and 40, to insert the following: “(7) The Minister shall, in appointing the directors of the Board, ensure that—
(a) among those directors there is at least one person who is a director or employee of a registered charity engaged in the delivery of social and affordable housing, and

(b) one person appointed as a director is a nominee of the General Council of County Councils and the Association of Municipal Authorities of Ireland, acting jointly.”.

Amendment put and declared lost.

Photo of Eoin Ó BroinEoin Ó Broin (Dublin Mid West, Sinn Fein)
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I move amendment No. 113:

In page 16, line 41, after “women” to insert “and people of different ethnicities and nationalities”.

Amendment put and declared lost.

Photo of Eoin Ó BroinEoin Ó Broin (Dublin Mid West, Sinn Fein)
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I move amendment No. 114:

In page 17, between lines 7 and 8, to insert the following: “(11) The Minister shall ensure that no member of the Board has conflicting financial interests in relation to the usage of land for social and affordable housing by way of a mandatory self-declaration.”.

Amendment put:

The Committee divided: Tá, 4; Níl, 5.



Amendment declared lost.

Photo of Eoin Ó BroinEoin Ó Broin (Dublin Mid West, Sinn Fein)
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I move amendment No. 115:

In page 17, between lines 7 and 8, to insert the following: “(11) The Minister shall, no less than 30 days after the appointment of the Board, lay a report on the appointment of Directors to the Board before the Houses of Oireachtas and the relevant Oireachtas Committee.”.

Amendment put and declared lost.

Question, “That section 15, as amended, stand part of the Bill”, put and declared carried.

Sitting suspended at 10.04 a.m. and resumed at 10.07 a.m.

SECTION 16

Photo of Malcolm NoonanMalcolm Noonan (Carlow-Kilkenny, Green Party)
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I move amendment No. 116:

In page 17, line 27, to delete “member” and substitute “director”.

Amendment put and declared carried.

Photo of Malcolm NoonanMalcolm Noonan (Carlow-Kilkenny, Green Party)
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I move amendment No. 117:

Amendment put and declared carried.

Question, “That section 16, as amended, stand part of the Bill”, put and declared carried.

SECTION 17

Photo of Steven MatthewsSteven Matthews (Wicklow, Green Party)
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Amendments Nos. 118 to 122, inclusive, will be discussed together.

Photo of Eoin Ó BroinEoin Ó Broin (Dublin Mid West, Sinn Fein)
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I move amendment No. 118:

In page 18, line 11, to delete “not”.

This simple amendment will remove the word "not".

The relevant section of the Bill states: "In appearing before the Committee referred to in subsection (1), the chief executive appears as a person accountable to the Committee and not as an accounting officer." I am interested in hearing from the Minister of State the logic of this. It seems a crucial facility for members of the relevant committee to be able to ask questions on the use of public moneys and lands as they would of Secretaries General of Departments. It is the normal practice not to allow this, but given the difficulties we have had with NAMA and the controversies around large financial and land transactions occurring out of public view because of commercial sensitivity redactions in freedom of information requests, I would have viewed this as a sensible transparency measure to allay public or political fears around the nature of the deals being done. Will the Minister of State explain the logic of not allowing the relevant individual to appear as the Accounting Officer? I would be interested in hearing his arguments.

Photo of Cian O'CallaghanCian O'Callaghan (Dublin Bay North, Social Democrats)
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Amendment No. 119 concerns the chief executive of the LDA giving evidence to the Committee of Public Accounts and amendment No. 121 is about the chief executive giving evidence to all other Oireachtas committees. I am seeking to delete the provisions that bar the chief executive from questioning or expressing an opinion on the merits of any policy of the Government or a Minister when before an Oireachtas committee, which is a legal gagging order. The chief executive of the LDA will be slow to criticise the Minister or Government policy in any event. He or she will not do that as a matter of course. The provisions in the Bill would apply a legal obligation preventing him or her from being critical of or questioning policies of a Minister or the Government and curtail the work of Oireachtas committees.

It is important that differing views on housing and other matters be aired and that we get different expertise. This would help us avoid mistakes. Recently, the outgoing chief executive of the LDA articulated a view that was not in line with Government policy regarding the LDA's financing. The outgoing chief executive felt that the €2.5 billion capitalisation was insufficient. That is a valid view. If the incoming chief executive appears before the Joint Committee on Housing, Local Government and Heritage and we want to ask him or her for a view on this matter, the chief executive could not articulate a full view under this legislation if that view could in any way be seen to be critical of a policy of the Minister or the Government.

My amendments are important. A chief executive will be slow to criticise the Government anyway, but having a legal gagging order such as this, which prohibits him or her from giving a slightly different or critical view, is over the top and unnecessary. To avoid mistakes and ensure that we have the best possible policies and housing outcomes, it is important that different people in the housing sector, including the chief executive of the LDA, can express their legitimate views in front of Oireachtas committees without being curtailed legally. That is the basis of my amendments.

Photo of Malcolm NoonanMalcolm Noonan (Carlow-Kilkenny, Green Party)
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Amendment No. 118 seeks to amend the provision in section 17(2) to provide that the CEO, when appearing before the Committee of Public Accounts, appears as an Accounting Officer. I am opposing this amendment, as the subsection is in line with the guidelines contained in the code of practice for the governance of State bodies. As drafted, the subsection provides that, when appearing before the Committee of Public Accounts, the CEO appears as an accountable person and not as an Accounting Officer. The term "Accounting Officer" is normally applied to the Secretary General of a Department with a departmental Vote. The code provides that, for State bodies audited by the Comptroller and Auditor General, a CEO can appear as an accountable person at the Committee of Public Accounts. As the accounts of the LDA are to be subject to audit by the Comptroller and Auditor General under section 45, it follows that the CEO will appear as an accountable person and not as an Accounting Officer.

Amendment No. 119 and 121 seek to delete section 17(3) and section 18(8), which provide that the chief executive, when giving evidence to an Oireachtas committee, shall not question or express an opinion on the merits of any Government policy. I am opposed to these amendments, as these are standard provisions included in the legislation of numerous State bodies. This provision is required to ensure that statements made by the CEO of the LDA or another accountable person at an Oireachtas committee are within the remit of the committee. It is standard practice.

Amendments Nos. 120 and 122 are technical amendments to section 18. For the avoidance of doubt, they provide that, where the CEO is appearing before an Oireachtas committee, he or she will give an account of the administration of the LDA and subsidiary designated activity companies, DACs. It was always the intention of this legislation when it was being drafted that references to the LDA would also refer to a subsidiary DAC, but for the avoidance of doubt, I am tabling these amendments. It is important that the LDA and its subsidiaries be transparent in their operations. These amendments will help ensure that.

Photo of Eoin Ó BroinEoin Ó Broin (Dublin Mid West, Sinn Fein)
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I am fully in support of Deputy O'Callaghan's amendments. Just because something is standard practice does not mean it is good practice. Often, the people leading State agencies can build up considerable expertise and knowledge that might not necessarily be shared in Departments or by their respective Ministers. Therefore, legally preventing them in any circumstance from expressing a contrary personal view based on their experience is limiting the Government from achieving its objectives. I will take as an example the outgoing chair of the Housing Agency, Mr. John O'Connor. In the previous Dáil, this committee would have benefited more if Mr. O'Connor, a man of immense experience and knowledge, had a little more freedom when necessary to give a personal view, that would have added to the public discourse and evidence base. Experienced public officials, particularly as they are approaching the end of their careers, for example, as the head of the County and City Management Association, CCMA, or another agency, will sometimes test the limits of that legal gagging order, as Deputy O'Callaghan rightly called it, and we benefit from that. We need the greatest level of expertise, evidence and experience. Therefore, these are sensible amendments.

Regarding the Accounting Officer issue, the Minister of State did not explain why. He just stated that it was the practice. We all know it is the practice that the chief executives of State agencies do not appear before Oireachtas committees as Accounting Officers, but why not? Why do we not require the same level of transparency in the use of public moneys or, as in this case, public lands when the chief executive of an agency - in this case, the huge agency that the Government wants to create - appears before an Oireachtas committee that applies to Secretaries General? Why is that the case other than it being the practice, which is not a satisfactory answer?

Photo of Cian O'CallaghanCian O'Callaghan (Dublin Bay North, Social Democrats)
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In this legislation, the Oireachtas is seeking best practice. We are not seeking for it to be the case that, since the standard practice in other State agencies is to do something this way, we will not question it. If the Minister of State is going to defend this practice, he should explain to us why he believes that it is beneficial during a housing emergency when we need every bit of expertise, opinion and effort to get the best possible housing outcome for people to have a legal prohibition on the chief executive of the LDA giving his or her actual view on Government policy. If the Minister of State cannot make that case beyond saying it is standard practice, he is not making a case for it at all.

Since the LDA will be a new agency, it is important that it have maximum public confidence, transparency and accountability. Barring the chief executive from giving his or her views in this way does not provide the maximum transparency, accountability or, indeed, expertise that we need in all discussions on housing.

Photo of Malcolm NoonanMalcolm Noonan (Carlow-Kilkenny, Green Party)
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It is important to note that the chief executive's job is not to impart his or her own opinion on Government policy.

That is what our parliamentary system is about and it works well in that regard. These committees are there to scrutinise legislation and policy. That is standard procedure and works well in this country. In that regard, there is robustness in the Bill to ensure we still have accountability in terms of the LDA. That is what these committees and the Houses of the Oireachtas are for. The parliamentary system is such that there is full accountability for moneys and that is the case with regard to the outgoing chair of the Housing Agency, John O'Connor, who Deputy Ó Broin mentioned. It is correct that this is the Government approach to this Bill.

Amendment put and declared lost.

Photo of Cian O'CallaghanCian O'Callaghan (Dublin Bay North, Social Democrats)
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I move amendment No. 119:

In page 18, to delete lines 12 to 14.

Amendment put:

The Committee divided: Tá, 4; Níl, 6.



Amendment declared lost.

Question, “That section 17 stand part of the Bill”, put and declared carried.

SECTION 18

Photo of Malcolm NoonanMalcolm Noonan (Carlow-Kilkenny, Green Party)
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I move amendment No. 120:

In page 18, line 30, after “Agency” to insert “or a subsidiary DAC”.

Amendment agreed to.

Photo of Cian O'CallaghanCian O'Callaghan (Dublin Bay North, Social Democrats)
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I move amendment No. 121:

In page 19, to delete lines 15 to 17.

Amendment put and declared lost.

Photo of Malcolm NoonanMalcolm Noonan (Carlow-Kilkenny, Green Party)
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I move amendment No. 122:

In page 19, line 20, after “Agency” to insert “or a subsidiary DAC”.

Amendment agreed to.

Question, "That section 18, as amended, stand part of the Bill", put and declared carried.

Question, "That section 19 stand part of the Bill", put and declared carried.

SECTION 20

Photo of Steven MatthewsSteven Matthews (Wicklow, Green Party)
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Amendments Nos. 123, 124, 135 and 232 are related and may be discussed together.

Photo of Malcolm NoonanMalcolm Noonan (Carlow-Kilkenny, Green Party)
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I move amendment No. 123:

In page 20, to delete lines 23 to 26 and substitute the following: “(5) As soon as may be after the commencement of this section, the Agency shall prepare and submit to the Minister a scheme or schemes for the granting of superannuation benefits to or in respect of persons appointed under subsection (1) and persons who were accepted into the employment of the Agency in accordance with section 36 and the Minister may, with the consent of the Minister for Public Expenditure and Reform, approve the scheme or schemes.”.

Amendments Nos. 123 and 124 amend section 20 to provide for standard provisions relating to the establishment of a pension scheme for the staff of the agency. Any scheme set up by the LDA will be in line with pension schemes for other commercial State agencies and will require the consent of the Ministers for Housing, Local Government and Heritage and Public Expenditure and Reform. These provisions are similar to provisions for other State agencies.

Amendment No. 135 amends section 36 to provide for transitional arrangements arising from the dissolution of the existing body and the transfer of staff from existing superannuation schemes into a new pension scheme. The staff of the LDA are currently in either the single public service pension scheme or an interim LDA pension scheme, depending on whether they had previous service with another public sector body. This was always a transitional arrangement until the legislation was enacted.

Amendment No. 232 inserts a new section 79 to provide that the LDA will be added to the Schedule to the Public Service Pensions (Single Scheme and Other Provisions) Act 2012 as a body to which the definition of public service body for the purposes of that Act does not apply. This amendment is required to provide that employees of the LDA are no longer members of the public service pension scheme. This is in line with arrangements for other commercial State bodies whose employees are in pension schemes associated with the commercial State body rather than the single scheme.

These amendments are technical in nature and provide further details relating to the provision of pensions for the staff of the LDA, as well as dealing with other pension-related issues relating to the transition of the LDA from the existing entity to the new fully commercial State body. They provide that when the new LDA entity is established, it will set up a new pension scheme and the staff will transfer out of their existing pension schemes to the new scheme. All staff are fully aware of this and were informed of these transitional arrangements when they took up employment with the LDA.

Amendment agreed to.

Photo of Malcolm NoonanMalcolm Noonan (Carlow-Kilkenny, Green Party)
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I move amendment No. 124:

In page 20, between lines 26 and 27, to insert the following: “(6) Every such scheme shall fix the time and conditions of retirement for all persons to, or in respect of whom, superannuation benefits are payable under the scheme, and different times and conditions may be fixed in respect of different classes of persons.

(7) The Agency may at any time prepare and submit to the Minister a scheme amending or revoking a scheme previously submitted and approved under this section and the Minister may, with the consent of the Minister for Public Expenditure and Reform, approve the scheme.

(8) A scheme or amending scheme submitted to the Minister under this section shall, if approved by the Minister with the consent of the Minister for Public Expenditure and Reform, be carried out by the Agency in accordance with its terms.

(9) (a) If any dispute arises as to the claim of any person to, or the amount of, any superannuation benefit pursuant to a scheme under this section, such dispute shall be submitted to such person and determined in the manner as may be specified in the scheme.

(b) A scheme under this section shall make provision for an appeal from a determination of a person referred to in paragraph (a) to any other person as may be specified in the scheme.

(10) A superannuation benefit shall not be granted by the Agency to or in respect of any persons who are members of a scheme under this section and no other arrangement shall be entered into for the provision of any superannuation benefit to such persons on their ceasing to hold office, other than in accordance with a scheme submitted and approved under this section or an arrangement approved by the Minister and the Minister for Public Expenditure and Reform.”.

Amendment agreed to.

Section 20, as amended, agreed to.

SECTION 21

Photo of Malcolm NoonanMalcolm Noonan (Carlow-Kilkenny, Green Party)
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I move amendment No. 125:

In page 20, line 29, after “Board” to insert “or a subsidiary DAC”.

Amendment agreed to.

Photo of Malcolm NoonanMalcolm Noonan (Carlow-Kilkenny, Green Party)
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I move amendment No. 126:

In page 20, line 36, after “Board” to insert “or a subsidiary DAC”.

Amendment agreed to.

Photo of Malcolm NoonanMalcolm Noonan (Carlow-Kilkenny, Green Party)
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I move amendment No. 127:

In page 20, line 38, after “Agency” to insert “or a subsidiary DAC”.

Amendment agreed to.

Photo of Malcolm NoonanMalcolm Noonan (Carlow-Kilkenny, Green Party)
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I move amendment No. 128:

In page 21, line 6, after “Agency” to insert “or subsidiary DAC”.

Amendment agreed to.

Photo of Malcolm NoonanMalcolm Noonan (Carlow-Kilkenny, Green Party)
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I move amendment No. 129:

In page 21, line 7, after “Agency” to insert “or subsidiary DAC”.

Amendment agreed to.

Photo of Malcolm NoonanMalcolm Noonan (Carlow-Kilkenny, Green Party)
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I move amendment No. 130:

In page 21, line 15, after “Board” to insert “or a subsidiary DAC”.

Amendment agreed to.

Photo of Malcolm NoonanMalcolm Noonan (Carlow-Kilkenny, Green Party)
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I move amendment No. 131:

In page 21, line 16, after “Agency” to insert “or subsidiary DAC”.

Amendment agreed to.

Section 21, as amended, agreed to.

Sections 22 and 23 agreed to.

Question, "That section 24 stand part of the Bill", put and declared carried.

SECTION 25

Photo of Steven MatthewsSteven Matthews (Wicklow, Green Party)
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Amendments Nos. 132 and 133 are related and may be discussed together.

Photo of Eoin Ó BroinEoin Ó Broin (Dublin Mid West, Sinn Fein)
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I move amendment No. 132:

In page 23, between lines 31 and 32, to insert the following: “(5) Shares in the Agency shall not be sold or otherwise transferred without the prior approval of the Government.”

Members of the committee will recall that we had a session with the Association of Irish Local Government, AILG. Members were effusive in their support and praise for the good work of local city and county councillors, and seemed to be supportive of the many concerns they were raising with this legislation. Amendments Nos. 132 and 133 are two of the 12 or 13 amendments that the AILG submitted to members and that it urged us to table and support. So far, none of the amendments it tabled have been supported and one has been referred back to the Minister for further consideration.

What these amendments do is self-explanatory. Amendment No. 132 states: "Shares in the Agency shall not be sold or otherwise transferred without the prior approval of the Government.” I suspect the Minister will tell me that is the case anyway but it would be much more reassuring if it was contained within the legislation so it is a legal requirement. Amendment 133 states: "Notwithstanding anything contained in the Companies Acts, no alteration of the memorandum of association or the articles of association of the subsidiary shall be valid or effectual unless made with the prior approval of the Government.” This is a very significant amendment.I have to praise the AILG because some of its amendments are very carefully worded to protect the public interest.

Where there is a subsidiary DAC that has charge of significant tracts of land, significant public funds or public borrowings and is potentially in partnership with a private developer through a joint venture, the amendment makes very clear that if there is any attempt to change the articles of association or memorandum governing that subsidiary, the Government has to have explicit approval for that. Again, I can see no reason the Government would not accept this given that the LDA is set up to comply with Government policy. Therefore, any significant change to the articles of association or memorandum of understanding should clearly have Government approval. For that reason, I will be pressing both amendments.

Photo of Malcolm NoonanMalcolm Noonan (Carlow-Kilkenny, Green Party)
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Amendments Nos. 132 and 133 seek to amend section 25 to provide that the shares in the agency shall not be sold or transferred without the approval of the Government and that any amendment memorandum of association or articles of association of subsidiaries require the prior approval of the Government. I cannot accept these amendments.

Section 24 provides that the whole of the LDA's share capital shall be held by the Minister for Housing, Local Government and Heritage and the Minister for Public Expenditure and Reform and does not provide for any other shareholders. Section 25 provides that the consent of both Ministers is required by the LDA if it seeks to redeem its shares, and any funds in respect of this redemption are for the benefit of the Exchequer. On that basis, it is not necessary for the Bill to provide for the approval of the Government as it already provides for the approval of two Ministers of the Government.

On amendments to the memorandum of association or articles of association of subsidiary DACs, this is not required as section 32(3) already provides that any alteration of the constitution of subsidiary DACs will not be valid or effective unless the prior approval of the Minister for Housing, Local Government and Heritage and the Minister for Public Expenditure and Reform is sought.

Photo of Thomas GouldThomas Gould (Cork North Central, Sinn Fein)
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We tabled these amendments because we believe protections need to be put in place. The amendments are not to be controversial. They are designed to improve the Bill and make it more constructive. It is disappointing that the Minister of State has not taken on board the way in which these amendments were tabled and the reasons for them. It is disappointing because we just wanted to enshrine protections.

Photo of Eoin Ó BroinEoin Ó Broin (Dublin Mid West, Sinn Fein)
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The difficulty is that when something has the approval of the Government, there is a formal process. There are memorandums to the Cabinet and formal decisions, and these are recorded and available for posterity to assess. Where it is just a matter of a Minister discussing a decision with another Minister, it could happen over the telephone or in an email. It is not the same process. We are not talking about minor issues here. We are talking about potentially significant matters, such as the sale or transfer of shares and changes to the memorandum of understanding or articles of association. As a result, I am not satisfied that a telephone call between two Ministers is a sufficient protection. I am pressing both amendments because I believe such matters should be dealt with through a formal decision of the Cabinet.

Amendment put and declared lost.

Photo of Eoin Ó BroinEoin Ó Broin (Dublin Mid West, Sinn Fein)
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I move amendment No. 133:

In page 23, between lines 31 and 32, to insert the following: "(5) Notwithstanding anything contained in the Companies Acts, no alteration of the memorandum of association or the articles of association of the subsidiary shall be valid or effectual unless made with the prior approval of the Government.".

Amendment put and declared lost.

Question, "That section 25 stand part of the Bill", put and declared carried.

Question, "That section 26 stand part of the Bill", put and declared carried.

Question, "That section 27 stand part of the Bill", put and declared carried.

Question, "That section 28 stand part of the Bill", put and declared carried.

Question, "That section 29 stand part of the Bill", put and declared carried.

Question, "That section 30 stand part of the Bill", put and declared carried.

Question, "That section 31 stand part of the Bill", put and declared carried.

SECTION 32

Photo of Malcolm NoonanMalcolm Noonan (Carlow-Kilkenny, Green Party)
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I move amendment No. 134:

In page 27, to delete lines 21 to 23 and substitute the following: "(a) if the Agency has obtained the prior approval of the Minister and the Minister for Public Expenditure and Reform for the provisions contained in the constitution of the subsidiary DAC, relating to the ownership and control of that subsidiary DAC, and".

Amendment agreed to.

Question, "That section 32, as amended, stand part of the Bill", put and declared carried.

Question, "That section 33 stand part of the Bill", put and declared carried.

Sections 34 and 45 agreed to.

SECTION 36

Photo of Malcolm NoonanMalcolm Noonan (Carlow-Kilkenny, Green Party)
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I move amendment No. 135:

In page 29, between lines 11 and 12, to insert the following:

“(5)Any scheme providing for the granting of superannuation benefits to persons that was established by the dissolved body under the Order of 2018 shall cease to operate on the dissolution day.

(6)A person referred to in subsection (1) who, immediately before the dissolution day,was a member of— (a)a scheme for the granting of superannuation benefits established by the dissolved body, or

(b)the Single Public Service Pension Scheme, shall, on the dissolution day, cease to be a member of the scheme concerned and shall become and be a member of the relevant superannuation scheme established under section 20.”.

Amendment agreed to.

Section 36, as amended, agreed to.

Sections 37 and 38 agreed to.

SECTION 39

Amendment No. 136 not moved.

Section 39 agreed to.

Sections 40 to 46, inclusive, agreed to.

SECTION 47

Photo of Steven MatthewsSteven Matthews (Wicklow, Green Party)
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Amendment No. 137 is in the name of Deputies Ó Broin and Gould. I invite them to speak on the amendment.

Photo of Eoin Ó BroinEoin Ó Broin (Dublin Mid West, Sinn Fein)
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Have we not already discussed amendment No. 137?

Photo of Steven MatthewsSteven Matthews (Wicklow, Green Party)
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I will just check the amendment groupings. It has possibly been discussed already. There is no indication in my notes that amendment No. 137 has been discussed.

Photo of Eoin Ó BroinEoin Ó Broin (Dublin Mid West, Sinn Fein)
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I move amendment No. 137:

In page 33, after line 37, to insert the following: “(4)The Agency shall furnish the report referred to in subsection (1) to the Cathaoirleach of each local authority and the Cathaoirleach shall cause the report to be made available to each member of the authority.”

I will be brief, as we are making such good progress. Section 47 deals with the reporting arrangements. Given the significance of the Land Development Agency and its work with respect to local authorities, this amendment seeks to place an obligation on the agency to furnish the chairs of each local authority with a report. The chairs would then make that report available to the local authority members. The amendment is designed to ensure the maximum level of accountability, transparency and knowledge of elected members. It seems like an eminently sensible idea. I would hope that the Minister of State can accept it. I ask him to surprise us.

Photo of Malcolm NoonanMalcolm Noonan (Carlow-Kilkenny, Green Party)
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Amendment No. 137, tabled by Deputies Ó Broin and Gould, seeks to amend section 47 to provide that the LDA will furnish a report to the Cathaoirleach of each local authority and the Cathaoirleach will make it available each member of the local authority.

I will be opposing the amendment, as I do not believe it is necessary. The LDA is required to prepare an annual report each year. The report is submitted to the Minister, who arranges to lay it before the Houses of the Oireachtas. The LDA, like all other public bodies, publishes a report. It is a requirement under the code of practice for the governance of State bodies. The LDA has published its 2019 report, which is available on its website. It is currently finalising the 2020 report, which will also be available on the website. The LDA will continue to do this in future years. Local authority members will be able to access that annual report on the LDA website, as it will be publicly available.

Photo of Cian O'CallaghanCian O'Callaghan (Dublin Bay North, Social Democrats)
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I appreciate the report will be available to people on the website. However, co-operation between local authorities and the LDA should be two-way in terms of having the provision for the report to formally go to local authorities as part of accountability. It seems to me to be a very sensible amendment that would not place a huge burden on the LDA. It formalises communication, co-operation and accountability in that sense. It recognises that local councillors are democratically elected. The LDA is going to be heavily involved in the management of land in local authority areas and is given extensive powers in respect of being able to acquire local authority land. Therefore, this seems to be a completely sensible amendment.

Photo of Eoin Ó BroinEoin Ó Broin (Dublin Mid West, Sinn Fein)
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The hearts of city and county councillors across the country are being broken yet again. As former councillors, we all know that piles of reports from many agencies are heaped on councillors and they do not have time to read them. This amendment would require the LDA to furnish each local authority chair or mayor with a report. One would expect that report to be short and deal, in the main, with the relationship between the LDA and its work in that local authority area. In many cases, that report would state that there was nothing to report. However, it would mean that the elected members of, for example, Kilkenny or Fingal County Councils or Dublin City Council would receive a report, as they do from the managers, but specifically concerning the work of the LDA and how it relates to that council. That would mean that members would be more likely to read and digest it.

I am aware that the Minister of State is not going to accept the amendment, but I urge him to consider it. Our councillors are already heavily burdened with large volumes of paperwork, much of which is not relevant to their functional area. This would be a simple way of doing that. It would also ensure that the LDA treats all local authorities with whom it engages with the appropriate level of attention.

Photo of Malcolm NoonanMalcolm Noonan (Carlow-Kilkenny, Green Party)
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In response, I agree that the intent behind the amendment is honourable. It is important, from the perspective of local authority members, that they have full knowledge and awareness of all of the LDA work that is related to their important work, particularly in respect of housing. However, we do not see the need for a statutory obligation to do this. Every local authority member will receive a monthly housing report at the monthly plenary meetings, at which the housing section of the local authority can report on the work of the LDA. That might be the more appropriate interaction for this with respect to the specific local authority in question. That should suffice in that regard.

Photo of Steven MatthewsSteven Matthews (Wicklow, Green Party)
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Do the Deputies wish to press the amendment?

Photo of Eoin Ó BroinEoin Ó Broin (Dublin Mid West, Sinn Fein)
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Yes.

Amendment put and declared lost.

Section 47 agreed to.

Photo of Steven MatthewsSteven Matthews (Wicklow, Green Party)
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NEW SECTION

Photo of Steven MatthewsSteven Matthews (Wicklow, Green Party)
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Amendment No. 157 is a physical alternative to amendment No. 156, amendment No. 163 is a physical alternative to amendment No. 162, amendments Nos. 166 and 167 are physical alternatives to amendment No. 169, amendment No. 169 is a physical alternative to amendment No. 168 and amendment No. 175 is a physical alternative to amendment No. 174. I invite the Minister of State to speak to amendment No. 138, and the other amendments in his name, to this section, which is a new section.

Photo of Malcolm NoonanMalcolm Noonan (Carlow-Kilkenny, Green Party)
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I move amendment No. 138:

In page 34, between lines 2 and 3, to insert the following:

“Definitions (Part 7)

48. In this part—

“market value”, subject to section 53(6), means the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion;

“valuation date” means the valuation date within the meaning of section 53(2).”.

I will speak to this amendment and amendments Nos. 138, 155, 156, 159, 161, 162, 167, 168, 181, 182 and 235. I am introducing a number of amendments to this Part regarding the process for valuing relevant public land that is being acquired by the Land Development Agency, LDA. I am also introducing some minor additions to ensure the initial sites the LDA is currently progressing are also covered by this Part and can be transferred to the LDA following commencement of Part 7.

Amendment No. 138 introduces new definitions of market value and valuation date for the purposes of Part 7. The definition of market value is an accepted technical definition that is used by persons valuing land, including the Valuation Office, which will undertake most valuations of land under this Part. In order for any valuation of land or property to take place there must be an accepted understanding of what market value means. This definition of market value already appears in Department of Public Expenditure and Reform circulars 11/2015 and 17/2016 regarding the transfer and disposal of State property assets.

I want to reiterate that when land is being valued under Part 7, it will take into account the proposed use of the land, which will be to deliver significant levels of affordable housing as well as Part 5 housing.

The valuation date definition is technical and clarifies that where the LDA is acquiring relevant public land, the valuation date shall be the date that the LDA gives notice to the relevant public body that it will be acquiring the land.

Amendments Nos. 155 and 156 amend section 51 to remove the obligation on relevant public bodies to get their own estimate of the value of land where it is being offered to the LDA. This was an unnecessary provision and would have increased costs to a public body where it was disposing of land to the LDA. It is envisaged the Valuation Office will carry out this valuation exercise in many instances, as is existing practice for property transfers between public bodies.

Amendments Nos. 159, 161, 181 and 182 amend sections 53 and 54 to provide for the transfer of the public lands already being progressed by the LDA such as the Central Mental Hospital in Dublin and St. Kevin’s Cork. When the LDA was established in 2018 the Government decided these lands would transfer to the LDA but the actual transfer would not take place until this legislation was in place. This amendment specifically provides for these lands as they are not covered by the two arrangements currently specified in the Bill where a public body offers land to the LDA or the Government directs land should be transferred following a report to Government by the LDA. By specifically providing for these lands in this section, it will ensure the full provisions of this legislation will apply to these lands. This includes there will be specific affordable housing attached to each site under Part 9 and the land can be valued in line with this Part. The details of the land to be transferred are set out in a new Schedule.

Amendment No. 235 is a new Schedule that details these lands to be transferred to the LDA.

Amendment No. 162 further amends section 53 to clarify the valuation date for the purposes of valuing public lands transferring to the LDA shall be the date the LDA gives notice it will acquire the land. Amendment No. 168 is a consequential amendment to section 53(4)(a)

Amendment No. 163 amends section 53 to remove the requirement for the relevant public body and the LDA to try to get an agreement on the valuation of land before the land will be valued in line with the regulations I will bring to set out the valuation process. This is to streamline the process and to reduce unnecessary costs. As currently drafted, it would require both parties to get independent valuations.

Amendment No. 167 is a consequential amendment to section 53(3).

Photo of Steven MatthewsSteven Matthews (Wicklow, Green Party)
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I did not see the order in which members raised a hand. I do not know if Deputy Ó Broin or Deputy O’Callaghan indicated first. They both have amendments to this section and I invite either of them to proceed.

Photo of Cian O'CallaghanCian O'Callaghan (Dublin Bay North, Social Democrats)
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Deputy ÓBrion had his hand up first but I am happy speak first. This section and the discussion on these amendments are a key part of the Bill. Amendments Nos. 157, 160, 164, 166 and 169 in this grouping are in my name. They all seek to remove the references to market value and substitute the words "existing use value". If we are serious about delivering affordable, cost-rental and social homes on a good value for money basis, we need to use existing use value rather than full market value. The Minister of State said the full market value will be subject to the fact that Part 5 will be applied to these lands as it is applied to all residential lands and some of these homes will be affordable homes. The issue with that is given the cost of Part 5 delivery to the State, its bearing on land values is quite minimal. Given the way the Government is going about the delivery of affordable housing and the way it is defining affordable housing as being just a marginal discount on full market rates rather than being tied to people’s incomes, there is a real danger the market value for the Land Development Agency, even allowing for the fact that some of the homes will be affordable, will have a very minimal bearing on the full market value. If we want housing that is genuinely affordable and cost-rental housing people on incomes below the national average income, for example, people who do not quality for social housing, can afford, it is very important land is delivered at a very affordable cost. If our amendments are not accepted, land will not be delivered at an affordable cost. Furthermore, we will not achieve that aim with respect to one of the key benefits that could be provided by the Land Development Agency in terms of strategic land assembly and getting land available at an affordable cost to provide cost-rental and social housing that is affordable. These amendments are very important in ensuring the Land Development Agency is able to deliver land at a lower cost to achieve the delivery of affordable homes. I strongly advocate for these amendments. I would like the Minister of State to indicate why he believes the use of market value will deliver a better outcome for us in the middle of a housing crisis. What is the Government's justification for basing this on market value when we need to be able to deliver homes at a much more affordable cost?

Photo of Eoin Ó BroinEoin Ó Broin (Dublin Mid West, Sinn Fein)
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As Deputy O'Callaghan said, this is one of the most important sections of the Bill. I have seven amendments in this grouping relating specifically to sections 53 and 54. These are new additions to the Bill. They were not in the original version. They did not get pre-legislative scrutiny. Given these are the sections which will determine what the LDA will pay for lands it is acquiring from other State agencies, it is crucial we fully understand what it is the Government is proposing. Unfortunately, when one reads the Bill and listens to some of what the line Minister, Deputy O'Brien, and some of his backbenchers have said, there are conflicting interpretations. I am not saying people are wrong or are misreading the Bill. Land valuation and the determination of price for land is a very complex area of professional expertise. People who work in this area in local authorities, Departments and in the private sector get master’s degrees from Technological University Dublin and have a level of knowledge about how one does this, which, unfortunately, many members of this committee do not have and, therefore, we are grappling with this as lay people. The difficulty with the legislation is it is quite opaque in terms of how this will work. I will throw out a few tangible issues, to which it is important the Minister responds. Public land has different values depending on who owns the land. Local authority land generally has what is known as historic value. It sits on the books of a local authority on the basis of the value it paid for it. That is very different from any calculation of its current use, whether it is existing use, which is the formula Deputy O'Callaghan and myself are arguing for, or market value, which is what is provided for in the Bill.

Therefore, the historic value, where that is lower than the existing use, should really be the transfer price so that the local authority does not lose out if it is transferring land but neither does the LDA pay above the price.

The really important concept of existing use, which should be the standard under this Bill, is generally the land from other public agencies that will be transferred. It is not used for residential housing; it is used for a variety of different forms. St. Kevin's is an old hospital site, Dundrum central is an old psychiatric hospital site. The CIE and HSE lands in Limerick, for example, are public transport and public health lands and they have existing use values. Existing use is invariably a lower cost than market value, so why the Government would not have used existing use as the bar is hard for me to understand and I would like it explained.

Finally, market value is the estimated value that the land will get when sold on the open market. Of course, if conditions are attached to the use of the land, that constrains the market value. For example, if we take the Dundrum central site, let us imagine it will have 10% social housing - which is too low, but that seems to be the indication - 50% affordable rental and purchase, and 40% open market sale. When any professional land valuer is estimating the market value of that site, there are four separate calculations: first, the calculation which keeps the land value for the social housing very low, then second, a calculation for affordable sale units which could be based on the future imputed uplift of the value of that land if-and-when that affordable home is sold into the market. That is a way of thinking about that valuation. There will also be a valuation for the land that the cost rental units are on. Again, that could be the imputed yield of those cost rental units over a period because that concretely affects the land value, particularly because the LDA may involve private equity investors or other private vehicles. Then, of course, there is the full market value of the land that would have open market price homes. The Minister said that his desire is in Dublin that a majority, if not 100%, will be social and affordable, but he is also indicating that some percentage could be open market sales. For example, in open market sale, the price on the strip of land beside Dundrum central hospital last year, for a two-bedroom apartment, was €500,000. What many of us are worried about is, notwithstanding the fact that where there is a mixed tenure scheme with social, affordable rental and for purchase on open market price, there will be a land value calculation for each segment of that housing and the accumulated cost of that to the LDA would be higher than the existing use value. If I am wrong, I am happy to be corrected but nothing I have heard to date says that I am.

Finally, the proposal around Part V is one of the most bizarre propositions. Part V is based on an assumption that a developer paid full market price for the land and has a full development cost. Part V has a very specific mathematical formula, which establishes the discount between the existing use value of the land at the point of purchase and the market value, if I understand it correctly, to achieve a discount for the purchase of the social and affordable homes by the local authority. A Part V formulation cannot be applied when the land is not bought at full market value as it is sold on the open market. That just makes no sense. The big concern in this regard is that surely if land is to be transferred, much as I would prefer if it was not for the purposes this Bill is setting out, from CIÉ, Iarnród Éíreann, the HSE or a local authority to the LDA, the agency should not pay anything more for that land than its book value, whether it is existing use or the historic value on the books of that agency or organisation, otherwise it is paying above the odds. Why is this important? It is not just an accounting exercise. The LDA will deliver affordable homes to buy and rent. The price of those affordable homes, the price of the rent that is set or the price of the purchase, will be determined by the all-in development costs. We know land, after the nuts and bolts of hard construction, is one of the largest factors of development so if the LDA pays more than it should for the land on which social and affordable homes will go, then unfortunately that will push up the development price and that will push up the cost to the affordable purchaser or renter. I am less concerned about local authority lands. How Dún Laoghaire-Rathdown managed that transfer will probably reflect the existing use value but I am really concerned about HSE, CIÉ, OPW lands, etc. We need the Minister to explain in plain English how this will work and how it will not result in what I, Deputy Cian O'Callaghan and others believe the LDA paying above what it should pay for land, thus pushing up the cost and ultimately the price of affordable homes to rent or buy for working people.

Photo of Thomas GouldThomas Gould (Cork North Central, Sinn Fein)
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I support the points outlined by Deputy Ó Broin on the price the LDA will pay for land. I am conscious of the domino effect the LDA paying over the odds for land will have on the price of affordable rent and purchase homes afterwards. They are intrinsically linked. It is important the correct figures are used for the value of land and the amount paid by the LDA. We cannot have the LDA pay over the odds as that will have a negative effect on those trying to rent or buy affordable homes.

A report came out today, which said that young people now live with their parents three years longer, up to 28 years, because they cannot set out to rent properties. The average age for a first-time buyer is now 34 and it has also increased by three years. This has ensured that the housing crisis continues to get worse, whether from the point of view of a renter or buyer. We are worried the LDA will not deliver what the Government says it will. That is why the price of the land has to be correct from the start and why I support Deputies Ó Broin and O'Callaghan's amendments. I ask the Minister of State to consider them.

Photo of Malcolm NoonanMalcolm Noonan (Carlow-Kilkenny, Green Party)
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I will address amendments Nos. 157, 164, 166, 175, 179 and 180 tabled by Deputy Cian O’Callaghan, No. 158 tabled by Deputy Duncan Smith, who had to leave to attend another committee meeting, amendments Nos. 160, 169 and 170 jointly tabled by Deputies Cian O’Callaghan, Ó Broin and Gould, and amendments Nos. 163, 165, 174, 175 and 183 jointly tabled by Deputies Ó Broin and Gould.

Amendment No. 157 seeks to amend section 53 to delete the reference to “market value” and change it to “existing use value” and No. 183 seeks to introduce a similar amendment to section 54.

Amendment No. 158 seeks to delete section 53 and replace it with an amended provision that provides that the relevant public body disposing of land to the LDA will receive a price that is cost neutral for them.

Amendments Nos. 160, 164, 166, 169, 170, 175 and 179 seek to amend section 53 by deleting the reference to “market value” and replacing it with “existing use value”.

Amendments Nos. 163, 165 and 175 seek to amend section 53 by deleting subsections (2) and (3) and amending the matters that the Minister can prescribe regarding how land is to be valued.

I will not accept these amendments. I have tabled an amendment to provide for a definition of "market value" that will allow the land to be valued taking account the proposed use of the land, which will be to deliver significant levels of affordable housing as well as Part V housing. I believe this is a more appropriate valuation. Where land is being used for affordable housing, I expect the land value to be extremely low.

The definition of "market value" is an accepted technical definition used by persons valuing land including the Valuation Office which will undertake most valuations of land under this part. For any valuation of land or property to take place, there must be an accepted understanding of what market value means. I reiterate that when land is being valued under Part 7 it will take into account the proposed use of the land, which will be to deliver significant levels oaf affordable housing as well as Part V housing.

That is a 50% minimum and there is also 10% social housing and 10% affordable housing under Part V. That is 70% in total. I have also tabled an amendment to section 53(2) and to section 53(3). It is important that the Minister can have the power to prescribe how land will be valued, and the matters that the Minister can prescribe are very clearly set out in section 53(4). These provisions should be removed from the Bill.

Amendment No. 180 seeks to amend section 54 by removing the reference to the local authority. Section 54 provides that the Minister for Housing, Local Government and Heritage can vest relevant public land in the LDA once a decision has been made that the LDA would acquire the land after it has been offered to it for sale by the relevant public body under section 51 or following a direction from the Government under section 52.

Vesting is often used where land is transferring from one public body to another and it can be a speedier process than traditional conveyancing. It is appropriate that the Minister can vest local authority land in the LDA only where the land has been offered for sale by a local authority under section 51. I do not consider it is appropriate to remove this provision. Local authority owned land cannot be vested by the Minister to the LDA unless it has been offered for sale to it by the local authority.

Photo of Paul McAuliffePaul McAuliffe (Dublin North West, Fianna Fail)
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I wish to speak on the amendments that seek to remove the term "market value". I can understand the desire to do this if the reason it is included in the Bill is not understood. We go back to the discussion we had in the first session. Effectively, the LDA is a mechanism that allows for the transfer of land at a nominal cost, so that when homes are built they do not include a significant land value. Therefore, the process or calculation that allows us to do this is to take the existing market value and apply an affordability charge to the land. In doing so, effectively the land is rendered of little or no value because if it was traded on the open market it would not be possible to have a profit or the normal developer's levy. In other words, it would have nominal value. Not only this but the responsibility to provide affordable housing on the land stays with the land permanently regardless of who the owner is. It is a permanent devaluation in the cost of the land. To remove the term "market value" would, in essence, remove the starting point of this devaluation process and, therefore, while it sounds like a good headline grabber it actually takes out one part of the equation, which would result in a land value that is nominal and, therefore, not included in the final price of the sale or renting of these homes.

Photo of Eoin Ó BroinEoin Ó Broin (Dublin Mid West, Sinn Fein)
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This is a very serious part of the Bill and, therefore, I am listening very carefully to what the Minister of State and Deputy McAuliffe have said. My concern is, and I say this very respectfully, what the Minister of State and Deputy McAuliffe are saying is not the same and let me outline why this is the case. I understand the Government's amendment very clearly, and the Minister of State rightly used the phrase "future use" and not "existing use" value. This future use is, as I outlined at the start, a mixture, with some social, some affordable and some open market housing. Therefore, each bit of land, depending on its future use, will have a different market calculation. Some will be very low and some might be a little bit higher. If, as the Minister of State suggested, that there could be some developments with 30% open market sale then that land has full market value in terms of what it would get on the open market. The combined cost of these three is higher than the existing use.

Likewise, and this is why the cost rental issue is relevant in the valuation, the Affordable Housing Bill allows for limited return shared equity investment, essentially private sector investment, which adds to the overall cost. This produces a yield and this yield is relevant to the market valuation of the land if those units are ever to be traded in future. It would be reasonable to expect that this would have to be taken into the market valuation.

Likewise with affordable purchase housing, if the terms and conditions of the affordable purchase housing are similar to those under the serviced sites fund there is a clawback, and once the clawback is paid they are open market price houses with open market price land. This gets very serious because, of course, this goes to the heart of whether or not the agency is compliant with EU state aid rules. A lot of private developers will look at the price at which the LDA acquires land for development. Parsing the valuations to ensure there is no undue state aid, particularly with respect to any aspect of the housing which allows either full market profit or a limited profit. Therefore, we could have at a future stage legal challenges by large residential developers who will dispute the land valuation. It happened in the context of NAMA and some of its land deals.

I respectfully disagree with Deputy McAuliffe that this is a mechanism to reduce the land to a nominal cost. If we were going to do that we would just use the existing use value or the book value based on historic cost to the State agency. This is an attempt to work out a complex valuation formula that will not run aground on state aid rules and will allow for a varying series of valuations on each piece of land depending on what it is used for. This will result in the LDA paying more for the land than if it paid existing use value. I suspect there is no way around this because the Government is wedded to trying to get this vehicle off-balance sheet and this is part of the price but that price is a higher cost to the LDA and the taxpayer and, ultimately, higher prices for the purchaser and borrower.

People really need to think very carefully before they approve this because it is an area where there will be in the future, mark my words, a Committee of Public Accounts hearing and a look-back inquiry from the Comptroller and Auditor General asking why on earth the LDA paid 5%, 10%, 15% or 20% or more above the existing use value for a piece of land owned by a State agency, resulting in higher prices for affordable purchasers and renters when they should have got it at existing use value.

This is not some headline grabbing issue. It is fundamental to whether the agency can do its job and can represent value for money for the taxpayer and affordable purchaser. If people who have more knowledge on this than I do, and there are many of them, can convince me I am wrong I will be happy to accept it. However, if I am correct then, in future, when the Comptroller and Auditor General is before the Committee of Public Accounts at least I will be able to say I raised these matters out of genuine concern on Committee Stage. If it ends up that these amendments are rejected and Deputy Cian O'Callaghan and I and others are ignored, well so be it. This is one of those moments, not unlike the NAMA legislation, where what legislators in the House do will determine how much money the taxpayer pays for land in future, how much affordable purchasers and renters pay and whether it is a good deal or not. Let us take this very cautiously and do the right thing by the taxpayers and working people in need of affordable housing.

Photo of Cian O'CallaghanCian O'Callaghan (Dublin Bay North, Social Democrats)
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The Minister of State has spoken to the amendments I have tabled. I accept the view put forward by Deputy McAuliffe was put forward in good faith. I do not agree with it. I do not believe under the legislation we will see land acquired at little or no cost. What we will see is land acquired with a fairly marginal impact on the full market value because of the provisions on affordable and cost rental housing. If we look at Part V delivery at present, the discounts being achieved are not at the levels that originally were envisaged. In fact, Part V delivery is quite a good part of the mix for some private developers because there is a guaranteed amount of sales immediately and guaranteed financing. In terms of delivery it can work out quite well. I have concerns this will not achieve the solid discounts Deputy McAuliffe and others have spoken about. This is my concern with regard to moving these amendments, and it is very important for achieving homes that are affordable to purchase or affordable rent, which I know is what we all want. This is a very important part of it.

Photo of Paul McAuliffePaul McAuliffe (Dublin North West, Fianna Fail)
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In many ways, we are having an academic discussion on what might happen in future.

We know that the Valuation Office will be involved in pricing this land. Perhaps, in advance of Report Stage, that office could make clear the basis of the valuation, which would show Deputies Ó Broin and Cian O'Callaghan, me and other members of the committee what is likely to happen. We will not then be talking about what may or may not happen but about how the Valuation Office will apply a valuation. I appreciate we will not have it this stage but it could be something we have in advance of Report Stage.

Photo of Eoin Ó BroinEoin Ó Broin (Dublin Mid West, Sinn Fein)
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Can I make a point of order, to be helpful?

Photo of Steven MatthewsSteven Matthews (Wicklow, Green Party)
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It might be helpful. What is the point of order?

Photo of Eoin Ó BroinEoin Ó Broin (Dublin Mid West, Sinn Fein)
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We are keen to get through this and it will go to another session. In order to ensure that we finish it in the next session, it might be helpful if those of us with amendments consult with the chair beforehand to work out a timetable so that it does not go beyond one more session. We have spent a lot of time on the Bill but I would be willing, as proposer of a bunch of the amendments we will be dealing with, to consult with the chair. I am sure others would be too. We can guarantee only one more session is required for this Bill to allow us to move on with other committee business.

Photo of Steven MatthewsSteven Matthews (Wicklow, Green Party)
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I am looking at the schedule and the list of amendments ahead of us and I am confident we have timed it well and will have the sessions available to us to deal with each of those. I thank the Deputy for that offer and I will discuss it with him and others after the meeting.

Does the Minister of State wish to press amendment No. 138?

Photo of Malcolm NoonanMalcolm Noonan (Carlow-Kilkenny, Green Party)
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I do.

Amendment put.

Photo of Steven MatthewsSteven Matthews (Wicklow, Green Party)
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We have reached the end of the time allowed to us, so I cannot proceed to a vote in the committee room. We will recommence at Tuesday at 12.30 p.m. and the first order of business will be to take the vote on amendment No. 138. I thank members and the Minister of State for attending.

Progress reported; Committee to sit again.

The select committee adjourned at 11.35 p.m. until 12.30 p.m. on Tuesday, 15 June 2021.