Michael D Higgins (Galway West, Labour)

This Bill is important in so far as it amends some of the basic housing Acts from 1966 to 2004. We should structure our discussion in terms of whether we are referring to a right to a home or to housing units in a speculative market. This point, which has been raised by a number of international observers of the Irish housing situation, relates to how housing was not exempted from the market and its dynamics. The right to a home was defeated by the decision to allow housing to become a feature of a speculative market.

It has had a number of results that have impacted, not only on those who would wish to have a home, but on the economy in general. For a period during the early emergence of the current economic difficulties, for example, how could one have a growth rate that was not sustained by exports?

It happened because of property revaluation. The Government was in receipt of revenue from new building and transactions to a certain extent. Consequently, the entire artificiality of the growth rate had as a contributor to it, the speculative housing market.

Perhaps it would be best were I to stick to facts as published in the Government's publications in respect of this matter. In 1996, the average second-hand house cost €85,629 while in 2005, such a house would cost €330,399. The average cost of new houses in 1996 and 2002 was €87,202 and €276,221, respectively. What happened in respect of housing was that it was regarded as being one of the main spaces and places for speculative investment. I am coming to the point where this subject affects the legislation before the House because the choice in the legislation is whether this is what one now seeks to recover and extend or whether one wishes to depart from it. The nominal value of housing stock in 1981 was €39.1 billion, while the equivalent figure in 2005 was €553.5 billion.

This has immense implications. Even though I have a slot that is longer than usual, I do not have the time to work them out in full. However, were one to examine comparative European figures, one could look at the ratio between value and loans. In other words, if a loan has been taken out for such a massively escalated valuation, what then happens if, in addition, a person has used the house that was his or her home as collateral for further liquidity and has made further borrowings on it? As the market has collapsed at present, clear implications arise. Although the madness of that economics is clear, such madness was not accidental. It was fuelled by property-related tax reliefs that were driven on in one budget after another by the then Minister for Finance and current Commissioner, Mr. McCreevy.

Goodbody's economic report contains some interesting figures as to the total cost of all this. For example, in 2008 the cost over the seven years between 1999 and 2006 in respect of the urban renewal schemes of tax revenue forgone was €1.423 billion. Moreover, in 2004, the Revenue Commissioners' report gave a figure for the annual cost of property tax reliefs of €8.4 billion per year. In other words, we were giving to the speculators, who now were taking the need for a home as a means of acquiring tax-evaded wealth, the equivalent of 22% of total taxation. It is interesting that I am making this speech this week because next week, Members will learn the degree to which an attempt will be made to claw back such relief or what such people's contribution will be to the position in which we now find ourselves with a deficit of 8% and €16 billion to be found. Members can discuss next week how it might be structured over a number of years.

In addition, what happened regarding capital gains tax also is interesting. When the rate for that tax was halved, where did people go with the cash they made, having cashed in some of their capital assets? They headed for the housing market, which is the reason we got such an inflator. The general argument from the McCreevy school of economics is that this will be good for everyone in the end. I noted elsewhere that some people were attracted to this notion in a manner reminiscent of Tawney's old adage as to the reason tadpoles put up with their miserable existence. They do so in the hope that one day, one of their number will sprout a jaw, jump to land and become a frog. Some people were lured into the notion that it might be their turn. However, of the 400 top earners in that version of the economy, in 2003 three of them had reduced their liability or in other words their effective tax, to zero, while another 48 had kept their liability below 5%.

I now will turn to the reason this is relevant. The background to this legislation is that the Government had the benefit of a number of reports. It need not believe anything I have just said. For example, it had reports from Dr. Bacon, the published work of Professor Drudy in Trinity College and Dr. Pádraic Kenna's work on housing dynamics. However, it decided not to act on any of them and in so deciding, it lived with it. It is very interesting that the National Economic and Social Council states how it got it wrong on page 83 of its report No. 118, which was published in March 2009 and I applaud it for so doing. It referred to how it had hoped for a soft landing and states:

It is important to acknowledge that the Council did not anticipate or fully understand the impact of the downturn in construction on the Irish economy. The Council's recent report on the Irish economy (NESC 2008) noted the dependency on construction and a likely decline in market completions, but did not predict the consequences now being experienced across the economy. The Housing Report (November 2004) identified the cyclical nature of housing and recurrence of asset bubbles and bursts phenomenon. In this, it relied on existing studies of affordability and stress tests in reaching the conclusion that, despite some overvaluation, the Irish market could slow down as supply met the underlying need for the additional housing. However, it also highlighted the need for new housing and argued that while output did exceed supply, there was evidence of "pent up" demand based, in large measure on the low number of households per 1000 in the population in Ireland and the need for more social and affordable housing.

I will turn to the legislation before the House. Where are these finished, completed but unoccupied houses? For example, if one examines their geographic dispersal, as someone who used to teach adult education in County Roscommon it is fascinating, while driving through that county, to see signs everywhere for town houses in villages with tiny populations of 1,000 or 2,000. This was the madness of the speculative drive in respect of housing.

Lest I forget to lay emphasis on what is being proposed and with respect to the Minister of State, I refer to his proposals such as, for example, the provision of a long lease for €20 million per year for 20 years, whereby local authorities effectively might supply tenants on lease for such unoccupied houses. At the end of the two decades, they then would go back to the property developers in a recovered market. This is an outrageous suggestion. I have listened to other Members speak about how market value is used to operate one of the purchase schemes. To invert, why not have the State become active as a purchaser and not a lessor in respect of such properties? Is this not the time to buy? Were this done now, the public would support the State's decision to relieve builders by offering to buy outright at cost such units as the State considers it needs and which would in turn make a contribution to a reduction in the social housing lists, which have become outrageous. How would a person in the street respond?

The opening speech in this debate suggested there is a limited amount of funding for social housing and something must be done for the poor developers who are stuck with all the finished houses. It is proposed to spend €20 million a year for 20 years helping these people but at the same time I must tell those who rely on social housing that they must put up with their existence and that there will not be a significant increase.

I refer to the text of the Bill and the disposal of powers in the legislation. I operate from the perspective that a home is a right, a right that should be exercised through a number of options, as it is in many countries. Some 77% of homes in Ireland are owner-occupied, an aspiration one must respect. Equally, one has a right to live and have one's housing needs met as a tenant. I was a member of two local authorities for 18 years, from 1974 to 1992. In that period, particularly towards the end of it and now seeing it from the perspective of the Dáil, I watched a reluctance on the part of city and county managers to want to be managers of a housing stock with tenants. It began with a reduction in staff. At one time in Galway city, as Deputy McCormack will bear out, there was a clerk of works and a foreman who would visit properties and supervise the repairs for a particular week. People got windows, doors and leaks fixed. Gradually, staff were taken from repairs. Managers began to reveal their ideological prejudice against being managers of a housing stock. Different Governments began to place the emphasis on tenant purchase schemes. There were rows in the transition from the 1966 obligation to transfer the house in a habitable condition and whether that included the boundary walls. The management had the urge to get out of the difficult business of managing local authority stock and there was an underlying prejudice in housing design.

Some local authority housing has insulation of a higher quality than houses built on the private market. The notion that one is entitled to a housing space with amenities, not just a roof over one's head, and that people with families, people with none and older people can live in a community was not in the housing philosophy. Great concrete nightmares were being built. They were being built in the past ten to 15 years in Galway city. Some of these great concrete nightmares would not meet the standards of general accessibility laid down in European law.

One is entitled to a home, as a right, and equally to live in security in one's community. The contributions on antisocial behaviour were interesting. If one is a local authority tenant — many of whom are on low incomes — one has the same right to live in security, free from intimidation and threat, as any citizen. As I listen to local authority management systems speak, they are very negative. They always refer to responding to the problem, not eliminating the problems concerning design and provision of amenities and staffing.

Looking across all local authorities, some regard the position of housing liaison officer as a punishment station. In others, people ask for a year or two in the position but find it so socially stressful that they cannot handle it and ask to be assigned to other duties. That indicates that local authorities are struggling due to under-provision from central Government. This stems from the nightmarish populism of 1977, when the then Taoiseach, Jack Lynch, decided to abolish local revenue. The capital grant was to be replaced by central funds but it never happened. Allowing for the under-provision from central Government we still have a hopeless system from the local authorities. There are special policy committees, housing committees and so forth. I wonder whether such units can genuinely influence policy. If they could, the idea for constructing the strategy for the city or county should come from the elected representatives. The director of services could explain what is being proposed. In the classic version of Irish local government democracy, county and city managers have the notion that if they have shown it to people, they have consulted and people have been involved.

How much time do I have left?

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