Michael Finneran (Roscommon-South Leitrim, Fianna Fail)

As was made clear by the Minister for Finance on Tuesday and in the weeks leading up to the budget, the decisions taken by the Government on measures to help restore balance to the public finances have been extremely difficult. They are necessary and have not been undertaken lightly. It is fair to say that they are among the most difficult economic decisions any Irish Government has faced and our deliberations have taken place against the backdrop of the most severe global economic crisis since the 1930s.

The Minister for Finance has already outlined how the difficult decisions focused on revenue raising will impact on the standard of living of all our citizens. Of course, raising revenue is just one side of a difficult budgetary equation. The other involves achieving expenditure savings across all areas of public policy and in every Department.

The budget of the Department of the Environment, Heritage and Local Government has had to play its part in this process and the housing area, in particular, is taking on a significant proportion of the Department's burden. Given the levels to which investment in housing supports has increased in recent years, it would be unrealistic to expect otherwise. However, it is important to bear in mind that the achievements we have secured on foot of that investment mean that we face into the challenges of 2009 and beyond from a position of relative strength.

The expenditure adjustments required will create challenges - challenges for my Department, for the local authorities who deliver the bulk of housing services to households who need them, and for the voluntary and co-operative sector, which has radically stepped up its level of activity in recent years, supported by significant Exchequer investment.

Foremost among the challenges faced by all of us involved in the housing area will be how the adjustments that must now be made are applied to those households that depend on the services being provided. The clear objective will be to ensure that we minimise the effects of the expenditure adjustments on those whose support needs are most acute and reorientate other programmes that can better adapt to the changing circumstances.

Notwithstanding the scale of the deterioration in the public finances, the Government's commitment to responding effectively to a range of housing needs remains solid. The Government has provided record levels of resources for social and affordable housing, improvement programmes and regeneration measures in recent years, including some €1.73 billion in Exchequer funding in 2008 alone.

Investment on a scale like this has enabled us to achieve record levels of activity, with the needs of some 19,500 households, in total, met last year through the full range of social and affordable housing programmes. Now however, as other Ministers before me have acknowledged, we are operating in a significantly more constrained environment. At the same time the increase in net need for social housing over the period 2005-08 reinforces the ongoing need to prioritise the provision of housing supports.

The Exchequer provision for housing for 2009 reflects these facts. While down on the provision for 2008, it still represents a significant level of investment. However, the extent of social housing need demands that we strive to maintain the momentum we have built up, that we try to deliver more for less, and that we continue to develop flexible and imaginative approaches to respond effectively to the diverse housing needs that exist today.

The adjusted housing provision for 2009 - at €1.412 billion - shows a reduction across current and capital funding of some €240 million from the provision announced in October last. As I have already said, while there is no doubt that a reduction of this level will require difficult adjustments across a range of social and affordable housing programmes, in the circumstances in which we find ourselves it still represents a significant level of investment by the Government in the delivery of a diverse range of housing supports.

Therefore, while the inevitable impact of the reduced level of financial resources will move us from a period of significant expansion of housing activity into a period of consolidating activity around current levels, it is important to bear in mind that activity levels are now at a level that is catering for the needs of more households than ever before. In other words, if we are required by our current economic and fiscal position into a period of consolidation, it is far better to be consolidating record gains, as we are.

The way in which the adjustments to the provision announced in October are to be applied is guided by a number of key strategic objectives. First, while recognising that the pool of resources available to us has reduced, we will continue to prioritise as far as possible activities focused on meeting the needs of the most vulnerable and disadvantaged in society.

Second, we will be endeavouring to make the most significant adjustments in areas where we believe that the changed housing market environment provides the greatest opportunities for new and flexible approaches to programme delivery. This will allow us to lessen the impact of the more constrained resource environment to a greater extent than would otherwise be possible. The roll-out of the new long-term leasing initiative for social housing is a prime example of this, allowing us to match up a significant social housing need with the increased availability of good quality homes available on the market.

Third, the Government recognises the significant labour intensity of particular programmes and their capacity for maintaining and supporting employment. In that regard we will, to the greatest extent possible, be reflecting this in our ongoing commitment to regeneration and remedial works projects. Recognition for labour-intensive activities is a common thread across many decisions in this budget.

I would like now to outline some of the details of the adjusted 2009 provision. Homelessness is, of course, the most extreme manifestation of housing deprivation. I have outlined in this House, and beyond, the priority I personally attach to tackling the causes and effects of homelessness. I need not do so again now, but I should re-emphasise that funding for the provision of accommodation and related services for homeless persons and households is being increased in 2009 by over 5% above the 2008 figure.

In the context of the wider budget, in which the two central themes have been revenue raising and expenditure saving, this is a significant achievement at a pivotal moment in the implementation of the Government's strategy on homelessness, entitled "The Way Home". Demand under the revised suite of adaptation grants for older people and people with disabilities has been exceptionally strong since its introduction in late 2007. This is due in part to publicity surrounding the launch of the revised schemes, a widening of the eligibility criteria for the target households, an expanded range of works to include improvements as well as more essential basic repairs and higher levels of grant in aid.

Funding pressures arising from this emerged in a number of local authorities last year and demand under the schemes this year looks set to be strong once again. An increased Exchequer allocation of €75 million for these schemes in 2009 was provided for in the October budget. However, conscious of the deteriorating economic position later in 2008 and the risk that this could ultimately impact on the 2009 budgetary provisions, further Exchequer funding of €12 million was provided towards these schemes in the final quarter of 2008, ensuring that many local authorities were facing into 2009 in a better position to respond to existing and new demand.

As a consequence, this allows scope for the provision for the schemes in 2009 to be reduced from the initial €75 million. We will still aim, however, to provide a similar or even higher Exchequer allocation for the operation of the grants schemes in 2009 than the initial allocation for 2008. This is another good outcome in the circumstances, which will allow for the payment of grant aid to an estimated 12,000 of the most vulnerable and disadvantaged households. In many cases these grants will enable people to continue to live independently by avoiding the need for long-term residential care or in other cases facilitating discharge of such households from long-term care.

An evaluation of the grants schemes is under way. The conclusions that emerge from the evaluation will be crucial in helping to ensure the schemes can continue to focus on the needs of the households most in need of support, taking account of the terms of the schemes and the more constrained resource environment.

We have all seen the extent to which trends in the overall housing market are being reflected in the affordable housing area. These trends have changed dramatically the landscape for affordable housing in a short space of time. Just a few years on from the Towards 2016 agreement, with lowering prices in the wider market eating into the differential between affordable and market prices, we find ourselves with a slower uptake of affordable housing and an increase in the stock of affordable housing units on the books of local authorities.

I am taking prompt and appropriate action to respond to the new affordable housing context. Only yesterday, my Department communicated a comprehensive strategy to local authorities to assist them in ensuring that available affordable homes are brought into use as soon as possible in the most appropriate and effective way. The Government remains committed to supporting the home ownership aspirations of the greatest possible number of households. However, with national affordability levels back to 2003-04 levels and affordability in Dublin back at levels last seen in the late 1990s, the number of households which need support in realising those ambitions is decreasing.

In the circumstances it is appropriate, therefore, that the financial provision for affordable housing be adjusted to reflect diminishing demand in many areas in order that the burden of adjustment required under programmes targeting lower income households can be reduced.

We will again provide significant levels of investment to support the activity of the voluntary and co-operative housing sector in 2009. While this will not match the levels provided last year, it must be borne in mind that the 2008 provision was boosted over the course of the past year by the provision of an additional €80 million of investment beyond planned levels under the capital loan and subsidy scheme.

The consolidation of activity under the schemes this year comes in the wake of record levels of investment which have secured record levels of output from the sector in recent years. Notwithstanding the funding pressures, significant output will again be delivered this year, meeting the needs of disadvantaged households and communities throughout the country, while supporting employment in the construction sector. The voluntary and co-operative sector remains a key partner for the Government and for local authorities and the funding being provided means voluntary housing programmes will continue to form a major part of the overall social housing investment programme.

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