Michael Finneran (Roscommon-South Leitrim, Fianna Fail)

Many commentators and Opposition spokespersons have made contributions that would indicate the budget deficit problems in Ireland are unique to this country but that is very far from the truth. The position is that 24 states in Europe are adjusting their position in the same way as Ireland. Our nearest neighbour, Britain, has the largest structural deficit in Europe at £109 billion. They are paying at the rate of £120 million per day, with £43 billion per year in debt interest. Its response has been to cut spending by £81 billion over four years, with a cut of 19% in all department budgets and a reduction by 500,000 of public sector workers. We are not in this on our own, this is spread across the European Union, a fact which is sometimes lost in the debate in this country.

Few sectors of the economy have been affected as dramatically by the slings and arrows of the past few years as the housing sector. The pace of change has been on a scale that few would have imagined; demand has collapsed, output has dwindled dramatically, affordability is back at early 1990s levels and yet more house owners are struggling to meet mortgage repayments. Just as the supply of affordable housing reached new levels, demand dropped off, leaving local authorities with considerable numbers of unsold units.

At the lowest income end of the housing market, social housing need is already high and rising further, and the funding available to meet that need must be adjusted to contribute to the savings required to begin to restore the public finances. In the face of these challenges the Government has two choices; it can carry on as though nothing has changed, with a failure to meet housing needs as a result, or it can radically adapt the way in which it goes about meeting the need.

People in this House should by now know that I am steadfastly pursuing the latter course. I have been advancing with a significant programme of reform on the way in which housing need is met. This reform is radical and is fundamentally altering the State's response to such a need. The cornerstone of that reform programme is a restructuring of investment in social housing away from bricks and mortar solutions towards a more flexible system, where measures such as the rental accommodation scheme and long-term leasing play an increasingly prominent role in meeting social housing need.

Over time this will have a number of major implications. Such a system will be based on the fundamental acceptance that a housing need existing at a point in time may see financial or family circumstances driving that need changing or disappearing. A system which provides for only one solution to housing needs - a house for life with an entitlement to purchase at a heavily discounted price and succession rights for family members - is not one our current circumstances can support. It is not desirable from a social equity perspective either.

The transition to a new approach will significantly alter composition of the overall social housing stock over time, with permanent stock remaining relatively stable at approximately 150,000 units and, in general, new need being met through a more effective and flexible option utilising privately-owned units, leased accommodation on the rental accommodation scheme and long-term leasing. Specific accommodation types not necessarily available to the market, such as special needs housing for the elderly and people with disabilities, can continue to be provided through the new Bills. I am continuing this currently. This restructuring, clearly flagged by the Government statement on housing policy, Delivering Homes, Sustaining Communities, is already well under way. The figures on social housing output clearly show a reliance on construction by local authorities is significantly down on the previous years, with the rental accommodation scheme in the mainstream since 2006.

In 2009 and this year in particular, the long-term leasing initiative will take up some of the slack. I anticipate this and the rental accommodation scheme will together deliver approximately two thirds of the total output for housing in 2010. It has been on the way for some time but circumstances are now converging to make an insurmountable case for the restructuring to be accelerated. The scale and pace of the adjustment required to the housing budget is one factor but so too is the need to exploit this unique position that is presented. The particular circumstances existing now in the wider housing market, with the demand for home ownership on the floor because of a range of factors, little prospect of any substantial recovery of demand in the near future and an over-supply of completed vacant housing units across the country ready to be put to use, are a silver lining in a big black cloud.

We must grasp the nettle and make those circumstances work for us. This involves a straightforward matching up of over-supply with rising demand from the long-term leasing initiative. This will be the central plank of social housing supply in the coming years. Landlords, builders, developers and banks are still sitting on properties they cannot sell and which they cannot rent privately or do not want to rent. Some of these properties will end up in NAMA and my Department has already engaged extensively with the agency to ensure that the aim of securing a sound return can be aligned with our need to provide accommodation for disadvantaged families.

The leasing initiative is beginning to bear fruit. Some 2,500 units have been sourced and approved for use up to now and this initiative is clearly gaining traction, with the pace of delivery accelerating. Thousands of households will have their needs met through this innovative, equitable and dynamic approach in the coming years. The easy path to take, as suggested by the Labour Party, is to buy up thousands of houses which are vacant around the country. We do not have the billions to spend in this way so if that party gets into Government, how will it be in a position to buy the stock and where will the money come from? Will it attack the social welfare or health budgets or will it borrow? If it borrows money, how will it meet the 3% deficit target?

My approach and that of the Government in the delivery of social housing and integrated communities is the correct one. With it, we can meet the needs of people and in 2009 alone, we have helped 15,000 households through the programmes I have in place. I expect we will compare favourably in 2010.

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