Eoin Ó Broin (Dublin Mid West, Sinn Fein) | Oireachtas source

On behalf of the Sinn Féin group, I thank Deputy Wallace for introducing the Bill, which we warmly support. What is important about this debate is that it addresses problems with the private housing market, which are, of course, the price of houses and the rate of supply. Whenever the Government is responding to these issues, it keeps telling us that supply is the answer and if it can just get the private sector to build more units, that will bring down the price. That is why the Government policy response is tax breaks such as the help-to-buy scheme, grants such as LIHAF, loans such as through Home Building Finance Ireland, and planning reform. All of that is about trying to incentivise the supply of private sector units. The problem, of course, is that this kind of policy is based on a false premise. The price of houses is not determined by the demand and supply of the houses themselves, as most housing economists will tell us. House prices are determined by the interaction of the availability of credit to build or to buy and the supply and price of land, as well as labour and materials. It is credit and land that are the key determining factors. Our problem in the private market is that land speculation is at the heart of our affordability crisis.

The House should not simply believe me. Members can listen to the Society of Chartered Surveyors Ireland, which has prepared two reports in recent years. One report in 2016 looked at eight real house building projects in Dublin, in particular the average cost of the land per unit of accommodation, which was €57,000, that is, €57,000 added on to the price of the house. Last year the society carried out a more detailed study looking at apartments, and the land price per unit of accommodation ranged from €30,000 up to an astronomical €125,000 for developments of five storeys or more. This problem is even infecting Part V social housing, so we now have the situation, albeit on a small number of developments in Dublin, where the land cost for Part V apartments is as high as €90,000, for example, in Dalkey.

One can see very clearly that speculation in land is driving up prices, in the first instance in regard to private supply but, increasingly, also in regard to Part V supply. As the Government's policy response is based on a false premise and a misunderstanding about what drives house prices and housing supply, many of the actions it is taking are making the problem worse. They are increasing house price inflation, making it more profitable for people to landbank and slow down the delivery of units.

What is very important is that it is not just affecting first-time buyers; it is also affecting renters, students and local authority balance sheets. In addition, it is not just a domestic issue or some odd quirk of our domestic market. TASC, the Think Tank for Action on Social Change, had a very important speaker, Ann Pettifor, at its conference last week. She is an internationally renowned economist and campaigner for developing world debt cancellation. She has been doing a great deal of significant research looking at the global phenomenon we are currently experiencing and to which Deputy Wallace's Bill speaks. She said that what is driving up land costs and house prices across the developed world is a great wall of money. She quoted figures of somewhere in the region of €390 billion of investment capital that is currently looking for a home. What it is looking for are safe, high yield assets. In the absence of Governments being willing to enter into the bond market themselves, this money is being invested in property. When investors started coming to this jurisdiction, in the first instance they were looking at distressed assets and focused on the portfolios of IBRC or NAMA, both in commercial and residential property. They are now moving into residential on a new scale, whether it is in terms of investment trusts, student accommodation or what we like to call the public-private partnerships on crack, the enhanced leasing initiative, which the Minister of State, Deputy Damien English, was responsible for launching.

What this influx of investment capital will do is further exacerbate the crisis. Unless real action is taken, the kind of action that is outlined in this Bill, the problem will get worse. We need a new approach, and Deputy Wallace and others have adequately detailed the value of the Bill. However, a vacant site tax has to be punitive. It cannot be fair or reasonable; it has to punish people for speculation. Whatever the rates, it has to be based on that principle. It is likewise with the removal of exemptions and the closing of loopholes, but also in regard to creating a situation where there is a real opportunity for the State in areas where it is required to purchase land at a discounted price for social good.

I have no qualms about supporting the Bill. It is dishonest of the Government to tell us it supports its intentions and will not stand in the way but, really, it will prevent it from ever coming to committee, so we will never have that discussion. I would prefer it if the Government was honest about that. Alongside this Bill, however, we also need to see the State stepping up and investing significantly in public land and social and affordable housing funded through the taxpayer. If we did those two things, we would start to see the kind of difference Deputy Wallace and his colleagues intend with this legislation.

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