Tommy Broughan (Dublin Bay North, Independent) | Oireachtas source

The Home Building Finance Ireland Bill 2018 was announced last October in budget 2018 and HBFI was expected to be functioning and giving out loans by the end of quarter 2 of 2018. It is now expected to be operational at the end of the year. One would think that there was not a housing crisis and no need for radical emergency measures, if we take nine months to bring in basic legislation.

During my speech on budget 2018, before details of the Bill emerged, I stated that Home Building Finance Ireland, HBFI, seemed "to be a very poor response to the many calls for the Minister for Housing, Planning and Local Government to establish a State developer of housing or a national housing executive" or a State development bank for housing. Based on the Bill before us, it is clear that I was correct. The €750 million fund to be made available to developers who cannot get loans or enough money elsewhere is expected to deliver around 6,000 homes. However, these are for-profit homes. Other than the usual Part V requirement of 10%, there are no stipulations that these loans are to provide affordable or social housing. We can come back to this point on Committee Stage.

While a housing finance bank is welcome in principle, the current proposal is merely carrying on the failed private developer model, the favoured policy of Fine Gael and its Fianna Fáil predecessors. That is the key critique of the Bill. The Minister for Housing, Planning and Local Government spoke yesterday at the launch of the report, The Future of Council Housing: An analysis of the financial sustainability of local authority provided social housing, by Professor Michelle Norris and former Senator, Dr. Aideen Hayden, which makes the case for the need for council housing for low income individuals and families. One of the central recommendations of the Hayden and Norris report, which we would all support, is that councils be enabled to raise their own housing finance from the property tax and borrowings and have self-financing planned maintenance of their estates. They do not have this option now. The total dependence of local authorities on Government grants for critical social housing development is one of the key reasons for the dearth of social houses from 2011 to the present day. Many improvements could be made in the provision of council housing but we first need a large-scale public and affordable homebuilding programme, and new financial arrangements for councils to raise and deploy finance for housing.

Representatives of developers and builders such as the Construction Industry Federation, CIF, say developers need access to cash and report that in an access to finance survey, 70% of respondents indicated they expect to have difficulty securing finance over the coming three years. Notwithstanding this, the pillar banks and other financial institutions have developed funds for housing development exclusively for these developers. Since 2013, for example, AIB has had a €350 million new homes development fund and a further €100 million social housing development fund was announced in 2017. Also in 2017, Bank of Ireland announced a €1 billion fund for property development. Activate Capital also provides finance for residential property development from a €500 million fund. Again, as mentioned earlier, this capital is being made available, in the main, for-profit, speculative residential units. It would be far better to put such funds and the funds under this Bill into an emergency public housing programme directed by local authorities or a new housing executive.

Section 9 provides for the services, systems and staff of HBFI. It is expected that some of personnel and expertise of the National Asset Management Agency, NAMA, will be transferred to this new company and that NAMA staff will be used in delivering the services of HBFI. It is expected that HBFI will also liaise closely with the chief executive of the National Treasury Management Agency, NTMA. Some will ask why the Government has not simply given a new mandate to NAMA, since HBFI will clearly be the daughter of NAMA and the NTMA. NAMA's recently published 2017 annual report estimates that it will deliver a "terminal surplus of up to €3.5 billion". The Government's explanation on the setting up of this new bank is that we cannot break EU state aid rules and so it will instead use the designated activity company, DAC, format. This is where a company is limited in its functions and is usually a special purpose vehicle, SPV.

As part of the DAC set-up, HBFI will issue shares of €20 million to the Minister for Finance upon incorporation. The Government argues that this is the best way to get around EU state aid rules and many of us thought along similar lines several years ago. Is the real reason that NAMA is not being entrusted with this task and fund that worrying and pertinent questions have been asked about its record, for example, on Project Eagle? Fine Gael and the Labour Party have been responsible for directing NAMA's policy since 2011 and the then Minister for Finance, Deputy Noonan, directed NAMA to dispose of huge assets as early as possible, meaning that it is estimated that between €20 billion and €30 billion of assets have effectively been lost to the Exchequer. My colleague, Deputy Mick Wallace, has, rightly, consistently criticised the Government and NAMA for this approach. In his book NAMA Land, the distinguished journalist, Frank Connolly, raises several disturbing questions but it is the political masters of NAMA, in particular Deputy Noonan, who must take the blame for the estimated huge losses to the State.

Continuation of the failed, far too slow housing policy as the modus operandiof this Government with the establishment of HBFI is deplorable. Meanwhile, households and people on the social housing waiting lists and in homelessness go on suffering. Deputies receive desperate phone calls daily from people who may have spent two years in homeless accommodation and want to find some kind of stable accommodation for their children. My office received a call from one such person this afternoon.

The Department of Housing, Planning and Local Government has misrepresented key statistics by telling us that 30,000 more homes were built in the period from 2011 to 2017 than was the case. There have been ferocious rent rises with no serious rent control and the 4% rule is not working. House prices have been exploding in recent years and younger savers have little or no chance of affording a home. The Government has presided over a litany of failures. Even the so-called affordable housing scheme has been a failure.

The HBFI will not seriously or urgently address our huge housing deficit. It is hoped the new entity will contribute between 10% and 13% of the housing stock needed, which would require it to fund between 2,000 and 3,000 units per annum. While this belated Bill is significant, it is sadly the same old approach.

One glaring omission from the Minister of State's speech and the discussions today on the Bill is any information on how interest rates will be calculated, what they will be linked to or what will be the loan-to-cost rate. AIB and Bank of Ireland's interest rates are approximately 7% and loan-to-cost ratios are between 60% and 65%. Activate Capital's interest rate is approximately 10% with a loan-to-cost ratio of 90%. Deputy Michael McGrath said between 30% and 35% of housing finance is sourced internationally at high interest rates. The Minister of State said over and over in his speech that the loans would be sourced at commercial rates but he has given us no further information. He might come back to that point.

On the positive side, like others, I welcome that the HBFI will be accountable to the Comptroller and Auditor General and the Committee on Public Accounts, that there will be protection for whistleblowers and that communication between the organisation and outsiders will be managed in a way that prevents a recurrence of the serious allegations made against NAMA. HBFI will not deliver what we desperately need tonight and every night since this housing crisis became so dire seven years ago. This vehicle will not rebuild this country and provide the homes we need.

See this speech in context