Michael D'Arcy (Wexford, Fine Gael) | Oireachtas source

There was considerable confusion around the effect of this amendment when it was last debated in the Chamber on 2 October. This confusion arose when it was suggested that amendments tabled on Report Stage would allow Home Building Finance Ireland, HBFI, to lend to builders and developers at lower interest rates and longer maturities to fund social, cost rental and affordable homes. I must clarify to the Chamber in the strongest possible terms that these amendments will have no such effect.

The reality is that this amendment only addresses the rates and terms on which HBFI is able to borrow money on the market to fund its operations. It has no bearing on the rates and terms that HBFI may attach to lending that it provides to builders or developers. This is evidenced by the fact that this amendment is directed at section 13 of the current Bill which is concerned exclusively with HBFI's powers of borrowing. As a result, it is clear that, if passed, this amendment would have no practical effect. As my colleague, the Minister of State, Deputy O'Donovan, pointed out, HBFI can raise debt from the capital markets at low interest rates and along with sureties, provided the capital markets are willing to provide funding on such terms. I must, therefore, oppose the amendment.

I understand, separately, the important point made by Deputy Ó Broin in previous debates regarding the Home Building Ireland scheme. In contrast to HBFI, it is important to note the Rebuilding Ireland home loan scheme is classified as within Government and provision for its funding must be found from the Housing Finance Agency with a resulting impact on gross Government debt. Under EUROSTAT rules it is impossible for HBFI to be state aid compliant and ensure that its activities are treated as off-balance sheet transactions if it lends to builders at interest rates lower than those available on the market. In general the EUROSTAT classification of HBFI's activities will be threatened if conditions on HBFI's lending are imposed, particularly where those conditions require HBFI to act in a manner that would not be consistent with other operators in the market.

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