Eamon Ryan (Dublin Bay South, Green Party) | Oireachtas source

I support the Labour Party motion. We tabled an amendment to it on a point where we differ. It is more respectful to highlight that rather than just glossing over it. We believe that we should set aside funding into a rainy day fund as it may help us in the event of an unseen downturn to have a countercyclical ability to increase investment in such circumstances. We tabled the amendment because we believe it is important to keep such a facility for fiscal reasons.

In the brief time available to me, I wish to outline other ways that we can achieve the same objective and guarantee the financing of the public housing that we need to tackle the housing crisis. We have been obsessing about this for two or three years. It is based on switching from the current system of providing either social housing, private rented accommodation or privately owned housing to a cost rental model of public housing. Everyone cites Vienna, which is a good example of how such a system can work, but I favour continuing to use the term "cost rental" because it is important to recognise that the rent we would apply on such sites would cover the cost of construction. The cost would be lower than in other developments based on the assumption that it would largely be built on State land where the cost of land would not be included in the development cost. I have yet to hear anyone disagree with the notion. In addition, because it would be developed by the State, there would not be the same developer's profit margin. In that way we would hope to achieve in the region of a 20% to 30% reduction in the rent that would apply compared with the private sector. There are significant advantages to it in that it is intervening in the market. It is opening up such property to people who at the same time would be looking for private rented accommodation. In that way, critically, it attacks the worst point in the housing crisis, namely, in the private rented sector, and brings down the prices in the market in a way that we see no other intervention doing.

The cost rental approach provides for social protection because if someone does not have sufficient income to pay the rent, it would be possible to apply an allowance for the individual or family to make sure that they could avail of such accommodation. It would be far better to give the rent supplement to the State-led public housing development rather than the way Fine Gael is doing it, which is giving it all to the private sector. Critically, because the costs are covered by the rent, it is also amenable to being financed, and in a way that takes us through downturns, because we are looking at a 15 to 20 year guaranteed rent return and we would move away from the current system. If we stick with the current social housing model, we are sticking with a system where the Department of Housing, Planning and Local Government still holds all the cards and, in particular, if we did not have a rainy day fund, we would see a constant cycle of boom and bust, stopping and starting depending on the annual fiscal situation. We need to get away from that and to be countercyclical in our building activity as well as in every other aspect of the economy, and the cost rental model does that. It does it in a way that would allow local authorities to start raising funds and issuing municipal bonds as well as setting up their own funding mechanisms separate to central State funding to deliver it. That is the most secure way of providing public housing, rather than always going back to the central Exchequer and allowing the Department of Finance and the Department of the Housing, Planning and Local Government run everything and then put the brakes on when funds run dry. As the former Minister, Charlie McCreevy said, if he had it he would spend it and if he did not have it he would not. That has to stop. We need to start thinking long term and planning and financing. That is the reason the cost rental model works.

We support the rest of the motion. There is widespread agreement across this House and throughout the country that the current model being applied by Fine Gael is a complete and utter disaster. The worst legacy of the Government is the ongoing reliance on private market solutions in a private market system that is clearly broken. What is really egregious in the way Fine Gael is approaching the policy is that it is also, in a sense, privatising the provision of public housing. In the land lease arrangements we are effectively paying a developer to develop private housing and in the end he owns it after being given a 20-year guaranteed rent stream. It is a subsidy to the private market and it is not building up the public asset that would be built if we were to opt for the alternative cost rental model. We are at the stage where private developers are going to the banks and other finance agencies and borrowing long-term at reasonably low rates to buy up properties which they then offer to local authorities and the State for public housing. The reason they can get the low interest rates is that the banks and financial institutions know the housing lists are so extensive that council rents are pretty much guaranteed and there is no real risk.

We are providing a privatised solution that has zero risk and provides a guaranteed return. After 15 or 20 years of financing a property that way, the owner then has an asset rather than the State having a public housing asset that it can then reuse for another family or use as leverage to get further borrowing for other public service investment.

There is a stubborn reluctance on the part of Fine Gael to listen to other voices in this House. As the Taoiseach said, as they see it, their strategy is the only one that is working, they will stick to it and no one else has a clue. It is obvious to everyone in this House that the Fine Gael model is not working, will not work, and is inequitable, inefficient and the biggest threat to our country and our economy. It has to change. That is the reason we support this motion with the twist that cost rental is the way to scale up the financing. We do not need to rob the rainy day fund to do it now. We need to have a rainy day fund for housing financing, which we get with the cost rental model. That is why we come back to it time and again as the intervention that will unlock and change the entire housing crisis we have before us.

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