Aodhán Ó Ríordáin (Dublin Bay North, Labour) | Oireachtas source

This Bill, as presented to the House, is very much a double-edged sword. Significant aspects of the Bill are to be commended, but other elements act as red flags and present a considerable challenge to us in the Labour Party as to whether we ultimately feel that this Bill will be fit for purpose. I hope the Government will take the opportunity to listen to our constructive criticism of the Bill, as well as accepting our support for aspects of it, and will use this debate as an opportunity to consider how best we can collectively amend the Bill so that we can legislate for an LDA which will do what the people of Ireland need it to do.

Let us remind ourselves of why we are here and what problem this Bill is intended to solve. We are in the middle of a crisis involving housing, homelessness, social housing, rental affordability and unaffordable house prices, as the Minister knows. Will this Bill help us to solve these problems? Will this Bill help us to solve the housing crisis and to keep it solved? We can break down that question into two main parts. The first concerns whether we need an LDA. The second part of the question then, if we agree that an LDA is needed, is if this Bill will deliver the LDA we need.

The answer to the first part of the question is yes, we need an LDA. The concept of an LDA is a good one. The former Deputy, Jan O’Sullivan, proposed a development bank to develop public housing on public land. This structure subsequently became known as a land development agency and is Labour Party policy. There is a large amount of public land, and a properly constituted LDA could help the State to utilise that land to provide an increased supply of public housing and create a mechanism for proactive management of the State’s land to help to solve the housing crisis and deliver more social and affordable housing.

The next question is whether this Bill gives us an LDA which will clear the social housing lists, lower private rents and increase the supply of houses that people can afford to buy.

The answer to that question, with the Bill as it currently stands, is maybe. In truth the effectiveness of the Bill will be entirely dependent upon the policy of the Minister of the day and his or her Department, whoever that may be. And therein lies the reason for concern.

We have serious concerns that there is a real danger under this Bill that the LDA could end up as a mechanism for the wholesale privatisation of large tranches of public land with a subsequent windfall profit for private agents while delivering only a bare minimum of 10% public housing and only 40% of moderately discounted housing labelled “affordable”, with the remainder sold at a price the market will bear.

An example of this concern in the Bill is at section 73, which seems to guarantee that 50% of the housing will be affordable, but actually provides no such guarantee because section 75 states that the Minister may set a percentage of housing higher or lower than that set out in section 73 and can also set different percentages for different geographical or administrative areas. Essentially, the seeming protections in the Bill of the 50% affordable housing aspect provide no such protection.

The second area of concern is the concept of market value of the land and the subsequent price paid for the housing built on it. The Bill mentions the concept of market value but the CEO of the LDA, Mr. John Coleman, has told the Joint Committee on Housing, Planning and Local Government that “the land will transfer at a value, taking account of the affordability requirement. Effectively, the value will be reduced to facilitate the delivery of affordable accommodation on the land.” So, we have a mechanism where land can be acquired at anything down to zero cost, depending on the project. Section 53 of the Bill provides that where there is a dispute, “The Minister shall prescribe the manner in which the market value of relevant public land shall be determined".

Another concern is in section 76 which states that any housing prescribed under section 73 must be below the prevailing market price or market rent, but it makes no prescription as to how far below the market price or rent the housing will be.

In section 55 we have a provision for disposal of land by the agency, again with ministerial consent, where it "is no longer required by it for those purposes or the performance of those functions." Presumably this is when the houses are built or no more houses will be built. It is presumed that the agency will make disposals to the private sector including but not limited to private individuals and commercial entities as well as to local authorities, approved housing bodies and other public bodies.

What we have here is a series of provisions that allow the agency to acquire land at prices to be effectively determined by the Minister, to deliver a level of social and affordable housing determined by the Minister, and then to dispose of much of this housing to private entities, again at prices approved by the Minister. This is an extraordinary level of power. It is a power to deliver housing for the public good, but also the power to deliver a considerable transfer of value from public to private ownership in deals that will have no remedy until after the fact.

Effectively, the LDA is there to create deals that deliver housing. In discussing the Bill, we need to ask ourselves what level of scrutiny there is on these deals? When we look at it, beyond the Minister, there is a serious lack of democratic accountability. We find that far from adding control or checkpoints to the process the Bill explicitly removes the role of local authorities in scrutinising any of these deals regarding land acquired from the councils. This removes a level of public scrutiny at a crucial stage in any project on local authority land. At no point in the process does anyone outside the agency, the Minister and the Department get to scrutinise these deals end to end to ensure a sense check on whether we are delivering value for the people from public landbanks. These are landbanks that were explicitly protected by the Labour Party from the planned privatisation by Fine Gael after the 2011 election.

This deficit of scrutiny brings us to the nub of the matter. Fine Gael and Fianna Fáil are two parties with a long history of delivering for the private sector. In Fianna Fáil in particular we have a party whose toxic relationship with private interests in this sector crashed the economy, collapsed the housing industry and destroyed capacity to build houses, resulting in the current drastic undersupply.

Part of the function of a land development agency is to try to break the boom and bust cycle by providing a steady predictable stream of projects on land it has acquired and a steady stream of public housing to act as an anchor against future housing bubbles. In an ideal world one would not need to involve the private sector in the delivery of these houses. In the short to medium term, however, some level of private sector involvement is inevitable.

The local authorities have been at the receiving end of a lot of the blame for the failure of the State to build adequate public housing. The truth is that the local authorities have long since been removed from any real decision-making power or capacity over public housing and we have a Department that has been institutionally reluctant to support any large direct local authority building on public land. Fine Gael took strategic housing development legislation, apparently almost verbatim, from the vested interests. The Minister will excuse me if I suggest that such a massive change in the way we manage public land, and particularly local authority land, will require a great deal more democratic scrutiny than is currently provided for in this Bill.

I ask the Minister to fix loopholes in this Bill. As it stands, there is a serious concern that these loopholes could facilitate a wholesale rip-off of the public sector by private interests at the whim of any Minister who has been captured by private housing interests. I am seriously concerned about the absence of approval by democratically elected bodies such as the Dáil or local authorities. This need not be the case. As the work progresses it will be inevitable that a few standard templates will emerge. While the first few deals may attract considerable attention, as time goes on a level of standardisation will hopefully emerge and analysis of the success and failure of previous projects will allow for a relatively easy and public process of evaluation.

We have discussed how the Bill provides for the acquisition, development and disposal of public land, but just as important for the long-term success of the agency will be the acquisition of additional private land. The LDA will have the power to acquire private land at scale again at market value. With a bit of imagination the Bill could provide an opportunity to deliver on the recommendations of the Kenny report to allow land to be acquired at a current use value rather than at inflated speculative prices. In order to be truly successful, the LDA will need to be able to acquire land to be developed at reasonable costs and for us no longer to be dependent upon the whims of private entities. This is a missed opportunity to provide a mechanism to make redundant the tactics of speculative acquisition, hoarding and flipping of sites by companies who make planning applications but never build houses and whose only objective is to create an artificial shortage of suitable sites that they can exploit through inflated sale prices. This is the very issue that caused the last housing bubble and crash and if we are not careful it will also cause the next.

We are in favour of a land development agency with significant power to acquire public and private land with the express intention of working in partnership with local authorities to deliver public housing on public land. We want a far tighter definition of what success looks like and a far tighter scrutiny of the value delivered on an ongoing basis, and we need far tighter democratic protection from the exploitation of the agency for the private sector at the instigation of the Minister.

Ultimately the success of the Bill will depend on whether we get enough social houses built to start clearing our housing lists and will depend on whether we get rents down to levels that mean we no longer waste billions of euro on short-term private rental at exorbitant rates. The success of the Bill will depend on whether the houses built are not just technically “affordable houses” or technically “cost rental” houses but are houses people can actually afford to buy or rent, and that we do it without pouring public cash without scrutiny into the bank balances of private entities. The best way to prevent the housing scandal of the future is to legislate now for the proper scrutiny of the key decisions that are made by the LDA as they are being made.

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