Malcolm Noonan (Carlow-Kilkenny, Green Party) | Oireachtas source

I move amendment No. 1:

To delete all words after "That" and substitute the following: "Dáil Éireann, while acknowledging the relevance of the Acquisition of Development Land (Assessment of Compensation) Bill 2021 in regard to securing more cost efficient development land with the objective that all persons insofar as practicable have good quality and affordable housing appropriate to their needs, in accordance with the principles of social justice and the exigencies of the common good, resolves that the Bill be deemed to be read a second time this day 12 months, to allow sufficient time to consider the work of the Law Reform Commission and finalise proposals currently being formulated by the Government, in line with the Programme for Government commitment."

I thank Deputies Kelly and Howlin for introducing this Bill. In summary, it raises an important issue of land value capture for community gain. In essence, it is an opportunity to debate the long-standing question as to how best we can ensure a share of increased land value arising from public policy decisions and investment, including in respect of zoning and the provision of infrastructure, may be acquired for public benefit. While I agree in principle with the aims of the Bill and acknowledge it is well intended, I am seeking support to defer its reading for 12 months. My rationale for doing so is very genuine. In the first instance, the Bill is premature with regard to the final report of the Law Reform Commission on the reform and consolidation of compulsory purchase order laws, which is expected before the end of 2021 and which I understand will include a draft compulsory acquisition of land (consolidation and reform) Bill. This will be the culmination of an extensive process that has been ongoing for almost five years. It will be substantive work that will need to be considered.

The Bill is also premature with regard to alternative Government proposals. In this regard, the programme for Government includes a commitment to bring forward proposals for reform in the area of community gain at the land zoning stage of the planning process, work which is now advanced. This will take the form key flagship measures arising from the forthcoming housing for all strategy and directly related legislative proposals being concurrently formulated as a general scheme of a new legislative proposal.

Like the Deputy, the Government is committed to dealing with this complex and thorny issue. How we tackle the matter needs to be comprehensive but also fair, equitable and proportionate. The Deputy's thinking is not far removed from the Government's position. The difference is in the approach. I will elaborate further on some of the differences but, before doing so, it is important for me to note that the Bill's provisions apply only to housing, with no consideration of infrastructure that may be required to enable housing development. That is a significant limitation. The provisions of Deputy Kelly's Bill are based on the 1973 Kenny report, which proposed the land value capture mechanism whereby designated development lands at the edge of built-up areas could be acquired by the State at existing-use value, generally envisaged as agricultural land value plus 25%, to facilitate the development of housing. Although adopted by the Government at the time, the provisions of the Kenny report were never implemented but have remained a point of reference.

To summarise, the Bill's proposals are to enable local authorities to acquire development land that is transacted after 3 June 2021 and without planning permission at not more than existing-use value plus up to 25%. In other words, it is not to exceed 125%. This is as per the 1973 Kenny proposals although the Kenny report was intended to apply to designated lands. In this regard, the Bill, as drafted, would apply to all "development land". The Bill would apply only to such land transacted after 3 June 2021, meaning the development lands that do not change hands at any stage after that date would not be affected. The Bill would exclude any benefit in respect of land on which there is an extant permission as full development and improvement value plus investment return would remain payable.

There are immediate considerations if the Bill, as currently drafted, were to be enacted. It would be a disincentive to buy or sell development land for the delivery of residential development that could impact housing supply in the short to medium term. It would create uncertainty in the development sector; be disproportionate and discriminate against new entrants to the market and not provide a mechanism for fair or equitable application; and be impractical to apply. The Bill, as drafted, would risk the immediate creation of a two-tier land market as it would give rise to motivation to cease all land transactions in the short to medium term. This is due to the cliff-face nature of the provision whereby there would be no impact on lands transacted before 3 June 2021. Those transacted after that date could lose significant value by comparison to those transacted prior to 3 June 2021. It would serve to remove any motive for a landowner or developer to transact current development land if such a course of action were to result in a near total loss of value, as would be the case in respect of recently zoned agricultural land. In addition, the Bill, as drafted, in combination with other existing planning provisions, would effectively exclude development lands on which there is an extant planning permission. Current planning extension-of-duration provisions enable existing planning permissions to be extended for up to five years.

It is possible for a landowner with a site acquired prior to 3 June 2021 to seek an extended period of planning permission, for example, ten years. These provisions would enable those with current permissions or no intention of transacting land to effectively hoard land with planning permission. The provisions of the Bill would therefore act as a barrier to any new entrants to the development market.

It is also relevant that there were an estimated 70,000 to 80,000 unimplemented permissions for residential units at the end of 2020, with 42,000 in Dublin alone. The Bill could result in a premium value in respect of unaffected lands benefiting from an extant planning permission, causing the value of sites with unimplemented permissions, especially those with permissions of remaining long duration, to increase. This could slow the output of housing in the short to medium term when rapid acceleration is required.

While the Kenny report has remained a point of reference, there are critical differences between now and when it was completed. For example, housing was delivered differently and in a much less complex operating environment, with less onerous procurement and tendering rules, which would have enabled the timely development or disposal of any lands acquired for housing purposes as recommended in the report. Moreover, at that time, the dominant form of development was low-density, suburban expansion. Extensive greenfield development sites were available as cities were relatively smaller and distances were shorter. Almost 50 years later, there is a much greater need to facilitate higher density brownfield and transport-led urban development to develop more sustainably in the face of climate change while improving both quality of life and competitiveness.

The principles of land value capture, as set out in the Kenny report and which inform this Bill, remain important considerations but need to be applied in a manner that is appropriate to 21st century societal and environmental priorities. The additional time I am seeking will enable us to fully tease through all the issues, recognising that this is a complex and sensitive area. Our aim is ultimately to address this challenge in a considered and fair manner that will endure in the longer term. I want to use the time well and get this right in a manner that can withstand any future challenge, rather than just get it done.

The emerging measures being developed in our Department, in the context of the housing for all strategy, are intended to be more practical, equitable and proportionate proposals for community gain related to the land zoning process that seek to balance the needs for land, infrastructure and affordable housing while at the same time taking into account the rights of private landowners, having regard to the overall benefit to society. I am confident that the proposals that will be brought forward by my Department will ultimately achieve the goal the Deputy has intended without the potential negative consequences I have outlined. Therefore, while the general intention behind the Bill is acknowledged, the Government proposes to defer the reading of this Bill for 12 months. This will facilitate the finalisation of relevant measures that will be brought forward under the forthcoming housing for all strategy and directly related legislative proposals.

It will also allow for consideration of the final report of the Law Reform Commission on the reform and consolidation of compulsory purchase order laws, which is expected before the end of 2021.

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