Thursday, 6 April 2017
Ceisteanna - Questions - Priority Questions
Social and Affordable Housing Funding
1. To ask the Minister for Housing, Planning, Community and Local Government his Department's engagement with the European Strategic Investment Fund on social housing PPP investment; and his views on whether the finance for the 2,500 social homes submitted to the Department of Finance task force can be attained through these sources. [17119/17]
I ask the Minister to outline his Department's engagement with the European Strategic Investment Fund on social housing PPP investment and his views on whether the finance of the planned 2,500 social homes submitted to the Department of Finance task force can be obtained through this source of funding.
In November 2014, my Department submitted potential projects to the Department of Finance in respect of the task force report for the European Fund for Strategic Investment, including the social housing PPP programme. Investment in social housing through the public private partnership, PPP, model is part of a wider plan to accelerate the supply of social housing, and is now reflected in the second pillar of the Rebuilding Ireland Action Plan for Housing and Homelessness.
The National Development Finance Agency, NDFA, is acting as financial adviser to my Department and the relevant local authorities. In that context, a submission has been made through the NDFA to the European Investment Bank, EIB, seeking finance from the European Fund for Strategic Investment to support the provision of some 1,500 social housing units under the social housing PPP programme. The submission, which is being appraised by the EIB, is in respect of a framework loan to provide financing to private sector partners to construct, finance, operate and maintain the housing units concerned.
The EIB is further involved in supporting social housing Ireland through loan finance provided through the Housing Finance Agency, HFA. On 2 March 2017, I announced a new €200 million long-term loan which has been agreed between the EIB and the HFA. The combined package, including matching funding provided by the HFA, is €405 million. The new loan is to support construction of an estimated 1,400 new homes and the refurbishment of more than 700 properties in Dublin and other locations across Ireland. The scope for further investment by the EIB in social housing in Ireland, including through the European Fund for Strategic Investment, is currently being actively explored.
I thank the Minister for his reply. I am acutely aware of the significant public infrastructure deficit across the country, the lack of capital investment over the past number of years and how economic productivity has been held back as a result. The most important area is housing, an area where there is a crisis. It is immoral that the State is leaving millions of euro on the table for European investment banks which is earmarked for investment in public infrastructure under the Juncker plan. My belief is that the risk aversion of the Government to PPP rather than constraints proposed by the fiscal rules is holding this back.
The fiscal rules are the greatest barrier to increased State investment in infrastructure. However, the European Commission Juncker plan to enable Government flexibility rather than the application of fiscal rules would promote investment in areas such as social housing. Yet in Ireland, the only public infrastructure projects being built and financed under the Juncker plan are 14 primary care units.
We need to think outside the box. Why is the Department so unwilling to engage with private finance to try to accelerate the flagging housing construction programme?
I agree in principle with the Deputy. A European fund is targeted at investment across the European Union to improve competitiveness and increase economic activity. That is the whole point of the Juncker plan. Ireland has an infrastructural deficit. We have been unable to afford to spend the kind of money that we would like to have spent over the past seven or eight years. The previous Government faced the same challenges.
As our economy recovers, and as tax revenues improve and the tightness of the fiscal constraints within which we have to operate loosen, undoubtedly that will mean increased expenditure on targeted capital projects. Access to money is not the problem, whether it involves the EIB, private investors or equity funds. The challenge is being able to spend money under the fiscal rules. Borrowing money is not an expensive business for a Government. Being able to spend it under the rules we have signed up to is the challenge. That is why PPPs are potentially a very useful mechanism to put in place commercial investments, along with private sector interests. We are considering the ways in which can be facilitated.
It is also probably true to say that the cost of PPPs today is significantly less than it might have been ten or 15 years ago in terms of the cost of finance. There is some merit to what the Deputy has said. Ultimately, it will be a decision for the Department of Public Expenditure and Reform.
I thank the Minister. My belief and that of my party is that we should build social houses and that we are constrained by the fiscal rules. Housing is the social and economic issue of our generation, and housing provision should be a right rather than a requirement. I was present in the House earlier when Seán Lemass was mentioned, and a Member suggested what he would have done about another issue. We in Fianna Fáil know what Seán Lemass would have done about housing. He would have ensured that the Irish State built and managed social housing and provided homes for our citizens.
In 2005 the EIB said, in reference to the Juncker plan, it was confident that the plan would be the catalyst for the financing of social housing and associate investment in community development as a priority target. We are not availing of the European fund enough. I ask the Minister to be more innovative in the way we finance and manage the State's building of social housing. I do not see any answer today that gives me confidence that we will get on top of the growing housing crisis.
Whereas I need to be careful about what I say in the context of how we draw down funding, in particular in the context of the European Union fiscal rules because the Ministers for Public Expenditure and Reform and Finance are primarily responsible for that, I can certainly comment on social housing. We are using a series of new approaches to drive delivery. We have already committed €5.35 billion in our investment programme for social housing which will contribute an extra 47,000 social houses units to the social housing stock in the next four to four and half years.
To put that into context, it will increase our social housing stock by nearly 30% over a four-year period. It is a very significant investment commitment and one of the very few multi-annual commitments the Government has made in order to respond to the social housing need with the required level of urgency.
Most Members of the House would accept that there was an over-reliance on the private sector, in particular the private rental sector, to solve the needs of social housing and families who needed State intervention. We are looking to correct that, while at the same time supporting many individuals and families in the private rental sector. It is a combination of Part VII. I remind the Deputy that in the past developers were given the opportunity to buy out of their Part VII responsibilities, which is no longer the case.
We have dramatically increased funding and encouraged AHBs to build more, something to which they are responding well. We have ramped up the capacity of local authorities to deliver in a much more ambitious way than we have seen for at least a decade. Things are moving in the right direction. The Deputy will see the numbers being delivered.