Tuesday, 12 November 2019
Ceisteanna ó Cheannairí - Leaders' Questions
I am sure the Taoiseach will agree that the latest daft.ierental report makes for very serious and depressing reading, revealing very high rents across the country. The average rent now stands at €1,400 per month. It has been going up continuously for nine years. Alarmingly, economist, Ronan Lyons is warning that the market could face another ten years of high rents and rent misery if the Government continues to settle for a system that depends on the likes of cuckoo funds to prop up the rental market. Meanwhile, Threshold is warning that the continuing high rents are forcing more and more people into homelessness and many more are under the threat of homelessness. Alarmingly across the country there are only approximately 3,500 homes available for rent. In Dublin 8, rents have gone up 125% over nine years.
We all have to agree that rents have been at an unaffordable level for many years. In Cork the average rent is €1,372; in Galway, €1,300; and in Limerick, €1,219. All of this should act as a catalyst for fundamental change in housing policy. In particular, younger people have been failed badly by current policies. A young person today is finding it impossible to pay these rents. Young couples, in particular, are finding it impossible to save deposits while paying exorbitant rents in tandem with credit constraints. Clearly, the rent controls in place are not working, contrary to what the Minister said in the Dáil last month. The various solutions with which the Government has come up have not been effective or had an impact.
Local authority income eligibility thresholds to qualify for a local authority house are very low. Accordingly, thousands of people on relatively modest incomes are trapped in this high rent misery. It is time for the Government to consider imposing a rent freeze, given the exorbitant levels of rent people are facing. Will the Taoiseach accept that it will be another ten years of misery, according to the comments of the economist Ronan Lyons this morning? Will he accept that current policies are simply not working and that, in particular, a whole generation of young people have been failed and can never look forward to the prospect of owning their own home, which is their wish?
I acknowledge that rents relative to incomes are high, which is a real problem. They have become unaffordable for many, particularly those living in cities. In the Government’s view, the solution is twofold, namely, rent controls and an increase in housing supply. Rent controls which are in place mean that for an existing tenancy, the rent cannot be increased in any given year by more than 4%. As the Deputy knows, the statistics produced today by daft.iedo not capture this but only new tenancies. Rent controls, with a maximum rent increase of 4% a year, are working for hundreds of thousands of people who are staying in the same place they have been renting in the medium to long term. If it had not been for these rent controls, these hundreds of thousands of people would have faced high rent increases by now. That is not captured in the statistics, as Assistant Professor Lyons said, because these are new tenancies and the statistics do not apply to existing tenancies.
The second aspect of the solution has to be more supply. If there was more supply of social housing, it would ensure people could move out of private rented accommodation, the housing assistance payment and rent supplement into social housing. We will provide an extra 10,000 social houses this year, more than in any other year this century. We will ramp up that figure to 11,000 units the following year and 12,000 the year after that. It is the biggest social housing programme in many decades.
There will also be an increase in the supply of private housing, with more places for people to buy to ensure they will not have to rent anymore. This will free up properties for others to rent and ensure more places to rent.
I am pleased that another set of statistics was out yesterday which showed a significant increase in the supply of housing. In the year to September, there was a 28% increase in the number of commencement notices. There had been concerns that the number was slowing down. We know from the numbers that were out yesterday that that is not the case. There has been a 28% increase year on year in the number of commencement notices.
Behind that, we see a 31% increase in the number of planning permissions. There have been commencement notices for 26,000 new homes in the past year, while planning permission has been granted for 31,000 right behind them. We see a strong pipeline of new housing. This covers social housing for people on housing lists and private housing for people to buy and rent. Fundamentally that is the solution and we can now see that it is working.
Deputy Micheál Martin quoted Assistant Professor Lyons, but I am not sure he was quoting from the actual report which I have here.
In it, he states, in big writing, showing that he believes this is the most important point:
It looks as though Ireland's longest-ever run of increasing rental prices may soon come to an end. Nationally, inflation in the private rental market - as measured by the Daft.ie Report - has fallen from over 12% in mid-2018 to 5.2% in the third quarter of 2019.
Dublin is driving this. Over the same period, inflation in the capital has fallen from 13.4% [his words] to just 3.9%. In four of the city's 25 markets - Dublin 1, Dublin 2, Dublin 4 and Dublin 20 - the inflation rate is now less than 2%. ... This is the first time since early 2013 that this has been the case.
We have had rent increases for the past 14 quarters. In 1987, a young couple would have had to pay 19% of their net annual earnings to afford a home. In 2014 - five years ago - it was 30%. In terms of a deposit in 1987, a young couple would have had to pay 30% of their net annual earnings. This increased to 50% by 2014. God knows what it is now. If the Taoiseach were to go out and talk to people, he would know this is the big issue. Young people are very angry and their parents are very angry. When one knocks on doors one is told by parents there are five or seven people living in the house because their adult children cannot afford to rent. There are as many people living in local authority houses. In the words of Threshold, high rents have forced people into homelessness. Instead of going on the streets or into emergency accommodation, many people are going back to live with their families. That is the reality.
We now have the lowest level of home ownership in this country in many a year. The reason for this is the Government's big policy mistake of going for the rental model. Fine Gael went for a rental model, thinking the private market would resolve the issue but it has not. These figures are extremely worrying. The prediction of another ten years' of rent misery for young people and young couples demands a dramatic change in scale of response in terms of house building and a rent freeze.
There is something a little bit odd about the Deputy referring back to 1987 or 1997. I am not sure which year he mentioned, but whichever year he chose was an interesting year to reference because he did not mention the 20 years of Fianna Fáil government that occurred after that period. During that period of government, Fianna Fáil was responsible for many of the policies that gave rise to the housing crisis and housing shortage that we face today.
The Deputy likes to pretend that he was only elected to the Dáil in 2011 or 2017 but he was part of the Government that was in power for almost all of that period or a large part of it.
Let us talk about those young people. Since this Government of Fine Gael and the Independent Alliance has come into office we have introduced the help-to-buy scheme. That help-to-buy scheme-----
That has happened because of decisions taken by this Government to support and help first-time buyers and supply is now coming on stream. According to the figures released yesterday, 28,000 new homes commenced in the past year, up significantly on the figure for last year, and 35,000 planning permissions were granted in the past year-----
The Deputy mentioned the daft.iereport and said there were 3,500 properties available for rent on that particular website. According to the website's own report, that is 10% more than this time last year.
There is a daft.iereport out today. For the 14th quarter in a row, average rents have risen. The average rent in Cork is now €1,372 per month. In Dublin, it is over €2,000 per month. This rental crisis - and it is beyond question a crisis - is crushing workers and families. It is costing people €2,000 per month, which equates to €24,000 per annum, to put a roof over their heads, not to mind the cost of food, insurance or sending children to school.
It is the same story in Galway, Limerick, Waterford and anywhere else in the State. There are sky-high rents and no action. The figures do not lie. They are crippling people entirely. While they are shocking, they are more than just figures. They are the mother with two kids facing homelessness because her landlord has just hiked her rent. They are the young people desperately rifling through daft.iejust to find anything remotely affordable within commuting distance of their work. They are the couples who have no chance of saving up for a deposit on their own home. A whole generation is being locked out of every having any option of having a permanent home. People have lost hope of that. Thousands of people pay rent that in reality they cannot afford. Inevitably, other things suffer. Hard decisions are made on what bills to pay and what a family can afford to let kids participate in. People dread trying to shop for decent food on a pathetic budget.
Renters in Cork and throughout the State have been badly let down by the Fine Gael-Fianna Fáil partnership Government. They have done nothing to reduce the cost of rents or to protect tenants from further rent increases. It just goes on and on. As has been noted, the reality is this is pushing more and more families closer to homelessness. There are 5,000 households on the public housing waiting list in Cork city. Homelessness figures in Cork reached 435 at the end of September. Rents in Cork city reached an all-time high, with renters having to spend 47% more than mortgage holders to live in a three-bed house. The Fine Gael-Fianna Fáil housing policy is not working. It is failing Cork and it is failing everyone else. It is time for real solutions. For a long time we heard Fianna Fáil criticising us for a lack of solutions. I am interested that for the first time, Fianna Fáil is talking about a rent freeze, something that Sinn Féin has been talking about for a long time. That is something real and actionable that the Government can do and that this side of the House has been calling for a long time. Now Fine Gael's coalition partner is calling for it. Will the Taoiseach now take the step that is clearly required to stop these runaway rents that are forcing people into poverty and homelessness? Will he give people that break and put in place a rent freeze?
-----and as a consequence of those rent controls, the maximum rent increase is 4% in any given year. For hundreds of thousands of people who would have seen rent increases much greater than that, the rent increase has been somewhere between 0% and 4% a year. Consideration was given-----
-----to a rent freeze. Notwithstanding the constitutional issues that may make that impossible, even if it was possible, there is a real concern about the unintended consequences of a rent freeze. What we may see happening in the event of a rent freeze is less supply. Ultimately, those who need to rent need to find somewhere to rent. While a rent freeze might work for people who are renting already because their rent would not rise, it might cause less new supply. People who need to rent for the first time, the young people the Deputy mentioned, people who have to leave the home they have been renting for some reason, people who lose the home that they owned, people coming in from other countries could really suffer in the event of a rent freeze. We have seen in other countries where they have introduced rent freezes that this has happened. It is protecting people who are renting already-----
-----because they do not see an increase but people who have to rent for the first time can run into real difficulties and that is why we think that is a policy that could indeed be counterproductive.
Let us talk about what the solutions actually are. The main solution has to be supply. Ultimately there has to be enough places for people to rent. To do that, we must increase the supply of social housing for people who are on the housing list, getting them out of private rented accommodation, off HAP and rent supplement and into social housing. Some 10,000 new social homes were provided this year, more than any year of this decade. We are ramping it up as quickly as we can with 11,000 next year, 12,000 the year after and 60,000 over the next five years. Of course, there is a need for increased provision of private homes because people want to buy their own home. They also want to be able to rent out a home. We see now from the numbers that came out yesterday a big increase in commencement notices and planning permissions so a very strong pipeline is coming beyond that. What we see unfortunately, though, is some people, in particular local authorities, voting down proposals for new housing.
As regards the Deputy's party, the truth hurts, and then they start shouting, but I will be heard.
Before we go on, may I appeal to Members? While tensions are a little bit higher because there are by-elections impending, the same members of the public are sitting at home watching this Chamber and expecting it to behave in a respectful and constructive manner. Will Members try to stop heckling the Taoiseach?
The Taoiseach has made a lot of the fact that the rate of increase is slowing. What does that say to people in reality? The Taoiseach is telling people they are still drowning, just not drowning as quickly they were, but it is going to keep getting worse. He is closing the door long after the horse has bolted and has offered nothing to deal with the crisis that is facing renters. Under his watch, not a single, affordable home has been built to rent or buy under Rebuilding Ireland. The rent pressures zones are not working. This situation is unsustainable. It is a crisis, is forcing people into penury and is locking young people out of any chance of having a permanent home. Every action the Government has taken on the housing crisis is a day late and a dollar short. As there now appears to be a consensus, this is his chance finally to get ahead of this rental crisis and to put in place the radical solution that is needed by this radical crisis, namely, a rent freeze and rent relief for all renters.
The Deputy in his opening question spoke about Cork, which is the city he represents. He may be interested to know that the latest figures tell us that in the year to June 2019, there were 2,095 commencement notices in County Cork, which is up 20% on the previous year.
There were 593 of these in the city, which is a 150% increase on the previous year. We are seeing new housing being delivered. It took a long time for us to get to the position where we could get the construction sector and social housing going again. That is now happening. Due to the financial crisis and the crash, we had a seven-year period during which almost no new homes were built. As a result, we have a big deficit of housing in this country, which is at the root of the problems we face. Finally, we are getting to the position where we are seeing real and sustained increases in supply. This year, 10,000 social homes are being provided, which is getting people off housing lists and into permanent tenancies with a big increase in the supply of private housing as well. There are more places for people to buy and rent. As a result, we can now see house prices are levelling off and falling in Dublin, as we see from the daft.ie report today. In the words of the author, which I repeat and they are not my words, "It looks as though Ireland's longest-ever run of increasing rental prices may soon come to an end." Would that not be a good thing?
The economy has stabilised and the public finances are in balance, thanks to the sacrifices made by the people of this country over the past ten years. Because of the positive role of immigration, we retain a relatively young population compared with most of Europe. We have to plan for the growing number of older citizens and for the gradual increase in the average age of the population. We do not have to have what at present is the highest retirement age in Europe. Right now, people are not entitled to the State pension until the age of 66. This is due to rise to 67 in 2021. That would put Ireland into a small group of countries with the highest retirement age in Europe. We are living longer. In future, people who go to third level education will likely only begin their careers in their mid-20 or later and probably will work beyond the age of 65 but we are not there yet. Many people who are now approaching retirement came into the labour market in their teens and have already done up to 50 years of work and paid up to 50 years of tax and social insurance contributions.
They have made their contribution to society and it is unjust to force them to wait another two years to receive their pensions. Many are tied into contracts that require them to retire at the age of 65 years. Some may choose to work longer if they can, but many of them do not have that option. For someone who may have been working in the same job for decades to suddenly seek a new job at the age of 65 years is not easy. Some employers may be reluctant to take on people in their 60s. Those in this cohort end up seeking jobseeker's benefit. The Government has created an exception to the rules for jobseeker's benefit to allow the payment to continue until a person retires, but there is no need to require thousands of older people to enter a pre-retirement period to wait for their pensions. The Social Insurance Fund is projected to have a surplus of €3.8 billion by the end of the year. We now have funds to pause or slow down the increase in the retirement age and give society time to adjust in order that those entering the labour force later can project themselves working later. We have the opportunity not to proceed in the timeframe forced on us when we were in the troika programme. In my judgment we can afford to allow 66 year olds to continue to access the full State pension, for which they have more than paid. Will the Taoiseach reflect, as I have done, and agree that it is time to pause the current plan to increase the waiting time again in 2021? Should we not give society and the economy more time to adjust before raising the retirement age beyond the current age of 66 years?
I acknowledge that the Deputy has acknowledged that there is now a budget surplus and that the Social Insurance Fund is back in surplus. In fact, it has been in surplus for several years. It recorded a small technical surplus last year and it looks like that it is going to record a bigger surplus this year than was even projected on budget day, notwithstanding the views of some, including the Irish Fiscal Advisory Council, that it would not do so.
The State pension age is due to rise to 67 years in 2021 and 68 in 2028. It is true that we are doing this ahead of most other European countries, but other European countries are also raising the retirement age. The reform was introduced by my forebear in the Department of Employment Affairs and Social Protection, Deputy Burton, and we supported it because it was important to make pensions sustainable. I have a lot of sympathy for the Labour Party sometimes when it does not receive enough credit for the tough decisions it made when in government with us for five years. I do not believe it gets enough credit for that and have said this before. However, I have no sympathy for the fact that the Labour Party, largely for electoral reasons, is now trying to move away from reforms it introduced . That is unfortunate. It is as simple as this: in the 1970s the State pension age was, believe it or not, 70 years. The average man lived to 68 years and the average woman to 72. The whole idea was that, over the course of one's working life, one paid a small amount into a pension fund in order to have enough for the short number of years for which one would be retired. A wonderful thing has happened since in that life expectancy has improved. People are living much longer, which is great, but it raises questions about the sustainability of the pension system in the long term. If we do not start to raise the pension age now, we may find that people now in their 30s, 40s or 50s will not receive a pension at all at a certain point. Knowing that is why Deputy Burton introduced the reforms. Essentially, Deputy Howlin is saying that since we do not now have a problem, we should put off taking action. Is that not what was said about climate change 20 or 30 years ago? Is it not what was said about so many other things? It has been said that since we do not have the problem now, we should not fix it, that we should wait until it is a problem before we fix it. What Deputy Burton decided to do was to get ahead of the problem and make sure pension payments would be sustainable in the longer term by making reforms in order that we would not have to wait until there was a problem to fix. I am disappointed that the Labour Party has moved away from that position.
I had hoped the Taoiseach might once look objectively at a serious proposal in changed circumstances, rather than always trying to be so partisan. We have come a long way since dire decisions were made under the troika's direction. The Taoiseach knows that; he is not a fool.
However, there are real issues that require to be addressed, one of which is whether this is the time to at least defer the decision in line with that made in other countries in Europe because of our demographics and people are coming on stream who will have to sign on after working for 50 years to receive a social welfare payment, not a retirement payment. That does not make sense.
We can close the gap for them. The Taoiseach is correct that there was a much higher retirement age in the 1970s. It was Brendan Corish and Frank Cluskey who reduced it. It is time to reflect again on these issues. We looked objectively, for example, at including the self-employed in the system of social benefits. Their contribution to the Social Insurance Fund is a fraction of that of the employed, but it was a justice issue. We did not say that as it would deplete the Social Insurance Fund, let us not do it. I ask the Taoiseach, rather than dismissing my request, to objectively consider it, at least for the next five years, to allow gradual preparation to face a later retirement age.
One set of circumstances has changed. The public finances are in much better shape than they were, but the fundamental circumstance that caused Deputy Burton, when Minister, to introduce this reform, namely, rising life expectancy, has not changed. That was the fundamental reason for the reform.
When the then Minister, Deputy Burton, introduced the reform, she did not introduce it right away as an emergency response to the financial crisis; she set a future date of 2021 for its implementation. It was not an emergency response to the crisis we faced at the time; it was the then Minister thinking and planning ahead and introducing a necessary reform a little before it was needed. The Labour Party has now abandoned that policy and stated let us put it off; let us wait until there is a crisis before we deal with it.
That is exactly how we get things so wrong in this country so often; we wait until there is a crisis before we deal with it. The then Minister was correct. This is an emerging problem and we can see that in the medium term pensions could become unsustainable. She was right to bring forward that reform to increase the pension age and to give people plenty of notice by passing the law in 2017 but not implementing it until 2021.
I can understand why, for electoral reasons or reasons of popularity, we could go out and say we were not doing this. People aged between 62 and 65 years would say that was great and that they would vote for the parties that were stating this because they would not have to retire at 67 years but at 66. However, the ones who would lose out are the people who are in their 40s and 50s or who are 60 because they are the ones who would see major reductions in their pension payments if we do not get ahead of this problem and make pensions sustainable long before there is a crisis.
I bring to the Taoiseach's attention the amount of money being transferred out of Ireland in personal remittances. Over the past eight years alone over €10 billion has left the country by way of personal transfers. That is a staggering amount of money. The top five countries to which money was transferred in the past eight year include €843 million to Lithuania and €1 billion to France. The top three countries were: €1.54 billion to Poland, €2.7 billion to the United Kingdom and €3.54 billion to Nigeria. These figures have been published by the World Bank which defines "personal remittances" as the sum of personal transfers and the compensation of employees. It includes all current transfers in cash or in kind between resident and non-resident individuals independent of the source of income of the sender. The World Bank is an internationally recognised organisation and its data come from the International Monetary Fund. I can understand the transfers to other EU countries, for example, money being transferred to the United Kingdom, our nearest neighbour, with over 100,000 British people living in Ireland and over 10,000 Irish students currently studying in the United Kingdom. The fact that people living in Border counties may do their banking in the North is also a factor. But Taoiseach, €3.4 billion transferred to one non-EU country is astronomical. Have Revenue or the Department of Finance any way of tracking this money or where it is coming from?
Are mechanisms in place to ensure the money that leaves this country in personal remittances has been fully accounted for within the Irish revenue and tax system and is not the proceeds of crime or fraud? We cannot have a situation whereby vast amounts of money leave the country with no proper controls or monitoring in place. Will the Taoiseach give assurances that all of these moneys that have been transferred in personal remittances have been fully accounted for within the Irish revenue and tax system?
The numbers that the Deputy quotes are no doubt correct but I am not quite sure where he is going with this. Everyone in this House will know from the stories that their parents or grandparents told them that for many centuries, Irish people went all over the world and sent back remittances to Ireland. I remember my grandmother, all of whose family went to America, telling me about the cheques coming from the US. Those were remittances coming home from Irish people who went to America. The Deputy mentioned that there is perhaps a distinction between those going to other EU countries and those who are not. If the Deputy walks a few metres across Merrion Square into Holles Street hospital, he will see a hospital full of midwives from India, nurses from the Philippines and doctors from Egypt, Pakistan and I do not know where. They work hard and pay their taxes. Out of their post-tax income, they send some money back to their families, who probably paid for their education. That is the way the world works, and it is the way Ireland worked and still will for decades. When it comes to money laundering, financial controls or tax evasion, of course all the normal protections and controls have been put in place by Revenue to make sure that any money that is taken out of the country was legitimately earned.
We have to assure the people that the money leaving the country, which averages just over €1 billion per year, is not the proceeds of crime. I know an awful lot of it is genuine money but I wanted to get a commitment from the Government that proper controls are in place.
-----that anyone is sending money abroad that is not theirs, I ask him to pass that on to us and we will have that checked. I will get him a detailed reply from the Department of Finance and the Revenue Commissioners as to what controls are in place.