Mairead Farrell (Galway West, Sinn Fein)
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99. To ask the Minister for Public Expenditure and Reform if he will commit to doubling capital expenditure in order to solve the housing crisis in view of the recent report by the Economic and Social Research Institute, ESRI, which calls for same. [31883/21]

Mairead Farrell (Galway West, Sinn Fein)
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The ESRI recently issued a report stating that major public investment in housing finance through additional borrowing is needed to address the State's housing crisis. Ireland will be facing another decade of a housing crisis unless the Government doubles capital expenditure on housing to the tune of €4 billion per annum. Will the Government commit to the doubling of capital expenditure on housing?

Michael McGrath (Cork South Central, Fianna Fail)
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I thank the Deputy for the question. The total level of capital expenditure, along with the sectoral allocations for areas such as housing, is currently under consideration as part of the ongoing review of the national development plan. That process has yet to be completed and I do not want to pre-empt any decisions that will be made in the coming weeks on foot of that review being finalised. The overall level of capital expenditure in 2021 stands at €10.1 billion, or almost €11 billion when capital carryover from last year is included. This allocation is almost €5.5 billion, or 119%, higher than the amount allocated in 2017. In other words, capital allocations have already more than doubled under the national development plan. This is an all-time high in the history of the Irish State, with a commitment to maintaining and further increasing this over the lifetime of this Government. This is in spite of the major challenges facing the Exchequer due to the impacts of Covid-19 and Brexit. It is also worth noting that the total allocation for the housing programme has increased by 230% between 2016 and 2021, increasing from €943 million to €3.1 billion. Of this, almost €2 billion in capital was committed to the delivery of housing in 2021. The overall capital allocation for the Department of Housing, Local Government and Heritage in the current year is €2.8 billion, an increase of €500 million from last year.

The Deputy can be in no doubt as to the level of priority that this Government affords the issue of housing and that has been reflected in all of the decisions we have made to date in our first year in office when it comes to the allocation of resources. The priority that is being afforded to housing is, of course, actively considered at this time in the context of the new Housing for All strategy that the Minister, Deputy Darragh O'Brien, is finalising, and certainly in the context of the review of the national development plan.

Additional information not given on the floor of the House:

Subject to the impact of Covid, this year the funding will support the delivery of 12,750 new social homes, including 9,500 new build homes. This is the largest social housing build programme in the history of the State.

Increasing the supply of social and affordable homes is a central commitment in the programme for government. However, these commitments must also be met in the context of competing demands on expenditure.

The ESRI report addresses the undersupply of residential housing in the Irish economy, acknowledging the effects of construction restriction due to Covid-19 lockdown measures in early 2021 and referring to the existing housing affordability challenges in Ireland. We have noted that the paper puts forward a funding option for consideration. It is also important to note that pre-pandemic, Ireland’s level of public debt per capitawas one of the highest in the developed world and this has increased as a result of our response to the crisis.

The national development plan, NDP, review will assess the balance of resourcing between sectors such as housing, health, education and transport, in the light of the programme for Government. The overall capital allocations over future years for housing and these other areas will be set out, once decided by the Government, as part of phase 2 of the NDP review. In addition, phase 1 of the NDP review examined the question of what the appropriate level of capital expenditure should be. As part of that, a macroeconomic analysis considered a number of factors including: the overall fiscal position; the demand for investment; the supply side capacity constraints in the public sector and construction sector; and international comparisons. All of those factors will need to be considered and balanced against each other as part of the NDP review when setting the planned level of public capital investment for the period 2021 to 2030.

Mairead Farrell (Galway West, Sinn Fein)
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As the Minister knows, I have been raising the need to increase capital expenditure over the past year, not just due to the fact that this State has historically lagged behind our EU peers when it comes to capital investment, and not just due to the fact we have a massive housing and infrastructural deficit which we badly need to close, but because capital investment is seen as the best possible route out of this crisis. Not only will it help us to turn things around in the short term but, in the medium to long term, it will place this State on a surer, more balanced footing. I take on board what the Minister says in regard to increased levels of capital expenditure. The fact it is set to rise to historically high levels, while welcome, says more about the chronic underinvestment that has taken place over the years than it does about the scale of the present ambition. We need to be absolutely ambitious in regard to this because people deserve better. People do not have homes. We now have a situation where the ESRI is very clearly saying that, yes, we know what the Government is committing but, wait a minute, it needs to double. Can the Minister commit to doubling that?

Michael McGrath (Cork South Central, Fianna Fail)
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I thank the Deputy. The funding we are providing in the current year is sufficient to deliver the direct build of 9,500 new social homes in our country. When we compare that to the last year for which we have full figures in the pre-Covid context, 2019, that figure was less than 6,000 units actually built. This year, the funding is provided for local authorities and approved housing bodies to build 9,500 units, so that is a dramatic increase in funding and in output, by any measure. Clearly, there will be an impact from Covid because of the shutdown of the construction sector for much of the early part of this year. That 9,500 units was part of an overall increase of 12,750 units in the social housing stock. The Minister, Deputy Darragh O'Brien, is making very significant progress with colleagues across the House in the passage of a suite of legislation that will enable him to deliver affordable housing, both affordable purchase and affordable rental, which is also critical, in addition to increasing the public housing stock through the scale of investment I touched on earlier, which will be continuing.

Mairead Farrell (Galway West, Sinn Fein)
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In my brief time here, I have lived to see the likes of the IMF, the EU, the Irish Fiscal Advisory Council, Social Justice Ireland and now the ESRI all highlighting our chronic infrastructural deficit. I take on board what the Minister is saying in regard to increases in housing supply and so on but the reality is the ESRI is literally telling us that we need to double this in order to deal with the major crisis of the time that people are facing. The real ideological position is to hold to a housing delivery model that has utterly failed and which has drawn the concerns of no less than the IMF, the EU and the UN.

If all these organisations tell the Government to change course with housing, it takes a major ideological commitment to try to protect a failed status quo.

Michael McGrath (Cork South Central, Fianna Fail)
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The Government's commitment is backed up by its actions. We are investing a record amount in public house-building. That is appropriate. When this country was much poorer, our local authorities and councils had a strong track record of building public housing and we need to get back to doing that again. In 2019, fewer than 6,000 public houses were built. This year, funding has been provided for 9,500 houses. The Minister for Housing, Local Government and Heritage will finalise ambitious targets for the new Housing for All strategy, which will be published before the summer recess.

I welcome the ESRI report. It makes an important contribution to the debate and the issues that we have to consider. Last month, the ESRI stated that we may need to increase taxes. I did not hear the Deputy speak about increasing property tax, income tax, VAT or asking pensioners to pay PSRI. The Government has to take the whole picture into account and make decisions that reflect our commitment to Sláintecare and investing in climate action and transport. Housing and the provision of social and affordable housing is a top priority for the Government which will be reflected in all the decisions that we make.