Séamus Brennan (Dublin South, Fianna Fail)

This amendment relates to the rent supplement debate, which has been protracted. I reviewed this scheme and made some changes to it. I only made those changes having met many groups, having listened to what was said in the Dáil and in the Seanad and having studied the matter in the Department with officials. I put a number of new arrangements in place. I have abolished the six months rule that applied for entitlement to rent supplement. It has been replaced by new measures to ensure that bona fide tenants who experience a change of circumstances are not disadvantaged but are eligible for rent supplement. The new criteria will be introduced in January 2005 after we have a chance to consult interested parties.

Applicants for rent supplement will be required to show that they could afford the rent when they took on the tenancy, that they had a reasonable expectation that they would be able to afford the rent into the future and that they have experienced a substantial change in their circumstances such as illness or loss of employment. Rent supplement will remain in payment in the case of a number of offers made from a local authority unless a third, as distinct from a second, offer has been refused. I have increased the number of offers in that respect from two to three. I also decided not to raise the minimum contribution for rent supplement this year, which would normally be expected.

There are specific provisions to ensure that the interests of vulnerable groups, for example, women who have crisis pregnancies, the homeless, the elderly and people with disabilities will continue to avail of rent supplement irrespective of whether they are on the housing waiting list. They are eligible to the rent supplement in their own right.

The new rental accommodation scheme operated by the local authorities provides for the long-term housing needs of those in receipt of rent supplement for 18 months or more. Rent supplement was not meant to be a permanent solution to housing needs. It is a short-term income support to get one through a period when because of illness or unemployment one can no longer afford accommodation.

The annual cost of the scheme this year is approximately €350 million. An economist said to me recently that if one took the amount we pay in rent supplement and paid a mortgage on it, we could probably raise €6 or €7 billion. We would build many houses for that amount. Getting from where we are to that point is not as easy as it sounds. The State is the largest single player in the private rented property market through this scheme. This scheme accounts for 40% of all the private rented property here. As a result of that, there are implications for rental prices and so on.

I am conscious that ultimately, housing, whether social, affordable or private, is the medium and long-term answer to the need in this area. At best, my Department can deal with the short-term situation by providing rent supplements but in the long term it is better if we provide houses. Conscious of that, I transferred €90 million in funding from the rent supplement scheme to the local authorities as an initial measure to enable them to start to put long-term housing solutions in place to meet the needs of people who otherwise would rely on rent supplement on a long-term basis. That is a fairly radical step and it will help to put the focus where it is needed to bring about a solution.

I have come to one conclusion from examining many such issues in recent months. It is not enough for me as Minister for Social and Family Affairs or my Department to simply take the view that we are there to administer schemes and to pay out the money. We have to examine the need behind the payment of the money to see if we can solve the problem in respect of which we are making payments. It is easy to get a problem to go away if one deals with it by paying money. Probably in most walks of life, one can buy one's way out of a problem. In many ways that is what we are doing with schemes such as this. We are buying our way out of problems and we can go home fairly satisfied that as long as we keep churning out the money the pressure will not build up. However, we must look at the issues behind the problem and solve it for the long term. Those comments come to mind in talking about the rental supplement scheme because fundamentally it is not a scheme on which in years to come a society like ours should rely. We should have houses for people who need them and not consign them to rental accommodation indefinitely into the future.

The changes we have made are for the better because people who need rent supplement will get it. It does not matter the number of months one is renting, but it does matter that one is able to demonstrate that one is bona fide in need of housing accommodation. I took the view that the six months rule should be removed because whether one is renting for two, three or fourth months, the issue is whether one is genuine and in need of such accommodation.

We wanted to stop abuse of the scheme that was taking place whereby the children of middle class families decided to move out of home because they fancied a nice pad in the Financial Services Centre or somewhere else and then began to claim rent supplement. There was no way they could have afforded the accommodation when they acquired it, therefore, they should not have done so and now they have fallen back on the State for support. That is from where that six months rule originated. I understand the thinking behind the policy to try to tackle the abuse in that way. I do not have any criticism of that but I choose to tackle it a different and better way, that is, by focusing on the individual and on whether he or she is genuine, should be in the apartment, could have afforded it in the first place and is in need of housing. The overall expenditure in terms of rent supplement next year will be €372 million. We are paying out rental payments of that order when perhaps we should be considering buying houses.