Feargal Quinn (Independent)

I welcome the Minister of State to the House and welcome the opportunity to debate the housing issue. At present, we are building too many houses, of the wrong type, in the wrong place. Part of our current economic growth has something of the air of a mirage. One quirk of the statistical methods we use to judge our economy is that any activity is considered to count towards growth in the economy, regardless of whether, from a common sense perspective, it would be regarded as real growth or whether such activity is sustainable in the long term.

When the present day is compared to the height of the Celtic tiger period, the periods differ in both the quantity and quality of growth. According to the figures, at present our economy is growing at a slower rate than it did during the late 1990s. However, an even more important change may be discerned when we consider the composition of the growth and its driving force. In the Celtic tiger period, growth was driven by our manufacturing and services outputs, which was reflected in the growth of our exports. In contrast, at present the two drivers of growth are consumer spending and construction activity. Our manufacturing is stagnant and there is very little growth in exports.

This means that at present, our growth is of an altogether different type to that which we enjoyed previously. It is of intrinsically less value and in particular, it is less sustainable. In the long run, we cannot earn a living simply by taking in one another's washing. Our long-term prosperity and capacity for growth will depend on areas in which we are not doing well. The fact that we boast a statistically higher growth rate than the rest of the EU tends to mask that reality from us.

One of the dangers of the housing boom is that it cannot go on. The number of houses we are building is ahead of demand. For many years we have been playing catch-up on providing houses, but those days are over. In five years we will not need to build the number of houses that we are now building. If we build that number we will have a glut of housing and the market will collapse through an imbalance between supply and demand. That issue is not of immediate concern because the market will look after it and builders will stop building as soon as the demand dries up. When that happens our economic growth as we measure it statistically will take a sharp fall. We need to be ready to respond to that correctly when the time comes. In particular, we should resist the temptation to prop up the construction industry with subsidies or tax reliefs just to keep the economic growth figures up.

Although we can rely on an unregulated market to reduce the number of houses we build in the future, we cannot rely on it to control the kind of houses that we build and where they are built. One need only travel around the country with one's eyes open to realise that we have problems in both these areas.

Despite the dramatic change over the past ten years, the balance between the number of apartments and houses is wrong. I do not have the figures but the proportion of Irish homes that are apartments is low by international standards. While I do not suggest we force people to live in a flat when they want to live in a house, there are certain family circumstances in which it makes more sense to live in a flat, for example, the large and growing number of people who live alone. We should, through planning and zoning regulations, make it easier and more attractive for people to live in apartments. Instead of allowing our cities to spread endlessly into the countryside, we should make a consistent effort to increase the density of our housing within the traditional city limits.

If we do not increase overall housing density, the situation will deteriorate. Dublin has already sprawled to an unacceptable extent but this process will continue unless we set our minds to stop it. I was in Australia last week, where one can see just how bad this situation can become. Around some of their big cities the suburbs sprawl in every direction for up to 100 km. and more.

We can control how the shape of our housing develops. The amount of housing we need depends on population demands, and there is little we can do about that, but we can control the kind of housing we provide and where it is provided. If we put our mind to it, we can stop the sprawl of our cities from getting worse. We cannot unbuild what we have built but we must learn to manage it.

The Australian Government recognises the problem of sprawl and has started to address it. The future is still in our hands but we need the will to address the problem. As we look around the cities and see the number of new apartments, far more than 20 years ago when they were practically non-existent, we are inclined to think the balance is right. We have fewer apartments compared with homes than other countries. Traditionally 20 or 30 years ago everybody had a house with a garden but if we do not take a different attitude the urban sprawl will continue and we will not be doing the sensible thing for our population and the environment.