Michael McCarthy (Labour)

I move:

That Seanad Éireann

—noting the continuing rapid rise in the price of new homes;

—recognising the failure of the Government to take effective measures to control the price of building land;

—deeply concerned that more and more people on modest incomes are now effectively excluded from the housing market;

—noting the successful provision of affordable housing by Irish firms operating in the UK;

—condemns the failure of the Government even to meet its own targets for the provision of affordable housing and calls on the Government to recognise the need for radical solutions to the home ownership crisis, these steps to include measures to control the price of building land and innovative provision of high quality low cost housing.

If the Government tried to change the Order of Business, might we be notified in a meaningful way? Recently, a cross-party delegation travelled to London at the invitation of the Irish part of a consortium. Our delegation included members of Fine Gael, the Progressive Democrats, the Green Party and the Labour Party, namely, me.

We were invited to view a £60,000 house. As part of a consortium, the Irish based company, Kingspan Century, developed a house that was short-listed by a unique British Government design to manufacture competition to develop a £60,000 house, which would help to create affordable housing for sustainable communities. The competition was run by English Partnerships and the Office of the Deputy Prime Minister and brought to the fore the issue of creating affordable housing for sustainable communities.

Many developers sought to rise to the challenge of creating the optimum £60,000 house. From discussions with people while I was in London, a certain prestige was pursued by those who tendered for the project. More than 80 developers sought the contract to build the house, which indicates that the principle is innovative and commendable and an Irish company fought off stiff competition to win the overall cotract. This speaks volumes about the company.

The project presented strong challenges to the construction industry and its ability to design and manufacture a range of houses using modern methods of construction is commendable. A house worth £60,000, or €90,000, is relatively affordable. After recent debates on prices, it was refreshing to consider that an idea could be pursued and a project put together involving different strands across the divide.

The competition was instrumental in encouraging the industry to take a fresh look at its approach to design, construction and partnership. The level of interest was clear, as more than 80 developers tendered for the contract. Each company was willing to recognise the need to evolve and adapt to the ever changing housing demands and the growing demand for affordable housing in particular.

There was a consensus among the members of the delegation that this was a good idea and it would be difficult for a reasonable person not to understand this point of view. We do not lightly say that there is no reason the project cannot be replicated in this country. The only requirement is political will. We have the expertise, trades and people capable of doing this, as borne out by the fact that an Irish-based company won the contract. If the Minister of State takes anything from this motion, I hope it is this idea. He should take it with a view to move from inspiration to action.

While it was a cross-party delegation and invitations were issued to Fianna Fáil, that party did not send any representatives for some unknown reason. An important body of knowledge would not have been lost on the major Government party if a Fianna Fáil representative had been in attendance. I say this as an observation rather than a criticism.

In recent years, the Labour Party has been to the fore in providing ideas and policies in this area. We firmly believe everyone has the right to a home and it is the duty of the Government to ensure everyone has a home sufficient to his or her needs. Everyone should be enabled to buy a home. In a buoyant and prosperous economy, with an Exchequer surplus of more than €1 billion, the country is awash with money. Matters were different when economics did not allow us to make such statements, but there is plenty money now. As home ownership is the normal form of house tenure, every working family should be enabled to buy within reasonable distance of work and family, which is the kernel of my statement.

We are committed to ensure affordable housing schemes deliver a minimum of 5,000 homes per year. Under Part V of the Planning and Development Act 2000 and the partnership agreement, 40,000 homes should have been delivered. To date, only 2,000 have been delivered. These figures speak volumes about the inertia in fulfilling this promise. It is a measure that received much fanfare during its announcement.

I am bound to give credit where it is due. In west Cork, the State donated land to the local authority by virtue of Clonakilty community college to build affordable housing. It would be remiss of me were I not to point this out. I was more than surprised that the project was obstructed at local authority meetings because house prices are particularly high in that area. I give credit where it was due, this was pursued by a Government Deputy, the land was made available and the affordable houses can now be built. I would like to see that happen everywhere. It is happening in Clonakilty to the credit of those involved but was opposed at council level.

We propose ensuring that all those on the council list can secure a home at a reasonable cost. The NESC in a recent report stated that by 2012, 73,000 additional houses will be required. Given our current rate of delivery, we cannot be optimistic about realising that objective. The All-Party Oireachtas Committee on the Constitution, which was chaired by Deputy Denis O'Donovan, recently recommended that in major urban areas, the local authority would have a publicly controlled land bank on which affordable housing can be built. That decision would end speculation in building land. We have all seen the battles at council meetings to rezone tracts of land. Zoned land, if it continues to be subject to speculation, will not relieve the huge demand on local authorities for social and affordable units. At the current rate of delivery, however, the Government will miss out on its own targets on social and affordable housing in spite of the €100 million announced by the Minister of State at the weekend. The money is significant and welcome but the caveat is that the Government is spending more on delivering fewer homes.

Before Christmas, a family came into my constituency office in Bandon, a husband and wife with two young children. At that stage almost 800 people were on the housing list in the western division of Cork County Council area, which does not include major urban centres such as Bandon and Kinsale. The couple have been on the housing list for four years but I could not look them in the eye and tell them their requirements would be met in the short term. Half of that family's disposable income was going towards rent and child care costs. They are an example of the new working poor falling into a poverty trap.

In recent weeks, the quarterly report on house prices from daft.ie gave the lie to the myth that has been put forward by those who know better, including in the Government, that the housing market has calmed. The figures confirm what everyone has known for months — the housing market has shown no sign of slowing down, with house prices escalating ever upwards. House prices are now 13.8% higher than this time last year and 5.5% higher than in January. Clonakilty was the most expensive town in Munster, where a three bedroom semi-detached house now costs €350,000, an astronomical sum for those on the lower end of the salary scale.

The European Central Bank is expected to increase interest rates by 0.25% soon, again in September and perhaps again before the year is out. Those are measures where we have no control but they have an effect on affordability. If the increase is only 0.25%, it will add about €28 to the average mortgage payment. When first-time buyer couples in Dublin are spending a third of their combined income on mortgage repayments, an increase from 29% last year, it is a huge amount for a double income couple.

The affordability index I referred to was completed by EBS Building Society and DKM economic consultants. It shows that the average mortgage in Dublin for first-time buyer couples is almost €1,700 per month and €1,300 in the rest of the country. We have heard about economic prosperity since 1997 but since 1996 house prices have quadrupled in Dublin and trebled in the rest of the country, fitting in with the tenure of the Government. The expected increase in interest rates will have an adverse impact on affordability. Coupled with the fact that increases are also likely in September and December, this highlights the difficulty faced by those in that trap.

It would be remiss not to mention homelessness during a debate on the provision of social and affordable housing. In February, the Government reviewed the homelessness strategy. At the time we called for practical measures recommended by the review group to be accompanied by a Government commitment to enshrine the right to own a home in law. I cannot see any problem with that. Given the wealth of modern Ireland and the boasting of the Government, it is a scandal that homelessness is still rampant. One does not have to go far from this House to see it.

Rent supplement now costs €400 million per annum. We have created a new form of social housing that is not readily visible. The social housing units do not exist and while people are in need of housing, the State is simply directly transferring €400 million to private landlords. That must be reviewed. The Minister of State knows this because Deputy Gilmore has flagged it during Private Members' business in the Dáil. Approximately 60,000 tenants in private rented accommodation are in receipt of rent allowance. Almost all of these tenants are on social welfare and receive an allowance of up to €1,000 per month. The poverty trap exists whereby if some of these people go into full-time employment, they lose their rent allowance.

I will reply on this motion. I hope the Minister of State does not bombard us with figures from his glossy press release at the weekend. He must sit down and examine this issue and the innovative idea that now works perfectly in Britain. All that is missing in this country is the political will, we have everything else.