Feargal Quinn (Independent)

I welcome the Minister of State, Deputy Power. I found the speech of the Minister of State, Deputy Finneran, very impressive. The concept of the policy statement, which is based on delivering homes and sustaining communities, is well worth while. There was a vision behind it when it was published last year. The objective, as the Minister of State said, is the transformation of the housing sector.

I will concentrate on three things, one of which is funding. A funding crisis has arisen because of a glut in completion of Part V housing units, which are units built by developers to meet their obligations to provide 20% social and affordable housing in each development and which are then sold to local authorities. The number of Part V completions has soared and, with it, the bill payable by county councils. This has drawn funds away from traditional projects undertaken by housing associations, charitable groups, and various other trusts. A Department spokesman said the Part V housing scheme gets priority because the houses are already built. Another factor prompting councils to divert money to Part V housing is believed to be the fear of litigation if developers are not paid.

Some 700 new homes were planned for St. Michael's estate in Inchicore in a deal worth €265 million, at least 220 of which were social and affordable housing. Other projects included the redevelopment of O'Devaney Gardens off the North Circular Road, with 860 homes, worth €180 million, and 360 apartments on Dominick Street, worth €150 million. Another 179 units were due to be built at the convent lands on Seán McDermott Street, of which 20% were to be social and affordable housing, and another 162 units on Infirmary Road, including 130 social and affordable homes. I am sorry for giving so many figures. However, the funding for voluntary social housing in Dublin has been suspended because Dublin City Council has stated that it has used up its annual allocation under the main scheme operated by the Department of the Environment, Heritage and Local Government. A spokesman for the Department said the council had reached its allocated borrowing level for the year and, as a result, no further social housing projects would be sanctioned under the scheme. The result was that McNamara Construction decided not to continue with the construction of five vital public private housing projects in Dublin. This is a disaster for inner-city Dublin, as the Minister of State knows, and not just for the estates that were to be regenerated. The rebuilding of St. Michael's estate in Inchicore, for example, involved not only the provision of private and public housing, but also a library, a civic centre, a health clinic and a shopping centre. The regeneration schemes held out the promise of an end to social segregation and the sink estates that had grown up over time in the city's social black spots.

The old, discredited model of segregated social housing has not been replaced by a working alternative. There are currently 44,000 households on housing waiting lists, as mentioned by the Minister of State, and some have been there for up to a decade. The collapse of these public private partnership schemes highlights the continuing failure of the Government to tackle the housing crisis. This is an important point and one that needs attention. The situation has come about because of success rather than failure, but that is the problem. It is a challenge for the Government.

I also wish to speak about Government support for non-housing parts of the Irish economy and tax measures to cool overheating in the housing market. Now that the housing market has slowed, Ireland is again out of sync with most of Europe, with the drop in house construction depressing growth. Analysis of the Irish market by Dr. Alan Ahearne of NUI Galway for Bruegel argues that we should not follow the example of Spain. He report states that "some building firms will collapse" and warns that the Government should not intervene as it did in Spain, where the state has ordered big social housing projects. Housing-related activity, which has driven strong revenue growth, will no longer boost Government coffers. The Government should now support non-housing parts of the economy, such as infrastructure. According to some estimates, infrastructure deficits are costing Irish businesses €2.5 billion in lost profits. The Government should also provide incentives for people to improve insulation in their homes to help the construction industry.

Dr. Ahearne has argued that since governments in the eurozone cannot change interest rates in response to overheating housing and credit markets, they must learn to use other mechanisms, such as tax, and intervene early with tax measures to cool overheating. The report by Bruegel suggests that mortgage interest relief should have been eliminated and capital gains tax introduced on the sale of primary residences to dampen the boom that began in 1996, and argues that a tax on interest payments for flexible-rate mortgages might also be called for. We must bear in mind the problems experienced in Spain and avoid intervening as the Spanish Government has done. Such measures may worsen the problem of extra inventory of unsold houses and prolong the adjustment process. It is a lesson to us that we must take care. If we look at what happened in Spain we can appreciate the problems that were created there.

Senator Ross is not here to comment on estate agents and he shows no love for them, though he has become one. Half of Spain's estate agents have collapsed in the past year due to a slowdown in the once-booming building sector. The figures amaze me. Of 80,000 that operated at the beginning of 2007, only around 40,000 have survived and some 100,000 employees lost their jobs, according to the Superior Council of Real Estate Agents, a nationwide group there.

My final point relates to the glut of housing in Dublin and the lack of accommodation for those who need it. In some counties, up to 30% of housing units lie empty. In Dublin, developers were aided greatly by Dublin City Council planners who raised the height limit in the city and permitted the construction of multi-storey blocks. One result is a glut of housing that is not needed, is not occupied and is in the wrong places. Another result is a dearth of housing that is urgently needed and which is suitable for families to live in. In Dublin alone, 2,000 households are trying to break out of homelessness each year, yet places can be found for just 300 of them. Why are the people who need housing being left behind in the light of such scandalous waste of unoccupied accommodation in the city?

These are some of the challenges that face us and there are no easy solutions. Part of the problem has emerged from the success of past efforts; that is to say, the public private partnership was so successful that we have used up our allocation. This is a challenge that is worthy of debate and concentration. We face up to this and set objectives, as the Minister did so well in the original document. On delivering homes in sustainable communities he said "the policy statement set out a vision to guide the transformation of the Irish housing sector over the medium term by delivering more and better quality housing responses and by doing this in a more strategic way, focused on the building of sustainable communities". The vision and the objective here are perfect. Disability and those left behind due to disability are included in the vision and it was interesting to read this because I was not aware of the amount that had been done. The efforts being made are very worthy.

I support the efforts and the objective but let us ensure we can achieve this in the short term, not just the long term.