Brian Ó Domhnaill (Fianna Fail)

I welcome the Minister of State, Deputy Seán Power, to the House.

The Minister of State, Deputy Finneran, referred to the proposed legislation which it is hoped will be published soon. The draft housing Bill, which we hope will be presented to Government shortly, will provide a legislative footing for the delivery of homes to many people, particularly those on local authority waiting lists. I welcome a number of areas which are being addressed under the Bill, particularly the rental accommodation scheme. This scheme is an excellent interim measure for a person who wants a firmer accommodation footing than dealing directly with a landlord. It should be rolled out nationally and the legislation put in place. Local authorities are availing of the scheme, but often in urban areas only. We must examine that. If it is available for people who live in urban areas, it should be also available for people who live in rural areas.

On expanding paths to home ownership, during my clinics at the weekend I met a number of people who were applicants on the housing list. The housing list is moving slowly in Donegal and these people suggested that if they were successful in their applications for mortgages, they would build houses themselves. If people on the housing list are taking steps to take out mortgages, we should support them in doing so by providing an incentive in addition to the mortgage, whether it is obtained through the local authority or from the bank. Even though bank interest rates are rising, the banks' mortgage rates are still lower than the local authority mortgage rates. Perhaps that also needs to be addressed.

I have been reading a report, which was compiled by DKM Economic Consultants on behalf of the Department of the Environment, Heritage and Local Government and which was published in May 2008, entitled Construction Industry Indicators: Issue 13. There has been much debate, particularly in the past few weeks, on the consequences of the deterioration of the housing market, not only for those purchasing or selling houses, but also for the economy. This report outlined that there were three specific areas in the construction sector — residential construction, general construction and civil engineering — and that they latter two were emerging and growing. Incidentally, the first quarter of 2008, according to the report, saw a volume of office space built which was on a par with that built in 2006. It shows that, away from the housing sector, the construction sector is developing.

Today, however, we are concerned with the housing sector. While houses may be more affordable to people's budgets, the difficulty for many is that they cannot get their hands on the money they need from the financial institutions to purchase a house. This is a major difficulty. Even though the price of houses has dropped, people can not obtain mortgages because of the banks' lack of confidence in the housing sector. That is a matter that would need to be addressed in the overall context. The banks supported people when everything was going well and they made a good deal of money. However, now that there is a downturn they are not helping the people who wish to help themselves. At present, the person — or the young couple — who cannot get a mortgage from the bank goes onto the local authority housing list. I have seen this at first hand in the past few weeks. It is affecting the housing lists, driving up the number of applications and this needs to be addressed. I welcome that the National Development Plan 2007-2013 will see a doubling of the housing budget spend. The budget in the last development plan was some €10.5 billion, which was spent on the local authority, voluntary and the affordable housing sectors. This budget is being doubled to €21 billion for the period 2007 to 2013. This figure includes €3 billion in supplementary welfare allowances or the rent supplement scheme.

During my time as a member of Donegal County Council, one of the key issues was providing affordable housing to people, especially to those in rural areas. Local authorities, including Donegal County Council, are not doing enough to promote the development of the specific instance cottage. A specific instance cottage can be built on a person's site in the countryside at a cost approximately 35% to 40% lower than a scheme house in a town. The local authority or the Department of the Environment, Heritage and Local Government does not have to purchase the site. The site is available from the applicant and the house can be built at a very cost effective rate. The Department should promote the development of specific instance cottages to a greater extent and should advocate this view with the local authorities in order that people who wish to have a local authority specific instance cottage built on their lands may do so. At present the guidelines state that a single applicant is prohibited from obtaining a specific instance cottage. He or she must apply for a scheme house, and this needs to be addressed as well.

I refer to the private house grants for older people and those with a disability. This year there was €71.4 million allocated under the scheme. Many local authorities have been given excellent allocations under this scheme, which was announced on 21 May by the Minister of State at the Department of the Environment, Heritage and Local Government, Deputy Michael Finneran. I welcome the funding, under which some 20,000 people have obtained grant aid since 1997. However, the difficulty appears to be that although the funding is available to local authorities there is a backlog of applications. This applies not only in my own county but in other counties as well and it has been brought to my attention by several local authority members. The reason for the backlog is that local authorities do not have the 20% matching funding to pay out grant aid, which needs to be addressed. I suggest the Department of the Environment, Heritage and Local Government should make contact with every local authority to find out the number of applications in the backlog and to determine, in conjunction with the local authority, whether a once-off allocation could be given to clear that backlog by reducing the 20% requirement.