Aideen Hayden (Labour) | Oireachtas source

I welcome the Minister of State to the House. I believe the legislation is balanced. I have looked at it very carefully and particularly around the issue of Part V. It strikes a balance between a carrot and stick approach and deals with the difficulties that arose with Part V in the past.

The general purpose of the Bill is expressed in the explanatory memorandum as facilitating increasing activity in housing construction, particularly in the Dublin areas, where the housing supply shortage is particularly acute, and it deals with the revision of the Part V arrangements in regard to social and affordable housing. It also deals with the reduced development contribution charges and the introduction of a vacant site levy which I particularly welcome.

In relation to point made by Senator Norris, I do not think that because legislation is aiming to encourage increased activity in housing construction that it is abandoning the issue of urban regeneration. For the sake of argument, I am looking at the submission on the proposed inner city vacant tax levy by the task force on vacant land which was established by the then Lord Mayor, Labour Party councillor, Oisín Quinn, in 2012. It noted that Dublin City had a considerable amount of vacant land and pointed out that there were 151 vacant plots of land and 131 sites with derelict buildings which were zoned for development and left unused. It actually noted that the largest vacant site in Dublin city was the Irish Glass Bottle Company site in Ringsend at just over 10 ha. We can extrapolate from that the amount of housing that could be located on 10 ha. The second largest site was Clancy Quay, formerly the Clancy Army Barracks, at Islandbridge with 5.6 ha. That it does not necessarily involve North Great George's Street does not mean there are not issues of regeneration in the city centre. The submission also noted that under the current system there was no disincentive to landowners leaving a site vacant for many years, which was not in the best interests of the city.

A vacant site levy is very desirable in Dublin city and its environs. The Derelict Sites Act 1990 has proved to be inadequate in dealing with the number of vacant sites in the Dublin region.The issue of vacant sites was not the first one I wanted to address, but while we are on it I want to note that this is a broader issue than that of land being left unused. There was an analysis in 2003 of economic and marketing influence on the construction industry in Building Industry Bulletin, authored by a noted building economist, Mr. Jerome Casey, who pointed out that the proportion of the price of a house which was accounted for by the cost of land in the early 1990s was 15%, rising to 40% to 50% by 2003. He also noted that eight major developers had cornered the market in north Dublin in 2011. The bottom line is that this goes further than the simple issue of land being left unused. The fact is that people who can afford to are hoarding land, and have done so in the past. It is pure speculation, and the ultimate purchaser of a house built on that land is the one who pays. We need to remember that when we discuss vacant site levies.

This is a particularly balanced Bill which deals with some of the worst aspects of the Celtic tiger. As I said, there are three aspects to the Bill that tie together. We all know that the construction sector in this country is on its knees. It has gone from representing 20% of GDP down to representing about 5% to 7%. Capacity in the sector is suffering, and recovery of the housing supply in this country will depend on the health of the construction sector. Whether one listens to the ESRI, the NESC or anybody else, it is accepted that there is a demand for about 20,000 units in the country, around 10,000 of which need to be in Dublin, and we are far short of that number. I understand around 8,301 units were constructed in 2013.

A number of factors have influenced this and I want to take the opportunity to discuss them in the context of the Bill. One relates to access to finance. I am aware, because of interventions by the Oireachtas Joint Committee on Finance, Public Expenditure and Reform, that the main pillar banks have indicated that only about 60% finance is available to developers, leaving an equity gap of 30% to 40% for any development. It is my understanding that NAMA is funding about 50% of the development in this country, which is something that needs to be addressed.

The cost of construction has been raised on a number of occasions. Developer levies, which are being addressed in the Bill, are something that need to be reviewed. Demand also needs to be kept under review, and we are all aware of issues around that, particularly with regard to the Central Bank. It is not a popular thing to say, but we need to investigate who is able to access finance for housing. We have to be conscious of demand driving up house prices, but we also need to be aware that we do not want to go back to a system in which only the upper middle classes and those in the professional sectors could access money to buy housing.

Part V housing is an issue I have followed for a long time. The debate around it did not happen today or yesterday. It behoves us to consider the outcomes of Part V, particularly those relating to social housing, where it has been noted that less than 40% of all housing produced under Part V ended up as social housing. Part of the reason was that developers did not want to build social housing and were much happier to provide affordable housing because we were told that private purchasers did not want to live beside social housing tenants. Ironically, Part V was supposed to promote a social mix. I am happy to see that we are very clear on what we are doing in the Bill. It is about social housing. The NESC has pointed out that in future one third of people will not be able to afford their own housing without assistance. We need to be very clear about our targets and ambitions as a Government on this point.

On the issue of contributions, as somebody who worked as a lawyer and took contributions from developers, I know that there is and has been no accountability.We need to make it clear that openness and transparency are needed in relation to developer contributions. When we consider the performance of this Government, it is worth pointing out that local authorities throughout the country were willing to take whatever they could in relation to housing developments, and however they could get it, partly because they were simply under-resourced. It is important for me to say, following the amendment of the property tax legislation, that I do not want to see local authorities using developer levies to fund their general operations.

I would like the Minister of State to consider a final suggestion. I have mentioned the issue of financing the construction sector and the shortfall between what is available through the banking system and what developers require to get on-site developments. In my opinion, the 10% Part V requirement has always been the last tranche of any deal. This could become the first tranche of any deal. In other words, the Part V requirement could become upfront seed funding for developers. I would like the Minister of State to consider that. I will conclude by saying that this legislation is balanced and by asking who ultimately pays for the inefficiency in the housing system. I am not into the blame game - the bottom line remains that we did not receive the social housing we should have received under Part V - but at the end of the day, the person who pays for the inefficiency in the housing system, for the hoarding and for the State's inability to enforce Part V is the purchaser of the home and the taxpayer.