Wednesday, 23 November 2005
Housing Policy: Statements.
I am pleased to have the opportunity to address Seanad Éireann on the important subject of housing. Housing is as important to the modern dynamic Ireland of the 21st century as it was to our newly established State early in the last century, which was a situation of urban slums and rural deprivation. It was a big focus of public policy. Good quality housing is fundamental to our economic progress and is an important element of our national infrastructure. For all of these reasons and many more we must provide housing in Ireland that is of a quality and value fully comparable with the best in the developed world.
In progressing Ireland's development since we took office in 1997, the Government has paid particular attention to housing. We have made remarkable progress and I want to give the House a brief outline of just some of our achievements. The supply of housing has been transformed since 1997. Last year almost 77,000 units were completed, which was double the level achieved in 1997. Our rate of house building, at 19 units per 1,000 of the population, is almost four times the western European average. Housing supply in the greater Dublin area, which averaged about 9,000 or 10,000 units per annum in the late 1990s, increased to almost 17,000 last year.
We have introduced adjustments to our tax regime to assist the first time buyer and we have introduced a range of targeted schemes to assist those seeking affordable housing. We have increased investment in social and affordable housing. I do not mention these things to boast, but because I believe they are important national achievements in which the nation should take some pride. We have concentrated on improving quality as well as quantity. Major funding has been devoted to regenerating run-down estates. For example, Ballymun is among the largest regeneration projects underway in Europe. It is a remarkable achievement by the people of Ireland, redressing a wrong that was created in Ballymun all those years ago. These achievements did not just happen. Government actions have supported the strong increase in overall housing supply and increased construction employment. Current policies have built on good foundations. Housing policy has been always a central plank of Fianna Fáil policy. In recent years, these policies have done the business.
Ireland has had rates of house building not seen anywhere else in Europe in recent years. Only in the immediate postwar years have such housing output levels been seen. To put the scale of activity into perspective, three out of every ten homes in Ireland have been built within the last ten years — nearly 500,000 units in all. Output in 2005 is likely to be broadly in line with 2004. Some of the Cassandra-like statements that it would fall away do not seem to be upheld by the available data. The exceptional rate of house building in Ireland has been facilitated by improvements made by this Government in the planning system and substantial investment in infrastructure in recent years. It has also been facilitated by councillors of all parties and none around the country who have the courage to zone sufficient land to build houses. Without those decisions, some of which are taken in the teeth of opposition, we could not build the homes of tomorrow. Increased output has brought greater stability to the housing market.
The general consensus among commentators is that current prospects for stability in the housing market, with balanced sustainable growth, are very good. A strong housing market has a positive effect on the economy as a whole, not just through its contribution to GDP. There are now around 240,000 people working in the construction industry compared with 92,000 in April 1994. If my memory serves me correct, 20 years ago the figure was as low as 71,000. The house-building industry has made a considerable contribution to this growth.
The residential construction component of total construction output grew from 51% in 1994 to 65% in 2004. The gross value of housing output was just over €18 billion last year, which is the equivalent to 14% of GNP. In 1994, housing output represented just 7% of GNP. These are not just blank statistics. Each of these houses represents a home. Each of these wage packets represents security and all that is positive for the people in the industry.
In analysing the housing boom, the National Economic and Social Council commented that given the remarkable strength of demand, a significant increase in house prices was inevitable. Supply is the key to responding to this unprecedented demand. The Government has placed a strong focus on policies to boost supply. It is not often acknowledged that house price increases have moderated since annual house price inflation peaked at a phenomenal 48% in 1998. That figure was caused by a serious imbalance between supply and demand. By comparison, house prices rose in 2004 by about 11% over 2003. It is still a very high figure, but at least it is heading in the right direction.
The Government has been particularly concerned to improve access to affordable housing and has promoted a range of schemes for low income households in recent years, such as the shared ownership scheme and the 1999 affordable housing scheme. More than 20,000 households have availed of these schemes since their inception. I expect that approximately 12,000 units in total will be delivered between 2005 and 2007.
The affordable homes partnership should be mentioned. It was established recently by the Government and will focus initially on the greater Dublin area. Although the partnership was only established last August, it has already made significant progress. It operates under the stewardship of Mr. Des Geraghty and a dynamic board. The partnership has already placed public advertisements inviting expressions of interest from parties capable of providing and developing land mainly for affordable housing. It is also giving early attention to the potential for land swaps.
One of the land swaps undertaken as a test earlier this year was the highly successful Harcourt Terrace pilot project. At the time, there was some extraordinarily unbalanced media comment about the concept of a land swap. However, that exercise has yielded 193 new homes ready for turnkey development. This is not a bad return for a land swap involving what was little more than a shed and less than a half acre of land. Undoubtedly, had we sold the land, taken the money and invested it in the normal way through the local authorities, we would not have seen 193 houses within a 12-month period. Everyone knows that is the case and that this was a good deal. We must now think outside the box as to how we might get better outcomes.
These homes and other affordable homes are now marketed in a most innovative manner by South Dublin County Council. I compliment the council on the manner in which it has dealt with this issue and its property path office is something that should be copied by all local authorities. I ask Members who have particular influence or contacts with county councils to encourage them to investigate this.
I want to discuss Part V. The NESC has suggested that Part V was "the single most important policy development in recent decades." This innovative piece of legislation will make a substantial contribution to the delivery of social and affordable housing output over the coming years. Part V requirements do not apply to all residential developments and the number of units delivered through Part V arrangements is dependent on the level and commencement of private sector residential development and, crucially, on the nature of the arrangements entered into. While it will take a number of years for Part V to fulfil its potential, its impact has begun to be felt. Already, by the end of June 2005, almost 1,300 housing units were acquired under Part V arrangements, more than 2,200 affordable units were in progress and a further 2,500 units were earmarked for acquisition. The transfer of 17 parcels of land and 169 partially or fully serviced sites has also been effected and more than €18 million has been received in payments in lieu under the withering levy. However, as Minister, I discourage local authorities from taking funding and prefer if they take the houses and move people into them.
The Government remains committed to the delivery of strong social and affordable housing programmes, as evidenced by the record levels of funding it has committed to these measures. The total housing provision, Exchequer and non-Exchequer, in 2005 will be more than €2 billion. That sum is more than double the expenditure in 2000 and more than five times that of 1995. Such a rate of acceleration is astonishing, even given house price inflation. More than 13,000 households throughout Ireland will be assisted through various social and affordable housing measures in 2005. This compares with approximately 8,400 households in 1998.
To further expand our response to housing needs, we have introduced the rental accommodation scheme. This is an additional housing option for households that are currently accommodated within the private rented sector. This option will make some strong inroads in the coming years.
We also encourage and support local authorities in implementing programmes of works to improve the quality of existing local authority housing. All Members will share my view that this is extremely important. The central heating investment programme was introduced last year to deal with those local authority houses that do not have adequate heating systems. This programme is making a real difference to the quality of life for many people. We have put aside €30 million this year for the programme and I am anxious that local authorities will press ahead with the work. I am also anxious that they receive value for money because in one or two cases that have been brought to my attention, I was not happy with the standard of work. I have made this clear through comments in the media and will continue to so do because carrying out sub-standard work is a betrayal of those who need central heating, particularly as the State and the taxpayers have put funding in place.
I am strongly committed to ensuring that resources set aside by the Government will help the maximum number of households. Local authorities have a key role in the delivery of this objective. Housing is, rightly, a local issue and local authorities must respond to the nature and extent of local need by devising and implementing appropriate programmes within the resources made available by the Government. Some authorities are more successful than others and I will examine ways and means to encourage those who are somewhat behind to improve their performance.
To create a strong framework for delivery, we have required local authorities to put in place five-year action plans. We have also introduced capital envelopes for funding purposes. Hence, the old discontinuities within the system have been removed. Past excuses for failing to meet housing targets no longer apply. In that context, when one considers the figures on output, it is disappointing that some local authorities — usually the same poor performers — are underperforming. I again ask Members who have any influence with local authorities to encourage them to improve their performance.
In conclusion, improving services requires both investment and ongoing reforms to ensure that resources are applied in a way that is efficient, effective and equitable. Some challenges for the future and issues requiring consideration have been raised by the NESC. Further responses to the NESC are under development and I propose to issue a new statement on housing policy soon that will set further directions for the medium term. In the meantime, we have made important advances in respect of the new initiatives announced in June, including the establishment of the affordable homes partnership.
My focus as Minister will be to build on the achievements to date, to promote housing supply at levels required to meet demand, to supply record levels of affordable housing, to modernise and develop the private rented sector, to roll out a strong programme of investment in social housing and to improve service and performance. The Government has a strong record on housing and will not simply rest on its laurels. It will press ahead with existing and new programmes to provide the best housing responses to Ireland's dynamic economy and society. That is the challenge for my Department, its agencies and me in the period ahead. Most importantly, it is a challenge for all at local and central government level to put their backs to the wheel to make an extra effort to deliver good quality and more affordable housing and to create the kind of homes that a dynamic and wealth economy should. The Government is making available the resources to ensure that the sector, particularly the social sector, continues to develop. It is important that local authorities also play their part.
The Minister mentioned the issue of central heating in local authority houses and the grants that were provided last year. While most, if not all, local authorities have provided the infrastructure in such houses, a serious problem exists with the ESB, which is probably the councils' biggest supplier in terms of connecting cental heating and electricity. I ask the Minister to investigate this matter. It is a nationwide problem and local authorities have contacted me to try to get action. The ESB is not co-operating with local authorities to make the final connection in respect of central heating.
I hope, in the interests of thousands of people on the housing waiting lists, to make my contribution in as positive a manner as possible. Members see at first hand the misery caused by the inadequate housing provision of this Government, with weekly clinics full of angry and frustrated people seeking help to get a roof over their heads. We all have an input in respect of the problems that have a significant impact on the quality of life of so many.
My party and I have not been silent on this issue in the past and have tried, as much as possible, to offer an alternative agenda and a workable plan that would help people in difficulty under the current circumstances, which have worsened since the arrival of our new-found prosperity in the mid-1990s. While the wealthy — in the context of the Celtic tiger — saw to it that their lairs were state-of-the-art residences, others were callously forgotten. Last week in the Dáil, the Minister asserted that a house is more than four walls. He stated that it is a place of shelter and comfort, a haven where one overcomes life's traumas and savours its triumphs.
Let us take this one step at a time. Most homeless people would be happy to forget the philosophy and just have the walls. It is sad that despite significant advances in terms of employment, the end of mass emigration, improvements in living standards and higher incomes, it is more difficult in 2005 to buy one's own home, get a local authority house and live close to one's family and place of work. This should not be the case. It is not inevitable that greater wealth brings greater housing difficulties. A booming economy should not mean Dublin house prices become as high as in downtown New York. This housing crisis is man made. It has been created by Fianna Fáil and the Progressive Democrats, in particular, and it is up to them to solve it.
Housing has been this Government's greatest failure. In 1996, the price of a house stood at the equivalent of €88,000 in Dublin and €75,000 elsewhere in the country. Today, Permanent TSB-ESRI say the average price paid for a house nationally is €268,040. The average price paid for a house is €356,220 in Dublin and €231,425 outside Dublin. This is a national emergency. It may suit anyone who gained a place on the property ladder ten years ago, but it has resulted in a situation in which tens of thousands of people are excluded from the property market, and tens of thousands of those who manage to get onto the first rung of the ladder are paying cripplingly large mortgages. I remind everyone that the interest rate time bomb is ticking. The only way the ECB will go is up, and all it will take for the era of higher interest rates to return is an improvement in the German or French economies.
I will outline the response of this lame-duck Government to this crisis. It abolished the first-time buyer's grant, failed to meet national development plan commitments on social housing, increased VAT on houses and housing materials, and imposed high development levies that add thousands of euro to the cost of every new home.
The Government was elected on a promise to assist the voluntary housing sector so that the target of 4,000 accommodation units per annum envisaged under the national development plan could be reached and, contained within that plan, a commitment to build 10,000 social housing units every year. We know to our cost the value of a Fianna Fáil-Progressive Democrats promise. To defend such a record in this House would be the action of an extraordinarily arrogant Government. This Government has had nothing to do with the significant increase in the number of private houses built in the past few years. This is the result of the market's response to demand and the resulting prices are too high. The Minister and his colleagues need not tell us about the great success story of Irish construction, which is a case of private success in the face of public failure.
We have been waiting for the housing needs assessment since March. It is now November. We cannot tackle our social housing problems if we do not even know how many people need houses. I repeat my call for, and my commitment to, an annual housing needs assessment so we do not have a situation where three and a half years go by without any fresh data on the subject. The Irish Council for Social Housing has made it perfectly clear that any drop in the housing needs assessment figures will have been a result of people leaving the waiting lists and entering the private rented sector. This results in a higher burden on the State through the strain on the rent allowance scheme without the gain of an increase in the social housing stock that should come with it.
While I welcome anything that will alleviate the housing crisis and provide badly-needed affordable housing, I am sceptical that moves by the Government to swap land to provide affordable housing will work. Fianna Fáil is using it to hide its failure to meet housing targets. Swapping land is inefficient, open to abuse and may result in the State losing out financially. Instead the Government should honour its housing commitments and build on State-owned lands. Its commitment to build 10,000 affordable housing units will not be met and, at best, only 5,000 houses will have been built by 2007.
At the 2003 ICTU conference the Taoiseach announced that lands at Gormanstown and McKee Barracks would be released for social and affordable housing. Earlier this year, at the 2005 ICTU conference, he announced that these lands would be made available to be swapped. These lands should have already been built on as promised. Financially, there is nothing to indicate that the deal by which land at Harcourt Terrace has been swapped for 193 housing units will benefit the State. If the Harcourt Terrace site had been sold on the open market, it could have garnered funds that would have built more than 193 units.
The danger of exchanging a number of houses below the market value of State-owned land will always be there. While I was interested to hear the Minister refer last week and today to the praiseworthy work of South Dublin County Council, which is under the excellent chairmanship of councillor and former Senator, Therese Ridge, in providing affordable housing, the Minister's praise was a self-interested move to promote and praise land swapping.
There is also nothing new in the Government's announcement that a new affordable housing agency is being set up. This is a mechanism designed to meet the housing targets, which the Government has failed to do. The current generation of young people is the first since the foundation of the State that cannot afford to buy their own homes. These people have been let down by this Government. The Minister has been critical of my party for what he has called our lack of policies. His cough has been softened of late — and mine today by 'flu.
Fine Gael spelled out its housing agenda last year, prior to the local and European elections. We proposed a house deposit savings scheme, similar to the SSIA scheme, to help young people who are saving for a deposit for a new home. Under the scheme, first-time buyers will receive €1 for every €3 they save provided those savings are used for a deposit on a house. We also proposed the abolition of stamp duty on second-hand homes up to €400,000, subject to review, bought by first-time buyers. This will mean a first-time buyer purchasing a second-hand home costing €325,000 would save €14,625. The Minister went part of the way in the last budget but the average house price in Dublin remains in excess of the new €315,000 threshold.
We called for the frontloading of mortgage interest relief for first-time buyers to the first seven years of the life of a mortgage and reform of the social welfare code that currently forces young people out of the family home, adding upward pressure on house rents and prices. The income of parents should no longer be taken into account when deciding on the welfare entitlements of those who remain at home.
We also called for an investigation by the Competition Authority into reports of building land hoarding in the greater Dublin area and some towns throughout the country. Fine Gael believes it is time for a new national housing agency. We envisage that the existing Housing Finance Agency will be expanded and strengthened to take on a new role in helping local authorities meet housing targets. The new body will be accountable to the relevant Oireachtas committee. Its functions would include monitoring county development plans to ensure consistency with the strategic planning guidelines and the national development plan investment programme, liaising with State agencies so transport, educational and recreational needs can be planned in tandem with accommodation provision, and driving the servicing of lands identified for housing by local authorities.
This may involve direct management of provisions for water and drainage facilities where a lack of expertise or manpower on the part of individual local authorities inhibits the supply of housing. At the request of the local authorities concerned, the land agency could also take responsibility for co-ordinating land servicing across local authority boundaries, where joint schemes are more appropriate and cost effective. All housing authorities would give an account of actions that they had taken to implement the provisions of the Housing (Traveller Accommodation) Act 1998. Where local authorities have failed, the legislation should be modified to enable the Government to enforce compliance.
We must also consider apartment dwellers. Despite a commitment in the programme for Government, they are still left without proper State protection from their management companies and agents. Fine Gael will seek to amend the Residential Tenancies Act 2004 by widening the role of the Private Residential Tenancies Board. If the amendment were passed, the PRTB would become the regulator in this area, imposing a pro-consumer code of practice on managing agents. The management fee would not be fully payable until management agents were in place and various services could be provided. At present, many builders demand payment of the first year's management fee before keys are handed over to new owners. This is despite the fact that the new owners may be moving into what is, essentially, a building site, with few of the services for which the fee is paid — for example, cleaning — being provided. Provision for an adequate sinking fund would have to be made from the outset. It has emerged that many managing agents have been setting annual fees without any provision for the large scale refurbishment that must be carried out every few years. That leaves residents with a shortfall and a choice of paying several thousand euro at once or living in a decayed physical environment.
It is vital that immediate action be taken on the homelessness agenda. It is intolerable that, after a decade of prosperity, we still live in a society where homelessness is a daily fact of life for many people. We must all, Government and Opposition alike, work towards eliminating homelessness once and for all. I am convinced of the need for the State to invest heavily in move-on accommodation to facilitate this aim. Such housing is designed to assist homeless people to move out of homelessness and to ensure that vulnerable people do not become so. It is also vital that the root causes of homelessness, such as poverty and the twin scourges of drug abuse and alcohol dependence, be tackled. Focus Ireland's Hungry for Change report——
There are 5,581 homeless people in Ireland, some 4,060 of them — including 1,140 children — in Dublin. That is a number high enough to fill the Point Depot twice over. It is high time that we solved those problems and I hope that the Minister will act on them immediately.
I welcome the Minister. I am glad of the opportunity to discuss housing matters. The Minister has clearly set out the approach that the Government and he have taken on housing. I agree with what he said regarding any influence that we, as Oireachtas Members, can have on local authorities. When the dual mandate was abolished, we had the opportunity to have meetings at least annually with our county managers and directors of services on local authority matters. I always use the opportunity, when attending such meetings, to raise the issue of affordable and social housing. I have also spoken to our councillors on how we can speed up and promote affordable housing in various counties. I have always made it my business to discuss that matter.
I take the Minister's point that the affordable homes partnership is obviously delivering very well in the greater Dublin area. I would like to see that expanded to every county. I do not believe that we have the one-to-one advice and consultancy of which the Minister has spoken in every county. Social and affordable housing is a matter of some controversy in County Galway, since there were rumours, when the Taoiseach launched the affordable housing initiative, that nearly every parcel of land would be built on. I refer in particular to lands owned by the former Western Health Board, now the western district of the Health Service Executive, which we debated in the House last week.
The rumours are that lands we thought had been earmarked for health services and a health campus are now to be subject to housing development. It is unfortunate that such rumours are circulating. It has led to a public meeting being called for next Monday in Tuam. I received assurances on an Adjournment Debate from the Minister of State at the Department of the Environment, Heritage and Local Government, Deputy Noel Ahern, that the situation is not so. Such assurances were also provided in the Dáil by the Minister of State at the Department of Health and Children, Deputy Seán Power. When people ask what surplus land one has, they should also be told its intended use. I make no apologies for saying that the six acres of land in Tuam have always been designated for a health campus, including a hospital, an ambulance base, a child care unit and psychiatric services. That is how the question should have been answered. I very much regret that it was not answered in that way.
What has happened regarding affordable housing is very good. We have now got some movement in Athenry, County Galway, and I would like to put on record what I was told on the Adjournment last week. The Minister of State at the Department of the Environment, Heritage and Local Government, Deputy Noel Ahern, stated that 22 hectares — a great deal of land — had been released by the Minister for Agriculture and Food, Deputy Coughlan, in Athenry, and that the Department of the Environment, Heritage and Local Government has engaged with Galway County Council to advance the project. The Minister has informed me that the council proposes to develop an initial phase of perhaps 60 affordable housing units on approximately two hectares of the site.
Preparatory work, including planning consultations, design and surveys, has been carried out on that portion of the site. An application for Part 8 approval under the planning regulations was advertised last week. That portion of the site will now go through the normal planning process. The balance of the Athenry lands, approximately 20 hectares, is the subject of a local area plan that is on public display until the first week of December. I understand that the council will be discussing the outcome of the public consultation process at its December meeting. The use of that portion of the site for the initiative will be assessed in the light of the local area plan process. The Department of the Environment, Heritage and Local Government will work with the council to ensure the most effective use of the site.
I am happy that this is on record in respect of affordable and social housing in Athenry. There has been much development in Athenry. A major roadway will bypass the down, part of the new road from Galway to Ballinasloe and Dublin. I am grateful that the Minister for Transport, Deputy Cullen, will be coming to Galway next Friday to officially open the Loughrea town bypass, something for which I have been pressing for a long time. The land in Athenry has now been designated for housing, and it is very important to state that.
I have a query for the Minister regarding affordable and social housing and what he spoke about in respect of Part 5, which is a very good idea. There have been some queries regarding, for example, a contractor building 80 houses in Oranmore, with another 20 proposed in Headford. There is a good distance between the two towns and people have said to me that they are a community and that, with the council zoning land in Headford, there is no reason for them not to carry out their own projects. People feel their town will be the dumping ground, as they call it, for social or affordable housing, which amounts to 20% of the overall development. They feel another town will be subject to a similar project and that the social or affordable housing will again be built in Headford, where there is extra land available. The process has not been explained to communities or councillors. We should get local authorities to explain clearly to people what is envisaged in respect of Part V and the 20% of housing that is to comprise social or affordable housing.
I am glad the Minister referred to progress in the housing sector. He referred to the completion last year of 77,000 units, which is double the completion level in 1997. This is a great achievement. Senator Bannon will accept that where people are trying to get on the property ladder, particular importance should be attached to affordable housing. The Minister stated this in this speech.
The Minister also referred to the central heating programme, which has been a great success in respect of local authority housing. We should never lose sight of the fact that house improvements are very important in local authority housing, particularly for the elderly, regarding whom very good schemes such as the essential repairs scheme and housing aid for the elderly scheme operate. We should continue to provide funding for these schemes because many people apply to their local authority or health board for the grants.
The disabled person's housing grant is of great benefit. Very good work has been carried out in this regard and we need to continue funding the scheme through which the grant is made available because it is the only scheme for carrying out improvements for people with a disability. I would like to see the Minister promote the scheme. I am glad he mentioned central heating because when local authorities refer to the thousands of extra houses that have been built, there is a danger of forgetting the existing stock, which should be refurbished and improved when necessary.
When considering the five-year plan the Minister is promoting, we must also consider transport issues. There are serious difficulties involved in getting in and out of Galway city. One of the city's real problems is its design, although some will say it was not designed at all. We must consider constructing bus corridors to allow people get into the city if they are to live in Claregalway, which is between Tuam and the city, or if they are to live north or east of the city. This is a major issue and must be addressed.
The Minister referred to water schemes. We have spent a lot of money on the public schemes and the group water scheme may present difficulties. There is now a welcome move to metering to tackle water leakage. Emphasis is now placed on bundling water schemes, as happens in the jurisdiction of Galway County Council. Much progress has been made in this regard. When one talks about housing schemes, one must also talk about planning and water and sewerage schemes. While progress has been made regarding water schemes, I am very disappointed the small villages and towns have not benefited from their fair share of investment in sewerage schemes. A lot of money is expended on the cities, which have huge populations. For example, there is a huge scheme for Mutton Island, which scheme serves Oranmore as well as Galway city, and water schemes on the Corrib serve areas that extend almost to the city. However, for approximately €1.5 million to €2 million, small villages could have housing and the necessary sewerage systems constructed, yet such schemes seem to be put on the back burner. Perhaps design, build and operate arrangements might represent a way to carry out improvements in this regard.
On announcing the Estimates, the Minister referred to extra money being allocated to An Bord Pleanála and the Environmental Protection Agency. We welcome this very much. On the question of councils and planning, preplanning meetings are very important. An increasing number of these have been held, certainly in my county, and I welcome this. We had a system of prior notice for public representatives, which I regret has now been abolished by Galway County Council. This is the case even for councillors. It was very useful for an Oireachtas Member who could only be in the council offices one day per week. At our annual meeting, I said to the manager that the prior notice system should be in operation. Consideration should also be given to the question of having inurement clauses attached to planning permissions. Some councillors tell me there are life-long inurement clauses, which I find hard to believe, or ten-year inurement clauses. Those involved in preparing county development plans should consider whether a ten-year inurement clause is appropriate. We all know people must move house for various reasons, usually to obtain employment, and therefore the ten-year inurement clause is not proper. I do not believe it is constitutional. People from County Galway may have a particular reason for stating they want these clauses included.
I very much welcome the rental accommodation scheme. From what I read and hear, rents have fallen, particularly for students in Galway, who had serious problems trying to obtain accommodation some years ago. I am sure the same is true for students in other cities. I hope the schemes to which the Minister referred will ensure the resources are made available in a good way and that we will have better-quality housing for all the households involved. I thank the Minister for what he has said and wish him well in his ministry.
I, too, welcome the Minister to the House and wish him well with his very difficult portfolio. Much has been said in the debate on affordable and social housing. I am disappointed over the slow progress regarding affordable housing. I noticed this week that the State has found an extra 235 acres to be made available for affordable housing. I fully support the initiative, established at the national partnership talks some years ago, to make land available to the State on which houses can be made available more or less at cost price. As the Minister probably knows, I was the one who proposed this at the talks. It would be very useful if the relevant committee could be urged to determine the obstacles that need to be cleared and where we can assist in the process.
I am not standing here to be critical and know there are difficulties involved. I know the process has been entered into in a spirit of partnership but I am very conscious, two and a half years later, that we need to be able to show progress at the new session of national partnership talks, which will commence if we are lucky. This is one of the issues that will be prioritised. Goodwill will not be good enough and people will want to see progress. Once progress begins to be made, people will be satisfied. As stated by Senator Bannon, they are not looking for volume on day one but they are looking for movement. We will discuss this issue again on another day.
The issue of most concern to me regarding housing is that of the impact of, and sequel and prequel to, the directive on installation which comes into operation in January. I recognise the Minister has only been in his current Ministry for the past two and a half years or, rather, for the past year. He has made such an impact that the period seems longer.
At the very least I am confused and at another level I am deeply suspicious. I recall when former Taoiseach Albert Reynolds came back from Edinburgh with the famous €8 billion in EU funding in the early 1990s. We all cheered and believed it was great — it was. Some years later I looked at where that €8 billion went. More than €6 billion, in one form or another, went through one Irish company — the Minister knows the company, Cement Roadstone Holdings — either through roads, bridges, houses and so forth. I am not saying these things were not needed but this single company, which has also been mentioned on a number of occasions in Dublin Castle over the years, appears on the radar too often for my liking.
In 1998, we became aware that the insulation requirements in Europe would move in a certain direction. We knew what would be required of us and people took the relevant steps in certain areas. However, steps were not taken in every area. From 1998 until the European directive finally emerged in 2002 or 2003 we continued to build houses in the old way. In that period almost half a million homes were built in the Dublin area and probably 90% of them were built with hollow blocks. I would be glad to be found wrong about this but it is still happening.
The Senators present, with the exception of Senator Brady, will be appalled at that but it only happens in the Dublin area. The reason is that HomeBond has a huge influence in this and outside the Dublin area, houses have been built with cavity walls for many years. In fact, I did not know the cavity block was still in use until I saw the recent pictures of Dublin builders in South Africa building with cavity blocks. There is a good reason for using them there.
What is wrong with cavity block? There are two or three things wrong. The first and most engaging fault is that it is close to impossible, if not impossible, to retrofit insulation as cheaply as in cavity walls. With cavity walls, one simply fills the cavity with insulation. That cannot be done with cavity block because the blocks are not in line. They cannot be in line or the structure would fall down. The only way to bring cavity block to the required level of insulation is by taking everything off the wall, scraping it back and installing an insulation bond.
The Minister and Members are aware that only a few weeks ago the OECD issued a report which stated that Irish housing is 15% over-priced. I do not know if that is right or wrong but at some stage it will be over-priced. Even if it is not over-priced what I say next is of great importance. From next year every house in Europe, which includes Ireland, that is offered for sale will have to carry a certificate of insulation. The 80% or 90% of houses built for speculative purposes in the Dublin area for the last ten years will now, therefore, carry a low level of insulation certification. That means when somebody decides to buy a house and two houses on a road are for sale, one with a certificate of insulation at an appropriate level and the other with a lower level of insulation, it is clear which one will be bought.
The people who were unfortunate enough to buy the cavity block houses over the last ten years will take the hit if there is a 15% drop in the market. There is no doubt about that. We talk about the property ladder but this could be like snakes and ladders. Just when somebody thinks they are up on the ladder, they could go sliding to the bottom again when they try to put their house on the market.
The Minister has only been in office for a year and I do not know enough about this subject but I know the Minister well, having served with him in different places, so I will take his word for it when he tells me that he has investigated this matter. As bad as that is however, it now appears, and I hope I am wrong, that not only is this directive coming into operation next January but Ireland, in its wisdom, has decided to give an exemption period of the following two years to the Irish construction industry. It will be able to continue doing this for another two years. That is appalling and there is no reason for it.
The Minister thinks logically about these matters and I do not believe his views would differ greatly from my own. This is something we have been aware of since 1998. This building method will have an impact on the people who buy houses and on energy and insulation. What are the reasons for giving a further exemption period when we are already years behind our European colleagues in this regard? The issue of insulation has different importance in different countries but I am anxious to hear a response to the points I have made.
The Minister shook his head when I referred to cavity block and the amount of cavity block building taking place only in the Dublin area. It is happening because HomeBond is prepared to accept it in the Dublin area but not anywhere else. Can somebody explain that? Somebody who is building a house outside the Dublin area will not get the HomeBond certificate if the house is built with cavity block. There is no sense in that.
Does self regulation work? It does if there is an oversight body. The oversight body must be either in the Minister's Department or it must be established by the Minister. I am very worried about this because we are creating a serious problem. If some of what I have said is wrong, because I am not an expert in this area, it is only partially wrong. I believe my comments are correct. I believe I have outlined the sequence correctly and I am forecasting a difficulty for the future. Nobody appears to be making any reference to it. I have been trying to come to grips with it because I do not understand it. I do not expect the Minister to be able to reply on this immediately but perhaps somebody in the Department could respond. I do not want a justification for where we are but to know why there is a different standard in Dublin, what difficulties there will be in the future and how the certificate of insulation will work.
Whereas there is a European system for the measurement of insulation, which is simply the insulation qualities and so forth, Ireland is producing a unique Irish solution to an Irish problem. We are measuring it on the basis of heat escape through the roof or easy heat escape as opposed to heat insulation. If that is the case, it is not right. Why is it so? I trust the Minister to get to grips with this and to ensure we are not being led up the garden path on this issue. I have raised a number of issues that must be examined closely.
The Minister will be aware that the British Government's chief scientific adviser during the week proposed to the Prime Minister that the government get involved in nuclear energy. The reason for that is Kyoto and energy conservation. I have discussed this with the Minister, perhaps over a pint or in the wrong place, but I will clarify it now. It relates to the energy issue. Senator Kitt spoke about water provision in various areas. Over the last 50 years or longer, people in Ireland have come together to establish water co-operatives to provide water. There have been difficulties with these schemes but they still exist.
I wish to make a suggestion that is a little radical but doable. It is something that has taken place in other countries. I said in the House last year that if any community were to state that it was prepared to look after all its energy needs, through a wind farm or whatever, and its waste, without linking to a national sewerage system, it should get a tax break for doing that. I did not say anything further but I have examined this matter in the meantime, particularly on a small scale. I am also considering the issue of agriculture at present. I cannot see why agricultural communities would not be in a position to involve themselves in such ventures. They would have replacement crops and work within agriculture. They would save energy, bring us into line with our requirements under the Kyoto Protocol and do us all a big favour also. They could build a five, ten or 100 KW wind generator, one small enough to be hooked up to the grid without the need for a substation. I do not know the exact size required — it could even be a 50 KW generator — but the electricity generated could be shared among themselves and they could save on their bills.
If people in what used to be part of our country until we changed the Constitution a few years ago — I refer here to the northern part — erect even a 1 KW wind generator on their house and the electricity generated goes back into the grid, they get only a tiny amount in clawback at the end of each year, although it is the principle that is important. Why can every new house being built not have a wind generator on the chimney and a solar panel on the roof? The solar panel would heat the water to about 30 or 40 degrees. How much energy would that save? In terms of the hollow block and all that goes into it — and I would like to get into the debate on the benefits of concrete and wood build — and having regard to our requirements under Kyoto, which are being decided on by the building industry, it is frightening.
If the people of Bellavary, outside Castlebar, which is a small community surrounded by land, decided to grow rape-seed, put up three or four wind generators and a solar panel on every house in the village and install a sewage treatment system, would they not be doing us a favour? They would be looking after themselves and raising awareness. They would be role models for the rest of the country. There is a company in Bellavary, the Surface Power Group, which is one of the leading groups in Europe in this particular area. Would it not be nice if, five miles from the rural museum or whatever it is called, the most modern village in Europe was looking after its own needs in terms of waste, electricity and wind generation? I am not talking about people wearing green wellies and tweeds; I am referring to ordinary people, not so-called green people, who want to make their contribution. These are good ideas. They are worth following up because they represent a step forward. There is a huge amount of development that can be done in this area.
If I may respond through the Chair, the Senator made some good and interesting observations. There has been a phenomenal change on the build side and I will send the Senator some details on that.
Much of the latter part of his commentary would be very much in line with my thinking. We will have some words on that in another place.
I also welcome the Minister and the opportunity to discuss housing in general. The housing culture in this country is slowly changing. My own experience is of Dublin's inner city. When one considers the changes that have taken place there in recent years, it is obvious that our historical preference for home ownership is changing slowly. I want to record my admiration and recognition of the people in the 1980s — politicians and officials — who came up with the idea of tax incentives for construction, particularly in inner city areas. Those changes led to the construction boom, which has lasted for over 15 years. It continues to provide affordable accommodation and, as the Minister pointed out, to employ a large proportion of our population. At the last count, almost 225,000 people were employed in the construction industry. That would not have come about if we had the Bacon reports in the 1980s or without the foresight and the courage of those who came up with the scheme of incentives that kicked off the construction boom which continues today.
My experience of local authority housing came about during my time with Dublin City Council. I understand from the Minister that up to 20% of local authorities throughout the country have not fulfilled their housing requirements this year. This indicates that there are problems throughout the country but my experience with Dublin City Council has been positive. There is no comparison between the quality and design of the housing Dublin City Council is constructing today and that which obtained in respect of the housing it previously constructed. In the 1950s, 1960s and 1970s, flat complexes were erected and Legoland housing built and neither had the requisite facilities or infrastructure. There is no comparison in terms of what is being done today, particularly in the inner city but also in the suburbs. The provision of infrastructure and proper planning and design of local authority housing from the outset is key.
The debate is raging at city council level in Dublin on whether to take the route of refurbishment of flat complexes or provide what is commonly referred to as "own door" housing. There is no argument in that regard. The only option is to provide people with proper family homes. When the Sherriff Street area was being developed, which was then a notorious local authority area, a section providing for the inclusion in the design of apartment blocks was included in the plan for the development of the area, despite the objections of a number of people. That was 15 or more years ago. It now transpires that those apartments blocks will have to be knocked down because they are at the root of many social problems. Concern about such problems was highlighted at that time, yet some local representatives encouraged people to remain living in poor conditions. The potential problems highlighted at the time have materialised.
There is no debate over whether flat complexes should be retained or demolished and replaced with housing units. Land and space in Dublin city is at a premium but good design and planning will pay for themselves in the long run and will save a great deal down the line in terms of helping to prevent the emergence of social problems. A prime example of what can be done, and the success of a scheme when properly developed, is the Ballymun regeneration project. Anyone who drives through that area will note that it has been transformed, with the emphasis on own door, modern family housing. As Senator O'Toole said, those housing units are cost effective in terms of energy consumption. This is where planning and design at the early stages is crucial. As the Minister pointed out, 77,000 units — four times the European average — were provided last year. The highest level of that provision was in Dublin.
We must continue to support first-time buyers. I take issue with Senator Bannon on a point he raised. When I bought my House in the early 1980s, it was as difficult to buy then as it is now. I would like a comparative study carried out on the relative cost of housing and incomes at the time to ascertain how the two compare. There is also the issue of people buying second homes for investment purposes. Families are investing in properties for the benefit of their children, their pensions or whatever.
Interest rates at the time were excruciatingly high. The then Taoiseach, Garrett FitzGerald, presided over a period when interest rates were at their highest in the history of the State.
The benefits are there for all to see. Basic economics tell us that the strength of demand influences the cost of supply. The Government recognised this at an early stage and the entire thrust of policy has been to increase supply. Accordingly, house price inflation has fallen from 48% in 1998 to 11% now. As the Minister observed, house prices are moving in the right direction.
The provision of affordable housing is key to reducing the waiting lists that exist in some local authority areas. I have, however, spoken to some Members whose local authority does not have a waiting list. It is not sufficiently highlighted that the needs of all those seeking housing in these areas have been met. Dublin City Council has a large waiting list but it is very much to the fore in regard to affordable housing. An example in my area is the docklands. Anybody who drives around that area will see it is totally transformed.
The Part V allocations, including social and affordable elements, are coming through on developments initiated in the last 18 months to two years. Last week, for example, both a co-operative housing development and a private development with a 20% allocation of social and affordable housing opened on the south quays. These units are available to people with a connection with the area, whether they live, work or have family there. An increase in the numbers of Part V allocations is to be welcomed. The system will bear fruit in the end. In some cases, ten-year permissions were granted so it will be some years before they come through. We are on the right track, however.
The Minister and I did a small calculation while Senator Bannon was speaking about the 193 units resulting from the swap that took place in regard to Harcourt Terrace. If we accept Senator Bannon's line, those units would cost some €300 million to produce in the space of four to six months on less than half an acre. In this scenario, it follows that an acre of land could cost between €700 million and €800 million. This shows how out of touch Senator Bannon is on the benefits of these schemes.
While one-off housing is largely a rural phenomenon, it is becoming more prevalent in urban areas. Throughout Dublin city, houses are increasingly being built inside gardens. This is most prevalent in settled estates, whether originally council or private housing. We must monitor this issue.
The Minister took part in a Dáil debate last night on management companies. Difficulties in this regard relate particularly to apartment complexes, of which there are many in my constituency. In many complexes, residents must pay a fee for security and general management services. It is not like joining a residents' association in that residents have no input into choosing the management company and their lease or purchase conditions may oblige them to contribute. They may or may not get adequate services. In a number of complexes in Dublin city, for example, there are major problems with refuse removal and maintenance of elevators, stairwells, windows and open spaces.
We must tighten the regulations relating to the responsibilities and operation of management companies. I am aware the Minister is examining this issue. I do not agree it is primarily the responsibility of the apartment owner. The responsibility is on the developer initially to provide an effective management company and ensure it will fulfil all its assigned functions. A person moving into an apartment complex does not always have a choice in the matter and may have no input into its ongoing management.
I thank the Minister, Deputy Roche, and the Minister of State, Deputy Batt O'Keeffe, for coming to the House. We are on the right track in regard to housing provision.
I welcome the Minister of State, Deputy Batt O'Keeffe. I am delighted to speak on the important issues of housing provision and the construction industry. We live in unprecedented times in terms of the construction of both social and private housing. A figure of 240,000 was mentioned. Will the Minister of State clarify whether this refers to the numbers working directly in the construction industry? We must bear in mind the large numbers of ancillary jobs in terms of services and builders' supply. In this context, the figure of 240,000 is probably an underestimate. How was it arrived at?
In Donegal, which is heavily dependent on the construction industry, young men leave Inishowen at 4 a.m. on a Monday morning, travel to Dublin or its outskirts in a van, begin work at 8 a.m. or 8.30 a.m. and continue until 7.30 p.m. They may work until 9.30 p.m. on Tuesday and Wednesday and until 7.30 p.m. on Thursday. At a time when it is advocated that we should not live in the past in terms of emigration, this represents a mass migration of workers from parts of Donegal to the east coast. The positive aspect of this is that young people can get work in the country and much money is being brought back to Donegal by workers in the sector. In terms of a sustainable future for the construction industry, however, we are living on a knife edge. We are self-deluded to believe this is sustainable in the long term.
Senator Brady referred to the design of houses. I agree with what he said. People should have far more input in terms of offering their opinion and advice on the type of estates in which they wish to live and the nature of the recreational and amenity areas that should be attached to them. When completing housing application forms, people can choose where they want to live but that is all. A person gives his or her details — name, address, number of children and current circumstances — and indicates the area in which he or she would like to live. However, nowhere on a local authority application form can applicants describe the type of estate in which they would like to live or whether they would like extra recreational amenities, a park for their children to play in or a safe area where their children can play among their friends.
People who go on housing application lists make no input whatsoever, which is wrong on the grounds that private applicants who wish to build on their own land have an input. They engage with architects. Their houses will be their dream homes where they will live and bring up their children. They have their own designs. They must work within a certain pattern or type of development but they have an input. A process should be facilitated or a mechanism created whereby applicants could have an input in terms of the type of estate design they would like. For example, 101 local authority houses were built in one Letterkenny estate in 1987. There were no recreational grounds, facilities or amenity or grass areas. Nothing was provided. After 18 years, successive residents' committees have failed in their attempts to get recreational facilities for the young people of that estate. This is wrong and is due to the fact that homework was not done initially and facilities and amenities not included. It is an ongoing battle. Successive hard working residents committees have faced obstacles and blockages in trying to express their needs for the people of the area. A plan is in place for the estate, Glenwood Park, and the current committee is working hard to make it happen. This is an example of poor planning and improper or no facilities, which was the wrong way to go about it.
The events to which I refer happened in 1987 but similar events still happen today. Developer-led estates are being built. We are buying from the plans of private developers as a result of large demand. This is wrong because single mothers of one or two children in Letterkenny are living in large four bedroom houses but cannot afford heating oil. There are no back boiler systems, which would allow them to buy coal, or plans in terms of conservation of energy, nor are there finances for people entering local authority housing because the proper homework is not being done. Demand exists and we must meet it. Therefore, we must endeavour to try to provide for it but we can still do our homework in terms of what types of facilities or housing is needed.
In the countryside, applicants who will live in SI houses or farmers' cottages, as we call them, have no input into which way their sitting rooms will face, on which side their bedrooms will be placed or into which part of their homes the early morning sun will shine. Such cottages will be their primary residences for the rest of their lives. This is an area we must examine closely and in respect of which we must give applicants an input. We may not be able to deliver everything they want but we could give them an input into some areas — for example, that relating to design — in which they can make an impression.
I will speak in the absence of Senator Brady as he spoke in Senator Bannon's absence. On the issue of first-time buyers, we live in a different era. How can Senator Brady, a Dublin representative, say that young people are not under the same constraints or do not have the same overheads now as they did in the 1980s? That is rubbish. Young people will have millstones around their necks for the rest of their lives. They buy apartments and houses for €600,000, €700,000 or €800,000. If they won the lotto in the morning, it would not even cover their mortgages. I do not know why they play the lotto because they would still be in debt if they won. A new generation of people is up to its tonsils in debt. This is the reality and it is a dangerous phenomenon because who knows what will happen in respect of interest rates, property crashes, etc.? I am not predicting a doomsday scenario but people are under serious financial constraints, which is a significant difference to the situation that obtained ten or 15 years ago.
On affordable housing, the Minister of State will be aware that Mr. Jack Nicklaus is to design a golf course in Carrigart. It is a lovely rural area and a nice spot. As a consequence of his arrival and input, the price of land will escalate. Farmers and people who own land in the area will benefit but the local community must be taken care of. Local people will be priced out of the land. A scheme that worked in Downings in north County Donegal is that of affordable housing. We should push for more affordable housing so that local authorities will buy land, service sites and help subsidise first-time buyers on the initial rung of the property ladder.
The gender of which the Minister of State and I are members is being discriminated against in the housing market. Men whose marriages break up, either through no fault of their own or as a result of their faults, and who must live in small apartments or rental accommodation and still contribute to paying the mortgages on their family homes, find themselves at the bottom of the pile when they apply to local authorities to be housed. They are treated as single men. A 44 year old male who is not with his wife and three children is placed on the bottom tier of a local authority's ladder. This problem must be addressed. I compliment Donegal County Council because it is working proactively and on an all-party basis to try to address the situation. This can be done in every other local authority area. However, policy is top-down in nature and there must be policy change. Non-resident men are being discriminated against, a matter we should be attentive to and tackle in the near future.
I also welcome the Minister of State and I acknowledge the contribution of the Minister, who has now left the House. Affordable housing is an important issue throughout the country, as is flexibility and the implementation of Part V housing. I wish to make a point to the Minister and local authorities that there must be flexibility if affordable housing is to be a success. This is a golden opportunity for the Minister to provide funding for land bank initiatives. At a time when local authorities are making town and village plans, it would be important, were they to avail of funding provided to the initiatives and work with developers through PPPs, to get a mix of housing acceptable to local communities. It would do away with many problems created by implementing of Part V housing at a later stage. People would know what type of developments were taking place in their areas and fully support them.
The local authorities' voluntary housing scheme has been a significant success for the Minister of State's Department. It is a scheme whereby local communities the length and breadth of the county have provided housing units for their elderly. Together with the issue of health, it is important to give grant assistance for the care of the elderly in those housing schemes where extra allocations of units for them have been made. The care of the elderly could be provided in those fine complexes. I ask that the Minister of State examine the issue of this care because it provides a significant service at local level.
Much has been said about the quality of housing in Ireland and it should not be forgotten that much has been achieved over the past ten or 20 years. A total of 240,000 people work in the building industry now compared with only 92,000 in 1994 and €18 billion was spent in the building industry last year. Three out of every ten houses in Ireland have been built within the past ten years, which is almost 500,000 houses, with an average of 77,000 houses built last year. This rate is four times the EU level and a rate of which any Minister or Government can be proud. It is important that this development is sustained. I congratulate the Minister on the guidelines for one-off housing.
It is very important that the local authorities implement what the Minister has set out to do and that members of local authorities get what they want for their own areas. This can be achieved if they work together. In this regard the development levies moneys are being collected throughout the country. Much has been said about the lack of facilities which was the case in the past. The Minister must ensure that by working with national and perhaps national lottery funding, local and rural development can be grown.
With reference to the Water Services Programme 2000-2006, much has been said about the lack of local facilities. It is a worry to local councillors that water and sewerage schemes are falling behind schedule. It is very important that the funding is made available in the years ahead to bring those initiatives to fruition. The development of land in an area is dependent on that scheme coming on stream. I wish the Minister of State well for the future.
I remind the Members opposite that as we speak, there are more than 50,000 on the housing lists. This situation will probably continue and worsen because more people are going onto the lists.
I have some issues to highlight for the Minister of State. At this time of year, every year, the housing sections and the Department of the Environment, Heritage and Local Government know what the allocations will be for the coming year but they fail to notify the local authorities of them. In the case of Galway County Council in the past few years, it was May or June before the county council was notified of the allocation. It is a pity that the best part of the year for house building and construction was gone before the local authority was notified. It would be a very small exercise within the Department to rectify that situation but it would mean a lot for local authority forward planning, tendering and housing output in any given year.
I welcome the commitment by the Minister to affordable housing which is a very important facet of the housing sector. It is probably one of the best schemes ever developed for the provision of housing. Sadly, its affordability will soon be gone out the window. For instance, any couple in an affordable house are outside the interest subsidy scheme if their combined income is in excess of €25,000. Even at the minimum wage, their combined income will put them in the bracket of being too rich to avail of this scheme.
In a recently developed affordable housing scheme in Loughrea, County Galway, 12 of the house owners have asked me to highlight the fact that after one year in their houses and their combined incomes having risen above the €25,000 limit, they are too rich for the scheme. I ask the Minister of State to use a scale and help ease them out of that situation rather than a total cut off. The impact of this will mean that the attractive affordability of the house for a young couple will not be there in the future. This is a situation that must be faced. They are in today and out tomorrow, which is a black and white situation. The impact is very great on a young couple who find it difficult to make ends meet and I ask the Minister of State to consider a scaled down system.
The building industry is very significant but I wish to raise the matter of unfinished estates. Houses are often purchased from the plans due to the great demand. When young people move into these estates, the chances are they will spend about five or ten years in that estate before basic services such as lighting, proper roads, playing facilities or open spaces are provided. Lawns and planting of the open spaces were part of the original planning application but they have been neglected.
Local authorities and public representatives are drained by their efforts to force developers back into the estates to complete them. Developers of local authority estates are also to blame. The community and environment within a housing estate can be enhanced greatly if people have pride in their estate and this is what many residents' groups do. However, this will not happen if they do not have an estate of which they can be proud and if the developer has reneged on his commitment in order to build more houses and has left the estate unfinished.
A very important feature of new housing developments is the fact that most developers and some local authorities insist on the provision of services such as crèches for young families. I was in Tuam two months ago when the first phase of a new housing estate was officially opened. The crèche was the first service provided on that site. I hope all developers could be encouraged to adopt this policy rather than utilising all space for the provision of housing and only providing other facilities if a corner is left over in some part of the site. In this regard local authority estates should also include some community facility. It might only take the space of one house to combine some of those facilities together but at least there should be an indication that the Department is looking at it.
Doubtless some great quality housing is being built under the current throughput where the workmanship is top quality but alas, as is always the case, there are others where the quality and finish of the end product leaves much to be desired. There was a time in the past where in order to qualify for the local government grant, or a part thereof, an engineer or architect from the Department went on site to inspect the quality of work. Sadly, today that is not a requirement in the output of housing. I hope there will be some redress in this area.
Recently I visited a group of students in a new three-storey development in Galway. They were beautifully designed houses but the emergency bells have rung on all sides because the floors on the second and third storeys started to subside, the plumbing and water pipes burst and everything in the house was destroyed. That was all down to faulty craftsmanship and input into the house. For the workmen, it was a matter of get in and get out. Probably there is great difficulty in such cases to monitor what is going on in that many of those major developments by builders are sub-let to other contractors who get in, do their work, walk away and wait for the other contractors to do the other finish fits. While we can say that there is considerable housing development going on in the country, we must query the quality of some of it. It is rushed. The reason for the rush is the quick turnover of resources and finance to get them sold. It is a pity.
Many Senators spoke of design. I compliment the Minister of State's county council which has produced planning and design for housing, particularly rural housing. It provides a flagship to be the copied by all other local authorities. Anybody who has inspected it will confirm this. I was lucky enough to get a copy of it from my colleague, Senator McCarthy, to show it to my planning authority in Galway, which has been persistently saying "No" to issues like timber housing. Such housing can be assimilated well into the environment, if only the authority had the initiative and was pro-active in accepting that these are a quality product.
I pay tribute to my local authority housing section in Galway as being probably one of the finest in the country. If the Minister of State provides the resources and the wherewithal for them to go ahead and take the initiative, and particularly in the allocations to which I referred, then the housing list, which currently stands at 50,000 or more — leaving aside the situation with regard to the homeless — can be very much reduced. In view of this I implore him, in the case the subsidy, that this aspect be investigated as a matter of urgency to relieve the difficulties.
I welcome the Minister of State to the House for this debate. I am happy to have an opportunity to speak on the subject of housing, in general but specifically in the local authority sector. The experience in different local authority areas can vary but I am proud of the record of my county and Sligo County Council for the progress being made in providing local authority housing. One need only drive anywhere in my native county of Sligo to see the level of work going on in the construction industry and all the housing being built, and I warmly welcome this. It is a great sign of progress. I remember when the building of a house in a parish or small town was spoken about for a month but I am glad that we have moved on from there. Big improvements have been made to villages, some of which have been transformed with new homes, shops and small businesses. In my area of south Sligo there has been significant expansion in the past number of years.
It is important that Senators get an opportunity to highlight problems and ask that action be taken but where there are good developments, we should not be afraid to compliment the progress. That is why I am not afraid to say that I am confident the Government is doing a good job in giving local authorities the necessary resources to provide housing. It is not perfect at present but we should not lose the run of ourselves on where we are. Having been a member of Sligo County Council, I remember over the years we were starved of funding. The simple fact is there was no money available to build anything, particularly housing. That is why I have no difficulty in complimenting the former Ministers, Deputies Noel Dempsey and Cullen, and the Minister, Deputy Roche, and the Minister of State, Deputy Batt O'Keeffe, for the funding provided which, in the case of County Sligo, amounts to €9.6 million this year. I warmly welcome the fact that this figure has increased by 100% over the past years.
Senator Ulick Burke mentioned that there are 50,000 on the housing wait lists. I dispute those figures. In Sligo a review was done two years ago to update the list of people genuinely waiting on the housing list and everybody concerned was contacted. At that time there were approximately 850 on the list and when the forms were returned the number had fallen to 500. I do not know whether the case is similar in the rest of the country. I thought for once we might get a handle on this and see exactly how many people are genuinely on the list. As every politician here will know, we fill out application forms for constituents. Anybody looking for a rent allowance must fill out a housing application form. Similarly, anybody looking for a grant under the improvement in lieu scheme to improve his or her home must fill out a housing application form. I honestly believe that the present figures are cuckoo. I thought we had sorted it out but now I do not. I recently discovered that a student who was applying for some scheme had to get his name on the housing list. This must addressed. The figures should be properly monitored or something should be done to ascertain, for once and for all, how many people are genuinely on the housing list.
The improvement in lieu scheme, to which I referred, is one of the schemes I want to raise with the Minister of State. It is an excellent scheme which is doing much good work. It is improving the homes of people, keeping them where they are used to living. The Minister of State might look at the income limits for the scheme. I would be involved in quite a number of cases under the scheme as I come from a rural part of County Sligo. There are difficulties with the income limit aspect of it but it is a great scheme. The people can get their work done. I recognise they do not pay back the full amount but if their house is sold within 15 years, the full amount can be recouped by the county council.
In my area the shared ownership scheme has helped quite a number of people, who were genuinely on the housing list, to get a home of their own. It provided a start, getting them on the ladder. One can see from the lists, where the county councils must notify the county council members of the sale of these properties, that these people are buying their homes after two or three years. Perhaps the Minister of State should look at the income limits because it is a good scheme. It is not costing the State one cent because the price of the house is recouped by the local authority.
I note that, increasingly, residents are buying these houses after two or three years. I could name ten people who got on the ladder at €140,000 or €150,000 for a three bedroom semi-detached house but who would not have done so but for the shared ownership scheme. After three years, their houses are worth €170,000 or €180,000. The scheme got them on the ladder and, thankfully, they are living in the houses and are moving on. Moreover, it is not costing the Government or the Exchequer one cent.
There are positives and negatives to affordable housing schemes, which depend particularly on their location. In my home town the county council built 12 affordable houses but failed to sell them and had to take them back into its own housing stock and allocate them to people on the housing list. While it was welcome that 12 more applicants were taken off the housing list in that case, it is disappointing that the schemes work in some areas but not in every area.
Essential repairs and disabled persons grants are beneficial, particularly for the elderly, but they are very restricted at present. While I am not sure the position is the same in every local authority area, to get an essential repairs grant in the Sligo County Council area one must be over 65 years of age and one will only get the grant for repairs to a roof and not for windows or doors unless these are part of an overall job. I understand the grant in Sligo is for 50% of the cost. The rules governing the disabled person's grant are similar to those for the essential repairs' grant in that applicants must be elderly and receive 50% of the cost. The grant schemes are not working as they should be.
I know of the case of a 53 year old mentally disabled and mildly physically disabled person who lives in her own home. She needs new windows and doors to improve her house so that she can live comfortably. However, she does not qualify for a disabled person's grant because it does not cover windows and doors and she cannot qualify for an essential repairs' grant because she must be over 65 years of age to do so. This person is caught in a trap, which should not happen to a genuinely disabled person who needs improvements to her house to ensure that she is able to stay there. These schemes are not working as well as they could.
I have experience of the excellent work done, mostly by FÁS workers, on local authority estates, which should be encouraged because it makes a difference. The more improvements are made in such estates, the happier the residents are and the better their quality of life, which can be proven.
I wish to refer to the new phenomenon of housing agencies, such as Cluaid, Respond and Focus Ireland, which seem to be springing up throughout the country. I was personally involved in the development of a scheme of houses in Ballymote, as a member of the Society of St. Vincent de Paul conference which received funding and grant-aid to build 28 houses for elderly people beside a nursing home. It is undoubted that the development has given a new lease of life to the elderly people housed there, located as it is beside the church, station and nursing home.
Young families are also grateful to get a house through a housing agency. When they move in, their circumstances might not be that good but when they get work, their lives improve and their incomes begin to rise. However, rents also rise and such families find they can never buy their houses whereas families moving into local authority houses can buy their houses. This might not be an issue for discussion in this debate but it is coming down the track. Somebody will make a challenge on the issue in the future. It is not fair that such people are not allowed to buy their houses.
Senator Brady referred to the benefits of tax incentives for the inner cities. While I realise the issue does not involve the Department of the Environment, Heritage and Local Government, I emphasise the effect of the rural social tax incentive scheme in my own area, where one can buy a fully finished three bedroom semi-detached house for €165,000 as a result of the scheme.
The income limit for first-time buyers should be increased because house prices have increased considerably in recent years. An issue raised with me concerned first-time buyers purchasing a site to provide their own house. Some first-time buyers on marginal incomes find they must pay stamp duty of €4,000 or €5,000 on a site. We should encourage and help such people, not penalise them with a tax they cannot afford at that time in their lives.
Reference was made to single fathers. I do not know what policies exist nationally but I know Sligo County Council has no policy in this regard. A father who visited my office last week had been abused by his wife. He had to leave his home with three of the children and is living with friends and neighbours, moving from house to house. While that may be hard to believe, it is the truth. A complaint was made to the Garda, which was aware of the abuse this man suffered. However, there is no policy in place to deal with such cases, a matter which we must consider.
I welcome the Minister of State, Deputy Batt O'Keeffe, and welcome the fact we are debating this important issue. I thank the Leader for arranging the debate. It is opportune that we discuss an issue as critical as housing, particularly in light of the report of the all-party committee on private building land and the more recent and more important report of the National Economic and Social Council, Housing in Ireland: Performance and Policy. Having perused that document in great detail, I believe it raises a number of important issues and says exactly what needs to be said about the current state of housing. It gives a clear indication of the direction policy should be moving. We could learn much from the recommendations of that report.
The NESC report urges the Government, social partners and others involved in this area to take action along three lines of policy, namely, the provision of social and affordable housing, the need for integrated sustainable neighbourhoods and active land use management. In highlighting the issue, the NESC described what needed to be done as "a major national challenge which bears comparison with other great challenges that Ireland has faced and met in the past half century". That is significant and spells out the extent to which this issue poses challenges, as well as the opportunities that may arise in dealing with those challenges. Despite the serious difficulties we experienced in regard to economic activity, emigration and unemployment, particularly in the 1950s, the challenge posed by housing today is put on a par with these issues. It is amazing that the NESC proposes the same course of action to deal with the issue of housing.
After almost nine years of rule by the same Government parties and several years of major economic activity, the country is now awash with money and there is great opportunity in terms of expenditure. Senator Scanlon referred to various local authority schemes. In the past, the money was not available for these schemes but, thankfully, it is now available. This gives us real impetus in terms of how to progress a particular argument in favour of this issue or how various methods or proposals would be used in terms of trying to allay further decline in this area. Thankfully the money is there. A great number of negative effects have surfaced as a result of economic activity. For example, there are now twice as many homeless people as there were nine years ago. More families have been evicted in recent times than under British rule during the land war in the 19th century. That is an amazing statistic. We have seen the highlights and the reports, but these issues do not make the headlines. They do not make nice reading and do not sell newspapers. Therefore, not as much attention is paid to them in print or on the air as to other issues.
We are now living in a society which has pushed generations of people into the commuter belts. We have created a new type of urban living, where people leave their homes early in the morning, get caught in gridlocked traffic and are out all day trying to earn the money to pay mortgages, etc. It is an anti-family existence.
We have all passed through villages that used to have a small petrol station, shop and community fibre, but this is no longer the situation. There are literally blocks and blocks of apartments and houses on display and this has created a new type of pressure on people. All of this has come about at great expense, ultimately to family life. The quality of life is dying out and that is the major issue. Younger people in particular have been pushed into these commuter belts, away from the supports they are used to and that are needed, in many cases, in terms of the particular forms of child care required.
That is an enormous cost to society, regardless of the economic benefits. The Minister of State, Deputy Batt O'Keeffe, is well aware of the house price problem, because he is a Corkman. I was in Kinsale last Monday on a leaflet drop. There are now at least three housing estates which were not there three years ago one of which is a fine development. When one considers the debate as regards unfinished housing estate developments, this is one which, thankfully, is finished to a high standard. However, houses in the front row are now costing €580,000 per unit.
As one passes further west the prices go down, but there are generations of people in that town who cannot afford to either buy or build. There are people earning relatively good money who are living in very poor accommodation, namely, apartments owned by those who have invested down through the years. Such people, in terms of paying rent, running cars and coping with the normal costs that affect those in their particular category, are now faced with spiralling house prices. At one time one could nearly buy a small village for €580,000.
That type of money is amazing. We are living in an area with all the benefits and attractions in terms of tourism and it is the place to be during the summer period. However, the reality is that there are people in those towns who will never even aspire to owning their own homes. Significantly, there is a major shortage in terms of the provision of affordable and social housing that could allay that problem.
Were it not for the manner in which the former Minister for the Environment, Heritage and Local Government, Deputy Cullen, dealt with the issue, we could have had almost 80,000 extra units to deal with this growing problem. Instead, he gave them back to the developers. It meant there would be more and more young people on housing lists, which have doubled in recent times.
I take the point which was very well made by Senator Scanlon as regards the criteria that are applied in terms of getting someone onto a housing list. We all know of people on housing lists who need to get a council house, and why they are on the list. However, others are on the list because the scheme they want to apply to or avail of requires that their application for a house is submitted to the local authority. This is an administrative bureaucratic measure which creates a smokescreen and muddies the issue. It tends to hide the real number of people who are on the housing list to be housed, and not to satisfy a level of bureaucracy that applies as regards the administration of a different scheme by the local authority. That is a point worth making.
The answers to the questions I raised are no mystery. In the past eight and a half or nine years, instead of pursuing policies that can allow people to own their homes at affordable prices, this Government has been intent on stimulating the property market, rubbing shoulders with the developers and speculators and forgetting about those who really suffer. Those suffering are younger persons with housing needs who are now being asked to pay exorbitant amounts of money to own their own homes. Ireland has one of the highest rates of home ownership in Europe. It has been a strong tradition that a person grows up, receives his or her education, becomes employed, starts earning, settles down and buys a house. It is one of the first steps that any young adult will take in this country.
However, we are fast approaching an era where a majority of younger people in the mainstream, earning relatively good money, will still not have enough to pay the exorbitant prices needed for a house. There is one critical factor in this debate. The Government of the day is the one organ responsible for subscribing to that problem and allowing a situation to develop whereby people can no longer afford to buy their own homes. It has been in office for almost nine years to deal with the issue. There is no point in realising a year and a half from a general election — somewhat like the Tánaiste on the issue of health — that this has now become a problem. The Tánaiste has been a Member of the Cabinet for almost nine years, but only now realises the extent to which the health service is in absolute chaos. This issue is somewhat similar, where Ministers start to propose what needs to be done, barely a year and a half before a general election, having spent the previous nine years ignoring the problem.
There have been conflicting views in terms of when the prices would start to drop, the crash begin or when house prices would revert to levels previously accepted as normal. Many such predictions were made, but none of that has happened. My party, particularly its spokesman on the environment, Deputy Gilmore, was very much to the fore as regards putting down solid proposals as to how this issue might be tacked. One of the proposals involved intervention. We were told by various Ministers that this was not possible, that the housing issue should be left to the market and that supply would increase and this would meet the demand. Thankfully, supply has increased and that is to be welcomed.
The Minister of State can say in his reply that we have so many housing units. One does not have to be a second Dr. Peter Bacon to realise that this country is reaching unbelievable levels in terms of housing output. However, the real issue is the number of people who are not occupying these houses at affordable prices. There is a complete lack of coherent policy as to how the Government has tackled the issue. That is the real issue, namely, affordable and social housing, and the manner in which young people are being prevented from owning their own homes.
House prices are now three times what they were eight years ago. Despite all the talk and gobbledegook about stabilising house prices, the latest figure from the Minister of State's Department shows that the annual percentage increase in new house prices is 11.8% nationally, 7.4% in Dublin and just over 10% for second-hand houses. That is enormous. For good measure, no pun intended, the Bank of Ireland states that prices will rise by 10% this year and rents are already starting to increase again. We argued for intervention in the past and we have repeatedly asked the Government to tackle this issue constructively. Unfortunately, those requests were not met by a proactive response, but rather by a type of absurd intervention.
I can recall my earlier days in this House, in late 2002, when the Minister for the Environment and Local Government at the time was Deputy Cullen. He sat in that chair and had the cheek to hand back almost 80,000 affordable sites to developers because they had embarked on a type of social pleading with him and his colleagues, more than likely at the Galway races, although we will not get into that debate.
In Christmas week almost 80,000 affordable units were handed back to developers and speculators. Some of those would have gone a long way towards sorting out the enormous housing problems in Clonakilty or Kinsale where prices have now reached unbelievable levels and where the supply of social housing is falling well behind because the local authorities have been starved of decent resources and funding to tackle the issue. Less than six months after the general election, having boasted about his exploits in Government during the previous five years, the Minister handed back 80,000 affordable sites. That was done when the Government dismantled Part V of the Planning and Development Act 2000, which was unforgivable. Eighty thousand units would have gone a long way to sorting out this mess, but they were not given to the young people who need them. Instead they were given back to the builders in Christmas week.
Next, the Minister and his foot-soldier Ministers of State abolished the first-time buyer's grant. We were told at the time by the former Minister for Finance, Mr. McCreevy, that €3,800 was not much money. It may not have been to someone like Mr. McCreevy and his colleagues in the Government, but it is a lot of money to the many thousands of young people who could have availed of the grant. That was especially unforgivable. Another great measure was to reduce stamp duty for investors, designed to put pressure on the hard pressed young couple, along with the urban renewal incentives for new buildings.
There has also been a huge increase in development charges and rural-based Members will know of this better than most. The development charges are there for the provision of public lighting, footpaths, roads and so on, yet none of these facilities have been provided in many rural areas, in spite of an increase in the charges. In one-off rural houses, this works out at around €2,500 per house, plus the cost of abolition of the first-time buyer's grant in the case of young couples who wish to build houses for themselves in rural Ireland.
Part V of the Planning and Development Act 2000 was botched in its inception, it was poorly thought out, badly introduced and abandoned in Christmas week in 2002. The Government abolished the first-time buyer's grant and increased development charges. I urge the Minister and his colleagues to take on board the recommendations of the NESC. We are 18 months away from an election and the thousands of young people in Ireland will not forgive the Government for the manner in which people have been pushed onto housing lists, pushed into poor standard rented accommodation and evicted from their houses. In the last few years, more people have been evicted from their houses under the watch of the Taoiseach and his Government than there were under British rule during the land war of the 19th century. That record is a disgrace to any politician who has the gall to knock on a door and look for a vote.
I welcome the Minister of State, Deputy Noel Ahern, to the House and I compliment him and the Minister for their work in the Department. I have listened carefully to many contributors this evening and I know some of them are young and have not been in local authorities. One does not have to go too far back before 1997 to realise the plight in which many people found themselves when waiting for housing. They often had no hope whatever in getting accommodation as lists were growing longer. I compliment the Minister and his predecessor, Deputy Cullen, on the developments that have taken place.
I wish to make a point about housing estates and private developments. Some developers are top class, some are average and some are very poor. The Minister should look at the planning conditions for housing estates. If someone gets planning permission to develop housing estates, they have five years to start or complete that development. In many cases, the estates have been built after 12 months. Unfortunately, some of the essential services are not in place, such as lighting and footpaths. I recognise that there are some very good developers who do an excellent job, but when private estates are given planning permission, that permission should ensure that the essential services are in place.
I appreciate the Minister's announcement that three out of every ten houses in the State have been built in the last ten years. That is obvious, given the amount of excellent developments that have taken place throughout the country. In the past, people did not have the wherewithal to take on board the development of housing. House prices should be controlled in some shape or form. It appears that some of the developers advertise houses off the plans and as the first four or five houses are sold, the price is increased substantially because the demand is there. That is unfair as the cost of materials have not increased at the same rate that housing costs have increased. We must look at that issue.
I would like the Minister to take on board the issue of the selling of local authority houses. With regard to tenant purchases, some people received houses in rural areas and were given a site by their parents for a nominal fee. After a few years, the family would wish to buy out the house. The council charges the full market value, including the price of a site, whereas in some cases those concerned had to buy a site and were entitled to do so. However, where the local authority gets the land for free or for a nominal fee, the sale price of the house should be reduced. I ask the Minister to have a look at that.
I compliment the Department for making funding available for Traveller accommodation throughout the country, be it housing or halting sites. A lot of money has been made available. Unfortunately, many local authority members have failed in their duty to provide proper accommodation and money was sent back to the Department every year because we did not move on the issue.
The Minister must take a stand with city and county managers and local authority members on the issue of transient sites. There are serious problems every year with a number of Travellers moving out of houses and into other areas. There is a responsibility to provide transient sites and the cost of doing so is not great. We should be able to do it reasonably quickly.
Local authorities must move ahead with local area plans. In some counties, villages are being developed and that is to be welcomed. It gives an opportunity for people to live close to services such as the church, the shop, the school. People should not be forced to move out to rural areas and they should have problems with planning permission, with getting children to school and needing to get a second car. Local authorities should provide private sites at those locations, so that people will have an opportunity to buy land for development close to the services at a reasonable cost.
Earlier, Senator O'Toole commented on the standard of construction of some of our housing stock. I wish to respond to this as I am reasonably familiar with the building trade. Undoubtedly, in some cases, it leaves much to be desired. In particular, he referred to cavity wall buildings. Such buildings may be insulated without any difficulty and can be executed to an extremely high standard. In terms of durability and strength, this must be balanced against timber frame construction. I have serious issues with regard to some timber-framed buildings under construction at present. While they may meet criteria with regard to insulation, they may fall short in other respects.
As far as change is concerned, once planning permission has been granted for a particular type of structure, the Department is not in a position to force change on those who received it. The planning regulations which were the law of the land at the time when planning permission was granted remain in force until it expires. Perhaps I am mistaken and something may be done by ministerial order. However, my understanding is that if one receives planning permission for a particular type of structure, one is entitled to build it. Permission has been granted for quite a number of houses of the type to which Senator O'Toole referred and such buildings will continue to come on stream.
This is similar to the introduction of affordable and social housing schemes into planning legislation. Such housing did not come on stream overnight either. When the schemes were introduced, everyone thought it was a great idea. However, because so many planning permissions had been granted previously, the benefits are only now becoming apparent. Such houses are coming on stream throughout the country and make a great difference to many young people who are able to purchase a house at an affordable price. The affordable housing scheme was an outstanding initiative on the part of the Department of the Environment, Heritage and Local Government.
Before leaving the subject of housing construction, I wish to touch upon the standard of materials. Recently, I encountered doors which were being sold as solid doors but which left much to be desired. They contained a MDF-type material with a finish that appeared solid. However, if one put a socket through such a door, one realised that one was being had. Thousands of such doors are being installed throughout the country, as people look at them and believe them to be solid. Standards must be examined in this respect.
Local authorities and the Department must be given credit for the standard of local authority housing under construction at present. Members may recall a time when white deal windows of extremely poor quality construction were installed. Now, one receives a house that is on a par with, if not better than, those constructed in the private sector. Much money is being spent in this regard, and rightly so, as one gets a house of high quality. When local authority tenants move in, such houses are painted, kitchen areas have floor tiling, double-glazed PVC windows have been installed and central heating is available. In some cases, features contained in local authority housing are not available in private developments.
As far as two-storied dwellings in local authority schemes, particularly in our towns, are concerned, the Department has changed its policy in respect of downstairs toilet facilities. This a worthwhile change, which I hope continues, whereby if someone has the misfortune to be injured in any way, such facilities may be developed easily on the ground floor to avoid people trying to climb stairs.
The changed circumstances of applicants has come to the fore recently at local authority level. Once, when people applied for local authority houses, it was par for the course that married couples had two or three children before they were granted a local authority house. At present, given the enormous amount of housing that has been developed, we find that single parents are able to get a local authority house, and rightly so. However, this demonstrates that we have come a long way.
As far as both local authority housing and private developments are concerned, the developers and local authorities get away easily in their failure to provide some kind of children's playgrounds or facilities on the estates. Such provision is necessary and we should make changes to ensure this happens in future. Local authorities should take on developers, possibly by imposing a new charge or by using some of the existing charges to ensure that playgrounds are provided for children in such estates.
The rental accommodation scheme to which the Minister commented in his contribution is a worthwhile initiative. Unfortunately, it is being abused up to a point as unquestionably, people have moved out of good accommodation in order to have their rental accommodation paid for.
Local authorities should be obliged to provide more private site accommodation in our towns and villages. Often, the local authority may provide ten, 20, 30 or whatever number of such sites. While they may sometimes be disappointed that a smaller number of people apply for them, it is worthwhile to provide such sites.
My final point concerns land banks for local authority houses. Some years ago, my local county council was forced to sell off land. It is important that local authorities provide a landbank for the future, because the demand for housing is ongoing and we will require a sufficient amount of local authority land. I thank the Minister and the departmental officials. Matters have dramatically improved in recent years.
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.
I am glad to have the opportunity to speak in this debate. When we debate this important topic in this House we generally have a widespread and reflective discussion and this afternoon's debate has been no exception. I thank Deputies Noel Ahern, Batt O'Keeffe and Roche for their attendance. I read the Minister's speech with interest. While he presented convincing figures on the strength of the housing market, its impact on the economy and the state of housing health as far as the Government is concerned, housing statistics can be twisted and turned in many ways.
If we are to ensure that housing, which is a basic and absolute need for every citizen, becomes an entitlement, we must address certain issues. Some of my colleagues said despite the huge number of houses being built annually and over the past six or seven years, we still have an enormous waiting list for local authority housing. I appreciate that Deputy Noel Ahern has greater responsibility for local authority housing than the other Ministers and I am sure he is taking note. It is disappointing that with so many houses being built, the local authority lists at best remain static and in many areas have increased. We need a broad debate on that issue.
So many housing issues must be addressed, such as quality and energy efficiency raised by Senator O'Toole, Senator Quinn's design arguments and the issues of affordability, shared ownership loans and local authority housing. It is surprising that after 60 or 70 years of our State we have never had a Minister or Department dedicated to housing. Housing is a crucial issue that affects our economy and society on an ongoing basis and requires particular political attention. While the Department of the Environment, Heritage and Local Government has always had a junior Minister responsible for the housing budget, for at least one Government term there should be a Cabinet Minister to look at the broad range of issues from a housing perspective.
The many issues, for example, the issue of auctioneering which Senator Ross raises regularly, are dealt with in a piecemeal fashion but if we had the benefit of a dedicated Minister for housing for five or ten years he or she could begin to make a real impact. It is not just a question of building 70,000 or 80,000 houses per annum. For every house built we discover new problems because of issues that have not been addressed.
The Minister made a passing reference to the rental market and spoke on the need to modernise and develop the rental sector. I agree, but nothing has happened in that area. We have not been able to move people from the concept that rental accommodation is second rate. That is an Irish and British view but not a European view. We should make it attractive for people to invest in providing top quality, affordable rental accommodation. If a person is lucky enough to have sizeable financial reserves and invests them in a shop, pub or hotel, he or she is generally considered a great pillar of economic activity. However, if he or she invests in private rented accommodation and makes eight, ten or 20 units of accommodation available for letting, we almost automatically question the motive.
I would like us to have a fresh look at rental accommodation. It should be a very valid form of economic activity and social progress to invest money to provide rental accommodation, and our laws regarding landlords and tenants must obviously be reviewed. However, it should be proper to invest money to make rental accommodation available. On the other side of the equation, there should be absolute guarantees of security and fair rents for tenants. That is the one issue that we have never properly addressed. It will have to be part of the jigsaw of solutions that we require in a modern, more flexible society.
When discussing housing in general in the House, we obviously speak a great deal about social housing, a very good concept that I strongly supported over many years as a member of Cork County Council. However, I am disappointed that we have not advanced the social housing project as far as I thought we could have done. I appreciate that, with the Part V procedures, houses are, in a sense, only beginning to come on stream. The Minister of State and his colleagues will have to drive that much faster and more strongly. There appear to have been too many cases of local authorities and builders taking for ever to decide to trip the Part V mechanism. With 50,000 or 100,000 people seeking housing, we must advance this one method of resolving their needs.
On affordable and social housing in its broadest forms, shared ownership loans, something I very much supported in their early years when they were neither profitable nor popular as far as most people were concerned, have allowed many people to house themselves who otherwise could not have secured accommodation. We must examine the regulations concerning the shared ownership loans, the terms and guidelines, to ensure that more people qualify for such a loan. It is great when one is able to assist a person who had no great expectation of owning his or her own house to use the shared ownership system to enter the market, and we must expand that scheme.
From the perspective of local authority house building, I appreciate that if the Part V procedure works well, local authorities will be building, individually or directly, fewer than heretofore, but they will still continue to build a significant number. One issue that always concerns me, and on which I spoke at local authority level, was the delay in initiating building projects. We received an annual housing grant, and it could be 18 months, 24 months or, in some cases, three years before the houses were built. We appear to take a very conservative view of housebuilding in this country. Local authorities simply would not consider fast-build methods such as timber-frame or steel-frame construction. We have a very reputable steel-frame construction company in Cork. I would like to see local authorities using their money in such a way that the housing stock is built more quickly than hitherto.
Senator O'Toole raised very valid issues concerning installation, energy conservation and so on. Local authorities should take a lead in that regard. It is interesting that in Cork, the northern division of the county council, in conjunction with Blackwater Resource Development, the LEADER company, is conducting a pilot project on sustainable living. In the village of Lombardstown, which is not in my constituency, they are building 20 houses using a sustainable development concept, with all the necessary environmental measures, including solar panels and geothermal heating.
Our local authorities should be pioneers in that regard. However, energy conservation and broader environmentalism should be taken on board. I hope that the Minister will request the Minister for Finance, Deputy Cowen, to provide grants in the budget for insulation and energy conservation in older housing stock. It is a necessity and will pay for itself financially and environmentally time and again. I ask that the Minister consider that suggestion.
I would like to share time with Senators Henry and Ross.
I welcome the Minister of State, Deputy Noel Ahern, to the House and this opportunity to speak on housing, an issue that we all know is among the economic challenges that continue to face us. The reason relates in part to those not able to afford a home of their own and who are reliant on local authority or social housing. There are also single people in jobs and young married couples who, because of the affordability issue, cannot buy homes in areas that they might have expected when growing up. We see ever more people forced to move further away from where they grew up in cities and towns and into country areas. Their moving away from home will create other issues in future.
Local authorities should go out on the open market and buy houses throughout the country. They should not be tied to their own local authority area. Perhaps I might take Galway city as an example. There is no reason that Galway city should not be able to buy small numbers of houses in new developments all around the county, renting them through the social housing scheme to people on its housing list. When I left Galway City Council two years ago, the housing list had approximately 1,300 or 1,400 people on it. I imagine that it is now well past 2,000, owing to the changes that have happened.
If we are to have any hope of housing those people within a realistic timeframe, we must do something radical and new. Regarding how we are to pay for those houses, I point out that we spend a fortune every week in this country providing rent allowance to private landlords. That rent allowance would pay back any mortgage gained on a long-term investment from the bank. If we had a method allowing the local authority to borrow the money from a bank or an Exchequer fund, paying it back with money already being expended on rent allowance, we would ultimately have people housed in accommodation and completely integrated throughout the whole country. No large local authority estates would be built to store up future social problems. We would have true integration and better housing stock throughout the country at no additional cost. I would like the Minister of State to take that on board.
At a previous discussion in this House, I raised the issue of stamp duty, which I know does not come under the Minister's brief. I have stated before that no stamp duty should be paid on family homes or by first-time buyers. If I am in a family home but am moving to a bigger one or a different area, I should not pay stamp duty when I sell up. It is a tax on the family that should not be paid. One can quite justifiably increase stamp duty on second or third homes, progressively raising the rate. If people can afford to buy a second or third house, they should pay the tax that it is their duty to pay, and I apologise to no one on that account. However, there should be no stamp duty for first-time buyers or on a family home. If one has a family home and is moving to a second one, there should be no stamp duty.
I would also like to raise the issue of Part V. It may not have been the best idea to allow developers to pay off their commitment under Part V of the planning process. I was disappointed when that changed. From the perspective of integration, I would much rather see one, two or three houses in all sorts of areas throughout the country available for people to buy under the affordable and social housing schemes.
I am disappointed that happened but I recognise we have yet to see the full benefit of the scheme. We should examine it closely. A considerable amount of money is being made by people in the construction industry and property market and those who have benefited most are the property developers. The landowners who sold land have certainly been well paid therefor, but the land they sell is sold two or three times thereafter, doubling in value each time. This needs to be addressed and we need to say to developers that if they are to continue to make the money they are now making, they must pay their due back to society.
I thank Senator Cox for sharing her time. We are not taking enough interest in the social consequences of one-off housing and ribbon development outside towns. Such developments are fine when those who buy the houses in question are young, but as they get older the consequences of their being far from shops, churches, etc., can be very serious. They become totally reliant on cars. This should be factored in when planning permission is being granted.
Developers still seem to be getting away with building more houses on a site than are allowed under the planning permission. I have recently received two such complaints, one pertaining to a development in County Wexford and the other to a development in County Kildare. In the case in County Kildare, it was only discovered that the detached houses in question were on smaller sites than they should have been on when there was a problem with the sewerage system. I would like to feel sure that the greatest possible care is taken to ensure developers comply with the planning permissions they are given.
I, too, thank Senator Cox for sharing her time. I agree with much of what has been said, particular by Senator Henry. The building, buying and selling of property comprise a big jungle of which people have a pretty ropy understanding. The system seems to suit the developers, sellers, landowners and everybody except the first-time buyer or the person who actually needs a house in which to live. It would be preferable if it suited the latter.
The odds in this jungle are stacked very heavily not just against the first-time buyer but also against the person buying a home in which to live. I do not want to lay all the blame on the Government for the young first-time buyer not always being able to buy a property but there are circumstances in which it is obviously fair that the Government interfere in what is known as the free market. There are social circumstances in which this applies and it certainly applies in the case in question.
Young people are finding it impossible to get on the housing ladder. The average first-time buyer's house in Dublin costs approximately €350,000, which is a very high price and unaffordable to someone earning an average income. There are ways of tackling this issue. It can be done on the supply side and the Government has had a go in this regard. It is not a matter of reducing stamp duty, as Senator Cox said. There is a bit of a myth about stamp duty as it is not a tax on the buyer but on the seller — nobody quite realises this. The former Minister for Finance was in full agreement with me in this regard, as he stated in this House not very long ago.
Let me explain what I mean. If one buys a house and pays 6% or 7% of the cost as stamp duty, or 9% if one pays at the top rate, one must have the money to do so. One must have borrowed it or acquired it somehow and have it in one's back pocket. If there were no stamp duty, one would pay the same price for a house because the price would simply increase accordingly. The buyer, who would have the money to pay if there were stamp duty, would be prepared to pay the same amount if there were none. It does not matter to the buyer whether the money is spent on stamp duty or on the house and therefore the person who is actually getting less from this system is the seller. Stamp duty is therefore a tax on the seller although it does not appear to be so.
What can the Government do to reduce prices? It is a very difficult question because there is a kind of conspiracy against the first-time buyer. It is not just the establishment that is involved — also included are auctioneers who conspire against the first-time buyer and enter a cabal to ensure that nothing works in his or her favour, as Senator Bradford stated. The banks are also involved because they are lending money recklessly, thus increasing the price of houses. They do not care about the consequences for the buyer. They are lending recklessly in a period of very low interest rates. This is fine if one wants to borrow a lot of money at present but it will be bloody murder when interest rates increase suddenly. I am not referring to the gradual increases which I suspect will occur next month or next year. When they increase suddenly, first-time buyers who have managed somehow to get on the property ladder by paying extraordinarily high prices will find they are being crucified by the same banks that have been so generous to them in the past. The consequence of this will almost certainly be a fall in the property market. The only question, as the economists' conference identified this week, will be whether the fall will result in a soft or hard landing. The social consequences will be such that houses will come on the market because people will not be able to pay for them, and there will be negative equity.
The market is now a fairly depressing place for potential buyers and may prove to be such for those who have bought in recent times by borrowing very large sums of money. I would like to hear the Minister of State's response.
I thank the Members for their contributions. This is a time of enormous and unprecedented change in the housing sector. In that context, the Government has set very ambitious goals and is delivering. To realise the changes that have taken place, one has only to look at the results of the last census, which indicate that the population increased by approximately 8% in a six-year period. The number of people between 25 and 34 increased by 18%. People in this age group are the ones who are buying houses and forming new families and relationships. The statistics demonstrate the pressure on the market but we are meeting the demand and providing record levels of housing. Investments of record levels have been made in the social and affordable housing sectors.
It is not just a matter of numbers as the quality of the houses developed is very high. As I stated previously, one third of the housing stock is very new, having been built in the past ten years. Not only are resources being ploughed into the construction of new houses but they are also being ploughed into older estates under the remedial works scheme. Some €35 million per year is allocated in this regard, and the investment in regeneration programmes amounts to approximately €130 million per year. Ballymun, Dublin's inner city, parts of Cork and Limerick and elsewhere have benefited in this regard. We started the central heating programme last year because approximately 45,000 local authority houses had no central heating. We are providing new houses and upgrading the existing stock.
The allocations in last year's and this year's housing budget amount to €2 billion. I heard Senator Ulick Burke state there is a delay every year in respect of the local authorities getting their allocations. However, we have agreed five-year action plans with the local authorities and they can fast-track them if they like. They do not have to wait until March, April or May in any year for their allocation because we have made a five-year deal with them involving five-year capital envelopes. They can get on with business and therefore the excuse of there being delays has worn out.
Part V has been mentioned. Its provisions have been slow to come on-stream but will be very important. Part V is delivering and will be a considerable source of social and affordable houses. I have heard different views on it in recent times but, regardless of these, it will be very relevant and successful.
Senator Moylan spoke about the sale scheme and said that if a site in a rural area has been provided to the local authority for a house and that house is being sold 30 years later, it is not fair of the local authority to charge the full, open market price. If that is happening in Offaly or anywhere else, the local authority is wrong. The rules and guidelines from the Department are clear. If a site is given or sold cheaply to the local authority, when the house is bought out later the person must get a considerable discount. The calculation should be based on the house minus the price of the site. If any local authority is not adhering to the rules, it should be pulled up for it.
The assessment of needs was mentioned. We carried out an assessment of needs some months ago but the figures are not yet ready. It is an extraordinarily tortuous job in conjunction with the local authorities but the figures will be released in the coming months. Regardless of what the figures are, everybody is aware that some people are on the local authority waiting lists in the hope that the ideal house will become available for them. There is want and there is need. Everybody on the local authority waiting list is not in immediate need. Most of them are living with families and there are 60,000 living in the best of accommodation on rent allowance. It is not the case that their lives are on hold if they do not get the ideal house.
There was reference to the income limits for affordable housing. There are a couple of affordable housing schemes and the Affordable Homes Partnership is driving this process in the Dublin area. The overall income limits for the earlier schemes were adjusted in the summer of last year. We are working on these and expect to increase the figures again in the next few weeks. However, if the income and loan limits are increased too much, one ends up catering for a different cohort of people and forgetting the people at the bottom who need help as well. We must be mindful of the category of people we are trying to help.
I do not have time to answer all the points raised. Broadly, however, we are doing a considerable amount of work. A sum of €2 billion is being spent per year on the housing budget alone. That is a fact. Members might rubbish that fact and say we can do more because there are still people on the lists. Of course, there are and we are doing our best to help them. The simple statistic is that we are spending €2 billion per year on social and affordable housing. Our record is a successful one. We are not getting complacent or suggesting there is nobody waiting for housing. We are aware of the realities. The issue is to continue what we are doing and to seek more finance to solve the problems of people who need housing, to upgrade the housing stock and make them sustainable and to make the communities that live in them more sustainable. Given the level of resources being made available, we will have further success in coming years.