Deputy Mullen has given notice that he wishes to raise the subject matter of Question No. 37 on today's Order Paper on the Adjournment.
Adjournment Debate. - Price of Houses.
This afternoon I posed the following question to the Minister:
To ask the Minister for Local Government when his attention and that of his Department was first drawn to the fact that house prices were unnecessarily inflated through individuals making exorbitant and totally unearned profits from the community's investment; on what subsequent dates such reports were made to him and to his Department; why no action has already been taken in respect of this very serious matter, having regard to the fact that almost all of the building land has been bought up by the developers and builders, and what action he now proposes to take to prevent a continuance of excessive profiteering in housing development.
I would not have had to raise this matter on the Adjournment, were it not for the fact that when the Minister answered my query, he did not give the information I sought. He did not, for example, indicate when he found out that those exorbitant profits were being taken. He did not indicate what action he had taken about the matter. Neither did he indicate what action he proposed to take.
Is the Deputy referring to the Minister's speech in Cavan?
I will come to that. I raised this question, having regard to the Minister's failure to use his powers and take effective action to control the price of houses. I came to raise this question, having read the newspapers. I noticed on the Sunday morning of February 5th, the Minister was reported as having made the speech he had. He was also reported in the Irish Times on Monday, 6th February. It was headlined in this way:
Homes as Important as Factories —Boland Denounces profiteering on sites.
The Government looks on the job of building new homes as being just as important as factory building and deplores speculation that sends up housing site prices.
Mr. Boland, Minister for Local Government, at Cavan yesterday, said that land buying and high profits had put burdens on the homeseeker. The private sector must not "unduly exploit" the social needs, he said.
I submit that there is no use denying the fact that there has been an inflated increase in the price of houses. This increase has been brought on by speculators and by the house builders. I am more than anxious to ascertain why no action has been taken before now and if it is intended to take any action in connection with this matter. The Minister is in the position to glean a great deal of information about a matter of this kind. I am satisfied that, having regard to his Department, he must be in a position to know what is happening in connection with the price of houses. I, in my small way, in an attempt to elicit information, have got this type of information from Dublin Corporation.
They tell me, having regard to the increase in the price of houses, the gross average price of houses in the last few years shows a substantial increase. In 1961-62, the position was found to be that the price put on a house was £2,124; in 1962-63, it was £2,356; in 1963-64, it was £2,550; in 1964-65, it was £2,768; in 1965-66, it was £3,297; and for April to December, 1966, the average was £3,428. This is the distinct evidence of what the Minister referred to in his speech in Cavan. I, in turn, submit it is not sufficient for the Minister to go to Cavan, or any other place, and make a complaint about this matter and at the same time do nothing about it. Had there been something done about it, the situation, as I described it, having regard to the corporation figures, would not be in evidence.
I am satisfied that this is a matter of great public concern. I am sure everybody will join with the Minister when he expresses the point of view that houses are as important as factories and also when he expresses the point of view that it is wrong for people to charge exorbitant prices for them. I now wonder if this is a matter of closing the stable door when the horse has gone. I am absolutely certain the Minister has full information about this inflation in the price of houses, having regard to what some of his colleagues, who are developers and speculators, indulge in.
When I asked my question today the Minister said:
The Minister for Industry and Commerce is responsible under the Prices Act, 1958 and 1965, for price control, including control in relation to the price of houses.
This is a well-known fact and need hardly be mentioned. The Minister went on to say:
It is to his Department that formal complaints under the Acts of specific cases of excessive house prices are conveyed.
It is only a natural query that I have to raise in that connection. Taking into consideration what the Minister said at Cavan, has he now approached the Minister for Industry and Commerce and has he given him the benefit of what he said or information in support of what he said? This is the obvious thing to expect the Minister to do in connection with a matter of this kind. In this very long drawn out reply which the Minister gave and which I contend did not answer my query, the Minister attempted to spell out that he did not have to give positive replies to queries. If you like, his reply is bordering on evasion.
This is one of the main reasons why I found it necessary to raise this matter on the adjournment. In the third paragraph of the Minister's reply, which is a very lengthy one, he said:
With a view to ensuring that any accretion in land value as a result of development by a council accrues to the benefit of the community, my Department advised local authorities by circular letters of 14th May and 12th October, 1960, 10th December, 1962, and 24th May, 1965, of the desirability of acquiring and developing building sites well ahead of programme requirements.
It is all very well saying this. The Minister, at the same time, neglected to state that simultaneously with the circulars, the situation which prevailed was that there was no money provided by the same Department. I hold that in a matter of this kind, in the matter of the inflation in the price of houses, when the Minister himself sees fit to talk about it, it is also imperative that the Minister take action about it.
Further, in his reply, the Minister said:
... I expect local authorities to use their powers under them to the greatest possible extent within the limit of available resources, particularly in areas where the cost of building sites may be disproportionately high.
Again, there is a semblance of evasion of the issue. The Minister is Minister for Local Government; he is responsible for the administration of all local authorities. Surely, he should be able to say what he did to ensure that local authorities were carrying out his wishes in this matter.
In the final paragraph of this long and evasive reply, the Minister states:
The ineffectiveness of the existing statutory powers in coping with the problem of the availability and cost of serviced land generally is at present under review.
This is a clear indication of the advice: "Live horse and you will get grass." Certainly it will not satisfy the unfortunate people who have been caught in the net to which the Minister adverted. It is no use telling them repeatedly the matter is under review. The figures of Dublin Corporation are those for ordinary houses being purchased by those described as the working classes who must have an income under a certain figure before they qualify for a loan or a grant. Advantage has been taken of these very people. They have been charged up to the hilt. The Minister says the charges have been exorbitant. Yet nothing has been done about them.
It is only right and proper that the Minister should indicate, and I expect him to do so, when he got this information. I have not access to the information the Minister has, but the figures I have indicate that this has been going on for years. If that is so, then the Minister should say why it has been so and why, if it has been going on for some years, no action was taken.
The Minister, too, should really be a little more positive and tell us what action he proposes to take now. I defy contradiction of the fact that people setting out to buy SDA houses in 1963 found the price had increased 40 per cent. A few years back in this House the attention of the Minister for Industry and Commerce was directed to this matter. The Minister disputed the fact that prices had increased. Very few builders or developers have been investigated. There was a public outcry two years ago approximately in the City of Dublin in relation to the price of houses and the unfortunate people who banded together found themselves confronted with a demand that they should provide all the information to substantiate their allegations. Eventually one builder was investigated. He was sorted out from the rest, and there was no more about it.
We all know what happened recently in connection with "Home Truths" on Telefís Éireann. We are aware of the fact that in the city of Dublin exorbitant prices are being charged for new houses. These cannot be attributed to labour costs. We are aware of the fact that developers came in and bought up land all over the place. I am sure the Minister is not without knowledge why a co-operative organisation has found it necessary to state that almost all the land for house-building has been taken up in the city of Dublin.
This is a very serious matter and the Minister in his reply now should indicate clearly when he or his Department —I do not hold the Minister personally to blame; I am conscious of the fact that he is new in this particular Department — first had this information. I think I am entitled to know, and so is everybody interested, when this information became available. When it did become available what action was taken? What action does the Minister intend to take now with a view to ensuring there will not be a continuance of this situation?
I am, I think, entitled to express some surprise that my statement that unjustifiable prices were being charged for land for housing should have aroused such annoyance in the Labour Party in particular. They seem to resent bitterly my having adverted to this and my having indicated that this was something not acceptable. My reply earlier today was anything but evasive. It answered the queries raised by Deputy Mullen, giving him the information he presumably wanted. The fact that he was given that information only seemed to increase his annoyance.
I stated quite clearly what steps had been taken already to deal with this problem. I indicated that I was now examining the effectiveness of the existing powers. As I say, this seemed to increase the annoyance of Deputy Mullen and his colleagues in the Labour Party. Apparently they did not want this question to be dealt with at all. It suits them better presumably to have these complaints and to be able to say nothing is being done about them. The fact that powers have been taken to deal with this problem and that I am examining the possibility of ensuring more effective action only seems to upset Deputy Mullen and his colleagues.
I stated in my reply today:
With a view to ensuring that any accretion in land value as a result of development by a council accrues to the benefit of the community, my Department advised local authorities by circular letter of 14th May and 12th October, 1960, 10th December, 1962, and 24th May, 1965, of the desirability of acquiring and developing building sites well ahead of programme requirements.
I said:
Local authorities have been repeatedly urged in Ministerial speeches to adopt a vigorous and progressive policy in this respect.
I went on to point out—
Section 44 of the Housing Act, 1966, provides for the payment of a specific subsidy for the provision by local authorities of sites for private housing development and section 77 clarifies and extends the powers of compulsory acquisition for these purposes in advance of ascertained needs.
That clearly indicates that the Minister for Local Government was still endeavouring to get these sections implemented by local authorities, to get them to acquire to the utmost extent possible sites for housing, particularly in areas in which the cost of building sites might be disproportionately high, having regard to the fact that the value of the land had been increased by the investment they had made on behalf of the community.
These sections of the Housing Act, as I told Deputy Mullen—he seemed to resent the information — were brought into force on 31st December, 1966. Deputy Mullen may or may not remember—I do not know whether he took an interest in it—that the Housing Act, 1966, had a long and tortuous passage through this House. For all I know, he may have taken part in the obstruction of the Bill. The fact is that, because of the delayed passage of the Bill through the House, it was only on 31st December, 1966, that I was able to bring these sections into operation, sections designed to facilitate local authorities in dealing with this matter.
I said that I expected local authorities to use their powers under this section of the Housing Act of 1966 to the greatest possible extent within the limits of available resources, particularly where the cost of building sites was disproportionately high. I went on to say that I was aware of the great necessity of servicing land in the Dublin area and that it was my policy to give priority to the servicing of land earmarked for new houses and new industries. Surely that is an indication of my intention to do all possible to alleviate the situation and to ensure that any land that is rendered more valuable by the investment of the community will not result in having these completely unjustified profits taken by people who had nothing whatever to do with increasing the value of the land.
The primary thing in the Dublin area is to increase the supply of serviced land available for housing and to ensure that the local authority will acquire as much as possible of that land for its own housing requirements and for the provision of private houses. Deputy Mullen emphasised this question of the Minister for Industry and Commerce being responsible for price control. To talk of tackling the problem of imposing control on the price of land is nonsense. That is not the way to tackle it. People have been known to get around these things. If the Minister for Industry and Commerce imposed a maximum price on land for housing, it would be no wonder if that were reflected in the usual manner, that the maximum price would become the minimum price.
Surely the proper way to tackle the problem is for the authority which made the land valuable to acquire it compulsorily as they have been empowered to do in the recent legislation introduced by the Government and with which they got very little help from other parts of the House? Deputy Mullen quoted figures for the price of houses and I have indicated that I think the contribution made to the increase in the cost of houses by the increase in the cost of acquiring sites has been excessively large in later years but I do not agree with Deputy Mullen that this is the sole contributing factor in the increase in the price of houses. Housing prices consist of the cost of acquiring and developing the land, the cost of wages, the cost of materials, the productivity of labour and the builders' profits.
It is a fact that house prices have increased between 1960-61 and 1964-65, that is, the erection of the superstructure, by one-third. Within that period, industrial wages have increased by 54 per cent. I would say that it can hardly be argued that the wages of those engaged in the building industry have lagged behind industrial wages generally so that it is safe to assume that the increase in wages in the building industry has been of the order of 54 per cent. That has obviously also been another factor in the increased cost of houses. The fact that the total increase in super-structural cost has been one-third and the increase in wages 54 per cent would suggest that that element in the costs had quite a considerable effect.
I do not say that there was not scope for a fairer distribution of the profits arising from house-building but the figures show that that process has been taking place and has contributed to the increase in house prices. What was quoted in the papers from my speech in Cavan was mainly this question of the contribution to the increased cost of housing made by the inflated values obtained for land for building. I mentioned that that element of the increased cost of houses was very largely unjustified. I have intimated already that certain action has been taken to make it possible to reduce that contribution to the increase in the cost of houses.
Local authorities can now acquire land compulsorily for purposes other than their own direct housing needs. They have been exhorted on many occasions since 1960 to go ahead and do that. There has been some response but there has not been sufficient activity on the part of local authorities in acquiring land and making it available for private housing at a reasonable cost. The sections of the Act which I have brought into operation provide extra incentives to local authorities to do that. An additional grant of £150 per site is now available for this purpose so that a person building a house on one of these sites will be helped to the extent of this £150, plus the State grant of £275, plus the local authority grant of £275, making a total contribution to his house of £700. I do not think that is an insignificant figure.
These facts were given to Deputy Mullen in my reply to his question and he is resentful of the fact that he was given them. Having given him this information, it is quite obvious from what I said last week that I am not satisfied that the matter is being satisfactorily dealt with as yet. There has not yet been time for the provisions made under sections 44 and 67 to be properly effective. I indicated that this was a problem which was receiving my attention and I told Deputy Mullen that the effectiveness of the existing statutory powers in coping with the problem is at present under review. That should be enough to alleviate Deputy Mullen's fears, if indeed they are genuine fears.
My fears are genuine.
He described his query as an important one——
And so it is.
——but it is obvious from the manner in which he has dealt with it himself, and the manner in which he resented the information which was given to him that it would be more accurate to describe the query as mischievous.
When did the Minister find out that the prices were inflated?
Is the Minister aware that when land is procured by agreement by a local authority, they often have to wait 12 months before the Minister's sanction is given and would he try to expedite decisions in such cases?
The Dáil adjourned at 10.50 p.m. until 10.30 a.m. on Thursday, 16th February, 1967.