I have pleasure in supporting the motion introduced in the name of Deputy Quinn and the other Labour Party Deputies in relation to the serious problem that exists in housing in the country in general and in the capital city of the country in particular. I listened with interest to what was said by the Minister of State and to what has just been said by Deputy Woods, because there is a distinct difference in tone between them. Deputy Woods did not embark on a diatribe of any kind, as he said, but they were basically using the same arguments and basically the same approach.
Deputy Woods said one or two things of an original nature which deserve a comment. He suggested that overtime should be excluded from reckonable earnings for the purpose of SDA loans. With respect to Deputy Woods, this is a very crude solution to a very complex problem. It is certainly true to say that over the past decade or so the dividing line between basic wage and overtime has become blurred. But that is not to say that here in housing policy is the place to deal with that particular problem in all its complexity. The answer is basically to increase the upper eligibility limit for these loans. Deputy Woods and the Minister of State can make all the capital they like by raising the amount of the loans to £5,000 and then to £9,000, but that ignores the fact that the take-up of loans is related far more fundamentally not to the maximum amount of the loan but to the maximum reckonable earnings of the person who wants to claim it. You can raise loans to £10,000 or £15,000 without getting any noticeably greater take-up if you fail to make any substantial alteration in the upper limit of reckonable earnings. That is the way to tackle the problem, and not the overtime rate he suggested. Raise the limit and you do not thereby discriminate, as his suggestion might do, between people who are earning a great deal of overtime and people who are earning very little overtime.
He also referred to the EMS as a kind of fairy godmother coming along with the magic wand to save us from all our problems, on this particular occasion from the problem of high interest rates on house purchase loans. He went to some lengths to argue that the advent of the EMS or, to be more precise, the accession of Ireland to the EMS—a reversal of the policy of St. Patrick because we are bringing the snake back into Ireland—would create this desired stability. But there is stability and stability. There is no point in having stability if it is stability of 14 per cent or more, and no point in having stability at a lower level if that stability is bought, or subsidised, or underwritten by long-term soft loans from the European Monetary System, loans which will eventually have to be repaid, and repaid with interest, however soft. Achieving low interest rates is only postponing the problem for another day, another Minister and another Government to solve. Indeed, there is some evidence that the number of problems which fall into this category under this Government is increasing by the day.
As part of his peroration Deputy Woods looked forward to the time when the housing programme would achieve the figures achieved by Fianna Fáil when they were last in Government. But that is not the target for Fianna Fáil. The target for Fianna Fáil is the target of 100,000 houses built in the four years under the last Government. If Fianna Fáil achieve that, or beat that, then they may have something to talk about, but not if they confine their expectations, modest and all as they are, to reaching a figure which was beaten by the last Government, and resoundingly beaten at that.
The speech of the Minister of State was a model of its kind. He used figures where figures suited his purpose and he used percentages where percentages suited his purpose. He skated very rapidly over the thin ice of his argument and it is logical to assume that, because he used figures in certain instances rather than percentages, it was because percentages would not have suited him. If he used percentages in some instances rather than figures it was because figures would not have suited him. The ice on which he was skating was very thin indeed. A classical example of the thin ice department is contained in the Minister's speech where he stated:
Housing authorities estimated some weeks ago that they would complete about 6,500 houses this year. I would be glad to see their expectations realised but because of the factors outside my control, and which I have mentioned, completions will probably be no greater than in 1977.
In 1977 the number of completions was approximately 6,333. The Minister is being sanguine if he believes that completions this year will reach this figure. On the basis of information available to us to date it seems unlikely that they will even break 6,000 or, if they break it, it will not be by very much.
The Minister also said in the course of his speech that the public capital programme in 1979 will once again give evidence of the Government's firm intention of achieving their housing objective. If we look at the question of capital we must look in terms of percentages and not in terms of gross increases. In particular, we must look at percentages of the public capital budget accounted for by housing in general and by local authority housing in particular. That is at the core of our motion and the only kind of housing available to people who are unable through their own means to buy private houses. If we want to examine cutbacks or increases in capital expenditure on housing the only unbiased way we can measure this is by calculating the percentage of the public capital programme allotted to housing in each financial year. The public capital programme gives not just estimates but, in relation to past years, gives actual outturns and actual expenditure. For example, for the years 1976-77 and 1978, under the headings of local authority housing and public capital expenditure on private housing there are some interesting percentages. These percentages, because they relate to the percentage of the public capital budget expended on housing, are a far more reliable guide to the sincerity of the Government when they talk about spending money on housing than any gross figures however much they may have increased in actual terms or in percentage terms on the actual allocation for the previous year. The public capital budget changes from year to year and it is the slice of that cake for housing, and public housing in particular, that we are concerned with.
In 1977 the public capital programme outturn for local authority housing, as a percentage of the total public capital programme, amounted to about 10.89 per cent and the estimate for 1978 is that the equivalent percentage will be 10.55 per cent. That means that a smaller proportion of the public capital budget will apparently be allocated for local authority housing this year than was last year. This 10.55 per cent includes the low rise mortgage increases of which the Minister and Government Deputies have been so proud. In the private sector in public capital expenditure on private housing there has been an increase over the two years from 3.85 to 7.54 per cent. It must be remembered that that includes the famous £1,000 grant which went, basically, into the pockets of the builders.
It is a fundamental part of our argument that the problems which the Government are now trying to solve are ones which they created by their inflationary policies and rash promises. They have thrown a whole series of spanners into a machine which is uniquely sensitive at the best of times but which has reacted in a predictable way to such uncouth and crude stimuli as have been applied by the Government. A classic example of this was the £1,000 grant on which the Government made such play coming up to the election. The recent report of the ESRI on housing stated this, and those who have bought a house know that the real obstacle for most people when it comes to buying a house is not so much the weekly repayments on a mortgage, although these represent a substantial problem, as the initial deposit required. Once one gets one's foot on the ladder of domestic house ownership unless one is very unlucky or unwise one can never effectively be budged off that ladder. The problem is to get on it in the first place. The price of getting on it in the first place is the deposit one puts down on one's first house. The effect of the Fianna Fáil manifesto was to persuade tens of thousands of couples that the pennies and pounds they had scraped and saved together would, on the advent of Fianna Fáil, be miraculously augumented by the dazzling figure of £1,000.
We all know what happened to that £1,000. Where it existed at all—even this was questionable in some cases because so many existing grants were absorbed into the £1,000 that in some cases the net gain to an individual would be about £100—it went basically on to the price of houses. The speed after the general election with which the average price of houses rose by exactly the £1,000 mentioned in the manifesto was eloquent testimony of the ability of the market to take advantage of a carelessly thought out scheme to the detriment of the people whom the scheme was supposed to benefit. I do not know if the Government ever considered the possibility of what would happen, but I suspect that even if they had they would have let it stand in the belief that this confidence trick—that is what it was—would have a substantial positive effect in their favour in the general election campaign.
The second aspect of my contribution relates to the undeniable fact that a very high proportion of available mortgage finance has been going to people who are buying more expensive houses with larger mortgages. A couple of weeks ago in my constituency a large estate of houses, costing £45,000 each, was opened. They are within yards of Dundrum village and within sight of many people who are on one of the longest and most pathetic waiting lists of any housing area within the general responsibility of Dublin County Council. Those houses at £45,000, all no doubt mortgaged to the hilt, are an affront to the officials and members of Dublin County Council who are trying to provide decent housing for the people who really need it. The tragedy was that the scheme was officially opened by a Deputy of the Minister's party. If the Government mean what they say about the need to provide low-cost housing for those who need it most, about the need to direct mortgages into the lower end of the mortgage market, it is time that Ministers and Deputies suited their actions to their words. They should avoid, politely or impolitely as they choose, public association with housing developments of the kind I have described which eat up mortgage finance that should be available for other sectors of the community. I can assure the Minister of State and whoever else lives in one of those houses in my constituency that I certainly would not because I cannot afford it on £6,700 per year and that amount is substantially ahead of the average industrial wage.
The Minister referred to this in his speech where he mentioned the Government's request to the building societies to make loan money available in certain ways; for example, that at least 60 per cent of the total funds available for mortgages should be allocated for house purchasers whose mortgage requirements do not exceed £13,000. Ironically the figure of £13,000 is the maximum that a building society will lend to a Member of this House on the basis of a salary of £6,700. As I have pointed out, this is not a small salary in comparison with the average industrial wage.
The Minister may make these approaches to the building societies but they are caught in a double vice which is in large part the creation of other fiscal and taxation policies of this Government. In the ESRI report to which I have referred, the authors point out that there are several reasons—I am identifying two in particular—why more mortgage finance should go to people who are buying larger houses. One is that the reduction of the higher marginal rates of taxation in 1977 would have enabled many on above average incomes to finance greatly increased mortgages. Secondly, the shortage of land in the outer Dublin area and the land price escalation could have given impetus to builders to build expensive houses.
It is not by any means the fault of the building societies. They have to do this because, among other things, they have a responsibility to their investors and they have to ensure that their appropriate liquidity ratios are maintained. I should like to ask the Minister of State or the next speaker on the Government's side if the Government have considered the possibility of allowing the building societies in a phased way over a period of time to alter their liquidity ratios so as to release a significant amount of money for mortgages at the lower end of the market. Carefully managed, this could be part of the answer to the housing problem. I do not say that it would be the entire answer, but at least it is a possible solution and it is one that has been canvassed in public. It is distinguished by the fact that it is the only one that the Government, so far, do not appear to have considered seriously.
The final point to which I wish to refer is the question of the price of land. In his speech the Minister referred to "problems such as possible constitutional difficulties, the possible disruption of the long-established traditional marketing arrangements for land, and other legal difficulties." I love the phrase, "the possible disruption of the long-established traditional marketing arrangements for land." What are they? They are institutionalised and legalised greed and that is one of the things that has helped to put up the price of land, to increase the price of housing and to put it beyond the reach of many ordinary citizens.
I do not altogether blame the builders in this regard, because in many cases they pay the initially inflated prices demanded and got by the middlemen in a position of scarcity. The builders make their own profits. Some of them make too much profit, but it is the middlemen who are creaming off the profit on land and we have been slow to do anything about these people.
The problem is that there is a finite supply of building land. We live on an island, and sooner or later we are going to run out of the stuff. Even if we did not live on an island the same would come true. I cannot remember the name of the American sage who said that he was putting his money into land "because they are not making any more of it." If that was true in the United States with its endless frontiers in the 19th century, it is doubly and savagely true for us in Ireland today. They are not making any more land. What there is is getting scarcer and the price is going up.
There is an irony in this because since the establishment of the State on occasions we have made structural changes in relation to land ownership in rural areas and to the acquisition of land by bodies such as the Land Commission. They have not been revolutionary but they have been significant in creating different patterns of ownership of agricultural and rural land from the patterns that were traditionally there. We have always fought shy of touching the development land in and around our cities because that is where the big money is, that is where the influence pedlars are and where the middlemen are. Those are the people who can buy and sell their way through laws and taxes whenever they wish.
