I welcome the Land Development Agency Bill.
There is a great deal of cynical opposition to this Bill in the House, however. Sinn Féin's housing policy offers simplistic solutions. When those solutions do not emerge, it blames conspiracies or looks for people to blame, whether it be bankers or developers or whoever. The reality is that Sinn Féin's policy involves blocking rezoning, which is needed for supply. It involves blocking mixed developments, which the Dublin City Council put forward, for example, in my constituency in Santry, as well as freezing rents, which blocks supply in the rental market. It involves opposing shared equity, a scheme before the House to allow people on low incomes who are locked out of the housing market to aspire to home ownership. Sinn Féin even objects to developments in its own backyard.
That is a toxic mix. Sinn Féin attempts to squeeze supply, not increase it. It locks people on low to modest incomes out of home ownership and the aspiration to home ownership. It involves a return to a policy of segregated housing. In my constituency, as indeed in Deputy McAuliffe's, we have seen the consequences of purely segregated housing not delivering the sort of opportunities for families that we want to see. We have seen too much attitude to the housing issue from the left-wing parties stuck in a narrow lens of ideological thinking. As Einstein said, we will not solve problems by using the same thinking that got us into them. We need radical thinking.
The Government has been developing for some years exactly that radical thinking we need. For too long, we have relied exclusively on private developers to shape the sort of development we want. We have an aspiration now that by 2040 we will see a dramatically different type of development. We will see the growth of compact cities. The new cities will grow at 50% over the coming years, twice the speed of the growth in Dublin. That represents a massive shift in the way in which we develop. We want to see compact development that will meet our challenges with the climate crisis we all face. That needs State leadership. The LDA is the powerful tool that can deliver that State leadership. It is important that we welcome it. It can take on the hoarding of land. It can take on the exclusive remit of private developers who want to move to greenfield development and not to build in a sustainable fashion.
Now we have the vehicle that can change that and can assemble sites, particularly in those cities we need developed, to a master plan that fulfils the ambitions and the needs of society. It is important we give our endorsement and support to that area. It is interesting to see that on the LDA website, it has already identified 60,000 folios of publicly owned land which have the potential to be assessed for housing use. That has a significant potential to impact on the availability of land for development which has been a source of considerable strain and dysfunction over many years.
We also need to recognise that other changes must occur. We need to see rezoning, particularly within the M50 in Dublin and within developed areas where some lands have been assigned to uses that are no longer fit for purpose. Equally, as we introduce such rezoning, it is vital that it is done with new responsibilities on those who aspire to develop. It is important that in rezoning we introduce new powers, as well as the obligation to deliver mixed housing and ensuring the development of infrastructures at the same time as housing. All of these should be key elements when rezoning comes up to be considered.
Traditionally, we have allowed rezoning to be like a windfall lottery where people come up winning and get an outcome they pocket. That cannot be the way we proceed in the future. What is really important in the housing market is that we seek to align what the private sector and the public sector do to both serve the public interest. That has been a problem that has eluded us because the State's instruments up to this have not been sufficiently discerning to deliver that goal.
Here we have the start of a shift that can give the State the tools it needs to ensure that what private developers are doing - they will want a margin for whatever they do - is aligned to the public interest. By having the control of the land agency, by having the master planning and by having new conditionality around planning and rezoning, we can deliver that.
We also need some new thinking about compact living. From the report of experts in the field, the chartered surveyors, we have seen how the cost of compact development in high-rise accommodation on brownfield sites is becoming prohibitively expensive. Effectively, we are asking first-time buyers to carry the capital cost of changes that will bring significant social benefits to the country over the years ahead as we live in a more sustainable way. We are asking those first-time buyers entering the housing market to shoulder that entire cost. In the case of higher rise in the city areas, that is simply putting living in those areas out of the reach of those people. That is not a sustainable policy. If we want, as we need, to see more compact development and higher density development, particularly on brownfield sites, we need to develop the tools to ensure that can be done in a way that is affordable. In the evolution of the LDA, the shared equity scheme and the serviced sites initiative, we are seeing the tools that will start to see us deliver that affordability in a more effective way.
The new relationship that the Bill seeks to forge between the LDA, which will have access to the entire portfolio of public lands, and the local authorities, which traditionally have not been able to carry land banks because of the severe financial constraints under which they operate, opens up the possibility of shaping our development with more democratic input for the future. However, it is crucial that the LDA meets its potential. In the past week alone, we have read in the newspapers from senior officials in Dublin City Council, one of the foremost agencies for delivering housing, how dysfunctional the public procurement process has become and how it is preventing effective procurement by the city of housing at an affordable price. That is unacceptable. Indeed, with some knowledge of public procurement in the area of delivering green procurement, I know that the system of public procurement is simply not equipped to meet public objectives and needs to be overhauled. That cry from the heart from Dublin City Council should be heard loud and clear in the Custom House and indeed beyond, in the Department of Public Expenditure and Reform and other Departments which shape public procurement policy. We need more flexible tools of public procurement so that we can deliver to the public interest which is rapidly changing. Many of the instruments used in public procurement have not kept pace with the changing expectations of public policy.
We also read this week that Ernst & Young, having done a report on the capacity of public bodies to deliver the sort of projects that we need to see as part of the national development plan over the next decade, believes that many of those agencies do not have the capacity to deliver the scale of projects. That is a wake-up call that we have to develop that capability if we want to meet our national ambitions. If there is difficulty in State agencies and public bodies in delivering individual projects, there are far greater challenges ahead if we are to see the shift in the way our country develops in terms of regional balance. The cities that have been earmarked to grow by 50% will not organically grow by that rate. One will need to see very effective public planning and the execution of infrastructures and the assembly of plots of land for development in a compact and sustained way. One will need to see new expertise in those areas. It is a wake-up call for those who want to shape the national development plan, NDP, which is now under review. We need to look at the projects and where they stand in the pecking order but, even more importantly, we need to review our capacity to deliver those in a way that will meet the public interest, on time and on budget.
As we scrutinise the elements of the LDA, it is important that we ensure that its powers, budgets and capacities are adequate. I would like to hear how the figure of €2.5 billion has been decided by the Government as being half by way of equity from the Ireland Strategic Investment Fund, ISIF, and the remainder in borrowing capacity. What will that allow in terms of advance planning and the building of land banks for the future in five cities in which we need to see that development occur in a sustainable way? Will that be adequate or will we find that the LDA, like the local authorities, will struggle to build adequate land banks to ensure it can shape development in a timely way? Its capacity to build a land bank is not outlined in the Bill in any shape or form, and it is important that we know it has the capacity to build those land banks because development in these cities will not happen overnight. It will be a question of a decade or more of development and we will have to be anticipating that by building land banks to meet that need.
The LDA has adopted the National Asset Management Agency, NAMA, approach to compulsory purchase order. Normally, it should not have to rely upon compulsory purchase orders but as we go, we need to be satisfied that the NAMA powers that received state aid approval from Europe in respect of the acquisition of lands are fit for purpose as we develop the new mandate of the LDA, which is quite separate from the mandate that NAMA has had, and we need to ensure those powers and capabilities are fit for purpose.
There has been controversy about section 183. This is where the local authority, if it has decided that it will not use its land for housing, has to give the option to the LDA and does not have to get approval from local councillors. In reality, that will rarely, if ever, arise. I cannot imagine it would arise in Dublin City Council where it owns land that had been designated for housing but it decides that there are other purposes that would be better fulfilled. It will not be a frequent occurrence but if the local authority is selling its land in this way, the LDA is probably a good place for it to land. I am open to listen to both sides of the argument. I am sure the Minister has a reason for this and we ought to listen to those arguments.
The entire focus of the Government's strategy is to deliver affordability and supply to people who have been locked out. The sad fact is that anyone earning over €42,000, which is the limit for social housing, and right up to the limit of the Rebuilding Ireland home loan of €75,000, has been locked out. In reality, families in those income brackets can borrow probably no more than €200,000 for a home. Without the shared equity scheme, we would not be able to give them access to home purchase. The shared equity scheme is a very important element in the jigsaw because, as we drive supply from the LDA, as we introduce new Part V obligations on private developers to provide affordable homes and as we drive the site service fund, we also need an instrument that ensures people on the lower ranges of income can aspire to homeownership. The tragedy at present is that many ordinary workers, be they in manufacturing or construction, teaching, gardaí or nurses, are not able to purchase and this scheme is a really important scheme.
I also would point out that there has been massive overexaggeration of the potential that this scheme might have to fuel additional demand that would promote price rises.
The reality is that these families are now in the rental market and are often paying €20,000 or more for their home. What one is doing here is not creating new demand but moving that demand from the rental market to the house purchase market where they will be able to purchase under these schemes for probably €5,000 less. It is a win-win situation. One is unlocking the door for these families, allowing them to purchase at a lower price, and releasing some supply in the rental market which is very constrained.
It is also important to say that supply is responsive. The ESRI, in an extraordinary piece, decided that it would measure the impact of this scheme on demand, assuming that supply would not change. Of course, if one assumes that the supply will not change the only thing that can happen is for prices to go up. The reality is that supply does respond. In my area, in particular, I can see that there is a massive undersupply of starter homes. Developers are preferring to build more expensive homes for the trading-up market. We need to see a shift in that mix so that we see more starter homes being built which gives access to people who are on lower income.
This is a very targeted scheme unlike mortgage relief or the rent relief that is favoured by Sinn Féin. Those are broad-based reliefs which would push up price. This is very targeted at a particular segment of the market which is now locked out.
I commend the Minister on the work he is undertaking. We must have ambition in this area and I would hate to see the potential of these instruments constrained by a very conservative approach to building on land banks and shaping master plans for the future. It is really important that the Minister retains his ambition and ensures that the powers are in this Bill to realise it. I thank the House for the time to speak.