No. 8 on the agenda is detailed scrutiny of the Social Housing Bill 2016. I welcome Deputy Eoin Ó Broin and invite him to make his opening remarks.
Social Housing Bill 2016: Discussion
I thank the Chairman and members of the committee, particularly those who have supported the Bill to date. I acknowledge the significant body of work done by the Oireachtas Library and Research Service in the briefing paper that accompanies the Bill. It is a substantial and helpful piece of work.
The Bill is very simple and does three things. It seeks to increase the Part V requirement for standard residential developments to 25% from the currently reduced 10%; it seeks to impose a larger Part V requirement of 30% in strategic development zones; and it also makes one significant wording change to the existing legislation. Not only does it change the percentages but it also changes the wording surrounding them from "not more than" to "at least", which is a significant change for members to be aware of.
The arguments are very straightforward and the committee discusses them week in and week out. We are not getting a sufficient supply of social housing, notwithstanding the increases taking place. There are very few affordable housing schemes in the pipeline and most of them will not start delivering units until 2020, 2021, 2022 and 2023. While the Government previously stood down the affordable housing schemes, affordable housing is still on the Statute Book and if we increase the Part V requirement to 25%, it will allow local authorities to make decisions on the basis of an increased supply of affordable housing.
That, in turn, will allow local authorities to make decisions on the basis of an increased supply of affordable housing. If combined with the serviced sites fund that is now available to local authorities, this could be used to deliver a much more significant increase in affordable rental or affordable purchase accommodation in these developments.
The Department has given a statement and I will comment on the concerns it has expressed. It is concerned about the change of wording from "not more than" to "at least". It is especially concerned that this could lead to local authorities which do not need more affordable and social housing having to agree to it. I am not convinced that there are many such local authorities. If, however, members are of the view that some flexibility needs to be introduced in order to ensure that local authorities will not be forced to take units they do not need, I would be happy to explore the matter on Committee Stage. We hear from Deputies in almost every county and local authority area that there is an urgent need for more social and-or affordable housing. In light of this, I am of the view that the change of wording is valid.
There is a concern that this will have an impact on the price of properties because developers will have less stock in each development to sell at open market prices. The difficulty is, as the Goodbody report published earlier this week confirms, that we have much housing stock which is currently being built in the wrong place or at the wrong price. It has shown that there is a reduction in the number of new purchased units at prices of less than €250,000. Rather than increasing prices, if the local authority chose the option of affordable housing as the increased portion, this would increase the volume of affordable housing for people who are currently priced out of the market, which would be an important change.
We do not have many strategic development zones, SDZs. The two most recently designated are at Poolbeg and Clonburris, which is in my constituency. Some 30% of the houses in the Clonburris zone will be Part Vs, or social and affordable houses, on lands that the local authority owns. That is in the SDZ and has been approved by An Bord Pleanála. Dublin City councillors approved a requirement for 30% in the Poolbeg SDZ in respect of land that is all private, albeit under the control of a NAMA-appointed receiver. While An Bord Pleanála ruled that any such percentage would have to be voluntary because the law does not permit otherwise, it still demonstrates that SDZs are, by their nature, very strategic in key locations and the latter are precisely the locations in which a higher percentage of social and affordable housing is needed. The idea that only 10% of the units in the Poolbeg zone would be social and affordable homes makes no sense, particularly in view of the nature of the area. There needs to be separate treatment for SDZs above the standard requirement.
Different views were expressed by parties which allowed the Bill to pass Second Stage. People stated hat they might like to see a slightly lower increase, perhaps to 20% rather than 25%, with a similar view about SDZs. I am happy to work with any of the Deputies, those in parties or Independents, in order to reach a compromise position. The objective is to get more than 10%. While I have set out in the Bill what I would like to see at an optimum level, I am open to supporting friendly amendments in order to ensure that the Bill passes Committee and Report Stages. I will work with Deputies in that regard.
I thank Deputy Ó Broin for that great presentation. I join him in acknowledging the substantial work that the Oireachtas Library and Research Service has done on the briefing paper. It was circulated to all of us and is very comprehensive. It is important that we acknowledge the enormous amount of work that the service does. It is a wonderful resource for the committees, the Dáil and the Seanad. I have heard what Deputy Ó Broin had to say and I read the submission from the Department that was circulated earlier. We need to keep it simple. I would not have supported the reduction in respect of Part Vs from 20% to 10%. I prefer to use the broader term, "public housing", rather than social housing. It is public housing, whether it is for an affordable purpose or some other purpose. I like that concept. I hear what the Deputy is saying about SDZs. I am especially familiar with the zone in Cherrywood. There is not much State land there, it is land that is held by private developers. SDZs are different from each other depending on where they are located. We would be doing very well if we could reverse the reduction and bring the figure back up to 20%. That would be practical and reasonable. We had it before.
I looked at an application for a development in south County Dublin recently that was approved by An Bord Pleanála. We see the clustering of social or affordable housing. The sites do not necessarily have the best aspects. Many are single aspect sites, facing north, and I am concerned about that. I would like to see stronger legislation for more equal and fair distribution of units across a complex. I do not like the idea or suggestion that they are maybe slightly substandard, not the same quality of build, or that they are single aspect. If we could get 10% social and 10% affordable housing, it would be a positive move. What we do has to be incremental. The Department raises many issues about stability in the market, how this is settling in and we are seeing these units come on stream. They are standard sentences. I do not want to rubbish the Department altogether. It has legitimate concerns about stability in the market and an increased peak in outputs of the delivery of housing across all sectors by all different types of providers. In general, I support this legislation and congratulate Deputy Ó Broin and everybody involved in drafting it. If we could reverse the reduction and get the figure back up to 20% from 10%, that would be a very good day's work.
I will be brief regarding where we stand on this legislation. We have supported it so far and we will continue to support it. We have reservations about the percentage and Deputy Darragh O'Brien has outlined these to Deputy Ó Broin. We are concerned about trying to apply the legislation retrospectively to existing permissions. We have just approved our regional and national plans and all our county development plans now have to fall into line with this. It provides an opportunity in the review of all of our county development plans to take this type of legislation into account so that there can be no ambiguity about it. It is clearly on the line there. We have always supported the 20%. We introduced it originally. We stand over that and have been looking for it. We are concerned about the percentages that Deputy Ó Broin is looking for but we are willing to work with him on it.
We will support this Bill. The point that has come up for discussion is the question of whether one reverses and goes back from 10% to 20% or whether one goes beyond that, which this Bill proposes. We need to go beyond it. We had 20% when there was no housing crisis. We now have the greatest housing crisis in the history of the State. The figure should not be below 25%.
I thank members for their support. If a consensus position emerges for a particular percentage, notwithstanding the fact that, like Deputy Barry, I prefer the percentages that are listed in the Bill, I commit to working with that. It is not legally possible to apply these retrospectively. Developments for which planning permission has previously been granted will continue. This is about future developments. I emphasise the point about affordable housing. On page 12 of the Library and Research Service's paper there is a good table of Part V developments and the breakdown of social and affordable housing from 2002 to 2018. One can see that, from 2006 to 2008, affordable housing was the larger proportion of those. We had a good meeting with officials from the Department, the National Development Finance Agency, NDFA, and two local authorities about affordable housing. Members that were here will know that those projects will not deliver a significant yield of affordable units for some years. We will get some in Dún Laoghaire next year but it will only be in the following years for Dublin city and elsewhere. For those members who are really keen to see affordable rental or purchases come on-stream more quickly, this is the only route on the table.
The final point I will raise, which Senator Boyhan mentioned - and which brought a wry smile to my face - is one that I will also mention to Mr. Paul Hogan when he speaks later. The final paragraph of the Department's presentation refers to fresh policy uncertainty.
One of the things the construction industry complains to the Government about is that it keeps changing the rules. I am not saying the Department is necessarily wrong; some changes I agree with, some I do not. If a policy change has a positive outcome, particularly for people who are unable to access social and affordable housing now, it is one that is worth making but when it is made the Government should stick to it for a period. Most members of the committee are of the view that we will not seek to come back to this at a later stage if we pass it and proceed. Industry will then know that is where it will stay for the future.
I propose we suspend the meeting for few minutes to allow the witnesses take their seats. Is that agreed? Agreed.
We are now back in public session. At the request of the broadcasting and recording services members and visitors in the Public Gallery are asked to ensure that for the duration of the meeting their mobile phones are turned off completely or switched to airplane, safe or flight mode, depending on their device. It is not sufficient to put their phones in silent mode as this will maintain a level of interference with the broadcasting system.
We are discussing the Social Housing Bill 2016. I welcome from the Department of Housing, Planning and Local Government, Ms Caroline Timmons, principal officer, Ms Marian O'Driscoll, assistant principal, and Mr. Paul Hogan, senior planning adviser. I draw the attention of witnesses to the fact that by virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. However, if they are directed by the committee to cease giving evidence on a particular matter and they continue to so do, they are entitled thereafter only to a qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable.
Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the House or an official either by name or in such a way as to make him or her identifiable.
I call on Ms Timmons to make her opening statement.
Ms Caroline Timmons
I thank the Chair and the joint committee for inviting the Department to discuss the Social Housing Bill 2016, which concerns what is commonly known as Part V of the Planning and Development Act 2000. I am accompanied by Paul Hogan, senior planning adviser, and Marian O'Driscoll, assistant principal in the housing policy unit.
The Bill as proposed intends to amend section 94 of the Planning and Development Act 2000 so that section 94 would essentially provide that at least 25% of land zoned for residential use or a mixture of residential and other uses would be reserved for the provision of social and affordable housing. In addition, it proposes adding a new subsection which would increase the figure of 25% to at least 30% in a strategic development zone, SDZ. This Bill was originally debated in the Dáil in November 2018 and the position on it has not changed. This is a time for stability and certainty in this policy area in order to foster housing supply and unnecessary change, which could affect supply and house prices, should be avoided.
There are a number of issues with this Bill, both substantive and technical, that deserve close consideration by the committee. It should be noted that the Bill is not a straightforward return to the language of the original Planning and Development Act 2000. The original Act referred to a percentage of "not more than 20 per cent", whereas the current Bill goes much further and proposes that "at least 25 per cent" or "at least 35 per cent" in a special development zone must be acquired by the local authority, thereby placing obligations on the local authority to acquire at least 25% or 35%. This obligation would persist whether or not the local authority requires the land or the housing units in that given area, without further consideration of appropriateness from a financial or integration perspective and without any clear analysis of whether and how a sudden significant policy change such as this would affect housing supply or house prices in the short or medium term.
The committee has referred to the fact that this policy was previously comprehensively reviewed and that the review included a public consultation based on a report prepared by economic consultants. In the context of this review, a detailed assessment of Part V requirements was undertaken, including the benefits that Part V had for social integration. The review had regard to the changed economic circumstances and the changed circumstances in terms of housing supply. It considered that the principle of integrated, mixed-tenure developments was positive from a housing policy perspective and therefore recommended the retention of Part V as a concept. It urged that Part V be focused on the delivery of social housing and therefore recommended the lowering of the requirement from 20% to 10%.
Following this review, a number of amendments were made to Part V by way of the Urban Regeneration and Housing Act 2015. While the developer's "contribution" was reduced from 20% to 10% of the "planning gain" - the amount by which the site increased in value as a result of having obtained planning permission - the previous provision which enabled the developer to make a financial contribution instead of selling land or units to local authorities was repealed. Also, the developer was henceforth required to conclude a Part V agreement before commencing construction.
It was considered that this would copperfasten the original objective of Part V in the legislation, the delivery of social housing, combined with integration and sustainable mixed tenure communities across the country. It should be noted that local authorities were informed, that they should seek to secure social housing units only, rather than affordable housing, under Part V. It is considered that the amendments made to Part V in 2015 were fair and balanced. It is also is a relatively short time since those amendments were made.
In relation to unintended consequences, it is entirely foreseeable that increasing the percentage to be set aside for social housing now would likely lead to an increase in private house prices as developers would likely seek to protect their overall profit margins. Such an unintended consequence would be seriously problematic in the current housing climate where we are finally seeing a moderation in price increases.
It is also not considered appropriate to require a higher percentage in a strategic development zone, which would require a higher contribution from a developer carrying out residential development in an SDZ as opposed to a developer carrying out residential development elsewhere, with no underlying policy rationale. Again, the local authorities should have the ability to make informed decisions based on the local need as to whether to acquire more housing in an SDZ without risking overall viability.
The supply of new housing in Ireland reached a nine year high in 2018, with more than 18,000 new units. Indicators so far are positive that this figure will increase in 2019. Having regard to the range of schemes and programmes that the Government has put in place to facilitate the accelerated delivery of social housing and affordable homes, including from State land, and mindful of the fact that the housing sector generally is still very much in a state of ongoing recovery, with a considerable journey yet to travel before a more balanced and stable housing market will be achieved, it is not considered appropriate to raise the current 10% Part V requirement to 25% at this time. It is a time for stability in order to foster growth in supply and when supply has reached the required levels the policy can be appropriately reviewed again.
It should be noted of course that there is nothing to prevent local authorities acquiring further units in a development beyond those delivered under Part V, subject to being satisfied that this is appropriate in terms of sustainable communities' objectives and subject to funding being provided by the Department of Housing, Planning and Local Government. This provides an appropriate level of flexibility whereby the local authority can acquire housing or indeed stimulate development in targeted areas.
While much has been achieved since 2015 in terms of recovery in the housing sector, there is still a considerable way to go, both in terms of achieving the level of supply that would better reflect a balanced housing supply and also in terms of achieving a recovery in supply that is more geographically spread. Much of the recovery in scheme type home-building has been concentrated in Dublin, the greater Dublin area and Cork.
The policies put in place in recent years have played a major part in the recovery that has taken place and it is essential at this stage that there is policy stability and certainty if the recovery is to continue in the desired manner. Now is not the time to introduce fresh policy uncertainty into this area by increasing or reintroducing costs and liabilities on the provision of housing, as to do so would foreseeably adversely impact the viability and therefore deliverability of housing in a market where viability, particularly in terms of housing at affordable price points, remains finely balanced in many areas and has yet to be restored in some parts of the country.
I thank Ms Timmons for her presentation. Local authorities are prevented from entering voluntary agreements in standard residential developments and SDZs because developers do not have to enter those agreements if they do not so wish. The point of increasing that is to make it a viable option. Dublin City Council voted to have a 29% social and affordable requirement in the Poolbeg SDZ but the receiver appealed it to An Bord Pleanála and effectively won the core point of his appeal, that such an agreement would have to be voluntary. That is now working itself out but it will cost the State a significant sum of money to purchase the land. It would have been much better if An Bord Pleanála had the legislative foundation to uphold the original Dublin City Council decision.
That is why I think there is a need to have some increase whether it is 30% or 20%, as others have suggested, within the SDZs.
At present developers are entering into voluntary agreements, for example at Shackleton Park, as Mr. Hogan will know, from his former job with South Dublin County Council. Due to the difficulty of accessing bank finance developers of very significant projects are quite open to voluntary agreements as it gives them a certain degree of additional security when they approach banks. There is an argument for making this a more secure option that could assist some of those projects being developed at a faster level.
One of the outcomes of the review in 2013-14 was a reduction to 10%. There is a growing body of social policy evidence to say that 10% is too small for any possibility of integration of the very small number of lower income households in a larger private housing estate. While nobody had the answer to what is the appropriate level to encourage the integration, which Government policy promotes, there is no evidence to suggest that 10% is high enough. In fact, there are bodies of evidence from Britain, Australia and the US, and some research here, that shows 10% is too small and contributes to the isolation of lower income households within a larger housing development.
The witnesses are correct about the significant change in wording and that is a correct interpretation of my intention. Do the witnesses know of local authorities that currently do not need an increase in social and affordable housing? I ask because all of the local authorities we have talked to have housing lists and affordable housing needs greater than the level of supply available.
In terms of the potential increase in price for the remainder of the development, I made the remark before the witnesses came in that the Goodbody report was published earlier this week and highlights that too much of what has been built is above an affordable price point. Therefore, surely if one has an increased Part V requirement it means there will be a greater level of affordability for those people who currently cannot buy in developments with only 10% provision.
In terms of policy uncertainty, we are going to have a series of other changes. For example, the Joint Committee on Climate Action is going to have to consider changes in building regulations that the nearly zero energy building requirements, as Mr. Hogan and other witnesses rightly know, will create. We are going to have a period of policy uncertainty. We know for sure that we do not have enough social and affordable housing and this is one way of increasing that. The Government cannot say we are going to have lots of uncertainty because of the initiatives that the Minister wants to introduce yet at the same time criticise the Opposition for creating alleged uncertainty because the Opposition wants to introduce those things. There is going to be uncertainty over the next period but so as long as it is well flagged and is left at that level for a period then the industry will cope adequately.
Ms Caroline Timmons
My colleague, Mr. Hogan, will comment after a few minutes but I shall start by answering the last point. The Deputy identified one way to increase the amount of social housing. The flaw in his logic is that simply setting a percentage does not automatically increase the level of social housing. One could set the percentage at 100% yet one will still not get social housing because simply no one would be able to supply it, instead one will affect development and choke supply.
The initiative does not address the impact on supply in the short to medium term. There has been no such analysis. Let us consider what was being developed during the years when the bust happened. In 2008 and 2009, there were 4,518 Part V units, which was the height of the provision, yet the number plummeted to just 36 in 2016. That shows the percentage does not automatically mean one will get more units. A percentage represents what one wants but it does not mean developers will provide units or that there will be a supply. What we are looking at here is increasing a percentage and effectively not knowing if the supply will be available. People have bought the land at these prices, they are looking at building these houses in the next two years and we are saying that we absolutely want them to do so. However, now we are saying we are going to change the rules so people must go back to their banks and say: "No, I am sorry but we will have to look at that again." As a result there will definitely be a delay and we could negatively affect the supply.
The reference by the Deputy to the Goodbody report is very apt because it shows how finely balanced things are right now. We are on the precipice and do not know whether we are going up or down. The ESRI still says that we will hit about 25,000 units and it is important that we maintain the momentum. I do not accept the point that there is instability in policy anyway and, therefore, we should have more, and it does not matter. Of course it matters. It matters that we do not have any more instability than we absolutely have to. The Minister accepted in his Second Stage speech that once a supply reaches a level that is maintainable and sustainable - possibly the 35,000 units mark - he would look at that again. That is a very fair and balanced position. Once we see supply coming back to the level we really need then one would consider whether we are getting enough and if we could get more. That is a really reasonable position. In 2000, we were very reasonable when we said we wanted to get more units and more again during the boom. However, we are not in that space now and have a very different economic reality in which to make decisions to change things; we said, in the review, that this is what we are going to do. The last point made by the Deputy was precise because he said we should stick to it for a little while. What we are doing is sticking to it for a little while, making sure we do not affect things and giving a little bit of stability but once we reach a position of stability we can make changes again. The Deputy is right that this is about providing certainty to the market. In other words, if one bought something at this price we are not going to change the game immediately and we will get= the supply, which is what we are asking for.
It is wrong to say that we are not going to get social and affordable housing any other way. Of course local authorities need them but this is why we are considering other ways to provide such houses. We are using public lands to do so, which the Deputy very much supports. We are also considering measures like the serviced sites fund, the local infrastructure housing activation fund or LIHAF, affordable purchase homes and the rebuilding of home loans. We know that all of these levers will accelerate and increase supply but this is a lever that manifestly could choke and decrease supply. One has got to use the ones that are safe bets. With this one there is a clear possible unintended consequence because at a minimum there will be a delay and, at a maximum, it could decrease supply. Given how much that might affect rents in the market we have to be very clear we have the evidence base to make a policy decision. We do not have the evidence base before us to make that policy decision right now. It would be something that we will consider again when the time is right, to check that this is something we would like to do.
My colleague, Mr. Hogan, will comment on strategic development zones. He is a planner and, therefore, has more expertise on them.
Mr. Paul Hogan
The one-size-fits-all nature of the proposal is an issue. A strategic development zone is a geographic planning designation, it is a spatially unique thing, applies to one place and is for a specified set of purposes. Each one of those aspects need to be considered in a local context as opposed to being subjected to a very high-level of overall national provision.
Not all SDZs are for housing. Again, this is a point that needs to be taken on board. Some include some housing or could include some housing at the point of designation but it is always specified, such as the Grangegorman SDZ for the Technical University Dublin. Waterford north quays is another current example of where the development could be entirely commercial but could also include some housing but we do not know for sure and depends on what comes forward. We have a current draft for Knock Airport, for example, which probably will not have any and an emerging proposal for the University of Limerick that could include some but, again, that is down the line. The real point is that there is no one-size-fits-all and the proposed threshold of 35% is very high. Therefore, it would be inappropriate to single out and prejudge how an SDZ can be approached locally given the intended purpose of an SDZ.
Finally, SDZs are intended to be, particularly in the case of housing, a strategic approach to planning whereby the normal set of uncertainties and things in a system are set aside and there is a clearer or more certain route to the volume delivery of housing such as Adamstown, Clonburris and Cherrywood. Applying this kind of differential standard, all of which would have to be negotiated in advance and prior to the commencement of construction, would for a variety of reasons, and viability comes into this as well, render SDZs unattractive vis-à-vis other development routes where a lower figure would apply. There is a concern that it would kill off any new SDZ proposals in the future.
On the first question about local authorities that do not need social and affordable housing, obviously, we know that an element of it is required everywhere. The point is that it is simply not viable to build scheme housing in approximately half the counties in the country, or possibly more, although it is not entirely county-specific. One of the reasons one-off housing is so popular in rural Ireland is because it is a possible route for people to house themselves. The margins are very fine. There is a lot of talk about county development plans and the need to be sustainable and provide an element of choice in terms of urban housing. However, if it is simply not viable to do scheme housing, it is unlikely that we will achieve even the modest 10% target that we have. That has to be seen as the baseline from which further units can be acquired in the future. We will not see any of it if we make it even more difficult than it is to deliver housing by means of Part V developments.
The starting point for this discussion, which we should not take as a given and of which we should remind ourselves, is the greatest housing crisis in the history of the State. It is a housing emergency, with more than 10,000 people officially homeless and a generation that has in large measure been locked out of the housing market. Every serious analyst, think-tank and commentator, almost without exception, is now arguing that an increase in the supply of social housing is key to dealing with the crisis.
It has been suggested that we need to provide certainty to the market, and so on. The starting point for me is that we need to provide certainty to people who are being locked out of the market and we need to provide certainty to people on housing waiting lists and who are in homeless emergency accommodation. I have listened to the points that have been raised about unintended consequences but if we are talking about an evidence base, the first piece of evidence we should have put before the committee is not what might happen if we go down this road but what is happening.
I do not have the statistics to hand and I would like to have them for this discussion. However, let us take the last three years, 2016 to 2018, inclusive. What have local authorities and the State received in terms of social housing units on the basis of Part V? Against the context of a massive housing crisis, what have we got, what is the evidence and what are the numbers?
Our guests will gather from the previous round of questions that we will be supporting Deputy Ó Broin's Bill. While we have reservations about the percentages, we have spoken to Deputy Ó Broin on that directly. However, we are fully behind the thrust of changing Part V back to a minimum of 20%, which will include affordable homes. We have not delivered on affordable homes for a long time and there is currently no affordable scheme. Affordability is a key issue for us.
Ms Timmons stated that people bought the land and that they need certainty. I do not buy that at all. In the context of county development plans, the Department had no problem completely dezoning land that had been bought. The Department has dezoned land wholesale and it did not cost it a thought to do so. I do not think the fact that somebody has bought land should be a concern of the Department regarding Part V and I do not understand that logic. In the context of Wicklow specifically, most developers are selling nearly 100% of their developments to the Department for social housing in any case. Why is there suddenly an issue and why should increasing it by 10% or 15% be a concern to the developer, who has already bought the land, when it did not concern the Department in previous years, when it was dezoning land or changing the criteria for zoning? That is still ongoing.
I mentioned earlier that this is an apt time to implement this measure. We have the national planning framework and the regional plans. Most counties will have a complete review of their county development plans on the basis of those regional plans. With that in mind, this is the ideal opportunity. I sometimes wonder whether we should look at all developments and state that a percentage should be build to rent, a percentage should be affordable, a percentage should be for first-time buyers and a percentage should be for social housing. Is that something we need to do? Should it be policy that all aspects of housing need are met with the planning application? Those are a few points to consider. On the question of unintended consequences for a developer, I do not buy that at all. Ms Timmons stated that they bought land. That is not a reason not to look at this as a logical policy.
I thank Mr. Hogan and Ms Timmons for their responses. To reassure them, I take all of the points very seriously and I appreciate the time they have taken to consider them. I agree with them that we need an evidence base and we need to be mindful of unintended consequences, so I am not disregarding either of those points. I have read the 2012 DMK report which underpinned the review of Part V in 2013 and 2014 and I did not see any evidence in that to support the reduction. There were assumptions, assessments and opinions, and, obviously, in the following five years, it did not lead to any immediate response from the market. Of course, it was never going to lead to any immediate response from the market in terms of increasing Part V because of where the construction sector was at that stage. Nonetheless, given the fact the reduction was not evidence-based, it is reasonable for us to argue that whether it is returned to 20%, 25% or 30% is something that should be explored.
Some of the language used by Mr. Hogan and Ms Timmons is interesting. For example, Ms Timmons stated that what is proposed would "choke supply". That is a pretty significant statement. What evidence does she have that makes her believe it would choke supply? In what was probably an even more extreme comment, Mr. Hogan said it would "kill off" SDZs. Obviously, I would like to believe that and, as that is what he said at the committee, I will take it at face value. One of the big criticisms of the Docklands SDZ is that there was virtually no social or affordable housing in real terms. One of the things we have seen with Poolbeg is a real desire on the part of residents and the vast majority of the elected members of Dublin City Council to have affordability. In fact, even the Ministers - the previous incumbent, Deputy Coveney, and the current one, Deputy Eoghan Murphy - wanted to have that 30%. SDZs are of such huge importance because they are always in key locations. One of the constant challenges in those key locations is, of course, affordability, given their proximity to economic opportunities, public transport hubs and so on. It is actually because of their strategic nature that a higher percentage is needed. Again, I am willing to work with committee members to respond to that.
Our biggest challenge is the undersupply of affordable housing. All of the information we have from the Department and the local authorities is that there is not going to be a significant supply of affordable housing through the serviced sites fund or LIHAF for four to five years, and they are asking us to wait until we reach 30,000 to 35,000 total completions, and then review it. The difficulty is that, by that time, we will have produced so many unaffordable private sector units that the affordable housing crisis will have got worse or, at least, remained static. There is still a compelling argument to do this. Do I genuinely think that by introducing this we are going to delay output? I genuinely do not, and I have yet to see any evidence for it. However, if the witnesses have any evidence, I would be more than happy to consider it and to reconsider my position.
Ms Caroline Timmons
Many of the arguments made are very fair. However, there is quite a circular argument going on in that, with regard to the proposals made, we are told we should provide the evidence that they are not true.
It is quite difficult for us to be asked to prove the negative. We should be shown evidence that it would work, but none is being put before us and so we cannot consider it. That is a difficulty. It is also an issue to say that if there was no evidence to reduce it, which we did the last time, we do not therefore need evidence this time. With the greatest respect, that is a difficult argument to accept.
We cannot say that we should just go back to the way we were without evidence to show that it will not have unintended consequences. I am not saying that that would justify it, but it could; it is a foreseeable possibility and we should have evidence to show that we are reasonably certain it will not. We need a decent economic analysis to show the reason it will not. The man in the street will know that if the game changes, the financial model changes and one will have to go back to one's bank, or to one's financiers, to say that the land or units have to be sold back to the local authority at a particular price. That is reasonable to assume. To say that that is not reasonable to assume, it has to be demonstrated why that is not the case.
It has been said that local authorities are acquiring in some areas, and that is absolutely right. Local authorities have the flexibility to do that. In a given area, if they want to acquire units, they now have the flexibility to do that. That is the beauty of the system. However, if it is stated that they "must" acquire a given area, as this legislation does, all flexibility is removed from the local authority to decide that there is enough social housing in an area.
The Department has looked at the research that was raised which states that 10% is enough, but that 10% is not separate from everything else. All these places are connected to other places. Local authorities have to look at the percentage in the broader area. Looking at one development is not a fine-grained assessment of the situation; the percentage around the development has to be looked at. To simply say that we should not care about what is around it and have 25%, regardless of what is needed, means that local authorities will have to spend a significant amount of money, perhaps in areas where the units are quite expensive, where it might not agree that it should. All flexibility to make the decision is removed.
It also means less flexibility in decision-making for a developer. It is important that developers are able to say to local authorities what would assist them in their model. If it works for everybody, that is wonderful, but developers should also be able to say that if they do this, they cannot supply the units because it does not work under their financial model. That has to be taken into account. We have to understand that it might not always work for a developer, but if it does, that is great.
I hope I have addressed logically the points being made.
Mr. Paul Hogan
I understand what was said in relation to the big statement about killing off SDZs. However, there has to be an element of voluntary motivation to act here. There is an assumption that developers and landowners will act rationally. If there is a significant differential for those areas of land, there is a disincentive to act to secure the designation to develop such an area and pursue the objectives of an SDZ. The likelihood is that this will eliminate one of the key advantages.
What was the number of units delivered last year?
Ms Caroline Timmons
I will address that. The information is available on the statistics page of the Department's website, which lists all the units delivered from 2002 to 2018. In 2016, 36 units were acquired under Part 5; in 2017, it was 522 units; and in 2018, it was 841 units. We can provide members of the committee with a copy of that information but it is available on the website, where it is broken down by levels of affordable housing and by local authority and by voluntary and co-operatives. It goes into those numbers, which is useful. It shows that the output went down severely over the years. There was a total of about 9,000 since that provision came in. The output went up significantly up to 2009 and then there was a severe drop off, right back to 36 units in 2016, which is the lowest we have had. We have not seen Part 5 spike it up. The 10% figure is there, but it has not got back to the level at which we need it to be. I hope that those figures are useful.
That information is also on page 12 of the Library and Research Service briefing paper, to which Deputy Eoin Ó Broin alluded.
As there are no more questions, I thank Ms Caroline Timmons, Ms Marian O'Driscoll and Mr. Paul Hogan for attending today and for the ongoing information that they share. I thank all our witnesses and the author of the Bill, Deputy Ó Broin, for their co-operation.