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Joint Committee on Housing, Planning and Local Government debate -
Wednesday, 16 Oct 2019

General Scheme of the Land Development Agency Bill 2019: Discussion (Resumed)

At the request of the broadcasting and recording services, members, witnesses and visitors in the Public Gallery are requested to ensure their mobile telephones are turned off completely or switched to airplane or flight mode, depending on their device, for the duration of the meeting. It is not sufficient to put telephones on silent mode, as there may still be interference with the broadcasting system.

We resume our pre-legislative scrutiny of the general scheme of the Land Development Agency Bill 2019. I welcome Ms Kathryn Meghen and Mr. John O'Mahony from the Royal Institute of the Architects of Ireland; Ms Caroline Spillane and Dr. Kieran Feighan from Engineers Ireland; Mr. Patrick King and Ms Áine Myler from the Society of Chartered Surveyors Ireland; and Mr. James Benson and Mr. Seán O'Neill from the Construction Industry Federation.

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 invite Ms Meghen to make her opening statement.

Ms Kathryn Meghen

I thank the committee for the invitation to attend this meeting. I am chief executive officer of the Royal Institute of the Architects of Ireland, RIAI, and I am joined by my colleague, Mr. O'Mahony, who is our spokesperson on housing. Founded in 1839, the RIAI has 3,900 members and is the support and registration body for architects in Ireland and the membership and support body for architectural technologists. Our mission is to drive excellence in architecture and the built environment, with a focus on developing policy and contributing to legislation that supports a better built environment. The RIAI works to ensure the safety of the public through the efficient and effective administration of the register of architects and the maintenance of standards within architectural education.

The RIAI welcomes the establishment of the Land Development Agency, LDA, as a key pillar in the delivery of the national planning framework and Project Ireland 2040. The challenges we face as a country, including climate change, a growing population, an ageing demographic and new patterns of work, leisure and retail, mean we need new strategies and vehicles to deliver a coherent and high-quality built environment. With the country facing so many critical challenges and having a number of great opportunities, we must now make decisions based on national long-term need. The LDA provides an opportunity to develop sites that meet the national need and move on from the inter-county, intercity and inter-parish debates that so frequently dominate discussions about where and what we build.

We need a coherent, ambitious plan for State-owned lands that focuses on delivering quality and helps to bring stability to the unpredictable housing market. The LDA gives the State the opportunity to drive this change and to lead in delivering a new type of housing that supports quality and innovation. However, we cannot build housing in isolation. The development of each landbank will require an informed study of existing and required infrastructure, the present condition of the site and a well-developed design strategy. The institute recommends that such studies are undertaken prior to the sale of any public landbanks. In the short-term, a pilot scheme should be funded to examine the optimum housing mix potential for each site to ensure that the homes, infrastructure and public realm that are developed are suitable for the people who will live there. There is scope for developing housing schemes based on a multi-generational approach, so that the needs of different cohorts of people, including students, young families and older people, can be met on an integrated basis on the same site. This will help to foster a sense of community in new housing developments and encourage private investment in amenities that match the requirements for everyone living there.

The procurement processes the LDA uses to identify architectural and other built environment professionals must focus on long-term quality and provide a clear pipeline of the work to be commissioned. The agency might consider the principles set out in the RIAI's publication, A Guide to Smart Public Procurement, which provides for a procurement model focused on quality outcomes and ensures that businesses of a range of scales and locations are eligible to tender for works. The RIAI strongly recommends the use of architectural design competitions as an integral part of the LDA's procurement processes to ensure the development of quality architecture.

The RIAI welcomes the draft legislation the committee is examining today, but we do have several observations to make. The objectives of the LDA set out under head 8 are comprehensive. However, we recommend that object 2(c), which concerns the aim of achieving a positive financial return for the State, be interpreted as broadly as possible. The financial return might include stimulation of the development of the wider area, which will bring long-term State benefit.

The functions for the LDA set out under head 9 are likewise comprehensive. Again, we propose that object 3(a), which deals with the establishment and maintenance of a register of relevant public lands, be broadly interpreted. A central register of all publicly owned lands is required to allow for informed decision-making at national level.

In defining the role for the LDA in the proposed legislation, the State should consider developing protocols to enable any uplift in the value of public or private landholdings consequent to rezoning to be either fully allocated to the State or equitably allocated between the State and any private owner affected by rezoning. The uplift in land value may then be used for the public good through infrastructure, public realm development, community development, amenity development and other sustainable developments. Precedents for this approach exist in Scandinavia, the Netherlands, and Germany.

To deliver on its functions successfully, it is important that all of the LDA's powers and resources be made available. The LDA requires sufficient staffing and resources to unlock the potential of sites for new housing. As has occurred with legislation other than the LDA legislation, the intent and ambition are detailed but the tools to deliver are not followed through. To be a success, this cannot be allowed to happen with the LDA.

The choices available to us as to how we develop as a country are reducing. We must take a long-term, holistic view of how and where we deliver our housing and built infrastructure. We must meet new improved standards of building and deliver new models of increased density to ensure the damage to the planet and our impact on climate change are reversed.

The RIAI welcomes the initiative to establish the Land Development Agency and asks that the legislation be progressed as a matter of urgency.

Ms Caroline Spillane

I thank the committee for the invitation to give evidence on this important topic. I am the director general of Engineers Ireland. I am accompanied by Dr. Kieran Feighan, a past president of Engineers Ireland and a chartered engineer. He is joining me in representing our institution at this morning's meeting.

Engineers Ireland is one of the oldest and largest representative bodies on the island, with more than 25,000 members. This membership incorporates all disciplines of engineering, including consulting and contracting organisations, the public sector, semi-State bodies and educational institutions.

Earlier this year, we published The State of Ireland 2019: A review of housing and infrastructure in Ireland, copies of which I have with me. The report's findings are based on the deliberations of an advisory group of engineers and other housing professionals from the public and private sectors. At the launch of the report, we were pleased to get the perspectives of many stakeholders and we hosted a panel discussion that included Mr. John Moran, chairman of the LDA. The report covers five core housing issues, the first of which is "land and supporting infrastructure". We note that urban land redevelopment offers major potential to meet housing demand and to rejuvenate areas of our towns and cities. The State is a significant landowner and should play an active and transformative role in land management.

In this context, there was very strong support among our expert advisory group for the establishment of the LDA. Indeed, one of our key recommendations in our report is to, "Actively manage public land, ensuring the Land Development Agency has a strong mandate and sufficient capacity to coordinate the development of State lands and to assemble strategic land banks from a mixture of public and private lands." Engineers Ireland therefore welcomes the general scheme of the Land Development Agency Bill 2019, which establishes the LDA on a primary legislative basis. We have five recommendations for the Bill, generally relating to head 8, covering the objectives of the LDA, and head 9, covering the functions of the LDA. I will outline each recommendation briefly.

The first recommendation is on clarity on institutional relationships. There are many State and Semi-state organisations involved in or related to land development activities. Indeed, the complexity of the interactions between the landholdings of these bodies partially gave rise to the LDA. Much greater clarity is needed in regard to the hierarchy of objectives, powers and compellability that will govern the interactions of the LDA with a range of State, semi-State and local authority bodies. These include existing local authority functions in planning and land disposal, the potential functions and powers of directly elected mayors, and the statutory role of the National Transport Authority in regard to the integration of transport and land use planning in the greater Dublin area and nationally.

Second, on a co-ordinated approach to infrastructure development, the LDA has major potential to embrace a cross-departmental approach to land management and development. A key constraint to land development and housing construction, however, is the availability and capacity of infrastructure, for example, transport, electricity and water infrastructure. Currently, there is a clear lack of co-ordination in the planning and delivery of infrastructure, with responsibility shared across many bodies. Engineers Ireland has consistently called for a single infrastructure unit, or national infrastructure commission, for the prioritisation, procurement and co-ordination of all key public infrastructure projects.

Third, on compulsory purchase orders, we strongly support the view that the LDA should have sufficient powers to carry out its mandate efficiently and effectively, and we believe these powers should include the power to purchase land compulsorily. Even if these powers are used infrequently, they send an appropriate signal to the market.

Fourth, on having an explicit focus on developing sustainable communities and quality homes, the general scheme of the Bill contains references to supporting the implementation of the national planning framework and having regard to the policy of the Government on proper planning and sustainable development. These references do not go far enough. We are in a climate emergency. Developing sustainable communities must be a fundamental objective of the LDA, added to what is in head 8, subhead 2. For example, LDA-developed communities should have excellent public transport links, highly energy-efficient housing and recreational amenities, and they should promote biodiversity.

Fifth, with regard to resources and professional competence, the LDA should directly employ qualified professional construction specialists, including chartered engineers, so that it has the in-house skills and expertise to manage the buildings, infrastructure and land assets, and liabilities of those assets, on its register. These competences will enable the LDA to maximise potential for sustainable housing development, but also the strong element of asset management that could be crucial in fulfilling its objectives. Furthermore, if the LDA is to provide professional services to relevant public bodies, as stated in the general scheme, these competences will be crucial.

The potential for the work of the LDA to transform Ireland's approach to land management should not be underestimated. However, the LDA must have a strong legislative mandate and should be well governed and adequately resourced with funding and expertise to grasp fully these opportunities for environmental, social and economic transformation.

Mr. Patrick King

I am director of policy and corporate services at the Society of Chartered Surveyors Ireland, SCSI, and Ms Áine Myler is a chartered valuation surveyor. Our professional membership is involved in the full life cycle of the built environment, from site planning and development to construction, sale and occupation management. Our members, comprising nearly 5,000 professionals throughout the country, are employed in private, public, not-for-profit and academic institutions.

The society has long supported the creation of a body with a remit to unlock the potential of State-owned lands to address Ireland's current and long-term housing and infrastructural needs. Developing a body to utilise State assets effectively and efficiently in a way that fosters long-term strategic benefits for society warrants universal support. It is evident that Ireland faces significant global and domestic short and long-term challenges, from global warming to the housing crisis, in delivering on the goals of Project Ireland. Therefore, a single body tasked with implementing and contributing to the strategic vision would represent a positive step. The society believes that the objectives outlined in Part 2, under head 8, need to be better aligned with the strategic objectives for the body, similar to the general objectives of the Dublin Transport Authority, which has become the National Transport Authority.

One of the core responsibilities and objectives of the LDA is to unlock key public assets, and indeed private assets, to serve society. Housing and homelessness comprise one of the most significant issues that I hope will be addressed with the help of the LDA. This should be recognised under head 8. We feel that the land cost component has yet to be grasped in public policy in the overall housing delivery program. Now that we are in a property price stabilisation environment, particularly in Dublin, the land cost component still represents 30% to 50% of the overall delivery cost of new housing. We feel this is too high.

The availability and affordability of serviced land is a significant contributor to the overall affordability of apartments in urban centres. There is high competition for well-located, zoned and serviced land. Given the high demand for this type of asset, many developers will take a long-term approach in terms of capital appreciation and therefore may be prepared to pay high prices for land. The cost breakdowns in our reports show the site purchase cost per apartment unit ranged from €33,000, for a suburban low-density development, to €125,000, for a high-density urban development.

Our study found that one site, the first, is affordable for the average income while the other one is not. This is a significant range with a huge impact on viability and affordability, which should be reflected in the objects of the Bill.

The relationship and collaboration between key partners and the LDA are essential to prevent mistakes in poor planning, short-term gains and costly errors regarding the provision of services. The National Economic and Social Council, NESC, in its report, stated that, "Effective active land management involves public authorities working with a range of private and non-for-profit development and housing organisations." A key component of this relationship will be planning. The society sees the usefulness of strategic development zones not only to provide planning clarity but also shared vision and speed of implementation for the LDA, local authorities and their private partners. It will be useful for the LDA to engage in these policies and this should be reflected in the Bill.

Looking longer term, the acquiring of private land in conjunction with these partners will be an important role for the LDA. The society has contributed to the Law Reform Commission's review of this aspect of land law and believes that action on those findings will be a prerequisite to the achievement of the objectives of the Land Development Agency as well as Project Ireland 2040.

The society welcomes the conclusion, under head 9(2)(h), which will allow the LDA to provide a more fundamental area of support to public bodies. There is a clear need to develop public sector expertise in the area of property and construction. Building this capacity within the public sector is much needed to ensure the public as a client has the best advice that it can get when negotiating with private partners.

The society has been encouraged by progress on its long-standing recommendation for mapping of all State-owned land. The LDA's work with Ordnance Survey Ireland, OSI, Departments and agencies has demonstrated the importance of removing silos and adopting a holistic approach to State-owned lands and their potential uses. Any strategic review requires a complete survey of assets. From this point, it is then possible to plan and measure the impact of their use to maximise the efficiency and productivity of State-owned land. Therefore, we welcome head 9(3)(a) to "establish and maintain a register of relevant public lands" to implement the national planning framework. The society suggests that, in the interests of transparency and good governance, this is maintained as a public register.

It is often said that we tend to overestimate the impact of change in the short term but underestimate the effect in the long term. The society welcomes the creation of the Land Development Agency and believes that, with an ambitious remit under head 8 and a robust approach to governance as part of head 9, as well as the supporting policies being put in place by the Legislature, it can achieve long-term strategy benefit for society.

I thank Mr. King. I now call Mr. Benson to make his opening statement.

Mr. James Benson

I thank the committee for the opportunity to talk about the general scheme of the Land Development Agency Bill 2019. I sit as the housing director representing the federation and the Irish Home Builders Association. I am joined by Mr. Seán O’Neill, vice-chairman of the Irish Home Builders Association, today.

Most commentators agree that Ireland needs an annual housing output of between 25,000 and 45,000 homes. This year, the CIF expects output to reach approximately 22,000. Of these, up to 40% could be one-off homes outside the parameters in Project Ireland 2040.

The CIF welcomes the Land Development Agency and acknowledges it has a significant part to play in ensuring the correct level of social and affordable housing for the State is delivered. It also has a role to enable development in regions, towns and communities identified as key in Project Ireland 2040.

If the LDA is calibrated correctly, it could become another part of an effective suite of measures, including Home Building Finance Ireland, the local infrastructure housing activation fund and the help-to-buy scheme that are starting to address the market failure in finance in home building. It could play a major role in addressing several affordability gaps stymieing efforts to increase supply currently.

Our analysis has identified a significant affordability gap for young couples. At the current average house prices, a couple earning under €93,000 combined will have to save for four years, even with the help-to-buy scheme, to save a deposit for the average Dublin home. A couple in Meath or Kildare would have to save for 15 years. This affordability gap is consigning couples to rental purgatory, and we are suggesting that the Government adopt a shared equity scheme, similar to that in operation in the UK, to help bridge this affordability gap. The CIF believes that this affordability gap will only expand over the coming years as construction costs increase, demand remains tight and regulation continues to increase the cost of home building.

As the committee will be aware, a functioning market requires people who can purchase, builders who can build and banks that can lend. Where prices are below the cost of construction, builders cannot secure finance to build, meaning potential purchasers are excluded from the market. This is the reason home building outside the greater Dublin area, GDA, has remained depressed. The LDA has the potential to license State lands to home builders in these areas, essentially removing land prices from construction costs. In this case, the Land Development Agency is intervening in areas where house building is restricted by the current financial model. This is an essential role, in the context of Project Ireland 2040, where cities, towns and communities outside the greater Dublin area must grow at twice the rate of the capital over the next 25 years.

The CIF is downgrading its estimates for housing completions in 2019 to just under 22,000. Social and affordable new builds are likely, due to the market dynamics, to be only a fraction of this output, with viability and availability of infrastructure key constraints in this.

The industry believes that the LDA is best placed to enable the delivery of social and affordable housing by license where it is simply not viable for home builders to secure finance to deliver units. In addition, if the LDA identifies the correct State lands for development, it would result in increasing the development potential for adjacent lands owned by home builders that are currently unviable. For example, connecting a State-owned site to infrastructure and utilities could conceivably mean other surrounding sites would then also become viable for development. This will require transparent and effective collaboration between national and local government and the private sector. This blended approach will prevent a counterproductive situation whereby the LDA effectively replaces the SME home builder while only marginally increasing the level of housing output. The principle of additionality should be applied in consideration of the selection of State lands to develop.

It is critical for a fully functioning market that the LDA provides full transparency in terms of the landbanks being prioritised for development, and with timescales. An approach similar to the Government's national development plan infrastructure tracker could be adopted for the LDA's portfolio, where a clear pipeline of projects has been identified and updated in real time. The agency will also require, in our opinion, greater powers to obtain critical State lands in a speedy manner to begin developments as soon as possible in the face of increasing construction, land and labour costs that can erode value where developments are delayed.

As specialists in the area and the market, home builders and developers are well placed to provide advice to the LDA on development issues, typologies and timeframes, and as such should partner with the agency. As part of this process, we believe that the LDA should only issue performance specifications as to what is required for tender to developers. This will allow developers apply their expertise within the regulatory regime to deliver quality homes. We would suggest the LDA also completes preparatory work for site pre-development for maximum efficiency.

Finally, the SME home building sector has undergone a traumatic decade. The LDA should ensure that its qualification requirements do not effectively exclude SMEs from securing licences in the future.

I thank Mr. Benson. I will call members of the committee to ask questions in the order in which they indicated. The Deputies each have five minutes initially and then we can go back for a second round.

I thank the witnesses for the useful presentations. There are many good suggestions in terms of amendments that some of us are considering for the legislation.

They probably know, if they paid attention to the previous hearings, or they will get a clear sense from the discussion today, that we are in a bit of a dilemma in this committee. We all want the Land Development Agency and we all want it do many of the things they outlined, but we will get one crack at this legislation. We have many concerns, although we do not have the full detail of the proposed Bill, with the direction the proposed Bill is going in. The witnesses should not take any of my questions or comments as opposition to the principle of what we are dealing with here but more the substance in front of us. My questions are for all four organisations.

Obviously, a big bit of this is not only the management of land but, as was stated in one of the presentations, the land cost component, and the issue of land value capture and land value extraction. It is one of the thorniest issues that we must try and deal with. I would like their thoughts on how the LDA can best deal with land costs, in terms of trying to depress or moderate them but also ensure that the public gets the best outcome in terms of the value extraction from it.

There are some general comments there but we are very keen to hear more about whether the Land Development Agency, LDA, is in the business of acquiring and developing out land, and in practical terms how it can best deal with those issues of moderating land prices and ensuring the public captures the value.

One of the big concerns some of us have is that while the LDA is currently constituted as a non-commercial semi-State body, this legislation would turn it into an independent commercial designated activities company, DAC. This provides the potential for a very clear conflict of interest between its requirement to get a commercial return and the social and environmental objectives that have been outlined by pretty much everyone here. Do the witnesses have a view on whether or not an independent commercial DAC is the right vehicle for that?

Climate change was referred to in a number of the presentations. Clearly, if we are to meet those climate change challenges if there is a question over commercial return versus long-term climate responsibilities where would the balance lie and what is the best way to try to tackle that?

All the representatives' organisations have spoken to us before, and some of them have done very important research, including that done by the Society of Chartered Surveyors Ireland, around affordability, viability and development costs. The committee had very interesting conversations yesterday around the affordable housing component of what the LDA does, and whether its delivery model is a cost model or a discount from market value model. Do the witnesses have views and thoughts on that? For example, what we are seeing at O'Devaney Gardens, because they are applying the market value at a discount, is still working out very expensive for the taxpayer and the purchaser. Where does the balance of that lie?

I have three further questions. With regard to compulsory purchase order powers we are hearing from the Department that it may bring CPO powers into the Bill at a later stage, but that it would be for ransom strips of land that are small pieces of land needed to resolve access issues, rather than for fuller powers. What are the witnesses views on that? Can the LDA do its cost component work if it does not have broader CPO powers?

Although the 10% social and 30% affordable ratio is a minimum, clearly if the LDA is to remain off balance sheet it would become the norm. Given the enormous housing crisis, and especially in affordable housing, do the representatives have a view on whether that should be a higher portion? The proposed legislation does not even mention the delivery of social housing and affordable housing, which are not mentioned explicitly in the aims and objectives under headings 8 or 9.

In Dublin city especially we are noticing that public housing projects tender prices are coming in at very high levels. They are way above the increases in costs of construction. We are aware of where construction cost inflation is going. We are seeing astronomical prices coming in for projects where there is no land costs and all sorts of other development costs that are not factored in. How do we, in the context of the LDA, ensure that it does not become victim to a very small number of competitors in the marketplace? Is it about breaking the lots up? Is it about reforming the procurement and tendering process? Even if we get the LDA right, if a tender goes out then ultimately prices will be set by the market. There are only four or five big players who can do big development projects. Many of the smaller and medium sized members of the Construction Industry Federation would be squeezed out. How do we get them in to maximise the competition and bring down the price?

I apologise but I must leave for another engagement at 10.30 a.m but I will follow everything up in the transcript if I do not get back.

I thank Deputy Ó Broin. Given that the Deputy has concluded by mentioning the Construction Industry Federation I will go to its representatives first. Then we will take responses organisation by organisation.

Mr. James Benson

I thank the Deputy for his comments. I will cover some of the elements of the questions in reverse order. The Deputy referred to prices and the costs in the construction industry. At the outset one can see that the land price is a major issue in that regard. Removing that cost would allow for taking away most of the risk, and one could see a reduced profit margin there. The riskier element being removed so substantially would see a lower margin required by the construction industry.

I contend that there is still quite an inflation in labour costs now, which we have not seen in the last ten years. We have seen increases in the minimum wage rates that were required, and first introduced through the sectoral employment order for the construction sector in 2017. It resulted in a 15% increase in wage rates. That is coupled with an increase on 1 October of a further 2.7%, which will increase again next year by a further 2.7%. That element of costs is continually creeping up. When we look at the hard costs of a build, to comply with the regulations currently, I estimate that over the past four years there has been an increase in costs of up to €20,000 to comply with such regulations as parts L and F and what is coming down the line for part B and changes to part C. There are numerous increases involved there. There is the requirement to deliver a far superior product, which was the case even at the end of the recession around 2011. Given some of these elements, even if the land costs are taken away, we might see a question around competitive or tender prices on it.

The Deputy referred to breaking up the lots. I would agree. There is huge concern from the bulk of the SME companies that make up the majority of the construction industry, that there would be some sort of mechanism put in place through the LDA for an allotment and for those licences to be broken up so it would not just be whole lots given off, so there would be no disadvantage to the industry.

The Deputy also spoke of securing a blended mix of tenure within the communities and constituencies. This will be key to the set up of the agency. I will now close off from our own side again, which echo the thoughts and concerns of the Deputy around CPO powers. We addressed that in our opening statement. There will be a critical need for this to happen in a speedy manner to ensure that developments can happen as soon as possible. Even looking down from projections, and even with the legislation going through, we could be looking at 2021 before we start to see shovels in the ground and this moving on. We are looking at needing up to 45,000 units to be delivered by 2024. This is only a five-year period. Getting up productivity to that point will be a challenge. Everything that can be done in a speedy manner to aid that, both fairly and competitively, would be encouraged.

I thank Mr. Benson. We will now call representatives from the Society of Chartered Surveyors Ireland and Mr. King and Ms Myler.

Ms Áine Myler

I will start at the top in relation to land values. The very raison d'être for this organisation is the fact that we have not managed our land or taken a long-term view of it. In my own precessional view I believe we have to take the hit at this point in time in terms of what land values are, extant in the marketplace. If we take a longer-term vision for the management of our land stock so that we buy cheap and use high, which is an analogy for it, then the land costs are neutralised over the long term. We are dealing with short, medium and long-term issues now. There is not much the LDA can do in a market that is hot for land to reduce costs of acquisition. One would imagine that State agencies, Government bodies and local authorities would want to come together to develop a process whereby any State land that is usable for social and affordable housing will be used for that purpose, whatever the minimum cost is of transfer to the Land Development Agency.

Our view of the Land Development Agency is not that it is actually going to go out and build houses itself. If it is doing its job properly, it will be a strategic organisation that facilitates the market to deliver social and affordable housing, and other forms of development as is held in the general scheme of the Bill. I take the point made by the Construction Industry Federation that the inclusion of the smaller players around the country is exceptionally important. We have a couple of really big players, where we could have a monopolistic position in a relatively short period of time if we do not look at bringing in the smaller players. Getting sites ready, putting in the infrastructure and licensing out the sites are all key components. This is a strategic piece of what the LDA should be doing. Other issues such as tax policies can also play into land, as do the constitutional rights of private property holders. Reference was made by one of the other organisations to sharing any uplift on the rezoning of land. This is a very useful way that we could develop policy. It could be the case that the public shares in that uplift and not just the landowners.

On the cost model, if we have an organisation that can take a long-term view then our long-term view could be very much cost model based. It was the sense that many local authorities delivered their social housing over many years. It was a cost model provision because they could take a long-term view. That is critically important for our housing provision.

On compulsory purchase orders, I am active in that area as a professional. CPO powers will be critically important to the agency in order so that it can operate on an effective basis. That power of compellability, in itself, is a useful tool. It may not be necessary to use it but it is very important. However, bigger issues arise regarding the operation of the CPO process. A root and branch review of the legislation and the arbitration process is needed. We have already made a significant submission to the Law Reform Commission on that basis.

Will Ms Myler send the submission to the committee? It would certainly be useful.

Ms Áine Myler

I am happy to do that. We have also made a submission to the Courts Service on the arbitration process. We will be happy to share those submissions with the committee.

I agree with the Deputy on the idea that there are percentages placed against social and affordable housing. All housing should be affordable, other than for those who do not need it to be affordable. That should only be the 10% of people who can write a big cheque. Affordability is not just financial. The definition of affordability should be examined by the Land Development Agency, LDA, because it can develop a long-term vision.

On tender prices, it is very challenging at this time for procuring agencies to see the detail within tenders and the reason prices are shifting. The society, and other bodies, have come together with international agencies to develop international construction measurement standards, which the Office of Government Procurement, OGP, is looking at. It is hoped these will help procuring agencies to be able to compare and contrast with other jurisdictions each stage of construction costs in other areas and the reason cost is necessarily a factor in certain parts of a construction project here versus in other jurisdictions. I am aware that materials, labour and every other cost, as well as regulation, have driven up costs very significantly in the recent past.

I ask Dr. Feighan and Ms Spillane from Engineers Ireland to respond.

Dr. Kieran Feighan

I will address some of Deputy Ó Broin's questions. Our professional colleagues have addressed some of them and I am sure the witnesses from the Royal Institute of Architects of Ireland will have a view also.

On the Deputy's first point about land value extraction and how to moderate or depress prices, there is a relationship between that and his question on compulsory purchase orders. As we stated in our submission, we are of the strong view that the authorities should have the power to issue compulsory purchase orders. Clearly, this can, in certain circumstances, impact on the land values, the purchase price and, ultimately, the cost of delivery.

The Deputy also asked where the balance lies between commercial activities and climate change or sustainability. As we stated in our submission, it is critical that this authority takes on board the principles of sustainability in delivering the units. Whether it delivers them directly or indirectly, the principle of sustainability and the need to provide the right housing in the right place at the right price are critical. While we have welcomed the commercial aspect of the agency, we believe it is critically important that we take on board that need for balance.

On the wider point of determining the various functions the committee has set out and the discussions it is having about the balance to be struck, there are a number of different ways to benchmark the performance of the agency. Some of these relate to commercial return, the number of units it delivers, the location of the units that are delivered, sustainability and so on. It is important that, through this committee and the legislation, some prioritisation or ranking is given to the benchmarking and the parameters by which, ultimately, the success or failure of the LDA will be determined.

I ask the witnesses from the Royal Institute of Architects of Ireland to respond.

Mr. John O'Mahony

Coming at the end, it is natural for me to say I agree with everything that has been said. I will make a couple of observations about land value capture. In Copenhagen, the authorities had a very interesting model where the port was effectively set up as an LDA-type organisation. The land it owned, which was the port lands and a very large military site on the edge of the city, were rezoned. The uplift in the value was used to build a metro and link the lands through the city. This was a very interesting way of using real value. There may be opportunities when we look at the value that might apply to lands the LDA buys-----

Was that value from the sale of the land and the use of it?

Mr. John O'Mahony

It was from the uplift in the value. At the time, it was port industrial lands. With the uplift to mixed use and residential, the difference was brokered to borrow to build the metro.

In terms of the non-commercial nature, I know this is like a poison but when it was first set up, the Dublin Docklands Development Authority, DDDA, was a very effective and efficient organisation. It did what it said on the tin. It remediated land, did public private partnerships with the private sector and delivered social housing in an effective and efficient way, rolling it out incrementally so that we did not end up with sporadic development. Given the way it was structured after that, we have to look carefully at how it lost the run of itself. In its initial format, however, the DDDA worked very efficiently.

I agree with the Society of Chartered Surveyors of Ireland on affordability. Cost model is one of the best models to be used to roll out proper affordable and social housing. We support making CPO powers available, if only as a deterrent. They are unlikely to be used but in certain instances it may be necessary to use them.

There should definitely be flexibility in the percentages of social and affordable housing. People forget that site location has a major impact on value. People also forget that well over half of the population fall into the social and affordable category. In some instances, the entire site should probably be used for affordable housing and developed out in that way, whereas in other sites where there may be large value uplift, passing that on would have to be very carefully considered. It might be better to use the uplift in value there to subsidise other sites elsewhere.

In terms of how to get small builders involved, the LDA appears to be structured to do that in that it can license out in smaller packages. In the way it has developed as a designer, we normally design in phased development. On phased development, there is a very good model in Germany which breaks up plots. Instead of having what I would describe as mono-tenure or mono-typology on each plot, within each plot of land there is a social component, an affordable component and a private component. This may amount to only 50 or 60 units. By delivering that type of a model of usage, one gets diverse tenancy and architecture on sites. One also brings in so many different typologies of development, whether co-operative, social or affordable. The LDA is an ideal organisation to start looking at how we might do that.

I thank Mr. O'Mahony. He added a great deal to the discussion despite being last in the queue.

I thank all the witnesses for their presentations. I am sorry I missed the start of them but I read the opening statements in advance of the meeting. To provide some context, this is the fourth meeting we have had on this legislation. My colleague, Deputy Ó Broin, has covered a number of issues. In saying that members have concerns, I am not being obstructionist in any way.

A common trend across all the presentations is that the witnesses see potentially positive aspects of a land management or land development agency. That is what we want to see. What I do not want is for the agency to become another layer and that is a concern. I have already seen that in some areas where lands have been identified already by the Land Development Agency and significant work has already been done to bring these lands to master plans and so on. Are we waiting for the establishment of this agency to do something with these? My general concern is about all the things we should be doing.

A number of the witnesses addressed the issue of procurement. Is this effectively a mechanism to avoid doing anything or changing anything until the agency is established? I ask that because I believe the agency should not have been established in advance of us seeing the legislation, or at least the heads of the Bill, to find out what it would do.

We have mentioned the need for CPO powers, freedom of information and issues around the lobbying Act, tendering and social value clauses in the procurement process. There is a lot that is not there but the agency is established, which I think is putting the cart before the horse.

It is absolutely necessary to get the smaller players involved, in design as well as construction, as we have an overdependence on a small number of bigger players to deliver commercial and residential projects and State infrastructure projects. How can we get them involved? What makes us think this agency will be any different from any other State agency? Are there any examples in this State of unbundling contracts to allow the smaller players to get a piece of the pie? Ten years ago, there was a report of the Committee of Public Accounts on this issue in public procurement, which found we were the second worst in Europe for utilising our own resources and assisting our own economy through the State. If the Land Development Agency gets a parcel of land, how will it be unbundled? Is there a risk the agency will act like other agencies, such as the HSE, which look for the lowest costs when giving big contracts instead of looking at their social value?

There is a need for affordable housing and for affordability in the market. I agree with Ms Myler that it would be good if we did not need a scheme in the future and if affordability simply permeated through the market. Section 98 of the Planning and Development Act has the proper definition of "affordable" because it is not based on the discount and market rate and it is for local authorities to set eligibility. What does the CIF see as the best way to establish an affordable housing scheme using State lands? We discussed Holland and other European countries and spoke about selling the land but we do not need to sell all the land. This is driven with a view to providing a commercial return to the State but that is not necessarily the way we should do it and by delivering houses and good quality homes for people we will yield a long-term saving to the State. What about long-term leasing of lands and other arrangements such as are available in other countries, where the State retains ownership of the land?

Licensing arrangements are very important and Ms Meghen mentioned a smart guide to public procurement, on which the RIA, the CIF and others have done work. Have we any examples of local authorities or State bodies using licensing arrangements to get smaller players back into the market? Last year, I negotiated a provision whereby the local authorities could carry out their own tenders of up to €6 million, which would involve social housing estates of between 40 and 45 houses. It would speed things up a bit and most local authorities have the expertise to do that. It was not done this year, which was something we revisited in the budget, but it gave them a bit of freedom and the autonomy to do it. It was suggested it would be reckless to allow local authorities to spend €6 million and Deputy Casey referred to this. We are giving this agency €1.25 billion, for which the taxpayer would be on the hook because there is some risk to it. The prospect of releasing equity based on land values was raised, for such projects as the metro, but things could easily go the other way. A lot of good work was done by the DDDA but the crash showed the exposure such agencies had.

I would be grateful if Ms Myler expanded on the CPO piece. Many of the measures the witnesses mentioned are things we should be doing anyway, without waiting for the LDA to be established. There will be a series of meetings and a report will be produced on a Bill that may not even pass in advance of an election. I do not want to have to revisit all of this next year.

Ms Kathryn Meghen

We were asked if any agencies had done procurement in ways that supported smaller companies. The Office of Public Works has done it, as have the Department of Education and Skills and the HSE. The OPW has split projects so that it had a lower threshold for smaller projects. It sets them up with a clear understanding of the nature of the businesses that are tendering. We consistently see that those who put together the tender documents do not know or understand the service or the product they are buying. They are setting the bar too high or are asking the wrong questions. The Department of Education and Skills has a good model which has a very low threshold for very small works and has a ladder process, so that once a company does one project and does it well, it is eligible for a project at the next level up. In architecture we see large practices doing very well with commercial projects here and internationally, but small practices do very small work while the middle is disappearing. For regional development and innovation, unless we have a spread of architectural practices and other construction professionals and contracting businesses, we are storing up another problem for ourselves. The HSE has a system for smaller projects in which it identifies three or four to go on to the framework and then adds a wild card. All the tenders have to meet a certain threshold but it is low and picking out a wild card means newer businesses are able to get into the model.

Mr. John O'Mahony

In tendering, we eliminate the highest and the lowest, which helps to eliminate lowballing which goes on in all areas of tendering. On the question of getting small architects involved in larger projects, when the Adamstown district centre was being designed seven architects worked on different plots under one oversight body. This encouraged a greater diversity of design and thinking and the same can apply to large housing schemes. It can be managed and it should be encouraged.

The Deputy asked about leasing and that is a very good idea which should be encouraged as it would help retain land within our ownership.

We want to be able to recycle our social housing. The ability to be able to take back social housing and recycle it is very important so we are not giving away value and blocking out social housing to tenants.

There was also the land cost issue.

We now go to Engineers Ireland.

Dr. Kieran Feighan

I will deal with some of the items and our director general will deal with the others. The Deputy's starting point about not wanting to add another layer is very pertinent. Our submission referred to the need for clarity on the institutional relationships that will come, and there is obviously a big interaction between what the local authorities are currently, their current powers and the powers directly-elected mayors may have, and the powers or lack of powers that the Land Development Agency, LDA, may have. Even after the LDA is established on a statutory basis, there is still a significant potential for delay in the delivery of schemes because it is not at all clear how those relative balances will evolve in those institutions.

The Deputy spoke about how to get smaller players involved. As the RIAI noted, we have seen the use of frameworks rather than doing it contract by contract, and having a framework in place so a large number players are available and, then, on a pot by pot basis, rolling those out. I believe that has been successful. I also echo what the RIAI said about the use of mechanisms, such as wild card and high-low, to make sure that we are giving all the players some opportunity to participate.

I will defer to Ms Spillane on affordability.

Ms Caroline Spillane

We feel that affordability should be an explicit objective for a body like the LDA. NESC, in its submission to the committee, talked about this notion of engineering affordability into the supply of housing. Having a supply of housing does not necessarily equate to the housing being affordable. One of the key measures that could be considered, which the committee has heard before, is the whole notion of cost rental, where affordability is considered to be permanent because the rents cover the costs and the equity that accrues as the loans are repaid creates this notion of a revolving fund that is then plugged into ensuring that further land is available, and that the amenities and services to the land remain of high quality.

We turn now to the Society of Chartered Surveyors of Ireland.

Ms Áine Myler

Looking at the establishment of the LDA, it would be a good job for it to have a public portfolio register, and it would be a good start for it at this point in time to have things mapped, visible and transparent. To even have that as a specific purpose of the agency is a very important part for public trust, apart from anything else, but also for proper planning. If that is something which is in the objectives of this group, it is a very good start for every facet of what we want to do with our country.

The public service data strategy is very much involved in the provision of that type of information, first, to the public sector, but it is then also available to the rest of us in the commercial field.

I want to go back to the Deputy's point about tendering and the licensing piece, which are probably joined up. We did a survey of our members a while ago and found that, in 2015, some 70% said they were involved in some way or another with public projects whereas that figure is now less than 40%. I would think that is a reflection of many of our professions and industry sectors where, when commercial projects are available, they will opt for the commercial market and will opt out of the public sector. I know many local authorities in particular are finding it very difficult to get people to tender, even for small jobs, because it is easier to do the commercial work, which is quicker and cleaner and there is a designated client. While this might be unpalatable to hear, it is just that essence. Business is more easily done, or that is the perception of the fact. There may be great schemes in place, and I know many organisations are involved in them, and it is the same for professional services. However, while small firms, medium-size firms and larger firms would be on those frameworks, frankly, to get people to engage in them is the challenge, not to develop the process. I believe the LDA will be a case in point.

I take the Deputy's point about the fact we have this fragmentation and we have too many agencies. We have four local authorities in Dublin but we have no business having four local authorities in Dublin, given the size of the city. We can look at bigger cities in the UK and see they have one. If we want to know why we have not managed our processes to date, it is because we have a proliferation of agencies, all crossing each other and with nothing actually happening at the end of the day. I am not a political person so I am allowed to say things like this but, frankly, the Deputy is right. If we just put in another layer on top of other layers, maybe some other layers will have to be subsumed into this one, and perhaps that is the sort of project we are looking for at this time.

Will it be a fix? Only if it is given the right powers and resources to do this. A real culture is starting to be developed all the way through. It is actually seen as a resource for public bodies such as local authorities and other agencies to go to for access to that sort of expertise in housing at a strategic level, although not at an operational level.

On the extra layer, I am saying this as a Fingallian and someone who is from Fingal. We have to accept the local authorities are genuinely trying to deliver social housing but they have not been given the go-ahead to deliver affordable housing yet. Does Ms Myler see the LDA in this guise actually taking that over from the local authorities or does she see both doing it?

Ms Áine Myler

That collaboration piece is very important. I lived for the first 22 years of my life in social housing. There has been this idea that it is delivered in some sort of a silo and it is only local authorities that deliver it, that it is only delivered in the one location and everybody has to live in one huge development, marked out as social housing. Mr. O'Mahony of the RIAI talked of a tiered approach to tenure in schemes, which is something that, potentially, the LDA and local authorities could work on together. It is not supposed to be about splendid isolation; it is supposed to be shared living across a number of different property uses.

I do not really understand the long-term leasing of land provision, in particular who would pay the rent. Under our legislation, one cannot create ground rents on houses so I am not sure who would fund that, although I understand the Deputy's point.

The retention of stock has already been mentioned. We sold our public stock at the lowest point in our market and, really and truly, albeit that my parents were recipients under the local authority purchase scheme, I would have to say that, in the long-term interest of the State, we have to look at recycling the stock that we create. It is too expensive to provide it and then sell it at a discount. If not all of it, certainly some proportion needs to be retained.

I could speak ad nauseam on the CPO piece.

Will Ms Myler send us the information?

Ms Áine Myler

Yes, we will. If the Deputy needs any other details, we are happy to answer on those.

I call the Construction Industry Federation.

Mr. James Benson

I echo the point made in our opening statement and in the comments from our counterparts here today. The identification of the portfolio piece at a very early stage will be key not just for consumer interests but to have a level playing field for all those within the industry. A potential tracker as to how that would be monitored for a clear pipeline that would update in real-time is something that will be required of the LDA.

On the layer piece, a key word mentioned was "collaboration", which will be needed on a couple of fronts. Very ambitious targets are required to be set out in the coming years and it will take all hands at the pump to deliver that in the different sectors. A couple of bodies will be needed to accomplish that. One point we would want to see in the legislation is the early involvement of the industry and professional bodies. We do not want to get to a very prescriptive stage with regard to tendering. The expertise within the market as to what will be suitable and appealing as a tenure in the future will be important under the LDA.

On the leasing side, we have seen significant changes in the leasing models and there have been some proactive local authorities in recent times. It provides a viable funding model for many of the regions, which we should not forget about. This is sometimes just not viable in regional Ireland because there are issues with funding. To have that model would provide a viable alternative in many cases, and it is something we would encourage.

Financing is key to the licence agreements. At the moment, financing is a massive issue for the industry and it is just not there.

It is probably one of the biggest inhibitors we have seen to increasing delivery in recent years outside the greater Dublin area. It is difficult within the greater Dublin area; outside it is virtually impossible. A licensing agreement that can provide a mechanism to help that funding model will be greatly appreciated.

I might ask Mr. O'Neill to talk about the qualification requirements.

Mr. Seán O'Neill

I agree with what Deputy Darragh O'Brien said. We represent all the house builders in Ireland. Many of the small and medium-sized builders in Dublin and further afield have had their balance sheets broken. As we said in our opening statement, they have effectively gone through ten years of nothing happening. When it comes to procurement, whether from an LDA or local authority perspective, these guys need flexibility. They cannot be looked on as basket cases. One has to take into account the journey they have been on. It is something that has been almost ignored in the discussion.

On the affordability issue, there is a lack of understanding of the true cost of developing apartments and houses. I did a quick analysis yesterday. We are in the process of tendering so this is live data. The cost of building an 800 sq. ft two-bedroom apartment is exactly the same as a 1,600 sq. ft four-bedroom house. We are not a basket-case country. In the US and Canada, and on the Continent, everyone is suffering from increased costs due to regulation. No one wants to say regulation is not a good thing; we all want to embrace regulation and build to the best standards. However, first-time buyers are like people buying their first car; they want to buy a Volkswagen Golf and not a Tesla. Whereas with the housing market, we are trying to deliver a Tesla to the first-time buyer. That is creating a major affordability gap and it needs to be addressed.

There have been suggestions about how the LDA can help that by having the land come in at a lower value than what the private market is paying for it. That is part of the solution. Having said that, committee members have made reference to the land market and I believe the land market has softened. Many sites are not moving in the market. Approximately three years ago, land was moving very fast and at very high prices. Most members of the IHPA stayed out of the land market because they just could not afford to compete in it. I can see that in our own valuations with banks. Land values are beginning to soften.

A big part of the land value softening is related to the increase in construction costs. We are seeing increasing construction costs. We are tendering to small and medium-sized contractors as well as very large contractors, and we are seeing increasing costs. Much of it relates to the lack of resources in the industry. We are competing with other countries for materials. We are competing with all the big countries in Europe for insulation products, steel etc. We need to pay the same price or even more to get it into our supply chain. People regard affordability as being a house at €300,000. It is very hard to produce it at that level even with a very low land value.

The committee has discussed the matter and I intend to propose that it does a forensic, deep-dive review of construction costs and the factors that are inhibiting us from realising our house-building potential now. When looked at line by line, it is surprising to find the components that add up to a house and particularly an apartment. Dr. Ronan Lyons suggested analysing construction costs in his report to the committee in 2016. That would be worthwhile and we intend to return to it, all being well, in the coming weeks.

Mr. Seán O'Neill

The IHPA is doing an analysis with a number of architects and cost consultants. On the density issue and the 35 per ha problem, we are looking at how the housing issue can be addressed with easing of the regulations to reduce, for example, the size of our back gardens. We are looking at how we can bring a cheaper product with the same quality. It would be more housing and maybe removing some of the apartments from the scheme but still achieving those types of densities. While it can be done at 35 per ha, when one gets up into 50 or 60 per ha, one needs to deliver apartments; there is no other way around it. We need to get everybody to understand the message about the cost differential between houses and apartments because it is getting lost in the discussion.

I agree. Mr. O'Neill spoke about live data. I would be grateful if he could provide a written submission to us with whatever he can within the constraints of commercial sensitivity.

While I will try not to, it is hard not to bring up the same issues. Everybody is focused on how we can deliver affordable housing. We might have different views on how that is achieved, but that is the ultimate aim of everyone present.

It is disappointing that 60% of State land is to be used for private housing. I have a fundamental problem with that. Is this adding another layer to the bureaucracy? At the moment local authorities and AHBs are delivering social housing. The LDA is now moving into that sphere. There is nothing to stop the local authorities and AHBs sitting down and negotiating with the agency as opposed to the Department to finish out sites.

On oversight, at the moment local authorities and AHBs need to go through the four-stage approval process in the Department. The Minister suggested that they do not have the capability to manage €6 million without going through the four-stage Department approval process. However, it could go to the LDA and there does not seem to be any oversight or processes in place. I am becoming concerned about the complexity of the situation. Who will ultimately be responsible for the delivery of housing? Is it the LDA, the local authorities or the AHBs? Where does the Department fit into this process? Who will continue to fund the agency into the future? As Ms Orla Hegarty said yesterday, the €1.25 billion will deliver 5,000 units, which is only a starting point. Do the witnesses believe there is enough oversight of the LDA?

Has the democratic process been taken out in the establishment of the LDA? What function does it have regarding its sites agreeing with local area plans and county plans? Strategic housing development can go straight to the An Bord Pleanála, which can use national regulations that supersede local area plans or county development plans. We are beginning to see that in our towns at the moment, where much higher density is being achieved where a local area plan would have used a lower density. I have an issue with the democratic process and the input that the public have into that process. They have no say in what the LDA does; they have a key say in their county development plan.

On affordability, the other phrases that keep coming through in the Bill are "commercial viability", "profit", "joint ventures" and the need for "return on investment". When we transfer State land, we talk about market value. Ms Meghen said that we should benefit from the uplift in value. If we keep going on the uplift value, I do not know how we will ever deliver affordability because all we are doing is increasing the cost of housing. Why can we not transfer State land at the cost to the taxpayer?

We could use that saving to invest in the infrastructure that is required. We need to row back a little and engage in detailed master planning for every town in this country, pooling State and private land together. Where State land cannot support 100% social and affordable housing, a percentage of it can be leveraged and the social and affordable housing can be located elsewhere in the town, with the uplift being used to provide the infrastructure. We can use the vacant site levy to penalise developers for not delivering on sites. As mentioned by Ms Hegarty, these master plans could be broken down to benefit small builders, architects and engineers. There has been insufficient emphasis in the housing debate on apprenticeships in engineering, carpentry, plumbing and so on, which are the areas in which there are significant skills shortages.

Ms Kathryn Meghen

We would agree with everything the Deputy had to say regarding the manner in which the lands should be used, including that where land is rezoned and part of it is to be sold the uplift should be reinvested, similar to a cross-subsidy.

On the ability of the general public to have their say in regard to what is being built, my assumption is that projects would still have to go through the planning process, unless they come under strategic housing development, SHD. Our feedback from members who are working with local authorities is that SHD is working. There is such a good level of interaction with the local authorities and the projects have to be developed to such an extent that before they are brought to the local authorities there is good oversight in regard to what is being delivered. Some of them have been brought to judicial review but in the main SHD is working. I will ask Mr. O'Mahony to address the cross-subsidy issue.

Mr. John O'Mahony

On the planning issue in regard to towns, etc., when speaking about higher density, we are speaking about place making and about introducing a new type of housing into towns and villages. When it comes to drafting our local area plans, they should be 3D rather than two dimensional. The plans need to examine all sorts of issues such as public open space, heights, location of amenities etc. This should become part of a more detailed planning. The LDA is a good body that might act as a monitoring body with oversight in regard to the delivery of social housing and how and where it is to be delivered. Mr. O'Neill, with whom I am working on a project, mentioned regulation and how to reduce the cost of housing so that it becomes more affordable. As architects, there are models that we work on. Taking density and the levels and graduations of density, up to approximately 100 units per ha can be built using domestic methods of construction such as walk-up apartments, a mix of housing, apartments and duplex units, which is ideal in certain suburban areas. Using those methodologies, one is attempting to control the cost of housing. Construction starts to get expensive when we move away from the small builder being able to build using domestic forms of construction. These are areas where we as architects can effectively work with builders and quantity surveyors to start delivering models of housing that just about fall into the affordability model. Some good examples were built before the bust, which used public private partnership, PPP, medium density housing, domestic forms of construction and removed underground parking and so on to make construction affordable. Hopefully, some of that work will feature in the report on regulation for larger housing schemes.

On cross-subsidisation and the concern that the LDA will be opaque in the manner in which it conducts its business, I agree that its planning remit is open. The SHD process is working well. As practitioners, we see it working very effectively and delivering very quickly. If the lessons that are learned from that are passed in two or three years, assuming its lifespan will be extended, when the agency ceases operating, it will be a job well done. In regard to the LDA, I do not see any reason legislation should fail to ensure that there is complete public oversight of all elements of its workings.

Dr. Kieran Feighan

I will address the Deputy's comments on master planning and Ms Spillane will comment on skills shortages. We echo his comments on the need to have an overall view of what we are doing in every town and city in the country. While local authorities and the LDA are important in terms of the delivery of housing, which is the key issue for this committee, the provision of infrastructure with housing being only a part of that is even more important. There are three elements to this: where people live, which is what we are considering in terms of housing; where people work and the other services required in terms of education, health, recreation, culture and so on; and how we link those areas together. We have an affordability problem because, to a large extent, the location of our services and jobs and where people are living are not co-ordinated. It is important to understand that. The fear in regard to the provision of housing is that because we have a deficit and it is seen as an emergency, we may make the same mistakes again. As land becomes available, we prioritise the development of those projects for housing even if they are not sufficiently co-ordinated and pulled together from a sustainability point of view in respect of transport links to health, education and so on services. We need to pull back and review our planning. Local authorities have a role at this level. We have regional oversight but we also need national oversight. Engineers Ireland has consistently called for a national infrastructure commission or a strategic infrastructure unit that examines all of these issues and not simply housing. We very much echo the points made by the Deputy on pulling together all of the aspects of infrastructure.

Ms Caroline Spillane

Regarding skills, I mentioned NESC earlier. The council makes the point that effective land management requires well staffed and well led urban development agencies that are dedicated to the task and have professional competence to draw up master plans and engage in complex arrangements around implementation. We made the point in our submission that the LDA should employ directly qualified professionals in construction, including chartered engineers, architects and surveyors and that this skill set should be available in-house such that the agency is not reliant on this expertise externally. The issue is whether those skills will be available at the right level and in the right quantities. Engineers Ireland has been examining the profile of those currently in the market who are engineers and those who are considering engineering as a future career. This is an issue on which we have engaged across the construction sector as well.

There is most definitely an issue in particular for people considering careers in the construction sector because of the sector's volatility. There is competition within the engineering profession between the traditional fields of structural and civil engineering and other disciplines, and we can see people being drawn away in that regard. That is most likely happening in other areas too, so we have a big job of work to do to try to convince young people that there are long-term, sustainable and exciting careers in the construction sector that have a lot of potential, involve innovation and can take them into using technology and cutting-edge practices. I do not think young people see that potential at present. Deputy Casey mentioned apprenticeships. We have supported the development of many professional apprenticeships but we feel there should be many more of them and that they should be actively promoted and supported in order that a mix of skills is available to the market not just from professionals but also from technicians and apprentices.

One final point I will make is that digitalisation of the construction sector is, I think, being recognised now, and it is very welcome that the Government is minded to support the development of a construction innovation centre. From the point of view of young people considering careers in the construction sector, this could be a very positive thing. In addition, the centre could support small to medium-sized enterprises in particular in the development of skills for their existing workforce to be able to tackle some of the challenges evident in the delivery of housing.

We will now turn to the Society of Chartered Surveyors Ireland. I call Mr. King and Ms Myler.

Mr. Patrick King

I thank Deputy Casey. To touch on the point Ms Spillane ended with, we are concerned about geography, a subject as close to our area as one can get, being removed from the junior certificate exams. As was said, we must think more widely.

Regarding the county development plans, and picking up on, I think, Mr. O'Mahony's point about the three-dimensional perspective, it is important that the LDA can contribute to that process to ensure that it gives its perspective and challenges the local authorities to give greater depth in order that they can make informed strategic plans, which, it is hoped, can lead to innovation. We have mentioned in our submission the SDZs and how they could be a useful tool, particularly in giving the LDA a straight line such as "this is the local authorities' thinking in this area; let us move to implement it". With a commercial raison d'être, one would go for the projects with the fewest barriers and risks involved, build capacity, etc. I think the commercial point has come up several times. I believe Mr. O'Neill referred to the apartment versus the four-bed in the suburbs, but there is an externality cost. In the city one does not have to support that cost but, from the perspective of the buyer, somebody else will flip the bill, namely, the people in this room and the people of this country.

I think there is a greater scope in object 2(c), which Ms Meghen mentioned, to take a wider view on this, instead of just the positive financial return, and the holistic return on investment that is available. That would be an important aspect, whether it is urban or town sprawl we need to address. The LDA could be a positive change to this whole area. This is where one would need to look at the objects. I do not think we necessarily need to involve the LDA in small construction; rather, it needs to build communities, think about larger blocks of land and have a role in areas where there is not capacity within the local authorities or other bodies. To that end, there is an important role for the committee and others in looking at the mapping of the agencies. I was involved in the employment process in my previous work, and one thing that became quite clear was that there were a myriad of agencies doing a lot of work and it took a long time to figure out which was the right body to do what and to help because they were all at different levels. As we design a new agency, understanding HBFI, the local authorities and that mapping process quite clearly such that everybody understands what role each group plays will be essential as a prerequisite of this legislation.

I do not know if there was anything else to respond to.

Ms Áine Myler

Regarding the skills issue, Deputy Casey talked about apprenticeships, and we have talked about this with the construction sector group before. Looking to the future, we consider that quite a lot of what we build, if it has a standard format, will be built on a modular basis. The skills we will need in five or ten years' time are therefore not the skills we have today. A body such as the LDA could drive the implementation of some of this future-based production method of building, whether of houses or other buildings, such as schools. Necessarily, then, the agency will almost influence and inform the skills the people working in the sector will need. I see this as an opportunity for a manufacturing base in this country. This is a submission we made even in this year's budget. We have always been good at making things around the construction components, but I refer to the agency's knowledge of the demand that is out there, for instance, in social and affordable housing to commission a lot of these. As CIF rightly says, we are in competition for supply of many components, be they modular or traditional elements of building. If we could produce some of those here ourselves, that would be fantastic. Bodies such as the LDA potentially flatten out the up-and-down cycles we have had across our delivery cycle for our entire existence, frankly. If, as I said, they can modulate that critical economic cycle we have in construction, it will give people more confidence to come to work in the market and the sector. It will also give them a future-facing skills base with which to do that. That is what we are all about in Ireland: upskilling and adding value. Regarding the LDA, that sounds a bit tangential at this point.

I will make one further point about governance. I can totally see why it would appear to be undemocratic to have an all-encompassing agency with very few employees reporting to one line manager about the entirety of the country's assets, and I absolutely hear Deputy Casey's concerns in that regard. Nailing this down in the legislation will be like nailing jelly to a wall, but it will have to be done. The competition that might be perceived in the private sector would be a concern in that the LDA would be almost too powerful in a way and that competition with the private sector could be somewhat off-putting. That is an important balance that the legislation will have to get right. It should not undermine the efforts many good local authorities already make to go out and buy in pieces of land and pieces of property that they see there might be a strategic value to in five or ten years' time. They might not even bother doing that because they might believe that somebody else will do it for them or that there is no need because somebody might decide for them that that is not the best use of their time and that they want them to do something else. That very strategic balance between local and national powers will have to be struck.

While the construction industry can do many things, nailing jelly to a wall is probably not one of them. Nevertheless, Mr. Benson and Mr. O'Neill might respond to Deputy Casey's comments.

Mr. James Benson

I will leave the comment on the feasibility of nailing jelly to a wall to our developer. All my counterparts made good points. The premise of this needs to be reiterated. There is an obligation on the State to ensure an effective housing supply in all sectors of society. This brings into the equation the whole private sector and the private element of this. I will let Mr. O'Neill discuss that in a little more detail in the second half of our response to Deputy Casey.

Regarding the SHDs, I will take this opportunity to reiterate that we are waiting for the announcement due very shortly - at the end of this month, I think - from the Minister as to whether that process will be retained, reformed or concluded. Again, we have called for its extension, although we recommend that some elements within it be reformed. It has worked not to fast-track but to speed up and smooth out some of the issues that were within the planning process. It gives a good opportunity to highlight some of the items we discussed around viability and affordability earlier. Looking at the recent figures, in recent weeks we have seen approximately 23,815 units approved under the SHD process, of which 51% are apartments, residential units, and 29% student accommodation. We have probably only seen a fraction of those going to the ground and actually happening. There are a couple of reasons for this, viability being one and affordability being another.

Getting it shovel-ready can take a minimum of seven or eight months, from when permission is granted to when a developer or home builder can put the shovel in the ground to get the works under way. Securing the finance, drawdowns and meeting the legal conditions attached to planning permission will take up to six additional months after its granting.

I will comment on the vacant site levy, as it was referenced and ties into some of the points made earlier. Neither the industry nor the federation encourages land hoarding in any shape or form. It must be recognised that, under the national planning framework, the assessment and identification of lands which comply with the guidelines and directives in the regulatory impact analysis, RIA, and under the county development plan will prove to be quite a difficult task for any local authority or planning authority. We need to ensure the lands identified are viable sites, with the necessary infrastructure and services in place, rather than just zoned lands. That issue needs to be addressed in the coming months when we will see it included in some of the county development plans coming up to consultation stage.

Careers and apprenticeships are massive issues. We have spoken about other issues in the House, as has always been reiterated. On the whole, apprenticeship numbers are up, but we need to be cognisant of the wet trades which are always considered to be the dirty element of the trades. The overall numbers are up, as we can see in the most recent SOLAS figures which were only released in the past few days. While the numbers of apprenticeships in the wet trades were already down to double figures, they have dropped by a further 50% in recent months. Only a handful of plasterers and brick layers are coming through the apprenticeship scheme. The resources for the trades will no longer be there if something is not done about this in the coming months or years. The Construction Industry Federation has put huge emphasis on apprenticeships and bringing resources for both the wet trades and other elements into the industry. We have backed the Skills Live campaign. There is also a shared apprenticeship scheme, focusing on regional Ireland, which is trying to get together a cohort of developers, home builders and contractors to share an apprenticeship scheme as taking on apprentices can be quite onerous for them. We will also launch a careers campaign in the next few months that will aim to attract a younger cohort into apprenticeships. Third level education is one way to get into the industry, but a viable living of good quality can be earned through apprenticeship schemes, something which is not always emphasised. A huge amount of work has also been done to provide career guidance within schools. We facilitate our own members in going into schools in order to highlight that a good career can be achieved through apprenticeships. There is a huge amount of work being done and we need to be careful not to be our own worst inhibitors. We cannot constantly give out about the boom-bust cycle in the construction industry, on the one hand, while encouraging people into it, on the other.

Mr. Seán O'Neill

To address Deputy Casey's comment on the democratic process, I agree that we need some detailed master plan for all towns and cities. Once that plan is in place and people come forward with applications consistent with it, there should be no objection process. That would fix the democracy piece. I have been involved in numerous SHD planning applications and people are still able to make submissions about applications. In a number of our decisions we have found that the board will take on board comments that come through submissions and condition certain things in planning applications to ensure those concerns are addressed throughout the project.

I refer to stakeholder engagement. We spend a lot of time engaging with schools, religious orders and neighbours to our sites to tell them what we are planning. Even doing this collaboratively does not stop people from having the right to object, but, at least, they feel they have been informed.

I do not know anyone who wants an apartment building within 20 m or 50 m of his or her house. However, what the Minister and the Department have done with the apartment guidelines is address an issue in the overriding of certain development plans. Mr. King referred to sprawl. We can continue to build low rise housing and sprawl out further and further, but we need higher density housing and higher buildings along the Luas and DART lines. That is the right thing to do for the long-term sustainability of the environment, with everything else. I do not apologise for using the apartment guidelines to override certain development plans which included a restriction of two or three storeys beside a Luas line, which does not make any sense.

The SDZ system was mentioned. What happened with the DDDA expedited the delivery of the proper type of product in the proper locations. That will create a level playing field, whether the product is being developed by the LDA or a private builder in the private market. Ms Myler also touched on this issue and how the LDA might impact on regular house builders and competition. We do not know what that looks like at this time.

I cannot do anything about nailing jelly to walls, but another point was raised about modular construction, which is part of the solution and will help to modernise our building techniques. Modular construction only works where there is repetition, volume and a standardised approach, which is hard to get on many Dublin sites. It is very hard to find a site large enough for modular construction to work. We are building timber-framed housing which is quicker to build than traditional housing and better in some ways. We have to look at new systems of construction because we have a huge issue with trades and have to find better ways to deliver them off-site.

Deputy Pat Casey took the Chair.

These exchanges have been very illuminating and confirmed many key issues about which committee members have been concerned and with which they have been grappling. Mr. O'Mahony has stated we must not let the LDA lose the run of itself and that the Bill needs to constrain it. However, we also must make sure we do not lose the run of ourselves. In the complexity surrounding the establishment of the LDA we must not create another monster that will add to those layers of complexity, rather than remove the barriers and obstacles to addressing the housing crisis. We must remind ourselves of the context in which the Bill has been brought forward. There are 10,000 people living in emergency accommodation, of whom 3,750 are children. There are a further 72,000 people on local authority waiting lists, while many more are paying extortionate and prohibitive rents. Whatever else the LDA does, it has to address that matter. I welcome the delegates' affirmation that it must be its key objective.

I welcome the focus on the mix of housing. According to the summary of social housing assessments for 2018, 47%, or almost half, of the 72,000 households on local authority waiting lists are headed by a single person. If we are addressing crises, we have to address that issue. Of the 10,000 people living in emergency accommodation, just over 4,000 are households headed by a single person. Whatever the outcome of the LDA's work, it must address both homelessness and the type of housing homeless persons need. Important reflections were also made about the ageing population. I live in a house that is too big for me as my children have left home. Many others are in the same position. Even if one wanted to downsize, often there is no stock available. Older people and people with disabilities could also live in the mixed communities that were described.

Sustainability is important. On Sunday night I delivered a wedding present to my niece who lives in Ballincollig.

Her house is at the edge of Ballincollig. A single car was in front of every house, two in some cases. If we are serious about climate change, we need to reverse that trend of sprawl and people needing cars to be able to go to work. I am interested in the witnesses' thoughts on the objectives and the complexity involved in addressing the objectives, which involve ending homelessness for those 10,000 people at the very minimum and getting the right kind of houses in the right kind of places that are good for people and our communities. We are proposing a significant handover of public assets. Deputy Casey talked about €1.25 billion. This is a significant transfer. In the ratios proposed, we are talking about 10% social housing that would be in the ownership of the State. This equates to 15,000 houses. I am not a businessperson but that does not seem like a great deal. Again, I am interested in hearing the witnesses' views on that. How can we nail down affordability? As somebody said at a previous meeting of this committee, affordability means one can afford to pay for it so it is a very relative term. How do we gravitate towards a cost model because housing is far more than a commodity or something to be traded? It is the very roof over a person's head where a person can rear a family, go to school, live a life and get a job. I am concerned about giving away of significant amounts of public assets that now belong to all of us for a return that is very small in terms of public ownership. I am interested in the Copenhagen model. If the witnesses have any details about that, it would be something at which the committee would like to look.

I am also very interested in the idea of apprenticeships. I am doing a lot of work on Traveller rights and issues. The unemployment rate among Travellers is 80%. It seems a no-brainer for CIF, the engineers, architects and others to reach out to that community because it is only 40,000 people anyway. That would be of enormous benefit. There were traditions of craft and making in that community that, sadly, have been lost but interesting connections could be made. I include other hard-to-reach communities. I know people who work in Youthreach. The people going through those programmes are crying out for the kinds of work where there seem to be shortages. I would be interested in hearing the witnesses' comments on those points.

Ms Kathryn Meghen

Looking at the numbers mentioned by the Senator - the 10,000 people who are homeless - that is one of the most shocking indictments of the country. Unfortunately, as an extra 1 million people will live on the island of Ireland in the next 40 to 50 years, we need to take a really strong long-term view. The Senator referred to her niece living on the outskirts of Ballincollig. We are not talking about moving somebody from the outskirts of Ballincollig to a different location. We are talking about the need to strengthen and increase density within Ballincollig and the infrastructure there. This is why we believe the LDA is so important. We need a State agency that will identify some of our suburban sites, look at purchasing them - possibly through CPO or through looking at existing social housing - and will really strengthen density. We carried out a study on the ageing population about two years ago. About 950,000 homes on the island of Ireland are under-occupied. We must find a way of unlocking those. That is where we believe the LDA could come in through purchasing large tracts of land and existing suburban housing through CPO or whatever model is used and looking at strengthening it. Does Mr. O'Mahony want to talk about the study we are conducting in Limerick?

Mr. John O'Mahony

We are carrying out a densification study. The institute is trying to look 50 years ahead beyond 2040 at what all of our main cities might look like in 50 years' time and identify where opportunities are. It is taking a wider view. The study will take about a year and a half or two years to do but we will do it in detail.

Regarding the figure of 10,000 people who are homeless-----

In emergency accommodation. More people are homeless actually.

Mr. John O'Mahony

Relative to the size of the country, 10,000 is not a large figure. I would have thought there was an opportunity for the LDA to look nationwide at how to kill that as the most important element. That is my personal view. In a country as wealthy as Ireland, I am still quite shocked that we have not managed to solve that problem.

Regarding the nature of our communities and what we are putting into our developments, 80% of our housing stock is family houses and families make up 38% of the population. We have a significant oversupply of family housing and there is significant re-balancing to be done to create more balanced communities. The old model seemed to be about putting in three and four-bedroom houses and not matching them to the actual community base. Nowadays, we should be capable of being much more forensic about what goes on to each site from a local point of view so there should be a percentage of housing for older people and a percentage of first-time starter homes in order that people can live their entire lives in one community. We need to be more forensic about how we design and lay out our estates.

I have a question at which the committee might look. When the LDA was first promoted - when the first document came out identifying what the LDA would do - it had two functions. One was as a land development agency to take public land and develop it efficiently, while the other seemed to be really interesting. It was to follow a Dutch and German model whereby the agency would have the powers to designate areas as regeneration areas, purchase the land at that land value cost and develop it over time so that as the value went up, it was shared with the landowners. What was proposed was that the LDA would have a bank of land it would be able to work through in the event of a recession. It was also an element that might control the price of land. This has disappeared from any of the legislation I have seen.

Does Mr. O'Mahony think that should come back into the frame?

Mr. John O'Mahony

It would be worth going back and having a look at what the remit was originally supposed to be. It would be interesting to find out why it did not proceed. Was it for legal or land ownership reasons? It is a model that has worked very successfully, particularly in the Netherlands, where it has delivered nearly 500,000 affordable and social housing units over about 25 years.

Ms Kathryn Meghen

With regard to the ageing population, it is very important that the LDA also has responsibility for or involvement in unlocking smaller sites within towns and villages where it would be possible to build one or two-person units. This would then enable people to trade down. When we did our research, it was very clear that very many people are interested in trading down but there is nothing within their local village or town to allow them to do so. It probably will not be the most economic way of doing it but it has long-term potential for the viability of our towns and villages.

Dr. Kieran Feighan

I thank Senator Kelleher for her comments. Regarding the example of her niece in Ballincollig, we would be very much ad idem regarding emphasising the role of sustainable development and the role the LDA can play in that regard. In our submission, we explicitly recommended a change to the Bill. We said that we believe that developing sustainable communities must be a fundamental objective of the LDA and that this should be included in head 8, section 2, in order that all of the subsequent development has that sustainable aspect.

As I have said, we are of a similar mind to the Senator. The homelessness crisis, as my colleague from the Royal Institute of the Architects of Ireland has said, must be addressed. The LDA can form part of the solution, which is one of the main reasons we welcomed it. If it is implemented properly, co-ordinates landbanks, and is able to identify underused land in public ownership and put it together with privately-owned land, we should, as a country, be able to address this issue in a timely fashion. We support the development of the LDA in that regard because it is clearly a mechanism that can help us to address some of these issues.

Ms Áine Myler

Everything we talk about with regard to housing is complex and is influenced by other legislation. The Senator made her point about the household sizes with which we are dealing really well. These are diminishing all the time. About three years ago, to squeals of indignation, Dr. Ronan Lyons suggested that we should stop building three-bed and four-bedroom houses because, frankly, we have too many of them. We need apartments, duplexes and different densification models. The difficulty is getting people to buy into those types of units. Our underlying legislation, the Multi-Unit Developments Act 2011, was a good start, but needs to be overhauled to encourage the concept of the common good that exists in more mature markets which feature apartment schemes. This means that one person cannot act in a way that is detrimental to everyone else's enjoyment of their homes. There is something to be done in that regard.

Should a greater emphasis on the common good be included in the framing legislation for the LDA?

Ms Áine Myler

Yes. There are many things that influence how housing is provided outside of the costs involved and where it should be built. Such issues include whether people will want to live there. They may worry that, if they share a front door with ten other people, one may cause mayhem, and they therefore may not want to be there. As a result, there may be a resistance to move into that kind of development. We have already discussed the question of the underlying legislation with the Department. As I have said, the 2011 Act was a good start but it definitely needs revision. The points on population growth are really important. It again goes back to the concept of mapping what we have and asking where everyone is going to live if our population grows to a given extent. We need modelling of trends and data-driven evidence to underpin our policies with regard to housing, infrastructure, and everything else.

The LDA is the agency to be given the public ownership target. Vienna has a target to retain 60% of the housing stock in public ownership. It is not quantified in terms of social or affordable housing; it is just public housing. If one can afford to rent a unit at a reasonable market rent, that is the rent one will pay, but it is retained in public ownership. This was achieved over 100 years so we are not going to do so over ten, 20 or 30. Nonetheless, it could be set as an initial target to be achieved on an incremental basis with staged targets for five or ten-year periods. The LDA could be the organisation to oversee that.

Ms Meghen made a really good point about smaller clusters, of which we have many in this country. If our local authorities are not using their powers to acquire sites in their own jurisdictions, that is an issue. If local authorities have a proper purpose for buying sites in small towns, they can do so. They should be using that power. The LDA could be tasked with measuring and appraising the performance of local authorities to ensure they are utilising the means available to them to develop their own lands or acquire adjacent lands.

Mr. James Benson

I thank the Senator. With regard to some of her points, we are all uncertain as to the make-up of the LDA and how it will be rolled out. If the principles underlying it are to provide increased output, to unlock State lands, and to remove the financial barriers in given regional pockets to facilitate delivery, it would go some way to addressing the issue of homelessness, although it will not be a silver bullet.

On the issue of our ageing population, this one of the points we have made. Early association with the professional bodies and industry will be key for the LDA. When one connects with the demographics of an ageing population, one sees that there is a lot of awareness of what is actually required for that population. Elements of age-friendly construction can be implemented very early in the design stage. Some of the other associations and bodies will be more abreast of these issues than the Irish Home Builders Association. For a relatively low cost at design stage, one can incorporate elements that allow for attic conversions or joists at first-floor level to allow for extensions. If that is done at-----

It is a matter of building in the technology.

Mr. James Benson

Yes. If that is done early, at the design stage, it can allow refurbishment or extension to be carried out at a less prohibitive or a lower cost at a later stage. Again, the early involvement of the professional bodies and ourselves with the LDA at design stage will be key in that regard. It is part of the conversation when considering the warnings about our ageing population. A very large cohort is in rental accommodation. What will happen to these people when they are out of work or about to retire? They will no longer be in a position to afford rent. In light of the existing affordability gaps, we are not in a position to get such people a mortgage to get them on the property ladder. That reality will become stark in the coming years. Those who are currently renting will not be able to afford rent-----

They have no security of tenure.

Mr. James Benson

-----and will represent an extra burden on the State. That is why we are calling for the likes of a shared equity scheme and a fresh look at the rules with regard to mortgages. The federation and the Irish Home Builders Association are very proactive in the area of apprenticeships, in respect of which we are very concerned. We are doing an enormous amount of work in that regard. I am happy to share information about the initiatives under way and the campaign that is about to kick off in that regard. That is open to all sectors of the industry and society. We encourage people from all fronts to get involved. We will happily share information on that front.

Deputy Noel Rock resumed the Chair.

I thank Mr. Benson very much.

Mr. Seán O'Neill

Deputy Ó Broin asked whether a designated activity company, DAC, was the appropriate entity for a project that is more social than profit-based and Senator Kelleher mentioned the objectives of the LDA. Every company has a constitution, or what we used to call a memorandum and articles of association, but the objectives of a company can be quite specific; they do not all have to be profit-based. A company's objective is to deliver housing, whether social, affordable or whatever else. It does not have to be overly prescriptive and specify the amount of housing to be private and the amount to be social. Flexible wording can be employed. One of the Senator's concerns regarding the objectives is that she wants delivery of housing to be predominantly State-led.

To touch on one of the points about homelessness, which is a real issue, there is a very significant issue with regard to the management of our public-owned housing stock. The Senator mentioned examples herself. I know many people who live in large houses despite only two people living there while there are families of four or five living in hotel rooms. There is something wrong with that model. It is not as if we do not have enough roofs in the country to house these 10,000 people, we are just not managing stock correctly. The first house I bought in Dublin, 20 years ago, was a council house. I probably paid 25 times the price the vendors had paid for it. Retention, recycling and efficient management of the public-owned housing stock is key to the homelessness problem. If the LDA is going to deliver social and affordable housing, that housing has to be retained. Mr. O'Mahony mentioned leasing it. It is a key point. This housing needs to be retained, kept in public control, and managed properly.

I thank Mr. O'Neill very much.

I am not against the Land Development Agency, I just have some reservations and concerns about it and feel that it could potentially do more. One of the key things that has come across today is that it could bring about stability in development to prevent cycles occurring. I fully accept the concept that, in a time of recession, this agency might be in a position to continue building when the private sector is not. It has a very significant role to play in that regard. I will try to expand my point a little bit further. We should be putting significant resources into the concept of master-planning. It is not going anywhere near far enough. Senator Kelleher has just spoken. None of us ever planned for enough one-bedroom and two-bedroom housing. That is the level of detail we should be getting to within the master planning in order to avoid having too many three-bedroom houses, shops, or whatever other type of unit.

We must invest significant resources in local authorities to enable them to prepare a master plan to the level required. We must then prioritise the provision of infrastructure. We must engage in zoning, come up with a timescale and provide the infrastructure. We can then apply the vacant sites levy in a much more transparent manner. It is being applied in different ways by different local authorities and there is no real transparency.

Mr. O'Neill has mentioned that local authorities have nowhere to send a single person who is living in a four-bedroom house because they have not built any accommodation for such a person. That brings us back to the problem of not engaging in detailed planning, which means that huge opportunities are being lost. If there was high quality accommodation available to such a person, he or she would probably move willingly, but, unfortunately, it is not available.

In terms of financial viability in the context of the fiscal space available, the Land Development Agency is being set up based on a ratio of 60% private and 40% public and on the basis that it will be off-balance sheet. Whether one agrees with the Government, it is stuck with it. If it were to create a model tomorrow morning that 100% of the units would be social and affordable, it would be ruled that it would be on-balance sheet. The sum of €1.25 billion n the fiscal space will prevent us from investing in other infrastructural projects. The Government did not do enough in lobbying EUROSTAT and the European Commission to highlight the importance of housing to us as a society. The provision of social and affordable housing should not be included in the figures for the fiscal space or some percentage of it should be allowed to be excluded. When the 13 large approved housing bodies went from being off-balance sheet to being on-balance sheet, it was not just State debt that was on-balance sheet but every piece of debt. Even private investment in approved bodies now forms part of the fiscal space. The State has not done enough in lobbying the European Union to remove social and affordable housing provision from the fiscal space. If that were done, the Land Development Agency could deliver a lot more social and affordable housing units. That said, I understand it is restricted in what it can do because of the off-balance sheet issue.

Ms Myler suggested local authorities should be buying more land, but they cannot do so without departmental approval. Furthermore, the local authorities cannot borrow any money without departmental approval. If they want to take out a loan, they must first get councillors on board and then obtain the approval of the Department. In fairness, some land was bought at the height of the boom. It was included in the land aggregation scheme, through which we are still working our way. This is an area in which the Land Development Agency should be involved. It should be assessing the potential to use land and buy it before it becomes unaffordable. That is a critical role played by the agency.

Mr. O'Mahony spoke about buying regeneration sites and the fact that the landowner only profited when the land was developed. In that way, the State does not have to fork out initially. I must look it up because it is an interesting concept. I have a question for Mr. O'Neill and Mr. Benson about Home Building Finance Ireland. Is there evidence that it is working? Is it getting into smaller rural areas, including rural towns, where smaller builders cannot access finance? Is there any information available on that aspect?

I will continue with the convention of moving from one end of the room to the other. If anyone wants to be passed over at this stage, that is acceptable, given that we have had so many rounds of questions. I will start with Mr. O'Mahony and Ms Meghen.

Mr. John O'Mahony

I sit on the housing committee in the RIAI, the members of which work in both the public and private sectors. Undoubtedly, there is a problem in the efficient approval of social housing delivery funds. I constantly hear about projects that have been delayed interminably because they have got stuck in the Customs House awaiting approval for the expenditure of moneys. There has to be a way to run that system more efficiently. Perhaps there could be a Land Development Agency clearing house. Perhaps the LDA might look at social housing delivery and try to come up with a more efficient way to clear spending on social housing. I must declare an interest here in the context of the procurement process for the O'Devaney Gardens project. There must be a better way to do it than the way being employed for the project. Again, it comes down to the LDA being a body that can procure more efficiently and effectively in order that the professionals and builders can be attracted back to the public sector. They do not want to do public work because they do not want to lose money. That is a role the agency should take on.

On the 60:40 private/public ratio, there must be some flexibility I know that there are issues in the fiscal space and so on, but I am not sure they will directly affect the way the LDA will operate. Will the agency be forced to adopt the 60:40 ratio?

We are drafting the legislation, but we do not know whether the model being proposed will be on o off-balance sheet. It is n the ether and nobody knows if it will eventually be on or off-balance sheet. The worst thing that could happen is that EUROSTAT and the CSO will decide that it is on-balance sheet. Then it will fail because it will not be able to function.

Mr. John O'Mahony

Absolutely. I totally agree.

Deputy Darragh O'Brien mentioned putting the cart before the horse. There is a little of that going on. We do not know whether the model being set up will be off or on-balance sheet and it is not just about the financing either. It is equally about control over who wll go into the houses, the types of house that will be built and so on. One of the major problems with the approved housing bodies was that the local authorities had too much of a say in the design of houses, the clients who would go into them and the setting of the rents payable. If 40% are deemed to be controlled by the State, the CSO or EUROSTAT could say there was too much State control and that the whole lot should be on-balance sheet. Then the Land Development Agency would not be able to go any further.

Mr. John O'Mahony

That would be a disaster.

We are putting the cart before the horse again.

Mr. John O'Mahony

The Deputy spoke about the importance of master plan and I could not agree more. There are some good examples. A long time ago we were involved in a small project in Dunshaughlin. There was a master plan for the village in which the community had become involved. There was community engagement and involvement through the community council through which a master plan was prepared. It was not statutory, but it did actually do everything that was required, including carrying out capacity studies, considering how to deal with the quality of streets, public areas and so on. It was very cheap. It was not an expensive exercise. I agree totally with the Deputy that we need to carry out baseline studies and draw up plans for all towns and villages which will then need to be renewed and updated. A classic example is the Ballymun regeneration master plan. When it was completed first, it was within the remit that everyone needed a front and a back garden. If one was to go back to Ballymun and do that now, it would be completely out of sync with current thinking on sustainability and so on. As a starting point, however, capacity studies are essential and the models are available. We are undertaking them for SDZs in order that-----

I have never had the experience of going through an SDZ process. It is my understanding, however, from the work of the Dublin Docklands Development Authority on SDZs, there is a model that can be worked on.

Mr. John O'Mahony

It does not have to involve a statutory instrument. The methodologies can be rolled out without there having to be a statutory document.

On the democratic process, I will give an example in Wicklow where people have had a raw deal. The national planning framework clearly indicated there would be 30% growth on brownfield sites, compact growth and greater densities. I have no major problem with that but Newtownmountkennedy's local area plan was adopted in 2006. It was rolled over because of the crash. There was a six-year cycle, nothing has happened and we had to move on. The national planning framework for 2040 was adopted and all the regional plans had to be redone and all the county plans put on hold, which meant all local area plans were put on hold.

Thirteen years later, Newtownmountkennedy has no realistic plan. Two applications for planning permission have been granted for high density residential units in two separate pockets that are completely inconsistent with the rest of the village because it has not had an opportunity to renew its plan. It brings us back to the democratic process. Individuals in the town are wasting their time appealing to An Bord Pleanála. They will never have the resources to secure a judicial review. They have never had the opportunity to have an input into how the village develops because of what has happened at national level, although it could apply to become an SDZ. That is just one practical example of what is happening in Wicklow. I question whether the developments are viable but they have been granted planning permission. It is a problem.

Ms Kathryn Meghen

One area where it is important for local authorities to be involved is in creating the towns and villages where people want to live. We can talk about high density living but we cannot force people into living in certain areas. In most towns and villages throughout the country, people prefer to live on the outskirts, in a house with front and back gardens. In the case of towns such as Clonakilty, Skibbereen, Westport and Enniscorthy, a municipal architect has been put in charge of curating the development of the urban fabric of the town or village, creating somewhere that is vibrant, safe and has mixed tenure with a mixed demographic. People then want to come and live in the towns and villages, and residents are happy for high density housing developments to be built in the core.

We have carried out aerial studies of some towns. The backland development potential in most towns and villages is incredible but we cannot force people to live there. There has to be quality, which is why the urban fabric is so important. One simple aspect in many towns is that the supermarket has been kept in the centre. People park on the village outskirts and walk in, which we are all capable of doing. We have to make sensible choices about how we redevelop towns and villages.

I thank Ms Meghen and call Ms Spillane or Dr. Feighan.

Dr. Kieran Feighan

We fully support the Deputy in respect of master planning. The LDA's terms of reference should refer to relevant public lands and define them as built-up areas of any census town with a population of 10,000 or more. While the LDA will be active, not least in the larger urban areas, it is clear a role will remain for the local authorities in the planning of towns and villages. We fully agree with the Deputy on the need to look ahead and, critically, to ensure the timely provision of all the necessary infrastructure to assist in the development of towns and villages, which is cost effective. Our greatest problem is trying to retrofit, that is, to install infrastructure, water and sanitary services, or transport links in areas that have developed out of step with the character of the towns or villages. We have to be on top of the matter.

The second point we support, which was raised earlier by our professional colleagues, relates to the potential role of the LDA in respect of the compilation of strategic land banks. While in the short term there is an immediate housing crisis we must address, as we heard from Senator Kelleher and others, the ability to accumulate strategic land banks and return them to the market when development is required and the private sector is not in a position to provide it will, over time, be an important strategic role the LDA can perform.

I thank Dr. Feighan and call Mr. King or Ms Myler.

Mr. Patrick King

The main point that has arisen during the meeting is that the future objectives for the LDA will be crystal clear. Senator Kelleher stated we should not lose the run of ourselves. We need to ensure we do not try to put everything into the LDA's basket, given there are other areas where supporting legislation is required, whether for development levies or the role of local authorities in master planning. Additional resources are needed in those areas. The LDA will not be successful if all the other partners in the process are not sufficiently resourced. We should not put our the eggs into that one basket and hope the LDA will somehow miraculously solve the problem with a handful of people, which will not be possible. Perhaps that should be reflected in the legislation.

The master plan, as an approach, may be better than the idea of describing it as a development plan. Similar to the case of Dublin Port, different scenarios could play out over different stretches of time. One cannot say a certain number of people will live in an area, given that people will not be mandated to move there, but there can be appropriate planning for various scenarios that may play out in different local areas, which the local authorities can do. The LDA can then play a component part in developing the lands under its control to build a community and housing within an area, regenerating it in a way that would not have been possible if done by the local authority. Each group must play its part. The master plan will fit into the role of the LDA, which will help to deliver the master plan.

I thank Mr. King and call Mr. Benson.

Mr. James Benson

On the two specific questions, we concur with what was said about the standardisation of the vacant site levy. There is an ad hoc approach to its implementation by the local authorities in some cases. There is a simultaneous need for housing and a demand for housing but there are subtle, yet stark, differences between the two. If that was addressed in the legislation, it would greatly benefit the standardisation approach and give the ability to the local authorities to roll it out further.

I commend Home Building Finance Ireland, HBFI's, initial set-up and outreach to our association and its members. In many of the regional pockets within Ireland where it has not been viable in the past, in recent years it has been a source of funds, where the traditional institutes and lenders have not been available in many cases. It could do a great deal more if it also examined the possible alternative of lending to those sites that are not ready to go and do not yet have planning permission. It could enable sites by connecting infrastructure and utility - the services passport - to a site. Similar to what the LDA will do in respect of bringing State lands to the fore for development, if the fund through the HBFI could enable developers or home builders to bring other locked lands, or lands that could be brought to development but are inhibited through a lack of services or infrastructure, could be examined, it would be a great benefit to the wider society and economy. While I will allow the HBFI report on its own figures, outreach and so on, I know from our own figures that it accompanied us at nine locations on a regional workshop that identified challenges and options. It directly addressed a cohort of approximately 400 of our members on its provisions. It has carried out a significant campaign but some subtle reforms might have an even greater outreach and benefit.

Mr. Seán O'Neill

One of the challenges facing the HBFI is that the viability issue becomes more pronounced as one moves further from Dublin. The last thing anyone wants to do is lend money where it cannot be recovered, not least when it is State funds. There is a challenge in that regard. The newly appointed CEO is reaching out to people in the industry and trying to identify the funding gaps and challenges.

She is reaching out to people in the industry. She is trying to figure out where the funding gaps and the challenges are. One of the issues in Dublin is trying to get lending for apartment blocks because builders have to commit a vast amount of capital to build an apartment block compared to a house. It is speculative building, because people simply will not buy them off plans anymore. We saw the concern in the Celtic tiger days when people were left having paid deposits but they never got their apartment finished ultimately. Builders really must have a finished product for the Irish purchaser to come in and buy an apartment. That is one of our big challenges and it is something that maybe we need to look at more.

Mr. O'Neill is saying there is a viability issue outside Dublin. Is that because of demand?

Mr. Seán O'Neill

I reckon it is relevant to anywhere a house is selling for in the order of €200,000 or €225,000. Once we take VAT off that price-----

It is on the margins.

Mr. Seán O'Neill

Even if land costs are zero, the builder is not covering the cost of development. That is my experience. Perhaps builders down the country reckon they can build for far less, but we are all buying the same materials and we are all pulling from the same pool.

Does that come back to the specifications?

Mr. Seán O'Neill

Absolutely. No one is trying to drum down regulations, by the way. We embrace it and we want to build better. Our building should be subject to scrutiny, but I believe one of the issues is that it is difficult to lend for a location where house prices are at €200,000 or €220,000 because it is marginal. If anything goes wrong, it is a problem. Every site is different. A builder could hit rock or any number of different issues. It is not a question of one size fitting all, but it is marginal at those levels.

Building standards adhere to my political mantra: "Do not hit Rock". Thank you all very much for your contributions. They were enlightening, illuminating and, from my perspective, very interesting. Certainly, I would appreciate any readings you can send on to us. I know you have a report prepared already, Ms Spillane. Ms Myler, I understand you have promised to come forward with further information in future. I would really appreciate that. The more information we can get in this regard, the better. You have certainly informed my views with regard to the upcoming legislation. I really appreciate your time and expertise today. It is a real pleasure to have you before the housing committee. Thank you all very much for your time today.

The joint committee adjourned at 12.12 p.m. until 11 a.m. on Tuesday, 22 October 2019.