I thank the members for inviting us to appear. I am joined by my colleague Mr. Phelim O'Neill, head of land at the LDA.
During my previous appearance before the committee, in early October, I provided a progress update on the sites in the LDA's initial portfolio and on the wider progress we have made since inception a little over a year ago. I also outlined our plans for the remainder of 2019 and 2020. Our engagement with the committee that day was very constructive and informative. I thank the committee for that and for the wider support it has shown for the LDA and the concept behind it.
On a more general note, I thank the committee for the extensive and detailed work it has done on pre-legislative scrutiny of the general scheme of this Bill. The contributions made by members and the many attendees before the committee recent weeks, which have included people with considerable experience of, and insight into, the issues and constraints facing the housing sector, are essential and valuable steps in the process of designing this legislation. It is clear that the committee's work is making a significant contribution to enabling the LDA to provide effective, tangible and durable measures that will improve housing supply in the short term and bring much-needed stability to the housing market over the long term.
In a similar vein, I am grateful to local authorities throughout the country for the quality of their engagement with the LDA since it began operating. The support they have shown, as well as the detailed knowledge and innovation that they have brought to their discussions with us, augurs well for our collective ability to address the problems that we share and that we want to resolve together.
Ultimately, the LDA cannot succeed without the support of its key stakeholders. I have been greatly encouraged by the strong commitment, collaborative approach and shared desire for solutions that I have seen at first hand among members of this committee, local authorities and our other stakeholders.
I will use my opening statement today to give the agency's perspective on some of the issues that the committee's work has identified in recent weeks. In particular, I would like to talk about the need for the agency to be established as a commercial body; the importance of enacting the legislation so that the agency can make the financial commitments it needs to make; our commitment to accountability, governance and transparency; and the delivery of affordable housing on State lands.
On the need for the LDA to be established as a commercial body, there have been some suggestions in recent weeks that it should not be established as such, or that if it were, it would in some way act in a manner that was not in the interest of addressing our housing issues. I reassure the committee that there is no conflict at all between being established as a commercial body and the provision of much-needed housing. My strong view is that operating as a commercial body offers the best way to ensure the sustainability of the LDA's resources and the sustainability of the agency through economic cycles.
I can assure the committee that the agency and its board, including me as CEO, are clear that our primary objective is to ensure that homes, including affordable homes, get built and delivered to people and families on the land we gain access to. Many State bodies have a commercial mandate while, at the same time, being committed to achieving important social and economic objectives, which include providing electricity, public transport, operating ports, health insurance and many other essential services. The LDA is no different, and while it will be commercial, pending the outcome of the legislative process, its mandate is clear. The mandate is to accelerate the provision of homes and supporting development on State and other lands.
We see ourselves as custodians and stewards of the €1.25 billion in taxpayers' money that the Government has earmarked for the agency. Our job is to use that money in a way that strikes the right balance in achieving all our objectives – improving housing supply, delivering long-term stability in the housing market, using State lands more effectively and freeing it up to deliver new homes wherever that is appropriate. We must do this in a way that preserves the sustainability and long-term impact of the agency. My fear is that if we do not get the balance right, we will be at risk of using valuable State resources inefficiently or unsustainably, and hence running out of these resources early.
Acting as a commercial operator will also help us to deliver housing in the good times, when Exchequer funding is available to support this activity, and future-proof the agency so that it can be just as effective in bad times, when the Exchequer does not have access to resources to invest. Establishing the LDA as a commercial body will enable it to raise finance and invest in housing provision in times when the Exchequer is simply not in a position to do this.
This will mean that the agency will be able to act countercyclically, which will achieve important wider economic benefits in stabilising housing supply and achieve best value for money by enabling it to procure land and buildings when the housing market is weaker.
When we talk about the desirability of the LDA being a commercial body, it is not because we are seeking to make profit for the sake of profit; it is about ensuring the agency can be an all-weather contributor to the State and housing market, irrespective of how the wider economy is performing. By way of example, if we consider the extreme financial pressures on the State ten years ago, as we were on the verge of a troika bailout, it is not realistic to believe that had the LDA been in place at the time, it could have sought money from the Exchequer to buy land or perform any of its other activities. If we are to be successful as a countercyclical operator that can take advantage of long-term opportunities for the taxpayer, we have to create the conditions that will allow us to achieve this. Establishing the LDA as a commercial body is the best way to do this.
Let us consider the importance of enacting the legislation so that the LDA can make the financial commitments it needs to make. There has been some public discussion on its ability to operate in the absence of the legislation. While we are operating effectively on the basis of a statutory instrument signed by the Minister, Deputy Eoghan Murphy, last year and this has been sufficient for what I would term the "start-up phase" of the LDA's operations, I am conscious that we are approaching the end of this phase. As I told the committee last month, we have made significant progress on the sites in the agency's initial portfolio, which have the capacity to deliver approximately 3,000 homes, and we are working well with local authorities in respect of these and other potential sites, including at Shanganagh in the Dún Laoghaire-Rathdown local authority area. We have been able to achieve this progress on our existing statutory basis. However, the more progress we make, the closer we come to a stage where we will need the provisions of the proposed legislation to continue to deliver on these sites as expeditiously as possible. In particular, we are approaching a point where we will have to make significant financial commitments in the middle of 2020, as our work evolves from valuable preparatory work to the nuts and bolts of active construction on the sites. This creates a natural time constraint for the enactment of the proposed legislation. While we do not envisage any delays in progressing our projects based on the current timelines, the existence of this constraint highlights the value of the committee's pre-legislative scrutiny process and the importance of getting this legislation right within a defined timeframe. I assure the committee that we will continue with our existing approach of working closely and collaboratively with it to ensure its concerns are addressed to its satisfaction and to facilitate the efficient and timely passage of the legislation through the Oireachtas.
I assure committee members and other stakeholders that we share their desire to create an organisation that is the best in its class in terms of its accountability, governance and transparency. As CEO of a State agency, I am aware of the importance for the LDA not only of doing our job to the best of our ability but also of being able to demonstrate to citizens and public representatives that we are doing our job to the best of our ability, and, indeed, to the highest standards, which people have every right to demand and expect from agencies such as the LDA. I regard exposure to public scrutiny as an essential part of our mandate and something that my colleagues and I should, and do, welcome. We want significant levels of oversight and accountability built into our operations, and the proposed legislation and governance frameworks for State bodies set out measures to achieve this.
Under the proposed legislation, the LDA is accountable to our ministerial shareholders and the Committee of Public Accounts, and it will be subject to audit by the Comptroller and Auditor General. In addition, it will appoint an external statutory auditor under the Companies Acts and an internal auditor. Since the inception of the agency last September, we have set out to ensure the highest standards of corporate governance. The agency's nine-person board comprises experienced professionals with a diverse mix of both public and private sector expertise. The board was established in January 2019 and provides ongoing strategic direction and oversight in regard to the agency's activities. We have established an audit-and-risk committee with responsibility for overseeing the assessment and management of the strategic risks facing the LDA that could result in financial, reputational or other loss to it. We have also provided for an investment committee, which will have responsibility for assisting the board in the control and management of the agency's investment activities. The agency will adhere to the code of practice for the governance of State bodies, as required and as mentioned by Ms Graham. In summary, the LDA will be accountable to its ministerial shareholders and the Committee of Public Accounts. It will have three separate auditors. It has an experienced independent board with audit-and-risk and investment committees. It will publish a comprehensive annual report and will be subject to the code of practice. I assure the committee that the LDA has been committed to continuing to place accountability, corporate governance and transparency at its core.
I draw the committee's attention to our commitment to delivering affordable homes on State lands. This has been, and will continue to be, one of our top priorities.
The affordability requirement on State lands is a separate policy matter set by the Government. The requirement sits outside the LDA and applies to any party accessing State lands, be it the LDA or anyone else. The LDA will implement the requirement as a party that will seek to access State lands on an ongoing basis. While it is ultimately a policy matter for the Government, in my view the policy strikes a balance in providing significant amounts of social and affordable housing while leaving open the option to lever the initial funding of €1.25 billion provided for the LDA. This is particularly important when one considers the context that if no third party funding was added to the LDA's mix, the €1.25 billion would be used in its entirety by our initial site portfolio when our ambitions go much further than that. To frame it another way, the 150,000 homes which have been targeted for the LDA to facilitate their delivery in a 20-year period would have a total delivery cost of well in excess of €45 billion, which I do not believe it is feasible to be funded entirely by the State. Furthermore, it provides for flexibility in particular areas which may need a diversity of housing tenures, including social, affordable and private.
As I said to the committee last month, we see the figure of 40% for the number of social and affordable homes to be provided as a minimum, not a maximum. We anticipate that we will be able to deliver social and affordable homes to a figure of 100% on individual sites where the circumstances are right. I am conscious that the provision of social and affordable housing is a major focus for the committee and that it is entirely understandable that many stakeholders want to highlight the importance of not missing any opportunity to deliver in this space. What I say to these stakeholders is that we share that sense of urgency and commitment to delivering on the requirement to provide all types of home, including social and affordable. We are confident that this can be achieved through a range of delivery options, including developments where 100% of the homes provided are social and affordable and developments in which there is a mix of private homes alongside social and affordable homes.
In my opening remarks I hope I have provided greater clarity on some of the issues raised in recent weeks. I am happy to take questions from members.