I move:
That Seanad Éireann takes note of the Report of the Joint Committee on Building Land.
Report of Joint Committee on Building Land: Motion.
I welcome the report of the Joint Committee on Building Land. It represents the first serious attempt by representatives from both Houses of the Oireachtas to consider in detail the problems associated with the supply and cost of building land and to put forward proposals for dealing with the issues involved. The committee had a very wide brief and received a large number of submissions from interested parties which reflected the wide range of issues connected with the question of building land. The committee, therefore, was able to make a comprehensive analysis of the problem. The report contains 28 main recommendations which are aimed at achieving three main objectives: the improvement of the operation of the land market; the recovery by the community of a fair proportion of the gains arising from the development of land; and the better implementation of planning objectives.
The Government have noted the report and have decided that its recommendations should be examined by my Department with a view to formulating proposals for submission to Government as soon as possible. This examination has begun and the views of other Departments and the local authorities are being sought before specific legislative proposals or other measures are developed in response to the report. There are, however, a number of measures which I have already taken which relate to the committee's recommendations and I would like to take this opportunity of outlining these to the House. As I have already stated, the committee's main recommendations were aimed at improving the operation of the land market. In this regard the committee recommended that measures be taken: to streamline and update compulsory purchase procedures; to counter urban decay; and to examine existing legislation with a view to reducing compensation liability.
There is a general recognition that the present system of compulsory purchase of land by local authorities is cumbersome and long delays can occur before land actually comes into the control of the local authority and becomes available for development. These delays cause planning blight and inhibit local authority intervention in the land market. A general review of the law and procedures relating to the compulsory purchase of land and other property has been completed by my Department and a general scheme of a Bill to consolidate and modernise CPO law has now been prepared and will be brought before Government in the very near future. While this is an extremely complex branch of the law, the provisions in the general scheme will give effect to the Joint Committee's recommendations in this area.
The committee also recommended that the basis for the assessment of compensation for land which is compulsorily acquired should be modified with a view to ensuring that a valuation of land would reflect its development potential on the basis of a reasonable development timescale and so as to eliminate the effect which ill-founded expectations on the part of the landowner, or any purchaser, might have on land prices. This recommendation highlights the need for a detailed look at the existing rules for the assessment of compensation. My Department are undertaking such a review so that specific legislative proposals can be developed. This is a difficult and complicated issue and will need to be carefully thought out in order to get the correct balance between private property rights and the interests of the common good. As evidence of this, one has only to consider the difficulties experienced a few years ago in devising arrangements for the control of rents of those dwellings to which the Rent Restrictions Acts formerly applied. I believe, however, that the compensation rules, which in their present form go back to 1919, need to be changed if we are to bring them more closely into line with modern requirements and if we are to achieve a proper balance between private property rights and the interests of the common good.
The committee also considered the financial contributions which planning authorities may require to be made as a condition of planning permission. These contributions, which are commonly referred to as development levies, have become a source of contention between some builders and local authorities and the committee recommended that my Department should ensure that consistent and appropriate procedures are followed in establishing levy systems. As the law stands, it is entirely a matter for each planning authority to decide to what extent they should seek to recover costs by way of levies. There may well be a case for introducing greater consistency and equity to the present system of levies and the proposals of the committee in this area are being examined with a view to considering what legislative and other changes might be desirable.
If an adequate supply of building land is to be maintained there will be a need for continuing investment in infrastructural services, and this was rightly emphasised by the committee. Over recent years there has been a considerable increase in capital spending on sanitary services schemes with a corresponding expansion in the level of activity on schemes in progress. Road grants totalling £160 million will be made available to local authorities this year for road improvement and maintenance. This represents an increase of 4 per cent on the 1985 provision. However, it has to be remembered that in 1985 there was a substantial increase in State funding for roadworks which was 14.5 per cent greater in real terms than the 1984 provision. The recommendation of the committee that tax revenues from transactions in building land be allocated to local authorities for use in land acquisition and development will need to be considered by the Government in the context of other proposals currently being developed in relation to the reform of local finances.
The report pointed out that the existence of rights of connection to services, independent of the objectives of development plans, may act as a serious constraint on the implementation of the plans and recommended that the law should be amended to restrict the right of connection to public main sewers to development which is in accord with the proper planning and development of an area as set out in the development plan. It is my opinion that the statutory right of connection to services, which was granted in 1878, has implications for planning, particularly in relation to compensation claims, and I intend therefore that this recommendation will receive very careful consideration in my Department.
One of the more sensitive areas which will require examination in the light of the report is the taxation system as it relates to land transactions and development and windfall gains. The committee enunciated the principle that the community has a right to recover its own contributions, through the provision of services, to gains arising from increases in land values and that a substantial part of the increase in land values should be acquired by the community subject to minimising any consequential effects on supply, availability and price. In this connection the committee expressed dissatisfaction that precise figures were not available of the amount of income tax and corporation tax arising from sales of development land. The lack of such information for an area as sensitive as this, where the popular perception is that large profits are being made and little tax is being paid, is a matter which must be pursued. My Department are already in communication with the Revenue Commissioners on this matter.
On a more general level the initial response to the range of financial and other incentives which I have introduced to promote the rehabilitation of inner-city areas in Dublin, Cork and Limerick by encouraging redevelopment programmes has been encouraging. These incentives are intended to attract development into areas which have generally been perceived as unfavourable for investment purposes and which would probably remain in a run-down and derelict state if left to the normal operation of the property market. Legislation is at present being prepared in my Department which will provide for the designation of these areas and the establishment of a new statutory authority to secure the redevelopment of one of these areas, the 27 acre Custom House Docks site in Dublin. I am also hopeful that the redevelopment of this massive site will do much to enhance the environment and employment prospects of the whole surrounding area and will serve as a catalyst to stimulate redevelopment along the docks and in the north inner-city.
Generally, I think that the overall reaction to the report has been one of welcome. The committee has put together a very good analysis of the problems which deserves the widest consideration. A large number of the report's detailed recommendations are acceptable and are being implemented. A detailed examination of the remaining recommendations is under way in my Department and when this has been completed specific legislative proposals and other measures will be developed and submitted to Government for approval.
Unfortunately I could not get my notes for this debate due to the snow storm so I will be speaking from memory. I am glad the Minister has welcomed the report because it is a very important one. I was anxious to be a member of that committee because I have some involvement in building and it seemed to me that I might be able to play a full part in that kind of work. As it turned out I discovered that a knowledge of building and housing was no advantage. My view is that somebody with no knowledge in that area would have been equally helpful to the committee.
The second point I should like to make is that I regard this report as a bible in this area. How do you deal in a brief contribution with a virtual bible? It is very difficult. There are many ways in which we can approach it. We can take a general look at it or we can refer to specific areas. I suppose there is for and against both these ways. I should like to pay tribute to the committee and particularly to the Chairman, Deputy Molloy and the Vice-Chairman, Senator Ferris. I should also like to express appreciation for the work done by the Clerk to the Committee, Mr. Kieran Coughlan. Unfortunately we lost him half way through on his promotion to Clerk Assistant in this House. He was replaced by Miss Patricia Ryan, who was a very able replacement. She had a very difficult job to take up where Mr. Coughlan left off. We were also very fortunate that we had Mr. Bob Jennings, Senior Research Officer with An Foras Forbartha to help us. No words of mine would be adequate to pay tribute to the hard work and the expertise of Mr. Jennings. Indeed, I would go so far as to say that in a large measure this report is a tribute to him. I would also like to thank Mr. T.C. Smith, Senior Counsel, and Mr. P. Kelly Barrister-at-Law, both of whom provided legal advice to the committee and also to the staff of the Houses of the Oireachtas who helped out with the typing and all the secretarial work.
In the whole area of social engineering housing is most important. Housing development may be regarded as the implementation of social policy. It is not merely structural planning. It is a fundamental part of social engineering. This is what underlies the importance of this report and indeed any examination in this area. This report contains 40 conclusions and 28 recommendations and represents two years hard work. It is very hard to focus on everything in that period. The presentation of the report is unique because I see that details are given of all the meetings that were held and the attendance of all the members. People looking at it will at least know who played their part. I must say, looking back on it, since nobody else is likely to clap me on the back, I am inclined to do it myself. My attendance is something of which I am proud. It is not easy for Deputies or Senators to attend these meetings. Meetings were held mostly on Wednesdays. I personally found it difficult to play my part here and also to take part in the committee. I am sure that would be the experience of every other member. There is a difficulty. In some ways it might be better not to have those meetings held when the Dáil or the Seanad are in session. That may be difficult, but in passing I would say that.
Coming closer to the report, one of the views we took about building land was that with regard to any profits in that area the community had an entitlement as well as the individual. By and large most people are of the opinion that the Kenny report was unconstitutional in its suggestion about the control of building costs. The view we took on the committee was that the community had a right to the benefits which accrued with regard to the cost of servicing areas and also that the individual had a right under the Constitution. The committee tried to reach a reasonable balance between the two. That was fair and reasonable.
I am sure I am in order in referring to the proposed amendment which regrets the failure of the committee adequately to address the constitutional obstacles to a proper organisation of the building land market. Senator Brendan Ryan was one of the most enthusiastic members on the committee and I could not agree that the committee did not face all the obstacles. I believe that if the committee came to the conclusion that constitutional change was necessary, they would have approached it in that way.
The committee came to the conclusion, in my view, that not alone was constitutional change unnecessary but there was adequate scope to do everything that was required under the Constitution. Furthermore, to deal with constitutional change would have involved very long delays and these would have been unacceptable because several times during the course of the sittings of the committee we came to the House to look for extensions. Many people had reservations about giving those extensions. The committee decided that constitutional change was unnecessary and I want to put it on record that the committee would not shy away from approaching it in that respect if they felt it was necessary.
Another area on which we spent considerable time was compulsory purchase orders. Suggestions were made about simplifying procedures. It was also felt that the value should be more in line with the existing use of a property rather than what it might be if planning permission was given. This is reasonable and it must be accepted. In other words, if property on which a CPO had been placed were within an urban area the value should be related strictly to the value of that property in its own right and not to the possibilities connected with it, possibilities in large measure which would be related to public services, public facilities, the infrastructure which the public had paid for. That was another area which was discussed at length with regard to serviced land.
In many instances serviced land brought considerable wealth to individuals by reason of the fact that the land or property was close to services provided by the local authority at the taxpayer's expense. This is the important part. The initial windfall went to the owner and then the developer and, in particular, the purchaser was paying on the double because he was paying the enhanced price because of the services that were provided by the taxpayer and as a taxpayer he had paid for the service. We had that difficulty.
Inner city development was another matter which came up during the discussions. Everybody knows there is a considerable problem in deciding whether very expensive and valuable land in the centre of the city should be used for a limited number of houses or whether the same amount of money should be used to build further from the central area, where the same amount of money would build more houses. This is a problem that has arisen. It is a political question — I do not mean party political — and part of the science of government and social policy. Unfortunately, many people would feel the wrong decisions have been made in this area. People were brought out from the inner city, they were disrupted, their culture was disrupted and interfered with, their way of life was disrupted with the result that they were discontented, under stress, placed in a strange environment. Crime and drug problems occurred. Indeed, in many cases very decent people were put in a situation where they succumbed to these pressures. The people were blamed for the problems which the climate had created. The people in their own setting were decent people who had a way of life; they interfered with nobody.
Bringing people from the inner city out to high-rise flats, we can all see now, was an enormous mistake. In other countries, even in London, the decision was made many years ago to regenerate the inner city on the same lines as we are doing here and, in fact, we are only copying what they have done and in many cases the designs and plans seem to be a copy of what they have there. Even in the area of high-rise flats people were put in an impossible position for which they were subsequently blamed. When I came to Dublin in the late 1950s, high-rise flats were the in-thing all over Europe. They came in here subsequently — I think really as a political issue — following publicity and people pointing out the success of high-rise flats and their advantages in other countries. I remember an exhibition in the Building Centre on Corbousier, who I suppose was the architect of high-rise flats and this exhibition went on for a very long period promoting high-rise flats and their success. I do not hear much about Corbousier now and, indeed, his flats were a great success until some years afterwards when people, instead of using the chutes for getting rid of refuse, threw it over the bannisters and the sides of the building. As a result, high-rise flats were no longer promoted and are a bad word now and rightly so. That is the specific problem with regard to the inner city regeneration and development.
It is worthwhile referring to one-off houses because the report did say that one-off houses took the pressure off serviced land. On page 23 it is stated:
The growth in private single housing diverted pressure which would otherwise have been felt on publicly serviced land.
In effect, the report states that publicly serviced land was not available because during the seventies there was a great expansion in the building industry. The problem arose because we were not prepared for that expansion and not geared towards an expansion in infrastructures, such as sewerage schemes, water supply schemes, and so on. It is worth pointing out that the report emphasises the value of the one-off sites. Of course, we have the advantage at present that we are in a period of great decline in the building industry and therefore, the pressure was not on the committee as it would have been in the seventies. We have much more time. Hopefully, the recommendations in this report will be geared for a period when the situation will change and when we will reach a degree of activity in the housing market.
Regarding the one-off houses. I realise and, indeed, the report emphasises that to an extent we are not considering the planning laws per se. In any event, it is worthwhile pointing out that even today the one-off house is taking considerable pressure off serviced sites. It is a mistake that we have this drive to make it more difficult to obtain planning permission for isolated houses in rural areas.
There are problems in some areas. For example, in parts of Meath we have higher densities and in the area close to Dublin we have pollution due to concentration of septic tanks. The report very clearly points out that the reason we have this concentration of houses in the adjoining counties of Meath, Kildare and Wicklow is that in the Dublin area with regard to planning permission for single one-off houses, there is a charge for the provision of services. Naturally this charge is greater in Dublin than it is in the other counties with the result that this, in itself, drives people to the adjoining counties.
The committee came to the conclusion that it would be a good idea if those charges could be standardised. On the legal side, there seems to be a problem in that regard. If that were to be done, for example, if Meath, Louth, Kildare and Wicklow were to charge the same amount as in Dublin they would, in effect, be making a profit. If, in Dublin, they were charging the costs that would have been incurred for those services in Meath, there would be a loss. I cannot see how this problem could be got over without legislation. I am sure there is some way to do it, because the committee clearly felt that one of the reasons for this rural sprawl in the areas contiguous to Dublin was the differential charges. They could be looked at and, perhaps, when we reach the stage when we will be looking at these problems on a regional basis this problem may very well be simplified.
I should like to put some emphasis on the value of the one-off house. I am not going to discuss any other area. It is playing an important part and should continue to do so. With regard to the planning legislation we have a democratic situation. Under the Planning Acts, 1963 up to the present, people are in control of what they want. Development plans have been drawn up by the local authorities for a period of five years. These are considered by the elected members and eventually a decision is reached with regard to a development plan. That plan is put on display for a period of three months. Any ratepayer who wants to make a complaint or has some observation to make is enabled to do so. In effect, the people are responsible for the development plan. This is something that should not be changed. With regard to changes in the development plan, if the elected representatives feel that it is necessary, that is possible.
The planning control is adequate. It is unfortunate that section 4 is necessary but it is something that should be retained. It is one of the few reserved functions and these are evaporating all the time. This is something we should not forego too easily.
It is fair that in passing that I should refer to the old housing stock and say that a concentration on helping out in this area of reconstruction and refurbishing also — as well as the one-off house — reduces pressure with regard to the requirements of building land. We welcome the reconstruction grant, 1985, scheme. If it is implemented in the way that it should be, it will have a major input into the whole area of housing. It will reduce the pressures on the requirements for sites for new houses which, in effect, in the subtleties of the market, will reduce the cost of building land.
It is worthwhile to refer to the reconstruction grant and to state that the committee felt that this was one area where pressure could be taken off the requirements for building land. This was before the announcements were made by the Government regarding the reconstruction grant in 1985. It is one thing that tied in very well with the thinking of the committee.
Another area we dealt with for long periods was the price, cost and value of building land. There are subtle differences but nevertheless, they are important. The committee concentrated on dealing with the value of building land. Value in this sense is determined by the use of land for the greatest benefit to the community. Price is not always related to benefit. It is something that is determined by the market and changes rapidly. Value is much more important because it is related to the planning and to the importance of the development plan.
In drawing up the development plan the members of the local authority come to a decision about the precise use of land. What the development plan really states is that within the terms of that plan the designations for the particular parcels of land are the best for the community. That is precisely what they are saying. They are putting the value on it for a particular purpose. The committee also pointed out that if these values are not maintained, in other words, if land which best benefits the community through it use for housing but instead is used for office blocks which will be there for many generations, that creates a major problem.
The value of building land is the important consideration. The value must be related to the community and the benefits which the community will get from that land. The committee decided that any consideration of building land must be placed firmly in the context of ensuring the best use of land in the community interest. While recognising the constitutional rights of the individual and the rights which could not be overlooked and the rights which are very important in the context of the culture and the history of this country, the committee while considering them all the time focused on the important benefits which were due to the community. It was not up to the committee to decide or to dictate how land should be used. That is the role at present both of the planning system and the land market. I suppose, in effect, one could say that this limited the scope of the work of the committee in the overall context and particularly in the context of social engineering of which this is a part. It should have been possible to look at that area and maybe not to dictate but to make recommendations in this respect and to point out that perhaps in some areas changes should be made in order to improve the planning legislation and in order to achieve the situation that we would all desire with regard to individual rights and with regard to the community.
There was a rapid growth in the building industry output in the seventies. Possibly it is still not fully appreciated how unusual that decade was in the economic and demographic life of the country. By 1979 total building output was about two-thirds higher than in 1971. New housing, the main area which gives rise to demand for building land, had doubled between 1970 and 1975 and peaked in the early eighties. It is no exaggeration to say that it was this growth and its consequences which were the dominant influences on most other developments connected with building land. Clearly that was a phenomenon. The fact that we are in a period of decline gave the committe time to look at this situation calmly without the pressure of having to rush through their report. Even looking back on it, the committee came to the conclusion that even if there had been adequate serviced land — which there was not — the pressures were such that they would result in distortion in the market. We realised that the supply of serviced land was caught unprepared — and even if it were prepared it still would not mean that some major problems would not have arisen with regard to the supply and cost of building land. In this regard, while we are reasonably satisfied now that there is a considerable area of serviced building land, to some extent it is never possible to say that we are in a satisfactory situation. In effect, what could happen would be that people who might require new houses might be driven out of areas in which they would want to reside and into areas where they would not want to reside. There is a major difficulty in ensuring that there is an adequate supply of building land available in suitable places. That is something that would be very difficult. In relation to requirements of people regarding where they want to work, the committee gave some consideration to the matter of why people who work in urban areas would want to commute from houses in the countryside. Many reasons were put forward such as getting away from the pressures of urban life to enjoy the amenities of the countryside — which they are entitled to do — but no clear impression came across. No statistics came up. We got no picture to show an overriding reason as to why people want to build in rural areas.
One survey shows that most of the people who build in rural areas acquire their sites from relatives, from in-laws or, perhaps, on their parents' farm. That, in itself, would be an overriding reason. Perhaps some people would like to live close to relatives. Why should they not if they want to? Indeed, why should a farmer not be able to give a plot of land to one of his family on which to build a house? Why should somebody with a small area of land not be allowed to build a house in a rural area, if that person wants to, because it is curtailing a right? This is something new and a departure from the old standards. I think it is wrong. In more recent years, while investment in services was increasing, the level of demand for building output was in decline. Those developments place in context one of the major conclusions of the committee that there is now a reasonably adequate supply of serviced land to meet needs arising for a number of years. This was fairly well established by the information before the committee from many local authorities. The committee drew attention to the inadequate levels of investment in related road networks which are also necessary to ensure that land can be developed. This is one area that is important. We should emphasise that it is not only the water and sewerage facilities that are necessary. The roads network is equally important.
At present when I see, in passing, that our roads are in such a sad state it is hard to feel it is unreasonable to look for development in this area. I would like to emphasise that the committee came to the conclusion that while, in general, it seems there is an adequate supply of serviced land, nevertheless there are situations where having the serviced land is not enough. The roads network and other areas such as telephones and electricity enter into the picture as well. That is a situation which might very well be looked at. I mention that in passing with regard to the problems we have in getting finance for these works at present. Nevertheless, while we say in general that we have an adequate supply of building land, that reservation about the roads network does raise a serious question mark with regard to all the information supplied by the local authorities.
The committee concluded, as Justice Kenny had done in his report many years earlier, that the overal increase in land prices was due to the heavy demand, to which I have already referred. Even in a well-ordered situation there would have been difficulty in keeping pace with that kind of pressure.
There are many areas of the report itself on which we could spend a lot of time. Section 1.1 of the report, in the first paragraph reads:
Land is a resource of both the community and the individual. The effects of individual decisions on land use often outlive the individual interest and in many cases are irreversible. Furthermore, the use of a parcel of land for one purpose usually means that it cannot be used in any alternative manner.
That is something I have already mentioned.
In urban areas, use of land in one location may influence the whole urban structure by affecting the possibility of similar land use in other locations. In smaller towns, ribbon development on access routes can severely restrict other development options.
It is important to refer to this sprawl in the suburbs and on the outskirts of towns and the damage this is doing. This is an area in which I feel great progress could be made without spending as much in resources as would be necessary in new housing schemes. On the outskirts of towns and cities and villages we have this sprawl. The reason for this sprawl is that the roads network, the sewerage facilities and the water supply are not available for development in depth. In many of those instances it would be possible to extend the services at a very reasonable cost. We could reach a situation in which we would have a total development of an area. We could, perhaps, limit the sites to certain sizes.
Sitting suspended at 1 p.m. and resumed at 2.15 p.m.
Most reasonable people agree that this is a very well researched document. While it does not solve all the problems, and nobody would claim that it does or could, it makes many very sound recommendations which, if implemented, would make a significant contribution in the area of building land. I am glad that the Minister appreciates that. Given the status of private ownership in our Constitution, most thinking people would feel that the committee have done a very good job. Many of the recommendations could be introduced quickly without new legislation by simple amendments to other Acts which are subject to frequent amendment. The report is very important and it has been acknowledged as being very important. It will become more so in time.
We do not have the pressures now that we had in the seventies, but we will have them again. This is a time when I feel I could make a party political outburst but I will refrain from that because the subject is much too important. We all hope that the problems will be solved and we will once again get back into the development that we had in the seventies. All of us involved on the committee and people who are involved in this area realise the complexity of issues connected with building land and that there is no simple solution for them.
A brief reference was made to the possibility of controlling prices. This is dealt with briefly. It is pointed out that to implement such control would simply transfer wealth because the value of the site or land is the intrinsic thing. If a community placed a value on a particular site of, say, £10,000 and if we had price control and that site had to be sold at £5,000, its value would remain the same and there would simply be a transfer of wealth. This transfer might not necessarily be necessary or desirable. In that situation I am sure there would have to be some kind of means test. Otherwise it would not be effective and price control, even if it were constitutional, which it is not, would not be the answer. People had the wrong idea that new house prices could be inflated to make up for the extra cost of the site. It has been shown that this is not so. New house prices are related to the second hand houses in the area or to the existing housing stock. While in other areas somebody selling a commodity might make up the input of costs and arrive at a total figure, in effect what the developer or speculator does is look at an area, see the type of houses that are in that area, how desirable the locality is, and put his price or the amount that he would be able to get for his houses, and work backwards like that.
What it points out also is that we are a class-ridden people. It shows that people by themselves determine the value of houses or the desirability of the locality. For example, if there was a travellers' camp in the locality it would devalue the area; so, in effect, the new house prices relate to the area, not to anything else. The developer in fixing his price will have to come to some kind of conclusion as to what price he would get for the houses he would erect in that area and the success or failure of his operation would depend on that judgment and the decision he would come to.
Another peripheral matter that came before the committee is worth mentioning. That is the problem we have with regard to sewage treatment plants and how this, in turn, affects prices and site costs. We have, of course, a serious problem in this regard. We have the unfortunate situation where raw sewage is being pumped into Dublin Bay. While this from the health point of view may not be serious, from the amenity and any other points of view it is totally undesirable.
As I said earlier, in rural areas one of the big problems is septic tanks and the pollution consequent on septic tanks, because the septic tank is really a very primitive and very primary method of sewage disposal. It seems strange that with all the developments we have in technology something has not been done with regard to this problem. It is difficult to understand and realise that in many ways the primitive privy attached to the old houses in pre-Famine times was more hygienic than the modern methods of treating human waste and sewage. When we are talking of the National Development Corporation, the many schemes that could be undertaken and the many areas where the corporation could help, this is certainly an area where scholarship, research and development would pay. Not alone do these matters push up our housing costs but they are also responsible for pollution of our rivers and destroying the amenity and the tourist attractiveness of the countryside. I hope that something can be done in that regard.
One thing the report makes clear is that raw land prices have not been a major influence on house price trends, contrary to what was generally believed. The raw land price had no effective influence on house prices. With regard to recommendations on the land market, the committee concluded that at present the planning system looks after the broad issues of land use and provision of main services. Land availability transactions and development are looked after by the market, quite apart from these main services. There is no policy area directly concerned with the operation of the land market, which is largely left to its own devices.
I think this is unfortunate. Broadly speaking, in this country we have no land policy either. I am not saying that in the critical sense. I am saying it in the sense that we need a land policy on the lines mentioned here. The land policy plays a very large part not alone in regard to building land, but we see that some areas traditionally used for agriculture may be converted into forestry with the result that the ecology and the wildlife of the place is totally changed. In some sense it seems to me that a land policy should incorporate all these considerations and would eliminate that possibility. Then the committee recommend development of policy to ensure effective operation of the land market. This policy should include measures to guide, regulate and supplement market behaviour, taking account of the more detailed recommendations which are given later on.
With regard to guidance, it was felt that the individual speculative house builder is the key to the operation of the new private estate housing and land markets and policy should be geared towards ensuring that they operate most effectively. Industry and the State have not made sufficient distinction between need, which is the prime policy interest of the State, and demand, which is the dominant influence of the market. The committee go on then to make recommendations, and these are:
Large or local authorities be required to publish an annual development report. This report should include, among other things, a review of the position on serviced building land, land transactions and prices, building intentions as indicated in planning permissions, and the position of unexercised planning permissions.
By and large, the development plan does not impose any strict obligations as regards the actual development on a planning authority. It is a framework against which proposals and planning permissions are considered. But of itself the development plan does not achieve the actual development that is desirable. It is a vehicle towards that end.
The committee recommended that:
Details of all transactions in building land be notifiable to local authorities. This should be an obligation on those engaged in the transaction, a legal statutory obligation, to ensure that this information is available for the development of the report.
And of course — it would have to be readily and immediately available. There are, of course, facilities with the planning authorities to be able to register this information and to monitor it constantly. The committee also recommended that planning permission should include a proposed development timescale. This is intended to assist in the preparation of the development report, which I mentioned earlier, and in particular to indicate the supply position of the industry. It is not intended as a matter which should influence the granting of permission. Of course, I am sure there will be no statutory basis to help in that regard, in having that as a consideration.
The committee considered the very important matter of compensation. Of course, in the present climate this is one of the major considerations. It says:
Refusal of planning permission can entail a liability for compensation at the development value of land. This frustrates amenity and open space objectives in development plans.
The committee felt, however, that there is considerable scope within public policies for supporting the decisions of local authorities as to the proper planning and development of their areas. Then the report goes on to recommend that subsidies and incentives for housing and industrial development be restricted to development which is in accord with the planning policies of local authorities as indicated in zoning or granting of planning permissions. This would largely eliminate development value on land which planning authorities do not wish to see developed and significantly reduce compensation liabilities.
It was the committee's view that, while public policy may not deprive property owners of their entitlements, it is under no obligation to confer entitlements and should not do so where these frustrate other policy objectives. That is a most important statement. I also feel that it is not improper for me to say that it is a statement which had the backing of the legal adviser. On such an important matter, it would have been most important to have that advice. By and large that is something that should be immediately considered and, indeed, it appears to an ordinary layman that it is very sound advice. While public policy may not deprive property owners of their entitlements, it is under no obligation to confer entitlements such as would be conferred where people have land beside services and want to develop it and so get a windfall in respect of that land. Short of that, some amendment or change could be made to the planning regulations to ensure that compensation would not be payable in those cases. It seems that this is the simplest course to take. I am sure the Minister will take note of that and has taken it already.
Regarding compulsory purchase orders the reports says:
The effective implementation of planning requires that local authorities have effective, speedy and efficient compulsory purchase powers. Reform and streamlining of the CPO procedures is therefore essential.
At present they are too cumbersome; they result in long delays and therefore increase costs. They also require a long time from professionals and from advisers in many areas.
In the case of market failure there is an inconsistency between the value which may be attributed to an individual parcel of land taken on its own and the aggregate valuation of all parcels taken together. The report goes on to say:
Any individual parcel of urban land might be used for office development; all parcels together could not because there would be simply no demand for that quantity of office space. The present method of assessing compensation for refusal of permission or in the case of compulsory purchase does not take account of this inconsistency.
This is something to which the Department and the Minister will give great consideration. It seems very sensible and it is something I referred to earlier. I believe that the compensation which is payable should be related to the value of the land as determined by the development plan.
In the past one of the causes of windfall gain for the original land owner was the provision of services, of the infrastructure, by the local authority at the taxpayers' expense. The committee considered this and said:
Owners and occupiers of land are at present entitled to connect to public main services. These rights can conflict with the proper planning and development of an area.
This can be easily understood where the local authority might have in mind a certain housing development and provide public services on those lines. A land owner in that immediate area would be entitled to connect to those public services. That seems inconsistent. The committee have very rightly underlined this by recommending that the right of connection to the public main services be restricted to the development which is in accord with the proper planning and development of the area.
I spoke earlier about development levies and contributions and said that they should be unified, but that there is a place for them. The committee were critical of the way in which development levies have been implemented up to now in an arbitrary way and which varies from one local authority to another with the unfortunate practical result that, because of the high levies in the Dublin area, people have been driven out to the adjoining counties, as the levies there are less or non-existent. This has created grave problems, not alone with pollution but with regard to the cost of land in those areas. The committee recommended:
that local authorities be required to publish the basis of assessing levies and contributions. The Minister for the Environment should ensure that consistent and appropriate procedures are followed in establishing levies
that changes in levies be notified well in advance of implementation
that levies should not amount to a tax on development
that standard levies be utilised as much as possible ... Variable conditions attaching to planning permissions, which affect development costs, should only arise in exceptional circumstances
that the seven year limitation on admissible costs, for the purposes of assessing levies and contributions be removed.
The report goes on to consider planning and the market and says:
A range of problems arise at the interface between the planning and market systems. In some cases these can have a significant impact on the cost or viability of proposed development. Consideration then of this particular aspect and the recommendations which the committee made are as follows:
that the Minister for the Environment undertake an examination of land availability to ascertain whether organisational changes within the planning system or an independent body, such as a land authority, would provide the most effective policy response
that the planning criteria adopted by different planning authorities be mutually consistent where the authorities' areas are part of a wider development region.
This, of course, may be helped to some considerable extent when, as I said, the development regions will become more effective because they cover larger areas. The whole country will be covered by live development regions. The report also recommends:
that the use of compulsory purchase procedures to assist in site assembly by private or partnership public/private development be encouraged
that the advice and guidelines issued by the Minister for the Environment be adopted by local authorities
that local authorities ensure that all of their activities connected with development are fully in line with the development plan.
With regard to the last point, I do not think there is any implied criticism of local authorities or planning authorities in this respect. It emphasises the importance of the development plan.
With regard to equity, this is concerned with the distribution of benefits from increases in land values and, as I have said before, the important aspect is that the community would benefit from the increases in land value. The report states:
The Committee's primary concern is with the question of windfall gain in building land transactions. This question is often concerned with proposals for reducing land prices, but in the committee's view these are largely separate issues.
I have dealt with that before. The committee goes on to give their views in relation to the distribution of gains and that these should be based on three important principles. The first one is the right to recover the community's own contribution in the provision of services. That is a basic right and is most important. I cannot see any reason why that should not be implemented straight away. The second principle is the need to eliminate distortions and pressures arising from windfall gains which are contrary to optimum development; and third is the need to ensure public acceptance that the distribution of realised gains is fair and reasonable. This the committee say "should take account of the fact that the overall operation of the planning system influences which landowners will benefit from development, and recognise that windfall gain is concentrated, in some cases, on a relatively small number of landowners".
We had a situation in the seventies and previously where the speculator was the person who possibly got most of the benefit, the person who did nothing, perhaps bought the land, applied for planning permission and reaped the benefits. Nobody would take serious objection to a developer who would make a profit because that is his motive in doing it, but the speculator was the person who did little and, in many cases, made most.
With regard to the recoupment for the community of gains from increases in land values, in relation to the first two principles which I mentioned, the committee were of the view that development levies are the appropriate method for recovering costs of services. Services are costly. It is comparatively easy to calculate the actual costs and it does seem a simple method of recovering costs of the services. The committee recommended:
that the recommendations made in regard to compensation and compulsory purchase, and other recommendations, will substantially reduce distortions and pressures related to windfall gain
—which is one of the primary reasons for setting up this report.
With regard to the value and the importance of a proper social policy, the committee dealt with the speculative situation where a local authority would have to pay £100,000 for an acre of urban building land and another authority which would own a similar site worth £100,000 and the different problems they would have. It may be possible to devise a scheme which would enable the first authority to acquire the site at substantially less than its market value. But, having done so, there is another question facing each authority: whether it is desirable to build houses on land without market price. There is a cost involved which could be measured by the number of extra houses which could be built on lower valued land if the site was sold. Longer waiting times for some prospective tenants are part of the cost of proceeding with the inner urban scheme. There are also benefits to society in general and to individual tenants for urban renewal and more central location. It is up to each authority to balance the benefits and the cost involved, but it is important that they be known and taken into account in such decisions.
It is very easy on a grand scale to come to a conclusion with regard to housing and planning that most houses are built and properly serviced in urban situations. Comparing the situation with isolated houses in rural areas and urban development, if we take the cost of the infrastructure for a one-off rural house we have to consider the cost of providing telephone facilities, the cost of roads and the cost of many other issues, perhaps providing free travel to schools, and we work out a certain figure. If we consider 50 houses together, of course, the cost works out so much less because providing the infrastructure for 50 houses is much simpler than it is for one. Therefore, if we are to have that kind of comparison it is very hard to make a case for the one-off house.
On the other hand, as I have said before, taking into consideration the time somebody has to wait, the stress which is caused, the problems of crime and use of drugs, air pollution which at present is very serious, it is not so simple. It is rather a complicated problem and, therefore, to make the decision whether to build in the inner city area a small number of houses or, with the same money, to build outside the urban area a larger number of houses and displace all those people, interfere with their culture and way of life, put all those stresses on them — all that comes under the heading of social engineering and, of course, as I said before, the implementation of a housing policy is an integral part of social engineering. The committee did not go into the pros and cons because it was not part of their remit, but the way they spell it out here is interesting and it is worthwhile putting emphasis on it in passing.
To control the price of building land would mean a transfer of wealth and, if wealth is transferred to households not requiring assistance, then there is less available for those in need. Similarly, in the case of local authorities, there are alternatives to new building. These include encouraging vacancies in their existing stock, purchase of secondhand houses or refurbishing rundown buildings. I complimented the Minister and the Department of the Environment on their 1985 reconstruction grants scheme. We should remember that throughout the country there are many vacant houses which the owners will not be tempted to refurbish even with the attractive grant scheme that has been implemented.
The Government have played a part in taking the pressure off the requirement of sites for new houses but there is still a considerable number of rundown houses that could be restored. In my own area I know of many which could be made suitable for people who are looking for houses. Indeed, in Kells we have a serious problem because so many people have applied for houses, have waited a number of years and still cannot get houses. Although we are making good strides, there is always the list that cannot be dealt with and many deserving cases are left out which should not be left out. In general, the committee felt from the information they got that between 30 per cent and 40 per cent of the cost of a house ended up in the State's pocket in one way or another.
I want to conclude with a comparison of costs and charges arising in housing and building land development on the lines of information we got in the committee. It brings in a few important aspects and I will complete my contribution with this. The comparison is a provisional one. Unless there is some unusual development, the situation will be the same for some considerable time to come. We were given two examples which outlined the land and building costs associated with housing development from "raw" land to completed house. Costs arising from arranging mortgage and finance were not included.
Would you give the source of your quotation?
This information was provided by An Foras Forbartha on 6 December 1983 by the technical adviser, Mr. Bob Jennings. The first example is a straightforward case in that the prospective house owner purchases a site directly from a farmer and contracts all the building and development work to a builder. This would apply to about half of all the new private housing which, in effect, means all the single one-off houses which is a very considerable number.
The second example is a fairly simple example of the situation which applies to speculative house building and would be representative of the main urban certres. In this case it is assumed that the builder purchases an undeveloped ten-acre parcel of land from a property company. A large number of variations are possible on either example. We got copious notes about these. I will not mention any of them as it would complicate the issue. Each example is based on a house purchaser with access to £40,000 finance. This is to illustrate the workings of the market for housing and for land. The general level of house prices is determined by the type of purchaser active in the market and the amount of finance to which the purchasers have access. The cost of house building and other charges arising will determine what the purchaser gets for £40,000, that is, the type of house, size, accommodation and location of the house.
In other words, if most of the purchasers who are active in the market are trading up, then the typical house traded will be four-bedroomed or larger in a reasonably "select" location. This was the case in 1978-79. Conversely, if most purchasers are first time house owners the typical house will be three-bedroomed on the urban fringe, a situation which prevails at present, and the average price of new houses would reflect this. The examples show that for the same amount of money a single one-off house provides more in terms of accommodation and plot size than the speculatively built house. There must be a moral there.
An Foras Forbartha surveys of new private house building confirm that one-off houses are typically larger than estate houses, and from my own experiece I would say in all respects better, including the construction and the materials used. Apart from difference in transaction costs, fees and other charges the house builder working on contract can provide for a lower profit margin than the speculative builder since the latter must allow for risk. In a buoyant market, a speculative builder may realise the full profit, but in poor market conditions it may be wiped out altogether by extra interest payments. Plot sizes are larger in single one-off houses because building and land prices per acre are lower in county towns and rural areas than they are in urban areas. In the examples we have used a price of £5,000 plus expenses for an undeveloped site. For estate houses this is based on the An Foras Forbartha study "Land Transactions and Prices in the Dublin area." No data were available on site prices for single one-off houses and, in any event, these vary very much. It is understood that a figure of £5,000 is reasonably typical.
The differences in plot size illustrate that where building land values differ, these differences do not necessarily carry through to house prices. Unless there are restrictions on building densities, it is more likely that plot sizes will adjust to leave the site prices unchanged by building more houses. Unlike all the other costs, the market value of undeveloped land is not the result of any productive effort on the part of the property owner. Under existing legislation, two types of tax liability will arise in respect of land transactions shown in the second example. The property company is subject to corporation tax on its profits — land is its stock in trade — and the original landowner will be liable for capital gains tax. In contrast, the seller of a site for a single one-off house is unlikely to be subject to tax.
It should be emphasised that although the property owner requires a substantial gain from sale of the land, he does not create the value of the land. The market value is determined by demand and by the amount supplied by other owners. It is interesting to see from those two examples that in the case of a private, single, one-off house the State receipts amount to £8,415 and for the private estate house built by the speculative builder, at 80 houses per ten acres, the State receipts would amount to £11,700. This puts the situation into perspective.
Finally, this was a hard-working and dedicated committee. They produced a very important report. It will be taken as the bible in this area for many years to come in the same way as the Kenny report was for such a long period. The Kenny report made an important contribution in many ways but the questions we considered were different questions entirely. I hope the Minister for the Environment will consider carefully all the recommendations made. Because no constitutional question is involved, because many of the recommendations can be incorporated by simple amending legislation or by regulations or statutory instruments of some kind and, indeed, also because many of the recommendations would not involve any large amounts of money on the part of the State but in effect would result in bringing in more money to the State, I hope the Minister for the Environment will incorporate all these recommendations as soon as possible.
I am calling on Senator FitzGerald to speak although I am aware that by doing so I am allowing the Senator who has moved the motion technically to speak twice. The mover of a motion does not have the right to reserve his speech until later in the debate. However, as the Senator was not aware of the position at the time he moved the motion I am allowing him to speak on this occasion.
Mr. FitzGerald
Thank you, Sir. I should like to start by echoing a point made by Senator Fitzsimons a few times during the course of his contribution to this debate. That relates to the fact that the report of the Joint Committee on Building Land is not only a comprehensive publication but one which will be treated through time as an extraordinarily important record in relation to an area of some considerable controversy in this country of late. That is not to suggest that the controversy relating to the price of building land is particularly topical just now. The market has seen changes in the demand for building land. That has not meant that the pressure on vendors to sell and purchasers to buy has not been what it was five years ago. Nonetheless, markets of their nature fluctuate and no doubt in the foreseeable future that position will change again. To that extent it is important that this House and the other House in due course consider this report and the implications of it and also the very many heavy recommendations that have been made in the report, many of which have been referred to in a positive manner by the Minister here today.
I should say at this stage that I was not a member of the committee and thus perhaps I am not as au fait with the report as the Senator who has just spoken or, indeed, as are a number of other Senators who were intimately involved in its preparation. However, I have a certain professional background in the auctioneering world. I am the Seanad nominee of the Irish Auctioneers and Valuers Institute and I am also somebody who, through a period of approximately 12 years on a local authority, has seen the other side of the coin, or another part of the total picture relating to the position on land and land purchase and the availability of land.
There are three distinct categories of sale of land which merit our attention. Every so often in the well established residential areas of our cities and towns we find parcels of land coming on the market. Very often in a period of high boom in the building industry these reach prices that are a surprise to those participating in the auction and to the wider informed public in relation to the price achieved.
It is fair to say also that these individual small parcels of land which might be five acres, or perhaps up to ten or 15 acres, generally speaking, seem to be priced by the market place at a level which reflects the price of the completed house when the exercise is complete. I do not think that the concern of the Joint Committee on Building Land nor my concern should be in that particular area as it seems to cater for itself through market forces. On the other hand, there is the sale of much larger tracts of land in greenbelt areas and areas that are perhaps changing from a former agricultural use into the developing of a town or city.
There is a third category which I will come to a little later. That relates to the methodology of the CPO procedures relating to the Acquisition of Land (Assessment of Compensation) Act, 1919, as it now operates in modern times. There are many frustrations in that Act. Its cumbersome procedures are long. Often as long as eight to ten years are involved in the process and obviously progress will have to be made. I was glad to hear the Minister say that a Bill to deal with this matter is now in course of preparation which he hopes to bring to the Oireachtas in the foreseeable future.
One of the problems with the servicing of land or the sale of land which is about to be serviced or has been serviced in the newly developed areas in the outskirts of cities and towns relates to the programme on servicing we have experienced in this State in the past ten or 15 years. It is fair comment at this point to say that I have the view, and it is a considered view and I think very widely held, that the zoning objectives in the city or county development plans — and I think it particularly relates to the counties rather than to the cities — lead to much premature zoning. The city of Dublin is already largely a developed area and thus the chances and opportunities given to members of the local authority of which I am a member, Dublin Corporation, for the rezoning of land is minimal. This occurs frequently also in the counties and in Dublin County Council, Meath, Kildare and Wicklow in particular.
Land is zoned for a five year development plan which in no way reflects the extent to which that local authority are able in the five years to see through the development of water and sewerage facilities, road development and so on. That acts to some extent to create an unreal value for some parcels of land. These parcels of land can be big or small depending on the attitudes taken by the market place and they do not assist in controlling the development of land which is not serviced and where in due course the new owner may recoup the value of servicing.
On the question of the servicing of building land, which is very central to the whole issue of the control of building land, we have enough land zoned but not too much. There must be a balance there. As I have said, there has been, to some extent, a premature zoning of land in certain areas but it is important that we have the land that is zoned serviced as far as possible by the local authorities and properly funded by the State to ensure that it does not contribute to the cost of pieces of land that may come on the market. One of the greatest contributory causes of the escalation in the price of land is the likelihood in a short time and the risks that are taken by people in relation to the servicing of land which may not be necessary in some circumstances. In chapter 3.30 of the report there is this observation:
It seems there were severe deficiencies in the supply of serviced land in the early seventies and that the level of investment at that time was too low. The Kenny (majority and minority) Reports both emphasised the "inadequate investment in the sanitary services programme in the 1960s... which was not sufficient to meet increased demands for serviced land for housing, industry and other purposes" and also the "existing deficiencies in infrastructure, especially in Dublin". This was the general tenor of many of the submissions to the Kenny Committee and reflects anxiety about the adequacy of provision and the possibility that existing facilities would become overloaded.
It is on the record, in the course of this report, that investment in sanitary services in 1983 was four times what it was in the early seventies. The importance of advance servicing has been recognised as one part of the State's contribution to holding the value of land rather than allowing it to accelerate to the extent it had been doing historically due to a great deal of the market attempting to take advantage of what was seen as a good buy, with poor knowledge of the likely indications of servicing.
Chapter 3.32 reads:
Sanitary services investment peaked in 1976 and fell back until 1978. It doubled between then and 1983. Since housing completions in the later seventies have not grown as rapidly and given the diversion of demand into privately serviced land, it is likely that the supply of serviced land is now on a much improved footing compared with the early seventies, at least where water and sewerage are concerned.
I wanted to make that point initially — that I saw the market place, to some extent being given an impetus for the sale of land at prices beyond what would normally be the case due to the inadequacy of servicing and due particularly to the premature zoning that was taking place.
One of the important recommendations in this report and which could contribute to a great deal more sensible behaviour by the market, is the one on page xi which reads:
That larger local authorities be required to publish an annual Development Report. This report should include, inter alia a review of the position on serviced building land, land transactions and prices ... that details of all transactions of the building land be notifiable to local authorities... that planning permission include a proposed development time scale. This is intended to assist in the preparation of the Development report...
All this kind of information could be extremely valuable in working to attempt a much more considered approach to the issue of building land and to a much more real atmosphere in the market-place.
The issue is, on the one hand, the question of the supply of land serviced in the outlying areas of our cities and towns while on the other hand we have to deal with the procedures for compulsory purchase so outdated, as I described in an earlier part of my contribution.
On page 152 of the report we have the principal Rule No. 2 relating to the value of land. This reads:
The value of the land shall, subject as is hereafter provided, be taken to be the amount which the land as sold in the open market by a willing seller might be expected to realise; provided always that the arbitrator shall be entitled to consider all returns and assessments of capital value for taxation made or acquiesced in by the claimant.
The Rule continues, as quoted in the report:
The compensation must be determined, therefore, by reference to the price which a willing vendor might reasonably expect to obtain from a willing purchaser. The disinclination of the vendor to part with his land and the urgent necessity of the purchaser to buy must alike be disregarded. Neither must be regarded as acting under compulsion.
In the course of some of the recommendations in the report we are considering today a number of points made relating to the area of compulsory acquisition. It seems to me that in this area, there is some little misunderstanding of the role of the arbitrator in handling a decision in relation to a proposal to purchase compulsorily. The recommendation in the report, page xv, is that:
any development value attributed to land must be established by reference to specified development which would be completed within a reasonable time scale and for which a market demand has been established...
The recommendation continues:
That other transaction prices adduced for comparability purposes be admissible only where they are shown to be related to similar development and provided there is no evidence that such prices are distorted.
The important area to advance here is the area which was mentioned in the Minister's speech. It requires a great deal of action by the Department of the Environment in the foreseeable future, that is, to have a situation where the whole question of advancing the period of acquisition is pursued. Chapter 7.37 reads:
Compulsory purchase procedures are cumbersome and slow. An order may take between five and eight years to complete and the process is very open to delay by legal proceedings.
The recommendations in this area are particularly worthy of attention. They suggest that specific time limits at the various stages of making a CPO could be looked at. Chapter 7.39 reads:
The statutory authority allowing a local authority to enter on or gain possession of land can often cause delays and consideration could be given to tightening up the law to enable a local authority to enter on land to do surveys, etc. and to gain possession of land with the minimum amount of delay.
In tandem with that is the need to move ahead in the general consolidation of the law. The whole speeding up of the process is an essential element in what we are dealing with here. I am inclined to think that the first section relating to the completion of a development within a reasonable time scale may itself act as a deterrent, add uncertainty and delay movements in the availability of land in areas where servicing has already been provided. I would suggest hesitancy in that area while being totally in support of the need to modernise the legislation and give the public authority the possibilities of advancing the purchase in a much shorter and more practicable way towards ensuring that important policy objectives in our cities and towns are seen to be fulfilled much faster than is possible at present.
One of the areas to which this report directs itself is the question of how we deal with the community investment in building land, particularly on the outskirts of our cities and towns where new servicing is being provided. I accept that some arrangement would have to be made to recoup part of the investment by the State by way of development levies and capital gains. I notice that the Minister referred to this and presumably we will be hearing more relating to that subject and the concern there is in the community about the area of windfall gains.
I have covered most of what I intended to say and would like to conclude by saying that the important objective as I see it, in the immediate future, is to attempt to ensure that local authorities do not engage in as much premature zoning as they have been doing and that the recommendations in this report are seen as being of some considerable significance, by way of the production of an annual report by the major local authorities on servicing intentions and the planning stage which has arrived in relation to areas where development is occurring. The report should help also in speeding up the area of compulsory purchase to make it more practical and to make the legislation of a kind that is modern in content and is of a type that will be approached with a great deal more likelihood of gaining results within a relatively short time. I hope the expected legislation from the Minister in relation to compulsory purchase will be tabled as early as possible. All those engaged in the production of this report should be congratulated on the way in which they have contributed to the debate.
As a member of the committee who produced this report I am pleased to speak briefly on it in the Seanad. I welcome the report. It was long in gestation but I hope its recommendations will be implemented and that they will receive serious consideration in the Dáil and in the Seanad. We all remember a previous report which dealt with issues of building land. I refer, of course, to the Kenny report. That was hotly debated when it was published. In many aspects it is now very dated. It certainly did not have any legislative follow-through. It has been largely relegated. It is my earnest hope that the same fate will not await this report which was worked on with great dedication by those people who were on the all-party committee.
I should like to pay tribute to the chairman of that committee, Deputy Bobby Molloy, for his dedication and enthusiasm for this subject and for the gracious way in which he handled meetings and for all that he contributed to them. I would like also to pay my own tribute to the clerk of that committee, Ms. Pat Ryan, who was extremely conscientious in all her duties. The life of the committee was extended on at least two occasions. That meant that the work she had originally decided to do had a longer life than was expected so that a great tribute is due to her for her dedication. We had a superb technical adviser, Mr. Jennings, from An Foras Forbartha. He was extremely generous with his skill and expertise and in the latter time of the committee he spent hours teasing out the arguments in the various areas we had to consider. His advice and expertise were invaluable to the committee. The report bears the stamp of much of the input which came from that source.
It is very important that we all have a clear understanding that this report deals with a sensitive and, constitutionally, a key issue for Irish people. Essentially it boils down to being about the ownership of private property. I believe that man has a right to the ownership of private property but like all rights it is not an entirely absolute one because that right is secondary to the common good. We have to recognise that property and the ownership of it, particularly land, has a social dimension. The ownership of land whether by an individual, a company or the State is infused with a certain burden of stewardship. Its use therefore must always be considered in the broad context of the common good of all the citizens of the land.
Members of the committee bore this very much in mind during their deliberations on this key issue. In the sixties and seventies the whole question of the ownership of land was more of a burning issue than it is now because the economic recession has had its effect on this area as it has had on so many areas of public life in this State. The building industry is in what might be kindly described as something of a dormant situation. Therefore, the supply of land and the turnover of land is markedly slow. This whole issue has been on the backburner. In a way that is a good climate within which to discuss the report of the committee because it means that people can be relatively detached from the issue and discuss it calmly and rationally. At the moment we are not bedevilled by a rash of zonings and rezonings in local authority areas. The picture is very changed from that which obtained in the sixties and seventies. This is a good time, then, to be calm and rational and to discuss this whole issue of building land in that kind of climate.
At the outset it is important to state the terms of reference of the committee. It was a broad brief, even within the parameters. It was charged to consider and make recommendations regarding possible legislative and other measures to deal, in the interests of the common good, with the supply and cost of building land, including land within and adjacent to urban areas, having regard in particular to the Constitution and judgments of the Superior Courts in regard to the relevant Articles thereof; the Report of the Committee on the Price of Building Land; tax legislation in relation to profits or gains from dealings in, disposals of, or development of, land; the operation of the Local Government (Planning and Development) Acts, 1963-82 and the Local Government (Building Land) Bill, 1982. It was also charged to report on the merits and demerits of any measures considered, with particular reference to their constitutionality, legal and administrative practicality, financial and economic implications and likely effects on the cost of housing and of other forms of development.
The Joint Committee were given powers to send for persons, papers and records and to conduct hearings with experts on all aspects of this matter. The committee did that. There is a valuable appendix in relation to all the various submissions that were made to the committee. It is true to say that concern with the supply and cost of building land was a recurrent feature of Irish life in the seventies and, indeed, in earlier decades. In the early seventies, given economic buoyancy, building land prices were increasing rapidly. This, of course, led to the establishment of the Kenny report, which I have spoken of earlier and which, sadly, has more or less been allowed to languish. It reported in 1973 when speculative building and land purchasing were at their height. It was the very first broadly-based assessment of this whole issue of building land and of the many ancillary problems connected with it. It occasioned wide debate throughout the length and breadth of the country. It is true to say that the Government of the day accepted in principle the basic approach and thrust of the Kenny report.
There was a lot of Parliamentary debate at the time and the difficulty seemed to rest on the constitutionality and, indeed, the scope of some of the recommendations at the time. Questions were asked as to whether or not they were practicable. The approach being adopted was also questioned. The members of this committee bore all that in mind. In addressing the problems they re-examined the whole issue in the light of the difficulties which had been raised in the Kenny report. In the late seventies also, there was a rash of rapidly increasing land prices. It was that that prompted the establishment of this committee to consider the matter. The terms of reference that this committee was given differed from those of the Kenny committee. In the Kenny committee members were asked to consider a particular issue connected with building land. The terms of reference of this Joint Committee, whose report we are discussing today, permitted a wider approach to an evaluation of all issues connected with the supply of land and the cost of land. It was, in a way, a reflection of the wider appreciation which has grown up with the passage of time, and an awareness of the range and complexity of the issues which are connected with building land.
Many submissions were received by the committee from interested parties. From my work on another committee and, indeed, with reference to a motion which we passed here this morning allowing the Joint Committee on Co-operation with Developing Countries to bring in people and hear oral evidence, I would like to state that it is extremely important that the citizens of this State have the widest possible access to Parliament and to Parliamentary committees. The establishment of all party committees and the invitation to make submissions is part of this access of citizens to Parliament and its offshoots. It is interesting to note that in all committees — and this one on building land is no exception — when submissions are invited and when people are requested to make an input they are only too pleased to do so.
I certainly feel from this report that the views given to the committee in the submissions are very much reflected in the report and that this was not a token exercise. It actually means that the views of the people and their consensus opinion has found its way into the report and as such adds weight and value to the report. It is important to put that on record because there is a lot of cynicism abroad about Parliament, about its committees and about relationships between public representatives and the public. Certainly in my experience, albeit limited, on committees and in this House, I have found a great willingness on the part of the public, and a great ability to be receptive on the part of public representatives, when views are sought and where at all possible they are incorporated into findings and reports.
Certainly as a member of this committee I would like to place on record my thanks and appreciation to all those people who sent in submissions and involved themselves so willingly and so wholeheartedly with the work of the committee.
The submissions reflect a wide range of issues connected with the question of building land. It is not that everybody felt the same about things; of course they did not. The differences — and the sharp differences at times — and the complexities of the issues certainly surfaced in the submissions and the various problems were identified and well and truly argued. The main concern of the committee, of course, was the supply and the cost of building land.
Certainly the bulk of the report deals with this whole matter. It would simplify things if one would group the issues under four headings. The committee endeavoured to ensure that it discussed the best use of building land. Again, the supply and the cost of building land and the distribution of gains from increases in land values took up much of our time. We also discussed and deliberated on related policy issues. The underlying issues are important and should certainly be considered very carefully by anybody who is giving some thought to this whole area. Land is a most valuable resource. It is a resource of the community in which we live and it has also given us our philosophy of private ownership. It is a resource of the individual.
The effects of individual decisions on land use often outlive the individual interest. In many cases they are irreversible. This is why they must be approached always with all seriousness. If a parcel of land is at one stage used for a particular purpose it usually means that it is never used for an alternative purpose again. In urban areas a decision to use land, for example for a shopping area, can influence the whole urban structure because it affects the land use of adjacent parcels of land. This is why in urban areas it is such a vexatious issue and why people care so very much about it.
In smaller towns we have all seen the blight of ribbon development, leading into and out of our towns and villages. This means that our access to towns is very often less than it should be. There is a certain restriction then on the possibilities of options for development in and around the access to towns. Communities have a fundamental interest in keeping an eye on what is happening in their areas and ensuring that the use to which land is put is the best possible and that the interests of the community as a whole are upheld in any scenario. Indeed, from my experience on a local authority, I know that issues of planning and zoning, and sometimes rezoning, are the ones that really raise the blood pressure. It is on occasions like that one really can generate much public interest in the deliberations and decisions of local councils. It behoves every citizen to keep a watching brief on planning permissions and decisions that are made by councils.
I also feel that concerned citizens in our counties and towns should all know what is in the county or, indeed, the city or town development plan. There should be more civic-minded people who would concern themselves with this. Of course, there are others who would rather keep all of those decisions very much under wraps and that is not healthy or good and it should not be so.
While I am on the subject I would certainly like to see some changes about the placing of notices for planning permissions. There is something reprehensible and sneaky about the facility which allows people to place their notice very often in papers which have a less than significant circulation in an area and to place their applications for planning permission in these deliberately. Very often people who have no great love or enthusiasm for our native language are only too happy to put their planning applications in that language in newspapers of minority circulation. That is to be roundly condemned and I do hope at some stage somebody will address themselves to that particular difficulty.
It is up to the planning authority to determine if they are satisfied with the publication. They can look for publication——
I know they can, but the legislation at present allows that to be so and the local authority very often does not make difficulties for people because they are acting within the framework of existing legislation.
I hope that I have stressed so far that the importance of using land properly is one that underlined all the thinking of the committee. This whole business of the use of land on the urban periphery or land contiguous to towns is a very significant one because what we have is a situation of continuing urban sprawl in many of our towns and cities. Consistent with that then is a growing dereliction of inner cities, and with that comes a growth in crime and vandalism and all the attendant evils which naturally and rightly we all deplore.
When cities and towns are making their development plans they should perhaps take a leaf from Waterford, the local authority on which I sit in Waterford city, where there is a very vigorous programme of inner city renewal. It is most harmonious and most pleasing and has given enormous satisfaction to people. The same thing is happening here in Dublin. People are rightly angered when the heart is seen to be torn out of a living, vibrant community and when families are settled on the periphery, miles from areas that they knew and loved and where their families have lived for generations. This all forms part of the thrust of a committee on building land.
It is clear that while the proper use and allocation of land are important for community welfare, the committee had to investigate issues which ranged far outside that aspect. Local authorities and planning systems were examined by the committee. I am interested to see the amendments which at least one other member of the committee put down. It will be useful to see that argument conducted in the Seanad, because the committee did not have a specific cut-off point. They examined as widely and as broadly as possible the whole role of land and its use by the citizens.
The basis of land value is something we should emphasise. The committee decided that it was the benefit which the community as individual groups or collectively would obtain from the use of the land. The value of most land in the country is related only to its potential for agriculture. Development land differs because it has a variety of other uses. This is what gives rise to the large difference in land values. Land values, if they are properly determined, are fundamental to ensuring the best use of land. This is the bench mark against which the committee considered the issues and against which it identified the problems and made its recommendations. The whole role of land values is implicit in much of the debate which has taken place on building land, but it is seldom addressed directly. As a result it is very often overlooked. The committee were determined in their work not to do this, and so much of the thrust of the report relates to land values.
I would now like to speak on how land use is currently decided. The planning system which we have and the market forces play a part in deciding how land is actually used. There are relative degrees of influence of both of these. It is dictated to some extent by private ownership of property, that is, the private ownership of property as interpreted under the Constitution. Indeed, we have got to remember in all discussions on land and land use that Ireland is a market economy. A freely-operating land market cannot achieve the best use of land because the interests engaged in the market do not take account of costs and benefits to the community at large. That is why we need a planning system. It is necessary to ensure orderly development and for the community interest to act as a check or a balance against individual interests represented in the market place. By and large, we have a good planning system in this country and the checks and balances work very well. From time to time local authorities feel aggrieved when An Bord Pleanála, which is the highest arbiter, overturns the decisions of local authorities. Nevertheless, it is useful and important to have that body in place. It is part of the checks, balances and brakes within the planning system. It has a very useful role and function to play.
Each local authority have a duty — and carry it out effectively — of preparing, reviewing, and updating their own development plans. Usually, they are quite free in doing this. They deliberate carefully. They take their time about it. Members, generally speaking, address themselves to it with all seriousness. They are perfectly entitled to adopt their own criteria in relation to the type and the mix and the density of development permitted. They are also allowed decide on what locations development should take place. It is very important for the members of county councils, borough councils and corporations to be allowed to do this in all seriousness and with a great deal of concern. The whole business of bringing out the development plan is a complex one and it is important to balance the benefits of developments against the costs.
Many things have to be taken into account. In an ideal situation communities, through the planning system, would decide that certain patterns of land use are in their own best interests and, through zoning, a provision of services and acquisition where it is necessary, and other measures, would ensure that land is used accordingly. Therefore, the development plan and the actions of the local authority would reflect the community's actual view on land and land values.
Of course, there are problems in this. Planning has a difficulty in that very often it has to do some crystal-ball gazing. It has to anticipate the amount of land likely to be required for development because, of course, the function of the local authority is to ensure that the servicing is put in place. This impinges directly on the value of the land. Development pressures which give rise to the demand for land are usually outside the control of any individual authority. There may be a situation where too much land is zoned for one particular purpose or, conversely, where too little land is zoned and, indeed, serviced. Then there is poor use of resources or undue pressure on land prices. These are difficulties which must be addressed. They also stress the necessity of having highly qualified technical competence available to people in local authorities.
I will conclude my remarks on this subject by saying that the whole report is worthy of very serious consideration in this House and, indeed, in the Dail. I certainly hope that the legislative changes which the committee have identified and which are clearly seen to be necessary will be implemented speedily, because this whole area has remained something of a Cinderella, legislatively speaking. It has not been addressed promptly by the Legislature. This is a good time to do it when the pressure is off land by and large, as I said at the outset of my remarks. It is a time when feeling is not running high on the issue. That type of back-drop is always useful when it comes to making hard decisions. I hope this report will not suffer the same fate as the Kenny report and merely be something which allows people to ventilate their views, prejudices or concerns without any specific legislative follow-through.
I would like to thank the three Senators who made contributions to this important debate. I would have expected a larger number to be contributing on such an important topic, but maybe the weather we are having is preventing them from being here. Nevertheless, I have taken note of the contributions. As I stated in my opening remarks, I am in the process of implementing the committee's recommendations in the area of CPO law. My Department are also examining the other recommendations in the report and when this examination is completed I will bring my proposals to Government for approval.
I welcome the report and I thank all the members of the committee and its support staff for producing such a comprehensive analysis of the land problem and making so many valuable recommendations. Senators may be assured that all of these recommendations will be examined in detail in my Department. Senator Fitzsimons drew particular attention to the recommendations in the report in regard to the assessment of compensation. As I stated in my opening remarks, my Department are undertaking a detailed review of all the legislative provisions in this area and I hope to bring forward in the near future specific legislative proposals to deal with all the compensation issues dealt with in the report, including compensation for land compulsorily acquired and compensation liabilities arising under the Planning Acts.
Senator Fitzgerald rightly drew attention to the importance of the provision of infrastructure. I also recognise its importance and, despite the difficult economic situation, I have maintained the high level of spending on services. As I have already stated, road grants totalling £160 million will be made available to the local authorities this year for road improvements and maintenance. A 4 per cent increase on last year's provision and an increase of 20 per cent on the 1984 provision is reflected in that figure.
I thank Senator Bulbulia for her interesting remarks and assure her that there will be no delay on my part in bringing forward legislative proposals to both Houses of the Oireachtas. We are looking at the recommendations. As soon as the Cabinet have dealt with our memorandum we will be bringing forward proposals this year to deal with the recommendations in the report and, perhap, also taking a look at what was in Kenny and seeing if we can include some of the thoughts and recommendations of that report without offending the Constitution.
I can assure the House we will not delay in bringing forward our proposals as soon as we have had very deep deliberations in the Department on the recommendations. I thank the Members for their contributions on what I regard as probably one of the most important questions about which my Department will be concerned.
Question put and agreed to.