Affordable Housing Bill 2021: Committee Stage (Resumed)

SECTION 6
Debate resumed on amendment No. 16:
In page 8, between lines 32 and 33, to insert the following:“
(7) No action taken under the provisions of this section should be to the detriment of the provision of social housing by a housing authority.
- (Senator Lynn Ruane).

I will be brief as my colleague, Senator Ruane, has already spoken on this amendment. This is a safety measure which I am sure the Minister has already assured my colleague on. The aim of the amendment is to make it very clear that nothing in this section should be to the detriment of obligations on housing authorities in respect of social housing. There is a concern here because we often hear narratives about "social and affordable" housing. They get pulled together as a package deal and affordable housing becomes equated with social housing but we have an extraordinarily strong need for social housing in this State. Social housing plays an incredibly important role and is the foundation for many families to be able to live predictable and secure lives. There are many people who will not fall into this cohort, especially given how affordability is pitched but leaving that aside, social housing has a key role. We want to make it clear, in the context of this Bill, that we are not losing sight of the key and central role for housing authorities in respect of the provision of social housing and that there is no sense of resources being diverted from one area into another, that this is an addition rather than a re-routing.

Is the amendment being pressed?

Amendment put and declared lost.

I move amendment No. 17:

In page 8, between lines 32 and 33, to insert the following:

“(7) In performing functions under subsection (1) housing authorities shall have regard to the appropriateness of the location of dwellings in respect of facilitating access to public transport, education services, health services and public amenities.”.

Is the amendment being pressed?

I accepted the argument from the Minister of State that some of this relates to the planning area. I reserve the right to bring back a version of this amendment but I accept the Minister of State's argument in respect of it. I hope that by Report Stage, when we will reintroduce amendment No. 15 in the name of Senator Fitzpatrick, we will have provided the local authorities or housing authorities and their elected members with the empowerment to ensure that the factors I am trying to address with amendment No. 17 are carried through. In the context of the Government's plan to support amendment No. 15 on Report Stage, I will withdraw amendment No. 17. I reserve the right to reintroduce it on Report Stage.

Amendment, by leave, withdrawn.
Section 6 agreed to.
SECTION 7

I move amendment No. 18:

In page 9, to delete lines 4 to 6.

This is one of a series of amendments which essentially argue that public housing should be developed on public land without public private partnerships. We spoke to this amendment as part of the debate on Friday. Its purpose is to orientate the Bill towards safe provision of housing on public land and exclude public private partnerships that require houses to be sold at market cost which is out of the reach of many thousands of people in this country.

I reiterate the point we made last week and Senator Moynihan has made, namely, public private partnerships are inherently bad value for money. Successive Governments have seemed wedded to the policy but in schemes where we are trying to keep costs as low as possible, we need to avoid such partnerships. I will be pushing this amendment.

Amendment put and declared lost.

I move amendment No. 19:

In page 9, between lines 13 and 14, to insert the following:

“(3) A housing authority or a planning authority may only enter into an agreement under subsection (2) where the dwellings specified in the agreement meet such criteria of affordability as may be set out in regulations developed by the Minister and laid before, and agreed by, both Houses of the Oireachtas and which may be reviewed by the Minister from time to time and which may be amended by the Minister from time to time subject to the laying before and agreement of both Houses of the Oireachtas.”.

Amendments Nos. 19 to 21, inclusive, 24 and 25 are related and may be discussed together by agreement. Is that agreed? Agreed.

This suite of amendments relates to the principle of affordability. It is an issue that was touched on earlier. There is a concern that there is no clear definition of affordability in respect of this Bill and no such definition ties itself to people and what they can afford. I remember similar debates about the minimum wage legislation when the Low Pay Commission legislation was going through. I was not a Senator at the time but a civil society advocate. I highlighted a gaping hole in the Low Pay Commission legislation in that it did not deal with the question of adequacy. It referred to low pay as a market point and used it as a comparative term rather than tying the definition to the question of pay on which people could live. It is similarly important that the term "affordability" in this legislation means a price that people can afford to pay and not what the market could sell a house for, minus a bit. We must begin by considering what people can afford to pay.

I have tried to take a few different approaches to this issue. Amendments Nos. 24 and 25 refer to specific arrangements. The earlier amendments relate to the schemes as a whole. I have many views about what affordability should mean. In amendment No. 20, I set out that affordability should mean that a house is affordable to individuals with incomes on or below the national median income. A few years ago, the national median income was €28,500. When I worked with the National Women's Council of Ireland, the median income for women was €20,000, which meant 50% of women were earning €20,000 or less in a year. It is a good reality check to look at the median income because we know that half the population earns less than that. Affordable housing should be affordable to the bottom half of the population. The Minister of State might even insert the average income, rather than the median, in which case we would want to ensure that two thirds or three quarters of the population are eligible for affordable housing because we know that some very high incomes skew that average in Ireland. It would be appropriate for what I call the social base, the foundation of the State, to be able to afford housing. That is what amendment No. 20 is trying to do. I suggested that as a criterion under amendment No. 20.

In my other amendments, I hold back from suggesting criteria and simply try to prescribe that the Minister would set out criteria. In amendment No. 19 and more specifically in the consequential amendment No. 25, I am simply stating that the Minister should set out the criteria of affordability in regulations, lay them and agree them before the Houses of the Oireachtas, and review them from time to time. Perhaps they will need to be amended and the Minister should then take those proposed amendments before the Houses of the Oireachtas. That is simply trying to include clear criteria that would allow us to respond to what we know about how the scheme is working out. We must ask whether it is working and reaching those we need to reach. The Houses of the Oireachtas would, alongside the Minister, have a role in that regard.

Amendment No. 20, as I have said, is similar but sets the median income as one of those criteria.

Amendment No. 21 is associated with amendment No. 24. Amendment No. 21 is important. It relates to the discussion that the Minister of State has been hearing about the level of knowledge and local knowledge that exists in local authorities, housing authorities and their elected members. Those people have knowledge of their areas and communities and how they are being sustained or not being sustained. It simply says that notwithstanding any national regulations which may be set out, referring to the regulations I have asked the Minister of State to bring before us, a housing authority might specify additional criteria for the determination of affordability before entering into a specific agreement. That again ties it back to amendment No. 24 which requires that a dwelling be affordable to specific and eligible applicants who are nominated.

The Bill should not legislate for affordable housing in a general sense relating to the market, meaning simply that somebody could afford a house at a certain price. It should cater for the kinds of people who local authorities know are in their communities, people who want to buy houses, need access to affordable housing and want to remain, in many cases, part of the communities their families have been a part of for decades, or who want to be near their workplaces, or who represent large cohorts of a population within an area. There might be a local factory employing 200 local workers. There might be a hospital and the Government might want to ensure all of the nurses who work there can access housing in the area. Those are all realities. This is where I would suggest that housing authorities should be able to add criteria to any particular Part 5 agreements they make.

We do not want "affordable" defined grandly as a percentage below market value. We want housing to be affordable for a specific cohort of our constituency. This amendment would enable local authorities to add criteria before they enter a public private partnership, public initiative or local authority direct build which, as the Minister of State has probably heard, is my preferred option in many cases.

I hope the Minister might consider these amendments. I believe they are constructive. They address one of the core gaps in the Bill, which is around the definition of affordability and people being able to see that this is going to work in the places they live.

I have spoken to amendment No. 25 already, and I believe I have covered the full set. This is about the criteria of affordability set out by the Minister or the relevant housing authority. I am seeing two layers. To be specific, I am not suggesting the housing authorities regulation of criteria would replace the Minister's criteria, but these might be additional criteria. If, for example, there was to be an affordable housing development, 20% of it could relate to a particular income quintile. That would be an example of a criteria for a local authority. If, for example, a huge cohort of people are working in an area, the 500 people working in that particular factory would be able to afford the housing in that area. This is an example of some criteria a local authority may add on top of the baseline criteria the Minister might set.

I welcome the Minister of State, Deputy Burke, back to the House on this important legislation, the Affordable Housing Bill. I will speak briefly to this series of important amendments. They are at the very heart of the issue of affordability, as Senator Higgins has said.

It struck me as rather odd that the Bill is entitled the Affordable Housing Bill, but it could not even give us a definition of affordability. There is no definition of affordability in the Bill. You could ask what are we doing here? That is our job. Currently there is no definition. I have studied this and spoken to a number of people about the Bill in recent weeks. I have taken stock of the Bill digest and I acknowledge the work done by the Oireachtas Library and Research Service on this.

Affordability is really the issue. When we consider the issue of the affordable dwelling, in section 5 or throughout the Bill, it merely talks of the ways in which homes can be made available. The Minister of State will be aware of that. The Bill mentions "a dwelling made available by a housing authority", it refers to "a dwelling to which a Part V agreement applies", and it also refers to "an open market dwelling". The Bill says that any home made available through these avenues is an affordable dwelling, but what is an affordable dwelling? My view on affordability is simple. Anything more than 35% of a person's net income is not affordable. That is the reality. Anything, be it any form of rental or purchase scheme or a shared equity scheme that costs more than 35% of a person's net income is not affordable. This is a simple rule and is recognised by many jurisdictions as a marker of affordability.

What use is the term "affordable dwelling" if it bears no meaningful or legal resemblance to what those words are commonly understood to mean? This is very important. Just because a home is made available to a person in a particular manner, it does not make it truly affordable. That cannot be changed by simply putting it into the Bill and passing it through the Houses. There is a lot of ambiguity around the issue of affordability. I know what we are all trying to achieve, but what is affordable is a critical aspect of the legislation.

We are all aware of people who are paying huge sums of money in rent to have a home. We are talking of homes rather than houses. They are paying this money and yet there is no sense of ownership. People want secure tenure, and fair rent or affordable repayments. That is the real issue, and it should be the very kernel of this legislation. I suggest the Minister of State and his officials might look at this again. It is very important and very simple. There is an omission in the legislation. Let us define affordability. We might disagree on our interpretations of affordability but let us define the general common view of it and what is acceptable to the Minister of State, the officials and everybody else. Clearly, we are aware the guideline is around 35% of income. I believe it would be very helpful to do this and it would give great comfort to people.

With regard to the open market dwellings, I live in Dún Laoghaire and there is no more expensive place to live, to acquire a property, to rent a property or to share a property. You could be in some other part of the country and it would be a different scene. What the market demands or sets in one place is very different from another place. This is national legislation so we must be clear. We must have a simple matrix about what we define as "affordable" in this legislation. It is only right and proper that it is set out clearly in this important legislation, which is, after all, the Affordable Housing Bill 2021.

I will speak in favour of these amendments. They get to the crux of the issue about what the Affordable Housing Bill lacks, which is the definition of "affordability" as linked to income. Throughout the Bill, reference is made to affordability being below market value. As Senator Boyhan has said, if a person is living in a place such as Dún Laoghaire and is earning a median wage of €40,000 or €50,000, below market value is not going to get that person one of the affordable units.

I have tabled a number of amendments to the Bill, some of which are clunky. I had a difficulty in coming up with the wording, on a legislative basis, to link affordability to CSO figures or to median values, or even that units be made available at cost. Senator Higgins's amendment in this regard is very good and I ask that the Government would take it on board. The Senator has allowed for the criteria to be set down by regulations and to be changed, with some flexibility added in.

In the next few years we might - I do not believe we will - have housing made available at somewhat affordable rates. We can see, however, what has happened with Part V, whereby Johnny Ronan calls €600,000 as one of his affordable housing units. We can see, therefore, that if we adopt the Affordable Housing Bill at this stage, which simply links affordability to below market value, then over time this provision in the Bill could be undermined. Inflation or other additional elements could also be taken into the costs. It is very important, in the context of State intervention, affordable housing, and the use of State-owned land, that there is a clear link between the median income of workers of this country and what is being provided to them. I ask that we take these amendments on board and at least work through a form of definition that is a workable definition of affordability linked to income.

I thank the Senators for their important contributions as we move through our Affordable Housing Bill.

Amendment No. 19 seeks to add a condition to section 7, that a housing authority may only enter into an agreement for the sale of affordable dwellings "where the dwellings specified in the agreement meet such criteria of affordability", and to include a criteria that any such dwellings should be affordable to individuals on or below the national median income, "as may be set out in regulations developed by the Minister and laid before, and agreed by, both Houses of the Oireachtas". Amendment No. 20, similarly, provides that housing authorities should only enter into direct sales agreements "where the dwellings specified in the agreement meet such criteria of affordability, to include a criteria that any such dwellings should be affordable to individuals on or below the national median income, as may be set out in regulations developed by the Minister and agreed by both Houses of the Oireachtas". Amendments Nos. 21, 24 and 25, similarly seek to restrict direct sales agreements to dwellings that are affordable or meet the criteria of affordability.

Broadly, it is envisaged that dwellings made available by housing authorities under this scheme would have purchase prices available between €160,000 and €300,000. I have mentioned this a number of times in this debate. A home costing €160,000 is within the range of an applicant with an income of €29,000 gross for a single person, or €27,000 gross for a couple with two incomes, using the Rebuilding Ireland home loan. In the case of applicants using their bank mortgage, this unit is accessible for applicants with a gross income of €42,142. A unit costing €220,000 is within the range of applicants with a gross income as low as approximately €44,000 for a single person and €39,500 for a couple, using the Rebuilding Ireland home loan. In the case of an applicant using a bank mortgage, this unit is accessible for applicants with a gross income of €56,571. A unit that costs €310,000 is the upper end of the scale, which I have mentioned.

It is accessible to a couple with a gross income of approximately €54,500 using the Rebuilding Ireland home loan or a gross income of €79,700 if using a bank loan or mortgage. The minimum price at which homes may be sold will be determined by the overall development of each particular scheme. This will take into account supports such as the local authority land value and the shared service sites fund, as well as the housing type, tenure and mix involved. I am satisfied that the dwellings of all types provided for will be accessible to people on low to moderate incomes and therefore, I do not propose to accept the amendments.

A number of Senators referred to affordability. I assure them that the macro-prudential rules are the cornerstone for our definition of affordability. Senator Boyhan referred to various metrics, including 35% of income being spent on a mortgage but under the macro-prudential rules, the proportion is generally significantly less than that. A single person with a 30-year mortgage, borrowing 3.5 times his or her income at 3%, for example, would be spending 21.4% of an income of €35,000, 23% of an income of €45,000 or 25% of an income of €55,000. The macro-prudential rules put sustainability at the heart of the market. They were devised to do just that against the background of the fractious situation we found ourselves in after the financial crisis. Sustainability is very important and provides a clear underpinning for affordability. Housing is unaffordable when people cannot purchase a home while taking account of the macro-prudential rules.

There is very little international academic support for a measure that concentrates exclusively on affordability in terms of a definition and averages because different groups can experience very different conditions. Accessibility, affordability and financial constraints on households are not best identified by rules of thumb or by asking "How much is too much?". Rather, we must ask "How much is too much, for whom, and in what circumstances?". That is the intention of the Bill.

I ask the Minister of State to respond explicitly on amendment No. 19 because none of what he has outlined is at odds with that amendment. It simply provides that the Minister would lay the rules before the Houses of the Oireachtas. I accept that amendment No. 20 sets out a criteria and one that I think is important but amendment No. 19 does not set out any specific criteria. It allows for exactly that nuance of different household types and different circumstances. Rather than tying us to specific amounts at a specific moment in time, it allows for a responsiveness as circumstances or the market change. Indeed, I hope the market will change. Under amendment No.19, all of the considerations outlined by the Minister of State can be factored in to regulations but it allows for more flexibility and a for a quicker response if the affordability matrix as we have been applying it is not working as we would wish. Is the objection based on the requirement for the Minister to come back to both Houses of the Oireachtas? In that context, I might reserve the right to suggest, for example, that it would be sufficient for the Minister to come back to the Committee on Housing, Local Government and Heritage. Either way, it would be appropriate to make regulations in this area rather than relying on a matrix at this flashpoint in time.

I also ask the Minister of State to comment specifically on the proposal on additional criteria that particular housing authorities may wish to attach. As the Minister of State indicated, there is a diversity of family and household types. If a housing authority knows, for example, that it has a huge cohort of single adult households, it may wish to focus on that part of the affordability piece. That might be something it wants to build in to the affordability criteria and a particular agreement or arrangement it might make. Notwithstanding his general response, I ask the Minster of State to comment on amendments Nos. 19 and 21 and to indicate whether there is any scope for engaging on those two.

The Minister will be setting the method of assessment in terms of the eligibility criteria through regulations which will come before the House, as I outlined last Friday. These can be extinguished by the House within 21 days.

Is the amendment being pressed?

Amendment put:
The Committee divided: Tá, 11; Níl, 30.

  • Bacik, Ivana.
  • Boyhan, Victor.
  • Boylan, Lynn.
  • Higgins, Alice-Mary.
  • Hoey, Annie.
  • Keogan, Sharon.
  • Moynihan, Rebecca.
  • Ó Donnghaile, Niall.
  • Sherlock, Marie.
  • Wall, Mark.
  • Warfield, Fintan.

Níl

  • Ahearn, Garret.
  • Ardagh, Catherine.
  • Blaney, Niall.
  • Burke, Paddy.
  • Buttimer, Jerry.
  • Byrne, Malcolm.
  • Byrne, Maria.
  • Carrigy, Micheál.
  • Cassells, Shane.
  • Chambers, Lisa.
  • Clifford-Lee, Lorraine.
  • Conway, Martin.
  • Crowe, Ollie.
  • Cummins, John.
  • Daly, Paul.
  • Davitt, Aidan.
  • Dolan, Aisling.
  • Fitzpatrick, Mary.
  • Gallagher, Robbie.
  • Garvey, Róisín.
  • Horkan, Gerry.
  • Kyne, Seán.
  • Lombard, Tim.
  • Martin, Vincent P.
  • McGreehan, Erin.
  • Murphy, Eugene.
  • O'Reilly, Pauline.
  • O'Sullivan, Ned.
  • Seery Kearney, Mary.
  • Wilson, Diarmuid.
Tellers: Tá, Senators Alice-Mary Higgins and Rebecca Moynihan; Níl, Senators Robbie Gallagher and Seán Kyne.
Amendment declared lost.

I move amendment No. 20:

In page 9, between lines 13 and 14, to insert the following:

“(3) A housing authority or a planning authority may only enter into an agreement under subsection (2) where the dwellings specified in the agreement meet such criteria of affordability, to include a criteria that any such dwellings should be affordable to individuals on or below the national median income, as may be set out in regulations developed by the Minister and agreed by both Houses of the Oireachtas.”.

Amendment put:
The Committee divided: Tá, 11; Níl, 30.

  • Bacik, Ivana.
  • Boyhan, Victor.
  • Boylan, Lynn.
  • Higgins, Alice-Mary.
  • Hoey, Annie.
  • Keogan, Sharon.
  • Moynihan, Rebecca.
  • Ó Donnghaile, Niall.
  • Sherlock, Marie.
  • Wall, Mark.
  • Warfield, Fintan.

Níl

  • Ahearn, Garret.
  • Ardagh, Catherine.
  • Blaney, Niall.
  • Burke, Paddy.
  • Buttimer, Jerry.
  • Byrne, Malcolm.
  • Byrne, Maria.
  • Carrigy, Micheál.
  • Cassells, Shane.
  • Chambers, Lisa.
  • Clifford-Lee, Lorraine.
  • Conway, Martin.
  • Crowe, Ollie.
  • Cummins, John.
  • Daly, Paul.
  • Davitt, Aidan.
  • Dolan, Aisling.
  • Fitzpatrick, Mary.
  • Gallagher, Robbie.
  • Garvey, Róisín.
  • Horkan, Gerry.
  • Kyne, Seán.
  • Lombard, Tim.
  • Martin, Vincent P.
  • McGreehan, Erin.
  • Murphy, Eugene.
  • O'Reilly, Pauline.
  • O'Sullivan, Ned.
  • Seery Kearney, Mary.
  • Wilson, Diarmuid.
Tellers: Tá, Senators Alice-Mary Higgins and Rebecca Moynihan; Níl, Senators Robbie Gallagher and Seán Kyne.
Amendment declared lost.

I move amendment No. 21:

In page 9, between lines 13 and 14, to insert the following:

“(3) Notwithstanding any national regulations which may be set out, a housing authority may specify such additional criteria in respect of the determination of affordability as it believes appropriate before entering into an agreement under subsection (2).”.

I reserve the right to reintroduce amendment No. 21 on Report Stage. I am hoping the Minister of State might actually engage with some of the subject matter during the course of his incorporation of amendment No. 15 from Senator Fitzpatrick.

Amendment, by leave, withdrawn.

Amendment No. 22 in the name of Senator Moynihan has been ruled out of order as it involves a potential charge on the Exchequer.

Amendment No. 22 not moved.

I move amendment No. 23:

In page 9, line 22, after “priority” to insert “and the eligible applicants will be owner occupiers”.

Amendment, by leave, withdrawn.

I move amendment No. 24:

In page 9, between lines 25 and 26, to insert the following:

“(iii) require that a dwelling specified be affordable for the specific eligible applicant nominated,”.

Amendment put and declared lost.

I move amendment No. 25:

In page 9, between lines 37 and 38, to insert the following:

“(c) shall require that the dwelling specified meets any criteria for affordability as set out by the Minister or the relevant housing authority.”.

I reserve the right to reintroduce amendment No. 25 on Report Stage.

Amendment, by leave, withdrawn.

What time is the debate going on until?

Until 7.15 p.m.

Amendments Nos. 26 and 27 are related and may be discussed together by agreement. Is that agreed? Agreed.

I move amendment No. 26:

In page 9, line 41, after “person” to insert the following:

“except where such an amount would bring the total amount paid for the dwelling to greater than market price”.

I have some questions for the Minister of State in respect of amendment No. 27. On amendment No. 26, I am trying to address the issue of the affordable dwelling purchase arrangement. This section deals with a situation an arrangement is made and the differences between the amount being paid in a direct sales agreement to a person providing housing under one of the arrangements provided for in the Bill and the arrangement that has been made in respect of setting up the situation for those direct sales agreements with a local authority or a housing authority. What I am trying to deal with via this amendment is a situation where there is a difference between the amount being paid directly for the dwelling and the amount that has been made in terms of the arrangement. Under the Bill, where a housing authority has made an arrangement with a provider, the difference between the amount of the arrangement that has been made and the amount the individual making the affordable purchase is paying will be paid out by the local authority or housing authority. My concern is that we may have a situation whereby housing authorities are making arrangements with private providers or other providers under some of the arrangements in the Bill to purchase houses at what might seem to be a reasonable price but where, in the two or three years - sometimes it is four or five - it takes to actually get these houses to the market, the market may have gone down. I say this in the context of my belief that our housing market needs to deflate, which I make no apologies for. Our market is priced too high.

Amendment No. 26 would apply in a situation where, for example, a local authority has made an arrangement that a certain number of houses would be available for €300,000 but where they are then made available for purchase at €250,000 and the local authority would be paying the difference. If there is a situation where, on the open market, those properties are available for €260,000, there should be a ceiling. Even if the local authority has made a previous arrangement, if the market has deflated, we should not have a situation where local authorities end up paying more than market price for houses that are meant to be contributing to our affordable housing provision. Regarding property rights and all of these balances and contracts, we are not taking from a developer if we will be paying them in that context up to the market price. We should not be contributing to an amount that is above market price because of a previous agreement because the market price is literally what a developer is getting for all the other properties he or she might have. Again, if one imagines a housing estate with 100 properties or whatever and we have 50 of them available on the open market, we should not have a situation where the houses being made available for affordable purchase are effectively costing more. That can happen in a situation of market deflation or where the gap in time between a local authority making an agreement and the houses actually being built is substantial. Unfortunately, we have seen that this can be the case and that is my concern in the context of the amendment.

I also have those concerns, perhaps more robustly, regarding amendment No. 27, explicitly in the context of Part 5. I am going to come back because I am examining this area. I particularly have a concern where the awarding of planning permission in the first place was conditional on a certain number of houses being available at an affordable price. We certainly should not be in a situation whereby the houses that are available as part of the condition of fulfilling the planning permission are effectively ending up costing more. The cost to the individual purchasing them will not necessarily be higher but the cost to that individual combined with the State, via the housing authority, may well be, so again perhaps the Minister of State might address those concerns. This really kicks in where time is concerned. We know that with O'Devaney Gardens and other sites there are concerns regarding some of the housing that has been priced as affordable. Members are hearing examples of some of the concerns around some of what is being priced as affordable and we want to ensure we do not end up paying over the odds for what should be provided, particularly with Part 5, at a price which should be under the odds.

I understand the point Senator Higgins just made, but the reverse also applies in the case of inflation in the market. If a council agrees and fixes a price in 2021, that price is fixed, regardless of whether the unit is delivered in 2022 or 2023. From what has just been suggested, it would seem the Senator wants to have the flexibility to break a contract when a price has been agreed. I can see the point she is making in terms of cases where there is a deflation in the market, but when a contract is agreed at a point in time, prices may go up or down. If one enters into a contract at a certain point, the terms apply.

I was listening to my colleague, Senator Higgins. The very same thought struck me that when one signs a contract, in my view, the terms should be cast in stone. Irrespective of whether the situation goes one way or the other, it would not be appropriate to have a facility to break a contract within the legislation. However, it is important that there is full transparency. All information should be available to all parties and it should also be in the public domain.

When it comes to affordable housing bodies, they also need to look at things in the round, particularly in seaside areas. There are a few examples in County Clare, where significant developments are under construction. Those responsible for developing projects have an idea of the groups of people they would like to see also living in an estate, whether they are people with disabilities or those from minority ethnic groups. That type of flexibility is appropriate. However, when a contract is signed - and perhaps I am misunderstanding the Senator - it would not be appropriate to break it in any way.

To clarify my point, I am suggesting that the facility should be part of the contract. Of course I am not saying the contracts should be broken. However, we should be setting the terms of the contracts that the State, through local authorities and housing bodies, is signing with housing developers in such a way that it is made very clear that we are not going to disadvantage people to the point that they will not get the market value back. We are not engaging as a company signing a contract with another company, where we are all trying to speculate and see where we can get the edge. The goal of the State, in engaging with these developers, is the provision of housing. The State is not engaging as a speculator. It is not a win or lose situation where stocks go up or down.

To be clear in respect of what the State is offering, the local authorities are offering, in many cases, to guarantee that a certain portion of a housing development will be sold. It would be reasonable to assert that we will guarantee the purchase of a specific amount of the housing, but we will set a caveat that we will not pay above the market rate for it if the market happens to deflate. That is a reasonable provision that could be inserted. Of course, it may also work in the other direction but that is a different scenario. That is where a company is going in for commercial reasons and looks to the steadiness of what is offered by the State, which is a guarantee. Planning permission for the development - the fact that a company can proceed with a development at all - is at the behest of the housing authority and the State. That is something else. We should be clear that what we are offering in this is already quite substantial.

There should be a little bit of insurance for the State. I do not want to see a situation where the State is worried about deflationary measures or we end up carrying the cost in a way that private housing purchasers will not. The State is working in large blocks and will be engaging potentially in the development of a large amount of affordable housing. It is reasonable - indeed it is a common practice - when signing a contract, the terms of which involve large numbers, that there should be caveats. Some terrible and unfair caveats were added into contracts in the past, upward-only rent reviews for example. It is a reasonable caveat to insert such a provision into the contracts. It is an insurance for the State that, in the event that the deflationary dynamics needed in the area of housing arise, it will be in a position to benefit from that, rather than fear it.

Progress reported; Committee to sit again.
Sitting suspended at 7.16 p.m. and resumed at 7.30 p.m.