Other Questions.
60 Mr. Deasy asked the Minister for the Environment, Heritage and Local Government if he will make a statement on the report of the housing policy unit on the changes to the system of housing provision and housing policy here since 1990; the action he intends to take as a result; and if he will make a statement on the matter. [4037/05]
View answerThe recently published Housing Policy Review 1990-2002, which is available in the Oireachtas Library, was produced by the housing unit at the request of the Department of the Environment, Heritage and Local Government. The primary purpose of the report is to document the principal changes to the system of housing provision and policy in Ireland since 1990. It also outlines recent social and economic developments which have impacted on housing and the range of market and non-market housing options which are available. Its target audience is housing researchers, practitioners and students.
The report outlines the factors influencing housing and the housing market which have changed dramatically since 1990. It examines how the Government's housing policy has had to adapt accordingly. The report notes that since 1990, the response to the broad range of housing needs has developed with the introduction of a range of better-targeted schemes aimed at those on low incomes and those with special housing needs.
While the primary purpose of the report was to document recent developments, it also highlights issues in some areas that merit further examination. The report provides useful background information for the review of the effectiveness of social and affordable housing, which is being conducted in accordance with a commitment in Sustaining Progress. Some of the issues raised were referred to in the recent NESC report on housing and are being examined by the Government in the context of its consideration of that report.
Given that more than 50,000 people are on the social housing waiting list, is it not time for a change in the Government's strategy on foot of reports of this nature? Is the Minister of State prepared to examine a proposal made by the construction industry to enter into a public private partnership with the Government to build more houses to be used by the Government as social housing? It is likely that the building industry will have spare capacity this year and next year. It seems that we have reached the limit on the number of houses people want to buy. Will the Minister of State consider the construction industry's proposal to build houses by means of a public private partnership and then rent them to local authority tenants or make them available under affordable housing schemes? The construction industry would benefit from the payment it would receive in that way.
The last assessment showed that 48,000 families were on the social housing list. Some public private partnership projects are in operation. Fatima Mansions is being redeveloped as part of a PPP arrangement under the regeneration scheme. The same applies to O'Devaney Gardens. We are encouraging and are interested in PPP projects.
Other innovative and interesting suggestions are being made regarding which there are ongoing discussions with the construction industry. On regeneration specifically, we are already involved in some PPP arrangements and we look forward to developing further options in that regard.
When does the Minister of State expect to make an announcement on the proposals under consideration?
I am not sure which proposal the Deputy is talking about.
I am talking about those to which the Minister of State referred.
There are different proposals and these are being examined. It is not a case of our running with every one that is made.
There is a major proposal offering to take on the burden of social housing.
Some have merit and others have not. Fundamentally, we are not just considering different proposals but trying all the time to increase our resources. A sum of €1.3 billion has been allocated this year for Exchequer-funded housing.
We are considering other proposals but we must ascertain whether they represent good long-term value. They can sometimes look very attractive and innovative but can also be very simplistic. We must consider the long-term benefits of the suggestions. Although they might provide housing in the shorter term, they must also represent good value to the taxpayer. Every angle of the proposals must be considered.
How many reports on housing policy is the Minister of State considering?
The main three are those mentioned by the Deputy. The NESC report is not really a report. I am not quite sure what proposal——
Four.
That is more or less an historical report. It is mainly meant to target practitioners and researchers although it contains some ideas.
The housing sector is one of the largest sectors in the economy. There will never be a day on which all reports and policies are decided upon.
Not while the Minister of State is in power.
Policy changes are important and some key changes may be made shortly. That said, one must ascertain the most effective way to spend the €1.3 billion in Exchequer funding. When combined with the non-Exchequer funding, the total amounts to almost €2 billion. Policy changes are fine and take up some time and energy, but one must also focus on whether housing is being delivered and resources are being spent in the proper way while at the same time considering other ideas that come forward. Given that the housing sector is now so significant to the construction industry and the economy generally, many outside bodies are making submissions, producing reports and talking about how we should do our business.
61 Ms Burton asked the Minister for the Environment, Heritage and Local Government his plans to ensure that Ireland will comply with the EU energy performance of buildings directive by 1 January 2006; if all buildings which are under construction or which will commence construction in 2005 will comply with the requirements of the directive; and if he will make a statement on the matter. [3922/05]
View answer128 Mr. Gogarty asked the Minister for the Environment, Heritage and Local Government if, in regard to the energy performance of buildings directive (details supplied), he has satisfied himself that sufficiently qualified auditors will be available here or elsewhere in the Union to ensure that new buildings will carry an energy rating label from 2006; and if he intends to defer this aspect of the directive’s introduction until 2009. [3928/05]
View answerI propose to take Questions Nos. 61 and 128 together.
The energy performance of buildings directive, Directive 2002/91/EC, was adopted on 16 December 2002. EU member states must legally transpose the directive by 4 January 2006. I plan to include the principal transposition provisions in the proposed building control Bill 2005, which is due to be published in mid-2005.
The directive provides for a longer period, up to 4 January 2009, for the practical implementation of more complex provisions. These provisions pertain to mandatory energy performance rating or "labelling" of newly constructed buildings and of existing buildings when they are sold or let; improvement of the energy efficiency of boilers; and mandatory inspection of air conditioning systems. Accordingly, the EU directive does not require that buildings under construction or commencing construction in 2005 must comply with the energy performance rating requirements.
An interdepartmental working group has drawn up a draft action plan for the implementation of the directive according to a proposed timetable. It provides for the development of an appropriate rating methodology and the training of auditors for building energy performance rating purposes. The working group comprises senior officials from the Department of the Environment, Heritage and Local Government, the Department of Communications, Marine and Natural Resources and Sustainable Energy Ireland.
Sustainable Energy Ireland submitted a draft of the action plan, on behalf of the interdepartmental working group, for my approval on 7 December 2004. However, Sustainable Energy Ireland advised me on 21 January 2005 that a revised draft of the plan incorporating a revised timetable would be forwarded to me. I expect to receive the revised draft shortly.
Does the Minister accept that those buying houses this week and who have bought them are not aware that from 4 January 2006 they will, if selling those houses, be required under European law to produce a certificate on their energy efficiency? Does he accept that since the directive will apply to houses that are to be purchased or let after 4 January next year, houses currently under construction will come under the remit of the directive?
The Minister is delaying the introduction of the directive. The derogation to which he referred, namely the extension of the implementation period to 2009, only applies to some technical aspects of the directive such as the appointment of inspectors. However, the main thrust of the directive will require energy labelling of every building sold, let or built after 4 January 2006. Does the Minister not agree that proposals on this matter are urgently required?
People looking at showhouses this week are not being told that if they buy them, they will have to produce certificates on their energy efficiency when they resell them. If a house is built with a cavity block or built in some other energy-inefficient manner, its owner will have a problem and will be at a loss. Many who have bought houses recently will be saddled with a loss on the resale of their houses. Will the Minister come clean to those buying homes or who own homes and inform them that they face a major shock next January? Is it not the case that the slow pace at which he is introducing the regulations and giving effect to the directive is not helping anybody?
Does the Minster agree that the energy performance of buildings is crucial to meeting our obligations under the Kyoto Protocol on greenhouse gas emissions? Does he agree that the construction sector is one of the few sectors in which we can make real change right now? Is he aware that the derogation on this directive is only available if there are no qualified people to implement it within the entire European Union? Why is the Minister putting this issue on the long finger? Is he doing so because he is being lobbied by the construction industry? Given that people are entitled to an energy rating label on a fridge, they should surely be entitled to one for their homes when they buy them.
Many new and effective energy-saving devices are available and they improve every day in respect of insulation for internal and exposed walls.
When and how will the directive be implemented? If we knew that, householders and those selling their houses might know where they stand.
I thank the Deputies for their contributions but they characterise the urgency of this matter very inaccurately. I am aware of this problem. Most EU member states find the implementation of this Bill very complex. I agree it is important to have the label as soon as possible. This is not the only country that will experience difficulties in this regard. Contrary to what the Deputies have suggested, Ireland is one of the few member states known to be planning to publish an integrated action plan for implementation of all aspects of the directive.
It is not correct to say that the possible derogations are narrow. The provisions are complex and the possibilities of derogation being there until 4 January 2009 was prudently examined. It is wrong, and unjust to suggest that there is footdragging in this regard. Work is ongoing. It is a complex area. I will introduce it as soon as possible.
Deputy Gilmore is probably correct in saying that many people are not aware of what this and many other European directives contain. The reality facing me, and my Department, however, is an extremely complex directive that must and will be implemented. There is no attempt to put it on the long finger.
As we are so often told in this House the country is producing record numbers of houses, which we all welcome. It does not make sense that so many houses are being built, and will be, which will fall short of the requirements for energy efficiency labelling. I appreciate that it takes time to put the legislation in place and regulations arising out of it, and so on, but some steps should be taken now to ensure that the materials used in house-building, design and insulation are such that homes under construction will be at the top of the energy labelling requirements.
It seems quite unfair that the Government knows that from next January people re-selling or letting their houses must produce a certificate of energy efficiency. Nevertheless, the Government allows construction to continue in a way that is not energy efficient. I agree with Deputy Cuffe that the Government is responding to pressure from the construction industry, and allied industries, which are quite hostile to the development of energy efficient means of construction.
There is a history of broken promises in regard to introducing more efficient measures in the building industry. For example, in the climate change strategy this Government promised to introduce incentives by the end of 2003 on building leases to encourage higher insulation levels.
It is on course to break another. Is the cement lobby whispering in the Minister's ear? Will this result in the European Commission yet again taking the Government to court because it is not implementing directives in a timely manner?
I am frankly surprised, given all that I have said about certain sectors of the industry over the years, that Deputy Cuffe should believe that any section of that industry can whisper in my ear.
Maybe they are shouting into it.
They have to do that to Deputy McCormack.
Do they go into the Fianna Fáil tent in Galway?
The Deputies should be careful. I will not go down the avenue into which they are drawing me. Nobody has lobbied me on this issue.
The Minister is being lobbied now.
Deputy Cuffe's paranoia in this regard is misplaced. No one has whispered in my ear or otherwise lobbied me.
I thought the Minister described me as a realist.
I have never described Deputy Cuffe as a realist. I am too friendly with him to describe him as I think he is but a realist is not one of the descriptions I would use.
Nobody has lobbied me on this issue and there has been no general lobbying of which I am aware. It is complex, as is recognised in the body of the directive. Deputy Cuffe is correct, we should get this up and running as soon as possible but it is difficult.
Deputy Cuffe asked about auditors. There will be no surplus in the European Union, there will probably be shortages in that regard. That is why we must undertake some training on the issue.
To answer Deputy Gilmore, it is not possible retrospectively to change the existing arrangements. His point about public knowledge may or may not be correct. My Department and I are trying to put in train the operations which will bring this into effect as expeditiously as possible. It is very complex and cannot be done overnight.
The Minister might require the vendors, particularly of new houses, to provide an information notice or warning to prospective purchasers that after January next the dwellings will require an energy certificate if they are to be resold. That is only fair. People buying houses should know this.
Hopefully the exchanges we have had today will go some way to help redress the lack of public information on this issue. Deputy Gilmore's suggestion may not be very practical but I will consider anything the Deputies propose because this is a serious issue and will continue to be so. Questions arise about how to implement the directive and determine whether the vendor has responsibilities or the purchaser has sole responsibility, which does not seem fair but it is too early to answer them.
62 Mr. Howlin asked the Minister for the Environment, Heritage and Local Government the average increase in the price of a new house and a second hand house in Dublin and the rest of the country during 2004; the anticipated level of increase during 2005; and if he will make a statement on the matter. [3895/05]
View answerThe rate of house price increase has generally declined in recent quarters and is now considerably lower than in the late 1990s.
Will the Minister of State repeat that please?
The rate of house price increase has generally declined in recent quarters and is now considerably lower than in the late 1990s. The figures for the third quarter of 2004 show this trend continuing with rates of increase well below those in 2003. The latest increases for new houses nationally are 10.6% and in Dublin, 9.9%; for second-hand houses nationally, 10%, and in Dublin, 9.1%. While my Department does not forecast house prices, several market commentators predict that the trend in prices will increase moderately this year. The likelihood of this is underpinned by the trend of housing output, with 2004 likely to be the 10th year of record housing output and indications of a continued high level of output in 2005 and subsequent years.
The Government will continue to promote moderation in house prices through effective policies, including measures to ensure adequate housing supply in keeping with demand in the context of balanced and sustainable growth of the housing market.
I invite the Minister back to this planet because whatever planet he is on, it is not the case that houses prices are going down, as he seemed to infer in his——
I did not say that.
I know what the Minister of State said. He said "The rate of house price increase". I know what he means by this, namely, that it is 10% now, for example, and was a higher percentage last year. However, the message the Minister is trying to communicate every time he refers to this is that house prices are coming down, whereas they are not.
I want to focus in particular on Dublin because, as we all know, the average house price in Dublin is at least €100,000 dearer than it is in general in the rest of the country, even for the smallest unit. Does the Minister accept that young families on normal middle incomes cannot afford to buy a home in Dublin and that what happens in the capital city has a doughnut effect, particularly in regard to young families who must buy in a ring around the city? I hear the Taoiseach is to build a new ring road even further out from the city to accommodate them because they cannot afford to buy in Dublin.
What are the consequences of this in terms of schools and key workers not being able to live in Dublin? Does the Minister have plans to investigate the impact of house prices, particularly in Dublin, and the demographic changes taking place in Dublin? The last census showed the degree to which the demographics of the inner suburbs are aging, with no young families because they cannot afford to buy or live there.
Consequences follow from this but what will be done? There is no foreseeable prospect of house prices in Dublin declining, although the rate of increase may slow, as the Minister stated. However, a 9% or 10% increase is still three or four times the rate of inflation and, on the basis of current house prices in Dublin, means that a house price in Dublin is rising between €30,000 and €40,000 per year. What will the Minister do about house prices in Dublin?
The average price of a new house in Dublin is €324,000 but that is the average price of all new houses. If one analyses the starter home end of the market, plenty of houses are available in Dublin, certainly on the north side with which I am familiar, in the €230,000 to €270,000 bracket. Affordable houses are being promoted under the various schemes, the details of which I will not go into, and it is only a few months since I opened affordable houses in Balbriggan priced at €140,000 for two bedroom houses and €160,000 for three bedroom houses.
Some people in a certain income bracket are under pressure and we are trying to help them through the various schemes. There was an over-concentration by first-time buyers on the new rather than the second-hand house market and this is why stamp duty was reduced in the budget. This has benefited many people by up to €12,000 so that instead of buying a new house 20 miles out of the city, many new buyers are in a more competitive position to buy in the older suburbs than they were some months ago.
The issue is not just about price but affordability. Figures show that houses are now more affordable than at the time of the 1992 financial crisis. Interest rates are historically low, disposal income is higher than ever and tax rates are low. People have the money and, by and large, are managing.
The key aspect for the Government is to encourage and maximise output. Although the final figures for 2004 are not yet available, the latest output figures for that year showed approximately a 12.5% increase over the previous year. Therefore, it seems the output for last year was approximately 75,000 to 77,000 new housing units, whereas ten years ago that figure was in the low 20,000s. By maximising and encouraging supply, it is now practically equal to demand. However, houses are available for the young couples to which Deputy Gilmore referred. There is a good supply of houses in the €230,000 to €250,000 bracket.
I was glad to hear the Minister acknowledge, following his first outburst when he pretended the price increase was less than in the 1990s, that there was a 10.6% increase in new house prices and a 10% increase in second-hand house prices. The Minister stated many times since taking up his current post that he is doing everything in his power to keep down the price of houses. How much of the increase in house prices is a direct result of Government policy?
For example, the now departed Minister for Finance, Mr. McCreevy, who got the yellow card and went to Europe, increased VAT on building materials by 1%, which added between €10,000 and €15,000 to the price of a house. In the same budget, the former Minister abolished the first-time buyer's grant. Instead of having me tell the Minister the figures, will he tell me how much of the increased cost of new houses relates directly to decisions taken by the Government since he took up his current position?
On that point, is the Minister concerned that the levies placed on units and the additional levies placed by local authorities on infrastructural projects, which are being put in place to compensate for the shortfall in Government funding for construction projects, are adding to the cost of houses? What is the Minister's view?
The householder is now paying benchmarking.
On what does the Minister base his claim that the reduction in stamp duty in the budget is causing house prices to reduce? Spokespersons for the auctioneers state that young couples are using the money made available due to the reduction in stamp duty to put deposits on houses. They claim that house prices have increased by several thousand euro as a result. Is the Minister seriously considering measures to reduce the price of houses? Does he prefer high prices because they might suit developers?
I am sure the Minister would concede that his use of statistics would make a mathematician blush. House prices are at their highest levels ever. Does the Minister concede that completion of local authority housing is at the lowest level it has been in a generation? Does he accept we are failing to meet our targets in terms of social and affordable house completions? Does he further accept the numbers on housing lists are at their highest level in decades?
I was not pretending anything. I simply stated that the rate of house price increase was at 10.6% for new houses and 10% for second-hand houses, whereas sadly, a couple of years ago house price increases were running at more than 30%.
From a lower base.
VAT on new houses is 13.5%. I accept there was a 1% increase in recent years, increasing the price by €2,000 on a €200,000 house. I also accept the first-time buyer's grant of some €3,800 was abolished. However, I cannot understand why people are upset and keep focussing on relatively small matters like this.
It is not small.
People cannot buy a house. That is the problem.
The stamp duty reduction gave many people a reduction of more than €11,500, which puts the 1% VAT increase into perspective. The 1% increase was buttons compared to the stamp duty reduction.
How much did it add to the cost of a house?
The first-time buyers are back in the second-hand house market in a huge way and are moving back into areas to which Deputy Gilmore referred, where there were elderly populations. If the type of people who bought new houses are now buying second-hand houses, this should relax the pressure on the new house market. Let us concentrate on the big picture which is that many people have saved €12,000 because of changes in stamp duty.
Deputy Timmins referred to levies. I believe that people who own land should pay a proper charge and not walk away with the profit that accrues from the sale of the land. The notion that the Government should build on the land and provide the drains, sewers, schools and transport, and the person who owns the land should put a fortune in his or her pocket and let someone else pick up the tab is nonsense.
I agree with the Minister of State if everyone gets the benefit.
It is right and proper that landowners who make a fortune should make a contribution to the services necessary for the houses that will be built.
The householders are paying.
Deputy Morgan referred to auctioneers. We saw one of them on television on the night of the budget saying that it is their job to increase the price as best they can. One must understand where these people are coming from. I met the gentleman afterwards and he said that the programme was edited badly and that he was embarrassed by what was shown.
The Minister of State will be hearing from him again.
He was honest about his job which is to maximise the price he gets for the seller. Once we understand that, we can be selective in listening to people.
First-time buyers of a second-hand house will be €12,000 better off in bidding for the house than they were before the budget.
The cost remains the same because prices have increased again.
The Minister of State is living in cloud cuckooland.
Deputy Cuffe is correct. The amount of social housing being built in percentage terms vis-à-vis overall house production has not kept pace.
The nutty professor regime.
At one time, we built approximately 6,000 or 7,000 local authority houses when the total house production was 25,000.
They were much poorer times than now.
The level of social housing output, by and large, decreased significantly in the late 1980s because there was no demand for it, there were empty houses in many estates in Dublin and, while the level of overall house production has increased significantly, the level of social housing output has not increased commensurate to that. When the Government gets around to dealing with the NESC report, that issue might be solved.
The last census indicated that the population increased by 18% in the age group between 25 and 34 years. These are the people who are buying homes. This is the key household formation age group. There is an enormous number of people in the market for buying houses. It is correct that we have gone through six, eight or ten years of pressure in the housing market, but the only way of meeting this demand is by increasing housing density and maximising the output of houses, which the Government has done, so that we can reach a position where supply equals demand. The figures for 2004 indicate that 75,000 or 77,000 houses were built, which is an enormous number. Most people agree that the number has now probably reached its peak. We need to keep to a substantial level over the next couple of years, but it may dip back a little. That is an enormous increase. Ten years ago, we were building just 21,000 or 23,000 houses.
One quarter of them are holiday homes.
That is a small segment of the market. At that level, we must be very close to the point where supply equals demand.
63 Mr. Ring asked the Minister for the Environment, Heritage and Local Government if he intends to extend the ban on bituminous coal to other areas; and if he will make a statement on the matter. [4079/05]
View answerThe June 2002 voluntary agreement between my Department and the solid fuel trade group provided, inter alia, for the delivery of significantly cleaner standards for bituminous coal and petcoke on a phased basis. The agreement encompassed the extension of the coal ban to four new areas from October 2003 and an increase in market penetration of smokeless fuel in a further four areas. It was agreed that the Department would not seek to designate further coal ban areas during the life of the agreement, except where required to ensure adherence to air quality standards. The agreement also provided for an initial review by the end of 2003 and a final review by the end of 2004, with the ambition of setting further targets from 2005 onwards.
My Department reviewed the operation of the voluntary agreement in 2003. However, the final review due by the end of December 2004 was postponed following the granting of a moratorium on the step-down to 2004 sulphur levels in petcoke for the 2004-05 heating season. The moratorium was requested by the trade group and was granted to help the industry through a difficult interim supply period, triggered by exceptional levels of demand for petcoke tonnages internationally, which made the sourcing of lower sulphur fuels problematic for the industry.
Additional information not given on the floor of the House
It is intended to undertake the final review when the 2004-05 heating season is concluded. At that stage, all parties will be in a better position to assess both the effect of the agreement over three heating seasons and the future market supply situation, and to explore further how to maximise environmental benefits from the solid fuel sector. I do not intend to extend the ban on the marketing, sale and distribution of bituminous coal before completion of the final review.
Written answers follow Adjournment Debate.
