Dáil Éireann Debate, Tuesday - 3 July 2018
7. Deputy Barry Cowen asked the Minister for Public Expenditure and Reform the specific use to which the €400 million proceeds from the sale of Bord Gáis has been put; and if he will make a statement on the matter. [29056/18]
View answerI seek clarification from the Minister regarding the €400 million proceeds from the sale of Bord Gáis. He told us in budget 2015 that those funds would be made available for social housing projects. It was further advanced that they would be specifically targeted towards the provision of affordable housing schemes. We have since heard that €10 million per annum would be allocated for 20 years, which amounts to €200 million I am anxious to know where this money is. Is it with the National Treasury Management Agency, NTMA, or the Ireland Strategic Investment Fund, ISIF? Irrespective of where it is, is it earning money for the State? Where is it and to what use is it being put? We are a long way from the commitment that was made initially in 2015.
As the Deputy will be aware, the intention when Bord Gáis Energy was sold was that €400 million from the proceeds would be made available to establish an off-balance sheet financial vehicle to provide financing to approved housing bodies, AHBs. This funding, together with additional private funding, would then facilitate the provision of additional housing units by the AHB sector, in support of the Government's social housing strategy.
The Government established a clearing house group to work with the sector with a view to developing a new model that could use the €400 million in this way. Unfortunately, it proved very challenging to find a model that would be capable of using the funding while remaining off-balance sheet in EUROSTAT terms. However, the clearing house group considered that there were aspects of the proposals considered that appeared to offer potential, in terms of the possible development of a new affordable rental initiative. This would seek to provide long-term affordable residential accommodation for low to moderate income worker households in urban areas of high demand.
In response to this outcome, it was decided to convert the commitment from a single lump sum payment to fund the initial capital cost of social housing provision into a commitment to provide €10 million per annum, indexed for inflation, over a much longer period of at least 20 years. This ongoing funding could then be used to fund a pilot scheme for the provision of subsidised housing, thus making the housing available on an affordable basis over a 20-year period.
This additional €10 million in annual funding was allocated to the Vote of the Department of Housing, Planning and Local Government from 2017. I understand the Department of Housing Planning and Local Government is utilising this funding in supporting additional activity under its housing programmes.
In that case, the commitment made in 2015 no longer stands. The clearing house group rejected the proposal and found a model by which the funds could be used. A commitment was made in 2017 which amounts to €10 million per year, capitalised over 20 years, giving a total of €200 million. Where has the €400 million gone since 2015? Where has it been lodged? Where has it been resting? What has it accrued on behalf of the electorate, the people we represent? What benefit has this State and its inhabitants gained from the commitment the Minister made in 2015, which he has failed to honour since then?
As to where that money currently sits, an amount of money like that would sit on the State balance sheet. It is managed by the National Treasury Management Agency. On the question of what interest rate it has accrued for the State, given how low interest rates have been in recent years, I expect the interest benefits delivered to the State will have been very low. The Deputy will be aware of the challenges we have in terms of translating once-off Exchequer gains into ongoing expenditure. For this reason, we proposed an alternative use, which I described to the Deputy. This involves making €10 million available per year for at least 20 years to allow the Department of Housing, Planning and Local Government to move forward on more housing projects.
For two years the Minister failed to honour the commitment he made in 2015, as he recognised in 2017. He cannot tell me what the €400 million from the proceeds of the sale made in these two years. I implore him to make available to the House exactly what it made as quickly as he can. In the meantime, he committed €10 million per annum for 20 years at most, which amounts to €200 million. There is another €200 million for which he has not accounted. I ask him again what has happened to that money since 2017. What is likely to happen to it in the future? How can taxpayers be expected to believe they gained from the sale of Bord Gáis Energy when the Minister failed abysmally to honour the commitment he made to the same taxpayers, especially when we consider the money was to used for housing? As we all know, housing has been the Government's greatest failure and an issue on which we hope to reflect when we discuss the budget in the coming months.
Given the Deputy is directing his questions to me, I should point out that at the time of budget 2015 I was not the Minister for Finance or the Minister for Public Expenditure and Reform. However, I take responsibility for commitments that are made-----
The Minister is a member of the Cabinet.
-----by either of my Departments up to this point. Regarding who manages the money, I have answered that question.
The Minister has not done so.
As to the benefit the State might gain from it, money that goes onto the State balance sheet in the way this windfall gain would have done reduces the net indebtedness of our State. That, in turn, means we can fund ourselves better than we would be able to do otherwise.
In terms of where the other €200 million would reside and how it would be used-----
Was it used to write down debt?
-----as I said, the commitment is for at least a 20-year period and if an extension of funding is needed beyond that 20-year period to move forward on an affordable housing project, I would be happy to give that commitment and I will work with the Minister for Housing, Planning and Local Government, Deputy Murphy, on it.
