I thank the Chairman and the members of the committee. Social Justice Ireland welcomes the opportunity to make a presentation to the committee on the issue of social housing supply. Ireland faces an immense social housing challenge. It will be a major challenge for the Government to secure sufficient finance to provide the scale of social housing required. There is no possibility of providing the level of financing required to deal with the scale of the problem on the Government balance sheet within the current fiscal rules. Social Justice Ireland recommends that the Government should put in place an off-balance sheet mechanism that could access the low-cost finance required to address the lack of supply of social housing in a way that would be sufficient to eliminate current waiting lists.
In recent years, Government policy was based on the premise that the private sector would provide sufficient rental accommodation to meet the total need for accommodation. However, the private sector is not coming close to delivering the number of units required to meet current demand. Although the social housing strategy is welcome, even if it succeeds in providing the planned increase in social housing levels, it will be far from the levels required to eliminate housing waiting lists. The strategy is not going to meet the demand that exists unless a new approach is taken to secure the necessary finance. Further initiatives on a much larger scale are required. The key challenge is to increase the supply of housing in general and of social housing in particular. An increase in the supply of social housing units would take the pressure off the private rental market and supply in the private sector. It would also take families out of hotels and enable them to find homes, to build bases and to participate in community and society.
Social Justice Ireland recommends that the Government should fully resource the social housing strategy. The effect of an expansion on the scale of the strategy would be to eliminate the current waiting list of 90,000 households and to provide for increased demand for social housing in coming years. It would not be possible for the Government to finance this level of provision on the books because of the fiscal rules that have been adopted since the crash. Therefore, a viable means of financing this provision off the books is urgently required. Social Justice Ireland proposes that the Government should put off-balance sheet financing structures in place to generate sufficient capital to finance the supply of the new social housing that is needed to eliminate current waiting lists and meet the additional demand that will emerge as the population grows. We also believe the Government should explore the use of NAMA as a housing agency with the ability to access and distribute appropriate off-balance sheet funding while taking an active role in the direction and support of approved housing bodies.
Our proposal contains two components. First, we are proposing the provision of an off-the-books financing mechanism for social housing stock through a special purpose vehicle. Second, the provision of this mechanism should be followed by the introduction of a cost rental system for social housing where the differential rent ceiling is removed. For the purposes of this brief presentation, I will focus primarily on the financing component. It is clear that the Exchequer cannot provide the funding necessary to deal with current demand. We are proposing that the Government should put in place off-balance sheet mechanisms to access the low-cost finance required to address the supply issue. Ireland cannot continue to borrow using traditional methods because this adds to the Government deficit, which we are committed to reduce. At the same time, there needs to be an adequate supply of housing for those on low incomes. This is required to stabilise the rental market and enable a cost-based rental system to work within the market.
Social Justice Ireland is recommending an examination of the possibility of using a vehicle such as NAMA, which has expertise in developing a financing mechanism. Given that approximately 107,000 social housing units are owned by local authorities and rent is being regularly paid in respect of them, it should be possible to put together a proposal that meets the EUROSTAT conditions for an acceptable off-balance sheet initiative. One of the advantages of using NAMA is that it already has a special purpose vehicle that has been approved by EUROSTAT. It is worth noting in this context that EUROSTAT's classification of public private partnerships implies that this method is unlikely to be suitable to address the supply of social housing units as the Government would be required to take on the construction risk, meaning that the public private partnership expenditure would remain on the balance sheet. Social Justice Ireland proposes that when the stock of social housing supply increases to such an extent that waiting lists have been eliminated, the Government should move to a cost rental system for social housing stock and remove the differential rent ceiling.