I wish to share my time with Deputy Burton.
Private Members' Business. - Planning and Development (Acquisition of Development Land) (Assessment of Compensation) Bill, 2003: Second Stage.
Question proposed: "That the Bill be now read a Second Time."
An Leas-Cheann Comhairle
Is that agreed? Agreed.
In an interview with The Sunday Times last weekend, the Taoiseach said:
Developers are tying up potential land by buying long-term options on its future purchase. The Government believes it is essential to maintain a steady supply of new housing to help control increasing property prices.
The article went on to state, "A package of measures to tackle land speculation is expected to follow."
This is not the first time the Taoiseach has identified development land speculation, land hoarding, land option-buying and the price of building sites generally as being central to the continuing rise in house prices. Earlier this year he asked the All-Party Committee on the Constitution to "look as a matter of urgency at the cost of building land and to assess the possibility of placing a cap on the value of development land". That quotation is from the Taoiseach's speech to the ICTU conference on 4 July 2003. Speaking to reporters following the conference the Taoiseach was even more explicit. He said:
The whole initiative is based on the fact that what makes houses so dear is the land value. By being able to have the land value at an affordable rate, it then allows the local authority, or whatever agency handles it, to control what the price of houses is.
On 6 April he told RTE that failure to tackle the rising cost of housing now would lead to future problems for the next generation. He said:
To try and make progress in this area we have to try and deal with it in the area of land. Developers not only have their land banks, but now have land options for the future, land options that will lead to enormously costly land into the future that will make sure that housing continues to be so costly.
In February, in the Dáil, speaking on housing, the Taoiseach stated that we could do much more in this area but that the debate always came back to the same issue – land.
The key issue of development land and its relationship to housing affordability, which the Labour Party Bill seeks to address this evening, is one on which the leader of the Government agrees with the Labour Party. The Bill before the House is a legislative measure for which the Taoiseach has repeatedly made the case since the beginning of this year. No interpretation can be put on the Taoiseach's statements other than that it is his clear wish that the price of building land should be capped and that this is the central measure required to make housing affordable again for working families.
If the Taoiseach believes in the statements which he himself has made over the past nine months he will see to it that the Government agrees to the Second Reading of this Bill. I acknowledge that there may be points of difference on detail, but these can be addressed if the Bill is allowed through Second Stage and referred to Committee. The general purpose and principle of this Bill is to cap the price of building land and to end land speculation with a view to making housing affordable. These are the very objectives for which the Taoiseach has repeatedly called since last Christmas.
It has of course taken the Taoiseach six years to reach the conclusion that profiteering and speculation in building land is at the heart of the housing crisis. The report of the Labour Party commission on housing, Housing – A New Approach, published in April 1999, stated:
A factor of central importance is the price of building land. Builders, planners and estate agents all agree that it is a major determinant of the rise in house prices. For example, the Irish Home Builders Association has estimated that average site prices in Dublin have risen by 200% since 1955 and in 1998 accounted for 36% of the average house price compared to 21% in 1995. Recent land sales indicate that in the future the proportion taken up by the price of land could be even higher.
This summer, a report published by construction economist, Mr. Jerome Casey, demonstrated that the proportion of the price of a house, which is accounted for by the cost of the site had risen from about 15% in the early 1990s to between 40% and 50% now, confirming the trend which the Labour Party first pointed out four and a half years ago.
Mr. Casey's report in The Building Industry Bulletin, July 2003, entitled “An Analysis of Economic and Marketing Influences on the Construction Industry”, stated:
Prior to the boom, land costs represented 10% to 15% of Irish house prices. Typically in the mid 1990s, Durkan Brothers sold apartments off O'Connell Street for £35,000 to £40,000 for which the site cost was £5,000. Currently, both the Irish Council for Social Housing and private house builders are reporting city house site costs at up to 50% of the house price. Outside the cities, site costs can represent up to 40% of the house price. For the country as a whole, site costs may now constitute 42.5% of the house price, an increase of almost 30 percentage points on the pre-boom position.
Mr. Casey went on to point out that in other EU countries, land costs of 10% to 15% would be considered normal, citing Denmark, Portugal and Holland as examples. He stated that:
There was a total transfer of €6.6 billion in the new and second hand housing markets last year, as a result of having land costs which were thirty percentage points above their long run average.
He continued to state that the main losers were those outside the housing market but attempting to gain entry, such as first-time buyers. Mr. Casey's conclusion means that up to eight years in the life of a normal 25 year mortgage now goes to pay for the excess in the price of the site.
Mr. Casey's assessment is consistent with the information published by the Department of the Environment, Heritage and Local Government. The Housing Statistics Bulletin, which is published quarterly by the Department, compares indices for private new house prices, consumer prices, the average earnings of adult workers and house building costs. Throughout the first half of the 1990s all four indices were virtually identical. Based on a 1991 index of 100, in the respective 1995 indices private new house prices stood at 116, average earnings of adult workers stood at 116, house building costs stood at 114 and the CPI stood at 111.
By 2002, all four indices had widened somewhat, but consumer prices, average earnings and house building costs remained reasonably in touch. CPI stood at 139, average earnings stood at 163, house building costs at 170, however, the price of houses index had shot up to 296. This was 126 points more than the house building cost index.
One word explains such a dramatic change between house prices and the cost of building them – land. As the Taoiseach stated in February, this debate always comes back to the same issue – land. The Assistant Director General of the Central Bank, Dr. Michael Casey, also drew attention last week to the part played by increased site costs in the escalating cost of housing.
The Taoiseach clearly knows the problem which is making housing unaffordable for working families. To date, however, the only action he has taken has been to refer the whole issue to the All-Party Committee on the Constitution, presumably because he considers it may be necessary to amend the Constitution before legislating to control the price of building land.
The Labour Party does not agree that a constitutional change is necessary. In our submission to the all-party committee we stated:
The Constitution has acquired a reputation for paying undue deference to property and the rights of property owners. We believe this reputation is largely undeserved and has in fact been relied upon, as an excuse for doing nothing, by those who are by and large satisfied with the status quo in terms of legislative intervention for the regulation of property and the enjoyment of property rights.
The Labour Party submission went on to examine how the Supreme Court has interpreted existing Articles 40 and 43 and why legislation to regulate by the principles of social justice and the price of building land would be consistent with that interpretation.
The availability of land at a reasonable price for housing, especially in the main urban centres, has been a deep cause of concern for almost three decades. In the early 1970s, this concern resulted in the establishment of the Committee on the Price of Building Land under the chairmanship of Mr. Justice Kenny. That committee was asked to consider, in the interests of the common good, possible measures for controlling the price of land required for housing and other development. It was also asked to ensure that some, or all, of the increases in the value of development that was attributable to the decisions or operations of public bodies could be secured for the benefit of the community.
The main objective was to find a way to stabilise or reduce the price of building land and to ensure that the community acquired on fair terms the betterment element which arises from works carried out by local authorities. The committee reported to the then Government in 1973. The main proposal was that local authorities should be enabled to acquire potential development land designated by the High Court at existing use value, plus 25%. Objections were inevitably raised to this proposal. In particular, it was argued that it was an unjust attack on property rights and was, therefore, contrary to the Constitution. This view was far from universal, however, on the grounds that the rights of property owners must be regulated by the principles of social justice and the common good, also set out in the Constitution.
The Local Government (Building Land) Bill, 1980, was introduced into the Dáil by Deputy Ruairí Quinn. It was defeated on Second Stage on 11 June 1980 by 15 votes to 59. The purpose of the Bill was to enable local authorities to designate land required for development and to enable them to acquire land at existing use value within five years of such designation, along the lines recommended by Kenny. Since the defeat of that Bill, no further action has been attempted.
Our advice is that any constitutional challenge to legislation along the lines proposed by Kenny would fail. In the present circumstances, in particular, where we face a severe housing shortage, social justice and the common good must surely dictate that land owners should not accrue huge gains purely as a result of land rezoning or planning permission.
Hear, hear.
Such planning permission always carries the responsibility to provide services, yet land owners only make a relatively limited contribution to this. Every opinion which the all-party committee received on this question is, however, of necessity speculative. The only way of finding out whether such proposals will survive constitutional scrutiny is to incorporate them into legis lation and await the outcome of constitutional challenge. If the legislation falls, then at least we will have a clearer view why it fell and the nature and extent of the amendments to the Constitution required in order to adequately restore it.
Our central proposal, therefore, is that legislation should provide that land being compulsorily acquired by local authorities for development purposes should be capped at existing use value, plus a reasonable addition. Time, however, has moved on since the publication of the Kenny report. First, constitutional jurisprudence no longer seems to require that the delimiting of property in the manner envisaged by that committee is an exercise that could be undertaken only by the High Court. Legislative interference in property rights occurs every day of the week, without direct High Court involvement. One could instance restrictions on the use of gaming machines, limitations on land use so as to protect national monuments, the regulation and control of banking, residential property tax, the super-levy on milk production and restrictions on casual trading. All of these were the subject of unsuccessful challenges to their constitutionality, yet none involved the direct participation of the courts, as Mr. Justice Kenny considered necessary.
Second, the Kenny report did not state its main proposal as being that a local authority should have power to acquire land anywhere at a price below its market price but rather that a court should authorise a form of price control in designated areas. If one has to justify compulsory acquisition at current use value by reference to the principles of social justice and the exigencies of the common good, then surely it is the purpose for which the land is acquired that is of importance rather than its location.
We consider it not to be constitutionally necessary as well as unduly cumbersome and restrictive, the idea that acquisition at current use value should be available only within specifically designated areas of a local authority's functional area and that such designation should be undertaken by the courts. This entitlement should be enjoyed by local authorities in any circumstance where they have powers of compulsory acquisition in respect of land needed for the performance of statutory functions and which is not being exploited by its current owner to its full development potential.
There is no reason in any such case the portion of the open market price of that land attributable to local authority works and/or economic and social forces such as planning schemes and the like should, as a matter of constitutional or any other principle, be held to belong exclusively to the land owner and to be immune from restriction or regulation under Article 43.
It should be borne in mind that since 1963 planning authorities have had general powers to develop or secure the development of land. In particular, under section 212 (1) of the Planning and Development Act, 2000, a planning authority has powers, inter alia, to:
(d) Provide, secure or facilitate the provision of areas of convenient shape and size for development; and
(e) secure, facilitate or carry out the development and renewal of areas in need of physical, social or economic regeneration and provide open spaces and other public amenities.
Under subsection (2) of that section:
A planning authority may provide or arrange for the provision of:
(a) sites for the establishment or relocation of industries, businesses, houses, offices, shops, schools, churches, leisure facilities and other community facilities.
Further, it reads:
. may maintain and manage any such site, building, premises, house, park, structure or service and may make any charges which it considers reasonable in relation to the provision, maintenance or management thereof.
Subsection (3) enables a planning authority to:
Make and carry out arrangements or enter into agreements with any person or body for the development or management of land, and to incorporate a company for those purposes.
Subsection (4) makes it clear that:
A planning authority may use any of its powers in relation to the compulsory acquisition of land, in relation to these functions, and, in particular, in order to facilitate the assembly of sites for the purposes of the orderly development of land.
Section 213 of the Act provides, more generally, that:
A local authority may, for the purposes of performing any of its functions (whether conferred by or under this Act, or any other enactment passed before or after the passing of this Act), including giving effect to or facilitating the implementation of its development plan or its housing strategy under section 94, do all or any of the following:
(i) acquire land, permanently or temporarily, by agreement or compulsorily.
Section 94, of the Planning and Development Act which deals with housing strategies provides that each planning authority must include in its development plan a strategy for the purpose of ensuring that the proper planning and sustainable development of the area of the development plan provides for the housing of the existing and future population of the area in the manner set out in the strategy. This strategy encompasses both private and public housing provision.
In summary, there is no shortage of enabling provisions to equip local authorities to take a proactive role in the planning and development of their areas, including the acquisition and development of land banks, either by themselves or in partnership with commercial developers, and in accordance with the provisions of a coherent overall plan rather than by considering planning applications submitted on a piecemeal basis. The only restraining factor is cost. Local authorities cannot afford to acquire land compulsorily on such a scale and for such a purpose at the current inflated and excessive price of building land. The Bill proposes to amend the rules for the assessment of compensation in cases where local authorities are compulsorily acquiring development land in order to enable the performance by them of statutory functions. The purpose would be to equip local authorities to undertake a programme of acquiring undeveloped land at present in private hands. The land could subsequently be either built on by the authority itself or zoned, serviced and sold on, with a view to ensuring that a constant supply of such land is available for local authority housing, voluntary and co-operative housing and private development purposes within the framework of a coherent and detailed plan for the area in question.
If effect was given to the Kenny report, local authorities would be entitled to acquire development land compulsorily at its current use value, plus 25%. This requires stripping out from the present compensation assessment rules, references to potential for or restrictions on, future development; current use value would be the governing criterion. It also requires however, special provision to be made in respect of development land that was acquired before the publication of the legislation so as to avoid an attack based on the claim that the legislation was expropriatory in nature and so unconstitutional due to a failure to provide compensation at least equivalent to expenditure actually incurred, plus a reasonable return on investment.
Our view in this regard is based on the fact that the courts lean against legislation affecting property rights with retrospective effect. The courts also lean in favour of the view that compensation should be provided in all cases where its provision is not inconsistent with social justice or the requirements of the common good and is clearly practicable. The intention, therefore, should be to cap the landowner's return on his or her investment rather than abolish it.
Where a person had acquired land before the publication date of this Bill, 4 October 2003, then compensation for its compulsory acquisition would be assessed first by reference to the cost of acquisition, including the cost of any loan entered into for the purpose, if that land was acquired by the claimant through a bargain at arm's length.
Where land was acquired otherwise than by way of an arm's length transaction, that is by inheritance or a gift, the cost would be the amount which would be assessed by an arbitrator applying the rules in force prior to the passing of this Act as the open market value of the land on the date of its acquisition by the claimant. To the cost of acquisition would be added the amount, if any, assessable in respect of the cost of improvements carried out, other than work consisting only of maintenance, repairing, painting and decorating, which have added to the value of the land. Finally, an amount would be added to represent a reasonable return on investment in the land. This might, for example, be calculated as if an amount representing the cost of acquisition and of improvements had been instead invested in securities yielding an annual rate of return 2% higher than Government stock. This total figure would in no circumstances exceed the open market value of the property. In other words, compulsory purchase rules would not produce a rate of compensation greater than what the market would provide.
There is of course nothing cast iron about the figure of 25%, or of 2% over Government stock as a rate of return on investment. Kenny picked 25% simply as offering a "reasonable compromise" between the rights of the community and those of landowners. Other figures may be suggested. It may also be argued that the circumstances of particular cases would require a greater degree of flexibility. If the principle in this Bill is accepted by the House, the specific terms could be developed on Committee Stage. This Bill will end the ongoing speculation and option-taking in building land and over time reduce the rate of increase in house prices and make housing more affordable. It will also ensure that building land which is zoned and serviced is released for development.
In Dublin there are 5,580 acres of zoned serviced land, capable of yielding over 100,000 dwellings. Much of this land is held by a small number of property owners. Jerome Casey in his July 2003 report to which I have referred, has conducted the only study of ownership of development land in Dublin and he concludes that over half of the development land in Fingal is currently controlled by 25 individuals or organisations.
The slow release of building land, particularly in Dublin, was identified as far back as the first Bacon report in 1998. Following that report, the Government reduced capital gains tax on residential development land from 40% to 20% with the proviso that the CGT would rise to 60% after four years. The incentive for landowners to develop was obvious and would probably have succeeded in greatly increasing housing supply in Dublin, had the same Government not abolished the 60% CGT within two years of its introduction.
Hear, hear.
In his interview published in The Sunday Times last Sunday, the Taoiseach hinted that the 60% may be re-introduced. It should never have been abolished in the first place, and the Labour Party calls for its re-introduction.
The prospect of CGT being increased from 20% to 60% if land is not released, coupled with the revised compulsory purchase regime proposed in this Bill, would ensure that housing land, especially in the urban areas where demand is greatest, is brought to construction. It is madness that in areas such as Dublin where house prices are highest, large tracts of zoned and serviced building land are lying idle while Dublin builders are constructing new commuter towns 30 and 40 miles out and home buyers are forced out of their own city to buy a house.
This Bill should be considered in conjunction with other proposals on housing policy which have been made by the Labour Party. We have proposed a system of fair price certification for new houses and the establishment of a housing market regulator. Fair price certification will be necessary to prevent the benefits of the cap on land prices being transferred to builders and to ensure that the ultimate benefit will accrue to the house buyer. We have also proposed the establishment of a national housing authority which would encompass the existing National Building Agency and the Housing Finance Agency. This authority would provide the professional and managerial support needed by local authorities to operate the new system and would be the agency for the provision of funding.
Unless we put a stop to speculation and profiteering in building land, we will not be able to make housing affordable and, as the Taoiseach said on 6 April, "Failure to tackle the rising cost of housing now will lead to future problems for the next generation." It will also lead to huge problems for the economy and the public finances. The Sunday Times article reported that the Taoiseach said the Government had spent “an awful lot of time” since 1997 examining the housing market. It is to be noted that in the six years since Fianna Fáil and the Progressive Democrats came to Government, the average price of a new house increased nationally by 125%. That is over five times the rate of inflation, over four times the increase in average earnings and three times the increase in the cost of building houses.
The increase in Dublin is even more dramatic. In 1996, the last year before Fianna Fáil and the Progressive Democrats came to power, the average price of a new house in Dublin was €97,058. Last year the average price of a new house in Dublin was €297,424. That is an increase of 206% or a trebling in the price of houses, nine times the rate of inflation, five times the increase in average earnings and four times the increase in the cost of building.
Who can now afford to buy the average priced new house in Dublin? The maximum loans provided by lending agencies amount to three times the combined household income, subject to a maximum of 92% of the house price – 92% of €297,424 is €273,630 and that is three times €91,210, well in excess of a TD's salary. That is the combined income a couple would now need from their own resources to buy the average priced new house in Dublin.
The Minister of State with responsibility for housing and urban renewal, Deputy Noel Ahern, may well shrug and respond, as he has done previously, "Sure a lot of them are managing to buy, somehow". It is true that some are. With interest rates low many new house buyers are over-borrowing and will come to grief if interest rates rise significantly. Some are receiving financial help from parents. Many parents are remortgaging the family home or committing pension lump sums to provide house deposits for their children. In many cases, young families are buying way out into the commuter belt adding pressure to themselves and to traffic congestion. It is the high cost of housing in our cities which is fuelling the demand for one-off housing sites in the countryside. We no longer need to rely on anecdotal evidence concerning families who can no longer afford to buy a house from their own resources.
Part V of the Planning and Development Act 2000 provides for the first time a means of estimating the number of families who have been priced out of the housing market. Under the Act each local authority is required to draw up a housing strategy which estimates the number of newly forming households who cannot afford to buy a house from their own resources.
In mid-2002, Focus Ireland, the Simon Community, the Society of St. Vincent de Paul and Threshold came together and produced an analysis of housing strategies. From an examination of the housing strategies, they concluded:
It is projected that 33% of new households will not be able to afford to become house owners, based on calculations prescribed under Part V. That figure rises to 42% in urban areas.
It is almost 50% on average across the four Dublin local authorities, it is 55% in my constituency of Dún Laoghaire and the Minister for the Environment and Local Government, Deputy Cullen, will no doubt be aware that the highest rate, at 65%, is in his city of Waterford. It should come as no surprise that as house prices soared increasing numbers of families were unable to buy and would have to turn to the State for assistance in meeting their housing needs. What are the implications for the public finances if one in every three families nationally and one in every two in Dublin will require some form of housing assistance from the State?
Last year, the Department of the Environment and Local Government spent €1,126,993 on local authority and social housing programmes and for that they produced 4,403 local authority houses and 1,360 from the voluntary and community sector, a total of 5,763, but how much more will need to be spent to meet the needs of the 60,000 applicants who are already on local authority housing lists, plus the additional 10,000 applicants who are now joining these lists each year? Many local authority housing applicants are in private rented accommodation for which they receive a rent allowance from the Department of Social and Family Affairs. This now amounts to approximately €300 million per annum and will grow as families have to wait longer for council housing and even more families join the list.
The new affordable housing schemes under which State-owned land is provided free for housing purposes or the local authority buys up to 20% of the sites owned by private developers under Part V of the Planning and Development Act will all cost money. These are the immediate costs to the State of high house prices. We may yet have a demand, as happened in 1992 when interest rates went up, for additional assistance for families who cannot meet their mortgage repayments. There is also the huge personal cost to those who are stuck on council waiting lists, living in overcrowded conditions at home or in poor standard private rented accommodation for which the State may have to pay in the future through increased education, health and social welfare. These are the issues of social justice and the common good on which the Labour Party Bill relies, to delimit the rights of a small number of landowners to profit from development land.
Since the proposal to limit the price of building land returned to the public agenda, there has been a series of comments to the effect that the State should stay out of the building land market. Even the eminent Dr. Peter Bacon in a "Prime Time" interview recently, when asked what went wrong with his housing reports, blamed it all on the politicians, although he did not indicate which side of the House he had in mind.
I bet he did not.
I have no doubt that over the next two evenings some of his thinking will be reflected in the debate. I am interested to note that the IAVI, in its submission to the all-party committee, states that the need for social and affordable housing "is best and most fairly met by the public sector drawing funds from the National Exchequer rather than imposing selective obligations on individual developers and landowners". It also states that it is the "view of the IAVI that any subsidy of housing costs should be borne by the taxpayers at large rather than penalising individual landowners". However, the IAVI does not say by how much taxes would need to be increased for the State to subsidise the housing needs of one in three new households nationally and one in two in Dublin.
This country faces some hard choices about housing policy. What is a house for? Is it a place in which to make a home or is it a property in which to invest? This House must make a clear choice in deciding on this Bill. Are we to continue to defend as almost absolute the property rights of a small number of development landowners at the expense of working people who, in increasing numbers, are being denied the right to a secure home at an affordable price? Whose right to property will this House vindicate tomorrow night? Will it be that of the owners of development land to make excess profits or the right of working people to buy and own their own home? I hope the Taoiseach will give meaning to his words and lead his Government to support this Bill for which he has been making an eloquent case.
I heard a former member of the Fianna Fáil Party declare on the radio this morning that he had left what had been a right wing party because it had dramatically shifted away from its founding ethos. Nowhere is that more clear than in relation to the deal that was done between Fianna Fáil and the builders and owners of private land to ensure that the maximum profits from the development of land and housing around our towns and cities did not go in due proportion to the original owners of the land at a rate of return of 25%, as was stated by Deputy Gilmore and referred to in the original Kenny report, or to the local authority or the other agencies which wanted to provide homes for people, but to the builders and developers who, either by way of option or outright purchase, exercised ownership and control of the land and were in an extraordinarily strong position to influence its rezoning when county development plans were being prepared.
I want to speak about the experience in Fingal and Dublin west. Last year's census shows that Dublin north and Dublin west, particularly Fingal, have undergone and will undergo in the future extraordinary levels of house building. The land, which is close to the city, is available. There is a clear argument that tens of thousands of people should find homes at reasonable prices in both Dublin west and Dublin north. What has happened in Fingal is that a profit of more than €300 million has been made as a result of land values being held by landowners and developers. That profit is not subject to any form of taxation. Through the system of options, split ownership, management companies etc. little of it is subject to capital gains tax even at the low rate introduced by the Minister for Finance.
This is not a victimless operation. One often sees celebrations taking place at the end of certain council meetings or at the publication of development plans because a lucky landowner or consortium of builders or developers has hit the jackpot. We often read in the newspapers that a profit of €25 million was made. We read the other day in the newspapers that one of the 26 firms mentioned by Deputy Gilmore made a profit of €25 million last year. It is not that people are envious of those who have suddenly won a triple jackpot and a triple lottery at the same time. However, the people have been left behind to pay for this by Fianna Fáil which once sought to represent them.
I spent the past day and a half at an An Bord Pleanála hearing on the Hansfield strategic development zone which was designated by the Taoiseach approximately a year ago. Under that plan a further 2,000 homes will be built in an area totally suitable for housing development. There is no problem with the principle of developing the land for housing as it is close to a railway line. However, a recent study by the Department of Education and Science shows that the population has grown by 65% in that area compared with an average growth of 17% in Fingal. That is probably the highest rate of growth in western Europe.
What has happened in relation to the strategic development zones, given that the Taoiseach said they would be accompanied by all necessary infrastructure? Several of the 26 firms mentioned presented a detailed submission to build a further 2,000 homes in an area where 4,000 homes have been built in the past four years and 3,000 are currently being built. The Government promised that all the infrastructural needs would be met. How have they been met? What provision has been made for educational services? Some 4,000 houses have already been built and occupied. One of the builders responsible for most of the building declared a profit this year of €25 million. What schools have been provided? Only one ten-room prefabricated school has been provided for 4,000 houses. The builders said at the An Bord Pleanála hearing that although 4,000 houses had been built, 3,000 were being built and a further 2,000 would be provided in the strategic development zone at Hansfield, there was no need for additional educational provision. The designation of sites on their plots of land in the strategic development zone would cost them the profit on 300 to 500 houses.
Not only are the young couples who are buying the houses being robbed by paying 42% extra in site costs which are widely inflated, but, as tax payers, when their children want to go to school they will not be able to because the money will have gone into the pockets of those who grace the Fianna Fáil tent at the Galway races. Like the gentleman said this morning on the radio, that would shame those who were involved in founding Fianna Fáil.
I wish to share my time with Deputy Peter Power.
Is that agreed? Agreed.
I am grateful for the opportunity to speak on this Bill, which proposes to amend the basis on which compensation is payable in respect of the acquisition of land by local authorities. Local authorities' rights to acquire land compulsorily are important instruments in facilitating public interest objectives for housing, water, roads and general development. It is essential in the interests of the common good that we ensure the right balance between the rights of property owners and those of public authorities.
Part V of the Planning and Development Act 2000 was a serious and well-directed intervention in this area. It enables local authorities to acquire up to 20% of zoned housing land at existing use value. It represents a more targeted approach than the proposal before the House, which applies to the compulsory purchase of development land for any purpose by a local authority. Part V contains nine sections and has been supplemented by three sets of ministerial guidelines to assist local authorities in its implementation. In light of this experience, I do not think the Bill before us, comprising just four sections, can seriously deal with the complexity of compensation for compulsory purchase and help local authorities deliver, for example, more affordable housing in a realistic timeframe.
The Bill provides for a major departure from the existing rules of compensation for compulsory purchase, under which the basic valuation of land is that of open market value, in favour of a system whereby land valuation would be determined by one of several different mechanisms, depending on the circumstances of each acquisition. It is not at all evident from this short Bill that important legal and practical issues have received the attention they deserve, that there has been the necessary rigorous evaluation of actions and consequences or that it is based on a clearly thought-out strategy.
The Bill would apply in respect of any acquisition of development land required for the purpose of any function of a local authority. However, it must be assumed that the underlying concern is the availability and cost of development land for housing purposes. The fundamental question, therefore, is whether in current circumstances this Bill would be an effective and work able response to the issue of housing supply. The Government is satisfied that it would not. Accordingly, we oppose not only the Labour Party motion but also the Fine Gael motion seeking to defer Second Stage of the Bill for six months. I have sympathy for the Fine Gael motion, but it would be disingenuous of me, based on my assessment of the Bill, to suggest that it be deferred for six months because that would imply that I would accept it in six months. I would rather be up front about this and not do what some have suggested.
Does that mean the Minister would reject the Taoiseach's—
No, I am not finished yet, as the Deputy well knows. I am just making that point to the House.
It would not be the first time the Minister has done that and got away with it.
That is right.
The Deputy should wait until he hears all I have to say. It will then become clear to him. The Government's strategy on housing is to continue to maximise and accelerate housing supply to match existing demand and stabilise prices so that people who desire to own their own homes will be able to do so. Rapid economic growth, coupled with increases in population and changes in demographics, including increased inward migration, increasing numbers in the household formation age group and decreasing household sizes, has led to unprecedented demand in the housing market. The overall objective of the Government is to continue to increase housing supply to meet demand and to improve affordability, especially for first-time buyers.
The House should consider carefully what has been achieved. We have put in place a series of measures that have seen the supply of housing expand every year for the past eight years. In 1997 about 39,000 houses were built, in 2000 about 50,000 were built and in 2002, 58,000 units were built. Ireland is building at the fastest rate in Europe, with 14.7 units completed per 1,000 population in 2002. This compares to about three units per 1,000 in the UK. Record numbers of completions have continued into 2003, with more than 13,700 new houses and apartments built in the first quarter, an increase of 14.5% on the same period last year. Completions this year could reach 60,000 units or even more. These figures are evidence that our housing policies are very effective and we will continue to deliver housing at these rates.
The national development plan estimated that an additional 500,000 new units would be required over ten years from 2000 to 2010 to meet demand, with some easing thereafter. We have been meeting and exceeding these targets. The Government remains committed to implementing measures to boost the supply of housing and in this way we seek to bring moderation to the rate of house price increases. We are assisting low income groups and those with social housing needs by means of a range of targeted social and affordable housing programmes, delivering high quality housing units nationwide. Last year more than 12,700 units of social and affordable housing were provided, compared to less than 8,700 units in 2000. Local authority housing output was 5,074 units in 2002, while the voluntary housing sector delivered an output of 1,360 units, the highest level ever recorded. About 13,000 units of social and affordable housing will be delivered this year.
Our target of 2,000 units under the affordable and shared ownership schemes was comfortably exceeded last year and I expect activity to increase further during 2003. Nearly 1,700 houses were sold under the shared ownership scheme in 2002, an increase of 4.6%. I expect a similar level of activity this year. The affordable housing scheme supported 880 households in 2002, a threefold increase on the previous year, and about 1,000 houses will be sold this year. Overall, the total capital funding for housing this year, at €1. 7 billion, is up almost 7% on the amount provided in 2002. At the same time, our policies seek to maintain an adequate balance of investment in the market to ensure a supply of private rented accommodation – this is particularly important to newly formed households and to an increasingly mobile workforce. The past 12 months or so have seen a welcome change in the supply of rental accommodation, with moderation and even reduction in rents in certain segments of the market. We will be exploring ways of continuing the development of the sector – for example, under Sustaining Progress the development of PPP arrangements in relation to rental housing will be considered.
We have been very innovative and proactive in introducing legislation to address the housing needs of all sectors of the community. Part V of the Planning and Development Act 2000, as amended, deals with housing supply and has specific provisions for delivery of social and affordable housing. There is now greater flexibility in concluding effective agreements between planning authorities and developers. Detailed implementation guidelines for these provisions have been issued following consultation with the industry and other major stakeholders. These will be followed up over the next month or so with a series of regional information seminars for local authority staff, builders and so on. Many authorities are actively engaging with developers in Part V pre-planning discussions and negotiations and I look forward to the contribution to overall output from this measure. The Residential Ten ancies Bill 2003, currently going through the Houses, reforms landlord and tenant legislation. It will ensure that for those who want to rent there is a fair, vibrant and high quality private rented sector that can contribute to the achievement of overall housing policy objectives.
Since 1998, almost a quarter of a million new houses have been built. New house price inflation was reduced from about 40% to about 8% at the end of 2002. We in Government continue to take new initiatives to improve affordability. In Sustaining Progress we launched a special new affordable housing initiative aimed at people who in the past would have expected to purchase a house from their own resources but find that they are unable to do so in the current housing market. The Government recognises that the identification of suitable sites is a critical factor in the success of this scheme and in July we approved the immediate release of two sites in Dublin and agreed to proposals relating to two further sites in Meath and Kildare to ensure early delivery of affordable housing under this initiative.
That is a laugh. It is the greatest red herring of all time.
The release of these spearhead sites will allow work to begin immediately. This shows the Government's determination to make measurable progress by the time of the mid-term review of Sustaining Progress, which will take place in mid-2004. Looking forward, available information clearly shows that the supply of zoned and serviced land coming through the planning system is adequate to meet demand.
The fourth national inventory of zoned residential serviced land, carried out in June 2002, indicates that there was a more than adequate stock of zoned serviced land available throughout the country for residential development – more than 30,100 acres nationally, with an estimated yield of 328,000 housing units. Dublin city and county council areas had approximately 5,700 acres of zoned serviced land with a potential yield of 96,700 units, while the mid-east region has 3,000 acres with an estimated yield of about 27,000 units. We now have in place a supply for the next three to four years so even if I were to accept this Bill tonight, it would not make a shred of difference over that time. Deputy Gilmore was absolutely right, the key is to bring enough zoned serviced land onto the market to cater for our needs and to bring the capacity of the building industry up to its maximum potential. We have done that and exceeded it because, as Deputies know, not only the builders who build houses are directly involved.
Because this is a quiet time in the commercial sector, all the developers who would normally be in the commercial sector are involved in the housing market. That is why we have been able to bring the capacity of the building industry up to phenomenal levels. I have no doubt that in years to come, case studies of housing in this country will be done in universities throughout the world.
They are doing that already, but for the opposite reason. They are showing how it cannot be done.
Young couples cannot afford to buy a house in Dublin.
The Deputies will have an opportunity to contribute. Please allow the Minister to continue without interruption.
The Minister is provoking us. We cannot help it.
Some 60,000 houses per year are being purchased. Somebody is buying them.
Yes, but who? It is not the young people.
Please allow the Minister to continue.
This is the difficulty with the debate. Either we can have an anecdotal, meaningless discussion based on non-facts and pub talk—
That is what the Minister is doing.
—or we can deal with the facts.
Really?
Please allow the Minister to continue.
Unfortunately, Deputy Burton has left the House, although I am not criticising her for that because I am sure she has other things to do. She made an interesting analysis of Fingal, including some very serious accusations. I would be delighted if she would give me the information and to see the evidence of land hoarding, abuses by developers, not releasing land, or land being built on elsewhere while there are land banks between built-up areas and other areas. Deputy Burton gave the impression that she has substantial evidence of this happening in Fingal. It is extremely important to me as Minister for the Environment, Heritage and Local Government, to have that evidence presented to me. If Deputy Burton has hard evidence – rather than making anecdotal comments about this, although I am not saying she is – I would like to have it.
I understand Fingal probably better than most. I have carried out assessments on housing and Fingal is probably one of the most dynamic county councils. I invite her most sincerely to come to see me and to present the evidence on the specific points. If the case is as Deputy Burton claims, it is extremely important.
Provisional planning permission data for the first six months of 2003 indicate that nearly 34,714 units received planning permission nationally. The situation was especially strong in the greater Dublin area with 13,400 units receiving planning permission, up 11.4% on the same period last year.
Who will buy these houses?
Over half the secondhand houses are being bought by first-time buyers.
More than half are being bought by investors.
Deputy Durkan will have an opportunity to contribute shortly.
If the Deputy wants to comment on the debate he should do so when he speaks but I invite him to do so on the basis of the facts, not anecdotal nonsense.
We have heard all this before – for the last five years.
Please, Deputy Durkan.
I am sorry, a Cheann Comhairle, but the Minister is upsetting me.
I am the one involved and I am giving the Deputy the facts that are accepted by the industry and the social partners.
The Minister codded the social partners.
I am giving him the facts. If he wants the facts then he should listen. There was a larger increase of nearly 32% in Dublin, where 10,260 units received planning permission in the first half of this year alone. Since the summer, planning permission has been granted for the Adamstown SDZ, involving 10,000 units, and for over 2,000 units at the Phoenix Park racecourse. The expansion is phenomenal. The thrust of Deputy Gilmore's Bill is to get more houses to the market on cheaper land. We would all like to do that but I wonder where the builders are who will build it.
They are in Rochfortbridge.
If we are at capacity, where will further capacity come from? Where is this land?
These are all very positive indicators that supply of housing is set to continue at the very high levels maintained over the past eight years. To summarise, the overall outlook for 2003 is positive from all quarters and supply is increasing to meet predicted levels of demand. The Government remains committed to targeted and effective measures to boost the supply of housing and assist low-income groups and those with social housing needs. We will continue to monitor housing developments and review policies and schemes as necessary to ensure that the demand for housing is met in a sustainable manner.
At a time when we are making significant inroads into the housing sector, the Labour Party proposes a radical intervention which, in the view of many, has potential constitutional implications. In fairness, the Deputy acknowledged that they may or may not have. These implications are currently under consideration by the All-Party Committee on the Constitution. The committee is examining the two articles of the Constitution relating to private property, to ascertain the extent to which they are serving the good of individuals and the community, and decide whether changes in them would bring about a greater balance between the two.
The committee had already been asked to consider the possibility of placing a cap on the value of development land. In discharging its functions, the committee has received detailed submissions and taken presentations from a wide range of individuals and expert groups, and has engaged legal advice to assist it in developing an agreed position on the various issues involved. The committee is expected to report in early 2004, a matter of a few months away, which is clearly indicated in the Fine Gael motion.
In a submission to the all-party committee, the Labour Party contended that it is not the committee's function to determine State policy in relation to development land, or to offer legal advice as to constitutional restrictions, if any, on the formulation of such policy. Accordingly, it sees no reason why action on issues such as the reform of compulsory acquisition policy should await the final outcome of the committee's deliberations. I do not agree either with the Labour Party's restrictive interpretation of the committee's role, or that it is necessary or prudent to pre-empt the considered conclusions of the committee.
The National Economic and Social Council is currently undertaking a major study on housing and land policy, which is expected to be completed by end of this year. I look forward both to that study and the committee's review. The council is adopting a broad approach to the study, undertaking an initial review of many aspects of housing systems and public policy with a view to highlighting what they perceive to be the key housing issues and policy problems in the Irish context.
Pending the conclusion of the work being undertaken by the all-party committee, and also the NESC, the Government is satisfied that it would not be appropriate for the Oireachtas to enact measures for such a significant intervention in the housing and land markets as is proposed. If I am reading it correctly, that is what the Fine Gael Party's motion is saying. This is very serious information that will enlighten everybody in the House, on both the Government and Opposition benches. The information is imminent and we will all have the benefit of it in order to see where both the anecdotal evidence and the facts lie. This is a grey area because we are not absolutely sure but we commissioned these studies to establish the facts. We should do justice both to the NESC report and that of the All-Party Committee on the Constitution, both of which will conclude in the next few months. No doubt we will then be back in the House either with further Bills from the Opposition or proposals from the Government. At least, we will have a reasoned debate based on the facts. I hope the NESC report will be extremely enlightening on these matters.
Is the proposed Bill appropriate, well founded in fact, proportionate and equitable in its likely impact? Is there a clear picture of what is to be achieved, of the extent and consequences of the proposed intervention? Does it clearly demonstrate itself as the best way to achieve our objectives? I believe it does not.
The bottom line is that a measure such as this must be supported by more than anecdotal information or assumptions. It can only be justified on the basis of comprehensive information on the operations of the marketplace, rigorous analysis of the legal and economic issues, clear guidance to relevant public authorities as to implementation, and confidence as to its consequences. These essential elements are not in evidence.
It would appear from an initial consideration of the Bill that, apart from legitimate concerns regarding the constitutionality of the basic approach, there are specific legal shortcomings. For instance, the Bill proposes three different systems of calculating compensation, depending on the circumstances of the landowners concerned – whether they acquired the land after 4 October 2003, or before that, either by inheritance or purchase.
The Bill would appear to discriminate arbitrarily between a landowner who could sell development land at open market prices, and those affected by a particular decision of a local authority to acquire their land at the much lower current use value. Who is to decide which farm we will take? I would like to be sitting at a council meeting deciding that one.
The Bill fails to spell out the principles in accordance with which different local authorities should operate the new compensation provisions. It appears to be at their discretion. Without a proper statement of guiding principles, local authorities could apply the proposed new powers to different degrees in a way that would undermine the fair operation of the provisions. The Supreme Court has already ruled in the Laurentiu case that the Oireachtas cannot delegate its powers without giving guidelines on how the powers are to be applied. This Bill does not provide such guidelines.
While not made clear in the Bill, the extent that lands acquired by local authorities could be passed on to some private developers at reduced prices, but not to others, could impact unreasonably on competitiveness within the building industry and again give rise to issues of fairness. As we know, a CPO award incorporates not only the price of land, but compensation for damages caused by disturbance, severance and other injurious effects to retain lands. In practice, these can constitute a significant, even major, part of the overall award. These grounds for compensation are not affected by the Bill so the scope for overall cost reduction is completely overstated by the way it has been presented. Finally, key definitions and concepts are less than clear. For instance, "development land" could include land attaching to private houses, open land in urban areas etc.
Consider the practicalities of applying article 3(c), a calculation of notional return on investment, and possibly re-investment, in "Government stock", especially over a prolonged period. This could entail so many imponderables and arbitrary assumptions as to be wholly unworkable. There are a number of practical considerations arising from this Bill that also merit attention.
Underpinning the Bill is an assumption that public authorities intervene in the housing market and either directly deliver or oversee the provision of most large scale housing. At present we are successfully delivering over 60,000 houses a year, through the co-ordination of public authorities, voluntary housing bodies and the private sector. To radically change the system of procuring this major housing output without first ensuring a build-up in local authority capacity, would invoke a high risk of disrupting housing construction programmes in the short-term. Further, if the powers provided for in this Bill were to have any short-term impact, it would be essential that the construction industry, which is already delivering record house completions, has the spare capacity to substantially ramp up its output. There is no evidence to show this. Otherwise we risk increasing construction inflation, which we have now managed to get to reasonable levels.
As stated, it is the Government's view that house prices are best stabilised by an effective housing market where supply closely matches demand. Considerable progress has been made in this direction. To the extent that further measures are considered necessary to enhance the supply side, the Government is prepared to consider a taxation-based approach to incentivise the early use of development land and secure a stable supply of land for housing. The development of this kind of initiative will be fully considered in light of the all-party committee and the NESC reports. Indeed, all the other issues that have been pronounced by the Government, which have been picked up on by the Labour Party, will be looked at in light of those two reports because we will have the facts to do it.
The Government has commissioned research and analysis of ownership control of building land in certain development areas, particularly Dublin, to determine whether current practices are retarding the overall delivery of building land or impeding long-term market stability and to explore the feasibility of possible interventions. All this is being assessed at the moment. This work will be completed shortly and will assist the Government in assessing the need and scope for action on possible land hoarding. That is why I have invited Deputy Burton to give us evidence of this.
At a time when record housing output is being achieved, we have before us a Bill that proposes a radical intervention by local authorities in the land and housing markets. This not only raises profound constitutional issues, but also gives rise to serious concerns about the practicality and the likelihood of unintended perverse effects on the operation of those markets. It seeks, deliberately in my view, to pre-empt the conclusions of an all-party committee that is specifically examining the constitutional implications of such an intervention. The Government considers this Bill to be premature in its timing and ill-judged as to its specific content. Accordingly, the Government opposes the Bill.
I thank the Minister for sharing time with me. I compliment Deputy Gilmore and the Labour Party for, at the very least, reducing an argument which has come before the All-Party Committee on the Constitution to legislative form for the purposes of debate. As the specific issue which he has introduced in his Bill was debated and submissions were made at length on this subject, I welcome its introduction at this stage. However, without doubting the bona fides and the intention behind the Bill, I have certain doubts and reservations, the reasons for which I cannot support the Bill in its entirety at this stage.
As I said, I sit on the all-party constitutional committee looking into this and other issues, which is chaired very well by my colleague, Deputy O'Donovan. It has been working intensively for the past year under the auspices of the House and the Taoiseach's Department. It was requested specifically by the Taoiseach to look into these issues, not just the narrow issue of the capping of land in so far as this relates to CPOs by local authorities, but the capping and the price of development land generally.
The committee held public sessions over the summer, which were attended by the Deputy's colleague, Deputy O'Sullivan, and by members of all parties. Much time and effort went into the formulation of the committee's methodology and approach and its timing. Invitations went out to all interested parties. Much time was spent scrutinising the submissions that came in. People, including in the Labour Party, were invited to make oral submissions. The committee studied the Kenny report and the implications that arose from that. Advertisements were put in the newspapers and eventually the committee finished its hearings in the middle of September. Today we embarked on the process of evaluating all those and setting out the format of our final report.
Taking all those factors into account, to submit a Bill to this House which impacts on a small area, albeit an important area, of our work would interfere unreasonably with the work of the committee. It would be premature to the work of the committee and to some extent it would pre-judge its outcome. The Labour Party, through its representative, Deputy O'Sullivan, has an actual input into the committee and is entitled to put forward the proposals that are included in this Bill into the final report. I submit that this proposed Bill will form a welcome part of our deliberations over the next few months, pending the delivery of our report early next year, because there are certain merits behind the thrust of the Bill.
I am sure that Deputy Gilmore drafted the Bill, but it was presented by Deputy Rabbitte in a very interesting submission. The submission states: "It is not in our view the function of the all-party committee to determine, for example, what the State role in relation to development land should be" I cannot agree with that –"Nor is it the committee's function to offer the Government or the Oireachtas legal advice as to its restrictions"– I cannot agree with that, to a large extent –"The former functions belong to the Government and the Houses while the latter, so far as Government policy is concerned, is the responsibility of the Attorney General." It goes on to state: "There is no reason, in our view [the Labour Party's view] that action on some of the more urgent items [presumably this Bill] on which submissions have been invited, should await the final outcome of the committee's deliberations and the publication of its report on the matter." I cannot agree to the Labour Party's submission on this point.
The reason I say that is that in our hearings and submissions – Deputy O'Sullivan attended practically all of them – a wealth of information came forward from a wide variety of bodies from the Law Society to the Bar Council, the IAVI, planners, architects, engineers, voluntary housing organisations, Threshold, Respond, the whole gamut of bodies interested in this subject. The members of the committee have been informed to a large degree on these issues both in written and oral forms. That in turn will inform our deliberations in our final report. To seek to bring in legislation at this stage while we are considering all these issues in a much wider context than the narrow issue which is being determined now would be premature. The Labour Party, as I have indicated, will have an opportunity to contribute to those final submissions.
While I in no way want to pre-judge the outcome of the committee, I see no reason the general thrust of the Deputy's Bill should not form part of one of the committee's options. Having said that, I do not want to pre-judge it, but it certainly is an option. I could refer to two of the submissions in particular that came before the committee in so far as they relate to the proposed legislation. The NRA and the railway procurement agency, RPA, made very interesting cases on the powers of compulsory acquisition by public bodies. The NRA made a detailed submission on the technicalities and problems associated with processing CPOs in terms of property referencing, problems associated with judicial reviews, the level and cost of awards and all the legal issues involved.
It made a very strong case to the committee that the problem with existing CPO legislation is not necessarily associated with the levels of awards but rather with the technicalities of the legislation. It would be better to introduce legislation with comprehensive reform of all the modalities of how local authorities and other public bodies deal with such issues. Many other proposals put before the committee deserve further consideration in a much wider context.
The legislation is premature and forms part of much wider issues being considered by the committee. There are better and more immediate ways of achieving the Deputy's goal of increasing the housing supply. All those were adequately addressed by the Minister in his contribution. While I have some support for the thrust of the Bill even though it is premature, it could form part of our deliberations in due course.
I move amendment No. 1:
To delete all text after "That" and substitute the following:
"Dáil Éireann:
– noting that the Oireachtas committee on the Constitution is currently examining the issues of personal property and property rights, including the constitutionality of a limit being placed on the value of development land;
– believing that the committee should prioritise its work on these matters and issue a report within six months;
defers the Second Reading of this Bill until this day six months."
I wish to share my time with Deputies Durkan, Jim O'Keeffe and O'Sullivan.
Is that agreed? Agreed.
The committee on the Constitution is examining property rights in the context of the Constitution and it has invited the public to make written submissions. My party has two representatives on the committee, Deputies McCormack and Neville, who have been consistent in their attendance and contributions. I understand the committee has received 139 submissions and held public meetings during July and September. It decided to deal with the issues under four headings: the balance of the rights between the individual and the common good; the dynamics of the property market; the planning system; and other issues related to access to the countryside and ground rent.
Initially I thought this committee would serve as a fig leaf for Government inaction on the housing problem. The Government has not proposed or implemented one coherent measure to tackle spiralling house prices. It has ignored the problem, which is an insult to those trying to buy their own homes and those on the social housing list. As of now there are 52,000 applicants for housing nationwide and the problem is so bad that the waiting list for social housing in Cork city has gone from 3,000 to more than 4,000 in a very short time. A sense of urgency and tangible action are needed and not Government promises, which it has a habit of breaking.
I repeat tonight some of the options my party has proposed. We believe the creation of a national housing agency would smarten up the whole planning system and would be an effective body to implement elements of the national spatial strategy. In previous debates here I have set out my view of the role of such an agency. As my time is limited I will not go into detail tonight. The implementation of the national spatial strategy is an important element of all this. A senior Minister should be appointed with specific responsibility for the overall implementation of that strategy. If the Government carried out its promise to decentralise the 10,000 civil servants from Dublin to the regions, it would diffuse somewhat the demand for housing in Dublin.
The first-time buyer's grant and an increase in mortgage interest relief for first-time buyers should be reconsidered. The Government cut the legs from under first-time buyers with the abolition of the first-time buyer's grant. Based on parliamentary questions tabled today it is clear there are still ongoing problems for people who thought they had that grant, but were let down.
There needs to be an integrated approach to homelessness, with a multi-pronged approach by the Departments of the Environment, Heritage and Local Government and Education and Science and the health services. I have gone into more detail on this in previous debates. We need a special strategy for student and elderly housing facilities.
Based on CSO figures the cost of building materials in the 12 months to 30 June 2003 increased by only 0.6%. Despite this there were double-digit percentage increases in housing prices. I welcome the Minister's statement that a consulting group is looking at the issue of hoarding building land, which we have called for. The Competition Authority should have investigated the hoarding of building land. The Taoiseach was recently "door-stepped" about once-off rural housing. The Government should come off the fence on this issue. A national commission to consider all the issues relating to once-off housing would give us much information and allow the Government and Opposition to draw conclusions about the different arguments about once-off housing.
Some 85% of all applications for once-off housing are approved.
Only by the councils. They are then appealed to An Bord Pleanála.
There is significant disquiet.
I was not being argumentative.
As there are many arguments on both sides, I call on the Minister tonight to establish such a commission to consider all the issues related to once-off housing and then rational decisions could be made.
I fully acknowledge Deputy Gilmore has an interest in housing, as has my colleague, Deputy Allen. In recent years they have both repeatedly laboured in the wilderness, calling on the Government to do something about the serious housing problem. Unfortunately and unwittingly the Labour Party has walked into the trap baited by Members on the other side of the House. The Government has no intention of making houses affordable. In the past few days the Central Bank has indicated there would be a catastrophe if house prices dropped or even stabilised because Government revenue would fall. The Government never intended house prices to stabilise.
Gurgling sounds came from the Taoiseach in the past six or eight months indicating that something should be done about the cost of building land because house prices were getting out of hand. Immediately after the Central Bank statement, the Minister of State said the Government would consider doing something about it. However, it has no intention of doing so because the land bank that was bought after 1987 when the local authorities were instructed to sell their land as quickly as possible is now nearly exhausted.
In recent days I heard the Minister of State with responsibility for housing indicate there were great schemes of affordable and social housing and that the public should be grateful for what is happening. However nothing is happening. It is an appalling vista. I have never seen anything like it in my life. This is not anecdotal. What worries me most is that I thought when the Minister took over in the Department he was the kind of man who knew something about this subject and that he would do something about it.
I earn my living by it.
He has been there for over a year and I am appalled that he knows so little about it and has done even less. Imagine the chagrin at the bash in Ballybrit when the word has gone out that the land bank is depleted. The Fianna Fáil Deputies will be wondering what to do, and will suggest bringing a Bill into the House to ensure that they can keep land, for nothing if possible, to replenish the stocks and sell more houses to the people who bought them before, with the same result.
That is the Labour Party's idea. It is not mine.
The Minister knows that the result is Government revenue goes up all the time.
What happens is that 60,000 people a year are getting houses.
The same people who have been buying semi-detached starter houses in the past couple of years will continue to buy them. Which house prices have stabilised? Those at the top of the market because there are no speculators buying there. They are not buying the six or eight bedroom houses in Killiney or Dalkey. They are buying the semi-detached three bedroom house which is a great investment and they move in first time. Why did the Government not introduce an incentive to encourage those who are building houses to build for the private first-time buyer? That would have been a simple solution, instead it commissioned three Bacon reports all intended to be the panacea for the housing problem. What did we get? Absolutely nothing.
We got 60,000 houses a year.
I can assure my colleagues that the Government has no intention of doing anything other than to enhance house prices to help its friends. If it did otherwise it would not get enough people to fill the tent in Ballybrit and that would be a catastrophe.
I do not go racing in Ballybrit.
The Minister does not back horses.
I do not back horses.
I can recommend Ballybrit. It is a great place to win a race.
It has been said, and this is anecdotal, that one of the contributory costs to housing is building land. The more scarce it is made, the more difficult it becomes. Landowners resented particularly in the past few years seeing the developers who bought their land cheaply achieve an enhanced value by keeping it in store for a long time, and then selling houses on it at an increased value. It is a disgrace. It is presumed that land price is a serious issue. It is a contributory factor but nobody has mentioned Government intervention in the housing market.
It is very successful.
Government intervention has increased the price of houses by anything up to 40%, in levies, VAT and the removal of the new house grant. The only area of revenue which is increasing is stamp duty. I can understand why the Central Bank and the Government are concerned about dropping revenue from housing. If the presumption is right that 50% is land cost, 40% Government costs, is one to presume that 10% is the cost of building the house?
That is all it is – presumption.
I have a serious doubt about that. I have never seen such an absolute neglect of a major sector of the housing market than has happened in the past five or six years.
I am very proud of our record over the past six years. It is an astonishing achievement.
It has never happened before. The Government should be ashamed of itself. In republics where people grow bananas they would have dealt with the like of the Minister long ago.
If we were waiting for the Deputy we would have had no houses.
I must declare an interest at the outset. I am and have been for many years a solicitor, a politician and have been involved in a minor way in a few minor development projects. It has brought odium on me from three points of view but it has also given me a perspective on this most serious issue. The Labour Party has done a service to the House by raising it and providing an opportunity for debate. My initial reaction to the Labour Party Bill is that it is a good idea to have the issue debated but the Bill is unconstitutional.
The Constitution is quite clear on property rights and Article 40.3.2. says "The State shall in particular by its laws protect as best it may from unjust attack, and in the case of injustice done, vindicate the life, person, good name and property rights of every citizen.". In Article 43 there is a further provision on private property. That is not my law, that is the Constitution of the people and we have to abide by it. If we do not like the Constitution we have to change it but any law that we consider passing must be in line with the Constitution.
That is what the Taoiseach is saying.
However, let us not hide behind the Constitution. The proposal is an unjust one. In that view I am agreee with the minority Kenny Report which came to that conclusion. In one respect it targets the super rich property developers – and I am in not in that category. It also applies to everybody, including the widow in West Cork with a cottage acre, part of which she wants to develop maybe for her son, or to sell for a few euro.
Laws apply to everybody and just because they are aimed in a particular direction does not mean they will be confined to that. It is not the right approach yet there is a need for some approach. I do not intend to provide a pro forma solution here. My colleague from West Cork, Deputy O'Donovan and the All-Party Committee on the Constitution which he chairs, are looking at this in great detail. I have read some of the submissions which are very interesting and I look forward to the committee's report.
The market needs supply. I see people who want cheap housing yet will oppose rezoning. Rezoning is a dirty word because of what is happening in Dublin Castle and I am opposed to the behaviour of the people being investigated there, but if we want more supply we must rezone more land. But what do we do about it? I am in favour of applying the new rugby law: use it or lose it. If hoarding is the problem then the rugby law might be applied so that if the rezoning is not used to beneficial effect the local authority can change it. Maybe that is the approach to take.
The Deputy is correct. I keep hearing about hoarding land; rezoning is not an answer.
It is a possible answer to hoarding. The Government has to look into its own heart. One does not help new house buyers by abolishing new house grants or by increasing stamp duty and VAT. The Government has done all three and we are now in a situation where it is estimated that 30% of the price of a new house goes to the Government in taxes. The Government must look at what it has done in that regard. Of course we should be looking at new thinking and new measures and the proposals to the Oireachtas committee are very interesting. For example, one from the Irish Planning Institute proposes the separation of ownership and development rights which is common in many northern American states. I am not saying this is the answer but let us look at these suggestions.
I look forward to a good debate on this but in regard to the Labour Bill, many people will look at a complex problem and say that for every complex problem there is a simple solution. However, I say if you look at it that way, you look at a solution that does not work. It may be necessary to find a complex solution to a complex problem.
I am a member of the All-Party Committee on the Constitution but the fact that we have been given the job of looking at the Constitution, and what changes might be needed in that area, does not mean that we as legislators do not have a duty to do whatever we can within the constitutional framework to make proposals. That is exactly what my colleague, Deputy Gilmore, is doing tonight on behalf of the party and I fully support him. The Minister and the Government have not addressed the main points Deputy Gilmore has made. The central point is the percentage cost of the price of land as a proportion of the cost of buying a house for young people. There are many people who cannot afford to buy a house. They are the two chief reasons the Labour Party is bringing forward this Bill. I do not believe we can delay in addressing this issue. From personal experience of queuing with my daughter to put a deposit on a house last winter, I know there is a huge problem in terms of huge numbers of people being unable to buy a house.
In the short time available to me, I will quote briefly from Article 43 of the Constitution to address the point made by Deputy Jim O'Keeffe. The rights with regard to property are tempered in Article 43.2, which states that civil society has to take account of, and be regulated by, the principles of social justice. It goes on to state:
The State, accordingly, may, as occasion requires, delimit by law the exercise of the said rights with a view to reconciling their exercise with the exigencies of the common good.
I believe that is quite clear. Many of the groups which came before the Joint Oireachtas Committee on the Constitution, in public session, made that point – that the rights to property under the Constitution are balanced by the principles and the exigencies of the common good. Quite clearly, the legislation we are proposing takes those points into account. The case has been made by people better qualified in constitutional matters than I to the effect that there is considerable scope under the current Constitution to make changes in legislation which will address this central issue of the non-affordability of houses for so many of our young people.
I fully stand over the Labour Party's position in bringing forward this legislation. It is constitutional, on the basis of our legal advice, and addresses a most urgent problem for many people who cannot afford houses. People on local authority housing lists will be waiting for years before provision is made for them under current arrangements.
Debate adjourned.