Vol. 1008 No. 6
99. Deputy Mairéad Farrell asked the Minister for Public Expenditure and Reform if he will commit to doubling capital expenditure in order to solve the housing crisis in view of the recent report by the Economic and Social Research Institute, ESRI, which calls for same. [31883/21]
The ESRI recently issued a report stating that major public investment in housing finance through additional borrowing is needed to address the State's housing crisis. Ireland will be facing another decade of a housing crisis unless the Government doubles capital expenditure on housing to the tune of €4 billion per annum. Will the Government commit to the doubling of capital expenditure on housing?
I thank the Deputy for the question. The total level of capital expenditure, along with the sectoral allocations for areas such as housing, is currently under consideration as part of the ongoing review of the national development plan. That process has yet to be completed and I do not want to pre-empt any decisions that will be made in the coming weeks on foot of that review being finalised. The overall level of capital expenditure in 2021 stands at €10.1 billion, or almost €11 billion when capital carry-over from last year is included. This allocation is almost €5.5 billion, or 119%, higher than the amount allocated in 2017. In other words, capital allocations have already more than doubled under the national development plan. This is an all-time high in the history of the Irish State, with a commitment to maintaining and further increasing this over the lifetime of this Government. This is in spite of the major challenges facing the Exchequer due to the impacts of Covid-19 and Brexit. It is also worth noting that the total allocation for the housing programme has increased by 230% between 2016 and 2021, increasing from €943 million to €3.1 billion. Of this, almost €2 billion in capital was committed to the delivery of housing in 2021. The overall capital allocation for the Department of Housing, Local Government and Heritage in the current year is €2.8 billion, an increase of €500 million from last year.
The Deputy can be in no doubt as to the level of priority that this Government affords the issue of housing and that has been reflected in all of the decisions we have made to date in our first year in office when it comes to the allocation of resources. The priority that is being afforded to housing is, of course, actively considered at this time in the context of the new Housing for All strategy that the Minister, Deputy Darragh O'Brien, is finalising, and certainly in the context of the review of the national development plan.
Additional information not given on the floor of the House:
Subject to the impact of Covid, this year the funding will support the delivery of 12,750 new social homes, including 9,500 new build homes. This is the largest social housing build programme in the history of the State.
Increasing the supply of social and affordable homes is a central commitment in the programme for Government. However, these commitments must also be met in the context of competing demands on expenditure.
The ESRI report addresses the undersupply of residential housing in the Irish economy, acknowledging the effects of construction restriction due to Covid-19 lockdown measures in early 2021 and referring to the existing housing affordability challenges in Ireland. We have noted that the paper puts forward a funding option for consideration. It is also important to note that pre-pandemic, Ireland’s level of public debt per capita was one of the highest in the developed world and this has increased as a result of our response to the crisis.
The national development plan, NDP, review will assess the balance of resourcing between sectors such as housing, health, education and transport, in the light of the programme for Government. The overall capital allocations over future years for housing and these other areas will be set out, once decided by the Government, as part of phase 2 of the NDP review. In addition, phase 1 of the NDP review examined the question of what the appropriate level of capital expenditure should be. As part of that, a macroeconomic analysis considered a number of factors including: the overall fiscal position; the demand for investment; the supply side capacity constraints in the public sector and construction sector; and international comparisons. All of those factors will need to be considered and balanced against each other as part of the NDP review when setting the planned level of public capital investment for the period 2021 to 2030.
As the Minister knows, I have been raising the need to increase capital expenditure over the past year, not just due to the fact that this State has historically lagged behind our EU peers when it comes to capital investment, and not just due to the fact we have a massive housing and infrastructural deficit which we badly need to close, but because capital investment is seen as the best possible route out of this crisis. Not only will it help us to turn things around in the short term but, in the medium to long term, it will place this State on a surer, more balanced footing. I take on board what the Minister says in regard to increased levels of capital expenditure. The fact it is set to rise to historically high levels, while welcome, says more about the chronic underinvestment that has taken place over the years than it does about the scale of the present ambition. We need to be absolutely ambitious in regard to this because people deserve better. People do not have homes. We now have a situation where the ESRI is very clearly saying that, yes, we know what the Government is committing but, wait a minute, it needs to double. Can the Minister commit to doubling that?
I thank the Deputy. The funding we are providing in the current year is sufficient to deliver the direct build of 9,500 new social homes in our country. When we compare that to the last year for which we have full figures in the pre-Covid context, 2019, that figure was less than 6,000 units actually built. This year, the funding is provided for local authorities and approved housing bodies to build 9,500 units, so that is a dramatic increase in funding and in output, by any measure. Clearly, there will be an impact from Covid because of the shutdown of the construction sector for much of the early part of this year. That 9,500 units was part of an overall increase of 12,750 units in the social housing stock. The Minister, Deputy Darragh O'Brien, is making very significant progress with colleagues across the House in the passage of a suite of legislation that will enable him to deliver affordable housing, both affordable purchase and affordable rental, which is also critical, in addition to increasing the public housing stock through the scale of investment I touched on earlier, which will be continuing.
In my brief time here, I have lived to see the likes of the International Monetary Fund, IMF, the EU, the Irish Fiscal Advisory Council, Social Justice Ireland and now the ESRI all highlighting our chronic infrastructural deficit. I take on board what the Minister is saying in regard to increases in housing supply and so on but the reality is the ESRI is literally telling us that we need to double this in order to deal with the major crisis of the time that people are facing. The real ideological position is to hold to a housing delivery model that has utterly failed and which has drawn the concerns of no less than the IMF, the EU and the UN.
If all these organisations tell the Government to change course with housing, it takes a major ideological commitment to try to protect a failed status quo.
The Government's commitment is backed up by its actions. We are investing a record amount in public house-building. That is appropriate. When this country was much poorer, our local authorities and councils had a strong track record of building public housing and we need to get back to doing that again. In 2019, fewer than 6,000 public houses were built. This year, funding has been provided for 9,500 houses. The Minister for Housing, Local Government and Heritage will finalise ambitious targets for the new Housing for All strategy, which will be published before the summer recess.
I welcome the ESRI report. It makes an important contribution to the debate and the issues that we have to consider. Last month, the ESRI stated that we may need to increase taxes. I did not hear the Deputy speak about increasing property tax, income tax, VAT or asking pensioners to pay PSRI. The Government has to take the whole picture into account and make decisions that reflect our commitment to Sláintecare and investing in climate action and transport. Housing and the provision of social and affordable housing is a top priority for the Government which will be reflected in all the decisions that we make.
100. Deputy Mairéad Farrell asked the Minister for Public Expenditure and Reform the plans he is putting in place to increase capacity in relation to a recent report by the Irish Fiscal Advisory Council, IFAC, which highlighted concerns that capacity issues were likely to stymie efforts to hit the current capital expenditure targets. [31884/21]
My next question follows on from the first. To address a point that the Minister made, if I asked a question about tax, it would have been transferred to the Minister for Finance. If we accept that capital expenditure should increase not just for housing but infrastructure more generally, then the question is about how we get there. A recent IFAC report highlighted concerns about capacity and how this could stymie efforts to meet the existing capital expenditure targets before we even think of increasing them further. What plans is the Minister putting in place not just to meet the existing targets but the more ambitious ones?
I thank the Deputy for raising this question. A key focus of the review of the national development plan, NDP, is on the capability and capacity of the public service to deliver the ambitious targets for investment that are set out in the plan. Building on recent reforms such as the update of the public spending code, this Government has initiated a suite of reforms to strengthen the assurance arrangements and public sector capability to deliver the NDP. The phase 1 report of the NDP review published by my Department in April includes an analysis of public sector capacity constraints in investment delivery. The analysis notes that even when functioning at maximum efficiency, the public sector has the capacity to deliver a limited amount of investment in any given year regardless of how much funding is made available. All investment typically requires administration, appraisal, planning, design, procurement, etc. All of these processes take time and expertise. Delivery capacity is relatively fixed in the short term, which naturally limits the ability to ramp up public investment in the short term.
It is possible to develop and step up the capacity of the public sector over the medium term through reallocation of resources, training, upskilling, knowledge-sharing and recruitment of additional staff and expertise to build delivery capacity. That is where my focus will be in the review of the national development plan. Money is not always the key constraint. It is the ability to get things done and to deliver projects through what can be a cumbersome and slow progress. We are bringing in a range of reforms. A range of measures are in train to increase public sector delivery capacity over the medium term, including the establishment of a commercial skills academy, the public infrastructure network, the expansion of the Irish Government Economic and Evaluation Service, an EU-funded independent report on the capacity of the public sector to deliver capital projects, and a range of reforms of planning, including the establishment of a new planning and environmental court. I have announced a number of reforms to enhance the external assurance in respect of the delivery of major capital projects to make sure that we get it right and deliver value for taxpayers' money.
We are all on the same page. We want these capital projects to happen. The Minister mentioned external expertise to try to deliver this. I am aware that he will hire additional external expertise for the Project Ireland 2040 delivery board. Those will be additional members if I am not mistaken. I am aware that he is establishing a framework of external specialists and infrastructure delivery to assist with a major project advisory group. The Minister says that this is to avoid the pitfalls which have arisen in the past and delayed project delivery. We know that there have been significant delays in the past on capital projects and we simply cannot afford this. The Minister has been reported in the media as casting doubt that we will reach our capital targets this year. That would have a knock-on effect on subsequent years. Is the Minister confident that we will be able to deliver these? We need large-scale capital investment to get us out of this economically and to rebuild the infrastructure in respect of which we have lagged behind for so long.
I agree that the focus needs to be on delivery. To be fair to the public sector, the independent report funded by the European Commission found many examples of excellence. It found many examples of the wider public sector having the capacity to deliver major capital projects. That includes Transport Infrastructure Ireland, which has a good track record of delivering road projects and public transport projects. The NTA, Irish Water, the OPW, the HSE and larger local authorities also have good records. It also identified gaps and where we can do better. That is why I am introducing what I believe are the most ambitious reforms in the delivery of our capital investment programme, by adding external members to the Project Ireland 2040 delivery board and setting up a major projects advisory group to advise me and my Department on the progression of different projects. I am introducing a panel of external experts that will assist line Departments to bring projects through various stages of the development life cycle.
A recommendation in my party's submission on the recovery and resilience plan was to allocate some of the money towards what I would call capital catch-up. These would be one-off spending measures to help us to get back on track to reach existing targets. That is before we look at potentially increased targets. I am aware, as the Minister mentioned, that the Government's housing commitments have been outlined in other places but I have not seen that in the recovery and resilience plan. It is crucial that we reach these targets. Over the last decade, this Government and that which preceded it, which the Minister's party supported, failed to hit the lower targets. What confidence can we have that we will hit the higher targets, especially given that we are already playing catch-up? This is essential for people's lives and we cannot leave people forgotten again.
There will be an impact from the shutdown of the construction sector for the first four months of the year. That has impacted on the delivery of projects and spending so some timelines will be impacted. In the last crisis, capital investment was cut by about 60% from peak to trough. We are maintaining and building on an elevated level of capital expenditure. We believe that it will be at the heart of the recovery of the Irish economy. I am working closely with all of my colleagues across Government on the roll-out of their capital investment projects. We have introduced some enhanced reporting requirements where all of Cabinet will be provided with information on capital investment progress across key spending Departments, which is important. I am confident that this Government will deliver on the ambitions in the national development plan and the new national development plan which will be agreed. That will underline the priority that this Government attaches to capital investment. We are playing catch-up and investing in our critical infrastructure is the right thing to do. I have to make sure that it is done as efficiently as possible and that we get value for taxpayers' money.
101. Deputy Michael Collins asked the Minister for Public Expenditure and Reform when the continuance of the Northern Ireland planned healthcare scheme, formerly the cross-border directive, will be placed in law here (details supplied); and if funding has been allocated to the long-term continuation of the scheme in addition to that of the cross-border directive, which forces patients to travel to mainland Europe for treatment. [32820/21]
Will the Minister confirm that the continuation of the Northern Ireland planned healthcare scheme, formerly the cross-border directive, will be placed into law in the State? This is crucial to thousands of our citizens on waiting lists across the country and it is a serious recruitment and retention issue for armed forces who rely on the scheme for treatment in hospitals in Northern Ireland through the Permanent Defence Force Other Ranks Representative Association.
I ask the Minister to confirm the funding has been allocated for the long-term continuance of the scheme in addition to that of the cross-border directive which forces patients to go to mainland Europe.
I thank the Deputy for raising this issue, which I know is of particular interest to him. I acknowledge the work that he and others have done in assisting patients in his constituency to avail of the services of the cross-border directive. While the policy matter is one for the Minister for Health, I am happy to answer the question as best I can.
Since the start of this year, the provisions of the EU cross-border directive no longer apply to the UK. On 28 December 2020, the Government approved the implementation of a new Northern Ireland planned healthcare scheme. The new scheme, operational from 1 January 2021, enables persons resident in the State to access the same treatments previously provided for under the EU cross-border directive and be reimbursed for such private healthcare in Northern Ireland by the HSE, provided such healthcare is publicly available within Ireland. It is intended that the scheme will operate for 12 months on an administrative basis initially, with a view to developing a general scheme to provide a statutory basis for the scheme. The Minister for Health is progressing plans in that regard.
The scheme is demand led. The cross-border directive costs have been increasing year on year and in 2020 were €15.4 million. The bigger picture here is that we need to get away from people needing to travel to Northern Ireland. That is the bottom line. We are investing €22 billion this year in our public health service. We should be able to provide the service for cataract treatment, for example. In that regard many of the constituents that the Deputy is assisting to bring to Northern Ireland will be able to benefit from the additional investment which is now being provided in ophthalmology services.
As the Deputy is aware, a reconfiguration is under way in Cork, involving the existing services amalgamated from two sites at Cork University Hospital and the South Infirmary Victoria University Hospital to now be based on the South Infirmary campus. It includes a new outpatient building, which is nearing completion. Following its completion, services will transfer to the South Infirmary in quarter 4 of this year. A new theatre complex is also being built in the South Infirmary which will create two new theatres, one of which is expected to be completed in quarter 1 or quarter 2 of next year. We need to get away from the situation where people need to travel to Northern Ireland and provide the services locally. For the Deputy's constituents in Cork, we should be providing that service in Cork and that is what I am determined to achieve with the Minister.
I thank the Minister for his reply. Next week bus 67 heads to the North from both Cork and Kerry. Deputy Danny Healy-Rae and I have been organising those buses, as the Minister has acknowledged. He says that we should get away from people needing to go to the North and I fully support him in that. It is not just the cataracts; it is the hips and the knees, and getting a simple thing like an MRI scan. Someone cannot get an MRI scan done without waiting for weeks here. We are light years away from resolving these issues here and until that is the case, I am asking the Minister to give more detail on the continuation of the Northern Ireland scheme that was introduced for this year.
When I raised this issue last year, we were led to believe that it was resolved. A Fine Gael Senator from west Cork said that it had been resolved for the long term and advised us to stop scaremongering. However, the Minister is telling me today that he is looking into it. I ask him to give me more details on what he is looking into. Will the Government fund it? Will it continue? I would appreciate an answer to those questions.
The Minister for Health is developing the general scheme of legislation to provide for the continuation of a scheme that is tantamount or equivalent to the cross-border directive in order that the services can continue to be availed of.
I want to finish the point on the cataracts and I acknowledge that it is not the only issue. In addition to the enhanced facilities at the South Infirmary, a new medical ophthalmology service funded by the South/South West Hospital Group is due to commence in August and will be based in St. Mary's health campus in Gurranabraher. The service will be provided following the recent appointment of two new additional medical ophthalmologist consultants and support staff. It will enable the streamlining of medical and surgical cases providing improved patient access. It will be clinically tasked with reviewing 3,000 patient referrals on current outpatient waiting lists. That is a very important reform.
I have looked at the breakdown of the services that people need in Northern Ireland when they have travelled there. When it came to day-case specialties, ophthalmology was by far the largest with over 1,300. The number for orthopaedics was 125 and for general surgery it was 53. The Deputy is right to say that when it comes to outpatient specialties in surgery and so on, orthopaedics also represents a very significant number. We need to fix that issue so that those services are provided here.
Any new services to be provided in Cork are to be greatly welcomed and I appreciate the Minister sharing that information with us. The problem is that the pandemic has led to enormous waiting lists throughout Cork and the rest of the country. People from Dublin, Waterford, Limerick and elsewhere have contacted me looking for services such as hip, carpal tunnel, knee and obviously mainly cataract surgery. The Minister has said that work is being done on the long-term development of the scheme that is there at present. However, I do not want to find myself in the situation I was in last year, being criticised by those on the Government side saying I was scaremongering and claiming that a long-term scheme was in place.
We still do not have that long-term scheme. The Minister has said it is being worked on. When will funding become available to continue that scheme in the long term? Will that be announced next week or will it go right up to 28 December as it did last year or will it be 1 January next year before we get confirmation? That is not fair for people who are suffering in pain and people who are going blind. They need to know today whether they can go somewhere to have this treatment within two months. Some people have told me they have been waiting for five years, which is incredible.
I assure the Deputy that funding is not the constraint. The cost of the scheme in 2020 was €15.4 million. In the context of a healthcare budget of €22 billion, funding is not the issue. The scheme is demand led and the costs depend on how many people avail of the services under the cross-border directive or the Northern Ireland planned healthcare scheme. It is important to reassure people that that scheme continues to be in place. I acknowledge that in its current format it is temporary, but it is the intention of the Government to put that on a firm footing in order that people in the Republic can continue to access services in Northern Ireland in a manner equivalent to the cross-border directive that we had up to the end of last year. The funding is in place. We have an existing scheme. The expectation is that a new scheme to be permanent should be underpinned by legislation. It should be a statutory scheme and it falls to the Minister for Health to introduce that. I will raise it again with him, further to the question having been raised by Deputy Collins this morning.
102. Deputy Mairéad Farrell asked the Minister for Public Expenditure and Reform further to the increased capital expenditure set to take place in the coming years and the current delays in commencing capital projects, his views on and whether he favours investing in a State construction body or an expanded role for the Office of Public Works; and if he will make a statement on the matter. [32592/21]
One line in the ESRI report stuck in my mind which stated, "it is evident that the domestic construction sector is unable to meet the scale of production required". Given the current delays in commencing certain capital projects and the longer-term problem of market supply meeting demand, has the Minister considered investing in a State-owned construction body or an expanded role for the Office of Public Works to help us meet the demand?
As I said earlier, capital expenditure is at an all-time high in the history of the State, with a commitment to maintaining and further increasing this over the lifetime of the Government. The overall level of capital expenditure in 2021 stands at almost €11 billion when capital carry-over is included.
Efficient public capital investment means quality investment decisions supported by robust evidence and analysis to maximise outcomes from limited public resources. This is not a static space and public bodies are continually working to improve processes and frameworks to ensure value for money in capital expenditure.
As the Deputy will be aware a review of the national development plan is now well advanced. A key focus of the review is on the capability and capacity of the public service to deliver the ambitious targets for investment that are set out in the plan. A range of measures are already under way to increase public sector delivery capacity. I touched on those earlier. I also referenced the EY report, Supporting Excellence: Capital Project and Programme Delivery Capability Review. I have acknowledged the good delivery capacity available in large parts of the public sector where responsibility sits for delivering major public investment projects.
However, the report notes that there are longer term capacity challenges in other sectors, some of which will see a major ramping up in capital investment over the life of the national development plan. These sectors may require an upgrade in capacity or enhanced support from the centre. This strategic and targeted upgrade will be the focus of Government investment in the medium term. While the Office of Public Works will have a key role in this workstream the establishment of an overarching State construction body is not envisaged at this time.
A key recommendation of the report is that the national investment office within my Department should convene an action team comprising experts from across the public sector to tailor and set out a roadmap for the implementation of the recommendations in more detail. That work is under way. That action team was established in March. I can talk about that more presently.
We are in a situation at the moment where demand consistently outstrips supply. This puts upward pressure on house prices and rent. The Minister mentioned in the past number of questions high expenditure in terms of capital. We need to look at the reality on the ground as well. People cannot afford housing or rents. Again today the Central Bank has said that house prices will rise further because of the shortage of affordable housing. Obviously, this is great news for the developers, bankers and investment funds but it is bad news for ordinary families and workers.
I am concerned. The NDP anticipates a further 1 million additional people living here in the coming 20 years. That is great news but I am struggling to see how we are going to house people or have affordable housing for people under the current model. I do not believe there is the ambition to follow through.
Certainly, we need to increase housing supply not only from the State but from the private sector. As the Deputy is aware, a range of domestic bodies and commentators have pointed to the need for output of somewhere between 30,000 and 35,000 units per annum. Pre-Covid, the figure had increased to a little over 20,000. We are still a long way short of where we need to be.
The State will play its part in the delivery of housing - make no mistake about that. We are also going to play our part in supporting the private sector to deliver housing all over our country because that will be needed. The State cannot do it all on its own. We need to ensure adequate finance is available. We must ensure land is serviced and that zoned land becomes available for development. We have to try to remove the bottlenecks that exist and ensure that it is viable to build housing throughout the country. We have to ensure we invest in transport, climate action measures, education, healthcare and a wide range of other areas.
Deputy Farrell correctly identified that Project Ireland 2040 anticipates an increase in the population of our country by 1 million people in the coming 20 years. That underlines the scale of the challenge we face to provide the necessary infrastructure.
I hope the Government will start to play its part in the delivery of housing, especially affordable housing that people can actually live in. The reality is that we have seen for a long number of years with previous Governments and this Government a failure to do that. That is why we are in the situation we are in. We are where we are because of political decisions. It is simply not good enough. I hope the Government will be ambitious and will try to deliver affordable housing so that people can live in the houses but at the moment that is not a reality.
There is also the problem of getting value for money for the taxpayer. We have seen serious problems with bid rigging. Some senior officials have mentioned that as well. Is there merit in having a State-led construction company that can build, sell at cost, create jobs and compete with private developers to drive prices down? That is what we need. We need far greater supply but it must be affordable for people so that people can live in those houses.
The Deputy raised the question of affordability in the area of housing. The Government is now putting in place an affordable housing scheme. Until now, such a scheme did not exist. Through the co-operation of the House, hopefully, we are enacting legislation that will provide an affordable housing scheme in this country that will be of benefit to thousands of individuals and couples who want to buy their first homes. In addition we are starting the delivery of cost rental homes with units coming on stream later this year. We have the serviced sites fund. It is up and running with funding of €310 million. The Minister for Housing, Local Government and Heritage, Deputy O'Brien, is enacting provisions to provide for a shared equity scheme.
In addition, we have the Land Development Agency. Once it is underpinned by legislation it will benefit from investment through the Ireland Strategic Investment Fund and this can greatly assist in the delivery of social and affordable, cost rental and affordable purchase homes throughout the country, especially in our cities. Its role could be significant and I look forward to seeing it deliver on the potential that I know it has.
