Dáil Éireann Debate, Wednesday - 18 May 2016
22. Deputy Mick Wallace asked the Minister for Finance his plans to seek a break from the European Union regarding the fiscal rules in order to secure finance to address the emergency in housing and homelessness; and if he will make a statement on the matter. [10514/16]
Amharc ar fhreagraI do not intend to seek a break in the fiscal rules, which are designed to ensure stable public finances that underpin sustainable economic growth.
There are provisions in the fiscal rules that are designed to promote public investment. Within the expenditure benchmark pillar of the fiscal rules, capital investment in respect of capital formation is granted favourable treatment. Thanks to capital smoothing, only one quarter of the increase in public capital formation investment must be funded in the first year from within the fiscal space permitted by the expenditure banchmark. This provision means capital spending for housing and other purposes can be leveraged within the EU rules.
As the Deputy will also be aware, Ireland's medium-term budgetary objective or MTO was loosened in the Stability Programme Update to 0.5% of GDP in structural terms. As I have already communicated, this loosening will result in an additional €1½ billion in fiscal space becoming available under the EU rules once the MTO is reached. Taking account of this development and capital smoothing, we will, as set out in the Programme for Government, be bringing forward proposals for an additional cumulative €4 billion in Exchequer capital in the context of the mid-term capital review in 2017.
Having said that the Government is very conscious of the housing crisis and in this context Ireland's Strategic Investment Fund (ISIF) have established a joint venture fund Activate Capital which will invest in the development and construction of housing. The venture will provide approximately €500 million in financing for the housing sector. By recycling this funding, the joint venture aims to develop 11,000 units over the medium term.
Similarly NAMA has stated that in accordance with its independent commercial mandate it will target the delivery of 20,000 additional residential units before the end of 2020. 90% of these residential units will be in the greater Dublin Area, where the demand for housing is greatest. Approximately 75% of these units will be houses, primarily starter homes. The overall cost of the programme will be approximately €4.5 Billion. NAMA will utilise its own cash resources to fund this necessary expenditure.
The Government has also outlined its commitment in the Programme for Government to accelerate the delivery of the €3.8 billion Social Housing Strategy. There will be a mid-term review of the Capital Programme in mid-2017 where the allocation of additional exchequer capital investment to priorities will be determined. In addition, the Minister for Housing, Planning and Local Government will set out the new Government Action Plan for Housing within the first 100 days. Once complete the action plan will be subject to target actions and specific deadlines.
In summary, I wish to assure the Deputy that ending the Housing shortage and Homelessness is a priority for this Government.
