Private Members' Business. - Planning and Development (Acquisition of Development Land) (Assessment of Compensation) Bill 2003 (Resumed).

Wednesday, 8 October 2003

Dáil Eireann Debate
Vol. 572 No. 1

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The following motion was moved by Deputy Gilmore on Tuesday, 8 October 2003:

[123]Minister of State at the Department of Finance (Mr. Parlon): Information on Tom Parlon  Zoom on Tom Parlon  I intend to share my time with Deputies Andrews, Cooper-Flynn and Cregan.

Acting Chairman:  That is agreed.

Mr. Parlon: Information on Tom Parlon  Zoom on Tom Parlon  I am grateful for the opportunity to speak on this Bill which outlines a method to change the manner in which local authorities pay compensation for the acquisition of land. This Government's housing strategy 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 home will be able to do so.

The Minister for the Environment, Heritage and Local Government, Deputy Cullen, and my party colleague, Bobby Molloy, in the previous Government, put in place measures that have seen record numbers of houses built in each of the last eight years. I ask the House to consider that in 1997, approximately 39,000 houses were constructed; 50,000 in 2000 and 58,000 in 2002. The rate of house building in this country is the fastest in Europe and the record number of completions has continued into this year with over 13,000 new houses and apartments built in the first three months of the year. This is phenomenal progress when one considers that the equivalent of a new Cork city has been built every year since 1997. This Government is committed to implementing measures to increase the supply of housing and bring moderation to the rate of house price increases.

[124]Major advances have been achieved in the provision of affordable housing. Last year over 12,700 units of social and affordable housing were provided and approximately 13,000 units will be delivered this year. Last July the Government launched a new affordable housing initiative aimed at those who cannot afford to purchase a house in the current housing market from their own resources. Through the Office of Public Works programme of transforming State assets I identified two key sites in Dublin, one in Infirmary Road and another in Jamestown Road, Inchicore. I am hopeful that further State sites will be identified in the future to provide quality affordable housing.

While both this Government and the previous Government have been busy building record numbers of houses every year, all the Opposition parties contribute to the debate is some hare-brained schemes such as the one underpinning this Bill.

Mr. Allen: Information on Bernard Allen  Zoom on Bernard Allen  The Government came up with some schemes. It is disrespectful to talk about hare-brained schemes.

Mr. Parlon: Information on Tom Parlon  Zoom on Tom Parlon  This Bill discriminates on a very arbitrary basis between a landowner who could sell development land on the open market and one who is affected by a particular decision of a local authority to acquire his land at a much lower current use value. The Bill provides no legal guidance as to how local authorities are expected to operate the provisions. Invariably different local authorities would use the powers to different degrees, which is unfair and would cause trouble.

The promotion of traditional civil liberties such as freedom of speech and freedom of association thankfully enjoy strong support from all sections of society but unfortunately private property rights rarely receive the same support. I am pleased that since the summer an important debate is emerging on the extension of rights to the socio-economic domain but property rights, as with most economic rights, rarely figure in the debate.

Article 40.3.2º of the Constitution pledges that the State shall guarantee every citizen's right to private property. Article 43 acknowledges that these rights ought to be regulated by the principles of social justice. Over the last number of months the All-Party Committee on the Constitution has been examining these articles and studying the extent to which they serve the good of both individuals and community. The provision of quality affordable housing to all citizens is the ultimate goal of the State and I support that.

I believe that the weakening of private property rights as outlined in this flawed Labour Party Private Members' Bill would be a great mistake. I have said it before and I have no compunction in repeating that such an approach is gift-wrapped in an ideology which is left of Stalin and which has no place in a modern, dynamic, open [125] economy such as Ireland's. What if one's home, business or farm is zoned for development? Should one be allowed to receive the benefits of this? In a democracy I believe one should. The practical implementation of such a measure would be very inequitable and would result in the value of land being taken from the property owner and being passed on to the eventual owners of houses on the site.

My party, the Progressive Democrats, has worked hard since our foundation 18 years ago to put competition and enterprise at the heart of the Irish economy and a move such as this would be a regression for the country. As we know from experience, in the market place, incentives work far more effectively than sanctions. When the rate of capital gains tax was cut from 40% to 20% the yield went up by 500% and thousands of acres were freed up for housing and development.

Clearly this success has had no impact on the Labour Party. If the Labour Party had its way, capital gains tax would be hiked back to 40% and the price of land would be capped at the same time. If that is not a plague on the property market and on all your houses, I do not know what is. The common and unchallenged misconception propagated by the Labour Party is that land and property owners are all money-grabbing capitalists who have only selfish motives at heart. Ireland is full of honest hard-working people who own property and penalising their initiatives though putting some extra charge on private property is wrong.

Any attempt to freeze the value of land would cause more problems than it would solve. This Bill is poorly thought out and is a battering-ram solution and a legally lazy way to solve a very complex problem.

Mr. Andrews: Information on Barry Andrews  Zoom on Barry Andrews  I oppose this Bill for two reasons. First, a process is already under way to tackle this issue, with which the Labour Party is co-operating through its membership of the committee on the Constitution. Second, it is a little premature to fashion legislation ahead of an all-party analysis of the problem. It is my view that the Bill would not survive constitutional challenge. In the debate yesterday the Minister pointed out the difficulties with the arbitrary discrimination between landowners who sell at market value and those who sell as a result of a local authority decision at the lower current use value.

There is no question that Ireland is land rich. We have no shortage of land for our population; compared to a place like Holland we are positively overwhelmed with supply. The record house completions of the last few years should also be taken into account. This suggests that the supply of land is good and if supply of houses is also good one would expect the price of houses to be low or at least affordable.

The issue before the Constitution committee and NESC is what should be done regarding land policy. The following was part of the Labour Par[126] ty's submission to the Constitution committee of which I was a member:

The Constitution had 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 question is whether the Supreme Court is frustrating the wishes of the democratically elected representatives of the people. At first glance this would not appear to be the case. However, two issues are worthy of attention and were brought before the Constitution committee over the last three or four months of hearings. The Employment Equality Bill 1996 was found to be unconstitutional by the Supreme Court on the basis that the concept of reasonable accommodation of employees with a disability was considered an unjust attack on the rights of employers.

The view of the Supreme Court in the decision on Part V of the Planning and Development Act is worthy of much greater analysis. Most people simply say that Part V got through, therefore there is flexibility within the Constitution to legislate for change. The judgment stated:

There can be no doubt that a person who is compulsorily deprived of his or her property in the interests of the common good should normally be fully compensated at a level equivalent to or at the least the market value of the acquired property.

The phrase used was “at least equivalent” to market price rather than just compensation or fair compensation. While remembering that “at least market value” could be below just compensation or fair compensation as well as being above it,

It was for those reasons the Taoiseach chose to apply the All-Party Committee on the Constitution to the issue of land policy. It is for that reason this Bill would not survive a constitutional challenge because it is two steps away from the concept supported by the Supreme Court in that decision. It moves away from the concept of market value and then it takes a further step away from the concept of rejecting the notion of fair or just compensation. One cannot be entirely sure if the Bill would be rejected by the Supreme Court, but it is likely that would happen for the reasons I have given. Market value can often be a function of Government activity, whether it is rezoning or the provision of infrastructure. I note that the Bill recognises that in the Schedule.

Much of what is contained in the Bill is sensible and is the kernel of what needs to be done. However, the All-Party Committee on the Constitution is involved in a process of trying to bring together all the views and to consult with all the stakeholders. This House can legislate for that [127] once that report, which will be published in 2004, and the NESC report are available. I urge the House to reject the Bill for the reasons I have outlined.

Mr. Cregan: Information on John Cregan  Zoom on John Cregan  I am glad to have an opportunity to make a brief contribution this evening on the Bill. I support what Deputy Andrews said that the All-Party Committee on the Constitution is currently examining the two articles in the Constitution relating to private property to ascertain the extent to which they are serving the good of individuals and of the community and to decide whether changing them would result in a greater balance being struck between the two. The committee has been asked to consider the possibility of placing a cap on the value of development land and is expected to report in early 2004. For that reason alone, the Bill is premature. Pending the conclusion of the report, it would not be appropriate for the Oireachtas to enact measures for such a significant intervention in the housing and land markets, as proposed in the Bill.

Meeting the strong demand for houses continues to be one of the major challenges facing the housing market. The strong demand has been driven by a range of factors, including demographic changes, growing population, lower interest rates and strong levels of economic growth which have facilitated lower tax levels and increased disposable incomes. With household formation patterns continuing to converge towards EU norms, this strong demand for housing is set to continue for the foreseeable future. However, the record levels of housing output which have been achieved in recent years have helped to meet this demand and have led to moderation in the rate of house price increases. The Government considers that supply is the key to addressing the pressure in the housing market and maintaining moderation in the rate of house price increases. The primary focus, therefore, has been on investing in infrastructure, to bring more serviced land into use and to ensure its effective use through residential density guidelines. The challenge remains to ensure continued high levels of supply to meet demand in the coming years. The Government will continue to support the delivery of an increased supply of housing.

The success of this approach is evident. We are now realising sustained high levels of housing output which have not been experienced before in this country. Last year was the eighth consecutive year of record housing output with 57,695 completions. That is an increase of almost 10% on 2001 levels and 36% on the number of houses completed in 1998. Ireland is now building houses at the highest rate per head of population in the EU, which is a significant achievement.

The Government's commitment to providing assistance to those who have difficulty meeting their accommodation needs through social and affordable housing also remains a priority, as set out in the national development plan. I am [128] pleased that last year saw the delivery of the highest level of output under the range of social and affordable housing measures for more than 15 years when the social and affordable housing needs of more than 12,700 households were met. Affordable housing options have expanded the choice for those on low incomes. The growth of the voluntary and co-operative sector has brought a new dimension to the provision of social rented accommodation. Specific programmes and plans have also been put in place to assist Travellers and the homeless. I expect the needs of approximately 13,000 households nationally will be met under the social and affordable housing measures this year. The supply of affordable housing in the coming years will also be boosted by the implementation of the provisions of Part V of the Planning and Development Act 2000 and the new affordable housing initiative in Sustaining Progress.

These targeted measures to assist low income groups and those with special housing needs, together with the broader housing objectives of increasing overall supply, are often the cornerstone of the Government's overall response to meeting housing needs. The implementation of this approach will continue to be balanced with the need to respect the environmental, economic and social aspects of development because delivering housing in a sustainable manner can improve the quality of life of all sections of the community.

It appears there are legal shortcomings with the Bill, some of which could leave it open to a constitutional challenge. The Bill appears to discriminate arbitrarily between a landowner who could sell development land at open market prices and those affected by a decision of a local authority who acquire their land at the much lower current use value. There is no legal guidance in the Bill on how local authorities would operate the provisions and there is no provision for ministerial guidance. Invariably, local authorities could apply the proposed new powers to different degrees and that could undermine the fair operation of the scheme. It seems to be intended that lands acquired by local authorities could be passed on to private developers at reduced prices as not all developers would receive such lands. There could be a significant impact on competitiveness within the building industry, which could give rise to issues of fairness.

While I agree with most of what is in the Bill, it is premature. We are speaking about an important issue and we want to ensure we are in a position to provide land at affordable prices, particularly for young families in urban areas. It would be wrong of us to pre-empt the findings of the All-Party Committee on the Constitution. We should wait for its report in early 2004. For that reason, I oppose the Bill.

Dr. Twomey: Information on Liam Twomey  Zoom on Liam Twomey  I wish to share my time with Deputy Gregory.

[129]An Leas-Cheann Comhairle:  Is that agreed? Agreed.

Dr. Twomey: Information on Liam Twomey  Zoom on Liam Twomey  It is just as well this issue is being discussed here this evening because it does not excite much comment from the public. This Bill will be an embarrassment to the Members of the House and to a small group of political commentators. The most embarrassing aspect of this Labour Party Bill is not the paucity of the detail, the technical faults or the fact that more time could have been spent in its preparation, but that it has taken so long for this House to introduce legislation on this issue. That is why the Labour Party should be commended. Unfortunately, it is probably too late to do anything because the property speculators have already made their millions. If the legislation was passed now, it would take a further two or three years to be enacted, and that would allow more time for those involved in such speculation to make more money.

We should not be too worried about such speculation because it has been happening since the foundation of the State. It is not considered illegal unless a county councillor gets involved to ensure that planning decisions go a certain way in property transactions. Unfortunately, as we have seen at the tribunals, power corrupts. However, weak ethical and legislative standards also play an important part.

The levels of corruption in this country would make the average African dictator blush. We have developed a golden circle of people with inside knowledge, which makes it easy for such people to make millions of euro. If this Bill was enacted tomorrow morning, what would be the result? Hundreds of thousands of angry protesters would take to the streets of all our major cities. The speculators would not protest because their numbers would not fill a bus. The builders would hardly be too concerned because they would continue making a profit. The streets would be full of the very people we are trying to protect by bringing in legislation such as this, because many families have paid huge prices for their average homes in our major cities.

If any legislation were successfully implemented to reduce the price of sites and consequently of houses, between €40,000 and €70,000 could be knocked off the cost of new houses. However, this amount will also come off the price of a secondhand house, and all the people who have been conned, misled or forced into paying huge prices for houses scattered across this city and its outskirts will see their houses drop in value.

This is why we have left it too late even to discuss this issue. Whatever measures were implemented, the very people we seek to protect are those who would suffer the most. The banks and speculators and everybody who has made millions in this area would not suffer – they might even find themselves with a couple of years' grace. I am not disputing what the Deputies are saying. There is an Oireachtas com[130] mittee discussing possible legislation to deal with this issue, but it will take two or three years anyway. This will give all these people plenty of time to work their way out before the sun sets on this kind of greedy behaviour which has been endemic in Irish political, cultural and economic life for generations, not just in the last ten years. The only difference is that now there is big money involved.

Good political leadership is about recognising a problem before it becomes a crisis. The issue of manpower in general practice, which is close to my heart, is receiving very little interest. There are huge problems in the education sector, such as those relating to schools and resource teachers. All these problems were predicted a long time ago but nothing was done about them. I commend the Labour Party for belatedly raising this issue but, sadly, the slow progress of legislation through the House will place the present difficulties far beyond political solutions for some time. At least the Labour Party is making a start on the issue.

Mr. Gregory: Information on Tony Gregory  Zoom on Tony Gregory  I support this Bill because it is an attempt to address an issue that successive Governments have failed to confront. Most Members agree that the breathtaking cost of houses in this State and the massive price increases that have spiralled out of control in recent years are totally unjustifiable and demand action. The scandal of homelessness is a black mark on the State, as are the huge waiting lists for local authority housing. In the background lurk those who profiteer and racketeer in new house prices and land values. A small number of multi-millionaires control the bulk of development land in the Dublin region. This is unsustainable and unjustifiable and no amount of tinkering with the system will change it.

The Kenny report in the 1960s demonstrated clearly that radical measures were required but no Government had the courage to implement the recommendations of that report. The present Government has put the issue on the back burner yet again. In the absence of any genuine attempt to confront the problem, I support this Bill as a timely measure that focuses on the urgent need to address the housing crisis and end the motivation for planning corruption.

Since the non-implementation of the Kenny report we have seen corruption on a Sicilian scale. A litany of mafia style activities are being detailed before the tribunals. We have seen how individuals, in their greed to make millions at the stroke of a pen and the redrawing of a line on a map, set out to corrupt public representatives and councillors so that they would do their bidding at meetings of Dublin County Council. All of this was at the expense of the decent PAYE taxpayer who then spent a lifetime working to pay for a home of his or her own, and countless others who will never be able to purchase a house. The price of development land must be taken out of the hands of such corrupt individuals. Even when a [131] mildly progressive measure specifying that 20% of developments should be set aside for social and affordable housing was introduced – by a Fianna Fáil Minister, to my surprise at the time – the same obsessively greedy developers and builders banded together to smash the attempt at reform and fairness. This Government capitulated to the developers' lobby just as surely as some councillors did at Dublin County Council. That progressive measure was effectively abandoned, demonstrating the unseemly political influence of builder-developer interests in this country, regardless of the common good.

One Member of this House did his utmost to expose the planning corruption that has contributed so much to this crisis. I refer to Deputy Joe Higgins who, for the past three weeks, has been incarcerated in Mountjoy Prison for representing his constituents' opposition to the confrontational policy of Fingal County Council in refusing to collect the household refuse of thousands of taxpayers who are boycotting the bin tax and for campaigning to abolish this double taxation. Deputy Higgins spent many years opposing planning corruption and it is an appalling injustice that he should now be imprisoned and denied his right to attend here as he was elected to do.

A Deputy:  Hear, hear.

Mr. Gregory: Information on Tony Gregory  Zoom on Tony Gregory  I unreservedly condemn the inappropriate and excessively harsh sentence imposed on Deputy Higgins, which, as many Members have already stated, is in stark contrast to the treatment received by corrupt developers and politicians. I cannot escape the conclusion that the sentence was, to put it mildly, inappropriately motivated. This is yet another example of double standards in this State.

Mr. McHugh: Information on Paddy McHugh  Zoom on Paddy McHugh  Recent comments by the Taoiseach to the effect that the rising cost of housing would lead to problems for the next generation give the impression that we have no problems now but we may have in the future. The Taoiseach might like to feel that he is playing the role of a visionary, looking into the future. The fact is, however, that we do not need a visionary to see this problem; we just need leaders who can look at what is happening and provide solutions. All kinds of people, including builders, planners, the Government and the Taoiseach, agree that the cost of land accounts for a massive proportion of the price of a house – up to 50% – but nobody has done anything to solve the problem. For that reason I welcome this Bill and compliment the Labour Party, especially its Environment spokesperson, on its introduction.

The Taoiseach has stated that over the past six years the Government has spent an awful lot of time examining the housing market. The reality is that over that period no reduction or stabilisation has occurred in house prices. Instead, the average price of a house has increased by more [132] than 125%. In a study carried out last year it was estimated that more than 30% of new households will not be able to afford to purchase a house. These people will look to the State for accommodation. That puts a strain on public finances and leads to higher taxation for the public. It is not only in the interest of the people who cannot afford to buy a house that this issue should be resolved; it is also of the utmost importance to the entire taxpaying population.

Of course the Labour Party Bill will not cure all ills, but it is an attempt to introduce some equity. As Deputy Gilmore stated, the details can be worked out on Committee Stage. I have problems rationalising the massive increase in value that zoning bestows on land while lands literally over the fence remain of much less value. There is no balance or equity in that situation.

Another issue that is not addressed in the Bill concerns lands that will be compulsorily acquired at a reduced rate. Adjoining lands may be similarly zoned, but because they will not be subject to compulsory purchase at a restricted price they can be sold on the open market at a much greater price. There is inequity there, too, but on balance I am supporting this Bill, if for no other reason than it is the only show in town attempting to address this problem.

Mr. Morgan: Information on Arthur Morgan  Zoom on Arthur Morgan  I welcome the introduction of this Bill from the Labour Party. A discussion on the need to control land prices is long overdue. The debate on this Bill represents one of the few times since his appointment as Minister for the Environment, Heritage and Local Government that I have heard Deputy Cullen addressing the housing crisis. He usually prefers to relegate the matter to his Ministers of State, who do not attend Cabinet meetings.

Sinn Féin made clear its views on the control of land prices in its submission to the All-Party Committee on the Constitution. In that submission we made the case for constitutional change, advocating that property rights should be dealt with in a single self-contained article. We also outlined our view that there are currently measures open to the Government to control the price of land. These include the capping of land prices at current use value and a more widespread use of compulsory purchase orders by local authorities to acquire land for housing. Our submission also stated:

Local authorities are impeded from using CPOs to procure land for the provision of social housing by prohibitive compensation. Local authorities should have the power to acquire land at a price below the market value where this is necessary for the common good. . . . Land owners must not be allowed to profit from the decisions which were intended to benefit society and address the severe housing crisis. Local authorities should not be put in a position that they are then forced to pay these same landowners outrageous sums of compensation for hoarded land.

[133] Sinn Féin also outlined its view to the all-party committee that, in many cases, Governments have used constitutional difficulties as nothing more than a convenient excuse for not introducing legislation. If there are such concerns, the constitutionality of legislation can be tested in the Supreme Court, as was done with Part V of the Planning and Development Act 2000.

It is not acceptable for the Government to use the deliberations of the All-Party Committee on the Constitution on the issue of property rights as an excuse for failing to bring forward any legislation to control land prices. Regardless of claims to the contrary by the Minister in yesterday's debate, the housing crisis has deteriorated to an astounding degree since this Government took office in 1997. Though the Government's failure on housing is particularly notable, it should be noted that every party in power for the last 30 years has failed to implement the Kenny report on building land.

Despite the obvious purpose of this Bill, in his speech to the House yesterday, the Minister failed to address the severe problems local authorities have in obtaining land for housing. He did not refer to the fact that this problem has been exacerbated by the nefarious Planning and Development (Amendment) Act 2002, which was introduced by the Minister on taking office. The amended Act allowed developers to buy their way out of the provision of social and affordable housing.

Mr. Cuffe: Information on Ciaran Cuffe  Zoom on Ciaran Cuffe  In 1838, some 165 years ago, Thomas Drummond gave the phrase “Property has its duties, as well as its rights” to the Irish people. His words were addressed to the absentee landlords of Tipperary and a statue of Thomas Drummond stands today in the rotunda of City Hall in Dublin. His words run as true today as they did 165 years ago and, if anything, the problem has become worse. It is now almost impossible for those on low incomes, or even a couple on two average incomes, to buy their way into the housing market in Dublin or other cities and towns. If Thomas Drummond were around today he would be appalled at the price of land in Dublin and elsewhere. Indeed, in an address to the All-Party Committee on the Constitution, Mr. P. J. Drudy felt that even Éamon de Valera would turn in his grave at the kind of prices required to access the current housing market.

It is not as if many people are gaining from that situation. A small cartel of developers controls the price of land in Dublin, yet Fianna Fáil and the Progressive Democrats have done nothing to attack that cartel. They have stood idly by and watched the price of land go beyond the reach of ordinary people. It is not good enough for the Government to say it is doing all it can to help people to acquire a home of their own, when the price of land has escalated and the price of an average home in Dublin has passed the €300,000 mark.

Why does the Government not destroy the car[134] tel? A recent article pointed out that a mere 25 landowners control the bulk of the building land in Fingal. That is not good enough for people who want to find their way onto the housing ladder, nor is it good enough for a Government that has pledged its commitment to housing, yet lacks delivery. It is not good enough for a previous speaker, the Minister of State, Deputy Parlon, to say he does not want to see the issue of land being addressed. It shows a lack of commitment and follow through in addressing the land issue.

The Green Party is proud to support the Labour Party's Bill. Indeed, we would have been much happier if everyone in the House had rowed in behind our Bill, which was introduced several months ago. It took a broader approach to this issue but the sentiment and substance of the Labour Party's Bill, which carries on the tradition of the Kenny report, is worth upholding.

We cannot stand idly by because we have to address the problem of rising land prices. The State must intervene. It took a courageous step in 1963 when it introduced the Planning Act but it must take a similarly courageous step today in addressing land prices. I commend the Labour Party on bringing this Bill before the House. The Green Party will certainly support it in the forthcoming vote.

Mr. Stagg: Information on Emmet Stagg  Zoom on Emmet Stagg  May I ask how much time I have available?

An Leas-Cheann Comhairle:  The Standing Order governing Private Members' Business allocates a certain amount of time to each group. The Deputy now has a 20-minute slot.

Mr. Stagg: Information on Emmet Stagg  Zoom on Emmet Stagg  May I inquire what happens to the remaining time that was not used by the Government?

An Leas-Cheann Comhairle:  Under the Standing Order it can be used up by the Government. It is its time.

Mr. Stagg: Information on Emmet Stagg  Zoom on Emmet Stagg  So it will be returned to the Government when it comes to their slot?

An Leas-Cheann Comhairle:  Yes, it can use up the time it is allotted.

Mr. Stagg: Information on Emmet Stagg  Zoom on Emmet Stagg  I want to share my time with Deputies McManus and McCormack.

An Leas-Cheann Comhairle:  Is that agreed? Agreed.

Mr. Stagg: Information on Emmet Stagg  Zoom on Emmet Stagg  In the past seven years we have witnessed a dramatic increase in house prices in Ireland. This has been accompanied by a public wringing of hands by various Ministers. As my colleague, Deputy Gilmore, pointed out in yesterday's debate, the principal hand-wringer has been no less than the leader of this country, the man who has been Taoiseach for the past six years, Deputy Bertie Ahern. That is all he has [135] done about it, however, and that is all he intends to do. With this Bill, Deputy Gilmore and the Labour Party intend to take effective action to deal with the crisis facing up to half the young families now seeking to provide their own homes.

What has brought us to a situation where the price of a modest home has increased by as much as 300% in this short time? My own home has rocketed in that time from a value of about €50,000 in 1996 to a present day value of €200,000. The answer, I believe, is to be found in the failure of the great sacred cow of our time, the famous market. The unimpeded unregulated free-for-all market in housing has seen large sections of the population excluded from the market for homes. It has seen large scale land purchases by a small group of individuals and companies. It has seen land hoarding and speculation. It has seen notorious option taking and the making of huge profits on the backs of home buyers.

That untouchable market has seen house sites representing up to 50% of the price of a home and it has seen land values increase from the present use value of £5,000 per acre to a regular €1 million. That has an added value of €995,000 per acre, 10,000% added value. The people concerned certainly hit the jackpot, but at the expense of young families throughout the country who were looking for a home. This is land that is eagerly zoned by a combination of Fianna Fáil and Fine Gael councillors up and down the country. The public does not seem to be aware that Fianna Fáil and Fine Gael and the Progressive Democrats, where they exist, have a near universal zoning pact on practically all our local authorities. This is land that is serviced with water, sewerage and roads from the taxpayers' pocket, with minimal return or claw-back.

How does the Government use the fiscal tools available to it to regulate this out-of-control market? It removed the threat – indeed it was an idle threat – to impose a capital gains tax of 60% and reduced the 40% rate to 20%. It restored the tax breaks to speculators who can thereby compete unfairly with genuine home buyers. It increased the VAT on housing materials and in the meanest cut of all, removed the first-time buyer's grant. In other words, it rubbed the fat pig's arse with lard, while dumping on the young families striving for a home of their own. The present housing market makes overnight millionaires of landlords, speculators and developers while driving city workers deep into the country in search of an affordable house, totally excluding a large section of the population from the possibility of buying a home. It drives the latter into the uncaring hands of unregulated landlords who have no social responsibility and whose only motive is profit.

Fianna Fáil has no intention of doing anything about it. Indeed, those who gained handsomely from this failed market are to be found in large numbers in the Fianna Fáil tent at the Galway [136] races. I suppose one could call them “the tent people”. The Progressive Democrats have been totally assimilated back into Fianna Fail and are powerless to act. Fine Gael has neither the political bottle nor inclination to act against the enthusiastic hoard of zoners in its ranks. That is to be expected.

Labour is determined to act effectively to bring equity and fairness to the housing market. This Bill is a first step. Labour accepts that competition can be a useful tool in regulating prices, provided there is a level playing pitch. The pitch in the housing market is severely tilted in favour of landowners and speculators. We intend to restore that balance. The market should be a tool for the common good and not a vehicle to serve the few at the expense and to the disadvantage of the many. That is our present model in housing. Labour demands that there be a social market, regulated in the common interest. Yet Labour will intervene in the market. We intend to put a halter on the sacred cow to ensure it operates for the common good. We will intervene to ensure that young families can again aspire to a home of their own, to remove them from the maw of unregulated landlords and let them live in proximity to their place of work. We will intervene to ensure that provision is made for adequate social housing. Some 60,000 families are now on the waiting list. That is approximately 250,000 men, women and children, and it is growing by 10,000 families per year. That is a scandal that must now be tackled in this rich economy.

To achieve these objectives there must be intervention in this out of control market. There must also be a positive use of fiscal measures and we will pursue an end to the tax bias for speculators and developers and positive discrimination for genuine home seekers. As indicated by our spokesperson, Deputy Gilmore, this Bill is a first step towards achieving our objectives in securing affordable and social homes for our people, and we believe it complies with the strictures of our Constitution. The common good is superior to claims to rights of private property, which damage and oppose the common good. If the courts find that our Bill is at odds with our Constitution – I am convinced it is not – let us put the issue to the people. Let the people decide whose side they are on, the speculators or young home hunters. I am confident of the people's response.

I take this opportunity to call on other like-minded Deputies and parties of the House to come together to support this measure and I welcome their indicated support in this debate. The right wing parties will do the predictable thing. They will wring their hands. They will cry crocodile tears and they will protect their friends, those I have described as “the tent people”. Let us show them that there is a real and viable alternative.

Ms McManus: Information on Liz McManus  Zoom on Liz McManus  I welcome this debate. I welcome the good, substantial work done by the Labour spokesperson on the Environment, Heri[137] tage and Local Government, Deputy Gilmore, in producing this weighty legislation to deal with an issue of major public importance. The fact that this Bill comes from the Opposition side of the House and that it is the Labour Party and not the Government parties that has taken the initiative speaks volumes. It is a product of work that a good Government should have done long ago. That is what a Government is for, to tackle the big issues that affect the lives of its citizens, through the enactment of good law.

Tackling issues is not what the Government is about, however. This is a Government that tends to look for different ways to deal with issues. It sets up working groups, establishes committees, brings in consultants and prepares endless numbers of reports, rather than being a Government that makes decisions. Nowhere is this more true than in the area of housing. Report after report has been produced by the Government and yet there is no alleviation in the difficulties that beset young people setting out to buy a home or indeed seeking council housing.

The rise in housing need, housing cost and homelessness continues inexorably. The Taoiseach has talked publicly about land hoarding and the need to tackle land speculation. Even today in the Dáil he said he supports the principles set out in the Kenny report on controlling the cost of building land. He even said he supports the effort of Deputy Gilmore as regards the Bill we are debating now. He apparently, like Deputy Gilmore, considers land to be the key to resolving the housing crisis that has characterised the period in office of Fianna Fáil and the Progressive Democrats. Unlike Deputy Gilmore, however, the Taoiseach refuses to act on that conviction. He refuses to support this Bill and assist its passage through the Oireachtas, even though it is a solid and well thought out approach designed to tackle the spiralling costs of building land and the issue of land hoarding.

In the face of this Bill the Taoiseach shelters behind the argument that a referendum may be required to change the Constitution before the issue can be confronted. He talked today about the “absolute right” to private property. Yet again he speaks in double speak. It is not an absolute right. It is a right enshrined in Article 43 of the Constitution, certainly, but one that is clearly tempered by the statement that the exercise of this right ought to be regulated by the principles of social justice. The Constitution goes further in declaring that the State may delimit by law as occasion requires the exercise of the said rights, with a view to reconciling their exercise with the exigencies of the common good.

The principle of protecting the common good could not be more explicit. It has already been instrumental in legislation that permits compulsory purchase by local authorities and in the more recent Part 10 provision, which in ways goes further than the Labour Bill does in capping the price of land. It is difficult to accept the argument that compulsory purchase of land to build a road [138] is constitutional and yet to cap the price of land in order to house a family is not.

The following question must be put again to the Government and to the Taoiseach, in particular: if the key to meeting housing needs is land – we are all agreed on that point – and if in the constitutional provision is made for the common good – as it is – why is the Minister for the Environment, Heritage and Local Government refusing to accept this Bill or to present his own Bill to be debated in the Oireachtas? Such a Bill once passed could – and no doubt would – be tested in the Supreme Court. I would wish good luck to anybody who sets out to do so.

Government inaction is prolonging unnecessarily the damage being done by the greed of speculators. Spiralling house prices continue to put terrible pressure of young people. Many couples with children are made up of two partners working – not out of choice but because they are locked into a mortgage, others simply cannot afford to get up the ladder and end up on local authority housing lists instead and some fall off the ladder altogether. Homelessness is a growing feature of the housing crisis but too often it is a forgotten experience.

Last week a survey was published on the extent of homelessness in my town of Bray, a town of 30,000 people. It was based on carefully measured research and if anything is conservative in its conclusions. It finds that 87 individuals or family groups in Bray alone are homeless – either sleeping rough or living in hostels, refuges or bed and breakfasts. Being homeless during the years of the Celtic tiger means being squeezed out of the private rented sector because rents are simply too high. More children than ever are being reared without the security of having a home of their own during their early and formative years. What kind of future do they face? The inequality between the prices that are made on land sales and the weekly income of homeless people struggling to survive is obscene.

Inequality needs to be tackled on many fronts. In order to get to grips with the great housing need that affects so many thousands of people, this Labour Bill is as good a place as any to start. This Bill will, if enacted, relieve the burden of high mortgages for house buyers, it will release land from being hoarded for house building and it will relieve local authorities of having to pay exorbitant prices for land to meet their housing programme requirement.

This is a visionary Bill that is radical and circumstances demand a bold and radical response. Regrettably we have a Government that is too craven or too compromised to take the necessary steps to ensure that housing is made available that is of a reasonable quality, at a reasonable rate and at a reasonable price. It is an objective that, long ago, would have been central to Fianna Fáil thinking. Today, looking at the record of Fianna Fáil Ministers in Government and the Taoiseach in particular, it is clearly the last thing on their minds.

[139]Mr. McCormack: Information on Pádraic McCormack  Zoom on Pádraic McCormack  I welcome the fact that the Labour Party published this Bill because of the debate it is generating both inside and outside the House. The proposals in the Bill attempt to address the issues of availability and cost of land for housing development. In his contribution last night, Deputy Gilmore stated that the cost of land represents 40% of the cost of housing and this theme was taken up by my colleague Deputy McHugh whose estimate is 50%. We need to be very careful about the difference between the reality and the propaganda, which is letting certain people off the hook in this debate.

I represent Galway city where building land is very expensive, about €300,000 per acre. However, this adds only 5% to the cost of building a house. In other towns in County Galway such as Athenry and Tuam, which Deputy McHugh represents, building land costs about €15,000 per acre and with 15 houses built on an acre, it represents only 0.5% on the cost of a house. We must not lose sight of the real target in our anxiety to say that the cost of building land is the only contributor to the cost of housing.

The proposed Bill may be of great relevance in Dublin where exceptional pieces of land can make exceptional prices and which may account for 40% of the cost of a house. However this is not the norm for the whole country. If we continue to propagate the notion that the cost of building land is the entire cause for high house prices, developers will have no bother asking whatever prices they like for houses. Let us remove the red herring of the cost of land driving up the cost of housing and allocate blame where it should lie, which is solely at the feet of the Government.

At the last budget the Minister abolished the first-time buyer's grant adding €3,800 to the cost of a new house. VAT was increased by 1% adding another €2,000. When the planning levies, planning charges, stamp duty, etc., are added to these increases we see the real cost. Responsibility for those increases lies solely with the Government and specifically the Minister for the Environment, Heritage and Local Government. Cash strapped councils are now raising their finances by imposing serious charges on planning permissions. Some time ago the Taoiseach hinted that land prices should be controlled, but this is only a smokescreen for the extreme Government tax policies which result in crippling costs of housing for young people trying to get on the housing ladder for the first time.

We should not be sucked into the belief that land cost is the real factor in the prices developers are charging for houses. There are Government charges and now local authority planning charges are being imposed at will on planning permissions. Local authorities are now dealing with their estimates and there is no provision made in the support grant for benchmarking or any other extra costs the councils will have to face. What will councils do? They will slap another €100,000 on every planning permission in the county and [140] drive up further the price of houses because the Government is not providing the money for local authorities to deal with the housing crisis.

Land prices represent only a small factor in the overall cost and we must not let people off the hook. If a developer buys two adjacent sites, one for €5,000 and the other for €50,000, and builds two identical houses, he will offer both for sale at the same price. One will not be €45,000 cheaper than the other. It is supply and demand along with the developers' greed that are causing very high houses prices.

I take some exception to Deputy Stagg's remarks about cosy cartels and agreements between Fine Gael, the Progressive Democrats and Fianna Fáil on local authorities. I have the privilege to represent my party on Galway City Council and was previously a member of Galway County Council. There is no agreement between the councillors. At the last council meeting on Monday night, I was joined by two Labour councillors in not supporting a material contravention of the plan. In the course of discussing our development plan I did not believe we had the authority to increase the value of land by several multiples, so I voted against the material contravention of the plan. The agreements mentioned by Deputy Stagg do not apply to the council I represent nor do they apply in several other authorities.

Our amendment is intended to allow us to await the outcome of the Oireachtas Joint Committee on the Constitution, which is a logical step that is supported by the Minister. Last night he said, “I do not agree that it is necessary or prudent to pre-empt the considered conclusions of the committee.” On this basis, it is logical that the Government parties would support our amendment. I am a member of that committee which received 139 submissions, 64 from organisations and 75 from individuals. During July and September we met 50 groups during our oral hearings.

If we follow the logic of the Labour Bill we would have to take other factors into account. For example, if an auctioneer or an agent is selling two houses, one beside a newly opened DART station and the other one and a half miles away, the one beside the DART station will sell for €50,000 more than the one that is one and a half miles away. Is the Labour Party suggesting that €50,000 must be taken from the person who gets the extra €50,000 for their house? That would not stand up anywhere. The committee is doing excellent work in sorting it out and will be coming back to the Government and the Dáil with a report on its deliberations before the end of the year.

Ms Cooper-Flynn: Information on Beverley Cooper-Flynn  Zoom on Beverley Cooper-Flynn  I am sharing my time with the Minister of State, Deputy Gallagher. I also welcome an opportunity to speak on the Bill. I have no doubt that Deputy Gilmore has been motivated by good will and that his intentions in bringing the matter before us are sincere.

[141]I was delighted to listen to Deputy McCormack's speech because previous speakers gave the impression that this Bill was aimed only at Dublin. There seemed to be no consideration given to the supply of, and demand for, housing in the regional towns and cities. The Deputy might take on board my remarks about my county when we consider this matter again a few months from now.

There is a problem in the city of Dublin and many other cities and towns with regard to the price of houses for the first-time buyer but we have to acknowledge what the Government has done in this regard already. In his speech to the House yesterday the Minister for the Environment, Heritage and Local Government outlined the significant progress that has been made in the number of new house starts and how this has increased from 39,000 houses built in 1997 to 58,000 units in 2002. This is a significant increase and about 60,000 houses will have been built by the end of this year.

When compared to other countries in Europe our track record is very high at 14.7 units completed per thousand. In the United Kingdom the rate is three per thousand. In addition this Government has taken several measures to help people living on a low income to buy their houses, through the social and affordable housing scheme and the shared ownership scheme which are operating successfully. The schemes have been quite successful in my county.

Like Deputy McCormack, I have to say that there is no agreement at Mayo County Council between the Fianna Fáil and Fine Gael councillors. We argue measures on their merits and if there is agreement at times it is because great minds think alike. There is no cartel operating between the main political parties.

Many people here have said that Part V of the Planning Act 2000 was a good measure and operated quite successfully and others have said it has been eroded by amendments.

Mr. S. Ryan: Information on Seán Ryan  Zoom on Seán Ryan  It is not working.

Ms Cooper-Flynn: Information on Beverley Cooper-Flynn  Zoom on Beverley Cooper-Flynn  It has not worked in my constituency but maybe for reasons other than those affecting some of the constituencies in Dublin. There are several options available under Part V, one of which, as we all know, is that 20% of the land will be made available; the second option is alternative sites and the third is the cash option. In my county not one site has been made available to the council since this measure has been introduced. It has been a disaster in County Mayo. Instead of helping to relieve the housing problem, this measure has been detrimental because it has hindered much development.

The emphasis of Part V is wrong. A developer who allocates 20% of the land can negotiate with the local authority that the Department of the Environment, Heritage and Local Government will provide €120,000 to build a housing unit on that site. The cash option, which can be used if [142] the other two options are not suitable, is less than that so the local authority never wants to consider the cash option as an alternative.

As a result, many planning applications that could have alleviated the housing problem in my county have fallen by the wayside. This is after massive fees have been paid to make the applications in the first instance. We even have the ridiculous situation in County Mayo that Part V is actually being applied to rural areas that are not zoned, which is completely against the legislation. I do not understand how that can happen.

I hope the Minister will address this. He mentioned in his speech that clear guidelines have been given to local authorities for the implementation of Part V. From my information it seems to be implemented differently in every county.

When Deputy Stagg was speaking he mentioned the “tent people”. Unfortunately, I did not get to the tent at the Galway Races but I consider myself to be pro-development, although that now seems almost to be a dirty word. Many developers have done excellent work even if it is not popular to say that in the present environment.

The Government has handed this matter over to the All-Party Committee on the Constitution. The price of land, and how best to deal with the question of capping it, are not new issues. I cannot understand why for the sake of a few months the Labour Party could not allow this issue to be left over until such time as we have examined and consulted various people on the constitutional and legal issues.

On many occasions in the past when legislation was brought before the House we were shot down for not having had adequate consultation. Here we have an all-party committee looking at this matter and unfortunately Deputy Gilmore feels that he has to jump the gun. It is politically very popular to do so because this is an issue affecting many people. The correct and proper action is to hear what the committee has to say and take the benefit of the consultations and advice. When all of that has been done, let us bring a Bill into the House that will address the issues, not just in Dublin but throughout the country. I do not see why we cannot look at different measures in different areas that would solve the housing problem in a comprehensive manner.

Minister of State at the Department of the Environment, Heritage and Local Government (Mr. Gallagher): Information on Pat the Cope Gallagher  Zoom on Pat the Cope Gallagher  This Bill proposes to amend the existing rules of compensation for land acquisition by local authorities, and move from valuation based on open market value to valuation determined by one of several different mechanisms, including current use value. The underlying focus of this Bill is the availability and cost of land required for housing development, and downstream house prices. Two main objectives were identified. The first is to empower local authorities to acquire development land at lower cost, either for their own use or for onward sale to developers. The underlying objective is to [143] restrict the betterment value accruing to development land as a result of zoning or servicing of land by public authorities. The second is to ensure that all available housing land is brought speedily to the market. Concerns were expressed that development lands were being deliberately hoarded, particularly in Dublin, to artificially inflate prices.

This Government has already made great strides regarding the availability and price of housing. Unprecedented demand in the housing market has clearly fuelled house price increases. This Government's strategic response is to maximise housing supply to match demand and so stabilise prices and improve affordability. By any objective standard, we have been highly successful. Housing supply has expanded consistently over eight years to the extent that completions this year could exceed 60,000 units. Ireland now is building houses at the fastest rate in Europe. Housing targets in the national development plan are being met or exceeded. However, the radical intervention now proposed not only raises very significant constitutional issues, but also could have major implications for the effective operation of the land and housing markets.

This proposal is premature, as the All-Party Committee on the Constitution is examining current constitutional provisions for private property, and has been asked in particular to consider the possibility of placing a cap on the value of development land. The committee is expected to report within a matter of months.

Furthermore, the NESC is undertaking a major study on housing and land policy to be completed by the end of this year. The study will be broad in scope, and will highlight key housing issues and policy problems in the Irish context. Pending the reports of the all-party committee and the NESC, the Government considers it would not be appropriate for the Oireachtas to enact such significant measures as are now proposed.

In any event, it would appear there are specific legal shortcomings in the Bill, as well as serious questions about the practical impact of the measures intended. In particular, large-scale public intervention in the housing market poses a high risk of disrupting housing construction programmes in the short-term and increasing construction inflation. Prudence dictates that a measure such as this must be based on sound analysis and engender a high degree of confidence as to the consequences. A “try it and see” approach would be wholly irresponsible. It is hoped that much of the requisite analysis will emerge from the studies currently under way.

As to alleged hoarding of development land, the position is that despite anecdotal comment, there is currently no hard evidence of monopolistic hoarding, as distinct from the normal land banking which one would expect. Deputy Gilmore, in suggesting that this is a contributory factor in the slow release of building land in Dublin, cited findings in the building industry bulletin [144] to the effect that over half the development land in Fingal is controlled by 25 individuals or organisations. What that finding suggests is that the market is not concentrated to a significant degree. The same article goes on to state: “there is no evidence of a cartel between Fingal developers”.

Available information shows that adequate zoned and serviced land is coming through the planning system. By mid-2002, Dublin had approximately 5,700 acres of zoned and serviced land, with a potential yield of 96,700 units. Approximately 13,400 units received planning permission in the greater Dublin area in the first half of 2003, including 10,260 in Dublin, an increase of 32%. Since then, the Adamstown and Phoenix Park developments, involving 12,000 units, have been approved. This does not suggest substantial hoarding. However, let me stress that the Government has an open mind on this issue. If Opposition Deputies have credible evidence of hoarding, I suggest they should supply it.

Deputy Power indicated that the all-party committee will evaluate the dynamics of the housing market as, no doubt, will the NESC. I hope this work will provide useful new information and perspectives. For its part, the Government has commissioned research in relation to building land in certain development areas, particularly Dublin, to determine whether the delivery of building land is being inappropriately retarded and explore the feasibility of a possible intervention. This work will be completed shortly. If, in light of the all-party committee and NESC reports, further measures are considered necessary to enhance land supply, the Government would consider a taxation-based approach to incentivise the early use of development land for housing.

The proposed Bill may be well meaning, but it is premature and not well founded. Accordingly, the Government opposes this Bill.

Mr. Rabbitte: Information on Pat Rabbitte  Zoom on Pat Rabbitte  I thank my colleagues from various sides of the House who supported Deputy Gilmore's Bill. It is subject to the criticism put forward by Deputy Twomey that perhaps it has not come forward as early as it might, but that is not really the fault of the Labour Party. When Deputy Ruairí Quinn tried to bring forward this Bill in 1980, it was voted down in the House. The comprehensive measure now put forward by Deputy Gilmore is an attempt to rein in spiralling house prices before all of us pay a bigger price.

Having thanked colleagues in the House for their support, I wish to deal with some of the arguments which have been advanced against this Bill. Perhaps the most dispiriting aspect is the response by the Minister with responsibility in this area, the Minister for the Environment, Heritage and Local Government, Deputy Cullen. He gave no hope whatsoever that the Government has any intention of taking measures other than letting the market rip. We know where that has left us over the past six or eight years. In his statement, the Minister said:

[145]This 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 homes will able to do so. . . . . . . The overall objective of this Government is to continue to increase housing supply to meet demand and to improve affordability, especially for first-time buyers. . . . .. 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. . . . .. 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.

In other words, according to the Minister, everything is fine, Government policy is working and there is no problem. That is the gist of the Minister's speech.

Mr. Cullen: Information on Martin Cullen  Zoom on Martin Cullen  That is not what I said, as the Deputy knows.

Mr. Rabbitte: Information on Pat Rabbitte  Zoom on Pat Rabbitte  That is what the Minister said. The message throughout his speech was “Leave it to the market.” As an important matter of detail, that is not the public view of the Taoiseach, although I do not know what his private view may be, and there is usually reason to check. However, his public view is that he agrees with Deputy Gilmore – that is what he stated today during questions in the House.

Mr. Cullen: Information on Martin Cullen  Zoom on Martin Cullen  I was here.

Mr. Rabbitte: Information on Pat Rabbitte  Zoom on Pat Rabbitte  The Taoiseach agreed with Deputy Gilmore. I am not sure where that leaves the Minister, but this is not the first time he has kicked the Taoiseach and got away with it. That probably says more about the Taoiseach than the Minister. Clearly, the Minister is closer to his former party's contributor to the debate, the Minister of State, Deputy Parlon, than to the Taoiseach. The Minister of State, Deputy Parlon, described the Bill as somewhere to the left of Stalin.

I have my own views about the Taoiseach and, in my time, I have called him a few things which I believe were richly merited. However, I never described him as being left of Stalin. I regard that as an extraordinary charge on the part of the Minister of State. The Taoiseach went into considerable detail today to say he agreed with the analysis put forward in this Bill. However, that view does not seem to have much support in the present Fianna Fáil-Progressive Democrats Government.

Mr. Cullen: Information on Martin Cullen  Zoom on Martin Cullen  The Deputy should take full account of my speech, which ran to 21 pages.

Mr. Rabbitte: Information on Pat Rabbitte  Zoom on Pat Rabbitte  I wish to make a particular point [146] about the Minister's conclusion that one should leave it to the market.

Mr. Cullen: Information on Martin Cullen  Zoom on Martin Cullen  I did not say that.

Mr. Rabbitte: Information on Pat Rabbitte  Zoom on Pat Rabbitte  That is what the Minister meant – that is the import of it.

Mr. Cullen: Information on Martin Cullen  Zoom on Martin Cullen  I thank the Deputy for that correction.

Mr. Rabbitte: Information on Pat Rabbitte  Zoom on Pat Rabbitte  I read out four quotes from the Minister's speech. He cannot expect me to devote all of my allotted time to re-reading what he said.

Mr. Cullen: Information on Martin Cullen  Zoom on Martin Cullen  The Deputy referred selectively to my 21-page speech.

Mr. Rabbitte: Information on Pat Rabbitte  Zoom on Pat Rabbitte  I quoted what the Minister said. It is interesting, in terms of that analysis, to refer to the Housing Times of summer 2003, in which this argument was discussed by an economist, Dr. Jenny Pollock. Her job is to advise house builders. Her argument was that to the extent that house price inflation may ameliorate, because of the way things are currently organised we can expect to see a fall-off in construction. That was the expert advice of Dr. Jenny Pollock in that edition. She stated: “As we have argued before, such a slow-down in housing starts would appear to be vital if the supply of new property is not to exceed demand.” In other words, with regard to the theory that one should let the market decide, Dr. Jenny Pollock, who was retained to advise house builders, said the situation as between supply and demand was coming dangerously into kilter and the only way to keep house prices up was to slow down the rate of construction. That is her proposition and that is inevitably what will happen.

Mr. Cullen: Information on Martin Cullen  Zoom on Martin Cullen  We will not accept that.

Mr. Rabbitte: Information on Pat Rabbitte  Zoom on Pat Rabbitte  It will happen because one measure introduced by the Minister for Finance with which the Labour Party agreed, in 1998, would have caused the land that is being hoarded to be put into the marketplace for building. He cut the rate of capital gains tax from 40% to 20%, except in the case of development land that was hoarded for four years, which would attract a rate of 60% if it was not released. Two years later, as soon as that measure was beginning to have an effect, he repealed it.

That is one of the aspects that is absolutely critical if we are to get land into the marketplace for building purposes. Otherwise it will be hoarded, as is being done. Dr. Jenny Pollock says it ought to be hoarded. Her job, after all, is to advise the builders and that is her view. It is an entirely respectable view but it is counter to the common good.

Mr. Cullen: Information on Martin Cullen  Zoom on Martin Cullen  I agree.

Mr. Rabbitte: Information on Pat Rabbitte  Zoom on Pat Rabbitte  That is the result of leaving the market alone.

[147]The Minister reads his script but the Taoiseach says entirely different things. The Taoiseach has a unique talent to describe a problem and leave the impression that action is being taken – the more he describes the problem, the more he convinces himself that the Government is acting on it. He will take over the arguments of the Opposition as if they are his own and then convey the impression that he acting on them or, if it is a difficult problem, that he is a helpless bystander merely commenting on events and the received wisdom of the day. During Question Time today, on questions on the proposals for a constitutional amendment, the Taoiseach said, “I accept many of the points he [Deputy Gilmore] made. I subscribe to his efforts.” He went on to say, “I agree with Deputy Gilmore because he said many of the things I have been saying.” The impression the Taoiseach seeks to give is unavoidable – he and Deputy Gilmore are of like mind and are resolved on a solution.

The problem is that the Taoiseach seems blissfully unaware of the fact that he is the leader of the Government and Deputy Gilmore is the Labour Party spokesperson on the environment. One has power to advocate solutions, while the other has power to implement. Our unfortunate Taoiseach does not know to which category he belongs.

Mr. Cullen: Information on Martin Cullen  Zoom on Martin Cullen  He certainly does. We would not have Part V of the Planning and Development Act if it were not for him.

Mr. Rabbitte: Information on Pat Rabbitte  Zoom on Pat Rabbitte  That is why we have had six and a half years of inaction. In his seventh consecutive year as Taoiseach, Deputy Bertie Ahern has used up four years seeming to agree with Deputy Gilmore but nothing has changed except that house prices have got worse. Houses that cost on average €97,058 in 1996 cost on average €297,424 last year, an increase of 200%.

Mr. Cullen: Information on Martin Cullen  Zoom on Martin Cullen  After trebling the output.

Mr. S. Ryan: Information on Seán Ryan  Zoom on Seán Ryan  What does that tell us?

Mr. Rabbitte: Information on Pat Rabbitte  Zoom on Pat Rabbitte  Indeed, and I congratulate the Government on doing that but the fact is we still have an acute housing crisis.

I will give the argument put forward by the Central Bank, which was misrepresented on some of the occasions reference was made to it during the debate. The bank said:

The level of house prices along with continuing high rates of increase in prices pose macroeconomic as well as financial stability risks. Even if rising house prices do not seem to have boosted consumption through wealth effects with related inflationary pressures, they have substantial potential to contribute to wage pressures as even relatively well-paid workers find it increasingly difficult to gain a foothold on the housing ladder. As regards financial stability, it is important that borrowers do not [148] assume excessive debt and that lenders maintain prudent lending standards.

The report continues:

To the extent that there may be overvaluation present, a continued rise in house prices could be followed by quite a disruptive adjustment as prices revert to their fundamental values.

Mr. Cullen: Information on Martin Cullen  Zoom on Martin Cullen  I said that 12 months ago.

Mr. Rabbitte: Information on Pat Rabbitte  Zoom on Pat Rabbitte  Maybe the answer is that the Minister should be in the Central Bank and the author, Dr. Casey, ought to be Minister for the Environment, Heritage and Local Government. Some have presented this as a comment by the bank that it sees a dip coming in house prices. That is not what it is saying. It is saying that if the Government does not tackle inflation in the housing market, and if there is overvaluation of housing – which there is – then there could, as a result of Government inaction, be a disruptive adjustment in prices.

That is an argument from the Central Bank that has serious macroeconomic implications if we do not address spiralling house prices. There is no evidence this message has been heard, judging by the extreme language I heard from the Minister of State at the Department of Finance, Deputy Parlon, whose last action on this issue was to lead a raid on the Exchequer by his then members that held up the national development plan for 11 months while they made a killing from the taxpayer. If that is the view of the Progressive Democrats, and I am not necessarily saying it is the view of the Minister for Justice, Equality and Law Reform – I can perfectly understand why he would have a different view from Deputy Parlon – I cannot see where the Taoiseach will go with this issue.

Another issue has not been addressed. Our overworked colleagues in the media who do not qualify for benchmarking have not adverted to this debate at all and rarely touch on it when it comes to dealing with the subject. The paucity of coverage the media gave to Jerome Casey's Building Industry Bulletin is remarkable. This traced the ownership of land in Fingal, where the majority of land is in the hands of a small number of people—

Mr. Cullen: Information on Martin Cullen  Zoom on Martin Cullen  There are 27 of them. That is not a small number.

Ms Burton: Information on Joan Burton  Zoom on Joan Burton  Some of them were at the tribunal.

Mr. Cullen: Information on Martin Cullen  Zoom on Martin Cullen  I wish we had competition like that in other areas of the market place – 27 is a substantial number.

Mr. Gilmore: Information on Eamon Gilmore  Zoom on Eamon Gilmore  There are many more potato farmers out there.

Mr. Rabbitte: Information on Pat Rabbitte  Zoom on Pat Rabbitte  There are 289,000 people in Fingal. I do not think 27 people is a large proportion of that number.

[149]Mr. Cullen: Information on Martin Cullen  Zoom on Martin Cullen  Does the Deputy know how much land is coming on stream as a result?

Ms Burton: Information on Joan Burton  Zoom on Joan Burton  What price are they getting for it?

Mr. Rabbitte: Information on Pat Rabbitte  Zoom on Pat Rabbitte  It was the first time the leg work was done to compare the ownership and the question of hoarding, which those on the Fianna Fáil benches have learned to refer to as “alleged hoarding”. Jerome Casey deals with the hoarding and it is not alleged.

Mr. Cullen: Information on Martin Cullen  Zoom on Martin Cullen  The Deputy has never heard me use that phrase.

Mr. Rabbitte: Information on Pat Rabbitte  Zoom on Pat Rabbitte  I cannot help believing that one of the reasons sections of the media do not bother to address the deeper arguments is the relationship between the big five auctioneering companies and the advertising features of the newspapers [150] that have helped to drive this phenomenon even more fervidly that would otherwise have been the case.

Deputy Twomey made a serious point about an issue that must be addressed. It is important to say to him that the cap would be accompanied by the tax measure that the Minister for Finance advocated himself until supply and demand are in kilter. Local authorities are building very few houses and housing co-operatives are building none because they cannot afford to buy the land. I regret that I see no more evidence in the contributions of Government speakers of an intention to do anything about this now than there was to support Deputy Quinn's Bill in 1980.

Mr. McCormack: Information on Pádraic McCormack  Zoom on Pádraic McCormack  The Minister supported the amendment last night.

Amendment put.

Allen, Bernard.
Breen, Pat.
Crawford, Seymour.
Deenihan, Jimmy.
Durkan, Bernard J.
Enright, Olwyn.
Hayes, Tom.
Kehoe, Paul.
Kenny, Enda.
McCormack, Padraic.
Mitchell, Gay.
Mitchell, Olivia.
Murphy, Gerard.
Neville, Dan.
Noonan, Michael.
Perry, John.
Ring, Michael.

Ahern, Michael.
Andrews, Barry.
Ardagh, Seán.
Aylward, Liam.
Boyle, Dan.
Brady, Johnny.
Brady, Martin.
Brennan, Seamus.
Broughan, Thomas P.
Browne, John.
Burton, Joan.
Callanan, Joe.
Callely, Ivor.
Carey, Pat.
Carty, John.
Connolly, Paudge.
Cooper-Flynn, Beverley.
Costello, Joe.
Coughlan, Mary.
Cowen, Brian.
Cowley, Jerry.
Cregan, John.
Crowe, Seán.
Cullen, Martin.
Curran, John.
Dennehy, John.
Ellis, John.
Fahey, Frank.
Ferris, Martin.
Finneran, Michael.
Fitzpatrick, Dermot.
Fleming, Seán.
Gallagher, Pat The Cope.
Gilmore, Eamon.
Glennon, Jim.
Gogarty, Paul.
Gormley, John.
Grealish, Noel.
Gregory, Tony.
Hanafin, Mary.
Harkin, Marian.
Haughey, Seán.
Healy, Seamus.
Higgins, Michael D.
Hoctor, Máire.
Jacob, Joe.
Keaveney, Cecilia.
Kelleher, Billy.
Kelly, Peter.
Killeen, Tony.
Kirk, Seamus.
Kitt, Tom.
Lenihan, Brian.
Lenihan, Conor.
Lynch, Kathleen.
McCreevy, Charlie.
McDowell, Michael.
McEllistrim, Thomas.
McGrath, Finian.
McGuinness, John.
McHugh, Paddy.
McManus, Liz.
Martin, Micheál.
Moloney, John.
Morgan, Arthur. Moynihan, Donal.[151]

Moynihan, Michael.
Moynihan-Cronin, Breeda.
Mulcahy, Michael.
Ó Caoláin, Caoimhghín.
Ó Cuív, Éamon.
Ó Fearghaíl, Seán.
Ó Snodaigh, Aengus.
O'Donnell, Liz.
O'Donovan, Denis.
O'Keeffe, Ned.
O'Malley, Fiona.
O'Malley, Tim.
O'Shea, Brian.
O'Sullivan, Jan.
Parlon, Tom.
Pattison, Seamus.
Penrose, Willie.
Power, Peter.
[152]Quinn, Ruairí.
Rabbitte, Pat.
Ryan, Eamon.
Ryan, Seán.
Sargent, Trevor.
Sexton, Mae.
Sherlock, Joe.
Shortall, Róisín.
Smith, Brendan.
Smith, Michael.
Stagg, Emmet.
Treacy, Noel.
Upton, Mary.
Wall, Jack.
Walsh, Joe.
Wilkinson, Ollie.
Woods, Michael.

Amendment declared lost.

Question put: “That the Bill be now read a Second Time.”

The Dáil divided: Tá, 38; Níl, 63.

Boyle, Dan.

Broughan, Thomas P.

Burton, Joan.

Connolly, Paudge.

Costello, Joe.

Cowley, Jerry.

Crowe, Seán.

Ferris, Martin.

Gilmore, Eamon.

Gogarty, Paul.

Gormley, John.

Gregory, Tony.

Harkin, Marian.

Healy, Seamus.

Higgins, Michael D.

Lynch, Kathleen.

McGrath, Finian.

McHugh, Paddy.

McManus, Liz.

Morgan, Arthur.

Moynihan-Cronin, Breeda.

Ó Caoláin, Caoimhghín.

Ó Snodaigh, Aengus.

O'Shea, Brian.

O'Sullivan, Jan.

Pattison, Seamus.

Penrose, Willie.

Quinn, Ruairí.

Rabbitte, Pat.

Ryan, Eamon.

Ryan, Seán.

Sargent, Trevor.

Sherlock, Joe.

Shortall, Róisín.

Stagg, Emmet.

Twomey, Liam.

Upton, Mary.

Wall, Jack.

Níl

Ahern, Michael.

Andrews, Barry.

Ardagh, Seán.

Aylward, Liam.

Brady, Johnny.

Brady, Martin.

Browne, John.

Callanan, Joe.

Callely, Ivor.

Carey, Pat.

Carty, John.

Cooper-Flynn, Beverley.

Coughlan, Mary.

Cowen, Brian.

Cregan, John.

Cullen, Martin.

Curran, John.

Dennehy, John.

Ellis, John.

Fahey, Frank.

Finneran, Michael.

Fitzpatrick, Dermot.

Fleming, Seán.

Gallagher, Pat The Cope.

Glennon, Jim.

Grealish, Noel.

Hanafin, Mary.

Haughey, Seán.

Hoctor, Máire.

Jacob, Joe.

Keaveney, Cecilia.

Kelleher, Billy.

Killeen, Tony.

Kirk, Seamus.

Kitt, Tom.

Lenihan, Brian.

Lenihan, Conor.

McCreevy, Charlie.

McDowell, Michael.

McEllistrim, Thomas.

McGuinness, John.

Martin, Micheál.

Moloney, John.

Moynihan, Donal.

Moynihan, Michael.

Mulcahy, Michael.

Ó Cuív, Éamon.

[154]Ó Fearghaíl, Seán.

O'Donnell, Liz.

O'Donovan, Denis.

O'Keeffe, Ned.

O'Malley, Fiona.

O'Malley, Tim.

Parlon, Tom.

Power, Peter.

Sexton, Mae.

Smith, Brendan.

Smith, Michael.

Treacy, Noel.

Walsh, Joe.

Wilkinson, Ollie.

Woods, Michael.

Tellers: Tá, Deputies Stagg and Boyle; Níl, Deputies Hanafin and Kelleher.

Question declared lost.


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