Tuesday 21 October 2014

Our planners want to land us in trouble again by not listening

Ronan Lyons

Published 25/05/2014 | 02:30

Joined-Up Thinking: Why does RTE have 30 acres of some of Ireland's most expensive land, when a 10-storey building on the corner of the current site would do?
Ronan Lyons

IN the space of a week, our government has announced both a Homelessness Implementation Plan and Construction 2020 Strategy. When it comes to housing, we also have a 2011 Housing Policy Statement and a host of planning and development regulations.

These link in with the 2012-2016 Infrastructure and Capital Investment Plan and, of course, the National Spatial Strategy, which runs to 2020. It's fair to say that our policymakers are not short of plans about who and what goes where.

With so many plans, strategies and statements, it is easy – and probably fashionable – to be cynical. So I have a confession to make: I am an optimist.

I believe that the plans our politicians announce have the potential to transform our lives for the better. Provided, of course, that they are well-crafted strategies and plans.

What do I mean by well-crafted? I have in mind in particular three features.

The first is that policies must be based around specific actions. Vague sentiments are not policy, they are at best a vision for where we want society to be.

Secondly, policies must be flexible to be realistic. When circumstances change, as they inevitably will, medium- to long-term public policy must be designed in such a way that it is not immediately out of date.

And thirdly, public policy must recognise that people – be they civil servants, company directors or couples with their first child – will respond to the incentives of the system they work in. If policy contains no signals to guide behaviour, it is unlikely that the best intentions of policymakers will ever come to fruition.

Unfortunately, when it comes to Irish housing policy, very few of these features exist. Even if the plethora of policies listed above weren't there, housing currently falls between the stools of the Departments of Environment, Finance and An Taoiseach.

(And that's by no means a complete list: the Central Bank controls macroprudential policy, while the Department of Justice is in charge of the Property Services Regulatory Authority.)

Our Minister for Housing has control of little more than the homelessness aspect of her brief and crucially doesn't have a Cabinet vote.

This is the system that has given us the current housing crisis so soon after the last one. Whereas the last crisis was caused by too much credit, this one is caused by too few homes. Or certainly too few homes close to where people want to live, while at the same time too many empty homes in other parts of the country.

Which is why incentives matter so much. In a world of easy credit, it was in the interest of the landowner to get their land rezoned residential and it was in the interest of the local authority to rezone.

There was no strong link between the underlying best use of land – be it agricultural, residential or commercial – and what was in the interest of local authorities. Instead, a string of windfall payments meant that local authorities felt they had to make hay while the sun shone.

The system we have today is pretty much the same as the one a decade ago. New homes have to cough up for infrastructure that those live in existing homes will also benefit from. This pushes up the cost of building, which of course reduces the number of new homes built.

At the same time, a complete disconnect between agricultural, residential and commercial land means that we are effectively dependent on county councils' benevolence to get land used well.

To take an example of this, consider the 150-acre Dublin Industrial Estate in Broombridge.

It is currently zoned industrial, half-empty and as land practically worthless, given there are one million square metres of empty industrial space scattered around Dublin. Beside Tolka Valley Park, close to O'Connell Street and the M50 and next door to the commuter rail line and the Cross-City Luas terminus, this would be very valuable residential land and could provide at least 4,000 homes, or nearly one year's supply for the entire city.

Given the chasm between industrial rates and the local property tax, though, it would be a brave councillor to suggest that Dublin City Council change things.

Businesses pay property taxes at a rate a multiple of what homes pay, skewing land use in favour of commercial uses long past their sell-by date. The council is considering a levy on vacant sites. But given that this will not replace any of the various developer contributions and levies, rather merely sit on top of them, this makes the maths of building now worse, rather than better.

In a way, this all goes back to the debate from two years ago, when the exact nature of the Local Property Tax was being discussed.

The two main choices were a tax on the full value of the property (buildings and land) or a tax on the value of just the land. Those of us who argued for a land value tax did so precisely for this reason. The right kind of tax is not just a way of raising revenue, it is a way of delivering outcomes society wants.

It's not just industrial estates or even just the private sector. Why does RTE have 30 acres of some of Ireland's most expensive land in Donnybrook, when a 10-storey building on the corner of the current site would do?

Around the corner, and indeed scattered across the city, Dublin Bus has sites of up to 10 acres each to house its buses, far removed from any bus terminuses. Why are they where they are? Because a century ago, that was where the city's tram-routes ended. All across Ireland, land is being used poorly because our system has no in-built incentives for us all to use it better.

What we have currently is a disconnect between how public money is raised and how it is spent. Per-hectare contributions to the Luas on sites near the outer Green Line epitomise this – who set those contributions and based on what cost-benefit calculus?

Why do young families buying off-plans in Kilternan have to contribute so much for being close to the Luas – while those residing in luxury homes off Palmerston Road pay nothing?

We could scrap all the various developer contributions, levies and charges, we could also scrap industrial and commercial rates, stamp duty on properties and, of course, the local property tax and replace them all with a single unified land value tax that raised the same revenue and stimulated building where it is viable.

If the Government were to build a new Luas extension, this would increase the value of land around it, thus giving the Government new revenues to pay back the money it borrowed to build the Luas.

The planning system is completely incapable of taking signals from us, the households who have to live somewhere, about where we want to live. These signals are all around us, in the value of land. Irish policymakers are very fond of plans and strategies – so why can we not have one about land use?

Dan O'Brien is on holiday

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