Wednesday 26 July 2017

Ivan Yates: Leo's overriding priority must be housing supply emergency

  • Getting rid of the Garda Commissioner is an immediate necessity
  • The external monster that is Brexit requires a full-time Cabinet Minister
  • Paschal Donohoe (as the new finance minister) must take co-ownership of the housing crisis
Newly appointed Fine Gael leader Leo Varadkar. Photo: Tom Burke
Newly appointed Fine Gael leader Leo Varadkar. Photo: Tom Burke
Ivan Yates.
Ivan Yates

Ivan Yates

The new minority Fine Gael Government faces multiple challenges: a Garda confidence crisis; the fallout from Brexit; public sector pay; perennial health atrocities; terrorism threats and Budget 2018.

Every TD Leo Varadkar is indebted to has their unique 'must-do' project/promise to be met. His in-tray is overladen. All this is compounded by a year of indecision, due to the do-nothing 'new politics' of risk-averse survival.

Getting rid of the Garda Commissioner is an immediate necessity - it's impossible to sustain her credibility. The toll of whistleblowers' veracity, financial irregularities at Templemore, the Charleton Tribunal, wrongful road traffic convictions and one million phantom breath tests are insurmountable. This means changing the Justice Minister; followed by an agreed plan with Fianna Fáil on regime change in the Phoenix Park.

A tightening fiscal space means pay policy constraint. Budget 2018 is an opportunity to programme specific income tax reductions and USC reform to incrementally increase net take-home pay over three years.

The external monster that is Brexit requires a full-time Cabinet Brexit Minister to work across departments and simultaneously liaise with Fianna Fáil.

A direct Dublin/London dialogue of practical political pragmatism across every sector is an essential precursor to the ultimate EU/UK deal in 2022-5. Leo can then focus on top-line diplomacy. Perceived competence is critical on Brexit.

Health requires a medium-term focus in equal parts on investment; improved productivity (dismantle demarcations/restrictive practices); application of technology (electronic patient records); hospital consolidation (regional/national tertiary focus); shake-out of incompetent HSE management; and resource prioritisation of primary/community care. Money alone is an unwinnable war.

Mr Varadkar must take one leaf out of Enda Kenny's Cabinet copybook - to drive, without distraction, a national singular government agenda focus. For Mr Kenny it was employment. For Leo it has to be housing.

What's emerging is a social catastrophe - 7,000 homeless in emergency accommodation may double, as vulture fund repossessions soar. Rent is the biggest household budget anxiety (450,000 tenancies), with 4pc annual increases, requiring up to a penal 40pc of monthly salaries. House prices are undermining competitiveness and repelling inward investment.

The legacy of the crash and the failure to make housebuilding profitable means these problems will be exacerbated over the next two years. It's a painful perfect storm: increasing evictions; incremental population growth; migration to employment-based cities; Nama's visceral attrition against many of its 850 client builders; insufficient competitive capital finance for construction; 37pc tax total costs on a new house and stifling planning/regulatory restrictions.

I'm not having a go at Housing Minister Simon Coveney. His 'can-do' hard-working commitment is commendable. His plan 'Rebuilding Ireland' contains innovative new initiatives including the Repair & Lease Scheme; €200m for local authority infrastructure; reform of the Housing Assistance Payment scheme: significant extra social/emergency housing provision; rent caps; a Special Delivery Unit to kick ass; and a Help-to-Buy scheme of €20,000 tax rebates for first-time homebuyers.

Mr Coveney is only part of the solution. Father Peter McVerry says his promise to ensure no one is homeless by July will fail. Michael O'Flynn says the maximum number of new houses built will be 15,000 per year, even if all these measures are implemented. The dysfunction is so deep that a new holistic approach must be led by Mr Varadkar.

This is my central contention: the Department of Housing, Custom House, Housing Agency and local councils cannot succeed while the Department of Finance applies the handbrake to fundamental economics of housebuilding.

Paschal Donohoe (as the new finance minister) must take co-ownership of the housing crisis. They must reduce the cost structure of viably providing affordable €300,000 semi-detached, three-bedroom starter homes in the greater Dublin area.

Let's start with a culture shock. Appoint dynamic delivery people with construction project CVs to Nama. Mr Kenny and Michael Noonan were Nama critics in 2010; since 2011 they've acted as guard dogs protecting a culture of self-serving PR and secrecy. One-quarter of all residential development in Dublin originates from Nama assets.

They've liquidated developers and assets instead of managing them in the interests of procuring new accommodation. Leaving aside concocted balance sheet profits, based on bargain basement distressed bank assets of €32bn, they dismantled our most prolific housebuilders into business basket cases.

Now is the last chance to introduce a radical three-year time-limited tax scheme of incentives to reduce new house prices and ensure instant construction of 70,000 units.

Mr Noonan and his department mandarins steadfastly refused to even temporarily reduce the 13.5pc VAT on housing. They failed to instruct State banks to provide construction finance - instead of a ratio of 70pc loans: 30pc equity, builders now operate with 70pc equity: 30pc loans - hence the minimal activity. They vetoed the reintroduction of Section 23 tax relief. Their tax regime forced smaller landlords out of the market.

The 2016 Census report 'Housing in Ireland' raised doubts about the accuracy of our new housing statistics. Electricity connections are not the same as house completion notices. Current references to increased numbers of planning applications are equally misleading. Planning permission processes are deeply problematic. A two-year procedure with enormous complexity and repeated delays of requests for "further information" mean insular planners are a significant systemic bottleneck.

Building regulations restrict high-density development beyond seven storeys, even in hotspot areas of public transport nodes and city living, where land prices can be €4m per acre. Apartment blocks must meet specifications in relation to parking, access and lifts that makes their provision unaffordable. There's simply insufficient land zoned for housing, both inside the M50 and in the adjacent commuter belt. Levies in the Dún Laoghaire/Rathdown Council area can amount to €40,000-€60,000 per unit.

Vacant land and houses (183,000) have been revealed nationwide. It's time to introduce a 10pc annual levy on hoarded moribund green/brown sites in the cities of Dublin, Cork, Limerick, Galway and Waterford.

Empty houses should be subject to a 200pc Local Property Tax liability after lying idle for two years, ratcheting upwards thereafter. Rural resettlement programmes should be offered to housing applicants in the worst-hit areas of counties Cavan, Kerry and Leitrim; with 50pc non-occupancy.

The success of our new Taoiseach depends on sound judgment defining the big picture; distinguishing between what's 'urgent' and what's really 'important'. Despite Mr Coveney's best endeavours, a resolution to our housing emergency can only be commanded from the epicentre of government.

It's even a no-brainer vote winner. Power is like a shot of adrenaline, but Leo shouldn't forget that if you don't use it effectively, you end up losing it.

Irish Independent

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