My advice to new housing minister is this - borrow, demolish, build

The right moves

Paul McNeive

Paul McNeive

July 02 2020 02:30 AM

Phew! At last, we have a new Government and congratulations to Darragh O'Brien on his appointment as Minister for Housing, Local Government and Heritage.

The brief appears simple enough: build 50,000 "social houses", ignite an "affordable housing" sector that makes sense but isn't happening, and unlock the "private sector" to ramp up supply and reduce prices and rents.

Mr O'Brien must shun the illusions of action, like rent controls and banning bedsits. To avoid joining the ranks of well-meaning failures, he is going to have to ruffle feathers and simplify matters.

My advice is to borrow, demolish and build.

Ireland Inc must take a more radical approach to borrowing, and practise what larger economies do, and not what they preach. The US and the UK can borrow massive amounts of money, because as reserve currencies they can generally print money when needed.

Italy can't do that, but it gets away with perpetual over-borrowing because of its size, and even Germany gets away with breaking EU borrowing rules.

Despite the pandemic, Ireland can afford to borrow €12.5bn at 1.5pc over 20 years to fund 50,000 social houses costing €250,000 each.

Each house has a life of at least 50 years, and will produce some income. The State already has the surplus land available.

The other brake to development is usually infrastructure, such as sewers, roads and railways. It's hard to believe that, in 21st century Ireland, 36 towns still discharge raw sewage into the sea. Just borrow the money and sort out our infrastructural deficit. Fast.

And this is all borrowing for capital, and not current expenditure, which is a point that has been lost in the EU focus on total borrowings as a percentage of GDP. No countries ever repay this borrowing, by the way; it gets "re-financed" and rolls on forever.

Now that we have the money, the minister needs to demolish all of the 'can't do' blockages in the system.

Building houses is not all that difficult. He should summon the local authority managers to produce a list of sites they are going to develop, with timescales.

I suggest circulating a monthly league table, ranked by progress. The local authorities have all the powers they need. They are the planning authority. They know the land in their area. They can zone land. They grant the planning permissions.

The local authorities also have compulsory purchase powers for assembling sites, but traditionally use them only for road schemes. Tell them to start using these powers as needed.

Swiftly issue design briefs to private-sector planners, architects and engineers to design the developments. If there are examples of existing good schemes, buy the copyright to the designs and repeat them; most professionals will want to co-operate with their local authority. Then tender the construction work to private contractors.

Demolish the labyrinthine procurement processes that waste so much time and resources.

Find out why the local authorities complain about the slow transfer of funds from the Department of Finance, and demolish those blockages too.

In the private sector, reduce vat by 6pc for schemes that are completed within an agreed timescale. The prices must be 'pre-set' to ensure that the saving doesn't go straight to the developer. On a €500,000 house, that €30,000 saving then would go to the buyer, who could use it for their deposit.

Irish society can be radically improved over five years. Borrow. Demolish. Build.

My advice to new housing minister is this - borrow, demolish, build

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