Wednesday 22 November 2017

The right moves: The bureaucracy disaster

The Economic Management Council of Enda Kenny, Michael Noonan, Brendan Howlin and Joan Burton
The Economic Management Council of Enda Kenny, Michael Noonan, Brendan Howlin and Joan Burton

Paul McNeive

As you drive through the village of Kilbaha, Co. Clare, the road to the lighthouse on Loop Head becomes a track.

In a cottage halfway along this road, sculptor Jim Connolly (my uncle) had an idea to repopulate dying towns in the west of Ireland whilst also easing the housing shortage in Dublin.

The idea was beautifully simple; facilitate moving Dublin families in poor accommodation to empty houses in rural areas. Rents are much cheaper in the west and social welfare payments go further.

In 1990 he established a charity, Rural Resettlement Ireland (RRI) and over 25 years moved over 800 families into new homes. Schools, post offices, Garda stations and local businesses were kept open and every family moving west created an extra home in the city. Government support peaked at €135,000 in 2008, which allowed RRI employ five staff, but funding was stopped in 2012. RRI is probably the most effective work of social engineering ever achieved in Ireland..

The housing crisis and the refugee crisis are dominating the media and of course Ireland should be taking in more refugees. But with families already living in cars and hotels, with no prospect of reaching the top of a housing list, and local authorities contemplating temporary "pre-fab" housing, where are we going to house more refugees? Inevitably they too will become long term residents in unsuitable army camps and abandoned hotels.

But why are we unable to provide basic housing or provide a handful of commercial buildings to cater for incoming companies providing thousands of jobs? For four years the IDA has been warning that Ireland could lose out on major investment due to the lack of Dublin office blocks and accommodation for staff.

Both these crises were entirely foreseeable. However the government relied on the private sector to provide housing and office space but the private sector development model was broken and is only beginning to respond now, but too little, too late.

The biggest problem is that there are far too many people, "stakeholders", government departments, local authorities, agencies, committee's, working groups and task forces involved, many of which are overstaffed with expensive managers. Consultants reports are batted around like a game of table tennis played in a dense fog.

The more people you involve in any process, the less likely you are to get a positive outcome.

In fairness, the government partly recognised this problem when establishing the "Economic Management Council" where the Taoiseach and three ministers have driven the economic recovery. I also suspect that Nama's relative efficiency is down to their "understaffing."

Unfortunately, politicians without the vision and drive to smash through this deadlock revert to creating taxes which often make matters worse. For example the ridiculous "windfall" capital gains tax rate of 80pc made certain that no rezoned land was sold for years (and no tax collected) and that has contributed to today's lack of supply. If you tax any economic activity it will slow down and if you tax land sales enough they will stop.

The "Derelict Sites Tax" won't stimulate development and the latest idea, to increase rent controls, will drive more residential landlords out of the system, reduce supply and increase rents. This is the stuff of Junior Cert. economics.

Real vision and delivery of large scale development plans by the public sector is rare and one has to think back as far as the International Financial Services Centre for a good example.

It may seem simplistic but after 35 years of involvement in the property business and observing politics and the public sector, it is clear to me that bureaucracy and political inertia are preventing simple development. The Empire State Building was built in three years from 1929, in the depths of a depression, yet government, with all its resources, can't build an office block or service a few fields and build houses and apartments.

The contrast between the effectiveness of RRI and the public sector in getting things done is stark. Every day Jim Connolly receives enquiries from Dublin families seeking to move west. He has put a proposal to government to re-start RRI, requiring funding of just €176,000, but after numerous meetings with government departments, he can get no response. Strangled by bureaucracy.

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