Saturday 24 March 2018

Home truths: The Government's big 'inaction' plan

Taoiseach Enda Kenny and then Tánaiste Eamon Gilmore who launched the Construction 2020 strategy for a renewed construction sector at the National Sports Campus, Abbotstown
Taoiseach Enda Kenny and then Tánaiste Eamon Gilmore who launched the Construction 2020 strategy for a renewed construction sector at the National Sports Campus, Abbotstown
Mark Keenan

Mark Keenan

We are almost a year into the Government's Construction 2020 plan to address the housing crisis but evidence shows not near enough homes are coming down the pipeline to sort it.

Indeed when it comes to this Government's handling of Ireland's housing crisis over the past three years, logic suggests there can only be two possible theories to explain what has been going on (or not going on).

Theory One: This Government's general inaction on the housing crisis has been a part of a finely-honed larger plan to get the greater economy back into gear. By deliberately failing to fast track the provision of homes at a time of shortage, Government policy has intentionally assisted property price inflation in our cities and towns.

In turn, this inaction plan aided inflation has helped to substantially increase the value of Nama property assets for sale, to rectify negative equity among borrowers, to improve the books of stricken banks and to elevate confidence overall.

However, the collateral damage of cunning inaction has been (a) to increase substantially what we spend on our housing to the degree that we have had to reduce what we spend on everything else and (b) to sacrifice hundreds of families and thousands of vulnerable individuals to homelessness, or...

Theory Two: Through chronic inertia and moronic bungling, this Government has made a dog's dinner out of housing policy - enabling unnecessary property inflation, higher accommodation spending for all, and the worst level of new homelessness in generations.

So, moronic bungling or cunning plan - which could it be? Because when you think about it, this Government has shown it can do both with finesse.

On the cunning plan front, it is a widely (if not universally) held view that the Fine Gael/Labour Coalition has done a near miraculous job of pulling Ireland Inc out of the greater economic abyss - as this week's European zone leading growth figures attest.

But they've also shown strong form on the moronic bungling end of things with their similar non handling of the health service crisis - through which an already sick patient has disintegrated to the point where the prognosis is critical.

Then again, could the non handling of the housing crisis be a combination of both masterful inaction and moronic bungling as some insiders seem to be suggest? In the reverse flip of Fianna Fail (who strived to deny a property crash was taking place), this Government seems to have tried really hard to ignore the new property boom caused by crazy planning requirements and abnormally high taxes on house building.

So non-committal has it been that three years after the crisis became apparent in Dublin, the Central Bank was moved to act with weighty lending restrictions - at the same time pointing out that its job was to prevent a new property bubble and not to address housing provision policy (hint, hint?).

There is also a suggestion members of the Government are "ideologically reluctant" to take the fast-track policy route to house building because they see political fallout in making hay for developers and builders - the rump of Fine Gael and Labour sees helping newly smirky developers as politically toxic given (a) the latter's intrinsic role in the boom and the crash and (b) their long standing association with Fianna Fail.

And they have similar views on tax restructuring or short term tax breaks to get things moving.

Many advisors to Government on housing also appear to be against incentives and even home ownership, as evidenced by one key advisor from the Housing Agency who told media late last year: "I will never buy a piece of property again - I rent."

Meantime, the quality of data which Government is getting from its departments - and on which it bases its housing policy - seems to be coming right from the bungle school end.

It recently emerged that official housing start figures for last year had been substantially overestimated (by 20pc) while a report published earlier this month in the Sunday Independent revealed emails that show an official at Environment emailing another at Finance to say: "We have been spinning that there is sufficient land with planning permission/zoned for housing circa 46,000 housing units… but the reality is that this figure includes land not yet zoned for housing and without planning permission."

A senior officer in Environment stated the "real figure" is 30,000 units. But this too might even be optimistic.

So while logic would never have suggested it, perhaps we should settle for the compromise theory after all.

Masterful bungling, anyone?

Indo Property

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