The Echo Chamber Podcast.
Episode 13.
Hosts Martin McMahon and Tony Groves are joined by academic, author, political analyst and activist Dr Rory Hearne.
They discuss the housing crisis; inequality; an alternative, left Government; next week’s Songs and Words: A Home For All event, at which Rory will be speaking; and the day Rory ran with Taoiseach Leo Varadkar in Dublin’s Phoenix Park.
Listen here
Previously: Dr Rory Hearne on Broadsheet
The panel on last night’s Tonight with Vincent Browne
Last night.
On TV3’s Tonight with Vincent Browne, presented by Newstalk’s Sarah McInerney.
The panel included Fine Gael TD Colm Brophy, Labour TD Jan O’Sullivan, postdoctoral researcher at Maynooth University Dr Rory Hearne and Irish Independent columnist Colette Browne.
At the beginning of the show, Dr Hearne repeated his claim that the State is over reliant on the private sector to provide social and affordable housing.
It followed an interview Dr Hearne did on RTÉ’s Today with Sean O’Rourke yesterday morning and an opinion article he wrote for yesterday’s The Irish Times, headlined Why Government response to housing crisis has failed.
Last night, Dr Hearne said:
“Last year, Rebuilding Ireland set out to build 2,000 new social housing units by local authorities, only 650 were built. We had 1,000 rapid units promised to be delivered for the families in hotels who are homeless. Only 150 are going to be built by the end of this year.”
“…They [The Government] are not willing, I think, to stand up to the property interests, the developer interests, the financial interests, the vulture funds. They don’t want the Government to provide a much greater amount of supply of affordable and social housing.
“I think, they’ve been bought over by this idea, they’ve been captured by this idea that you have to encourage the private sector to build. The private sector isn’t building…
“The private market has shown it doesn’t work. The State has to provide housing but the Government seems to be ideologically captured by this, they don’t believe in social housing, they don’t want affordable housing, they seem to just want to follow that private market model. And I think that’s the reason why we’re in this crisis.
Following this…
Colm Brophy: “Well listen, I mean, a lot of what Rory said there was just either palpably ignorant of what the Government is actually doing, it’s either ideologically derived and I don’t say that with any pleasure but it really…”
Colette Browne: “What facts, what facts that Rory mentioned do you disagree with?”
Brophy: “Sorry, can I just, listen, there’s one of me here now so I’ll, I’ll just, there is no question, it is completely wrong to say that the Government doesn’t want to provide social housing, that the Government doesn’t want to provide housing, that the Government is somehow involved, and I heard you earlier on, in a couple of media interviews where you nearly have this hard-left, conspiratorial view that, somehow or other, there is some divine right that everything should be done by the public sector and if you advocate any other way or approach to it, that you’re involved in some type of conspiracy with venture funds and banks and everything else like that.”
Hearne: “I never said that.”
Talk over each other
Brophy: “No, the fact, no but I’m saying you seem to be coming from this type of view, that the only solution is the one you look at and advocate. Now let’s look actually at what is happening and what is being done. This Government came in, Simon Coveney took on a ministry for housing, it was especially created to recognise the importance of the problem which was there. There’s a commitment for €5.3billion to be made available by this Government to provide social housing. Now that’s between now and 2021.”
“The thing people always want to overlook and they think, I just, I don’t know why people don’t get this: you can’t wave a magic wand and make houses appear…”
Sarah McInerney: “No, ok, ok but hold on, hold on, hold Colm, you’ve made a number of charges against Rory there, ideological charges there, etc. But let’s just stick with the figures for a second. Because Rory made a number of different points but one of the things he talked about was figures and that’s not factually incorrect or not factually incorrect, it’s just the figures as we know them and one of those figures is that there were 650 new social housing builds in 2016, instead of the 2,200 that were planned.”
Brophy: “But, again, it’s all…”
McInerney: “Now the Government told us they were going to happen, they didn’t happen. They told us they could wave that wand, that we would get those houses…”
Brophy: “No they didn’t…”
McInerney: “Well, we were told that they were getting 2,200 and we got 660, so what happened there?”
Brophy: “What the Government has said very clearly is that there’s a mixture, which certain people don’t like, I mean I was on the original Dail housing committee, so I’m familiar, I’ve heard all the hard-left arguments before of…”
McInerney: “Ok, forget ideology for a second…”
Brophy: “No, no…”
McInerney: “Because I’m just asking you about the facts. I’m asking you about the target that you set yourselves that you failed to reach. Why did you not reach it, is what I’m asking.”
Brophy: “If you actually look at it, and by the way, just to clarify another point, the money problem is not there, the [inaudible] is the supply problem…”
Watch back in full here
Previously: Whose Interests Are Dictating Our Housing Policy
‘They’re Loud And They’re Growing’
Meanwhile…
Free next Saturday, June 17?
From top: Dr Rory Hearne; From his paper ‘A home or a Wealth Generator’?
A conference, entitled Solid Foundations? Economic Inequality and the Housing Crisis, will take place in the Croke Park Conference Centre in Dublin, organised by TASC, next Friday (June 16).
One of the speakers will be post-doctoral researcher at Maynooth University Dr Rory Hearne, who will present his research A Home of a Wealth Generator? Inequality, Financialisation and the Irish Housing Crisis.
Ahead of this.
Dr Hearne was interviewed on Today with Seán O’Rourke earlier today.
Rory Hearne: “My analysis is that the Government’s policy and strategy, up to this point, has been inadequate in terms of social housing or even new forms, and what I propose is, and support others, like the Nevin Institute, towards the idea of an affordable rental housing company. That the Government is not doing enough to directly supply itself and what it has done is it’s over-focussed on incentivising private sector.
And by doing this incentivisation, whether that’s reduction in apartment sizes or it’s the Help To Buy scheme to try and introduce demand, that it has in actual fact inflated rents and inflated house prices and contributed to the crisis.
Last night.
On TV3’s Tonight with Vincent Browne.
The panelists were: Michelle Murphy, from Social Justice Ireland; policy analyst Dr Rory Hearne; media lawyer Andrea Martin, and political correspondent at The Irish Times Harry McGee.
In the latter half of the show, they discussed the Disclosures Tribunal, following on from Judge Peter Charleton making his opening statement yesterday morning.
The tribunal will investigate allegations of a smear campaign against Sgt Maurice McCabe.
Specifically, Mr Browne raised the subject of journalists and their sources.
Vincent Browne: “There is another issue that arises and it is that a woman made, allegedly made allegations of misconduct against Maurice McCabe which she subsequently withdrew*. And which the DPP found, it couldn’t possibly prosecute on the basis of those allegations. But the name of that person was disclosed to at least two journalists who went off and got exclusives in interviews with this woman. Now that would seem to me that there’s something really insidious involved in that. And who disclosed it? And the journalists then going and interviewing those people. What do you think about that, Harry?”
Harry McGee: “Well, I don’t know if, I mean, what evidence is there that the name was disclosed to journalists?”
Browne: “Well, how else would journalists know otherwise?”
McGee: “Well, I don’t know, you’d have to ask the journalists.”
Browne: “I know but can you think how the journalists would know otherwise?”
McGee: “I can think of many ways in which journalists might know otherwise.”
Browne: “Tell us.”
McGee: “Well, they might have been told my some other people, they might have…”
Browne: “By who? Who’d know?”
McGee: “Well, I don’t know, Vincent.”
Browne: “But who’d know? A priest? A nun? A social worker? A counsellor?…”
McGee: “Well, who do you say? Who would you suggest told the journalist?”
Browne: “I would think that the likelihood is that it was the gardai, members of An Garda Siochana.”
McGee: “I just, I don’t know. I, I…”
Browne: “These are crime journalists that were…”
McGee: “But listen I wasn’t [inaudible] to that particular story, Vincent, you’re asking me to give…”
Browne: “Social workers wouldn’t have much truck with crime journalists…”
McGee: “You’re asking me to answer a question for which I have no, I have no direct knowledge.”
Browne: “Assuming, assuming that it was revealed by gardai – or that the journalists were tipped off by members of An Garda Siochana – this would be pretty insidious, wouldn’t it?”
McGee: “If they were tipped off about the…the identity of…?”
Browne: “Given the name of the person who originally made the complaint.”
McGee: “But there’s no evidence to suggest that at this particular juncture, Vincent, other than supposition. And I, I have no direct influence…”
Browne: “What do you mean there’s no evidence for it? The fact of the matter is: a woman made a claim of abuse. Subsequently, that woman’s name was released to journalists, crime journalists and they went and interviewed that person.”
McGee: “But, you, there is no direct evidence that the identity of the woman was released by gardai. They might have come to identify that woman and find out where that woman was and contact that woman from a separate source. To illicit that information. I think that you should ask…”
Browne: “But is it likely that, is it likely that, given that it was the crime journalists that were given that information – not journalists that are involved in social issues or political journalists or whatever – it’s crime journalists. Isn’t it likely that they got it from the gardai?”
McGee: “Well, there’s a possibility…”
Browne: “But anyway…”
Talk over each other
McGee: “I just can’t…”
Browne: “If that’s so, do you think that’s another dimension of insidiousness with the garda in this whole thing?”
McGee: “Well, I mean, if that were so, yes it would be. But there’s no direct evidence to suggest that, Vincent.”
Browne: “Ok, in your view, in your view, can journalists validly claim confidentiality with regard to their sources, in respect of texts they may have received, or emails, or whatever, they may have received, concerning phone calls, relating to false information concerning Maurice McCabe?”
McGee: “Well, I think that, what the judge was doing today was he was making a distinction between legal professional privilege where he said that the privilege lay with the client and that of informant privilege where it lay with the informer, as opposed to the recipient of that, which is the journalist in this case. And that’s an important distinction, that he’s making. So, I think that, from what I, he said he [Judge Peter Charleton] hasn’t reached a conclusive decision in relation to this and he’s going to receive submissions on it. But he is making the case that if the informer were to waive his or her privilege, than the privilege wouldn’t attach to the journalist who received it. Now, but, for that to work, the journalist would have to reveal who their source was and the journalist, no journalist, in my experience would reveal who the source was. The second…”
Browne: “But, on what basis?…where information was received, that was entirely false, designed to do terrible damage to a person’s reputation, all in the aim of discrediting that person, in the context of…”
McGee: “But in your own, you said that it was, in your opinion, that journalists actually believed the information that was conveyed to them. So, in this case, I think that the test will be a subjective test because if it were an objective test, if the journalist believed that what was being said to them was a calumny, detraction, was a lie – that would be ludicrous and the journalist would be in dereliction of their duties as journalists. So I think that journalists, who received that information, believed that information to be true…”
Browne: “And they should not disclose and, in your view, they should not disclose the source?”
McGee: “Well, yes, if, I think journalists are quite entitled not to disclose their source.”
Browne: “On what basis do you think that?”
McGee: “On the basis that they gave an undertaking to their source that they wouldn’t compromise that source. They believed that information that was being given to them at the time…”
Browne: “And if it then emerges that that source told them lies, and malicious lies, should the journalist still be bound by the the confidentiality arrangement?”
McGee: “Well, that would be post-hoc and so..”
Browne: “Well, we now know it was lies…”
McGee: “I think that might change the circumstances somewhat, if the informer were to waive their privilege. But the difficulty is that the journalist would then be required to reveal their source.”
Browne: “Yeah.”
McGee: “That would present a difficulty for journalists.”
Later
Andrea Martin: “[If she was a journalist] What I would do is I think that I would disclose my source. If ordered to by the court to do so, if there was no greater good going to be had by staying silent on it. But I think many, many journalists would not agree with that. And it’s a personal decision…”
Michelle Murphy: “I think if you are aware that, or if you become aware that what you have been used as a conduit to spread lies then, I think the journalist, in order to protect their integrity, might do so. If they felt that they were being used by a particular individual….in this exact situation, I think they should. But then there’s other areas where you need whistleblowers, in for example, the HSE…”
Rory Hearne: “I think in this case, yeah, they should. I think that the level of maliciousness, the extent and depth of, you know, it’s just shocking to see the corruption and the way people are treated. Our institutions are, you know, used. People who are supposed to be there to protect us are actually, you know, like the guards, are doing things like this to other guards. Tusla has appeared to be used, it’s just disgusting if you ask me. And I think if you were a journalist, and you realise that these people had done this, you know, used you, to denigrate their colleague, then I think I would say, ‘I’m going to tell who that person is’.”
*Broadsheet understands that what’s been reported thus far has been that the girl made an allegation against Sgt Maurice McCabe in 2006, it was investigated, a file was sent to the DPP – with the recommendation that there was no grounds for a prosecution – and the DPP directed that no prosecution should be taken, with the observation that it was doubtful the allegations should constitute a crime at all.
Watch back in full here
From top: Housing Minister Simon Coveney; Dr Rory Hearne
A strategy for the rent sector proposed by Housing Minister Simon Coveney which includes rent restrictions in Dublin and Cork city s due to come into effect in the new year.
Rory Hearne writes:
The government’s Strategy for the Rental Sector, while containing the welcome provision of rental restrictions is ultimately flawed because it does not link rent increases to inflation, excludes areas outside Dublin and Cork (particularly the commuter counties), does not provide security of tenure, proposes the sale of public land ‘below market value’ (i.e. give away/privatising a valuable public resource) to global real estate funds to increase ‘supply’, and is based on the failed (and contradictory) market assumptions that increasing rents will lead to further supply and increased supply will lead to affordable rents/house prices.
Firstly, in relation to the Strategy for the Rental Sector, there is no evidence or research provided by the government or the Department of Housing as to how the 4% increase in rents is being justified.
For example, 4% per annum represents 8 times the increase in annual earnings for full-time employees in 2015. It has no justification from price inflation as the (Consumer price index) is running at -0.3%. Within the CPI there is a specific category, Furnishings, Household Equipment & Routine Household Maintenance, which you would think would be a reasonable indicator as to the main on-going cost for landlords. Inflation for that category is running at -4.3%.
Furthermore, the most recent PRTB rent index for Dublin showed in the last quarter that rental growth moderated significantly, and fell to 0.6% and the annual % change for Dublin houses was 3.3% in Quarter 3 of 2016. So the 4% level is above this ‘market’ level. This is why rent increases should be linked to inflation (the CPI) which is running at -0.3%.
Secondly, it excludes areas outside Dublin and Cork from the designated ‘pressure-zones’. But it indicates they could be included at some point next year. All areas across the country have seen significant increases in rents in recent years – so why are they being excluded?
For example rent in Wicklow increased by 9%, Meath 15%, and Kildare 12% last year. Landlords are very likely (as is already reportedly happening today in Dublin) to inform tenants of substantial rent rises immediately in anticipation of being designated a rent pressure zone in these areas across the country in the coming months. This is why the entire country has to be included in the rental restrictions.
Thirdly, the Strategy for the Rental Sector does not sufficiently address the other major aspect of the rental crisis – that is security of tenure. There is no change to the situation whereby landlords can evict tenants if they intend to sell the property or want it for ‘family ‘use’ and there is insufficient protection for tenants being evicted from buy-to-let properties in receivership being sold on to vulture funds.
Without proper tenant security the rental sector is not a secure form of tenancy whereby people can make a long term home as tenants are left living in constant fear and threat of eviction and homelessness.
The rental strategy proposal actually gives landlords a potential incentive for evicting existing tenants.
Properties that are ‘renovated’ or not let for ‘two years’ are exempt from the rental restrictions so a landlord could evict lower paying tenants, engage in renovations (or leave it idle for two years) and then get new tenants in and charge them much higher rents – which gives the landlord a bigger return over the long term.
The Rental Strategy in fact could worsen security of tenure and homelessness through its proposal for a “fast track process…to enable landlords to regain possession quickly where the non-payment of rent constitutes the grounds for termination.”
Finally, the strategy does not address the fundamental issue of the current unaffordability of rents.
Rents are already too high. So rather than facilitating a further increase in rents there needs to be a strategy to reduce rents. An affordable rent is around 20% of your disposable income. Yet tenants are paying 50% and more on their rent and as a result are going without basic necessities in order to cover their housing costs.
An alternative strategy for affordable homes: A ‘New Deal’ for housing
What is needed to provide affordable rental and homes for ownership is a Roosevelt-like ‘New Deal’ for housing. A massive state-led house building and renovation programme that provides 30,000 affordable homes per year.
It could be done through a new affordable housing state authority – like the ESB delivered electricity across Ireland –that would launch a new housing tenure – community affordable housing involving housing for a broad range of income groups from the lowest income to average and above average income workers.
It would use the huge existing land banks – including that of NAMA – to build mixed income affordable community homes for rent and ownership. Crucially though, the land and housing would always be held ‘in trust’ by the state and not sold on the market – owners could sell it back to the trust – housing wold thus be kept affordable.
Local authorities, housing associations and co-operative housing associations could do it directly or through arms-length trusts. It is cost-neutral as the state can borrow at very low interest rates and it would make a return from the range of rents and ownership models. It would also direct some of the 500 million going to private landlords back to the state.
It could purchase and bring it to use the 35,000 vacant homes in wider Dublin area, and the 27,042 buy-to -lets in arrears (and derelict sites and land being hoarded by vulture funds, NAMA and developers.
Rental Strategy privatises much-needed public land
This is what the public land of local authorities should be used for and not, as the Strategy for the Rental Sector outlines, to be sold to private developers and speculators providing ‘build-to-rent. The proposal to sell off local authority lands is the most serious mistake (and indeed tragedy) in the rental strategy and the government’s wider housing plan.
Page 15 of the strategy outlines that, in order to ““Kick-start supply in rent pressure zones” …”Lands held by local authorities in rent pressure zones will be brought to market on a competitive tendering basis, with a view to leveraging the value of the land to deliver the maximum number of units for rental targeting middle income private rental households”.
This is a shameful use of public land – selling it cheaply for global vulture funds to provide ‘unaffordable’ housing. As the strategy notes through this land subsidy for private developers and financiers “the cost of providing rental units will be permanently reduced by lowering the initial investment and development costs for providers”.
Local authorities are being given immediate instruction, by end January 2017, to “identify a number of sites with the potential for up to 1,000 units of accommodation and will move forward, as soon as possible, to issue calls for proposals from parties interested in developing rental accommodation for middle income households”. As the report notes “these developments are potentially a major engine of growth of supply for the rental sector by tapping new sources of finance from institutional investors such as pension funds and Real Estate Investment Trusts”.
The ironic thing is the private interests who will get below market land from the state will then not be subject to the 4% restriction rent caps as they will be providing new housing. This is the same approach being used in the land initiative for public land in social housing estates like O Devaney Gardens and St Michaels Estate.This is a new form of Public Private Partnership, but as in the previous housing PPPs, the value of the land will be appropriate in the main by the developers and financiers.
Political Choice and Public Attitudes-time of opportunity
So there is a clear political choice here. To focus, as the government is, on achieving ‘supply’ through global wealth investors, vulture landlords and speculative property finance- or the state to lead in a historic programme of providing affordable homes for rent and ownership. One approach will enshrine unaffordable rental and house prices into the future and associated poverty and financial stress for large sections of our population.
It will increase economic inequality as wealth is transferred from the lower income groups in Ireland (renters, young people, first time buyers) to the top 10% wealth holders (from Ireland and across the world). the other approach can deliver and guarantee the human right to housing for all our citizens.
It is a choice the government, and we as a country, have to make. But it is one where we already know the outcomes for each path.
Dr Rory Hearne is a policy analyst, academc, social justice campaigner. He writes here in a personal capacity. Follow Rory on Twitter: @roryhearne
Rental strategy insufficient for affordable homes (Rory Hearne, Progressive Economy)
Previously: Rory Hearne on Broadsheet.ie
From top: Minister for Finance Michael Noonan, and Dr Rory Hearne
There’s been a rise in the number of people who, having experienced years of austerity, are demanding a more central role for the State and protective public services. This should be reflected in tomorrow’s budget.
Dr Rory Hearne writes:
Another opinion poll, this latest one from the Irish Times/Ipsos MRBI, shows that “a large majority of voters favour increasing spending on public services and welfare ahead of reducing taxes and charges”.
Tomorrow’s Budget should reflect this public mood and provide a very significant increase in investment in key public services and infrastructure, particularly housing, a reversal of regressive austerity measures and outline a plan for the restructuring of the Irish economy away from failed neoliberalism towards a more social economy model of development.
According to this latest poll in the Irish Times, when offered a menu of choices between tax reductions and spending increases and asked to pick one priority, “voters overwhelmingly prefer spending increases in a variety of areas, with by far the biggest preference being for increasing spending on healthcare”.
The aggregate support for tax cuts was only 19 per cent (including income tax at just 7 per cent and the reduction or abolition of the USC at 10 per cent). While support for increased public spending was over three times that, at 72 per cent (with healthcare the highest at 29 per cent and housing and homelessness next, at 14 per cent).
So this shows support for increased spending on healthcare is four times greater than that for cuts to income taxes and support for investment in housing is double that for cuts to income tax.
The most significant aspect of this poll is that it confirms a trend of the changing attitude amongst a majority of the Irish public towards our economy and the role of the state, expressed through attitudes to public services.
It shows that a new popular ‘common sense’ has emerged in Ireland where a majority of people, having experienced the harsh reality of crisis, austerity and a laissez-faire economy, are demanding a more central role for the state and protective public services.
For example, an opinion poll commissioned by TASC in June 2015 showed that 70% of people felt the government should prioritise investing in public services rather than spending money to cut income taxes (this poll also found that 50% of respondents were willing to pay higher taxes to improve public services, and 63% supported an increase in the tax rate for high earners (over €100,000 per annum).
Furthermore, a recent Eurobarometer poll, showed that the issues of main concern to the public in Ireland are housing (34%), health and social security (29%) and unemployment (32%) in contrast to tax (at just 9%).
The trend in these polls, expressed also as a key message from the public in February’s General election, is that the Irish people increasingly want to see accessible and high quality universal public services (particularly health care and housing) and they see investment in these as a priority over tax cuts.
These views are even more significant when we consider the lack of comprehensive, well-funded and universal public services in Ireland and the growing drive toward privatisation and commercialisation.
We have some excellent quality public services – in education, transport, areas of the health service and local authorities, and semi-state agencies such as the ESB.
But many citizens also have negative experiences of long waiting times to access these services (hospitals) or are excluded from them (e.g. social and affordable housing).
This is because we have the lowest level of public expenditure as a proportion of GDP in the entire EU. We also have the lowest level of investment in infrastructure in the history of the state.
And this public opinion is being formed in spite of the mainstream media, economics and government policy continuing to promote the Celtic Tiger obsession with ‘tax cuts’ and a ‘low tax’ economy as part of a laissez-faire, neoliberal, economic policies.
These espouse private market solutions, privatisation, minimising investment and underfunding of basic services, and promoting the monetisation and financialisation of public services by facilitating and supporting the ‘for-profit’ commercial private sector through PPPs and other mechanisms.
These policies have contributed to the multiple social and economic crises our citizens face such as rising poverty and deprivation, our housing crisis, lack of health care, unaffordable childcare, regional underdevelopment (through lack of public investment in infrastructure) and a lack of state investment in research and development and support for indigenous sustainable businesses (rather than an over reliance on foreign investment).
Budget 2017 is being introduced at a time of rising inequality in Ireland despite the so-called ‘recovery’, the legacy of the recession and austerity years (visible in 29% of the population suffering deprivation – with lone parent households, at 58.7% and children at 36.1%, most affected), a cost of living 25% above the EU average, a national housing emergency, precarious work, unemployment, and regional underdevelopment.
This Budget therefore, should reflect the public’s very sensible demand for greater investment in public services, and provide a ‘new deal’ for Ireland with a large scale public investment plan, beyond anything currently being considered, such as TASC has proposed in A Time for Ambition: Ensuring prosperity through investment.
This should go considerably beyond the narrowly defined (and misleading) ‘fiscal space’.
Restrictions of budgetary discussions to what is possible within the defined ‘fiscal space’ has foreclosed the discussion of the many real and viable alternative approaches to fiscal and budgetary policy that are available to the government beyond the fiscal space.
For example, we could substantially increase investment beyond the €1.2bn ‘fiscal space’ if the decision was made to retain the USC, or to introduce a wealth tax, close the tax reliefs that benefit the better off, raise employer’s PRSI, if the decision was taken to borrow for investment or use funding returning from the banks for public investment instead of debt repayments.
Flexibility on EU fiscal rules could be sought (and more are likely to be achieved given the post-Brexit and European and global economic crisis – see below) to facilitate this investment, if necessary.
There is growing support at European and indeed, global, level favouring such radical public investment plans to address the twin crises of stagnant growth and rising inequality.
This perspective was provided in the Financial Times recently. Firstly, a former US Treasury secretary wrote that,
“After seven years of economic over-optimism there is a growing awareness that challenges are not so much a legacy of the financial crisis as of deep structural changes in the global economy…concretely, this means rejecting austerity economics in favour of investment economics…Enhancing infrastructure investment in the public and private sector should be a fiscal policy priority…And the focus of international economic co-operation more generally needs to shift from opportunities for capital to better outcomes for labour.”
While, Wolfgang Münchau, the FT associate editor wrote:
“From an economic point of view there is nothing extreme in the argument for large investment programmes, especially after years of fiscal consolidation….the overwhelming consensus in favour of centrist libertarian economic polities is breaking down.”
Furthermore, public investment (and the necessary taxation to fund it) is not, as it is often portrayed, a ‘cost’ or ‘unaffordable’ as it provides many multiples of return on its investment (through various multipliers particularly in areas of housing, childcare, etc).
Public services such as health care, education, and welfare, along with public investment in infrastructure such as housing, water, and transport play a vital role in addressing inequality in society and are a key mechanism by which to achieve sustainable and socially inclusive economic development.
This Budget should, therefore, be used as an opportunity to change our dominant economic and fiscal policy which is worsening economic inequality and move it closer to that of countries such as Sweden and Denmark, that have substantially higher levels of investment in public services, and, as a result, have more stable economic growth, are much more equal and have less social problems.
Dr Rory Hearne is a Senior Policy Analyst with TASC and co-author of Cherishing All Equally 2016: Economic Inequality in Ireland
Rollingnews
From top: the Committee on Housing and Homelessness launching the Report of the Committee on Housing and Homelessness in Leinster House today; Dr Rory Hearne
Further to Nama Wine Lake’s analysis last night.
While the focus is on an ‘off-balance’ sheet mechanism to fund social housing we could be facing a situation where there are over 3,000 homeless by this time next year.
Dr Rory Hearne writes:
There is a lot of criticism of the political system in Ireland, and particularly the elected TDs and how the Dáil goes about its business, for being ineffective and a waste of time.
The newly formed Committee on Housing and Homelessness has shown what politicians can achieve. The committee was only set up two months ago, in April, “to review the implications of the problems of housing and homelessness, and to make recommendations in that regard”.
And this is vital and urgent work. The Dublin Regional Homeless Executive provides regular updates of the homeless figures in Dublin and the most recent ones from April show this crisis is just getting worse.
Their infographic below reveals that in April, there were 888 families with 1,786 children in homeless accommodation in Dublin. The number of children is almost double what it was just a year earlier.
At this rate of increase in homelessness we could be facing a situation where there are over 3,000 homeless by this time next year. A shocking prospect.
The Committee on Housing and Homelessness has had presentations over the last two months from a broad range of organisations, groups and individuals involved in housing.
These included the housing charities (Peter McVerry Trust, Focus Ireland, Simon Communities of Ireland, Threshold), also representatives of excluded groups (Irish Refugee Council, Pavee Point), the Irish Mortgage Holders Organisation, the Residents of Tyrellstown affected by evictions from the vulture funds.
The policy decision makers and funders also presented including the National Treasury Management Agency (NTMA), the Department of Finance, NAMA, the Housing Finance Agency, the Minister for Housing and the Minister for Finance, and the Irish Property Owners Association, the Irish League of Credit Unions and the Construction Industry Federation.
Interesting individual experts such as the Master of the High Court Edmund Honohan, Professor PJ Drudy, and the Mercy Law Resource Centre also presented.
There are groups who are very active at a grassroots level – such as Housing Action Now and the Irish Housing Network – who do not appear to have presented to the committee which is unfortunate given their ‘on-the-ground’ experience of supporting those most affected by the crisis and their innovative ideas on potential solutions.
The quality of debate at the committee meetings was very high and there was a substantial amount of really important information provided on the facts about the housing crisis, the different groups affected and potential solutions to the crisis.
All the submissions and the discussions at the committee are very interesting and you can read them all on the Oireachtas website here.
For example, during its hearing on May 31, the NTMA and the Department of Finance made a presentation on the issue of our ability to borrow (while staying within the EU fiscal rules) in order fund the provision of much-needed social housing.
The NTMA (the National Treasury Management Agency) manages our National Debt and various funds such as the Infrastructure Investment Ireland Fund (which is what used to be the National Pension Reserve Fund) and borrows on behalf of the Government.
The NTMA explained that Ireland’s debt levels (the debt to GDP ratio) have fallen from 120% to 94% but our absolute level of debt, at over €200 billion, is four times what it was in 2007.
And the annual interest that we must pay on this debt is close to €7 billion (which was just €2 billion in 2007).
European fiscal rules require Ireland to reduce the debt-to-GDP ratio by roughly 5% per annum.
But due to our economic growth rates we are achieving this and therefore, there is ‘fiscal space under the debt-reduction rule’ that could allow us borrow more while staying within the EU rules.
But the debt is only one of three rules.
The other two relate to government expenditure benchmark and the ‘balanced budget’ rule. This means that if we borrow to spend or invest directly by the government (or local authority which is considered a state agency), for example in social housing, it affects our public spending limits.
But if we borrow and invest it through a non-government body on a commercial basis it does not affect public spending limits as it is considered by EUROSTAT (the European agency that defines if we are breaking the rules or not) to be ‘off-balance-sheet’ spending.
This is why pretty much the sole focus of the Department of Housing, Finance and Government has been trying to find ‘off-balance’ sheet mechanisms that allow investment not affect the rules.
But there is a very obvious issue here that requires clarification. If you increase spending on an area, like social housing, and fund this through an equivalent increase in taxation, then surely nothing changes in terms of the budget deficit?
Now if the planned abolition of the USC was going to cost us approximately €4bn then surely that could be paused which would then leaves a number of billions that could be invested in social housing provision and not require borrowing or lead to a breaching of EU rules?
The committee will present its final report today.
It will be well worth a read to see what’s in it.
Dr Rory Hearne is a policy analyst, academc, social justice campaigner. He writes here in a personal capacity. Follow Rory on Twitter: @roryhearne
Yesterday Nama Winer Lake Writes
Dr Rory Hearne, from Maynooth University, on RTE’s Six One last night
Yesterday, the Housing Agency released a report entitled the National Statement of Housing Supply and Demand 2014 and Outlook for 2015-2017.
It claimed that over 20,000 new homes per year, over the next three years, will need to be build in order to satisfy demand.
In response to this Dr Rory Hearne, a lecturer in political and economic geography at Maynooth University, spoke to Sharon Ní Bheoláin to lay out his criticisms of the report and the Irish Government’s approaching to housing in general.
Sharon Ní Bheoláin: “60,000-odd new homes over the next three years. It doesn’t sound overly ambitious but you were saying our entire approach, the entire housing provision model needs to be completely overhauled?”
Rory Hearne: “Yeah, I think if you look at the report, it analyses that there’s going to be 20,000 houses required, additional houses required, from new household formations over the coming years. But I think what’s missing in the report is a lack of ambition, a lack of appreciation of the wider housing crisis that’s there and it does identify it within the report. Issues like the mortgage crisis, the rental crisis. But, within it, it still focuses and a lot of debate focuses, on the private sector and we’ve seen the private sector developers, you know in the property industry sector coming out and looking for VAT reductions. And I think what it doesn’t analyse enough is the role in which that private model, that speculative, the home ownership, mortgage model failed, led to the cause of the crisis and a lot of people simply won’t be able to get mortgages or afford their housing. And I think what’s in it, the supply, the 20,000 units, there’s not an explanation enough: what type of units are required in that, are they social housing? Are they rental? Are they home ownership? But there’s an assumption that there’s just private development we need. Rather then looking at, I think in particular, the government could address through additional local authority housing, a lot of this demand…”
Ní Bheoláin: “OK, so this over-reliance on mortgages and private development is contributing to the various crises we hear day after day in terms of affordability, in terms of the squeeze on the rental market, that the Government really needs to start looking at building it’s own units as well.”
Hearne: “Yes, it does. It has to look at alternative housing model. The housing system in Ireland is in crisis, it’s dysfunctional and if we look at, in particular, how the Government is responding to the crisis; the use of NAMA for example, is a good example of where they have just followed the same speculative model. We see NAMA now bringing in new vulture funds to buy up residential property. In fact NAMA has enough land and residential property to develop 25,000 units over the coming three or four years. I would argue that the Government should change NAMA’s remit to actually become a housing delivery agency, focusing on need rather than…”
Ní Bheoláin: “NAMA of course was set up to deliver the best return for the taxpayer and that’s why they’re selling off massive portfolios to these big international investors.”
Hearne: “Yeah and I would argue that is a completely short-termist perspective because, while the taxpayer is getting a certain amount in return, what’s happening is we’re bringing all this property investment into the Irish market which is fuelling rents, fuelling, and the other issue is NAMA is concentrating on building offices – we don’t need more offices, we need housing units.”
Ní Bheoláin: “We need housing units, and we need smaller housing units, according to today’s report.”
Hearne: “We do need smaller housing units and that also comes to another issue of vacant properties. There’s a huge issue in particular of, and the housing need that’s identified in the report, it’s around Dublin, Cork, Galway, the big cities, there’s a huge issue of vacancy, derelict properties that need to be looked at but I think the bigger issues is our housing model in Ireland. What this report really lacks and analysis, a critical analysis and pointing to alternative solutions that are there, that could move away from…for example, if we look at Ireland. Ireland only has 9% social housing or local authority housing..”
Ní Bheoláin: “How does that compare with Europe?”
Hearne: “England, for example, has 17%, the Netherlands, 33% and this is why we’re seeing 1,000 children in emergency accommodation, we’re seeing 90,000 households on the housing list. Through the last ten years and, in particular, over austerity the budget for social housing has dropped dramatically.”
Ní Bheoláin: “And yet we had this massive housing strategy announced by the minister [for the Environment Alan Kelly] not so long ago. You seem to be very, very critical of our approach to this, the lack of creativity, innovation and joint-up thinking.”
Hearne: “Yeah I think what’s happened is the Government is over focused on the issue of the banks and developers and rather than actually looking at the housing system and what is the purpose of the housing system, it hasn’t put it together. And I would argue that in the hierarchy of the housing system, housing need, housing shelter, people’s requirement for affordable housing should be put first before the property development industry and before international finance and sorting out the banks and, in many ways, the banks have been prioritised over people. And I think as well, what has happened with the Government is that they haven’t really significantly increased invested in purchasing social housing. Within the housing strategy, three quarters of the new social housing is going to be through the new private rented sector. That’s not a sustainable model and I think that we need a radical change that would actually address housing need.”
Watch back in full here
21,000 new homes a year over the next three years needed to meet demand (RTE)
Irish times fuelling another property boom?30 pages of property advertising. Not one critical article @JulienMercille pic.twitter.com/HZwBFfdUT9
— Rory Hearne (@RoryHearne) May 21, 2015
Thirty.
There you go now.
UPDATE:
property supplement in today's Irish Times is two pages longer than the actual paper
— Oireachtas Retort (@Oireachtas_RX) May 21, 2015