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Opinion: 'Vulture funds pay around €1 in taxes for every €1 million they hold in Irish assets'

Despite endless promises from government ministers, the housing situation is steadily deteriorating, writes Dr Brian O’Boyle.

Dr Brian O’Boyle Economic advisor to People Before Profit

DYSFUNCTION IN THE housing sector has become the defining crisis of our age. Despite endless promises from government ministers, the housing situation is steadily deteriorating.

Consider some of the facts. There are currently 7,472 people classified as homeless, 2,563 of whom are children. This is a record level of homelessness in the state. More than 75,000 families remain in mortgage arrears, 55,000 of whom have not paid anything for more than 90 days. In the public system things are no better. Around 130,000 families are stuck on local authority waiting lists, some for more than decade.

This has added to the current explosion in rental costs, with prices rising by around 13% year on year.

Corporate giveaway

One reason for this crisis, is the historical drive to commodify housing. Since the 1970s successive Irish governments have run down the social and affordable housing stock in a deliberate move to facilitate the private sector.

To put some figures on this, more than 500,000 houses were built during the early 2000s, with only 46,000 designated social and affordable. To make matters worse, the State has sold off nearly 200,000 public units, whilst Fine Gael have built virtually no local authority housing since they came into office. This chronic undersupply is one part of the problem.

The other part is the corporate give away. When it was formed, the National Assets Management Agency (NAMA) was touted as the solution to potential fire sales in the property sector. NAMA was supposed to take distressed assets off the balance sheets of the banks and hold them until the market recovered.

This never happened. Instead, Fine Gael instructed NAMA to engage in the fire sale it was meant to avoid. Up to 90% of the property in NAMA went to Vulture Funds who, in turn, used section 110 legislation to pay virtually nothing in taxes.

According to a recent report in the Sunday Business Post, vulture funds pay around €1 in taxes for every €1 million they hold in Irish assets. Between them International Funds and local developers have hundreds of billions of property assets and zoned land. The best way to get some of this land into use would be to penalise those sitting on their assets. Instead, FG wants to give 700 new public sites to the private sector.

Never let a good crisis go to waste

The Mayor of Chicago, Rahm Emanuel, once said that the elites should never let a good crisis go to waste. Simon Coveney clearly agrees, using a crises caused by private speculators to further enrich the private sector. There are at least three good reasons why handing parcels of public land to private developers should be opposed.

The most obvious one is the chronic lack of local authority housing. Instead of owning 100% of the resulting housing stock, the government have agreed a 30/70 spilt, with developers selling the larger share at market value. This will leave longer waiting lists than would otherwise be possible.

The second reason has to do with cost. The cost differential between public and private is roughly €100,000, with councils able to deliver houses for €200,000 versus €300,000 for the private sector. This will make private houses unaffordable for the majority of the working population and those on the waiting list.

The final reason centres on alternatives. Councils could use direct capital expenditure or housing finance agency loans to develop their own mixed tenure estates. People Before Profit recently submitted such a plan to South Dublin County Council, showing that real alternatives are, indeed, possible. For ideological reasons they are not being implemented, however.

Sinn Féin and Labour Support

In a recent opinion piece, Sinn Féin’s, Eoin Ó Broin, likened Coveney’s policy to selling off the family silver. Pity then, that Sinn Féin and the Labour Party are voting for these Public Private Partnerships in local councils.

On April 10, South Dublin County Council voted to sell off 87.37 acres of public land in Kilcarbery the Grange. The site is capable of supporting 892 housing units, but at least 550 will now go to the private sector. Sinn Féin and the Labour Party voted for the initiative.

In Dublin City Council similar initiatives have been voted through in O’Devaney Gardens, Oscar Traynor Road and St Michaels Estate. In each of these developments PPP’s will ensure that at least 50% of the houses will be lost to the private sector.

As the largest group on Dublin City Council, Sinn Féin played a significant role in ensuring that these plans came to fruition, despite alternative proposals being submitted by People Before Profit councillors and other left-wing representatives. The Labour Party has also consistently supported Sinn Féin in this regard, voting in favour of these proposals at every stage.

Simon Coveney is currently engaged in a land grab of epic proportions, but it wouldn’t be possible without support of Sinn Féin and the Labour Party.

Dr Brian O’Boyle is an economic advisor to People Before Profit. He is the co-author of Austerity Ireland the Failure of Irish Capitalism (Pluto Press).

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About the author:

Dr Brian O’Boyle  / Economic advisor to People Before Profit

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