Dáil Éireann

DÁIL ÉIREANN

AN COISTE UM CHUNTAIS PHOIBLÍ

COMMITTEE OF PUBLIC ACCOUNTS

Déardaoin, 25 Deireadh Fómhair 2018

Thursday, 25 October 2018

The Committee met at 9 a.m.

MEMBERS PRESENT:

Deputy Bobby Aylward, Deputy Alan Farrell, Deputy Shane Cassells, Deputy Marc MacSharry, Deputy Catherine Connolly, Deputy Catherine Murphy, Deputy David Cullinane, Deputy Kate O’Connell.

DEPUTY SEAN FLEMING IN THE CHAIR.

1 PAC Mr. Seamus McCarthy (An tArd Reachtaire Cuntas agus Ciste) called and examined.

Business of Committee

Chairman: We are joined by the Comptroller and Auditor General, Seamus McCarthy, who is a permanent witness to the committee. He is joined by Deirdre Quaid, senior auditor. Apolo- gies have been received from Deputy Deering.

I am holding over the minutes of the previous meeting and we will come to clear a few of them, in a group manner, shortly. Therefore, no matters arise from them as we have not dealt with them.

Deputy Marc MacSharry: I appreciate we have correspondence and a good deal of work to get through but given the seriousness of the issue involving the 40 schools and media indications that the number will be even more than that, we need to allocate an unforeseen but serious level of priority to examining that issue. When the Secretary General of the Department of Education and Skills appeared before the committee when we were dealing with Cork Institute of Technology, CIT, the Marine Institute and problems that arose there, I asked about reviews of public private partnerships and the very lengthy periods that are allowed to elapse before they are reviewed and now, at least in one instance but potentially in more than 40 others where there may be difficulties, schoolchildren will have no school to go to in the next few weeks. In terms of value for money, this is a very serious issue. Clearly, a level of oversight, enforcement and inspection took place during the construction of those schools but the problems that have emerged certainly seem to suggest those processes and procedures were defective. Perhaps there are new procedures. We should move quickly to request the people from, I presume, the building unit of the Department of Education and Skills to come before us to give an account of what seem to be clear failings in the system that operated at the time these schools were being constructed.

Deputy David Cullinane: I support what Deputy MacSharry has said. This is a very serious issue. It involves more than 40 schools and it may involve more. We all saw the images of the schoolchildren and their parents locked out of their school yesterday. I imagine temporary arrangements will have to be made which will involve a cost. There will be a cost involved for the taxpayer even in relocating the students. We do not know what remedial works will have to be carried out in all these schools to bring them up to the required standards. There are issues regarding contracts, regulation, enforcement and the other issues that have been raised. Would it be wise for us to request a detailed note from the Department on the number of and nature of the contracts for each of these schools and the number of schools involved? When we request that note, perhaps unfortunately more schools might be added to that list. We need a very detailed note on that. We also need to know the nature of the problems involved. We need as much information as we can get on it for the next meeting and we can determine then how we can map this from this committee’s perspective. We should definitely write to the Secretary General of the Department today and get as much information as possible. The big issue is the way it will affect the children concerned, but from our perspective there is the value for money aspect and the additional costs involved, which I imagine is a guaranteed. Unfortunately, there will be an additional cost involved for the taxpayer. We need to understand what happened, why, and what lessons will be learned.

Deputy Catherine Murphy: When the tender was done, one of the factors that saved 2 25 OCTOBER 2018 money at the time was not having somebody on site to monitor the building. It is always harder to identify the faults that lie behind the walls once a building is completed. We need to focus on that particular aspect. Next week is the mid-term break in schools and assessments will be done and probably more information will become available after that. It might be useful to delay sending the letter until the end of next week as more information may have come into the Department, by which time it will have had sight of, or even a cursory glance over, the remaining schools that have to be examined.

Deputy Catherine Connolly: I support that point and I do not need to repeat it. Regard- ing the ongoing inspection by the Department, I understand from an interview I heard that the Department was active in its inspection. We might have that clarified also in terms of what role it had when the schools were being built.

Chairman: During the course of construction.

Deputy Catherine Connolly: Yes, what the role, if any, the Department had. It has been alleged that it had an active role and that it went out to inspect the buildings at various stages.

Chairman: Fine.

Deputy Marc MacSharry: That is an important point. I note from media coverage that the company involved raised the fact that the Department was there every week or every two weeks inspecting, but who was inspecting? Was it administrative staff, a structural engineer or a quantity surveyor? Also, there are issues around planning enforcement in terms of planning and building regulations with respect to the impact there. If those questions could be included in the letter to the Department, that would inform our decision on this issue next week.

Chairman: We are agreeing to write to the Department on those lines. We should ask it at this stage for the contract price for each of the schools involved. If we are sorting out the money side of this issue, we need to know the global cost of what is involved. We want to be specific on that. I propose that we write to the Department and ask that it reply by 13 November, as we have a meeting on 15 November. The Department will need a week or two to reply. If we get a quick reply, it will not be remotely complete. We will give it at least a fortnight and there will be updates on that. I am sure the Joint Committee on Education and Skills will deal with this issue but we will focus on the points that were mentioned, namely, the teaching, alternative accommodation, and the health and safety of students. The joint committee will inevitably deal with that latter aspect.

A substantial element of the issue, however, involves the contract, the procurement process, the tendering, supervision and cost of the project. Regarding each contract, and the Depart- ment can give us the information in a variety of ways, but, in terms of the company that won the contract to build the schools, I want to know what was the next highest price submitted by the alternative contractors. Did the company that was awarded the contract come in as the cheap- est all round? In terms of its bid, where was it in the ranking? Was it marginally below the second one on the list or was it well below it? We would be worried if it was very well below the industry norm at the time. If it was, that in itself should have set off alarm bells. We want to examine that tendering process. We will seek that additional information from the Depart- ment on each of the tenders. We will ask it to give us as much information as it can supply by 13 November. That is a good two weeks away, and at that stage we can assess the issue at our meeting on 15 November. That is very helpful and I thank the members for raising that issue.

3 PAC The next item on the agenda is correspondence received since the last meeting. Under category A - briefing documents and opening statements, No. 1668 A is from Ms Karen Mur- phy from the Irish Council of Social Housing, dated 19 October, providing a briefing note for today’s meeting, including an overview of social housing provided by approved housing bodies, progress on publicly funded social housing outputs 2015–2018, the total amount of funding approved and received from public sources, and details of lands transferred by any public bodies between 2015 and 2018. We will note and publish that. We will return to this topic in November.

Deputy Catherine Murphy: Is that on the schedule?

Chairman: No. 1668?

Deputy Catherine Murphy: The Chairman said he will return to it.

Chairman: It is. We are holding it over. All items related to the housing issue will be noted for today but they will be on our agenda for when have our second meeting on the housing situation, which will be on 29 November.

Deputy Catherine Murphy: Will that deal with the housing assistance payment, HAP, scheme? There is a crossover between them.

Chairman: There is. Chapter 10 in the Comptroller and Auditor General’s report today, on which we have commented, is on the approved housing bodies. There is no statutory regulation there. The Comptroller and Auditor General made that point very clear in his report last month. We will be dealing with that issue and it is fair to raise it today. While the people from the Irish Council for Social Housing are not here today, the Secretary General of the Department of Housing, Planning and Local Government will be before committee.

Deputy David Cullinane: I missed matters arising. Did we deal with that?

Chairman: I did not take the minutes, but if the Deputy wants to raise something, he can.

Deputy David Cullinane: An issue for us to watch is the advice from the Attorney General to the Department vis-à-vis the Higher Education Authority’s powers and functions. Can we ensure that we get that as soon as it comes in and that we do not have to keep chasing it up? As soon as the Department has that, it should come to us as quickly as possible. It will be an interesting observation.

Chairman: It is very important.

Deputy David Cullinane: It has implications for-----

Chairman: Everything.

Deputy David Cullinane: -----everything. Can we keep an eye on it?

Chairman: We will keep an eye on it. That was an important issue which came out the last day. The next items are No. 1670 A and 1671 A from the Department of Housing, Planning and Local Government, dated 18 October, providing briefing information for today’s meeting on Vote 34, specifically, details on lands transferred to approved housing bodies, details of publicly owned land, the Rebuilding Ireland home loan, and a note on the funding progress on a county- by-county basis. We will note and publish this.

4 25 OCTOBER 2018 No. 1680 A is from Mr. John O’Connor, CEO of the Housing Agency, dated 23 October 2018, and it is his opening statement. We will note and publish this.

No. 1681 A is from Mr. John McCarthy, Secretary General of the Department of Housing, Planning and Local Government, and it is his opening statement. We will note and publish this.

The next category is B, correspondence from Accounting Officers and-or Ministers as a follow-up to the Committee of Public Accounts. We held over the following items and are continuing to hold them over. There are a number of items from the Department of Public Ex- penditure and Reform responding to our previous periodic report. There is detailed correspondence, running to hundreds of pages, from the HSE, following up on our earlier meeting. We held over quite a lot over the summer because we had 100 items to deal with. I propose that for each meeting, we take one chunk and deal with it. I propose that, at the next meeting, we deal with the responses from the Department of Public Expenditure and Reform with regard to our previous periodic reports. It was slow to get to us so we do not want to be any slower following up. We will move on and clear a large chunk each time. I will note the reference numbers, which we have noted before. They are Nos. 1482 B, 1486 B, 1490 B, 1502 B, 1510 B, 1513 B, 1526 B, 1528 B, 1530 B, 1538 B, 1560 B and 1561 B. We have held all those over from the previous meeting and we will deal with them as well as we can from the next meeting onwards.

Deputy Marc MacSharry: Will it be shown on the database as part of the next meeting?

Chairman: The next item is No. 1637 B from Ms Ann-Marie Walsh from the Office of Pub- lic Works, providing the managing valuer’s report on five historic cases on foot of a preceding submission to the Department of Public Expenditure and Reform. I note that we had that before and it is being held over again.

No. 1640 B is from Mr. Timothy Owens, chief executive of Cork Education and Training Board, ETB, providing further information requested by the committee regarding employment policies in Cork ETB. The item was held over from last week’s meeting. It was agreed to circulate the transcript of a meeting of the committee in 2015 and this was circulated to members yesterday. I wondered what was going on when I got that 90 page email. I was scratching my head, wondering why that was asked for, and this is the answer. In the meantime, the correspondent who made the original enquiry and is the subject matter of the case has contacted the secretariat for a copy of the letter from the ETB and I propose to send this to the correspondent. We will also note and publish the correspondence. Is that agreed? Agreed.

No. 1649 B is from the Secretary General of the Department of Education and Skills, Mr. Seán Ó Foghlú. It relates to a previous item and is a response to a question regarding the possible prohibiting of people from applying for employment or re-employment as part of any legal settlement. This came to our attention in relation to Cork ETB. We will note and publish this and send it to the correspondent who has contacted us on this topic.

No. 1650 B is from Ms Kerrie-Anne Galvin from the National Treatment Purchase Fund on a review of the pricing mechanism for long-term residential care in the private and voluntary sector. Work is ongoing. We will note and publish the letter. We will mark that down and we want a copy of the report as soon as it is completed.

Deputy David Cullinane: I know the Chairman wants to note it but I want to note that I think it is an unacceptable delay. We dealt with this issue with private nursing home providers when we had them in before us. I am not sure why it is taking so long. They say they were tied

5 PAC up with budgetary matters and other issues but I think it is unacceptable. It has implications for private and voluntary nursing homes because they will be setting a new pricing mechanism. They have said they will have it next month. They are meeting the Department of Public Ex- penditure and Reform.

Chairman: They are scheduled to meet later this month. The steering group, which involves the National Treatment Purchase Fund and the Department of Public Expenditure and Reform, is scheduled to meet later this month to discuss the draft report and determine the next step. That is not a commitment to finalise it.

Deputy David Cullinane: We have had problems before in flooding and other areas where steering groups are established, do not meet as often as they should and do not present reports in as timely a fashion as they should. If the steering group is in place to do a particular job, it should have done it. It seems the issue is sitting there, with a steering group which meets whenever it feels like it rather than having any sense of urgency. I advise that we go back and say that we think it should happen as quickly as possible. As soon as they have that report, it should be provided to the Committee of Public Accounts.

Chairman: This query is on our desk because we as a committee wrote to them on 11 Sep- tember to say that we wanted this information to complete our periodic report. At this point, they are holding up the committee in its work on completing our periodic report. It is only as a result of that that they are now saying that they will meet next month. If we had not contacted it, I wonder if this steering group meeting would even have happened. Perhaps it was already scheduled.

Deputy David Cullinane: Can we get a note from them as to who is on this steering group, when it was established, how often it meets and how often it should meet? Maybe that will give us an indication as to whether there is a problem.

Chairman: In other words, we want a copy of the minutes of the meetings of that steering group since its initiation. We want to know who the chairperson is, the date of the next scheduled meeting and the timetable to complete the work. They are holding up the Committee of Public Accounts in completing our work and we contacted them. Had we not done that, we might not even be aware of this. That is an example of us following up on our work in our periodic report. People think we forget about all these things that are mentioned here but we do not.

No. 1653 B is from Mr. Gerry Greally from the livestock breeding, production and trade division of the Department of Agriculture, Food and Marine, providing an information note requested by the committee concerning a complaint to the European Commission regarding alleged illegal state aid to Horse Sport Ireland. Mr. Greally provides details of another similar complaint and states that the Department disputes both complaints and is responding to the European Commission accordingly. We will note and publish this but the matter is clearly in the hands of the EU.

Deputy Catherine Murphy: How do we know, apart from if there is a public finding, when the European Commission has closed this or responded to this? Can we ask the Depart- ment to notify us of the response from the European Commission? We could be some time waiting for that.

Chairman: When we get issues like that and are told they will be sent to the European Commission, they could be there for two months or three years. I do not know. We want an

6 25 OCTOBER 2018 update for 8 December. We are not leaving before Christmas without knowing. We will track it on a periodic basis. When any of these issues come in, the matter is looked at, and we want to hear about them in two months. We will ask the Department for an update in two months. I have no concept of how long it will take.

Deputy David Cullinane: Is Horse Sport Ireland audited by the Comptroller and Auditor General?

Mr. Seamus McCarthy: I do not think so.

Chairman: Horse Racing Ireland?

Mr. Seamus McCarthy: I audit Horse Racing Ireland but I do not audit Horse Sport Ire- land.

Deputy David Cullinane: What is Horse Sport Ireland?

Mr. Seamus McCarthy: From recollection, I think it is a representative group and sport self-regulation body.

Deputy David Cullinane: It is not audited by Mr. McCarthy.

Mr. Seamus McCarthy: I do not audit it. It is a grant recipient.

Chairman: We will log that to have an update in early December.

Deputy Catherine Murphy: Does it receive its grant through Horse Racing Ireland? Is it a subset?

Mr. Seamus McCarthy: I do not think so. I think it comes from the Department. I would have to check the details on that.

Chairman: Maybe the liaison officer would circulate a note. We will ask the officer liaising between the Office of the Comptroller and Auditor General and our committee to circulate a note on that issue rather than going around the houses asking the Departments and everyone else. That will be sent out to us during the week and we are going to keep track of it.

Next is No. 1657 B from Ms Mary Lawlor, communications department, NAMA, providing an information note requested by the committee on the €24 billion sale of underlying assets with a geographic breakdown of where the purchasers were located. She does not answer the question. The information is interesting, but when I read it for the third time, I realised she did not answer the question. There is a very short paragraph that I want to read out. We had asked for a note on the €24 billion sale of underlying assets with a geographic breakdown of where the purchasers were located. That was straightforward. The reply is three sentences:

Since inception, €24 billion has been generated from the sales of secured assets by NAMA debtors and receivers. Of this, €13.2 billion was generated from the sales of assets located outside of Ireland. Based on our analysis, the geographic location of the purchasers of assets located in Ireland is set out in the table.

They have given us a table but we asked for a breakdown of the €24 billion and the geographic breakdown of where the purchasers were located. In the second sentence, she confirms that €13.2 billion or 55% of the assets were located outside Ireland, but the banks and loans fell to the Irish taxpayer. I am not worried about where the property was that fell to the Irish 7 PAC taxpayer. Then she proceeds to give us a breakdown of the locations of the purchasers of the 45% of the assets that were located in Ireland. She only gave us a breakdown of a subset of the €24 billion. We will send it straight back and say we want the original question answered. She broke our question into two halves and answered one half of it. That is not satisfactory. We will note and publish it but we are writing back for a proper answer.

Next is No. 1659 B from Mr Robert Watt, Secretary General, Department of Public Expen- diture and Reform, providing information requested by the committee on the costs incurred by the State for the recent visit by Pope Francis to Ireland. The original inquiry referenced article 44.2 of the Constitution, which provides that the State guarantees not to endow any religion. We will note and publish the response. The response says that the Papal visit will not cost any more than the €20 million budget approved for the visit. That is one figure I want to put on the record.

Deputy Catherine Murphy: I have no issue in respect of overtime and that aspect. That will be accounted for in respect of this visit. There was quite a short lead-in time in terms of the known date and procurement for other aspects such as fencing and so on. It does not strike me that there was time to have adequate procurement on this with multiple tenders and so on. There is an issue around that. What are the various aspects under the remit of the Office of Pub- lic Works, OPW? We know about the Garda Síochána. What are the other headings? I think there is an issue in respect of one or two things. It would be useful to write to the OPW asking for the headings of those so we can see if there is an issue with the fairly sizeable amounts. I am not talking about high-visibility jackets and things like that. I am talking about the serious spending.

Chairman: This is the second letter in a row from a senior public body where we asked a specific question and have been given a detail in respect of a fraction of the question. Here we are told the OPW has advised that expenditure to date is €14.1 million. Then they give us a remark about Garda overtime which might be approximately €5.2 million. We need a breakdown of the €14.1 million from the OPW. That is reasonable. We will write directly to the OPW as the Deputy has suggested. In the meantime we will note and publish this.

Next is No. 1662 B from Mr Seán Ó Foghlú, Secretary General, Department of Education and Skills, providing an update to the committee regarding the transfer of properties in respect of contributions from religious congregations towards the costs incurred by the State in responding to residential institutional child abuse.

Deputy Catherine Connolly: I welcome the update from Mr. Ó Foghlú. It is clear. What is not clear is why it has taken so long. Going back to the 2002 indemnity agreement, 16 years later, five properties remain to be transferred fully. It was expected that four of these properties would have transferred by the end of quarter 3 of this year. The current position is that three of the five will transfer by the end of the year, one by the first half of next year, and I do not know when the fifth will transfer. That is outstanding.

If we go to the 2009 voluntary offers, I have followed matters up with the assistance of the Chair, who has been very attentive to it. They arose as a result of the Ryan report and its damn- ing findings. Properties were offered on a voluntary basis. We were led to believe there would be no difficulty. That was in 2009 and of those 18 properties, nine still have not been transferred in 2018. I see that there is progress and that a lot of those buildings and properties are in use by various State bodies. I welcome that.

Coming to Galway and St. Anne’s, Lenaboy, if anything typifies or brings into acute focus

8 25 OCTOBER 2018 this whole scheme it is Lenaboy in Galway, which I think is empty since 2009 although I am told it has been empty officially since 2011. Galway City Council announced it was a gift. I have gone into that background and will not do so again. It was not a gift. It was given by way of redress. It has, inexplicably, remained empty since 2009 or at least 2011, and now we are told that a geophysical survey was carried out. I realise that was under way. I did not realise the city council had requested it. I understand that the results of the geophysical survey have not yet been provided to the congregation. A geophysical survey was commissioned. It is very important to see the results.

The context of the mother and baby home in Tuam is only relevant to today’s proceedings insofar as we again have a Minister saying that the sisters of the Bon Secours are willing to give so much money. We are back again. We do not know the circumstances. It seems the Minis- ter approached them for a contribution but it is not put in context. It is very important to give context in these matters. The context here is that this particular building at Lenaboy was never given as a gift. It was given as redress and it is inexplicably empty and deteriorating at a terrible rate since it became empty. In this regard and in respect of the other ones, I simply do not understand the role of the Department of Education and Skills or how it failed to ensure these agreements were complied with in a more speedy fashion. I do welcome the Department’s continual updates and I welcome the progress.

Deputy Catherine Murphy: Some of these are from 2002 and 2009. Obviously the 2002 properties are a legal obligation and the 2009 ones are a moral obligation. Given the particular sector in question, I would have thought the moral obligation would have been almost on a par with the legal obligation, but so be it. We have all said this kind of stuff before.

I want to find out about one or two practical things. The HSE and the Department of Educa- tion and Skills are pursuing the matter with different organisations because some of the facilities are being used, for example No. 15, the National Rehabilitation Hospital in Dún Laoghaire. There is work being pursued on one of them. I am talking about No. 15. This offer comprises the lease of land for the operation of the National Rehabilitation Hospital and the transfer of a 33 acre site. It is stated that this transfer will facilitate the redevelopment of the hospital. That project is under way.

The final paragraph states that work on this complex transfer is progressing but is taking longer than expected. The estimated timeframe for completion is the third quarter of 2019. Is the lack of clear title and spending of public money on a development delaying that? Is there duplication going on between the Department of Education and Skills and the HSE? How is that working in practice? It costs money to follow this up. Is the lack of clear title causing a problem? Since the HSE has an involvement, perhaps we should ask it about that and about how it relates to the Department of Education and Skills. A few relate to the HSE, not just that one.

Chairman: Is that agreed? Agreed. We will do that.

Deputy Catherine Murphy: I presume the HSE is not paying rent on this?

Chairman: We hope so. We will ask for that to be confirmed but we would expect that. I call Deputy Cullinane.

Deputy David Cullinane: We need to remind ourselves of the context. A special report of the Comptroller and Auditor General looked at this and the whole indemnity scheme in the first

9 PAC instance. Was there a cap of €128 million on the contribution from the religious bodies? Was that their contribution?

Mr. Seamus McCarthy: That is correct.

Deputy David Cullinane: In the Comptroller and Auditor General’s report at the time, up to 2015 or 2016, only 13% of the costs of the redress scheme-----

Mr. Seamus McCarthy: It was the end of 2015.

Deputy David Cullinane: Does the Comptroller and Auditor General have an up-to-date figure?

Mr. Seamus McCarthy: I do not have one offhand.

Deputy David Cullinane: Can we get that?

Mr. Seamus McCarthy: I am sure we can try to do something using the updates provided by the Department.

Deputy David Cullinane: There has been some progress, and perhaps the figure has increased, but the position is still unacceptable. Let us be honest about it. This scheme, which was put in place in 2002, is a joke. Many of us commented on the fact that the religious orders got off the hook almost completely. The taxpayer footed-----

Mr. Seamus McCarthy: When I presented my report, the calculation of the contribution by the congregations was made on the basis of the commitments given and not on the basis of the cost-----

Deputy David Cullinane: The cost was €1.5 billion overall.

Mr. Seamus McCarthy: The figure of €1.5 billion is correct. I can find the figure for Deputy Cullinane but that was calculated on the basis of the commitments given and not on the amount that had been received. The percentage in my report will not have changed.

Deputy David Cullinane: Yes, and that was the story. It would be useful to get that up-to- date calculation.

Deputy Catherine Connolly: Can that be clarified again?

Chairman: Can we have that again?

Mr. Seamus McCarthy: My recollection, and I would need to check it, is that the calculation of the share contributed by the congregations was based on what they had committed to give-----

Deputy David Cullinane: It was not based on what they gave?

Mr. Seamus McCarthy: It was not what had already been received. That figure is unlikely to-----

Deputy David Cullinane: Unless they are going to give more, which is unlikely.

Chairman: We want to get 100% collection of that amount.

10 25 OCTOBER 2018 Mr. Seamus McCarthy: -----of what was committed.

Chairman: Yes, 100% collection of that. I thank the Deputy for raising that.

Deputy Catherine Connolly: How will that be monitored?

Chairman: I have not started.

Deputy Catherine Connolly: I am sorry.

Chairman: I am sorry Deputy. This has been going on for 16 years. I want to say to the Accounting Officer that it says something about how the Department of Education and Skills follows up issues relating to taxpayers’ money. I hope it does not have broader implications across the public service. As a result of our previous meeting, the committee asked for a breakdown report by report. On 23 July, Mr. Ó Foghlú wrote to us with a detailed breakdown. He gave us those commitments, we did not ask him to do so. In respect of each of the outstanding properties, we asked him to provide a breakdown as to the position at the end of June 2018 and the timescale for completion. That letter was dated 23 July. I am referring to the commitments he voluntarily gave last June. Mr. Ó Foghlú outlined which items would be completed by the end of September. We gave him further time. At the end of September, we asked him how he had got on in respect of the commitments he gave to the committee in writing in June.

I will now outline the current situation. I have the letter Mr. Ó Foghlú sent to the committee in June. The heading is “Properties not fully and finally completed under the 2002 agreement”. We are discussing the 2002 agreement. Mr. Ó Foghlú told us in July that the estimated date for completion regarding the property at Waterpark, Newtown Road, County Waterford, was the end of September. That was his commitment. Today, he states that the estimated timeframe has moved to the second quarter of 2019. Not only did he not meet the commitment he gave to us for the end of September, in his most recent letter he has moved the completion date out by nine months to the end of next June. That is unacceptable.

The next property Mr. Ó Foghlú mentions is Coiscéim, Cappoquin, County Waterford. The commitment he provided in respect of that property was that the estimated timeframe for completion was the end of September. That had been revised from the previous quarter. What happened with that commitment for the end of September? The estimated timeframe is now the end of the fourth quarter. That has been moved back by three months and the commitment not been delivered upon.

The next item on Mr. Ó Foghlú’s list was the fifth item on his list for the last day. It refers to the Sacred Heart centre in Waterford. The estimated time he gave the committee for completion in that instance was the end of September. That had also been moved already from a previous commitment. His response to us today is that it is now being pushed back a further three months.

In the context of the 2002 agreement, none of the three commitments Mr. Ó Foghlú gave to us in writing has been honoured. That is the problem. I do not mind once it has been done but I am not going to have people give commitments to this committee in writing and then fail to honour them. There has been 100% failure to meet the deadlines. They are Mr. Ó Foghlú’s deadlines. We will accept the current deadlines he has provided. They are the ones he has cho- sen for the second or third time, but they had better be honoured in full. Mr. Ó Foghlú is not to come back seeking a further update. If he has a problem, he must inform the committee. If he does not believe those commitments are achievable, why is he stating in writing that they are 11 PAC achievable?

Deputy David Cullinane: If we are going to write to Mr. Ó Foghlú stating that we are not happy with the changing deadlines, then we have to ask, robustly, why the deadlines have changed.

Chairman: Yes, the deadlines that we were given.

Deputy David Cullinane: I refer to more detail and not just one line stating that the dead- line was shifted.

Chairman: Mr. Ó Foghlú gave us a commitment after due consideration. The question is what has happened? Did he not give proper consideration when he provided the initial deadlines or has something happened in the meantime? We want to know. I will finish the record then and speed matters up a bit. This is no better. Appendix 2 lists properties accepted for transfer under the 2009 voluntary agreement. The situation in this regard is something similar. Mr. Ó Foghlú has moved the commitment in respect of St. Bernard’s group home, Fethard, County Tipperary. It was to be completed at the end of the third quarter. That has now moved to the end of the fourth quarter 2018. On lands in respect of Convent Road, Cahir, County Tipperary, that was to be completed at the end of the third quarter 2018 and has now moved to the end of the fourth quarter, another three months. The property in Ballyjamesduff in County Cavan had a revised timeframe that was to be the end of 2018 and Mr. Ó Foghlú is now moving it to the end of June 2019. He is moving that back by six months. We also had Scoil Phádraig primary school, Altamont Street, Westport, County Mayo. The estimated timeframe there has been moved from the end of 2018 to the end of June 2019. As far as I can see, none of the commitments given to the committee has been honoured.

Deputy Catherine Connolly: It moved to the end of 2019.

Chairman: Yes. That is what has happened for 14 consecutive years. It is not going to continue. Somebody has to call a halt. I am saying to the Department of Education and Skills that the Office of the Chief State Solicitor or whichever State body has responsibility is not getting the business done from a legal perspective. I do not want to have to bring Mr. Ó Foghlú back before the committee to deal with this matter. We will have to do so, however, if this keeps happening. I do not intend to do it at this stage. We will accept these current deadlines but we want to know why Mr. Ó Foghlú provided the original deadlines, why these were not me and how confident he is in the context of the new deadlines. If Mr. Ó Foghlú does not meet his new deadlines, he will be explaining why on a case-by-case basis. I am sorry for going on about this but if the committee is to be thorough in its work, that is the nitty-gritty end of the business we have to do in order to send a signal. In the future, we will not accept letters containing commitments if we can identify, with the passage of time, a failure to honour previous commitments.

No. 1664B is correspondence from Mr. Jim McGlynn, director of organisation support and development, Donegal ETB, dated 17 October 2018, providing information requested by the committee regarding a payment made to the Revenue Commissioners on foot of an underpay- ment of PRSI in the period 1997 to 2011. We will note and publish this.

No. 1666B is correspondence from Mr. Ray Mitchell, assistant national director, HSE, dated 18 October 2018, in response to two requests from the committee for information on the direct and indirect costs of the Portlaoise review group and the charging of residents for incontinence wear at the Brothers of Charity Services in Roscommon. On the cost of the Portlaoise review

12 25 OCTOBER 2018 group, the HSE confirmed the legal fees.

Deputy Marc MacSharry: Can we go back?

Chairman: There are two aspects to this. The legal fees were €94,340 and the cost of the investigating team was €305,320.34, giving a total cost of €399,660.34. There were no significant indirect costs because the members of the review group were all external to the service. We will note and publish that information.

On the charging of residents for incontinence wear, we will note and publish the response and send a copy to Deputy Fitzmaurice, who made the original inquiry.

Deputy Marc MacSharry: I am aware of this case and I do not concur with the briefing note. I am concerned that the HSE is not fully up to speed with the situation. The HSE did not exist in 1997 so, presumably, the reference is to the relevant health board. This group was charging a daily rate, in the normal way, of €12.50 and, in addition, was charging people for incontinence wear. The issue was pursued by a long-term resident’s family and eventually the HSE and the group were dragged, kicking and screaming, to reimburse some money to the individuals’ families.

The note before us states that those involved have got all their money but I have information to suggest otherwise and that some people were not reimbursed for the period 1997 to 2001. A family raised the issue in 2013 and was refunded €6,000 out of a possible €21,000, meaning €15,000 remained outstanding. On the back of the 2005 change, the Minister of the day, Mary Harney, introduced legislation to deal with illegal charges. However, for this one resident, the service decided to impose a retrospective, long-term-stay charge to reduce the €15,000 that it may have been applicable to return. The situation continued for a number of years, with families being put through an extraordinary level of difficulty. Questions were not answered and there is a deeper problem than is covered in this note. I would like the section 38 organisation, along with the appropriate people from the HSE, to join us in order to discuss the matter in more detail. This note suggests that the synergy project, Mary Harney’s legislation and the HSE’s own initiatives, dealt with the problem but that is not the case. The evidence will show that those involved were dragged, kicking and screaming, to acknowledge this as an issue and to refund the money in full. To this day, moneys from the period 1997 to 2001 remain outstanding for some families. I also have concerns that the Ombudsman closed the case without adequately dealing with all the facts.

Public money has been provided to the Brothers of Charity Services - most recently €105,335, on a once-off basis, for this year - so we could usefully have this section 38 organisation before us, together with the appropriate people from the HSE. In advance, and, if necessary, with names redacted, they might provide us with details of how much was charged to these individuals, how much was refunded and when. It could be a short deliberation but it is necessary because I am not entirely comfortable with the idea that this might be replicated elsewhere.

Chairman: I met the family concerned during the summer and I accept that we cannot leave matters as they stand. Perhaps we could publish the note with caveats attached and members could meet them outside the setting of the Committee of Public Accounts. It might be the case that they do not want the matter brought to a public meeting of the committee.

Deputy Marc MacSharry: I suggested we allow redaction. I have also met with the family and did so at length at the beginning of the summer. We have this response on the back of

13 PAC the inquiry.

Chairman: It is the first response we have had.

Deputy Marc MacSharry: I do not need to meet them again, and there are sufficient questions. I will not be mentioning the names of the residents or talking about personal information because I am only interested in public money and illegal charging.

Chairman: We want to go into this matter and I am with the Deputy on it. However, the families might have a concern and they are clearly identifiable within the institution because the organisation knows about the issue. I want to be sensitive to the people who are living in the nursing home and their families and I do not want to escalate something in such a way as to make them uncomfortable.

Deputy Marc MacSharry: I know where the Chairman is coming from in that regard.

Chairman: I would like to check back with them.

Deputy Marc MacSharry: Did the Chairman speak to all the families?

Chairman: No. I met a delegation here in Dublin.

Deputy Marc MacSharry: How will he identify all the families?

Chairman: I will start with the person in question.

Deputy Marc MacSharry: He could drop them a note.

Chairman: We can possibly have a chat about it.

Deputy Marc MacSharry: We all have enough meetings to go to and I do not need any more information. Ask them if they mind us pursuing this and tell them we will not be mentioning their names. I would say they will unanimously say we should do it.

Chairman: As Chairman, I would not like to call the organisation in without touching base with the families concerned.

Deputy Marc MacSharry: Will the Chairman do that on our behalf?

Chairman: I will be happy to do that.

Deputy Kate O’Connell: It might be wise to broaden it past incontinence wear because that might help to avoid the issue with people’s personal details. In my previous job, I had reason to notice that it is not just incontinence products that are not covered, or “coded”, by the HSE. Complex syringes are not covered either. We often hear of residents getting a bill for blister packing of medications, for catheters and for incontinence wear. Incontinence wear is generally provided for in a public health place and people put it in the boot of their cars. There is luxury incontinence wear for which there is a differential in price, and people sometimes have a preference for it over the product provided by the State. It might be wise to look at the charges for people in nursing homes on top of their basic rate. One hears of charges for certain activities and for mass, for example, so it may be a wider issue.

Deputy Shane Cassells: Deputy O’Connell is right. The Ombudsman was before the Committee on Public Petitions to discuss the report into additional charges in the nursing home

14 25 OCTOBER 2018 sector and the Minister of State, Deputy Jim Daly, also appeared before the committee in recent weeks. There are detailed reports on it. The private sector is beyond the scope of investigations by the Houses of the Oireachtas but it is worth noting.

Chairman: To which report is the Deputy referring?

Deputy Shane Cassells: On the point Deputy O’Connell raised, the Ombudsman made a report on what is charged beyond what is paid for by the State.

Chairman: We all know that the recommendation of the Ombudsman is not legally bind- ing. We can take up that report if the Ombudsman has already done a body of work.

Deputy Catherine Murphy: I concur on the wider issue. I have come across matters such as mattresses being required. It is across the spectrum.

The other response concerned the Portlaoise review group. I recall somebody stating that other inquiries that were carried out should not just sit there and be viewed as nothing more than a cost and that lessons should be learned from them. It might have been Deputy Connolly who said that. We had an understanding of the totality of those inquiries, of what they cost and of the lessons taken from the review.

Chairman: Is Deputy Catherine Murphy referring to Midlands Regional Hospital Portlao- ise or to other hospitals?

Deputy Catherine Murphy: I am talking about the other inquires that were carried out. The matter was raised one of our meetings in the past couple of weeks.

Chairman: It might not be quite the same topic, but we have written to the State Claims Agency to identify the number of hospitals on its books in the context of material cases and the cost of the reviews.

Deputy Catherine Murphy: All right. It is covered. The State Claims Agency will come back to us.

Chairman: Representatives from the State Claims Agency will be before the committee at its next meeting to discuss medical negligence.

Deputy Catherine Connolly: Recently, I raised the question of independent reviews carried out into various incidents in hospitals. Is that what we are discussing?

Chairman: Yes. The State Claims Agency has a system for monitoring and recording all of those. It is the national incident management system, NIMS. This is an issue to which we will return when the representatives from the State Claims Agency appear before us in a fortnight to discuss medical negligence.

In the meantime, I have given an undertaking to follow up on this matter. I will communi- cate further with the family I met during the summer in order to touch base with them before we make direct contact with the section 39 organisation. Deputy O’Connell suggested that we broaden our examination to include other matters. However, Deputy Cassells indicated that the Ombudsman has compiled a report. The first action we must take is to have that report circulated to members in order to discover whether it contains information on which we can follow up. We are not going to redo the Ombudsman’s work.

15 PAC Deputy Marc MacSharry: We have specific evidence relating to this one issue. While it would be a very good idea, as other Deputies stated, to look at the wider picture, I do not want to lose sight of the key issue.

Chairman: I will meet the family because I met them during the summer.

Deputy Marc MacSharry: Brilliant.

Deputy Kate O’Connell: It depends on what is classed as the key issue. The key issue here is charges on people in residential homes in addition to their regular bills. The can range from bingo to incontinence pads. It is a wider issue if people are vulnerable and-----

Chairman: There is a specific issue, which we are dealing with, and there is also a broader issue.

Deputy Marc MacSharry: We are all agreed.

Chairman: We will keep both alive.

No. 1667 B is correspondence from Ms Katherine Licken, Secretary General of the Depart- ment of Culture, Heritage and the Gaeltacht, in response to a request made by the committee for information regarding Galway’s designation as European Capital of Culture for 2020, including the new structures and plans for the money that has been allocated and the service level agreements that have been put in place. We can note and publish that. Is that agreed?

Deputy Catherine Connolly: I agree, but I note that the correspondence is dated 17 Oc- tober. I welcome it. This is something on which we are keeping a close eye in view of what happened with the Pálás Cinema in Galway and the failure of governance and Department oversight there. The letter reassures us that the Department is monitoring this matter closely and that an audit committee, on which the Minister is represented, has been set up and meets regularly. I remain concerned, however, that there is no performance delivery agreement for the Galway 2020 programme. I have asked numerous parliamentary questions and followed the issue up here. I have been informed that it is coming and that the terms of the agreement set out the conditions for the release of the funds. Presumably, this means that they will do so. We are talking about €15 million. Some €250,000 has already been disbursed and a further €6 million will be disbursed in 2019.

I am raising this matter because we have been here already with the Pálás Cinema. We have been here with a special chapter from the Department. All of these are very good ideas. The Pá- lás Cinema was a very good idea. It is a privilege for Galway to be named European Capital of Culture 2020, but the operation of it is a completely different matter. The performance delivery agreement is at an advanced stage of negotiation. In the meantime, a series of people have left the board in Galway. It is interesting that we have a head of programme, a head of production, a director of communications, a director of finance and operations and a head of human resources for Galway 2020, but we do not yet have anyone in charge of the culture and leadership role. The Department recognises that this is important. The Galway 2020 programme seriously lacks of someone in charge with, in the Department’s terms “the required creative talent”.

I highlight this because we look back on the Pálás Cinema story and we cannot do anything about it. We can certainly do something about the governance of this from the Department’s point of view and from our own. I would like to see a performance delivery agreement or whatever it is called.

16 25 OCTOBER 2018 Chairman: A commitment has been given that the performance delivery agreement will be in place with the Department by the end of October, which is next week. We will ask to have a copy of it by 6 November, in advance of our next meeting.

Deputy Catherine Connolly: I thank the Chair. As a very important aside, I would say that the board should have some sense and go back to the creative talent on the ground in Gal- way, which is something for which the artists have asked. However, that matter falls outside the remit of the committee. The board should make this an artistic, not a business, endeavour.

Chairman: We will ask for that to be with us in advance of our next meeting. That is agreed.

No. 1672 B is correspondence from Professor Ciarán Ó hÓgartaigh, president of National University of Ireland Galway, providing information requested by the committee on non-competitive procurement to the value of €5.2 million and severance payments and out-of-office leave payroll costs of €91,000, both arising from the 2017 financial statements. Under the heading “Details of ‘non-competitive’ procurements €5.2m”, the letter states, “We attach the requested list in Excel file format together with background explanation/details”.

Deputy Marc MacSharry: May I put a question to the Comptroller and Auditor General?

Chairman: In a moment. G4S Secure Solutions Ireland Ltd. was paid €373,302 without competitive procurement. That is extraordinary. Tomkins and Co. was paid €241,074, Mi- cromail Limited was paid €208,989, Core Computer Consultants Ltd. was paid €180,100 and Swimworld was paid €127,980 without competitive procurement. I know there are not many procurement options for Swimworld’s tender but I cannot understand some of the others.

Deputy Marc MacSharry: Seven items were identified by the Comptroller and Auditor General. There is another list which does not include the Comptroller and Auditor General’s seven times. Did the University not identify that group of seven, is the correspondence simply putting both together, or-----

Mr. Seamus McCarthy: I cannot say offhand but perhaps the university identified these separately. We have been pushing for third-level institutions and all State bodies to undertake an exercise each year of looking at all of their procurements and identifying where they had not procured by competitive means. We would expect to see a schedule every time.

Deputy Marc MacSharry: Is it not frightening that this would require a review? I presume there is one payment office.

Mr. Seamus McCarthy: Yes. That would usually be the case in an organisation. It is different in the HSE.

Deputy Marc MacSharry: I know. How would organisations not remember tender processes?

Mr. Seamus McCarthy: There would be many procurements in a year. Detail gets lost sight of.

Deputy Marc MacSharry: One would know if one did not put it out to tender. Would one not?

Mr. Seamus McCarthy: One should. We would expect there would be a register of all

17 PAC procurements and that it would be able readily to generate a report from that.

Deputy Marc MacSharry: What does Swimworld provide?

Mr. Seamus McCarthy: I cannot answer that off hand at the moment.

Chairman: Some 13 items have been identified that did not meet procurement requirements and the amount of money involved was over €100,000 in each case. The report details the actions at the end of it. The covering letter says it is attaching the request to the Excel format together with background explanation details as furnished to the Comptroller and Auditor General and that it is styled as appendix three, finding one, including action to mitigate reoccur- rence. I had missed that Excel document. I will hold that over because I would like to study that in more detail. We will note and publish it as it is but we will hold it over for a discussion on it. It is a useful example of public procurement-----

Deputy Catherine Connolly: Would the Comptroller and Auditor General be in a position to look at that between now and the next time we discuss it?

Mr. Seamus McCarthy: Yes, I will certainly look at it.

Chairman: We will come back to that because there is quite a bit of information there and we will not delay this morning’s meeting with it.

No. 1673 B is correspondence received from Jackie Maguire, chairperson of the County and City Management Association, CCMA, dated 22 October 2018, which has declined our invita- tion to attend today’s meeting on a voluntary basis to assist us in our examination of matters relating to housing supply. As I mentioned, due to the fact we are dealing with housing, we had asked the county and city managers to send a representative in view of their very senior posi- tions and key role in delivering social and affordable housing. As we know, the CCMA is not under the remit of the Committee of Public Accounts but I propose we write to it again asking it to assist us in a voluntary capacity and to be helpful to the committee and the Oireachtas in examining the housing issue. The CCMA has knowledge and information that could be helpful to the public. It has a key role and I do not mind whether the individual chief executives come in or whether they come in formally representing the CCMA but we need to see some people who can assist this committee in its work. We will write back in that vein.

Deputy Shane Cassells: I endorse what the Chairman said but I would write to Ms Ma- guire, as chairperson, in the strongest possible terms. Like the Chairman, I do not mind if the CCMA sends in one representative, be it the chairperson or someone else, or if individual CEOs come in. We can bring in the 40 or so CEOs and get deck chairs but I have consistently said that they have a statutory responsibility to this State and its citizens and they are as important to delivery of services as any Secretary General or Minister. They are a linchpin in the delivery of services in society because at this level in the Houses of the Oireachtas we allocate money on a headline figure basis and the implementation of that then goes to the chief executive officers who are given a high standing within this society. It is imperative that the CCMA sends a representative and participates in this committee on these matters.

Deputy Catherine Murphy: The chief executives have overall responsibility for the local authorities of which they are the chief executives of. I refer to drilling down into some of the aspects. Housing goes across a range of different departments within a local authority - for example, the oversight of approved housing bodies is one while the likes of the delivery of local authority housing and builds is another. Then there is the finance section that would deal with 18 25 OCTOBER 2018 everything from local authority loans to HAP, rent and issues like that. There are elements to it and it may well be worth our while identifying the elements that they could be helpful to us on because the oversight is fragmented and it is not possible to close that circle without having that side of it reflected. It might be worth our while identifying specific pieces. It may well want to bring in the director of service of a particular local authority where there are many approved housing bodies. That can provide a more nuanced understanding of it where there is a day to day responsibility.

Chairman: The chief executives of the local authorities would not have any regulatory or supervisory role with the approved housing bodies. They go to the Department directly. Their documents have to be approved, and shown to be consistent, by the local authority but the gap in the regulation of the approved housing bodies is in legislation. There is a-----

Deputy Catherine Connolly: Housing agencies are fulfilling it on a non-statutory basis.

Chairman: They are doing it on a voluntary basis.

Deputy Catherine Murphy: Yes, but they have to provide their accounts, for example. It is one aspect of a number of issues.

Chairman: Exactly. We will write back to CCMA because we need the CEOs, as very senior public servants who have a key role in delivering houses, to assist the Oireachtas. One would expect that they would see the merit in that. We accept that legally they are not under the remit of the Committee of Public Accounts but just because they are not legally obliged to come in here is no reason they cannot come in.

Mr. Seamus McCarthy: We will talk later about the relationship between the local authorities because the Local Government Audit Service carried out a review in local authorities on how they see the approved housing bodies, AHBs, that operate within their locations and they have made a number of recommendations on how that relationship needs to be tightened up.

Chairman: That is the main subject of the meeting for the rest of the day.

No. 1675 B is correspondence received from Mr. Pat Haran, clerk to the Joint Committee on Health dated 19 October 2018, regarding the report undertaken by Dr. Scally in relation to the CervicalCheck screening programme. We will note and publish this. This is an effort to ensure the work of the Joint Committee on Health, which is also looking at this, is not duplicated by the Committee of Public Accounts. In terms of value for money, tendering for contracts with the laboratories and financial matters, the Committee of Public Accounts can deal with those issues. It is good to clarify that.

No. 1676 B is correspondence received from the Department of Public Expenditure and Reform, regarding the appointment of Mr. Brendan Gleeson as Accounting Officer for the De- partment of Agriculture, Food and the Marine. We will note and publish this.

Moving to category C, No. 1595 C was held over from the last time. No. 1652 C is correspondence received from an individual dated 16 October 2018. The secretariat has sought the permission of the individual to forward an earlier query regarding waiting lists for psychologi- cal assessments to the HSE. Since then, the individual has let us know there have been some developments. However, she raises a question in relation to what she suggests may be ad hoc administration of the waiting list. While this may be a matter for the Joint Committee on Health to look at, I propose we request a note from the HSE in relation to the matter. Is that agreed?

19 PAC Agreed.

No. 1654 C is correspondence received from an individual dated 16 October 2018, regarding the funding and ethics of research undertaken by higher education institutions. The correspondence has also been sent to the Department of Education and Skills. The matter raised falls within our remit, or forms part of our engagement with the third level sector. We will continue to work on that area. No. 1658 C is correspondence received from an individual dated 16 Octo- ber 2018, raising matters with the committee in relation to electricity interconnector. I propose we seek a note from the Department of Communications, Climate Action and Environment on the points raised.

No. 1661 C is correspondence received from an individual dated 17 October 2018, regarding the University of Limerick. I propose we write to the individual to inform him that the committee will be examining the matters relating to the University of Limerick when it receives an upcoming report from the Comptroller and Auditor General. We will be in further contact with the individual at that stage. Is that agreed? Agreed.

No. 1663 C is correspondence received from Deputy Catherine Murphy, regarding the Han- naway report. We previously requested the report and the HSE provided a number of slides, but according to the information provided to Deputy Catherine Murphy, this is not the full report. We will again request that the HSE provide the full report. Is that satisfactory?

Deputy Catherine Murphy: Yes.

Chairman: We will write again to get that.

No. 1669 C is correspondence received from Deputy Catherine Murphy dated 19 October 2018, regarding the extension of the contract for the maintenance of the metropolitan area net- work by Enet. Would the Deputy like to comment on that?

Deputy Catherine Murphy: The clerk asked that I would expand on what I am seeking and I can expand further after the meeting. I am seeking to get to the net point-----

Chairman: In the meantime, will we ask for a detailed note from the Department on it?

Deputy Catherine Murphy: Essentially , this is the item that I want us to examine closely. I want us to set aside time to explore it. The net point is that the MANs contract was extended in March 2017. Then the Irish Infrastructure Fund purchased 78% and subsequently, the remaining 22%.

Chairman: Who is Enet?

Deputy Catherine Murphy: Granahan McCourt is the entity behind Enet. Enet was involved in the roll out of broadband in the metropolitan area networks, MANs, of which there are 94 in the country. The original contract was up to 2019 but in 2017 it was extended to 2030 without a tender. Another entity was looking to tender for the contract, prior to it being rolled over. Essentially, I am asking if value for money was obtained from rolling it over to 2030, particularly when three or four months later a State entity purchased a more lucrative contract. That is the net point.

Chairman: How does the Deputy want us to proceed? Does she want us to do anything in the meantime, like include it on the work programme as part of our examination of broadband?

20 25 OCTOBER 2018 Deputy Catherine Murphy: Yes, I want it included on the work programme as part of the broadband issue and I would like it to be addressed as soon as possible.

Chairman: We will include it as part of our work programme under the broadband topic which we will be dealing with soon.

That completes the correspondence to be considered today.

Three financial statements and accounts have been received since the last meeting. All three, from An Bord Iascaigh Mhara, An Bord Bia and the Heritage Fund, received clear audit reports. The financial statements and accounts are in respect of 2017. I ask the Comptroller and Auditor General to explain the Heritage Fund to the committee as it did not seem to be involved in many transactions in 2017.

Mr. Seamus McCarthy: It is a fund that was established in the early 2000s to acquire heritage assets. Most of the money was provided between 2001 and 2005 and was used to acquire assets for the National Library and the National Museum as well as some art works. Effec- tively, the fund is deplete and the balance that remains is just over €200,000.

Chairman: Is €200,000 available?

Mr. Seamus McCarthy: It is dormant. In fact, there is a prohibition on moneys being used unless the purchase price is less than €325,000 so that money is caught unless the fund is topped up.

Chairman: Okay, I understand. Finally, we will hold over our discussions on the work programme until the next meeting. There is nothing new in it and we know what we are doing for the next while.

Deputy Marc MacSharry: The prison officer issue is missing from the programme.

Chairman: We are scheduling a time for that. We have written to him and are expecting that it will happen immediately after the recess.

Deputy Marc MacSharry: I asked because it is not on the programme at the moment-----

Chairman: Actually, it is on the programme that I have in front of me. We are proposing to deal with it on 15 November. We have a date scheduled.

Deputy Bobby Aylward: Have we heard anything on the school buses? I made a request-----

Chairman: What I am suggesting is that we hold over our discussion on the work programme until the next meeting because we have witnesses waiting to come in. We can discuss the timetable at our next meeting. We have not done any advance work on it and only have a timetable laid out for the next few weeks. I am quite happy to come back to that issue in the context of the work programme. We will make sure it is listed as a topic for consideration. School transport is on our list but we have no date as yet.

We will now suspend for a few minutes while our witnesses take their seats.

Sitting suspended at 10.24 a.m. and resumed at 10.31 a.m.

21 PAC 2017 Annual Report of the Comptroller and Auditor General and Appropriation Ac- counts

Chapter 10 - Funding and Oversight of Approved Housing Bodies

Vote 34 - Housing, Planning and Local Government

2017 Financial Statements - Housing Agency

Mr. John McCarthy (Secretary General, Department of Housing, Planning and Local Government) and Mr. John O’Connor (Chief Executive, Housing Agency) called and examined.

Chairman: Our meeting will focus on matters relating to the achievements of targets and value for money achieved in regard to housing supply and delivery. We will be dealing with the following: the Appropriation Accounts 2017; Vote 34 - Housing, Planning and Local Govern- ment; the 2017 financial statements of the Housing Agency; and chapter 10 of the Comptroller and Auditor General 2017 report, funding and oversight of approved housing bodies.

We are joined from the Department of Housing, Planning and Local Government by: Mr. John McCarthy, Secretary General; Ms Mary Hurley, assistant secretary; Mr. David Walsh, assistant secretary; Ms Nina Murray, principal officer; Ms Marguerite Ryan, principal officer; Mr. Aidan O’Reilly, principal officer; Ms Theresa Donohue, assistant principal; and Mr. Maurice Coughlan, finance officer. We are joined from the Housing Agency by: Mr. John O’Connor, chief executive; Mr. David Silke, director of research; Ms Margaret Jordan, head of finance; and Mr. Pat Fitzpatrick, senior executive officer.

Please note that we have scheduled a second meeting on this topic for 22 November and we will deal with the housing assistance payment, HAP, housing supports and matters in regard to the approved housing bodies, as well as any other matters arising out of today’s meeting. Therefore, this is the first of two meetings.

I remind members, witnesses and those in the Public Gallery that all mobile phones must be switched off entirely or to aeroplane mode. Merely putting them on silent will still interfere with the recording system.

I wish to advise the witnesses that by virtue of section 17(2)(l) of the Defamation Act 2009, they are protected by absolute privilege in respect of their evidence to this committee. If they are directed by the committee to cease giving evidence in regard to a particular matter and they continue to so do, they are entitled thereafter only to a qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise nor make charges against any person, persons or entity, by name or in such a way as to make him, her or it identifiable.

22 25 OCTOBER 2018 Members are reminded of the provisions within Standing Order 186 that the committee shall also refrain from inquiring into the merits of a policy or policies of the Government or a Minister of the Government, or the merits of the objectives of such policies. While we expect witnesses to answer questions put by the committee clearly and with candour, witnesses can and should expect to be treated fairly and with respect and consideration at all times, in accordance with the witness protocol.

We will take the opening statement from the Comptroller and Auditor General.

Mr. Seamus McCarthy: The 2017 appropriation accounts for Vote 34 - Housing, Planning and Local Government records gross expenditure of just over €2 billion in 2017. As the figure indicates, housing-related expenditure accounted for 63% of that expenditure. The Housing and Sustainable Communities Agency, usually referred to simply as the Housing Agency, operates under the aegis of the Department of Housing, Planning and Local Government. The agency’s role is to provide a range of support services to assist the Department, local authorities and approved housing bodies in the discharge of their functions. This includes implementation by the agency of the pyrite remediation scheme.

The Housing Agency is mainly funded through State grants. Its income in 2017 was just over €34 million. Expenditure in the year was €33.1 million, of which payments under the pyrite remediation scheme accounted for €25.3 million. The agency has two roles relevant to housing provision that might not be immediately obvious from the principal financial statements. First, in 2016 and 2017, the agency received capital grant funding of over €70 million from the Department which it used to establish a revolving fund for social housing acquisition. Using the fund’s resources, the Housing Agency acts as an intermediary, purchasing targeted suitable residential properties from banks, investors and other owners. The properties are then sold on to the relevant approved housing bodies, which are not-for-profit organisations that provide and manage housing for people with a housing need. Second, at end-2017, the agency held 243 ha of residential development land in 72 locations. This land was transferred to the agency from local authorities under the land aggregation scheme that operated between 2010 and 2013. The agency does not have the authority to dispose of or develop the land without ministerial sanction, and carries the land at a token value in the financial statements.

I turn now to chapter 10 on funding and oversight of approved housing bodies. Both local authorities and approved housing bodies are outside my audit remit. As Members are aware, the local authorities are subject to audit annually by the Local Government Audit Service. I felt it might be useful to examine how the Department gains assurance about the effectiveness of the use of the resources being channelled through the local authorities to the approved housing bodies. That examination resulted in the chapter that is before the committee today.

The report sets the context for operation of the approved housing bodies by outlining the range of schemes used to provide social housing or to support households in rental accommodation, and the associated costs in 2017. When we tried to match the scheme expenditure with output data, we found the Department does not currently report outputs on a scheme-by-scheme basis. We also found that the Department does not report the size of the social housing stock. It has figures for local authority stocks but not for social housing held by the approved housing bodies.

In 2017, the Department provided capital funding of just over €180 million to the approved housing bodies through four schemes. The schemes involve varying degrees of complexity in terms of flow of funds between the Department, the local authorities, the Housing Finance 23 PAC Agency and the housing bodies. We have tried to summarise those fund flows in diagrams in the chapter. The key message from this analysis is that the bulk of the capital funding for the housing bodies’ stock of properties comes from public sources.

We found there is currently no statutory regulation of the housing bodies. An interim regulation office was set up within the Housing Agency which launched a voluntary regulation code for such bodies in July 2013. By mid-2018, 246 bodies had signed up to that code, which represents less than half of the housing bodies registered with the Department. However, the Department has pointed out that the bodies that have signed up for the voluntary code account for an estimated 95% of the housing stock of the sector.

The chapter recommended introducing a process for identifying inactive housing bodies so that they do not retain approved status indefinitely. The Department has committed to tidying up the register prior to the introduction of statutory regulation.

In December 2015, the Local Government Audit Service published a report on the oversight role of local authorities in the provision of social housing by approved housing bodies. That report recommended that a review and reconciliation of all mortgages charged on housing body properties should be carried out and that a comprehensive management information system should be put in place in local authorities to record details of properties and their tenants. As we were completing the chapter in September 2018, the Local Government Audit Service was reviewing the implementation of its recommendations.

The chapter also makes a recommendation aimed to ensure that the standard requirements in regard to the management of Exchequer grants are met in regard to the oversight of public funds provided to approved housing bodies. The Department is undertaking a review of all circulars relating to approved housing body activity.

Mr. John McCarthy: Chairman and members, I am pleased to be here this morning, as Accounting Officer, to assist the committee in its examination of Vote 34, insofar as it relates to housing supply issues, and its consideration of chapter 10 of the Comptroller and Auditor General’s annual report 2017, concerning the funding and oversight of approved housing bodies, AHBs.

I am joined by a number of colleagues who the Chairman has already introduced. As requested, I have provided some advance briefing on housing expenditure and delivery, as well as a range of notes on specific issues of interest that had been raised by the committee, so I will keep these opening comments brief.

In terms of Vote 34, the Department’s gross voted expenditure on housing programmes, as set out in the subheads of the appropriation account before the committee today, totalled some €1.3 billion in 2017. This includes an additional €100 million that was provided to the local authority housing and regeneration subheads by way of Supplementary Estimate towards the end of 2017, to meet costs arising from the level of housing-related activity then under way across the country. A further €98 million was also made available in 2017 from surplus local property tax, LPT, receipts to fund housing programmes, bringing the overall total resourcing for the Department’s housing programmes to over €1.4 billion in 2017.

The implementation of the Government’s Rebuilding Ireland action plan is the core focus of our daily work in the Department and, indeed, across central and local government, as we strive to make meaningful, tangible and sustainable progress towards a better housing landscape. I

24 25 OCTOBER 2018 and my colleagues in the Department, together with our Ministers, are firmly committed to achieving the maximum outputs possible from State investment, both current and capital, while ensuring that close attention is paid to delivering value for money and tangible housing out- comes for citizens. We are committed to regular review of policy and delivery and work very closely with colleagues in the Department of Public Expenditure and Reform in this regard.

Rebuilding Ireland is a six year action plan, with a very firm emphasis on delivery across the full range of housing mechanisms. All stakeholders agree that accelerating the delivery of new build activity is absolutely critical. At the outset of the programme, however, we knew that establishing viable pipelines and building local authority and AHB capacity to expand new build delivery would take time, taking particular account of the significant extent to which house building, both in the general market and of social housing, had contracted. Therefore, in parallel with driving increased capacity building, we focused also on harnessing the potential of the available housing stock.

In summary, Rebuilding Ireland seeks to achieve the delivery of some 50,000 additional social housing homes through build, acquisition and leasing schemes, out to 2021. A further 87,000 households will have their needs met under the housing assistance payment, HAP, and rental accommodation, RAS, schemes. The relative contributions of individual programmes to overall delivery is to shift significantly over the course of the six years, taking particular account of the substantial increase in the delivery of new build social housing homes as the programme progresses.

During 2017, significant progress was made to deliver on the commitments in Rebuilding Ireland. In overall terms, housing supports were delivered to some 25,900 households last year, through the range of social housing measures in Rebuilding Ireland, which were significantly ahead of the target of 21,050. Within this, almost 2,300 new build social housing homes were delivered, more than three times the level in the previous year. In addition, wider housing supply continued to grow, with the number of new homes becoming available for use reaching 18,222 in 2017, an increase of 29% on 2016.

Significant progress was made in 2017 in advancing many social housing projects, through the range of delivery mechanisms and programmes. By the end of last year, a substantial construction pipeline was in place, which will result in further increases in the number of new social housing homes being built this year and in the coming years.

This year is a critical year for delivery. Pipelines established over the last two years, in particular, are yielding fruit, with the number of private and social homes on-site and completions increasing quarter on quarter. While this is welcome, there remains very significant further progress to be made right through to the end of the Rebuilding Ireland action plan. There is absolutely no room for complacency and we continue to actively monitor, refocus as necessary and mobilise the range of players involved in order to achieve our ambitions in what is a very challenging landscape.

Nowhere is this more evident than with regard to homelessness. It is essential that supply continues to increase if we are to address both the backlog of housing demand in the system, and also new demand arising. While Rebuilding Ireland is heavily focused on this, in the interim we must, and are, continuing to work to provide the most appropriate accommodation possible for those of our citizens who find themselves in immediate housing need. The programme of family hubs is intended to provide more family-friendly transition accommodation, and the implementation of the HAP placefinder service will further assist families in various types of 25 PAC emergency accommodation to transition into more long-term housing solutions. One of our key areas of focus is on prevention and avoiding the use of emergency accommodation wherever possible by matching families and individuals in need with appropriate accommodation.

While the numbers presenting to homeless services continue to be very challenging, the numbers for whom pathways to more sustainable housing solutions are secured are also increasing significantly. A record 4,729 adults exited homelessness into an independent tenancy in 2017, with a further 2,332 adults in the first 6 months of this year.

Overall, in the first two and a half years of Rebuilding Ireland up to the end of the second quarter of 2018, housing solutions have been delivered for over 57,000 households across all delivery streams. The impact of this delivery can be seen in the year on year reduction in local authority housing waiting lists.

In addition to highlighting outputs, it is critical to mention the pipelines for future delivery, particularly new build homes, that are now being put in place. The latest social housing construction status report published on the Department’s website provides significant detail on projects at various stages of advancement across a range of delivery schemes led by local authorities and AHBs as at the end of the second quarter of this year. Overall, we can see a substantial increase in the scale of the build programme since end 2016, when it included over 500 projects, delivering more than 8,400 homes. By end of the second quarter of 2018, the programme had virtually doubled in size to over 1,060 projects and 16,350 homes. Some 3,518 of these homes have already been delivered, 4,602 more were on site and under construction, and a further 1,577 were at the final pre-construction stage, with the remainder progressing through the various stages of planning, procurement and design.

In the second quarter of 2018 alone, projects delivering almost 1,100 homes went on site, an increase of 27% on the previous quarter and an increase of 239% on the second quarter in 2017.

Table 1, which I have circulated in the briefing paper, sets out for the information of the committee the key Rebuilding Ireland targets for the period 2016 to 2021 and details the progress that has been made to mid-2018. Delivering on this scale, and committing to doing even more, is crucially dependent on effective cross-organisational co-operation. Within the policy and legislative decisions made at political level, the Department provides the funding streams to support delivery. However, on the ground activity and delivery can only be accelerated by local authorities, the Housing Agency and AHBs working in partnership.

Turning to chapter 10, as I have highlighted, AHBs play an important role in our work to address housing need. Indeed in terms of social housing delivery, it is expected that AHBs will deliver up to one third of all build, acquired and leased social housing homes out to 2021. Given that the sector has been mandated to deliver on this scale, it is imperative that appropriate structures and oversight mechanisms are in place. Chapter 10 of the Comptroller and Auditor General’s annual report provides an account of the range of the housing programmes generally, including detail on AHB delivery and the associated funding and oversight arrangements for local authorities to deliver social housing supports in partnership with AHBs. Funding under these programmes is provided by

my Department directly to local authorities, which in turn advance the funding to AHBs, as appropriate, with robust arrangements and agreements in place in order to ensure value for money and quality delivery.

26 25 OCTOBER 2018 A number of years ago, the Department recognised the need to put in place a more comprehensive regulatory regime for the AHB sector, beyond that which had been put in place historically under the Housing (Miscellaneous Provisions) Act 1992. Rather than wait for the development of legislative proposals for this purpose, in parallel, a voluntary regulation code, entitled, Building for the Future - A Voluntary Regulation Code for Approved Housing Bodies in Ireland, was put in place as an interim step. The implementation of the code is overseen by the interim regulation committee, IRC, based in the Housing Agency. Since the code was put in place, any AHB applying for housing funding from the Department and local authorities must furnish proof of compliance with the code. This interim arrangement will be built on by a new statutory regime, which will include placing the code on a statutory basis. The Department is at an advanced stage in preparing the necessary legislation under which the regulator will be responsible for approving and registering housing bodies, setting standards for the sector and ensuring AHB compliance with the standards, and will be provided with the necessary powers to fulfil that role. Subject to Government approval, it is expected that the Bill will be published in the coming weeks.

In these opening remarks, I have touched on the important work of my Department, local authorities, the AHBs and other partner bodies to address the housing challenges that we face and to support our most vulnerable citizens, while managing long-term programmes to create a clear pathway to a more stable and sustainable housing sector. I and my colleagues will be happy to respond to questions or issues that emerge in the course of the committee’s work today. Thank you, Chairman.

Chairman: I thank Mr. McCarthy and I call Mr. O’Connor to make his opening statement.

Mr. John O’Connor: I thank the Chairman and members for the opportunity to present to the Committee of Public Accounts today on the 2017 financial statements and the work of the Housing Agency. The Housing Agency works with the Department of Housing, Planning and Local Government, local authorities, approved housing bodies and others in the public and private sectors in meeting the current and future housing needs and demands. For example, in the last few weeks, the Housing Agency has provided an apartment building to one of the homeless charities; has concluded an agreement to deliver a large housing project for Dublin City Council; and has finalised an agreement to deliver 155 housing and apartments for social and affordable rental housing on Housing Agency land in Dún Laoghaire-Rathdown County Coun- cil. The Housing Agency supports direct delivery initiatives such as the acquisition of vacant properties from banks centrally through the use of a €70 million revolving fund. A total of 487 properties have been acquired to date. The agency also sources properties and potential developments for local authorities and AHBs. It addresses homelessness by acquiring and refurbish- ing vacant properties for permanent accommodation, including suitable homes for families and for the Housing First initiative. The agency sources properties for family hubs and supported temporary accommodation. It works with NAMA and the Department of Housing, Planning and Local Government in the acquisition of properties from NAMA’s loan portfolio. A total of 2,475 houses and apartments have been delivered to date. The agency provides procurement services for local authorities and AHBs. It manages and develops sites that it owns. It centrally supports the implementation of the housing strategy for people with disabilities.

The Housing Agency undertakes a significant amount of work in research and supporting policy development. Specifically, it prepares the annual summary assessment of housing need report and the national statement on housing supply and demand. The agency works on supporting affordability measures through the central management of specific schemes such as

27 PAC the mortgage to rent scheme, the underwriting of local authority Rebuilding Ireland home loan applications and the provision of support for the Department as it develops affordable housing purchase arrangements and a cost rental scheme. It provides the interim regulatory function for AHBs and is working in partnership with the Department of Housing, Planning and Local Gov- ernment towards the transition to a statutory regulation. The agency remediates homes under the pyrite remediation scheme and has remediated 1,237 homes to date.

The primary objective of the Housing Agency is to promote the building of sustainable communities that last in places that are well planned. We promote the development of good quality housing in places where people want to live and have opportunities. The four key features of good housing are security, quality, affordability and appropriateness. Our housing stock needs to be appropriate in size and accessible. The location of housing should meet current and future needs. The Housing Agency has undertaken a great deal of additional work in the past two years to assist in dealing with the significant housing challenges we face. We are committed to ensuring financial probity, good governance structures and efficient measures are in place to meet the remit and objectives of the Housing Agency.

I thank the Comptroller and Auditor General and his staff for their assistance and courtesy during the conducting of the audit. I also thank the Chairman and the other members of the committee for their attention. I will answer questions they may have.

Chairman: I thank Mr. O’Connor. I would like to ask Mr. McCarthy a straightforward question before I call the opening speaker. He rightly said in his opening statement that “delivery [of housing] can only be accelerated by local authorities, the Housing Agency and AHBs working in partnership.” Will he give me a report on the most recent meeting that would have taken place, having been called by the Department as the funder, with the local authorities, the Housing Agency and the major AHBs? Obviously, that is the hub where everything should happen. When was the last meeting the Department had with all of these groups?

Mr. John McCarthy: It was in early September. My colleagues might be able to remember the exact date. The Minister and the Department convened a meeting with representatives of the County and City Management Association, with representatives, I think, of 15 of the AHBs and the Housing Agency particularly because it-----

Chairman: How many representatives of the CCMA were present, approximately?

Mr. John McCarthy: I think there may have been four or five-----

Chairman: Were they from the housing sub-committee?

Mr. John McCarthy: We had a similar separate meeting with all of the chief executives and directors of housing of the local authorities. The meeting in September to which I refer was specifically for the AHB sector. Obviously, we wanted the link back into the local government sector to be represented there also. Therefore, it was-----

Chairman: Would it be possible during the next couple of hours to get a record or the minutes of those meetings to give us a real flavour of where it is happening? The Department provides the funding, but we are not seeing delivery. I presume the critical issues in this process were identified at those meetings. I take it that a record or note was taken at them.

Mr. John McCarthy: I presume there are-----

28 25 OCTOBER 2018 Chairman: Not a formal-----

Mr. John McCarthy: I can-----

Chairman: Minutes of some description must have been taken.

Mr. John McCarthy: There was certainly a set of actions that were to flow from them.

Chairman: To assist the committee in its work, would it be possible for somebody to contact the office and have them emailed over? It is crucial for us, as a starting point, to know where the Department, the Housing Agency, the CCMA and the AHBs were at collectively when they held a meeting on the delivery of housing. Rather than talking to departmental officials today and the housing bodies next week, it would be preferable if Mr. McCarthy were in a position to get somebody-----

Mr. John McCarthy: Yes.

Chairman: There must be a record. I am sure it could be accessed under freedom of information legislation were it to come to that, but we do not want to go there. I ask for it to be made available to the committee this morning. I think Mr. McCarthy referred to two separate meetings, one with the chief executives-----

Mr. John McCarthy: The one with the chief executives was a workshop-style meeting.

Chairman: Fine.

Mr. John McCarthy: There would have been actions flowing from it.

Chairman: Okay.

Mr. John McCarthy: I am not sure if there were actual formal minutes, but there would have been a set of actions flowing from it.

Chairman: I do not mind whether the document is entitled “actions” or something else, but it would be helpful to the committee if it could be emailed to the secretariat in the next couple of hours. Perhaps we will have it copied and circulated. At least then we would all be starting from the same position. Members have indicated in the following sequence: Deputy Catherine Murphy who will have 20 minutes; Deputy O’Connell who will have 15 minutes; and Deputies Cullinane, MacSharry, Connolly, Cassells and Aylward, each of whom will have ten minutes.

Deputy Catherine Murphy: All of the witnesses are welcome. I will try to keep my questions focused. I would appreciate succinct replies in order that I can get in as much as possible in the 20 minutes available to me.

I would like the Comptroller and Auditor General to clarify something on page 125 of the report. He mentions in chapter 10.35 that he audits the accounts of the Department and the Housing and Sustainable Communities Agency and that they “are subject to audit by the Comptroller and Auditor General and by implication, to direct examination by the Committee of Public Accounts”. We are trying to have clarity on a range of topics. There are levels of responsibility and audit. That makes it difficult for us to have clarity. Given that €2 billion was spent across all of the headings in 2017, is this degree of fragmentation of oversight unusual? Does it occur in other sectors, to the best of the Comptroller and Auditor General’s knowledge? Is it desirable?

29 PAC Mr. Seamus McCarthy: There is a level of fragmentation in all of the major sectors. In the health sector there are section 38 and section 39 bodies, for instance. Most of the section 39 bodies are not within my remit. A lot of the spending is happening in such agencies. It is not completely unusual. One of the reasons I wanted to have this chapter was to get a sense of where the money was going and where it would be expected that the delivery of service would be seen. I hope we have succeeded in providing clarity.

Deputy Catherine Murphy: I would like to get a sense of something on the same page of the report. There are approximately 500 approved housing bodies. Obviously, there are tiers. How many of them would be tier 3 bodies which I understand are the larger ones? What percentages fall into the other two groups?

Mr. John McCarthy: One of my colleagues is just getting the figures for the Deputy. The tiered system from 1 to 3, inclusive, is a function of the voluntary regulatory system which has been in place since 2013. There are 232 registered AHBs, accounting for 95% of the stock, with 73% of their homes under the control of 17% of tier 3 AHBs. While in excess of 500 organisations have historically applied for and received AHB status, 90% of the regulated stock is owned and managed by 50 of them. It is quite concentrated.

Deputy Catherine Murphy: It is. There are a number of sources of funding from the Department, including capital to build in the first instance. An amount for the maintenance of housing stock can also be drawn down annually as long as there is compliance. From what I am reading, I presume that the latter would only have been drawn down by the organisations that were complying with the voluntary code.

Mr. John McCarthy: Yes.

Deputy Catherine Murphy: Is there any oversight of AHBs’ cash reserves? Most have mortgages but some do not. I understand some may have sizable reserves. Does this impact on the drawdown of maintenance funding?

Mr. John McCarthy: I will take the last part of the question first. The drawdown of funds on an annual basis is related to project related costs and operated on a scheme by scheme and project by project basis.

Regarding financial standards, with the Chairman’s indulgence, I might ask the regulation office which is based in the Housing Agency to respond. The interim regulatory arrangement that has been in place since 2013 has focused on three areas - governance, finances and, more recently, performance standards. The submission of annual accounts and so on is part of the voluntary regulatory process, about which Mr. Fitzpatrick might wish to say a few words.

Mr. Pat Fitzpatrick: All of the larger bodies have registered with the regulation office. The annual reports produced in that regard consolidate the global accounts of the tier 3 bodies. There is considerable interaction with the larger bodies in the form of meetings. For example, the regulation office meets each of the larger AHBs at least once a year, examines their financial, business and growth plans and considers the organisations’ viability. The larger AHBs are delivering a significant number of units and taking on a great deal of debt finance. Since they pose the greatest risk, they are the ones on which the regulation office focuses most of its regulatory efforts.

Deputy Catherine Murphy: As the notes cross a range of issues, I will dip in and out of them. Paragraph 10.25 on page 123 reads: 30 25 OCTOBER 2018 In addition, the local authority pays the AHB an annual management and maintenance fee for each unit. These fees are also recouped by the local authority from the Department under the scheme.

How is that decided? How much was drawn down in 2017?

Mr. John McCarthy: I believe that paragraph relates to the capital loan and subsidy scheme which has now been terminated for new applications. It is being replaced by a new scheme. Apart from the management and maintenance fee, the moneys were used to pay off borrowings undertaken during the scheme’s 20 years of operation. Between Exchequer and local property tax funding, just under €67 million was spent in servicing the loans in 2017.

Deputy Catherine Murphy: That is counted in the housing budget.

Mr. John McCarthy: Yes.

Deputy Catherine Murphy: Does the payment continue after a mortgage is discharged?

Mr. John McCarthy: No. It is used to pay down the loan. Once the loan is paid down, the payment comes to an end. Afterwards, we move to the next phase of how the units in question are managed and maintained.

Deputy Catherine Murphy: A point was made about the local property tax, which crops up in this chapter. The Department has provided us with some useful documentation. This is the reply we received on 25 October, PAC32-R-1670 A. It shows the various subsidy and grant levels, including the local property tax. It states there has been a surplus of local property tax receipts to fund housing programmes and gives figures for 2016 to 2018, inclusive. This year’s figure is €92 million, for example. The Department confirmed to us not that long ago that a review of its baselines was under way. The amount of money involved could change significantly. Population has not been accounted for in determining the baselines since they were established in 2000 or thereabouts. There is a significant shortfall in some of the larger local authorities, which are the ones contributing to the local property tax pool. Not all local authorities make a contribution to it, only those in the likes of Dublin, some commuter belt counties, Galway and Cork, which are the likely winners in a reconfiguration if the baselines change. In that context, what consideration has been given to the future sustainability of the tax as a source of funding, or is that more of a policy area?

Mr. John McCarthy: It is and I am loath to stray into that space. I know that this is an issue the Deputy has raised many times. We undertook to carry out a review. We kicked it off this year and it is at an advanced stage. I cannot say what its outcome will be, but it has been designed to try to provide a mechanism that takes account of a wider range of factors in determining how local property tax proceeds are to be distributed. We are probably not too far away from wrapping it up completely.

Deputy Catherine Murphy: We will revert to it when we see it.

I will pick Mr. McCarthy up on something that he mentioned in his opening statement. He said: “The numbers presenting to homeless services continue to be very challenging.” He also referred to “pathways to more sustainable housing.” He stated: “A record 4,729 adults exited homelessness into an independent tenancy in 2017.” Nearly 10,000 people were in homelessness in 2017. If we add the 4,729 adults who experienced homelessness, does that not mean that the situattion was much worse, in that 14,000 or more experienced it? I do not understand

31 PAC why the fact that people exited homelessness is almost presented as a positive. The very fact that they were homeless to begin with reinforces the point that the overall number who have experienced homelessness is more than 10,000. Does Mr. McCarthy agree that that is the case?

Mr. John McCarthy: I certainly agree with the Deputy, but I do not want anything I say to be taken in any way as presenting this as something other than what it is - a very serious issue. There are two things. The figure of just under 10,000 that Deputy Catherine Murphy referenced relates to a point in time. The figure of 4,729 is over the course of a year. Therefore, they are different.

Deputy Catherine Murphy: The number has been growing and stayed consistent. It is not that there is a huge difference between July and September, either last year or this year. This number is one to be added to the number at the end of the year who will have experienced homelessness.

Mr. John McCarthy: If one looks at the numbers who experienced homelessness over the course of a year, one will look at the numbers at the start of the year in terms of the numbers who presented to homeless services. The point I am trying to get across is that the number for whom we are finding solutions is also increasing significantly but not at a fast enough pace.

Deputy Catherine Murphy: The point is that way more people than 10,000 experience homelessness in a year. To be honest, one of the things that prompted us to have this session and the other later in the autumn session is the lack of clarity and transparency on the various housing solutions. Very often there is a degree of spin, not necessarily from the Department but politically, on the number of houses built, as opposed, for example, to housing assistance payments, HAP, leasing and various other schemes. One of the things that is referenced in the report is the lack of clarity. A recommendation was made on foot of the Comptroller and Auditor General’s report that there was a need to have a more transparent approach. The Comptroller and Auditor General said that, in addition to the current output report, the Department should consider reporting on the output of social housing support schemes on a scheme by scheme basis, both to assist its oversight and increase transparency. Has that recommendation been fully taken on board and, if so, what initiatives will feed into it?

Mr. John McCarthy: In some respects, I might take one step back. We started out in the middle of 2016 with Rebuilding Ireland. We set very clear targets and the process of trying to measure, report on and be held accountable for delivery against these targets was something with which we grappled very early on. In fact, when we started out initially, we would probably have had more scheme by scheme-type specific reporting of the kind to which the Comptroller and Auditor General referred. We would have said so many homes had been delivered using the capital advance leasing facility and so many under the capital assistance scheme, but the view we were getting back was that they were terms we understood but that people generally did not. We moved from it to a programme of reporting. We publish data every quarter, fundamentally built around the build, acquisition and lease scheme, the rental accommodation scheme, RAS, and the HAP scheme. In terms of the recommendation from the Comptroller and Auditor Gen- eral, the form of reporting we have and what he is recommending are not incompatible because we can tell behind these broad categories what the individual schemes are. The reason we have the type of reporting we have is the suggestion we were getting was that it was more simple and straightforward for people to understand. We said in response to the Comptroller and Auditor General’s report that we had the underlying scheme by scheme data.

Deputy Catherine Murphy: The Department differentiated the internal language between 32 25 OCTOBER 2018 the schemes and the external consumption of information.

Mr. John McCarthy: Yes, that is quite doable.

Deputy Catherine Murphy: The thing about it is that it is still vague. For example, the Budget Statement outlined that there was leasing, acquisitions and builds. Very often the way it is reported to the public is that there are 10,000 new homes when in actual fact some of them are not new. In the leasing category the figure can include the leasing of existing houses. It is important that we find out how many publicly funded new builds there are, irrespective of whether it is through approved housing bodies or the scheme to which it relates. The important thing is the total number of new builds. That is the piece.

Mr. John McCarthy: We do. That is already in the data that we publish. We separate out builds, acquisitions, leases, the RAS and the HAP scheme as very distinct categories.

Deputy Catherine Murphy: I will ask Mr. McCarthy about another aspect. Local authorities go through a four-stage process from beginning to end, from identification of a site to tender stage. A single-stage process was initiated, but it appears that there is a very low uptake. Why is that?

Mr. John McCarthy: Initially, when we introduced the one-stage process, there was a very poor take-up. We investigated and engaged with local authorities and there was a sense that it was too risky for them, that, in effect, they would sign up to a project and an associated budget and that if they encountered unexpected costs, they would be left to meet them.

Deputy Catherine Murphy: Therefore, there was a financial risk.

Mr. John McCarthy: Yes, it was a financial risk. We modified the one-stage approval process in order that we would allow latitude for a local authority and if it encountered certain types of issue, for example, unknown ground conditions that gave rise to a significant cost, it could come back to the Department for an increased budget for the project. However, the financial risk piece does not seem to have been got over because in the latest construction status report we published on the position at the end of quarter 2 in 2018 there are probably around 200 projects of a scale that could go through the one-stage process, but, from memory, only about 12 have used it. A more general review of the public spending code is being initiated by the Department of Public Expenditure and Reform. It is an issue at which we are going to have to look again as part of it to see how we can have an improved take-up of the one-stage process and get things moving, rather than have local authorities going backwards and forwards to the Department when they do not need to do so.

Deputy Catherine Murphy: Yes, that is what people are looking for, namely, that there be no impediments. I can understand why local authorities would try to make sure they would not be financially exposed, but it should be possible to work through it internally.

I wish to focus on the various schemes in terms of value for money achieved. Has the De- partment examined, for example, the HAP scheme over the lifetime of a typical mortgage of about 30 years? I refer to building, as opposed to rental. Rents are very high, but I hope they will not continue to stay at that level. The HAP scheme seems to be a very expensive and unsustainable approach. What background work has been done in that regard?

There were approximately 10,500 subsidised leases in 2018, which breaks down at 22 leases for every new build in the country. According to an article in Village magazine, penned by Mel

33 PAC Reynolds who has been very vocal on the issue of housing, a subsidised lease is twice as costly as a local authority new build on State land. Would the Department look at that aspect of it from a value for money perspective? Has the Department done any work on that or carried out an actuarial assessment of the various schemes including the housing assistance payment, HAP, the rental accommodation scheme, RAS, and leasing arrangements? If we are looking for value for money, we need to have those comparators and if that work is already done, it would be very useful for us to have a look at it.

Mr. John McCarthy: The approach in Rebuilding Ireland and the policy decision that was taken was to aim to deliver, from within a particular pool of resources, as close to a target of 50,000 new social housing units as possible, as per the recommendation of the Oireachtas Committee on Housing and Homelessness that was established in 2016. Clearly, on the basis of capital cost, it would not have been possible to fund that because the capital resources were not available. It would also not have been deliverable in the timeframe required because construction takes time and, as we know, construction had virtually ground to a halt. The mix of approaches between construction, acquisition, lease, RAS and HAP, that are in Rebuilding Ire- land reflect a policy balance between getting as many units as possible through the capital side while also determining what was needed on the current programme side to be able to achieve the 50,000 by 2021.

Historically, we got into the business of leasing-type programmes in 2008 or 2009, when the market had crashed. In 2010 or 2011, an analysis was done by the Housing Agency that examined capital and current models which showed them to be broadly similar in terms of costs, depending on the assumptions one makes. More recently, as part of the 2019 budgetary process, we asked the Irish Government Economic and Evaluation Service to undertake an analysis of the kind to which the Deputy refers. That was published as part of the budgetary process. The conclusion that the service came to was that in certain parts of the country, it may be more expensive, while in other parts of the country, it is less so. The broad conclusion arrived at was that the change in the mix of housing delivery mechanisms more towards capital delivered mechanisms over the course of Rebuilding Ireland was the way to go. When we get to 2021, for example, we will deliver more housing solutions in that year through build, acquisition and lease rather than through RAS and HAP.

Deputy Catherine Murphy: Is that the totality of the documents to which we can refer in terms of answering the questions I asked about evaluations having been done from a value for money perspective?

Mr. John McCarthy: We would do various value for money tests according as different programmes are being rolled out, but in terms of the broad current versus capital question, there would have been the analysis in 2011 and the more recent analysis as part of the budget.

Deputy Catherine Murphy: We are continually being told that it takes time to build houses, that there is a pipeline and a lead-in time and so forth. The Land Development Agency has been set up, which offers the prospect of delivering affordable houses if there is the right mix of social and affordable houses. If there is inadequate capital available, will that have an impact on the mix or slow the work of the Land Development Agency? Has that been considered by the Department in the context of affordability into the future?

Mr. John McCarthy: I do not see that as an issue. Once the legislation is passed and the Land Development Agency is established, the intention is that it will be capitalised substantially from the Irish Strategic Investment Fund, ISIF. One will not be competing with the other. 34 25 OCTOBER 2018 Deputy Catherine Murphy: When the voluntary code was being put in place for approved housing bodies, AHBs, we were told that without such a code it would be impossible to draw down funding from the European Investment Bank, EIB, because that was a requirement for that type of investment. We were also told that there would have to be some sort of partnering from the Government side because AHBs, which are mostly charities, would not be permitted to make a loss. Has it been possible to draw down EIB funding for AHBs or does their funding come directly from the Exchequer?

Mr. John McCarthy: A number of the AHBs would borrow funding for some of their projects. To date, funds have been largely borrowed through the Housing Finance Agency, HFA. Some of the funding that the HFA has sourced on the market has been through the EIB so there would be some AHB projects that are based on a flow of borrowings from the EIB.

Chairman: I wish to follow up on one point made by Deputy Murphy. Mr. McCarthy said in his opening statement that 4,729 adults exited homelessness to independent tenancy in 2017. What is the comparable figure for 2016?

Mr. John McCarthy: It was certainly higher than in 2016 because it was actually a record figure.

Chairman: Yes, Mr. McCarthy said that in his statement.

Mr. John McCarthy: I will be able to get that figure for the committee.

Chairman: Does the Department have data on the numbers that have exited homelessness in each of the last four or five years?

Mr. John McCarthy: We should be able to get those data for the committee.

Chairman: Will it be available shortly?

Mr. John McCarthy: Yes.

Chairman: When those figures become available, I hope after Deputy O’Connell has had a chance to speak, I ask Mr. McCarthy to provide them to the committee. I note that Mr. Mc- Carthy referred to adults in his statement but I ask that the data provided would include children as well.

Mr. John McCarthy: The data system does not capture the associated children.

Chairman: I need to know the numbers of people rather than-----

Mr. John McCarthy: We are looking at the whole data collection system at the moment and we will capture that in the future but-----

Chairman: In terms of information that Mr. McCarthy can access now, there must be data on the numbers who have successfully exited homelessness. He has given us the figures for 2017 and to date this year. I just want the figures for a few years prior to 2017. Deputy O’Connell has 15 minutes now and, after her slot, we will return to this issue.

Deputy Kate O’Connell: I thank all of the witnesses for coming in and for the work they do in the most challenging of circumstances. My focus since I came into the Dáil has mainly been on health, and HSE representatives tend to get a fair beating in the media when things are not going well. I am very conscious of the fact that many of the witnesses here today also get 35 PAC the raw end of the stick sometimes, even though they are doing their very best.

I will start with Brexit. I believe the Oireachtas Committee on Housing, Planning and Local Government has commissioned a report on the impact of Brexit on the housing and homelessness situation in this country. This is coming down the tracks, possibly very quickly. It has been suggested that up to 500,000 people in the UK exist in a sort of no man’s land and that after Brexit, there is a risk that they may end up here. This could cause problems and exert serious pressure on our system. If the witnesses know anything about that or have done any preliminary work on it, I ask them to speak on it and outline how we might deal with it.

Last week or the week before, representatives of the OPW were before this committee. They told us that they use the British standards of the Royal College of Chartered Surveyors when calculating the size of a building. In terms of buildings, if we photocopy what is done in the UK and use it here, what impact will any changes in regulatory alignment have on our system? Will there be any issues with regard to materials or products that we import from the UK and the related building standards associated with those products?

The second issue I want to raise is Traveller accommodation. It is my understanding that local authorities have a ring-fenced budget for accommodation for members of the Traveller community but it is often not spent in its entirety. At the same time, as is evidenced by recent media reports, there are still many people from that community seeking accommodation. Per- haps Mr. McCarthy could give me some indications of the barriers in the development of Trav- eller accommodation despite the resources being there? What are the additional complexities that may be associated with the housing of members of the Traveller community? Perhaps it is not as simple as giving a house or a bed and there are far more complex issues to consider. I am thinking of lifestyle issues such as connections with the equine industry. I am also speaking about complex medical needs that require additional equipment at home. Will Mr. McCarthy outline that it is maybe not as simple as putting somebody in a bed. Will Mr. McCarthy answer those questions first and we will go back then?

Mr. John McCarthy: I thank the Deputy. On the first issue, I cannot attest to the figure of 500,000 people the Deputy referred to. There is a difference between the UK and Ireland. In Ireland if families or individuals present as homeless, even though they may not strictly have entitlement to housing services within the law, they are provided with emergency housing supports on a repeated short-term basis. In the UK, as I understand it, those services are not provided to anything like the same extent. In a post-Brexit situation, the movements of people both legally and otherwise is an issue that is being looked at. The Dublin Region Homeless Executive has formed a group to look at the possible implications for homeless services and we are liaising with it. We are about to engage in a liaison with the Department of Justice and Equality because there are connected issues across the system that we will need to join up.

On the issue of standards, the National Standards Authority of Ireland, NSAI, is the key accreditation body for products generally in the construction industry and otherwise. The key thing from a building point of view is that products will continue to have the relevant CE mark, meaning they meet the relevant standards. The Department of Business, Enterprise and Innova- tion and the NSAI have been looking at this. There have been some inquiries from some certi- fying bodies - I forget the technical term - looking to relocate to Ireland so they can continue to provide those kinds of CE marking services.

In terms of Traveller accommodation, we have certainly had difficulties in recent years in terms of the drawdown of funding from the Traveller accommodation budget. Looking back as 36 25 OCTOBER 2018 far as the year 2000, not far off 20 years ago, we have invested a total of just over €350 million in Traveller accommodation. Looking at more recent years, particularly in 2017, for example, the allocation for capital was €9 million, yet €4.8 million was drawn down. There are problems in particular areas. The Minister of State, Deputy English, has established an expert group to dig into this to see what issues are giving rise to the poor drawdown of the available funding. I do not want to start talking about specific cases that have been in the media. Local authorities will be able to provide plenty of examples of where there can be difficulties getting projects through the planning process. There can sometimes be local opposition. As we have seen in some cases when projects are delivered, they can run into issues at that stage. A group has been established by the Minister of State, Deputy English, to drill into it to see what the issues are that need to be tackled to get the Traveller accommodation programme back delivering at a rate equivalent to the funding that is available for it.

Deputy Kate O’Connell: Mr. McCarthy has answered the first number of questions. With regard to the issue of the delivery of homes and supply, we have a skills shortage as a result of emigration and a drop in the number of people entering the sector. Are we doing anything to at- tract people back home to work in the sector? Will Mr. McCarthy outline any measures his De- partment or other Departments are taking to deal with this manpower - or womanpower - issue?

Targets are set by local authorities. In the case of Dublin City Council we have had recent examples of councillors voting against projects. In South Dublin we had 1,000 homes at Kil- carbery voted against. I do not want to be drawn into the issue of what the average house price is or what is affordable but those houses would have been in or around the property price index average price. That is 1,000 homes that could have been delivered that were voted against. Will Mr. McCarthy talk us through how the Department has a field that is zoned for housing yet there are no houses on it 18 months later? Will he walk me through the steps and barriers people meet on the journey to making houses appear in the field?

Mr. John McCarthy: Construction industry capacity was an issue that was recognised and flagged when the new national development plan was being published because the issue is in the construction industry generally, that is, not only residential construction but commercial and civil as well. The Department of Public Expenditure and Reform has established a group with relevant Departments, the Construction Industry Federation and others to look at this and to engage with the likes of SOLAS on apprenticeships and skills but also to engage with the construction industry on modern methods of construction and to determine whether the industry is engaging with those to the extent that it needs to.

In terms of attracting new workers, from an overall perspective one would nearly prefer people already in the country to be upskilled into the construction industry. Attracting more people into the country will result in an increased demand for housing. I am not saying we will get all the skills we need from within our own space but efforts are being made. That is why the likes of SOLAS and activation measures by the Department of Employment Affairs and Social Protection have to be an important part of the solution as well.

On the issue of going from a field being zoned to the appearance of houses, Deputy Cath- erine Murphy referred earlier to the one-stage approval process. I am talking purely about social housing projects. I will come to private ones in a minute. We have a four-stage approval process for the bigger type social housing projects that do not come within the limits of the one- stage process. That four-stage process is borne out of the public spending code and the capital works management framework the Department of Public Expenditure and Reform has in place for capital projects generally. I am sure most of the members are blue in the face, as I am blue in 37 PAC the face, from hearing about the four-stage approval process and projects bouncing backwards and forwards. To try to deal with this, we sat down with the local government system and set timelines for each stage of the process. We benchmarked getting from the first idea of a project to getting on site with comparable private sector delivery. It is as good as what can be delivered in the private sector at 59 weeks. People speak about it as 59 weeks to get approval but it is 59 weeks to do the design, get through the Part VIII process with the local authority, do the procurement and do all of the work on assessments at various stages of the process. If we look at how the 59 weeks break down, approximately 45 weeks involve work that the local authorities are required to do at various stages.

Chairman: What percentage of the projects met the 59 week target? That is the theory. What percentage achieved it?

Mr. John McCarthy: The 59 week process was agreed at the back end of last year. We have just done the first measurement of the projects started through the process under the new arrangements. After projects reach stage 1, the next test is whether they get through stage 2 in the required time. For stage 2, 16 weeks are allotted and 22 of the 33 projects got through stage 2 on time.

Chairman: How many?

Mr. John McCarthy: It was 22, which was two thirds. The average time for the 33 projects was 17 weeks. On average, those that did not quite make the 16 weeks were not too far beyond it. Obviously there are ranges within this. We have assigned a resource to manage and monitor projects as they go through the stages so we will be able to show not just the theory of the timeline but whether it is being met and, more importantly, where it is not being met and why it is not.

Chairman: How did they get on in stages 3 and 4?

Mr. John McCarthy: These projects came into the process in the early part of this year so they have not completed stages 3 and 4.

Chairman: We have not seen the outcome-----

Mr. John McCarthy: We have not seen the full-----

Chairman: We have not got to the end of a 59 week period yet.

Mr. John McCarthy: No, because it only kicked in at the start of this year. We have put this arrangement in place to stop all of this toing and froing and to commit to what we will do at various stages and how quickly we will do it, so that in each part of the system involving the local authorities and ourselves, our performance can be measured. We will continue to-----

Deputy Kate O’Connell: The Department has moved to a point where it is as efficient as the private sector. Is it fair to say that?

Mr. John McCarthy: We have asked our planning people, who have considerable experience of what happens in private housing, to look at this and that is their view. They have spoken to a lot of people in the industry as part of this. In terms of getting things moving in private housing, we have introduced a new single-stage planning process for housing developments of a particular scale. They go straight to An Bord Pleanála. This new arrangement kicked in in July 2017. All of the cases submitted as part of the process have been decided within the 38 25 OCTOBER 2018 timescale, which is quite short.

Deputy Kate O’Connell: Have they been positive? Has the board approved them?

Mr. John McCarthy: The vast bulk of them have. From memory, approximately five were refused and there will probably-----

Deputy Kate O’Connell: Five of how many?

Mr. John McCarthy: There were 29.

Deputy Kate O’Connell: Right.

Mr. John McCarthy: As I understand it, the particular project the Deputy referred to in Kilcarbery is a South Dublin County Council promoted project.

Deputy Kate O’Connell: Yes.

Mr. John McCarthy: Approval on it was deferred at the September meeting of the council but it was approved at the October meeting, so it will move on.

Deputy Kate O’Connell: Other than having no home, what is the most common reason for people presenting as homeless? Is it family breakdown, substance misuse or stigma? Other than the bed or the solution, and I hate the term “housing solution” because it seems so made up, and other than a place to stay and a roof over someone’s head, what is the reason? Is the De- partment doing anything to try to get at it from the angle of the reasons people are presenting?

Mr. John McCarthy: To take Dublin as the area where not all by any means but where the greatest pressures are, the reasons for probably approximately 90% of homeless presenta- tions are pretty much evenly split between people coming out of private rented accommodation and what are collectively termed family circumstances, which can be family breakdown or overcrowding. Obviously there are the other cases the Deputy described, where there are very complex health and social care issues that require a different form of solution.

We have a tenancy sustainment service in place with Threshold to try to promote tenant rights. I do not have the figures with me but it supports quite a significant number of tenants in the private rental sector in staying in their own homes. We have also made changes in the residential tenancies legislation to introduce longer periods of notice to quit so there is that longer time period within which services can engage with people who are at risk of homelessness. When people present as homeless, particularly families, the new housing assistance payment place finder service is playing a part in terms of trying to source accommodation for families so that in some cases they do not have to enter emergency accommodation or, if they do, it is for short periods of time.

Chairman: The next speaker is Deputy Cullinane. We are down to ten minute slots and, if possible, I want to get everyone in before the first voting session.

Deputy David Cullinane: I ask the Chairman to put me down for a second time because I will never get through all of the issues in my first slot.

Chairman: Absolutely. I will put the Deputy’s name on the list.

Deputy David Cullinane: I welcome Mr. McCarthy. We had a lengthy discussion on many of these issues a number of months ago and it is good he is back. The housing crisis, as it is 39 PAC termed, has been around for some time so it is not a recent incarnation. We have discussed this for years. Does Mr. McCarthy accept there is a housing crisis?

Mr. John McCarthy: There is.

Deputy David Cullinane: Does he accept it is an emergency? Is that the type of language he would use? Does he accept that for many families in need of housing at present and who simply cannot access it, whether it is affordable or social housing or people stuck in high rent accommodation, this is a housing emergency?

Mr. John McCarthy: Certainly people are presenting as homeless and they enter emergency accommodation. Absolutely.

Deputy David Cullinane: There are record levels of homelessness, as Mr. McCarthy acknowledged earlier. The people see the politicians and talking heads on the television all of the time, but the witnesses before us, whether the Housing Agency or the Department, are the public and civil servants tasked with building the homes and supplying the solutions, as an Teachta O’Connell spoke about earlier, to meet the demands and needs of people. I want to put myself in the shoes of the people who come to my constituency office every day. It is almost like a conveyor belt of people asking me to make representations for housing, which pretty much does not exist. People who are on a social housing list come in, but unless they have been waiting seven or eight years and have a particular set of circumstances, there is very little prospect of them getting a social house. Do the witnesses accept this? The vast majority of people’s housing needs are now met through the private rented sector. Is this a fair assessment?

Mr. John McCarthy: Yes, if we look at the data we published for the first few years of Re- building Ireland, we can see the contributions of the constituent parts. That twists back around as we get closer to the end of Rebuilding Ireland.

Deputy David Cullinane: I refer to housing needs and I speak primarily from my own experience. I imagine, however, that it is the same for other Members of the Dáil here. People come into my office with a housing need. They want social housing and there is no chance of them getting social housing. I can make as many phone calls as I want to the housing office but the homes are simply not there. The response in any event would be that the housing assistance payment is the only solution. We send all of these people into the private sector to find solutions. What has happened as a consequence of not building social housing is that we now have everybody competing in the same space as social housing applicants. That includes people who can afford to rent and want to rent. As a consequence, the price of rent has been driven up. Does Mr. McCarthy agree that is the reality for people? I also want to know if he agrees that is the reality because the State has not built social housing. Does he accept that?

Mr. John McCarthy: Yes. If we go back to 2013 and 2014, the level of social housing building hit the floor. Rebuilding Ireland is framed on the basis of getting back substantially into that space, but it is going to take to the end of Rebuilding Ireland before the mix of the various delivery streams-----

Deputy David Cullinane: We will get to that in a second. I have Rebuilding Ireland as one of the topics I want to get to. My point is that, as a consequence of policy, rents have now gone up to record levels and to what many people see as unsustainable levels. That is especially the case in Dublin but also in other parts of the country. Part of the reason for that is everybody is now in the same space. Private rented accommodation is the only solution for the housing

40 25 OCTOBER 2018 needs of the vast majority of people. What socio-economic analysis has the Department done over recent years on the decision of the State to stop building social and affordable housing and the implications of that on the private rental sector? What analysis, research and reports have been done by Mr. McCarthy’s Department? That is where the buck stops in many of these areas.

Mr. John McCarthy: The analysis that was done drew significantly on the work of the Oireachtas Joint Committee on Housing and Homelessness in respect of what was an ambitious target in trying to deliver new social housing. Rebuilding Ireland was initially 47,000 houses, now it is 50,000 houses. That marries pretty much with the committee’s report.

Deputy David Cullinane: I am not talking about that. That is the future. We have landed in a situation and we are looking back. We can look to the future and we want to look to the future, but as a committee we primarily look back. Over the past five or ten years, decisions were made to stop building social and affordable housing. As a consequence, the vast majority of people now have their housing needs met through the private sector. That has pushed up rents to unsustainable levels. Over the period that was happening, what analysis was done by the Department? Was it pointed out to people like Mr. McCarthy and the Department that as a consequence of not building social and affordable housing, rents would be driven up and that was going to affect our competitiveness? Was any such research or analysis ever done? Was that advice ever given to the Department in the past ten years? I am not referring to what might happen in the future. We now have to correct what has happened. I refer to why we got into this situation in the first place.

Mr. John McCarthy: We were in a very different situation in the early part of the past ten years. Rents were dropping, there was a massive overhang of accommodation and the public spending programme was significantly contracting. Put all of those things together and they formed the rationale for why we tapped into the private-----

Deputy David Cullinane: That was done. My point is that as we sit here, in real time, here and now, too many people are in private rented accommodation where the rents are too high. I am asking a simple question. Did the Department see that coming?

Mr. John McCarthy: The Department certainly saw that social housing delivery had dropped to a level-----

Deputy David Cullinane: Did the Department see it coming that rents would get to such an unsustainable level and be such a huge element of people’s incomes? Did it see it coming that the vast majority of people in need of social housing would not have those needs met by local authorities but by the private rental sector and in so doing that would push up the price of rents? Was that foreseen by the Department? I refer to being in the position we in are today.

Mr. John McCarthy: To foresee specifics of the implications is one thing. From our point of view, however, we saw very clearly where we were in 2014 and 2015. What led to Rebuild- ing Ireland in 2016 was that we had a shortage of housing. It was housing delivery generally and not just social housing. The housing spectrum is a continuum. What happens in the private purchase sector affects what happens in the rental sector, the social sector and in respect of homelessness. The Department certainly recognised that housing supply needed to be mas- sively ramped up. Apart from the social housing measures in Rebuilding Ireland, there are a whole range of other measures to try to support that as well.

41 PAC Deputy David Cullinane: I am going to get to that in a couple of minutes. I want to come now to the issue of Traveller accommodation. Alarm bells went off in my head earlier when Mr. McCarthy spoke of an expert group being established. Frankly, I could not care less what the expert group states. I am sick of expert groups. Mr. McCarthy is the Accounting Officer before us. He is the person responsible for making sure policy is implemented. Setting up an expert group is a classic Civil Service governmental response to a problem. It will discuss the problem until the cows come home, there will be a report at some stage and then we will discuss that but nothing changes. Money is allocated to local authorities on the basis of need for Traveller accommodation and it is not being spent. I want to know from Mr. McCarthy, as the Accounting Officer, why that is still happening and what he and his Department have done. I am not asking what some expert group might say in the future or its opinions. I am sure they are wonderful. I want to know what Mr. McCarthy and his Department have done in response to what is a real problem. Local authorities are given a budget on the basis of need and it is not being spent.

Mr. John McCarthy: As with housing programmes generally, we engage with local authorities on delivery right across the board. We provide them with as much forward visibility as we possibly can on the available funding so they can plan for what they need to do to be able to draw it down. For some authorities, we even move money around because there are local authorities that go beyond their allocation. We get a clear supportive arrangement in place in respect of finance and any issues with which we can possibly help. It does, however, come down to the local authorities themselves-----

Deputy David Cullinane: I refer to local authorities that are not stepping up to the plate. Let us cut straight to the chase. I do not need an expert group to tell me what the problem is. I was a councillor for many years. I was in a minority of councillors at times who supported Traveller accommodation when it came before me. We all know what the problems are and we do not need an expert group to tell us why there is a problem in some local authorities. The reality is that there is. If there is, and it is continuous and ongoing, then I want to know what more can be done by the Department to make sure the housing needs of Travellers are met and that money allocated on the basis of need is actually spent.

Mr. John McCarthy: Deputy Cullinane said he knows the reasons. I am sure he knows the reasons in his own area. I am not disputing that at all, but we need to get a proper understanding of the range of things affecting the delivery of the Traveller accommodation programme. If we do not have that, then any measures we choose to take will not be taken on the basis of a proper understanding that they are responding to the problems.

Deputy David Cullinane: I will finish on this. This is my own point of view. I do not believe the system wants to change. It is almost acceptable that the local authorities do not do it. The money comes back and, sure, it is only Traveller accommodation. There is no real focus on it. I do not see any focus or urgency and it is a real cause of concern for me. I want to get to Rebuilding Ireland, which Mr. McCarthy mentioned several times. I know what the overall-----

Chairman: This is the last topic because we want to get everyone else in before the vote.

Deputy David Cullinane: Will I be able to come back in?

Chairman: Deputy Cullinane will get a second chance. I guarantee that.

(Interruptions).

42 25 OCTOBER 2018 Deputy David Cullinane: The Chair will tell me when my time is up. It will not be my colleague. On Rebuilding Ireland, we know the overall targets. Is there a county-by-county breakdown?

Mr. John McCarthy: To go back to the discussion with Deputy Catherine Murphy in regard to transparency, the aim this year was to publish targets for within the year, if one likes. Therefore, at the start of the year we published a target for each local authority for 2018 and we also gave them targets for 2019 to 2021. These are published and they are the targets against which delivery is-----

Deputy David Cullinane: I have one more question in this space. From the figures for Waterford city and county, I see the target for 2018 to 2021 is 687 units, and we must bear in mind that is acquisitions, lease and build. The figures I got from the local authority show that, up to September of this year, 288 new families were accepted and came onto the housing list. I am looking at the figures for actual people coming onto the housing list with a housing need and I am then looking at the target, which will not even meet that need. By 2021, we will not have dealt in any way with the existing housing need in Waterford. In fact, it will have become greater.

Mr. John McCarthy: The figure of 687 is build, acquisition and lease, and the housing assistance payment will also support households over the course of those three years, but there is no target for that.

Deputy David Cullinane: If we take a city and county the size of Waterford, from 2018 to 2021 it is 687 units, including all of those mixes. As I said, I have the figures from the local council showing 288 applications were approved up to September of this year alone.

Mr. John McCarthy: The social housing need figures for Waterford as measured this year were for 1,117 households.

Deputy David Cullinane: That is people on the list. It is the overall figure. I am talking about the number of approved applications. We are not even at the year end, so it will exceed 300, yet the number of units that will be built under Rebuilding Ireland will be much less than that. We then look at the number of units that will be built up to 2021. My point is that the targets we have set are woefully unambitious and will not in any way tackle the housing crisis in the county I represent. I am saying that is a microcosm of what is happening in the State.

I know others want to come in so I will leave it at that. Mr. McCarthy might come back on that and I will wait until the second round to raise other issues.

Mr. John McCarthy: To go back to what I said earlier, the level of ambition in Rebuilding Ireland flows fundamentally from the special Oireachtas committee report. That is the level of ambition. While the Deputy is talking about the number that have been added to the list, others will have come off the list as well. The reason I point to the 1,117 figure, which is as of June 2018, is that it is a point in time figure and the 687 out to 2021 is designed to contribute to dealing with that need, along with the housing assistance payment.

Deputy Marc MacSharry: The Minister this morning announced new initiatives in terms of Airbnb. Has the Department analysis on the number of rental spaces that will make available?

Mr. John McCarthy: I will ask my colleague, Mr. David Walsh, to deal with this.

43 PAC Mr. David Walsh: Some anecdotal analysis has been undertaken by Dublin City Council in the past year or so, looking at properties that were previously available for longer-term rent and engaging with what information is available on some of those letting websites.

Deputy Marc MacSharry: What is the position nationally?

Mr. David Walsh: We are probably looking at up to 2,000 which could come back in towards longer-term rental, assuming-----

Deputy Marc MacSharry: That is assuming everybody is compliant and without any enforcement.

Mr. David Walsh: It is very difficult until there is a register, which is the key point.

Deputy Marc MacSharry: Assuming that everybody decides to do the right thing, comes off Airbnb and makes their properties available at an appropriate market value for long-term rental, who will enforce it?

Mr. David Walsh: The local authority planning authority.

Deputy Marc MacSharry: How much money will that cost the local authorities?

Mr. David Walsh: It is part of their planning enforcement.

Deputy Marc MacSharry: Therefore, we are changing the planning enforcement and we are giving additional chores to the local authorities but no extra resources. Is that the case?

Mr. David Walsh: No, the Minister has signalled-----

Deputy Marc MacSharry: Does Mr. Walsh agree that, given the pressures to try to fulfil the four-stage planning process and so on, the enforcement ability of local authorities throughout the country to carry out this work is probably fairly limited, so it is somewhat superficial in terms of its vision.

Mr. David Walsh: The regulations will be published in due course and will-----

Deputy Marc MacSharry: We have seen the interpretation of most of them today. For example, if I live in a flat on my own with one extra room, I can rent out that room for a period, no problem, but if I have a second home, I cannot, and I cannot let my own home for any more than 90 days. I think it was fairly self-explanatory in the media today.

Mr. David Walsh: The key issue is the requirements on anybody who is availing of the planning exemptions. People can rent out a second home for short-term accommodation but they must seek planning permission. The issue is that each local authority must create, manage and monitor this through a register. Anyone availing of those will have to write in and that will be used to assist in enforcement.

Deputy Marc MacSharry: If they are enforced. The existing number of staff in the local authorities throughout the country, many of them already hard-pressed, are being given no additional resources and are told to enforce this. Is that the case?

Mr. David Walsh: As they would with-----

Deputy Marc MacSharry: We are basing that on anecdotal evidence from Dublin City

44 25 OCTOBER 2018 Council suggesting that it could be 2,000 nationally.

Mr. David Walsh: Indeed. The Deputy asked-----

Deputy Marc MacSharry: Do we tend to rely on anecdotal evidence? How was it approached? Did somebody sit down and look at daft.ie or did we get statisticians from the CSO to help with the analysis?

Mr. David Walsh: The difficulty is all of the information in regard to short-term letting platforms is not available in detail.

Deputy Marc MacSharry: The answer is no.

Mr. David Walsh: The answer is that Dublin City Council had to extrapolate from information that was publicly available.

Deputy Marc MacSharry: Which is what?

Mr. David Walsh: Which is that it estimated there could be 2,000 properties that could potentially-----

Deputy Marc MacSharry: Based on what?

Mr. David Walsh: On the basis of what Airbnb and other platforms would have produced and published. They said that every year they have so many places-----

Deputy Marc MacSharry: They looked at Airbnb’s website over the previous period to see what was available and they looked at daft.ie and did an analysis in between. Is that it?

Mr. David Walsh: Airbnb says it has 11,000 hosts that are registered online.

Deputy Marc MacSharry: This was a desktop analysis by somebody in Dublin City Council.

Mr. David Walsh: Not just desktop. They went out and discussed and met key people.

Deputy Marc MacSharry: Met who?

Mr. David Walsh: Different providers.

Deputy Marc MacSharry: Such as?

Mr. David Walsh: They met with the Irish Property Owners Association and the different platform letters which operate in the city centre. They also looked at the enforcement and what complaints were coming through.

Deputy Marc MacSharry: There is no Supplementary Estimate and no money. It is a non-scientific method of analysing the number of benefits there could be. In many ways, it is a superficial act because there are no additional resources for people to enforce this throughout the country.

Mr. David Walsh: The Minister has signalled he will provide additional resources to-----

Deputy Marc MacSharry: Mr. Walsh has just told me there are no additional resources.

45 PAC Mr. David Walsh: No. I said the Minister said this morning-----

Deputy Marc MacSharry: I asked were the local authorities getting any additional resources to enforce this. Mr. Walsh said that, no, it is part of their function. It is extending their function but not their budget.

Mr. David Walsh: If I did, I was incorrect.

Deputy Marc MacSharry: How much will Sligo and Leitrim be getting, for example?

Mr. David Walsh: These are matters the Minister will consider as part of the rolling out of the-----

Deputy Marc MacSharry: How much is the overall budget?

Mr. David Walsh: It has not been decided yet.

Deputy Marc MacSharry: There is no budget available for enforcement but Mr. Walsh feels the Minister has indicated he may have one.

Mr. David Walsh: He has indicated this is a matter for 2019, as the scheme is rolled out.

Deputy Marc MacSharry: Will Mr. Walsh inform the committee what proportion of money will be allocated to each local authority, and on what basis, for the enforcement of this new measure, which is going to give us an additional notional 2,000 places?

Mr. David Walsh: I can.

Chairman: We ask Mr. Walsh to come back to us in writing.

Deputy Marc MacSharry: That is what I just did. That is fine.

In terms of process trumping delivery, and we know there was the one-stage process and the four-stage process, I put it to the Secretary General that the sum of the parts within the Depart- ment do not add up to the overall mission. Let us use Sligo as an example. On the one hand, it does not have the money to have appropriate staff to meet the technical process that is being demanded by the four-stage, or indeed the one-stage, process to get planning for a scheme. Would he agree with that?

Mr. John McCarthy: I would not.

Deputy Marc MacSharry: Therefore, Sligo has the optimum number of staff. It should be able to roll out a scheme as quickly as Fingal, which has €100 million on deposit at any given time. Sligo should be doing the same.

Mr. John McCarthy: What I can say to the Deputy is that we have made a range of supports available to local authorities to allow them to upskill and upscale to deliver on their housing programme. For example, there could be a 30 unit housing scheme of three-bed units. On the basis of the cost of that scheme-----

Deputy Marc MacSharry: I have limited time, so I do not have time to go through a whole scheme.

Mr. John McCarthy: I am sorry. I am not going through a whole scheme. I am trying to be helpful. On the basis of the cost of that scheme, the local authority would be entitled to more 46 25 OCTOBER 2018 than €500,000 for its design team. If it had two of those projects, it would be twice that cost. If it was three projects, it would be three times that.

Deputy Marc MacSharry: At what point in the process is it given that money?

Mr. John McCarthy: It can draw it down as the project moves on.

Deputy Marc MacSharry: I will use Sligo as an example because I am from Sligo. If Sligo local authority, Fingal or whichever local authority rings and says it has an idea for a scheme, that it is down €500,000 and there are 30 beds, is that how that works?

Mr. John McCarthy: No. It would be part of the project as it is moving on.

Deputy Marc MacSharry: It is a bit of a chicken and egg situation because if it does not have the people, it cannot do it.

Mr. John McCarthy: I cannot have money being given out and no projects being delivered on the strength of it.

Deputy Marc MacSharry: Absolutely, but we cannot be busy fools either thinking that there is money available. Live, horse, and get grass. The Department is saying that as soon as a local authority has a scheme that demands the level of support it is in a position to give, it will give it the money, but until then it is getting nothing. We know that we have all these schemes available but because it is such a chicken and egg situation, they are not getting any money and therefore they are not getting houses.

Chairman: To clarify that, can the payment be made on an ongoing basis during the design process ever before-----

Mr. John McCarthy: It is incrementally through the project. It is not that we do not pay the staffing costs-----

Deputy Marc MacSharry: I have the lovely chart before me. At what stage do we get the €500,000 on this?

Mr. John McCarthy: According as it is moving on through it.

Deputy Marc MacSharry: When is it moving on? This is the beginning. When do we get the €500,000? When is the money divvied up to begin this process? This is a lovely colourful chart. I am at site identification, so how much do I get at that stage?

Mr. John McCarthy: As projects are drawing down money, they can draw down the pro- portionate amount.

Deputy Marc MacSharry: That does not mean anything to me. At what point can I get €500,000?

Chairman: It will not be given all in one go.

Deputy Marc MacSharry: Okay. What is the first increment? Is it €5,000, €10,000 or €50,000?

Chairman: The local authority employs either external people to do the design work or its own team. As soon as it has a bill, it can send it to the Department for recoupment.

47 PAC Mr. John McCarthy: Exactly. Going back to the hypothetical project, it can work on the basis that if it needed to incur just over €500,000 costs for its in-house design team, it will get that money.

Deputy Marc MacSharry: What if it does not have an in-house design team?

Mr. John McCarthy: There are other mechanisms. If it does the architectural aspect in- house, there is a different-----

Deputy Marc MacSharry: What if has none? What if Paul Lemass has shaved the budget to the nth degree and it does not have the staff? What does it do then?

Mr. John McCarthy: Chairman, I do not think it is appropriate for-----

Chairman: To explain-----

Mr. John McCarthy: I am sorry, Chairman. I do not think it is appropriate to name officials who are not here.

Deputy Marc MacSharry: What is not appropriate?

Mr. John McCarthy: An official is being described as shaving a budget. I do not think that is appropriate.

Deputy Marc MacSharry: Why does Mr. McCarthy not think it is appropriate? The person is an assistant secretary in the Department and is answerable to this committee, as is Mr. McCarthy. What is the problem?

Mr. John McCarthy: The Deputy is levelling a charge against him and he is not here to defend himself.

Deputy Marc MacSharry: I am not levelling any charge at all. I am asking Mr. McCarthy if, as I know, and I have been in meetings with him that show this, a particular local authority is to the pin of its collar to survive and does not have an in-house design team, what is it to do? It is a perfectly legitimate question. We cannot be precious in here.

Mr. John McCarthy: We could provide funding for an external design team.

Deputy Marc MacSharry: Okay, but at what point does it come in? At what point does that happen? If I lift the phone to a Secretary General and say that I am a county manager but we have a very tight budget, that we cannot survive on our rates base and depend on the Local Government Fund, that we have a great idea for a 30 bed scheme but I need €100,000 to get things moving, at what point can I get it or is it live, horse, and get grass, which is my impression of it, reading this wonderful document?

Mr. John McCarthy: One would get 5% on stage 1, 20% on stage 2, 40% on stage 3-----

Deputy Marc MacSharry: Five per cent on stage 1. Five per cent of €500,000 is €25,000.

Mr. John McCarthy: Yes.

Deputy Marc MacSharry: Is that enough?

Mr. John McCarthy: On the basis of what stage 1 requires, it is very preliminary stuff. I do not think that is unreasonable. 48 25 OCTOBER 2018 Deputy Marc MacSharry: Mr. McCarthy might send us the breakdown on the 5%.

Mr. McCarthy told us about the one-stage process, the new 59 weeks and so on, but there were many schemes in the year before last. He spoke about 33 coming in, presumably since the beginning of this year, that he is assessing against that performance period. How many schemes in total for the country are in the system?

Mr. John McCarthy: The quarter 2 construction stage had just over 800. That shows projects the whole way through so-----

Deputy Marc MacSharry: I understand that. There are 800 schemes or what is the number?

Mr. John McCarthy: At quarter 2, 2018, the total was 1,067, but that includes the ones that are finished and others that are on site. If we take those out, approximately 550 are at planning, design or procurement stage.

Deputy Marc MacSharry: I am not interested in anything that is finished.

Mr. John McCarthy: That is why I have stripped them out.

Deputy Marc MacSharry: There are 550 in total.

Mr. John McCarthy: At planning, design or procurement stage - pre-construction.

Deputy Marc MacSharry: Is that stage 1?

Mr. John McCarthy: No. Stage 1 is the basic capital appraisal. Stage 2 is at pre-planning.

Deputy Marc MacSharry: How many are there between stage 1 and completion?

Mr. John McCarthy: We can give the Deputy this table after the meeting. At the end of quarter 2, 2018 there were 145 projects at stage 1, 140 at stage 2, 79 at stage 3-----

Deputy Marc MacSharry: Will Mr. McCarthy slow down? I am adding these up. Is there a total on that because that might suit me?

Mr. John McCarthy: The other bits are in there as well. If my mathematics are right, I think it is 442.

Chairman: Mr. McCarthy can send that chart on to us-----

Mr. John McCarthy: It is published on our website. We can send the link.

Chairman: -----together with the note he read about the 5% payment.

Deputy Marc MacSharry: Apart from the 33 that came in this year, how many years are they operating?

Mr. John McCarthy: I could not honestly say.

Deputy Marc MacSharry: Will Mr. McCarthy give us a breakdown of that because anecdotal evidence from some local authorities would suggest that some are there for years. I did not include the approved housing bodies but the Iveagh Trust had a 78 unit one that took seven years. That would be a concern if that was going to be the benchmark for some of the other 442,

49 PAC not including the 33 that are performing so well since January. I will move on.

Mr. John McCarthy: Can I make a clarification in respect of that?

Chairman: Yes.

Mr. John McCarthy: Deputy MacSharry talked about a project that took seven years. That would not be because the process took seven years. A significant chunk of that seven years would have been the time there was no funding.

Deputy Marc MacSharry: It might also be down to the local authority not having staff.

Mr. John McCarthy: Possibly. If we look at the figures through 2011, 2012 and 2013-----

Deputy Marc MacSharry: Would it not be fair to say that larger local authorities such as Fingal, with €100 million on deposit at any given time, would be in a position to supplement the staff costs and so on to get to that design stage and get over those initial humps without drawing down the 5% and the 10%? That would not hold it up. Would it not be fair to say that local authorities such as Sligo are at a disadvantage?

Mr. John McCarthy: I would not think so. We are treating all local authorities, for the purposes of-----

Deputy Marc MacSharry: I know, but some do not have the money while others do. Some have Dublin Airport in their rates base. Others do not.

Mr. John McCarthy: There are two issues. One is what we are funding on housing and the other is the broader financial position of a local authority. As the Deputy knows, we have been and continue to engage with Sligo as part of that process.

Deputy Marc MacSharry: I have two more questions. Has there been any change at a policy level nationally? In his opening address Mr. McCarthy mentioned prevention and matching families with need with appropriate accommodation before they become homeless. Is he aware that many local authorities are telling people they can do nothing for them until they are declared homeless?

Mr. John McCarthy: In what context?

Deputy Marc MacSharry: For example, in terms of a marriage break-up as a result of domestic violence. If their name is on a mortgage, the local authority can do nothing for them because the rule is that they own a house, therefore, they do not have a housing need and it cannot look after them.

Mr. John McCarthy: No. We have issued guidance on that, and I believe we changed regulations-----

Deputy Marc MacSharry: Will Mr. McCarthy inform us on that?

Mr. John McCarthy: I will send the committee a note on that because that issue has been raised in parliamentary questions.

Deputy Marc MacSharry: And the mortgage arrears situation where it was a house sur- render. If somebody owned the house but they surrendered it because they could no longer afford it, is it the case that they cannot be considered for housing? What is the status of these 50 25 OCTOBER 2018 guidelines? Is it open to the local authority to interpret them or is it obliged to follow them?

Mr. John McCarthy: I will come back to the domestic breakdown situation the Deputy speaks about. It might be a regulatory change that we may have made. If that was the case, it should be quite clear and there should not be any-----

Deputy Marc MacSharry: It is something we all come up against in our constituencies so it would be interesting to get the clear statutory position on that. If there is not one, perhaps-----

Chairman: Deputy, there has to be a divorce involved. A breakdown does not work.

Deputy Marc MacSharry: That is the problem. Someone must be separated four years before a divorce is possible.

Mr. John McCarthy: I think it might apply even in separation agreement situations. I will come back and clarify that.

Deputy Marc MacSharry: Even in that, it can take several years to get a judicial separation, never mind a divorce. Someone has to be separated for a minimum of four years before they can get a divorce. There are anomalies there that we could usefully examine.

Part of the commitment in Rebuilding Ireland is not just to build houses but to try to buy ones where there is value and so on, which is reasonable. Many local authorities refuse to buy houses in former local authority schemes. Is there any statutory rule on that?

Mr. John McCarthy: I am not aware of one. I do not think there is.

Deputy Marc MacSharry: Could the Department look at issuing a direction to local authorities that they must consider buying in former schemes? One example of which I am aware - I acknowledge that it might date from a couple of years back - relates to five houses in a local authority scheme that were available for possibly €130,000 and the relevant local authority buying a single house for €250,000.

Mr. John McCarthy: I am loath to get into the business of issuing directions. We get lambasted quite regularly for issuing diktats of various kinds.

Deputy Marc MacSharry: We do not mind being lambasted once we get delivery. If we could have five houses for the price of one, surely that is basic common sense. Surely the De- partment would be amenable to issuing directions along those lines.

Mr. John McCarthy: No, because we would be issuing a direction that would require something to be done without knowing the local circumstances. We rely on local authorities to make decisions about whether particular houses suit their needs. We cannot manage that from the Custom House.

Chairman: We are moving on. The next speaker is Deputy Connolly.

Deputy Marc MacSharry: In the context of management by those in the Custom House, I am, quite honestly, stunned by that.

Chairman: There are mixed views. The chief executive and the housing officer are the best people to identify things. The problem we have is that they feel they are buying too many houses and that low-paid workers now have to compete against local authorities. I am just saying that there are different views on it. 51 PAC Deputy Marc MacSharry: I am not disagreeing with the Chairman but I just think it would be great to have an element of consistency. If I had a choice of sleeping on Molesworth Street or in a house in a former local authority scheme, it would not take much thought on my part. We could have a national direction as opposed to superficial things involving Airbnb.

Chairman: All I will say is that we will have our annual meeting with our chief executive tomorrow. This is an issue to raise at that meeting. I would say this to every Member of the Oireachtas. They are issues within the local authority. I would not like things to be so prescrip- tive. It might work for Sligo but it could cause problems everywhere else.

Deputy Marc MacSharry: That is the Chairman’s view.

Chairman: Exactly. All I am saying is that there are different views.

Deputy Marc MacSharry: It would be good to have consistency though.

Chairman: I am looking for consistently good chief executives.

Deputy Catherine Connolly: To put the matter in perspective, I checked the figures for Galway. A total of 239 people are homeless and while there are 154 in the west. Those figures do not cover people living in cars, staying with friends and living in refuges or direct provision. I am from a city that did not build a single local authority house in the period from 2009. I am just providing the context. It was inevitable that there would be a major housing crisis. I think we have now built 14 houses and I am not sure if they are even available. That is the length of time it has taken. We received quarterly reports to which I will refer. We bought land at astronomical prices partly under the land aggregation scheme to which I will return. We received quarterly reports. From 2010, our housing programme was laid out. The final column contained the word “suspended”. There was no construction. Today, I looked at the empty properties in Galway as of the end of August. A total of 60 houses were empty. I can tell Mr. McCarthy that I am most unhappy with the oversight of the Department with regard to these houses. As the crisis intensifies, less information comes out. We were told when the houses became vacant in these quarterly reports. This significant piece of information is now gone. Reasons why they are empty include “pre-tenancy works completed”, “under consideration” and “under offer”. I do not know the difference between the latter two. Other reasons include under offer or offer accepted pending allocation. A total of 60 houses are empty, most of which are in the middle of the city or very near the outskirts. That is the background to my questions.

I thank Mr. John McCarthy for all of the information, which has been very helpful in clari- fying matters. There are 547 voluntary bodies, the Department, the Housing Agency, the Land Development Agency and the Housing Finance Agency, which does not come under the committee’s remit. A new agency is about to be set up to lend because the banks are not lending. In the midst of this, we have the most significant housing crisis, which I am glad Mr. John Mc- Carthy has acknowledged. I acknowledge that 95% of the 547 voluntary bodies come under a small group. What did the Department do about regulation? Why has it taken up until now to talk about it? How has this sector remained unregulated for so long?

Mr. John McCarthy: It started out in 1992.

Deputy Catherine Connolly: Why has it taken so long for the sector to be regulated? From where has the impetus for regulation come? Has it come from the Comptroller and Audi- tor General’s report?

52 25 OCTOBER 2018 Mr. John McCarthy: No.

Deputy Catherine Connolly: From the Department’s analysis of the lack of-----

Mr. John McCarthy: In fairness, the Comptroller and Auditor General has acknowledged in his report that not only is a voluntary regulation system in place but that legislation is at an advanced stage of preparation-----

Deputy Catherine Connolly: I have asked that. Why has it taken until now given that these bodies are major operators in social housing? Why has it taken so long to bring in legislation? Where does the fault or difficulty lie?

Mr. John McCarthy: The key aspect from our perspective was to ensure as early as possible that a regime was in place that would give us a good and fairly comprehensive overview of the sector. We had a choice to make at some point. I have been around long enough to know that if we put all our eggs into the legislation basket in the first instance, we could wait a very long time to get anything so we made a conscious decision that we would put a voluntary regulation system in place that had implications. Number one, a body had to subscribe to that regulation system in order to get funding and, number two, body that subscribed to it but was not complying would not get funding either. That was where we took our first significant initial step.

Deputy Catherine Connolly: I have to say-----

Mr. John McCarthy: A further step that we have taken-----

Deputy Catherine Connolly: I find it unacceptable that this sector is unregulated. We have a report that sets out the Local Government Audit Service and the deficiencies found generally. It seem that the Department is being pushed into doing something. Mr. McCarthy has given me a different explanation and I hear that.

Mr. John McCarthy: I cannot accept that. The Deputy can see that the voluntary regulation system has been there since 2013, which was five years before the Comptroller and Auditor General’s report. I can find a date to show the Deputy when we first flagged in the legislative programme that we would introduce legislation relating to this so we have not been forced into this.

Chairman: Was it in the programme for Government?

Mr. John McCarthy: I could not tell the Chairman, but it has certainly been in the legislative programme for some time now. It is at pre-legislative scrutiny.

Deputy Catherine Connolly: I think I heard Mr. McCarthy say it will provide one third of social housing if it is not doing that-----

Mr. John McCarthy: One third of the 50,000 units under Rebuilding Ireland.

Deputy Catherine Connolly: So it is unregulated. There is a serious report from the Comp- troller and Auditor General in which he refers to where mortgages related to three schemes were not fully executed and recommended conducting a review and a reconciliation of all mortgages charged on approved housing bodies. He then goes on to point out that the Local Government Audit Service made a number of recommendations. I think there are 12 bullet points. What has happened with regard to that?

53 PAC Mr. John McCarthy: Very substantial work has been done in respect of the mortgages piece as much for the credit register the Central Bank requires to be put in place. The Housing Agency has been involved along with the Local Government Management Agency to support local authorities in pulling that full picture together. They are at the point of data exchange with the Central Bank with regard to that. The Local Government Audit Service is working on a follow up so it is carrying out a comprehensive exercise to look at all of the recommendations and see what has been delivered. I hope to get that report by the end of the year or very early next year at the latest. There are two things here. We are clear that there is no statutory regulation beyond section 6 of the 1992 Act. However, I do not think it is accurate to say there is no regulation because the voluntary regulation system does have teeth and produces very comprehensive analysis and reports. If a body was not in compliance with the regulatory regime it would not get funding from us. The important point from a regulatory perspective is the regulatory step we took in 2016 to bring the approved housing body sector within the remit of the Residential Tenancies Board. Tenants have added protections from that. The bodies are subjected to standards and-----

Deputy Catherine Connolly: Serious issues have been identified here and Mr. McCarthy is telling me that the answer is that the Department will have a report at the end of the year or in January.

Mr. John McCarthy: There is-----

Deputy Catherine Connolly: This is in relation to the 12 bullet points identified by the audit service.

Mr. John McCarthy: As a matter of course when it does value for money exercises, the audit service generally would have follow-up reports-----

Deputy Catherine Connolly: The Department also indicated that a follow-up examination of the implementation of the recommendations would happen, with a final report due by the end of 2018 or in early 2019. Is that on target?

Mr. John McCarthy: That is on target.

Deputy Catherine Connolly: Great.

Mr. John McCarthy: The local government audit service is doing that.

Deputy Catherine Connolly: The bullet points also include recommendations that local authorities should carry out periodic inspections of funded properties and so on. They cannot even inspect the properties they give out under the housing assistance payment, HAP, scheme and the rental accommodation scheme. There is a minimal inspection rate, and now there is a recommendation - rightly so - to inspect these voluntary housing bodies.

Mr. John McCarthy: We are providing funding this year, which will increase every year to 2021, to support them in doing that.

Deputy Catherine Connolly: The Department has provided funding in relation to the very low inspection rate at the moment.

Mr. John McCarthy: Does the Deputy mean the target?

Deputy Catherine Connolly: It is very low.

54 25 OCTOBER 2018 Mr. John McCarthy: The target in Rebuilding Ireland is to get to 25% by 2021. This means that every property would be inspected on average once every four years.

Chairman: That issue came up before. Under the legislation, all properties are required to be inspected.

Mr. John McCarthy: Is the Chairman referring to the HAP properties?

Chairman: Yes.

Mr. John McCarthy: I was talking about rental accommodation generally.

Chairman: Whatever Rebuilding Ireland 2040 has said with regard to a target of 25%, when the legislation says that there must be 100% inspection who gave Mr. McCarthy the authority in this plan to set aside 75% of the legislative inspection requirements? The Department is only targeting 25% and it should be targeting 100%. Somebody made up this 25% figure and there is no legal basis for it.

Mr. John McCarthy: Sorry Chair, there are two different things there. The 25% figure is for all private rental accommodation. There are some 320,000 tenancies, many of which are not supported by HAP or any other scheme. That 25% is of all private rental tenancies. The other target is a statutory requirement that neither I nor anybody else - other than the Oireachtas - can change. That requirement remains. When I was before the committee last I said that the De- partment was doing a piece of work that we would finish by the end of the year to pull various data systems together that would actually tell us how many are HAP properties. That statutory requirement has not changed.

Chairman: In other words, this report will tell the Department how much in breach of the law it is.

Mr. John McCarthy: Hopefully it will show how in compliance with the law we are.

Chairman: Or in breach. Both sides.

Mr. John McCarthy: Both sides.

Deputy Catherine Connolly: I have a specific question for Mr. McCarthy. My colleague, Deputy Catherine Murphy, asked it but was not answered. It refers to page 123, in paragraph No. 10.25. the Deputy asked about an annual management and maintenance fee. Mr. McCarthy went back to talk about the payments of the loans. This is, however, in addition to the loans. The local authority pays the approved housing body an annual management and maintenance fee. Will Mr. McCarthy explain what that is?

Mr. John McCarthy: As part of the capital loan and subsidy scheme there are the loan re- payments and there is a management and maintenance fee. I believe I gave the Deputy a figure of about €68 million in total-----

Deputy Catherine Connolly: No. Mr. McCarthy did not give any figure. He gave a figure for the loans.

Mr. John McCarthy: I think the figure I gave was a total figure. I believe that some €5 million of that is for management and maintenance. I can check that for the Deputy.

Deputy Catherine Connolly: €5 million. What does management and maintenance mean? 55 PAC Mr. John O’Connor: I will come in on that. It is covered in the capital loans subsidy scheme. The approved housing bodies collect the differential rents but that is not sufficient for management and maintaining the properties. For each property they get approximately €480 per annum as a management and maintenance allowance for every HAP property under that scheme also. That is approximately €5 million per year. In addition to the differential rent col- lected on those properties a management and maintenance allowance is provided.

Deputy Catherine Connolly: Is that paid over by the Department or by the local authority?

Mr. John O’Connor: It is paid by the local authorities. The funding comes from the De- partment to the local authorities, and then on to the approved housing bodies.

Deputy Catherine Connolly: Does every single approved housing body get that?

Mr. John O’Connor: Every single approved housing body that has a property that is provided under the capital loans subsidy scheme. It is for the general social housing

Deputy Catherine Connolly: My time is going to be limited and I want to come back to that before I finish. There are so many schemes here and the Comptroller and Auditor General refers to the complexity. Because of this complexity it leaves less oversight. This is of serious concern. Does the Department have data on how the total number of social houses and the nature of the tenures that are held by the voluntary bodies? When I started out as a councillor, we were told there was no difference except that a person could not buy the house. I now learn that over the years there are different tenure times. Instead of having a house for life, a person now might have it for ten or 20 years. I would like to come on to a different question before I am stopped; what is the exact number of houses held by the voluntary bodies? What is the nature of the tenancies and what are the durations and the maintenance fees paid? If I could have that information, it might come back later through the Chairman.

I have looked at the Housing Agency reports and have no idea why the agency is necessary. Forgive me; it is not personal. I have no idea. The agency gets a €70 million plus revolving fund and in addition there are all the salaries and administration costs. I do not like the word “quango” but to me it appears to be another unnecessary level of bureaucracy. The money should be going straight to the local authorities. That is my preface.

Chairman: Deputy, I do want to finish before the vote. If there is time we can all get back in again.

Deputy Catherine Connolly: How many houses has the Housing Agency purchased? It changes. Under the €70 million, I see a figure of 487. I see a different figure of 500 and something, and then a different figure. How many houses, apartments or units has the agency bought under the €70 million plus?

Mr. John O’Connor: We are buying houses on an ongoing basis-----

Deputy Catherine Connolly: How many-----

Mr. John O’Connor: -----we bought 470, actually bought and completed the purchase of 487-----

Deputy Catherine Connolly: The witness tells us it is 487 and the annual report tells us 536. I have a different figure from somewhere else. Specifically under this programme we are told the agency has purchased 536 houses and apartments under the rolling fund. Under the 56 25 OCTOBER 2018 public statement, the figure is 487. Precisely how many apartments and units has the agency purchased? Is there a difference or a distinction overall of which units are social housing? If the Housing Agency does not have an answer today could we get it?

Chairman: Mr. O’Connor can send it on.

Deputy Catherine Connolly: Does Mr. O’Connor have the answer?

Mr. John O’Connor: Under the €70 million fund we have bought 487 houses and apartments. We have also been buying houses for local authorities. We can send on the details with regard to the difference in the numbers.

Deputy Catherine Connolly: Please clarify that. My final question is under research expenditure. This figure for research has jumped from €249,731 up to €320,516. Research is great. Did the Housing Agency do any research on Airbnb?

Mr. John O’Connor: We did not do any research on it.

Deputy Catherine Connolly: Did the agency do research on Galway city, which has an equal housing crisis to Dublin, where no local authority house has been built since 2009 and where the HAP is the only game in town, as my colleague said earlier? What research has the agency done on Galway or on the HAP scheme? The HAP scheme is going up to €431 million next year. What research has been done on that because they are not available in Galway under the limits? That is my final question.

Mr. John O’Connor: We have done an amount of research on the HAP scheme. With regard to our overall research we carry out specific research projects, including in the area of homelessness. A lot of the funding for the research carried out by the Dublin Region Homeless Executive comes through the-----

Deputy Catherine Connolly: I understand that, and I can only ask questions within my time. Galway has a serious housing crisis. I am asking Mr. O’Connor what specific analysis his organisation has done. It is nothing. The agency did not look at Airbnb. No initiative has come to say this policy is difficult here and it will lead to a worsening of the crisis. I do not see that coming out of any single piece of research or paper that the agency has done.

Chairman: I want to move on. There may be an opportunity to come back in again.

Deputy Shane Cassells: I welcome Mr. O’Connor and the staff from the Housing Agency, as well as Mr. McCarthy and the staff from the Department. I thank them all for their work and support.

At this committee last month Mr. Brendan McDonagh, chief executive officer of NAMA, was questioned on its remit in respect of the role of housing in the Comptroller and Auditor General’s report and disclosed that 6,984 social housing units were offered to local authorities in the State, but only 2,717 units were availed of. Following on from that, I asked the Minister, via a parliamentary question, the reason not all units offered were availed of. The answer I received was that the Department, the Housing Agency and the local authorities worked systematically through the full list of homes supplied to determine if there was a social housing demand for the properties identified. There are tens of thousands of people who have been languishing for years on waiting lists. The average waiting time in my county is around eight years. I am sure that it is similar in other constituencies. The word “systematically” was used.

57 PAC Huge resources are being expended on the housing assistance payment, HAP, increasing with every budget. Can the witness please explain what the Minister meant in his reply? He specifically mentioned the Housing Agency. How is it the case that 61% of the properties offered by NAMA were deemed not fit?

Mr. John O’Connor: To put this in context, we have been working with NAMA, along with the Department, to get as many houses as possible from NAMA’s loan portfolio for social housing. I have one clarification in terms of the numbers provided. The original number identified by NAMA was 6,951 properties. Of those, 1,843 were sold, so the actual number available from NAMA was 5,108 properties. It is important to clarify that. More than half of those properties that were available from NAMA will be provided as social housing. The properties that were deemed not suitable by local authorities included holiday homes and large houses in golf villages, but more importantly there were some very large developments in parts of the country, for example over 500 apartments in one local authority area in one development, which had already been partially allocated to local authorities under Part V provision. It was decided that 65 additional apartments was an appropriate number so as not to cause an over-concentration of social housing in that area. Similar scenarios played out in other locations. There were large concentrations of social housing and it was decided to only take some of those properties. In my opinion, the decisions taken by the local authorities as to what properties were suitable were reasonable.

Deputy Shane Cassells: Even if the 1,843 properties which were sold are taken out of the total, that still means that 50% of the total was not accepted by the local authorities. There is no way that NAMA offered 2,500 holiday homes to the local authorities. The Secretary General has said that he does not want the Department to issue missives or directives in terms of what the local authorities do. When I asked this question I was told that as part of the process the Housing Agency has been liaising and in direct contact with all the relevant local authorities to discuss the demand requirements, and that it was for the Housing Agency to co-ordinate the response to NAMA. It seems to me that is exactly what is happening here. The Secretary Gen- eral has said that the Department is not issuing directives or missives, but the Housing Agency seems to be acting in a very controlling way, deciding the properties that were picked and were not picked. It is not the CEO of the local authorities deciding things here, but rather the Hous- ing Agency. Mr. McCarthy used the phrase “an over-concentration of social housing”. In the midst of a housing crisis, that is a terrible statement.

Mr. John O’Connor: In terms of-----

Deputy Shane Cassells: Can the witness tell us who is making the call here? The Minister has firmly suggested that the Housing Agency co-ordinated the response, with the result that only 50% of these homes were taken up.

Mr. John O’Connor: The Housing Agency co-ordinated the response. We worked with NAMA. Indeed, we provided staff to NAMA to identify all of the residential properties. Having identified the available properties in NAMA’s loan portfolio, the Housing Agency approached each local authority with a list of properties in each area and asked the local authorities to decide which of those properties they considered suitable for acquisition for social housing. We liaised with each local authority and acted on their responses. If we thought the local authorities were rejecting properties we thought suitable, we pushed them on that. However, at the end of the day we accepted the view of the local authorities. They had to be supported, and in my opinion they took reasonable decisions.

58 25 OCTOBER 2018 Deputy Shane Cassells: The OPW, which appeared before this committee last week, told us that squandering €11 million on empty office space was a good deal. We are now hearing that rejecting 50% of a portfolio of homes offered for social housing is reasonable. It is not reasonable. The response goes to the heart of the matter in terms of what is deemed suitable and not suitable. Elsewhere in the answer we were told that some of the homes offered were located in areas where there is no demand. I know of nowhere on the housing list I am looking at where there is no demand. Indeed, it is the complete opposite.

It was said that where units were declined it was due to the need to avoid over-concentration of social housing units. I ask again if this an example of the philosophy of the Housing Agency influencing the fact that we are not going into a construction phase and are instead dependent on HAP?

Mr. John O’Connor: The decision on the appropriate mix of housing is a decision for the local authorities. The local authorities-----

Deputy Shane Cassells: That is what I mean. Is the Housing Agency saying it should not be the case? The Housing Agency is blaming the local authorities, and the local authorities are blaming the Housing Agency. I want to get to the root of this. It is good that all relevant people are together in the same room.

Mr. John O’Connor: In respect of the NAMA properties, the Housing Agency did not take a view on what represents over-concentration or what the proper mix of housing is.

Deputy Shane Cassells: The Minister has said that it did take a view.

Mr. John O’Connor: I am not putting it on the local authorities, but it was a decision for each local authority. They know the particular areas in question, and we accepted their judgment in this situation.

Deputy Shane Cassells: This goes to the heart of every frustration we have here in terms of dealing with bodies with responsibility in this State. I asked the Minister for Housing, Planning and Local Government how, at a time of a housing crisis, 50% of houses offered for social housing can be discounted because they have been deemed not suitable. The Minister is blaming the Housing Agency and the Housing Agency is blaming the local authorities. Who is ultimately responsible and who is driving the philosophy?

Mr. John McCarthy: To clarify, the Minister’s response to the parliamentary question refers to the Housing Agency. The Housing Agency was used as the vehicle for co-ordinating the activity and for working with the local authorities but as Mr. O’Connor has said, decisions on demand in different areas and any issues of over-concentration were taken at local level. I do not want there to be any misinterpretation. The Housing Agency was not overriding local authorities but was merely the vehicle for co-ordinating the inputs from the various local authorities. There is a Government policy dating from 2007 on delivering homes and sustaining communities. It does have a sustainable-communities philosophy at the heart of it that points to the issues and difficulties associated with large concentrations of social housing in particular areas. It is not always the case that there are issues but in some cases in the past there have been.

Deputy Shane Cassells: I was not drawing Mr. John McCarthy into this at all but he has jumped in. The interpretation of sustainability frustrates the life out of me. I was raised in the middle of a large town with council estates on every side. We seem to have lost the phrase “council estates”. I did not differentiate between private homes and council homes. They were 59 PAC very good communities. Again, I return to the philosophy that meant local authorities were deeming 50% of the available homes in the midst of a housing crisis not suitable. We are talking about the need to avoid over-concentration. At what point does over-concentration kick in?

Mr. John McCarthy: The point is determined by the facts on the ground. I am not in any way referring to bad communities. I am not in any way casting aspersions on anybody. I am just saying there has been a Government policy in place since 2007. In framing that policy, account was taken of instances in the past where very significant developments with social housing only did not work out. Of course, there are developments that did work out, and they have very strong communities. There were areas, however, where they did not work out. It serves as a caution-----

Deputy Shane Cassells: We do not have time to get into the myriad of reasons they did not work out. At the start of the noughties, substantial council estates were still being built in my town. In tandem, funding was got from the Department to build community centres in the middle of them to make sure they worked as sustainable communities. Swimming pools and so forth also were provided.

In Mr. John McCarthy’s opening statement, he said on-the-ground activity and delivery can be accelerated only by the local authorities, the Housing Agency and the approved housing bodies working in partnership. We have a letter today from the CCMA. Its representatives did not come here today to discuss this most critical issue pertaining to the country. Therefore, it is somewhat hard to find out about on-the-ground activity. Mr. John McCarthy did not make reference to quarter 2 of this year and to the fact that, of the 200 projects of a scale involved in the one-stage approval process, only 12 have gone through. What is going on with the local authority system if that is the figure?

Mr. John McCarthy: I do not know. We did investigate it when we were not getting a response. In the previous version of the one-stage approval process, we did get very strong indications from the local government sector that it was too risky for it. We did take a number of steps to de-risk it. It still does not seem to operate as expected, as I mentioned.

Deputy Shane Cassells: Mr. John McCarthy must be frustrated. I am a strong believer in autonomous local government. If a stage is reached where the local authorities are not delivering, the Secretary General and Minister must be saying at the meetings with all the city and county managers that they are not delivering or prepared to take risks, and they must be ques- tioning the point in having them in the first place.

Mr. John McCarthy: I share the Deputy’s frustration. Despite putting a system in place in the first instance and then revising it in order to address the issues that were being put to us, the take-up has not been any way near to what it should be. This is quite frustrating.

Deputy Shane Cassells: It is not good enough. I am not blaming Mr. McCarthy. There is a problem at local government level but he is the Accounting Officer for local government. There is a significant amount of money in the Vote in this area. I have touched on one area in which, as a result of what is happening, we are ending up having to spend more money on HAP. There was a report in the newspapers yesterday and today that 3,500 council-owned homes are vacant. Who is accountable? I am asking questions here and being told by the Housing Agency that the local authority bosses are responsible, the local authority bosses are telling me the agency is responsible, and the Minister is saying something different. If there are 3,500 homes vacant for a prolonged period and 2,500 social homes being refused by county and city managers, is it

60 25 OCTOBER 2018 not time to say the system is broken at local government level and centralise the whole system and be done with it?

Mr. John McCarthy: I am not going to stray into policy.

Deputy Shane Cassells: This is not a laughing matter. CCMA representatives did not attend today. We will write to them again asking them to do so. There is no point in Mr. John McCarthy, as Accounting Officer, and the Minister allocating significant funds to the local government system if it is failing to deliver.

Mr. John McCarthy: It is certainly failing to take advantage of efficiency in the system. The programme has certainly been ramped up quite significantly. In fact, last year we had to get a Supplementary Estimate of €100 million to be able to support it. One can see in the construction status report that the programme is ramping up. What is occurring is frustrating, however, considering that there are mechanisms that can accelerate delivery.

With regard to the voids issue that the Deputy raised, the local authorities are accountable to their elected members and to the National Oversight and Audit Commission. It is in the public domain for the National Oversight and Audit Commission to shine a light on it. It is cold com- fort in many respects that the average re-let time is actually coming down. The position was actually worse in 2016. This is the second year in a row in which the re-let time has come down but it is still too long, on average. It is too long an average because the local authority-by-local authority breakdown shows there is a very significant range. Some local authorities can actually re-let properties very quickly. We have to get best practice rolled out across the system.

Deputy Shane Cassells: I want to ask about whether LIHAF is delivering what it is supposed to deliver. In my county, there has been no substantial progress in the two schemes that were acknowledged. I do not want to focus on my county but on the general situation. Since the inception of LIHAF, how many finished units have been made available through both private schemes and council-delivered schemes?

Mr. John McCarthy: Finished units would really be expected in 2019, 2020 and 2021.

Deputy Shane Cassells: What is under construction?

Mr. John McCarthy: The roll-out of the LIHAF projects has been slower than we would have liked. It took quite a bit longer then we would have liked to get signed-off agreements between the local authorities and the landowners concerned that would allow us to ensure we would have some value and speed of delivery. At this stage, two of the LIHAF projects are under construction, and I believe another seven or eight are in procurement.

Deputy Shane Cassells: How many were there in total in the scheme when it was first initiated?

Mr. John McCarthy: Thirty.

Deputy Shane Cassells: Thirty nationwide. Two pieces of infrastructure are under construction to enable work on the landbanks.

Mr. John McCarthy: One is in Fingal, in Deputy Farrell’s area, and the other is in Limer- ick.

Deputy Shane Cassells: How many are at planning stage?

61 PAC Mr. John McCarthy: Another seven or eight are in procurement at the moment. Some of those will go on site before the end of the year. Does Mr. Walsh want to elaborate?

Mr. David Walsh: Yes. Four will be started before the end of the year and a further seven will start in quarter 1 of next year. To answer the Deputy’s other question, 600 units are to be delivered on the sites before the end of this year.

Deputy Shane Cassells: Six hundred on the two that have commenced.

Mr. David Walsh: Yes. In some cases, one could actually build in parallel because one knows the enabling infrastructure will open up the site eventually.

Deputy Shane Cassells: I have a final question for Mr. John McCarthy, on land acquisition. Through the land aggregation, LAG, scheme, the Department is dealing with a series of bad land deals. Notwithstanding that, there is a definitive need for land acquisition in certain counties, especially the commuter counties. Mr. John McCarthy was kind enough to supply a table on what is in council ownership throughout the country. In my county, there are nine local authority sites zoned but only one of those is a substantial landholding. The rest are all smaller than 1 ha. The substantial one is part of a LIHAF scheme that has not kicked off. What is the position of the Department on acquiring landbanks in commuter counties to try to develop council homes?

Mr. John McCarthy: Before I get to that, the first thing we wanted to do was to try to build up a good overall picture of what the land bank of local authorities was. We have that mapped now on the Rebuilding Ireland land map. There are just over 700 sites across the local authorities. That was the first piece that we wanted to put in place.

Deputy Shane Cassells: Is it 700 in local authority ownership or in State ownership?

Mr. John McCarthy: It is 700 in local authority ownership. It does make a first step at mapping I think approximately 30 other State-owned properties, but the 700 are local authority ones. We wanted that as a baseline so that if we got applications in from local authorities to borrow money for land, we would be able to say, “You’ve either got this land or you don’t.” That has been hugely important. We have not had a significant demand for land loans. I do not want to say we are open for business - that is not it - but if a local authority was to come to us we would certainly look at it. I think in the Deputy’s own county we did actually approve a land loan earlier on this year. I am not sure that it has actually been drawn down yet, but it has been approved.

The Deputy could count on the fingers of one hand the number of loan applications that have come our way in the last number of years. I suppose we would really look at it on a local-authority-by-local-authority basis. We do it as part of the engagement we have with local authorities on their social housing programme because as we look forward for what they plan to deliver in the next three or four years, one of the questions that we absolutely engage with them on is asking where the land to deliver those sorts of units is so that we are planning forward.

Deputy Shane Cassells: I appreciate it is very difficult for the departmental officials once the State enters the market in terms of the price and the acquisition. Are directors of housing looking at possible existing land banks? Is preliminary work done with departmental officials to identify if it is something that could be progressed?

Mr. John McCarthy: I would not say it is being done collectively within the system, but

62 25 OCTOBER 2018 many local authorities are very active in that space, primarily because they now have their social housing targets out to 2021. They need to start to think if we are going to deliver X number of units in 2021, we need to get through the construction and the planning, but before we ever get there we need the land. They are actually getting into that space, so it is a much more structured and forward-looking arrangement. If there was a need for land and if it was available at an appropriate price, subject to the local authority’s capacity to be able to service it, we would approve it

Chairman: I will suspend in a moment for voting in the Dáil. I propose we resume at 2 o’clock.

Before we suspend, will Mr. McCarthy have for us the numbers of people who left homelessness over each of the years? Over lunch, will also get to the secretariat the copy of the minutes we spoke about involving the Department? Finally, there is an obvious question on which Mr. McCarthy may have a note. I ask for a simple breakdown of the €1.4 billion on housing last year. How much went on construction, purchases, HAP, leasing, maintenance and improve- ments? He should probably know that off the top of his head. He should have that by the time we return at 2 o’clock. I do not know how much of the €1.4 billion went on construction. He knows what we are looking for.

Sitting suspended at 1.04 p.m. and resumed at 2.10 p.m.

Chairman: We resume our discussion of chapter 10, concerning funding and oversight of approved housing bodies, the appropriation accounts 2017 and Vote 34, specifically the housing aspect of the Vote. We are also reviewing the Housing Agency financial statements 2017. The next speaker is Deputy Alan Farrell.

Deputy Alan Farrell: I thank our guests for attending and for their efforts in their various Departments. The Department of Housing, Planning and Local Government in 2017 spent about €1.4 billion, I believe, of which €230 million-odd on rents. Could the witnesses indicate to the committee how much was recouped in terms of the receipt of tenants’ rental payments to the State? I ask the witnesses to give me a figure for that later. Could they also provide the committee with a list of active approved housing bodies as opposed to a full list of approved housing bodies? I think that would be quite useful for the committee’s consideration. Fur- thermore, how many approved housing bodies have been removed in the past five years, for example? Perhaps ten years would be a good indication as to how many have withdrawn from the market. I would be very interested to see a figure for the total sum of money provided to approved housing bodies as a separate figure to that which has been spent by the Department on the provision of housing. If the witnesses can answer these questions straight up, I ask them to do so, but if they want to take some time to gather them together, that is fine. I will move on.

What percentage of the LIHAF funding has been drawn down? The witnesses might be able to provide us with a note on this and perhaps break down the figure per application. Is there a specific policy within the Department which precludes the development of large-scale social housing or is it just the case generally that the Department believes it should not engage in such developments because it would like to try to learn from the past? Would Mr. McCarthy like to try to tackle those questions?

Mr. John McCarthy: Yes. I was scribbling as the Deputy was talking so I might need him to come back to me on some of them.

63 PAC I am not sure I have with me the figure for the total differential rents which accrue to local authorities-----

Deputy Alan Farrell: In 2017.

Mr. John McCarthy: -----but we can-----

Deputy Alan Farrell: Perhaps Mr. McCarthy could come back on that.

Mr. John McCarthy: We can do that.

Perhaps Mr. Fitzpatrick or someone else on the regulatory side could answer the question about AHBs that have been removed from the system in recent years.

Mr. John O’Connor: I will cover that. This is done in two ways. A few years ago, every approved housing body was identified and the ones that were inactive were contacted with a view to their delisting. There was a significant number of them. I would have to come back to the Deputy with the figure-----

Deputy Alan Farrell: Please do.

Mr. John O’Connor: -----but probably of the order of 100 were removed.

Deputy Alan Farrell: What qualifies a body to become an approved housing body? What checks and balances are performed in order for it to become an approved housing body?

Mr. John O’Connor: Under section 6 of the 1992 Act, the Department has set down a set of requirements to be approved. Among the requirements are that the body must be set up as a charity, its constitution must contain certain conditions, it must set up a board with a minimum number of-----

Deputy Alan Farrell: Does the Department have oversight over this? Is there a secondary oversight or a parliamentary oversight over this?

Mr. John O’Connor: It is a function decided by the Department of Housing, Planning and Local Government.

Deputy Alan Farrell: Functional oversight would involve the housing committee.

Mr. John O’Connor: No. It is done internally by officials in the Department of Housing, Planning and Local Government.

Deputy Alan Farrell: Mr. O’Connor is saying there is no oversight function.

Mr. John O’Connor: No. There is-----

Deputy Alan Farrell: He is saying it could be introduced into committee, for instance.

Mr. John McCarthy: To clarify, we are not far away from publishing legislation to put in place a statutory regulator for the AHB sector. On Committee Stage this will go to the line committee.

Deputy Alan Farrell: I refer to the oversight, the auditing, the probing of how AHBs are spending their money and the figure I asked for, which, again, the witnesses can provide in due course: the number of properties and the cost of the delivery of those properties through AHBs 64 25 OCTOBER 2018 and then our own direct delivery, either through the Department or local authorities. I would be interested to know those figures and then the actual number of properties delivered in both those categories. If the witnesses could try to indicate those figures to me, it would be helpful.

Mr. John McCarthy: Looking at the overall funding for housing in 2017 and breaking it down between AHBs and local authorities, about €229 million would have gone to AHBs and €1.07 billion would have gone to local authorities, so it is a ratio of about 4.5:1.

Deputy Alan Farrell: What about the number of dwellings?

Mr. John McCarthy: The number of dwellings delivered by each - give me one second-----

Deputy Alan Farrell: While Mr. McCarthy gets that, I will move on. In recent days there has been quite a stir about one particular contractor hired by the Department of Education and Skills and also, I believe, by local authorities or perhaps directly, namely, Western Building Systems. I understand it has delivered some social housing. How confident are the witnesses that those units, whenever they were delivered, are robustly developed? Do they present any safety concerns to the Department?

Mr. John McCarthy: Certainly, as of right now, there are no safety concerns. They would have been involved in the first of the rapid-build housing projects, the one that was done in Ballymun. They may have got other contracts as well-----

Deputy Alan Farrell: Have they been inspected?

Mr. John O’Connor: I can take that question. Yes. As far as we are aware, one scheme was done by Western Building Systems for Dublin City Council. In that case, it was after the introduction of a new building control system came into play.

Deputy Alan Farrell: Post-2014 then.

Mr. John O’Connor: In that case Dublin City Council carried out a very extensive set of inspections during the manufacture of that housing-----

Deputy Alan Farrell: Mr. O’Connor is confident they are-----

Mr. John O’Connor: Yes, one would be very confident. Very importantly, Dublin City Council put inspectors into the factory in Northern Ireland.

Deputy Alan Farrell: Have the units been inspected since they were delivered on foot of the information that is now in the public domain?

Mr. John O’Connor: That is something that the Deputy would have to check with Dublin City Council, but I would be confident that it carried out very robust inspections.

Deputy Alan Farrell: I accept that.

Could the witnesses outline to me the number of individuals in the State who are either in emergency accommodation or being supported by the State through the HAP scheme or any other scheme and who do not have a right to permanent housing?

Mr. John McCarthy: In terms of mainstream social housing, I would say there is none. The prime area in which people without housing entitlements would be supported would be in homeless emergency accommodation. 65 PAC Deputy Alan Farrell: That is exactly what I am asking. How many people in emergency temporary accommodation do not have a housing right?

Mr. John McCarthy: I would need to drill down into the Dublin Region Homeless Execu- tive, DRHE, figures. It did a report earlier this year which stated that about a third of families presenting as homeless did not have a housing entitlement.

Deputy Alan Farrell: One third?

Mr. John McCarthy: That is my recollection. I will come back and clarify.

Deputy Alan Farrell: That would be helpful.

Could Mr. McCarthy outline the number of family hubs delivered, the numbers of persons housed in them in 2017, and the cost involved?

The sole purpose of the Committee of Public Accounts is to probe financial expenditure so I will move to that. I believe the Department has an extra €60 million this year for the provision of hubs across the State. Looking back on 2017, the year we are analysing, does Mr. McCarthy believe it is offering good value for money in terms of the time it takes to create a hub and the amount of time it takes to find permanent housing solutions for the residents of those hubs?

Mr. John McCarthy: To go back to one of the questions the Deputy asked as a follow-on from the funding breakdown between AHBs and local authorities, in terms of the unit breakdown and build acquisition and lease, there was a total of 7,095, 2,330 of which were AHBs, which is about a third. Two thirds then were-----

Chairman: What did the witness say those figures were?

Mr. John McCarthy: Out of 7,095, it breaks down as 2,330 AHB and 4,765 local authority.

Deputy Alan Farrell: Did Mr. McCarthy say the cost is approximately a ratio of 4:1?

Mr. John McCarthy: Yes.

There are 20 hubs with family accommodation for more than 500 families in place. The Department has spent €19 million on the provision of family hub accommodation this year. The family hub programme was introduced primarily to provide better transitional accommodation than resorting to hotels. On the basis of projections by the local authorities for 2018, as part of their homeless budgets, the cost of a family in a family hub is the equivalent of about €36,000 a year. The average cost in 2017 for a family in a hotel was about €67,000. Obviously, there is a capital cost associated with a hub, but the running costs are significantly less and it is a better service.

Deputy Alan Farrell: How many people exited the hotels in 2017?

Mr. John McCarthy: Bear with me one second. I am told approximately 2,400.

Deputy Alan Farrell: I do not know if Mr. McCarthy will be able to answer these questions, but what is the average build cost of an average three-bed, semi-detached house versus the acquisition cost in the State?

Mr. John McCarthy: The average construction cost in the mainstream local authority programme, across a mix of units, is about €214,000 and the average acquisition cost, from a sam- 66 25 OCTOBER 2018 ple taken in the fourth quarter of last year and the first quarter of this year, is about €177,000.

Deputy Alan Farrell: The acquisition is significantly-----

Mr. John McCarthy: Yes, and that would reflect that much of the acquisition activity is in areas of the country where prices are still-----

Deputy Alan Farrell: I understand. That is as opposed to where demand is, which is mostly in the cities. Have any housing estates been developed in the past five years where there has been no provision of social or affordable housing?

Mr. John McCarthy: That depends on when they got their planing permission. Part V changed in 2014. If permission was granted after that, it would have been 10% social. If the permission was granted prior to that, it would depend. In some cases, the mix could have been 20% entirely social, or it could have been a mix between social and affordable housing.

Deputy Alan Farrell: Deputy MacSharry was getting to the issue of the lack of personnel in certain local authorities earlier and he continually referred to Fingal County Council. I am very proud of the work that is done in Fingal County Council. The Minister and I visited the area last Friday and were told a target of 1,376 housing units were to be provided over a three-year period. Fingal has delivered 2,241, which is a significant increase on the target it was given. I was informed it was also going to significantly exceed the target it was set last year. Why are other local authorities not able to match that? Housing output is in single figures in certain local authorities in the State. I appreciate there may be a lack of expertise in some local authorities but Mr. McCarthy outlined to me that, over the various stages of the drawdown of the funding provided to the local authorities during the development of a scheme, they would get €25,000 for doing very little. That sounds like the sort of money one might pay to an architect to draw up an advanced, large-scale plan. That is not an excuse for a local authority not putting properties on public display for consideration for their development. In a less adversarial manner than was presented to Mr. McCarthy earlier, would he have a view on that? I have a firm view, based on what I have heard, but perhaps Mr. McCarthy would like to enlighten me further?

Mr. John McCarthy: There is a range of factors. It is still cheaper to buy than to build in some parts of the country. A significant proportion of some local authorities’ output is in acquisitions rather than construction sites. The Deputy referred to earlier conversations in relation to capacity and, while those issues would have been raised historically, one would imagine they should be resolved at this stage because of the type of arrangement that I outlined.

The programme was not far from zero in 2013 and 2014, so it takes a bit of time for that to ramp-up, although that should be resolved in 2018. It is a case of taking the targets that have been set and delivering on them.

A lot of local authority time has been spent on getting stuff through the Part 8 process. That pipeline of proposals is there.

Deputy Alan Farrell: Could I intercede for a second? If there is serviced site outside a provincial town with road frontage and correct zoning, is Mr. McCarthy telling me it is cheaper for the local authority to simply ignore that serviced, zoned site and try to find properties to buy within that provincial town for the provision of social housing? The point I make is that surely it should be doing both. It is not as if there is a lack of money. What I see in this example is a lack of will to do that. We have serviced sites with power, drainage and accessibility. If they do not have accessibility, that is what LIHAF is for, even if it is only a case of providing €100,000 67 PAC for a few hundred yards of roadway. If the Department has lots of money, which clearly it does, I am trying to understand why local authorities are not hitting their targets and why they are not developing sites that they may own and that are zoned appropriately and serviced or purchasing properties in their areas. I am just trying to understand what is the issue.

Mr. John McCarthy: I did not want to present it as a case of either-or. When I was talking about some places where local authorities have access to cheaper acquisitions that was just in terms of their relative share of the activity because those opportunities would present. When I think of my own town - and other parts of rural areas - where there would be a fair amount of vacant properties in the centre, it would make sense from a town regeneration point of view, apart at all from the point of view of meeting a social housing need. We would be quite supportive of local authorities in that regard. In many cases they would be properties that might have been on sale for a significant period and there was no market for them. For example, our buy-and-renew programme is targeted at town centres, particularly in the context of properties that probably nobody else is going to buy which we do up even if there is a site further out on the fringe of a town. The latter might be for the next phase of activity. The national planning framework refers to trying to build up the core. We are not be in any saying that it should be either-or. If local authorities come forward looking to do both and it made sense then we would support that.

Deputy Alan Farrell: With respect, Mr. McCarthy did not answer my question on why they are not doing both. I appreciate that there are lots of vacant properties. We are nearly four years into this crisis and various policies have been put forward for local authorities, which are now being fully funded. Mr. McCarthy illustrated the drawdown parameters for funding to each of those authorities in terms of bringing schemes to development stage. I do not think there is an excuse, but I am trying to understand the reason some local authorities have not done what they are supposed to be doing.

Mr. John McCarthy: On the building side, if one looks at the construction status report one can see that some local authorities did get out of the traps quicker than others. Deputy Farrell’s local authority is a case in point whereby we are seeing the product on the ground in terms of finished houses and people living in them. In other local authority areas, are at construction or final tender stage. All local authorities now have a significant programme but they are at different stages in terms of bringing projects to fruition.

Deputy Alan Farrell: As my time is limited, I will conclude by asking Mr. McCarthy to provide the figures in response to the questions that are outstanding. I am happy to provide him with the questions if he did not catch them all.

My final remark relates to the additional funding for the provision of family hubs. Mr. Mc- Carthy illustrated the cost of hotel accommodation versus family hub accommodation and it is clearly significantly cheaper. He mentioned the capital costs, which is what the €60 million is for. How many of those facilities will be delivered for €60 million? Does Mr. McCarthy have an idea of where they will be located? Are we looking primarily at the major cities, namely, Dublin, Cork, Limerick and Galway or are there other locations where there is proposed provision?

Mr. John McCarthy: That is where we would be looking at primarily but not exclusively. For example, one of the family hubs that is in operation is in Athy, County Kildare. It is really where it makes sense from a local authority’s perspective in terms of the homeless situation that they are dealing with. The bulk of what is going to come on-stream with the additional funding 68 25 OCTOBER 2018 is going to be in Dublin and the other main centres. The Minister is engaged in a process with the four Dublin local authorities to try to nail that quantity but we are talking about hundreds of additional family hub accommodation centres in Dublin.

Deputy Alan Farrell: I alluded to the fact earlier that a significant number of people are being supported in housing across the State who do not have a long-term housing entitlement. I am not targeting those individuals for any other reason than that it is not discussed. It is not something that is out there. We are not discussing the fact that there are large numbers of people who are not entitled to social homes because of their nationality. I would like more information to be provided to this committee, and perhaps even to the Joint Committee on Housing, Planning and Local Government. I have not seen those figures being provided and it would be very helpful in terms of getting the total figure so we have an idea of what we are dealing with. I hope Mr. McCarthy can do that.

Mr. John McCarthy: We can certainly do that. The information was evident in the context of some of the work the Dublin Regional Homeless Executive. These are individuals and families.

Deputy Alan Farrell: Absolutely.

Mr. John McCarthy: They have no long-term rights. We are supporting them on almost a day-by-day basis.

Deputy Alan Farrell: My point is that this is the Committee of Public Accounts. Our job is to scrutinise public expenditure.

Mr. John McCarthy: Absolutely.

Deputy Alan Farrell: It occurs to me that we are throwing huge sums of money at short- term housing for people without a social housing entitlement. We need to change the provisions in order that they have a housing entitlement and they get houses. We must stop spending vast sums of money on an annual basis on the provision of short-term accommodation and give them permanent residency here. There is no point in the State continuing to throw money at the situation, we need to put such people in homes. That is my point, lest anybody think I am saying this for other reasons.

Deputy Bobby Aylward: I welcome our guests. I am sorry that I missed some of the debate. I was present initially but then I had to leave due to other commitments. I apologise if I repeat questions that have been asked.

I will start with Mr. McCarthy and his report, which was glowing and it looked good in terms of where we are going. The view is that we seem to be getting on top of the housing issue but that is not the reality on the ground. I know this because I represent a rural constituency, Carlow-Kilkenny. The number of homeless people is at 10,000 plus and the waiting list is a mile long and is getting longer. The view Mr. McCarthy gave this morning in his presentation and what the ordinary Joe Soap sees happening on the ground are two different things. Figures are great but the reality is different. We are still in a severe housing crisis. That is well known and no figures will cover up that fact. I would like to get a comment from Mr. McCarthy on that first.

Mr. John McCarthy: In the context of what I said at the outset and in the answers I have given to Deputies over the course of the day, there has been no intention to cover up or to gloss

69 PAC over anything. I am simply putting the information and the data that we have out there. When I started this morning, I tried to do two things, first, to show the extent to which progress has been made, but I said very clearly that there is-----

Deputy Bobby Aylward: Does Mr. John McCarthy accept-----

Mr. John McCarthy: -----absolutely no room for complacency and we continue to actively monitor the situation. Deputy Cullinane and I talked about the housing emergency for what it is.

Deputy Bobby Aylward: So Mr. John McCarthy admits that the situation is not all hunky- dory and that we have a long way to go to even catch up. Is that correct?

Mr. John McCarthy: It is not a question of admitting anything, I am just repeating what I said at the start. There is no room for complacency because we have a long journey to travel.

Deputy Bobby Aylward: As long as that is recognised. The report seemed to suggest that things are better.

Mr. John McCarthy: That is fully recognised.

Deputy Bobby Aylward: I have a question about the mortgage-to-rent scheme, which is probably directed at the AHBs. I have tried to get AHBs to intervene and invest in mortgage- to-rent schemes in Kilkenny. I contacted a few of them and I was told they were not interested on the basis that it was too costly and there was too much difficulty attached. I was very disappointed with the response I got. I mentioned individual cases and I thought the AHBs would be interested in buying the houses and leaving the families in them. I also asked the county council but it said that it did not have a role to play in that regard but that the AHBs did. They could buy houses and take over the mortgage and leave people in their homes instead of allowing the banks to put people out of their houses and them having to go on the list for social housing. I thought there was plenty of scope for AHBs to buy such houses, or at least to look at them and see whether such an option would be viable, in order to keep people in their homes instead of them having to go on the social housing list. I would like someone to give me a reason they did not use the mortgage-to-rent scheme produced by the Government or use it better. I was very disappointed that, among the few I had contacted, they told me that they did not like the scheme, that it was not fit for purpose and that they were not interested in looking at the houses.

Mr. John O’Connor: On the mortgage-to-rent scheme, the bank must make the case in the first place.

Deputy Bobby Aylward: We went through all of this.

Mr. John O’Connor: If a household wishes to avail of the mortgage-to-rent scheme, the case comes before the Housing Agency and we seek an approved housing body.

Deputy Bobby Aylward: I know all of this, as we have been through it, but, ultimately, there was no one in the approved housing bodies willing to take on any of the houses, certainly among the ones I approached. When I asked them why, they said they were not interested in the scheme because there were costs involved in bringing houses up to a certain standard and so on. I said that was nonsense where there were people who had been living in the houses for 15 or 16 years, that it was their own house, that they would be glad to stay where they were and gladly pay the rent if left in situ. However, no one was even willing to look at the houses.

70 25 OCTOBER 2018 They went through the entire process about which Mr. O’Connor is telling me. They went to the banks and the voluntary housing bodies, but none of them would take up the houses. That disappointed me when the scheme was in place for that purpose.

Mr. John O’Connor: If there are particular cases, the Deputy could raise them with me and the Housing Agency directly.

Deputy Bobby Aylward: This was two years ago.

Mr. John O’Connor: If there are current cases, we will look at them and find out the reason. We will get a body to take them on.

Deputy Bobby Aylward: Is Mr. O’Connor saying that if I had contacted him instead of some of the voluntary housing bodies, this option could have been examined and facilitated?

Mr. John O’Connor: I expect that we would have been able to do so, yes.

Deputy Bobby Aylward: It is a pity that I did not know that at the time. I could go back to some of the people concerned who presumably are in the same position, not having managed to get out of the position they were in in the last year or two. I will follow it up.

Deputy David Cullinane: Sinn Féin will be sorting it out.

Deputy Bobby Aylward: Sinn Féin has money than we do. It gets it from different sources. I will move on.

In the case of voluntary housing, there is a system under which tenants are not allowed to buy out their houses. I was a member of a local authority for 20 years prior to coming into the House and always wondered why people could not buy out their house in the same way one could buy from the county councils and so on. Families have a house and will pay a mortgage for ten, 15 or 20 years, but they can never own it. I always thought that was wrong. Taxpayers money was put into such housing. If someone is long enough in a house, say, for seven years, he or she should be allowed to buy it out. Will the Housing Agency ever consider changing that provision in order that houses could be purchased and bought out?

Mr. John O’Connor: Departmental and Government policy has been not to provide for tenant purchase in the case of houses provided by approved housing bodies. It might be something that could be looked at. The decision not to allow tenant purchase was based on the funding put into them and retaining social housing. It is not the approved housing bodies that are deciding not to sell; it is due to Government policy.

Deputy Bobby Aylward: There will be hundreds of thousands of houses held by voluntary housing bodies if this policy continues. All of the families who reside in them will never be given the opportunity to buy them. That policy is wrong and needs to be changed, whether at agency’s level or the level of the Department or the Government. If a family have been living in their house for seven to ten years, they should have the opportunity at some point to buy it out and live out their days in it. I do not know who is responsible. I have tried to suggest this several times, but no one is giving me an answer as to why it cannot be changed.

Mr. John O’Connor: It is a matter for the Minister and the Government.

Deputy Bobby Aylward: Can I ask Mr. McCarthy the question?

71 PAC Mr. John McCarthy: As Mr. O’Connor said, the policy is for approved housing body properties not to be subject to tenant purchase. It is partly tied to their charitable status and their core purpose and memorandum and articles of association. There is nothing in life that is not changeable. We are carrying out a review of the local authority tenant purchase scheme. It would be a policy matter if the situation was to be reviewed, but it is not on the agenda.

Deputy Bobby Aylward: I ask Mr. McCarthy for his personal view on whether a family living who have been living in a house for ten or 15 years should be given an opportunity at some point in their lives to buy out their house. The rent they pay under the rent-to-buy scheme could be used to purchase more houses as social and voluntary housing. It is a shame that this option is not being taken up.

Mr. John McCarthy: I hear what the Deputy is saying, but I will not express a personal view on a policy.

Deputy Bobby Aylward: Does it not make common sense?

Mr. John McCarthy: There is also a common sense view in favour of maintaining social housing stock in terms of the public investment made in it. Where the tenant purchase scheme is not available, it is sold at a discount. That is for good policy reasons, but there is a cost associated with it. Any extension of the tenant purchase scheme would have a cost implication attached to it.

Deputy Bobby Aylward: This is general information that I probably should know, but who actually owns voluntary housing? Is it the Government or the voluntary housing bodies?

Mr. John McCarthy: The voluntary housing bodies.

Deputy Bobby Aylward: All of that taxpayers’ money is used and they are owned by the voluntary housing bodies. Can they distribute them according to their will?

Mr. John McCarthy: No, there is approval. Under section 6 of the Housing Act 1992, in order to become an approved housing body, it must have in its memorandum and articles of association a prohibition on the distribution and sale of assets.

Deputy Bobby Aylward: They are non-profit and voluntary bodies, but they are still owned by private groups. This is taxpayers’ money.

Mr. John McCarthy: They are owned by private groups, but they are being used for the purpose of providing a public good in social housing.

Deputy Bobby Aylward: I question that. I will move to Part V housing. It was a big thing during the boom and nearly took over from the building of social and affordable housing from 2000 onwards. What percentage of Part V is working? Is the system still working as well as it was? Is it starting to pick up again now that the level of building has picked up? Are we beginning to depend on it again?

Mr. John McCarthy: We are starting to see a pick up in Part V delivery associated with the pick up in the delivery of private housing. In 2016 there were 69 social houses delivered through Part V. That figure increased to just over 500 last year and it is expected to approach 600 this year.

Deputy Bobby Aylward: What percentage of the total number of social houses does it

72 25 OCTOBER 2018 represent?

Mr. John McCarthy: In 2017 the number of local authority builds was 1,014; the number for approved housing bodies was 761, while there were 522 units under Part V.

Deputy Bobby Aylward: I was involved for a long time in local government. During the 1950s and 1960s it was always the local authorities which built houses. Is the Department pushing towards voluntary housing bodies in providing social housing instead of county councils? I know that some county councils are better than others in providing houses, but they are all turn-key. When I first entered local government, they were building houses and had their own engineers and staff to build them and so on. Now they look entirely to voluntary housing bodies or just buy them on contract. I am disappointed that that happened. We have lost many good staff. The rural cottages built in the 1940s and 1950s provided a service. Is it being pushed by the Department, rather than making the local authorities do what I reckon they ought to do, namely, build social and affordable housing? I am happy with our local authority in Kilkenny which has been very busy and is way up there. Other local authorities have not gone so far or have not built houses at all. It is a pity that that is happening. Why is there such a discrepancy between good and active local authorities and those that seem to be falling behind or not making any effort?

Mr. John McCarthy: It goes back to what I was saying to Deputy Farrell. The building programmes of all local authorities are being ramped up, but some are at different stages of pro- gression. I do not want to give a sense that we are pushing either local authorities or approved housing bodies over the other. That is not what this is about. Rebuilding Ireland aims to deliver 50,000 social housing units under the headings of build, acquisition and leasing in the period to 2021. Two thirds are to be delivered by local authorities and one third by AHBs. A 2:1 ratio is a very big part of our vision for local authorities.

Deputy Bobby Aylward: Is it left up to every local authority whether it has turn-key properties or gets in personnel and starts building? I am talking about value for money. Does Mr. McCarthy have statistics to indicate the value for money achieved by local authorities in the case of an average three-bedroom house compared to voluntary bodies? Is there a difference in cost between what a local authority would buy it for, on average, anywhere in the country and what a voluntary housing group would spend? Does it come in at the same cost?

Mr. John McCarthy: On the basis of the data at which we have looked, approved housing bodies have slightly lower acquisition costs. Some AHB projects cost less to construct, while some cost slightly more, but there is very little in it. Going back to some of the earlier conversations, we want local authorities to be in the driving seat and make judgments on where and how social housing is to be delivered in their area and to take a lead role in partnering with any AHB which can play a part. We have had quite a few more rural local authorities stating to us that in areas where they did not have land there were builders who had land but did not have access to capital. In many cases, turn-key properties are a vehicle to marry them and actually get activity going in delivering social housing where it is needed. We would be informed about the approach being taken in a local area by the local authority.

Deputy Bobby Aylward: With reference to pyrite, I see that the Housing Agency is mostly funded through State grants. The report of the Comptroller and Auditor General indicates that its income in 2017 was €34 million, while its expenditure was €33.1 million. Payments under the pyrite remediation scheme amounted to €25.3 million. For what part of the country is that figure? Is it for County Donegal or all over the country? 73 PAC Mr. John McCarthy: I was going to say Deputy Farrell would know.

Deputy Bobby Aylward: We do not hear about it in Kilkenny or the south east.

Chairman: We have good quarries down our way.

Deputy Bobby Aylward: We have good stones.

Mr. John McCarthy: It was primarily in the greater Dublin area. It was subsequently extended to south Dublin and Dún Laoghaire where some instances were found. It was primarily a Dublin phenomenon. Does Mr. O’Connor have statistics?

Mr. John O’Connor: North Dublin and County Meath are the areas most affected. I will explain the difference in pyrite between north Dublin and County Meath and counties Donegal and Mayo. In north Dublin and County Meath the pyrite is the stone underneath the ground floor slabs in houses and expands. The problem is confined because, as the Chairman said, of the stone supplied. It is a problem with the blocks used to build houses in counties Donegal and Mayo. It is a different problem. What is called pyritic heave is primarily a problem in north Dublin and County Meath.

Deputy Bobby Aylward: Does it mean that houses have to come down and be rebuilt or that remedial work has to be carried in situ?

Mr. John McCarthy: It is remedial work carried out in situ and the family has to leave the house. We take out the ground floor slabs and all of the stone underneath the floor, put in new stone, put back in the ground floor slabs and fill out the ground floor again. It is very disruptive for families.

Deputy Bobby Aylward: Who carries the cost? Does the builder or whoever supplied the pyrite originally have any responsibility or does it all fall on the taxpayer?

Mr. John O’Connor: A certain amount has been paid for by way of various court actions. One was taken by developers against the quarries. The Pyrite Resolution Board has sought funding from particular developers.

Deputy Alan Farrell: To my knowledge, no cases have been won which are not pending an appeal. The vast majority of private dwellings which were remediated privately were remediated through out of court settlements. They were not adjudicated on by the Judiciary. I am happy to show the Deputy photographs of my house when it was being remediated.

Deputy Bobby Aylward: If the material was not up to scratch, why was it allowed to go through the system and why did no one realise it would cause trouble down the line, with blocks starting to fall apart? With modern technology, one would imagine the strength of stone and cement would be one of the first things that would be tested. Why did that not happen? The taxpayer will probably have to cover most of the cost.

Mr. John O’Connor: It was caused by stone from quarries. People call it pyrite, but the problem is posed by sulphides. A very small percentage in the stone can cause a huge number of problems. There was a lack of awareness of the issues involved in the quarries. Perhaps in the past quarrymen, when they saw the stone, had better judgment than when it was being extracted by machines.

Deputy Bobby Aylward: Is Mr. O’Connor convinced that that has all stopped and that it

74 25 OCTOBER 2018 could not happen tomorrow morning in the case of another material being used that is not up to standard?

Mr. John O’Connor: I would not expect it would. The National Standards Authority of Ireland has tightened the controls.

Deputy Bobby Aylward: In other words, it is testing it and making sure it is up to scratch.

Mr. John McCarthy: It is testing it, but it has also improved the standards with regard to the amount of sulphide that is permitted to be used in stones supplied. Controls were not set previously.

Deputy Bobby Aylward: I see that in 2018 the Housing Agency held 243 ha of residential development land in 72 locations. The land was transferred to the agency from local authorities under the land aggregation scheme in operation from 2013. That seems to be a lot of land. Being a farmer, I know what a hectare of land is and it seems to be a lot of land to have lying idle, from what I am reading between the lines. I read that the witnesses are doing something with various sites. With the crisis we face, the agency is sitting on a lot of land. I would like an explanation as to why that land is not being utilised or built on as soon as possible?

Mr. John O’Connor: We are very focused on having that land developed. It is available to any local authority that wishes to utilise it.

Deputy Bobby Aylward: Did the local authorities hand it over to the Housing Agency? The report of the Comptroller and Auditor General states land was transferred from local authorities to the Housing Agency. They should have utilised it, but that is another story.

Mr. John O’Connor: It was handed over at a time when we had an economic crisis and funding was not being provided to deliver housing. Now that we are back in the building game again, local authorities are utilising a number of sites for developments. We have asked approved housing bodies if they are interested in some of the sites. We have a number of large sites to be developed. It will come within the remit of the Land Development Agency to provide funding and the capability to develop larger sites.

Deputy Bobby Aylward: We are being told all the time that there is no problem with funding and that money is available to build houses. As we have land and money, what is the problem? There are 239 ha available, yet the country has a housing crisis. That does not make sense.

Mr. John O’Connor: Where there are smaller sites on which from 20 to 150 houses can be delivered, they can be managed by local authorities or approved housing bodies. On some sites there are 500 or 600 houses to be delivered and there will be mixed development. It is about having the capability and the viability to deliver on the larger sites.

Deputy Bobby Aylward: When is it envisaged that that 239 ha of land will be utilised and that building will happen on it? Are we talking about three, five or ten years?

Mr. John O’Connor: I expect the sites in areas where there is a need for housing all to be developed within five years.

Mr. John McCarthy: Some 23 of the sites are at various stages in the construction programme.

75 PAC Deputy Bobby Aylward: Of the 239 ha.

Mr. John McCarthy: I do not have the acreage associated with them, but work on 23 of the sites is being moved forward under various housing programmes.

Deputy Bobby Aylward: The Department reports outputs on a scheme by scheme basis but does not report the size of social housing stock. It has figures for local authority stocks but not for the social housing held by approved housing bodies. It seems strange that it has all of the information on local authority stocks but nothing for the approved housing bodies, given that taxpayers’ money is involved. There does not appear to be good accountability in that regard. Can Mr. McCarthy say why the Department does not have that information? Is it good governance?

Mr. John McCarthy: In the earlier discussion we acknowledged that we needed to move on in getting a statutory regulation system in place for approved housing bodies.

Deputy Bobby Aylward: Why is it only happening now?

Mr. John McCarthy: Rather than wait to draft legislation and get all of that work done, our first step forward was to put a voluntary system in place. It is operated through an office in the Housing Agency.

Deputy Bobby Aylward: It is self-regulation.

Mr. John McCarthy: No, it is not. The process the regulation committee in the Housing Agency operates is such that if an approved housing body wants to obtain funding, it must sign up to the process and----

Deputy Bobby Aylward: Is Mr. McCarthy happy that the process is foolproof?

Mr. John McCarthy: In the years it has been operating - probably for three years at this stage - the process has shown itself to be quite robust. However, it is not based on statute, which is why we must move on the matter. We will be publishing the legislation very shortly.

Deputy Bobby Aylward: There is no regulation of approved housing bodies, but the legislation is being brought to fruition. How long will it take for regulations to be in place? They should have been in place first before all of the bodies were set up and granted their status. That is how there is good governance.

Mr. John McCarthy: There was a basic regulatory system in place in 1992 under which various requirements were set out that a body had to meet before it could be given approved housing body status. Obviously, the world has moved on significantly since. Rather than wait the length of time it would take to get a legislative regulatory regime in place, we put a voluntary system in place. Instead of there being no regulation, there is a voluntary regulatory system in place. To receive funding a body must subscribe to and go through it. We had discussions with some of the Housing Agency representatives earlier on how the process worked.

Deputy Bobby Aylward: What is the total number of approved housing bodies? At one time I thought there were only four or five, then there appeared to be ten or 12, but it now appears that there are hundreds.

Mr. John McCarthy: Over 500 have received approved housing body status.

76 25 OCTOBER 2018 Deputy Bobby Aylward: Where are they?

Mr. John McCarthy: Some of them are very small. In many cases, they would have been established purely for the purpose of undertaking one project.

Deputy Bobby Aylward: There are 500.

Mr. John McCarthy: There is an AHB in my home town and it was established purely to build six houses for senior citizens. It has no more ambitions than that.

Deputy Bobby Aylward: They are growing like mushrooms.

Mr. John McCarthy: That is one way of describing it. The Deputy said he previously had the view that the number was much smaller than over 500. In fact, 90% of the approved housing body stock that is registered with the regulator is in the hands of 50 AHBs. There are over 500, but we will go through a process before the regulatory system kicks in to identify the ones that are no longer active and remove them from the list. The vast bulk of the AHB stock is concentrated in a much smaller number of AHBs.

Deputy Bobby Aylward: Is there a need for 50? Most of the actions we are taking to achieve value for money aim to make groups smaller and amalgamate them. It is the preferred way to make them more efficient and effective. Instead of this, the number appears to be growing when there are so many of them. They are supposed to be non-profit, but there must be a reason for them starting. I am sure there is a manager and staff in each of them. They all have to be paid. They might be voluntary bodies, but somebody is paying somebody. Is it a waste of taxpayers’ money to have so many? Could the number be reduced to ten or 12 or could we have a target in that regard? As Mr. McCarthy said, perhaps 400 of them were set up to build a few houses. Are we talking about good management? It is crazy to have that many individual agencies.

Mr. John McCarthy: In the last while we have seen an element of consolidation and mergers of bodies. It has contributed to the fact that the vast bulk of the stock is concentrated in a small number of them. As the statutory regulatory system is put into place in due course, it is possible that we will see an increase in the process of mergers and consolidation. However, some of the approved housing bodies have a particular niche or focus. They might be focused on older people, homeless persons or people with a disability. There will always be these niche players in the system because they provide not only housing but often for a care element also, given the supports required.

Deputy Bobby Aylward: Is the regulation strict enough? Can any group meet in a room, decide to start a voluntary housing body and just apply and everything is hunky-dory? If regulation is tight, that should not happen.

Mr. John McCarthy: It cannot happen. There is a process under section 6 of the 1992 Act whereby organisations have to be properly established. They must have a charitable purpose which must be set out clearly in their memorandum and articles of association. They must also subscribe to and come through the regulatory process before they can receive money.

Deputy Bobby Aylward: If 20 more appear in 2019, will the Department approve them if they just comply with the regulations?

Mr. John McCarthy: The regulatory people might wish to comment on that issue, but

77 PAC as part of the process, we certainly look at the extent to which a new body is meeting a new requirement and what it is bringing to the table. It is not fair to say it is willy-nilly and that if people come forward and satisfy the other requirements, they will be approved automatically.

Mr. John O’Connor: Perhaps I might offer a comment. Only one or two, at most, are being approved each year. It is now very difficult to become an approved housing body. One has to prove one is genuine about what one is going to do and that there is a need to do it. It is very restricted.

Deputy Bobby Aylward: Does Mr. O’Connor accept that there are too many?

Mr. John O’Connor: I agree with the Deputy. It needs to be a smaller number of organisations for the bulk of the delivery, but there is still a need for some specialist organisations.

Deputy Bobby Aylward: Will that happen in the future? Will they be disbanded?

Mr. John O’Connor: Yes, I believe there will be a merging of organisations.

Chairman: There was a comment earlier that the approved housing bodies received €480 per house for maintenance and upkeep.

Mr. John O’Connor: Under the capital-----

Chairman: Is that the amount per house going to each of the more than 500 approved housing bodies?

Mr. John O’Connor: No, just the ones that receive funding under the capital loan and subsidy scheme. They must have an active stock of units.

Chairman: Let us say a scheme was set up in a town or village 30 years ago to provide ten houses for elderly persons. Is it in receipt of funding now?

Mr. John McCarthy: It probably would not be under the CLSS because elderly specific accommodation would probably have been funded under the capital assistance scheme. These would be mainstream social housing units.

Chairman: Members want to get in for a second round of questions. I will hold over some of my questions until after the second round but I wish to ask a number of brief ones now. Our guests submitted a chart showing the land owned by the State in each of the local authority areas. Every site is listed on the chart. I presume the LA designation refers to local authorities. To what does LAGS refer?

Mr. John O’Connor: The land aggregation scheme.

Chairman: Do LAGS belong to Housing Agency?

Mr. John O’Connor: Yes.

Chairman: Once the land development agency is set up, is it intended that the Housing Agency would morph into it, merge with it and transfer its assets to that agency?

Mr. John O’Connor: Yes, we would transfer sites that the agency deems suitable for its purposes to it.

Chairman: It is a great day for solicitors. Let us say that a local authority bought land a 78 25 OCTOBER 2018 few years ago but did not use the site. Solicitors on both sides got paid for conveyancing in order to transfer the land to the Housing Agency. Now the Housing Agency is going to transfer to the land development agency and will pay for the conveyancing again. We have about three sets of conveyancing happening here, with up to six solicitors involved, all for the one parcel of land. Title is being moved from the local authority to the Housing Agency and then from the Housing Agency to the land development agency. It is possible that the legal fees at the end of this process will be more per acre than the cost of the actual site. Has anyone thought about that? It seems grossly inefficient. Why do we need another State agency? Why can the Hous- ing Agency not be beefed up? Perhaps it is a policy matter but we must ask why every time there is a problem the answer seems to be to establish a new agency. Here we go again. The Housing Agency is relatively new. I was here a few years ago when the land aggregation group, or whatever it was called, was in place. That agency is gone now and the Housing Agency is in place but we are still talking about the same fields in all of these places throughout the country. The Housing Agency will be gone in a few years. There will be someone else at a future meeting of the Committee of Public Accounts looking at the same field owned by a new State organisation. It is the same field the entire time. This is great news for solicitors in any event . I am not asking our guests to respond but I hope they understand the point I am making. I am sensing a shrugging of the shoulders here. I would prefer to see a greater effort going into building houses rather than into transferring title from one body to another. That point flows out of the chart showing sites in the various local authority areas.

Who manages the land that is under the stewardship of the Housing Agency in all of the different counties? Let us say it has 20 acres in a particular local authority area and 20 acres in another. Does the farmer next door use that land to graze his cattle? What happens with all of those sites? The agency has 2 ha here, 3 ha there and so on. What is happening with that land? Money was spent when the local authorities bought the land initially. When the Housing Agency was taking it over, contractors were sent out to fence off every one of the fields. It will probably have to be re-fenced. Who manages the sites? How many sites does the agency have in its ownership around the country? How are the sites managed?

Mr. John O’Connor: The Housing Agency manages the sites. In some cases, the local authority assists us in managing the sites. Where land is suitable for farming at the moment, we rent it to farmers.

Chairman: How much does the agency get from agricultural rent each year? Is that in the agency’s accounts?

Mr. John O’Connor: It would not be a significant sum of money.

Chairman: I ask Mr. O’Connor to come back to us with a summary on the land that is in the ownership of the agency, the number of sites involved and the income being received from those sites. How many hectares does the agency have in its name?

Mr. John O’Connor: It is about 600 acres of land.

Chairman: I ask Mr. O’Connor to send us a note on the current economic use of those 600 acres.

We spoke about homelessness earlier. How many people are currently homeless? I think the figure is approximately 10,000.

Mr. John McCarthy: There are 9,800 people homeless at present. 79 PAC Chairman: Okay.

Deputy Bobby Aylward: It was over 10,000 at one point.

Chairman: What of the figures that we requested earlier from Mr. John McCarthy? He referred to the fact that 4,729 people, both adults and children, exited homelessness in 2017.

Mr. John McCarthy: No, just adults.

Chairman: That figure is just for adults. Is that correct?

Mr. John McCarthy: Yes.

Chairman: When did the Department change from counting people to separating them into adults and children?

Mr. John McCarthy: That particular part of the data system has only ever counted adults but we are----

Chairman: Is Mr. John McCarthy saying that the figures on those exiting homeless have only ever referred to adults?

Mr. John McCarthy: Yes.

Chairman: How many children exited homelessness last year? The Department has given us the figure for the number of adults exiting homelessness. How many children exited homelessness in 2017?

Mr. John McCarthy: We do not have that figure.

Ms Mary Hurley: We do not count that. We are looking at our data at the moment with a view to enhancing the type of data we collect.

Chairman: These are people, not data. The Department is telling us that it does not count them. The Department does not collect data on the number of children exiting homelessness. Please explain that so we can determine whether it really is what it sounds like. How many children exited homelessness last year?

Ms Mary Hurley: We count dependants and adults. We count children and adults in emergency accommodation.

Chairman: I ask Ms. Hurley to repeat that.

Ms Mary Hurley: We count children, who are dependants, and adults in emergency accommodation at the moment.

Chairman: The Department counts children, dependants and adults. Is that right?

Ms Mary Hurley: Children are part of the dependants group.

Chairman: How many dependants exited homelessness last year?

Ms Mary Hurley: At the moment, we count the number of adults who exit homelessness. We do not actually count the number of associated children.

80 25 OCTOBER 2018 Chairman: In this crisis, the Department of Housing, Planning and Local Government is telling us that it does not have a count for the number of children who exited homelessness.

Ms Mary Hurley: That is a piece of work we are doing at the moment in terms of-----

Chairman: It is very easy to count children. If six children are moving to a hub, one does not need a computer system to count them.

Deputy Catherine Murphy: We know the numbers who are becoming homeless.

Ms Mary Hurley: Yes, we count the number of children becoming homeless-----

Deputy Catherine Murphy: How would the Department not count them on the other side?

Ms Mary Hurley: We are not catching that at the moment. That is why we have been conducting a review of our data, of the numbers and categories of persons in homelessness. That is a piece of work that we will be catching and tracking that-----

Chairman: Can somebody not just work it out tonight or by the end of the month? Can somebody not gather data on the numbers of children who are homeless, the numbers that will exit homelessness in November and so on? I am amazed. This is the Committee of Public Accounts, which is chiefly concerned with money but if the Department is not even counting people or children, what is it doing? I am baffled by what I am hearing. I am hoping that someone will tell me I am misunderstanding what has been said. Ms Hurley has just said that the Department does not count the number of children leaving homelessness. It is awful.

Mr. John McCarthy: We count the actual numbers in homelessness at any point in time but-----

Chairman: Does the Department accept that what we are hearing is bizarre? It is absolutely awful. The Department counts the adults leaving homelessness. Generally, the ratio of those people in homelessness is 2:1, adults to children. Approximately one third of those who are homeless are children. Roughly 3,000 of the 9,000 are children. The 9,800 figure includes children. Is that correct?

Ms Mary Hurley: Yes, that is correct.

Chairman: The public will have to bear with me on this. I thought we would have these figures presented to us but now we are trying to work them out ourselves.

Deputy Bobby Aylward: What is the information to which the Chairman is referring?

Chairman: We asked for information earlier in the meeting on the numbers who exited homelessness last year.

I ask people to bear with me. I should not be trying to come up with this figure. The fact that this figure has not been recorded by anyone in the Department to date is awful. Mr. McCarthy mentioned earlier that 4,729 adults exited homelessness in 2017. He also said that 2,332 adults exited homelessness up to the end of June of this year. The document provided to the committee during the break refers to 3,079 adults exiting homelessness in 2016, 2,322 exiting in 2015 and 2,161 exiting in 2014. That adds up to 14,623 adults who have exited homelessness since 2014. That figure excludes children. In the circumstances, I am going to add on another 5,000 for the children who exited homelessness. Shame on the Department that it did not count them.

81 PAC I cannot believe it does not count the children exiting homelessness. So 14,000 adults and approximately 5,000 children exited homelessness during that period and the officials tell me there are 9,800 people still homeless, which includes adults and children. That is over 28,000 people who have been declared homeless since 2014. I want to put that figure on the public record.

We all hear about the figures hovering around 9,000 or 10,000 but every year there are thousands going out of the system and thousands more coming in. Effectively, 20,000 people have been homeless at some point in the past four years. They were declared homeless and were accommodated in various centres and hotels. They are no longer there, thank God, but there are still another 10,000 or 9,800 there. The figure for those who have presented as homeless, adults and children, since 2014, at a minimum and based on what the officials are telling us, is over 28,000. That is a figure I have never seen or heard before and I am only putting it together on the basis of the information we have been given. Do our guests follow how I have arrived at that number? There were 14,000 adults and I am adding on a third again to account for children, making almost 20,000. There are nearly 10,000 still there, which means that over 28,000 people have been declared homeless since 2014. I want the public to understand that.

We talk about homelessness figures and hear that only 10,000 people are homeless and that the problem is not really getting worse. Almost 30,000 people have been declared homeless since 2014. I can understand why the Department is not getting on top of the problem if it does not even count all of those affected. I do not want to be dramatic but, as a public representative, I find this hurtful. After all this and after we have trusted the Department to deal with homelessness, the officials now tell us they do not even count the homeless children who are going into hotels, hubs and places of that nature. I have made my point and I ask the officials to reflect on it.

Deputy David Cullinane: I have a remark to make on that topic as well.

Chairman: We will come back to it. I have put that in the public arena just to get the point across.

The next matter I want to ask about is the figures we were given regarding the breakdown of the €1.4 billion in the housing budget last year, which is fine. Some €800 million of relates to build, acquire or lease. I will come back to the breakdown of that part. A further €296 million was spent on RAS or HAP, €109 million on homelessness and €201 million on pyrite resolution, house grants, agencies, Traveller accommodation and, probably, repairs for the elderly and people with disabilities. We understand all that. We are focusing on the build aspect. In that context, €802 million was the figure for build, acquire and lease. Do the officials have a breakdown of that amount in the context of the amounts spent on build, acquire and lease? Is it readily to hand?

Mr. John McCarthy: It is not readily to hand but we can pull it together and send it on to the Chairman.

Chairman: I am going to ask a simple question. Out of the €1.4 billion spent last year on the housing programme, how much was specifically spent on building houses? It is probably the question I should have asked at the outset. How much of the €1.4 billion was spent on housing construction, not acquisition, leasing, HAP, homelessness or house improvement grants?

Mr. Seamus McCarthy: We tried to provide an analysis of that. We divided the supports

82 25 OCTOBER 2018 for social housing into a rental figure and a construct or acquire figure. The Chairman can see on the slide that the total is €885 million. I think the difference between that figure and the €802 billion is possibly the social housing current expenditure, which is a figure of €84 million. That is added in but the rest of it is an analysis of the figure of €802 million.

Chairman: Can somebody answer the question? Out of the €802 million, how much was spent on building new houses?

Mr. Seamus McCarthy: There is not an exact figure. If the Chairman looks at the or- ange-----

Chairman: I suggest that is why we have a problem. We do not know how much we spent on building new houses and we do not know how many children exited homelessness. It is no wonder there is a housing crisis.

Mr. Seamus McCarthy: It is an aggregate figure so build, lease, and acquire would be in there. There is the capital loan and subsidy scheme spending of €67 million, the capital advance leasing facility, and the capital assistance scheme - they are all operated through the approved housing bodies. Then there is the local authority housing scheme which, again, is acquisition and construction.

Chairman: That is local authority housing. A large proportion of that figure was acquisition. Have we a breakdown in respect of building?

Mr. John McCarthy: Not readily available. We can certainly do it. We have a breakdown in terms of the actual number of units provided.

Chairman: I am coming to that.

Mr. John McCarthy: We will come back to the committee with a breakdown of the figure between build and acquisition.

Chairman: As Chairman of the Committee of Public Accounts, I find it extraordinary that, several hours into a meeting specifically called to deal with housing, and having asked a straightforward question about how much the Department spent on house construction last year, there is no answer forthcoming. Do the officials not see how that makes people query the Department’s commitment to solving the problem? If they do not know what they are spending and they do not know the figures for children leaving homelessness - I am afraid the longer I go on, the more I discover that the officials do not know what is happening.

Mr. John McCarthy: We do know what we are spending, I just have not got it in that form today.

Chairman: That is the most obvious formation - how much the Department spent on house construction.

Mr. John McCarthy: Our commitment in terms of delivering solutions is evident in the number of houses that-----

Chairman: I know that and I accept that there is leasing, HAP and purchases. I mentioned that the Department does lots of purchases in my own county and I am happy with that and have no issue with it. However, the figure should have been provided straight up in respect of how much was actually spent on building last year. The officials told us earlier that the local

83 PAC authorities built 1,014 last year.

Mr. John McCarthy: That is right.

Chairman: AHBs built 761 and Part V generated 522. We would be in a sorry state if the private sector was not providing the 522 through the Part V obligation. Out of that €800 million on housing last year, the local authorities built 1,014 houses. How many will be built this year to completion? What is the equivalent figure to date this year compared to that 1,014? It is an awfully low figure, the witnesses must understand that.

Mr. John McCarthy: Absolutely. The equivalent figure for the local authority build this year is 2,300.

Chairman: Is that the projected figure?

Mr. John McCarthy: Yes.

Chairman: What was the projected figure for last year versus the outturn for last year?

Mr. John McCarthy: I think 92% was the build target that was achieved last year.

Chairman: So there was a target of 1,100 or 1,200 last year, something like that.

Deputy Catherine Murphy: What is the 92%?

Chairman: They had a target of which they achieved 92%. I want to know what the actual target was last year compared to what they achieved last year. This is what the Committee of Public Accounts does. We want to put things to the test. I am asking people to bear with me on this. These are the issues that I would have thought should have been hopping out at us first thing this morning.

Mr. John McCarthy: The figure of approximately 90% is the combination of local authority and approved housing body, AHB, builds. I am looking at the targets versus the actual----

Chairman: Does that include Part V units?

Mr. John McCarthy: No. The Part V figures are further down the table. Taking all of the build programmes, including the Part V cohort-----

Chairman: The Department completed about 2,300 units last year.

Mr. John McCarthy: The target last year was 3,200.

Chairman: It managed 2,300 units.

Mr. John McCarthy: Including Part V and including voids-----

Chairman: No, I am not including repairs made to old council stock. I am talking about new builds.

Mr. John McCarthy: Let us take those out then. The target was 2,434, and the delivery was-----

Chairman: It was approximately 2,300. The 2017 target was 2,434. The figure of 2,300 that Mr. McCarthy gave us included the Part V builds. The Department is banking on the Part

84 25 OCTOBER 2018 V units and the private developers.

Mr. John McCarthy: Obviously if those Part V units were not coming through, we would have funded additional projects.

Chairman: That is, purchases.

Mr. John McCarthy: Builds or purchases.

Chairman: I do not think a house was not built because the Department was short of al- locations last year.

Mr. John McCarthy: No, we had additional-----

Chairman: It would have got the money. At bottom, the Department did not stop work on a house because it ran out of money. That would not have happened. What is the target for this year under the categories of local authority, approved housing bodies and Part V builds?

Mr. John McCarthy: Between the local authorities and the AHBs, the target for this year is 3,819. The figure for Part V units is 590. The rough figure is 4,400.

Chairman: What percentage of the year has passed? Some 85% of the year is gone. How many houses were built by the end of September, the last quarter?

Mr. John McCarthy: We do not yet have the figures as of the end of September. The published figures we have run to the end of the second quarter of this year. The figure comparable with the target is 1,051.

Chairman: That is, 1,051 units were completed up to the end of June.

Mr. John McCarthy: Yes.

Chairman: As 2,300 units were completed last year, the Department is a little behind last year.

Mr. John McCarthy: The profile of the year is always such that the third and fourth quarters are when the bulk of the delivery comes through.

Chairman: Would Mr. McCarthy hope to exceed last year’s figure?

Mr. John McCarthy: Absolutely.

Chairman: Does he have the target for local authority direct builds for 2018?

Mr. John McCarthy: The target for local authority direct build is 2,319 units.

Deputy Catherine Connolly: Is that for 2017?

Mr. John McCarthy: No, 2018.

Chairman: At the year’s half-way point, where is the Department in that regard?

Mr. John McCarthy: We have reached 487.

Chairman: Mr. McCarthy is saying the Department has completed 487 in the first six months and will complete 1,900 in the second six months. 85 PAC Mr. John McCarthy: Yes. The profile of delivery is always heavily weighted towards the second half of the year, the third and fourth quarter.

Chairman: What does the Department call “complete”? How does it define the units that will be completed by 31 December?

Mr. John McCarthy: The unit must be physically completed.

Chairman: What does that mean?

Mr. John McCarthy: It must be finished.

Chairman: Does that mean it has an ESB connection or it has been handed over to the local authority? What does it mean?

Mr. John McCarthy: It has been handed over to the local authority.

Chairman: In other words, 1,900 houses will be handed over to local authorities in the second half of the year. If that happens, it will be great news. When will the Department have the figures for the end of September?

Mr. John McCarthy: We will have them near the end of November.

Chairman: I ask the Department to forward the numbers to the committee as soon as it has them.

Mr. John McCarthy: Yes.

Chairman: I know that officials expect a lot of units to be completed in the last quarter. If 1,014 local authority houses were built last year, that was poor. In the first six months of this year only 487 local authority houses have been built. Let us hope there is a big increase on that. That is all I can hope for.

I will ask about one related topic before I let other members come back. The issue concerns the housing summit the Department held on 17 September in the Custom House. I thank the witnesses for giving us information on that. The Department gave the committee a sheet of paper. I am not sure it was fully circulated over lunch. The document lists actions to be taken following the summit. These are notes taken by officials of the Department of Housing, Plan- ning and Local Government on the summit. In attendance were Mr. McCarthy, the Minister of State, Deputy English, the City and County Management Association, CCMA, and the Irish Council for Social Housing, ICSH.

How many years into the housing crisis are we? I know the Department will not use the term but it is an emergency for those who are affected. It has been quite a number of years. If homelessness has been highlighted since before 2014, we are certainly five years into the housing crisis. In that light, under the heading “Actions to bring forward”, this is what the Depart- ment’s notes of its meeting on that day with its Minister of State state:

More high-level/ national strategic collaboration between CCMA and AHB representatives in order to plan and develop best practice on a national basis. As it stands, we don’t have a view of how the shortfall against targets will be made-up; don’t have a view of the local plans at the level of the individual 31 local authorities.

Five years into the housing crisis, according to the minutes of a meeting attended by the 86 25 OCTOBER 2018 Minister of State, the Secretary General, the CCMA and the body representing the approved housing bodies, the attendees state they do not have a view of the plans at the level of the 31 individual local authorities. Is it any wonder we are where we are when it comes to housing? If, as an occupant, I had read that four years ago, I would have thought those concerned should get their act together. Five years on, however, this is what we are being told.

The Department has made light of the lack of statutory regulation for approved housing bodies. It has spoken of the voluntary code but that has not delivered information that gives the Department a view of the plans at the level of the 31 individual local authorities. I can understand that the Comptroller and Auditor General might say that, and I believe he does say that in his report. However, I note this is stated in the minutes taken by the Department’s own senior officials on its meeting four weeks ago with its Minister of State and the organisations I have mentioned. The Department still does not know what is happening in the 31 local authorities. We had hoped to make a bit of progress here today, but we are so badly prepared five years on that we do not even know what is happening in the local authorities. These are the Depart- ment’s minutes.

Mr. John McCarthy: I think-----

Chairman: That is what the Department says. It is written here. I am reading the minutes taken by the Department.

Mr. John McCarthy: That refers to the prospective view to the end of 2021 and to building the pipeline necessary to deliver on the targets. In 2016 we had a target of 17,500 housing supports across all schemes and we delivered 19,000.

Chairman: They are solutions including housing assistance payment, HAP, rents, leases-----

Mr. John McCarthy: That is true, but they are social housing supports.

Chairman: -----voids being brought back in-----

Mr. John McCarthy: In 2017-----

Chairman: -----and relets.

Mr. John McCarthy: No, we only count voids to which we give significant capital funding. We do not count normal local authority relets as part of that. In 2017, the target was 21,000 and 25,901 were given. One of the purposes of the summit was to plan for three years down the road and beyond. We wanted to have a pipeline in place to ensure we are well placed to meet those targets.

Chairman: The other members have indicated in the following sequence. Deputy Cath- erine Murphy was first, followed Deputy Cullinane, and perhaps Deputy Connolly wants to contribute. After that I will come back with a few final wrap-up questions.

Deputy Catherine Murphy: It was worth expanding out on the homelessness crisis because that 4,700 figure jumped out for me this morning, as it does every time. It may be down to our different experiences in dealing with people coming into our constituency offices. Last Friday three new families came into my office in the space of an hour. It usually happens on a Friday afternoon when I can do very little about it. We are seeing the stress these people are suffering. It is not possible to quantify the damage done by that experience of homelessness even if it is only for two or three months. Given the uncertainty and stress that is caused, we 87 PAC need to accurately capture the number of people it is damaging.

Mr. John McCarthy gave us figures for builds and acquiring leases. In terms of transparency we should not see builds and acquiring leases connected together because acquiring leases is not new, but existing. We need to see the amount of money for builds expressed separately on every occasion. Is regeneration included in that build component? A number of regeneration programmes are under way. Presumably they are also counted in that. Some of those go back many years, including, for example, O’Devaney Gardens and St. Michael’s Estate in Inchicore. I ask Mr. John McCarthy to give us a note with a breakdown on regeneration.

Mr. John McCarthy: On the 2,319 target for local authorities for build this year, just 150 is under regeneration.

Deputy Catherine Murphy: I spoke earlier about spin or flowery language. I took a paragraph from one of the documents we got, which stated it is worth noting that 1,074 units went on site in quarter 2 of 2018, which is an increase of 27% on the previous quarter, which was 846, and an increase of 239% on quarter 2 of 2017. I accept the percentages are right, but the numbers are tiny relative to the scale of the problem. That kind of presentation suggesting something is a great leap ahead drives us bananas. The Department would want to put an extra zero at the end of some of those numbers to make a sizeable impact.

Page 125 of the Comptroller and Auditor General report relates to the approved housing bodies. Paragraph 10.36 states “A report from the Local Government Audit Service (LGAS) in December 2015 found a number of instances in a number of local authorities, where mortgages, related to the three schemes, were not fully executed and recommended conducting a review and reconciliation of all mortgages charged on AHB properties.” About 12 different points are made about other recommendations. One of them is that “local authorities should record all loans outstanding on their financial systems and issue annual loan balance statement”. Another recommendation is that “local authorities should review AHB projects to ensure that final accounts and post-project reviews have been completed”. Another one is that “suitably qualified local authority staff should inspect and verify certificates for payment for capital projects”, which suggests they are not suitably qualified. It also recommends that “local authorities should ensure that relevant staff received training in capital appraisal and procurement requirements”, which suggests a deficiency there.

Earlier we heard that the local government auditor is coming back to review how those recommendations were completed. That was not available when this report was being done. Is that available now?

Mr. John McCarthy: It is likely to be by the end of the year. It may slip to January, but no later than that.

Deputy Catherine Murphy: We need to have sight of that when the Department receives it to see what progress has been made here. It would be worth exploring what those failings were because they would not be pointed out as recommendations if there were not failures in those areas. The number of questions the local government audit threw up certainly shows that there is an issue with oversight here. Given that this is a significant partner in delivering social housing, it is really important that it has the kind of oversight that is needed. Presumably we will get that as soon as the Department has it at the end of the year. I ask him to make a note of that so that it is not forgotten about.

88 25 OCTOBER 2018 Mr. John McCarthy might come back to us if he does not have the information immediately to hand on the following matters. Document 1679(ii), dated 22 October, contains a table stating that 582 sites are unencumbered and that 128 sites have loans attached to them. There is no way of knowing the potential number of houses that could be accommodated on those sites. The 128 figure might be the higher number in terms of the number that can be accommodated. I ask Mr. John McCarthy to provide the projected number of houses that could be accommodated on those sites - the unencumbered and the ones that have loans attached.

Mr. John McCarthy: In total, across the just over 700 sites, I think the figure is 42,500 homes, but we can get the Deputy the breakdown between the ones that are unencumbered and encumbered.

Deputy Catherine Murphy: It does not make sense without that breakdown.

I refer to the drawdowns of the loans by the Housing Agency at the end of 2018. Obviously this was under the Rebuilding Ireland home loan. By August 2018 only 57 loans had been drawn down. Are there many more in the pipeline? Has this not succeeded? What are the impediments? What have we learned from that? I presume someone from the Housing Agency can answer that.

Mr. John O’Connor: On the Rebuilding Ireland home loans, we do the underwriting of the loans on behalf of the local authorities. The local authorities actually issue the loans. It is important to note that it only started earlier this year. In terms of people applying, getting approval, actually buying a house and drawing down, it will start increasing now and ramping up.

Deputy Catherine Murphy: Will the Housing Agency be watching that to see if there are impediments with the possibility presumably of making changes to address some of those if there is a difficulty?

Mr. John O’Connor: Yes. In conjunction with the Department and the local authorities, we have been reviewing the issues and making changes in terms of assisting people as far as possible.

Deputy Catherine Murphy: Okay.

Mr. John McCarthy: May I come on that one? We have been doing some further data gathering with local authorities. It is not fully complete yet, but on the basis of returns from 23 local authorities, at this stage 147 mortgages have issued with a value of just over €27 million.

Deputy Catherine Murphy: Therefore it has increased.

Mr. John McCarthy: As I said, that is on the basis of 23 out of 31.

Deputy Catherine Murphy: There appear to be two categories of Part V units, unless I am misreading something. I cannot find the page in the document I had highlighted to question. Am I right in assuming that there is-----

Mr. John McCarthy: It is probably down to the way they are funded. Some would be funded through the local authority programme and some might be funded for AHBs through the capital advance leasing facility.

Deputy Catherine Murphy: Does Mr. John McCarthy have information on both?

89 PAC Mr. John McCarthy: Yes.

Deputy Catherine Murphy: I can come back on that through a parliamentary question.

When HAP was introduced I remember the debate in 2014. There was a very hot debate in the Dáil because the feeling was that HAP was being introduced to get people off the housing waiting list. A housing transfer provision was introduced where somebody was regarded as suitably accommodated where HAP was supporting that tenancy. However, we are seeing the housing waiting lists appearing to go down when, in fact, the number of HAP tenancies is going up. In essence, the same number of people must be provided for. Is HAP regarded as a sustainable form of long-term housing? If someone loses a tenancy, he or she must source accommodation himself or herself. For example, in my area HAP for a family of two adults and three children is approximately €1,300 per month, if one can find accommodation. Usually, the family has to pay more than that themselves. Over 30 years, that is €468,000 but with no house at the end of it. It is a very expensive funding mechanism. We have been told by the Department of Public Expenditure and Reform that by 2022, HAP will cost in the region of €1.7 billion. The more that goes up, the greater the squeeze on the finance needed to build. It then becomes an unsustainable form of housing support. Is it regarded within the Department as sustainable in the long term? Given the new thinking on building, are we likely to see HAP phased out? Is that what the most recent research suggests?

Mr. John McCarthy: I do not think we will get to a point where it is phased out. However, even within the space of Rebuilding Ireland, its relative contribution to meeting people’s housing needs will start to change from next year. By 2021, it will no longer be the biggest component in meeting social housing need. On the transfer issue, it was provided for in legislation that people could go on the transfer list if they wished. To date, approximately 1,400 households have moved from HAP to mainstream social housing.

Deputy Catherine Murphy: That would be almost unusual. That is fair enough. That is nationally. It is 1,400 nationally.

Mr. John McCarthy: Yes.

Deputy Catherine Murphy: It is being scaled back with the building programme.

Mr. John McCarthy: The building programme is going up. If one looks at the mix in table 1, which I circulated, and at the composition each year of how the annual target is reached, one will see how the share of the individual parts is moving towards build and away from HAP.

Deputy Catherine Murphy: If even more funding were put into building, that cost could potentially reduce even further.

Mr. John McCarthy: If sufficient capital were provided to house through capital schemes 100 people currently accommodated under HAP, one would change into the other.

Deputy Catherine Murphy: Has the Department done any figures on that?

Mr. John McCarthy: I have some figures on it in the midst of these other papers. I ask the Deputy to bear with me for a moment. We have done some useful analysis, it is just a question of laying our hands on it. The Deputy might have another question while we are finding that.

Deputy Catherine Murphy: Homeless hubs are far from the ideal for families. Are there still families in hotels? Do we know the number? 90 25 OCTOBER 2018 Mr. John McCarthy: We do. In Dublin, where the bulk would be, it is certainly above 700. Approximately 800 is the figure.

Deputy Catherine Murphy: In hotels.

Mr. John McCarthy: Yes.

Deputy Catherine Murphy: Mr. McCarthy said the cost for a hotel was €67,000 as opposed to €36,000 per annum for a hub. Is that per family?

Mr. John McCarthy: Yes. That is per family. In effect, that is taking the expenditure on hotels in 2017 and dividing it by the average number of families accommodated.

Deputy Catherine Murphy: Is it always just one room per family?

Mr. John McCarthy: No. That reflects the fact that for some families it is two rooms.

Deputy Catherine Murphy: Does Mr. McCarthy have the figure on HAP versus capital schemes?

Mr. John McCarthy: If one takes the first two and a half years of Rebuilding Ireland and puts together all of the current funded programmes, €1.17 billion was spent and it supported 34,000 tenancies which were already in place and another 57,000 new ones. That is approximately 90,000 households being supported through those two and a half years through the current programmes.

Deputy Catherine Murphy: I am trying to get to programmes like rent assistance, RAS and HAP.

Mr. John McCarthy: I am grouping those together under the heading “current programmes” for the purposes of a comparison between current and capital, which is where the Deputy was coming from. That €1.17 billion has continued to support 34,000 tenancies that were in place at the start of 2016 and has provided housing for another 57,000. That is approximately 90,000 households.

Deputy Catherine Murphy: All from the current side.

Mr. John McCarthy: All from the current programmes in that two and a half year period. If one were to transfer that money over to capital and take the average cost of building a unit, one would get 5,500 units. This goes back to the point-----

Deputy Catherine Murphy: There will always be a time lag where one has to create a balance. What I am looking for is a projection on how HAP, rent assistance or RAS can be phased back. Has the Department looked at a balance between greater investment in-----

Mr. John McCarthy: It is sort of the same analysis to some extent, but it is on the basis of hard figures that we have. To look at it another way, if one takes the period from 2016 to the middle part of this year, 46,000 new current-funded tenancies were created. If one wanted to deliver solutions for those 46,000 households through capital funding, it would have taken €10 billion, or 1.7 times the entire capital spend across the governmental system in 2018.

Deputy Catherine Murphy: I could not argue that it could be done in one year. However, has the Department done a ready reckoner on how to phase it out, largely, over a period?

91 PAC Mr. John McCarthy: We have done it as far as 2021 and one can see how those profiles change out to that date. That is the period of Rebuilding Ireland. Thereafter, it will depend on the available resources.

Deputy Catherine Murphy: Does the Department have that on paper to send to us, if it is not available now?

Mr. John McCarthy: Is that the targets and how they change to 2021?

Deputy Catherine Murphy: Yes.

Mr. John McCarthy: It is in one of the tables. I will get it for the Deputy. It is in one of the tables that has been circulated.

Deputy Catherine Murphy: Mr. McCarthy spoke about the approved housing bodies and how some of them may well not continue as approved housing bodies. I do not know what the terminology Mr. McCarthy used earlier was. It was-----

Mr. John McCarthy: The mergers between-----

Deputy Catherine Murphy: Did Mr. McCarthy say the status of approved housing body would be taken away from them? Is that what he is talking about or is he talking about merging them? I appreciate a lot of these are very small. There are a good few of them in Kildare. There might have been a dozen houses or half a dozen houses and it was just one body and there was a name on it. Some of them worked well and some did not. Very often they rely on volunteers which can be very patchy. I appreciate why there are the number there are. At the end of the mortgage period, which has been funded from the public purse, there is still a house there and that house will turn over at some point. They are not going to be sold. The houses will always be owned by the approved housing body so if the Department ceases to recognise an approved housing body, what happens to the houses?

Mr. John McCarthy: When I was talking about approved housing bodies becoming de- listed, I was referring to ones that had never been active. When we did a de-listing exercise five or six years ago, bodies were removed from the approved housing body list. They had gotten status but had never progressed to delivering a project. If we find there are some of those in the next iteration of that exercise, they would come off the list. If one wants to remain as an approved housing body and is signed up to the code and can deliver, that is fine. Otherwise, we will have to get into a space where, in effect, the assets would transfer to a merger process or a transfer process across to another approved housing body. Ultimately, the units would continue within the sector, although possibly in some circumstances through another body.

Deputy Catherine Murphy: They would still be available.

Mr. John McCarthy: Yes. Absolutely.

Deputy Catherine Murphy: That is all.

Deputy David Cullinane: I want to come back to the homelessness figures for a moment. The figure was given that approximately 9,800 people are homeless. I do not have the exact figure for how many people are homeless at this point in time or in homeless accommodation. Was it 9,800?

Ms Mary Hurley: It is 9,798.

92 25 OCTOBER 2018 Deputy David Cullinane: Sorry.

Ms Mary Hurley: It is 9,798.

Deputy David Cullinane: What is the breakdown between adults and children?

Ms Mary Hurley: I will give the breakdown now.

Mr. John McCarthy: It is 5,869 adults and 3,829 children.

Deputy David Cullinane: How many families is that?

Mr. John McCarthy: It is 1,753.

Deputy David Cullinane: Is that all children and families in emergency accommodation provided by the State or is it just children in emergency accommodation that is funded by the Department?

Mr. John McCarthy: It is funded through our lines of funding.

Deputy David Cullinane: Are there more children that are homeless but funded through Tusla, the Department of Children and Youth Affairs or the Department of Justice and Equality?

Mr. John McCarthy: Yes, there are and we have had discussions at the joint committee about it. There are families with children in direct provision-type accommodation and there are families in domestic violence service facilities. These are purely-----

Deputy David Cullinane: I understand that but what I am saying is I want an overall accurate picture. We hear the figure of 3,828 children who are homeless or in emergency accommodation but that is only children who are in emergency accommodation funded by the Depart- ment. There are more. Do we have the extended figure which includes children in refuges or direct provision and so on?

Mr. John McCarthy: We do not have those figures. We can get them from Tusla or in the case of direct provision from the Department of Justice and Equality.

Deputy David Cullinane: Given this was a source of discussion, debate and contention because political charges were being made that the figures were being massaged, why is that information not available? I do not understand why Mr. McCarthy has not gone since then to other Departments and asked them for the number of children in these services.

Mr. John McCarthy: The discussion was on an explanation of-----

Deputy David Cullinane: I understand that.

Mr. John McCarthy: -----what we-----

Deputy David Cullinane: Mr. McCarthy knows the question I am asking. The question is: why is there no global figure for how many children are in emergency accommodation or homeless accommodation funded by all the Departments, in other words funded by the State not just Mr. McCarthy’s Department? It would give us a more accurate picture of how many children are classed primarily as homeless.

Mr. John McCarthy: “Homeless” has a particularly statutory definition. Going back to a conversation we had earlier, there are a considerable number of families that might be in direct 93 PAC provision that may not have an entitlement to be here. We need to be careful about how we add different things up. Those figures are readily available. Our focus-----

Deputy David Cullinane: If they are can they be readily given to this committee as quickly as possible?

Mr. John McCarthy: I will certainly endeavour to get them for the committee from the others.

Deputy David Cullinane: Mr. McCarthy knows which figures I am looking for.

Mr. John McCarthy: Yes.

Deputy David Cullinane: I will look for other figures as well. There was some discussion about the targets under Rebuilding Ireland for acquisitions, purchases and new builds and I gave the figure for Waterford which was 687 over a three-year or four-year period, which is woefully inadequate. Can we have a breakdown in tabular form of the number of social housing applications received by each local authority, the number validated and the number approved as close as possible to real time, whether that is September or October? Can Mr. McCarthy get those figures broken down?

Mr. John McCarthy: The closest we have is the annual assessment that is done in June. That is the housing-----

Deputy David Cullinane: I will stop Mr. McCarthy there. I contacted Waterford City Council and I got the figures up to September. If it has them, I am sure every local authority has them. There are 30 local authorities. We want as much information as possible to allow us to see what is happening in social housing. Whatever timeframe Mr. McCarthy can get them for is fine. I think he can get them up to September but whenever he can get them is fine. The breakdown is applications received, validated and approved. I am talking about them being broken down by local authority. I also want the figures for the Rebuilding Ireland targets under the headings acquisitions, build and lease. What are the targets for each local authority and what targets are being met? Mr. McCarthy gave us the overall figures but I want them broken down by local authority. We might be able to see that some local authorities are better at delivering than others. We will then be able to see the number of people being approved for housing, the targets over the next three years for each local authority and whether things will get better or worse or stay the same so that at least we can benchmark. Could as much as possible be provided to the committee? I will send the clerk a note of exactly what I am looking for in that breakdown which can then be forwarded to Mr. McCarthy.

Mr. John McCarthy: I will need to check. I do not think it will be as straightforward as the Deputy has said in terms of the analysis that has to be done to get to a single national figure. This used to be done every three years and a number of years ago we said it was not often enough.

Deputy David Cullinane: Which figure is Mr. McCarthy talking about?

Mr. John McCarthy: The annual summary of social housing assessments. Each local authority does it and sends it back to the Housing Agency. We have a comprehensive national picture as of a date in June this year and we repeat that exercise every year. Mr. O’Connor might want to say a few words on that.

94 25 OCTOBER 2018 Mr. John O’Connor: I will ask Mr. Silke to outline what is involved.

Mr. David Silke: Every year we get the data in from all the local authorities and we cross- check it to see where individuals or households have applied to more than one local authority. There are duplications in the data that it is important to check to get an accurate figure of the total number for each local authority and at a national level.

Deputy David Cullinane: Is Mr. Silke talking about the total number of people who are approved?

Mr. David Silke: Yes.

Deputy David Cullinane: I do not think that is an impossible task.

Mr. David Silke: To do-----

Deputy David Cullinane: To do it. To get the data. If I contacted Waterford City and County Council, which I did, for a document I was doing, and got a breakdown up to September of this year, which showed applications received, validated and approved, why can that not be got for each local authority? If there is a crossover surely it can be worked out.

Mr. David Silke: What we get is the total number of households that are approved.

Deputy David Cullinane: Does the Department have the figures up to June, to make it easier?

Mr. David Silke: We do it on an annual basis and June is the date. It is a point in time.

Deputy David Cullinane: Is that for June of this year?

Mr. David Silke: Yes. It is on our website.

Deputy David Cullinane: If that is what the Department has, will it give us what it has?

Mr. David Silke: Yes.

Deputy David Cullinane: It is broken down for each local authority-----

Mr. David Silke: For each local authority.

Deputy David Cullinane: I mean when each case is received, validated and approved, and then the Rebuilding Ireland targets under acquisitions, loans and lease. There is a figure for each local authority that spans three years. Is it broken down? Let us say the figure for Water- ford is 687. Is it up to the local authority to decide whether it builds or-----

Mr. John McCarthy: It is between the local authority and ourselves.

Deputy David Cullinane: Is there a target? Is the target broken down further?

Mr. John McCarthy: Not beyond 2018.

Deputy David Cullinane: Not beyond 2018.

Mr. John McCarthy: Yes.

Deputy David Cullinane: It is whatever targets are set by the Department. We come up 95 PAC against this issue all the time. The Comptroller and Auditor General would always say that targets, a metric or a benchmark, make it much more easier for us to evaluate whether they have been met.

Mr. John McCarthy: We will, as we go on. For this year, it is broken down. When we come to the start of 2019 we will break it down so there will be a clear picture of the delivery for 2019.

Deputy David Cullinane: So each year is broken down.

Mr. John McCarthy: We will report on that again.

Deputy David Cullinane: Whatever the Secretary General has, he can send on to us as it would be useful.

Earlier the Secretary General talked about the change. One of the difficulties with building new homes is the process and the Cathaoirleach has asked how much of the overall money is spent on building new homes. We have been told that one of the problems is the four stage process. We hope to get some of the county managers, or their association, in to help us better understand that aspect . We know they have been before the Joint Committee on Housing, Planning and Local Government. The Secretary General said the Department came up with a bespoke one stage process that was offered to local authorities. It was anticipated that 200 projects would avail of it but only 12 did so. He said that the reason for the low uptake was that local authorities felt they would be exposed to risk. I counter that the reason there was a four stage process in the first place was that local authorities did not want to take any of the risk. The point they make to us when we meet them, as politicians, is that unless they know they are going to get paid back fully by the Department they will not take any risk because they cannot afford to do so. Whether it is one stage or four stages the problem is the risk. The Secretary General said the process was modified and some of the risks were removed. Have all the risks been removed? Will the local authorities still feel, even with the modified version, that the element of risk is still too great for them to engage with the process?

Mr. John McCarthy: I think on the basis of the risks that we have taken out in terms of tender price inflation and exceptional ground conditions or exceptional circumstances, they would have been the big risks that would have been presented to us.

Deputy David Cullinane: Why are the local authorities not taking it up? This was one of the issues in the overall debate. The Department says the local authorities will not build quickly enough and the local authorities say they cannot because the process takes so long from start to finish due to a cumbersome four stage process. The Secretary General has said the process was modified down to a one stage process and most of the risks they were concerned about were removed. Unfortunately, there were only 12 projects out of an anticipated 200 projects. That shows there is something wrong somewhere and I want to understand what is still wrong.

Mr. John McCarthy: That is what we are trying to get to the bottom of. We thought we had gotten to the bottom of it and we made these changes but that still has not resulted in the take-up. Talking about the 59-week process, in terms of it being cumbersome, the 59-week process if it works the way that it should - it is aligned with private sector best practice in terms of housing development - it can actually deliver projects in as fast a manner as the private sector and it can provide the certainty that the local authorities need.

Deputy David Cullinane: All the more reason, a Chathaoirligh, we should have represen- 96 25 OCTOBER 2018 tatives of councils or the CEOs-----

Chairman: Yes.

Deputy David Cullinane: -----appear before us so that we can explore the issue with them. I have spoken to a number of them. If the Secretary General remembers the last time he was in here, I had contacted a number of managers who I know across this State and that was one of their concerns. I am interested to see how this works out. Obviously, it is still not fully resolved and I hope that it is because it certainly was one of the impediments.

I want to move on to discussing the approved housing bodies. Much has been made of the volume of such bodies. EUROSTAT has compiled a report that deals with whether the expenditure for approved housing bodies would be on-balance sheet or off-balance sheet. The second paragraph of its conclusions reads:

Moreover, Eurostat considers that AHBs have a non-market nature due to their principal aims and other existing provisions. Furthermore, the prices charged for renting cannot be seen as being economically significant, due to the fact, among others, that they do not seem to respond to change in the market or to economic signals and have little influence on how much the producer is prepared to supply and on the quantities demanded.

Essentially what I am taking from that is that the not-for-profit element of the approved housing bodies needs to change fundamentally, that the rents need to reflect market rents and that the investments decisions that are made need to change as well.

Mr. Seamus McCarthy: I do not think that would be my interpretation of the CSO. I think it was looking at what the facts are in relation to the AHBs. Based on what the facts are, its conclusion was that they should be classified as being part of the Government sector. I do not think it is a proposal to shift them into the market and make them operate as market players. Maybe it was more recognising that they are providing rents in a non-market responsive way.

Deputy David Cullinane: I am talking about the European Commission’s report.

Mr. Seamus McCarthy: Sorry, I beg the Deputy’s pardon. I thought it was CSO.

Deputy David Cullinane: No.

Mr. Seamus McCarthy: Sorry.

Deputy David Cullinane: I refer to the European Commission and the sector classifica- tion of approved housing bodies. It looks at whether AHBs should be on-balance sheet or off- balance sheet. Is that a source of contention? The conclusion was that “Eurostat considers that AHBs have a non-market nature.” Is the Secretary General concerned about that? Has he read the judgment?

Mr. John McCarthy: I am not sure of the particular document that the Deputy is referring to.

Deputy David Cullinane: It is a EUROSTAT ruling, essentially.

Mr. John McCarthy: The EUROSTAT ruling, absolutely-----

Deputy David Cullinane: What are the implications of that ruling?

97 PAC Mr. John McCarthy: The immediate implication of the ruling was that the approved housing bodies sector came on-balance sheet and the Minister for Finance reflected the implications of that in the stability programme update, which is the annual publication put out in, I think, April of each year for EU purposes. That is the immediate implication. Where does it go after this? The AHB sector is looking at, and continues to look at, the decision in some detail. That was one aspect of the decision but they are obviously-----

Deputy David Cullinane: Have I read it correctly? Is it essentially talking about market rents? It had a concern about the way rent is calculated by the approved housing bodies - in other words, whether it is a subvention.

Mr. John McCarthy: Without having seen the particular language, I think what it is saying is that approved housing bodies largely charge differential rents, which is not a market rent.

Deputy David Cullinane: Yes.

Mr. John McCarthy: I do not think that it was making any judgment as to where AHBs need to go if they want to move back on-balance sheet. That is one of many different factors that would have to be considered-----

Deputy David Cullinane: That is something the Department will have to consider and is considering.

Mr. John McCarthy: We are certainly looking at the decision and what the implications are, as are the AHBs. We will continue with that work.

Deputy David Cullinane: Maybe we will come back to the issue at some point.

The last topic I want to deal with before I make one overall observation is public private partnerships, PPPs. There are 500 units as part of a PPP project in Dublin on site. I know from what I have read elsewhere because we have not discussed this matter that there was an element of benchmarking done to consider the economic cost of doing this work through PPPs as opposed to other ways. That information has never been published because of commercial sensitivity. Is that correct?

Mr. John McCarthy: Yes.

Deputy David Cullinane: Given that the project is now under way, what would prevent the Department from publishing the benchmarking exercise in respect of this project?

Mr. John McCarthy: The PPP programme is being taken forward in three bundles. The Deputy has referred to the first bundle and it is not quite on site yet. It is in that final stage but, hopefully, contracts-----

Deputy David Cullinane: Who signed off on it?

Mr. John McCarthy: I would sign off. There are various stages. There is a project board-----

Deputy David Cullinane: Would local councils have a role?

Mr. John McCarthy: The way it works is that depending on the number of sites involved, and I think in the first bundle they were probably spread across four or five local authorities, one local authority is nominated as the lead authority and the other local authorities make what are called----- 98 25 OCTOBER 2018 Deputy David Cullinane: Do local councillors have a role to play?

Mr. John McCarthy: Not in relation to signing off on the value for money piece. The councillors have a role to play in terms of putting the land into the PPP programme.

Deputy David Cullinane: The local councillors have a role to play in terms of passing the land into the programme. How can they make judgments? This is what I hear from local councillors. How can we be assured that we are going to get value for money if we cannot see the ex ante analysis that is done or the value for money or benchmarking exercises that are done? How can I, as a member of the Committee of Public Accounts, be satisfied when we are asked to take the Department’s word for it?

Mr. John McCarthy: There are clear written guidelines and procedures in place that govern the PPP process. The National Development Finance Agency does an incredible amount of the heavy lifting in terms of the numbers. It is not that the public sector benchmark will never be published; rather, it is a matter of when it will be published.

Deputy David Cullinane: We went through this before in respect of other matters. We are talking about post-project reviews that, in some respects, were never published or whose publication we had to force. I think that was in the context of either health or transport.

Mr. Seamus McCarthy: Transport was the main one.

Deputy David Cullinane: Yes, and education was another. Those organisations are audited by the Comptroller and Auditor General and, therefore, he would have sight of some of those reviews. The problem is that in these cases he does not. He would not have had sight of any of the analysis done here as he does not audit-----

Mr. Seamus McCarthy: I do not audit the local authorities.

Deputy David Cullinane: What about the Local Government Audit Service? Would it have the information?

Mr. John McCarthy: No, the public sector benchmark is a confidential piece of information until, in the case of the housing PPP programme, all three phases are completed. We are a little further back on the second phase and we will launch the third bundle shortly. The public sector benchmark is relevant to all three. The established practice is that once the procurement process for all three is completed, that is, once comparable bundles are completed, the public sector benchmark is published on the Department of Public Expenditure and Reform’s website.

Deputy David Cullinane: I appreciate all that is being done, and I accept that Mr. John McCarthy says the benchmarking is done and that he is satisfied there is value for money. My problem is that we can never really determine that, however. We can determine it at some stage long afterwards, but there is little democratic accountability about all of this. We came up against it in other areas also. We must find some way of doing it and of satisfactorily establishing that going down this route will give value for money and that everything is what it seems.

I will return to that point but I wish to make a general observation about the human side of all of this. I imagine Mr. John McCarthy and everyone else here understands that there are people in need of social housing, that there are people on housing lists - many of whom live in their parents’ or friends’ homes - and people in need of affordable housing, a matter on which we have not even touched. There was very little in the budget in respect of affordable housing.

99 PAC Almost everyone who has a housing need is forced into the private rented sector, which has pushed up the price of rents. When I arrive in my constituency office in Waterford tomorrow, probably a dozen or more of the many people I must meet will have housing-related issues. They are looking for social housing but it is not there. I will have to tell them that they must find private rented accommodation through HAP, but they cannot find places within the rent caps. They are on a merry-go-round and they come to us to look for assistance. They then ask us to make representations for houses which do not exist. I do not buy into that clientelist system of doing things in any event; people should be entitled to a home based on merit and need. They come to local politicians, however, when they want advice. The problem is that for many of them there is not enough private rented accommodation available, or certainly not at the rates where they can avail of HAP. They are left to their own devices and, in many cases, abandoned. That is the reality and, unless we seriously start to build, it will continue to be the case and there will be debate after debate in the Dáil regarding the housing crisis. The Cathaoirleach said earlier that it had gone on for five years but it is probably longer than that.

I return to what was said earlier about the amount of money we spend on subsidising people in private rented accommodation rather than building homes. The human cost of this is enor- mous. I stress that it is difficult for us, as politicians, to deal with people who we know have a real housing need and who ask us to help them or make representations. As I said, however, we are making representations for houses that do not exist. We must do it and we go into the local council and meet the housing officers but they say “Sorry, Deputy, but HAP is the only option”. We revert to the constituents but they say they cannot find anywhere. Does the Department understand what it is like for people in that situation? Does it understand why we say there is a housing emergency which is real, which impacts on people’s lives and about which much more needs to be done?

As an observation, in my constituency in Waterford, where the target is 687 units by the end of 2021 and with almost 300 people who are approved for housing this year alone, notwithstanding how many came off the list, we are only scratching the surface. We are not dealing with the crisis at all, notwithstanding all the figures trotted out about how many homes will be built, how many acquisitions and purchases there will be and so on. If the targets for each local authority are broken down, one will see we are not getting to grips with it at all. That is only an observation and if Mr. John McCarthy wishes to respond he can do so.

Mr. John McCarthy: I thank the Deputy for giving me the opportunity to respond. I accept what he says and I do not think anybody sitting on this side of the room does not fully understand the implications of the housing crisis. We visit homeless facilities and we see at first hand what it means for some people. I fully understand and accept, therefore, what he says.

We have embarked on a six-year plan in the form of Rebuilding Ireland. In overall terms, we have exceeded the targets of the first two years and the build piece is increasing, has increased over the past two years and will get to a point in 2021 where it will exceed 8,700, from a point in 2014 or 2015 when it was in the hundreds at most. There is an ambitious plan, therefore. The mix in the early years is a particular mix but it will evolve very much towards the build programme as it is significantly ramped back up to where it was in 2007 or 2008, in terms of scale of build. We are aiming to get there and there is full commitment and dedication to that on this side of the room. There is full understanding of the implications of what the housing situation means for people on a daily basis.

Chairman: We have been here for two and a half hours. We will suspend the sitting for a few moments. 100 25 OCTOBER 2018 Sitting suspended at 4.30 p.m. and resumed at 4.35 p.m.

Deputy Catherine Connolly: I was speaking earlier on the Charleton tribunal. One sentence from its report states “Public relations speak as a substitute for plain speaking is an affront to the duty of [the Garda]”. I think the criticism of public relations speak as a substitute for plain speaking could be applied to every body including Deputies. I am looking at the Hous- ing Agency. I am not being personal. It has been put in a particular position, where it is doing its job. However I am looking and see it has had a summit - of which the Chairman has asked for its result - and spring lectures, there was a conference in 2017 which was moderated by Ms Terry Prone. Presumably she was paid for that.

Mr. John O’Connor: No, she was not paid.

Deputy Catherine Connolly: That is good to know. I look at it and what I see is public relations. I see that over €300,000 was spent on research. Did the agency not study or examine the effect of Airbnb on the market? The answer is “no”. Did it look at Galway and the Travel- ler accommodation plan that has never been implemented? Did it look at how that is affecting them?

Mr. John O’Connor: I will ask my colleague to respond specifically on Traveller accommodation, on which we have done an amount of work.

Deputy Catherine Connolly: No, we have all the plans in the world. I will return to the Department. I spent 17 years there and I know it was not implemented. It has never been implemented. The last time I was briefed as a Deputy, which I think was over a year ago but I am losing track, we were told that the manager was not averse to using his emergency powers because the Traveller accommodation plan had not been complied with. That is for the Depart- ment and the agency. When I see that huge amount of money being spent on research and the plans are there, why did it not look to see why it was not being implemented or what were the implications of that?

Mr. David Silke: On behalf of the national Travellers accommodation consultative committee, we commissioned an independent review of all the Traveller accommodation programmes since 2000. It was published on our website and the information was-----

Deputy Catherine Connolly: What did the Housing Agency learn from the fact that Gal- way City Council had not implemented its Traveller accommodation plan? There was consul- tation and the plan passed, but it was never implemented. Did the agency look at the implications?

Mr. David Silke: Yes. We looked at all of the plans.

Deputy Catherine Connolly: Will Mr. Silke confine his remarks to the plan in Galway?

Mr. David Silke: I would need to look again at the report to pick out the results for Galway, in particular. I can do that for the Deputy and send on the results.

Deputy Catherine Connolly: I do not wish to interrupt Mr. Silke, but I am looking at the report and trying to see why we have a housing crisis. It seems to get worse the more initiatives we take. The House Agency was set up as an initiative - that is not a reflection on the staff who work in it - and I see the amount of money it takes to fund it. Did I see a figure for the cost of renting office accommodation?

101 PAC Mr. John O’Connor: We own the building in which we are located.

Deputy Catherine Connolly: Good Lord, the Housing Agency must be the only body that owns its office space. Does it actually own it?

Mr. John O’Connor: Yes, the building was transferred by the council from the library service.

Deputy Catherine Connolly: Why do we have a huge housing crisis? We are investing a significant amount of money. The housing crisis in Galway is equal to, if not worse than, the crisis in Dublin. Let me outline the facts. People have been on the housing waiting list since 2002. Up until very recently, there were almost 5,000 households on the list, but, mysteriously and magically, that number has been reduced. We do not know how that was achieved, but one of the reasons is that when someone takes a house under the HAP scheme, he or she is taken off the list. The figures the Housing Agency sees for Galway have been reduced because people have accepted a HAP scheme payment and are no longer on the waiting list but a transfer list and so on. Do the witnesses understand my frustration? I am looking at the statistics, yet the housing crisis is getting worse. We have a housing agency that is holding a summit, conferenc- es and spring lectures, but it is not carrying out research into the real causes of the crisis which I see as no social houses having been built in Galway city - I am using Galway as an example - since 2009. In 2018 it started to build 14. There is no escaping the figure. Did the Housing Agency look at the affect of not building a single social house in Galway city until 2018?

Mr. David Silke: In our research programme we would not go into that level of detail; rather we would look at the position at national level. We make a summary of social housing assessments, to which we referred. We also produce a statement on housing demand and supply nationally. It looks at the situation at a national level, driving down to the likely demand for and supply of accommodation. It also looks at affordability.

Deputy Catherine Connolly: I hear that, but I bring it back to the area I represent in order that I can understand it. Of course, the Housing Agency has to look at the problem nationally, but it also has to learn from what is happening. Let us use Galway as an example. No social house was built and the only game in town is the HAP scheme. That was a policy decision made in the Department. As my colleague said, people are being told that their only option is to find a place to rent and what costs the HAP scheme will cover, but the amount of the payment is useless in Galway. One cannot find a two-bedroom, or even a one-bedroom, apartment to rent which is within the range of the payment. That is a fact. Has the Housing Agency looked at it?

Mr. John O’Connor: I will speak specifically about the HAP scheme. The limits to the amounts that can be paid are set, but each local authority can exercise discretion.

Deputy Catherine Connolly: Will Mr. O’Connor, please, listen to me? I know that the limits are set. I know what the limits are in Galway and that the local authority can use its discretion. Notwithstanding all of that, one simply cannot find a house in Galway to rent. That is why the homeless figures are rising. I know from a person related to me who was looking for accommodation that it costs more than €1,000 a month to rent a two-bedroom apartment. The HAP scheme has been the only game in town since 2014 when it was rolled out having been a pilot scheme. Some €300 million has been allocated this year, double the figure for last year. Will Mr. McCarthy comment on the increase from €150 million to €300 million which will rise to €421 million? There is also the RAS, as well as the rent supplement scheme. Has it occurred to the officials from the Housing Agency that they should conduct research into the impact of

102 25 OCTOBER 2018 the various schemes on affordability in the housing market?

Mr. John McCarthy: Our primary focus is on trying to meet the needs of as many households as we possibly can within the resources available to us.

Deputy Catherine Connolly: Will Mr. McCarthy, please, listen to my question? If the allocation for the HAP scheme is on an upward trajectory and spending next year will rise to €421 million, it is one scheme that is actively promoting the private housing market. Will the officials, please, try to answer my question? If they are not able to do so and say they cannot, that is okay, too. I am trying to understand it and do not want to be negative, but there cannot be solutions if the money spent on schemes that promote the private housing market continues to rise.

Mr. John McCarthy: As I said, if one looks at Rebuilding Ireland and the way housing supports are provided in the first three years compared to the final three, the mix is quite different. It is a reflection of the need to further accelerate the building programme in order that we will get to a point in 2021 where through a process of build, acquisition and lease we will be housing more people than under the HAP scheme.

Deputy Catherine Connolly: I hate being parochial, but I will keep referring to Galway where the housing crisis is on the same level, if not worse, than that in Dublin. Last year building work started on 14 social houses. Does Mr. McCarthy know straight off - I am sure the Housing Agency brought in the city manager - the size of the land bank available and what the obstacles are to direct build, in encouraging small builders to come forward or engaging in the supply of co-operative housing which is not on the radar? Personally, I would have thought this was the role of the Housing Agency, but I ask both witnesses to comment on the problem in Galway.

Mr. John McCarthy: In fairness, there are more than 700 sites on the Rebuilding Ireland map. I cannot be expected to know all of the information on 700 sites off the top of my head.

Deputy Catherine Connolly: Let me help Mr. McCarthy. There are 14 acres of land at Ceannt Station which is in a central location, eight of which are included in a plan on behalf of Bus Éireann with a private developer. There are major land banks in the docks area, while there is other land that was bought at astronomical prices. Of all cities, there should not be a housing crisis in Galway, but there is. I know that the Housing Agency has knowledge of the land banks available. In my time as a local authority member there was the land aggregation scheme. It was a time when we bought land at a ferocious price, some of which was then given to a body in Dublin to avoid paying interest. All of that land is available. Is it the case that the Housing Agency is hoarding land?

Mr. John O’Connor: No.

Deputy Catherine Connolly: Good.

Mr. John O’Connor: In Galway city the site that is in the ownership of the Housing Agen- cy is in Ballymoneen. We have provided part of it for Galway City Council. As it progresses the building of social housing, the remainder of the site will be transferred to it.

Deputy Catherine Connolly: While many sites were earmarked under the land aggregation scheme, only one was transferred to the agency.

103 PAC Mr. John O’Connor: The land at Ballymoneen in Galway city was taken over under the land aggregation scheme.

Deputy Catherine Connolly: I think there was a second site.

Mr. John O’Connor: There was, but that site is still in the ownership of Galway City Council.

Deputy Catherine Connolly: Do the officials see the difficulty? The land was bought. The councillors did their job. They earmarked the land which was bought and zoned residential, but it was not built on. There was then the land aggregation scheme. The Housing Agency is holding one site, while the other was not transferred. They have not been developed.

Mr. John O’Connor: Social housing is to be provided on the lands at Ballymoneen and more will be provided.

Deputy Catherine Connolly: Why was the site not built on before this?

Mr. John O’Connor: There was no funding available for a number of years to build on the site. Funding is now available.

Deputy Catherine Connolly: Since the day I entered the Dáil, successive Ministers - there have been three - have repeatedly said there is no problem with money. We started with Deputy Alan Kelly who was followed by Deputy Simon Coveney and the current incumbent Deputy Eoghan Murphy. We have been told repeatedly that there is no problem with money, yet no houses have been built in Galway.

Mr. John O’Connor: As funding becomes available, social housing is being built on the specific site and there will be more built on it.

Deputy Catherine Connolly: Let me now address questions to the departmental officials. How does the Department stand over the non-implementation of the Traveller housing plan?

Mr. John McCarthy: The implementation of the Traveller plan-----

Deputy Catherine Connolly: Yes, in Galway city, where the manager is on record as saying he will not be averse to using his emergency powers. We have got that far. He is considering using his emergency powers. He is still considering them, mind. They have not been used and the plan has not been implemented. What is the update to the Department from the local authority on that?

Mr. John McCarthy: In terms of the Traveller accommodation situation in Galway-----

Deputy Catherine Connolly: Has it been implemented?

Mr. John McCarthy: I think the Deputy knows very clearly that it has not been implemented.

Deputy Catherine Connolly: What is Mr. McCarthy’s view on that? That is all I want to know.

Mr. John McCarthy: Our view is the same for the Galway city plan as it is for every other Traveller accommodation plan. We want to see it implemented to the full.

104 25 OCTOBER 2018 Deputy Catherine Connolly: What has the Department done to have it implemented?

Mr. John McCarthy: We have funding available to Galway City Council and to other local authorities.

Deputy Catherine Connolly: They have not drawn it down.

Mr. John McCarthy: They have not drawn it down.

Deputy Catherine Connolly: What is the Department’s role when they do not draw down funding and they are obliged under the plan to provide the accommodation? What is its role in monetary terms?

Mr. John McCarthy: Our role is to continue to engage with them to try to understand what are the factors, what we can do and what they need to do. The Deputy pointed to the fact the chief executive is saying he is not averse to using his emergency powers, so he needs to use his emergency powers if that is the case.

Deputy Catherine Connolly: I am asking Mr. McCarthy what he has done, what steps he has taken and what steps he can take in this regard.

Mr. John McCarthy: I can continue to reassure Galway City Council and all other local authorities that there is funding available to implement their Traveller accommodation programmes. One of the things we have done in Dublin and Cork is to put in place a social housing delivery group between ourselves, the local authorities and the AHB sector. We would be quite happy to have a similar arrangement for Galway if that would help the delivery of its social housing programme and its Traveller accommodation programme.

Deputy Catherine Connolly: I am looking at a list of 60 empty houses. I am looking at Traveller-specific accommodation - three bedroom, two storey - and I can see four units, all empty. This has gone on for years. I will not put a year on it. I will let Mr. McCarthy do that.

I will turn now to the Housing Agency and the revolving acquisitions fund. I rushed Mr. O’Connor this morning and I apologise for that. I have gone back and looked at it. The Hous- ing Agency acquisition fund was established with the objective of acquiring 1,600 units over the period to 2020 for social housing. How many units have been acquired to date under that fund?

Mr. John O’Connor: Some 487 houses have been bought where the purchase is fully completed. We have a lot of other houses that we are in the process of buying through that fund.

Deputy Catherine Connolly: This comes up in the Housing Agency papers. Of the 1,600 units, it has bought 487. Is that correct?

Mr. John O’Connor: Yes.

Deputy Catherine Connolly: Therefore, the agency is not on target for meeting 1,600.

Mr. John O’Connor: We are, yes. We are buying houses all the time.

Deputy Catherine Connolly: As they get more and more expensive.

Mr. John O’Connor: No. We have already agreed to purchase many of them.

105 PAC Deputy Catherine Connolly: How many are agreed to purchase with the price set?

Mr. John O’Connor: In addition to what we have purchased, we have bids accepted on 818 houses.

Deputy Catherine Connolly: Bids?

Mr. John O’Connor: Yes. We have made an offer and that has been accepted.

Deputy Catherine Connolly: That is on 818 houses.

Mr. John O’Connor: Yes.

Deputy Catherine Connolly: How many of those are in Galway?

Mr. John O’Connor: I will get the Deputy the figures for Galway.

Deputy Catherine Connolly: How many sustainable communities has the agency built, given its vision and its mission to build vibrant sustainable communities?

Mr. John O’Connor: In terms of where we are involved in a development, whether acquiring properties or doing work with NAMA-----

Deputy Catherine Connolly: The primary objective of the Housing Agency is to promote the building of sustainable communities. My question is how many sustainable communities has it built since it was started in 2012?

Mr. John O’Connor: In everything we do when we are buying housing, or supporting approved housing bodies or local authorities in terms of their delivery of housing, we aim to make sure that the housing is sustainable and it is in areas where there are proper facilities.

Deputy Catherine Connolly: It is indirect.

Mr. John O’Connor: Yes.

Deputy Catherine Connolly: I have not been given to despair in a while. The last time was when representatives of the Garda were before us, and they actually improved. We have a major housing crisis and I see no element of value for money anywhere. I see a complete lack of value for money in terms of the HAP scheme and RAS. The Housing Agency is in the middle of a policy that is crazy. It is misusing language, though not on a personal basis, in talking about social housing, social support and housing solutions as opposed to a right to a home and how to give security of tenure. There is a complete absence of a recognition of that in any of the documents before me from the Department and the Housing Agency. Where the fault lies-----

Mr. John O’Connor: I will come back on one point. I will give the Deputy the figures for Galway city but the number of houses provided in terms of what we are acquiring through the NAMA portfolio is significant. When we were working with NAMA, there were quite a number of developments in Galway city and a lot of effort was put into completing those developments and making them available for social housing. I would need to check the number but it was of the order of 196 houses for social housing.

Deputy Catherine Connolly: I will be the first to apologise if that is the case, but I am not aware of that. All I have seen is the housing crisis get worse and worse, and the waiting lists get longer, and then more deception in terms of the waiting list being halved because they are now 106 25 OCTOBER 2018 on HAP or somewhere else. That is what I have seen. I do not mind waiting and people do not mind waiting. In fact, that is the biggest change from when I was elected first. We would go with people and ask them to bear with us and tell them they would get a house eventually because they were entitled to one. Now, there is absolutely no message like that. They are going from one house to another to another. It is shocking. However, this is about value for money and I do not see any value for money. I see one level of bureaucracy after another.

Chairman: Thank you, Deputy. I have some questions. I am a bit confused on one point. It is the Housing and Sustainable Communities Agency, known as the Housing Agency for short. Will Mr. McCarthy explain what is the Housing Finance Agency, which comes under the Department? I am sure not just Members of the Oireachtas but the public at large confuse the two. What is the Housing Finance Agency?

Mr. John McCarthy: The Housing Finance Agency is a body under our aegis that was specifically established as vehicle through which local authorities could borrow money for their housing purposes. It has subsequently been extended so it can be a vehicle for local authorities to borrow for other purposes and it can now also be a vehicle for approved housing bodies to borrow.

Chairman: It is not just housing.

Mr. John McCarthy: It has a wider remit.

Chairman: If a local authority wants to develop parks or swimming pools, it can borrow money. It is really a lending agency to local authorities and housing bodies.

Mr. John McCarthy: In the chapter of the Comptroller and Auditor General’s report-----

Chairman: We will not go into the detail.

Mr. John McCarthy: I am simply saying there is some information there.

Chairman: It is at the end of the Department’s appropriation account as a body under the aegis of the Department. Roughly, what kind of money did it lend last year? Is it €2 million or €222 million? We have heard of a fund of €70 million given by the Department for a revolving fund for the purchase of houses. Now, the Secretary General is telling me we have a Housing Finance Agency whose job it is to lend money to local authorities for housing. Please explain why we need this. We also have the Land Development Agency.

Mr. Seamus McCarthy: The report has figures for the end-2017 position of the Housing Finance Agency. The balance due from local authorities to the Housing Finance Agency was €970 million and that is under the CLSS.

Chairman: What is the CLSS?

Mr. John McCarthy: It is the capital loan and subsidy scheme, which started in 1992 and finished in-----

Chairman: To keep it simple, the Housing Finance Agency has been there for decades.

Mr. John McCarthy: Yes. The Housing Finance Agency has been there since 1981.

Chairman: Mr. McCarthy is relatively new.

107 PAC Mr. John McCarthy: It was established under a 1981 Act.

Chairman: Fine. Historically, the agency was the body that lent to local authorities. Is that what Mr. McCarthy is saying?

Mr. John McCarthy: Yes.

Mr. Seamus McCarthy: That is the CLSS scheme. There is also the CALF scheme whereby the outstanding loans-----

Chairman: The CLSS scheme was referred to earlier and it is mentioned in the report, but it is being replaced.

Mr. John McCarthy: It was wound down a number of years ago.

Chairman: It is still there.

Mr. John McCarthy: There are still outstanding loans which are being paid off but it was closed to new applications.

Mr. Seamus McCarthy: The outstanding loans are for €357 million. That would bring one to approximately-----

Chairman: It is probably right to ask the Accounting Officer to send us a note on all of these different organisations and capital loan schemes in the context of the amounts outstanding, capital advance leasing facilities and so on. Will Mr. John McCarthy provide an indication of the throughput, the value of money and where the debt rests? Is it with the Housing Finance Agency? I ask for a pen picture because we have the Housing Finance Agency, the Housing Agency and a new agency coming along, all of which are in the same corner. If we have the Housing Finance Agency, why was it necessary to arrange a €70 million revolving fund for the Housing Agency for the purpose of housing? Was the Housing Finance Agency not able to do it?

Mr. John McCarthy: The Housing Finance Agency is involved, but the Housing Agency was asked to take on the role of central point for engagement with banks with vacant properties rather than have them-----

Chairman: Which agency?

Mr. John McCarthy: The Housing Agency. Rather than to have individual approved housing bodies deal with banks bilaterally, the housing agency engages with the banks.

Chairman: Mr. John McCarthy has just told me that the Housing Finance Agency will lend to approved housing bodies. As such, why does it not just deal directly and cut out the middle man?

Mr. John McCarthy: The Housing Finance Agency is a very small organisation. It is purely a bank, if you like, and does not have the property or housing skills.

Chairman: It is a bank with no front of office.

Mr. John McCarthy: It is about getting the necessary linkage between two bodies that have two important roles to play and-----

108 25 OCTOBER 2018 Chairman: It sounds to me as if there should be just one organisation.

Mr. John McCarthy: -----it has worked quite well to recycle properties and-----

Chairman: In the note to the committee, Mr. John McCarthy should provide the pen picture on all of those different schemes. He should also outline the justification for why there are two agencies in the same corner dealing with the same loans to the same housing agencies.

Deputy Catherine Murphy: One is lending and one is buying.

Chairman: This is for my benefit. I will always ask a question if I do not know the answer. If I do not know the difference between one and the other, I take it that others also do not. As such, I do not mind asking. The Comptroller and Auditor General stated earlier that the Depart- ment is committed to tidying up the register of approved housing bodies prior to the introduction of the statutory regulation. In the five years’ work involved in that tidying-up exercise, it will be discovered that the agencies own properties out there. The question arises as to where it is to go. Trusts were set up 30 years ago and people have long since passed away. Where is it registered? I can see it being a far more protracted exercise than-----

Mr. John McCarthy: The comparable exercise, which was done in 2012 and 2013, was completed reasonably quickly.

Chairman: How many agencies were cut and what were the starting and ending numbers?

Mr. John O’Connor: We will have to check the figures but probably of the order of 100 were culled at that stage.

Chairman: Of the 500, 50 carry out 90% of the business. Is the target to get them down to 100 or is there any target at all?

Mr. John McCarthy: I do not necessarily have a target because within the remaining number there may be-----

Chairman: The Department is committed to an exercise of tidying up but it has no target as to what it wants to achieve.

Mr. John McCarthy: No. The target is to take off the registered bodies which perhaps were never active because they never moved on to do a project.

Chairman: Was that not done the last time?

Mr. John McCarthy: It was but some may have come on since then which never-----

Chairman: Some have been approved since but never did anything. When was that?

Mr. John McCarthy: I think it was in 2012.

Chairman: In other words, the Department did a tidying-up exercise a few years ago and it is telling us that it is very difficult to get on the register now. Only one or two are approved each year. However, it is now saying that some may have come on in the past few years, having got charity approval and proved their bona fides, but they have never done anything. Based on the one or two approved per year, it is an afternoon’s work.

Mr. John McCarthy: However, there are all the other ones in respect of which we have to

109 PAC be satisfied that they are still there and have everything they need, particularly the 5% that are not in the voluntary regulatory system. They have being contacted over the course of the last month to try to get them into that system so that when the regulatory piece comes in, they will be available for it.

Chairman: Does the Department have a timeline for that tidying up exercise?

Mr. John McCarthy: We have said we will have it done before the introduction of the legislation. Our priority is to get the legislation published. Once we have a timeline for how that is going to work its way through the Oireachtas, we will work to ensure-----

Chairman: Is it on the list for this Dáil term?

Mr. John McCarthy: It is on the list for publication in this Dáil term.

Chairman: That is something. The Comptroller and Auditor General also stated that the Housing Agency acts as an intermediary to purchase targeted suitable residential properties from banks, investors and owners. For whom does it act as an intermediary?

Mr. John O’Connor: We purchase and typically sell to approved housing bodies. We also act as an intermediary for local authorities. It means a bank with a portfolio of properties can come to us rather than to have to speak to 31 local authorities or a lot of approved housing bodies. We get the portfolio and ask each of the 31 local authorities which of the properties are suitable. We then go about trying to buy those properties. They are either bought on behalf of local authorities or bought and sold on to approved housing bodies.

Chairman: These are perhaps vacant properties where the banks have entered into posses- sion.

Mr. John O’Connor: Yes.

Chairman: What commission does the agency get for doing all of this for the banks?

Mr. John O’Connor: We do not get any commission.

Chairman: Some fool - the organisation; I do not mean an individual. Mr. O’Connor is saying that the agency is acting as the banks’ selling agent and auctioneer and finding people to buy properties. It is getting blue-chip purchasers who have no problem with mortgage approval. Nobody else would do that for the banks for nothing. I ask Mr. O’Connor to go away and think about that. The agency should be charging the banks they minimum fee that they would have to pay in the commercial market to get the same work done. While we need houses, I do not understand why we are finding buyers for banks free of charge. I do not get it. I ask Mr. O’Connor just to think about it. That is all I will say. Perhaps I am coming at it from a different perspective. I ask Mr. O’Connor to come back and tell me if there is a reason I am talking nonsense. On the face of it, I do not understand why we are doing it.

We glanced over the four-stage down to one-stage approval process. We had a bit of discussion and Mr. McCarthy was on top of it. This one-stage approval was much vaunted but Mr. McCarthy is saying chief executives are loath to take on a risk. I can understand why they would be. They are being asked to apply for a figure before a project has gone to tender. It is a little bit premature but the Department is going to hold them to that price, albeit they can be facilitated with tender inflation provided the €2 million cap is not exceeded. There is still a €2 million cap in the scheme. Did the Department sit down with the CCMA to work out if 110 25 OCTOBER 2018 this single-stage approval process was one local authorities would run with or was it simply announced only for the authorities to say they were not interested? Will Mr. John McCarthy talk me through the process? Did they indicate that what the agency came up with was a good scheme? If they gave it the go-ahead, why are they not operating it?

Mr. John McCarthy: We can have that from the horse’s mouth, so to speak, because Mr. Aidan O’Reilly was involved in those discussions and can provide the Chairman with chapter and verse.

Chairman: Thanks.

Mr. Aidan O’Reilly: We had extensive discussions with the housing committee of the CCMA as part of the 59-week programme and, in that conversation, we also looked at how to improve the single-stage process. We walked through all of the options for making improve- ments and there was a good acceptance within the CCMA housing committee of the new proposal. However, that has not translated into an uptake at individual local authority level. We are looking at that to determine why.

Chairman: When was this introduced?

Mr. Aidan O’Reilly: The newer version rolled out at the beginning of this year.

Chairman: Will our guests talk us through this? It is the main reason they are here today. There is €1.4 billion for housing but we cannot get the chief executives to operate something that the Department says it discussed with them, namely, a good idea that will speed things up.

Mr. John McCarthy: Absolutely-----

Chairman: That is why we need to meet a chief executive or two to help us understand where the logjams are located. The witnesses can understand why we are here.

Mr. John McCarthy: Absolutely. For what it is worth, some of it goes back to what I said at the outset. When one looks at the 59-week, four-stage process, if one actually strips out the time that we are adding to the process by having three stages of approval, we think that it actually only takes six weeks out of the 59. Against that background, at one stage, albeit significantly de-risked versus six weeks more and having things very nailed down and de-risked further-----

Chairman: Mr. John McCarthy is saying that the 59-week timetable is the panacea. The one-stage process might not amount to a hill of beans if the 59-week process works.

Mr. John McCarthy: Yes, and that is why we are monitoring the 59 weeks now. We are tracking it to ensure it is working. By the time a local authority designs-----

Chairman: One is only at stage two with the first batch-----

Mr. John McCarthy: Yes.

Chairman: Five years into a housing crisis and it is only now that the Department is coming up with the idea of compressing the whole process from beginning to end.

Mr. John McCarthy: In fairness-----

Chairman: The the most common phrase at local authority meetings is “It is with the De- partment”. 111 PAC Mr. John McCarthy: I have heard that from many chief executives directly. When I go and check in the Department, it might be “with” the Department but I will not say publicly what I say afterwards when I see what is actually there.

The Chairman referred to five years and I am not arguing that point with him. What I am saying is that Rebuilding Ireland has been in place for just over two years. Within less than a year and a half, we had worked through a revised one-stage process and a much shorter, targeted, timelined, four-stage process. We have been quite active in trying to make sure that the build programme that we envisage going on a sharp upwards trajectory has the systems to support it.

Chairman: Yes, but 59 weeks works on the basis of everything going like clockwork, with no hitches in design or tender, no delays with tender approval and no delays in getting suitable people on site which is difficult, given how busy the market is at present. Builders are making more money from building offices and hotels than from housing. It does not allow for long lead-in periods for builders, for example.

Mr. John McCarthy: Yes, but at least with the monitoring arrangement that we have in place - and that will continue to develop as projects move through - we will have a sense of whether timelines are being met and if not, why that is the case. We will be able to determine the factors that are impacting delivery.

Chairman: Mr. John McCarthy said that there are approximately 1,000 of these in the system at present, at various stages. In that context, I suggest that the Department should detail on its website a list of those projects, by county and by stage. It should be possible to see at a glance which ones have moved from stage one to stage two, for example, on a particular day. The public will then be able to see very quickly that projects are sitting with their local authority for nine months, for example, without moving. That must be shown.

Mr. John McCarthy: We are not quite at real time stage yet in terms of being able to check on a daily basis but every quarter----

Chairman: There is a big difference between a quarter and a week, for example. We are not asking the Department to send out a circular to the housing officer to be filled in and emailed back. There should be a mechanism in the Department to monitor and publish data on those projects that have started. When they have successfully gone through stage one, a box could be ticked in the Department. The same applies with progressing to stage two and so on but if a project is sitting at stage three for six months, somebody should know what is going on there.

Mr. John McCarthy: Absolutely. I misinterpreted what the Chairman said. That is fine. When we move to the substantive part of reporting, that is certainly something we can-----

Chairman: I would say it is best to start that system now rather than coming back later and trying to backfill the data into an IT system. I am making a suggestion and the Department can agree or disagree as it sees fit. People are understandably frustrated with the delays and I know that lots of them are at local level, with tendering, redesign issues and so on.

Mr. John McCarthy: The general point I wanted to make is that the type of visibility to which the Chairman refers is already available. We have published that data every quarter for the past six quarters. As an example, if one takes project X in this document, one can see that it is at stage one. One can see when it entered stage one and-----

112 25 OCTOBER 2018 Chairman: I think the Department already gave us that document.

Mr. John McCarthy: We certainly provided a summary.

Chairman: No, we have one that gives the details on a county-by-county basis.

Mr. John McCarthy: That is published------

Chairman: We have all been reading the data on our own areas closely over the last few hours.

Mr. John McCarthy: The data is on our website and is updated on a quarterly basis. It is there as part of our efforts to be open and transparent.

Chairman: If the speeded up four-stage process delivers the goods, that is fine.

Mr. John McCarthy: Yes.

Chairman: Mr. McCarthy referred to Rebuilding Ireland. Why is the credit policy govern- ing loan approval decisions a secret? Why is this information not available to any member of the public or to public representatives? I tabled a parliamentary question and asked for a copy of said policy because I wanted to be able to explain to people why they did not get loan approval but it is a secret. Why is that the case? It affects people’s lives and it is not fair for a public body to have a secret document. My local authority has informed me that it is a secret and that I am not entitled to see it. I have asked a parliamentary question and have been told it is a secret. I also raised it as a Topical Issue a number of months ago but the answer I got was “No hope”. Will Mr. John McCarthy explain why the decision-making process around approving loans is secret?

Mr. John McCarthy: I think there have been some developments on that in the very recent past. A redacted version was released, as far as I am aware.

Mr. David Walsh: Yes, if one goes to the Rebuilding Ireland home loan website now, one will see a redacted version of the credit policy which has removed what are seen as the core commercially sensitive items of information. The remainder of the 20 or more pages is available to view.

Chairman: The last time I raised this as a Topical Issue was-----

Mr. David Walsh: This has been done in the last two weeks.

Mr. John McCarthy: We can send on a copy to the Chairman.

Chairman: I ask that it is sent to the committee rather than to me personally. What is the nature of the redactions?

Mr. David Walsh: It is issues around the calculations and around some of the elements-----

Chairman: They are probably the parts that people want to read.

Mr. David Walsh: Local authorities need to be able to make assessments themselves and decide what level of risks they are willing to take, as per the advice of their credit committees. These policy documents have never been released before but we have now decided that a certain amount of information can be released and made available.

113 PAC Chairman: I will take some credit for that, having raised it as a topical issue. That is fine and it will be good to get that document. I also ask the Department to clarify and send us a note on the issue regarding separated people.

Mr. John McCarthy: Yes, we will do that.

Chairman: I am asking the Department to address this in the context of the nuts and bolts of how these schemes work. I know of couples who have split up, legally separated and sold the family home. They might have ended up with €20,000 having cleared the mortgage. However, under the Rebuilding Ireland home loan scheme, one of the parties must still live in the original house. I think I am correct in saying that. Under the scheme, a loan will be given to the person who must look for a new house. A condition of the scheme is that one of the parties must stay in the house. One of the parties may not have benefitted financially to any extent or may have only ended up with €10,000 but is ineligible. I ask the Department to clarify the exact specifics in such circumstances. People are coming up against that barrier. Applicants have suggested to me that it is unconstitutional that their right to access this loan scheme is being jeopardised by virtue of the fact that someone now unconnected to them lives in a particular house, namely, the former family home.

Mr. John McCarthy: We will certainly clarify that for the committee.

Chairman: Does Mr. McCarthy understand what I am asking?

Mr. John McCarthy: Yes and we will clarify it. Please do not hold me to this until we clarify it, but, to the best of my recollection, we use the same definition of first-time buyer in the regulations for the loan as that used in tax law. I am not sure why it would be a problem but I ask the Chairman to leave it with us. We will look into it and come back to him.

Chairman: The Department can correspond with the committee. I have had correspondence and there is a different definition of first-time buyer in another scheme in the Department.

Mr. John McCarthy: There are probably two issues. There is the definition of first-time buyer for the Rebuilding Ireland home loan and there may be a slightly different definition for social housing purposes and someone’s entitlement to social housing. They are two different things but we will clarify both.

Chairman: The Secretary General can understand why, when I am told there are two different definitions of first-time buyer in the Department depending on what scheme people are under, I do not get the logic.

Mr. John McCarthy: We will clarify them both.

Chairman: Does Mr. McCarthy understand me asking?

Mr. John McCarthy: Absolutely.

Chairman: There is an organisation with billions of euro that for years has been trying to give the Department money to build houses. This is the credit union movement. Everybody, starting with the banks, is determined to keep credit unions out of their sphere of activity. The Minister of State, Deputy Damien English, said just the other day in answer to a parliamentary question that one of the credit unions is ready, that it has gone through the process and has money available. He stated he could not be any clearer than this and it would be very helpful if it could be explored with housing officials - he must have been speaking about the depart- 114 25 OCTOBER 2018 mental officials. He also stated that to be ready, a special purpose vehicle must conform to the Central Bank requirements and no other vehicle will be acceptable, presumably to the Central Bank. Will Mr. McCarthy talk me through this because I think I heard an announcement on my way here this morning that a credit union would be able to come into this but the Central Bank has restrictions on that credit union lending its money? I have said what the Minister of State, Damien English, stated very recently. Perhaps it was not scripted.

Mr. David Walsh: There are two issues.

Chairman: Talk me through the credit union issue and why a special purpose vehicle is needed.

Mr. David Walsh: The credit unions have been exploring how they can work with the Irish Council for Social Housing, ICSC, which is a representative body for the approved housing bodies, to provide funding in the same way the Housing Finance Agency or other banks are privately funding the construction, management and maintenance of some of these programmes. The Central Bank needs to look at the requirements and steps and whether certain minimum levels are met. Earlier this year, the Central Bank amended some of its rules. In parallel with this, the Department is not in the job of telling credit unions that they must loan to approved housing bodies but we did make sure we engaged and facilitated dialogue between the approved housing body sector through the ICSC. We provided core research funding, through innovation funds, to the approved housing body sector on how a special purpose vehicle could be developed that could avail of credit union funding.

Chairman: Why is there a need for a special purpose vehicle?

Mr. David Walsh: The point is it would be off-balance-sheet as an activity. At present, the credit unions could go out there. It is a condition of some of the Central Bank’s requirements that something off-balance-sheet is created.

Chairman: Are the approved housing bodies off-balance-sheet?

Mr. David Walsh: No. The CSO and EUROSTAT made a ruling in December that under the current arrangements, and given the revenue that comes through and how they operate, any lending coming to approved housing bodies is dealt with and counted as part of the local government general debt.

Chairman: They are on-balance-sheet.

Mr. David Walsh: Yes, for now.

Chairman: Whose idea is it to make up this wheeze of a company, called a special purpose vehicle, to take it off-balance-sheet? Is it the Central Bank that wants it off the balance sheet or is it the Department or the approved housing bodies? What is wrong with having them and the credit union loans on the State balance sheet if they are to build houses? Who is making the effort to take them off the balance sheet given that the loans are already on the State balance sheet? Why not leave it as it is?

Mr. David Walsh: The approved housing bodies have been examining whether they could draw on wider sources of funding, not just from the State and the Housing Finance Agency, to fund not only housing but other activities they may have on affordable housing or non-social housing elements. In recent years, they have been looking to see whether there are funds they

115 PAC could draw on, either through European banks or private Irish banks. In the middle of this process, in December the CSO concluded its analysis of the approved housing bodies and made a decision that all current activity and lending undertaken by approved housing bodies in Ireland is on the general government balance sheet.

Chairman: When was that decision effective from?

Mr. David Walsh: December

Chairman: Last December.

Mr. David Walsh: It was retrospective so we had to recalculate all of their previous-----

Chairman: By how much did our national debt increase as a result?

Mr. David Walsh: There were two pieces of work, as the Secretary General said, in the calculations of the Minister of Public Expenditure and Reform.

Mr. John McCarthy: The Minister for Finance said at the time, in the stability programme update, that general government debt increased by 0.03% of GDP.

Chairman: No, I want a figure.

Mr. John McCarthy: It was €100 million.

Chairman: They only had borrowings of €100 million.

Mr. John McCarthy: Most of their borrowing is through the Housing Finance Agency-----

Chairman: And it was already on balance sheet.

Mr. John McCarthy: Exactly.

Chairman: There was an issue there years ago.

Mr. John McCarthy: Yes.

Chairman: This was all only approximately €100 million. They want to get some of their activities off the State balance sheet.

Mr. John McCarthy: It was approximately €100 million at that stage but, looking forward, it could potentially be more if it is structured in the right way and if proper finance is available.

Chairman: Are they even sure if they succeed with this special purpose vehicle that EURO- STAT will go along with it? Perhaps it will not. We have been around this house a few times.

Mr. John McCarthy: Indeed.

Mr. David Walsh: I can give the committee a note on it.

Chairman: Send a detailed note to the committee. Some committee members have left and the topic was not raised earlier. It is something lurking in the background.

Mr. Seamus McCarthy: This is related to the point Deputy Cullinane raised on the level of rents relative to the market.

116 25 OCTOBER 2018 Chairman: Yes, exactly

Mr. Seamus McCarthy: It is the same type of issue.

Chairman: It is their commercial activity. My next question is on the same topic. Are the approved housing bodies confined to the housing assistance payment limits for their tenants’ rent?

Mr. John McCarthy: Generally for most of the stock of approved housing bodies it is the differential rent scheme for the local authority. It is one of the issues they raise with us. Some of the bigger ones that operate throughout the country must deal with many differential rent schemes. For some of the capital assistance scheme properties they charge a more economic rent that will cover some of the-----

Mr. John O’Connor: It is slightly higher. Traditionally they got rent supplement but they get some additional-----

Chairman: How much funding does an approved housing body get on top of the equivalent of the differential rent?

Mr. John McCarthy: It depends on the particular funding mechanism.

Chairman: How does the system work? If a private landlord takes the equivalent of the differential rent is that all he or she gets? The person may have the housing assistance payment and can make a top-up payment to the landlord. In this situation, the person pays the differential rent. Who pays the top-up to the approved housing body? Is it the Department or the local authority?

Mr. John McCarthy: In the capital assistance scheme cases it is the Department of Em- ployment Affairs and Social Protection.

Mr. John O’Connor: Yes.

Chairman: We will write for a detailed information note. Can the Comptroller and Auditor General help us on this matter?

Mr. Seamus McCarthy: The committee will bring the Department before it at the end of November for the second leg of this issue.

Chairman: Yes, we will.

Mr. Seamus McCarthy: Rental issues will be the focus.

Chairman: It is our next scheduled meeting. There might be an issue with the date and we will come back to it. We will deal with-----

Mr. Seamus McCarthy: The Chairman might signal to the Department-----

Chairman: -----rent supplement, rent support issues and housing support issues at our second meeting on this topic. It will be raised in that.

Mr. John O’Connor: It might be worth providing the committee with information on how the various schemes and approved housing bodies are funded because there might be some confusion-----

117 PAC Chairman: Yes, there is.

Mr. John O’Connor: -----on it.

Chairman: The witnesses can understand that level of detail is not our day job. We only touch on this occasionally. Well in advance of the meeting, I ask the witnesses between them to have the note sent to us so when we arrive at the meeting we will already have the information, rather than people having to ask questions about it.

Mr. Seamus McCarthy: One feature of regulation very often is price setting. I am not sure whether it is an aspect of the voluntary code. It does not feature.

Chairman: We must now look at Mr. O’Connor’s financial statement. One of the items on our agenda today is the Housing Agency’s financial statement for 2017. Nobody has asked a question on it and it would be remiss of me to allow the meeting to conclude without going there. I am going straight to page 37. I want Mr. O’Connor to read the opening paragraph of the statement on internal controls signed by the chairman, Michael Carey. Is he the new chairman?

Mr. John O’Connor: Yes, he is.

Chairman: The first paragraph, on page 37, states:

In respect of Procurement during 2017, expenditure of €1.246m was incurred in relation to goods and services where procedures employed did not comply with procurement guidelines. The services employed related to legal services, insurances and temporary resources.

We need to go through each of these. Did any of this relate to the pyrite remediation scheme?

Mr. John O’Connor: None of that related to the pyrite remediation scheme.

Chairman: None of it. Approximately what is the payroll bill in the Housing Agency, to the nearest million?

Mr. John O’Connor: It is approximately €3 million.

Chairman: The €3 million in payroll is not affected by this procurement issue. The pyrite issue of €25 million is not affected by this procurement issue. Is that correct?

Mr. John O’Connor: Yes.

Chairman: That is €33 million minus €28 million. This €1.2 million happened in respect of €5 million of the Housing Agency’s purchases. Can I take it none of it had to do with the National Building Agency or the agency’s pension costs?

Mr. John O’Connor: It was to do with-----

Chairman: I am ruling things out, not ruling them in. I want to rule out, from page 42 of the Housing Agency’s expenditure statement, the headings under which this breach of procurement procedures occurred. None of it affected the pension costs column, did it?

Mr. John O’Connor: No.

Chairman: It did not come out of the depreciation costs column?

Mr. John O’Connor: No. 118 25 OCTOBER 2018 Chairman: It has nothing to do with depreciation. Was any of it due to office administration costs?

Mr. John O’Connor: If I could interject-----

Chairman: I will let Mr. O’Connor in but I want to rule out a few things. What was the “Payment to the Exchequer”, referred to in note 5.8 in the financial statement? Was the procurement issue related to the payment to the Exchequer?

Mr. John O’Connor: No.

Chairman: Was it in connection with the heading, “Fingal costs”?

Mr. John O’Connor: No.

Chairman: Did it relate to the heading, “HomeBond staff and services”?

Mr. John O’Connor: No.

Chairman: We will get to the area Mr. O’Connor wants to talk about, but I want to rule out all these items first. It certainly has to do with legal and professional costs and we will come to the specifics. There were property acquisitions and then legal and professional separate to that, and then there were office administration costs and some employment costs. My impression is that, out of €2.5 million spent, almost 50% was outside procurement guidelines because the vast majority of the Housing Agency’s expenditure during the year related to pyrite, employment costs, pension costs, depreciation costs, HomeBond costs, transfers to the Exchequer, Fingal costs. There is only about €4 million left, or even less. Most of the Housing Agency’s discretionary purchasing or procurement of goods and services was completely outside the pale. Does Mr. O’Connor understand the point I am making? I have narrowed down the areas where this breach of procurement procedures occurred and ruled out all of the areas in which it cannot have occurred. That means that in the areas where good and services were procured, €1.246 million was outside procurement guidelines. That is a phenomenally high percentage. I have never seen any organisation with such a high percentage of their procurement outside Government guidelines. I know Mr. O’Connor will give me the excuse now but does he get the starting point?

Mr. John O’Connor: Yes.

Chairman: Organisations come before the committee that might have €1 million outside of procurement guidelines but it could be out of purchases of €50 million.

Mr. John O’Connor: If I could interject, our purchases were over €100 million. We had a pyrite remediation scheme in which significant money was expended.

Chairman: How come purchases were €100 million?

Mr. John O’Connor: We have a revolving fund of €70 million for the acquisition of properties.

Chairman: Is that separate from the statement of income and expenditure on page 42?

Mr. John O’Connor: Ms Jordan might just point that out, but I would like to come back in thereafter.

119 PAC Ms Margaret Jordan: That is under note 18.

Chairman: Has Ms Jordan a page number?

Ms Margaret Jordan: I have a different edition.

Chairman: Is it note 18 on page 66?

Ms Margaret Jordan: Page 65.

Mr. John O’Connor: If I could give an overall explanation, we had a significant amount of expenditure in 2017, well in excess of €100 million.

Chairman: Did this happen every other year as well? This was the only year I looked at. Is this a recurring issue?

Mr. John O’Connor: No. It was specifically in relation to property acquisitions under the revolving fund and the engagement of solicitors for conveyancing.

Chairman: Did the Housing Agency know it was going to purchase these properties at some stage?

Mr. John O’Connor: Yes.

Chairman: Did it know a solicitor would be required to help complete the transaction?

Mr. John O’Connor: Yes.

Chairman: How was the agency caught?

Mr. John O’Connor: The agency knew it was going to make acquisitions. It engaged with the Office of Government Procurement about the engagement of solicitors. The Office of Government Procurement said it was setting up a framework and would prefer us to use that framework in terms of engaging solicitors. It confirmed that it expected to have a framework in place by a certain time but the framework was not in place in sufficient time and we had run out of time to go through the full procurement.

Chairman: The tender process?

Mr. John O’Connor: We went through a procurement process. We went through a restricted procurement process, tendered it to legal firms and selected from that. We went through a procurement process. The intention had been to use a framework from the Office of Govern- ment Procurement which we subsequently have done. The agency has put that in place and used that framework and engaged solicitors from that framework.

Chairman: There is also the issue of €270,000 for insurance. The agency was buying houses and transferring them. The Housing Agency must have known on the day the house was purchased that it would have to be insured. It sounds as if the agency was shocked it had to be insured between the time the house was bought and sold.

Mr. John O’Connor: We expected that the period from buying to selling on would be short.

Chairman: Was the original intention to carry the houses uninsured?

Mr. John O’Connor: No, we were going to insure them but we expected to be carrying the 120 25 OCTOBER 2018 houses for two to three months. The sales on to approved housing bodies have been taking up to a year.

In the meantime, we have made the properties available to the approved housing bodies to refurbish and have tenants in place, but the timescale to convey the properties onwards was far in excess of what we expected.

Chairman: What caused this delay of a year? There were people looking to get into these houses. What caused this delay of conveyancing? Another reason we are here today is because people cannot understand why there is €70 million sitting in the bank and it takes a year to go through. The other side is also involved in the transaction but-----

Mr. John O’Connor: We enter into a caretaker agreement with an approved housing body the minute we get the keys. We give them the keys and make sure the properties are refurbished and occupied as quickly as possible. In terms of buying the properties, that can happen-----

Chairman: The note the committee needs from Mr. O’Connor is to give us information as to how many houses the agency acquired and the length of time it took for the approved housing body to have tenants move in. I know that after the agency got paid, it would take the AHBs a week, or two, or three to get their tenants in. They were required to take the people off the local authority list anyway and they would have been doing the interviewing process of those people towards the end of the process. It looks now as if we are uncovering a new void system through the agency. The agency buys a house but it can take a year before the tenant gets the house.

Mr. John O’Connor: It takes a year before the property is sold on. The tenant will be in place before that sale.

Chairman: Mr. O’Connor said a lot of remedial work may have to be done.

Mr. John O’Connor: There could be some remedial work but the minute we get the keys we pass them on to the approved housing body on a caretaker lease. It refurbishes property and gets it occupied by a tenant.

Chairman: Does the Housing Agency insure it during the caretaking period or does it insure-----

Mr. John O’Connor: We insure it until we sell the property.

Chairman: Did it recruit some people for a recruitment process?

Mr. John O’Connor: Yes, temporary staff.

Chairman: How much cash did the Housing Agency have on hand in the middle of this housing crisis at the end of the year, based on its financial statement?

Mr. John O’Connor: Some €14.8 million.

Chairman: Where is that figure taken from?

Mr. Seamus McCarthy: Note No. 13 on page 60.

Chairman: I am looking at page 44, the statement of financial position as at 31 December. Does cash make up many of those housing acquisition deposits and stock of houses for sale?

121 PAC Mr. John O’Connor: Some €9.7 million.

Chairman: In that case, the Housing Agency had approximately €14 million in cash at the end of the year, and the big change was that the Housing Agency received the €70 million.

Mr. John O’Connor: Yes.

Chairman: At what stage of the year did that come? It was not the reason for the Supple- mentary Estimate.

Mr. John O’Connor: No, that was provided for in the Estimate as it stood at the start of the year.

Chairman: Okay. I think I have done enough. I wished to ask some more questions about the financial statements but we have had a long day. As witnesses will understand, we are trying to get information into the public arena in order that people will understand what is going on because there is some frustration with how long it has taken the €1.4 billion spent on housing last year to translate into houses on the ground, never mind the €1.5 billion or €1.6 billion spent on housing this year. I know there are many acquisitions and many issues at local authority and approved housing body levels. That is why we are having a second meeting which we hope some chief executives will attend to help close the circle because they are an important group of people.

I thank all the witnesses from the Department of Housing, Planning and Local Government and the Housing Agency, as well as the Comptroller and Auditor General and his staff, for their attendance today. The meeting is adjourned until Thursday, 8 November 2018, when we will meet with the State Claims Agency on matters related to medical negligence, CervicalCheck and thalidomide litigation. We will have a further meeting with the witnesses as soon as possible but we must confirm the date.

The witnesses withdrew.

The committee adjourned at 5.44 p.m. until 9 a.m. on Thursday, 8 November 2018.

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