Building a better future with some old ideas from the Kenny Report

Building a better future with some old ideas from the Kenny Report
In June 2017, RTÉ sold 8.64 acres at Donnybrook to Cairn Homes for a price of €107.5m. Picture: Sam Boal/Rollingnews.ie.

With development land prices prohibiting many young people from owning their own home, Tim Ryan says the 1973 Kenny Report is now more relevant than ever.

Forty-six years have passed since the report by the Committee on the Price of Building Land (the Kenny report) was first published in 1973.

It contained a set of radical recommendations which had the potential to transform the way building land was purchased by local authorities forever. However, the recommendations were never implemented, thereby missing a key opportunity to avoid subsequent decades of very incoherent and distorted housing policy.

To this day, in virtually every housing debate in the Houses of the Oireachtas, reference is made to the report and calls are still made for the implementation of some of its key recommendations.

For example, speaking at the opening of the Thomas Kent School of History in Fermoy on September 30, 2018, the Fianna Fáil leader Micheál Martin said he was asking the party’s justice spokesperson and senior counsel, Jim O’Callaghan, to examine whether the report could be implemented without the need for a constitutional referendum on the right to private property.

The committee was established in 1971 by the then Fianna Fáil Minister for Local Government, Robert Molloy TD, in reaction to the disproportionate price of building land at the time, notably in the capital.

Chaired by High Court judge Mr Justice John Kenny, it had two representatives from the Department of Local Government, one from the Taoiseach’s Department (Dr Martin O’Donoghue, who later served as Minister for Economic Planning & Development), one from the Revenue Commissioners and one from the Valuation Office.

Its terms of reference included the consideration of possible measures for controlling the price of land required for housing and others forms of development as well as ensuring that all or a substantial part of the increase in the value of land attributable to the decisions and operations of public authorities would be secured for the benefit of the community.

The members were also asked to advise on what changes in the law may be required to give effect to any measure recommended.

The committee sought written submission from interested parties and also wrote to organisations which it believed had a special interest in the area. In total, 42 submissions were received, including 16 from local authorities, three from Government departments and the remainder from interested parties and organisations such as the IDA, the City and County Manager’s Association and the Construction Industry Federation.

One TD, Fine Gael Deputy Mark Clinton (who later served as Minister for Agriculture from 1973 – 77) made a submission. A total of 59 meetings were held at which two heard oral evidence. The report was published in March 1973. It included a Majority and a Minority report, the Minority report drafted, ironically, by the two civil servants from the Department of Local Government, the commissioning department.

In its opening chapter, the committee noted that in the period 1963 to 1971, the average price of “serviced” land (ie undeveloped land which has the main services of water, sewerage and drainage close to it) in county Dublin increased by a staggering 530% compared to a rise of 64% in the consumer price index.

When the committee reported in March 1973, the Majority Report recommended that local authorities be given the right to acquire undeveloped lands at existing use value plus 25 per cent by adopting Designated Area Schemes.

This financial deal was deemed to be “a reasonable compromise between the rights of the community and those of the landowners”. The Majority Report members believed this would, in turn, stymie the disproportionate price rise in building land and thus end speculative land banking.

As the increase in the value of building land was in many cases attributable to infrastructural works carried out by local authorities, the Majority Report argued that the local community had a legitimate claim to all profit accruing to the land. This increase in value was referred to as ‘betterment’.

The Minority Report recommended that areas required would be “designated” by the local authorities. In a designated area, the local authority would have first option to purchase land put up for sale. A levy of 30% would be charged on all disposals of land in the area. The proceeds of levies would accrue to the local authorities to be used by them to finance capital works.

However, regulating the price of building land was considered by many, including the two Minority Report members, to be an infringement of private property rights which are protected under the Constitution, notably Article 43.1.2.

By the time the report was published, the Fianna Fáil Government had left office and was replaced by the Fine-Gael Labour Coalition of 1973-77 led by Taoiseach Liam Cosgrave.

Since then, there has been much general commentary as to why its recommendations were not implemented. In January, 1974, the government announced their acceptance in principle of the concept of the Majority report.

However, no commitment was given as to the amount of compensation payable in a designated area and the questions as who should be the Designation Authority was left open.

Records in the National Archives show that the Government was advised that the principles did not infringe the Constitution but concurred with the view in the Majority Report that the opinion of the Supreme Court on the legislation should be obtained, pursuant to Article 26 of the Constitution.

The economic recession of the mid-70s caused further consideration of the Report to be side-lined and, in 1976, the then Minister for Local Government, Jimmy Tully, decided to defer the implementation of the Kenny majority proposals in view of the then prevailing economic and fiscal circumstances.

Since then, there have been a myriad of reason why the Kenny Report was not implemented, including powerful vested interests and the well-trotted out threat of a constitutional challenge.

Furthermore, the introduction of the Local Government (Planning and Development) Act, 1963, saw the culture of compensation for landowners grow rapidly in cases where planning permission was refused.

But equally, there have also been many and varied calls for the findings of the Kenny Report to be implemented. In 1982, for example, the Commission on Taxation echoed calls for the recommendations in the Kenny report to be implemented, particularly in relation to betterment.

Most significantly, some 31 years later, in 2004, in the context of the emerging Irish housing bubble, the approach recommended by the Kenny report was reiterated in the Ninth Progress Report of the All-Party Oireachtas Committee on the Constitution. In its recommendations, the Report, whose legal advisor was Gerard Hogan SC, now an Advocate General in the Court of Justice of the European Union, concluded that “it is very likely that the major elements of the Kenny recommendations, that land required for development by local authorities should be compulsorily acquired for development by local authorities at existing values plus 25% — would not be found to be unconstitutional.”

In June 2017, RTÉ sold 8.64 acres at Donnybrook to Cairn Homes for a price of €107.5m. Cairn Homes plans to build 500 apartments and nine houses on the site, giving an initial cost of €210,000 per unit — for site costs alone.

Today, with development land prices still prohibiting many of the nation’s young people from owning their own home, the Kenny Report is as relevant as ever.

Tim Ryan is a former Irish Examiner journalist currently researching a PhD thesis on the 1973 Kenny Report at the School of Social Work and Social Policy, Trinity College Dublin.

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