Kelly may be right about housing crisis, but it’s on his doorstep

DAWN French, great comic and Vicar of Dibley, was asked in a newspaper interview at the weekend what she thought was more important, ambition or talent, writes Gerard Howlin.

“Talent,” she replied. “Ambition without it is a hollow old thing.”

Most of us have enough failed pretension to take her point. Reading another newspaper on Sunday, which featured a lengthy, illuminating interview with Environment Minister Alan Kelly, French’s words hovered ominously. Ambition without talent is a hollow old thing, indeed.

The good news is that the minister is angry. Responsible for Irish Water, housing, climate change, and local government, he has much to be angry about. Righteous anger is a just emotion. But flailing the Central Bank, greedy developers, unnamed officials, and Phil Hogan, in no particular order of importance, read like political weakness.

In government, it’s good to shame sin and lacerate failings, but you are paid to be the man with the plan. Glorying in the nom de guerre of AK47, Kelly was firing on all cylinders. I have never had any contact with a real AK47, so I am not sure how it performs, but I imagine it spews bullets in all directions with incredible velocity and deadly effect.

The minister, perhaps without meaning, lived up to his own caricature. He enjoys conflict, he says, and it’s good to see a minister who has the courage of his convictions. But some of his convictions are contradictory. Others are self- serving and, bundled together, they have the look of a hurricane force blame-game, rather than of considered plans that have a chance of delivering lasting results.

His eye-catching, eye-watering accusation is that the Central Bank “has wrecked” the housing market in Dublin while, at the same time, admitting that the bank’s approach is “probably the right long-term policy”. So there you are.

The controversial, but highly effective, regulations brought in by outgoing governor Patrick Honahan allow lenders to provide up to 90% of the value of a home to first-time buyers up to a limit of €220,000. This means that first-time buyers will need a 10% deposit for the first €220,000 of their property’s cost and 20% of whatever is above this limit.

For buy-to-let mortgages, the figure is 70%. The policy is cooling what was already beginning to be an alarmingly overheated market.

According to MyHome.ie, while asking prices for new houses rose by 1.8% nationally, from a very depressed base in some parts of the country, prices in the capital fell for the first time in three years, by 0.1% in Q3 2015. The Central Bank’s policy is right, not only in the long-term, as the minister admits. It is working effectively in circumstances where we have a shortage of housing supply, historically low interest rates set by the ECB in Frankfurt, and an expansionary, pro-cyclical budgetary policy at home, again.

These three factors made up the lethal cocktail which, when combined with a global financial crisis, led to the spectacular property bubble and economic crisis here.

A government back then, with every good intention, increased domestic spending, creating unsustainable inflationary pressures in demand for housing and much more.

It answered the repeated demands of the construction industry for tax incentives, and, in the end, unleashed forces it could not control and which wreaked havoc. We are a long way off that now. But, looking at the recent budget, looking at the rushed-out, additional €1.5bn in supplementary spending for this year, and reading Alan Kelly’s disjointed, disconnected, politically opportunistic slew of accusations, it is clear that, culturally, we are right back to where we started.

Last Saturday, on the Marian Finucane radio show, Noel Dempsey, one of Kelly’s predecessors as environment minister, was interviewed. It was a very upfront, stark reflection from a man who is older and wiser.

Noel Dempsey

Some of us, regrettably, acquire only half that pair of accomplishments. Asked if he thought we have learnt the lessons of the past, he replied: “I don’t think we have.” Regrettably, he is right.

Dempsey and Kelly arrived at a similar conclusion on one point. Dempsey said that the civil service’s structures haven’t changed much and that its hierarchical, rigid system does not get the best out of people. He is right about that, too.

There is no shortage of either talent or integrity among civil servants, but the system, and how it abuts election politics, is based on accountability-avoidance mechanisms.

So-called reforms have been anaemic and largely ineffective, which brings me back to the current incumbent at the Customs House, Mr Kelly. “I think” he said, “some people at certain officialdoms need to wake up to the scale of this,” referring to the housing crisis. “They need to understand it, because it doesn’t affect them in their daily lives.”

He may be right, but he is in charge and he is a member of the government that has passed up on the historical chance to implement major reform, either in the public service centrally or locally. It has, furthermore, paid upfront, via the Lansdowne Road agreement, for a system that Mr Kelly frankly admits isn’t delivering appropriately on what he says is the country’s number-one problem.

In politics, as in life, you make your own luck. It is to this Government’s credit that it pressed on relentlessly with the budgetary measures agreed upon by its predecessor. That we are recovering economically, now, is a significant measure because of that.

The same Government, Mr Kelly included, largely reneged on its promises of reform.

And as for the ranting about Phil Hogan, he did implement modest reforms of local government, by reducing and rebalancing the numbers of councillors and abolishing town councils.

Phil Hogan

He partly addressed a contributory cause of the economic crash, which was a dangerous narrowing of the tax base, via the introduction of a local-property charge and a service charge for water. Both were substantial economic reforms, their unpopularity aside, And, yes, the roll-out of the water charge was an unmitigated disaster.

It is a mess that was increased, however, by Mr Kelly’s quick-fix of a €100 water-conservation grant. Those quick-fixes have a quick way of coming back to bite you.

But maybe it’s all a misunderstanding. Yesterday, Mr Kelly said his criticism of the Central Bank was exaggerated. Cowardly, anonymous forces were briefing against him, he said, and lest by now we didn’t know it, in a Pee Flynn-esque self-reference in the third person, he intoned that “Alan Kelly on his own cannot solve this [housing] issue”.

Dawn French could give valuable lessons in self-deprecation. Self-confidence that has seeped into self-regard is unattractive. In government, what ultimately delvers solutions is not blaming your colleagues, it is getting them on-side. I advise a charm offensive.