Will Alan Kelly be the hero of affordable housing?

Alan Kelly is proposing forcing developers to hand over 10% of new developments for social and affordable housing. He better be prepared for very stiff resistance, writes Michael Clifford

ALAN KELLY is boldly going where another has gone before, only to encounter a brick wall and a bloody nose.

According to reports, the Minister for the Environment is to bring to Government proposals to force developers to hand over 10% of new developments for social and affordable housing.

This is expected to be one of a number of initiatives unveiled in the coming weeks to tackle the ballooning housing crisis.

Already, this week, it has emerged that Dublin City Council is considering constructing prefabs to house homeless families.

On Monday last, President Michael D Higgins delivered a passionate, bordering on angry, denunciation of a system of housing that relied entirely on the vagaries of the market.

Now, it would appear that Kelly intends having it out with the market. The proposed intervention will be fiercely resisted by the construction industry, which holds plenty of aces. With a major housing shortage, and an election hovering at the back end of next year, these lads will pull hard on every lever of power they can access in order to stymie any such proposal. Kelly had better acquire some eyes in the back of his head.

We have been here before, and the results are plain to see. Back in 2000, Kelly’s predecessor in the Environment brief pushed through a similar proposal.

Noel Dempsey was, by the standards of Irish politics, a very progressive politician. At a time when house prices were already heading towards the stratosphere, he saw an opportunity to ensure that the market be tempered by the requirements of social justice.

Part V of the Planning Act 2000 provided that all new developments include a social and affordable housing element of up to 20%.

The policy was informed by two agendas. At a time of increasing urbanisation, Dempsey saw the new Ireland was in danger of producing the kind of ghettos for which big cities in the USA and Europe were notorious. In a rapidly expanding economy, in which the country was effectively catching up with our more prosperous neighbours, the dangers were obvious.

The second plank of thinking behind the policy was the prospect of ensuring that the lotto-type windfalls available for rezoned land could include a community gain. The system of rezoning, in which land increased in value by a multiple as a result of a vote in a local authority, meant land owners and developers were effectively rolling in money on the back of society’s requirements.

Of course Dempsey’s party had been the biggest beneficiary of the munificence of grateful developers through financial contributions, but he recognised that if the system was to endure, then ladling a little of the gravy back into society would be a nod towards social justice.

The only previous occasion when a government even contemplated a dramatic intervention in the market was in 1974, on foot of a report compiled under the chair of high court judge John Kenny.

That report was commissioned on foot of another housing crisis and it recommended that the price of rezoned land be fixed at the preceding agricultural price, plus 25%. Reportedly, the government of the day under Liam Cosgrave considered the report for an hour or two, heard there might be a constitutional issue about the proposal, and then threw the report on a dusty shelf.

Then, 15 years later, Dempsey was sallying forth with another novel idea that society should not be totally subservient to the market when it came to housing.

The resistance was fierce. In the type of over-the-top reaction that is unique to this country, Dempsey was cast, in some quarters, as a dangerous socialist.

After all, property and land had an elevated position in the Irish psyche, and among the moneyed, this tenet of belief was reinforced by the realisation that they had most to lose. The Construction Industry Federation canvassed views across the country, but met its fiercest resistance at a gathering in Cork. No way would this new departure be tolerated.

In the end, Dempsey was not for backing down and, despite some reservations within government, he got his way.

President Mary McAleese referred the bill to the Supreme Court to test its constitutionality.

Five judges, good and true, returned with a thumbs up for the government. No problem there with the little blue book. (All of which suggests that had the Kenny report been referred to the Supreme Court, it may well have got the go-ahead also). Dempsey basked in something of a victory for all of a year before a general election was called. When the outgoing government was returned to power, the great socialist Bertie Ahern moved Dempsey to education and gave the environment brief to Martin Cullen. Here was a man the developers could do business with. By the following Christmas, Cullen had watered down the bill to include a provision that instead of handing over the housing element, developers could donate land elsewhere or simply pay an equivalent sum to the local authority.

What resulted was, more or less, a disintegration of the original policy. Many local authorities accepted less than market value as the money in lieu, and, as was inevitable, the money wasn’t always ringfenced for the purpose for which it was collected. Less than 4% of the 400,000 homes built between 2002 and 2011 were for social housing. The market triumphed, developers were allowed to proceed unfettered by any considerations for society at large.

Now Alan Kelly wants to revisit Dempsey’s strategy, albeit with a ceiling of 10% of developments. The policy is sound, but if Kelly pursues it he is likely to meet resistance in the first instance from elements in Labour’s coalition partners and, thereafter, the big guns in the construction business.

Pushing the policy through to implementation would be a feather in Kelly’s cap and a signal that Labour really is intent on moving in a new direction.