Ethics not ‘immutable economics’ should drive housing policy

VILLAGEAugust/September 

OUSING in Ireland raises ethical

issue s, thou gh for histor ic al rea sons

we tend to see them almost exclu-

sively as practical (or ‘economic’) ones.

There is no other broad area of Irish soci-

ety where public trust in institutions has

been more corroded. Housing has been

central to the collapse in Ireland’s State and

personal ﬁnances and in respect for the pub-

lic interest (such as it ever existed).

Its supply, distribution ﬁnancing and prof-

its are at the heart of fairness in this country.

Of course, most people in Ireland have no

clear views on ethics or the absence of ethics

in our housing system. Indeed our housing

policies have generally been more about

extending property ownership, boosting

the construction industry, increasing public

spending (in counter and pro-cyclical styles),

facilitating lending and rewarding or provid-

ing for particular groups in society.

In , an American academic, based at

the Institute of Public Administration, stud-

ied the Irish housing system and concluded

that it was the most heavily subsidised in the

world. If he returned today and made simi-

lar investigations in relation to the housing

tax reliefs over the past  years, absence

of tax on betterment and development, rent

and mortgage supports, and the colossal

State bailout of loans on development land,

POLITICS

Also in this section:

Piketty Special: Gurdgiev 30

Lone parents 33

Piketty Special: Buckley 34

Basic income 38

Living wage 39

Revolution 40

Abortion 43

Housing ownership, supply, distribution, ﬁnancing, subsidisation, proﬁt,

taxation, planning, quality, standards, regulation and economics determine a

lot about Irish society. By Padraic Kenna

Ethics not ‘immutable

economics’ should drive

housing policy

money wins

August/September VILLAGE

he would probably be shocked. Calculating

how much of the Irish State € billion bail-

out bill is related to residential development

land would give us some idea of the extent of

these market subsidies. Clearly, nobody is

doing that kind of economic research these

days.

However, these market subsidies to

lenders, developers and landowners are

politically acceptable, although rarely

discussed.

When house prices reach a level at which

signiﬁcant numbers of new households are

unable to aﬀord homeownership or even

home rental, governments are faced with

a dilemma, described by Pfretzschner in

:

“Either [a government] can take the steps

to raise the level of wages, pensions and

beneﬁts suﬃciently so that each family

can aﬀord to pay an economic rent, or it

can take steps to provide the shelter, or to

assure its provision, and absorb the loss

itself, meaning that the burden of the loss

is passed along in the form of higher tax-

ation and/or rates to the rest of society”.

Of course, today, states have developed

many eﬀective instruments to direct the

housing system, through planning, taxes,

regulation etc, although in Ireland many of

them are only marginally acceptable even

in the wake of the Irish housing market

ﬁasco.

As lon g ago a s , Hen ry Ge orge pointed

out that as the productive output of coun-

tries increased, such as in Ireland during

the past  years, much of the increased

wages and salaries can get swallowed up in

housing costs. The huge increase in produc-

tive power does not result in increased real

standards of living, but rather in an increase

in the value of land. Indeed, the increase in

land and housing costs prevents increasingly

productive citizens from enjoying ethical

increases in living standards and developing

their full potential. In Ireland, the long com-

mute (so as to aﬀord a decent-sized home)

and the absence of quality family time, as

a result of expensive urban housing, is well

established as a legend of our Celtic Tiger

housing bubble.

What is remarkable is that building costs

have not increased that much at all, yet

access to a decent home costs more and

more in terms of multiples of annual earn-

ings. Here, the hidden price of land and the

proﬁts of the developer are concealed.

Henry George in ‘Progress and Poverty’

() states that “all the advantages gained

by the march of progress go to the owners

of land”. A house and the land on which it

stands are treated as property by the law, –

“yet in nature they diﬀer widely”. The “one

is produced by human labour” and the other

is part of nature.

Lawyers look on the private ownership of

land as the foundation of society. Yet, most

people believe that it is unethical that owners

of land should beneﬁt from publicly funded

and organised improvements in its location,

connection to services, planning and zoning.

People’s homes and front gardens cannot be

regarded as the same as development land.

Indeed, the Kenny Report in the s

suggested that local authorities be given

the power to designate land required for

development and the right to acquire this

land at a price  per cent above its value

in its existing use. The All-Party Oireachtas

Committee on the Constitution Ninth Report

on Private Property () called for a

“new mindset” in how we look at develop-

ment land in Ireland. It suggested that the

community should beneﬁt from the “better-

ment” of land created by zoning, planning,

infrastructure connections etc. A planning-

gain levy was mooted in the s. This has

now been enacted, with surprisingly little

public awareness, in the NAMA Act ,

which introduced a “windfall tax” on dis-

posals of development land, to the extent

to which they are attributable to rezoning.

Capital Gains Tax is exacted at a special rate

of %. The danger in Ireland is that this

will be insidiously removed sometime soon

on grounds that it might raise prices. This

particular issue should be an ethical not a

practical one.

A recurrent property tax on all land

zoned for development where the land was

not being developed was proposed by the

Commission on Taxation in .

The idea of a site value tax (SVT) on land

(including where homes have already been

built) is to capture the underlying value of

developed land. In general, the value of a site

derives from its location and accessibility

to publicly funded or subsidised services,

a policy

that

didn’t

work

VILLAGEAugust/September 

is that in many cases it is of poor quality,

badly managed and tends to create a third-

class citizenship.

This third-class citizenship is reinforced

for example by the lack of a complaints or

dispute-resolution process (unlike the sit-

uation with private-rented housing); the

absence of any enforcement (or even inspec-

tion) process for violations of housing

standards; and the absence of any remedies

for tenants who are treated unfairly.

There have been regulations on stand-

ards in rented housing since .However,

while these apply to local-authority housing,

the local authority itself is the inspection

and enforcement body. Needless to say there

have been no enforcement actions in rela-

tion to such accommodation. We know that

estates in Dublin’s Dolphin’s Barn and in

Limerick endure unacceptable conditions,

yet tenants have no way of enforcing stand-

ards. Private-renting tenants can appeal

to the Private Rented Tenancies’ Board

about any dispute with a landlord, but local

authority tenants have no such facility and

must rely on the Ombudsman – who has no

enforcement powers.

Further disenfranchisement ﬂows from

the fact that Ireland is unique in Europe in

lacking a representative organisation of ten-

ants in either private or social sectors. Some

, household local authority tenant

households and , private renting

households have no representative organ-

isation to enable them to have a say in the

making of laws and policies which aﬀect

them. These decisions and laws have an

overwhelming impact on the lifetime oppor-

tunities of themselves or their children. In

Ireland, citizenship and property ownership

are siblings, still close friends while non-

owners are still outsiders (and there are no

plans anywhere to change this).

Our housing and landowning system is out

of step with our constitution. Article ..

states that “All citizens shall, as human per-

sons, be held equal before the law”. While

there may be formal equality in the courts,

there is substantial and real inequality in

society. Housing consumers are not equal

to developers. Tenants, especially those in

local authority housing, do not even have the

opportunity to raise such issues.

In housing debates today, we rarely hear

of new paradigms of thought and action.

Droning about the immutable “iron laws”

of housing markets continues to constitute

a starting point for most commentators.

The Great Recession provided an opportu-

nity for a rethink centring on the truth that

so long as housing is unethical, society will

remain unfair. •

facilities and utilities”. No SVT has been

introduced in Ireland, though it was prom-

ised in the programme for government.

Whereas a value-based property tax like the

one the coalition in the end pursued has the

ethical purpose of spreading wealth, a site

value tax serves the practical end of promot-

ing economic land use. Indeed the economic

imperative is so ﬁne that it becomes an ethi-

cal purpose in its own right. The motivations

of ‘property’ and ‘site value’ taxes are sepa-

rate and Irish politicians should note that

one should not preclude the other.

Is it time to shift media and academic

commentary on housing from its simplistic

standard where reports on the “iron laws” of

supply and demand always accompany har-

rowing personal accounts of homelessness

and housing hardship, with nothing more

than superﬁcial analysis of the system which

perpetuates both.

The experience of a decade ago show that

prices will rise to whatever purchasers can

aﬀord (or borrow) even if building costs

barely increase. Is it good public policy to

allow housing (or land) to soak up all the

gains in productivity and output expressed

in the wages and salaries of society? Why

are development and infrastructure lev-

ies applied only to new homes? In the UK,

where increases are again pricing people

out of a home, some are suggesting using

graduated capital gains tax on primary res-

idences as a way of cooling prices – in the

public interest.

It is an ethical question to why we have a

housing system where , households

(or .%) were last year waiting for State

provision of housing.The Irish, largely pri-

vate, housing system does not serve all. Of

the , households some , were

employed. The waiting lists included ,

households on Rent Supplement. At least

, of households are on waiting lists

for more than  years.

Some , people accessed homeless-

ness service in  in Dublin, with 

families living in emergency housing in

hotels at the end of .

In the past few years horrendous abuses of

housing consumers have taken place. From

the tragic ﬁre safety breaches at Priory Hall

to the Pyrite scandal this is an ethical issue,

particularly as housing purchase takes up

almost all a person’s lifetime savings.

True, some new regulations have been

introduced this year, but they leave the

individual consumer in much the same posi-

tion. They must wait until a defect appears

in their home, then try and get a lawyer to

take a case against a builder of other pro-

fessional, ultimately ﬁghting a lengthy and

expensive legal battle with an insurance

company possessing huge resources. We

need an ethical, accountable and eﬀective

housing consumer agency which has real

enforcement powers rather than advising

people to ‘shop around’.

We also need a courageous State to

take a strong role inspecting all housing

developments, and not just the -%

contemplated by the so-called protocol with

the local authority Managers. Why not make

the local authority liable in neg-

ligence where a defect arises

which should have been obvi-

ous on inspection, as is the case

in the UK?

Most people ﬁnd it totally

unethical that a builder (who

may have built defective homes)

ca n w ind up a compa ny and avoid

any legal or personal liability

for any damage or ruin caused

to hapless house buyers. How

about personal bonds secured

properly to cover defects for

up to  years, to be held by a

State body – and not by a bank

or trade body?

What is an ethical proﬁt for

a housing developer? Is a norm

of -% as much as society can

take or should we, for some

reason, allow a laissez-faire

approach?

At ﬁrst sight, the provision

of State housing through local

authorities seems to be an

activity of the highest ethical

standard. And indeed, over the past cen-

tury this has provided valuable and secure

homes for many people. Today, however,

many local authority housing estates have

become residualised – largely conﬁned to

persons without employment and essentially

poor. This has followed successive policies

of council house sales. Since , there

has been a policy of “counteracting undue

segregation between people of

diﬀerent social backgrounds”.

While this might sound admira-

ble, it fails to mention diﬀerent

economic backgrounds. The

result is a gloriﬁed, aspirational

but meaningless statement

which appears over and over in housing

and planning policies. A similar criticism

applies to the term “sustainable commu-

nities”, which is now included in all State

housing policy documents, but which again

has no legally deﬁned or enforceable sta-

tus. So while there are many high-minded

platitudes about State housing, the reality

POLITICS HOUSING

Dr Padraic Kenna is a

lecturer in the School

of Law, NUI Galway,

specialising in housing

law, rights and policy.

Whereas a

value-based

property tax

like the one the

coalition in the

end pursued

has the ethical

purpose of

spreading

wealth, an

SVT serves the

practical end

of promoting

economic land

use

“

August/September VILLAGE

some lone parents to stay in employment.

This cut comes on top of the other signiﬁ-

cant cuts to incomes and services that have

particularly targeted lone parents.

Lone parents who wish to take up edu-

cation or training opportunities will also

struggle due to the loss of the OFP. The pay-

ment can be claimed by those parenting

alone and undertaking education or training

courses, along with a

student maintenance

grant. Those who lose

the payment but who

wish to take up edu-

cat ion or tr ain ing w i ll

now have to claim the

Back to Education

Allowance. This can-

not be claimed at the

same time as a stu-

dent maintenance

grant. This fur-

ther disadvantages

lone parents on low

incomes with lim-

ited resources and

high levels of caring

responsibilities. It

will be too much for

many who will now

not take up education

and training oppor-

tunities as a result.

The loss of the OFP when the youngest

child turns seven years old will undermine

Government’s stated objective of support-

ing those in jobless households and assisting

families in low paid work. The development

of a system of quality childcare and after-

school care that is aﬀordable and accessible

would have supported the Government’s

objective of tackling poverty and jobless-

ness. Such a system would have

provided real support to all par-

ents, particularly those with low

earnings potential, to enter and

remain in the labour market.

Long term, passive recipiency of

a social welfare payment is in no one’s best

interests. However, penalising those lone

parents already in employment and mak-

ing it more diﬃcult for those who might be

considering taking up employment, educa-

tion or training makes no sense. •

N July , over , recipients of

the One Parent Family Payment (OFP)

lost the payment. This was as a result

of the decision announced in Budget 

to restrict eligibility for the OFP to those

parenting alone whose youngest child is aged

seven or under.

Then-Minister for Social Protection, Joan

Burton TD, highlighted two reasons for

the decision. The ﬁrst was the high rate of

poverty among lone parents in spite of con-

siderable expenditure on social welfare. The

second was the desire to support lone par-

ents getting employment, in order to tackle

poverty.

One-parent families have the highest rates

of poverty and deprivation of any family type

in Ireland with % at risk of poverty and

almost % experiencing basic depriva-

tion. The need to address poverty among

those parenting alone is clear. However, this

measure will actually make it more diﬃcult

for them to take up employment, education

or training opportunities. This is because

they will no longer have access to the fea-

tures of the OFP which were designed with

the additional needs of those parenting alone

in mind.

In response to this concern Minister

Burton stated at the time that the change

would not be implemented before the intro-

duction of a safe, aﬀordable and accessible

childcare system, similar to that available

in Scandinavian countries. There has been

some increased provision of childcare and

afterschool care places targeted at low

income families. However, provision still

falls far short of a Scandinavian system of

childcare. In spite of this, the changes to the

OFP have now proceeded as planned.

The loss of the OFP will be most keenly felt

by lone parents who are already in employ-

ment. A lone parent, by way of

example, who is earning €

per week net income and is

combining part-time employ-

ment with the OFP and Family

Income Supplement will have a

loss of income of around € per week. This

is in spite of an increase in the Family Income

Supplement payment, which, while vitally

important, is not enough to compensate fully

for the loss of the OFP. It is likely that this

loss of income will make it impossible for

A lone parent

who is earning

€200 per

week net and

is combining

part-time

employment

with the OFP

and Family

Income

Supplement will

lose €70 per

week

“

5,000 with youngest child

under seven lose payment.

By Caroline Fahey

Senseless penalising of lone

parent employees

LONE PARENTS POLITICS

Caroline Fahey is Social

Policy Development

Oﬃcer with Society of St

Vincent de Paul.

Now, how can we make

her life more difcult?