New paper: The Role of the Media in Sustaining Ireland’s Housing Bubble

A new paper on housing and the Irish crisis has just been published in New Political Economy by Julien Mercille: “The Role of the Media in Sustaining Ireland’s Housing Bubble”.  It seems to be open access to download from the journal page.  There is also a short piece about it here.  This is the abstract:

This paper examines Irish mainstream media coverage of the housing bubble that burst in 2007 and plunged Ireland into economic and financial crisis. It is shown that news organisations largely sustained the bubble until the property market collapsed. As such, news stories reflected the views and interests of the Irish corporate and governmental sectors, which had adopted neoliberal policies during the ‘Celtic Tiger’ years (1990s to 2007). A political economic conceptualisation of the Irish media outlines four factors explaining why this is so: (1) news organisations have multiple links with the political and corporate establishment, of which they are part, thus sharing similar interests and viewpoints; (2) just like elite circles, they hold a neoliberal ideology, dominant during the boom years; (3) they feel pressures from advertisers, in particular, real estate companies; and (4) they rely heavily on ‘experts’ from elite institutions in reporting events. The last section presents a detailed empirical analysis of Irish media coverage (newspapers and television) of the housing bubble that confirms the above claims. It is shown that prior to the bubble’s collapse, the media made little mention of it, remained vague about it or tried to refute claims that it even existed, thus sustaining it.

 

Whither Industrial Policy? The Future of Public Institutions and Economic Development

3-6 pm, Thursday April 25th 2013
Institute of Bankers, 1 North Wall Quay, Dublin 1
Sponsored by NUI Maynooth (NIRSA/ Sociology) and UCD Geary Institute

Globalisation, regional economic clusters, open systems of innovation, financialisation, legal restrictions on state aid and a range of other factors appeared to have consigned industrial policy and the developmental state to history. However, as economies struggle to restore growth and seek models of sustainable prosperity, there is renewed interest in the role of public institutions in promoting industrial and regional development. Moreover, recent decades have seen significant experiments with new forms of ‘old’ institutions – ranging across the industrial development agencies of Israel and Taiwan, the state investment banks of Germany and Brazil and the diverse network of agencies promoting innovation in the US.

This workshop explores the new forms of industrial and innovation policy that have emerged in recent decades. It examines their distinctive features, limitations and potential and asks what futures there might be for a developmental role for public institutions.

3-4.20 Public Institutions, Innovation and Growth in the Knowledge Economy
Chair: Seán Ó Riain, Sociology/ NIRSA, NUI Maynooth

Danny Breznitz, College of Business, Georgia Tech
“The Diverse Paths to Rapid-Innovation-Based Growth: The Strategic Role of the State”

Shiri Breznitz, School of Public Policy, Georgia Tech
“The Fountain of Knowledge? University Technology Transfer and Economic Development”

4.45-6 Round-table Discussion
The Role of the State in Development Strategies in a Changing Economic Landscape
Chair: Niamh Hardiman, Geary Institute and SPIRe, UCD

Short contributions from the following will be followed by discussion.
Seán Ó Riain, Sociology/ NIRSA, NUI Maynooth
Philip O’Connell, Geary Institute, UCD
Aphra Kerr, Sociology/ NIRSA, NUI Maynooth
Patrick Paul Walsh, School of Politics and International Relations, UCD

The workshop is funded by the European Research Council and the Irish Research Council for the Humanities and Social Sciences. It is sponsored by the ‘New Deals in the New Economy’ project at NUI Maynooth (NIRSA/ Sociology) and ‘The Political Economy of the European Periphery’ at UCD Geary Institute.

Registration is free but places are limited. To register please email geary@ucd.ie  with the subject line “Industrial Policy” before Monday April 22nd.

Information on Venue and Transport is available here

 

Unfinished estates and the local property tax

Yesterday Minister Phil Hogan announced the unfinished estates that will be exempt from the local property tax (LPT).  In total, 421 developments consisting of 5,100 households will be exempt (the full list can be found here).  This is significantly different to the number of estates (1,322) and households (43,000) that were exempt from the household charge.  Hogan argues that over the past year “The number of properties eligible for a waiver reflects the progress made in tackling unfinished housing developments, as well as the more objective approach to categorisation applied to the 2012 National Housing Development Survey.”

The press release gives no specific information on how the 421 estates were chosen, but we know from the property tax legislation and answers by Michael Noonan in the Dail on 3rd February that:

“Minister for the Environment, Community and Local Government must satisfy himself or herself that the development in question is incomplete to a substantial extent. Examples of the criteria that the Minister for the Environment, Community and Local Government should take into account in such a determination include the state of completion of roads, footpaths, lighting facilities, water and sewerage facilities within the development as well as compliance with the terms of any planning permission applicable to the development and the extent to which roads, open spaces, car parks, sewers, water mains, drains or other public facilities in the development have been taken in charge by the local authority concerned. These criteria are set out in section 10 of the Finance (Local Property Tax) Act 2012.”

In other words, the 421 estates are those that the Minister deems to have major outstanding development work.** [I've spoken to someone in the Department of Environment and have more info on how the estates/parts of estates were selected - see Addendum below]

So, the questions is: Has there been significant progress on unfinished estates that would mean that 901 estates and 38,000 households that were exempt from the household charge are no longer exempt?

Just four months ago in November 2012 the Department of Environment published a report on unfinished estates that stated: “1100 of these or parts thereof are in a seriously problematic condition.” ** [again, see addendum below]  Of the 1,770 unfinished estates (statistically adjusted down from 2,876 by changing their definition) only 252 (8.5%) are active.  There are 16,881 units are vacant and 17,032 units are under-construction.

Site Resolution Plans, funded by a €5m fund, basically tidy-up estates and try to make them safe and secure.  It is not used to do major development work such finishing roads, paths, lighting, sewage, water, etc.

It is therefore difficult to believe that there has been such major development work on unfinished estates over the past year that would move them out of the ‘seriously problematic condition’.

My sense then is the Minister Hogan is going to get a number of challenges from residents who were previously exempt, who may well have paid large stamp duty payments for the privelege of living on an unfinished development, who would like greater clarity as to how the 421 estates were chosen and why their estate is no longer exempt.  It will also be interesting to see how many units affected with pyrite he makes exempt.  Based on what has happened with unfinished estates I suspect there will be a similar attempt to minimize those that qualify.

Addendum

For the household charge exemptions were given to all residents in category 3 and 4 estates regardless of the condition of the house and environs and the services they received.  For the local property tax an assessment was made of all units as to whether they have decent roads, lighting infrastructure, paving, sewage and water, and access to the usual services supplied by the local authority.  If a unit has those services and facilities then they have been deemed liable for the property tax in the same way as all other households have been.  The 901 estates and parts of estates that have dropped off the list either have all those services/facilities or they are fenced-off building sites in which no-one lives (thus seriously problematical, but unoccupied), so no-one is therefore liable.  The 421 remaining estates are those where residents do experience problems with services and facilities.

Rob Kitchin

 

Property tax evaluation model and what it means for residential property owners

The Revenue Commissioners have published a technical paper setting out the method used to calculate the estimated property tax values to guide home owners in the self-evaluation of the tax due on their property.  The model is a hedonic econometric regression model, which is the standard method of estimating and tracking property values.

In many ways, the problem for the Revenue has not been the method to use, but assembling a set of data that can provide robust estimates.  To this end, they have bought together property characteristics from a range of sources:

• Valuation data from the Revenue’s electronic stamp duty system, NAMA, and valuations commissioned by Revenue from professional valuers.

• Geo-Directory (the national address database): a list of all properties in Ireland, their type and location;

• Spatially derived data that indicate relative distances of all residential properties from a series of key amenities and services that add value to property;

• Geographically linked data from sources such as the CSO’s 2011 Census that provide characteristics about areas.

Sources of data used in estimating property tax

Having excluded a number of transactional data for various reasons (where the return indicates the transaction is a part of a larger series of transactions; where the return indicates a fractional interest in the property is being transferred; where the return indicates shared ownership; values under €25,000) the result is a dataset of 17,400, 15,000 and 19,200 transactions for 2010, 2011 and 2012 respectively.  This set is relatively small as it based only on transactions since 2010.

34,400 (67 per cent) of these 51,600 properties were successfully matched to a Geo-Directory address point, thus providing property values for units at known locations. These are spread:

• Dublin (Dublin City Council, Dun Laoghaire-Rathdown County Council, Fingal County Council and South Dublin County Council) – 15,693 properties;

• Other cities (Cork Corporation, Limerick Corporation, Galway City Council and Waterford Corporation) – 3,039 properties;

• Rest of the country (all remaining county councils) – 18,014 properties.

These properties with known values provided a basis on which to estimate the value of near-by property with similar characteristics in each Electoral District in the country. Ideally, it would have been preferable to provide estimates for Small Areas given the variation in stock in an ED, but the relatively small data set precludes doing this robustly and EDs are the best that can presently be achieved.

Given that the value of property varies geographically, rates differ across the country, with the highest mean values in Dublin and the Leinster region.

The vast majority of properties are valued in the lower bands, reflecting the 50% fall in residential prices since 2008.  Indeed, 91.3% of residential units are estimated to be worth less than 300K, with 60.6% less than 150K.  I can imagine that the low estimated value of many properties might come as a shock to many homeowners and reveal the extent to which they might be in negative equity.

What this means is that the property tax value for 60.6% of residential property owners is estimated to be €225 or less per annum.  For another 22.7% it will be €315, 8% it will be €405, and 3.1% it will be €495.  Only 8.3% of residential property owners will pay €585 or more.

As with any model, the one developed by Revenue is not going to be 100 percent accurate and they provide some estimate as to the probability that the valuation is in the correct band.  91% are either in the right band, or one band above or below.

This suggests that there might be some horse-trading between property owners and Revenue as to whether they are in the right band or one very close to it, but in the main their estimates will be quite near to the actual value and the haggling will be over c.80-90 euro difference in cost between adjacent bands (with I suspect all challengers looking to move downwards).

To be fair to the Revenue Commissioners the approach they have taken is the industry standard and they have used all the possible data at their disposal. Their problem has been the small number of known valuations to work from and a lack of information about every property (type, number of rooms, etc).  As such, the model seems to be as robust as it can be given the data constraints, though it is not without its issues such as having to provide estimates for EDs rather than Small Areas.

Rob Kitchin

 

Vacancy at individual property and town level

Prompted by a colleague, I’ve been browsing the CSO Census report, The Roof over our Heads.  It is full of information from the Census 2011 on households and housing in Ireland.  I’ll probably blog about some of the other material at some point, but I thought it might be useful to point to some of their data on housing vacancy, a familiar topic on this blog.

In the report, the CSO produce an interesting map of all vacant residential address points in the country classified as vacant houses, vacant apartments and holiday homes.  There is little chance of identifying individual properties from this map as it is a scale of 1: 1 million, but by plotting the individual units as opposed to shading in areas we can get a sense of the scale of the issue (which in numeric terms is: 168,427 vacant houses; 61,629 vacant apartments; 59,395 holiday homes; out of total stock of 1,994,845 residential units).

Map of vacant properties in Ireland

There is clearly a patterns to holiday homes, concentrating on the coast, as well as the upper and lower Shannon.  Vacant apartments are mainly confined to large urban areas.  And whilst, there is much media talk at present concerning a shortage of family homes in Dublin, the data reveal there is no shortage of apartments.  In fact, there are 16,321 empty apartments in Dublin City, let alone the other Dublin local authorities.  As for vacant houses, they are everywhere.  The few blank spots are mountains or remote areas.

The CSO report also provide some data on towns with the highest levels of vacancy, both including and excluding holiday homes.  The table below lists the seven towns with the highest levels of vacancy excluding holiday homes.  In the case of Tulsk and Ballaghaderreen, two places I have some familiarity with, there is a strong correlation with the presence of unfinished estates.  However, as we have discussed elsewhere, unfinished estates are just one element of vacancy given that there are only 16,881 vacant properties on such estates, meaning there is a high degree of background vacancy in many locations beyond unfinished estates (see our AIRO VacantIreland interactive mapping tool that let’s you examine vacancy at Small Area level and individual unfinished estates).

Rob Kitchin

 

Ireland’s house prices in comparison to EU27, 2007-2012

Eurostat, the European statistics agency, recently released the Q3 2012 results for its pan-European house price index (HPI).  The data charts house prices on a standardized basis for 2007-2012, baselined against Q2 2010 (=100).  The index tracks price changes of residential properties purchased by households (flats, detached houses, terraced houses, etc.), both newly-built and existing stock. The Member States’ HPIs are compiled by the national statistical institutes, while Eurostat calculates the euro area and EU HPIs.

The AIRO team have compiled these data into an interactive data visualization accessible on the AIRO website.

What the data allow is a comparison of whether house prices have gone up or down over time with respect to the baseline.  For example, if we consider Ireland against a baseline of 100 in Q2 2010, in Q3 2007 house prices were indexed at 151.7 but had fallen to 75.3 by Q2 2012.  In other words, house prices had halved in valued over that period.

What the data reveal is that during this period of European financial crisis property markets behaved in four different ways across Europe.

1. Prices have declined continuously, either steeply in the case of Ireland, Spain, Romania and Bulgaria or more modestly such as the Netherlands and Cyprus.

2. Prices declined and then have either levelled off (e.g. Denmark, Slovenia) or have bounced back modestly (Estonia, Latvia, Lithuania, which all experienced very dramatic and rapid declines).

3. Prices have bounced along within a few percentage points of the baseline (e.g., Austria, Czech Republic, France, Greece, Hungary, Italy, Malta, Slovenia, UK) and effectively have flatlined.

4. Prices have increased modestly but steadily (e.g., Belgium, Finland, Germany, Luxembourg, Sweden).

These differences arise due to issues such as the nature of the national housing markets (e.g. proportion of renters/owner-occupiers), the robustness of the wider economy during the crisis, and wider property market issues such as levels of oversupply where excess supply, coupled with a financial crisis linked to property, work to depress prices in the absence of sufficient demand that would halt decline.

There is tentative evidence that the Irish decline might be starting to level off, but we need a few more quarters of data to reveal whether this is a sustained trend.  The decline, however, has been the worst in Europe in terms of sustained, rapid decline with no levelling off or bounce back.

Justin Gleeson, Eoghan McCarthy, Rob Kitchin

 

Scrapping of the National Spatial Strategy

Yesterday Minister Phil Hogan announced that the National Spatial Strategy (NSS) is to be scrapped and replaced by a new policy in about a year’s time.  He said that said the present ‘strategy had failed’ because ‘the gateway and hub cities and towns never received the resources to ensure their development and “nothing has happened” in the ten years since they were designated.’  Continuing that ‘there was no point in having a designation without the resources.’

It is certainly the case that the NSS did not live up to its expectations, despite its promise and intent.  The initiative failed for a number of reasons, of which resourcing is just one.

First, there were flaws in its initial design with respect to the designation of too many hubs and gateways and there were accusations of stroke politics in location selection.

Second, because it was introduced in 2002 it missed its logical initial resourcing stream, the National Development Plan (NDP) 2000-06.  It did underpin the NDP 2007-13, but then the crisis hit and the NDP got quitely dropped and funding for NSS initiatives, such as the gateways fund, was one of the first things the DECLG dropped from its programme.

Third, there was weak political buy-in across the board, especially within government.  This was made abundantely clear by the decentralisation programme introduced by Charlie McCreevy in 2003 that sought to move government departments and state agencies to just about every location except gateways and hubs.  Decentralisation seriously undermined the rationale and impetus of the NSS.

Fourth, the NSS was not put on a statutory basis and up until 2010 planning authorities only had to give ‘due regard’ to it, rather than complying with it.  In a period of developer-led, laissez faire, localist planning this was a license to largely ignore it.

What this meant was a very partial implementation, though the NSS did have some effects on other policy (e.g. NDP, Transport 21, Rural Ireland 2020, etc) and was significantly boosted by the introduction of regional planning guidelines and the Planning and Development Act (2010) and the introduction of core strategies (in which planning decisions have to demonstrate they fit local, county, regional and national policy objectives).

So what happens now? Is this the end of spatial planning in Ireland?

Well one would hope not. If Ireland ever needed a strategic plan to make the most of limited resources in order to facilitate inward investment, stimulate and support indigenous growth, produce sustainable development and create of better places, it is now.

The logic of spatial planning is to align and coordinate sectoral initiatives (such as transport, energy, jobs, property, utilities, communications, public services, etc) across territory in order to leverage complementarities, reduce redundancy and duplication, increase competitiveness, and create multiplier effects (where the sum is greater than the simple addition of parts).  It does this by selectively prioritising areas for different kinds of activities in line with its demographics and local resources and distributing funds suitable to enable targetted investment and coordinating development across sectors.

Rather than abandoning spatial planning and the NSS, we need to do a fundamental rethink and produce a new NSS that is suitable to the present context. Localism and ad-hocism is not the solution to the economic and social crisis and will not create a sustainable, competitive country into the long term.

The challenge over the next year is to produce a new NSS based on a robust evidence base, learning from international best practice, and involving detailed stakeholder consultation, that is strategic and is prepared to make difficult decisions given limited resources.  Once agreed upon, the new NSS needs to be put on a statutory basis, as advocated in the Mahon Report, and it needs to be implemented through a series of interlocking programmes and initiatives.

My hope is that we can rise to this challenge and produce a spatial planning framework that will serve us well.

Rob Kitchin

 

For a good introduction to the present NSS, see the recent special edition of Administration 60(3), The National Spatial Strategy: Ten Years On, guest edited by David Meredith and Chris van Egeraat.

Revisiting the National Spatial Strategy ten years on – David Meredith & Chris van Egeraat

 

The National Spatial Strategy: Rationale, process, performance and prospects – James A. Walsh

Economics – The missing link in the National Spatial Strategy – Edgar Morgenroth

Perspectives on Ireland’s economic geography: An evaluation of spatial structures – David Meredith, Jim Walsh & Ronan Foley

Gateways, hubs and regional specialisation in the National Spatial Strategy – Chris van Egeraat, Proinnsias Breathnach & Declan Curran

Urban specialisation, complementarity and spatial development strategies on the island of Ireland – Des McCafferty, Chris van Egeraat, Justin Gleeson & Brendan Bartley

Governance and the National Spatial Strategy – Placing spatial policy at the heart of the diagonal public service – Séan O’Riordáin

Shrink smarter? Planning for spatial selectivity in population growth in Ireland – Gavin Daly & Rob Kitchin

 

Ireland and tax evasion

Yesterday’s Observer newspaper highlighted a shocking ActionAid report about the tax activities of Associated British Foods, a corporate giant with operations across the world. The report explains how ABF have managed to minimize the amount of tax they pay in Zambia, one of the world’s poorest countries, where they grow sugar under the name of Zambia Sugar, which is owned by Illovo Sugar, a member of the ABF group. Indeed, the report finds that “ABF’s Zambian subsidiary has, overall, paid less than 0.5% of its US$123 million pre-tax profits in corporate income tax,” even though the corporate tax rate in Zambia is actually 35%.

The role Ireland plays in all this is a disgrace. In stark contrast to the ‘development’ relationship between Ireland and Zambia (one in which Irish Aid provided €16.3m in development aid to Zambia in 2011 alone), Ireland thoroughly undermines Zambia’s tax-raising powers, to the tune of about US$17.7 million since 2007. For example, ABF has paid management fees to an Irish company that employs no-one here; it has exploited a lop-sided tax treaty between Ireland and Zambia to minimize tax it pays to the Zambian exchequer on interest on loans it took out; and it has taken advantage of tax treaty loopholes to shuffle profits via some of its subsidiaries, including in Ireland. Thus, as the report makes absolutely clear, ABF’s tax activities have been helped along by Ireland (including the tax treaty with Zambia and the ‘light tough regulation’ that oversees activities in the International Financial Services Centre). To their credit, ActionAid don’t mess about when it comes to noting the hypocrisy:

“Not only does this tend to nakedly boost Irish revenues at the expense of Zambia – ironically for a country which is one of Ireland’s nine long-term development partners – but it also allows multinational companies to ‘treaty shop’, as we have seen, using Ireland as a tax-free conduit for transactions between Zambia and other countries. While Ireland gives aid to the Zambian government with one hand, Zambian government revenues flow out again thanks to its Irish tax treaty” (p.24).

Given all this, the report recommends that: “Ireland should urgently either renegotiate or cancel its bilateral tax treaty with Zambia, to allow Zambia to levy the tax rates it chooses on payments of royalties, dividends, interest and service fees from Zambian to Irish companies” (p.36). I completely agree. But more also needs to be done. This issue isn’t just about Ireland’s tax treaty with Zambia. As Colm Keena reported in the Irish Times in NovemberIreland’s place in the world helps other giants minimize their taxes, including Microsoft. He writes, “The Irish centre is responsible for retail sales in Europe, the Middle East and Africa. Because Microsoft Ireland Research has the right to sell Microsoft products in that geographical zone, profits on the sales of Microsoft products in that vast portion of the globe end up in 70 Sir John Rogerson’s Quay.” This sort of arrangement is great news for Microsoft shareholders: its Irish subsidiaries helped reduce the company’s 2011 US tax bill by $2.43 billion (€1.87 billion). But it absolutely stinks. As Keena says: “Seen from the perspective of Africans, it must be very rum indeed to see profits from sales in their countries being taxed in Dublin, to fund a society a million miles away from theirs in terms of development.” Thus, not only should Ireland renegotiate or cancel its tax treaty with Zambia, the government should also make a commitment to ending our involvement in this sort of tax evasion.

The even bigger story here is about what sort of post-crisis Ireland we want to see. Is scamming the neighbours – near or far – a good development strategy? Of course, we don’t want to have this image of ourselves. We’d probably all prefer to think of our country as climbing the development ladder by engaging in a race to the top, for example by attracting investment from the likes of Google and Facebook. Yet, what the ActionAid report highlights is the extent to which we’re also still very much engaged in a ‘race to the bottom’. By undercutting tax rates, undermining tax revenue regimes, and underpinning the tax evasion strategies of some of the world’s richest companies, we’re putting pressure on countries such as Zambia to reduce their corporate tax rates down to the Irish floor.

Maybe we’d prefer to celebrate our potential as a small country that can make a big difference. Indeed, just such a claim was made by Tom Arnold and Jamie Drummond in last week’s Irish Times, when they noted how Ireland, “can make a disproportionate impact at international level. Due to our 19th-century history of famine, we have a unique legitimacy in making hunger a priority of our foreign policy in the 21st century.” I’m sure Ireland can do a lot to help the fight to eradicate hunger while it has the EU presidency and then again at the G8 meeting in Fermanagh in June. But as the story about ABF’s activities in Zambia highlights, Ireland must recognize that its role in the eradication (or, indeed, the production) of hunger is absolutely also about how it facilitates tax evasion. Appallingly, Ireland is undermining the ability of foreign, often much poorer governments to address the sorts of inequalities that generate a prevalence rate of undernourishment in Zambia of 47.4% in 2011. This has to stop.

Alistair Fraser

 

Some Thoughts on the Introduction of a Planning Regulator

Yesterday, Minister Jan O’Sullivan appeared before the Oireachtas Joint Committee on the Environment, Culture and the Gaeltacht to outline her Department’s proposals to legislate for the introduction of a Planning Regulator in 2013. The introduction of an Independent Planning Regulator was a key recommendation of the Mahon Tribunal Report published last year. The Tribunal recommended that the Minister for the Environment’s planning policy enforcement powers be transferred to an Independent Planning Regulator who should also be charged with carrying out investigations into systemic problems in the planning system as well as educational and research functions.

The introduction of an independent Planning Regulator, which the Minister has publicly committed to, does not entail a simple ‘bolt-on’ addition to the planning system. It will profoundly alter and transform the entire way in which planning policy has to-date been implemented in Ireland. It is clear from the text of the Minister’s speech that in framing their policy proposals for the forthcoming legislation, the Department is grappling with the many complexities and difficulties at the heart of the problem – that is, that planning is fundamentally a political activity which does not lend itself neatly to simple bureaucratic regulation. In guiding the discussion at the JOC, the Minister posed a series of questions as follows:

• Should the Minister’s powers be fully transferred to an independent regulator or should the final forward planning decisions remain political in nature (i.e. to be taken by the Minister / Government / Oireachtas) with a regulator providing an independent advisory / supervisory role?
• If power is to be fully transferred, how can we ensure accountability by an independent regulator?
• What would be the limits of the regulator’s powers vis-à-vis the planning process and elected members? Is the regulator’s decision final?
• Should the role of a regulator be confined only to situations where a dispute arises over a plan?
• What is the most suitable institutional arrangement for delivery on the recommendation (e.g. new authority or some type of recast of existing framework)?
• If a new authority is to be established how would it interface with the existing institutional framework (planning authorities, regional authorities, An Bord Pleanála)?
• If existing structures are to be used, what entity could take on the function and how can the new function be taken on without eroding capacity to discharge existing roles or without being detrimental or damaging to well established and publicly accepted independent role’? For example, if the plan-making regulatory function is to reside in an existing body such as An Bord Pleanála, might that affect the other functions of the board creating an inherent tension between making the Board making decisions on forward planning, development plans and local area plans as well as individual planning cases?
• Is there not a case for the Regulator to be the person who conducts the fundamental assessment of the performance of the planning system, including an assessment of the effectiveness of the Minister, local authorities and so on rather than becoming a super-non accountable national planning body?

Firstly, it is worth commenting on what the Minister did not say in her speech to the JOC, but which is absolutely critical in framing this debate. It is essential that, as also recommended in the Mahon Tribunal Report, both the National Spatial Strategy and National Development Plan be placed on an explicit statutory footing (as is the case in Scotland, for example). The forthcoming legislation should specify that both the NSS and NDP be reviewed in parallel and be subject to Oireachtas approval. The legislation should place a mandatory obligation on government to jointly review both the NSS and NDP at a minimum each and every eight years; outline precisely what is required to be included in both plans (including delivery and implementation); the procedure by which they are to jointly be reviewed; and provide for transparent public involvement in the process i.e. a staged process similar to that required of local authorities in adopting development plans. The placing of the NSS/NDP on a statutory footing will require both plans to be subject to Strategic Environmental Assessment and Habitats Directive Assessment, – including an analysis of alternative future scenarios – and allow for a public and political debate which is desperately needed.

The placing of the NSS/NDP on a statutory footing will ensure that that national planning policy remains a political activity. However, the regulation and oversight of the system should be independent. There has been considerable reform and improvement of the planning system in recent years with the introduction of multi-level and multi-agency oversight. As a result, the scope for local authorities and/or regional planning authorities to deviate from national policy has been considerably reduced. However, the current system whereby the Department reviews, comments and potentially ‘calls – in’ local authority development plans through Section 31 of the Act needs to be replaced with a system of independent oversight. Planning in Ireland is mired in a public perception of corruption, cronyism and political interference and only an independent regulatory authority will suffice in undoing this perception. In doing this, the Department can get on with the important business of plan-making.

Accountability can be ensured by designing the system so as to be fully transparent through, for example, the full application of the Access to Information on the Environment Directive, requirement for the Planning Regulator to attend at Joint Oireachtas Committees as necessary, an open and transparent appointment process for a fixed term, full publication of all reports within mandatory time limits, and strong legal deterrents against lobbying, etc. The decision of the Planning Regulator should be final. This does not imply that the role of the Planning Regulator is designed so as to be inflexible. As is currently the case between, for example, the Department, the National Transport Authority, the Regional Planning Authorities and local authorities, the regulatory system can be designed so as to allow formal interaction with the Planning Regulator to reach consensual solutions where possible. It is accepted that there could be rare occasions whereby the Planning Regulator fails to act or acts inappropriately and a fail-safe mechanism is required. In such situations the Minister must remain ultimately accountable and the power should rest with the Minister to override the decision of the Regulator. Again, the legislation could be crafted such that, in such rare circumstances, a draft order be required to be laid out before each house of the Oireachtas and could only be proceeded with following a resolution approving of the draft has been passed by each house.

It is not appropriate that the proposed Planning Regulator be merged with An Bord Pleanála. In the same way as the Minister is precluded from commenting on any specific planning application and An Bord Pleanála has no role in the forward planning system, there should be a strict separation of powers. The role of the Planning Regulator should be confined to ensuring that national planning policy is correctly implemented and overseeing complaints against planning authorities. This should include complaints on allegations of corruption, improper procedures or systemic problems and undertaking periodic audits of the planning functions of local authorities – but not extending to a role in reviewing a decision on any specific planning application. For example, the Local Government Ombudsman currently has the powers to examine complaints about how local authority staff carry out their everyday executive and administrative activities in relation to the planning system. These include complaints about delays or failing to take action in relation to, for example, planning enforcement matters. These oversight powers should be transferred to the Planning Regulator.

The introduction of the Planning Regulator does not necessitate the creation of another expensive QUANGO. Throughout the ‘Celtic tiger’ period local authorities employed significant numbers of planners and other professionals to deal with the huge volume of planning applications. With the dramatic fall-off in new development proposals and the proposed reforms of local and regional governance structures, there is considerable scope for suitable professional staff to be seconded from elsewhere in the public service. There is also a plethora of agencies with some responsibilities in oversight, such as the Regional Planning Authorities, the National Transport Authority, the Local Government Ombudsman and the Office of Environmental Enforcement. An innovative and rationalised approach to oversight could yield significant savings and the establishment of a more coherent system. For example, the Planning Regulator could be housed as a sub-unit of the Local Government Ombudsman to ensure administrative synergies are maximised.

Finally, a further important recommendation of the Mahon Tribunal Report, also not referred to in the Minister’s speech, was that the Planning Regulator should be mandated to undertake educational and research functions. There is no doubt that heretofore planning education and public/political awareness of the important role of land-use planning in society has been abjectly lacking in Ireland. The abolition of An Foras Forbartha (similar to the Design Council in the UK) in 1988, the abolition of local rates and political cronyism and ineptitude all contributed to this end. The evidence-base for planning has improved dramatically with the development of tools such as MyPlan and AIRO. However, I am not convinced that a regulatory authority is best positioned to undertake planning education and research. It should be the role of the Department, unburdened by oversight responsibilities and with a new and focused national planning mandate, to lead in this important task drawing on the existing capacities within universities and other private and public bodies. For example, could the Housing Agency be reformulated as the ‘Housing & Planning Agency’ to provide a 21^st Century An Foras Forbartha?

2013 has the potential to be a landmark year. In the aftermath of the economic collapse, exactly fifty years after the introduction of the first planning acts in 1963, twenty-five years after the short-sighted abolition of An Foras Forbarhta and ten-years after the publication of the NSS, we have a once in a generation opportunity to reform the planning system, rethink the role of national planning for our long-term prosperity and to foster a new consensus in the public and political consciousness as to the value of planning in building a nation for the common good. We shouldn’t waste it.

Gavin Daly

 

Still living in a haunted landscape

Yesterday the Irish Times published a short piece of commentary written by me to accompany a map of housing vacancy and unfinished estates, as part of the AIRO Pictures of Ireland series.  I’d originally submitted a slightly longer piece, which got cut by fifty percent due to space considerations.  Here is the full text to accompany the map.

As early as 2006, David McWilliams had coined the term ‘ghost estates’ for the dozens of unfinished developments visible on any trip across Ireland.  As the crisis deepened, unfinished estates became a symbolic and tangible marker of the excesses and follies of the property bubble.  In every village and town in the country were half-built houses and apartments, where the developer had ceased work or where units were unoccupied.

In short, too many housing units had been built for demand, the problem compounded by development finance evaporating.

The families who had bought and moved into what became unfinished estates were left trapped on them, facing a number of related problems.  These included living on or next to building sites and their associated health and safety issues, a lack of services and infrastructure, negative equity, anti-social behaviour, and a diminished sense of place and community.

Move forward to 2013 and very little has changed.  Unfinished estates still litter the Irish landscape, the people living on them face many of the same problems they did in 2006, and there is still a large oversupply of residential property in many areas of the country.

To date, the Department of Environment, Community and Local Government (DECLG) has undertaken three National Housing Surveys to monitor unfinished developments.  In the first survey, conducted in 2010, the number of unfinished estates were reported as 2,846, rising to 2,876 in 2011.  They were present in large numbers in every county in the country, but were particularly prevalent in the Upper Shannon area of Cavan, Longford, Leitrim, Roscommon and Sligo, the result of the tax-incentivised development.

In 2012, the DECLG reported that the number of unfinished estates had fallen to 1,770.  Unfortunately, the fall in numbers is principally because the definition of what constitutes an unfinished estate was changed.  The definition used in 2010 and 2011 refers to estates that have issues of vacancy and oversupply as well as outstanding development work.  In 2012 the definition refers only to the latter.

The map shows the distribution of the 1,770 estates with outstanding development work (black dots; see below).  The shading is the level of residential vacancy as reported in the 2011 Census, where dark red is over 25 percent vacancy.

In total, the Census revealed that there were 289,451 vacant properties (14.5% of total stock) in April 2011.  Of these 59,395 were classed as holiday homes.  In any ordinary housing market, approximately six percent of properties would be expected to be vacant (120,000 in the Irish case), meaning that oversupply is about 110,000.  There are also 17,032 units still under-construction according to the DECLG 2012 survey, excluding one-off sites.

To try and tackle the issues facing unfinished estates, the government set up two schemes.  The first, the social housing leasing initiative has sought to make some properties available for social housing.  The second, site resolution plans, are designed to tackle health and safety issues arising from incomplete or poor construction, with a fund of €5m administered by DECLG.  The former has had little take up and the latter has had little effect beyond fencing off dangerous areas and filling in potholes.

Most worryingly, the DECLG acknowledges that 1,100 of the estates are in a ‘seriously problematic condition’, yet only 250 estates (8.5% of 1,770) are active; that is, the developer is on site and undertaking construction.  That means that 1,520 of the estates that require development work have been abandoned to their fate.

Given that their developers have gone bust they are not likely to move towards completion in the short to mid-term.  In other words, several years after the crisis started, families are still living on developments that are substandard, with huge negative equity that locks them in.

In November, the Housing and Planning Minister, Jan O’Sullivan, announced that decisions would be taken in early 2013 to establish which estates are commercially unviable and need to have parts of them demolished.  Regardless of whether this happens or not, the unfinished estates issue does not seem set to be resolved for a number of years to come.

Unfinished estates and residential vacancy in Ireland

Rob Kitchin