“Finance, Economy, Society – Geographical Perspectives” Seminar

Fri 30th May 2014, 11am-1pm,

Trinity College Dublin (TCD), Department of Geography, Museum Building, Seminar Room B.

Speakers:

Dr Sabine Dörry (Oxford University)

“Strategic nodes in investment fund global production networks: the example of Luxembourg”.

Dr Zoltán Gál (Hungarian Academy of Sciences / University of Kaposvar)

“The role of financial FDI in Central and Eastern Europe revisited: A financial geographer’s view in the context of the dependent market economies model “.

The event is free. Coffee/light refreshments will be provided at the beginning of the seminar.

Please email Martin Sokol (sokolm@tcd.ie) if you wish to attend.

Today the government announced a new Construction 2020 Straegy for Ireland – the full report can be found here.

The strategy is to be welcomed in that we’ve needed an overarching strategy re. construction, property and housing for some time.  It’s also good that it is wide in its remit, covering all the main areas.  It seems to me the strategy is about four things:

1.  creating a strong and sustainable construction sector
2.  producing new jobs and getting construction workers back to work – the plan is 60,000 by 2020
3.  Creating sustainable planning and communities
4.  dampening down the cyclical nature of property development

In other words the ‘Strategy aims to ensure that necessary and sensible development can take place, and that it is not held back by unnecessary obstacles.’  It sets out 75 action points, quite a few referring to initiatives that have already been announced previously, though the strategy does tie all the stuff together into a roughly coherent whole.

The question is whether these action points are going to address the various problems and issues.  At present, this is difficult to tell, because a lot of what the document sets out is a roadmap for finding solutions rather than providing solutions.  At one level this is good – we need well thought out solutions.  At another level it isn’t so great because we should have done the strategising a few years ago and now we’re trying to play catch-up whilst various forms of crises continue to play out around us – mortgage arrears, social housing waiting lists, rising prices, weak supply in some areas, oversupply in others, etc.  The report is full of proposed new committees, task forces, review groups, consultations.  Here’s a list of some:

• will propose a new national planning framework
• will publish a general scheme of a Planning Bill, along with a new Policy Statement on Planning, to implement the planning recommendations of the Mahon Tribunal and other planning concerns, and to establish an independent planning regulator.
• will create a Housing Supply Coordination Task Force for Dublin
• will produce a comprehensive strategy for Social Housing, setting out a vision for the sector.
• will undertake a review of Part V of Planning and Development Act
• will review Special Development Zones planning with the aim to streamline and speed up process
• will explore mechanisms for private financing and greater use of Public Private Partnership models for infrastructure procurement
• will engage with the banks, NAMA and other interested funding providers to ensure the availability of sufficient development finance
• will create a High Level Working Group chaired by the Department of Finance will be established to explore the issue of sustainable bank financing for the construction sector.
• will increase our engagement with the European Investment Banks (EIB) and European Investment Fund (EIF) in developing and implementing mechanisms designed to maximise the provision of financing to SMEs, including in the construction sector.

As it stands then, we have few concrete recommendations with respect to any of these things.  These need to be set up asap and to do their work quickly.  Ideally they will also be dealt with in some kind of a holistic way and not in isolation from each other.

There were a few concrete actions.

• National Pensions Reserve Fund (NPRF) is to become the Ireland Strategic Investment Fund (ISIF) with a mandate to invest on a commercial basis to support economic activity and employment in Ireland.  Work with IDA and others to invest in offices/infrastructure.
• A tenancy deposit protection scheme will be provided in law this year
• Regional Planning Guidelines that co-ordinate local authority plans will be replaced by more broadly based Regional Spatial and Economic Strategies from 2016, with inputs from LAs, key infrastructure and economic development agencies

They are also proposing greater certainty and flexibility in planning:

• flexibility around overall densities will be considered.
• changes to existing planning permissions – though only after public consultation
• streamlined planning process for certain types – ‘repeat’ or ‘change of house type’ applications – and also for appeals
• enable local authorities to introduce a ‘use it or lose it’ provision with respect to land zoning to reduce land speculation
• vacant site tax – examine the possibility for enabling a local authority, should it wish to do so, to adopt measures that incentivise the use and development of vacant sites
• legislate for and introduce a registry of options on land for development purposes to ensure market transparency

Some issues seem to be in a holding pattern.

• Homelessness – Mentions setting up of Homelessness Oversight Group and aim to eliminate homelessness by 2016 but gives no indication of how that will be achieved, esp. in light of rising homelessness levels.
• Unfinished estates – no new policy just continue with Site Resolution Plans;

The strategy sets out then a roadmap for getting to actionable initiatives, rather than setting up many new initiatives.  It does not set out many concrete actions but rather proposes a roadmap for dealing with construction and property issues.  There are proposals for lots of task forces and reviews, some tinkering with existing legislation but no radical overhaul, but not a lot of new concrete, strongly cash-backed initiatives – schemes mentioned in the strategy are all relative small sums of money or restate existing public capital expenditure plans (which are a fraction of pre-crash levels).

What would have I liked to have seen?  I would have preferred something a bit more holistic, rather than trying to frame a whole bunch of stuff as a coodinated plan.  Personally, I would have started with a new NSS/NDP and worked down from there.  I think it would have been useful to be more proactive in setting out options re. financing.  How to get finance into initiating construction seems to be largely missing beyond saying the government will talk to and encourage NAMA, EIB, EIF, ISIF (Ireland Strategic Investment Fund) to make finance available and look at issues.  I would have liked the government to be a bit more proactive in terms of initiating and driving funding, seeking ways to increase public capital expenditure.  The strategy announced €200m of new investment into the various property related areas, but this is a tiny amount of funding vis-a-vis the issues that need to be addressed.  Hopefully when all these various task forces and committees report, suitable budgets and means of financing can be attached to the action points, otherwise they’ll remain just that – action points, rather than actioned items.

Rob Kitchin

I think there is an election on? From where I sit here in Luxembourg you would hardly know. The lamp posts are not festooned with every manner of local and European election candidate posters. Now and then a billboard reminds you that there is in fact a European election on – and only a European election. Meanwhile, the commuter buses are daily packed with bureaucrats busily going about the policy work of the EU – policies which are having an ever-increasing and direct influence on Irish people but which have barely registered in the European election debate.

Take for example the Europe 2020 strategy which is currently the flagship overarching policy initiative of the EU. The strategy is built around five ambitious headline targets for each Member State to achieve by 2020 in the key areas of employment, R&D, climate and energy, education and the fight against poverty and social exclusion – pretty much the entire sphere of national government. Yet, reviewing the European election manifestos of each of the major political parties and trawling news reports on the elections, the Europe 2020 strategy is not mentioned, not once.

These are not vague or distant targets which have no immediate concrete policy meaning in practice for Irish people. The Europe 2020 strategy is now implemented and monitored through the new European Semester, the yearly cycle of coordination of economic and budgetary policies at EU level. Within this new process the European Commission can, depending on performance towards achieving targets, issue Country Specific Recommendations on the basis of National Reform Programmes which must be carried through in the annual budgets of each Member State. Where recommendations are not acted on within the given time-frame, policy warnings can be issued. There is also an option for enforcement through incentives and sanctions, including by withholding structural funds.

Ireland’s National Reform Programme 2014 was published just last month – again without a murmur in the media so fixated on reform at the last election. It is clear from EU monitoring that Ireland is struggling badly to meet many of our 2020 targets, particularly in respect of poverty and greenhouse gas reduction, which could prompt policy warnings from the European Commission. As part of the National Reform Programme, the government also published the Draft National Risk Assessment 2014 for public consultation. This new strategic policy initiative is designed to identify the future risks, both financial and non-financial, which Ireland faces and, which according to the Taoiseach, is “an attempt to avoid the mistakes of the past by not only identifying risks the country faces, but also encouraging debate in the Dáil and by the public”.   

It is hard to think of a more meritorious political debate to be had during the European elections than the future direction of the Europe 2020 strategy.  However, judging by the woeful election campaigns, most Irish people, including most of the candidates, have most likely never heard of it. Just this week the European Commission announced a review of the Europe 2020 strategy as it is now considered time to reflect on the design of a new long-term ‘post-crisis’ strategy. The review presents an opportunity for an informed national debate on a whole series of risks and issues which can now only be effectively tackled at pan-EU level including: fiscal imbalances, renewable energy, growing energy dependency, greenhouse gas emissions, real estate bubbles, unemployment, widening social inequalities, dysfunctional financial systems and underperforming public administrations. These are the real European policy issues which struggle to rise above the clutter and polemic of the election campaigns.

As we creep incrementally towards greater European integration and an ever greater importance of EU policy, it may be about time that we consider separating European from local elections. Having both elections on the same day, and with both sets of candidates competing for scarce space on lamp posts and in the media, inevitably results in a conflation of local, national and European issues.  Granted, there may be a genuine fear of plummeting voter turnout given the general apathy towards Europe. However, I am equally unconvinced that the status quo is the way forward. The important European reform agenda needs to be met with a maturing political discourse in Ireland and a significant change in attitude in how we engage with EU policy making.

Gavin Daly

• Submissions on the Europe 2020 Strategy can be made here before the 31^st of October 2014
• Submissions on the National Risk Assessment 2014 are being accepted before the 30^th of June 2014. See here.

There have been a few headlines recently about some families losing their rental accommodation as rents increase and becoming homeless (see these stories: one, two, three, four; also listen to this radio piece on RTE). It is reported that homelessness is on the rise and a homeless crisis is emerging in Dublin in particular. According to Dr Dáithí Downey, Deputy Director of Dublin Region Homeless Executive (DRHE), paraphrased in Saturday’s Irish Times, the homeless crisis is ‘bloody awful and getting worse’, with Jan O’Sullivan TD, the Minister for Housing, admitting that there is ‘no doubt’ that the issue of homelessness among families is a growing issue.

So what is the situation in Dublin at present? 

According to DRHE, in 2013 a total of 4,613 unique individual adults used homeless services in Dublin (across all funded NGO’s and statutory services – a full report for 2013 is available from DRHE upon request).  The demand has strengthened and changed in character since Autumn 2013 with more families with child dependents experiencing homelessness.  The Simon Community report that in 2012, there was an increase of 24 per cent in those using their services, to over 5,000 individuals and families.

During the week beginning April 28^th 2014, the DRHE confirmed there were 184 households with dependent children accommodated in 21 commercial hotels across the Dublin region in lieu of provision of more suitable emergency accommodation for families due to a lack of capacity in usual emergency accommodation.  The majority of these families were welfare dependent private tenants.  The decision to use hotels is seen as a last resort taken in order to prevent any increase in rough sleeping in Dublin, especially among adults with dependent children.

Dublin’s homeless services secured an exit to tenancies and independent living for 793 persons in 2013. This is down by 10 per cent on the previous year’s 879 exits, and a similar downward trend exists for 2014.

So what is causing the rise in homelessness, especially amongst families in Dublin? 

Here’s what I think is happening.

1) From 2012 onwards there has been an increasing shortage of supply of property for purchase and rent in Dublin city due to in-migration and lack of construction.

2) The increasing demand for tenancies has led in turn to a rise in rent due to demand outstripping supply.

3) The rise in rent has been bolstered by new institutional investor owners, and by buy-to-let landlords facing a move from forbearance to foreclosure, seeking a certain yield by squeezing tenants – moving rents up at a rate significantly above inflation (25% to 30% increases in some cases)

4) Families who are income insecure – low wage, uncertain hours, flexible working, dependent on welfare – cannot afford the increase in rent, and rent supplement is not sufficient to cover the gap. They are being priced out of their homes in favour of those who can afford the new rental price.  Such pressure is not aided by tenants often not knowing their full rights or seeking redress through the Private Residential Tenancies Board.

5) These families find it difficult to find alternative private rented accommodation due to rent inflation across the rental sector and landlord preferences for tenants not reliant on rent supplement and discrimination against such tenants. This is also reducing exit routes from homelessness.

6) There are nearly 90,000 households on the social housing waiting list and it is therefore almost impossible to parachute newly homeless families immediately into social housing.  Consequently, those pushed out of the private rental sector end up in emergency homeless accommodation.

7) This process of creating new homeless families is likely to continue as rents rise given the present reliance on private rental sector for new social housing provision.  Moreover, it might be bolstered if repossessions increase as expected from this summer onwards, with former homeowners becoming homeless.

So what is the solution?

DRHE recognise that the use of hotels is both an inadequate and inappropriate way to meet the housing needs of homeless families and can only be considered a short-term respite from being shelter-less and also that it is financial unsustainable. They are projecting a final year cost of over €4.5m for the use of hotels in 2014 if no alternatives are brought forward. So what is required?

First, the state needs to invest in creating new social housing – both refurbishing empty, unoccupied and derelict housing stock in the city and creating new suitable stock in control of the local authorities not private landlords.  The Dublin local authorities have already submitted plans to government for the acquisition and refurbishment of stock for homeless households that will requires a projected capital budget of at least €10.5m to realise.

Second, rent control needs to be introduced that limits unregulated rent increases that are far in excess of inflation.  This needs to be accompanied by an increase in tenant rights that offers them enhanced protections as is common in continental Europe.

Third, there needs to be an additional investment into homeless services to provides the resources that will enable them to more adequately deal with the crisis.  Wishing it will to go away will not work.

Rob Kitchin

One-Day Conference:

The National Institute for Regional and Spatial Analysis in association with ESPON will host the following one-day conference: 

Creating the Regions of Tomorrow: 

Maximising Ireland’s Reform Opportunity

Renehan Hall, NUI Maynooth, County Kildare

Friday 26^th September 2014

*Admission is free but registration is essential*

The Conference Programme is now available here:

Conference Programme

Mark Boyle & Gavin Daly