Commentaries


There will be tens of thousands of words written this week about Donald Trump’s first year as President of the United States. His first 12 months has been characterised by a gummed-up domestic policy and letting the military apparatus do what it wants elsewhere in the world. In Europe, we may look askance and turn our noses up at the sheer grubbiness of it all. Within the EU we may find ourselves silently smug about how different things are here in Europe. There are however echoes of Trump’s vision for Making America Great Again (MAGA) among the 27 members of the Union. In Hungary, Poland and Austria, right wing parties lay bare the ugly face of late capitalism with anti-immigration measures and welfare retrenchment. In the UK, the unfolding Brexit mess brings with it a number of considerable political and economic costs yet to fully explored. Anyone living near the border in Ireland could attest to this. Similarly, people in Ireland are not immune to the midnight tweetings and wild policy pursuits of a leader who may not see out his first term without a dirty political fight. Trump and his cabinet are determined to bring jobs back from overseas to employ US residents as a way of shoring up working class support. It is not clear yet how US capitalists are taking to this idea but even a moderate success in this regard would make a considerable difference to the Irish economy, north and south.

Two incidents in recent weeks point to how this may unfurl in Ireland. Firstly, Apple is planning to build a data centre near to the town of Athenry, Galway. The planning application has been upheld but not without a chance for the High Court to review a decision to allow An Bord Pleanala’s decision to have effect. Two residents sought a review of the decision on a technical ground.  They claimed that the EIA was based on eight halls of data servers and not only one as sought in the application. Other people in Athenry have been out marching in favour of the planning application, citing that jobs would be lost to some other location if local politicians do not support the application. Not unrelated to these movements of course is the fact that the Irish state will bend over backwards to accommodate a company that owes us at least €13,000,000,000 in unpaid tax. On his return from a recent US visit, the Taoiseach Leo Varadkar committed to Apple, indicating that his government will do anything to curry the company’s favour. It has been reported that “the Cabinet is developing a detailed position on the role and importance of data centers, including on their designation as strategic infrastructure”. It is not at all clear how many jobs would result in the Athenry project (perhaps 100?) but it will be a significant drain on our electricity grid.

During this time, across north America, cities have been competing for Amazon’s second headquarters. Mexican, Canadian and US cities have been offering tax breaks, highway construction and whole city blocks in bids to ensure Bezos’s company would land in their turf. As an aside, it was not radically different under previous administrations, Obama’s included. ‘Infrastructure’ is fast becoming code for the reshaping of entire cities using privately held surplus. This resonates in Ireland where a deeply embedded cluster of policies lowers corporate tax rates and environmental monitoring to ensure foreign direct investment. In Ireland we like to convince ourselves that FDI is because we offer an educated and English-speaking workforce, implicating all schoolchildren in an ideological project since at least the mid-1970s. In reality, as the Panama Papers, Wikileaks and the Paradise Papers all make clear, Ireland’s economy is best in class for tax avoidance. International best practice eludes our health service but in the matter of squirrelling money forced out of people’s labour and pockets, we are among the elite. (What is it about islands and tax avoidance?)

Global finance and money moves quickly around the world, landing in different places in different ways. Regional geographers and others examine this unevenness in great detail. We need, however, to connect political struggles like the election of Trump and the re-emergence of reactionary governments in the EU with this unevenness. The attraction of high quality jobs can no longer act as cover for large scale tax avoidance and politicians in Ireland may have to realise that quicker than they think. The game with the highest stakes is that of money flow derived from profit. The implications of MAGA are being felt in east Galway and elsewhere in the Republic. This is not because of what elected politicians have or have not done in Galway but because of what happens in Washington and California.

Eoin O’Mahony

Teaching Fellow, School of Geography, UCD.

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Barrow Street (Google Street)

At the T-junction on Barrow Street, or as the locals call it “Google Street”; looking down the road to the right, we see the old and the new emerging Dublin. Google’s 67-meter tall building of steel and shiny glass, (I must admit here the magpie in me loves the shiny steel and glass construction), with its three pronged ‘hyperlink’ bridge, towering over the small pebble dash cottages

Google Bridge

The dwarfing of the inner-city communities’ homes by the prevailing industry is not a new sight, the old industries such as Boland’s Mills, the gas company cylinder, and the ESB red and white power towers on the Shelly banks, were once the dominant structures in the Dublin sky line.

Bolands Mill

However, the new industries unlike the old do not provide employment for th local community. Without a local labour clause in the regeneration of Dublin Dockland area this trend looks likely to continue as the government implements the Strategic Development Zone (SDZ)  promoting Dublin as a creative city. The SDZ is being held up as the only way to restart the regeneration of Dublin city after the property crash and the international financial crisis of 2008.

The fast track planning through the SDZ in the interest of economic growth has meant a change from the process of planning taking three years, with the freedom of third-party planning appeals, to being completed in 18 months now without an appeals process. This change along with the deliberate mapping of the zone to exclude the local residential areas of Ringsend, Pearse Street, Sheriff Street, and East wall, will remove all obligations on developers to consider local community needs despite the language of “integration” and “community involvement” that is in the document. In earlier developments, under the older planning provisions, there were some gains which, while few in number, gave hope and aspiration to the local area, a promise of a real investment, a commitment to lifelong education and a promise of a sustainable community and real job opportunities.

To be clear, I don’t believe that the responsibility for sustainable communities should be dependent on the private market yet without proper planning and investment, in schooling, housing, adult education/retraining, the low socio-economic cycle and high unemployment associated with these areas of inner city Dublin will continue and allow pockets of deprivation to be hidden in the statistics, as the middle-class population of Dublin increases.

The Government’s stated urban policy is to create a social mix, to bring families back into the city, yet there is no indication of any real commitment to the investment, in local schools, suitable accommodation, and the development of the necessary public social gathering spaces, such as parks with seated areas not exclusively associated with cafés-needed to achieve this goal.

Chimney park

There is one example of where there was an attempt to create this open public space with the development of the small Chimney Park beside the Bord Gais theatre Yet, there was supposed to be a number of these parks and with the crash these projects were dropped, and we can see an example of this failure in the large area to the north side of the Samuel Beckett Bridge which was supposed to be a public park but now has been left as an un-landscaped flat green space.

The present main social gatherings spots in Dublin docklands area are of consumerism, expensive restaurants, coffee shops and bars, sitting in to have your coffee will cost upwards of €5 making it an expensive commodity for everyone other than a small privileged group.

Bord Gais Theatre

This group are the people able to afford to live in the high rent apartments, to go to the expensive bars and restaurants and to avail of the Bord Gais Theatre and the Three Arena. These are the “creative” class that work in the multinationals of Google, Facebook, and Airbnb and in the legal and financial sectors. These people do bring much needed spending power to the area, but they are a more transient group and can leave if economic factors, for example, corporation tax, dictate that their firms have more favourable conditions elsewhere.

There is a clause in the SDZ to preserve local culture and heritage, but is this goes little further than the adaptation of street-names such as “Blood Stoney Road”, in the case referring to the nineteenth-century engineer responsible for the construction of the South Wall.

Blood Stoney Road

A more progressive approach might have been to have adopted some vernacular placenames for example, the MacMahon Bridge is known locally as the Iron Bridge. This care given to street naming is truly only a minor element of local and certainly there are more vital culture institutions under threat. For example, a Paddle Group  formed to support cancer survivors worries about the risk of eviction from its home in a concrete storage unit in the underdeveloped end of the basin.

If we want a living city, economic growth cannot be the sole focus of urban policy. For our cities to be sustainable they need to have places that parents can and want to bring up children. Our social fabric needs to provide high-quality integrated school, parks and recreational areas and residents should comprise a diversity of incomes, cities for the many not the few.

Mary Broe

Mary is a PhD student in Geography at Maynooth University.

The Ireland 2040 National Planning Framework (NPF) currently under preparation, is tasked with providing a ‘framework for future development and investment in Ireland’ (Issues and Choices Consultation Paper). The consultation document makes clear that the NPF is intended to provide a high-level strategic policy document, working to coordinate the spatial aspects of a wide range of sectoral policies concerned with ‘housing, jobs, transport, education, health, environment, energy and communications’. The potential of strategic spatial policy to be provide a frame for the coordination of broad-scale policy objectives such as quality of life, prosperity and environmental sustainability and the development of place-based policy is explicitly addressed. It is evident that the NPF is intended to provide more than a reformulation of the politically-sensitive issue of balanced or effective regional development. It is also evident that it is not to be understood as ‘national plan’, prescribing where development should take place, as discussed previously on this blog here). Whereas the NPF will hopefully provide a central guiding framework for planning authorities, informing their decision-making and placing their work in a wider strategic context, this should not be understood as its primary function.

The NPF is asking to be taken seriously as cross-sectoral overarching framework for investment, rather than treated as a national plan to be ‘implemented’ by local authorities. These strategic cross-sectoral policy coordination policy coordination objectives are to be welcomed. The current context of Brexit-induced uncertainty calls for open dialogue, cross-sectoral communication and strategic stakeholder engagement, as Ireland-UK and by default, Ireland-EU and North-South relations are simultaneously re-ordered and re-worked. Indeed, this period of uncertainty calls for spatial public diplomacy. The NPF can play an important function in this context providing in particular a framework for working out island-of-Ireland perspectives and reaffirming existing commitments to cooperation in matters of spatial planning and regional development on a North-South basis.

The experiences of Wales and Scotland with strategic spatial planning furthermore demonstrate the potential of spatial strategies with strong cross-sectoral ambitions. The Scottish National Planning Frameworks build on a strong Scottish tradition of strategic planning and have played an important role as part of a broader ‘national conversation’ post-devolution. More importantly, they have served to focus policy attention on key projects of national importance and ‘spatial priorities for change’. The Wales Spatial Plan similarly was designed from the outset as an over-arching cross-sectoral framework, placing the work of the then newly established Welsh Assembly in a strategic spatial context and supporting joined-up thinking at a sub-regional level.

In order to be taken seriously and to have relevance as a framework at a strategic policy level outside of the Department of Housing, Planning Community and Local Government, however, the NPF needs to be explicitly linked to public sector investment decision-making. The National Spatial Strategy was of course, designed to give spatial expression to the National Development Plan with the Gateway Investment Fund as the bridge linking spatial and capital investment planning. Unfortunately, the GIF was one of the first items to go when budgets were cut and the decentralisation fiasco characteristically served to make the worst out of a bad situation. We should nevertheless expect and demand that the NPF contain explicit commitments regarding major infrastructure projects of national and regional importance, aligning the spatial framework with national transportation policy and other key sectoral policies. Debate on the NPF should focus on concrete substantive issues of strategic spatial significance such as outstanding commitments under Transport 21, sustainable energy and climate adaptation policy and the future of the border region in a time of uncertainty. NPF scenarios could focus on the spatial development implications of infrastructure investments and policy choices, providing informed insights into possible regional development dynamics in Ireland 2040. This of course is based on the perhaps naive assumption that the Irish Government is prepared to commit public funds to strategic investment projects rather than relying on private sector investment.

The NPF might also be expected to make funding commitments to support innovative regional development initiatives emerging from the bottom-up. It is possible to envisage a scenario where local authorities, business and community stakeholders could apply for capacity-building or small-scale investment funding on a competitive basis from funds administered by the three regional assemblies. Projects would be required to support the objectives of the NPF and to cross local authority boundaries, working with ‘functional territories’ in order to ensure strategic regional importance. Lessons can be learnt from urban-rural partnership programmes organised on a similar basis in Germany which have challenged metropolitan and rural districts to identify potential synergies and means of working together. Closer to home, the experiences of three Border Area Networks and work of ICLRD in developing common projects and strategies on a cross-border basis demonstrate the potential of this approach in the Irish context.

It is time for a mature debate on the substantive issues the NPF can and should address on a cross-sectoral basis, and time for the Government to commit to public investment aligned with national spatial policy.

Reminder: Submissions on the NPF consultation can be made until this Thursday 16th March (12 noon).

Cormac Walsh

To make a submission about the proposed NPF go to the website and follow the instructions provided; or email npf@housing.gov.ie; or write to:

NPF Submissions, Forward Planning Section, Department of Housing, Planning, Community and Local Government, Custom House, Dublin, D01 W6X0

homes-not-hostels

Over the last month, strong attention in Irish public debate has concerned the dramatically deteriorating housing conditions of an increasing number of people in the country, especially in the main cities. Launched by a variegated network of activists and groups, the Home Sweet Home campaign has been centred around the occupation of a vacant building owned by NAMA in the city centre of Dublin to give a shelter to homeless people who experience on a daily basis the serious lacks of the Irish welfare system in relation to housing. Solidarity towards the campaign has rapidly spread in the city (with more than a thousand of people volunteering in the project) and all around the country. I here do not want to account for the actions and strategies occurred up to last week when the building was evacuated following a court’s injunction; my aim is to stress the political importance of the Home Sweet Home campaign since it brought back direct action in Irish political arena.

The main political aim of Home Sweet Home is to give a grassroots-led response to the “housing crisis”, an idea full of political ambivalence. In fact the “housing crisis” has been recently invoked and used by the Irish government to support new supply-centred measures, thus guaranteeing conspicuous profits for developers. However such specious rhetoric collides with the material constraints of thousands of households who struggle to pay the rent or are in arrears with their mortgage; quoting David Madden and Peter Marcuse, we see how “the state of their housing is critical indeed” (2016: 11). So the direct action promoted by the Home Sweet Home campaign represents a response by those whose lives are severely conditioned by the “housing crisis”.

hsh

Direct action in housing through squatting vacant buildings is a long-standing political practice in Europe which has been traditionally associated by social and political scientists to several positive consequences for transformative politics, such as the experience of direct-democratic decision-making, and the prefiguration of another mode of organizing society through the challenge of private property rights and the power of making profit (exchange value) over material needs (use value). More recently the squatting of vacant buildings has re-appeared in southern Europe (where is has a strong social and political tradition), notably in Italy and Spain.

Spain represents a particularly relevant case for the Irish audience since the events leading to the “housing crisis” there echo what happened in Ireland with the boom and the burst of the bubble. Following a massive wave of evictions and foreclosures (made easy by a very punitive mortgage law) all around Spain, “mortgaged lives” (to quote the powerful concept introduced in a text edited by the current mayor of Barcelona, Ada Colau, a former spokesman of the PAH) soon started to organize to give a response to such a dramatic trend: the Plataforma de los Afectados por la Hipoteca (PAH) was created in Barcelona in 2009 and rapidly spread all around the Spanish country (currently counting more than 200 nodes).

For sure one of the main strategies leading to the success of the PAH has been its ability to cope with difference both in terms of people involved and repertoire of action, combining practices borrowed from anticapitalist/radical autonomy (e.g squatting of vacant buildings owned by financial institutions) with reformist practices (e.g. negotiating with banks, appealing the Spanish mortgage law in courts). Urban scholar Sophie Gonick has defined this encounter between different visions/perspectives realized by the PAH as agonistic engagement. Here the point is not to review all the different strategies and successes of the PAH, but emphasize how such agonistic engagement (deeply embedded in direct action in the form of blocking evictions or occupying buildings) has determined a double shift:

– in public discourse/popular narratives around the housing crisis, challenging those discourses/narratives blaming evicted/foreclosed people as irresponsible;

– in the material living conditions of thousands of people who got their eviction blocked or obtained new social housing agreements thanks to the direct action of the PAH.

pah

PAH activists occupying a bank

While I do not believe in the possibility of simply imitating/replicating what done by the PAH because it is the result of contextual factors and practices, I think it is important to keep it as a source of inspiration and reference for a campaign such as Home Sweet Home and for all those activists who struggle everyday for a more inclusive and equal system in which basic needs/rights (like housing) are acknowledged and defended.

Direct action like the re-appropriation of a vacant building destined to real estate speculation and private profit is important because it sheds lights on the political possibilities that we have here right now: while formal institutions are completely trapped in market/profit-centred measures/rationalities and some critical voices continue to call for a massive public intervention in the housing sector through new social housing construction, Home Sweet Home has unveiled another political possibility centred around re-appropriation, people’s engagement and the opposition to the power of non-transparent institutions serving private profit instead of promoting public wealth.

Of course the path initiated by Home Sweet Home is still new and will have to face a massive resistance from the part of conservative institutions (and the legal system developed to serve the interests of those in power and preserve the status quo). However direct action is able to create among those involved a passionate awareness and hope in the possibility of change, shaping new political subjects who do not see themselves anymore as passive receipts of the decisions made over their lives but are ready to create new worlds centred around solidarity, inclusion, respect, redistribution and mutual care.

Cesare Di Feliciantonio

Cesare Di Feliciantonio is a postdoctoral research fellow in the Department of Geography Trinity College Dublin. His work lies at the intersection of social/urban geography, political economy, housing studies and urban studies with a focus on neoliberal subjectification and its contestations.

There has been much discussion, and not a little disagreement, about the Housing Bill 2016 (Housing Miscellaneous Provisions Bill 2016) currently going through the Seanad.  In essence, it is the Government’s attempt to ‘fast track’ the delivery of new housing units.  And while there has been some debate about a small number of legislative changes that will, potentially, give tenants more rights, the bill offers an example of more of the same, rather than fundamental departure, in terms of the housing policy pursued by successive governments.

In this post, I want to do two things. Firstly, I want to look briefly at some core points of the bill with a view to identifying where they depart or continue existing policy.  Secondly, I want to place the state’s approach to focusing on stimulating supply through incentivizing the development sector in a historical context.

dscf1655

 

The Housing Bill 2016

The Housing Bill 2016 is generally a continuation of the kinds of housing policies successive governments have been pursuing for years now. Its basic premise is to remove (more) barriers to development in order to increase supply quickly. Most fundamentally, it assumes that supply is the single most important element of the housing problem and that remedying the issue of supply will have a ‘trickle down’ effect to subsequently alleviate the other crises of housing affordability, homelessness, and tenure insecurity.

As I want to argue below, this assumption is highly problematic, as borne out from historical evidence in the Irish context.  But before I get to this, I want to briefly focus on three key points from the bill that have gained media and activist attention.

Firstly, the bill includes a clause to curb wholesale evictions when a property is sold to a large investor. It builds on the so-called ‘Tyrllestown amendment’ by including a provision that landlords with 20 properties or more cannot evict tenants when selling to an investor.  This protects against a particularly high-profile form of eviction, but one which is perhaps very limited in the overall scheme of things.  Some estimates suggest that this will affect only 0.56% of landlords*.  Moreover, a new get-out clause was also included in the bill, which allows a landlord to pursue a vacant sale (i.e. evict existing tenants) if they can prove that the value of the sale is decreased by 20% as a result of occupancy.  Given the current market conditions it may not be difficult for landlords to ‘prove’ this.

Secondly, the bill makes provisions to amend Part 4 Tenancy by removing the six-month window at the beginning and end of a four-year lease agreement in which a landlord can terminate a tenancy.  This improves the rights of tenants but offers limited protections in a context where a number of other gaping loopholes exist that allow landlords to terminate tenancies. Moreover, in a context where rents have increased by 40 per cent since 2011 this will do little to combat the tsunami of economic evictions taking place.

Thirdly, the bill proposes to give increased powers to An Bord Pleanála by introducing new ‘fast-track planning permissions’ for ‘strategic housing development’.  This removes planning powers, in particular instances, from the local authorities.  The bill proposes that:

“Applications for permission for strategic housing developments shall be made direct to the Board (An Bórd Pleanála) and not to the local planning authorities.”

The rationale here is to reduce the time it takes developers to secure planning permission, and thus reduce the overall time it takes for new housing supply to come on stream.

In the Irish planning system, An Bord Pleanála operates as an adjudicator of last resort on planning decisions made by local authorities: “Anyone applying for planning permission and anyone who made written submissions or observations to the planning authority on a planning application, can appeal a subsequent planning decision to An Bord Pleanála”.

As such, the ‘fast track’ approach, while ensuring a quicker process for developers, potentially removes one more avenue for community opposition to new development. Given the less than exemplary recent history of sustainable development in Ireland, the removal of recourse to objection is potentially worrying.

It has been documented in academic work by Linda Fox-Rogers and Enda Murphy and Gavin Daly that during the boom local authority planning departments were put under pressure to deliver favourable planning outcomes.  One mechanism used was the incorporation of ‘pre-planning’ talks, whereby a developer submitting an application could avail of extensive meetings (even negotiations) with the planning authority to ensure that a planning application could fit the criteria to be granted permission.  Will An Bord Pleanála, which is an independent body, now also be expected to engage in pre-planning discussions with developers given the political pressure to quickly increase supply?  If the answer is yes, it could seriously undermine the independence of the authority.  If the answer is no, the new measures might well fail to deliver the fast-track supply of housing the bill promises.

Underpinning the bill as a whole is the assumption that the supply of housing is the biggest challenge to overcome.  This dogma, although increasingly challenged by various housing experts, is stubbornly trotted out in the media by politicians and vested interests.  This simple formula for solving periodic housing crises, namely increase supply through removing barriers to development and incentivizing the construction and investment sector, has had a long history in Ireland, with highly variable outcomes.

 

Build it and they will come

This approach has deep roots in the history of Irish Housing Policy. Indeed, the first Fine Gael government sought to deal with a crisis of tenement housing by offering grants to incentivise higher income families to take out mortgages to buy their own home, thus freeing up units in tenements for low income families.  When Fianna Fail came to power in 1932, they instead embarked on a programme of building social housing, in the process offering incentives for the construction sector during a period of relative economic stagnation.  These two moves set in place the conditions that have remained stable in Irish housing policy since – a focus on homeownership as the optimum model of housing tenure and a close relationship between the successive Governments and the construction sector.  These close relationships have provided fluctuating outcomes for Irish housing.

To take two broad, and broadly different, examples.

Firstly, attempts by the state to solve period social housing crisis have in the past focused on strategies to increase supply and/or renovate existing stock.  Moreover, this has often been achieved through incentivizing the private sector.  For example, the plans to create Ballymun emerged in the context of a crisis of tenant housing in Dublin city centre.  Built using new rapid-build materials, Ballymun was intended to as modernist utopia delivering a large supply of working class housing.  However, while the development proved a relative success in the early years, the state’s failure to deliver local jobs coupled with the withdrawal of Dublin Corporation investment and general upkeep of the flats led to spiralling social problems in the area.  The supply of housing alone was not enough to make the community sustainable.

However, when the regeneration of Ballymun was slated in the 1990s, the focus was once again overwhelmingly on the ‘bricks and mortar’ approach to supply.  Although the plans included provisions for community and economic regeneration, these promises remained largely undelivered by the state.  Moreover, the regeneration was to be financed by the construction of new private housing units on site, which was expected to also lift the economic profile of the area.   Thus, what the community got was new public and private housing units, but less in terms of long-term investment in the community or the local economy.  The regeneration during the 1990s failed to deliver on long-term community development because of a focus on a supply of housing units rather than taking a more holistic view of housing.

Despite these problems, the Ballymun model of regeneration became the template for regeneration schemes in places like Cork, Limerick, and Dublin.  Using a Public Private Partnership (PPP) approach, regeneration of social housing was expected to deliver new social housing, enhance community development, and deliver private sector housing supply.  Moreover, it was expected to do this by incentivizing the private development sector.  Many of these PPP schemes collapsed with the property crash, leaving communities high and dry.

Secondly, from the 1986 Urban Renewal Act on, the state introduced a series of tax incentive schemes to increase the supply of property development in urban and rural areas.  This was a major factor in kick-starting the Celtic Tiger property bubble, which saw an astronomical increase in the supply of housing.  Between 1991 and 2006, 762,541 housing units were built in Ireland.  However, this supply did not lead to more affordable housing. In fact, house prices increased by between 300 and 400 per cent in different parts of the country.

The tax incentive schemes were extended far beyond the point at which they were necessary.  These policies to increase supply were a key factor in the creation of the 2,846 unfinished housing estates identified in 2010, including 78,195 complete and occupied units, 19,830 under construction, 23,250 complete and vacant, and planning permission in place for a further 58,025.

Moreover, the unregulated development that resulted from reducing the barriers for developers actually undermined the creation of sustainable communities built around strong transport links and services.  One of the reasons planned developments like Adamstown and Clongriffin failed to deliver on their promises, for example, was that unregulated development in neighbouring local authorities undermined plans for the timely delivery of schools, transport links, and other amenities in tandem with the phased delivery of housing.

Following the crash, there was little legislative change introduced to the planning system. And while the development sector has been significantly affected by the financial and housing crash, this has been the impact of external factors rather than designed through government policy.

The current housing and homelessness crisis is a direct outcome of the series of systemic problems created throughout the boom and the policy responses to the crash that ignored issues like mortgage debt, the decline in social housing provision, and the changing character of the rental sector, and continued to support existing and new development interests.

 

More than supply

The Housing Bill aims to solve a series of complex problems in the housing system through a short-term intervention to increase supply.  While this might be what vested interests in the sector need to get building in the short term, it will only exacerbate conditions for most of us with regard to our access to secure and affordable housing.

It foolish to assume that focusing on the needs of the same vested interests will remedy these problems.  Firstly, because they have never solved these problems in the past and indeed created many of them. Secondly, because the housing market has changed since the crash.

For financial actors, the rental market has become more profitable in recent years as a form of investment.  For international funds, in particular consistent rising rents is essential for them to return growing profits on their investments.  As such, a greater supply of rental stock will not mean more affordability – there will still be pressure to push up rents.  In combination with the incentives for first time buyers, measures supporting developers, landlords, and investors will only serve to further inflate the housing market.

In the meantime, the clear and modest demands to increase the supply of social housing, or improve tenants’ rights are being side-lined.  For example, the Secure Rents campaign asks for three things:  to regulate increases in rent by linking rents to the Consumer Price Index; to revoke the right of landlords to evict tenants for the purpose of sale; and to move from current 4 year leases to indefinite lease terms. These provisions are not radical by any means, but rather start to address some of the imbalances between the rights of tenants and those of landlords.  Indeed, tenant rights are particularly poor in Ireland in comparison to the rest of Europe. These provisions would not unnecessarily penalise developers, landlords, or investors. But they would slow down some of the crisis conditions.

More starkly, within the context of a housing crisis of unprecedented proportions, the Irish Housing Network have made a call for a complete ban on evictions.  It is worth remembering here that the number of homeless people in Dublin has risen by 35 per cent in a year.

In sum, the Housing Bill is unlikely to change the current system to any great extent – in terms of tenants, the new amendments will not make much of a dent, while in terms of development interests, the changes are just the latest iteration in a long-standing state support for this sector.  But in the context of the current housing crisis, this response is inadequate at best and has the potential to worsen the problem.

The assumption of supply being the most significant factor is highly problematic, as we can see from historical evidence.  The evidence suggests that relying on the logic of supply (without considering issues of affordability and security of tenure) will create increasingly dysfunctional housing systems.  It is time that we finally took stock and addressed the bigger housing problems that repeat themselves.

This is an emergency. And an emergency requires new thinking.

Cian O’Callaghan

*My thanks to Lorcan Sirr for providing this figure

IMG_1170

The role of finance and financial actors in shaping the city is increasingly key to understanding some contemporary urban problems. Why are rents rising? Why is office space being built when we’re in the middle of a homelessness crisis and desperately need to increase the supply of affordable housing? How and where is profit being produced from urban space and what are the likely outcomes of this type of model? All of these questions in some way relate to how finance shapes the city.

These questions have somewhat complex answers.  Moreover, these are also quickly shifting sands. Indeed, the crisis (both in Ireland and internationally) and government responses to it has also created new opportunities for financial actors (Vulture funds, Real Estate Investment Trusts etc) to invest in and profit from the production of urban space.  To understand the contemporary city requires us to understand the role that finance plays.

In a previous blog post I looked at the concept of the ‘financialization of the city’. There were two key arguments put forward in that post. The first was that it is important to grasp precisely what is being financialized when we say the city is being financialized. It is the capacity of urban space, or rather property ownership over urban space, to generate ‘rent’ by capturing socially produced value. The issuing of credit and other financial products secured by or underpinned by income streams arising from property is ultimately underpinned by this singular monopolistic feature of ‘place as a commodity’, to use Molotch and Logan’s term.

The second argument relates more specifically to the contemporary context of ‘financialization’, understood as a specific phase of the development of capitalist political economy. Here, the argument is that what is decisive about the current conjecture is the ‘tradability’ of income streams arising from property. The classic example here is the securitisation of mortgages, whereby mortgage repayments are bundled together and traded on international financial markets. This argument has been put forward by a number of the most insightful commentators on this issue, including John Coakley’s (1994) early and extremely prescient work on property as a financial asset and the empirically rich analyses of Guironnet and Halbert (2014; see also Gotham 2006; 2009). Fine and Saad-Filho are particularly succinct in their analysis here:

“[A] mortgage…remains a simple (transhistoric) credit relation between borrower and lender. However, it becomes embroiled in financialization once the mortgage obligation is sold on as part of some other asset…”

In my previous post and elsewhere (e.g. Byrne, 2016) I also but forward the above argument. However, there are problems with this approach that I’d like to address here briefly.

The principal problem with the focus on real estate as a ‘tradable income yielding asset’ (Guironnet and Halber, 2014) is the fact that it is overly reliant on the US case and especially on the example of securitization. This is understandable given the role of securitization in the financial crisis. But it presents a particular problem for understanding the financialization of the city in the European context, where securitization played a relatively minor role. Understanding the role of property in the European financial system leads us in another direction. Here, the key driver of the property bubble was flows of finance between ‘core’ and ‘periphery’ (Flassbeck and Lapavitsas, 2015). This mainly took the form of inter-bank lending.

Essentially, northern European banks invested in the over-heating property markets of Ireland and Spain (and elsewhere) by lending to banks in those countries. Securitization did play a role in Spain (López and Rodríguez, 2010; Norris and Byrne, 2015), but it was far from the main vehicle through which credit flowed into real estate. Nor was it the vehicle through which income streams arising from Irish residential and commercial real estate flowed bank into the international financial system.

Most of the credit issued in Ireland during the property boom was non-securitized, more or less old fashioned development finance, investment loans and residential mortgages. The main driver was thus not financial innovation and the tradability of property as a financial asset, but economic and monetary union and the deregulation of financial flows, elimination of exchange rate risk and low ECB interest rates that accompanied it.

If the transformation of real estate into a tradable income-yielding asset is not the definitive feature of financialization of the city then what is? Drawing on the Irish and Spanish cases, the key feature relates to the way in which income streams arising from local real estate took on a structural and systemic role in the European financial system and its expansion as well as in European political economy more generally. As has been argued by others (Hadjimichalis, 2011; Flassbeck and Lapavitsas, 2015; there also many parallels with David Harvey’s work on the built environment as the secondary circuit of capital here), investment in and returns from real estate canalized the flows of capital from the ‘current account surplus’ core countries to the ‘current account deficit’ peripheral countries.

What is novel, then, is the systemic role of real estate in the circulation of interest bearing capital at a European level. The massive increase in the volume of credit flowing into real estate in Ireland and Spain reflects this role. From this point of view, securitization and inter-bank lending are two different mechanisms or avenues through which global financial capital can flow through local urban spaces, but not the cause or essential factor of the financialization of the city. Instead, the key  factor is the structural and systemic role that income streams arising from property take on in the accumulation of capital at the European level.

One concluding note which is interesting, however, is that the aftermath of the financial crisis has seen huge trading of financial assets linked to property in Ireland, Spain and across Europe. This has mainly taken the form of ‘bad banks’ and other ‘wind down operations’ selling distressed assets to US private equity and hedge funds (Byrne, 2015; 2016; forthcoming). This may mean the importance of property as a ‘tradable income yielding asset’ will grow in the aftermath of the crisis and the role of inter-banking landing and structural flows of capital between core and periphery may diminish. For the moment it is too early to draw any conclusion.

Articles referenced

Byrne, M. (2015). ‘Bad banks: the urban implications of Asset Management Companies’, Journal of Urban Research and Practice, 8(2) 255-266.

Byrne, M. (2016a). ‘Asset price urbanism’ and financialization after the crisis: Ireland’s National Asset Management Agency. International Journal of Urban and Regional Research, 40(1), 31-45.

Byrne, M. (Forthcoming) ‘Bad banks and the urban dimension of financialization: theorizing the co-constitutive relationship between finance and urban space’. City.

Coakley, J. 1994. ‘The Integration of Property and Financial Markets’. Environment and Planning A 26 (5): 697–713.

Flassbeck, H., & Lapavitsas, C. (2015). Against the troika: Crisis and austerity in the Eurozone. Verso Books.

Gotham, K. F. 2006. The secondary circuit of capital reconsidered: globalization and the U.S. real estate sector. American Journal of Sociology 112(1): 231-75.

Gotham, K.F.  2009. Creating Liquidity out of spatial fixity: the secondary circuit of capital and the subprime mortgage crisis. International Journal of Urban and Regional Research 33(2): 355-71.

Guironnet, A. and Halbert, L. 2014. The financialization of urban development projects: concepts, processes, and implications. Working Paper n14-04 URL: https://hal.archives-ouvertes.fr/hal- 01097192/document

Hadjimichalis, C. (2011). Uneven geographical development and socio-spatial justice and solidarity: European regions after the 2009 financial crisis.European Urban and Regional Studies18(3), 254-274.

López, I. and E, Rodríguez. 2010. Fin de ciclo: financiarización, territorio y socieded de propeitarios en la onda large del capitalismo hispano. Madrid, Traficantes de Sueños.

Norris, M. and Byrne, M. 2015. Asset Price Keynesianism, Regional Imbalances and the Irish and Spanish Housing Booms and Busts. Built Environment, 41(2): 227-243.

Mick Byrne

Media coverage of the 2016 Population and Migration Estimates, just issued by the Central Statistics Office, has focused on the return to net immigration. This, combined with the recent report that 2 million people are now at work in Ireland, has been used as evidence of an economic upturn in Ireland.

These headline figures mask an important change that has taken place in Ireland. That change is shown by the ‘dependency ratio’, which measures the relative size of younger and older populations (under 15 and over 64) compared to the working age population (between 15 and 64). This ratio is important, because working people provide funds for public services and benefits, such as full-time education, health care and pensions, that are used by the younger and older populations. The higher this figure, the more people have to be supported by each working person.

The total dependency ratio across the EU as a whole in 2015 was 52.6% (calculated by Eurostat). This includes the young dependency ratio (23.8%) and the old age dependency ratio (28.8%). In Ireland in 2016, the total dependency ratio in 2016 was 55.3%, made up of the young dependency ratio (34.5%) and the old age dependency ratio (20.8%). On one level, this shows that there are proportionately more younger people and fewer older people in Ireland than across the EU. It is possible to argue that Ireland’s high young dependency ratio is potentially positive, but this would only be the case if these young people remained in Ireland. Instead, the CSO figures show us that many young people have left, particularly those aged between the ages of 20 and 40.

In 2016, total dependency ratios varied across regions. The highest was the Border region (62.7%), while the lowest was Dublin (49.8%). There were also considerable variations in the young and old age dependency ratios. These are shown in Table 1.

Table 1: Dependency ratios by region in Ireland, 2016

Total dependency ratio Old-age dependency ratio Youth dependency ratio
STATE 55.3 20.8 34.5
Border 62.7 24.6 38.1
Dublin 49.8 18.4 31.3
Mid-East 56.0 17.2 38.8
Midland 56.8 19.8 37.0
Mid-West 58.0 23.1 34.9
South-East 56.8 22.3 34.4
South-West 55.3 21.8 33.5
West 59.2 23.9 35.3

Source: Calculated from CSO Population and Migration Estimates 2016

The geographical variation highlights one problem, since some areas (e.g. Border, West, and Mid-West) have proportionately fewer economically active people. A second problem is the dramatic change in total dependency ratio since 2009, when the average in Ireland was 47.3% (see Table 2). This means that there has been a significant increase in the proportion of younger and older people who are supported by working people.

Table 2: Total dependency ratio by region in Ireland, 2009 and 2016

2009 2016
STATE 47.3 55.3
Border 51.5 62.7
Dublin 42.5 49.8
Mid-East 47.0 56.0
Midland 51.5 56.8
Mid-West 48.6 58.0
South-East 50.6 56.8
South-West 47.8 55.3
West 49.2 59.2

Sources: Calculated from CSO Population and Migration Estimates, 2009 and 2016

Across the EU, changes in dependency ratios are attributed to declining fertility rates and ageing populations. This is not the case in Ireland, which consistently has one of the highest fertility rates in the EU. While the population of Ireland is ageing, the country has the lowest proportion of people aged over 64 in the EU. Instead, the key factor in Ireland’s changing dependency ratios is the decline in the proportion of the population aged between 15 and 65. This is a result of migration: in particular, the net emigration of almost 170,000 people aged from 15 to 44 in the years from 2009 to 2016. Net emigration is the main reason for the striking change in dependency ratios in Ireland.

Headline figures, such as a return to net immigration in 2016, mask the ongoing and persistent effects of austerity in Ireland. The increase in dependency ratios means that the working-age people who remain in Ireland have more people to support, particularly in rural areas. These geographical variations will intensify further in future years. There are long-term consequences from austerity, and the dependency ratios show this clearly, through the loss of a significant number of economically active people from the country. Headline figures must not distract us from this, more troubling, reality.

Mary Gilmartin

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