- 28 May 19
Even allowing for concerns over the cost, it would be churlish to argue against the provision of rural broadband. But the fact remains that the homeless crisis is still the single biggest issue facing Irish society.
Sometimes I think I must be stupid. The government recently announced its plan to bring broadband to 540,000 farms, homes and businesses in rural Ireland. They intend to invest €3 billion of citizens’ money in making it happen.
There is nothing wrong with this in principle. The lack of broadband is a major impediment to the development of businesses in rural areas. Access to the internet can be vital. From an educational point of view, kids who live in Kerry, Mayo or Donegal – and other less-populated places – are at a significant disadvantage compared to their peers in major urban areas. It is important to minimise whatever disadvantages accrue from the relative isolation of rural communities. This is an essential part of the social pact. It costs far less to deliver the post to Galway than to the further reaches of Mayo or Donegal. The old way was to agree that we should all subsidise the longer, more expensive journeys required to ensure that letters would be delivered to people in Belmullet or out to Tory Island. That was always fine by me. It still is.
Every house needs water. Every home needs electricity. There is an argument that the same can be said of broadband. Good government is about equalising things, to the greatest extent possible, across all sections of society. If money were no object then you’d pony up and get the contractors on site as quickly as possible.
But we still have to ask critical questions about the plan.
For a start, there are serious concerns around the issue of ownership. The project will be a public-private partnership. The State will be investing €3 billion in it, and will be taking the risk. Its money goes in first. If economic conditions change and the plan has to be delayed, it is the State – or rather the people of Ireland – that will be out of pocket. Talking in rough numbers, the private contractors involved, the US based Granahan McCourt, will invest just €2 billion. And yet, under the terms of the proposed agreement, it is Granahan McCourt who will own the infrastructure lock stock and barrel, once it has been built. They will be free to charge customers in perpetuity.
The economist David McWilliams has made the point that the State is making a gift of billions to a private firm. I am not sure that there is any other way of seeing it. The only reason Granaham McCourt are involved is to make money. And since there is no competitor capable of offering an alternative, in the long run, they will be in a position to dictate the terms. In any event, what is to stop them selling the infrastructure to a third party, and exiting with a large lump of cash?
No matter what way you twist the facts, or spin them, it seems like a bad deal for the State, albeit less so for people in rural Ireland. But the reality is that Ireland Inc would likely be far better to go the whole hog, invest €5 billion and collect the tariffs afterwards.
A VICIOUS CIRCLE
The second caveat relates to money. Senior public servants in the Department of Public Expenditure opposed the deal on the basis that it would be an ill-advised use of public funds. Their argument is that spending €3 billion on the plan will inevitably reduce the money available to pay for other public services, or to support vital capital investment projects. The cash might otherwise be invested in housing, health, education or the environment. It is a question of priorities. If doing one thing is to a large extent at the expense of doing another, then you must pursue the most socially important projects first.
Which brings us to housing.
Figures released to the Fianna Fáil party a few weeks ago, under the Freedom of Information Act, confirm that the State has spent €1.2 billion buying houses for social housing, from private construction companies, over an eight year period. During that time, the homelessness crisis has deepened, with record numbers of families, and of children, presenting as homeless.
The situation on the ground really is dire, especially in Dublin. The cap on rent increases is not working. I’ve seen it first-hand. Tenants are told that the apartment or house they have been renting is needed for a son or daughter of the landlord – and they are turfed out, and forced to search for somewhere else to live. The son or daughter can then sub-let the apartment, retaining the right to stay there on occasion. Or after a short period in quarantine, the property is simply put on the market again. Either way, the rent is pushed up by much more than the permitted 4%.
There are other routes open to landlords who want to squeeze a better return out of the market. In Dublin, properties are taken off the general market and pitched at the short-term, subsidised corporate sector, with companies paying some or all of the rent for employees. Here, restrictions on rent increases don’t apply. And companies are willing to pay more than the market rate. Landlords win every time.
Meanwhile, people who desperately need somewhere to live are going through a world of pain.
Far too few houses are being built in Ireland right now. And while the number of new houses under construction has been increasing, we are still nowhere near the figure required to enable us to bridge the gap properly. Recent figures published by daft.ie show that the number of properties available to rent in Ireland is at an all-time low. It really is a landlords’ market. Young people in particular are being squeezed, and they are understandably feeling wounded – and increasingly resentful. This creeping realisation that they are being treated like trash will not be easily assuaged.
The Minister for Housing Eoghan Murphy is not a bad guy. He means well. But that is not enough. No matter how much he equivocates, there is no escaping the fact that the Government has failed to respond with the anything like level of urgency required to address what is now a deeply-rooted, and thoroughly demoralising national emergency.
The €1.2 billion that the Government spent, through local authorities, since 2011 bought 7,200 privately built homes. But the very fact that these were purchased by the Government meant that there were far fewer houses for sale on the open market, inevitably pushing prices up. It is a vicious circle. We must break out of it.
It might be simplistic to say that the Government should have used that €1.2 billion to build 7,200 (or even 8,000) additional homes and let the developers sell what they built to people who want to buy. The legacy of the catastrophic failure of the banking system had to be factored into the way things were approached.
But Ireland has moved on. Whatever about the past we need a new, and immediately effective, policy. We need to offer not just hope, but tangible progress. So if there is €3 billion in State funding available, surely housing must be the priority that trumps all others? This, in effect, is the question that was asked by the Department of Public Expenditure.
In all of these arguments, there is an element of comparing oranges and potatoes. The truth is that it should be possible to manage competing demands in a properly structured way.
So it would be churlish to argue against the provision of rural broadband – it is desperately needed. But dealing with the housing crisis, and in particular with the tragic human costs of homelessness, is the single most urgent challenge facing Irish society.
People are angry and justifiably so. The system has failed. And there is every likelihood that, without radical action on the government’s part, it is going to get worse rather than better. Spinning about a drop in the ‘rate of increase’ in rent prices isn’t going to wash. People are being charged rents that they cannot afford. Rental growth is still far outpacing earnings growth. 10% of Irish people are paying over 60% of their income on rent and 20% are paying over 40%. In Dublin, the average is over 55%. It is a simmering outrage: we are paying a far higher percentage of our wages for accommodation than anywhere else in Europe (apart from Kensington & Chelsea!). It is wrong and unsustainable in every way.
Even looked at from an establishment economic perspective, it is destined to be hugely damaging. The lack of housing has the potential to badly impact on the drive to attract foreign direct investment to Ireland. It will push up costs for businesses. And it will critically hamper our competitivenesss.
For all of these reasons, urgent action is needed. Eoghan Murphy has said that the Government has no ideological hang-ups about providing social housing. Well, if not, why not commit local authorities to a programme of social housing construction? There is general agreement that houses and apartments can be built for about 10% less than it costs to buy the equivalent buildings from private developers. But most importantly the process can be driven at a pace that ensures that the potentially explosive, pressure cooker element is taken out of the situation.
There will be a knock-on effect on house prices. Some people might stay in negative equity for longer. But that is an effect that we have to accept if we are determined to make it possible for young people to live in Dublin, Cork and Galway. And if we are committed to taking families, and children in particular, off the streets in the interests of natural justice.
Is there any one of us who would choose to go and sleep on the streets tonight, rather than being tucked up in a place that we can, even temporarily, call home?
The answer is no. We need roofs over people’s heads because it is a fundamental right in a wealthy society. We need homes to ensure social stability. We need houses and apartments for Irish citizens, and for international workers and students coming here, alike. And – while it shouldn’t be necessary to say this – providing them would also be good for business.
Maybe I really am stupid. There are times when I wonder how members of the government can sleep at night knowing that the stakes have been stacked so heavily against ordinary people. I wonder over and over: can they really not see the potentially disastrous consequences, when they are staring everyone else in the face? I wonder what the hell is it going to take to inspire the radical action that is clearly necessary? The grim reality is that no one else can fix this problem.
Now: how long must we sing this song?