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Housing Crisis

Maurice Earls writes: We should not imagine that the politics of housing in Ireland will stay at its current level of visibility. Like a lot of other things right now, public feeling on this issue is largely hidden behind heavy Brexit drapes. When these fall away, as they soon will, the strength of sentiment that emerges may cause surprise.

We can reasonably expect increased pressure on government to sort out the housing crisis and also that it will be a central issue in the next general election, which will probably take place later this year. However, overcoming the problem will be tricky for any government because, short of discovering gold in Wicklow, it will involve raising taxes, and while the Irish like public services they do not, rich and poor alike, enjoy paying taxes.

But money is not the only problem. There is also the issue of the Boston versus Berlin tension in our political culture which derives from a tension between the political values and vulnerabilities we import along with the massive inward investment Ireland receives from the US and our cultural and democratic history of above average social integration and consensus.

The problem which results from endorsement of these conflicting orientations within our political culture is the problem of incoherence, which in turn carries with it the risk that the polity will become something of a headless chicken. Given that in practical terms we cannot reject the boons of inward investment and that equally we cannot reject the values of our history, it seems we are doomed to wearing two hats. The question is whether it is possible to wear two hats without becoming a headless chicken.

Incoherence is not inevitable. It is possible in a two-hat situation, in theory at any rate, for one to be ultimately in the service of the other. That too is a tricky desideratum in the Irish context, given that we don’t much like sifting through political ideas or talking ideology. On the other hand, our ability to reconcile the seemingly irreconcilable is well above average.

One of the most spectacular examples in recent history of multiple hat-wearing that didn’t work came in the form of the PD/Fianna Fáil coalition under Bertie Ahern. The PDs were set free to do their soft-touch low regulation dance on economic matters including, to our great cost, prudential banking, while Fianna Fáil ensured that no one was left behind. It was brilliant, the votes for Bertie just kept coming, as did the inward investment. Then the banks collapsed.

History never repeats itself in exactly the same way but today politicians are looking at the two hats and wondering if there is any way of wearing them both while doing something substantial about housing. Unfortunately from the point of view of our politicians, because of the scale of our housing problems an Irish fudge won’t work. Housing is a watershed issue, either the Boston hat or the Berlin hat will win out.

The political and social issues around childcare are closely related to the housing question and can help illuminate what is at stake. Contemporary women, for the most part, want to work outside the home. The decades following the 1970s saw huge numbers of women take paid employment. It was seen by many as a great liberation and for couples in good employment, those were the halcyon days of two incomes, modestly priced childcare and affordable housing.


A generation or two later it’s a changed world, regulation around the casual employment of carers, along with the increased insurance, salary and rental expenses involved in running a creche, mean the cost of childcare has skyrocketed. The price of housing and rents have also, as everyone knows, gone through the roof. Those two incomes are now needed to get by and are often not enough for those in certain employments such as teaching, retail, transport and nursing.

The post-crash negative equity experience – now pretty much over ‑ turned out to be not so bad compared to the significant socio-economic decline now facing substantial sections of the middle and working classes. If you are living in inadequate rented accommodation with no security of tenure and with your rent entirely exposed to market forces while your parents lived in their own home or a council house, then you are experiencing downward social mobility. You are falling, becoming déclassé. It is unlikely that such people will go gentle into that good night. This simple fact should concentrate minds.

As the penny slowly dropped that what was being experienced was not a temporary blip but that the floor under people was actually vanishing, the political stakes here grew. Government says it is doing all manner of things and that in a few years everything will be grand. But no one – not builders, economists, civil servants or voters, and probably not even government ‑ believes this any longer.

The evidence is now clear that massive interference in the property market is the only way to fix things. But how can you do that if you have spent fifty years going around the world telling people to invest in Ireland because it is a capital-friendly location with stable rules. How can you keep that sales pitch going if, for example, you are obliged to ‑ horror of horrors – hold a constitutional referendum to qualify the rights of private property?

It’s a big ask, but not an impossible one. How to keep American industry on board while maintaining civilised social standards? It would require a good deal of sophisticated and calculated communication which, as it happens, is one of our strong areas. If, and this is crucial, we can still retain a basic attractiveness to foreign direct investment and develop further attractions, we should be able to remain in control our regulation and tax regimes. We shouldn’t have to crawl. Up to now our response has been to do a great deal to keep the multinationals happy – perhaps too much.

Some years ago politicians promised the electorate that, in the commercial and retail sectors, upward-only rent reviews would be prohibited. The property sector then explained to government that inward investors would not like this and it would seem as if we were changing the rules mid-stream, as it were. The measure was unceremoniously dropped. In this case the cost was small. The travails of shopkeepers have never much concerned the Irish public. It was about as safe a concession as could be made.

Another concession which emerged this week is more worrying. It has been reported that a group of US congressmen have written “a strongly worded letter” to the Taoiseach objecting to the Occupied Territories Bill currently before the Dáil. The tone of the letter was threatening. The Irish Times reported that it warned that US investment in Ireland would be under threat and declared that “The stakes for Ireland are high”. This is not what is called diplomatic language and – leaving realpolitik aside ‑ is insolent and interfering. It challenges our legislative autonomy. The government, however, did not see it that way and immediately rushed to assuage the threatening congressmen, in advance of the St Patrick’s Day visit to the White House, assuring them that the government was completely opposed to the bill. This is a most unfortunate precedent ‑ and probably quite unnecessary.

Could our desire not to ruffle US feathers influence our response to housing? In recent times, international business has made considerable investment in apartment buildings in central Dublin, so much so that the Department of Finance has flagged a negative potential for market control.

The question facing our politicians is one of red lines. This is not something which comes naturally to our political class. But the time may have arrived, as housing affects a massive swathe of society with significant electoral clout. Better to act soon before there is more outside investment in the Irish housing stock.

One evidence that the government accepts that the private market will not solve the housing crisis is the affordable home plan, but significantly that had to be stopped when it was just out of the traps because the 200 million euro the government set aside to fund the scheme was quickly used. Where do you get the necessary billions? The political denials, shouting and general panic which followed are a harbinger of what probably lies ahead.

There will be a lot of noise, because we live in a very active democracy. The much maligned transferable vote and multi-seat constituencies have ensured that that is the case. Often it has led to what some types, including the present author, have seen as unedifying localism. Will Offaly get a minister? Will Roscommon get a state-of-the art hospital? Will the council clean the pigeon shit off the balconies? Representatives to our legislature are routinely asked to assist in form-filling and negotiating with state agencies. For high-minded types this was all very dispiriting, but we may yet have reason to be grateful for our in-your-face democracy.

Politicians in Ireland have little choice but to play the game. In this country the tribunes of the people have to get down and dirty to keep the votes coming. Our democracy never had the remoteness found in some countries. The plain fact is that being a Teachta Dála has never been a very dignified profession and those who tried to pretend it was usually ended up as a laughing stock.

The late John Healy told with delight the story of a Kerry TD who, driving home after a week in Leinster House, made the journey with an inscribed gravestone for one of his constituents on the back seat. In a case like this there was the added humiliation of never knowing for sure that the bugger actually voted for you.

When there was a local problem, local TDs were expected to lobby for the funds to sort it and their standing depended on how well they did this. In the old days when things were going well politicians purchased electoral goodwill, usually with borrowed money. Political vision took the form of dreaming up new ways of buying votes. Sometimes the dreams were big, as with the abolition of domestic rates in 1978. Apart from regular economic collapses, this approach to running our affairs worked quite well.

Borrowing is no longer an option. We have signed up to rigorous EU financial disciplines and, of course, we are very very good Europeans. We know that inward investment ‑ organised by a particularly efficient section of the public sector ‑ which accounts for 90 per cent of our exports, would collapse without the EU. We know that the democratic union which is the EU protects the independence of small countries which would otherwise be exploited by larger ones. We know we have no choice but to accept EU rules. And, of course, sometimes EU rules can be used to hold back US business interference in economic and social matters.

The new “fiscal architecture” is slowly making itself felt politically. Recently there was a “Holy Cow!” moment when it became clear that the cost overrun on the new children’s hospital could not be covered by some sort of three-card trick or further borrowing but had to paid for by cutting back on the motorway programme. It seems the electorate is now demanding a high level of project management efficiency from government. Attempts to blame “bad contractors” are being rejected scornfully, even by the government’s core supporters.

A revitalised social Europe would help support efforts to ensure affordable housing but, in the end, if this is to happen it will be down to Irish political determination. Given the sectoral differences within Irish society and their capacity to cause disruption, success would probably involve reviving the social partnership idea, which achieved quite a bit in the recent past. Indeed, it is almost impossible to imagine the necessary consensus for increased taxation without the two-way pay-offs a new social partnership could deliver. This time it would be tougher. The benefits for workers would be social services, not tax cuts. And business taxes, including those on the multinational sector, would have to be raised. A fair bit of talking would be needed, but after four decades of silver-tonguing the British, those skills are available to the state. It is a question of whether any of our political parties have it within them to rise to the challenge.

The alternative is an era of disruption. This would not be dull, but it would be destructive and unlikely to deliver anything much unless your political principles derive from the Trotskyist International Section of the Committee for a Workers International and you view chaos on the streets as a good in itself.

Photograph: the tents of the homeless along the Grand Canal in Dublin

18/3/2018