1 Joint Committee on the Constitution ________ Dé Máirt, 15 Iúil 2003. Tuesday, 15 July 2003. __________ The Joint Committee met at 10.35 a.m. ________ MEMBERS PRESENT: Deputy B. Andrews, Deputy J. Breen, Deputy C. Cuffe, Deputy J. Devins, Deputy P. McCormack, Deputy F. McGrath,+ Deputy A. Morgan, Deputy D. Neville. Senator B. Daly, Senator J. Dardis, Senator A. Ormonde, Senator J. Tuffy. + In the absence of Deputy J. Breen for part of meeting. In attendance: Deputy J. Higgins. DEPUTY D. O'DONOVAN IN THE CHAIR. 2 Property Rights: Presentations. Chairman: The committee is currently reviewing Articles 40.3.2° and 43 of the Constitution, which deals with private property. Submissions have been made to the committee on this issue and this meeting has been convened to allow the committee to seek elucidation of the points in the written submissions. Is the schedule, which has been circulated to members, agreed? Agreed. The first presentation will be by the Law Reform Committee of the Law Society. The group is represented by Mr. John Costello, Mr. Rossa Fanning, Mr. William Devine and Ms Alma Clissmann. Before we commence, I remind visitors that while Members of the committee have absolute privilege, the same privilege does not apply to witnesses. Members are reminded of the long-standing parliamentary practice to the effect that members should not comment on, criticise or make charges against a person outside the House or an official by name in such a way to make him or her identifiable. I invite the group to make a presentation of approximately six to eight minutes, which will be followed by a question and answer session. Mr. John Costello: I thank you, Chairman, for inviting us. We are delighted to be present. I am the chairman of the Law Society Law Reform Committee, which was set up a few years ago to advocate changes in various laws where they were needed. The last report we made was on charity law, which was a substantial report. We have met the Minister for Community, Rural and Gaeltacht Affairs, Deputy Ó Cuív, and presented him with a copy of that report. As members know, a new charity Bill will be introduced in the next year or so. We are delighted to be given an opportunity to make our submission on property rights in the Constitution. By way of introduction, my colleague Mr. Rossa Fanning will go through the paper. The main point at issue here is that of the rights of the individual to own property versus the rights of the community - the common good - and the balance that has to be struck. That is the main point we have to discuss today. The second point is that there are certain areas where we feel legislation might be sufficient to bring in the necessary reforms and not necessarily a constitutional change. Mr. Rossa Fanning: I also thank you, Chairman, for the invitation to address the committee this morning. I propose to bring the members of the committee through the written submission we have filed and talk my way through it. I will take any questions following that. At the outset, I wish to make a few points about the context in which we appear before the committee. The Law Society of Ireland is the professional body representing solicitors. We do not have a corporate policy on property rights as such. The Law Society's members would, no doubt, range from wealthy property owners to struggling tenants unable to afford housing in Dublin. Accordingly, we do not have a particular view or policy 3 to advocate this morning, or any particular content or ideology in the general field of property rights. We simply do not have any remit in that area. From a perusal of the other groups and individuals who will be addressing this committee today and over the following days, it appears to us that they may, perhaps in many cases, have a particular political, philosophical or ideological agenda which they will seek to urge upon the committee. No doubt, it is entirely appropriate that the committee be exposed to a wide range of differing views. However, we wish to offer a form of legal template or set of legal parameters within which we believe the discussion should take place. On that basis, I commend the implicit choice to invite us to open the batting, so to speak. I hope we will be able to set a legal parameter within which the committee's deliberations may take place. Chairman: I should point out that the order of appearance was more by lot than design. Mr. Fanning: I apologise for any false credit given in that regard. Chairman: The Law Society of Ireland has made a very substantial submission which members of the committee have studied carefully. While I do not wish to be restrictive, it would take a very long time to go through every detail of that document. Mr. Fanning: That is not my intention, Chairman. In preparing for this meeting, I reflected on the healthy disrespect which lawyers and politicians have for one another. Lawyers are frequently accused of being excessively verbose and prolix, while politicians are often accused of being preoccupied with sound-bites and spin over substance. I hope neither the presentation nor reception of this morning's proceedings will fall into those categories. However, I will open with an unashamed sound-bite: "If it ain't broken, don't fix it". That, in essence, is the nub of our submission this morning, but in using that phrase, I do not mean to suggest that there are not societal problems in connection with property rights. It is very clear there is a wide range of problems and issues confronting our society at this time in that arena. What I mean to convey is that, in our view, the Constitution has worked rather well in this general area and generally strikes an appropriate balance between the rights of the individual property owner, on the one hand and, on the other hand, the rights of the community or society at large. Furthermore, there are serious practical and ideological reasons whereby a move to amend the Constitution at this time would be premature, fraught with danger and would represent an insult to the role of the judicial branch in the separation of powers, under which our model of democracy works. Bearing the Chairman's admonition in mind, I wish to refer the committee to selected features of our written submission, of which additional copies are available if required. Paragraph 6 of our submission refers to the relevant constitutional provisions. Article 40.3.1o states: 4 The State guarantees in its laws to respect and, as far as practicable, by its laws to defend and vindicate the personal rights of the citizen. That is the general, unenumerated rights provision which does not refer to any particular case. Property rights are referred to in subsection 2o of the same Article. Property rights are more extensively considered in Article 43, which I do not propose to read in full, save to say that, while it protects and recognises the institution of private property, it makes it very clear that the institution can be regulated by the principles of social justice and, under Article 43.2.2o, may be delimited by law with a view to reconciling the exercise of property rights with the exigencies of the common good. Our submission states, at paragraph 8, that certain propositions are self-evident from the text of those articles. Property rights are simultaneously acknowledged and protected by the Constitution, but the rights are capable of limitation by the broad principles of social justice and the exigencies of the common good. The submission goes on to make a somewhat academic point about the partly overlapping nature of the two articles, which need not trouble the committee at this stage. At paragraph 12, we make the important point that, at times, the superior courts in this jurisdiction have demonstrated a willingness to intervene and to strike down legislation on the basis that it constitutes an unconstitutional interference with a citizen's property rights. However, the celebrity of the occasions on which this has been done illustrates an important feature of case law on property rights: most intrusions into an individual's property rights which have been challenged, have been challenged unsuccessfully. The two notorious examples, so to speak, are the Sinn Féin funds case - now of almost 50 years vintage - and the more recent decision of 20 years ago in Blake v Madigan in the Rent Restrictions Acts cases. Those cases are at the extreme edge of the spectrum which, in many ways, constituted an effective confiscation of property or were, at least, tantamount or analogous to that. Unless something equally draconian is proposed by the committee or is on the legislative agenda, it is not immediately clear from the case law - we go on to develop this point in our submission - what is, in fact, certain to fall foul of the existing constitutional provisions. At paragraph 14, we quote Professor Casey, my colleague in the UCD law faculty, who stated: Legislation will not constitute an unjust attack on property rights if passed to reconcile the exercise of those rights with the requirement of the common good and if consonant with the principles of social justice. In particular, we refer and strongly rely on the decision of the Supreme Court three years ago in respect of the Planning Bill 1999, which was referred to that body by the President in accordance with her powers, under Article 26 of the Constitution, to refer a Bill to the Supreme Court for a determinative view on its constitutionality. As the committee will, no doubt, be aware - because it involves the most recent important piece of intrusive legislation in the property rights sphere - the planning Bill made unprecedented inroads into the rights of property owners. 5 Without going through the detailed legislative scheme in the short time available to me, it proposed a social housing system whereby, in various circumstances, developers would have to hand over either undeveloped land, or land with houses already completed, to a local authority in part return for a grant of planning permission in the first place. It is important to note that the Supreme Court was without any apparent strain in holding that legislation to be constitutional on the basis of the Article 26 reference. That is clearly a landmark decision, being the most important recent decision, which underlines my central opening point - "If it ain't broken, don't fix it". The fact that the most recent intrusive piece of legislation in relation to property rights was upheld by the Supreme Court begs the question as to what amendment is required and for what purpose it is required. At paragraph 16, our submission quotes the Supreme Court as recognising the provision of community housing as being an objective of particular importance and stating its view that the measures set out in the Bill were: ...rationally connected to an objective of sufficient importance to warrant interference with a constitutionally protected right and given the serious social problems which they are designed to meet, they undoubtedly relate to concerns which, in a free and democratic society, should be regarded as pressing and substantial. At the same time, the court is satisfied that they impair those rights as little as possible and their effects on those rights are proportionate to the objectives sought to be obtained. I suggest that the committee should bear this important landmark decision in mind in its deliberations. In summarising the historical jurisprudence of the courts, paragraph 18 of our submission states that the concepts of "social justice", "common good" and "unjust attack" are broad and flexible notions that effectively amount to an inbuilt balancing scheme which is provided in the existing constitutional text. At paragraph 23, we go on to examine property rights, particularly as they occur in the sphere of licences or permits - more by way of abstract property rights than by physical rights of ownership over land. It is, perhaps, in this context of planning permission or zoning, where more abstract issues of property entitlements arise, that the committee may ultimately find much of its concerns. We regard the jurisprudence of the courts in this area as of particular note from the perspective of the committee. We submit that challenges to variations in laws or legal schemes regarding licences or permits which have had direct implications for the financial value of a particular asset, whether it be land or another form of real property, have been mainly unsuccessful. In the Hempenstall case Mr. Justice Costello states property rights arising in licences created by law, enacted or delegated, are subject to the conditions created by law and to an implied condition that the law may change those conditions. Changes brought about by the law may enhance the value of those property rights or diminish them. Mr. Justice Costello went on to state: A change in the law which has the effect of reducing property values cannot in itself amount to an infringement of constitutionally protected property rights. There are many instances in which legal changes may adversely affect property 6 values (for example, new zoning regulations in the planning code and new legislation relating to the issue of intoxicating liquor licences) and such changes cannot be impugned as being constitutionally invalid unless some invalidity can be shown to exist apart from the resulting property value diminution. That approach was followed recently in the context of taxi deregulation whereby the capital value of a taxi plate was, in effect, abolished overnight. A challenge on the grounds of interference with constitutional property rights was unsuccessful as it was in the context of a change to the milk quota regime which was the subject of Maher v. The Minister for Agriculture and Food. We state at the outset that the constitutional jurisprudence of the courts establishes that decisions in respect of planning permission and zoning are generally noncompensatable. There are constitutional triggers to the entitlement to compensation under the compulsory purchase scheme and we quote that towards the end of paragraph 27 of our submission. The Supreme Court stated clearly in reference to the Planning and Development Act that there can be no doubt that a person compulsorily deprived of his or her property in the interest of the common good should normally be fully compensated at a level equivalent to at least the market value of the acquired property. This is the standard position and there has been no attempt to interfere with that orthodoxy. At paragraph 30, we say in conclusion in addressing the jurisprudence of the superior courts that we believe the superior courts have struck a generally appropriate balance in this area between meeting the needs of society at large on the one hand and of the private property owner on the other. We attribute the generally intelligent and appropriate decision making of the superior courts to the far-sighted equivalence with which the property rights provisions in the Constitution were drafted in the first place. I do not wish to trespass unduly on the committee's time as members will have had the opportunity to read section B of our submission. In it, we acknowledge that property rights and this general area are causing severe societal problems in terms of the cost of housing and infrastructure. Democratically elected Deputies and Senators will be far more familiar with those problems from their constituents than we will. We say, in short, that no link has been suggested between the Constitution and the societal and social problems in the area of property rights. As a starting point, we ask rhetorically what is the panacea that has been stymied by the obduracy of the property rights provisions in the Constitution. What legislation which promised to be the great salvation and solution to society's problems has been struck down by the Supreme Court? We ask these questions rhetorically as they cannot be answered in the affirmative. Legislation, by its very nature, can have important effects and consequences in this area. Planning law and zoning decisions have an immediate effect on the supply of land, the demand for it and its price. Policy making by local authorities and An Bord Pleanála and legislative change governing the way they make decisions have important roles to play, but no case has been made to our satisfaction to amend the constitutional provisions which underpin legislation. Far from acting as an impediment or break on social or legislative reform in the context of property, we say in paragraph 40 of our submission that the recent 7 Supreme Court decisions in terms of the Planning and Development Act paves the way for future legislative innovation. It gives such innovation the "all clear", provided it is proportionate and in accordance with the principles of social justice. In section C of our submission we raise the general concerns we - the legal profession - have as conservative guardians of the Constitution with regard to any amendment of it. We say that in the 76 years of its operation Bunreacht na hÉireann has served the State in its present form with minimal amendment. A compelling case must always be made before its amendment is seriously contemplated. Constitutional amendment is a legitimate and lawful response to a problem which has developed and crystallised. It is a lawful and legitimate response to a decision of the Supreme Court which purports to interpret the existing text in a way which the majority of Members of the Oireachtas and of the people find is not to their liking. By way of referendum, the Oireachtas and the people are entitled to amend the Constitution if they do not like a decision of the Supreme Court. We have seen this happen in respect of the sequalie of the X case. The referendums on the right to travel and the right to information in effect reversed the Supreme Court decision. Without involving ourselves in that substantive issue, we say that no problem has yet crystallised in this case. While there are weaknesses in the present text, they are superficial and relate to the sort of wording in use in 1937. Such weaknesses do not appear to pose a significant problem in terms of the enactment of legislation in the current context. A different wording was suggested by the Constitution review group in its report of eight years ago, but at paragraph 46 we state the wording drafted was suggested in advance of and without the assistance of the Planning and Development Act decision of the Supreme Court which supersedes it. The Supreme Court decision gives the "all clear" to that which the group was concerned would not pass constitutional muster in anticipation of the decision. While the wording proposed is perhaps more modern and focused, it fails to offer a single tangible advantage over the provisions as they stand. A window-dressing exercise to update the text is not sufficient reason to amend the Constitution without proposing substantive change. There is no need to trouble the committee with the legal points we make in the paragraph. Paragraph 50 addresses the difficulty of amending the Constitution without strong motivation. To do so creates an unavoidable effect of casting the settled jurisprudence of the courts into doubt until an entirely new range of cases has been fought under the amended provisions. We refer to the eighth amendment which was made in 1983 as the best example of a constitutional amendment passed to remedy a problem which had not yet materialised. It was an unhappy example from whichever perspective one speaks. We conclude that there is a great need for extreme caution when tinkering with a complex and organic mechanism such as the Constitution. It is appropriate to adopt the alternative approach of simply drafting legislation deemed to be appropriate by the Oireachtas to remedy problems. Such legislation can be constitutionally tested in the ordinary way by the President, ab initio, by means of an Article 26 reference, or immediately on enactment through a private challenge 8 by a property owner. It is the only time to instigate a constitutional process after the Supreme Court has had the opportunity to review the legislation and approve it - in which case there would definitely be no need for a constitutional amendment - or reject it in the context of a period of reflection in which the court's views are given due consideration according to our constitutional scheme. To seek to amend the Constitution parallel to introducing amending legislation is an effective attempt to oust the jurisdiction of the Supreme Court to review legislation. Simultaneously, the design is to ensure the constitutionality of legislation before the legislation has been even put into practice. That, we believe is to oust the proper role of the courts as a kind of brake and supervisory process on the legislative process to allow for reflection and to prevent against the enactment of, perhaps, on occasion, reactionary or ill-considered legislation. That is the proper role of the Supreme Court. Any attempt to amend the Constitution while simultaneously introducing legislation, or as an attempt to ensure the constitutionality of legislation is ultimately a startling insult to the proper role of the judicial branch under our constitutional system. The case for an amendment to the Constitution has not been made. I am happy to answer any questions members may have, subject to the limitations that it is a very poor lawyer, indeed, who will offer on-the-spur advice, or any meaningful opinion at all, on the constitutionality of any given measure that individual Members of the Oireachtas may have in mind. I am a barrister speaking on behalf of the Law Society which does not see it as its role to have any particular proposals or legislation in mind in making this submission. It is not in a position to offer any views or perspectives on mooted proposals or legislation. The Law Society does not have that kind of authority and we make our proposal this morning purely as a matter of law. Chairman: Do I gather that Mr. Fanning's suggestion is that it would be preferable to opt for a more innovative and bold system of legislative proposals rather than a constitutional amendment? Mr. Fanning acknowledged that difficulties exist. In 1993 approximately 21,000 local authority houses were built in Ireland. Although the current figure is 58,000, the waiting lists are expanding, there are more homeless people and more people are unable to afford to buy houses. Is Mr. Fanning saying that all these problems can be addressed by legislative change, rather than by an amendment or a more flexible approach in the Constitution to the property situation? Mr. Fanning: Yes, in a word. Deputy McCormack: I thank Mr. Fanning for his submission. He stated that a move to amend the Constitution at this time would not be advisable. Can I infer from that statement that the time will come when it would be advisable to do so? Mr. Fanning: The right time is when a problem has presented itself and at the moment there is no pressing need. The most recent Supreme Court decision on the table offers a green light for future legislative innovation. What I have said 9 already to the Chairman in response to his initial question is that the Oireachtas, effectively, has a green light and should proceed to enact the legislation it seeks to enact and, through the Attorney General's office, seek to defend the constitutionality of such legislation on the basis that it is in accordance with social justice and the common good. If and when that legislation is struck down, that is the time to reconsider the position. Deputy Morgan: I had a number of questions which were addressed by Mr. Fanning towards the end of his presentation and in response to a question from the Chairman. Given that Mr. Fanning's submission suggests that there is not a constitutional impediment to acting in the common good, and I think that has clearly been established over a number of instances that he cited, does he believe that there is any constitutional impediment to the abolition of ground rent? Mr. Fanning: To answer that question would be to fall into the trap that I outlined a few moments ago that I was not prepared to fall into. Deputy Morgan: I take Mr. Fanning's point. I was coming at it from the perspective of it being a potential property right and, therefore, it would be within the remit of his submission to deal with that. Mr. Fanning: I am not prepared to offer any sort of meaningful opinion on that offhand. Senator Ormonde: I welcome the submission, although I would have to spend almost a week assessing and assimilating the points contained within it. We are talking about the balance between private property and the common good and what is the definition of the common good. Does it refer to the standard of living, quality of life or dignity? At a time when people with a reasonable income cannot achieve a certain quality of life because of the cost of living, house prices and so on, the Constitution can be deemed to have failed. Will legislation incorporate such issues as the cost of land and the effect this has on house prices and so on? Has the Constitution failed us in that regard? Mr. Fanning: I do not think the Constitution has failed us for the simple reason that I have not seen or heard it suggested that there is an alternative text out there that will solve any of the regrettable problems to which the Senator refers. Deputy Cuffe: Did I hear Mr. Fanning correctly in stating that the Law Society are the conservative guardians of the Constitution? Mr. Fanning: There is an element of self-parody in that, but the legal profession would presumably be on the more conservative wing of ideological views in terms of a matter like amending the Constitution as opposed to, perhaps, political parties such as Deputy Cuffe's own party. 10 Deputy Cuffe: I am intrigued because I did not think it necessarily followed that such an august institution as Mr. Fanning's would take that view. I wish to home in on paragraphs 39 and 40 of his submission. One of the more curious aspects of life in Ireland in the past ten years is the incredible increase in the value of land following on from rezoning decisions of local authorities. In paragraph 40, Mr. Fanning quotes from a Supreme Court decision to the effect that it is novel and even radical for a social objective to be realised through the use of Part V in the Act. At that time, however, a view was suggested that it was quite inequitable that developers should be taking on the burden of contributing to social housing. That view was put across quite clearly in an article by Berna Grist from An Bord Pleanála. She asked the question quite forcefully as to why one small sector of society should shoulder this cost. Is Mr. Fanning happy with that Supreme Court decision or would he see some change in the Constitution as being a more equitable way of addressing this issue? Mr. Fanning: If I understood Deputy Cuffe correctly, he was articulating concerns on behalf of property developers. What the----Deputy Cuffe: I was. I said that a small group is being targeted rather than society. Mr. Fanning: The essence of the Supreme Court decision on the Planning and Development Act is that it was seen as a quid pro quo in return for the grant of permission, which would obviously contain an enhancement in the value of the land and would inherently be profitable for developers. A proportion of 20% might have to be given over, either by way of land, or developed land with houses on it. Given the quid pro quo nature of that, it was seen as still being a profitable venture for developers in certain circumstances where local authorities would engage in that. Again, I am not sure what alternative legislative scheme or constitutional scheme Deputy Cuffe has implicitly in mind in asking the question that would be a preferable solution. Deputy Cuffe: Perhaps I should have been more explicit. I would go back to the Kenny report and the various proposals it put down for part of the increase in the value of zoned land to accrue to the State, rather than simply to the developer. To go back to the quid pro quo, that only arises in the case of land that is rezoned for housing, it would not impact on land that was rezoned for industrial use or for some use other than housing. Therefore, it seems slightly inequitable that one sector would be penalised for the greater good of society. Mr. Fanning: The Kenny report had a relatively narrow scope because it excluded cases where land values increased through planning decisions only. It proposed that local authorities could only acquire lands where the price had been increased through local authority works in addition to planning decisions. I am not sure if I can answer the Deputy's question because, again, there is no 11 implication or insinuation that any legislative change proposed would necessarily be found unconstitutional under the present Supreme Court text. Deputy Andrews: I welcome the delegation and thank Mr. Fanning for his very informative, useful and interesting presentation. Following on from Deputy Cuffe's queries on the decision on Part V of the Planning and Development Act, and in reference to paragraph 28 of Mr. Fanning's submission in respect of the American concept of a "taking" clause in the Fifth Amendment to the US Constitution, I realise that he believes we should not move or change anything. I detect, on the basis of paragraph 28 and his general views, that perhaps the two articles in our Constitution should come together. There is room for some alteration to the Constitution to try to incorporate something that relates to the Fifth Amendment to the US Constitution, given that its Fifth Amendment refers, in reality, to a taking of property although this is regarded as a non-compensatible taking of property. Is there a contradiction between Mr. Fanning's observations in respect of the American "taking" clause and the fact that Part V, in terms of how it brings itself to bear on the taking of property, implies a non-compensatible exercise? Will Mr. Fanning outline what his central case is about? Mr. Fanning: The taking and regulation issue is complicated in the context of the Planning and Development Act because there is both a taking and a regulation. A regulation increases the value of the land whilst "taking" involves acquiring a portion of it as a quid pro quo for the regulation. It is a mixture of a taking and a regulation that offset each other. It is almost impossible at this remove to offer any meaningful opinion whether it would pass constitutional muster in the United States. One doubts the wisdom of inquiring into the law of a foreign jurisdiction on such a neat point. I do not see this as necessarily a contradiction in terms because the current articles of the Constitution contain such broad balancing considerations as social justice and common good. These are broader, more abstract and, at times, more elusive than the American distinction between a taking and a regulation, which is a more technical and formalistic distinction. The Deputy asked if the separation of the two articles in the text is justified or whether it should be the subject of amendment. I take the point that it is an added difficulty in construing the Constitution but such issues and the relationship between the two articles have effectively been resolved in Supreme Court decisions. Whilst it is a neat point for constitutional lawyers I do not believe it is of any practical moment. Senator Daly: I welcome the delegation and thank Mr. Fanning for his articulate presentation and well argued case. I said to my colleague that perhaps we should all go home and conclude this matter straight away but Mr. Fanning will be aware that it is not as simple as that. He will also be aware that some suggestions will be made to this committee in later presentations on the changes that might be made to the Constitution. Will he indicate the adverse effects some of those changes might have if he is aware of them? 12 Mr. Fanning: Unfortunately, I do not think I am privy to any of the submissions that have been made. Senator Daly: For instance, the religious orders will be speaking to the committee. Father Sean Healy, who will be making a presentation this afternoon, has made some very cogent suggestions as to how the Constitution might be changed to alleviate the problems with social housing that are beyond the capacity of communities to handle. Is Mr. Fanning aware of those? Mr. Fanning: I have not seen Father Healy's submission. If we were to respond to it we would have to return on a different occasion. Chairman: There are other groups that do not know what other groups have said. It is the duty of our committee to analyse the various submissions and ask questions rather than have the Irish Law Society or CORI, for example, answer each other's questions. Senator Daly: He has argued very strongly----Chairman: I accept the Senator's point. Senator Daly: -----why the constitutional position should remain unchanged but perhaps he might indicate the adverse consequences if we were to make some changes that would go some way toward alleviating housing problems. Does Mr. Fanning think that a combination of constitutional change and legislation is required? Mr. Fanning: Until I see the proposed constitutional amendment, it is impossible to answer that question. Senator Tuffy: I welcome the delegates and thank them for their presentation. I am a member of the Law Society. Mr. Fanning stated that "if it ain't broken, don't fix it" and that a problem has not yet arisen that would require a constitutional amendment. I question that. Mr. Fanning quoted paragraph 27 from the 1999 Supreme Court case, which states that there can be no doubt that the person compulsorily deprived of his or her property in the interest of the common good should normally be fully compensated at a level equivalent to at least the market value of the acquired property. Surely this is the problem that needs fixing. Is Mr. Fanning suggesting that it can be fixed by legislation? There are many problems with Part V of the Planning and Development Act 2000. We know this because the Government has pulled back in terms of some of its provisions. As the Chairman pointed out, the problems associated with housing lists are not being addressed and there is very little delivery on affordable housing. In obtaining a site for a school, for example, why does the Department 13 of Education and Science have to pay the market value? Can such problems be addressed by legislation? Mr. Fanning referred to the notion of a constitutional amendment being contemplated at the same time as legislation. Surely the point of making a constitutional amendment is to allow for the implementation of legislation. I do not understand how it could, in any way, be an insult to the judicial branch. I have much sympathy with Mr. Fanning's point that the present wording may be as good as is possible. I note that the alternative arrived at by the constitutional review group may be too specific. There is a lot to be said for general phrases such as "common good". Has the Law Society of Ireland considered what would constitute better wording if the Constitution were to be amended? Mr. Fanning: Senator Tuffy suggested that the 1999 Act had not been successful in practice and that there had been very little delivery of affordable housing. This issue concerns the implementation of legislation and does not bring itself to bear on the Constitution at all. The Senator suggested that the market value issue is the problem, but I presume she would expect to obtain the full market value for her property by way of compensation if the M50 was routed through her home, thus enabling her to be re-housed elsewhere. One must reevaluate whether paying the full market value to a homeowner or landowner is a problem. Legislation could perhaps be contemplated at the same time as a constitutional amendment when it is a clear cut case and something completely different is intended. However, in this case, where there is a complicated, sophisticated and nuanced balancing of rights by the Supreme Court in the property rights arena, it would be inappropriate in such a finely balanced area to simultaneously contemplate legislative and constitutional amendments because the balancing structure that exists under the current constitutional scheme makes it an appropriate test for legislation. Was there a final point which I did not address? Senator Tuffy: Has the Law Society considered any wording which can be used to improve the provisions? If the Constitution was being redrawn, could it think of a better wording than what is there now? Mr. Fanning: Not necessarily. We do not perceive a problem with the current canon of decided case law. At points in our submission we have suggested that there are areas where the language could be more felicitous but perhaps not more effective. Deputy Neville: I welcome the Law Society and thank its representatives for their submission. My comment is an interpretation of what the witnesses were saying rather than a question. Senator Ormonde identified that there is a problem with the common good and social justice. My interpretation of what the Law Society representatives have said is that the Legislature has failed to deal with that problem over the years. Are we now bringing the Constitution in as an excuse 14 for the failure of the Legislature? Is that a fair interpretation of what Mr. Fanning is saying? Mr. Fanning: Not entirely, because I am not saying that I have the legislative answers that Members of the Oireachtas have missed over the preceding years. I am saying I am not certain what the answers are and some of these problems may well be intractable and may be simply the unwelcome by-product of the past decade's economic success. We are now perhaps more comparable to other large cities abroad where property has always been more expensive than Dublin. Although the Constitution should not be amended at this time, there is a hint in our submission that it should not be used as a scapegoat or an empty gesture when legislative change is not on the table that would be unconstitutional under the present text. Deputy Devins: With other members, I welcome the Law Society and congratulate Mr. Fanning on his concise presentation. It could be argued that the Constitution gives pre-eminence to personal rights as distinct from the rights of the common good. Does Mr. Fanning agree with that assertion? It might also be argued that lawyers, by their very nature, like to see matters go to court and be resolved by the Judiciary. Is that one of the reasons for the Law Society's submission? Mr. Fanning: We believe that the Constitution strikes an appropriate balance between personal rights and the common good. We are not here to defend any individual decision of the Supreme Court, but, as a broad canvas, the 76 years of the operation of the property rights provisions have left the constitutional position in a generally satisfactory state. As to whether lawyers like to see things go to court, I can only assure the Deputy that if there is a constitutional amendment, there will be far more litigation because of the consequent uncertainty as to what the proper interpretation of the new provision should be. With the existing canon of case law, the law is much clearer than it will be, irrespective of what amended text is proposed. The only thing which is certain to promote more litigation - to which the Deputy may or may not take views on the attitudes of lawyers towards - is a new amended text. Deputy F. McGrath: I welcome the delegation from the Law Society to the committee. On Mr. Fanning's light-hearted introductory comments, I would like to correct an impression that politicians are more interested in sound bites than are lawyers. I would like to remind people that most politicians are interested in solutions, particularly in regard to the debate about property rights. It is a major problem, with tens of thousands of young couples and many others who cannot afford to buy houses. We are looking for the best professional legal advice to assist us to introduce legislation which will solve the crisis. It is a serious issue and we have a major crisis in the State. 15 Correct me if I got the wrong impression, but it appears that the best professional legal advice seems to be in regard to the issue of property rights and legislation or a constitutional amendment. It appears that it comes down to legislation. If that is so, was the senior Government Minister wrong when he gave the impression that he was calling for a constitutional amendment? Many of us believe that Article 43°. 2, which states: "The State accordingly guarantees to pass no law attempting to abolish the right of private ownership or the general right to transfer, bequeath or inherit property" will never be changed since no politician would have the political guts to do so. The Law Society seems to present a conservative view of the legal situation. Will Mr. Fanning outline why it adopts this position? Mr. Fanning: The Deputy asked me to comment on the views of a senior Government Minister. I have not seen the view expressed and my submission speaks for itself. In regard to the abolition of the right to transfer, bequeath and inherit property and the provision prohibiting the abolition of the right of private ownership, the Deputy has made a statement that no Government is likely to interfere with that. I am not sure if I am being asked to respond to that. On the Deputy implicitly criticising the Law Society for having a conservative view, the provisions have served us well and we are not in the legal profession---Deputy F. McGrath: What does Mr. Fanning mean by the phrase "served us well"? Mr. Fanning: I mean that they have served us well as a society. Deputy F. McGrath: Not the Law Society? Mr. Fanning: No. The Constitution has served us well as a society and a community at large. At the outset, I distinguished between the social problems which the Deputy wished to list and be on the record as saying that 48,000 people are seeking housing. This is a problem but it is not a constitutional problem. There is no indication as to what the Constitution can do to solve that problem and I have not heard Deputy McGrath suggest in his questioning what the Constitution can be reasonably expected to do. We must distinguish between a social problem that our society faces and the constitutional balance between the rights of private property. I am not sure if implicit in what the Deputy said was a proposal on his part to abolish the right to private property or to bequeath it. If the Deputy has a solution like that, perhaps it needs to be fully considered and aired, as is his entitlement as a Deputy. We say that the constitutional balance is appropriate, notwithstanding the fact that there are underlying social shortages of housing. Deputy F. McGrath: There are contradictory legal opinions. 16 Mr. Fanning: There will always be lawyers who will contradict one another. Deputy F. McGrath: The reality is that many people in the legal profession are saying that the whole debate on property and the housing crisis needs to look at the Constitution, legislation and amendments. That is the debate. Mr. Fanning: We are offering only one perspective. Chairman: I read yesterday that a small portion of land near Cork city was sold for housing development at more than €1 million per acre. Does the present constitutional regime allow for an efficient procedure so that some of the substantial added value of re-zoning can be recouped by the State? In this case, land owned by one person was rezoned making it worth in excess of €1 million per acre. This is a substantial windfall. Do the State and society receive any benefit from that huge mark-up in value from about €6,000 per acre for agricultural land to more than €1 million per acre? Mr. Fanning: I can answer that directly. Paragraph 20 of our written submission states that the power to levy taxes is generally constitutional and for the most part the challenges to various taxation statutes taken by plaintiffs at one time or another have been unsuccessful. Without predicting the specifics of any legislation the Chairman might have in mind in asking the question, generally speaking, the power to levy tax is a constitutional power, provided it is exercised proportionately. Chairman: I thank the members of the Law Society for their excellent submission. Mr. Fanning: I thank the committee on behalf of the Law Society for inviting us along. I remind the committee that we are not all conservative. Many of our members are in the Labour Party. Sitting suspended at 11.31 a.m. and resumed at 11.35 a.m. Chairman: We welcome the Society of Chartered Surveyors, which is represented by Mr. Donal french-O'Carroll, Mr. Joseph Bannon and Mr. Barry Boland. I remind the visitors that members of this committee have absolute privilege but this privilege does not extend to witnesses appearing before the committee. We have already received an excellent submission from the society and studied it. Mr. Joseph Bannon: The Society of Chartered Surveyors thanks the committee for the opportunity of summarising our submissions. Mr. frenchO'Carroll is chairman of our Valuation Division and Mr. Boland is part of our Planning and Development Division. They were involved in the preparation of the original submission. 17 The society has chosen to address five issues raised in the original press invitation. We are an independent professional organisation whose members are involved in all aspects of management and development of urban and rural land in Ireland. Our members act for landowners, developers, financial institutions and local authorities. We, therefore, speak with the benefit of a wide spectrum of experience and knowledge in this area. Fundamentally, the society believes there is no need for constitutional change, but we do recognise a growing imbalance between the dictates of social justice and the needs of the community in the current arrangements for zoning, planning and developing land. To help us in the debate afterwards I will provide some background information. Land moves through five phases in the development process. It starts off as a green field, which is then, typically, zoned. Having been zoned, it becomes serviced land. Planning permission is sought and granted and the land is finally developed. We believe there is added value at each phase of development there are five links in the chain of value. In our submission the first item we mentioned was infrastructure - roads, drainage and so on. The society regards infrastructure as a vital component of the economic and social development of the country. It considers that such infrastructure should be provided on a carefully planned and co-ordinated basis to provide in advance of expected development facilities and services capable of sustaining the future use of land. The society fully endorses the provisions of Part III, sections 48 to 49, of the Planning and Development Act 2000, which enables the recovery of levies from development to cover the cost of infrastructure. Adequate roads, drains and transport systems are an essential part of a better built environment. The price of any commodity is a product of supply and demand. The society believes there is an inadequate supply of zoned and serviced land coming to the market. Some incentive must be introduced to ensure that land zoned and serviced for development is developed within a particular time frame. A local authority must be in a position to ensure that land which is zoned, and serviced, is developed and not held by landowners until they may wish to release it. The two issues to be addressed are the supply of zoned and serviced land and the ability of local authorities to ensure it is utilised. The society considers it appropriate for local authorities to seek to recover the costs of providing infrastructure and services to zoned land by way of levies. The extent of such levies should be known in advance so that when land is placed on the market an appropriate adjustment may be made by purchasers to account for infrastructural levies in the future. This will have the lateral effect of adjusting the price of land downwards to provide for future payments. We support the plan by the four Dublin authorities to put in place such a scheme. The impact of such levies would be that the price of land offered for development would be reduced and, therefore, the cost of land being acquired for public purposes under CPO would equally be reduced, a further issue. The next item the Society of Chartered Surveyors has addressed is the price of houses. House prices are, in the case of development land, a function of supply and demand for housing at any point, coupled with the financial capacity of 18 potential purchasers to support their mortgage repayments. The society does not support the view that the relatively high price of land is the cause of high house prices but, instead, that high house prices generate high land values. When a developer works out a financial equation for providing a house, he estimates the ultimate sale price for a house and then deducts his costs, other than land, to deduce how much he can afford to pay for it. We refer to this as residual value. In his equation, the developer will adjust the price he pays for land to provide for future levies that are known in advance. Zoning is a vital part of urban development. It is essential that sufficient land is zoned for projected needs in the State and that such land is zoned in good time to allow the necessary infrastructure to support the development to be put in place. Zoning is the first step in adding potential value to land that will ultimately be realised at the development stage. That alone, however, does not create the added value but coupling it with adequate infrastructure to support development adds significant value to land. It is for this reason that the Society of Chartered Surveyors supports the recovery of the cost of providing infrastructure through a levy system at the planning and development stage. The fundamental concept of acquiring land for public purposes at open market value is correct and should not be changed. The question to be addressed is whether the open market value of land acquired for public purposes is too high because the land is being acquired at too late a stage in the development cycle land that is already zoned and may have planning permission. The compulsory purchase process should be more efficient and the arbitration process should be initiated more quickly to avoid long, drawn out disputes. The perceived high compensation settlements are not due to any inadequacy in the current code but due to high land values which are fixed at the circumstances of the land at the date of notice to treat. All of the foregoing points are important and complex. The Society of Chartered Surveyors fully supports any statutory changes that may be necessary to assist in bringing a greater balance between social justice, the needs of the community and the constitutional right to land. My colleagues and I will be happy to answer any questions the committee puts to us. Chairman: The submission mentioned a suggestion of levies as opposed to taxation. If a tax is imposed, it is across the spectrum and affects all citizens whereas a levy hits the developer or the owner of the zoned land and would be more equitable. Mr. Bannon: There are two dimensions to that. If a tax is imposed it may be an impediment to the release of land coming to the market. The owner of the land at the initial link in the chain may defer from putting land in the market because he does not want to pay the resultant tax. The tax goes to central Government funds but we are looking at a situation where levies return to local authorities that provide the infrastructure, zoning and the basis that gives the land its added value through the development chain. 19 Chairman: I read recently that in Dublin in 2002, 30% of domestic dwellings on the market were bought by developers or speculators and not genuine home seekers. How could that be addressed? It is a growing difficulty - instead of people who are seeking a home buying it, developers are snapping up apartments en bloc and the young couple finds it impossible to compete. Mr. Donal ffrench-O'Carroll: When a developer buys a property in competition, it usually indicates that it is ready for redevelopment and it should not be seen as a bad thing. Developers have a part to play in providing housing in society and if they buy property over the heads of private purchasers, it is an indication that the property is ready for redevelopment and that is to be encouraged. The issue is the availability of alternative properties at a realistic price for individual buyers who have failed. We like to think the proposal we are putting to the committee would ensure that. Senator Ormonde: I thank the society, with its experience of going through development plans in other fora, for its submission. We are here to strike a balance between private property and the common good and I have a problem reconciling how we can do that. The common good was not referred to at all in the submission. There was talk of levies on developers and the zoning of land but we have not got to the core of the issue - has the Constitution failed to protect the common good in the past ten years? The ability of the citizen to have a small house and enjoy a certain quality of life has not been addressed by the society. It says that levies will solve the problem and that if there is a tax on developers, it will be passed on through the price of the house, a catch-22 situation. There are action plans whenever a development plan is going through local authorities and there are levies applied to the infrastructure but that does not mean they will solve the problem. Mr. Bannon: The Society of Chartered Surveyors does not have the answer to all these questions. We are sympathetic to the common good but, as a profession dealing with property, we recognise that the price of land is currently too high and that does not operate in the common good. The Chairman mentioned the price of land in Cork being €1 million per acre. A substantial portion of that value has been placed into the land by virtue of zoning and the provision of infrastructure. In the interests of the common good, we are recommending that be taken back substantially as a levy into the community that has supplied the benefits to the land in the first place. Mr. ffrench-O'Carroll: Our submission is explicit in saying that levies will not work unless land is forced on to the open market. We know of many instances where serviced and zoned land in a near-urban context is lying fallow in terms of its potential to provide housing. Levies exist to recover the added value that society puts on land by virtue of services and infrastructure but that will not work unless we force land on to the open market. The price of land is a function of those levies but it is also a function of the supply and demand for land and the 20 scarcity of development land. If serviced and zoned land is forced on to the market at a regular pace, combined with levies, the price of land will come down dramatically. Ultimately, when supply and demand are balanced, it will be reflected in much cheaper housing. At the minute, because the supply of serviced and zoned land is limited, only the top level of housing is being satisfied in terms of demand. The volume of houses satisfies the stronger purchasers. The weaker purchaser is not being satisfied because supply is limited. Senator Ormonde: Is that not a reason for examining whether legislation will address that issue or should we address it in the Constitution? Chairman: The other delegation made it clear that a constitutional amendment is not required. Mr. Bannon: From our knowledge, I do not understand how they could say that. Chairman: I see that in your submission. Mr. Bannon: There is the commercial aspect. Deputy Neville: What are Mr. Bannon's views on a progressive levy? Land is zoned for five years. If the levy were to progressively increase each year the land stayed fallow, could such an incentive be of benefit? Mr. Bannon: I believe it could. We believe that zoned and serviced land should come to the market, and we want some method of bringing it to the market. Deputy Neville: If the value were to increase by 10%, 20%, 30% or 40% each year, surely that would be an incentive. Perhaps it could be nil the first year. Mr. Bannon: May I ask Mr. Boland to comment on that? Mr. Barry Boland: I should like to return to the need for constitutional change, because it is relevant to what the Deputy is saying. Having examined the Planning and Development Act 2000, we believe there are provisions within that Act for local authorities to take the steps we suggest - either introduce levies or move into the market and compulsorily acquire it. We believe those provisions should be implemented but I go back to one of the points the Law Society delegation made. It is not a constitutional or a legislative issue. It is an implementation issue. That is the important point we are trying to get across. Deputy Andrews: I welcome the group to the committee. Mention was made of the levies. My own council area, Dún Laoghaire-Rathdown, is the only council 21 that has introduced the section 49 levy, which relates to the development of Luas. Is the delegation advocating more of that? Do they want to bed down part 5 and the other parts of the Planning and Development Act, and no constitutional change? Is that because they believe that, strategically, we need certainty in terms of the supply of and demand for housing? They are saying that the legislative and constitutional framework exists but it is a question of local authorities delivering, and Dún Laoghaire-Rathdown is the only council which has delivered on a section 49 levy. I am not sure whether section 48 levies are widely implemented; perhaps the representatives could comment on that. Is that their view of the way forward? Mr. Bannon: That is our view, and Dún Laoghaire-Rathdown council has done it for section 49. That is exactly how we see it, to take that added value out of the land. That is helping to some extent. There is an issue, which Senator Ormonde referred to, and that is that those who can afford to buy houses on the open market may stretch themselves to buy those houses but there is a sector of society which cannot do that. Some method needs to be found for buying land at reasonable prices and which does not reflect the value of the zoning or the infrastructural works. Houses could then be built at cost and released to those who cannot afford to play in the open market, so to speak. Deputy Andrews: By local authorities? Mr. Bannon: Yes. Deputy Andrews: Others have made submissions to the effect that local authorities are not the appropriate bodies to be buying up land in terms of their lack of expertise and professionals. Mr. Bannon: A substantial number of house buyers can afford the houses but there is an equally large proportion that cannot, and how we satisfy both sides is a difficult issue. Mr. ffrench-O'Carroll: In many ways it is open to local authorities to buy in advance of zoning and servicing but they need to be funded to do that. There is little point in local authorities buying land that was zoned and serviced by them, and paying what are now very high market prices. There is nothing to stop local authorities - they are empowered to do it - buying land in advance of zoning and services. It is a question of capital but that is the means by which they can provide cheaper housing, and the zoning and servicing will follow. That is quite natural. Senator Tuffy: I thank the delegation for their submission. Mr. ffrenchO'Carroll said that the local authority could buy the land before it is zoned. What is his opinion on proposals that local authorities should have some kind of first call on zoned land which is being sold at less than the market value? In other 22 words, if local authorities zone land they should be able to acquire that land for affordable housing or whatever. Mr. ffrench-O'Carroll: We would advocate the open market. We do not believe that concept should be interfered with. We do not advocate constitutional change. What we are saying, however, is that open market value is in many ways created by society and the combination of levies and controlling supply will bring prices down. If the local authority wants to buy land in the open market, it must pay market value. We believe there is no other method. Senator Tuffy: There are already levies in place, and there is a limit to the amount of money one can get back in terms of a levy. Under the change in the Planning and Development Act 2000, a local authority can recoup money instead of affordable housing but that is not as good because land is such a difficult commodity to acquire. Mr. ffrench-O'Carroll: Historically, levies have been far too small. They do not reflect the added value of infrastructure, and infrastructure must be very broadly defined. Simplistically, it includes drainage and roads but the picture is much bigger. It means public transport, leisure facilities, playing fields or whatever. Those are infrastructural items that create value. Deputy Devins: I thank the members for their presentation. I have two questions. First, the presentation appears to focus on housing and while I recognise that the members say there should not be a change in respect of property rights, at the same time they recognise that there is an imbalance between the rights of the individual and the rights of society. What are the members' views on infrastructure and the place land plays in holding up some of the major infrastructural projects currently under way? Second, the members recommend that the zoning and rezoning of land be instigated solely by planning professionals. In their experience, what is the incidence of non-professionals - I presume by that they mean developers or owners of land - instigating zoning requests? Mr. Bannon: If I may, I will answer the Deputy's first question about the part land plays in providing infrastructure. One of the issues we are trying to address is the land element. I am sure members are aware that in a claim for compensation, the value of land is determined by the date they come to treat and if the land is already zoned and serviced at that point, the values paid for the land reflect that. If it were known in the development land market generally that anybody buying land for development purposes will ultimately have to pay substantial levies, the price should come down. By way of illustration, although this is not necessarily accurate, and in respect of a €1 million claim for land, if the party buying that land knew in advance that they would have to pay €0.50 million in levies, they should depress the price to €0.50 million. Ultimately, they are still paying €1 million but part of it is being paid through levies and part of it for the 23 original land. On the provision of infrastructure, therefore, the value of the land would only be €0.50 million rather than a reference point of €1 million. Deputy Devins: I do not quite follow what Mr. Bannon is saying. Mr. Bannon: When land is acquired through compulsory purchase, it is valued at the open market value. If the prevailing open market value is, say, €1 million per acre, in the current circumstances, and if we move to a new situation where substantial levies will be imposed at the development stage, the person buying that land should, for economic reasons, reduce his or her bid substantially. The new reference points for the open market value of land is substantially lower than it is currently and that is----Deputy Devins: One aspect that is holding up the building of major roads, etc. is the fact that the site of the road is outlined, some land owners do not agree with it and say the value that the local authority is offering is insufficient, and it ends up in litigation in many cases. Mr. Bannon: There is an ample CPO code and arbitration process, through official property arbitrators, to deal with that problem. That was one of the points made by Mr. ffrench-O'Carroll in his submission. Deputy Devins: I accept that but would it not be argued that the Constitution is protecting the individual's rights over the rights of the common good? Mr. Bannon: That is not so if we ensure that people whose property is taken, whether land or buildings, receive the open market value. Compulsory purchase frequently deals with buildings out of which people trade or which they occupy as their homes. That is one side of the equation. On the other side, individual landowners should not have windfall gains by virtue of the acts of local authorities. Deputy Devins: The second question was about the influence or prevalence of non-professional planners instigating zoning. Mr. Boland: I am a planner as well as a surveyor. There is a recognised problem that the mechanism for looking at rezoning in all its shapes and forms has led to abuse, not just by developers but in some cases by politicians. The approaches and procedures which professional planners use have often been overruled. We are not spelling out how that can be achieved but it is a problem. The professional planner should be the one who instigates it and the elected politician should have the right to say "yes" or "no" but the process should be insitigated by the professional planner. Deputy Cuffe: There is a solid theme running through the five submissions the chartered surveyors have made to Government in the past 29 years and that is to 24 their credit. There are many worthy features in the most recent submission, for example, the view that there needs to be certainty on levies, and the aspiration that new development levies might add certainty, is welcome. Likewise, for instance, for those trading down, the difficulty of paying stamp duty often at 9% in the greater Dublin area is a significant disincentive to trading to the most appropriate home. In my constituency, Dún Laoghaire-Rathdown, this results in many older people staying put rather than trading down to a more suitable dwelling. I welcome the views on rezoning in this submission. The issue of withering came up in previous discussions here as did the view that the levy might increase if the land was not developed. Do the chartered surveyors have a view on whether there is a supply of zoned and serviced land that is being witheld from the market or from development at present? That view has been expressed in the media several times in recent years. Does the society think that is a significant problem in getting land to the market and developed for housing in the greater Dublin area? Mr. Boland: The failure to develop a large portion of land is due to procedural difficulties of some description, usually obtaining planning permission contrary to the media perception that there is a stranglehold on development land, particularly in the Dublin metropolitan area because the landowners wish to hold back. There is no doubt that the size of the land banks held by perhaps 20 or 30 developers is worrying. It is never good in a free market society to see a small number of people have control over a limited resource such as land. Part of our suggestion, as Donal ffrench-O'Carroll said earlier, is that we are talking about levies but these will not operate successfully unless there is some mechanism for freeing up that market. We do perceive it as a problem without the simplistic solution that is commonly identified. Deputy Morgan: There are many positive points in the chartered surveyors' submission with which I concur, like Deputy Cuffe. If we take the case of land being zoned for housing by a local authority but which remains undeveloped for five years, for example, would the society agree that the land should be purchased compulsorily by the local authority, if it had a serious need for development land for housing within its area of administration? Should the levies amount to the full value of the increase, or the "betterment" as it was called in the Kenny report, as a result of the zoning by the local authority? Mr. ffrench-O'Carroll: Our submission proposes that the local authority should be empowered to issue a certificate of suitability for development on a piece of land that is zoned and serviced and that is apparently stagnant. Some mechanism should thereafter apply such that if it is not released within a reasonable period it should be subject to some penalty. We suggest, for example, increasing tax or whatever. We did not specifically suggest increasing levies and we did not want to for a particular reason. Whether levies should recover the entire added value is an interesting and subtle question because our recommendations on designs did two things: 25 recover the value of that infrastructure but also to drive down the price of land by increasing the supply. The balance is not immediately obvious. One could look at the real cost of levies which may not be the same as the value but one has to be careful to drive down the cost of land in the long term by forcing it onto the market and thereby increasing supply. There is a balance to be found between the size of the levies and increasing supply. At some level if we impose levies and do not at the same time increase supply we will put up costs. That is a danger. Deputy Morgan: Should those levies be set by the local authority or centrally, or is the society advocating that they be flexible? Mr. ffrench-O'Carroll: The Planning and Development Act 2000, sections 48 and 49, provide the legislation for the local authorities to do it and to publish and attract submissions on them, which is healthy. We want, first, that they be of a good magnitude but also that there be certainty because development is a risky process and developers are important to society. Transparency and certainty in the levies is important. In response to Deputy Neville, this cannot be done overnight. There must be a transition period because there could be hardship caused to people like the person in the Deputy's example who paid £1 million per acre in Cork. That individual has bought under certain expectation, so in order not to damage the market and not to cause hardhship to people there must be a transition to such changes, with clear forewarning as to what is happening. That will happen naturally because sections 48 and 49 include a consultation period, which must be respected before it can be put into planning permissions. Mr. Bannon: Every transaction has a cost. It does not exist in smaller towns. My view, and that of the society, is that it should be done by the local authorities and not at national level. It is interesting that the four local authorities in the Dublin area recently announced plans in that direction. Senator Daly: I thank the delegation for their assistance which is important for the joint committee. However, I am trying to reconcile some issues from the previous submissions they made. In their response to the Kenny report to the then Minister, the society stated that they favoured the updating of the compulsory purchase order legislation. However, in the submission to the joint committee, the society does not favour changing the law. Why did the society change its mind? Mr. Bannon: I am sorry I do not know if we did. Do any of my colleagues know? Mr. ffrench O'Carroll: I do not think we are saying that compulsory purchase law is not evolving. What we are saying is that there is a fundamentally good 26 framework of statutes and, by now, of jurisprudence. It is an evolving situation. However, we have no fundamental problems with CPO's. Senator Daly: However, a few years ago the society claimed it needed to be updated. Mr. ffrench O'Carroll: Could the Senator quote what we said? Senator Daly: I have it here in writing. It is the response to the Kenny report to the Minister for Local Government at the time in 1973. I simply want to get the society's views on compulsory acquisition and whether we need to change the Constitution to allow for it. Chairman: To bring some balance to the proceedings, the current submission from the Society of Chartered Surveyors considers the CPO system fair, but it also advocates arbitration to be used more often. Is that a fair assessment of the society's views? Mr. Bannon: Yes, it is. One of the issues is that sometimes it is a resource that is required by smaller local authorities. At then end of the day, the whole focus of compensation under the compulsory purchase code is based on openmarket value. We recommend that open-market valued land should be brought back down to its basic value. Senator Daly: Can that be done by some constitutional amendment? Mr. Bannon: I am not a constitutional lawyer, but if there is a levy system in place, any land which it is claimed has development potential but it attracts substantial levies towards the cost of supporting that development, then the land value will reduce proportionately. Chairman: I wish to return to the notion of local authorities being pro-active and the society's belief that local authorities are not pro-active enough in acquiring land, even before it is zoned. Does constitutional uncertainty play any role in this? Coming from the western division of Cork county, I note that the county council has spent €25 million over the past three years, acquiring tracts of land, most of it unzoned, around the towns and villages. The land was acquired at a reasonable price. The county council feels that for the next decade we should not have a problem. However, take the well-documented example in Cork, where three acres of land went for auction, opening at €1.5 million and with 150 interested buyers, eventually sold for €3 million. According to the statistics, the price of each site will work out at €300,000. If that is the trend in Cork, Dublin and Galway, is it not a worrying issue? 27 Mr Bannon: The issue that is illustrated by that example, is the lack of supply. If there were 150 people looking for one piece of land, for example? Chairman: The auctioneer in question stated that there were 150 inquiries about the property. At the auction, the opening price was €1.5 million and rose to a final price of €3.1 million. Mr Bannon: Whether it is 100 or 150 people, it is irrelevant. In the overall context, the demand for land is well in excess of supply. That is why we are advocating that the supply of land be enhanced so that there will be more balance in the marketplace. Chairman: Is it correct to say that the society feels by and large that local authorities are not proactive enough in moving forward on this issue? Mr Boland: At the risk of criticising the local authorities, there is certainly an axiom that the planning and development act has always been a planning act rather a development one. The local authorities have not been encouraged to be as active and use the powers that are contained in the Act for development purposes. Our view is that capital should be made available to local authorities and they should be encouraged to get involved in development. To answer the Chairman's question, yes. Deputy McCormack: In the society's submission, it states that the society's view is that the promotion of such reform should be instituted by the professional planners employed by the local authorities. The members are always anxious to zone more than the professional planners. It is contrary to what the society are saying. In any event, that is the factual position when one is dealing with city or county development plans. Mr. ffrench O'Carroll: We believe that the public has lost confidence in the process. Zoning in advance of the planned roll out of services is not helpful. They must be co-ordinated. One thing we do state in our submission is that we would like to see the local authorities that are part of the development plan commit themselves to a pre-determined roll-out of services. In many ways, it is too simple to simply put coloured blobs on a map. That is not a plan. The plan must have the roll-out of services included. The zoning and services must----Deputy McCormack: That depends on central Government. Mr ffrench O'Carroll: That may be so, however, zoning and services must go hand in hand. The danger is that if land is arbitrarily zoned without roll-out services or in such a way that services are not going to follow efficiently, it causes problems. 28 Chairman: At this stage we will have to wrap up. I thank the Society of Chartered Surveyors for their submission. From the number of questions that arose, it was clearly a stimulating presentation. Deputy Devins: The society say that the price of land is dictated by the supply of land. Are they advocating compulsory purchase by local authorities of land to help bring down the price? How do they suggest it be done? Mr ffrench O'Carroll: We are saying that it will take simple legislation. For example, we put forward the idea that local authorities could issue a certificate of suitability for development with the idea of forcing land onto the market. If it is on the open market, it should be penalised in some way. It is not really necessary for local authorities to compulsorily purchase all the land, so long as the land comes on the market, it would answer the problem. Sitting suspended at 12.08 p.m. and resumed at 12.25 p.m. Chairman: We will now hear the presentation by the Irish Auctioneers and Valuers Institute, represented by Mr. Aidan O'Hogan, Professor Alaistair Adair and Mr. Alan Cooke. I welcome the delegation to the meeting. I remind visitors that members of this committee enjoy absolute privilege but this same privilege does not apply to witnesses appearing before the committee. I invite the delegation to make its presentation, if possible within six to eight minutes. The committee has received the detailed written submission which the members have read. I invite the delegation to give a synopsis of the submission and this will be followed by a question and answer session. Mr. Aidan O'Hogan: I am the current president of the Irish Auctioneers and Valuers Institute. On behalf of the institute, and its members, we thank the committee for this valued opportunity to present the considered views of the institute and its members on the various property-related aspects which the committee is considering as part of its constitutional review. I am accompanied by Professor Alaistair Adair, the immediate past president of the institute and professor of valuations at the University of Ulster. He is also a fellow of our institute and of the Royal Institution of Chartered Surveyors. Mr. Alan Cooke is chief executive of the institute and is a fellow of the institute and a fellow of the Society of Chartered Surveyors in Ireland. I am a fellow of our institute and also a fellow of the Society of Chartered Surveyors in Ireland. In my day job I am managing director of CB Hamilton Osborne King and, therefore, fairly well exposed to the realities of the property market over the past 35 years. Our written submission to the committee is the result of a consensus thinking of our 1,600 members throughout the island of Ireland and details of our views and recommendations. In this brief oral presentation, I propose to focus on the key messages and recommendations. Our members recognise and are fully supportive of the need to balance the rights to private property with the common good. Contrary to popular perception, 29 the institute is acutely aware of the benefits and the obligations which ownership and/or occupancy rights of property bring and the need to balance those rights with the needs of the common good. The institute recognises that there is a right to shelter for every citizen and the fact that not all citizens will be capable of achieving this through the private sector. In those circumstances, the institute recognises that part of the funding cost of such provision may be legitimately partially derived from other property owners. The institute sees minimal need for constitutional amendments and especially those that would reduce the rights of property owners. It requests an amendment by way of a removal of Article 44.2.6o which affords special treatment to religious denominations and educational institutions. There is no reason, in today's climate, for that special treatment. The institute advocates an amendment which would extend the rights to private property under Articles 40.3.2o and 43 of the Constitution. As uncertainty remains and having due regard to the general importance of property to the economy and to the sheer monetary scale of most property transactions today which frequently require syndicated or corporate ownership structures, the need for unequivocal extension of those constitutional rights beyond the individual has never been greater. Other than those two amendments, the institute does not see any need for constitutional amendments but it believes that other legislative or procedural amendments could be beneficially made which would contribute to solving many of the perceived problems with property rights. I wish to debunk one of the greatest myths that the high cost of building land is the direct cause of high house prices. In a buoyant economy, nothing could be further from the truth. This theory represents a classic case of looking through the wrong end of the telescope. If this proposition is true, why are the prices of houses which have been developed on land bought as agricultural land and subsequently rezoned for residential use, on a par with those of adjoining land more recently bought at full market value after rezoning? Why are the prices of houses in the second sale phase of a development higher than the first when both the land cost and the construction cost have been exactly the same for both? The reason is clear: value is only indirectly related to cost. Value is dictated by what the market generally will pay for the completed house, irrespective of its cost. The reasons behind the rapid increase in house prices are well documented and include demographic and economic growth, low interest rates, net immigration and the availability of mortgage funds. What that does not highlight is the reason that there has been exceptional growth. That is attributable to the lack of supply in zoned and serviced land and the delays in the planning process. The house completion figures confirm that those impediments have now been substantially removed, and it is already apparent that the rapid growth in prices of new houses is coming to an end and that the supply-led solution, which to be fair to Dr. Peter Bacon formed a significant part of his original recommendations, is 30 now bearing fruit and that we are approaching the end rather than the beginning of the problem. The IAVI also believes that the price of new homes is very heavily influenced by the balance or imbalance in the supply and demand equation, the level of mortgage or deposit interest rates prevailing in the market and the availability of mortgage finance. We recommend the introduction of a voluntary code of practice among mortgage lenders towards the abandonment of the practice of soft interest rate first-year lending. We advocate that mortgage providers be encouraged to provide incentives by way of marginally more lenient testing for those taking out mortgages with five to ten year fixed interest rates. However, the supply solution also entails increasing the supply of building land. We are absolutely satisfied that the price of building land is a residual function of the price which potential purchasers will pay for the housing developed on it less, of course, the costs of development and profit. Costs are incidental to rather than a function of value. We are also satisfied that attempting to cap land prices will not result in any reduction in house prices. Any such attempt at capping is likely to result in a reduction in the volume of land coming to the market and instead reduce the supply of available land, consequently limiting the supply of new homes and leading to further increases in house prices. The imposition of any drastic measures designed to depress house prices suddenly and significantly as distinct from more measures designed to slow them down naturally or neutralise the rate of capital appreciation would not be in the common good. If they were excessively severe, generating a loss in value, it would in the main be those who have stretched themselves to acquire homes within the last three to four years who will be most penalised, a situation that could only serve to undermine confidence in the Irish economy generally and punish the most vulnerable. We are satisfied that the only fundamental solution to the generation of a stable environment in both house and land prices is a supply-based one. We know of the interest and encouragement of the Minister of State, Deputy Noel Ahern, and that he has now recognised that fact and is at last promoting the only real solution to the challenge, that of supply. Although we are aware that a relatively small number of large developers in the greater Dublin area are holders of a significant quantity of residential land, we see no concrete evidence of the hoarding of development land by them for the primary purpose of benefiting from increased house prices. On the contrary, the experience of IAVI members is that most zoned and serviced land held by builders and developers is in the process of being progressively brought into productive development use as quickly as possible, having regard to the servicing and planning processes and the essential time, personnel and financial resources of the owners. We also see very little evidence of pure speculation. The vast bulk of land which has been traded in the past ten years had been in family or farming ownership for many years before sale and was acquired by builders or developers unzoned or zoned in the normal course of their trade. Some is directly developed by them, some partially developed with infrastructure, roads, drainage and so on and parcelled out in small lots to builder developers, and 31 some is sold on in its entirety to other developers who are in a position to proceed immediately. We have seen minimal land sales from speculators who have simply succeeded in achieving rezoning and then sold on the land. In the unlikely event that such hoarding did occur, we are very conscious that the State and local authorities already have more than adequate compulsory purchase powers to bring forward to the market a supply of suitably zoned and serviced land by compulsorily acquiring it at open market value and simultaneously passing the land on to those who are able and willing to develop it, thereby minimising the State's financial exposure. There is no reason that that cannot currently be done, although the CPO legislation is slightly dated and may be procedurally cumbersome. We recommend consolidation of the legislation on compulsory purchase rights, but we are strenuously opposed to any amendments to the fundamental principle of compensation being anything other than the open market value. We can see no reason to penalise any individual landowner selectively. In its written submission, the IAVI recommends several procedural changes to the CPO code which should accelerate the time line for implementation, make the process less adversarial and provide a better balance between the rights of the acquiring authority and those of the claimant. Principle among those are the provision of early and detailed information on the proposed works, which will enable the claimants to measure their loss accurately and remove the adversarial legal approach which has developed in what is essentially a valuation exercise. We believe that the implementation of those measures would significantly improve and accelerate the CPO process and reduce the perceived escalation in cost value during the process. We do not subscribe to the principle that the rezoning of land in isolation from the provision of infrastructural improvements or services should give rise to any entitlement on the part of the State or by a public authority to betterment levies. The institute's view is that rezoning normally takes place primarily for locational reasons, the physical suitability of the lands for a specific use, the natural progression of development and optimum land use strategies. We also note that that was the finding of the Kenny committee's report. On betterment, we are in principle sympathetic to the view that the value of development land is significantly enhanced by the availability of infrastructure and services, usually provided by national or local authorities. We are equally sympathetic to the view that it is equitable for those authorities to recoup part of the added value attributable to enhancement which those infrastructural improvements or services have generated. However, we calculate that some 75% of that betterment is already recouped by the State and local authorities through taxation and service levies. We also note that there is a significant distinction between properties developed for commercial use and residential purposes. With commercial development, the ongoing provision of services by the local authority is funded to a significant degree through rates, whereas with residential development, there is minimal ongoing contribution to the cost. Except in a few authorities, payments for services such as water and waste disposal represent only a fraction of the real cost. 32 We are also conscious of the fact that major commercial development schemes usually attract significant development levies. Further recoupment of commercial enhancement is evident through other quasi-PPP initiatives such as the proposal at Carrickmines and Cherrywood for the funding of the extension of the Luas by the landowner developers adjacent to it. That provides a suitable model for future betterment recovery in commercial developments. We propose as a supplement to development levies the imposition of a national scale of larger development levies on residentially zoned and serviced land. Those would be payable when planning permission is implemented. The levies we suggest would be moderated for five years but would increase progressively the longer the land remained undeveloped. That would enable existing landowners and developers who have bought land under a different regime not to be penalised in the short term but would also incentivise them to bring their development land into production promptly. It would simultaneously arm the developers with firm knowledge of the quantum of future levies before the acquisition of additional land and enable them to reflect that extra cost by discounting the initial land purchase. Our experience leads us to believe that the implementation of any measures on landowners leading to further direct taxation on the realisation of their land asset will have the effect of reducing the supply of land into the market. However, measures that serve to depress the value indirectly - in other words, by the known imposition of levies payable by developers - will not necessarily have the same negative effect. We are also anxious to comment on the issue of rights of access to the countryside. We recommend the development of a statutory code of practice regarding public right of access to private land in the countryside. Such a code would include clarification of the obligations of both landowners and public users. There should also be onerous penalties for those users who breach the code of conduct. The conclusions of our thinking therefore are that we believe the market for housing, and indeed for housing lands, is already rapidly heading for equilibrium and will, if not interfered with, achieve that balance within the next 24 to 36 months. We also believe that experience, especially in recent years, shows that the market is best left alone to achieve this equilibrium. We see just cause for the recruitment by local authorities of some of the lands' value enhancement, which derives from the provision of public infrastructure and services. We recommend the introduction of a graduated system of more meaningful levies designed to incentivise and accelerate development within the next three years. The recoupment of those levies for betterment can, we believe, be achieved under existing legislative procedures, perhaps with some minor modifications. We are totally opposed to any system in which individual land owners are deprived of the open market value of their land in the interests of favouring other more disadvantaged members of the community. It is our view that any subsidy of housing costs should be borne by the taxpayers at large rather than by penalising individual land owners. 33 We see a need for only minor modifications to the Constitution in relation to private property rights. We have considered in detail the recommendations of the Kenny report but find that they are inappropriate in today's market and, also, that through other measures introduced in the interim, the betterment recruitment objectives, which were set out in that report, have already been achieved. That is a summary of our submission, Chairman. Chairman: I thank Mr. O'Hogan for his submission in respect of which I have a couple of points to raise. His view is that the market for housing and housing lands is heading towards equilibrium but the reality is somewhat different. I remember inquiring about a house in Dublin almost six years ago when I was told by an auctioneer friend not to rush in because things will level off. However, six years later they have not done so. My perception is that Joe Citizen does not accept this is happening. It is like the boy who cried wolf - we have been hearing this for almost a decade. Is there more evidence available now than was available in the past five, six or seven years that this is happening? Mr. O'Hogan: I think there is, Chairman. We see it in the front line. Although one sees the statistics, which are perhaps three to six months behind, we see it on a day-to-day basis. There is no question but that the rate is slowing down and by the end of this year the rate of increase will certainly be half what it has been this year. Sadly for us that is the case. There is no question about it. Chairman: Does Mr. O'Hogan think that will have an impact on the housing waiting list, for example, or will it bring about a rebalance? Earlier, I mentioned to another group that something like 30% to 35% of properties that came on the market in 2002 were bought up by speculators or developers rather than house hunters. Mr. O'Hogan: In the front line, we see very few developers and speculators. We do see investors but speculators, per se, are almost non-existent. That is partly a function of the very high stamp duty rates. If one looks back at what happened in the UK in the early 1990s, there were stamp duty rates of 1% so people could speculate, go in and turn the property. Now most properties are attracting a stamp duty rate of 9%. In order to make any money, and even allowing for capital gains tax, one would have to have increases of 20% or more to be able to speculate and turn the property. Investors certainly have been a big factor in the market but they are definitely in decline. There is absolutely no question about it. We have seen that rents are declining and, in fact, that will introduce more people into the rental market as they decline. We are probably in for a six to nine-month period when there will be very few investors in the market. Chairman: The previous group to appear before this committee, the Society of Chartered Surveyors, suggested that a system of levies - which Mr. O'Hogan also advocates - might be better. One thing causes me some confusion, however: they felt that by using a levy system one took money or levies from the 34 person whose land was rezoned, thus rising in price from €6,000 per acre to - as we saw in Cork - €1 million an acre, rather than putting a general tax across the board that would affect all citizens. In Mr. O'Hogan's conclusions, he stated: "It is the view of the IAVI that any subsidy of housing costs should be borne by the taxpayers at large, rather than penalising individual landowners". Mr. O'Hogan: They are two different issues. We agree with the Society of Chartered Surveyors: our belief is that if one tries to tax the existing landowner it will reduce the supply of land. That has certainly been our experience with farmers - mention tax and they do not want to know. In effect, the builders decide how much they are going to bid for the land. Provided they know they will have to pay €1 million per acre in levies, they will build that into the price they bid. So, the money is still coming off the landowner but he does not have the money to give back to somebody else - he never gets his hands on it. That is the principle which we are advocating. We are saying that no individual landowner should be penalised by way of compulsory purchase by having his land bought at agricultural value simply to facilitate the transfer of wealth to a whole lot of other people. If the State wants to buy land and subsidise people, it should buy it at the open market value and spread that cost. Why should an individual be paying this? Chairman: Mr. O'Hogan mentioned in point 8 of the executive summary that some of the measures taken by national and local government have helped the situation, including rezoning, greater densities and modest capital gains tax. Is there a justification for continuing with the low capital gains tax rate of 20%? Mr. O'Hogan: It certainly has been a factor in encouraging the supply of land. Last year, when there was a lot of speculation about the rate being increased, we saw that it was impeding and worrying people. It perhaps accelerated the process at that time. I have no doubt that it will increase the supply, rather than diminish it. Deputy Neville: Not being a constitutional lawyer, I wish to know what problems are being created by the fact that Articles 40.2 and 40.3 do not refer to corporate bodies, trusts, partnerships, etc.? What practical problems are arising because of that? Mr. O'Hogan: In practice there have not been many cases but there have been a number of constitutional cases in which this issue has arisen. It is simply a matter of concern that there is a distinction between the property rights of an individual and a corporate body or, indeed, a syndicate of individuals who may have a trust - or some sort of protection or grouping - in which to purchase property. 35 Deputy Neville: Mr. O'Hogan is saying that he does not really have a problem here but wants to head off possible problems in the future. However, the Law Society would tell us that if one does not have a problem, there is nothing to fix. Mr. O'Hogan: Apparently, the Law Society does not have many problems. The committee has invited us to make our comments. We believe this is a situation in which there should be absolute clarity, rather than anything else, and I think it could do with tidying up. Senator Tuffy: I thank the delegation for its submission and I have a couple of questions. Is Mr. O'Hogan saying that the problem has not been created by the hoarding of land or the slow release of building land? Is he saying that has not occurred? If one looks at the number of houses that are being built in various areas, while I know it has increased in recent years, there has been a pattern of releasing so many houses onto the market. Large tracts of land have not been developed, however, and that is not because of servicing difficulties. Very often it comes down to a choice of when one gets the land serviced. Is Mr. O'Hogan saying that there has not been any problem in that regard? Mr. O'Hogan: We have looked at this situation in detail and we cannot find any evidence that people are hoarding. There are no real examples of this. Frankly, most of the companies are completely stretched in trying to get the land developed, in terms of personnel, building and financial resources. They cannot develop everything at the same time. Senator Tuffy: Does the release of houses at a certain level each year not help in terms of making sure that the prices continue to increase? Mr. O'Hogan: Yes, prices have increased and they have tended to release houses in phases but that is not really an issue. The land has been acquired at that stage and there is only a physical level at which one can build houses. If one looks at what is happening now, most of the houses are being sold off the plans well in advance of construction. If that were the case, why would they be selling off the plans? Should they not be holding the houses for two or three years after being built, before selling them? I understand this public perception but when one examines it there is no evidence to suggest that. We know from the developers we work with that they are all flat out trying to develop everything they can. Deputy Neville: While they have a certain amount of expertise, they are buying land they do not have the expertise to develop and which they know will take them ten years to develop. Is that no hoarding? Mr. O'Hogan: That is building into the future. There is nothing to stop anybody who is ready to develop the land from buying it. Somebody else can out-bid them if they are ready to build immediately. These are natural market forces. 36 Senator Ormonde: Paragraph 13.3 of your conclusions states that the IAVI considers that the market for housing and housing land is heading towards equilibrium in three years' time. Our role is to be concerned with an equilibrium between private rights and the common good. There is no equilibrium today. People have become overnight millionaires at the expense of young people trying to find a house. That is the issue. To suggest that there will be equilibrium in three or four years is not relevant. We are trying to consider how best to reduce the cost of land and to consider the question of land rezoning. It is immoral that agricultural land today can tomorrow make somebody a millionaire. There is something wrong with the system and it needs to be rectified by constitutional or legislative means. The group has not presented the committee with any solutions other than to suggest that there will be equilibrium in two or three years. The last paragraph in the submission states that the IAVI is opposed to any system under which landowners are deprived of the open market value of their land and that the cost of maintaining this should be borne by the taxpayers. When graduates get employment and become taxpayers they will effectively make these people millionaires. There is something wrong with that justification and I cannot accept it. Chairman: That is more a statement than a question. Professor Alaistair Adair: A number of issues have been raised which need to be separated in terms of their constituent parts. By equilibrium we mean economic equilibrium in terms of a levelling of the rate of growth of house prices. We are not necessarily saying that prices will fall, but that the large rates of growth of the past, of the order of 20%, 23% and 25%, are not sustainable given the current rate of inflation. We are looking at equilibrium in terms of where those high rates will fall to more sustainable levels. Land prices are so high for the simple reason of Ireland's success over the past decade as one of the main economic growth centres within Europe. It means that when agricultural land is rezoned, there is a large increase in the value reflecting the prices people will pay in terms of the house built. Deputy Morgan: I am interested in the concept of equilibrium in two years. I see no evidence of it elsewhere. Will Professor Adair elaborate on this? Is it the case that the members of the IAVI earn a percentage of each sale, therefore, the higher the sale the bigger the income for them? On that basis, the higher the cost of land the more wealthy they become. Does Mr. O'Hogan have a concept of the term the "common good" or does he even recognise that it exists? If so, does Mr. O'Hogan have a contribution to make to it? If not, how does he propose to solve issues such as the purchase of land for road construction, which is done for the common good and is the kind of activity in which his members would be involved? Alternatively, does he consider the common good to be a bad concept? 37 Mr. O'Hogan: We acknowledge and recognise the common good. We have made suggestions regarding the acquisition of land for road construction which we believe will simplify matters and reduce the cost of CPOs. We have no difficulty with that. With regard to fees, new homes are not charged on a percentage basis but are negotiated on a flat fee per house basis. There is no marginal incentive in increasing the price. It is a tradition in that area, so any view to the contrary is a fallacy. Second hand houses are generally charged on a percentage price. On the question of equilibrium, the reality is that supply is already beginning to exceed demand. Some 58,000 houses will have been built this year and probably more than 60,000 next year. This means that the number of houses to be built will probably exceed the number of new houses required. That is equilibrium. Chairman: Will that impact on the problems associated with social and affordable housing? Under the Constitution, we must balance the right to private property with the exigencies of the common good and the principles of social justice. It may be argued that in the past decade this balance has not been struck. Deputy Morgan: Some 48,000 people are on social housing waiting lists while another 6,000 are homeless. Where has Mr. O'Hogan addressed those issues in his presentation? Mr. O'Hogan: We deal with it by calling for more land to be made available. Many developers will be more keen to develop social and affordable housing as the market becomes more difficult for them in the private sector. It is inevitable. It has happened on every previous occasion. Professor Adair: There are a number of mechanisms, such as the safeguarding of provisions of percentages for the provision of social or affordable housing in terms of granting planning permissions. The situation prevailing in Ireland is not unlike that in many other western European countries. One aspect of the common good, particularly if Ireland is to remain competitive, is that there must be an efficiently operating property market. The moment that the Government or any institution sets impediments to that, foreign direct and international investment will immediately translate it into a lack of confidence and move elsewhere. It is, therefore, important that Ireland sends out the right signals in terms of the efficient operation of its property market. Deputy Devins: I was a little confused when Mr. O'Hagan said the value of land did not have an influence on the price. Is that correct? Mr. O'Hogan: Not a direct influence on the price. 38 Deputy Devins: I would have thought it self evident that it has a very direct influence on the price. If one pays €100,000 per acre and somebody else pays €500,000, what will be built on the latter will be more expensive. Maybe I misunderstood Mr. O'Hogan. Mr. O'Hogan: That is a complete and utter myth. One can have two properties next door to each other. It is the value that counts and that is what drives the land prices, it is not the other way around. It does not matter what one pays for the land, it is what covers----Senator Ormonde: It is the location. Mr. O'Hogan: That is a factor in any value. However, if a person pays £1 million for one plot in Phibsboro and another person pays £100 for the property next door and they both build the same type of house, the value of the second house will be the same as the first. It does not matter what was paid for it. That is a complete and utter myth. Deputy Devins: I do not understand that rationale whatsoever, but there you go. Mr. Alan Cooke: Excuse me, Chairman, for I do not wish to interrupt or cut across Deputy Devins. If I may interrupt, however, this is the big problem - the politicians do not understand. There are people from the Taoiseach down repeating this mantra that houses are dear because land is dear. The basic facts are that land is dear because houses are dear. The Deputy has mixed the cause and effect. The reason land is expensive is because what one builds on it at the end will fetch such and such a price, and one factors everything else out and is left with the land value. No valuer will start at the land, put a value on it and work up to what one can sell----Deputy Devins: In reverse, if one builds a house on two pieces of land which are of exactly the same value, say €300,000, and one piece of land sells for €500,000 while the other piece sells for €100,000, surely it does not take a rocket scientist to work out that the value of the house, including the land, on the more expensive piece will be more expensive at the end of the day? Mr. O'Hogan: It is not. It is the same house. The house has only got a certain value. It is completely the opposite. Deputy Devins: All right. We disagree. Mr. Cooke: Sorry, it is a bit like this concept of the 10,000 social houses. If we may talk briefly about the 10,000 social houses, there is nothing that the committee is talking about - nothing that the Taoiseach or any of the Ministers have mentioned - that will impact on the value of houses. The value of houses is 39 dictated by two things, and two things alone - supply and demand. What ones does with the money that goes to the building land is irrelevant. (Interruptions). Mr. Cooke: Sorry, whether one wishes, in principle, to whip away half of that value as a tax or levy - whatever one wants to call it - does not impact on the end value of what is put on the land, and it is the value of what is put on the land that dictates its ultimate value. The Deputy may say one cost €100,000 and the other cost €500,000. They were both worth a half a million if somebody paid €500,000 for them. Deputy McCormack: If there are two builders in competition and one builder buys this same site for €500,000 and the other buys the adjacent one for €100,000, the first builder can make the price tag on his house €300,000 cheaper and he will still have €100,000 more profit than the other man. Mr. Cooke: He will not do that. Mr. O'Hogan: Why would he do that? Deputy McCormack: He can do it. It is up to the builder, it is up to the developer. Mr. O'Hogan: He can do anything. He can----Mr. Cooke: The Deputy is moving away, (Interruptions). Deputy McCormack: He will sell more houses. It is more money at the end of the year. Mr. Cooke: We are moving away from the concept of an open market economy. What the Deputy is saying is that because he bought it at this price he should factor it up, we should cap his profit and therefore he should only be able to charge A + B + a percentage and if A + B is less, and the percentage concerned is 6%, then obviously the end price is such and such. What the Deputy is doing then is giving the value to the buyer, he is saying to the buyer as he will with these social and affordable houses unless there is a clawback that we are actually going to give him or her the building land element, "on behalf of the taxpayer, here's a gift". The end value of the houses will be the same as similar houses in similar locations for which full value was paid for the land. Deputy Devins: May I ask a second supplementary question, Chairman? The IBA represents 1,600 members spread throughout the length and breadth of the 40 country. I think Mr. O'Hogan stated he had no experience of hoarding of land. Do any of his members have any experience of developers entering into agreements with present landowners that when the landowner dies or decides to retire, the developer will have first preference on buying that land? Mr. O'Hogan: I cannot say I directly know. I have not come across that. I am sure these things happen but they are not commonplace. Senator Tuffy: I think Mr. Cooke is right, in the sense that the land has a value because the housing can be built on it, but it does feed back then. It is not just a one-way street. There is a circular effect and I think that is the point. Mr. O'Hogan: Yes. It is driven by the value of what can be developed on it, not by the land. Deputy Neville: If the value of the land falls he drops the price? Mr. O'Hogan: Precisely. Mr. Cooke: Mind you, one cannot flood the market because one would end up with the worst possible scenario of creating widespread negative equity and would not be very popular. One has to moderate the supply but one has to increase supply so that it, at least, matches demand. The house building statistics, which we have available to circulate, include the figures which were only released yesterday. They show that we have increased the rate of building construction here by 170% in ten years. Professor Adair is the valuation professor at the University of Ulster, operating within the UK environment. He is a highly respected valuer in the UK. He will tell the committee that if they manage to achieve in the UK what we have achieved in terms of the percentage increase, they would be going through hoops praising themselves. The building industry here has responded very well to the demand. One of the reasons that housing lists increase, if the committe does not mind me saying so, is that for long periods too little taxpayers' money was spent on providing social housing. Deputy Neville: There also has been a group of people who have moved away from the private housing sector into the social housing sector because of what has happened. Mr. Cooke: It is cause and effect - I accept that. Chairman: I accept the other point. Deputy Devins was making the point that in the past decade builders have done extremely well. They came from a recessionary period to a boom period. Auctioneers have done well. My own profession, the solicitors, have done well and so forth. However, at the same 41 time, we are isolating, perhaps unintentionally, a large section of people who, as Deputy Neville has said, six or seven years ago could afford to buy houses of a type now valued at €150,000, €200,000 or €250,000, and who now find it impossible due to those prices. Professor Adair: That is a European problem. It is occurring not only within both parts of Ireland but----Chairman: Having said that, a person I know who bought a four-bedroom house in a good location in Brussels, which in many ways is the capital of Europe, said that a comparative house in Dublin would be double the price. Logically there is something wrong. Mr. O'Hogan: In Brussels they have to pay rates. There are costs. This is a function of our cost. We have eliminated rates. Chairman: Is Mr. O'Hogan advocating we should re-introduce house rates? Mr. O'Hogan: I am simply observing that this is the reality and one has got to compare like with like. Chairman: Right. Deputy Andrews: I want to get away from that ideological issue. The delegates are talking about the price being determined by supply and demand and achieving equilibrium. Equilibrium will never last for more than a nanosecond before it goes one way or the other. Therefore, it is all very well to say that may happen but it will not last. The question really is: what will happen after the moment of equilibrium, however long that will last? The delegates might put their minds to that. I thank our visitors for the thought-provoking presentation. It was probably the most thought-provoking one to date. They suggest a solution, I think, in paragraph 20, the slow release of land. A solution to a problem does not exist, they state in paragraph 12. They state that there is not hoarding of development land and other members have referred to that. Perhaps they would square that circle for me. Another issue is Article 44.2.6o of the Constitution relating to the Church and educational institutions, and that they should not be forced to give up land except for the issues of public policy. Is that a good phraseology in general in order to achieve the common good where clearly price is achieved by supply and demand? We are more concerned with another aspect of the economy, that is, the social economy where the price should be determined by more than just a simple open market. Here we are talking about a social economy where the open market is determined for the social good. While Article 44.2.6 o, it seems to me, only applies to those two types of institutions, it might be a more appropriate phraseology in general. 42 Mr. O'Hogan: The reality is that probably the biggest landholders in greater Dublin are the Church and the educational establishments, and I can see no reason they should be exempt or treated any different from anybody else. Deputy Andrews: What would be achieved by its abolition? Mr. O'Hogan: It simply gives a balance and it puts everybody on an equal footing. Deputy Andrews: They are on a special----Mr. O'Hogan: They are on a special footing at present. Deputy Andrews: Does Mr. O'Hogan think it would lead to the release of more land? Mr. O'Hogan: It may. It would change the balance which is there. It allows that to be released. Why should they be treated favourably? There are very good reasons they should not. There is a slightly different point in respect of paragraphs 12 and 20. On levies in paragraph 20, many developers have bought land in the market at full value in a scenario in which no superlevies apply. They have made an investment on that basis. If these levies were introduced and it was pointed out to them that they bought the land at full price without reflecting these levies and that, before they were introduced, they would be given a window of opportunity to release the land and go through the process over three to five years at a scaled rate, this would create an incentive for them to release the land. That is the issue regarding levies. On paragraph 12, the hoarding of land is a different issue. However, if there were hoarding, an incentive would be created for people to release land because they would be penalised by the levies if they were to hold on to it. There are landowners who have significant land holdings. There is no question about it. They have bought them in the market in competition with others. There is nothing wrong with that per se. If people wanted to buy the land, I am quite sure that some of the landowners would release some of it. We see that where they are not capable of developing it themselves. Deputy Neville: Does Mr. O'Hogan ever see the culture in Ireland changing where people will rent rather than purchase property? We have a culture of property ownership which is obviously ingrained from 150 years ago when Irish people were not allowed to own property and could not vote because they did not own property. Can Mr. O'Hogan see the culture changing whereby we become a renting rather than an owning nation? 43 Mr. O'Hogan: As an overall culture, the answer must be "no". The European model is increasingly moving away from renting, and home ownership levels in Europe are increasing all the time. As rents fall, more people will enter the market. Professor Adair: Where house prices rise to such a level that an increasing number of groups cannot enter the housing market, there becomes a need for an efficient operating rental market to capture those people. Going back to the point Deputy Andrews made, the market equilibrium is always changing. The property market is a complex entity in terms of different locations, different types of property and different users of that property, be they users, investors, developers or landowners. Our submission is that each of these groups reacts to different market signals and that, when Government takes a view that it will interfere in the housing market, we say that there should be increased levels of deregulation and liberalisation of property and other markets. It would send out a very negative signal to international investors, especially in the attraction of foreign direct investment, if there were any capping of land values or other such intervention within the market. Chairman: We have exceeded our time limit. I thank the witnesses sincerely for making a detailed written submission and attending for what Deputy Andrews described as a thought-provoking interchange between politicians and the witnesses which remained quite balanced. Mr. Cooke: May I make one suggestion before the Chairman finishes? The British Government has announced in the past two weeks the establishment of a property forum. I know the Construction Industry Federation is represented on different forums, including at partnership level with Government, but the broader property sphere is not represented anywhere. There is no ongoing dialogue between Government and the property industry and sector. Given its importance to society and the fact that we only build 5% of new homes annually, that the rest already exists and plays a huge part in the market, and the efficiency with which it is used is very important, if we could increase the efficiency with which we use existing housing stock by 5%, it would be the same as building a whole year of new supply. We do not home in on that area. One recommendation I would love to see coming from the committee is that a property forum be established in the Irish context where the Government, the different property bodies and other sectors could interrelate to get communication going because it is a lack of ongoing communication that, unfortunately, has led to knee-jerk solutions, and we saw recently that such solutions do not work. Chairman: We will take that on board. Sitting suspended at 1.15 p.m. and resumed at 2.10 p.m. 44 Chairman: I welcome CORI Justice Commission, the Conference of Religious in Ireland, which is represented by Fr. Sean Healy and Sister Brigid Reynolds. I draw the attention of our visitors to the fact that members of this committee have absolute privilege but this same privilege does not apply to witnesses appearing before the committee. I invite the delegation to make a short presentation as we have already got their excellent written submission and we will have a question and answer session afterwards. Fr. Sean Healy: I am grateful for this opportunity to present the important points from our submission and to take questions. There are three sections in our submission. First, we address the issue of social justice, which we approach from a Catholic social thought perspective there is a long tradition in that area dealing with this issue. Second, we want to emphasise a rights-based perspective which looks at social, cultural and economic rights as well as civil and political rights. Third, the need for social housing and for legislative change in that area. We have some specific suggestions in that regard. In Catholic social thought it is important to note that the right to property is not an absolute right. This issue is often misunderstood. Various Papal encyclicals and documents outlining Catholic social thought have argued consistently that private property is not an absolute and unconditional right. No-one is justified in keeping for his or her exclusive use what they do not need when others lack basic necessities. Even the current Pope has outlined in an encyclical that the possession of material goods is not an absolute right. He goes on to say it is limited by human rights. In that context, the issue of the right to private property not being absolute is located next to recognition of the fact that the goods of creation are destined for the whole human race and not just for those who have possession or ownership of them at any particular moment. Another tenet of Catholic social thought holds that a social responsibility is rooted in the right to private property. It is important to recognise that exorbitant profits through speculation on land for housing developments, for example, is particularly morally blameworthy and therefore is of relevance to the work of the committee on this issue. On the issue of a rights-based perspective, Ireland and the EU need to acknowledge that human rights go beyond civil and political rights to incorporate social, economic and cultural rights also. These rights are recognised in many different documents from the EU, the UN and the Council of Europe. It is important to understand how we present this; we believe it is important to talk about the right "to" rather than the right "of". When talking about rights sometimes people imagine we are referring primarily to the rights of Travellers or the people with disability. We say it is better to focus on the right 'to' rather than on the right 'of', for example, the right to a number of social, economic and cultural issues such as the right to appropriate accommodation, to relevant education, to meaningful work and to enough income to live with dignity. Those rights should be justiciable and vindicatable in law. We have had many discussions on the problems in this area. There are three variations to the 45 negative responses we have heard. Some argue that these should not be recognised at all as rights. Others argue that even if they were recognised one could not have a situation where everyone could appeal to the Supreme Court if they did not have the accommodation they felt was appropriate or insufficient income to live with dignity. The third variation is that many argue these are issues which should be considered in the political rather than the judicial arena. We propose an approach which tries to recommend the various rights we have mentioned but which also fully respects the electoral process and the fact that people are elected, governments appointed and people have responsibilities. We suggest the following: this committee should recognise that social, economic and cultural rights be recognised in the Constitution and we have suggested a number of specific rights in our submission. Once this recognition is given in the Constitution there should be legislation which ensures these rights could be vindicated. How to achieve that without producing a non-viable situation is the real challenge. We suggest that there should be a legal requirement on each Government that within three to six months of coming to office it would have to set concrete targets on each of those rights - these targets could be for periods of two and four years, though those would be open to variation - and its basic business would be to achieve those targets. If it did not reach those targets the situation would be justiciable but on a class action basis rather than allowing everyone who did not feel they had appropriate accommodation go through the entire legal process up to the Supreme Court. It would be justiciable in the sense that a class action could be taken against the Government for not reaching the targets it had set itself two or four years previously. The only justification which would be acceptable to a court of law would be the Government showing in a court of law that the economy had changed sufficiently from the time of the forecast on which the target was originally built to justify their failure to reach a specific target. We suggest that that would have a positive impact. For example, the most difficult issue in the social, economic and cultural rights area is income; we argue that people should have sufficient income to live life with dignity. To take a hypothetical situation, if there were a requirement in legislation to honour that right, the present Government, on taking office, could set itself a four-year target regarding what it wants to do for the lowest social welfare rate. It has already set targets to be met by 2007 for the National AntiPoverty Strategy which are very concrete and spelt out in cent and euro. The Government could have set two and four-year targets which would support a right in the Constitution entitling everyone to sufficient income to live with dignity. For example, the programme for Government recognises that there is a lacuna whereby these people do not benefit from the budget. People on very low incomes who are already outside the tax net do not benefit from budget changes. There is a commitment in the Programme for Government to address that issue. This is another variation of the same right which could be included as a target to be achieved. 46 I will now move on to the third point. I will not go through all the figures on housing because members will be more than familiar with these. I will just go through the proposal we think might have a serious impact in this context, that is, the zoning and compulsory purchase of land. We are setting this in the context that the right to private property is not absolute, private property and the common good are linked and there is a rights-based underpinning for what we are proposing. We believe that compulsory purchase is an under-used tool of spatial development. We also recognise that the zoning of land for particular purposes is a necessity. However, the zoning and rezoning processes have been open to substantial abuses over recent decades and tribunals are currently investigating some of these issues. We are proposing a number of changes in the way zoning decisions occur. The principal change we are proposing is the introduction of a law confining the rezoning of land to land in the ownership of local authorities. At the moment local authorities have the power and responsibility for rezoning, which they carry out throughout the country. They rezone all land. We are suggesting that there should be legislation whereby one could only rezone land which one already owns. Consequently, to rezone the land one must get ownership of the land either through purchasing it on the open market or through compulsory purchase. If one were to go down the compulsory purchase route, we would support the proposal in the Kenny report 30 years ago. It suggested that people should get the agricultural value, plus 25%, so that there would be some serious gain for those who already own the land, but there should be no situation where people could get an increase of multiples of ten for the property simply because there was a possibility it might be rezoned. This proposal would have many positive features in terms of eliminating speculators who have been the main winners in the process over recent decades. It would also have a huge impact on the cost of new housing. It would ensure that the huge land cost, which is currently a major component of new housing cost, would be reduced dramatically. It would make it much easier for local authorities to access land which they could then use for building social housing, as well as zoning for other purposes, including other types of housing and so on. We believe this type of approach could be taken without changing the Constitution. A recommendation from this committee that legislation to that end be put in place would achieve the desire of many people for raising the particular issue because it has been raised to such a level of importance in Irish society as a result of the problems with housing shortages, the huge escalation in costs and the long waiting lists for local authority housing. These details are contained in our submission. Chairman: The representatives of the Auctioneers and Valuers Institute made the point that under article 44.2.6 of the Constitution, special privileges are afforded to religious orders and educational institutions. They felt that this special treatment should be abolished in the Constitution because it has caused 47 particular problems in the greater Dublin area. Has Fr. Healy a view on that issue? Fr. Healy: We have no problem whatsoever with the religious being subject to the same laws as everyone else. I would point out, however, that CORI has no property but some of our members have property. I would also point out in that context that a substantial proportion of the property is already tied up in educational institutions, health care institutions and in a range of other social welfare type activities of one kind or another. These include social supports and all sorts of infrastructural and other types of support for a range of groups in society. Much of the property left to the religious in one form or another has tied the properties to these particular types of activities. Even if the property was not owned by the religious it would have to be used for that type of activity. However, we would have absolutely no problem with the religious being subject to the same laws as everyone else. Chairman: We are somewhat restricted here because we are considering property rights within the current constitutional provisions and whether the principles of the common good and social justice are being properly catered for. Does Fr. Healy believe the existing Constitution is too narrowly confined and the common good and social justice have been neglected under it? Is there a need for constitutional change or would legislative change be adequate? Fr. Healy: On the issue of rezoning and the compulsory purchase of land, while we are not constitutional experts, the advice we have received is that there is probably sufficient capacity within the Constitution to legislate as we propose. However, we would argue that there is a lack of recognition in the Constitution for social, economic and cultural rights. This problem is consistent with constitutions throughout the world generated prior to the second half of the 20th century. If one thinks in terms of the way human rights have been encapsulated over the centuries, the American and French revolutions fundamentally altered people's understanding of human rights at the end of the 18th century. In the 19th and first half of the 20th century, the focus was on the development of civil and political rights. It is only in the last half century it was recognised that human rights go beyond civil and political, to include social, economic and cultural rights. In other words, there is a second generation of human rights. It is only in that context that we began to realise that constitutions written previously needed to be updated or amended to take cognisance of this fact. Likewise, we need to see how these things can be vindicated in law because, at one level, rights can be recognised in a Constitution, but if it is not possible to vindicate the rights in law, they are hardly worth the paper they are written on. There is a constitutional issue about the content of the Constitution and there is the issue about the justiciability of rights going forward. Chairman: These rights are recognised under the Constitution. However, they are probably not justiciable. 48 Fr. Healy: In a previous presentation to this committee - perhaps seven years ago when the committee was looking at the Constitution - we made the same recommendation on social, economic and cultural rights we are recommending today. The situation is interesting today in that it has moved on dramatically from where it was six or seven years ago when this type of issue would not be entertained or discussed in any serious way. Today there is a plethora of evidence across not just Ireland but the rest of the world about the importance of social, economic and cultural rights and the need to have them recognised in the Constitution, and also the right to make them justiciable. We have made suggestions about what these rights might look like in general, but we have also made suggestions about how to make them justiciable. One could make them justiciable by getting the Government of the day to pass legislation setting its own targets. That would have the added value that general elections would in part be fought on the basis of what the targets were likely to be. That would not be a bad situation. I believe most political parties would like a situation where they were arguing about real issues and real targets that they would or would not meet if they were in Government. The electorate would have a much simpler decision to make and it could make it as it saw fit. Deputy McCormack: The most far-reaching proposal being made by Fr. Healy is the recommendation to confine rezoning of land to land in the ownership of local authorities. Such a proposal would have far-reaching repercussions and it is lovely in theory. How would that be put into practice? How can the local authority become the owner of the necessary land required in any period of the five or six years of a plan? It has nothing to do with the Constitution; it is to do with Government policy and whether Government would give money to the local authorities or whether it would purchase the land. Will Fr. Healy expand on that key point of the presentation? Fr. Healy: If there is a need for a constitutional amendment----Deputy McCormack: I imagine that could be done through legislation if there was a will to do it. Fr. Healy: We agree with the Deputy on that. The reason we are making the point here is that we think on the issue being addressed - the property issue in the context of the Constitution - that some of the suggestions being made give the impression that a constitutional amendment is required to achieve what we are proposing. We believe it can be done without a constitutional amendment. How this would be worked out in practice would be quite straightforward. The local authority would purchase the land. Deputy McCormack: With what? 49 Fr. Healy: I will explain to the Deputy how the loop closes. The local authority would purchase the land. It would rezone the land and then make the land available for resale to property developers of one kind or another. It then has two options. It could sell the land for the price at which it bought it, or it could decide to sell it for more and use the balance of the money - which would be additional money to the local authority - for the further development of social housing or whatever. Within that framework, it would then be possible to get the money under one of two ways. The local authority has the capacity to rezone the land and because it can then be assured of a resale in that context, either the Government could make the money available or, if the Government chose not to do that, the local authority could borrow the money. The loop is closed and there is a certain guarantee to a lender that the money will be repaid. Deputy McCormack: Then one type of speculator is replaced with a local authority speculator. Fr. Healy: The scale is completely different. In the case of the speculator the value of the land can rise by a factor of ten and they can start adding noughts to the number. That will not happen in the case of the local authority. If land is worth €1million, for instance, in agricultural terms, the owner is paid €1.25 million. That money is borrowed either from the Government or from financial institutions. The land is purchased and rezoned. It is then decided what housing will be put on the land and it is then made available to developers who are business people. They will purchase the land from the local authority and build houses on it according to the zoning decisions made by the local authority. They will still make a profit but there will be a different scale to the profit. The land bought for €1.25 million can be sold to a developer for a little more than that sum in order to cover the interest rates or it can be sold for €2 million. It is completely different to what would happen if the local authority rezones the land and it becomes worth €10 million or more. That €10 million cost will go onto the cost of every house built on the land. Deputy McCormack: We had an argument at an earlier session that the cost of land does not affect the cost of housing but we did not reach a conclusion. We were almost convinced in the end that it did not affect the cost of a house. I have experience of several county and city development plans and I know that 99.9% of the land rezoned does not belong to speculators when land is rezoned within the terms of the county or city development plan. Around Galway city, for instance, land is being rezoned for farmers or landowners who have owned it for perhaps ten or 12 generations. A mistaken impression is often given that local authorities are merely rezoning land for speculators and that is not the position. Galway City Council began the process of the city development plan last night. When someone offers Galway City Council the facility to borrow money to buy the necessary 3,000 or 4,000 acres required for housing under the city development plan, then I will fully support Fr. Healy's case. Until then, I believe it is just pie in the sky. 50 Fr. Healy: We accept that one must be in the position to borrow the money and to pay landowners for the compulsory purchase of their lands; otherwise it would not be viable. Given that the land will be sold back to developers, there will be more than enough money in due course to pay back what has been borrowed. Local authorities could have the right to make some kind of profit on some parts of it which would then be used as additional money for social housing in particular, which is an issue that will become a bigger problem in the future. Our proposal is an effort to deal with the situation which faces the urban centres of Galway, Cork, Limerick, Waterford and Dublin, in particular. At present speculators are being given a first option on the land from farmers and other landowners. It is our understanding that they are paying to have that option. All the payments being made will be added to the cost of the houses being built on that land. We are asking for a simpler system that reduces the cost of housing because the increases in the cost of housing are not tenable. We argue that the housing situation is probably the major Achilles heel in society. We are not coming to grips with the scale of this serious problem of housing and accommodation. Our proposal is a suggestion as to how this problem might be progressed in an effective way. I agree with the Deputy that if one does not have the money, then it makes no sense. We believe the money can be obtained within a loop as we have outlined and it does not have to involve the Government. Deputy Neville: I wish to highlight an issue to which Deputy McCormack referred and which was spoken about earlier. It is not the price of land that dictates the price of houses but what the market is prepared to pay for those houses. That is a feature of demand and supply. It is a very attractive suggestion to reduce the value of land but if the value of land is reduced, it will increase the profits of the speculators because the market will bear the price. In an open market, the highest bidder wins. Why will people pay less for houses because the price of land is reduced? How will it affect the open, free market? Fr. Healy: The simplest answer is that it immediately has the capacity to substantially increase the supply. The Deputy is talking about a supply and demand issue. Deputy Neville: Fr. Healy is saying it is to affect the supply and demand rather than to reduce what the speculator or the market is prepared to accept. Fr. Healy: That is a fair point, but let me answer it. If the supply of housing were to dramatically increase at the moment, it would solve the housing problem. It would deal with the issue about the costs and so on. It would have to go some way on the social housing side to ensure that everybody has enough accommodation. That is a separate issue; that is a social housing issue. Let us consider the market. If the supply increased dramatically that would solve the 51 problem. It would deal with the issue of the nonsensical annual increases of 15%, 20% and dramatically higher in some years that we have been seeing. The issue at present is that speculators are holding on to land and only dripfeeding it onto the market so that they can keep the prices very high. We have, therefore, produced a situation where the cost of a house has completely lost connection with the average industrial wage. Most people here will remember a time when a person with an average industrial wage could afford to get a mortgage in order to buy a house. In more recent decades two people with two average industrial wages would have had no problem getting a mortgage that was adequate to buy a house. That is not the situation or even remotely close to it now. That escalation happened in the past decade. We need to stop that trend or we will make the situation worse and not better. We do not believe the price of land has no impact on the cost of the house. We believe that if actual land were available and built on the cost of housing would level out quite dramatically. The simple key is increasing supply. It is funny to be coming up with a supply side solution. Deputy Neville: While I can accept what Fr Healy is saying, there is a view that reducing the price of land will automatically reduce the price of houses. However, that is not the case. Fr. Healy's argument works if the price of land is reduced by increasing the supply. Fr. Healy: The two pieces have to go together. Deputy Neville: It is a pity we did not have both deputations here together. I do not think they would disagree on this matter. Chairman: There would be the clash of the ash. Deputy Devins: I welcome both witnesses and thank them for their very novel approach, which I find very interesting. Many of their proposals could be addressed by way of legislation rather than by changes to the Constitution, with which we are primarily concerned. In that regard the suggestion that the local authority be able to purchase land from the vendor at an amount somewhat in excess of its agricultural value might be seen to infringe on the personal rights of such a landowner. I would like to hear the witnesses' comments on that. I know of one or two local authorities that are buying land and waiting for the development plan to rezone it, as has been suggested. This is not being done with a view to selling it on, but perhaps to develop it for social housing. How should this be approached? Fr. Healy: The question the Deputy raises is an important one and it is a concern about that issue that motivated us, unusually for us, to start our submission with a presentation of Catholic social thought tradition on that issue. We had to set out the values that are central for us in the decision making process in terms of what decisions we support or suggest should be made in 52 terms of the society moving forward on this issue. It was because of this that we raised the issues we did in the first section of our submission, pointing out, for example, that the goods of creation are meant and destined for everybody in the long term and not just this generation. The right to private property is not absolute; it has responsibilities attached. Consequently we argue that when these are put together we wind up with a situation where the personal rights of the landowner do not extend to a point where that landowner has a right to ensure the maximising of the cost regardless of the social consequences. We are not talking about nationalising land or anything of that nature. We are talking about the land being paid for and that the landowner should make a profit on top of what the going rate for the land would be. It would obviously affect the price of the land quite dramatically. We do not think that the personal rights of the landowner would be in any way infringed by that. At the end of the day much of the property we are talking about is in the hands of a relatively small number of people. The fact that they have it tends to be an historical accident or whatever in the sense that they may have had it for six or eight generations, or more as Deputy McCormack said. In the overall scheme of things that is a very short period of time. The issue of ownership has to be balanced with recognition that the rights of ownership are within a social responsibility that is linked to the common good. Senator Tuffy: I thank Fr. Healy and Sr. Reynolds for their presentation. I am very supportive of the proposals they have made. Even if local authorities were to buy land before it was rezoned, the speculative cycle could still exist. Developers are in the business to make profit. The people who end up buying the houses will still pay more than they should for what the delegation considers a basic right to housing and accommodation. In the past local authorities have sold land particularly, for example, in south County Dublin, which has just become part of the whole cycle of speculation. It has not prevented such speculation. Zoning and planning are strategic activities in deciding where to locate housing. The delegation seems to be putting the cart before the horse by proposing buying the land before it is zoned. Should not the local authorities have the first call on zoned land as opposed to buying the land, as I believe was suggested in the Kenny report? If the land is passed on to developers that provide the houses for sale, they will continue to make the largest profits they possibly can. Much more needs to be done to ensure that does not happen. Fr. Healy: We are not saying that everything is going to be solved on the back of one proposal. We are not suggesting the Constitution should be changed to make profit illegal or anything of that nature. I am sure an argument could be made along those lines, but we are not making it here. We want to try to ensure that the property can be accessed for a reasonable amount of money and on the other side, once it is accessed, that there can be an adequate supply of housing and variations on accommodation as required. In the south Dublin example 53 given, the problem was that level of supply was not adequate to the scale of the problem. Although land was allocated for a certain number of houses, at the end of the day, the demand has far outstripped the supply. That has been a constant and growing issue, year by year. Senator Tuffy: The problem has not been due to a shortage of land, or even services but, rather, that the supply of housing is released in a particular way. Fr. Healy: The challenge to a county council in that situation, if it actually owns the land, is to ensure that the developer has a contract to deliver within a particular time frame and on a particular scale. The current position is that, as the money available in society has grown dramatically over the past ten years or less, the actual demand for housing has increased substantially. In addition to the growth in wealth of the nation, the population also grew dramatically and will continue to do so in future. The scale of the demand has been spelled out very well in the medium-term review produced by the Economic and Social Research Institute, particularly in Professor John FitzGerald's commentary on this issue he has been spelling it out for quite some time. Over the past decade and a half, we have been predicting the scale of the problem and the lack of adequate response relative to demand. However, we did not predict the accompanying cost increase. Some cost increase was inevitable because demand outstripped supply, but nobody had factored in the huge increase in the economy and the dramatic increase in incomes and resources. Perhaps I should deal with the issue of "first call on land". That has limitations. It is not so much an issue of first call on the land as of having sufficient land available to ensure the required scale of response to meet the demand. We are trying to find a way of doing that while, at the same time, avoiding a situation in which people can increase the cost as they please. Recognising the role of the market, the supply has to increase. We are trying to find a balance in that context. Chairman: We are already 15 minutes over time limit and there are five further speakers. Questions should be kept to the point and statements should be avoided by members. We have to hear a further six groups. Deputy Andrews: I will be as brief as I can. I welcome Fr. Healy and Sr. Reynolds. A previous delegation suggested that Article 44.2.6o, which refers to church property, should be deleted from the Constitution. That raises the issue of the supply of church land, in terms of land in the possession of religious orders, which may address the issue of supply to some extent. I invite the delegation's views on that. It was stated in the submission that constitutional rights should include socio-economic rights which are justiciable. Article 45 deals with that, to some extent, but limits it to the Oireachtas and is aspirational. Is the delegation aware of any constitutional framework, in another country, for socio-economic rights which are justiciable in that regard? 54 Fr. Healy: On the question of the availability of church land to make some contribution towards dealing with the housing issue, that is already the case. A particular example is that of Dublin City Council, which is, perhaps, the local authority with the greatest problem in this context in that I understand it will run out of land for housing by 2008 or 2009, in terms of its current development plan. Religious congregations have supplied very substantial amounts of land at very low cost to Dublin City Council, as has been acknowledged by the council, for social housing of one kind or another. That action has not been confined to Dublin - many congregations have supplied land to various organisations involved in social housing, as well as local authorities. At least four or five of the main social housing organisations were established by religious congregations, which continue to make a very substantial input to the situation at present. On the question of constitutionally justiciable socio-economic rights in other countries, South Africa is one such example. Senator Ormonde: The thrust of the delegation's submission appears to be in terms of giving control to local authorities and redistribution of wealth, either through legislation or amendment of the Constitution. Redistribution of wealth is a difficult issue to interpret in a broader sense. I could elaborate further, were it not for the time constraints on this meeting. Fr. Healy: We did not suggest that there should be a social right in relation to redistribution of wealth. In our submission, we set out seven social rights, the first being that every man, woman and child has the right to sufficient income to live life with dignity, including appropriate accommodation. If that is to be achieved, it will obviously entail a certain redistribution of wealth in society, particularly where we have the widest gap in the European Union between those who have resources and those who do not. Sr. Brigid Reynolds: That was demonstrated last week in a United Nations report. Fr. Healy: Exactly - that is an issue in that context. We are not proposing a provision in the Constitution about redistribution of wealth; we are saying that a series of socio-economic and cultural rights should be recognised in the Constitution. That has a redistribution component as a subsequent corollary to it - it could not be done otherwise. Senator Daly: The State, as Fr. Healy is aware, got involved in land acquisition and division over a period of 30 or 40 years under an agricultural restructuring programme, the outcome of which did not affect the price of land in any way. While the delegation's proposal is interesting and, at first sight, looks enticing, I am not certain it would succeed in the long term, just as the restructuring of agricultural land did not succeed. Another difficulty is that there would not be uniformity in terms of the level of activity on the part of local authorities and, consequently, results would be uneven. There are also implications for smaller 55 towns and isolated rural areas. The wealthier areas could afford to acquire land and develop their housing supply at the expense of denuding western rural areas of their population. While raising those issues, I also wish to express my appreciation of the huge contribution of Fr. Healy and Sr. Reynolds to the development of social policy over many years. Chairman: That is duly recognised. Fr. Healy: In response to the Senator's three points, I believe there is a fundamental difference between our proposals and the Land Commission experience. While the price of land may not have been affected in the Land Commission situation, it would very definitely be affected in the issue we are addressing. In the example we gave, instead of costing €10 million, it would be available at €1.25 million. Clearly, the price of land would be affected. The key problem, having regard to the issues raised, is to ensure there is a gain for those who ultimately purchase the houses which are provided. We are trying to deal with that by providing that the supply would be increased through this process. The local authority consequently would be able to provide land and ensure that sufficient units were built to substantially tackle the supply problem. It is true that uniformity is not guaranteed across the country. The challenge will be for local authorities to ensure that their own areas are properly looked after and that they do not let the whole thing go to the active ones. Given that we support devolution and attempts to give more power to local authorities, we would see that as a step in the right direction. Society must face up to the danger of denuding the western areas. The west needs a number of things, a fact which is recognised in the Government's spatial strategy. Our proposal would sit very neatly with the spatial strategy and could be used by different county councils. Councils could have a role in preventing depopulation, particularly given the compulsory purchase component of what we proposed. Deputy Morgan: First, I apologise for missing some of the presentation as I was unavoidably detained. I read the presentation most carefully last week and I could not help being taken by the references to various Popes. It struck me at the time that political parties could produces quotes from the various leaders which would be laudable but the trick is to implement them. I agree with much of what Fr. Healy proposed and compliment him on the submission. Does he believe there is a need to change Articles 40 and 43 of the Constitution to effect the implementation of his proposal? Fr. Healy: Any change that is required in the Constitution to deliver on a rightsbased approach and the justiciability of that, in addition to the issue of compulsory purchases and rezoning, should be made. Deputy Morgan: How can that be done? 56 Fr. Healy: We are getting the same advice as Deputy Morgan, which is contradictory. He has much greater access to constitutional expertise in this area than we have. A change is required in respect of the justiciability component of the socio-economic and cultural rights because that is not in the Constitution. On the actual rights, we would prefer them to be spelled out in the way we specified, because there are no ifs, buts or maybes about them; they are very clear. At the moment, they are not necessarily that clear, although, given the fact that the Constitution is a legal document that may be open to interpretation. We are certainly of the view that one does not need constitutional changeto give local authorities the power to zone land. In effect, it is a case of rezoning land that they already own, which we think could be done relatively quickly. In terms of the housing issue, we are conscious of the urgency of action in this area. This was the issue that precipitated the setting up of the current discussion of this issue by this Oireachtas committee. Action could be taken along the lines that we propose without, necessarily, changing the Constitution. Deputy J. Breen: What controls are envisaged on the price that a developer can charge for houses? Fr. Healy: It will be up to the local authority to work that out. Everything must be done to ensure that building comes on-stream and that the situation does not arise whereby a developer does nothing with a site which has planning permission. That would completely defeat the purpose of the exercise. It may be necessary to impose a time limit of two or three years for the completion of work. Sites which have not been developed within such a period should be given to somebody else. It should not be that difficult to handle such a system. Senator Dardis: I thank Fr. Healy for his contribution. The people who got land bonds would not agree with his proposition that they got the market value for the land. People who were paid for land by the Land Commission in land bonds would say that the bonds had no value. Fr. Healy: That was not the point I was making. I was not engaging in that aspect of the issue. Senator Dardis: If we accept what Fr. Healy said about housing, we cannot take it in isolation; land is also required for infrastructure and industry. How do we reconcile these competing interests? Should they be dealt with in the way suggested by Fr. Healy or should the needs of housing be given priority? Fr. Healy: We propose that no land should be rezoned that was not already in the ownership of the local authority. One has to provide infrastructure, which is a budgetary issue. I did suggest earlier that there could be a provision to allow the local authority to gather extra money without paying anything remotely like the 57 value of the land post-rezoning. That is one way in which the infrastructure could be put into place. The national development plan, which I accept is behind schedule, is supposed to provide adequate infrastructure to meet the requirements of the country to 2006 and the scale of that should be adequate to meet existing needs. Senator Dardis: I do not refer to the need to provide infrastructure; I refer to the value of the land for the purpose of infrastructure and industrial development. These interests are competing with the need to build houses. Fr. Healy: Land is required for infrastructure, other development purposes and housing. We are talking about all of the land involved. The price paid for it would be the same, that is, the agricultural value of the land plus 25%. Deputy McCormack: If 40 acres of agriculturally-zoned land comes up for sale beside any city, town or village, the local authority buys it, is Fr. Healy's suggestion. He also suggests that it should give the responsibility for zoning to the owner of the land. That is a dangerous precedent no matter how one looks at it. The landowner will zone it in the next development plan for whatever is the perceived requirement. One will then have to wait for services and everything else to be put in place. This proposal is fraught with danger and I am merely pointing out the difficulties that can arise. That responsibility cannot be given to the owner of the land. Senator Dardis: To follow on from that, how does one prevent the profit being transferred from the owner to the builder of the houses? At present, the owner of the land and the builder stand to make a profit. Fr. Healy's proposal deals with only one aspect of the matter. How can one stop the builder from profiteering? Fr. Healy: I will come back to that. Senator Dardis: They can stand back from the market. They do not have to get involved with the local authority. Fr. Healy: We can do both. Models exist for doing that. If I can deal with the previous point first, that the responsibility for rezoning is being given to the owner of the land. Our view would be that the owner of the land in this case, i.e the local authority, is fundamentally different to a private owner because local authorities are composed of elected people. Deputy McCormack: No. Fr. Healy is giving the power to the manager of the executive who has power to alter the county development plan. The power is being given to non-elected people. 58 Fr. Healy: At the end of the day the plan must be approved by the local councillors. Are the committee members telling me that the members of a local authority do not approve the development plans? Senator Dardis: Under the most recent Act, the manager can make the plan. Fr. Healy: Yes, but there are conditions around which this must happen. I find this most interesting. Although I am surrounded by many people who are members of local authorities, I am the one defending the power of local authorities. I am strongly of the view that one should never take decisions up to a higher level than is required. The kind of decisions we are talking about here should be made locally. I do not support the argument that all such decisions should be made in the Custom House. Senator Dardis: In seventh heaven, is that it? Fr. Healy: Even in the Church I am a great believer in decisions being made locally. Senator Dardis asked how one can stop the person to whom one sells the land from making dramatic profit. In Canada, for example, the authority designates to the developer the right to built X houses for a specified amount, Y houses for another specified amount and Z houses for yet another specified amount, all to be built in a particular integrated way. This was used particularly as a mechanism for integration, but in this context it could also be used for capping the cost of the houses. This is one possibility and many other examples exist which, if applied, would ensure that it is not simply a question of transferring the profit from the landowner to the builder, which is the danger the Senator is highlighting. This can be dealt with----Senator Dardis: Father Healy has confirmed my view that it would require an intervention. Fr. Healy: Absolutely. The intervention is a local one and not a constitutional issue. We were dealing with the constitutional elements of the issue in the submission we made here. The committee has probably read some of our other submisions to Government on housing. We have quite a lot of other proposals apart from the ones under discussion. Chairman: Regrettably, we have exceeded the time allowed, which obviously indicates the amount of food for thought Father Healy has given to the committee. I thank him for his interesting submission. The next function of the committee, after it has dealt with property rights, is to look at the area of disabilities - intellectual and physical - and the rights of those who suffer therefrom under the Constitution. Father Healy may want to make a submission 59 on this matter, which I hope we should deal with some time next year. We will certainly take on board many of the points he made. Fr. Healy: I thank the members of the committee. Sitting suspended at 3.12 p.m. and resumed at 3.15 p.m. Chairman: I would like to welcome the Dublin 15 Community Council Group, represented by Ms Barbara Brennan, Ms Irene Martin, Mr. Ciaran O'Neill and Mr. Charlie Kurtz. I apologise for the slight delay but things seemed to overlap beyond our control. I remind visitors that members of the committee have absolute privilege but this same privilege does not apply to witnesses appearing before it. I invite the delegates to make a presentation of approximately six to eight minutes in length, which will be followed by a question and answer session. We have already received and read the delegates' detailed written submissions so I suggest that they try to synopsise the important issues. Committee members should only ask succinct questions and not make extended statements. We will try to adhere to our schedule because further delay will cause problems for the other four groups with which we have to deal. Ms Barbara Brennan: I thank the committee for inviting us. Dublin 15 Community Council was formed 13 years ago to provide an umbrella organisation for many residents and voluntary community groups in the Dublin 15 area. We are a completely voluntary organisation comprised of more than 30 residents' associations, environmental groups and community organisations. The affiliated residents' associations come from local authority estates who have experienced long-term disadvantage, new estates, established estates and very affluent estates. Our main objective is to develop and convey the consensus of the Dublin 15 community on matters relating to planning and development, infrastructure, public transport, environment, job creation, education, crime prevention, etc. The Dublin 15 area has grown at an unprecedented rate. In 1990 it had a population of 40,000 and it has in excess of 80,000 today. The area is changing from an outer suburban region to one of higher density. Prior to 2000, our developments were mostly two-storey, semi-detached buildings whereas most new developments are apartments or town houses. With the increased density there is sufficient residentially zoned land for 120,000 people. Based on the rate of development since 1990, it is expected that this population will be reached by about 2010. Our area is predominantly development-led, with infrastructure in continuous catch-up mode. Examples include a shortage of schools, overcrowded public transport, distributary roads constructed up to ten years after the first phase of development. This has resulted in an 18th century road network with 21st century housing. Current circumstances need to be changed so that infrastructure leads development. The Constitution needs to change to ensure that new developments are sustainable. 60 Mr. Ciaran O'Neill: The 1937 Constitution protects the rights of property, and this is what the committee is reviewing. Since the original Constitution was framed, two significant changes have taken place. The urban population of the State has exploded while the rural population has decreased. This is most evident in the expansion of the Dublin metropolitan area. The planning and development Acts from the 1960s to date have conveyed a value on development land. In practice, land is rezoned from agricultural to residential or industrial status to meet the projected needs of a local authority. The value of that re-zoned land is significantly increased and results in a large windfall gain to the individual landowner. To realise the development potential of that land when it is rezoned from agricultural to either residential or industrial use, several things have to happen. The developer needs to construct the internal roads, water, sewerage system, power and telecommunications within the estate. The State, either nationally, locally or through its utility companies has to provide a sewage treatment plant and distribution to the boundary of the estate. Recent examples in Dublin are the upgrade of the Ringsend waste treatment plant and the south Fingal fringe, which is a new major pipeline running along the north side of Dublin city to serve new development areas. These are all provided by the State. It also has to provide water treatment plants and distribution of that water up to the boundary of the estate. Recent examples in our area are the upgrade of the Leixlip plant and two new rising mains from the Leixlip water plant to the reservoir in Blanchardstown. The State also has to provide the road network and upgrade the capacity to the boundaries of that estate. Schools need to be built and the land will now have to be purchased at residential land values which is incurring additional expense by the State. Transport needs to be provided to the new areas and in Dublin 15, with the way in which the capital has grown, that means public transport. The State has to build commuter railways and provide capital for any new carriages and, as shareholder, needs to provide the capital for additional buses to serve the new area. In our submission, we note that the differential value between the development land and agricultural land is directly attributed to the provision by the State of the necessary infrastructure which is schools, water supply, sewerage systems and road and rail transport infrastructure. While it is true that the developer has to construct the last piece within the land, the expensive part is constructed by the State and the developer's infrastructure is useless without the rest of the backbone. We do not believe that the originators of the Constitution intended that the State and its tax payers should fund the development value of zoned land while allowing the property owner to absorb the development gain when the land is rezoned. We believe the current position needs to change so that infrastructure leads development and that the Constitution needs to change to ensure that new developments are sustainable. Ms Irene Martin: On infrastructure, which seems to fall between everyone's rights, the framers of the Constitution would not have intended that the majority of people going about their daily business would be so victimised by the few who 61 have gained enormously from all of the development which has taken place in the State. I can speak with more experience of Dublin. Like many others, I have seen my area grow from a very small old village into a massive city which is still being catered to by the infrastructure which was built for the villages. The unfortunate part of the development of our district, which I can see applies to all of the other surrounding areas, is that the only thing which has been built has been houses - places for people to sleep in and struggle about their daily business. The infrastructure is the single biggest problem for all neighbourhoods and communities. The systematic failure over a decade to provide roads, public transport, schools, recreational facilities for newly emerging communities in advance of development is exacting a high price on communities. It prevents them from becoming cohesive bodies as well as all the civilising influences of settled communities taking place because people are out of their homes from 7 a.m. until 7 p.m. They do not see their homes in daylight except for two days a week. It makes child rearing extremely difficult and is destroying the family unit because of the unavailability of families to be together for any period of time. We ask the committee to consider the reasons our planning and development processes have allowed this to persist for so long. Infrastructure is the single biggest impediment to a good and decent lifestyle for people who should be protected by the Constitution. It was intended that people would be protected by it in their daily lives. We appear to have allowed the benefits of policy decisions accrue to the few and, by the same token, failed to ensure that those benefits are passed on to the wider community in the form of provision of schools, public transport and better quality housing and other facilities. We have allowed residential density guidelines to be introduced which have insisted on higher density housing which generates high profit for development land. However, the Government was due to guarantee or promise high standards and safeguards for the residents of those areas and they have not been delivered on. It seems that every time a new set of guidelines is introduced, they have been cherry-picked and allowed by the authorities - who are there for the benefit of the community at large - to accrue to the benefit of the minority. No benefits have been passed on to the communities who are paying for these homes and areas. If a development is less than one kilometer from a rail corridor, for example the Maynooth rail line, high density is encouraged and insisted upon by the local authority. However, there is no regard to the carrying capacity of the railway line or the provision of feeder services to that railway line, nor are extra services introduced on the line. Every year there is a slight grudging increase while the communities increase at enormous rates. The developers are ploughing ahead with high profit schemes and the authorities are not ensuring that matching services and facilities are provided in parallel, let alone where they should be, which is in advance of housing. Another important area in developments is their taking in charge by local authorities. Many developments have been built for years without being taken in charge with the result that people are living on virtual building sites. They are short of absolutely basic services such as transport because the developments 62 are not fit to be driven into. Therefore, people must provide their own transport for these areas. They are abandoned by the developer, transport providers, local authorities and there seems to be no one in charge of people's living standards in an area which will remain a no-man's land for years. We ask the committee to devote some time to this issue, particularly since communities' access to the planning system is being significantly reduced. When we want to access the planning system, we have to pay all along the way as if we were professional bodies working through the system for gain. On many occasions, community and residents' associations are only interested in the residents and the communities which are forming in those areas and which have been utterly abandoned by the authorities. Instead of having to pay for access to the planning system, it should be basic that all community organisations have total access to it. When these same impediments are put in the way of developers, they immediately complain about delays in the planning system, that they must have planning decisions completed within a given time frame. All of the weight is with the developer in terms of the benefits to be gained. The people who will form communities and make a life for future generations are far down the list of any priorities. We need protection of the common good in the planning process. Mr. Charlie Kurtz: The planning and development process is the cornerstone of the area in which constitutional property rights are exercised. We see it as one of the key issues for the committee to consider. It has a material and lasting influence on society and the environment and largely determines where we live, the type of housing we occupy and the type of community we live in as well as the availability or absence of infrastructure and facilities necessary to sustain a modern community. Hence the importance we place on the planning system and its associated processes being beyond reproach, inclusive and transparent. It is in our opinion the primary vehicle for delivering an environmentally sustainable and socially just society. The planning system is regarded as developer-led by many in the community and many commentators. Many difficulties are currently being experienced in facets of Irish life which can be attributed to the inadequacies and lack of balance of existing planning and development processes, the lack of access to the system, exclusion from pre-planning discussions and the enforcement process. Some of these are the inability to influence outcomes in our own areas regarding the formation of development plans; the impact of the planning and development process on house prices; the failure of initiatives to arrest property price inflation and the various guidelines of the Department of the Environment, Heritage and Local Government; the failure of national spatial strategies and so forth. The process is failing to deliver sustainable development in the wider sense and failing to meet the various needs of modern Ireland and its people. Hence, we place great importance on the work of the committee in this area. There is a need to undertake a radical review of the checks and balances in our Constitution with regard to property rights to ensure that it serves the needs of society and the greater good. 63 One of the key proposals within our submission is a suggestion that we try to arrest inflation of residential property prices by forming a new agency. Having listened to the presentation of CORI, I can say that our proposal is not wholly dissimilar to theirs. What we are proposing is the formation of a national land bank management agency which would be responsible for taking in charge development land and holding architectural competitions for its use on a nationwide basis. That would allow consistent and across-the-board implementation of the national spatial strategy; it would give consistency to future Government policies and initiatives involving planning and development and ensure that they were fulfilled. It would also carry out reviews and assist with the delivery of county and city development plans. We have suggested in our submission that the agency have the development of land, both residential and industrial, vested in it. It would allow the developers to develop the land under licence; they would tender to build in a particular area. Also, by having open competition we could generate a competitive, lowered price for the building of property in a particular area. The proposed agency would also help to establish a mix of use for a particular development area, such as integration of housing rather then having just apartment blocks or three-bedroom semi-detached houses. Through this a viable and sustainable community would be allowed to develop. The agency would be able to insist that infrastructure be provided ahead of development, as is the case in countries such as the Netherlands. The Dutch model has been widely practised for the last three decades. Infrastructure must be provided before residential accommodation is allowed to proceed. We see no reason a similar type of model cannot be implemented over time in Ireland. The agency would seek tender prices for the sites and licences to fund the development of which we spoke earlier, infrastructural development such as drainage, major road networks and so on. It would also provide a rationale for the rezoning of lands from agricultural to development by ensuring a consistent approach across the board by the agency. It would act as a clearing house for development plans. We are not proposing that local democracy be superseded and Big Brother step in. We are asking that county and city plans be undertaken by councillors in conjunction with the formation of development plans as is done at present, but that they be subject to sanction by this higher body which would effectively ensure that the Government's national spatial strategy is brought into effect. Recently we heard a High Court judge questioning the Meath county development plan. The judge said that landowners and individual concerns were taken into account rather than the wider good. We also see this agency as a useful economic tool for regional development; it could attractively price housing in the regions such as Galway and the midlands, thus ensuring that factories and businesses would want to relocate to these areas. On the Constitution itself, we agree with much of the preparatory documentation with which the committee supplied us. It was well presented. We feel that an individual's right to property should be protected. However, balance needs to be restored. Up to now, the rights of individual landowners have superseded the 64 rights of the common good in the way that the legal and regulatory framework has been developed and particularly in the planning and development process. Deputy Neville: I thank the representatives for their interesting presentations. While their suggestions were laudable and necessary, I put it to them that it is not necessary to change the Constitution in order to have these matters attended to. At present the Constitution would facilitate the Legislature doing all they have requested. For example, there is no difficulty about introducing development charges to ensure that infrastructure is put in place. Others would suggest that if such an approach was adopted, because the market sets the price of the house, any charges would come off the price of the land. Supply and demand decides the price of the house. If we were to insert such a provision into the Constitution we would have court challenges over a number of years which would delay further what the delegation wants to achieve. Perhaps it is the responsibility of the Legislature to ensure that these objectives are enshrined in law. Mr. O'Neill: The key point we are trying to make is that the development value of the land is paid for by the State. We need to consider the value of property. Deputy Neville: We can alter that without changing the Constitution. Mr. Kurtz: We should consider the way the development levies are exacted out in practice at present. A significant number of appeals to An Bord Pleanála are in fact developers appealing the size of levies. Levies are frequently overturned or reduced by the board. Deputy Neville: The board responds to the Acts which direct it. It is our duty to change those if they are not working. Mr. O'Neill: By and large, they are not working. The reason we have suggested a constitutional change is that individual property owners have been successfully defending their rights more effectively than the legislators have been defending the common good. They have used it to their advantage in the past 30 years in particular. Deputy Neville: We should change the Constitution because of the failure of the Legislature to protect the common good. Mr. Kurtz has a point. Mr. O'Neill: The other point is the ambiguity of "private property". We have tried to demonstrate that the State provides the development value by virtue of its investment. Deputy Neville: That can be changed without changing the Constitution. Mr. Kurtz: If the Legislature can undertake that, fine. We are not experts on the Constitution but our experience is the failure of the current system to deliver 65 adequate infrastructure to communities and the failure of development levies to fund that infrastructure. It has not happened despite changes in the Planning and Development Act 2000. There is a public transport levy under the Act but we are aware of very few examples of where it has been applied. We are the communities that live without the infrastructure, we are the ones on the crowded trains. If a constitutional change is needed to reinforce the Act and make it solid, we should consider it. We do not have the expertise to argue the point in detail if it can be done through legislation we should do it that way because it is cheaper and quicker. We agree with that. Chairman: We are under pressure for time. I accept that the witnesses are not lawyers or constitutional experts but are from a community council and members of the committee should understand they do not have all the answers. I accept that what they are saying is happening. Senator Ormonde: I thank the council for its submission and I agree with many of the points it made on development and infrastructure. In any new development structure, however, there are levies introduced and infrastructure is phased. That has taken place in some councils. We are here to discuss the protection of private rights versus the common good and how to strike a balance between the two. This issue could be addressed through legislative change rather than a constitutional amendment. The concept of a land agency was raised. I have no difficulty with tidying up the legislation to give everyone a quality of life but will such an agency duplicate the work of a body such as An Bord Pleanála or the NRA? There are many agencies dealing with this. Mr. Kurtz: Even the Minister for the Environment, Heritage and Local Government has had problems implementing the national spatial strategy because councils are not properly fulfilling their requirements. There was a reference earlier to An Taisce and another party that took Meath County Council to task over this in the High Court. It was found that the interests of individual land owners were looked after rather than the requirements of the national spatial strategy. Senator Dardis: We should make the point that the plan was upheld. Mr. Kurtz: It was, but it was also found that there was not full compliance with the spatial strategy. There is an issue where development is taking place in inappropriate areas. That is why the Government introduced that national spatial strategy. Senator Ormonde: How would the council define inappropriate? Mr. Kurtz: Last year houses in Dunboyne were under seven feet of water with a further instance of similar flooding in Lucan recently. There are areas with no 66 provision for roads, schools or public transport, inappropriate developments where people have to travel great distances just to commute from work to their homes, and the Government is trying to avoid such unsustainable development. We all accept that this is a problem in Ireland. People are spending greater lengths of time getting from work to home. On Saturday, The Examiner, in its editorial, pointed out that high house prices are linked to suicide. Property rights are having a major impact on people's lives and the absence of the protection of the greater good is having a real impact on the quality of life. Senator Tuffy: A national land bank agency was mentioned. The council said it does not want to get rid of local democracy but it is describing a body that would own and manage the land. Would that be at odds with local democracy? Local authority officials would know the nuances of an area better. A national body with a lead role would go much further than simply overseeing the process. Are local authorities using the powers they already have to protect those people living in the area? If they do not have the powers, could they be granted such powers by legislation? It was stated that infrastructure should be in place before a development. A developer would reply that he funds the infrastructure by the sale of houses. How would that conflict be addressed? Is there a role for developers in the provision of infrastructure? In the submission, the State provides the infrastructure and it is refunded through receipts from tenders for the land. Is there an alternative to that? Financial sustainability is an issue in that area. Mr. O'Neill: We see the agency implementing the decisions made by local councillors. The councillors will retain the power to zone land to meet local needs but the agency would implement the decisions. It takes years for developers to build roads. In Clonsilla a huge development was put up but only now is the local authority building the Ongar Road, the main artery in the area. Our experience is that developers are slow to provide infrastructure. They are quick to use the 18th century network but slow to provide the modern major arteries. A large amount of additional infrastructure is needed to make the area sustainable and we are suggesting that the agency would buy the land at around existing use values and provide infrastructure that would then lead to development. As part of the additional value between agricultural and residential or industrial, that value would be used to provide the infrastructure before the development takes place. To illustrate that, approximately 20 years ago Dublin City Council provided a lot of local authority social and affordable housing in the Clonsilla area. As part of that, I had a conversation with the local headmaster and the school was built a year before the children were available to go into Hartstown school, whereas now the opposite is occurring. The developer is lagging behind. There is huge demand for schools and the schools are very slow to be built. I am sure members are aware of the budgetary constraints on building new schools. The fact that a five acre site has to be bought at residential values is a huge cost to the State. Our proposal is about using the value to provide the infrastructure in advance of the development. 67 Chairman: We are way over time. Deputy Devins has a question. Deputy Devins: Many of the issues raised can be dealt with by legislation but I specifically refer to page 10 of this submission which contains a comment on the Constitution, which is what we are talking about today. I am a little confused because the comment is to the effect that the Constitution should expressly protect the rights to property but it goes on to state that such property rights can be qualified, restricted or, in some cases, even extinguished by law. If I understand the delegation correctly, they are more in favour of the common good than individual property rights. Would that be a fair summation? Mr. Kurtz: That would be fair. We are not proposing, for example, that individual house owners should not have a right to own their homes. Individual property rights exist but they do not have primacy over the common good, so to speak, in a particular situation. Deputy Devins: I wish to focus on that point. If it was decided tomorrow to build a motorway running through Clonsilla, Mulhuddart or wherever which would impinge on the homes of 30 or 40 people but which could be demonstrated to benefit up to 50,000 people----Mr. Kurtz: A test of proportionality would have to be introduced. In the guidance notes on the Constitution, for example, there is reference to the European Convention and the test of proportionality. Everything must be proportionate to the benefit gained. Deputy Devins: We would be coming from the point of view that the common good in that case would be greater than the----Mr. Kurtz: That would have to be clearly demonstrated. It would not be based on an individual's opinion. One would have to clearly demonstrate that the common good had to be served. We had an example recently of the type of case the Deputy is talking about with the widening of the M50 to three lanes. A proposal was put forward to compulsorily acquire a number of residences in the area. The community got involved with the National Roads Authority at an early stage in the consultative process and pointed out that there was a better way to do it. The NRA came back a second time, having taken on board our consultation, and reduced the number of houses to be compulsorily acquired from eight to one. The NRA listened to what the community had to say in that case. That was a proactive example of the consultative process working and an agency being responsive to a need, listening to what the members of the community were saying and the community accepting that they would lose one or two houses but not ten, as originally planned. 68 Deputy Devins: I accept everything Mr. Kurtz is saying, and it is right and proper, but this committee is examining the Constitution. Is Mr. Kurtz more in favour of the common good as distinct from the individual? Mr. Kurtz: Yes. By and large, we would see that as carrying greater weight. Senator Daly: I compliment the delegation members on the huge effort they put into the production of this document. As has been pointed out, we are dealing with specific issues relating to the Constitution but a number of committees of the House deal with issues such as development of rail service networks, roads authorities and so on. The delegation should seek an opportunity to raise the many points in this document with the relevant committee dealing with those issues. I compliment the delegation on its work and thank them for their presentation. Chairman: Is the delegate saying he would like to see constitutional as well as legislative change? From your perspective, living in Clonsilla or Mulhuddart - the same could be applied to Tallaght and other growing areas. Does the delegate believe the system has let him down? Mr. Kurtz: It is unfair to society in general. Even the Taoiseach expressed concern about the control of development land in particular. The social and economic importance of development land now rests in the control of a very few people. We are asking the committee if we are adequately protected under the current provisions of the Constitution with regard to all the issues we have raised. Our view is that we are not but the members believe there is a way for them to deal with it through the existing powers and legislative process. If that is the case, we urge the committee to use those powers wisely. The committee has an opportunity to make a lasting impact on our social and economic development. Chairman: Following our deliberations, if our committee were to suggest a reasonable wording for a constitutional amendment, would you, as a community council, actively support it? Mr. Kurtz: If it was reasonable and proportionate within the overall context of a just and socially equitable society, we would say "yes". We believe in live and let live. Chairman: The group has presented a very professional and well laid out submission. I would have liked to have spent more time on it, and I hope the delegates do not get the impression that we are trying to rush them, but we are running late and we have other groups to meet. We will take on board the submission which will form part of our report. I sincerely thank the delegation for attending and answering the questions put. I found the discussion very thoughtprovoking. 69 Mr. Kurtz: Thank you very much. Sitting suspended at 3.57 p.m.and resumed at 4.02 p. m. Chairman: I now welcome Mr. Roger Garland, Professor Frank Winder and Mr. David Herman from Keep Ireland Open. I remind them that while members of the committee have absolute privilege, the same privilege does not apply to witnesses who appear before it. I invite delegates to make their presentation in approximately eight minutes. We will then have a question and answer session. We received your submission which I found very interesting. Mr. Garland: Our submission is quite short and is limited to the issue of the right of access to land. It is in two parts, the first endeavouring to answer as best we can the recommendations that the committee is suggesting. Many of them were not relevant to our issue so unless any member wishes to ask questions I propose in my submission to deal briefly with the background. When the 1937 Constitution was written there was a de facto freedom to roam all over Ireland. Virtually no area was out of bounds, and people who walked for recreational purposes or used the countryside for fishing had a ready welcome. There were few if any problems in those days. It was assumed that, provided people did not do any damage or inconvenience anybody, they could wander about. Unfortunately, the position is very different now. In some respects we are happy with the Constitution in so far as it would be our intention at some stage to promote freedom to roam legislation for about 7% of Ireland's land space. We are not experts in constitutional law so we looked further at the issue. For this legislation to be introduced we should consider an amendment to the Constitution on the following lines: The State acknowledges the right of access to land regulated by law in a manner and at locations compatible with the protection of the environment, the carrying out of agriculture and other legitimate uses of land, privacy and other appropriate considerations. We are conscious of property rights. Property carries duties and responsibilities but property owners have, and should have, extensive rights but these should not necessarily exclude a reasonable freedom to roam. David Herman will talk about what happens in other parts of Europe. Mr. David Herman: According to Bord Fáilte, overseas walking tours brought in €144 million in 2001 and that was the year of the FMD outbreak. We attracted more people to Ireland for walking than for golf, angling or cycling. In addition, there are many residents who walk for exercise and enjoyment. The Bord Fáilte strategic development plan 2003-06 states: "Let it be emphasised once again that access is the most critical issue for the developers of the walking product right now and needs to be solved post-haste." This is not going to wait five or ten years. Ireland is at variance with any country we have studied, including Sweden, the UK, France, Germany and I am not sure about Austria and 70 Switzerland. Every country we have studied has some legal provisions for people to walk on suitable terrain. The suitable terrain in Ireland is rough grazing land, not crops or the area around people's houses. This amounts to only 7% of the country. In Scotland, our direct competitor for tourism, the parliament is bringing in legislation to allow freedom to roam everywhere, except in the immediate vicinity of buildings and across pastures. We have no hope of maintaining our walking tourism if we cannot match that or at least go some way towards it. This is a serious matter and it is getting worse. There are clashes all the way down the west coast and that is the area where there are fewest walkers. In Wicklow, by contrast, where there are many walkers, including some who do not behave well, farmers have been co-operative and there are no problems. The problems are in the area where one would least expect them. For many years I wrote books on hill walking but I gave up a few years ago because I did not know from one day to the next where I was going to be turned away or where someone would forbid me to walk across their land under any circumstances. I enjoyed writing the books although I did not make much money from them but I gave up because I was not going to go to every farmer and commonage holder to find out whether I could walk across their land. My giving up the books may be a small loss to the country but we will have to act quickly to maintain any walking tourism product. Chairman: I must confess a particular interest in this activity as I was involved in West Cork with the Slí Muintir Bhaire, the Sheep's Head way and the Beara way, where there have been some recent difficulties. I understand the difficulties mentioned as it took us three years to establish the Muintir Bhaire way. While I laud the approach made by the group, I wonder if it would be more appropriate to use consensus with farmers, particularly, and commonage holders in these cases? Landowners - farmers and land developers - are extremely nervous about insurance problems. There was a recent decision in Donegal concerning an accident where a farmer unknowingly and unwittingly was hit with a substantial claim. Where can this problem be alleviated? Another point that came up in West Cork, and probably other counties, under the first REPS farmers who allowed access through their land to archaeological sites received a top-up payment. The argument by the Minister for Community, Rural and Gaeltacht Affairs, Deputy Ó Cuiv, and the Minister for Agriculture and Food, Deputy Walsh, is that this is not a top-up payment rather an effort to compensate farmers and to ensure access is maintained. One of the earlier submissions to the joint committee was that for the genuine person who would keep a 60 km route walk open and maintained it twice annually there should be some form of compensation. Mr. Garland: We are involved with the agri-tourism consultative group. I have attended several meetings of the group and that is precisely what we totally support. Of course, if farmers are involved in maintaining stiles, keeping the brambles back and so on, they should be paid for it. There is no problem with 71 that. The Chairman is quite right in saying that the supplementary measure 5 from REPS has ceased. There is no longer any payment from the scheme and there is no immediate prospect of it being restored because the EU takes the view that farmers are already paid under CAP and that there should be no further payments to farmers for access to their land. It is not really a question of getting over it. If a farmer spends time mending stiles, he is entitled to be paid for it. On the voluntary approach, we have tried it and it currently works reasonably well in Wicklow. However, we never know when it is not going to work. As far as the Beara Way and the Sheep's Head Way are concerned, every now and again if the IFA have some barney with Duchas or the Department about something, it always claims it will close down the rights to permitted footpaths. This is a constant threat. Bord Fáilte raised this issue. If one is walking a long distance path, one could have 50 to 60 owners to deal with on the route. One section in the middle of the route may be crucial and if that is closed, the whole walk is ruined. On occasions on the Beara Way, a particular section of the walk is closed. We have tried another approach but it has partially failed and is liable to failure at any time. For that reason, we have no hesitation in saying that we need a more legislative approach. That is not to say we should not co-operate with farmers. My colleague, Mr. Frank Wilder, will deal with the issue of liability which is important. Mr. Frank Winder: Members will be aware that the Occupiers' Liability Act was introduced in order to avoid difficulties that had occurred. It was recognised that the recreational users and landowners had no common law duty of care. Traditionally the landowner had a requirement not to deliberately harm the recreational user and not to act with gross carelessness. Otherwise, it was up to the recreational user to provide for himself and have insurance cover or whatever was required. All seemed to be well for seven years. Then there was a case in County Donegal and the whole arrangement was thrown upside down. I understand, from several sources, that the decision is being appealed. A great deal depends on how successful this appeal is. If it is successfully that will be fine. If not, we are in real trouble. It is hard to see how the law can be amended again to get around this. Senator Dardis: I want to try to find some common ground if I can both from the viewpoint of the landowner and the user. I farm beside the River Liffey near Newbridge with walking paths along it which people say is a right-of-way, but it is not. As an angler, I am perhaps somewhat prejudiced. However, local angling clubs are beneficial to the landowners, because if they notice problems with livestock, they tend to make it known at the farmhouse. They maintain the stiles and have public liability insurance. Form that viewpoint, they are welcome as guests on the land. It has been my experience, that traditionally landowners wanted to allow unfettered access. However, Mr. Garland referred to responsibilities and it seems to me that people do not accept responsibilities when crossing farm land. I have had large areas of corn trampled down by 72 people accessing the river for swimming. I do not mind the swimming but I do wish to God they would leave my corn alone. I have also farmed in Luton, England, beside an urban centre where there was a public footpath across the land. The public footpath was defined every year when crops were planted and no one ever walked off it. It would be a naive expectation for that to happen in Ireland. There is a different psychological and, perhaps, legal view of this issue. Would it be acceptable just to have defined footpaths through agricultural property? Alternatively, should people be allowed to wander at will throughout the countryside? If so, will they accept that there is an attendant responsibility with being able to do so? An important point was made concerning the reaction of farming organisations. There is an example in that in the west of Ireland with fisheries where the fisheries boards are interested in protecting the fish stocks and water quality. The farmers are now denying access to rivers because water quality is being examined and they might be implicated in its contamination. Can we marry the two approaches? I wanted to create a Liffey Way as a member of a local authority all the way from Poulaphuca to Dublin City, excepting certain parts but neighbouring landowners reacted in a hostile way to the proposal. Does it require a constitutional amendment? Alternatively, could it be dealt with by way of legislation? Does this group want it enshrined in the Constitution? Mr. Garland: We are not constitutional or legal experts and do not have the resources to employ them. We would be much happier with the change we are proposing or some similar amendment to the Constitution. We have an open mind on that. We just want to ensure that if we succeed in getting legislation through the Oireachtas it is not struck down afterwards as being repugnant to the Constitution, which is not in anybody's interest. The Senator's first point was very well made and is very fair. To summarise briefly, we have two aims. We want to get lists of rights-of-way written into development plans, which is clearly something that does not require a constitutional amendment. This is beginning to happen. Counties are now beginning to put a proper list of public rights of way into development plans. This, of course, limits people to walking strictly on the path - and we totally accept that - in farmland, lowland, along rivers and in the places the Senator mentioned. Where we want freedom is on a typical hill, which is the area of most interest to us. Sometimes it is possible to access that open ground from the public road. One can simply leave one's car there and walk across the bog land, which is fine provided that we have the right to do so. However, in many areas, it is necessary to go through farmland, which is fenced in the normal way. One might have to cross three or four fields to get into the uplands. It is very much in the farmer's interest that we are not trying to cross his fences. We would seek a reasonable number of access routes - perhaps three or four - to a particular mountain area from the public road. Once we get to the mountain area with the rough grazing, we see no reason we could not walk anywhere and everywhere, 73 because the area should be largely unfenced with just sheep and perhaps a few cattle. We do not think that represents any inconvenience to anybody. I accept we cannot say to anyone that we can guarantee that people who access the land will act responsibly. We cannot guarantee that. The Senator rightly said people are more ordered and better disposed in Britain than they are here. I have to agree with that. It is a problem. I am afraid there is no easy answer to that one. Senator Dardis: I do not want to prolong the discussion, which is not particularly germane to the work of the committee. The excesses tend to become so repetitive that a farmer - even one who comes from a position of wanting to allow access - gets to the point of saying he has to stop this as it is ridiculous. Gates, crops, etc. are being damaged. Deputy Devins: I am interested in the group's statement that many of the problems are on the western seaboard. As one who represents a constituency in that area, I can see it from both sides. In the last general election, one candidate stood specifically on a platform opposing the right of people to roam on his land. In many discussions with him during the campaign he repeatedly made the point that there was no control over the number of people walking on to his land. As a result his land was being damaged and he questioned why he should suffer this damage, as he had done nothing wrong. How would the group answer that? Mr. Garland: I would answer that by saying that first I would very much doubt the veracity of the statement that he had lots of people there. The farmers in County Wicklow would have 20 times the number of people walking over their land and they are the very people who do not complain. The Deputy would be talking about hundreds of walkers in a year, whereas in County Wicklow there would be tens of thousands. Deputy Devins: I know the situation and I know there are many more than hundreds. How does the group answer the question? Mr. Garland: I ask Mr. Herman to respond, as I am somewhat lost for words. Mr. Herman: I saw this gentleman on television, a few years ago. He said that if he got £10,000 for one right-of-way, £20,000 for another and £10,000 thrown in for fencing, then it would not be so bad and he might accept it. He said, in my hearing, the sort of stuff the Deputy says when he said that if he got €3 from everyone who went through his land it might be a different matter. This man is out for money. The number of people who are in that area and cross that land is very small compared to the number in County Wicklow, as Mr. Garland has said. I have been walking for 35 years and as far as I know very few walkers cause any damage. The damage is caused----- 74 Deputy Devins: I do not want to focus on one particular person. My question has still not been answered. If many people walk across the land and cause damage, who will pay for that damage? Mr. Herman: This is the sort of thing that could happen in County Wicklow. A right-of-way should be provided and compensation paid to the landowner. If things are genuinely very bad the entire area can be blocked off. That is all that can be done. We do not want to be unreasonable. However, that is not the situation in County Sligo. Deputy Devins: How would the group propose blocking off the area? Mr. Herman: This can be done by saying people cannot walk in the area. If people misbehave that is all that can be done. Senator Daly: The solution probably lies in agreement between those who want to walk and the landowners. In my constituency gun clubs for instance have been able to negotiate with landowners rights to shoot over the land. That was done in a formal and organised way under the Wildlife Act, I believe. Public notices were published and agreements were signed with farmers. The farm of any farmer who refused to sign was excluded from the area in which people could shoot. There have been some problems in Clare. I need not mention the Burren and Mullaghmore. As I am sure the delegation is aware, there is an on-going problem in the Burren area where farmers have legitimately complained that their cattle have been allowed to wander and damage has been done to fences and boundaries. In spite of that there has been some agreement involving Shannon Development on the walkways of Clare. I am sure members of the delegation have had experience of these walkways, which have been very well organised and signposted. It is doubtful that such a constitutional amendment would be passed. Even if it were, an individual could still claim walkers were interfering with his stock, crops, water, etc. and claim the privilege to prevent them from doing so under the protection the group is seeking in this amendment. If this is to be advanced it should be by way of agreement and by putting formal arrangements in place as the gun clubs have done. Mr. Garland: With respect to Senator Daly, dealing with a gun club is a very much easier operation. Members of a gun club have to get gun licences. They are specific people who can be pinned down and the clubs can control their members. No group representing walkers can control people who want to access the land. What we are most interested in doing is having this on the agenda. It is now on the agenda, albeit low down. We do not claim to have all the answers. We rely on the members of the committee. Very fair questions have been asked. Other countries have solved this problem and the farmers and the walkers are happy 75 with it. What is so different about Ireland? Maybe Senator Dardis is right. People here may just be so irresponsible that they cannot be allowed to have such rights. If that is the case we may as well all go home and forget about it. Senator Daly: I know that on the French coastline there have been huge problems of access to beaches in Normandy and other areas. However, that is not the issue we are discussing. I am not certain the amendment the group is suggesting would be of benefit in the long term. People could claim under any of the headings mentioned that their property was damaged or interfered with. Deputy Cuffe: I welcome the delegation and sympathise with many of the points that were put. It is worth stressing the tourism value of hill walking to the Irish economy and I hope some solution can be found to this difficulty. If the appeal of the award mentioned decides in favour of the State and the landowner is held not to be liable for every rock on his land, presumably there would be much less reason not to allow walkers onto such land. Nonetheless, the point was made that damage can be caused to it. If that can be shown, would the delegation be in favour of the State assuming liability - in other words, if there is a very well-travelled route and fences are knocked down or a crop damaged? Presumably there will not be huge numbers of such cases, and the State could perhaps take on the liability where damage is proven to have occurred. Mr. Garland: Yes, I quite agree with that, and I am glad that Deputy Cuffe has raised it. One of the countries that we studied was Denmark, where the state takes responsibility for damage of that nature if it cannot be established who has caused it. In the Danish budget a few years ago, the Government provided €70,000 for the whole year to provide for whatever damage landowners could establish had been caused to fences or land. That is the measure of the kind of problem here. We are talking about very little money. There are many reasons for not allowing people access to land. There are plenty of excuses. However, it goes on virtually everywhere else in Europe. What is so different about Ireland? Chairman: I wish to thank the delegation for their submission. Are you affiliated to the Irish Uplands Forum? Mr. Garland: Yes, we founded the Irish Uplands Forum. Chairman: I understand that it has made a submission to us on related matters. In fairness, 99% of those who walk for their health or their profession keep to the paths and are vigilant. One will always have a few cowboys, which is hard to accept. The other thing to bear in mind is that a recent delegation met the Minister, Deputy Éamon Ó Cuív. He said that the notion of compensating commonage-holders or farmers was out, because there are 14,000 commonageholders in Ireland, and if we compensate one, we must compensate them all. 76 That would be an impossible task. That is the difficulty, but as far as possible the door should be kept open to the notion of negotiation. Our committee will take on board the points raised. Some experts have told us that this topic is ultra vires for this committee. However, that will be put on ice until we conclude our deliberations. Many thanks for your interesting submission. Mr. Garland: I thank the Chairman for a very fair hearing and the members for their questions. Sitting suspended at 4.35 p.m. and resumed at 4.40 p.m. Chairman: Next on the agenda is the presentation by Professor Gerry White from the law department at TCD. I must remind our visitors that members of this committee have absolute privilege, but the same privilege does not apply to witnesses appearing before the committee. We have received a very wellconstructed written submission from Professor White. Rather than read that through, perhaps he might summarise it, after which members of the committee will ask questions. Professor Gerry White: I thank the Chairman and the committee for affording me the opportunity to make this oral presentation. Its focus is on socio-economic rights and specifically, given this committee's brief, the right to shelter. The case I make is for the inclusion of a statement of socio-economic rights, including the right to shelter, in the Constitution. A debate is developing on that issue, at least in academic circles, and to a certain extent in the political community too. It might be worthwhile if I started by indicating the degree to which I can sympathise or empathise with people with whom I will subsequently disagree. I accept that the protection of socio-economic rights is primarily a matter for the political process. The principal reason for accepting that is that the political process has more room for manoeuvre when it comes to formulating policy to protect such rights. I agree that it is preferable that it be dealt with through the political rather than the judicial process. In calling for a statement for the protection of those rights in the Constitution, I point out that it is a political document. It clearly has legal consequences, but the Constitution is first and foremost a statement of the values that we endorse as a society. In that political context, it is important that we state a commitment to social inclusion through a reference to socio-economic rights in the Constitution. However, I am also of the view - though not wishing to cause offence to committee members - that, as currently practised, Irish politics are not very effective in protecting the interests of people on the margins. The Canadian economist, John Kenneth Galbraith, coined a phrase in one of his books to describe the political system that he sees as operating in the United States and the United Kingdom. His book is called The Culture of Contentment, and the title summarises his argument, which is that politics in the west, or at least in those two jurisdictions, reflect the needs and interests of those with a stake in society. If one is not part of the status quo, it is very difficult to have one's interests or 77 needs addressed by the political process. In my view, the same analysis applies to Irish politics. I could point to different instances but I will leave that premise there. I take the view that the Irish political system, certainly as it functions currently, does not adequately protect the needs of people on the margins. The way forward, of course, is to ensure that the political system does become more responsive. I would support any effort that would make politics more inclusive. While waiting for that to happen, however, I am of the view that there is a role for the lawyers and the courts to protect the needs of marginalised groups such as children with learning difficulties, Travellers or asylum seekers, pending, as I said, the evolution of our political system. A number of objections have been advanced to that last thesis - the idea that the courts should get involved with socio-economic rights and that such rights should be, in the language we lawyers use, justiciable. I wish to briefly address those objections. The Supreme Court has clearly signalled its opposition to this course of action. In two important cases - the Sinnott case and, more recently, in a case called, ironically enough, TD - the Supreme Court indicated that the defence of socio-economic rights was really a matter for the political system and that the courts should not get involved. The Supreme Court judges offered three reasons and when one reads the judgments one can see three arguments coming through. First, they believe that the idea of legally enforceable socioeconomic rights is contrary to the constitutional doctrine of separation of powers. Second, they believe it is anti-democratic for the courts to get involved in formulating public policy. The courts do not have a popular mandate, judges are not elected and, therefore, for judges to formulate public policy would be for them to act, in some way, without democratic legitimacy. Third, they are also concerned about the fact that the courts have no expertise in dealing with these large questions. I have addressed those objections in my paper and will briefly summarise the responses I would make. In the context of the work of a committee such as this one, were a proposal to be put to the people that certain socio-economic rights be endorsed, then if that were accepted in a referendum that would overcome any argument grounded on the doctrine of separation of powers. There would then be a constitutional or popular mandate for the constitutional protection of socio-economic rights. With regard to the argument that the courts are acting in an anti-democratic manner, or that there is a lack of democratic legitimacy when the courts get involved in these areas, that is true up to a certain point, but my response to the Supreme Court is that they take their argument too far. When they make this argument they are overly influenced by the US experience. There is, however, a very important difference between the position of the United States Supreme Court and the Irish Supreme Court, which is relevant here. If the United States Supreme Court pronounces on some issue and garbs it in some constitutional protection - if it announces that some right is constitutionally protected - given the complexity of amending the US constitution, the Supreme Court statement is almost effectively the last word. It is almost impossible to modify any judicial 78 pronouncement in the United States that relates to the constitution. That is not true of our system. Relatively speaking, our Constitution is more flexible when it comes to amendments. Certainly, by comparison to the United States, it is much easier to amend our Constitution. Indeed, when one looks at the 21 or 22 amendments we have had since 1937, if I was pushed to it, I think I could account for about one third of them as being responses to either actual judicial decisions, or to comments made by judges, or in some cases in anticipation of what the courts might do. It ranges over areas like abortion, adoption, bail, European integration and voting rights for non-citizens. There is a range of areas where the referendum process has been used to respond in some way to the judicial process. In the Irish context, if a court decides to protect a socioeconomic right it is always open to the political process to respond to the referendum process to neutralise it, should that be so wished. Therefore, I think the anti-democratic argument is not as forceful here as it is elsewhere. With regard to a concern about judicial expertise, it is true that socio-economic rights have not traditionally been the focus or concern of lawyers and judges. That is not to suggest, however, that we cannot adapt or develop remedies or processes. I have asked yet more paper to be circulated, adding to the committee's burden. Over the weekend, I took a look at what the South African constitutional court has been doing on the explicit socio-economic rights enshrined in its constitution. They seem to be functioning reasonably well and they are engaging with the issues before them. It is interesting to note the moderate approach the constitutional court in South Africa is taking. It is not setting itself up as another house of parliament to formulate policy in these areas; it is testing existing policy against a criterion of reasonableness. Moreover, it is acknowledging that with regard to the protection of socio-economic rights, those rights have to be protected within the limit of available resources. It is taking a very incremental and progressive approach towards the protection of these rights. It is early days yet with the South African experience, but so far they seem to have been able to take on board these novel issues and deal with them, in my view, appropriately. Finally, I would refer to some political objections that have been voiced by politicians participating in this debate. I have discerned three different arguments that have been adduced. One is the suggestion that socio-economic rights are somehow qualitatively different to civil and political rights, and that civil and political rights are traditionally the focus of the courts but that, because of their nature, socio-economic rights cannot be so focused. The suggestion is that socio-economic rights involve resource implications whereas civil and political rights do not. I would submit, with respect, that that distinction is not correct. When one looks at certain civil and political rights one sees that they do in fact involve resource implications. If we decide for example, as we have done in the Constitution, to ensure a right of democratic vote, we have to spend money to ensure that everybody is able to exercise their franchise. If we provide, as we do in the Constitution, that persons charged with criminal offences should be tried with due process of law, we have to spend money to ensure that happens - we have to pay for the Judiciary, and for defence lawyers where legal aid is 79 provided. We also have to pay for court buildings. Mainstream traditional civil and political rights have financial implications and, therefore, I do not think one can exclude socio-economic rights from the purview of the courts on that ground. Second, it is suggested that if the courts get involved with socio-economic rights and if these rights are made justiciable, it will result in an increase in public expenditure and that the courts will start to present outrageous bills to the Oireachtas, which will cause trouble for the public finances. There are two responses here, one of which concerns the South African experience. If the provisions dealing with socio-economic rights are carefully crafted, as I would expect they would be, the courts would always have to take account of the state of public finances, as the South African constitutional court does. Its decisions are always made in the context of the availability of resources. Although I am not an economist and I cannot be categorical about this, I wonder to what extent, if we invest in the whole area of social inclusion by creating these sort of rights, one will draw more people into the economy. If we provide better education for people on the margins one will make them economically more productive. One hopes that one will also indirectly affect crime rates, health and issues of that nature. I pose the question as to whether creating these rights would necessarily result in increased public expenditure. The final objection that I have seen aired publicly about protecting socioeconomic rights is that this will undermine individual initiative and enterprise, and that we will become some sort of nanny State with everybody drawing upon it. When I talk about socio-economic rights, I am thinking about groups who frankly do need the assistance of the State in order to fulfil their potential. In some cases that potential will be very limited. If one is talking about plaintiffs or people like Jamie Sinnott or Paul O'Donoghue - these were two children with severe and profound learning difficulties - one is referring to people who are absolutely dependent on the State and we cannot deny that fact. If one looks at the series of cases that went before the High Court, and in particular before Mr. Justice Peter Kelly, they concerned children at risk. In many cases, children of tender years from dysfunctional families were on the street with histories of drug abuse and, in some cases involving those in their early teenage years, suicide attempts. These children need support. Whereas it is important that we do not undermine individual initiatives - I sympathise with that argument - we must be realistic about the plight of some sections of our society and realise that if the State does not help them they will be deprived of effective assistance. Chairman: Thank you for your detailed and enlightening presentation. We are somewhat constrained in our deliberations on property rights. When we finish this aspect, we plan to consider disabilities, both intellectual and physical, in terms of how they are catered for under the Constitution. The points on the right of shelter are within the remit of our deliberations. Does Professor Whyte consider that the only way to resolve the difficulties he has outlined is by way of constitutional amendment or can it be done by way of legislative change only? 80 Professor Whyte: I would not argue that the only way to solve homelessness is by way of the Constitution. If I thought that a constitutional change would effectively deal with problems like social exclusion I would be campaigning fulltime for it. However, I am not that naive. It is part of a process. We are concerned here with the protection of rights, which might in itself be controversial. I believe that people should have a right to shelter. How that is protected is the question. The key thing for me is that it would be done effectively. It is possible for legislation to address this, if it is respected by the political powers. For example, there is legislation dealing with Traveller accommodation, yet some would argue that progress has been slow and that, politically, the system has not responded as quickly as it might to meet statutory obligations. A legislative approach is the preferred way to proceed. Where possible, these matters should be handled politically, but if there is a failure on the part of the political process to engage meaningfully with something like the right to shelter, the Constitution should then be available as a means of requiring it to address the issue. That is one of the arguments I would make in favour of constitutionalising the right to shelter. Chairman: The Constitution mentions socio-economic rights, but they are not justiciable. I understand the advice by the experts to Mr. de Valera when he was drafting the Constitution was that if he was to proceed on that basis it would create a burden on the Exchequer. Does Professor Whyte consider the same view prevails today, not only in this jurisdiction but also in other countries, such as Great Britain and the United States? Professor Whyte: It is worth noting that the Constitution already contains a socio-economic right to free primary education by imposing a duty on the State to provide it. It could be argued that the express obligation on the State to look after children who have been essentially abandoned or neglected by their families also gives rise to clear socio-economic rights. Deputy Neville: If I am correct, Professor Whyte is saying that the Legislature has failed to create socio-economic rights. I would largely accept that. He proposes that the Constitution should be changed to force us to do what we should have been doing from the outset. Professor Whyte: Yes, and I appreciate the argument is circular. I hold out the hope that the political process would become more responsive to the needs of these groups. Deputy Neville: That is the challenge to the political process, but it is not responding adequately. Professor Whyte: I agree. It probably implies that any attempt to change the Constitution to secure these aims is politically doomed. However, I must make 81 the argument because I believe in it and I see it as a way forward. It is for others to decide if it is politically viable. I am a constitutional lawyer and I draw on whatever expertise I have in this area. Deputy Neville: What would the Minister for Justice, Equality and Law Reform have to say? Professor Whyte: I am sure he would have strongly expressed views, but I hope I have responded to some of the arguments he would make. Senator Dardis: I am not here to speak on behalf of the Minister. I thank Professor Whyte for his contribution. This is becoming an increasingly important subject. I am sure Professor Whyte is aware of the work of the convention on Europe and the proposal that there should be a statement of rights under the European Convention, but which will not be justiciable. Professor Whyte rebutted the argument regarding the doomsday financial implication for the State involving a person vindicating his or her rights in court. When Professor Whyte made a submission to the constitutional review group in 1995, he mentioned Article 7.4 of the South African constitution, which states: "When an infringement or a threat of any right entrenched in this chapter is alleged, any person referred to in paragraph (b) shall be entitled to apply to a competent court of law for appropriate relief, which may include a declaration of rights." Is there any case law regarding what may be meant by relief and a declaration of rights? Professor Whyte: When I drafted my submission, South Africa had in place a provisional constitution. It subsequently adopted a permanent one, so the article references are somewhat different. The document I have circulated today sets out the key provisions of the current South African constitution dealing with socioeconomic rights. In some of the cases decided by the constitutional court on this issue, it has taken the view that, where appropriate, it could grant a mandatory order. It is accepted it can grant declarations, simply stating the rights, but the controversial issue centres on whether the courts can go further and direct parliament to adopt certain policies. In the Irish context, the Supreme Court drew a clear line and said it could not go that far. The South African court take a different view in that where it is appropriate, it has the constitutional power to issue mandatory orders. Senator Dardis: Have any of these cases involved class actions or have they dealt with the vindication of individual cases? Professor Whyte: To date, three or four cases have been taken under this broad heading in the South African constitution. One of them was taken by a campaigning group on behalf of pregnant mothers with the HIV virus. It sought increased availability of an anti-HIV drug to those groups and it was successful. 82 The decisions of the court can have implications beyond just one individual litigant. Senator Tuffy: I thank Professor Whyte for his presentation. In its presentation, CORI made a similar proposal. It also made a proposal regarding the price of housing. If the Constitution provides that resources must be available to provide social and affordable housing, but land prices continue to be outrageously high, could it mean the Government could avoid its responsibility to implement the right? Is more required and can it be done by legislation or does it require a constitutional amendment? Professor Whyte: I thank the Senator for that question. I should like to unpack one element in it, which I have not already addressed but which I think is probably of more central importance to this committee given the sort of political climate, that is, the question of the impact of the Constitution on the price of land with its consequent rollover on the price of housing. If one takes into account, first, the text of the Constitution and, second, relatively recent pronouncements of the Supreme Court and of the High Court on the interpretation of Article 43 of the Constitution, it seems to me that it is open to the Oireachtas to regulate the price of development land to provide for the acquisition of land in circumstances where compensation would not be payable at market value - if I say market value, I mean the value of the land as development land - but rather at agricultural value for the land. It seems to me that the popular perception of what Article 43 requires in this context and what it actually requires are not ad idem; there is a gap. There is a general popular perception that Article 43 has somehow placed property rights beyond any sort of regulation, that they are sacrosanct, and that is clearly not the case. Even without a constitutional amendment, even if one takes Article 43 as it stands, from my reading of the text and of the jurisprudence here, it seems to me that the Oireachtas does have power to legislate for the regulation of development land. That is just by way of responding to that element of the Senator's question. But that, of course, influences the second issue. The question the Senator asked me was if a right to shelter is provided for, and would that increase or impose great financial burdens on the Legislature and the Executive in responding to that. I cannot quantify what public expenditure would be required. If the right was couched in appropriate language, as the South African rights are, in other words, if there was an acknowledgement that this is not an absolute right but that it has to take account of the availability of resources, the inclusion of such a right in the Constitution would not create a financial crisis for the State. It would create a certain threshold which those who are affected by homelessness would be able to insist on having met but I do not believe that it would result in wholesale disaster on the financial front. I am sorry that I cannot be any more specific than that. I cannot give the Senator a costing. 83 Senator Tuffy: No, I was more concerned that, as opposed to the costs for the State, that the State would then use the cost as an excuse not to deliver on it. Does Professor Whyte know what I mean, that the State could say that it does not have the resources? Professor Whyte: I would have to accept that if you couch a right in terms of, or if you make it referable to, available resources it is for others to decide whether or not those resources are available, and if the State comes along and says the resources are not there, then you have to accept that the right cannot be implemented in those circumstances. However, I think that the inclusion of the right in the Constitution puts down a marker and obviously it might be possible to counteract the argument that there are no resources there. Chairman: Thank you very much for your submission. We appreciate your help. We will now suspend for three minutes to allow the final group to take their places. Sitting suspended at 5.03 p.m. and resumed at 5.06 p.m. Chairman: The next item on the agenda is the presentation by ACRA, represented by Mr. Tony O'Toole, Mr. Eoin O'Cleary and Mr. Edward Doyle. You are all very welcome to the committee. I remind visitors that members of the committee have absolute privilege, but the same privilege does not apply to witnesses appearing before us. I invite the delegates to make a presentation. This is the last group today. I apologise for the overlapping but this was beyond our control. I would hope that the delegates will present a synopsis of their case. A written submission has been presented, which we have acknowledged and studied. I ask the group to give a synopsis of approximately six to eight minutes, which will be followed by a questions and answers session with the members. Mr. Tony O'Toole: I am chairman of the ACRA sub-committee. I thank the committee for the invitation to say a few words on this issue of ground rents. It is a vexed issue. It has been going on for a long time, many hundreds of years, but for us it is going on for nearly 28 years. We think it is now time that the ground rent problem should be put to bed once and for all. We presume, as the Chairman said, that the ground rent sub-committee submission is taken as read and that the contents therein will be taken on board. We also note that there are proposals, we hope by the Government, through Fianna Fáil and the Progressive Democrats, to take the ground rent issue during this year. We have heard that many times before over the years, but with this committee set up, and our submission put, perhaps by the end of the year we will see something positive done about all these promises. There are two minor errors in the submission we provided. On page 2, the figure "147", that is the number of attempted jailings, should read "176". 84 Obviously, on page 5, Michael Cooney is mentioned and that should, of course, be the former Minister for Justice, Mr. Paddy Cooney. I wish to refer to an extract - this is something that we have done since 1965 because it is relevant to us - from an article in the issue of Business & Finance of October 1965, and it is still relevant today. It stated that taken in extremes, the idea of a modern community which does not entirely own the land on which it exists is faintly ridiculous; that the fact that the rental is paid to some obscure Lord whose only claim to fame was that his ancestors won the land by conquest only aggravates the situation; that the sooner grounds rents are completely abolished the quicker we will have a rational land structure, and that anachronisms of this nature have no place in the Ireland of today or in a modern democracy. The ground rent campaign of ACRA, it is important to point out, started in 1973. Many submissions on the ground rents issue were put before 1973 to various Governments , but nothing was ever really done apart from the introduction of a Bill in 1967 by the late Deputy Brian Lenihan and passed by the Dáil. That was the first break through in the matter. The Conroy commission then reported and certain things were done. I wish to give some idea of the result of the campaign and of our national membership. More than 20,000 of our members have appeared before the courts for non-payment of ground rent, which is an astonishing figure by any stretch of the imagination. Of these, 176 received jail sentences and five were jailed to date. Our best estimate based on the figures given is that the arrears are now €97 million. Of these, €21.25 million are legally due. The remainder are statute barred. We discovered recently that the Statute of Limitations applies to ground rent arrears, even though we have not paid them for the past 30 or so years. The limit is six years. The numbers who have bought out through the buying out scheme introduced in 1978 were 71,526 as of last October, which is the number of vesting certificates issued. That represents 20.5% of total ground rents in the country. Our campaign of non-payment and boycott of the Government purchase scheme has been reasonably effective. There is another point worth considering regarding ground rent payable. Until 1979, householders who received ground rent demands also received as part of that a demand for tax which was paid separately to the Revenue Commissioners from whom a notice would also be received stating that a certain amount in tax was owed. That was changed in 1979 and since then ground landlords collect the full amount. What tax do they pay to the State on rents received? The tax was paid previously by householders to the Revenue Commissioners. ACRA is a voluntary organisation and was established in 1953. The main purpose of its establishment was to deal with the issue of unfinished estates. Two other issues came to light immediately, namely, residential rates on houses and ground rents. Another issue which came to light as well was what to do with all the young boys and girls in the new estates. The community games were formed as a result through ACRA and other organisations. 85 Before 1978 when ACRA achieved certain major reforms through legislation, there was a horrendous situation with threats from ground rent landlords and about 15 attempts to evict, every one of which we frustrated. The sheriff could not obtain evictions on the properties because we were so strong and vocal through demonstrations. The sheriff backed off, much to our delight at the time. After 1978, when we managed to have legislation passed which outlawed the creation of ground rents on new dwelling houses, which was welcome, a purchase scheme was also introduced. However, members of ACRA have boycotted that because we were promised that ground rents would be abolished and that people with expired leases on dwelling houses would be treated equally. We understood that those with expired leases would be dealt with, and a provision was introduced in the 1978 Act to allow those whose ground rent leases had expired in the past ten years to acquire freehold of a property like anyone else as if their lease had never expired. However, the catch and sting in the tail was that they had to apply within one year of the commencement of the Act. Those who knew nothing about this and discovered they had an expired lease were no longer involved. They were caught in the hideous position whereby they had to pay one eighth of the gross price of the house to the ground rent landlords. We had members jailed and goods seized. We also had many conflicts with auctioneers where goods were seized and brought to auctioneers’ premises. The sheriff had to inform those concerned of the whereabouts of the goods. We were in the position to tell the auctioneer to put the goods that were seized for auction for non-payment of ground rent as the last items for auction so that we would not have to disturb the auction. If they were to be auctioned in the middle of proceedings, we would have to stand up and make the point clearly that the goods being auctioned were seized for non-payment of ground rent. We were reasonably successful in this regard. We make the point in respect of those who do not pay ground rent that we must suffer the law in that we must go along with it. The law should be changed. We have had many difficulties with solicitors and the legal profession whereby, despite the law being changed so that eviction cannot take place while the lease is in operation, certain solicitors have persisted in threatening our members with eviction for non-payment of ground rent. We have had to go before tribunals in the Law Society in Blackhall Place and name certain solicitors. We think matters are fine now. We request the committee to consider the following. Expired and expiring leases should be treated in the same way as a lease that has not expired. That is the first consideration. We have members whose leases have expired and ground landlords seek one eighth of the price of the house to acquire freehold. If the householder cannot obtain this money, the alternative is a shorter lease for 35 years and the amounts are more horrendous. They are based on the open market rental value of the house and the total income by way of rent. One eighth of that is the new ground rent per annum to be reviewed upwards every five years. There is something radically wrong with our laws that allows that to happen. 86 People say we signed ground rent contracts, which we did, but we had to sign them under duress. We had no choice in the matter. I made a submission separately in my name and was told I would pay ground rent forever. I had to sign a contract stating this or I would not get a house. That is what I was confronted with in 1961. When one thinks about it, a house for sale was really a house for rent only because, when the lease expired and there was disagreement, everything reverted to the ground landlord. That is out of the question at this stage. We have come across situations where the valuations of houses are less than the ground rents per annum. People in this situation are not able to buy out the ground rent because they do not qualify. It is presumed the person has a house that belongs to the ground landlord, even though it has come down through the family for generations. Jailing is not acceptable in a modern society for nonpayment of ground rent, nor is seizure of goods. The payment for the site land in my case almost equalled half a year's salary. Those of us who pay ground rent have paid for the sites but have had to suffer the law by signing leases that last forever and having to pay ground rent with no goods or services in return. I have never heard the likes of it. The Mafia would not have dreamed of such an idea. Some allowance should be given to people who paid ground rent up to when the campaign began which would include the ground rent paid and the site fine. We realise we will not obtain abolition but we seek it. No interest on any moneys due to a ground landlord, no matter how small, should be added as a penalty against the householders of Ireland. That is important. Ground rent should be a contract debt only, the reason being that, from the date of commencement of the terms of the previous Bill proposed by Deputy Woods in 1997 and agreed by all parties in Dáil Éireann, we would all have had freehold of our properties. The ground rent would be separated as a contract to be dealt with separately. Those issues could be discussed with the Government of the day. Many homeowners have paid more than once, through site fines and ground rent, for the plot of land on which their homes stand. This must end. Ground rent is dead and the urban householder is not going to foot the bill for this. We feel very strongly on this point. If anyone is aggrieved it is the householders, not the landlords. We do not pursue a policy of vindictive opposition to particular persons or groups who benefit from ground rents, native or foreign. We want this to be solved and it should be solved by our legislators rather than going down the constitutional route or going to Europe. We have the capacity among ourselves to sort this out. Some might ask why we do not buy out, but to buy out under the present rules and regulations would mean paying ground rent in advance and in perpetuity, saving the landlord the cost of collection. The landlords are therefore in a better position to benefit from any money payable to buy out. That is why we do not buy out. It is a matter of principle. 87 Those affected are generally elderly. They come to us because they do not want to go public on this. They are elderly and are afraid to make a bad situation worse. That is one difficulty we have. Legislators should think of those people. The report details efforts made by political parties to deal with the issue of ground rents. Very little has happened. This is an opportunity to finally grasp the nettle. We will not be found wanting if our support is sought. We must be fair but also the householders must get a fair deal. We have already paid for the land that has houses with front and back gardens on it. The residents have contributed to the upkeep of the local green spaces. Deputy Neville: I thank Mr. O'Toole for his coherent presentation. To develop the last point, we were advised this morning by another group that we do not fix something that is not broken. If we wrote a provision into the Constitution on this it would be open to interpretation all the way to the Supreme Court and a raft of claims could result. Is Mr. O’Toole saying we, the Legislature, can overcome the difficulties without changing the Constitution, by passing a law? Mr. O’Toole: We have never accepted that the reason this could not proceed or be solved was the constitutional difficulty, which is what we were told. There are parts of the Constitution that could solve this - the exigencies of the common good - but it depends on which one is selected. Deputy Neville: Is Mr. O’Toole saying the Legislature has failed to deal with this matter of public importance, an issue of social justice? Mr. O’Toole: They have failed--Deputy Neville: It is not the Constitution which has failed people here but the Legislature, the Dáil and Seanad? They have passed a Bill. Mr. O’Toole: They have not passed a Bill which is satisfactory. When we were discussing this in 1976 with both the coalition Government of the time and Fianna Fáil, which formed the next Government, we were told that the abolition of ground rents would hinge on the point the Deputy made - it would affect property as we know it. We argue that ground rent is a unique form of property, though it is not to be confused with property as we know it. Legislators can separate these from each other. Deputy Neville: The common good--Mr. O’Toole: Yes, the common good. Deputy Neville: ---could overcome any constitutional difficulties. Mr. O’Toole: I believe that. 88 Deputy Neville: The thing to do would be to pass a Bill and test it. Mr. O’Toole: And test it before the Supreme Court. Deputy Neville: Rather than change something when we do not know if it is broken? Mr. O’Toole: Yes. That is one area. Deputy Morgan: I congratulate the delegation on the measured nature of their presentation. I was reminded of marauding invaders of centuries ago; now they are getting grace in the legislation whereas at that time they had pikes and henchmen to throw or burn people out if they did not pay. It is the same now but the difficulty is that they are not all foreigners now - there are as many indigenous landlords involved - and they are protected by legislation. It is like Robin Hood in reverse. Does Mr. O’Toole think this is an absolute scandal, that legislators in this century can stand over this legislation? Mr. O’Toole may not agree but I will ask the question: does he agree that there is a case for legislation for rounding these people up and jailing them for robbing people? When one looks back at the taxes paid to the churches years ago at least people got blessings for those taxes. One does not even get that blessing now. Can one imagine this committee not dealing with this issue or the Government, as a result of the committee's recommendation, not dealing with it? The last point was that legislation would probably be sufficient to deal with this and that a constitutional amendment would not be needed. It is a property rights issue and the delegation is right to be here. Mr. O’Toole: This is the first time we have dealt with an all-party committee. Before this we always addressed different political parties and whether they were busy or had vested interests I do not know. The issue was never solved in a satisfactory way. I will give two examples. Irish Life was a wholly owned Irish subsidiary at one stage but is now privately owned. It sold all its ground rents to Dublin Land Securities for 3.6 times the annual ground rent, which included all arrears and eight acres of prime development land in the Palmerstown area. This is Irish Life, which is supposed to know about land law and business, yet it allowed this to happen. It became the subject of a High Court case before Mr. Justice Ronan Keane, who held that the deal originally made was correct and the new ground rent landlord was entitled to those acres. That is what is going on. Irish Life had roughly 9,000 of them but I do not know why it could not give those ground rents to the householders of Ireland. What was done seems vindictive in a way. The McInerney group masquerades as Henry Hunt and other different groups. The present ground landlord, Ellard Lipson, bought ground rents from McInerney and said on oath in the District Court that he bought these from McInerney for less than £10 per house, which included the total buying-out price and all arrears. McInerney did not have the grace or goodness to give those to the people of 89 Ireland, having made millions from those people. We want this attitude brought to an end. This is our first chance to address the committee and I am thankful. This time we may see the end of the road for this matter. Deputy McCormack: I understand Deputy Morgan's anger and any public representative would be angry. I ask Mr. O’Toole not to pin too much hope on this committee. While this all-party committee will bring this matter to the attention of the relevant authority we do not have the solving of this problem. As Deputy Neville said, it might be a matter for legislation rather than a change to the Constitution. I must declare an interest because I am subject to ground rent on my house. Page 4 of the submission states that people may lose protection of the 1978 Act by not taking action before the lease expires. I was not aware that the lease could expire. How does one become aware that the lease could expire? Mr. O'Toole: A law was passed in May 1978 which outlawed the creation of ground rents on all new dwellinghouses. Prior to that many leases were signed for 99 years, 600 or 999 years. A few years prior to that leases were signed for 99 years. These leases are now expiring and people are receiving solicitors' letters outlining the harsh reality. Deputy McCormack: I understand that. The submission also states that ground landlords can sell their interest in the land to whom they like. This has happened in my case. I cannot get a phone number in order to communicate with the people who are now my landlords. If I write to them they may write back in six weeks, six months or not at all. I find this a very strange world in which to live. When I pay them money, I do not know where the money is going or who is getting it. I never get a receipt for it so I wonder what the story is. I stopped paying money a few years ago because I could not make contact with anyone. I am relating the reality for tenants. Even though I am a public representative who should be expected to understand these things, I must admit entire bafflement and ignorance in relation to my landlords because I cannot trace who they are. I inquired through Directory Inquiries and no such people were known at the address given on the bills I receive. What happened to the 11th amendment to the Constitution of 21 February 1991? Mr. O'Toole: Nothing happened. I provided that information to the committee to show the many attempts by various political parties to solve the issue. Deputy McCormack: Was there an 11th amendment to the Constitution? Mr. O'Toole: No. If it had been put and carried there would have been an 11th amendment. 90 Senator Tuffy: I thank ACRA for the presentation. The issue of expiring leases was raised. It is not a matter of when the lease expires. If there is less than 70 years on the lease, there is a question mark over whether it is a good title and whether a mortgage company would approve it for a mortgage. Mr. O'Toole: Building societies are usually against selling a house if there are 70 years or so on the lease. They want a greater number of years left on the lease. Senator Tuffy: As a solicitor I am aware of this. County councils seem to have leases of that type. I am sure they could take action to discontinue leases and hand over the property. Mr. O'Toole: A TD introduced a Bill in Dáil Éireann on our behalf under which local authorities who owned ground rents would lead by example and discontinue ground rents and homeowners would own their properties totally. The Bill was not passed. Senator Ormonde: I have known Mr. O'Toole for a long time and I would like to congratulate him on his campaign which goes back many years. I wish him luck. Is he here today to try to incorporate this thinking into the Constitution or would he like legislation to abolish ground rents totally? I wonder whether it is relevant in relation to what we are talking about today? Can we push the issue forward somewhere else? Mr. O'Toole: The Senator must understand where we are coming from. We are always told that we cannot progress the issue because of the constitutional difficulties that exist. We do not accept that. However, we have accepted the opportunity to come here today so that in the event of the issue not being progressed through Dáil Éireann another vehicle could be used to progress it. When ground leases expire, instead of signing another lease for 99 years, the legal profession consider the 99 years as a ground rent. They regard 35 years differently. There is an opinion that there is a professional risk in granting a 35year lease. People could sue the legal profession for granting 35-year leases instead of 99-year leases. Various things are happening in this regard. This has been my opinion going back to 1993. Senator Dardis: I thank Mr. O'Toole and his colleagues for their presentation. How many residential ground rents are there and, of those, how many are local authority or private rents? Is there a bulge in terms of renewal? I expect many relate to the 1900 or 1920 period. Is there a bulge in terms of renewals or is there a constant stream coming through? Mr. O'Toole: It is a small constant stream. We cannot say for certain how many are in this category. 91 Senator Dardis: Have you any idea how many residential ground rents there are? Mr. O'Toole: When we started we thought there were approximately 300,000. Some say the number may be higher. Senator Dardis: How many involve local authorities? Mr. O'Toole: The numbers involved in local authorities are small by comparison. Senator Dardis: Would they run into thousands? Mr. O'Toole: They would throughout the country. Chairman: I thank the delegation for their presentation. As has been said earlier, I admire the organisation for which this campaign is a labour of love. The members have been banging their heads against the wall. While the effects of the campaign has not been widely appreciated, the 1978 Act was a step in the right direction, even though perhaps it did not go far enough. Members of the committee are constrained in that they are looking at property rights under the Constitution. Given what has been said today, ACRA may have a role to play. The committee will take on board the content of the submission. We thank the delegation for their attendance, their helpful views and interaction between the members. The joint committee adjourned at 5 40 p.m. until 10.30 a.m. on Wednesday, 16 July 2003.
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