Monday Blog: A bridge to a new deal

Last week, the NERI published its 21st edition of the NERI Quarterly Economic Observer. Since its first edition and foundation as a trade union associated Institute this day five years ago, the 27th March 2012, (QEO Spring 2012) we have continued to make the case for an enhanced programme of investment in economic and social infrastructure. Following a welcome recovery in economic activity and in many areas of investment including commercial building activity, the recovery in house building has been extremely slow and well below what is needed to begin to shift the rising and alarming levels of visible homelessness and hidden homelessness (illustrated, for example, by individuals and young couples ‘living at home’ or struggling to pay rent from month to month).

There has been a remarkable level of complacency at official level. This has demonstrated itself in an unwillingness to consider different options including new departures from the tried (and failed) models of property-led development so familiar in the decades leading up to the Great Crash of 2008-2013.  We have witnessed a lost decade of investment in homes and the rising tide of homelessness and a new crisis of affordability for many working people.  The problem of housing supply should be at the centre of a plan to rebuild Irish society.  New ways of planning, thinking, delivering and securing homes for an expanding population are required.  The following assumptions or assertions need to be challenged:

‘we don’t have the money to build that level of housing in the coming years’

‘the problem is not money but something else’

‘firms cannot build more than they are’

‘EU fiscal rules don’t allow it’

'A new state agency or enterprise would be a failure'

‘a vacant site levy cannot be introduced before 1 January 2019’

‘a state-led initiative off balance sheet is impossible under current Eurostat rulings’

‘the proceeds of state holdings of bank shares cannot be used in any way other than to pay down the equivalent value of Anglo-Irish bank debt locked into General Government debt on Prom night in February 2013’

‘that would never work here’

‘that was not tried anywhere else’

‘the current plan is working’

‘amazing things are just about to happen in the coming months’.

And so on.

In a recent NERI Working Paper [Ireland’s Housing Crisis: Time for a game changer] Paul Goldrick-Kelly and I have made the case for an evidence-based, ‘what works’ approach to the design, delivery and security of a new model of home supply.  It does not represent the full answer to the current housing crisis. Neither would its adoption lead to a major transformation in the situation, immediately. However, it could begin to change the game by ‘playing the market’ in taking some of the lead away from a private sector dominated market failure in the supply of rental accommodation. By unblocking supply and creating a new market force a European Cost Rental Model could shift the balance of market power in favour of:

  • Those seeking long-term, secure high-quality and affordable rental accommodation;
  • Workers in the building industry contending with unsatisfactory employment conditions and contracts; and
  • Sensible sustained planning that integrates public services, living space and transport.

Such a model could become a bridge to a new deal for Irish workers, their families and communities.  

The Irish Times stated in an editorial last week (‘Boost supply, not prices’ Image removed. )

Aspects of both reports [….the ESRI Quarterly Economic Commentary and the NERI Quarterly Economic Observer focussed on housing..] deserve careful consideration.

The NERI research has come of age.  But, the job has only begun.

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Tom Healy

Tom Healy was the Director of the Nevin Economic Research Institute (NERI). Tom has previously worked in the Economic and Social Research Institute, the Northern Ireland Economic Research Centre, the Organisation for Economic Cooperation and Development, the National Economic and Social Forum and the Department of Education and Skills.