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It hasn't gone away y'know

The Irish housing crisis erupts yet again

14 May 2021

The housing crisis in Ireland has exploded yet again. As in a slow motion car crash, everyone foresees the eventual destruction of the coalition government but not a way to head it off.

Pressure had already built over the slow rate of home construction. In response the government announced a new plan to speed the building programme.  This met with widespread derision as being identical to every failed initiative over the past three decades. The government claimed that the plan put the squeeze on developers. The critics said that the programme had been written by the developers and that it provided initial funds, guaranteed a 25 year mortgage payment and then handed the property back to the developer.

This simmering row hit the headlines when Vulture funds, Round Hill Capital and SFO Capital, brought 135 out of 170 homes  in an estate in Co Kildare.  The two UK companies also bought 112 homes in Dublin. Supporters of the coalition argued that these funds account for only a small percentage of the housing market,  but their concentration in this sector means that families are frozen out of house purchase and will have to pay rent at a rate set by the vultures.

The story sums up government policy.  Financial and legal changes encourage inward investment.  It should be noted that this investment is utterly parasitic, forcing up prices without building a single house. Even in the face of widespread public anger the Government has failed to come up with firm proposals,  waffle about first time buyers balanced by a reluctance to face down property funds.

Government policy is more easily understood once we know that Irish capital is invested in the vulture funds and that special funds, REITs or Real Estate Investment Trusts, have been set up to partner local and transnational speculation in housing. The result of this policy was revealed earlier in the year, when it was disclosed that the minimum cost of a Dublin apartment put it out of the range of the average salary for two skilled workers.

What isn't said is that the housing issue is not new, existing at crisis level for years. Given that it hasn't been resolved why did it stop being an issue? One answer is that there is no electoral way out of the crisis. The Fine Gael/Labour coalition fell in 2016 because of a ruthless austerity budget that included a squeeze on house building.  When the government fell it was replaced with a similar Fine Gael minority government held up through a confidence and supply agreement with the other main capitalist party, Fianna Fail and with an identical housing policy.  That in turn was replaced by the government of the 33rd Dail, a formal coalition of Fine Gael and Fianna Fail, together now with a minority of the popular vote and requiring the inclusion of the Green Party to form a government.

That's not to say that housing policy was static. The 32nd Dail in 2016 voted a substantial increase in the housing budget and this was expanded again by the 33rd Dail. The problem was that the strategy of relying on private investment did not change and tax incentives and grants simply left the door open for price inflation.

There was one other sizable factor. The trade union leaders and their policy of partnership.  In 2018 and 2019 they supported demonstrations by a national housing coalition and in 2019 organised a mass lobby of the Dail through the "Raise the Roof" campaign. The lobby led to a government pledge of €1.1 billion for housing and the campaign was wound down, despite experts warning, correctly, that it was utterly insufficient and that it was likely to be diverted towards subsidising the private rental sector.

The current debacle is likely to see a boost in Sinn Fein's election share and increase their chances of coalition government in the next election.  They are the only major party not to have been part of the failed coalitions of the past and claim a completely new orientation on the housing question.

The central issue in the Irish housing question is imperialist investment and its effects. Ireland gained its Celtic Tiger label in the 1990s, when transnational industrial investment went alongside low tax, massive infrastructure support and either no union involvement or "sweetheart" union deals.

As the industrial investment tapered off the process was rapidly financialised and a runaway housing boom developed from not too few houses, but too many, with estates and commercial buildings being built in the middle of nowhere as speculative investments.

The collapse in the credit crunch led to a decade of austerity.  There was almost no public house building. The public paid through the NAMA agency for worthless properties to save the speculators and then set out to obtain foreign currency through a fire-sale of the publicly owned properties. When the state attempts to resolve the crisis today it is held in the scissors of sovereign debt on the one hand and the financial strictures of the European Central Bank on the other.

The solution, using public funds as bait to attract the vultures,  has failed in terms of its stated goal but is wildly successful in enriching bondholders at home and abroad.

The obvious reform  is a public housing scheme,  with the state building and renting homes. But where is the funding to come from? The standard suggestion is that we can borrow from the European Central Bank. But in fact Europe has already agreed a post-covid stimulus pack, the European Union Recovery and Resilience Fund, which has been criticised as being insufficient and involving further austerity demands on the weaker economies.

The funds that Ireland can draw on have been outlined as €900 million from a fund of some €672.5 billion. This can be presented as an electoral strategy to talk up a green new deal and building a science hub, but it is totally insufficient for a mass public housing initiative.

Nor is the government in a position to ask for more. GDP figures, on which allocations are based, put Ireland number two in European rankings. The government can explain that this figure is wildly distorted by the income of transnational companies,  but if they do so Europe will suggest that they start charging a fair tax rate to the companies. This is a lot more than the Irish opposition does, with one of the left groups limiting itself to a plea that the existing low level of corporation tax actually be paid.

Sinn Fein are credited with presenting a radical alternative on the housing question but, as with other reforms, the economic base is substantial public investment that would require ECB support.  We must also consider the inherent dishonesty of Sinn Fein. Their role in the Northern administration is simply ignored, but their minister has announced a privatisation of the Housing Executive that would allow an influx of vulture funds, moving the Northern housing crisis in the direction of the Southern catastrophe.

Such is the low level of combativity that a number of the socialist groups propose a left government led by Sinn Fein as a solution to the housing crisis.

Is there a workers' alternative?

It is correct to call upon the state to provide basic services. Homes for all, a mass public housing scheme,  protection against arbitrary eviction and tight control of rents. When the state claims poverty we simply point out that doubling the level of corporation tax would raise easily raise the necessary funds.

But a working class programme can not be reduced to demands on the government. The workers have to act independently,  expropriating unused property and defending tenants from bailiffs and the state.  This has always been a strand in the battle against landlordism.  Falling in behind the union bureaucracy has smothered that current in favour of the current deal with the government.

Partnership has had its day. It's time we rediscovered the history of the struggle against landlordism, so central to Irelandís revolutionary history.


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