Notes on the Front

Just a short follow-up to the previous post outlining the dismal facts about the housing crisis.  Lest anyone say that those campaigning over the crisis are great at pointing out problems but are short on solutions (this is not the case but it is said anyway), here’s one more small suggestion.  You know that projected surplus NAMA will have when it’s wound up in two years’ time?  Use it to build social and affordable housing.

NAMA has projected a ‘terminal’ surplus of €3 billion when it is wound up in 2020.  This could be even higher according to Investec, which suggested the surplus could be closer to €4 billion, but let’s stick with the NAMA projection.  According to the Irish Times:

‘The Oireachtas Public Accounts Committee (PAC) has called for a Dáil debate on how a projected €3 billion surplus on the wind-up of Nama should be spent.’

Can we spend that €3 billion?  Yes, according to the Minister for Finance.  Unlike the sale of AIB shares, the NAMA surplus will count as current revenue and, so, can be spent. 

We should reject any suggestion that the surplus be used to pay down government debt or be assigned to a rainy day fund.  We are already reducing our debt levels faster than what is required by the EU rules (and any other Eurozone country).  As for a rainy-day fund – well, for those in housing need, it’s pouring.

In fact, given that we can spend this money on housing without recourse to borrowing or increased taxation, it will have a beneficial effect on our debt levels given that the increased economy activity will generate higher GDP and tax revenue.

This money can really only be used on capital spending as it is a once-off revenue bounce.  And if the €3 billion is assigned to housing, it should be additional spending.  The Government shouldn’t be allowed to reduce its own projected housing capital spending under Rebuilding Ireland by substituting the €3 billion.

This money won’t solve the housing crisis.  The €3 billion equates to the cost of building 15,000 to 17,000 houses.  However, it would make a significant contribution to reducing the level of housing need.

Indeed, given the scale of the crisis, spending the NAMA surplus on housing building should be a no-brainer.  The only debate should be over how it is spent – whether on social housing, cost-rental affordable housing or a combination of the two. And fiscal strategies should be devised to draw down part of that surplus before the agency is wound up. 

But regardless of the balance of the expenditure or when the money comes on stream, use the NAMA surplus for house-building.   

It’s one more reason to march on April 7^th – to ensure the Government gets the message.