The Tree of Gold or Crann an Óir sculpted by Eamon O'Doherty in 1991 stands outside the Central Bank's Headquarter Building on Dame Street in Dublin. The bronze tree (not gold) is overshadowed by a curious piece of granite clad concrete that overshadows its leaves. Perhaps it's an appropriate metaphor for the way that construction and speculation took over during the boom years. Indeed the building itself designed by the late high-flying architect Sam Stephenson was built some 10 metres higher than the the drawings submitted in its planning permission, a fact only noticed apparantly when the city planning officer looked out from his office which was then just across Fownes Street, and scratched his head at the mismatch between the plans and the building.
The Irish Green Party's Housing Policy, adopted in 2004 pointed out that "land speculation and the hoarding of zoned land have distorted the housing market and impeded the provision of affordable housing" and stated that the Government needed to "progressively limit the amount of money that lending institutions can lend for house purchase in order to reduce the price of housing." Back then we were in opposition, now we're in Government. We didn't cause the problem, but we are working hard to clean up the mess and get 'Ireland Inc.' back onto an even keel.
The National Assets Management Agency (NAMA) will be used to consolidate and stabilise our banking and property sector. It will be the largest property owner and developer in the State. It is crucial that the regulation and overview of NAMA is free from undue political interference, once it is up and running. I'm glad to see a health debate emerging about the foundation of NAMA. A glance at the Irish Times Opinion piece 'Nationalising banks is the best option' last Friday might make you feel that an incorrect decision has been made, but I'm not convinced. Twenty economists put their names to the piece, and the line-up included many of the heavy-hitters from the UCD Economics Department. As a a piece of rough and ready research I went over to the excellent IrishEconomy website and checked to see how many of their contributors had signed the piece. Only 5 of the 29 had put their names to the irish Times piece. Of course its highly likely that many of them weren't asked to, but still, it wasn't quite a flood.
Nationalisation would still appear to require the same amount of capital as NAMA, so I don't feel it jumps off the page as neat solution. I'd also be a little bit wary of the Department of Finance being put in charge of six major banks. In addition, there's also advantages to allowing some semblance of a real, rather than a full state market to operate in the price of land. There are strong arguments being made in the middle of this economic storm for more and more state intervention and control, but unless this is done at arms' length from the Oireachtas, it will be open to charges of political control.
One of the crucial and positive steps that must be taken, though is to remove the hope value of land that seems almost ingrained in the Irish psyche. That may be happening anyway, to judge from a piece of land a few miles out the road from Sligo that sold for six million a few years ago, and that more recently changed hands for €500,000. However a colleague pointed out that in Catalonia, they have mapped and zoned (in a good way) that entire region of Spain, so that developers know what the development potential is of every patch of land before it is sold. That clearly leads to better planning decisions, more certainty, and more buy-in from local communities. There's still far too many County Managers here in Ireland granting permission for rural business parks, and having their decisions overturned by An Bord Pleanála.
NAMA will have to maximise the value of its loan book and the underlying assets in the interests of the State and tax payer. I'm hoping that transparency and smart planning might allow us to look beyond a very narrow fiscal definition of maximising, and ensure that the best use is made of all assets. That could mean converting a hotel close to a hospital into step down beds, or producing a proper planning scheme for lands adjacent to a railway line before it opens so as to maximise value and sustainability, rather than selling off the four green fields for face value. For starters they'll need to prioritise sites for development according to the National Spatial Strategy.
Things are moving fast though. NAMA has a website, and they seem to be hiring from what I can see on their home page.