Committee Reports > List of Committees > Joint > 1980 > Committee on Commercial State-Sponsored Bodies > Report No. 12 - National Building Agency, Limited

MIONTUAIRISC NA FIANAISE

(Minutes of Evidence)

Dé Céadaoin, 23 Eanáir, 1980

Wednesday, 23 January, 1980

NATIONAL BUILDING AGENCY LIMITED

Mr. S. O’Hanlon, Chairman; Mr. D. Foley, Managing Director; Mr. J. Boland, Director; and Mr. B. O’Reilly, Principal Architect of the National Building Agency Limited called and examined.

Chairman.—Mr. O’Hanlon, the normal procedure is that we direct the questions to you and you can either deal with them yourself or hand them on to whom ever you think fit.

1. Deputy B. Desmond.—I speak as a member of the Committee and as a member of a local authority which has recently availed of the services of the NBA, and indeed Deputy Lawlor here is also a member of that local authority; we both are aware of that involvement. We are very much aware of the role and current activity of the NBA being limited to the provision of local authority housing in a very substantial way and occasionally becoming involved in other building for the IDA, the Department of Defence and so on. The Memorandum of Association as submitted to us enables the NBA to have a much wider role. To what extent in the future will we see that wider role being availed of by the NBA?

Mr. O’Hanlon.—Strictly speaking, these were not objectives. What was set out was a conglomerate of activities any one of which at one time or another might have been felt suitable by the Minister for the time being to be assigned to the Agency. There was never any intention at the outset for the agency to engage in other than house building and ancillary services. If you want to get the original reason for the existence of the agency you will find it set out very succinctly in the Second Reading speech on the National Building Agency Limited Bill, 1963.

2. Senator Cooney.—Did the Agency in their memorandum take wider powers just in case they might be used?

Mr. O’Hanlon.—That is right. From time to time it has been found that we want to provide, let us say, a fisheries school and perhaps a swimming pool in Limerick or plan a clinic in Monaghan. We have the power to engage in that type of activity, but it was never envisaged as the main activity or the principal activity of the Agency.

3. Senator Cooney.—Do the Agency feel that they will be able to take on the expanded role?

Mr. O’Hanlon.—We have no doubt whatsoever, either in diversity or in output in the field of housing. We have proved that in the past because our output jumped a huge amount, to about 2,400 in a single year.

Mr. Foley.—When we were required to do so in 1975 we stepped up our output in that year to over 2,800 completed houses. Our average number of completions per year is of the order of 1,200 to 1,500. As our Chairman has said, when circumstances required we were able to increase production.

4. Chairman.—Do the Agency have a feeling that they have not realised their potential, that they would like to expand to other areas and into a bigger turnover, or do they feel that at the moment they are doing a sufficiently wide job and that they should not necessarily do any more than they are doing?

Mr. O’Hanlon.—I will call on the most recently appointed member of the board, Mr. Boland, who has strong views on this subject and has tried to motivate the board into a greater degree of diversification.

Mr. Boland.—On that point there is a strong case for considering diversifying and expanding the role of the Agency to such an extent that it might be developed as a State building agency. Some of the obvious ranges of activities worth considering after the full implications have been examined in detail are national schools, Garda stations and employment exchanges. Buildings of a special nature obviously would require special expertise and a special approach. As the Chairman of the Agency has said, there is power to enable the Agency to do this and this has been discussed from time to time at board meetings of the Agency and the Managing Director is going to carry out further research on it. There is a case for a State building agency.

5. Chairman.—Taking it from the point of view of a county manager, should the agency take over all local authority building?

Mr. Boland.—Oh, no! On that point, some local authorities have always been a little suspicious, although that suspicion no longer exists, generally speaking. Some authorities may have felt that the Agency were competing with the local authority or usurping their housing function. That is not so. The Agency are there by invitation of the local authority and the great advantage is that they provide a comprehensive service and to that extent they complement and supplement the local authority’s own housing programme. As a local authority officer I would not in any way support the view that the local authority should not be engaged in their own housing construction programme.

Mr. Foley.—As regards the local authority programme at the moment, there are a number of options available to housing authorities. They may utilise their own staff to undertake the work, they may engage a firm of consultants or they may avail of the services of the National Building Agency. This is a healthy situation. It keeps the Agency as a semi-State body on its toes and to some extent in competition. We have to prove ourselves to housing authorities and we know that our services will be retained as long as we produce houses to the standard they seek within the time scale. It is a healthy arrangement.

Mr. O’Hanlon.—From a practical point of view also there is something that we have learned from bitter experience in connection with the Garda programme when we built about 480 houses scattered throughout the country. We found that getting suitable contractors and supervising the work was a practical impossibility and quite uneconomical for a body like the Agency. One must remember too, that local authority schemes are small, generally speaking, and Mr. Boland will be able to tell us that in County Clare the majority of schemes, nearly 90 per cent, comprise maybe 20 houses or fewer scattered through the county. It would not be a desirable undertaking for the Agency to move in there to do work which is being done competently by the local engineers and various supervisory staffs. It is done as part and parcel of the day-to-day work of the local authority staff.

6. Deputy Kenneally.—Have the NBA sufficient staff? I am on a Corporation board and we have a great understanding with the NBA and we build more than tens and twenties. Would the Agency have the professional and technical staffs necessary to implement the package that Mr. Foley spoke of, even down to the clerks of works, or have they a difficulty like local authorities? We all know that local authorities have difficulty in getting professional staff.

Mr. Foley.—We have shown ourselves to have been sufficiently flexible in the past whenever requested by a local authority. We can visualise a situation, for instance, in which a partial service could be provided for a local authority by our preparing plans and contract documentation for a particular project. Then, the local authority, through their local engineers and permanent staff, would arrange for the actual construction. We do not insist on our handling all aspects of a project.

7. Deputy Kenneally.—If you were asked by a local authority would you have sufficient staff?

Mr. Foley.—Yes, in the sense that we have the senior staff who can arrange to control the project in question with the assistance of consultants, if required.

Mr. O’Hanlon.—In practice the actual proof of that is that the Agency conducts the entire housing operation for a number of fairly large local authorities, Galway Corporation is one, Limerick Corporation is another and, to a large extent, Wexford Corporation. Also the proof is that we could swing up from producing 1,200 houses in one year to 2,400 houses two years later. We can deal with an on-going programme of between 1,200 and 1,500 houses in a given year. If there is need for a sudden surge in output we can bring in consultants to make good any shortfall in our resources.

8. Deputy Fitzsimons.—The housing statistics last year were something of the order of 26,000 houses built. Of those approximately 6,000 were local authority houses. While those might be scattered here and there in tens and twenties, they still constitute a considerable proportion of the 26,000 built. While I agree more or less with the Managing Director, in Meath we carry on with our own officers, technicians and experts. Nevertheless is it something which could be looked at?

Mr. Foley.—Following on that point, for a small housing authority we have undertaken a scheme of forty dwellings and gone on to provide a project of four dwellings as part of the redevelopment of a street. Again, I wish to stress that we are flexible in the scale and scope of our operations. Of course, the situation where we undertake all the housing work for a local authority helps in as much as an orderly programme can be arranged in that instance.

9. Deputy B. Desmond.—Might I revert to the broader dimension of the National Building Agency. It strikes one from time to time that, with the diffusion of programmes throughout the State sector—whether it be those of the Department of Education, Defence, which is not a very big programme, or the Office of Public Works, which would be a large programme, or indeed that of the Industrial Development Authority—the emergence of the National Building Agency as a major contributor has not been fully realised. Perhaps it could be argued that the NBA’s contribution has not been fully appreciated by those agencies, in terms of availing of the wide expertise of the National Building Agency. Bearing in mind the enormous cost of such programmes and the need to ensure that they are effectively implemented on a cost-benefit basis, is there any action which could be taken, say, by the Government to give the National Building Agency a greater involvement and a larger role with a view to cutting costs and State expenditure in the process?

Mr. O’Hanlon.—The answer to that is that the Agency are willing to take on any type of building work. But one must remember constantly that it is an agency, a body to which potential clients may have recourse. We cannot peddle our wares on the market any more than can, say, a solicitor or architect. We have made other Ministries aware that if they want barracks built, if, say, they want smaller hospitals built, the Agency will be more than willing to provide the necessary services.

10. Deputy B. Desmond.—Taking the example given of hospitals, would one see the Department of Health, in terms of their hospitals programme, consciously coming to the National Building Agency and saying: “Look, we intend spending £7 million this year on four specific projects: this is our programme; give us a package?”, thereby enabling the Department to spend that money more effectively on behalf of the taxpayer?

Mr. O’Hanlon.—Perhaps a hospital is not an ideal example to choose because nothing could be more specialised than the building of a modern hospital complex, requiring very high expertise in the architectural and all the other facilities involved in the designing and building. We have been contacted by and have worked for some of the health boards but not on a major project. We were approached recently by a Government body inquiring whether we could provide a fairly large office complex for a State-sponsored body. Our response was that we would be delighted to do so. For one reason or another it has not subsequently progressed very quickly. But we would welcome a venture like that.

Deputy B. Desmond.—I make my point also in the context of the enormous amount of accommodation rented by local authorities, including Dublin County Council, who would not normally get the capital moneys from the Department but who perhaps, over a period of ten years, could go to the National Building Agency and say: “Could we agree on a package, because we are paying currently anything from £4.50 to £8 per square foot for staff who must be accommodated?” For example, our own council, who employ 2,500 people, are overwhelmingly catered for in rented accommodation, and the costs are enormous.

11. Deputy L. Lawlor.—What could the National Building Agency do on the question of the brief to build an office block? Would it be purely a technical brief, or would they see themselves providing the package in the way of funding?

Mr. O’Hanlon.—No, we could not do that.

12. Deputy L. Lawlor.—Acting merely on a technical brief?

Mr. O’Hanlon.—We are a building agency.

13. Deputy L. Lawlor.—The other Government agency is the Board of Works. What is the dialogue? One gets the impression that for a variety of reasons the Board of Works cannot cope with the workload, and that you people are saying that you are capable of doing this work. Have you had any dialogue with the Board of Works in the sense of undertaking some of the work in respect of which they are incapable of delivery? In my constituency I have discovered that there are a number of projects held up in the bottleneck occasioned by the lack of technical personnel in the Board of Works. Have you had any discussion with the Board of Works in this sense?

Mr. O’Hanlon.—That is an awkward question.

Deputy Lawlor.—It may be but it is an important one.

Mr. O’Hanlon.—There is a certain area of tension between two public bodies perhaps competing for public works. The Board of Works see themselves traditionally as the providers of each type of accommodation required for Government services. I imagine they would be somewhat jealous about hiving off any of that work to the agency.

14. Deputy Fitzsimons.—Deputy Lawlor is quite correct in saying that there is a bottleneck in the Board of Works, in that they do not seem to be able to deliver. While, at the end of the day, they may do a good job, certainly they are very slow in such things as the building of schools, school extensions, etc. Even in this House, where there was a fire in the Members’ Bar, we understand they will be unable to rebuild for at least another twelve months. But in respect of schools, school extensions and so on, the situation is very frustrating in that they fail to meet deadlines. If they are unable to deliver the goods then the National Building Agency should be given a chance of competing. Comment?

Mr. Boland.—There is a case for establishing a committee representative of various Government Departments involved in construction projects, representative also of the semi-State bodies involved, particularly the IDA, to examine the possibility of the National Building Agency being involved. As Mr. O’Hanlon said, we are a building agency undertaking work by invitation. It is very difficult to expand into other fields without the co-operation of the various Government Departments and semi-State bodies involved. There is a case for the establishment of a committee representative of the various Government Departments and semi-State bodies involved to examine the problem in depth.

15. Senator Cooney.—Is not part of the problem with the Board of Works and with State building generally that the levels of accountability, financial and administrative, are high and that very high standards are required? Then, when it comes down to the practicalities of building a particular building, the State agency involved, probably the Board of Works, runs into the difficulty, no doubt experienced by the National Building Agency, of getting a suitable contractor to do a once-off job in a particular part of the country? Will not these constraints continue, and would they not equally affect you if you were to diversify, as you think you could, into the Board of Works area? Why do you think you would be more efficient than the Board of Works? Would you supplement or supplant them and, if so, with what benefit, and why do you think you could do so successfully?

Mr. Foley.—I suppose we have the advantage in the sense that we are now so widespread in our housing programme that we have built up a good knowledge of the standard of contractors throughout the country. If we were operating in the housing field in a particular locality, we would be in a position, with our background and expertise, to move sideways, as it were, to use the available contractors in that instance. A point I should make is that the staffing of the Agency is orientated towards housing. That is our special skill. In the event, therefore, of our broadening the scope of our activities and taking on projects which would differ greatly from housing, we would have to look at the permanent technical staff of the Agency with a view to broadening it also for that purpose.

16. Senator Cooney.—You say you would have knowledge of contractors because of your involvement in the house building sphere throughout the country but would not the Board of Works have similar knowledge from their experience in the building sphere during a very long period?

Mr. O’Hanlon.—We have an ongoing sequence of work. In particular areas we are working constantly during periods of from six to nine years whereas the Board of Works tend to carry out one-off jobs—to build a house in one place, a school in another place. They have their panel of contractors but they are not as au fait with the performance of the contractors during a long period as are the NBA.

Senator Cooney.—I accept that.

Mr. O’Hanlon.—I would make the point also that there should not be any inference that there is not as high a level of accountability on the part of the Agency as there is on the part of the Board of Works.

17. Senator Cooney.—I did not mean to suggest anything of that nature but that accountability criteria can have a slowing up effect. What administrative procedures will the Agency be able to employ in order to obviate some of the kind of delays caused by the administrative procedures that the Board of Works must comply with? If they build a school, for instance, the Department of Education may have a technical input so that the matter goes from the Department to the Board of Works and then back to the Department. Generally, there is a fairly heavy administrative procedure to be followed before building can commence. How do the Agency propose improving or streamlining that sort of situation?

Mr. O’Hanlon.—There is a great degree of standardisation in respect of most public buildings such as schools. We have the experience of designing model house plans, not the elevation element but the floor layout. We have experience of up to 50 of these. Contractors are aware of them and are used to building to these plans. If we felt that we were to be given work relating to the designing of schools and supervising the building of schools, it would be our business to produce also a set of typical plans.

18. Senator Cooney.—But the Board of Works have similar plans. Would the arrival of the NBA on that scene result in an improvement in the present system whereby projects would come quicker out of the pipeline?

Mr. Foley.—We deal, for instance, with the Department of Defence in relation to housing projects and in that case matters run very smoothly. We have an initial briefing following which we return with outline proposals. We give an estimate of cost and then we proceed to contract documentation. We have not experienced any problems with the Department of Defence. There is no reason to doubt that the same sort of cooperation would exist if we were given work by another Department.

19. Deputy B. Desmond.—To take another Department in respect of which there is a major public capital programme, an ongoing programme that will continue for the next decade at least—I refer to the Department of Posts and Telegraphs. With the major capital moneys made available to that Department during the past four or five years for the provision of such facilities as automatic exchanges, office accommodation for staff, the building of new sorting offices and so on, has there been any contact between this Department and your Agency or is all the work a matter entirely for the Department? Is it done through the Office of Public Works?

Chairman.—Would you consider that to be too specialised as, perhaps, you would consider a hospital to be too specialised?

Mr. O’Hanlon.—I imagine that, given the briefing that would be necessary, we could provide the shell.

20. Deputy L. Lawlor.—Though it is our intention today to talk about the NBA rather than the Board of Works, that Board have many historical buildings to deal with in addition to their building activities. Therefore, I suggest that the NBA could play a key role in such work as the provision of telephone exchanges which, basically, are concrete boxes. However, is it not the position that the Agency do not have the flexibility to allow them to put forward a package in relation to such work? Are you so restricted that it is not within your power to present a proposal to the Department of Posts and Telegraphs, for instance, in regard to what you would be able to do in the context of any programme of that Department?

Mr. O’Hanlon.—Is the Deputy talking about finance?

Deputy L. Lawlor.—No. I am talking about building, say, 200 telephone exchanges of varying sizes during a period of ten years. Would it be possible for the Agency to put forward a package of proposals in the knowledge that such work is necessary?

Mr. O’Hanlon.—We have never taken the initiative initially in such matters. We do not look for work in such a manner. We have never pushed ourselves as a building agency. This gets back to part of our charter. During the Second Reading speech on the Bill in 1963, the then Minister, Deputy Blaney, said that it was not the intention that the Agency would compete with any existing Agency or person engaged in the provision of houses but rather that the Agency would become involved only in cases where normal facilities for house building were not available for one reason or another. We have always regarded ourselves as a supplement to resources available in the context of either local authority or other public bodies.

Deputy B. Desmond.—Having regard to the enormous cost of professional fees in terms of contracts entered into for construction work, if one had full-time staff centralised in the Agency capable of producing a service package of a technical advisory nature, I suggest that the saving in professional fees alone would be very significant. In saying that I am not in any way disparaging work done by the Office of Public Works in regard to the saving of professional fees. We are not here to knock in any way the OPW.

21. Deputy L Lawlor.—As Mr. O’Hanlon said, that happened in 1963. There is a need for the NBA to take on a greater role from now on, particularly based on their track record in providing a substantial number of houses within a short period, compared with local authority or other types of house building. What would be your conclusion if you decided you could play a more vital role? Will you see yourselves as a board making a presentation to the responsible Minister, asking him to expand your role?

Mr. O’Hanlon.—Since the Agency were set up we have taken our directions from the Minister. Through me as chairman, and an officer of the Minister, the Agency can make suggestions to him but policy for the Agency is determined by the Minister.

Deputy L. Lawlor.—He might appreciate some very tarseeing recommendations from the NBA based on their experiences to date. I suggest that the agency might consider recommending that they could undertake the role which they say they can take on.

Senator Cooney.—It is clear from what you say that the amount of autonomy the board have is very limited in the context of the original terms of reference given by the Minister in 1963. It is within those terms of reference that you work. There would have to be a different relationship between you and the Department of the Environment if you are to expand into the area mentioned by Mr. Boland in this discussion.

22. Deputy B. Desmond.—One of the areas where we, as members of local authorities, find a lack of expertise is in urban renewal, land use studies, general research into city development and so on. Have the NBA engaged in that type of activity for local authorities?

Mr. Foley.—We have prepared a number of land use plans of the type the Deputy mentioned. We prepared one for Dundalk Urban District Council, Dun Laoghaire Borough Corporation and Carlow Urban District Council, and we are now preparing, on behalf of Limerick Corporation, a very important plan covering almost 200 acres extending from where the existing city building ends into the country area in the southern environs of Limerick. This action plan would indicate the broad uses to which the land should be put—housing, open spaces, services, industrial development and so on.

23. Deputy B. Desmond.—Would they be limited to sites of 200 or 300 acres? Would you do broader studies?

Mr. Foley.—If required to do so, yes.

24. Deputy B. Desmond.—Would you have the capacity to do that? I am thinking of a belt of country like north County Dublin or the foothills of south County Dublin.

Mr. Foley.—I am glad you mentioned that because before Christmas we were asked by Dublin Corporation to prepare plans for a fairly large area at the foothills of the Dublin mountains. There are 240 acres involved. This will be one of our major projects for the eighties. We will be developing it in cooperation with the officers of the Corporation, hopefully beginning the first phase of housing as quickly as we can. The plan will deal with matters other than pure housing.

25. Deputy B. Desmond.—Will you be incorporating sanitary services, road works, land drainage usage, recreational facilities and so on?

Mr. Foley.—Yes, it will be an overall plan. In other words, it will be a new satellite town. There are 240 acres involved. Assuming that 200 acres are for housing, we are speaking in terms of 2,000 dwellings, perhaps 10,000 people.

26. Deputy B. Desmond.—I apologise to my colleagues for concentrating on Dublin. Take, for example, the development of the satellite areas in Blanchardstown, Clondalkin and Tallaght. Were you involved in the massive development of those areas? Were you called in?

Mr. Foley.—No, we were not called in. Basically, it was the local authority who determined those areas and the road systems. They then might invite us to develop one of those areas having indicated the various usages to which they should be put. The initial action plan determining where the major road systems will go, where housing will be placed, is determined by the local authority. I mentioned that we provided an action plan in Carlow. We were given the actual situation as it stood on the ground and were asked to prepare an action plan as we saw how that particular area should develop.

27. Deputy B. Desmond.—In terms of a presentation of virgin land to you?

Mr. Foley.—Yes.

28. Deputy Fitzsimons: In your accounts for 1978, under current assets, you show a figure of £1.15 million for land. What does that represent? Is the land in areas around the country or mostly in Dublin?

Mr. Foley.—We have land holdings in various areas. I will give the background. These lands were purchased initially in connection with the industrial housing programme. The IDA advised us about the areas where they anticipated a need for housing to meet industrial expansion. At the moment we have holdings in Counties Louth, Mayo, Sligo, Wexford, Wicklow, Cork, Donegal, Galway, Kildare and Longford. Our policy is to make these lands available to local authorities if they are required for their housing programmes. We dispose of the land to the local authorities and construct local authority housing for them.

29. Senator Cooney.—How so you come to buy land?

Mr. Foley.—That arose in connection with our industrial housing programme of some years ago. At that stage we were granted an allocation of money to provide industrial housing, to the order of the IDA, in areas where the authority felt there was a need for housing to meet the needs of industrial personnel. In latter years the IDA have changed their policy. They no longer give us orders to build dwellings but make money available to provide house purchase loans to people who require such loans.

30. Senator Cooney.—How do you buy your land?

Mr. Foley.—By negotiation or on the open market, but we have not purchased any land of that nature in the past six or seven years.

31. Senator Cooney.—I take your point about buying land by negotiation or on the open market, but the point is, if you are going into a certain area, what steps do you take to see that you are giving the current price? What advice do you get? How are you briefed on what the price you pay should be? I mention this because from time to time I have seen instances where land, property or a building may be bought in a town and the body coming in might not know the full property scene intimately and might have criteria in their minds which apply to different parts of the country and which have had the effect of establishing a new plateau of prices within that area.

Mr. Foley.—I can assure you that we would not consider going into an area without full consultation with the local authority, the county manager and his advisers. The last land we bought was in County Sligo and it was bought with the full co-operation of the county manager at that time, with his advice and at the rate he felt would not distort his land purchasing in that area.

32. Deputy Fitzsimons.—Obviously with the announcement by the Minister in the last couple of days of the increase in local authority loans to £12,000 there will be an encouragement to people to build their own houses. I am interested in local authorities providing private sites at a fair price for young married people. Indeed in Meath we provide private serviced sites for about £1,300, which are very good value. People have got very interested in building their own houses. The problem is that the land bank in Meath is very expensive. While we have a fair land bank at the moment it is constantly being eroded. We acquired this land bank some time ago. I know you have no land in County Meath and I find it interesting that you would be prepared to deal with local authorities with regard to their acquiring some of your land. This is obviously a solution to the national problem of housing young married people. It is very interesting that the £12,000 and the £1,000 grant puts it within the reach of people erecting their own dwellings if they can get sites at a fair price. You have a solution to it where you have a land bank and you can do a deal with the local authorities. It is a pity you did not acquire some of your land in County Meath some years ago. Comment?

Mr. O’Hanlon.—We have actually done that in County Dublin and possibly elsewhere.

Mr. Foley.—At the moment we are engaged in a housing scheme for Galway Corporation. Some of the dwellings are intended for local authority tenants and the balance will be reserved for people in a co-op group intending to purchase their own houses. This is a project catering for both needs.

33. Chairman.—Is it because the IDA have changed their method of having houses built for industrial workers that you have now decided to make land available to local authorities?

Mr. Foley.—Yes. Before disposing of lands to local authorities we consult with the Industrial Development Authority to ensure that they have not changed their minds and still need some of the land for industrial housing. We want to ensure that no particular facet of policy is affected by our decision.

34. Deputy L. Lawlor.—Is the land bank, which you have, not in use for too long? Did you not buy it under a certain scheme which was changed? You have outlined the land bank which you have. Should you not cash it in and surrender all or part of it to local authorities to put it into use? You really hold it on the basis of a switching policy. If the IDA had continued their policy, that land in the main would probably have been utilised by now.

Mr. Foley.—Practically all our land holdings at this stage are committed to local authorities. In some cases we have made arrangements whereby the holding is acquired by the housing authorities in the form of a long-term agreement of purchase and construction by the Agency.

Mr. O’Hanlon.—If we sold all this land bank at once we would be paying 40p in the £ tax on the proceeds.

Deputy L. Lawlor.—We would like to get our hands on it.

35. Chairman.—On what basis do you hand on that land? Do you allow for the cost of holding it? How do you value it when you are passing it on?

Mr. Foley.—We value it by having recourse to a valuation by the commissioner of valuation. We compare his valuation with our original cost plus the holding charges to date.

36. Deputy L. Lawlor.—The NBA are engaged in administering mortgages in excess of £6.5 million. Could you elaborate on your mortgage scheme?

Mr. Foley.—At the close of 1979 the value of mortgages outstanding was somewhere in the region of £7.3 million, which represents about 1.260 mortgages. These mortgages were created in connection with the industrial housing programme. In 1978 we got £1.25 million from the IDA for mortgage operations in 1979. So far in 1980 we have got no indication of an allocation for this year from the IDA so we are waiting until we receive notification.

37. Deputy L. Lawlor.—How do you view Irish Life going into the building society business? Do you see the NBA having any dialogue there with a view to providing a package? Do you see any potential there or have you had any contact with regard to this?

Mr. Foley.—As my chairman has said we are available for any suggestion. We do not like putting ourselves forward and saying that we have the expertise in handling mortgage operations. We carry out our instructions from the IDA as of now but we are there if any further matters can evolve from these.

38. Chairman.—The initiative for that came from the IDA and not from you. Is that not the case?

Mr. Foley.—Yes.

39. Chairman.—I take it that it was not envisaged originally by you?

Mr. Foley.—It was always envisaged that in our role of providing housing that that role would include providing the necessary finance for the people concerned.

Mr. O’Hanlon.—With regard to the point raised about Irish Life we are building a co-operative housing scheme in Portrane at the moment. All the mortgages there are being financed by the Irish Permanent Building Society. This was part of the package deal. The Agency provided the plans and negotiated the loans.

40. Deputy L. Lawlor.—You are really working in the direction I suggested?

Mr. O’Hanlon.—It is one of the facilities we would arrange for any co-operative group. We approached The National Association of Building Co-operatives to let them know that we would provide all the professional facilities and help them in negotiating loans.

41. Senator Cooney.—Was that approach taken up?

Mr. O’Hanlon.—Very slowly but they have now asked us for a meeting in the very near future.

42. Senator Cooney.—It seems to me wherever co-operative building has been undertaken—I am speaking from personal knowledge—that it has been very successful. Would you consider, because of this and with all the advantages for the economy, that you might perhaps push the National Association?

Mr. O’Hanlon.—We would. As an encouragement we would be prepared to cut down our fees. Mr. Foley, in the Portrane case, gave a guarantee that the quoted price for the houses would not be increased, which is quite an attraction in a period of escalating costs.

43. Senator Cooney.—It seems to me from what you are saying that if you want to expand your activities the push will have to come from yourselves. You are there for quite some time and people are aware of the various facilities you offer but for one reason or another they are not asking you to provide those facilities. It seems to me that the time has now come, if you feel it is right and your parent Department feel it is right, that you should expand and start to engage in some of the activities provided for in your memorandum, that you will have to take the initiative yourselves and start offering services. What is your view on that point?

Mr. O’Hanlon.—We hope to do that in the future, because only last year the Department were allowed to subsidise the National Association of Building Co-operatives to the extent that the national organiser’s salary was recouped by the Department. He is a man with some drive; we have high hopes that he will bring the Agency more into the picture.

44. Senator Cooney.—That concerns the Department. In all other areas—the Departments of Education, Defence and others—these Departments, apparently, are not going to come to you. They have not come to you. Have you considered, or would you consider, going to them and selling yourselves and providing these other services—land study, technical services, etc?

Mr. Foley.—I suppose, Mr. Chairman, the answer is that we are looking very hopefully to the eighties as a time of expansion for the Agency. In my time, our order book was never so full as it was at the end of 1979.

45. Senator Cooney.—But that is for building houses?

Mr. Foley.—It is important, as the Senator is aware, to ensure that your basic job, shall I say, is showing fruit and that clients are coming to you and have confidence in you. It is on that confidence that you build to expand. This is why I mentioned my order book situation. Now that I know that we have clients who depend on us and have confidence in us it gives us the confidence to start selling our wares on a broader scale.

46. Senator Cooney.—Arising from that, it appears, from your organisation’s structure, that the managing director has a very heavy burden of co-ordination. He is both administrator and technical head. If you are to expand your house building activities and also your activities in other areas, do you think that your organisational structure may have to be actually changed?

Mr. Foley.—Yes. This is a matter of which the Board are very conscious. It is aware of the desirability of changes in that regard. This is something which we shall be further examining.

47. Deputy B. Desmond.—In relation to the totality of the operation of the organisation, you do about 87 per cent of your work in local authority housing?

Mr. Foley.—Even more so, 98 per cent.

48. Deputy B. Desmond.—98 per cent of the NBA’s work is local authority housing. The Minister for the Environment went on record—yesterday I think—as saying that the State subsidy is now about £30 per week for local authority housing. Am I correct?

Mr. O’Hanlon.—£36. That is for a new local authority house.

Deputy B. Desmond.—£36 a week for a new local authority dwelling!

Mr. O’Hanlon.—It costs £15,000.

49. Deputy B. Desmond.—With the cut-back in State allocations to local authority dwellings, we would be building about 6,000 a year, but if there were a substantial cut-back would it not, in effect, mean that the local authority work of the NBA could substantially decline? The Agency does about 22 or 23 per cent of local authority housing now. With the increase in mortgages from £9,000 to £12,000, are people expected to avail of the local authority mortgages?

Mr. O’Hanlon.—The Minister did give his assurance that there would be no cut-back in the local authority programme—that it would be maintained at the same general level, about 6,000 completions in 1980.

50. Deputy B. Desmond.—He did, yes. He said it would be maintained at the average of the 1978-1979 programmes. However, there has been a tremendous increase in the cost of building local authority houses and enormous pressures on the Exchequer in respect of the subsidy for local authority houses, which could very well finish up at something like £45 a week in the middle or end of 1980. There are also the inevitable Exchequer pressures for cut-back on local authority construction, with the possible argument by the Minister—I am not saying we necessarily accept such argument, now—that we are providing £12,000 loans and next year the loans will be £15,000 and the low rise mortgage scheme for people to build their own houses instead of local authorities providing them. Therefore, could it not happen that, on balance, there would be a diminution in the short or long term. notwithstanding any assurance given: that next year you could see 5,000 local authority houses built and the next year 4,500, with the pressure on, on the part of the State, to take this burden of massive local authority housing subsidisation off the back of the Exchequer? Surely that kind of policy would have a serious effect on your work in the NBA?

Mr. Foley.—Of course, our level of output will always depend, in the local authority sector, on Government policy from time to time. When I look at my order book now and see so many local authorities, in many cases giving the Agency their entire programme, irrespective of how the ups and downs may occur we shall still have a sizeable share of the programme. Depending on Government policy about the number of dwellings to be produced, it may drop, admittedly. On that point, this is one of the problems for management; that you have to gauge the size of your permanent staff by looking ahead and making the best possible projections.

51. Deputy L. Lawlor.—How many houses do you hope to build in 1980?

Mr. Foley.—In fact, the board adopted a programme last week and we expect 1,500 completions in 1980, which is 25 per cent of the on-going policy of approximately 6,000 completions a year. We have 2,100 dwellings in progress at the moment and almost 9,500 at various stages of planning. To harp back again to my order book, we have orders in hand which will give us six to seven years work based on our average output and that is not even taking into account the normal orders which will accrue, hopefully, over the next six years.

Mr. Boland.—Could I come back to what Deputy Desmond was saying about trends? I would put forward the view, that, having regard to the demographic trends the rate of house building will have to go up. First of all, the total numbers will have to go up and also the number of local authority houses over the eighties and nineties.

52. Deputy B. Desmond.—Would it be fair to say that the local authority housing, in terms of cost to the taxpayer, is likely to be much more expensive?

Mr. Boland.—One would hope that as incomes rise, it might reduce the subsidy, relatively speaking.

Mr. Foley.—To help you on that point, could I say that in our planning programme, we are planning almost 1,000 private sites in various projects, hand in hand with the local authority programme, so that we are making provision for the possibility of more people availing of SDA loans. As recently as yesterday. I had a discussion with a county manager who asked us to move immediately on one of the land holdings I mentioned to you and arrange for the development of 60 private sites as quickly as possible for him, in the light of the interest shown by people who wished to build their own houses.

53. Deputy B. Desmond.—Would it not be a factor in terms of private sites—something of which we are acutely aware in Dublin county—that if you make private sites available, they will tend to be allocated to small builders at local level? Small builders would construct the dwellings and there would be a massive hidden subsidy in the provision of those private sites, provided very cheaply. Even at the top of the market in Dublin county, we are talking about £4,300, which is what we offered recently to one of the co-operative groups in terms of economic charge on transferring a site. One finds that where private small builders tend to take up such sites and construct dwellings for people, they tend to be very costly houses, on balance. Even with the CRV’s in operation the private site hand-over policy is not as successful as has been alleged even though it keeps small builders in work. Is it true to say that it would be better to hand over those sites to local authorities in toto than to carry out an NBA scheme because houses could be constructed for between £2,000 and £3,000 less?

Mr. Foley.—That is exactly what we are doing in the Galway situation. We are building a scheme of that nature hand in hand with the local authority scheme. In my discussions with the county manager yesterday I learned that people wanted detached sites on which to erect their own bungalows. The manager was anxious that plans be prepared to facilitate those people. That is something we will work out with local authorities. We will seek to have available a range of plans for private purchasers so that they can see how a particular dwelling would fit precisely on a site. That would streamline the matter further and, hopefully, get house building moving quicker.

Deputy L. Lawlor.—In Dublin county we have had experience of a different type of small-builder scheme which was not successful. Because of the way that scheme operated two or three blocks of houses on the fringe of the site were not completed very quickly with the result that those living in the heart of the site had to pass through a construction site for a long period in order to get to their houses. I suggest that private purchasers should be allowed to choose their own builder. I would not like to see the problem we experienced in Dublin county being repeated elsewhere.

54. Deputy B. Desmond.—Is there any income limit on the purchasers of such sites?

Mr. Boland.—Not really. Those eligible for local authority tenancies get priority.

55. Deputy B. Desmond.—I have found that, where such sites are available, in some instances most of the sites are taken up by those who could well afford to buy a site privately. The NBA and the local authorities are alleged to be providing houses for those in great need but, in fact, individuals who could afford to build their own houses, get good sites at very low cost. If a local authority was to build on such sites the houses would be allocated to people in dire need.

Deputy L. Lawlor.—I suggest that it is the duty of county councillors to monitor such matters rather than the duty of the NBA.

Deputy B. Desmond.—Perhaps the NBA would impress on local authorities that they should not be giving away sites to such people?

Mr. Foley.—We cannot step into the functional area of a local authority. We must be very careful in that regard.

Mr. Boland.—Most local authorities sell sites to individuals who make their own arrangements.

56. Chairman.—I should like to know if any of the witnesses would like to comment as to the relative advantages, or disadvantages, from the cost and other points of view, of providing detached houses, terraced houses and flats?

Mr. Foley.—A terraced house is the cheapest but when dealing with private sites one has to get two people to agree to build a pair of semi-detached houses at the same time. People tend to prefer to have control over their own sites and to provide their own design of houses on them.

57. Deputy B. Desmond.—And high-rise is not the cheapest?

Mr. Foley.—It is not likely that those anxious to provide private sites would go in for any high-rise structures on such sites.

58. Deputy B. Desmond.—And high-rise, generally speaking, is more expensive?

Mr. Foley.—Yes.

59. Deputy B. Desmond.—With a multiplicity of local authority housing schemes, a multiplicity of local authority agencies and housing staffs, it has been suggested that there should be a central national housing construction agency responsible for building local authority houses. It must be remembered that we only build about 6,000 such houses per year which, in the context of the UK or other EEC countries, is a relatively small programme. Would the witnesses like to comment on the suggestion that we should have one central agency responsible for design, research, administration and financing of local authority housing? In Dublin Corporation, for example, expert staff are attached to the housing section and the housing sections of Dublin County Council and Dun Laoghaire Corporation also employ such expert staff. In my view there should be a greater degree of centralisation which would lead to a reduction in costs and an improvement in standards.

Mr. O’Hanlon.—We have the example of that type of structure in Northern Ireland in the Housing Executive. Frankly, we flatter ourselves that we have done better than the Northern Ireland Housing Executive have done. We have been to Northern Ireland and Housing Executive staff have visited us. They have been very impressed by the quality of what has been done here. The tenants of housing schemes we visited in Northern Ireland have told us that the Housing Executive is far too remote from them and that their own whims and fancies as to what should go into a house in the way of equipment and design are completely disregarded.

Mr. Boland.—We have too much centralisation and what we would like is further decentralisation. Deputy Desmond was arguing for one single authority in Dublin for which there is a good case but housing is such an emotive issue that it would not be a good thing to have one housing authority for the country.

60. Chairman.—Is there not scope for centralisation of research on building materials?

Mr. Boland.—We have An Foras Forbartha.

61. Deputy B. Desmond.—I remember a former Minister arguing that in terms of capital allocations to local authorities some of them had not taken up their capital allocations with the result that at the end of the financial year the Department were left with millions of pounds and wondering where the county managers concerned had disappeared to. For that reason is there not a tremendous disparity in standards? Some local authorities appear to want to do things in their own way and, on occasions, they do not do things properly. Is there a need for national co-ordination?

Mr. Boland.—In Clare, like many western counties, the policy is to build up villages and small towns so as to ensure a balanced development throughout the county and to preserve rural traditions and culture. At present contracts have been placed for 166 houses spread throughout 16 centres with 19 contractors. The houses are being built in groups of four, up to a maximum of 20. In my view such a programme can most efficiently be carried out at local level.

62. Chairman.—Some years ago the Agency went in for system-building but I think they have moved away from that. Am I correct?

Mr. Foley.—Yes. We have found that the best and safest way is the traditional form of construction. In addition, it is the form of construction most acceptable to tenants.

63. Senator Cooney.—There have been one or two notorious instances where the contractors have let you down in terms of faulty workmanship. The incident in Cork got most publicity and also that in Galway to some extent. Would you like to comment on how that happened? What steps have you taken to supervise the standards of workmanship to ensure that it will not happen again? Generally what protective mechanisms have you vis-á-vis your own contractors?

Mr. Foley.—The Chairman mentioned we had moved away from system-building. That really is the answer. In the 1960s there was a swing towards system-building and prefabrication in construction and contractors tended to argue that if they were given sufficient orders they could produce cheap housing. We had problems which came from the fact of having system building. We find now that if we restrict ourselves to traditional construction our problems fade away. With regard to control, in 1973 the Department issued outline standard plans for local authority houses. We processed those further and we produced standard details for all local authority housing. These standard details ensure that our supervisors and our contractors know precisely what the Agency want. Our consulting architects know also. By starting off correctly with documentation, making sure that everyone involved knows precisely what is the standard required, you are on the right road to achieving a correct finished product. That is the answer to the question.

64. Senator Cooney.—What system have you for monitoring work in progress? Is it the clerk of works system?

Mr. Foley.—The clerk of works and in large schemes the site engineer.

65. Deputy B. Desmond.—Perhaps you will tell the committee how the Agency act in the following situation. For example, in relation to the Loughlinstown development, the Dún Laoghaire Corporation may say they want a 12.5 density on a certain site and a three-storey development while the Dublin County Council may want a far better layout such as that at Shanganagh, which is much to the credit of the NBA. There is this wide disparity in standards. Some local authorities tend to pack in as much as possible on certain sites, something that is resented by the tenants. Do the Agency resist this from the local authorities?

Mr. Foley.—When we get an order from a local authority and discuss it in detail with them, we try our best to tell them precisely from the tenant feedback what we think the tenants prefer. We cannot deny that in the final analysis it is the local authority who call the tune. In other words, we must do what the local authority tell us to do, but we endeavour by persuasion to indicate the type of housing most acceptable to tenants. We are finding that that policy is paying off. Not alone do we discuss the brief with the county manager and his officials but we attend meetings of the elected members. At these meetings there is a general discussion of the matter and if we have any reservations about the proposal we make them known. This is done at an early stage before detailed drawings are prepared. Therefore, at the end of the day on the completion of the project the Agency is happy in the knowledge that all matters relating to design were discussed in detail and explained fully at the outset. We have put much emphasis on this important matter in the past years. There have been discussions in depth with the client including the elected members of the council and we make sure from the beginning that everyone knows what is being done.

66. Chairman.—When accepting the commission you have a written reservation mentioning your advice and so on?

Mr. Foley.—Yes. On numerous occasions we have mentioned such reservations at public meetings. I recall one scheme in 1979 where there was a decision made to have a certain form of development. It was a simple matter of arranging car parking. We have found that a tenant likes to have his car at his front door. The proposal was to have a general parking area; we did not favour it and we made our thoughts known at the beginning.

67. Senator Cooney.—Are the contractors bonded or do the Agency only seek bonds above a certain figure?

Mr. Foley.—I did a review at the end of 1979 and it showed that with one exception all of our contractors were bonded. In the one case the man had very valuable assets.

68. Senator Cooney.—Were you able to call on the bond in the case of Cork and Galway?

Mr. Foley.—Yes.

69. Senator Cooney.—You were not out of pocket in those cases?

Mr. Foley.—We will not know until the scheme is finished in Cork.

70. Senator Cooney.—Are repairs still being done?

Mr. Foley.—No. This was an existing scheme. I think the Senator is speaking of the old Cork scheme. When the remedial work had to be done in that case, the Agency made a contribution towards it but there was no additional cost to the local authority.

71. Senator Cooney.—Were you able to get compensation from the contractor’s bond in that case?

Mr. Foley.—No, because it was outside the provisions of the bond. It was a very complicated and controversial argument at the time.

72. Chairman.—Did you learn a lot from it?

Mr. Foley.—We certainly did.

73. Senator Cooney.—In the accounts for 1978 there is mention of a sum of £62,000 in respect of maintenance costs on completed schemes. How is maintenance the liability of the Agency? Would it not be the liability of the local authority?

Mr. Foley.—No. In one case it was a matter of having to do a complete roofing job on a scheme we had built under the low-cost programme. We felt that these additional costs should not be placed on the shoulders of the local authority and we stepped in. At that stage the figure was provisional; it has not yet been finalised. There were elements of the remedial works that were beyond the responsibility of the contractor.

74. Senator Cooney.—In other words, it was a design factor?

Mr. Foley.—Yes.

75. Senator Cooney.—On the question of design, do you have an on-going design situation? Are you constantly changing and updating your package of designs?

Mr. Foley.—Yes. In the case the Senator is referring to, the house design was a package arranged with the contractor. In all our modern building we prepare the design and the contractor builds in accordance with it. The problems referred to by the Senator, even though they appear in the 1978 accounts, related to schemes built some years before that.

76. Senator Cooney.—Have you any system for getting a continuing feedback of information from your clients and from the house occupants that would enable you to make changes and alter the design?

Mr. O’Reilly.—We have no system but we never fail to get some feedback. Usually it emerges in the form of comments. We have no regular system of asking the tenant by way of questionnaire what he wants but, if something is wrong, we learn about it quickly.

Mr. Foley.—We make it our policy and I personally do it also—to visit tenants of completed schemes and talk to them. In that way you build up a fund of information about what tenants like and dislike. Certain matters like the extent of the vents in windows and positioning of doors—these are always under constant review.

Mr. O’Hanlon.—Members of the board also make a practice of visiting centres and discussing house types with the people concerned. Personally I find that by taking the views of practical laymen one discovers some factors that can be improved by technology.

77. Senator Cooney.—In the earlier years of the Agency am I right in thinking that you were plagued by, shall I say certain hiccups of one sort or another and that these are all behind you? They arise in some system building. Are you satisfied that they are all behind you now?

Mr. Foley.—They are all behind us but although they caused us a lot of problems and worry we learned a great deal.

78. Deputy B. Desmond.—Do you think the Minister of the day learned a great deal?

Mr. Foley.—The Agency learned a great deal.

79. Deputy B. Desmond.—Then no more harebrained schemes for low cost housing will be foisted on you. We have also had a submission from the Confederation of Irish Industry and they are of the opinion that the NBA should concentrate on using the legal, technical and administrative experience of their organisation as an advisory agency and that you should not in fact be involved in the actual construction work which should be carried out by local authorities and by private builders. I presume you do not accept that role?

Mr. O’Hanlon.—There are already adequate facilities for vetting the technical aspects of any type of building. The Agency were brought into being to fill a lacuna where no local authority or private enterprise was prepared to build to meet a particular need.

Deputy B. Desmond.—We accept that.

80. Chairman.—What you are saying is that nobody need accept your services if they do not want them?

Mr. Foley.—That is true.

81. Deputy B. Desmond.—But the CII did not want you to have that role. That was their submission to us.

Mr. O’Hanlon.—The builders themselves like to deal with the Agency because we have a very good reputation for paying promptly and for co-operation with them.

Mr. Foley.—I cannot understand the reason for what the Deputy says. One would think the private sector was sufficiently occupied. We play an important supporting role in the provision of local authority housing with all the in-built safeguards that we are now using about standards and so on. The number of people employed on Agency projects at the end of December totalled over 1,600.

Mr. Boland.—And we cannot forget that it is the construction industry itself that undertakes the building—whether in the public or private sector—and the net result is the same.

82. Deputy B. Desmond.—We had a further submission from the Construction Industry Federation that the NBA would function more effectively if confined to commissioning and purchasing but not engaging in construction even for State personnel. I presume you would not accept that?

Mr. Foley.—No. We prefer to be involved in the cold practicalities of building houses and not in some kind of qualified advisory situation. At least at the end of the day we can show that we produced over 1,200 dwellings in 1979. That is a practical result.

83. Senator Cooney.—In cases where you are deeply involved with local authorities, do you find them coming to you earlier and involving you more in advising them on land acquisition and general lay-out or are they bringing you in when they have done all that and saying that they want so many houses on such a site?

Mr. Foley.—It varies. We depend on the decision making of the local authority as to when they consider it advisable to invite us in but we would welcome——

84. Senator Cooney.—You would like to come in early?

Mr. Foley.—We certainly would and that is why we were commissioned for the preparation of land use plans. In these cases we are in at the start; we then know the area and the problems and we can work more satisfactorily.

85. Senator Cooney.—Are you paying any attention to elevation design for appearances in different parts of the country?

Mr. Foley.—That is one point on which we are very strong. Even though we have produced standard details for our houses, they are produced in such a way that each of our principal architects can indicate his own special elevational treatment. We do not want to flood the country with the same type of elevational treatment for every local authority housing scheme. We pride ourselves that we endeavour to vary, not only from area to area but from one pocket of houses in a scheme to the next.

86. Senator Cooney.—In cases where the local authority are building without recourse to your assistance, would you make those elevational designs available to them?

Mr. Foley.—It is our policy to be cooperative and helpful to every local authority because we feel in effect that we are involved in the local authority housing programme.

87. Deputy B. Desmond.—We have been examining quite a number of State-sponsored bodies engaged in trading and commercial activities and it would appear that the liaison between these bodies and the Departments concerned is less firm and strong than that between the NBA and their sponsoring or controlling Department. For example, I think there are two members of the staff of the Department of the Environment and one of the Department of Finance on the NBA board. To what extent does that very close relationship between the NBA and the Departments concerned inhibit your work? Or does it inhibit you?

Chairman.—Before you answer that, which cap are you wearing?

Mr. Foley.—As chief executive of the Agency I certainly welcome this close liaison with the Department, since it is the Minister who determines the overall policy for local authority housing. It is beneficial to the Agency to have this close relationship and to work within that programme. I find, in fact, it helps our clients as well as everybody else.

88. Chairman.—Does it have any inhibiting effect?

Mr. Foley.—None whatever. In fact I would say it is the direct opposite.

89. Chairman:—You would not feel as some bodies in somewhat similar circumstances feel that they are definitely inhibited and restricted by their association with the Department? The Agency do not feel that they may be at a disadvantage in some ways but may be at an advantage in other ways if the Department had less control over them?

Mr. Foley.—I certainly feel that the close liaison with the Department of the Environment is very helpful to the Agency and is helpful to the overall housing programme and in the end is beneficial to our clients.

90. Deputy B. Desmond.—The Construction Industry Federation expressed the view that the chief executive and the chairman of the NBA should be outside professionals, and they feel that the NBA would benefit from that. As we know the NBA can be substantially circumscribed as I outlined earlier. May I presume that the other board members and perhaps the county manager might not accept that?

Mr. Foley.—The involvement with the Department relates to the Department’s normal involvement in the question of standards and costs for local authority houses generally, but in the day to day running and planning of 30 contracts the Department of the Environment are not involved. These matters are carried out quite separately. The Department are only involved in questions of the level of costs and standards generally. Beyond those broad issues the Agency operates as a normal company.

Mr. Boland.—It is inevitable that there should be close liaison between the Agency and the Department in the context of the primary role of the Agency. The Minister must look at the overall local authority housing programme, including the amount of the capital involved and that is understandable. I have never been inhibited by this close relationship.

Mr. O’Hanlon.—It must be remembered that the majority of the members of the board are not civil servants.

91. Deputy B. Desmond.—We received a staff structure chart. In terms of contrasts with other State-sponsored bodies there appears to be a very heavy burden of coordination at Managing Director level. He has direct responsibility for 3 principal architects, the design architect, the senior engineer, the quantity surveyor, the contracts controller, the financial controller, the company secretary and an administrative officer. It is somewhat different from other State-sponsored bodies where one would have the managing director, the deputy director and so on. Are there any comments on that?

Mr. Foley.—This matter was raised by Senator Cooney and the board have been looking at this and are conscious of the desirability of making certain changes. That will certainly engage our attention as we move into the eighties. There are certain circumstances and practical difficulties which make changes in these structures somewhat difficult. That does not mean that we will not keep them under review.

92. Deputy B. Desmond.—Bodies such as the IIRS would have a deputy director and then divisional heads. That may not be the best structure for the NBA but it is somewhat unusual that the NBA do not have a somewhat similar structure. Is that not so?

Mr. Foley.—The board have not overlooked that factor which will continue to be examined.

93. Deputy B. Desmond.—There is no staff representation on the board?

Mr. Foley.—There is.

Deputy B. Desmond.—I am talking about worker participation at board level.

Mr. Foley.—There is not.

94. Deputy B. Desmond.—That is not your direct responsibility?

Mr. O’Hanlon.—It is felt to be inappropriate.

95. Deputy B. Desmond.—Is there any reason for this?

Mr. O’Hanlon.—The Agency are not analogous to CIE and the ESB where workers participate in activities which are part and parcel of the direct interests of the board. Our staff do not work in the production of goods and it was felt that they were not analogous to CIE or to the ESB or other bodies who were selected for worker participation.

96. Deputy B. Desmond.—Who handles staff directly—the managing director?

Mr. Foley.—Normally the secretary of the company but any major decisions would be brought to me.

97. Deputy B. Desmond.—Are the staff members of the NBA in a trade union?

Mr. Foley.—I understand that they are. Certainly staff relations have been very good. The turnover of senior staff is very low and the best of relations exist between the board, the managing director and the staff.

98. Deputy B. Desmond.—Are the salary levels of the NBA publicly available?

Mr. Foley.—Yes, all of the salaries of the staff of the Agency are related to comparable grades in the civil service or local authority service.

99. Deputy B. Desmond.—They have comparable pension arrangements as well?

Mr. Foley.—Yes.

100. Senator Cooney.—In relation to getting a contractor, how do the Agency choose their contractors?

Mr. Foley.—Normally we accept the lowest tender. I prefer open tendering. We are allowed, however, to avail of what is called selective tendering following a public advertisement inviting contractors, who have the necessary expertise, to apply for inclusion on a panel, but I favour open tendering because it gives us the best of both worlds. We are seen to be taking all the necessary steps to protect public finance and, at the end of the day, we still have flexibility. Since we joined the European Economic Community, we must operate in accordance with the Community’s directives. In relation to public works contracts, the directives say that a contract will be awarded to the building contractor who submits a tender in accordance with the tender documentation which is the most economically advantageous to the client in respect of price, period of completion, technical merit and running costs. These criteria give us ample opportunity to ensure that we pick the right contractor.

101. Senator Cooney.—Who does the actual picking?

Mr. Foley.—The tender and the choice of contractor are recommended to me by the principal architect, having availed of reports from junior architects and quantity surveyors. Then I make the decision that a contract be awarded. My acceptance of the tender at this stage is subject to the approval of the Department of the Environment and acceptance by the local authority.

102. Senator Cooney.—The CIF stated that there were complaints that the NBA were accepting tenders from firms which had little experience. Is that historical?

Mr. Foley.—Yes.

103. Senator Cooney.—There was a suggestion from the same source that in the case of the Lakeglen Construction Company a large contract was awarded in 1978 when it was known to the Agency that the firm were in serious financial difficulty. The firm subsequently went into liquidation. Is that correct?

Mr. Foley.—That is not correct. In fact when the last contract was awarded it was bonded to the extent of 25 per cent by an insurance company.

Senator Cooney.—It was a very wrong thing for the Federation to allege.

104. Chairman.—In what circumstances do you use your own consultants and in what circumstances do you use outside consultants? I should like to know your policy on that. We had a comment from Waterford Corporation that in future they will seek to have competent local consultants engaged by the Agency. The present method favours too much centralisation in Dublin. Will you comment on that also?

Mr. Foley.—When we get a commission we examine it to see whether it can be undertaken by our own staff. If our own staff are fully occupied, we have then recourse to a panel of consultants which is drawn up by the Board of the Agency. From the panel we choose the consultant whom we consider is best suited for the project. As regards the request by Waterford Corporation, this is not unusual. There have been instances where a housing authority, on learning that it was necessary for us to utilise the services of a consultancy firm, have indicated the consultant whom they would like to see engaged. If we are satisfied that the particular consultant has the necessary expertise and is on our panel, we will go along with the wishes of the local authority. I see no problem with the request made by Waterford Corporation.

105. Chairman.—You are flexible?

Mr. Foley.—Yes. I should like to emphasise that the anxiety on the part of the Agency is to ensure that the client is satisfied and not embarrassed and that we do nothing which will create a problem for him.

106. Senator Cooney.—You mentioned £62,000 for maintenance. Is that in regard to Finglas?

Mr. Foley.—Not all, there are other problems all springing from the historical matters we discussed.

107. Senator Cooney.—Who will be responsible for the Finglas repairs?

Mr. Foley.—I gave an undertaking to Dublin Corporation that it would not have to suffer financially as a result of this problem. It is a matter for determination between the Agency and the contractor who built the scheme. That is going on at present.

Mr. O’Hanlon.—The maintenance period had passed but the contractor came in and did all the necessary remedial work. We split the cost between the Agency and the contractor.

108. Senator Cooney.—Was the cause of the fault identified?

Mr. O’Hanlon.—It was faulty workmanship.

109. Senator Cooney.—Would the passing of the maintenance period have any——

Mr. O’Hanlon.—It was inherently defective.

Mr. Foley.—We do not like picking up our problems. Dublin Corporation are a good client of the Agency. The maintenance period may have passed but we still felt that it was our problem.

Mr. O’Hanlon.—Senator Cooney’s point is that if the defect is due to defective workmanship at the time of construction there is a continuing liability on the contractor.

110. Senator Cooney.—Was that the case here?

Mr. Foley.—It was but to explain the necessity for this provision in our accounts, it should be noted that when the IIRS and our consulting engineers examined the problem they recommended additional work which was not included in the original contract documents.

Mr. O’Hanlon.—We have negotiated with the same contractor to rectify defects on other schemes. Where there was a grey area about liability as between the contractor and the Agency the contractor bore the brunt. We felt that it was only equitable to meet him about half way on the Finglas case.

111. Senator Cooney.—If it was a question of faulty workmanship why did you feel it necessary to go half way?

Mr. Foley.—The remedial works recommended by the consulting engineers included the insertion of additional purlins under water tanks. These were not provided in the original contract and were intended to have a belt and braces effect. I got legal advice on this matter and there is no way in which the contractor could be expected to pay for such work under the terms of his original contract. It is in that grey area that a settlement had to be made.

112. Senator Cooney.—I know there can be grey areas in building contracts. There have been comments from various local authorities on one thing or another. Westmeath County Council had an experience which, again, was the builder’s fault. There have been complaints about lack of liaison from a number of authorities. Wexford Corporation and County Council, Kildare County Council, Naas UDC and Carlow UDC. Are you conscious of them making complaints to you?

Mr. Foley.—Not really. We enjoy the best of relations with our clients. There may be a problem that might blow up and be quoted subsequently but in the cases you mentioned there is liaison.

113. Senator Cooney.—What form does it take?

Mr. Foley.—At the original briefing session we are deeply involved with the local authority. As we proceed to contract and get in tenders we invariably go to the local authority and present our proposals for the construction of the scheme. During the construction of the scheme the local engineer or architect is invited to our site meetings, the normal monthly meeting to control the building contract to see that it is being built in accordance with the contract documents. With many local authorities we have the arrangement where the borough or town engineer will come to the meetings and express a point if it affects his clients interests. If there is any breakdown of liaison it is of a minor nature.

Chairman.—Generally speaking they were complimentary but they did make that point.

Mr. Foley.—It is something that we can take care of.

114. Chairman.—I should like to ask a few questions about financing. What is your policy with regard to profitability? Last year your profit or your surplus was something like £8,000. In fact if anything your profitability is becoming lower per annum as time goes on. Your total shareholders funds are something in the region of £160,000. Do you see yourself as being obliged merely to break even or do you feel you should build up some reserves which might be used for one reason or another in the future?

Mr. Foley.—We do not aim to make a large profit but, at the same time, we must approach our accounts as any good trading company would. We have now built up reserves of over £163,000 and in the process we have paid almost £40,000 in corporation profits tax. We have also met our responsibilities in the Cork scheme and in Finglas in the situation that arose there. Our policy will not be to aim for a large profit but to ensure that the results of our year’s operations will gradually build up an adequate reserve having regard to our fixed overheads from year to year. From 1980 our overheads will run to the order of £500,000, that is, permanent staff and normal overheads. It would be my intention, with the approval of the board, to work gradually towards a situation where we would have reserves on hand at least equivalent to a year’s fixed overheads.

115. Chairman.—It seems to me that with such overheads, £8,000 is very near the bone. It could very easily have been £8,000 the other way. From time to time something may go wrong and you may feel it necessary to contribute to something like Finglas. It might be felt that you were not building up sufficient reserves to meet contingencies of one kind or another.

Mr. Foley.—When the situation came to light after 1978, when considering our budget arrangements for 1979 we took certain corrective measures which were aimed towards an improvement in that situation. I can see the fruits of these measures coming to light in our 1979 accounts. We also have assets in the form of our land bank.

Chairman.—Which you are gradually getting rid of.

116. Deputy B. Desmond.—On the sale of land to local authorities, how do you value your final point of sale?

Mr. Foley.—There are two factors. We have recourse to the Commissioner of Valuations for his valuation and we examine the original purchase price plus the holding charges. These are the two criteria.

117. Deputy B. Desmond.—The 1978 accounts include £1.15 million for land —under current assets. What does that represent in acreage?

Mr. Foley.—Off the top of my head, about 200 acres.

118. Senator Cooney.—Was that cost price?

Mr. Foley.—Plus holding charges up to the year of the accounts.

119. Senator Cooney.—What are your holding charges?

Mr. Foley.—The moneys we used to purchase these holdings were originally borrowed from the State. We have to repay those moneys and we accumulate the interest charged in the repayments to the Exchequer on the assets.

120. Deputy B. Desmond.—According to the 1978 accounts you had close on £2 million in cash in the banks. Is not that quite a substantial amount?

Mr. Foley.—It was an unusual circumstance. It included an allocation of £1.25 million from the IDA for our mortgage operations in 1979. In addition it included moneys relating to the redemption of mortgages by various mortgagors throughout the country. In January 1979 we paid £500,000 to the Exchequer. We have an on-going arrangement with the Exchequer that where mortgages are redeemed the capital moneys are repaid in due course to the Exchequer.

121. Deputy B. Desmond.—At the time you did not decide to indulge in any short-term cash investment?

Mr. Foley.—We ensured that it was invested to give the maximum return. It is our on-going policy. We have an arrangement with our bankers and the Agricultural Credit Corporation. If we have spare finance from week to week we endeavour to get the maximum return from it while we have it on our hands.

Chairman.—Strictly speaking, it was not in the banks. It was on deposit.

122. Deputy B. Desmond.—On the general question of financial control you seem to have implied that you prepared annual forecast budgets. Do you do that?

Mr. Foley.—Yes.

123. Deputy B. Desmond.—It was not quite clear from the way the data were presented to us. Have you a forecast for 1980?

Mr. Foley.—It will be considered by the board with the draft accounts for 1979 at the February meeting. We are in the happy position with an accounting system that can show within a week of the close of any month precisely how our local authority receipts and payments stand. I have available to me from the financial controller at any time details of how any particular problem is working out with regard to overheads and so on.

124. Deputy B. Desmond.—When you do a contract for Dublin County Council you charge 6 per cent for general administration, professional services, fees and so on?

Mr. Foley.—It varies.

125. Deputy B. Desmond.—It seems to be a fairly general figure. In some contracts it might not be enough and in other contracts perhaps 4½ per cent might do. How does it work out at 6 per cent?

Mr. Foley.—We will be looking at this matter when we are examining our draft accounts for 1979. Each year we review the position. At this moment the figure is adequate. Contracts and problems relating to contracts may vary from locality to locality and from one size of contract to another. A client who requires us to build 12 dwellings in the west of Ireland is looked upon as being as important a client as somebody who asks us to build a large housing estate. We tend to equate our overhead charges right across the board.

126. Deputy B. Desmond.—There is no way in which a massive contract with Dublin County Council would be subsidising some small urban district council down the country?

Senator Cooney.—What harm?

Deputy B. Desmond.—I am not objecting to it.

Mr. Foley.—The point is that if we charge 6 per cent it is still below the cost which a local authority would incur if it engaged outside consultants.

127. Deputy B. Desmond.—I accept that. That brings me to the question of consultants. How do you form your panel of consultants?

Mr. O’Hanlon.—As I mentioned initially, the use of consultancies generally depend on the kind of projects we get and the number arriving at any particular time. Before this meeting I looked through our figures and I found we have 31 consultancy firms engaged in various projects. Some of the input by some of the consultants might be quite small. Others may have a larger project in hands.

128. Deputy B. Desmond.—Another point that struck me was that, looking at the 1977 and 1978 reports, at least 15 architectural consultants have remained unchanged. If that is so it would strike me as being unusual that the architectural consultancy panel has not changed over three or four years.

Mr. O’Hanlon.—We advertise from time to time and we advise people who are already on the panel to re-apply at that stage.

129. Deputy B. Desmond.—Is it the board who form the panel?

Mr. O’Hanlon.—Yes, on the advice of the principal technical and administration officers.

Mr. Foley.—In the case of a consultant engaged in 1977 his involvement with a project will last until about 1980 so his name will be repeated regularly.

130. Deputy B. Desmond.—One of the submissions we received is rather difficult and I am sorry for taking up time with it. The Construction Industry Federation made a point in relation to one matter which has been referred to, the Lakeglen Construction Company Limited, of which I have some experience as a member of the local authority which had a contract with that firm. The CIF alleged that the serious financial difficulties of the firm were known to the NBA when the contract was awarded. What are your views on that? They made the allegation to us; we put it straight to you.

Mr. Foley.—The answer to that is on entering into a contract with a contractor I do not know his entire financial situation. That is his own business. As I said to Senator Cooney, when we entered into this contract with this particular firm, the firm was bonded to the extent of 25 per cent of the contract. What further criterion does one use, if an insurance company is prepared to provide a bond of 25 per cent at that stage. The alternative would be for the Agency to employ a financial firm to enquire into these matters.

131. Deputy B. Desmond.—I accept that in the context of my own situation. I am an interested party as a member of the local authority involved but the allegation has been made. If I may finish my observations, the CIF have also said that they received complaints from members and from trade unions that the NBA were accepting tenders, in many cases, from firms which had very little experience, which did not have the capacity to carry out contracts to the requisite standard and which were not observing the agreed wage rates and conditions of employment. It is essential that this type of allegation be dealt with.

Mr. Foley.—Certainly they should be dealt with. Could the Deputy repeat the last point?

Deputy B. Desmond.—The Construction Industry Federation have stated that shortly after its inception the Federation began to receive complaints from members and from trade unions that the NBA were accepting tenders, in many cases, from firms which had very little experience, which did not have the capacity to carry out the contracts to the requisite standard and which were not observing the agreed wage rates and conditions of employment; on checking the matter the Federation ascertained that (a) the statements on conditions of employment were for the most part correct and the NBA apparently were not concerned with this aspect, (b) the statements regarding capacity to execute work were verified by the unusually high rate of bankruptcy and non-completion of contracts by NBA contractors as well as numerous complaints regarding the quality of NBA contractors as well as numerous complaints regarding the quality of NBA work. These are the pretty broad allegations made by the CIF. I am quite sure that copies of the allegations can be furnished if necessary and perhaps you could make a further submission to us to deal with the matter.*

Mr. Foley.—I think the operative words there are “shortly after its inception”. This is back in 1963. I can assure the Deputy that what may have happened in 1963—and I certainly never went back to examine that—does not relate to the current activities of the Agency.

Deputy B. Desmond.—I see. I thought it as well that we put the allegations to you.

Mr. O’Hanlon.—There is no doubt that there were teething problems and it would be wrong to conceal that fact. That perhaps is over-stating the extent of the number of cases in which the Agency fell down due to lack of experience. Certainly that did not persist for more than their first five years in existence; I can speak from ten years experience and nothing like that has happened on any kind of appreciable scale over that period.

Deputy B. Desmond.—I put the point because I do not necessarily regard the CIF as having the most objective opinion in these matters but nevertheless they made the submission to us and, in fairness, I wanted to put it. These are the only comments I wanted to make.

Chairman.—I would mention that we have to hand over this room at 5.30 for another meeting.

132. Deputy B. Desmond.—There is just one final matter. Have the NBA done studies in relation to family sizes in Ireland to determine housing standards necessary for them?

Mr. Foley.—We operate an ongoing research policy as regards the outline standard plans issued by the Department. These outline plans take note of the various family sizes and the particular circumstances and so on. As the Deputy mentioned, he is fairly conversant with a scheme in his own area where we specially adapted a house to cater for the needs of a physically handicapped person. We have this flexibility to provide a dwelling suitable for particular circumstances.

Mr. O’Hanlon.—We have plans available for families of up to ten persons if the local authorities feel they are going to accommodate a family of that size; there is no problem in providing a suitable house.

Chairman.—There may be some points arising from today that we may get in touch with you about.

The witnesses withdrew.

*See Appendices 31 and 32.