Sins of the Father (15 page)

In February 1967, a group was formed in Dublin which set out to raise funds for the Fianna Fáil party. It called itself Taca, and its main focus was builders, speculators, surveyors, architects and businessmen. The main organiser of Taca was Charles Haughey. Its offices were on Amiens Street, at the same address as Haughey Boland, an accountancy firm run by Haughey and his friend Harry Boland. They were later joined by Desmond Traynor. It was an open secret that Taca was more than a fundraising organisation: it was about access to the corridors of political power. Kevin Boland, who was Minister for Local Government from 1965 to 1970, and responsible for local authority housing, recalled a 1960s Taca meeting where contributors to the Taca fund got to meet Fianna Fáil cabinet ministers, ‘We [the cabinet] were all organised by Haughey and sent to different tables around the room. The extraordinary thing about my table was that everybody at it was in some way or other connected with the construction industry.’
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Writing in 1972, the journalist Rosita Sweetman summed up Taca in her book
On Our Knees
:

You may wonder why the Fianna Fáil government doesn’t do something about controlling the price of land, the building of houses and general accommodation problems in a city bursting at the seams … If you’re still sceptical, you might take a trip around the newer, posher estates being built on the outskirts of Dublin. The names ‘Gallagher’, ‘McInerny’ and ‘Silk’ will re-occur constantly on the billboards.

Now if you dig a bit deeper you will discover that Mr Matt Gallagher and his brother are two of the biggest building/contractors in Dublin. And they’re among the biggest contributors to Taca. And Taca is the fundraising section of the Fianna Fáil party.

Without Taca, Fianna Fáil would go bankrupt in the morning. The eventual outcome of the situation whereby the government party derives a lot of its finances from such organisations as Taca, which in turn derives its finances from the capitalists, the speculators, means the government is in debt to such people.
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The level of speculation was such that in January 1971 the then Minister for Local Government, Bobby Molloy, set up a special committee to look into the price of building land. It was headed by Justice John Kenny and it presented its findings three years later, in January 1974. It became known as the Kenny Report, and its recommendations, to help curb the economic and social damages caused by land speculation, have never been implemented. In 2007, the Irish Green Party made the recommendations of the Kenny Report a key part of its election manifesto. This was shelved as soon as the party entered government. In this, the Greens were following Irish political precedent, as every party has made the same promise, and each one has dropped it on entering government. Nothing so became Irish politics and the Kenny Report, it can be said, as the manner of their leaving it to one side.

The Committee on the Price of Building Land was established under the following terms of reference:

… to consider, in the interests of the common good, possible measures for controlling the price of land required for housing and other forms of development; ensuring that all or a substantial part of the increase in the value of land attributable to the decisions and operations of public authorities (including, in particular, decisions and operations relating to the provision of sewerage and water schemes by local authorities) shall be secured for the benefit of the community.
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The committee found that from 1963 to 1971, the average price of ‘serviced land [i.e. undeveloped land with water, sewerage and drainage services near it] in County Dublin increased by 530 per cent. In the same period the consumer price index increased by about 64 percent.’ In one example of the type of profit to be made from speculation, the committee highlighted the case of sixty acres of land in Castleknock, County Dublin, which were sold for £67,000 in October 1964. ‘In March 1965, the purchaser sold them to a finance company for £160,000 and so made a profit of about 140 per cent in a few months. Planning permission to develop the lands was granted to the finance company on 6 September 1968.’ After five pages of similar examples, the committee pointed out that:

These large increases in the prices of serviced and potential building land would not have taken place if the services (water, sewerage and drainage) had not been or were not intended to be provided by the local authority. If these were not available or were not likely to be provided in the near future, the price of the land would have been that for agricultural land.

Therefore, the provision of the services by the local authority is largely responsible for the difference in price between agricultural land and serviced and potential building land and so, it is said, the community which provided the services has a legitimate claim to all the profit.
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This was a crucial point. Land speculators were able to make large profits not because of any improvements they made themselves to the land they had bought, but because of consequent public investment in the necessary infrastructure to turn agricultural land into building land – namely, the provision of water, sewerage, and drainage – all of which was paid for with taxpayers’ money. The speculator need only sit and wait until the land was rezoned for development. The committee argued that this practice of ‘betterment’ of land by local authorities gave the taxpayer rights with regard to the rezoned land – they, after all, had paid for the ‘betterment’, not the speculators – and that remuneration through capped prices of land or increased taxation on land speculation was justified as a result.

The committee also found that large tracts of land surrounding various cities had been bought up by ‘a number of large firms in the building industry’. In Dublin alone, ‘they have acquired about 4,000 acres which they will presumably hold until services are provided’. It noted that local authorities had bought a pool of land surrounding the capital in order to release it for development once the price of land became too high. However, this policy was only undertaken after 1966, by which time the majority of speculative purchases had already taken place. In March 1967 the Dublin City and County manager, Mr Macken, wrote a report for the local authorities of Dublin City, County Dublin, and Dún Laoghaire, in which he outlined the problems caused by land speculation:

The competition for land, even remotely available for development, has been so keen that even the public authorities (in cases where they have reached agreement for the purchase of land at high prices) find that builders and other speculators come in and offer a still higher price and in some cases have succeeded in prevailing upon the owner to sell to them rather than the local authorities.

Even land for which drainage is not available at present has been purchased in the belief that when drainage becomes available the price of land will remain sufficiently high to ensure a profit to the speculator who believes that he will eventually obtain at public expense free main drainage and water facilities.

These speculators feel that once they have bought the land at any price that that must be the minimum price they will get for it.

The result has been that the price of undeveloped land has been inflated entirely out of its real value and the local authorities have had to pay exorbitant prices, even for land for the housing of the working classes.
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The local authorities were being charged via higher land prices for the improvements they made regarding water, sewerage and drainage – improvements which gave the developed land its speculative price in the first place. The developers did not have to do anything except squat and wait for rezoning to come their way. And for some at least, Taca was the road to rezoning.

The committee’s main recommendation was to allow the High Court to designate areas which will:

… probably be used during the following ten years for the purpose of providing sites for houses or factories or for the purpose of expansion or development and in which the land or a substantial part of it has been or will probably be increased in market price by works carried out by a local authority.

Once a designated area had been established, the local authority would have the right to acquire that land within ten years at its agricultural price ‘plus some percentage of that value together with compensation for reasonable costs of removal but without regard to its development potential’.
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The committee proposed that landowners should be given the price of the land at its current use value, plus 25 per cent. This percentage was, in their opinion, ‘a reasonable compromise between the rights of the community and those of the landowners’.
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The committee also recommended that the rezoning of land for development purposes by local authorities should not in any way benefit speculators. In a particularly lucid section, it argued that:

The foundation in principle of this scheme is that the community is entitled to acquire land at existing use value plus some percentage of it when it can be established by evidence that works carried out by the local authority have increased the price of the lands.

This price however is also increased by the decisions of the planning authorities in their development plans at to the future use of the lands. Zoning may add a considerable amount to the price.
We do not think that an increase in price caused solely by decisions of the planning authority can be classified as betterment
[my emphasis].

Legislation which provided that a local authority could acquire lands at existing use value plus some percentage of it when their price had been increased not by local authority works but by planning decisions only would, in our view, be unjust and probably repugnant to the Constitution.

We therefore do not recommend that the designated area scheme should apply to lands in relation to which the sole cause of the increase in price is the decision of the planning authority as to their future use.

The committee also produced a minority report, which believed that ‘open market value must continue to be the basic determinant of the price of land acquired for public purposes’.
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It was signed by Michael J. Murphy and J.T. O’Meara, both government officials with the Department of Local Government.

The publication of the report in January 1974 was greeted with praise. The Minister for Local Government, James Tully, welcomed it. He said that the government agreed with its findings, and that they hoped to have ‘The bones of the necessary legislation drawn up by the end of the year’. According to the Minister, ‘if they did not stop speculation now they would never be able to stop it, as the problem was getting worse all the time’.
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The
Irish Times
’ journalist and local government correspondent, Frank Filfeather, said that the promised legislation would give ‘a tremendous boost to the building of the three satellite towns west of Dublin at Tallaght, Clondalkin and Blanchardstown and the acquiring of property in central Dublin for housing purposes’, as well as facilitating ‘The construction of the motorways recommended in the £160 million Dublin Transportation Study, the new Liffey bridges and the proposed new rail lines’.
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In an editorial entitled ‘Looking to the Land,’
The Irish Times
warned:

… it may be assumed that those vested interests who have been fattening themselves on the status quo will react angrily against the findings of the Kenny Report, and will proceed to lobby with their experienced deviousness; they deserve no compassion and must be blocked off, together with any politicians who are over-sympathetic with their objectives of self-aggrandizement.
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The warnings of possible inaction were quite justified. Despite the positive soundings of Minister Tully, the reaction of the government to the Kenny Report was to shelve it. The two main recommendations – that the price of development land should be capped at the price of land plus 25 per cent, and that the act of recategorising land for future development should not be used as a payout for speculators – would have affected not only builders and speculators, but also the various politicians, banks and building societies who themselves profiteered from speculation and rezoning.

The Kenny Report has been cited and praised by every opposition party and sidelined and forgotten by every government since its publication. In February 2007, the then leader of the Irish Green Party, Trevor Sargent, highlighted the fact that his party had ‘consistently called for the implementation of measures recommended in the 1973 [
sic
] Kenny Report, often in the face of opposition from Government parties’. He said that the ‘persistent foot-dragging’ in relation to the report ‘has denied people access to homes; it has cost homeowners hundreds of millions of euro; and it has allowed speculators to profit at the expense of house-buyers and communities for decades’.
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Four months later, the Green Party entered into a coalition government with Fianna Fáil, with a Green TD, John Gormley, as Minister for Local Government, and as such responsible for the implementation of the findings of the Kenny Report. Nothing was done. On 23 August 2010, NAMA reported that it had paid €6.12 billion for loans relating to land purchased for speculative purposes. This amounted to 22.5 per cent of all monies paid out up to that date. The Kenny Report, meanwhile, is out of print and off the agenda.
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In March 1956, the government passed an Act which granted tax exemptions on new mining activity. The previous year, a Canadian company, International Mogul Mines of Canada, had expressed interest in the copper mines of Avoca, County Wicklow, where, according to experts in 1955, there was ‘a potential of copper ore valued at about £20 million’.
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The government had entered into negotiations with ‘mining concerns in Sweden and Canada to have the mines developed and operated as a commercial concern’.
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These were successful, and Avoca was eventually leased to St Patrick’s Copper Mines Ltd, a subsidiary of Irish Metal Mining Ltd, which itself was owned by Mogul Mines. At the end of 1955, the Minister for Justice, Mr Everett, told the annual dinner of the Wicklow Chamber of Commerce that the government hoped that soon up to 500 men would be employed at the mines. Everett said: