There is, for some of us at least, a sort of irony about the notion of a man who by one measure did a lot to create the conditions for the housing crisis now being asked to sort it out.
Now, in order to accept this description of Brendan McDonagh – the putative new head of the Housing Activation Office or “housing tsar” – you would have to also accept the premise that Nama, which he has run for the last 16 years, botched the opportunity to reset the housing market.
It’s not unreasonable to argue that Nama, which controlled pretty much every acre of building land in the country when it was set up, could have done things differently. It is less reasonable to blame McDonagh, who did not design the State bad bank or set its objectives. That was a political decision.
Based on the metrics by which he was judged, McDonagh did a good job. Nama is set to wind up at the end of this year with a surplus of about €5 billion after repaying the €32 billion it borrowed when it was set up to rescue the Irish banks. But does that make McDonagh the right man for the job of housing tsar?
If being the public face of the Government’s housing policy is a key part of the role, then the answer is a straight no. McDonagh gives the impression of being someone who does not suffer fools gladly and who believes the media by and large falls firmly into the category of fools. Surprisingly taciturn for a Kerry man – in public at least – he could not be described as made-for-television.
But that might be no harm. Chances are he will only be sent out to bat when the news is bad. When the news is good, he risks being trampled in the stampede of Ministers looking to take the credit.
Arguably the quality that most recommends McDonagh for the job is that he is a realist and he, as he has suggested himself, knows how the world works. Buried in the report published this year of the commission of investigation into Project Eagle, the 2014 sale of Nama’s Northern Irish loan portfolio, was a revealing comment from McDonagh.
Asked why he did not tell the bank that was advising Nama on the deal that the leading bidder had pulled out because they were not happy about the way the process had been run, McDonagh replied: “That’s not the way the world works.”
That attitude could serve him well, as might his long experience of navigating the upper echelons of the public service.
[ How a housing ‘tsar’ in waiting became a PR problem for the GovernmentOpens in new window ]
It is worth noting that Nama is an unusual beast, insofar as it is legally at one remove from the Government. This is in order to prevent its debts being added to the State balance sheet. The extent to which Nama took orders from Merrion Street is harder to discern, but given that it held the solvency of the State in its hands during the first few years of its existence, it’s likely politicians took a keen interest.
Whatever the relationship was, it can be deemed a successful one. There was a clear plan – sell off the assets and repay the billions in Nama debt. Ensuring the State was able to meet its housing needs was not part of the mandate. With hindsight, that was a mistake.
McDonagh and Nama executed the plan. It was no mean feat, but they had a formidable set of legal powers and clear ownership and control of the assets they were looking to sell. The critical nature of the success of Nama to the solvency of the Government meant that political interference was minimal.
The role McDonagh is apparently contemplating would appear to be quite different. For starters, there is no real plan, just a lot of reports, strategy documents and powerful vested interests.
The Housing Activation Office, which he is in line to run, is one of many ideas in the report of the Housing Commission, which was published last year and has been pretty much gathering dust ever since.
The job description – insofar as there is one – is to bang heads together to get large projects off the ground. The heads include local authorities, utility providers and the construction industry.
The Housing Commission envisaged that the office would have the power to resolve conflicts between the various stakeholders – but as things stand, there doesn’t seem to be any plan to create those powers. McDonagh will thus be left with little more than moral persuasion to achieve the impossible. You can’t help feeling the main function of the job is to be a lightning rod.
McDonagh is no fool. If he gets the job, there is speculation he will remain an employee of the National Treasury Management Agency (NTMA), which manages the national debt and seconded him to Nama. Senior Government sources have said that if he were to end his secondment with Nama and return to the NTMA when the bad bank winds up, he could revert to a lower salary than the €430,000 he gets to run Nama, in line with what he was originally paid when he worked at the NTMA directly.
There is some suggestion that these terms could justify offering him a lower salary as chair of the HAO.
Either way, he would be nuts to take the job – unless, of course, he feels the need to try to sort out the mess he arguably could have done more to prevent.
