The Government has abandoned efforts to force builders to provide cheaper housing in new private estates, following a two-year campaign by the Construction Industry Federation (CIF).
Under the changes made by the Minister for the Environment, Mr Cullen, builders will instead be required to build social and affordable housing on other sites, or swap land with local authorities.
In addition, the Minister has decided to scrap the two-year withering rule - which had threatened to leave 44,000 planning permissions null and void on December 31st, 2002.
However, builders will have to pay a levy on each of the properties covered by these planning permissions - in a move that could raise €70 million for local authorities.
Insisting that 70,000 extra new houses could be built next year, the Minister said the changes honoured the Government's promise to supply more lower-cost housing.
"The 20 per cent provision for social and affordable housing remains. I am committed to continuing the objective of real social integration in Ireland.
"Furthermore it enshrines in legislation that builders must play their part," Mr Cullen said shortly after he published the Planning and Development (Amendment) Bill 2002.
The 20 per cent social and affordable housing and the withering rules were key elements of the Planning and Development Act 2000 passed by Mr Cullen's predecessor in Environment, Mr Dempsey.
As originally designed, the 20 per cent rule meant builders were supposed to set land aside in each housing estate for social and affordable housing, which would be either rented or sold cheaply by local authorities. Builders objected from the beginning, and there was evidence that private house purchasers were unhappy at the prospect of living next door to local authority tenants.
Acknowledging there had been difficulties operating the original legislation, the Minister said his changes were designed to remove current rigidities. In future, developers will be able to build their social quota elsewhere, organise land swaps with local authorities or contribute to their house- building funds.
However, the amendments would not lead to the development of local authority "ghettos", a Department of the Environment spokesman told The Irish Times last night. Local authorities must approve all developments. "They won't be able to build their estates on the good side of town and leave local authority housing on the bad side," he said.
The Minister announced he was removing the provision under which 44,000 existing planning permissions would expire this year, and 30,000 more next year. "With the demand that exists, losing so many permissions would have had a serious impact on housing supply next year. I could not afford to let this happen."
Under the legislation, developers will pay a levy on the 74,000 houses covered by these permissions: 0.5 per cent on houses up to €270,000, and 1% on those over that.
It will be illegal for developers to pass on this levy and any attempt to do so will be challenged. "The money, if paid over, can be recovered," the text of the legislation states.
But the Labour Party TD, Mr Eamon Gilmore, said the changes opened a major loophole that will be exploited by builders.
Cautiously welcoming the changes, the CIF's Mr Ciaran Ryan said the original legislation had been unworkable.
