The salary for the new head of the Government’s housing activation office will not be “anywhere near” the €430,000 that had been mooted for the position prior to a process to fill it collapsing this week, Fianna Fáil has said.

The party’s housing spokesman, Cork South Central TD Seamus McGrath, said the figure of €430,000 was “excessive”. Speaking on RTÉ‘s This Week programme, Mr McGrath said: “That type of salary was excessive and I don’t believe it will ultimately be anywhere near that.”

The figure of €430,000 was first suggested as it is the salary currently paid to the Nama chief executive Brendan McDonagh, who was Minister for Housing James Browne’s preferred candidate for the job.

Mr McDonagh withdrew his name from contention on Thursday after the salary became a lightning rod for the Opposition, alongside criticism of the powers and capacity of the new office to make inroads into the housing crisis.

Mr McGrath said he did not accept the appointment had been “botched” and that the Government was determined to press ahead with the establishment of the office. He said that any proposal would have been subject to full agreement of the Government.

The Government has argued that no salary had been approved and that no candidate had been agreed – but the issue led to significant tensions between Fine Gael and Fianna Fáil last week after Mr Browne publicly confirmed that he wanted the Nama boss for the job.

Mr McGrath argued that Mr McDonagh’s name had been in the public domain by the time of Mr Browne’s intervention, also arguing that there were discussions with Minister for Finance Paschal Donohoe as the proposal was being worked on, and that there had been discussions with party leaders in relation to the appointment.

He said the Government would now identify other individuals with the required skill set to fill the role.

The Cork South Central TD defended the Government’s record on housing in its first 100 days, including passing the National Planning Framework which he said would allow more land to be zoned for homes, as well as the allocation of new budgets for housing.

On Sunday, Minister for Higher Education James Lawless insisted that the Coalition would be proceeding with its plan to set up the office rather than focusing on political “parlour games” and getting “bogged down in procedural wrangling”.

Speaking on RTÉ’s The Week in Politics programme on Sunday, Mr Lawless said: “On paper there is cross-party agreement, including the Opposition and the Housing Commission… we need a housing activation office to break down the barriers, to build houses at scale and at urgency.”

He sounded a note of caution on proceeding to fill the role by using the Public Appointments Service, saying it could take up to a year to go through that process.

He said that people deserved the hope and expectation that the houses they need would be delivered.

Social Democrats TD for Dublin Central Gary Gannon said that the Government had deviated from the Housing Commission’s approach that the new office, which was that it should operate on a statutory basis. He said State agencies which the new office would interact with did have such powers.

Sinn Féin TD for Clare Donna McGettigan rejected a suggestion that her party had put a similar idea into its general election manifesto. She said the mooted wage was “eye-watering”. She said the new office set up by the Government has no powers sufficient to address the scale of the challenge.

The issue comes as the Government prepares to consider what to do when rent pressure zones (RTZs), which limit rental increases in areas where prices have climbed steeply, expire at the end of the year.

Mr Browne, it is understood, has been presented with a paper of options about what to do next drafted by the Housing Agency. The paper outlines that the RPZs could be retained, ditched entirely, or varied to allow landlords to increase the rent by higher than the current limit of 2 per cent.