Housing policy.

Author:Law-Yone, Hubert
Position:And standard of living assessment - Statistical Data Included

Since its establishment, the State of Israel has declared that adequate housing for all residents is a matter of the highest priority. Massive budgets have been invested in solving housing problems, and construction is one of the country's most important industries.

Residential construction accounts for a large share of the economy in terms of both investment and product. Nearly half of the state's development budget is earmarked for housing. In 1992, residential construction investment consumed 6.2 percent of the GNP. Gross investment in residential construction reached NIS 2.5 billion in 1989 and soared to NIS[upside down ^] 6.2 billion in 1990, nearly one-third of the gross domestic investment each year (Statistical Abstract of Israel, 1993). In 1992, 11 percent of all employed persons worked inconstruction.

Even in the pre-state period, housing activity was an extremely important tool in realizing the goals of the pre-independence Jewish community. It was a major factor in establishing the Jewish geographical presence, and it helped the Jewish population consolidate its economy, security, and supremacy in the area.

The right to housing is not one of the entitlements spelled out in Israeli law. However, the government, through the Ministry of Construction and Housing, considers itself responsible for all aspects of housing and residential accommodation. It is active in three main areas: production, subsidization, and regulation.

The goal in governmental production of housing is to increase the housing supply. This activity takes place in two major ways:

  1. Budgeted building. In such a case, planning, site development, and construction are fully financed by the state and the dwellings are state property. Private contractors do the construction work.

  2. Building by housing companies. Here, the Ministry of Construction and Housing is responsible for general planning and infrastructure development, and pays for both. The housing company is responsible for planning and performance of construction and financing and selling the dwellings built.

Government housing subsidies are meant to affect housing demand through assistance programs for persons whom the state defines as eligible. Assistance is given in the form of mortgages, loans, grants, and -- in special cases -- rent subsidies or allocation of public housing for the needy.

Government regulation is meant to steer the building industry in the direction of the government's economic and political interests. In view of these interests, the state regulates the supply of production factors and raw materials by allocating land for building, by controlling the prices of building inputs, by maintaining a pool of human resources, by controlling wages in the building trades, and by encouraging housing investments through the mortgage banks.

Although the state has repeatedly affirmed every citizens right to suitable housing, it has made inequitable use of the housing services. This inequality is a consequence of the link between housing activity and the states spatial control of land and land use. The governments housing policy perpetuates the correlation of housing and class, because its decisions on housing location, planning, and tenanting create processes of differentiation on socioeconomic grounds. The results are disparities in the quality of housing available to different population groups.

Moreover, by fine-tuning, guiding, and regulating the building market, the government encourages and promotes certain segments of the population in a manner that discriminates against other segments. As a result, wide disparities in the housing levels of Jews and Arabs have developed over time -- disparities that widen with each passing year -- as well as considerable inequality in the housing levels of Ashkenazi and Mizrahi Jews.

Housing as an Entitlement

Different countries relate to the right to adequate housing in different ways: some ensure it by means of legislation, as in the Netherlands and Great Britain, and others do so as part of overall governmental social-welfare policy.

Israeli law does not guarantee citizens entitlement to housing. In the first half of the 1950s, when the new state faced mass immigration, the Jewish Agency for Israel assumed responsibility for the housing needs of homeless immigrants. The government first began developing a housing apparatus of its own in 1949. The Public Works Department, then a part of the Ministry of Labour, was the first to be charged with this function. Later on, the Labour Ministry established its own housing division; a separate Ministry of Construction and Housing was created in 1961.

Housing Rights and Public Housing Policy in Different Countries

Most Western countries have free housing markets that meet the needs of households of medium to high income. Because such a market cannot serve low-income households, governments assume responsibility for them. At times, the government itself discharges this duty, i.e., builds suitable housing for low income persons, not directly but through public agencies such as trade unions, housing cooperatives, and local authorities.

In some places, such as France, the Netherlands, and the Scandinavian countries, the government provides housing for the needy by increasing the market supply for targeted sectors such as low-income groups, the elderly, and the disabled. Other countries, such as Israel and Bulgaria, support disadvantaged population groups by planning and monitoring the supply of housing. In socialist countries, such as the former Soviet Union, the housing market is nationalized.

In capitalist countries such as the United States, Canada, Australia, and Japan, housing supply is in the hands of the profit-driven free-market apparatus. A basic assumption in such a market is that every purchaser will choose a dwelling suited to his or her purchasing power, meaning that those unable to afford high-priced housing select dwellings that the affluent have abandoned in favor of superior housing. Even though this is a free market, government intervenes indirectly (e.g., by means of taxation) in order to set forth the ground rules and subsidize certain players (usually middle-income groups rather than those most in need of support).

In social-democratic countries such those in Scandinavia and Western Europe, post-World War II governments assumed statutory responsibility for action in social-welfare matters, including housing. The basic assumption underlying this intervention is that, because the free-market mechanism cannot meet the needs of disadvantaged population groups, it is the duty of the state to mitigate disparities and ensure the basic needs of the poorest groups. Differences among welfare states usually manifest themselves not in the extent of intervention but in the ways in which the welfare services are delivered.

In socialist countries, the state controls all planning, production, administration, and consumption, including housing. Consequently, most housing activities in the Communist bloc (excluding rural areas) were undertaken by the state.

Despite marked differences in the methods invoked by Western countries to ensure adequate housing, the main difference is in the choice between a total housing policy, which aspires to plan and control all housing activities, and a complementary housing policy, which strives to reinforce the private market and ensure adequate housing for low-income and needy groups.

Countries such as Denmark, Sweden, and the Netherlands meet the housing needs of weaker strata within the framework of total housing policies. Most public housing in these countries is built by private contractors. Countries that adopt such a housing policy resort to the private market in two ways: by subsidizing private builders in the form of loans, grants, and/or tax cuts, and by subsidizing consumers in the form of rent assistance or housing loans.

Countries such as the United States and Great Britain, by contrast, choose a complementary policy: the private market meets the housing needs of the population at large; public housing is made available to the needy only. The result is that low-income housing is more conspicuous in the United States and Great Britain than in countries that have total housing policies.

Israeli Housing Policy

The guiding principles of Israeli housing policy were set forth in the early independence years. Ever since, Israel's housing policy has been geared toward two goals: immigrant absorption and population dispersion. On March 8, 1949, when David Ben-Gurion unveiled the first Government, he declared the goal of "swift and balanced settling of the country." Since then, the goal of population dispersion has directly informed the policies of the various governments with respect to settlement, development, and physical planning. Although this objective is rooted in strategic security factors arising from the need to maintain geographical and political control, its direct practical implementation manifests itself in the housing of the civilian population.

One factor that helped the government meet its goal of population dispersion -- particularly in the early years of statehood -- was the arrival of hundreds of thousands of immigrants, most of whom destitute, whose immigration was organized and carried out by the government. This population group became the main instrument in the "swift and balanced settling of the country." The guiding principle was the need to find ways to house the needy ("housing solutions" in the jargon). This was accomplished by use of public resources such as foreign-exchange capital, land, and an administrative apparatus. The immigrants were given housing solutions and, consequently, settled in accordance with government stipulations, largely irrespective of their own needs. In other words, the government undertook to provide the immigrants with low-cost housing, but the dwellings were offered in the...

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