The Treasury’s misguided move to axe public housing

The Ministerial Legislation Committee will soon discuss a bill intended to enlarge the supply of apartments available for public housing. The idea is simple and easy to implement: 5% of the units in each residential development built on state land will be transferred to the government to be rented as public housing for low income families. Developers who submit tender bids will know of this condition in advance and will incorporate it into their proposal.

The bill is meant to be a turning point in a decades-long policy of reducing public housing that has hurt both existing renters and potential beneficiaries. If adopted, it is likely to increase the stock of available public housing by 1,500 units each year.

The Housing Ministry and its minister, Ariel Atias; social organizations; and a long list of MKs from both the right and the left support the law. But the government, under pressure from the treasury, opposes it. Recently, Finance Ministry Director-General Doron Cohen expressed his opposition to the bill, claiming it would lead us down Greece’s path.  Were he to check, he would find that, as a matter of fact, there is no public housing in Greece. But why let facts ruin a good opportunity to intimidate the public?

Housing Minister Ariel Atias (photo credit: Noam Moskowitz/Flash90)

While Israel is not the only country in the world that has scaled back its public housing, it has done so distinctively, and without offering a suitable alternative. At the end of the 1960s there were 70 public housing units for every 1,000 people in Israel. Today there are just nine. In Holland, by comparison, there are 138 units for every 1,000 people; in Austria, 100; in France, 86; in Finland, 85; and in England, 80.

Moreover, compared to other countries in the world, Israel builds or buys a trifling number of apartments for public housing. Take, for example, Austria, where 27% of housing construction is earmarked for social housing; Denmark (22%); Holland (19%); Germany (15%); and France (12%). The Israeli bill in question is even more modest: it seeks to apportion just 5% from new building to public housing. Nevertheless, the Treasury, and with it the government, vehemently opposes.

The Treasury’s magic (i.e. cheap) solution to the plight of those who cannot afford housing is to offer limited financial assistance in the private rental market – a clear manifestation of the policy of privatization.  Although such aid is customary in other countries, it is not a substitute for public housing, but rather a complimentary policy that goes hand in hand with a regulated market for long-term rentals – something that doesn’t exist in Israel.

The treasury defends its position with the claim that rental assistance gives its beneficiaries the freedom of choice and flexibility, and allows them to leave poor neighborhoods. But this claim only holds true on paper. Not only is the proposed aid laughably inadequate; it isn’t even tethered to actual rental prices (which only continue to rise). As a result, the beneficiaries are forced to live in impoverished cities and neighborhoods where rents are relatively low. The bill to increase the pool of public housing, on the other hand, is designed to avoid new concentrations of poverty by scattering the public housing units among market-priced apartments.

The Treasury seeks cheap short-term solutions, but true social policy means investing in the future. The country must offer public housing beneficiaries opportunities to live in the surefooted cities where there are many more opportunities for employment and quality education. Maybe it’s cheaper and easier to sit back and watch as low-income populations are pushed out to the periphery or impoverished neighborhoods, but the price that the Israeli society will pay in the long term will be the widening of social gaps and the exacerbation of poverty.

The treasury should learn something from France, which responded to social tensions with a solidarity and urban renewal law that requires every local authority to make sure that 20% of the units in the city are public housing for low-income households. The French also anchored the legal right to housing in law. Here the Treasury holds fast to false visions in which the housing shortage, like the cellular market, can be solved only by increasing supply and competition.

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This piece was adapted from an article that originally appeared in Hebrew in The Marker.