Comptroller’s Report Blames Government for Housing Crisis

Israeli State Comptroller Yosef Shapira. (Flash90)
Israeli State Comptroller Yosef Shapira. (Flash90)

State Comptroller Joseph Shapira issued on Wednesday a report on the desperate state of housing in Israel that opposition candidates have been eager for, though he avoided targeting Prime Minister Binyamin Netanyahu as the single culprit.

As such, Shapira’s 294-page indictment of governmental inaction will not have quite the stopping power they had hoped. But since Netanyahu has been at the helm for the past six years, most of the blame will inevitably fall on him, even though the criticisms are usually couched in generalizations like “the government and its offices have set national housing policy in a deficient manner.”

The report reviews the bleak statistics from the period 2008-2013, noting that housing prices skyrocketed around 55 percent during those years and rental prices jumped around 30%, outstripping a slight rise in average income.

“The burden of housing expenditure may have far-reaching implications for the life and well-being of the individual, and his economic robustness. If these trends continue, they could adversely affect the whole economy,” he wrote.

But the blame is spread around. Former prime minister Ehud Olmert, Housing Minister Uri Ariel, and former Housing Minister Ariel Attias, were apportioned responsibility, though often indirectly rather than by name.

The crisis started in 2008, during the Olmert administration, when Israelis needed 103 monthly salaries to buy an apartment. By the end of 2013 it had reached 137 salaries. It currently stands at 148 salaries, in contrast to  the U.S., UK and Netherlands, where it is roughly 65.

Shapira assailed bureaucratic inefficiency, which would be astounding if it were not already common knowledge.

Local planning authorities were cited for holding up approvals for new housing units for unreasonable amounts of time, leaving 50,000 units that could have eased the shortage stuck in the pipeline.

In the most egregious cases, approvals took up to 5.5 to 7 years; in one instance it took 12 years from the time a development proposal was filed until anything was actually ready for occupancy.

The report does not overlook the Israel Lands Administration (ILA), which owns most of the land in the country and has kept land off the market, perpetuating the chronic shortage for housing.

As Shapira noted, “the state has great power” over the issue since “it manages most of the land” in the country. The ILA has failed to develop any strategic plan for setting shorter-term targets for development or to tailor its planning efforts to local housing needs, he said.

Where it does single out Netanyahu, the report is scathing enough, taking him to task for a policy that was at best reactive. Even though housing prices had already skyrocketed in 2008, the Netanyahu government only began to take notice of it in July 2010, more than a year after it took office. It only designated housing as a priority in response to the massive street protests of the summer of 2011.

“Only in July 2010, more than a year after its establishment, did the 32nd government, headed by Binyamin Netanyahu, identify the need to curb the sharp rise in housing prices, and determined that there should be a housing policy that aimed to lower the price of apartments, with an emphasis on apartments for young people purchasing their first home.” But these programs did not lead to a drop in prices. “Nevertheless,” writes Shapira, “housing prices continued to rise in 2011 and 2012, albeit more modestly.”

The name Yair Lapid was conspicuous for its omission, even though Lapid was Finance minister for the past two years. A later report is being prepared to focus on the Housing Cabinet and Lapid’s own plans, such as his controversial 0% value-added tax proposal.

The Likud party responded to Shapira’s scathing comments with a statement that read more like a campaign flyer than an acknowledgment of a major policy failure.

“Only a strong government led by Prime Minister Netanyahu will resolve this crisis, just as we did with many other reforms and deep institutional changes we implemented that have made the Israeli economy strong and competitive,” the statement said.

Likud had sought to delay the release of the report until after the elections.

Shapira defended his decision on the timing of the publication, explaining that the “report was ready” for publication at this time, and only coincided with the election campaign because of the politicians who had “advanced Knesset elections to be early.” In other words, he did not move up the publication date,  they moved up the elections.

Shapira quoted former comptroller Eliezer Goldenberg, who said that “oversight does not get silenced” even during elections season. “The state comptroller is not a political player,” Shapira said.

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