Battling the bureaucrats

New committees with enhanced powers to speed up building permits sounds promising, but they will be manned by people mired in the old cumbersome ways.

By JOHN BENZAQUEN
building 521 (photo credit: Marc Israel Sallem)
building 521
(photo credit: Marc Israel Sallem)
Last week, the Knesset initially approved a bill submitted by Prime Minister Binyamin Netanyahu that will simplify and substantially shorten the bureaucratic process needed to obtain building permits. Special committees with powers to streamline the process and neutralize stumbling blocks are to be set up.
Before the bill – popularly known as the “supertanker” – becomes law, it has to go through the committee stage. Only then will it be voted on again in the Knesset.
The process by which a bill becomes law is lengthy. But there are exceptions; and this bill is one of them, with the legislatory process going full speed ahead.
A bill of this kind would normally have to be approved by both the Knesset’s economic and interior committees. This particular bill was initially approved in the Knesset on Monday night last week. On Tuesday morning, the Knesset’s parliamentary committee approved the establishment of a special committee to deal with the bill. It will be made up of 10 members from the economic and interior committees, which will both simplify and hasten the procedure. The government hopes to complete the legislative process by the end of August.
The prime minister is very upbeat about the bill.
“It will increase building starts – boost the supply of housing – and bring down prices,” he told reporters on Monday .
Bringing down prices is the crux of the matter and the raison d’etre of the bill.
Real-estate prices have been spiraling upward since the end of 2007. In the last three years, 2008 to 2010, prices rose by approximately 60 percent – 16.5% in 2010 alone. In 2011, price rises have been more moderate, but they are still climbing. In June, prices on a nationwide basis rose by 1.1%, and the trend is expected to continue in the coming months.
The reason is simple: Since 2007, demand has outstripped supply because housing starts have, on average, been fewer than 30,000, as against a “natural” demand of 36,000.
The constant price rises have become a grave political issue, and it is no wonder the prime minister himself is tackling the issue. Unresolved, it may cost him the next elections and the Likud may find itself in opposition.
Most political analysts believe that housing is expected to be one of the main issues – if not the main issue – in the next general election scheduled in 18 months.
But will streamlining the building authorization process achieve the desired results? Will it increase housing starts, boost supply and bring down prices? While all the experts support a bill meant to curb the excessive bureaucracy that swirls around the issuing of building permits, many doubt it will do the trick.
Ohad Danos, chairman of the Land Appraisal Association, said, “The bill is of prime importance to the real-estate industry, but I very much doubt it will have the desired effect. The new building committees will have enhanced powers, but the people manning them will be the same ones who are used to the old bureaucratic ways. Changing ingrained habits is not easy.”
But that is not all. Most experts believe that there is a shortage of 100,000 dwellings.
“The prime minister wants to see over 114,000 new building permits within the next two years. I very much doubt if this is feasible,” said Danos.
Danos is not the only one to harbor grave doubts regarding the bill.
Gil Nevo, a well-known lawyer who specializes in real estate, is also skeptical.
“The bill is a step in the right direction,” he said, “but there have been attempts in the past to reform the slow and complicated process of authorizing building projects.
These reforms have, in most cases, become diluted during the implementation stage, and nothing has come of them.
“Battling entrenched bureaucratic procedures – and especially bureaucrats – is a very, very difficult task. In many cases, it is doomed to failure.”
Adina Hacham, director-general of the Anglo Saxon real-estate brokerage network, is also pessimistic.
“They are going too fast. And as a result, the total impact [of the initiative] has not been taken into account. The result may be a flawed, unworkable bill.”
It is always difficult to change bureaucratic procedures because of the negative effect on vested interests. These tend to fight back, at times openly, but mostly covertly – which is much more dangerous.
But one major flaw in this bill is that it is not “holistic” – i.e., it does not take other aspects of the problem into consideration.
Moti Kidor, director-general of the Association of Contractors and Builders in Israel, is happy that someone has taken aim at the frustrating bureaucracy contractors and developers have to deal with.
The problem, as he sees it, is that the government is trying to deal with the bureaucratic bottlenecks while ignoring other issues.
“The bill may perhaps accelerate the number of building permits produced by the building committees, but that does not mean housing starts will increase,” he pointed out.
“That’s because we builders and developers have other, no less pressing problems.
“For one thing, we do not have enough construction workers.
So while we may get many more building permits, without a sufficiently large labor force we will not be able to increase building starts.
“The government has increased the number of Palestinian construction workers we are allowed to employ, but the number still falls short of our needs. The same holds true with regard to foreign construction workers. We are still waiting for a government decision on this issue.”