Thursday, February 16, 2012

Translation: Cuba's new housing subsidies

This detailed report in Juventud Rebelde announces a new housing subsidy scheme for low-income households. It also stresses the underlying principles: a move away from universal subsidies of products and services to targeted subsidies of people in genuine need of assistance; and the rights enshrined in Cuba's socialist constitution, in particular, "ARTICLE 9. The state... (c) works towards ensuring that no family is left without a comfortable place to live."

It should be noted that the Constitution also enshrines the right to free heath care and education at all levels, as well as other social rights that are left to the whims of the market in capitalist societies, such as the right to employment and access to sports and cultural activities.

Here is my translation of the Guidelines on housing and some introductory comments that may be helpful background reading.

Neither state charity nor a gift, but the fulfilment of a constitutional obligation

The decision of the government to grant subsidies to low-income persons and households is a policy that promotes equality of opportunities in Cuba. It aims to ensure that nobody is left destitute and that the socialist state upholds organised social solidarity.

By Ricardo Ronquillo Bello, Mayte María Jiménez, Margarita Barrios, Alina Perera and Ana María Domínguez Cruz

Juventud Rebelde, January 7, 2012

Translation: Marce Cameron

With the approval of the subsidy for low-income persons and households, a measure adopted by the Executive Committee of the Council of Ministers in December and which will be enacted on January 15, Cuba took the first step towards eliminating subsidies for products and instituting subsidies for those people who really need them.

The essence of this decision is that nobody should be left destitute, affirmed Raquel Rodríguez Gato, head of Working Group 6 of the Permanent Commission for the Implementation and Elaboration of the Economic and Social Policy Guidelines for the Party and the Revolution.

The decision is in line with Guideline 173, which aims to eliminate undue gratuities and excessive subsidies, based on the principle of compensating those who need it and no longer subsidising products as a rule.

It is also in keeping with Guideline 299, according to which “construction materials for the purposes of preservation, repair and construction of housing will be sold at non-subsidised prices. In cases where it is required, people will be partially or fully subsidised within the planned limits”.

These concepts were explained in a press conference at the head office of the Construction Ministry by representatives of the aforementioned Commission and of the ministries of Finances and Prices, Labour and Social Security, Domestic Trade, the Cuban Central Bank and the National Housing Institute.

Raquel Rodríguez emphasised that it is another way of seeking solutions to the housing problems in the country, while clarifying that it will not resolve all such situations.

This measure is one of a series of actions such as the free[1] sale of construction materials without subsidies, the implementation of a policy for bank credits for the purchase of construction materials and labour and price reductions for more than 122 construction material products. It is now possible for those low-income families who are most in need to organise their own housing repairs or construction, she said.

Miguel Limia David, a member of Working Group 6 of the Permanent Commission, said that the housing subsidy is not a charitable gesture but another means for the socialist state to offer support for the most vulnerable citizens.

The subsidy is not a credit, he stressed, and as such it does not have to be repaid. However, it does imply an elevated sense of responsibility, both on the part of the state and the beneficiaries, that is, those who are going to carry out the work that is to be subsidised.

The press conference turned into an in-depth and clarifying dialogue with the journalists about the implications of this government decision.

Miguel Lozano, Prensa Latina: "Are there reference points in the international context for what Cuba is putting into practice?"

Miguel Limia David: “Yes, there are points of reference but they’re not as comprehensive as what we’re doing, because this is a policy that is social, horizontal, universal, but which is implemented in a democratic way at the local level.

“Perhaps what is specific in our case is that it has to do with the socialist nature of our state, of the social objective of our economic policies. It shows that our state – as part of the process of improving its work as a result of the implementation of the Guidelines approved by the Sixth Communist Party Congress – is not abandoning its constitutional obligations, but looking for for a more efficient and sustainable way of guaranteeing these citizens rights.

“This is a social policy that is not implemented from the top down: the decisions are taken at the local level by the democratic governing bodies, which are the ones that decide on where it will be targeted. It’s a policy that addresses social problems, but democratically through the People’s Power local governments. That is, they identify the problem and make a decision in a transparent, accountable manner. The People’s Power municipal assembly is the body that ratifies the decision, that exercises oversight. It is also obliged to regularly inform people about the process.

“As such, it is a policy that tends to promote equality of opportunities in Cuba, to not leave anyone without support. That is, to uphold organised social solidarity through the socialist state. It’s not state charity nor a gift but the fulfilment of a constitutional obligation, but with an emphasis on individual initiative.

“On this last point there are also international experiences, but of essentially capitalist countries where the individual is left to fend for themselves. In our case the citizen is not left to fend for themselves, they are supported, though in a context in which they take their own initiative to manage credit and, together with their family, improve their housing situation without waiting for someone else to come along and do it for them.

“Such a policy breaks with the notion that you sit around waiting for someone else to come along and resolve your problems.”

Raquel Rodríguez Gato: “This new measure – aimed at assisting low-income people and households, on the basis that nobody will be left destitute – contributes, among others, to going some way to solving the housing problems in the country, in other words the problems of construction, repair and maintenance, which doesn’t mean that the state won’t continue building homes.

“The state continues, fundamentally, with the necessary work of constructing new housing in the country. The current measure is being taken in this context.”

Fidel Rendón, National Information Agency: "Are we prepared for a possible 'avalanche' of people who consider that they have the right and the need for this type of assistance?"

Loida Obregón González, head of Economics at the National Housing Institute: “Currently, the offices of the Institute are processing all of the requests that people submit. Those that have been affected by climatic phenomena have been attended to now by the Institute; there are already many applications that have been taken up by the municipal investment entities.

“We’ve had no option but to establish priorities because there are many in need of assistance. And while the Institute must process all applications, it does not have the authority to approve any of them: every application is passed on to the Municipal Administrative Council. All the requests submitted by the population will be processed.”

Vivian Bustamante, Bohemia magazine: "According to the Official Gazette, people can only make one application for the subsidy. What happens to those who want to partially build or renovate their home, that is, little by little?"

Loida Obregón González: "That’s right, you can only apply for the subsidy once. It can be up to 80,000 pesos[2] and include the purchase of the necessary materials and the hiring of the workforce.

“Subsidies can also be granted for smaller works of up to 5,000 pesos, or up to 10,000 if they are more complex, without having to apply for a building permit. The financing of such grants is based on the tax collected on the sale of construction materials in the various provinces, and is granted for the construction, repair or maintenance of up to 25 square metres, that is, for the basic housing unit comprising a bedroom, a bathroom and a kitchen."

Miguel Limia David: “The subsidy has nothing to do with bank credits, so it doesn’t have to be repaid. So every application will be evaluated in a comprehensive manner in relation to the socio-economic situation of the family, its incomes, expenses and employment, among other factors; and in accordance with the priorities we’ve established, financing for the works will be granted. This must be audited, supervised and properly administered by the beneficiary.

Ricardo Ronquillo, deputy director, Juventud Rebelde: "How can it be ensured that the decision to grant subsidies does not lead to favouritism in some cases?"

Raquel Rodríguez: “Favouritism cannot occur because there will be a commission charged with supervision and investigation of both the granting and the use of subsidies as part of the auditing carried out by the Municipal Administration Council, which will be given new powers. It will be tasked with evaluating the real needs of people, their economic situation, approval or rejection of the subsidy application and checking up on how the subsidy is spent.

“The Municipal Administration Council must report twice a year to the Municipal Assembly of People’s Power regarding compliance with the process.”

Margarita Barrios, Juventud Rebelde: "In terms of the current prices for construction materials, wouldn’t it be better to sell them at closer to their cost of production to make them affordable for more people?"

Bárbara Acosta Machín, deputy minister, Domestic Trade: “The current prices of the materials on sale in the stores are based on production costs. These prices are the same for all buyers (free sales, bank credits and subsidies). To the extent that production by local industry increases, there will be greater supply and costs will come down, as will retail prices.”

Alberto Loreydi, Radio Rebelde: "It has been explained that the priority cases for the granting of subsidies will be those whose housing was affected by natural disasters and those who are most needy. In terms of the latter, who are we talking about?"

Yusimí Campos Suárez, director of Social Security, Ministry of Labour and Social Security: “This refers to someone who requires the assistance of the state in order to carry out this type of work due to physical incapacitation, old age or something else that prevents them from working.

“The granting of the subsidy has an order of priority, which includes families affected by natural disasters such as cyclones, flooding and fire, among others; families who have suffered the partial or total loss of their homes; and critical social cases, such as the incapacitated and all those individuals who have complicated socio-economic circumstances.”

She explained that the commission that has been set up, together with the municipal branch of the Ministry of Labour and Social Security, will assess each family that applies – their financial situation, incomes, as well as their social circumstances – so that they have a comprehensive sense of the realities of life of every household that applies for the subsidy.

“To these we must also add those who suffer illnesses and those who are aging, factors which prevent them from being able to cover their living costs and maintain their home in a habitable condition.

“In this regard, priority will be given to the 3,214 total collapses and the 10,179 partial collapses of homes as a consequence of meteorological phenomena in provinces such as Pinar del Rio, Artemisa, Camaguey and Holguin, according to National Housing Institute statistics.”

Although the experts and functionaries stressed that nobody who needed such assistance would be left helpless, they insisted on the need for every citizen to be conscientious and responsible in applying for the subsidy, since only those who really need it should apply.

The money must be used for the purpose specified in the contract and the beneficiary must be an active participant in the solution of their housing problems.

Adalberto Carbonell, director-general of Budget at the Ministry of Finances and Prices, explained that the subsidy is funded from 40% of the proceeds from the sale of construction materials in the provinces.

“The Provincial Administration Councils are now being empowered to distribute to the Municipal Administration Councils the funds transferred to the provinces by the Ministry of Finances and Prices according to the needs of each municipality, independently of the proceeds from the sale of construction materials.”

Carbonell added that the subsidy includes 40% of 2011 sales and those over the course of this year.

Melbys Nicola, Opciones magazine: "When does the subsidy expire? Can someone else be appointed to receive the subsidy on behalf of the applicant? If transport of construction materials is required, is this cost included in the subsidy?"

Raquel Rodríguez: “Once granted the subsidy does not expire. It must be remembered that the recipient signs a contract in which it is specified how, when and where this subsidy will be spent."

She also explained that in those cases where the applicant is unable to do it, they can name a representative to utilise the subsidy.

“Up to 30% of the subsidy that is granted may be used to cover labour costs and the transportation of materials. This labour must be be legal, that is, it must be carried out by registered self-employed workers.

José Hernández, Tribuna de La Habana: What happens to people who need subsidies and have outstanding bank debts?

Raquel Rodríguez Gato: “In each case there will be files kept by the Ministry of Labour and Social Security and the National Housing Institute, which will have to be forwarded to the municipal government so it can assess each situation.

“The municipal office of Labour and Social Security assesses the household, the problems they have, if they have such debts, and on the basis of this analysis they make a recommendation as to whether or not a subsidy should be granted. The analysis includes the possible reasons for the household having debts. It may be precisely because they need the subsidy. So an assessment will be carried out and a decision is then made by the Municipal Administration Council, which later on, every six months, reports back to the Municipal Assembly and also to the Provincial Assembly.”

In response to the concerns of the journalists present at the press conference regarding the procedures for applying for this monetary benefit, Miguel Limia David confirmed that the country has no precedents for such a process.

He emphasised that a lot of work was done to try to minimise the number of administrative procedures required of beneficiaries, and these were reduced to six.

They make an application and then sign a contract, he explained. They take this to the bank and open an account for the subsidy. They order the materials in the store and request a document that lists the prices of these materials; they then go to the bank and ask for a cheque. The materials are held for them for only five business days during which time the banking process is completed. If they’re not able to pick up the materials within five business days they have to begin the purchasing procedure again.

At the bank they receive two cheques, he said, one to pay for the materials and another to cover labour costs, which must be carried out by a team of licensed self-employed workers.

The process must be transparent and feasible, he stressed, and will be adjusted in response to difficulties that may arise when the subsidy becomes available from January 15.

Translator's footnotes:

[1] In unrestricted quantities at non-subsidised prices

[2] Regular (i.e. non-convertible) Cuban pesos. 

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