Budget cuts will worsen shelter problem–IBON

August 17, 2017

by IBON Foundation

Research group IBON said that the decreased 2018 housing budget will worsen the housing problem in the country. Amid a persistent housing backlog and disproportionate and rapid growth of urban population, the Duterte administration’s proposed housing budget cuts could affect millions of Filipinos in need of homes. The group said that it is the government’s responsibility to uphold the people’s right to shelter by increasing the budget and ensuring safe, decent and affordable housing.

IBON’s comparative analysis of the 2018 National Expenditure Program (NEP) and the 2017 national budget indicates that the combined budget of the six key shelter agencies (KSAs) will suffer a 70.2% decrease from Php14.8 billion in 2017 to Php4.4 billion in 2018. These agencies include the Housing and Urban Development Coordinating Council (HUDCC), Home Guaranty Corporation (HGC), Housing and Land Use Regulatory Board (HLURB), National Housing Authority (NHA), National Home Mortgage Finance Corporation (NHMFC), and Social Housing Finance Corporation (SHFC).

Based on the proposal, the NHA will suffer the biggest budget cut – by 82.4%, from Php12.7 billion in 2017 to Php2.2 billion in 2018, noted IBON.

Of the total budget proposal for NHA, only 28% (Php624.9 million) is allocated for the relocation of informal settler families (ISFs) that will be displaced by infrastructure projects, while the remaining 72% (Php1.6 billion) is for the construction of housing units for the Armed Forces of the Philippines (AFP) and the Philippine National Police (PNP). Excluding the AFP/PNP housing budget, the total budget for the construction of housing units for ISFs and the development of existing relocation sites will actually decline by 95%, IBON observed.

Meanwhile, the Philippine Statistical Research and Training Institute (PSRTI) estimated a housing backlog of 5.6 million units from 2010-2016. Figures from the NHA indicate that there are around 1.5 million ISFs in the entire country. In the National Capital Region (NCR) alone, the NHA recorded a total of 584,425 ISFs.

Each housing unit will cost an average of Php500,000 to construct, according to the National Economic and Development Authority (NEDA). This means an estimated Php2.8 trillion or Php467 billion annually will be needed for six years. IBON noted that the proposed Php4.4 billion budget for the KSAs does not even meet 1% of this annual budgetary requirement needed to address the housing backlog.

The group also said that despite the decline in the housing budget, the government seeks to lift value-added tax (VAT) exemptions on low-cost and socialized housing, and housing rentals. Should lawmakers approve the comprehensive tax reform bill, Filipinos paying amortization for low-cost and socialized housing, or a monthly housing rent of Php12,800 and below will have to shoulder an extra 12% VAT.

IBON said that the Duterte administration should not renege on its responsibility to ensure and uphold the people’s right to shelter. The government should increase the budget for housing programs and prioritize the development of sustainable, decent, as well as free and affordable housing in consultation with poor communities.