Housing subsidies and immigration – in the focus of direct democracy

Background to the referenda of 9 February and 17 May 2020

by Dr rer. publ. Werner Wüthrich

Housing and affordable rents are part of existence and are therefore something sensitive in political debates. It is not surprising that a particularly large number of popular initiatives have been, and are, launched in this area. This is once again the case today: on 9 February, we will vote on the popular initiative “More affordable homes”, on 17 May on the delimitation initiative. It wants to terminate the free movement of persons with the EU and give the federal government the opportunity regain control over immigration.

The Swiss are a nation of tenants. Just a few decades ago, 75% of the apartments were rental. Because the number of owner-occupied dwellings (condominium ownership) has risen sharply in recent times, the figure is now just over 60 %. Compared to European countries, the so-called tenant ratio is by far the highest in Switzerland. Another factor has an impact on dwellings: the level of immigration. A strong expansion increases demands and makes living space scarcer. Accommodation becomes more expensive. Both factors, the high number of tenants and the extent of immigration, can lead to political tensions and the launch of popular initiatives. It was not rare for the Swiss electorate to vote almost simultaneously on various popular initiatives to limit immigration, promote housing and affordable rents. This is the case again today. Both initiatives are part of a long series of popular initiatives and votes that have taken place over the last 50 years, all of which aimed at regulating immigration and promoting non-profit housing.

What does the popular initiative  “More affordable homes” want? 
(vote on 9 February)

The popular initiative intends to entrust the Confederation with the task of ensuring, in cooperation with the cantons and communes that at least 10 % of new housing has to be built in the area of non-profit housing construction. This goal is to be reached by means of subsidies, building regulations and the appropriate planning of building zones. In addition, non-profit housing developers should be entitled to a right of pre-emption in the housing market. For the conservative counter-committee, the initiative goes much too far. It talks about rigid quotas, counterproductive market interventions, expensive housing programmes or even nationalisation of the housing market, thus creating more problems than solving them. – There is nothing wrong with the initiative’s goal of creating more affordable housing. However, is this the right approach?

Characteristics of federal Switzerland

Some statistics (see Bundesamt für Wohnungsbau 2018 (Federal Office 2018)): in the Canton of Basel-Stadt 84% of the inhabitants live in a rented flat, while in Valais or Appenzell Innerrhoden the figure is only 43%. In Switzerland there are about 170,000 cooperative flats, 69,000 of which are in the city of Zurich. We also find building cooperatives and cooperative housing estates mainly in urban areas such as Zurich, Lucerne, Bern, Basel and Geneva. In rural areas they are hardly ever found. In Ticino, for example, only three out of every 1,000 inhabitants live in a cooperative flat, whereas in the half-Canton of Basel-Stadt there are 87.

In general, the number of cooperatives has fallen from about 13,000 to 8,000 over the last 20 years – partly because many small cooperatives have merged into large ones. One quarter (2000) are building cooperatives. Their number has increased, however. Currently, new cooperative housing estates are hardly ever built, however, many existing ones are being demolished and rebuilt in a denser building scheme, so that the number of flats is increasing. Smaller cooperatives are set-up lately, which, for example, offer flats for the elderly.

There are differences between the individual regions. There are historical reasons for this (see Wüthrich 2018, pp. 41-71). In the following, two special examples from the Cantons of Zurich and Basel. As early as 1869, the people of the Canton of Zurich voted on a free and democratic constitution, which contained communal autonomy, civil liberties, separation of powers and numerous popular rights. Article 23 stated: “The canton promotes the cooperative system based on self-help and enacts laws for the protection of workers. The early socialist Karl Bürkli, who had already founded the Konsumverein Zürich (Zurich Consumer Association) in 1849, campaigned for this article in the Canton’s Constitutional Council with great passion and success. He argued that the cooperatives would not need any subsidies, they should merely be supported in raising initial capital. The sovereign agreed. This also happened subsequently. Funds were set up to provide interest-free, though repayable loans to the emerging building cooperatives. In the canton, and especially in the city of Zurich, a real cooperative settlement culture thus developed. The housing promoted with interest-free loans is only available to tenants whose income does not exceed a certain limit. However, 70 % of the 69,000 cooperative flats in the city of Zurich today, have been built without any support and do not receive subsidies.

Another example of a special cooperative culture is the Freidorf in Muttenz (Canton Baselland). It was built after World War I according to the ideas of a full cooperative. Most of the capital was donated by the Verein Schweizerischer Konsumgenossenschaften VSK) (Association of Swiss Consumer Cooperatives). The settlement consists of 150 houses. Their inhabitants form a kind of living community. Not only do they live together, but they also work together in their own, cooperatively run business – in the Konsumverein Basel (which recently merged into the Coop). Shops, kindergartens, schools, cultural and leisure facilities, numerous associations and militia work belong to this cooperative. At the centre of the building is a large, now listed cooperative building, which offers plenty of space. The culture of the building and housing cooperatives was created because of a need among the population and because innovative citizens like Karl Bürkli took the projects into his hands.

However, the current popular initiative “More affordable homes” takes a different approach. It wants to assign the federal government the task of ensuring such a culture from the top. In view of the widely varying starting situations in the numerous communes and cantons, it is questionable whether a national quota is necessary, that has to be implemented by a centralised planning office. Furthermore, it is questionable whether it is capable of achieving the desired goal.

Indirect counterproposal from Parliament on the popular initiative “More affordable homes”

The Confederation has been supporting housing cooperatives since 1975 through a fund (now Fonds de Roulement). It has a capital of half a billion francs, grants long-term, low-interest or interest-free loans and also guarantees loans. So far, 45,000 cooperative housing units were financed in this way. If the popular initiative is rejected, the councils have decided, as a counter-proposal, to increase this fund by a quarter of a billion francs. – I believe this approach is in line with the principle of subsidiarity and the spirit of federalist Switzerland.

Cantons and communes
are best to find the right way 

Voters in the 26 cantons and a good 2,500 communes know the local social needs and resources best. Nine cantons have already passed a law that supports non-profit housing construction. Usually, these laws have been voted for with a clear majority, in the popular referenda.

In 2007, the Canton of Geneva decided to increase the proportion of cooperative housing from 9 to 20% in the longer term. In 2012, the electorate in the city of Zurich decided to give more support to cooperative housing construction and to increase its share from the already high 24 % to 33 %. Shortly thereafter, a popular initiative was accepted in the canton calling for the establishment of a fund to promote cooperative housing construction. Furthermore, the Zurich sovereign has approved a building and planning law that allows communes to provide for a minimum share for low-cost housing when zoning. In 2014, the city of Bern adopted the communal initiative “For affordable housing”, and in 2017 the people of Nidwalden adopted the counter-proposal to the popular initiative “For affordable housing in Nidwalden”. – These examples show the paths that fit in with federalist Switzerland. The increasing centralisation of more and more areas of life does not correspond with the Swiss model.

Prospects

We can vote on two popular initiatives on 9 February and 17 May: One wants to promote non-profit housing and provide affordable rents, the other wants to give the federal government back the power to control immigration. The aim is to set the course for the future. What kind of Switzerland do we want? In the 1960s, Switzerland had a population of about five million and a proportion of foreigners of about 10 to 12 %. Today, there are 8.4 million with a foreign population of 25 %. In the last 13 years, one million people have immigrated. There is already talk of a “10 million Switzerland”. The problems associated with this are often even more pressing – such as integration, the highly challenged infrastructure (for example, the Swiss Federal Railways (SBB) are increasingly reaching full capacity), the expansion of the education system, energy supply … Such issues were resolved relatively well at the time, even in difficult situations – through direct democracy with the involvement of the people. The integration of the many southern Europeans in the 1960s, particularly from Italy at the beginning, was also successful. Without them, modern Switzerland could never have been built.

Switzerland is politically stable, and we have an efficient economy and, in particular, an efficient construction industry. However, as a small state with limited space, we are facing the situation that more and more grassland is built-over and that construction must be carried out at high-rise. In the last 13 years, an area the size of 57,000 soccer playing fields has been built-over. One million additional inhabitants urgently need more housing, schools, roads, public transport, etc. In addition, the number of commuters and cross-border commuters has increased significantly.

Today’s tenants and homeowners have been lucky. The very low mortgage interest rates have eased the tense situation on the housing market. If property developers had had to pay normal interest rates, there would certainly have been far greater problems. The limitation initiative we will vote on 17 May is different from the corresponding initiatives of the last 50 years. Whereas these all contained a cap and sought to reduce the number of foreign residents again, the current initiative merely aims to restore the federal government’s authority to manage immigration itself – just as it always did before the Bilaterals I. The limitation initiative, submitted to the vote on 17 May, follows on from the mass immigration initiative of 8 February 2014 and calls for the implementation of the Swiss sovereign’s “yes” vote at that time.

Today, the relationship with the EU is central. Greater political inclusiveness, as required by the Framework Agreement and the EU Citizenship Directive, would change or even render impossible the tried and tested interaction of the people with their authorities. In federalist Switzerland, direct democracy has made a significant contribution to political stability and social peace, even in difficult and sensitive situations. This necessitates sufficient political sovereignty. We are a bottom-up country. The rest of Europe is of a more or less authority-based nature and ticks differently.

What is often forgotten in debates today: Switzerland is not only a popular immigration country with a well working economy. Around 700,000 Swiss live abroad. Swiss companies have created around two and a half million workplaces abroad. It is thus more cosmopolitan and liberal than many other countries. The popular initiatives that have repeatedly been submitted to improve the housing situation or limit immigration were more a response to this openness and sometimes also an outlet for conflicts and issues that parliament did not address – but by no means a sign of isolation or even xenophobia, as is sometimes claimed. •

Sources:
Federal Office 2018: Bundesamt für Wohnungswesen (Federal Office). More affordable housing. Popular initiative and fraumework credit to increase the Fonds de Roulement. Additional report of the administration for the attention of the EATC–N (Economic Affairs and Taxation Committeees of the National Council (18.035n). Bern 2018

Linder, Wolf; Bolliger Christian; Rielle, Yvan. Handbuch der eidgenössischen Volksabstimmungen (Manual of the federal referenda). Berne 2010

Wüthrich, Werner. “Charles Fourier, Victor Considerant und Karl Bürkli als Wegbereiter der direkten Demokratie und des Genossenschaftswesens in der Schweiz des 19. Jahrhunderts” (Charles Fourier, Victor Considerant and Karl Bürkli as pioneers of direct democracy and the cooperative system in 19th century Switzerland); in: Roca, René (ed.), Frühsozialismus und moderne Schweiz. (Early Socialism and Modern Switzerland) Basel 2018

Wüthrich, Werner. Wirtschaft und direkte Demokratie in der Schweiz – Geschichte der freiheitlich-demokratischen Wirtschaftsverfassung der Schweiz. (Economy and direct democracy in Switzerland – History of the free democratic economic constitution of Switzerland.) Zürich 2020

  

Economy and direct democracy in Switzerland

New publication by Zeit-Fragen edition

cc. Today one speaks in many countries of a social market economy. This generally refers to a market economy system in which a decent life is guaranteed – in old age, in health care and also in professional life.

However, the differences between the individual countries are considerable. Only in Switzerland has the word “social” acquired a further meaning, which makes a significant contribution to social peace and political stability in the country.

Since the 19th century, the people have – in cooperation with their authorities – been actively determining and shaping economic and social events via their popular rights. They assume direct co-responsibility – far more so than in countries where the people only elect politicians, whom they hardly know, every few years. The new publication in hand shows the origins and development of this Swiss model.

Werner Wüthrich, doctor of administrative sciences and lic. oec. et iur. (comparable with master of economics and jurisprudence) has worked as a commercial teacher at business schools and as a publicist for many years. He very successfully demonstrates the essential importance of direct democracy for a free and social economic order. In this, he proves himself to be not only a specialist in economic history, but also an author who knows how to present the subject matter in a way that is readable as well as stimulating for both experts and laymen.

Werner Wüthrich. Wirtschaft und direkte Demokratie in der Schweiz – Geschichte der freiheitlich-demokratischen Wirtschaftsverfassung der Schweiz (Economy and direct democracy in Switzerland – a history of the free democratic economic constitution of Switzerland).

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PO Box 8044 Zurich
e-mail: redaktionzeit-fragen.ch;
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