Housing crisis grips Portuguese public debate, sparks political tensions

A discussion on housing shortages in Portugal is currently dominating the political sphere after President Marcelo Rebelo de Sousa vetoed the government’s housing package, citing doubts about its effectiveness, leading to institutional tensions between the two branches of power.

Rebelo de Sousa’s veto, citing the urgent need for affordable housing, exposed latent tensions between him and the country’s socialist Prime Minister, António Costa, whose party holds an absolute majority in parliament.

The rift culminated this week in a meeting of the Council of State – the presidential advisory body made up of 13 members, including the highest representatives of the nation and public figures chosen by the president – at which the president reportedly made a speech criticising the government while the prime minister remained silent, according to news reports.

The government’s new housing package had only been approved by an absolute majority composed only of Costa’s Socialist Party (PS) – which will confirm the bill – sparking criticism across the political spectrum.

It contains a series of measures considered controversial by most opposition, from limiting short-term rentals in urban centres to the compulsory rental of vacant homes to tax incentives for landlords, limiting rents and social support, among various programmes.

At the same time, the government has pledged to build more housing, using funds from the EU Recovery and Resilience Plan (€2.7 billion or €3.2 after reprogramming), which is considered insufficient.

Like many European countries, Portugal suffers from a lack of affordable housing due to a combination of factors, including the boom in tourism, a market geared towards luxury, rising interest rates and the effects of inflation, which have made it more difficult to buy or rent a home.

As in the rest of Europe, young people are having a tough time as most are forced to rent or, like an estimated two in three of Portugal’s 25-29-year-olds, live with their parents.

While many are facing the brunt of a housing crisis, the National Health Service has also taken a severe hit as recent strike announcements of doctors working in public service and the closure of emergency services have put the situation of the National Health Service (SNS) on the agenda of the new political year.

A reform of the SNS has been announced in recent weeks, providing for a new organisation of so-called “local health units”, which, according to the government, will be the biggest the SNS has undertaken since 1979, the year it was created.

Health Minister Manuel Pizarro will, therefore, be the first member of the government to be called to parliament by the opposition for a “thematic debate” on the SNS.

The start of the new school year has also revived tensions in the education sector, where teachers have been fighting since last year for better conditions. In the previous school year, the multiplication of strikes in the sector led to disruption of the school year across the country.

About a month before the state budget presentation, in which the government is expected to “open the purse strings” to lighten the tax burden – expected to reach 37.2% of GDP in 2023 – taxation is once again dividing the government and the opposition.

The Social Democratic Party, the main opposition party, has already proposed to revise income tax, which it claims would provide immediate tax relief of €1.2 billion.

The supposed “budgetary slack” that the opposition is claiming for redistribution is contested by official circles, who believe that given the unpredictability of the international situation and the burden of public debt, calculated at 107.5% of GDP by 2023, according to the government, it is necessary to take care of the debt burden first.

Just this week, in an unprecedented article on ” Political crossroads”, Mário Centeno, governor of the Bank of Portugal and former president of the Eurogroup, warned that “the weight of permanent expenditure in the economy remains above 2019” so “at a time of a possible change in the economic cycle, we cannot be caught off guard, as has happened so many times”.

(Luisa Meireles | Lusa.pt)