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Dec 17, 2010 Features / Columnists, Peeping Tom
This term of the PPP administration has been distinguished by one main feature. The rich are getting richer.
From 2006 onwards what we have had in Guyana are policies being implemented that have caused those with wealth to become richer. This term of the PPP administration has been good for the rich. They have reaped great rewards as a result of the policies of the administration.
This is shocking when one considers that the ruling party is supposed to be working class in orientation. It is shocking when one considers that there is still absolute poverty in Guyana. It is shocking when one considers that there is a growing gap between rich and poor within the society.
If there is anything that signals the present administration’s support for private businesses over the small man, it is an advertisement which appeared in last Sunday’s newspaper inviting expressions of interest from private developers to be involved in developing a massive stretch along the East Bank of Demerara that will cater for some 38,000 persons.
The government had some time ago announced that it was expanding housing along the East Bank of Demerara. The demand for housing remains high and it was expected that when the new housing development kicked in, many of those who did not own homes would have been afforded the opportunity to live in the new schemes to be developed along the East Bank.
The East Bank schemes were expected to help ease the shortage of housing among the poor. It would also aid in empowering the poor since owning their own homes would be a base upon which they can build on in the future.
But just how many of the lots that will be available on the East Bank will end up in the hands of the poor? Who will benefit more from the new schemes that will be developed between Agricola and Herstelling?
The government has now signaled that unlike the vast majority of housing schemes in Guyana which were developed without private developers, the government wants to involve these developers in the proposed massive developments along the East Bank. What we have is a proposal for public/private partnerships, private developers and the government.
Some lots will therefore be developed by the government for the poor, but what is worrying is why it was necessary in the first place, given the still high demand for housing by the poor, for these sorts of partnerships which do nothing more than put wealth into the hands of the rich.
When private developers are involved, they do so for profit. They are in it to make money. They invest their capital and they expect a return. In a market economy, there should be a place for private housing developers. But this does not mean that state land must be sold to them for development. These developers usually end up building for the rich; creating high-end homes for the wealthy. So why should state land be made available for these purposes when these private capitalists can well afford to go onto the private market and build houses on private land as has been done to such great effect?
Private developers do not usually build houses for poor people. It is the middle class and rich who can afford these homes. Why use the land belonging to the people to further enrich those who are wealthy? Why private developers for this land? Why a public/private partnership, when it is obvious that what will be created in the process are schemes that will benefit primarily those who are already wealthy?
What happens is that the government sells this land for a premium price, say, $2M per lot. The developer then builds a $6M property and sells it to the rich for $10M, making two million on every lot.
But it does not end there. What we have developing is now an exclusive scheme and within one year, the prices for those houses will appreciate to around $15M. Thus, it is rich homeowners becoming wealthier.
The government each year boasts about the billions that it spends on developing housing schemes. It always omits to mention that it also collects billions from poor families who pay substantial sums for their house lots.
While private developers will help absorb some of the expenditure that would otherwise have to be funded by government, these developers also end up making a healthy profit after they would have built their mansions which are then sold to the rich.
So three things happen. The first is that land which belongs to the people of this country ends up in the hands of the wealthy and the rich developers end up making huge profits from the development of the schemes. Then these schemes become exclusive high income schemes and appreciate in value faster than the normal housing schemes, thereby making the owners richer. It is a vicious cycle that increases the gap between rich and poor.
This is what is going to happen on the East Bank of Demerara. Private/public partnership in housing is going to enrich those who are already rich. It is going to result, also, in rich persons buying up land which belongs to all the people of Guyana. The poor and those who do not yet own their own homes should have been given all of this land so that they too can share in the national pie.
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