Response to interpellation 2023/24:725 on responsibility and measures in connection with the construction crisis
Translated from Swedish by AI; the translation may contain errors. The Swedish text is the original.
Summary AI, written in advance
KD considers that the government takes responsibility through a responsible policy that fights inflation, which is the root cause of the construction crisis 1. KD argues that measures have been taken such as increasing the tax deduction for renovations, appointing a cottage commission, and proposing relaxations in construction requirements for student apartments 2 3. KD emphasizes that structural reforms to shorten lead times and simplify regulations are necessary 1 3. KD argues that the government's policy yields results as the fight against inflation is taking effect 3. KD emphasizes that the government is working with different forms of tenure and has commissioned an inquiry into presumptive rents 3. KD wants to implement measures to retain competent staff and is considering credit guarantees 4. S considers that the government's measures do not meet the acute crisis 5. S claims that the government's policy deepens the recession 6. S advocates for an offensive reform agenda with production support and construction credits 7.
Written by AI in advance and may contain errors. The numbers lead to the speech a statement builds on; check against the text below.
Statsrådet Andreas Carlson (KD)
Madam Speaker! Jennie Nilsson has asked me what responsibility I believe I and the government have for the construction crisis. Jennie Nilsson has also asked me what measures I intend to take in view of the acute construction crisis.
Sweden is in a tough economic situation. Housing construction has decreased as a result of the high inflation and the higher interest rates. These have affected households' demand for housing while simultaneously contributing to the fact that production and financing costs have increased rapidly for the construction companies. We now see that inflation is clearly falling and that the inflation fight is biting. That is good, but it is still important to remain vigilant. The Riksbank lowered the policy rate last week. In the long run, lower interest rates are expected to contribute to a recovery in the construction industry.
Despite the tough economic situation, the situation differs between different actors in the construction industry. The situation and expectations differ between house builders and civil engineering contractors. The house builders state to a greater extent than the civil engineering contractors that construction has decreased, and the civil engineering contractors expect increased construction over the next three months, in contrast to the house builders. The house builders are, however, not as gloomy as before. When housing investments decreased by 22 percent last year, investments for other buildings and structures simultaneously increased by 9 percent.
The government has taken several measures to facilitate the construction industry. At the beginning of May, I decided to appoint Stefan Attefall as the commissioner for owner-occupied housing to increase the construction of small houses. The purpose is to work towards a new owner-occupied housing movement and to increase the share of small houses in the new production of housing in the long term.
The Government has further proposed that the ceiling for the repair deduction be temporarily raised during 2024. It is a measure that can make a difference when demand wanes.
I can also mention that Boverket, on behalf of the government, has recently submitted proposals for relaxations in the building requirements for student apartments. The report is now being prepared within the Government Offices.
In addition, the government has introduced two incentives for municipalities that adopt detailed plans, which enable small-house development and conversions from premises to housing.
Boverket has also, on the government's assignment, prepared a basis for increased small house construction. This includes an account of where there is buildable land for small houses and an assessment of how profitable small house construction is. Furthermore, a coordinator has been appointed with the assignment to work towards achieving housing construction on state properties through the sale of state land.
The Government is closely following the developments within the construction and housing sector and does not rule out that further measures may be needed.
Jennie Nilsson (S)
Madam Speaker! I begin by thanking you for the answer. I must, however, say that it makes me concerned.
My questions to the Minister for Housing were what responsibility he and the government have for the construction crisis and what measures he intends to take in light of the acute construction crisis. The first question is not answered at all. Instead, the Minister for Housing content himself with stating the current state of affairs and reporting a number of factors that have contributed to the construction crisis: high inflation, high interest rates, and increased production and financing costs.
We agree that these factors have made it difficult and, in many cases, impossible to make the numbers work.
The question is what responsibility the government and the Minister for Housing have taken to mitigate the effects of these factors and whether it has had the desired effect. The answer can well be interpreted as that one has chosen not to take any responsibility.
The question regarding measures to meet the acute construction crisis is answered by the Minister for Housing by listing a number of interventions and measures that have been taken. A small-house commissioner has been appointed, the ceiling for the rotavdrag (deduction for repairs) has been raised, an investigation has been ordered regarding relaxations in construction requirements for student apartments, and Sweden's 290 municipalities are given a total of 80 million kronor to share in order to produce detailed plans and convert office premises.
None of these measures meet the acute construction crisis here and now. Possibly it can contribute marginally in a situation where the economy has already turned.
The Minister for Housing also chooses not to mention that at the beginning of the mandate period, in a beginning recession, they broke entered agreements and phased out the Sweden negotiations and the investment support without replacing them with anything else. This has likely contributed strongly to the construction crisis that is now a fact.
Overall, it gives a picture of a government that does not want and is not able to act to save jobs and companies in a construction sector that is now in free fall. It is serious.
The year 2023 was a pitch-black year. The timber house industry saw more bankruptcies during the autumn than during the pandemic. In the last quarter, the number of bankruptcies and layoffs in the construction sector was at a level we have not seen since the 90s crisis. And it continues during 2024. In the first quarter of this year, bankruptcies in the construction sector increased by 56 percent. On average, it is seven construction companies a day that go under.
And with the construction crisis and bankruptcies come layoffs. The total number of laid-off construction workers increased by 154 percent during 2023. And the figure for this year is expected to be higher. For the timber house industry, it looks even darker. GS-facket reported that the number of laid-off workers within the timber house industry increased by as much as 270 percent last year compared to the year before.
We now have the worst construction crisis since the 90s crisis. It will, if nothing is done, make the housing shortage permanent at a high level for a long time to come. The consequences will be great. Fewer young people can move out from home. Fewer can start a family. Fewer can divorce. And women subjected to violence can be forced to stay in violent relationships.
Fewer people will also be able to move to take a job or get an education, which affects skills supply, jobs, and growth. And with that, Sweden becomes poorer. Konjunkturinstitutet assesses that the low construction levels lower Sweden's GDP by 1 percentage point. That corresponds to approximately 60 billion kronor. It is 60 billion that could have been spent on school, healthcare, police, pensions - the list of needs is long.
With that reality as a background, I place my hope that the Minister for Housing nevertheless concludes his answer by saying that he is closely following the developments and that he does not rule out further measures. The question then becomes: What are they? And when will they come?
Statsrådet Andreas Carlson (KD)
Madam Speaker! Thank you for the questions, member!
The first question concerns responsibility. An absolutely decisive reason for the situation we are in has to do with increased production and financing costs as a result of higher interest rates due to the high inflation. Therefore, combating inflation is very important in the work of taking responsibility to achieve a better functioning housing construction market in Sweden. It is the root cause of large parts of the problems that are now hitting very hard, especially the part of the construction industry that builds houses and dwellings.
That is why the government's very responsible policy in the economic area is important. It is now also gaining traction. I said in my response that we now see that inflation is clearly falling and that the fight against inflation is biting. That is good. But it is important not to cry danger but to continue taking responsibility for keeping inflation down, because it is a major and fundamental reason why we stand where we stand.
Even with high inflation, it would obviously have been better, and we would have been better equipped when we enter a recession, if more of the structural reforms that need to be implemented had been done already. It is about shortening lead times for construction, improving and simplifying regulations, and making buildable land available, not least for small houses, because we know that seven out of ten want to live in a villa or a terraced house.
We are also working on those measures. Step by step, we are addressing the structural problems that have built up over a very long time. I believe there is a fairly large consensus there, but unfortunately, we did not see the pace of reform that would have been needed during the good years during the previous government's time in power. It is about ensuring that we have a better functioning housing market and housing construction market.
The member of Parliament raises the investment support. Not even in a booming boom with the inflation that prevailed and a low-interest environment – there was even negative interest during parts of the S years – did the number of completed dwellings meet the needs established by Boverket. Not during any of the years that the member's party governed Sweden did the number of completed dwellings meet the needs established by Boverket.
We are now in a tough economic situation with high inflation, sharply increased construction prices, and raised interest rates that have pressured both households and construction companies. The government and I are therefore taking responsibility through very responsible politics. It is about fighting inflation but also about addressing the structural problems that exist.
Madam Speaker! When it comes to measures, I have described some of them in my response. We are also looking at and preparing the proposals that the government's coordinator has developed on behalf of the government regarding housing construction in the north. But the proposals that Peter Larsson has presented can affect the entire country. They concern credit guarantees and rent loss guarantees. These are proposals for measures that are now being prepared in the Government Offices.
It is primarily a matter of holding on, so that we keep inflation down at more normal levels. It is the inflation that is the cause. When we now see that housing construction can pick up and start to increase again, that will also be the most important part.
In the gap that arises, it is however important to see what we can do so that construction companies can be able to retain competent staff and not lose them to other sectors from which they might not return to residential construction. We see, in fact, a great need to build housing for a long period ahead. It is also an important area.
Jennie Nilsson (S)
Madam Speaker! What concerns me most when I listen to the Minister for Housing is that he seems to assume that it is sufficient to come up with proposals for measures that should be in place when the economy turns anyway. When the economy turns anyway, it is too late.
In that context, one must remember that the construction sector is a growth engine. Right now, it is driving the recession. This has consequences not only for the construction sector, but it also leads to effects in other sectors as well. We know from experience, not least from the 90s crisis, that if it is knocked out and the staff disappear to other sectors and so on, they will not come back. Then one deepens and delays a recession, and the upturn proceeds more slowly.
Despite that, when we are in the middle of it down there, there are no proposals at all from the government and the minister that meet that situation here and now. One speaks of something coming later, preferably rule simplifications or measures that are unilaterally aimed at building small houses.
Get me right. I have nothing against us building small houses. But we need a housing policy that covers all forms of tenure, which ensures that we build rental apartments, BRFs, and small houses based on people's needs, the business community's needs, and so on. Here, the entire policy is limping, in the extent that it functions at all.
The Minister refers in his answer to that responsibility has been taken by combating inflation. I can only state that combating inflation is not the same thing as doing nothing. When there is high inflation and a difficult economic situation, it is harder to be a politician. One needs to have more balanced proposals, which hit the mark and do not have unwanted effects. But doing nothing does not hit the mark either, and it also has unwanted effects. Right now, the effect of combating inflation is that one deepens the recession. It is not a reasonable way to take responsibility.
I think that the Minister for Housing has no problem taking that criticism from me or from the opposition. But that criticism is shared by virtually all other external assessors. It is the same criticism that comes from the sector regardless of whether you speak with the construction companies, the timber house industry, the trade union, the Konjunkturinstitutet, or the banking side. Everyone says the same thing. The Minister's answer will be that something will come later when the tide has turned. That is not sufficient.
The Minister refers to the most intrusive measure that has been taken, namely the removal of the investment support. That was done because it was inefficient, that not enough was being built despite it being good times.
I can only state that during the years when the investment support was in place, an average of 60,000 housing units were built. They built nearly at the level that is needed at a cost where the rent became lower. An average of 60,000 should be compared with the average the last time Ulf Kristersson was in government. Then the average figure was 22,000 housing units. This time Ulf Kristersson is in government, that average figure will likely be lower. If anything, it shows that politics makes a difference.
When will the measures that affect the situation here and now arrive?
Statsrådet Andreas Carlson (KD)
Madam Speaker! The member obviously did not listen to what I said, namely that it is important to see what can be done in the gap to retain competence in the sector. The government is, of course, working on various measures. One of them is the increase of the rotavdrag ceiling. In the Craftsman Barometer from Beijer Byggmaterial, 80 percent of the participants answer that the rotavdrag has a large or very large significance for the craftsman industry. To the question of what is the most important thing decision-makers should do for the construction industry, 65 percent of the participants answer that the rotavdrag should be increased. I said in my answer that the government has already taken that measure.
We are not moving away from the question of inflation. It is possible that the member is right when she says that it is harder to be a politician, but during the time we had an economic boom, a low-interest environment, and furthermore building subsidies in the billions, it was still not built as much as the needs established by Boverket had determined. This points to the fact that there are structural problems that need to be addressed, and they are also important. It is clear that it may take some time to get them in place because in several respects we have eight lost years when it comes to the measures against structural problems that many know would have resulted in us having a better functioning housing market. Nevertheless, it is important to get the measures in place together with a policy that leads to inflation fighting.
We are now receiving a receipt for the government's policy as the fight against inflation is taking effect, which is a decisive factor in achieving a better functioning market.
The member notes that small houses are positive. I assess it as the member welcoming the assignment we have given Stefan Attefall as a commissioner for owner-occupied homes. But it is not the case that the government only focuses on small houses, as the member claims. On the contrary, we see that the proportion of newly produced housing that are small houses is low, approximately 25 percent. But we know that approximately 70 percent want to live in small houses. If we do not address those problems and get more small houses built, fewer and fewer will be able to realize their dream of living in a villa or a row house.
The government is also taking measures for other types of tenure. A mix of different types of tenure is needed that fits into different parts of life and meets different people's needs. In order to create good conditions for building new rental apartments, it is important that there is a well-functioning system for rent setting. And in order to get the construction of rental apartments started, there must be reasonable opportunities to increase the rent to, for example, cover cost increases. Today, these are limited, and we have therefore commissioned an inquiry that shall take a position on how rents for newly produced apartments can be changed. It is therefore about the so-called presumption rents, which are also widely demanded by those who build rental apartments. Here, the government has commissioned an inquiry that is working on the issues at a high tempo.
I also note that the member wants to compare different years against each other. In that case, one compares years that the previous government produced during a period of high economic growth with a low-interest environment with figures in the wake of the financial crisis. Now we are in a new tough economic situation. Figures must be compared in the correct way, and they must be set against Boverket's established needs. We can once again state, Madam Speaker, that not during a single one of the eight years that the previous government governed the country in high economic growth, in a low-interest environment, with construction subsidies, did the number of completed dwellings reach Boverket's established needs.
Is there any kind of self-reflection in the Social Democrats' policy now that you are in opposition?
Jennie Nilsson (S)
Madam Speaker! I will start at the end.
When it comes to proposals for active measures, the Social Democrats note a lack of an offensive reform agenda being put forward by the government parties. It contains a construction stimulus in the form of production support, i.e., a variant of the investment support. We have taken into account the difficulties with the old support and adapted it based on the situation as it stands here and now. They are directed, for example, to those localities that now face large company establishments and cannot provide housing for them - and for student housing.
We have also already proposed what Peter Larsson has proposed to the minister, and which the minister is preparing, namely that there should be construction credits in place so that the calculation works out and something actually gets built.
There is a whole range of proposals, and I am convinced that the Minister is well aware of the Social Democratic proposals - given that his party comrades have voted down all of them in this chamber.
What still concerns me in the debate is that the minister is hiding behind inflation and claims that structural measures will solve all problems. I have no problem discussing structural measures with the government, but they need to be implemented on a significantly deeper level if we truly want to address the problems that the minister says exist in the sector. It would require cross-bloc conversations, which would mean we can launch rules of the game that hold over a long period. Also, that is something that has been said no to previously.
I therefore have a closing question for the Minister for Housing: Will you at least appoint a housing commission to look at both acute measures here and now as well as long-term rules of the game?
Statsrådet Andreas Carlson (KD)
Madam Speaker! I have accounted for our very responsible work in keeping inflation down. Now we see that the work is taking effect, and we see positive highlights. I have also pointed out in the debate measures that the government is taking and is prepared to take. We are preparing measures to be able to retain competent staff in the sector during the period before we enter a new boom. We are, after all, in a concerning economic situation.
We cannot escape the fact that we would have been better equipped for the downturn if structural measures had already been in place. It is positive, Madam Speaker, that the member here in the chamber says that she has no problem discussing structural measures. It would have been even more welcome if they had also been implemented during the eight years they had at their disposal. Much of what we see today is the consequence of the absence of accurate measures that would have resulted in shorter lead times, better regulations, and more accessible buildable land. That, together with other measures that the government has taken in the review of macro-based supervisory measures regarding the amortization requirement and the mortgage ceiling, are other important parts that we are also working on.
The important thing now, Madam Speaker, is to implement measures, which I perceive there is a fairly large consensus on, rather than getting stuck in political discussions.
I am happy to have a good dialogue with the members of the Riksdag, but now our focus should be on taking on, step by step, those problems for which it would, of course, have been better if we already had measures in place through decisions in the Riksdag chamber.
I also welcome the tone of the inquiry, Madam Speaker, and perceive that the previous investment support has been evaluated and changed.
We will, of course, prepare and move forward with the proposals from the coordinator Peter Larsson regarding credit guarantees and rent loss guarantees. They are being prepared in the Government Offices, as stated, and we do not rule out that further measures may be needed.
Source: The Swedish Parliament. The speeches come from the open data of the Riksdag, translated into English by AI, which may contain errors.