Fixing Housing and Communal Services in Belarus: A New Minister is Not Enough
As of 17 November, the Ministry of Housing and Communal Services has a new head - Aliaksandr Cierachaŭ. However, this new appointment will unlikely fix the serious problems which the sector is facing.
Housing and communal services swallows up 8% of the Belarusian budget and remains a hotbed of corruption. Over the past half year, the police have identified more than 100 crimes in this sector.
The authorities want to reform the sector to make public utilities more effective. Yet, they are concentrating more on punishing corrupt officials and implementing patchwork fixes instead of reforming the entire system of housing and communal services.
A Little Known Hotbed of Trouble
On 17 November, Aliaksandr Lukašenka appointed a new minister of housing and communal services. Thirty-six-year-old Aliaksandr Cierachaŭ, former first deputy minister, will manage one of the most corrupt wings of the Belarusian state. On 14 May, Aliaksandr Jakabson, an aide to the President, stated that 10% of the expenditures of the Ministry of Housing and Communal Services are criminal in nature.
The expenditures on housing and communal services remain enormous, running up a bill of about $3.5 bn –– the equivalent of 8% of the consolidated budget of Belarus. Even according to the official Belarusian Economy magazine, established by the Council of Ministers, "the Belarusian housing and public utilities sector needs to be streamlined its management structure and performance standards like its man-hours and number of employees." In other words, the authors of the article are calling for firing people whose jobs are redundant.
Moreover, a chunk of the state's tax revenues has a tendency to disappear inside the ministry. Last month, Independent Belarusian television Belsat covered a low-level corruption scheme, exposing just one of many similar schemes. Residents of Slonim, a town in western Belarus, decided to privatise a housing building in which they had lived for a long time. However, the price they were asking for the building appeared grossly exaggerated by the local officials.
The building's residents learned that, according to the available documents, the government had spent $60,000 on renovations for the building. The money they had used on the renovations, however, had mysteriously vanished, and the actual repairs done to the property were minimal.
Furthermore, local officials forged documents showing that the its residents refused to instal boilers and plumbing at the expense of the state. These facts would have remained unknown if the people had not appealed the decision with the police demanding to see all of the available documentation.
Currently, the police and the Committee of the State Security (KGB) are investigating the case. At the same time, the authorities intend to fine Belsat journalist Aleś Zalieŭski, who broke the story, for working without the required press accreditation.
A System That Promotes Corruption and Inefficiency
There are three main factors that make Belarus' housing and communal services system susceptible to corruption: its a state monopoly, the absence of public oversight over its expenditures, and chronic mismanagement.
The state remains a monopolist in the housing and communal services industry and serves 95% of all apartments in Belarus. This lack of competition leads to a lower quality services, overpricing and a lackluster performance by many municipal workers.
Andrej Tyčyna, a democratic activist from Salihorsk, explained to Belarus Digest that the renovation of his apartment building's entrance –– which required a the walls to be painted and replacing windows and a door –– went on for six months.
The lack of public oversight over its expenditures only makes matters worse. This is partly due to the fact that Belarusians formally pay directly, according to Naviny.by web-site, 31% of the total cost of the housing and communal services. Taxes cover the rest. The recent piece by Belsat revealed that people may simply not know how much is officially being spent to repair their buildings.
Poor management, in this case, is a natural consequence of the state's monopoly in this sector, to say nothing of the lack of accountability or the absence of proper incentives. The higher the costs and needs of state monopolies, the more subsidies they receive from the budget. Therefore, local authorities often prefer to carry out long-term or ongoing repairs.
The Authorities Working on Reforms
This year housing and communal services became a priority for the government. In February 2014, Aliaksandr Lukašenka created a working group on the issue headed by Aliaksandr Jakabson.
From February to May the group held 30 meetings. In 2013-2014, law enforcement agencies identified more than 100 crimes in the sector. Officials from the Committee for State Control say more than half of the irregularities led to criminal cases being opened. This peak of interest may have something to do with the economic slowdown, so the authorities have no choice but to combat corruption to stay afloat.
While it appears that the authorities are attempting to fix the system, they still prefer to struggle with the consequences, rather than fixing the root of the problem. On the one hand, the government wants to punish corrupt officials, cut expenses and jobs and get rid of bad assets.
Still housing agencies have to preserve detrimental properties that have nothing to do with communal services. For instance, the Ministry of Housing and Communal Services is currently keeping sunflower-seed frying operation afloat as its owner went bankrupt. Despite its unprofitable nature, the state still wants to keep it open.
Under the reforms being proprosed currently, the state wants to clean up its finances in order to avoid cross-subsidies and to introduce superintendent jobs for housing throughout Belarus. This superintendent will be an electrician, locksmith, plumber, painter and carpenter -- and responsible for several buildings. These steps by the government may seem rational, but the regime can do much more if it really wants to improve the situation.
The authorities should allow for more private service providers to work on the housing and communal services market. A public-private partnership, like the one between German company Remondis and Belarusian public enterprises, shows that sharing responsibilities with the private sector has its benefits. Together they created a waste management system in Minsk. Many EU countries forbid housing and communal services companies to engage in supplying gas, water, heat, and electricity all together in order to avoid one firm becoming a monopoly.
Moreover, the state can make the financial system more transparent. The government’s belief that people should pay 100% of the total cost of the housing and communal services actually makes sense if, in return, people receive high quality services for their money. Rather than prosecuting corrupt officials, it would be more efficient to deprive them of their opportunities to steal from the state coffers.