The world’s most generous government assistance for a third child

The Orbán government gave a wonderful Christmas present to families who either already have three plus children or who are planing to have at least three children in the next ten years. A couple, as long as they are young enough, can apply for a very generous subsidy for a newly built house or apartment even if at the moment they have no children at all. But there is a caveat: they must be officially married. Those people who have been worrying about all those children born out of wedlock can rest assured. The government is defending the institution of marriage and the traditional family structure even if currently half of Hungarian children are being taken care of by a single parent, usually a mother.

The rules and regulations of this generous package are spelled out in great detail. Those who put it together tried to think of all possibilities, including in vivo insemination and its possible failure as it impacts the contract signed by the state and the couple who agree to produce at least three children in ten years. Almost all the major internet sites summarized the law, which appeared a few days ago. I read the version that appeared on Index. Put it this way, the hopeful couples should begin studying the law because it will not be easy to follow all the rules that will regulate their lives over the next ten years. For those of us who are not interested in participating in this undertaking, these details are not really important. What is important is the country’s financial investment in this demographic scheme. The young couples who decide to embark on this latest brainchild of the Orbán government will most likely hit the jackpot. But will they break the country’s bank?

Although couples whose goal is to produce two children will also get free money, 2.6 million forints, I would like to concentrate here on those with three children either on the ground or still only a twinkle in the eyes of the parents and the state. Here the stakes are high: 10 million forints gratis and 10 million forints in a low interest (under 3%) loan as long as the apartment or house is new construction and of substantial size.

How much will this cost the taxpayers? No one really knows because, as usual, the government neglected to conduct an impact assessment as Ágnes Hornung, undersecretary in charge of finance at the National Economic Ministry, perhaps unwittingly admitted in an interview with Magyar Idők when she said that they are “currently studying the possibilities of [the program’s] financial sources.” They don’t seem to have any idea how many people will take advantage of it, but if current calculations by economists are correct, one would be a financial fool not to participate. Zoltán Balog was the only cabinet member who dared to guess the number of applicants. He talked about more than 100,000 couples. This would involve a financial outlay of more than a trillion forints.

This talk of subsidies and low-interest loans guaranteed by the state brings to mind another Fidesz project initiated in 2000 which a few years later had to be scrapped because it put too great a burden on the budget and added to the country’s indebtedness. Moreover, the project didn’t really alter the demographic situation.

family2Let’s take a quick look at some of the statistics of families with children. In 2011 there were 615,815 families with one child, 449,261 with two, 131,321 with three, 29,043 with four, and 15,686 with five or more children. So, families with three or more children number 176,000 while another 449,000 already have two children. If all the people with three children were to receive ten million forints, that would come to 1,760 billion forints, which is more than all the revenue the government receives from personal income tax in a year. And we didn’t talk about families with two children who just might be tempted to produce a third. Moreover, as it is, these families are eligible for 2.6 million forints even without a third child, which must be added to any calculation. Then there are the very low-interest loans for which the government is responsible. If we add all this up, the cost will be enormous. This plan poses serious risks to the country’s financial well being.

The government, of course, wants to weed out certain undesirable elements whose reproduction is not in the interest of the state. They are the poor, the unemployed, and, as we just learned, those in the public work program. The last group counts as employed only when the Orbán government wants to boast about the fabulous improvements in the unemployment figures. But even without these restrictions only those who are better off will be able to afford to sign the contract. A newly constructed house must be at least 90m² and an apartment 60m². They cannot consist of only smaller rooms; there must be at least one room that is 12m². And the house has to have central heating.

Origo reported on some calculations done by Bankmonitor that show how much couples who take advantage of this new program will gain at the expense of the taxpayers. Bankmonitor took as its examples two apartments, one in Budapest and the other in Debrecen. Both are fairly large: 75m². The average price of such an apartment in Budapest is 40,275,460 forints, while in Debrecen it would sell for 28, 777,620 ft. The new owners of the Budapest apartment will have to pay 20,275,460 out of pocket while the Debrecen couple would need only 8,777,620. Then Bankmonitor compared the monthly mortgage expense at a very low interest rate to one bearing the current 6.9% official rate, which resulted in another 6,786,043 ft savings. One also has to consider the difference between the monthly mortgage payment and renting. The final word is that the Budapest family will be able to own a house at 37% of its market value while the Debrecen couple will have a house at 42% of its market price. As Origo said, “it is worth rushing because the stakes are high.” Mind you, the paper also added: “This is the world’s most generous assistance for the sake of a third child. Can it be sustained? We don’t know.”

If large numbers of people can scrape together the money for a down payment, I have my doubts. To keep it going would need a level of economic growth that is not in the cards right now. In fact, all estimates predict slower growth in the next few years. If, on the other hand, only the affluent can take advantage of this program, it will further widen the gap between the haves and the have-nots, with the poor subsidizing housing for the wealthy.

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András B. Göllner
Guest

Éva, any chance of this subvention becoming a retroactive entitlement ? Where can I sign up ? 🙂

petofi
Guest

Wow!
By hook or by crook, Orban will bankrupt the country in some way….and if he can cause mayhem along the way, all the better.

How stupidly blind can Hungarians be.

And, if all this be on the level, there are plenty of larcenous Hungarians to take the government for a long, long, long, ride.

Guest

I assume the ” certain undesirable elements whose reproduction is not in the interest of the state” is code for the Roma population? This article certainly suggests that Roma tend to live in cramped accommodation and are significantly over-represented on the public work schemes. So not much chance of any Roma families being to take advantage! This scheme is effect a wealth transfer scheme designed to enrich the middle-class at the expense of the poor, i.e. the Roma. And all with EU money. FIDESZ certainly seem hell bent on taking Hungary back to the 1930’s.

[Edit. This is the article I was referring to above http://www.refworld.org/docid/5036010888.html%5D

Member

“But there is a caveat: they must be officially married. ” I am wondering how does this line-up with discrimination.

Adoption for those who are not able to conceive?
Couples who have 3 or more children but aren’t married?

discrimination based on family status, state of health, etc. are all against UN Human Rights, and various EU laws.

tappanch
Guest

This is just a PR trick for December 2015.

My prediction:
Since this scheme would bankrupt Hungary before the next election, it will be modified and silently eliminated after a few months.

tappanch
Guest

If one million couples signed up to get the 20 million forints NOW, that would almost double the government debt immediately.

Expect a big fall for the Hungarian currency in the meantime.

By the way, the debt was trimmed by 1 trillion forints (4%) on paper just for December 31, and the forint was kept “low” at 313 EUR/HUF until 11:00 AM on that day.
This is when the National Bank declared the official exchange rate for accounting the government debt.
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tappanch
Guest

Fidesz might plan a surprise, early election for 2016 to make sure to capture all of the EU money until 2020.

Opposition is still disorganized, Fidesz can have 2/3 again with the Fidesz-made election laws, then modify the “basic law” to make Orban president for life, and to make the dictatorship more totalitarian.

komasaufen
Guest
Good point. Since the actual ballots can be printed now at any minute (ÁNY Nyrt., formerly called Állami Nyomda, just won the tender, more than 2 years before the 2018 elections) I also think that a snap election is in the making. On the other hand, I don’t that many people will take advantage of this plan. People will speculate for sure, but one has to trust the government and future governments too. And exactly this is what Fidesz has undermined. Economy is about psychology, Hungarian people have to believe that things will get better to take up loans which will have to be paid back. Plus it is a myth that there is a lack of real estate: 400,000 pieces of house dwellings are empty as we speak (although a 100k are being used for Airbnb and booking.com). The reason prices go up because the banks give you 0% so people invest in real estate but not because there’s underlying demand. The population keeps decreasing and people are moving to Western Europe. Upgrading to a house is a possibility so I guess in rural towns like Debrecen or Nyiregyhaza where many people live in panel (socialist-era drab housing estates)… Read more »
Guest

Absolutely!
When we walk though the village we see so many empty houses (at least 15%) and many others are run down with old windows where you see the water collecting on the inside of the windows, wet walls etc …
It would be much more sensible to give cheap money to the people living there to renovate and insulate, make heating more efficient etc …
Many people here – even in rich Western Hungary near Hévíz can’t afford a central gas heating – they’re still burning wood, coal and who knows what. The smell sometimes is abominable!
PS:
In Germany the different governments did just that – and it was much cheaper for everybody concerned and also gave a large impetus to the building industry …

tappanch
Guest

Perhaps, this is the reason the Fidesz-run municipality started to remove the Simicska ad towers forcibly and unlawfully today, on a Saturday. They are afraid that Simicska, the “turncoat” would give ad space to the opposition parties.

https://youtu.be/R5lKsmCKQ2A

LwiiH
Guest

It goes without saying that this move will both inflate the price of new housing and damage the markets for pre-existing homes. there are of course better ways to achieve the effect of larger families but of course those would preclude the right companies from being able to capitalize on all this free money.

LwiiH
Guest

I just love the oppositions attack to the VAT decrease on new homes.. It will help Fidesz oligarchs. Who cares…. is anyone talking about how this will further damage the market for pre-existing homes? If they want people to care maybe they should start caring about the people instead of squabbling amongst themselves over who got the second slice of cake.

Guest
OT – George Soros and the threat of Islamic terrorism Hungarians talk a great deal about George Soros, most of them reviling him (without having the faintest clue as to what he is really on about), though some few of course greatly admire him. I happen to be very much and very enthusiastically a part of this latter group, tiny as it may be. But sometimes George Soros can disappoint, and at those times it seems a great mind is running on empty. A recent example of this is this article of his that appeared last Monday in The Guardian: http://www.theguardian.com/commentisfree/2015/dec/28/terrorists-demagogues-scared-charlie-hebdo It is a cri de coeur not to allow Islamic terrorism to win by we ourselves giving in to an irrational fear of Islamic terror that could then drive us to in fact dismantle our open societies. It goes without saying that I could not agree more with this sentiment. The trouble is the article is telling us only that which we already know (and telling it in an insipid, lackluster, “semmitmondó” way), but does not tell us a damn thing about HOW the noble objective of preserving our open societies in their pristine, pre-Islamic terror form may actually… Read more »
csermanek
Guest
You always remain on the first, superficial level. Orban, as any good politician should, operates on the meta level. That’s where the war is conducted. Even if this plan is insane from a budgetary and economic points of view, even if not many people will be eligible or will actually take up the opportunity the plan will move the fantasy of many middle class people. For quite a long time, for weeks. This is importnat because during that time they will not deal with Tóni Rogan’s corrupt dealings or grandma’s hospital care. But more importantly, more importantly that anything else, it strengthens the image that “Orban cares”. Sorgen – as we know from Heidegger – is fundamental. Orban cares about the orderly, middle class people with jobs. Orban demonstrated that he cares about the little joes (cutting energy prices) but just as he did in 2000 when he introduced unsustainable state-subsidized loans to anybody who wanted to purchase real estate (duly phased out in 2002, though the budget still pays the costs) he now shows again that he cares about the middle class. Tell me: when did the Left send the last meta message that it cared about the middle… Read more »
Guest

You are right.

The Hungarian left is effectively dealt out of the political game not only because they have nothing concrete to offer middle class, lower middle class and working class Hungarians, but principally because the critical issue is not substance, but salesmanship and smoke and mirrors hucksterism, on both counts of which they are not even in the game, thus doomed to miserable failure.

Guest

You’re painting a bleak picture, but I have to agree. O probably learned this from the US repugs via his advisors.
It’ s not much of a consolation though to see that many (most?) Hungarians are as brain-dead as the creationists and NRA members in the obesity belt (formerly known as the Bible belt …).
Is there no hope?

petofi
Guest

@wolfi7777

re: “O probably learned this from the US repugs via his advisors.”

Not so. Orban is an auto-didact in the ways of totalitarianism and exploitation.

The so-called ‘advisors’ are future fall-guys…

spectator
Guest

“Is there no hope?”

Depends on just whom do you asking.

You see, the average Hungarian — about 98% or so — fervently hoping just them will be able to make ends meet a little better next year, and even if they don’t directly supporting the Orbanian way of thinking/living, they will certainly won’t do anything against.
Because if they will, they’ll possibly lose even their present status for the worse. To quite a number of people it would mean homelessness and starvation, since many just barely hanging on. Hope the only commodity what they may possess…

To the people with independent minds and civilised, — say European — values, who still remember the meaning of words like “truth”, “honour”, or even “shame” isn’t much hope what I can see.
Within the borders only if you financially independent, existentially indestructible and live far outside of the system, maybe. Particularly if you can stomach the present moral standards and the ideological mess dominating the country.

That’s it. Sorry to disappoint you, I really am!

Guest

Can’t say I’m surprised on the splurge of forints, forints and more forints to keep the home fires of ‘family’ life stirring in Hungary in the service of the state. This looks like the ‘csirke in the pot’ from the all-benevolent state government…with all its strings attached. Bad ones too as shown by possible repercussions. We’ve had our deleterious share of a government making bad decisions at times affecting the financial reality of millions.

Orban looks to be coming off as a supreme ‘giver of gifts’. For autocrats , Christmas runs 24/7 and 365. It is always in style to have the minions feed at the trough. How else to get allegiance?

Member

To my best knowledge in Hungary it was and remains a 30+-year commitment to raise children with higher education. If you don’t want to slave your own offspring financially you’d better buy him/ her an apartment to start his own life.
The underlying cause is that housing was never included into the salaries (btw, health care, retirement, etc. open wide grounds for manipulating would-be “citizens” also not included). Obviously, this grant is more of a reminder of communist past than a market solution. A pseudo-solution to be more precise, ruling party stile.

Homo Hungaricus never seems to sit straight on the horseback. I have a feeling that we are riding a direction opposite where the horse is heading. Do they just try to satisfy the guy with the nasty “national” mustache? Who has a personal secretary moved in from Sylvania-in-Trans and who is a “man-behind” figure for many free ride issues and scandals for the borderless Hungaricus?

Guest

What is the buck per baby rate going to be in this scheme? Are there cheaper ways to repopulate Hungary?

Laci
Guest

This is not about repopulation.

This is about votes and the construction business (now firmly in the hands of Orban’s Srohmen).

Yegor
Guest
Never in history have financial incentives produced more babies. This project will fail too in that regard. However, when the project will be phased out, and once it will be because it’s clearly unsustainable, there will be a marked decrease in the number of new babies. (There exists a clear negative correlation in this respect.) There is also the rule of diminishing returns. There are actually more babies born in Slovakia, Romania, Czech Republic with way less financial incentives. But Hungarians have gotten used to the lavish system and now they implicitly demand more and more just to have as many kids. This project will not significantly increase the number of babies – those who anyway planned a third child may or may not take part, but there will be no net gain. The project is great from a political point of view, though. It’s actually a stroke of a genius. I can report that the middle class – regardless of the political orientation – is busy running the numbers, and even if they won’t participate it’s a great fun to imagine that they could get “10m for free”. And if not too many people will participate then Orban will… Read more »
spectator
Guest

“Are there cheaper ways to repopulate Hungary?”

Yes!
Confiscate and destroy every single condom and severely punish everyone who practicing ‘coitus interruptus’…
Not to mention the new possibility to sell any kind of contraceptive only in shops with the word “National” in it and has the “18” sign, with 5.000% profit rate.

Because of “the interest of the Nation”, you see.

Guest

After the devastations by the Turks, Hungary was repopulated by farmers from Germany. This can be done again. Confiscate all land belonging to absentee landlords and invite Western farmers to settle on it for free. They will bring capital, knowhow and children along.

Guest

Today we discussed this proposal (which probably hasn’t seen its final version yet …) with several of our neighbours (their young ones might be interested) but the confusion was palpable – probably only a select few will fulfil the criteria in the end and we all know what that means …

Fig
Guest

wolfi:

it doesn’t matter. People are happy that the government throws around millions for” worthy causes”, while the leftists only implemented restrictions (that’s their image, ruthless cost cutters in the name of rationality).

Even if these people don’t end up participating, it’s great fun to imagine you could have it.

It’s like reading Vogue magazine, you won’t buy the 6,000 euro Prada shirt but it’s great to fantasize about it.

Orban provides a fantasy (and easy to grasp narrative) to people. What’s the Left’s competing fantasy?

More immigrants and more gay rights? Well, guess who’s winning? The left doesn’t understand how people think. People are not rational automatons but fallible humans who like to daydream and hope and fantasize.

Guest

Are you telling us that Hungarians (or at least a large part of them …) are so stupid that they can’t see through this?
Just like the Tobacco shop story of many others?

If they really believe that crap – then petofi here is right, they earn what they’re getting …
And maybe then Hungary should really leave the EU – good riddance!
PS:
As I’ve written before, I as a foreigner living in Hungary would probably profit from this even – Hungarians would be even more eager to service me – my €s would be even more valuable …

Ypsilon
Guest

This is not a question of seeing through, although I think most people have zero clue about the long-term financial consequences of such plans. Most people feel entitled to any state handout. It’s human psychology. People are not that rational, they may know or suspect something on a rational level but also feel something (the opposite) on a non-conscious level, which may then be the deciding factor. Look, if the state offers you millions, do you philsophize whether that’s a plot to purchase your votes or take the money feel finally a winner first time in your life?

spectator
Guest

It would be truly enlightening to know, or at least have some ‘educated’ estimation of the families who qualify, and happens to belong the ethnic minority at the same time!

In my opinion this is a clearly discriminatory measure, I even dare say, pretty much the first step toward a kind of “passive” ethnic regulation, put it mildly.

Paul
Guest

Aside from all the above, the most significant criticism of this scheme is surely that it won’t work.

I am no demographics expert, but, given the low birth-rate in Hungary and the vast numbers emigrating, I suspect that you would need a hell of a lot more couples having three children to make any sort of impact on population ‘growth’ than this scheme could ever produce.

And, even if it did produce an increase in children, what will happen to them? After experiencing the wonderful Hungarian education system, the limited chances of going to university, the exciting job opportunities on offer, and the overall attractiveness of living in a post-Orbán Hungary, most of them will jump on the next plane to Germany, the UK or the US.

Schemes like this can actually work. The obvious example being France – the only European country currently bucking the decreasing population trend (without having to rely on immigrants). But the big difference is that people actually want to live in France.

tappanch
Guest

A Polish journalist describes how he was beaten by Hungarian police at Roszke-Horgos on September 16. The Hungarian police has closed the investigation without filing charges against its own ranks.

“Suddenly some of you used batons against journalists.”
” I was bleeding and shocked. ”

“one of your officers said I was detained in Hungary but not in Europe”
This speaks volumes !

http://jacektacik.pl/hungarian-police-nothing-happened-really/

Guest

Do they really believe in this:
Hundreds of thousands of families can take advantage of subsidies of up to HUF 10 million for purchasing a new home, Katalin Novák, the state secretary for family and youth in the Ministry of Human Capacities, said at a press conference yesterday.
http://bbj.hu/economy/official-housing-grants-for-families-with-kids-can-help-many_109286
If I understand this correctly, you also get help buying an existing house (apartment?), less of course:
The program also gives families who buy a previously built home the opportunity to apply for subsidies, ranging from HUF 550,000 for those with one child up to to HUF 2.75 mln for families with four children, according to MTI.

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