The Government's approach to extracting $45.6 billion from the National Housing Trust (NHT) betrays an attitude to governance that has contributed much to the creation and continuation of the very development challenges the Administration now desperately seeks to address.
All things considered, the NHT is perhaps the best source of the funds needed to plug the big hole in our public finances and meet one of the prior conditions for getting an absolutely necessary agreement with the International Monetary Fund (IMF).
It appears that the Portia Simpson Miller Administration did not clearly think through the legal, governance and public communication implications of relying on governmental authority to get the money from the Trust. The approach seems to have been: We are the Government; we have all the facts; we know that getting the money from any other source would impose unbearable hardships; so we must act.
Indeed, when asked to respond to criticisms about the measure, the prime minister said the government simply "have to do what we have to do". There's no choice but to take the money from the only place that is currently cash-rich.
I have no difficulty with the Government seeking cash support from the NHT. But I have a problem with taking the money on questionable legal grounds.
Also, suggesting that giving up $11.4 billion a year for four years will not affect the ability of the Trust to offer housing solutions to its contributors makes no sense; and getting into a war of words with critics rather than seeking to engage them in the search for solutions is poor strategy, given that the problems facing the country require a truly national effort to solve.
Taking the money from the NHT helps the Government achieve certain fiscal targets that Finance Minister Dr Peter Phillips says the Government must do as prior action needed to secure an agreement with the IMF to stabilise the economy.
The announcement ignited a raging controversy over the legality of Government using NHT funds for budgetary support, with one group, Citizens Action for Principle and Integrity (CAPI), initiating legal proceedings to halt the plan.
I am on the side of those who insist that all monies in the NHT belong to the contributors. When Government or a private employer makes a contribution it is done in the name of a specific employee. I also question the notion of a 'surplus' that can be used in any way other than to help contributors with home-ownership.
Early consensus around the Trust
I recall the debates and discussions about establishing the Trust in 1976 when I worked at Jamaica House as press secretary to Michael Manley, who was prime minister at the time.
The Opposition was worried that a housing institution controlling such a large pool of funds could be used to build and allocate housing along political lines, a practice that has cemented garrison politics to the detriment of both our democracy and development.
Working with Hugh Shearer, the former prime minister and JLP leader, Manley was able to secure co-operation of all nine major trade unions at the time, including the BITU, an affiliate of the (then) Opposition Jamaica Labour Party. Within the context of an economic stabilisation programme being developed to respond to the economic crisis of the period, the unions bought into the idea of the Trust as something that would be beneficial to workers facing wage and other restraints.
But to get their support, the unions insisted that the trust funds be insulated from Government's general revenues in the Consolidated Fund; its governance structure and houses should not be allocated along party lines; that Manley should assume ministerial responsibility for the Trust becauuse they did not want it to fall under Housing Minister Anthony Spaulding, MP for South St Andrew.
The system has worked fairly well, although two PNP governments have taken NHT funds on two occasions: PJ Patterson drew down $5 billion for Education Transformation, and Prime Minister Simpson Miller took a drawdown for an Inner-City Housing Project that provided houses for poor people who were not contributors.
The protest, this time, has been louder and more sustained. I believe that the increasing demand for accountability may, in part at least, explain the current mood.
Responding to a legal challenge which has the potential to stall the IMF agreement and worsen an already fragile economic situation, Dr Phillips tabled a bill in Parliament last Tuesday to amend the NHT Act to remove the legal shroud hanging over the plan.
Despite the plan to amend the Act, CAPI seemed to be pressing with the challenge. In a strongly worded statement released last week, CAPI charged that amending the NHT Act to give the finance minister "unfettered powers to exploit the contributions of hard-working Jamaicans" would result in the "erosion and plundering of the NHT resources". Hardly the language of compromise.
I assume that the legal remedy proposed by the Government will clear the way for the drawdown; but it still raises some troubling questions, including the danger of retroactive legislation after the fact. It also risks undermining confidence.
More than a legal remedy, I am more persuaded by a cash-for-asset approach making the rounds last week by several persons, including former Prime Minister Bruce Golding. Indeed, it is under consideration by the Government, according to Senator Sandrea Falconer, minister of information.
The idea is that Government would provide land or other physical assets to the NHT in return for the cash. This would be a win-win, as NHT would preserve its balance sheet and the Government would get the needed cash. The Government has more than enough land all over Jamaica to make it work.
And there is a precedent for the concept. When the Trust started operations, it had no completed houses to allocate to beneficiaries. It needed to fix this quickly to establish its credibility early as a source of housing on terms not available from the private mortgage market. The Government had houses at various stages of completion and was in a cash crunch like the current one.
What emerged was what Manley in his Budget speech of March 24, 1977 called "a marriage of convenience between the Government and the Trust... It was to the advantage of the Trust to acquire Government units which were either completed or under construction. For its part, the Government was strapped for cash because of the general pressure of the economic crisis and was glad to be able to sell some units to the Trust." It was a commercial transaction of asset for cash.
It worked then, it can work again, and it does not require any legislative amendment. The Government could use its energy to challenge the people to work our way out of the crisis rather than quarrelling with them.