The National Housing Trust (NHT) has been widely recognised as a well-run organisation that has enabled thousands of persons, including many who would not otherwise have been able to do so, to own a decent home. Of course, the NHT is in a privileged position because it benefits from mandatory payroll contributions from both employees and employers that currently amount to some $21 billion annually.
Since its inception, the NHT has provided mortgage assistance to approximately 150,000 beneficiaries. As impressive as that figure might seem, it has to be viewed in relation to the chronic need for housing among its contributors and the entitlement that their payroll contributions create.
There are currently just under 400,000 contributors to the NHT. One can safely assume that another 200,000 persons would have contributed since the start of the NHT 37 years ago but are no longer doing so because of retirement, death, etc. It means, therefore, that since its inception, the NHT has benefitted no more than 25-30 per cent of those who have contributed to the Trust.
It is useful to remind ourselves that when the NHT was established in 1976, it was estimated that Jamaica needed to build 22,000 houses annually to meet the demand for shelter, as well as replace obsolete and sub-standard dwellings. Despite its achievements, therefore, the mandate of the NHT remains significantly unfulfilled.
A statistic that has never been published but which would provide a graphic illustration is the percentage of persons applying for NHT benefits who were unsuccessful in their application.
Another interesting statistic is how many of those applications are rejected because the applicants do not have sufficient income to meet the mortgage payments for even the lowest-cost benefit. This raises a moral question: Why should I be forced to contribute to a pool of funds if I do not qualify to benefit from that pool of funds?
It is because of these startling realities that the NHT cannot be regarded as a cash cow, being milked for other purposes than to benefit the many legitimate, malnourished calves that deserve and demand to be fed. Talk of a "surplus" may be technically accurate in strict accounting terms, but cannot be regarded as such when there is a huge surplus of NHT contributors whose need for housing assistance remains unfulfilled.
What we should concern ourselves with is not just how to extract this "surplus" but how to find creative ways to utilise it to provide assistance to those thousands of contributors who are frustrated and angry because, for them, the NHT is like a 'pardner' in which their turn to get a draw never comes!
It is acknowledged that the Government is in a crisis. Indeed, the country is in a crisis. A crisis requires a crisis response. However, we must be careful not to lay the foundations for another crisis or to aggravate a crisis that already exists.
The NHT spent a total of $21.2 billion in providing housing benefits to 7,165 persons in 2011, according to its most recent annual report. The $45-billion that the Government intends to take from the Trust is equivalent to two years of housing solutions... tantamount to virtually shutting down the NHT for two years! That means preventing over 14,000 contributors from receiving benefits that they so badly need.
The NHT may be the only recourse the Government has if it is to satisfy the pre-conditions for an IMF agreement. But a better way can be found... must be found!
The suggestion has been made for the Government to transfer assets to the NHT in exchange for this money. The Government says this approach is being looked at. I urge the Government to do more than look at it. What this suggestion would mean is that the asset value of the Trust would not be impaired even though its cash flow would be disrupted. Those 14,000 plus potential beneficiaries might not benefit right away, but their opportunity to secure those benefits would not be lost for all times.
It would also open up significant opportunities for both the Trust and its contributors. If government lands are transferred to the Trust, it could invite private developers to submit proposals for the development of these lands with the value of the lands being returned to the Trust in the form of completed units that would then be available for allocation to its contributors.
Some of the lands that could be so transferred are likely to be in rural areas. In these areas, there are agricultural workers employed on estates and large farms who contribute to the NHT but have never benefitted. The NHT could usefully introduce a new programme to provide farmsteads to these contributors — 2-, 3-, 4-, or 5-acre plots — with assistance to erect a house on those farmsteads. West Portland, I know, could benefit from such an innovation.
When the Government first extracted funds from the NHT — $5 billion in 2005 to fund the Education Transformation Programme — it was solemnly declared that it would be a one-off transaction. It wasn't long after that that the NHT was again raided to finance the Inner-City Housing Project. Now, it is again being raided to fund something called "Fiscal Consolidation".
What started out as a one-off business is now becoming a habit. Habits tend to become addictive. The purpose for which the NHT was established, the "trust" proclaimed in its very title, is now under threat.
The current attorney general's advice to his Government is now being viewed in some quarters as flawed, maybe a deliberate act for political expediency or a genuine lack of knowledge of non-criminal law. Whichever it is, it raises the issue of the separation of the attorney general from the political executive.
Notwithstanding that the Government may see no alternative but to secure funds from the NHT, we can avert this threat. We can, we should, and we must!
It is ironic that the late Prime Minister Michael Manley in addressing Parliament on the setting up of the NHT in 1976 said the following, and as the leader of the opposition did in Parliament last Tuesday, I will quote excerpts of Mr Manley's remarks verbatim from Hansard:
"It is proposed to establish as of 1st January, 1976, a National Housing Trust which will be required to receive and disburse funds from compulsory contributions to be made by both employers and employees. The Trust will operate primarily as a financial institution for the housing sector. Its role will be to supplement the existing public and private institutions in the field and not to replace them, supplement them.
"The collection of this — of course that will grow as the years pass — the collection of this fund will be made by the existing NIS machinery, but the Trust Fund will be completely independent of the NIS and Consolidated Fund and will be managed by a special board comprising representatives of Government, employers, trade unions and other members of the public. However, as this Trust will be primarily responsive to the housing needs of the low and middle-income earners, the Government has decided — please hear, all of Jamaica — the governing council of the Fund will have a majority of worker/representatives on that governing council.
"The Trust will pay out of the profits of its operations a return in the form of interest to each contributor and this interest will be free of tax. So that each person — it is not like NIS — as each person contributes, he is actually getting interest."
I sat in Parliament during the debate last Tuesday and witnessed the divide vote: 37 - Yes; 18 - No; 1 - Abstention and could not help but thinking how Prime Minister Manley may have voted — A BIG NO!
While the Bill has passed we anxiously await the outcome of the pending legal challenges which are now an urgent necessity for the Courts to make a final determination on whose side the law sits.
— Daryl Vaz is the Opposition member of parliament for West Portland