Former Prime Minister Bruce Golding yesterday rubbished the Government's claim that the $44-billion it intends to take out of the National Housing Trust (NHT) will not affect the agency's ability to provide houses and mortgages for its contributors.
At the same time, Golding acknowledged that the Administration is faced with a difficult choice on how to slash the country's trillion-dollar debt, and gave a prescription as to how the Cabinet could have better handled the drawdown.
"The Government insists that the extraction of these funds will not affect the NHT's ability to provide houses and mortgages to its named and uniquely numbered contributors. That is nonsense!" Golding said in an article released yesterday.
"The $44-billion that is to be paid over to the Government is money that would otherwise be available to provide houses and mortgages to its named and uniquely numbered contributors.
"At an average cost of $4 million per housing solution, it means that 11,000 families that could have received benefits over the next four years will not now do so. The thousands of jobs that the provision of these housing solutions would have created will not now be created," he said.
Noting that the NHT represents an attractive store of cash because it receives $21 billion in annual contributions and earns an additional $10 billion from investments, including mortgage collections, Golding said that "a Government faced with a fiscal crisis will inevitably look to this cache of funds to bail itself out".
However, he made a number of suggestions as to how the State could have acquired the money from the NHT "without violating the fundamental moral obligations the Government has toward the NHT".
Among the suggestions was for the Government to utilise the method used to allow the NHT to fund the building of new barracks for the Jamaica Defence Force (JDF).
Under that arrangement, which was finalised last December, the NHT will purchase Government lands held by the commissioner of lands for $1.69 billion. These lands will be used for future NHT housing development.
The money will be transferred to the JDF for the project, which consists of barracks and dormitories to accommodate 1,400 soldiers, accommodations for 140 senior enlisted officers and 70 officers, storage areas, lecture rooms, and offices.
"It is a template that could have been used to find a more appropriate solution to the current fiscal crisis," Golding said.
Finance Minister Dr Peter Phillips's announcement two weeks ago that the Government would be withdrawing $11 billion annually for the next four years from the NHT to plug a fiscal shortfall has generated heated debate.
Opponents of the move have said that the Government has no right to take the money, and one citizens' group has taken the Administration to court as it insists the Government is breaking the law.
However, the Government has insisted that it had no other option, as taxpayers could not be hit with a heftier tax package than the $16-billion one announced earlier this month by Phillips.
The NHT drawdown forms part of the measures the Government has taken to meet the International Monetary Fund's (IMF's) insistence that Jamaica complete a series of measures before its application for an extended fund facility could go to the IMF board for its stamp of approval.
Last Sunday, Phillips said that the Government was willing to change the law in the Parliament in order to ensure that the funds can be drawn from the NHT.
But yesterday, Golding said that the extraction of funds from the NHT must also be seen in the context not only of the NHT Act, on which the courts are now being asked to pronounce, but also of the moral obligations implicit in the management of NHT funds.
"The NHT, as its name asserts, is a trust fund. Every cent of contributions that flows into the Trust is made by or on behalf of a person with a name and a unique number. Its purpose is to offer housing benefits for those named and uniquely numbered persons," Golding said.
"The Government's role, exercised through the board of directors it appoints, is to manage those funds in an efficient way to ensure the maximum benefits to those named and uniquely numbered persons."
He said he disagreed with the view advanced by some people that the income earned from investments made by the NHT constitutes a surplus that the Trust is free to disburse as it chooses.
"It is no different from income earned from investments made by a company that properly belong to its shareholders and is not a 'surplus' to be dispensed by its managers at will," Golding said.
Pointing out that this was not the first time that a government has raided the NHT to fund State projects, Golding said, "it is grossly unfair to the named and uniquely numbered NHT contributors, who see these NHT deductions recorded on their pay slips every week, fortnight or month, but who, despite repeated applications, have never been able to secure a benefit from the NHT. Many are told that they don't qualify. How then does the Government qualify?"
(Read Golding’s article in full here: That $44 billion NHT 'contribution')