Editorial | The pragmatism of government
Andrew Holness is right. The weight of government imposes pragmatism.
That is why he finds no opposition from this newspaper for his administration's decision to tap the National Housing Trust (NHT), over three more fiscal years, for up to J$34.2 billion to help finance the national Budget. Further, we commend the Government for deciding now to be bold and transparent, rather than resort to the circumlocution and hedging that characterised its first two nips at the Trust.
If, in the end, Mr Holness' Government takes from the NHT the money allowed it by the bill approved by the House last week for the period of the 2017-18 through to the 2020-21 fiscal years, and it stays in office until then, it will have extracted J$57 billion from the NHT.
There are two additional lessons in this matter for Mr Holness and his Jamaica Labour Party (JLP), and for politicians in general
One is the flip side of that to which Mr Holness alluded in Parliament, and to which he claimed to have adhered on that side of the aisle: opposition parties, too, owe responsibility and pragmatism. Second, policy options should be given deep and clear thought to prevent a scramble if and when they have to be implemented.
We commend this thought to the People's National Party (PNP), which is now the Opposition.
The NHT is a strong, cash-rich mortgage and shelter agency. It is funded by a tax on employers of three per cent of their wage bill. Employees contribute two per cent of their incomes in low-interest loans, which they can start to recoup seven years in arrears of each year's contribution. The NHT has assets heading towards $300 billion. It invests more than $20 billion a year in shelter-related projects.
In 2013, with Jamaica at the fiscal precipice that forced it into an accommodation with the International Monetary Fund, requiring the Government to achieve a primary balance of 7.5 per cent of GDP, the PNP decided to go into the NHT's vault for J$45.6 billion over a four-year period. Mr Holness' party decried the move as a 'raid' on the Trust and threatened to take the matter to court - which others did. Unsuccessfully!
When the JLP came to office in 2016 with little time to a fashion a Budget, they maintained the NHT option, then followed that in the current 2017-18 Budget - without being too loud about it. Now the administration has said this will continue for another three fiscal years. The amounts of the extraction, however, could be less, depending of the performance of tax revenue.
INTEREST OF THE COUNTRY
Mr Holness has argued that his party, when in Opposition, didn't "mindlessly" oppose the use of the NHT's money. For, in the end, it took into account the interest of the country. "The same conditions that necessitated that move when ... [the PNP] were in government are the same conditions that exist [today]," he said.
But there is something else.
The JLP's decision to move the income tax threshold to J$1.5 million, the cost of which it severely undercounted while in Government, represents a bill for J$16 billion a year. The Government has now pivoted this to a broader tax reform, to place greater emphasis on indirect taxes. We look forward to the outcome of deeper studies from the Planning Institute of Jamaica on the long-term efficacy of this move in the peculiar context of Jamaica.
In the meantime, the PNP should know that it will be held accountable for its postures in Opposition and, if it comes to office, reminded of any mindless declarations or policy faux pas.