Editorial | Phillips’ NHT idea good policy debate
Peter Phillips in his Budget Debate intervention last week came close to a full embrace of an idea championed by this newspaper for using National Housing Trust (NHT) money to finance urban renewal, except that the opposition leader's focus was on so-called squatter settlements, where upwards of 700,000 people, or around a quarter of Jamaica's population, is estimated to live.
There is, however, need not only for Dr Phillips to expand on his idea, but for a debate on whether the mechanism he hopes to use to tap the NHT for the cash can be legally employed.
On a fundamental issue, there is clearly common ground: that notwithstanding its large, and expanding, upscale housing stock, Jamaica faces a shelter crisis that is in need of urgent attention. While the problem is more expansive in the Kingston Metropolitan Region (KMR), in urban communities across the island, blight and decay are deep and endemic.
Often, families are cramped in squalid tenements, exacerbated by a continuing drift from rural communities to the cities and towns by people seeking employment and other opportunities. The upshot, generally, is that as shanties develop next-door once stable, middle-class communities, those residents move out, usually to greenfield developments.
Given Jamaica's economic circumstances, money is a limiting factor for an assault on this problem.
We have felt, however, that the constraint need not be great with the creative use of the resources of the NHT, an agency established to expand shelter for Jamaicans and funded by contributions from workers and their employers, against whom are levied a three per cent payroll tax. Workers are essentially required to make a loan of two per cent of their income to the Trust, with each year's payment redeemable after seven years.
The NHT, with assets of more than J$220 billion, collects nearly J$25 billion a year in contributions, and in recent years has spent around J$20 billion a year to provide below-market-rate mortgages and to help finance real estate developments.
In 2015, the last year for which its audited financial statements are publicly available, the Trust's liabilities included J$80 billion in refundable contributions, half of which were due within five years and 29 per cent beyond that period. That year, the NHT repaid 140,000 people J$5.3 billion.
We have suggested that, perhaps for a decade, the NHT should radically scale back on the financing of new schemes and mortgages to such projects, to concentrate on brownfield projects, starting in the KMR and nearby St Catherine, where many of the blighted communities already have more-than-basic infrastructure - including roads, water and, in some instances, sewerage - and many of the houses are basically sound. Where necessary, including cases of squatting and when registered owners cannot be located, the forced acquisition of homes by the NHT should be facilitated by the Government. For existing residents and owners, sweat equity could help offset some of their financial obligations to the Trust for the redevelopment. Moreover, the Brotherhood legislation relating to Port Royal, but effectively administered, could provide a template for some of these projects.
Dr Phillips' not dissimilar proposal is to invest J$10 billion in "uncollected NHT ... refunds to finance an islandwide Squatter Community Transformation Programme". The money would be used to help provide titles, upgrade infrastructure and bring homes up to minimum standards.
Despite Dr Phillips' certainty that refunds that remain uncollected for seven years could be so employed, we are not convinced, the seeming ambiguities of Section 22 of the NHT Act notwithstanding, that there is a limit on when a contributor can collect his/her refunds after the seven-year period. The Trust has historically made these payments on demand, including a full payback, at age 65, to persons who never took refunds or received an NHT benefit. Nonetheless, Dr Phillips has placed on the table for debate a substantial policy issue.