Fri | Oct 20, 2017

Is NHT a trust or financial agency? - Shaw explains Holness comments, defends 'raid'

Published:Tuesday | March 14, 2017 | 12:00 AMJovan Johnson
Holness
Dr Paul Ashley
Howard Mitchell
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Amid confusion triggered by Prime Minister Andrew Holness over the purpose of the National Housing Trust (NHT), Minister of Finance and the Public Service Audley Shaw is insisting that the administration's $11.4-billion draw-down from the agency to fund income tax relief is not "a raid".

Interestingly, in 2013 when the then People's National Party Government started the current phase of withdrawals from the trust, Shaw had said, "I am surprised at the International Monetary Fund (IMF) that they are supporting this kind of scandalous raid on a trust fund."

Speaking yesterday, Shaw argued that when he made the statement, his Jamaica Labour Party was not considering the income tax relief promise that has now cost more than $30 billion to implement over two years.

"Having conceived the idea, and having given birth to it, we had to make the conscious decision that we couldn't do everything one time - we couldn't cease to take the draw-down from the NHT this year, [but] it is firmly our intention to phase that out," the minister stated.

He said it would have been "fiscally irresponsible" to end the NHT draw-down and "virtually double" the $13.5-billion tax package.

Questioned on the need for politicians to exercise responsibility in their utterances while in opposition, Shaw appeared dismissive.

"It's a nice intellectual point. But the context that I'm making is that we have in the process made significant game-changing decisions that are changing the lives of Jamaicans in a positive way. My mother used to have a saying [that] circumstances alter cases," he said.

 

NHT HAS BECOME AN ATM

 

Meanwhile, Holness has left some public commentators confused over his statements on Friday in Westmoreland that "the NHT is not a housing agency ... the NHT is a financial institution," adding that the agency be run as a financial institution "bearing in mind the provision of affordable housing".

Explaining yesterday, Shaw said Holness "was speaking broadly about the NHT ... . The Housing Trust commands vast resources and therefore the company has to be rescoped along maybe more traditional prudential lines."

Political commentator, Dr Paul Ashley, has argued that Holness might be correct in saying that the NHT is a financial institution, adding that it justifies governments' use of the NHT's funds for budgetary support.

"To say that it is a financial institution does not answer the real question, 'is it a trust'? because a trust has limitations on the use of its trust funds and for whom it shall benefit. But maybe he's correct because, over the years, it seems it has been used as an ATM," said Ashley.

Howard Mitchell, a former NHT chairman, said Holness needs to clarify his remarks, as they may cause confusion.

"If the NHT is a financial institution, it opens up a whole range of issues which I am sure he didn't want to take the lid off," said Mitchell.

A court in 2016 said the NHT was never intended to operate as a private scheme, in dismissing a legal challenge against the 2013 withdrawal.

In the meantime, the finance minister said the Government will do "a careful forensic study" of the almost $200 billion in surpluses that public bodies have "sitting in bank accounts" to determine how to use the money in central government operations.

The NHT, according to its website, was established in 1976 "with the mission of increasing and enhancing the stock of available housing in Jamaica".

It is projected to have about $249 billion in liabilities and accumulated funds by the end of this fiscal year, according to finance ministry documents. That includes $134 billion in surplus on income and expenditure.

jovan.johnson@gleanerjm.com