HOUSE FIGHT - Gov’t backed into corner for $57b NHT drawdown
Financial expert Dennis Chung says the Holness administration had no alternative but to tap the coffers of the National Housing Trust (NHT) over the next five years to shore up government spending in the wake of the massive fallout owing to the effects of the COVID-19 pandemic.
Finance and the Public Service Minister Dr Nigel Clarke tabled a bill on Tuesday to amend the NHT Act to allow for the Government to draw down $57 billion from the housing entity over the next five years to cushion the economic impact of the virus.
In tabling the National Housing Trust (Amendment) Act, 2020, Clarke said this was one of three legislative measures designed to place the country on a path to economic recovery in the medium term. The other two are the Independent Fiscal Commission Act, 2020 and the Financial Administration and Audit (Amendment) Act, 2020.
“I don’t see that the finance minister has an alternative,” Chung said in a Gleaner interview.
Chung, a chartered accountant and former CEO of the Private Sector Organisation of Jamaica, argued that the slump in revenues linked to COVID-19 containment measures could affect government services.
He argued that the move to dip into the NHT’s resources again was likely to cut the pace of the Trust’s housing development as there would be less funds available to the entity. The administration has pledged 70,000 housing starts over five years.
However, he argued that “if people are not making money, because of loss of jobs, there would be nobody there to buy the houses anyway, or even if it is sold, it would be sold to a select few who have money.
“It would be better for him to just take the money out and use it to work in the economy and get things going again,” Chung said.
In a statement to Parliament on Tuesday, Clarke sought to assure the country that the policy focus of the administration of increasing the supply of affordable homes would remain unaffected by the multiyear $11.4-billion drawdown from the NHT.
The finance minister said that the biggest challenge in satisfying housing demand in Jamaica was not the annual contribution that the NHT made to the Government.
He said there was a market failure in the affordable-home section of the market, noting that there was an insufficient supply of houses valued at between $7 million and $8 million.
But Opposition Leader Mark Golding, who is also the shadow minister for finance, disagreed with Clarke that extracting $11.4 billion annually from the NHT would not have an impact on the supply of houses to beneficiaries.
“I don’t see how it can be possibly said that taking that level of resources out of the National Housing Trust doesn’t weaken the Trust’s ability to address the supply side issues,” he said.
Golding reminded the ruling JLP administration that it “severely criticised” the then Simpson Miller government in 2013 when it took steps to claw funds from the NHT.
He noted that the former deputy general secretary of the JLP and co-founder of Citizens Action for Principle and Integrity, Dennis Meadows, took the People’s National Party administration to court over the issue and lost.
In 2015, then Opposition Leader Andrew Holness castigated the Government at the time for extracting money from the NHT, stating that the “JLP does not support the use of NHT funds for purposes other than those for which they were intended”.
In a 2015 Facebook post, Holness charged: “The JLP has always stood in the vanguard where stewardship of NHT funds is concerned. We are the ones who have always defended the NHT and protected the interests of contributors, not the least of which are those thousands of Jamaicans who have been making contributions to the NHT and are yet to access a benefit.”
Chung told The Gleaner on Tuesday that pulling money from the NHT would only be a start as the Government would have to target other sources for funding.
He said that the Government had very little option because it could not impose taxes when there is “nothing to tax”.