Thu | Dec 13, 2018

1% growth not good enough

Published:Monday | November 24, 2014 | 12:00 AM

Amid indications that the Budget, which was passed in May, is no longer credible, Dr Peter Phillips, the country's finance minister, will tomorrow table the First Supplementary Estimates for the fiscal year in the House.

The updated Budget is being tabled against the backdrop of a $5.9-billion shortfall in revenue at the end of August, and a warning from Financial Secretary Devon Rowe that expenditure will have to be cut by roughly $7 billion if Jamaica is to meet the primary balance target.

Phillips' challenge will not be so much about the tabling of the new Budget and getting it passed, but rather to convince colleague legislators that he knows what is required to get more than one per cent growth in the economy.

Jamaica's medium-term economic programme, which is supported by the International Monetary Fund, is aimed at reducing the country's debt, which has been a millstone around the necks of the people. While debt reduction is a most important strategy, it is critically important that the major growth projects move from stratospheric in concept to actuality. The logistics hub, for example, must start taking shape. Similarly, Harmony Cove, which is growing a beard as a concept, must be accelerated towards delivery.

The fact is that while the economy has recovered from a five per cent contraction over the past few years, one per cent growth will take us nowhere fast.

It is time to build on the successes of the agro parks and the business-enabling legislation that are being passed. While it is a truism that growth will not come overnight from such fundamental reforms, the lot of the people will have to be improved within short order or the implications could be dire.

The surest way to improve the lives of the people is for disposable income to increase. According to a document prepared for Parliament's Public Admin-istration and Appropriations Committee (PAAC) by the National Housing Trust, adjust-ments to salaries over the period April 2009 to March 2014 have been minimal, while inflation has eaten away nearly half of their value since 2009. So while it appears that it may be raining, the ground is tough, the people are thirsty.

We hope Phillips bears that in mind when he seeks to debate the adjusted Budget on December 9.


On another note, this time having to do with housing, one hopes that an enterprising member of parliament (MP) will find it necessary to review the report presented to the committee and seek to lead a debate in the House of Representatives on how the Trust may be of even greater value to its contributors.

North West Manchester MP Mikael Phillips and North East St Elizabeth Member Raymond Pryce have paid close attention to matters in the PAAC and should consider moving the necessary private member's motion in the House.

Based on information presented to the PAAC, an estimated 17,339 scheme and service-lot solutions were effectively demanded over a five-year period from April 2009 to March 2014.

When the information is disaggregated by parish, Trelawny has the lowest effective demand with 49, followed by St Thomas with 137, St Elizabeth with 429, Manchester with 459, Portland with 610, and St Mary with 671, completing the low scale.

Interestingly, the NHT has written 4,753 loans, or 27 per cent of the effective demand, for 17,339 solutions.

When the NHT appeared before the committee last week, a lot of attention was focused on the fact that the NHT has 444,000 contributors and only 101,000 mortgagors. Members, in looking at that issue, lost sight of the fact that it did not provide a single loan in Portland, where 610 solutions were demanded; there was not a single loan in Hanover, which demanded 2,086 solutions; only 17 loans in St James, where 2,798 solutions were demanded; and 175 loans in Westmoreland, which had a real demand for 1,446 housing solutions.

While the issue was not pursued by the committee, it would be good if the NHT, since it has committed to sending information to the PAAC on its new housing forecast, also indicates the strategies being undertaken to put the number of loans written in line with the effective demand.

The NHT has collected $8 billion up to July in contributions, which is just over $1 billion more than the $6.9 billion which was budgeted. Yet, the Trust has underspent its housing budget by $1.4 billion.

Some 30,088 mortgages are in arrears to the tune of $1.4 billion. The greatest culprits are persons earning $10,000 to $20,000 weekly. As at September, $693 million of the loans were categorised as bad debt.

The Gavel has no doubt that these persons want to pay their loans but are unable to do so. It is for this reason we should resist the argument that the Trust should just go and build houses for all its contributors who desire a house. This would be bad business. A pointed debate in the House could help to further distil these issues and, just maybe, assist the Trust in being more responsive to its contributors.


And by the way, it took a big man to make the kind of apology that A.J. Nicholson delivered in the Senate on Friday. The apology was full of sincerity and was unconditional and unqualified. It goes to show that despite his indiscretion with the "flexi rape" joke and many other unfortunate utterances, Nicholson is, at the core, a human, and at the end of the day, none of us are perfect. For we have all sinned and fallen short of the Glory of God.

The Gavel is particularly heartened by his statement that the Senate "deserved better, has received better from me and will witness no such repetition by me".

Carry on, Senator Nicholson. You are too talented to be on the sidelines; there are lots of runs to be scored. Just please, don't give your wicket away.