EDITORIAL - Put government real estate under central management

Published: Wednesday | December 12, 2012 Comments 0

We feel compelled to return to an issue on which we focused Monday - the more than J$1.2 billion a year the Jamaican Government spends on rent annually, while much state-owned property goes to ruin.

The old Jamintel building, at the corner of North and Duke streets in Kingston, is a prime example of such waste. Eight years ago, the Government's National Housing Trust bought the multi-storey building from Cable & Wireless Jamaica. It was to have become the new headquarters of the Jamaica Constabulary Force, plans which were scuttled.

Two years ago, it was announced that the Urban Development Corporation (UDC), a government agency that owns tens of thousands of square feet of unoccupied property in the capital and elsewhere in Jamaica, had swapped the building for land. That deal is yet to be completed. In the meantime, more than J$30 million has been spent to secure the empty building as it grows increasingly decrepit.

This example, and others cited in our previous comment, are symptomatic of something far deeper than the waste of public resources: the failure, or more likely the absence of, management systems in the Government.

JUST SCRATCHING SURFACE

While this newspaper, as well as Bruce Golding, the former prime minister, was able to piece together bits and pieces about empty UDC and other empty government-owned properties, we don't believe the real extent of the empty or underutilised real estate was captured. Nor, for that matter, the extent of rent bill.

The problem is that there is no proper inventory of the real estate owned by the Government or analyses of their use or potential use.

Nor has the Government undertaken a robust review of the properties it rents, the cost and the potential savings if there were consolidations, or if properties were refurbished and agencies and departments transferred to them. Further, it is far easier for a department or agency to get money from the finance ministry for rent, calculated as a recurrent expense, rather than for refurbishment, which falls under capital expenditure.

Nor has there been an economic cost-benefit analysis on the potential impact on inner-city renewal, if the core of Government was forced to relocate to downtown Kingston, from which there has been an exodus over the last 40 years.

These things must now happen.

CENTRAL MANAGEMENT

Further, we propose that all government buildings be centrally owned and/or managed, based on market principles. Additionally, departments and agencies should be charged market rental rates for those state buildings that they do not own, thus allowing for an economic return on the properties and a surplus that can be invested in their upkeep.

Our other point is part of our broader proposal for a shift in the management of the Government's accounts from cash to an accrual basis.

The current system, which allows the booking of obligations/expenditures only when the cash is paid, provides crevasses where much can be hidden: in this case, overdue rental expenses. Rent should be accounted for when it is due.

Hopefully, the so-called 'fiscal accountability framework' and the provisions of the new public debt-management bill, about which the finance minister, Peter Phillips, shouts a lot, will prove catalysts towards this added element of public accountability.

The opinions on this page, except for the above, do not necessarily reflect the views of The Gleaner. To respond to a Gleaner editorial, email us: editor@gleanerjm.com or fax: 922-6223. Responses should be no longer than 400 words. Not all responses will be published.

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