Cash-rich NHT to the rescue - Legislative changes may be needed to pull billions from the housing agency
R. Anne Shirley, Gleaner Writer
There is growing speculation that the Government will have to amend the law governing the operation of the National Housing Trust (NHT) to ensure that it can pull $11 billion from the entity each year for the next four years.
At least one entity, Citizens Action For Principle and Integrity (CAPI), has indicated that it is going to court to challenge the government's decision and others, including the Opposition Jamaica Labour Party, could follow suit.
"We questioned the legality of it and we are examining it now and we make the public call that the Government should also seek the advice of the solicitor general on this matter," declared Opposition Leader Andrew Holness last week.
"We are of the view that it is illegal, either they change the law or they abandon that course," added Holness.
Legal experts have also suggested that the Government will have to go to Parliament to amend the NHT Act to cover "financial emergency measures in the public interest" to allow for the financial distribution from the NHT to the Consolidated Fund.
But this has been rejected by NHT chairman Easton Douglas.
Speaking on the Nationwide 90FM programme 'This Morning' Douglas argued that as a public body, the NHT can be called on to contribute to the national coffers.
"By virtue of the Public Bodies Management and Accountability Act, the minister of finance has the power to legally require the NHT to make a financial contribution in support of government's fiscal initiative," said Douglas.
"That was one of the legal matters we faced when we were asked to support this initiative," added Douglas.
He said with $174 billion in assets and a surplus of $22 billion in the NHT, fears expressed since last week that the government's drawdown will affect the viability of the Trust are unfounded.
Last week, Finance Minister Dr Peter Phillips announced that the NHT would be required to contribute $11 billion to the Consolidated Fund each year during the life of the four-year Extended Fund Agreement with the IMF.
Phillips argued that the mandate of the Trust will not change, and that the distribution will not impair its viability.
Impact on new housing projects
However, critics say with such a large outflow from the coffers of the Trust this must have an impact on its ability to roll out new housing projects.
According to the critics, when the drawdown is combined with the reduction in interest income from investments by the NHT in government bonds, based on the National Debt Exchange, there will be less cash available for new investments and new housing projects. Not so, says Douglas.
"We will be able to keep the Trust viable and sustainable, and we will continue to build houses for contributors," said Douglas.
"The NHT's mandate will not change under this arrangement. The Trust will continue to play its part as a major player in the housing-construction industry but will focus its efforts on the lower-income earners and the improvements of community living conditions for our contributors.
"We will also seek to support initiatives which create jobs in the construction industry," added Douglas.
This is the second time in recent years that the Government has raided the coffers of the NHT.
In 2005, $5 billion was taken from the NHT for what then Prime Minister P.J. Patterson said was to "transform the education sector once and for all".