NHT cookie jar - A history of sticky fingers

Gary Spaulding, Political Affairs Journalist

Former Jamaican Prime Minister Michael Manley must be turning in his grave in that small plot of land at National Heroes Park to which he has been assigned in death.

In life, it is the Michael Manley administration which is credited for the building of 30,000 houses in the second decade of Independence (that, before the San José Accord, also under his leadership, facilitated the construction of the massive development of Greater Portmore).

Manley's penchant for social policies was demonstrable in late 1975 by his recognition that the average working-class citizen would be hard put to purchase a home without assistance. It was in this vein that Manley created the National Housing Trust (NHT) in 1976 under the National Insurance Amendment Act.

The then prime minister formally brought the bill on October 8, 1975, and it was tabled on December 17 with provisions for contributions to commence January 1, 1976.  The first deduction began on January 9, 1976, ahead of the passing of the legislation.

Under the act, employees and employers were mandated to contribute two per cent and three per cent, respectively, of gross wages.  Household help and the self-employed were also required to contribute. Householders were responsible to deduct $0.40 per week for the purchase of stamps and affix to stamp cards and submit annually. The self-employed were to pay three per cent of projected earnings quarterly to the Collector of Taxes.

Those earning up to $50 per week could elect to pay by the purchase of stamps at the rate of $0.30 for each $10 in earnings.

The contributions to the Trust were regarded as loans, with the proviso that they would be repaid after seven years to employees and 25 years in the case of employers.

Both accrued interest tax-free based on the earnings of the Trust and were payable on repayment to employees and semi-annually in arrears to employers.  In 1976, it was projected that over the next 10 years, 22,000 housing units would be required annually.

The main purpose of the Trust was to add to, and improve, the existing supply of housing by:

(i) Promoting housing projects;

(ii) Making available to employee contributors loans to assist in the building, purchase, maintenance, repair or improvement of houses; and

(iii) Encouraging and stimulating improved methods of production of houses.

In summary, there were three aspects to achieving the housing objective: promotion, financing, and research and development.

NHT has failed

However, there is a view that the NHT has failed on all three counts - with the second objective being the most measurable, the Trust providing only 101,084 mortgage solutions in almost 40 years.

Based on an estimate five years ago, Jamaica is in need of more than 25,000 housing units annually over the next five years; that should take the NHT roughly 45 years to achieve.

To be fair, in more recent years, under Chairman Howard Mitchell, the window of opportunity for homeownership has been opened with a raft of new measures, including more funds at customers' disposal at lower interest rates.

But even as the doors have also been opened through a gamut of initiatives, the Government has begun to use it as a feeding tree at a time when Easton Douglas, a former housing minister in the People's National Party administration, has taken over the mantle of chairman of NHT.

The Government's folly must be put in perspective. The Trust has accumulated a huge surplus over the period, but all too frequently, the benefits to contributors have not been sufficient to facilitate a full mortgage on a home.

Notwithstanding, the NHT is one of, if not the only, comparatively well-run public institutions, with the result that it is 'cursed' for being cash-rich and the Government seems bent on making it 'pay'.

It is well known that a liquid entity in the public domain is an incongruity. Entities such as Air Jamaica and the sugar sector fell on hard times and had to be disposed of. It appears that the Government felt duty-bound to spoil the NHT's good image.

When then Prime Minister P.J. Patterson dipped into the NHT coffers to extract $5 billion to spend on an educational initiative, in 2003, he promised Parliament that it would have been a one-shot action.

Patterson solemnly promised not to yield to temptation a second time when the Edward Seaga-led Opposition raised concerns.

Patterson appealed to the Opposition, as it was Seaga who had brought a private member's motion to Parliament in order to activate the then Government's conscience to address the ailing education sector.

Both Patterson and Seaga have since retreated into retirement, but a precedent had been set - and the haemorrhaging of the NHT continues.

When Patterson, an attorney by profession, suctioned NHT funds, the legality of the move was questioned and he promptly moved to address that concern.

A bill amending the National Housing Trust Act (NHTA) was passed in both Houses of Parliament, allowing the Trust to divert $5 billion in a one-off transfer to finance the upgrading of schools that financial year.

A sunset clause to remove the provision after one year in existence was placed in the legislation. This clause has, however, failed to prevent subsequent cash-strapped administrations from following suit.

Since then, Portia Simpson Miller and Bruce Golding have both dug into the fund, while chastising each other for respective indiscretions.

Golding raided the fund to finance drought relief a year after he was elected to office in 2007. And Simpson Miller appears to have learnt too well from her predecessor, Patterson.

Eyeing more

Not only has her administration raided the Trust for $15 billion to finance the inner-city housing project in 2006-2007, now a more brazen and bolder, or desperate, Government is eyeing a cumulative $45 billion over four years.

In 2003-2004, the NHTA was also amended to enable the NHT to, from time to time, make a contribution to the development of social projects and physical infrastructure in areas where it has provided special housing solutions and in areas where schemes are contemplated.

After its passage in the House of Representatives that year, Information Minister Burchell Whiteman, who piloted the bill in the Senate, conceded that the move reflected a fundamental but positive departure from the NHT's mission.

"It is, in fact, saying we are not just about building houses, we are providing for people's welfare," he asserted, noting that the Trust's performance had been above par.

However, in that same debate, then Opposition Senator Shirley Williams said while she recognised the importance of education and lauded the effort of the NHT to intervene, the Trust could not be lauded for its failure to better invest the $38 billion in accumulated funds.

Subsequently, Howard Mitchell, who was NHT chairman then, made his sentiments publicly known about the appropriation of resources which should have been set aside for homeownership. Nearly eight years after Patterson took $5 billion, Mitchell said the board informed the Government it was a costly mistake.

When Simpson Miller ventured into the Trust for $15 billion, the Opposition, as well as some public commentators, roared disapproval. "The NHT has picked up characteristics over the years that had nothing to do with its original mandate," argued Kevin O'Brien Chang.

In 2006-2007, Simpson Miller's decision to scrape $15 billion from the NHT to finance the Inner-City Housing Project (ICHP) elicited unease. Opinion was rife that the Simpson Miller administration was without legal authority to extract from the NHT surplus to finance the project.

Subsequently, Simpson Miller declared that she harboured no regrets about using NHT funds to finance the ICHP, in which some beneficiaries have failed to pay for the houses which are located primarily in garrison constituencies.

"If I am in Government and I had money anywhere at all, and there are people sleeping on the cold ground and using rock stone as their pillows, as Bob Marley said, 'I would take steps to lift the poor and the oppressed'," Simpson Miller told The Sunday Gleaner. "As long as there is money and it would not put the fund (NHT) into trouble, I will be using it to ease the pain of the poor."

Simpson Miller's stout defence was in response to Golding's warning in Parliament that the NHT could become insolvent if it continued on that business path. "The NHT has been converted, in terms of the Inner-City Housing Project, into a social-welfare organisation," Golding said.

But today, many Jamaicans continue to be without homes, even as the Government has been accused of transforming the NHT into another feeding tree to bail out its coffers. Now, the prime minister is challenging detractors to provide another option.

But what if the idle funds garnered from contributors were being used for their rightful purpose - to provide houses?

The focus must be to widen the source of revenue intake (the tax net) rather than 'taxing' the working poor who are already the ones paying both NHT and income tax.

But then again, that would be asking too much of the Government, which is bent on taking the easy way out instead of demanding that every citizen account for his or her taxes.

Gary Spaulding is a political affairs journalist and winner of the 2011-12 Morris Cargill Award for Opinion Journalism. Email feedback to columns@gleanerjm.com and gary.spaulding@gleanerjm.com.