NHT chairman knocks CaPRI recommendations to curb contributions, issue rental vouchers
A proposal by think tank Caribbean Policy Research Institute (CaPRI) that employee contributions to the National Housing Trust (NHT) be eliminated and employer contributions cut to two per cent of payrolls has been rubbished by the agency's outgoing chairman, Dr Carlton Davis.
He also scoffed at CaPRI's recommendation that the NHT facilitate rentals for persons in the lower socio-economic brackets.
Currently, a combined 5 per cent on an employee's income is paid over to the Trust, with the employer paying 3 per cent and the employee shouldering the other 2 per cent.
Economist Damien King and co-executive director of the think tank, who presented CaPRI's newly released study on the National Housing Trust at a forum on Monday, argued that the NHT was building up surpluses while some of its contributors were paying for benefits that they could not afford to access.
"At the current level of contributions, the NHT is infinitely sustainable," he said.
Reached for comment on the study, Davis, who is acting as chairman until the new Holness administration replaces him, pulled no punches.
"A lot of what Damien said is nonsense," he asserted Tuesday, while voicing surprise that no senior member of the NHT attended the CaPRI forum, dubbed 'The NHT, Wrong Funding, Wrong Target, Wrong Strategy? We Can Fix This!', to give the facts from the trust's side.
"If you take any of the annual reports, it shows roughly $40 billion inflows from contributions and mortgage payments. Between reserved funds for insurance, staff, contribution refunds and the $11.4 billion currently reserved for Government, it means that its housing expenditure would be way down," Davis said.
Staff costs for the Trust are about $5 billion to $6 billion, with roughly $7 billion reserved for refunds and insurance, the chairman said, while cautioning that he did not have the precise numbers at hand.
A reduction in the contributions would, therefore, cause serious challenges for the NHT, he said, "because a whole lot of people are in arrears".
CaPRI suggests that were the NHT to relinquish construction of houses to the private sector, it would to facilitate competition and force suppliers to become more efficient.
King said the NHT could survive with reduced funding if it stops building houses. To that Davis intoned: "He is wrong."
King puts the NHT's accumulated capital at $202 billion, some of which he said could finance vouchers to be offered by NHT to "subsidise housing for those who are unable to purchase" a home.
Pressed later on how the voucher system would work, King told Wednesday Business that CaPRI has not done the precise analysis.
"We haven't done that analysis, but it's simple arithmetic - the value of the contributions and the value of the voucher should be balanced to make it sustainable," the economist said.
While not totally dismissing the suggestion of the rental vouchers, Davis described the idea as "too risky".
"You have enough trouble collecting the mortgages from people who own the houses," said Davis. He suggested instead that contributors habitually claim their refunds.
For the 2012-13 financial year, the NHT refunded $3.9 billion to some 156,539 contributors, up from $3.3 billion and 147,653 contributors the previous year.
Davis did concede that the NHT needs to assess its mandate and accomplishments.
"NHT is 40 years, this year and it's more than time to review what you have done or what areas need improvement," the outgoing chairman said.