Speech

‘The allegation by the Leader of the Opposition that the National Housing Trust is being politicized is baseless and provocative. The contract of the Managing Director expired at the end of December. There is no requirement in the contract for it to be automatically renewed. The decision was taken to advertise the post and the period for receipt of applications is still open. The Board will in due course consider the applications and make a selection. The charge by the Leader of the Opposition that the non-renewal of Mr. Earl Samuels’ contract is an act of political victimization contains an insinuation for which she owes Mr. Samuels a public apology.
The term of appointment of the Board of Directors which also expired on December 31 has been extended to January 15. A submission for the appointment of a new Board is before the Cabinet and an announcement will be made next week. Almost all the former members have been recommended for re-appointment, the only changes being in the representatives of specific organizations.
In an effort to respond more effectively to the prolonged drought that has affected most areas of the country, the Minister of Water and Housing presented to Cabinet an estimate of $477 million required to rehabilitate certain wells and acquire water trucks to provide emergency supplies to badly affected communities, schools and hospitals. Given the severe fiscal constraints currently being experienced, he was advised to seek to negotiate an interest-bearing loan from the NHT which would be fully covered by a government guarantee and would be repaid over 5 years. The advice of the Solicitor-General has been sought in the matter.
In its normal course of business, the NHT invests a significant portion of its cash reserves in government paper. This is, in effect, a loan to the government. A special loan to deal with drought alleviation is no different in principle except for any difference that might exist in the rate of interest applied when compared to that which obtains on government paper. This is entirely different from the approach of the PNP administration which on more than one occasion, extracted billions of dollars from the NHT to finance various projects and programmes such as Emancipation Park and the Education Transformation Programme without any intention or requirement for these funds to be paid back to the NHT.
Mrs. Simpson-Miller’s misplaced indignation conveniently overlooks the fact that as a result of the politically-motivated directions which her administration issued to the NHT, it recorded for the first time in its history a loss of over $600M in 2008.
Major contributing factors to this dilemma were the huge subsidies being provided to special projects as directed by the government and the reduction of mortgage rates to levels that were insufficient to cover its cost of funds.
An analysis of the medium-term viability of the NHT, a report of which was tabled in Parliament, stated
“The Trust is anticipated to be operating at a deficit for each of the next five years with a cumulative deficit of $14.7 billion at the end of 2012/13.
Based on projected trends, the cash reserves of the Trust will be totally depleted by the end of 2009/10 and the organization will require funding of $29.5 billion to offset cash flow shortfalls by March 2013.
Based on the balances at the end of each year, the Trust will be unable to stay within its margin of safety. The organization will face the risk of becoming insolvent.”
The present government had to take action to reduce the subsidies, reduce operating costs and increase mortgage rates at the higher income levels while leaving the lower rates unchanged. As a result of these measures, the NHT has been returned to good financial health and has been able to re-energize its programme of providing housing benefits to its contributors with over 11,000 mortgage loans valued at over $20 billion being issued since April 1, 2008.