Gov’t tables economic recovery support Bills
MINISTER of Finance and the Public Service Dr Nigel Clarke yesterday tabled three Bills in Parliament which, he said, are critical to the country’s economic recovery in light of the novel coronavirus pandemic.
However, he warned that, while the Government is actively pursuing a framework for economic recovery, much of the expected positive returns rest on ensuring the continued existence of a credible fiscal path that supports economic recovery, while retaining debt sustainability.
“We, therefore, have to plan not just for today, but we have to look ahead and plan across the medium term. By making adequate plans today Jamaica will make its way through this and emerge stronger. As such, today I will be tabling three Bills designed to help shape the fiscal path that will underpin an economic recovery while not compromising debt sustainability,” he told the House of Representatives.
The Bills — The Independent Fiscal Commission Act, 2020; The Financial Administration and Audit (Amendment) Act, 2020; and The National Housing Trust (NHT) (Amendment) Act, 2020 — will assist the Government in actively putting in place the framework for economic recovery.
Two of the bills — The Financial Administration and Audit (Amendment) Act, 2020, and The National Housing Trust (Amendment) Act, 2020 — are being amended and are to be debated next Tuesday, while the third, the long-anticipated Independent Fiscal Commission Act, 2020, will possibly go to a House committee and be debated in a few weeks’ time.
According to Planning Institute of Jamaica and Bank of Jamaica forecasts, the pandemic is expected to result in an economic contraction of approximately 10 per cent of gross domestis product (GDP).
Dr Clarke explained that, although current year-to-date (April-october) central government revenues are ahead of the supplementary budget’s projections, revenues remain approximately 17 per cent or approximately $60 billion below that of fiscal April-oct 2019/20, even after including the annual $11.4 billion from the NHT.
He said that while, ordinarily, the NHT contribution to central Government would have ended by March 2021, given the circumstances, it will be necessary to continue these contributions at the same level through the economic recovery period.
The $11.4-billion annual contribution to the budget from the NHT funds was first introduced by the Government in 2013, in addition to a $15.9-billion tax package tapping the NHT for a total of $45 billion over the next four years.
Despite expressing the need to find alternative financing in 2017 to replace that agreement, the current Government failed to find an alternative, and eventually decided to continue with the relationship to meet its economic challenges.
However, successive administrations have insisted that, despite the annual contribution to the budget, NHT housing starts have increased dramatically in recent years.
Clarke said that this is testimony to the ability to significantly improve NHT housing starts, while the annual contributions continue to be made to central Government.
“So, we have a full range of demand subsidies. But, if houses don’t exist at levels people can afford, demand remains unfulfilled. The understanding is that the problem is best solved by Government’s intervention that has the effect of increasing the supply of affordable housing,” he stated.
He added that the Government and the minister of housing are keenly focused on working in partnership with developers to significantly increase this supply, and the policy focus will be unaffected by the necessary continuation of the NHT’S contributions to central government.
The minister also noted that, consistent with Government’s policy of commitments to institutionalising fiscal transparency and strengthening Jamaica’s fiscal responsibility framework, the Administration has tabled legislation to establish an independent fiscal commission as an oversight body for the economy.
The commission will be the guardian and interpreter of Jamaica’s fiscal rules, monitoring compliance with these rules, reporting on fiscal outcomes, and keeping the public informed by providing independent analysis on fiscal policy developments, he noted.
Leader of the Opposition and spokesman on finance Mark Golding noted that the Opposition had been ridiculed for introducing the NHT’S $11.4-billion contribution to the budget in 2013, but it was extended by the current Administration when it came to Government in 2016 and has been benefiting from it since.
He said further that the five years for payment will add another $57 million to the extracted resources and reduce the NHT’S ability to meet its housing programme.