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Home construction can kick-start sluggish economy

Monday, November 30, 2015

Meeting our basic needs for housing and food could return growth to the economy with sustainable jobs and without massive leakages of foreign exchange and can do so in the environment in which soft international energy prices have begun to inflict pain and cause deep anxiety in the political economy.

These areas of economic possibilities have been with us for a long time, we have simply not paid the kind of attention to them that is required; we may not have even seen solutions in a well-designed and varied home construction programme and a food import replacement initiative.

An annual $4 billion food import bill and meeting the market need for 160,000 homes provide the government, the private sector and the national population in all its varying sectors and manifestations with the basics for growing the economy out of the slump, occasioned by the crash in oil and gas prices.

The first step by the Government in the right direction is removing families with a joint income above $25,000 from being eligible for subsidised state-funded homes. The calls by the opposition United National Congress for government to continue maintaining and cultivating segments of the population in a state of dependency amount to backward economic thinking.  What is more, it is a failed political economy model which has caused large groups of people to cling to the government/state for handouts in return for electoral support.  

Instead, the present circumstances should be seen as a period for dynamic entrepreneurial excitement by the private sector; so too should the credit and trade union sectors see the possibilities for meeting the housing needs for their membership.

Most of the ingredients for a home construction boom are acknowledged to be in the society and economy at present.

Excess liquidity in the financial system has been identified by succeeding reports of the Central Bank as a feature of the economy; contractors and their experienced and expert labour force abound from the previous construction boom. Tens of thousands of workers are in the under-employed category, many others are receiving social security in the form of Cepep, URP payments and the many other forms of make-work programmes which were created to distribute income during the boom—the almost full employment figures of the present mask the reality beneath the surface.

Construction materials in the form of aggregate, cement, iron and steel are sourced locally; ArcelorMittal has stopped the production of steel because of over-production and low prices in the international market and insufficient demand locally; a construction programme can at least keep the plant operational.

Land, though not inexhaustible in two small islands, is sufficiently available in the possession of the state to be brought into productive use. To start with, large tracts of land are available from the former sugar cane fields of Caroni 1975 Limited; and it is a well-established fact that such lands are not the most arable and therefore can be turned into spaces for home construction. Needed is a land-use policy to identify the best areas for home construction.

In addition to the construction programme of the Housing Development Corporation, which at best has achieved not too many more than 5,000 housing units per year, the need is for a wide-ranging public, private, NGO and citizen sector programme to meet the market demand for home construction and broad-based economic activity.

In the public-private sector model being advocated, the major input of the state would be some form of land grant arrangement with the developers, the financial institutions, including the likes of the Home Mortgage Company, the credit union sector and home owners, individually and in community groups.     

The land-lease-grant will immediately and dramatically reduce the cost for home owners; it will be a non-cash subsidy by the Government to home owners, one which will be far more acceptable than the HDC constructing a $4 million apartment and selling/renting to owners at $750,000, as claimed in the Senate by Minister Franklin Khan.

The allocation of lands, as suggested above and in other areas outside of the already built-up areas will accrue a number of vital benefits. It will be in keeping with the Government’s manifesto proposals for rural development; it will slow the drift into the already over-crowded city centres; it will generate much-needed productive economic activity in town and village; it will take thousands of travellers off the roads at peak hours; it will re-build the sense of community pride that existed in fishing villages and agricultural settlements of a previous era.

Planning and establishing such an economy will lay the foundation for the kind of broad-based economic diversification that is required at this time.  Entrepreneurs, the Government, people in communities, financial institutions et al, will begin to conceive of possibilities and gain the kind of confidence required for taking on the post-colonial economic challenge.

Producing to meet our need for food will stimulate growth in the agricultural sector. For decades it has been clear that the hang-over from the colonial economy of producing for the needs of metropolitan countries while we consume the products of those societies has stifled the growth of a vibrant agricultural sector.  

In the 1970s the economic thinkers and planners advocated an import substitution programme, cassava for flour etc. Today the focus must be on the replacement of certain imports with products of T&T and Caricom under the Single Market and Economy programme.

• To be continued.


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