Editorial: A promise made

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The prime minister’s grand promise of “500 homes in 500 days” is having some unexpected consequences.  The third year anniversary of the Antigua & Barbuda Labour Party (ABLP) administration saw just 17 keys delivered to the new homeowners with a reported 48 near completion in Dredge Bay. The Chief of Staff, Lionel “Max” Hurst, has indicated that all 48 homes “have been earmarked”, however, “several people did not want to be part of it [the handover ceremony]”. The ABLP has also indicated that 278 homes are under construction in Paynters and Denfields.
To get a better understanding of the promise it is worth going back in time and where better to start than the ABLP Manifesto leading up to the 2014 general election. On page 76, the “Highlights” page lists the project as one of the key initiatives for the party. The one-line description reads: “500 AFFORDABLE HOMES IN 500 DAYS”.
The concept of affordable homes for those on the lower end of the economic spectrum is something that we support wholeheartedly. Sure, the timeline was overly aggressive but the concept is not one that should be subject to criticism.
That said, the ambitious initiative was met with considerable skepticism and described as a ‘pie in the sky’ promise by the opposition United Progressive Party (UPP). The ABLP, however, was not swayed by what they deemed to be political criticism and stuck to its guns, referring to the skeptics as having little or no vision. They stated resolutely that the project would proceed.
Shortly after taking office, the Prime Minister proudly proclaimed to workers, “start dusting your tools” and “start checking your rolodex for contact information for all those laid off workers.” The euphoria of the election win was the mandate from the people to deliver and the PM was seemingly doing all that he could to ensure that there were green lights along the way.
The plan, as we understood it, was a partnership with private and public sector organisations such as the Teachers, Nurses and Police Welfare associations. We were told that plans had been drawn up and work would have begun within weeks of the announcement; thereby creating 2,500 new jobs for contractors, architects, engineers, electricians, plumbers, masons, carpenters, labourers, and artisans.
Aggressive timeline and financing aside, all seemed set for a big “promise kept” celebration in about 500 days. Things, however, did not quite go to plan. According the PM, the poor management of the country’s debt by the United Progressive Party (UPP) administration created a chokehold on cash flow and the housing initiative suffered. Losing, first the Venezuelan, and then the Mexican financing compounded the issue. And then there was the overwhelming demand which saw thousands of people clamouring for the affordable homes.  That caused a re-think. Housing numbers were adjusted along with timing and the initiative hopped from promise to promise landing most recently on a pledge to complete the first 500 in five years rather than 500 days.
This brings us to today and the deafening question that is echoing through the land. Who are these houses for?  That question is not asked from a political perspective but rather from an economic perspective. The assumption was that the homes were to be built and subsidised for those on the lower rung of the economic ladder but fresh pronouncements have people questioning the target audience.
It was recently suggested by a minister that anyone who earns $4,500 per month could afford one of the high-in-demand homes. It has also been suggested that if you pay $1,200 in rent, you will qualify. Those are interesting numbers that warrant at least some scrutiny, so we hooked up with a local banker for some mortgage guidance. We settled on a nice round figure of $250,000 as a placeholder figure for the house price. There are options available at National Housing so please use the numbers only as a guide.
Banks typically ask for 20 per cent down so that leaves you with a $200,000 mortgage. Our banker was in a generous mood so he offered to calculate the repayment based on a fixed six percent over 30 years. He insisted on $3,000 per year for insurance and half of a per cent for property tax. The mortgage payments worked out to about $1,550 per month. His opinion was that it would be hard to qualify for that mortgage on a salary of $4,500 but we responded by letting him know that a minister say so, so is so!
An inquisitive economist happened to be walking by and was intrigued by what he had overheard. He invited himself to the conversation and openly questioned our description that the homes were affordable. “Affordable for who?”, he asked.
Not being economists, we became intrigued by the uninvited guest’s question. This guy must have been a boy scout in his younger days because he was prepared. He immediately whipped out a copy of the Antigua & Barbuda Social Security Board of Control Business Plan for FY 2017-2019 and drew out attention to a very relevant statistic. According to the plan, “Analysis of the data revealed that approximately 94.3 per cent of the active insured population earned at most $4,500 on a monthly basis in 2015.”
Our economist then blurted out an obviously rhetorical question/comment before walking-off. “Sounds like we building houses for the top ten per cent.”
Now, we realise that the social security data only considered 39,838 active insured persons and does not capture everyone, and that combined incomes must be taken into consideration, but if 94.3 per cent of the active insured population would likely be disqualified then who are these houses for?
If your answer is the middle class then consider this: the middle class is typically defined as the group with incomes lying between 75 per cent and 125 per cent of the median.  That would move down the scale and be well below the $4,500 threshold. Even if you decide to utilise the other methodology of leaving out the poorest 20 per cent and the richest 20 per cent and accept the middle 60 per cent, you would still move down the earnings scale.
If we are indeed subsidising housing for the top 10 per cent of society then we need to revisit the concept and maybe even reexamine our ideals.

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