Editorial Comment: Housing scheme in line with economic vision 

Source: Editorial Comment: Housing scheme in line with economic vision | The Herald January 31, 2019

Editorial Comment: Housing scheme in line with economic vision

Government yesterday unveiled a $60 million housing facility for civil servants as part of the package of non-monetary incentives for its staff, the sort of programme that is the only way conditions for civil servants can be significantly upgraded without massive redundancies or huge tax increases.

Several economists within Government and outside have been explaining for years that capitalising some benefits is a necessary path to upgrading the conditions of State workers without wrecking the economy.

While economic growth and raising tax revenues, can allow the Treasury to push up salaries and allowances moderately, it is unlikely that such modest increments will be regarded by many as an ideal solution.

But since such a high percentage of tax revenues already go towards the payroll it is basically impossible for the Treasury to juggle the figures and move money from other programmes to the salary budget. Most other programmes are already underfunded.

So a large pure monetary increase offers just three alternatives, none of them useful or acceptable to anyone. First it would be easy to double the pay of all civil servants by firing half of them and diverting their salaries to the remaining half. This is simply not an option.

We cannot close half the schools, hospitals and the like. People were hired because we need them to run a decent modern country offering the bare minimum in services expected in the 21st century.

Secondly, the Government could double taxes to pay for a doubling in pay. Again this is not an acceptable option for many reasons, including the certainty that the economy would be destroyed and the general population, including the civil servants, would be totally pauperised.

Finally we have the option that has put us in the present economic mess; we can print the extra money, that is create it out of nothing. We have been through that cycle far too often and we know it does not work. The present administration of President Mnangagwa has shown admirable firmness in its determination to climb out of the trough that the previous administration kept thrusting us, although that reform does mean austerity for a while.

But this does not mean we need to just wring our hands and ask everyone to be patient. We can do something, and something significant, with the roll out of the new housing scheme being an excellent first step.

Housing lasts forever, so every extra dollar means that the benefit remains forever; it does not need to be renewed, only expanded.

Several Government units already have reasonable housing stocks that ease the life of their staff. The Ministry of Health and Child Welfare has been building up its stock of housing at major hospitals for decades so doctors and nurses have somewhere to stay. The Defence Forces with their barracks, the Police with their camps and the Correction Services with the housing at prison complexes are major landlords, although admittedly quality can vary from modestly upgraded 70-year-old colonial cottages to decent modern flats.

Rural boarding schools in both private and public sectors are able to attract first-class teachers because of on-site housing.

In addition there are some large flat complexes around that are the result of intermittent efforts in the past to provide decent housing for civil servants.

Now that the Government has embarked on fiscal reform and is determined to end the stop-go-stop economic progress, or lack of it, and move into continuous growth it should be possible to move away from ad-hoc hosing schemes, intermittent bursts of activity and the like and lay out a major continuous programme.

There are a lot of things to discuss, negotiate and agree on. But targets can be set, timelines created. The Government, could for example, set how many housing units are to be built each year, or even what percentage of tax revenue goes to the programme so that as the economy, and so tax income, grows, the programme is accelerated. Patience is far easier to exercise when everyone knows what is going to happen.

Civil servants, their ministries and the Civil Service Commission need to settle important points like what percentage of the new housing will be allocated at low rents to civil servants posted around the country fairly frequently, what percentage will be on reasonable-interest mortgages for permanent ownership, what percentage will be flats, what percentage will be serviced stands, what percentage will be finished houses.

There are many needs and many variations. A particular civil servant might have multiple needs: for example a decent rented flat early in their career followed by a permanent place with title as they mature. A good scheme can incorporate all this. Allocation systems need to be agreed and be transparent and fair.

None of this is impossible. We need the major effort. It is one of the best ways of boosting civil service living standards without wrecking the economy and country.