Editorial

Our Political Editor deals on this page with the state of confusion within the National Government on the issue of the Value Added Tax (VAT) and like the VAT itself, the confusion has been passed on to the people. Such confusion has become the hallmark of the UNP-SLFP coalition Government. It also betrays the competitive spirit among the equal partners within the coalition eager to score brownie points with the voter. One-upmanship, it seems, is the flavour of the month.

It is now becoming clear that the UNP is blaming the previous Administration (of which the SLFP was the dominant party) for the country’s economic woes while the SLFP, both inside and outside the coalition Government, is placing the blame on the UNP for the current state of the economy. Oh, what a mess of scrambled eggs is this?

In the midst of all, going nearly under the radar until the newspapers brought it to light, is the massive US$ one billion 65,000 houses project in the North and East (mostly the North). This project was rushed through the Cabinet in the same manner and with the same haste as the numerous ‘unsolicited projects’ which this Government accused the Mahinda Rajapaksa Government of rushing through at the time. The elephantine Cabinet seems to adopt a ‘you scratch my back, I’ll scratch yours’ attitude merely rubber stamping Cabinet memorandums presented by their colleagues. The Housing Minister raised a feeble objection at the beginning to this project, and called for a better evaluation, but has been silent since.

The project was too big however, to escape public scrutiny altogether. Even belatedly, it has raised a storm and the technical, economic, environmental and political aspects of it are now beginning to surface.

The Tamil National Alliance (TNA), the ‘guardians’ of the people of the North (though less of the East), has suddenly woken up to what is otherwise seemingly a project that is on a fast-track mode for final approval. There is a trace of jealousy in its objections to this massive project. The Leader of the Opposition and TNA leader’s statement last week accuses the Government, inter-alia, of trying to gain political advantage out of this exercise. The complaint that there is a lack of transparency has come long after even the President made a visit to Jaffna some weeks ago to see for himself a model house built by the Anglo-French developer.

The fact is that the TNA feels it will be left out in the hot sun, out of the loop in the distribution of these 65,000 houses for those thousands of families that were affected by the 30-year virtual civil war and the political advantage thereby will go to the Government (UNP).

Political considerations have dogged the post-war reconstruction of the Northern Province. Unless the TNA’s seal of approval is given, or the Chief Minister’s blessings are obtained no development ought to take place in the North, seems to be the credo of the Northern politicians. The former Rajapaksa Government learnt this bitter lesson the hard way. It believed that reconstructing the railway line to Jaffna and beyond, putting up electricity pylons, paving the highways and building bridges to reconnect the North with the rest of the country were going to win it the hearts of the Northern voters. The TNA saw to it that this was not to be. It pooh-poohed the development of the North and kept whipping the communal bogey; spoke of war crimes and Geneva resolutions. Will this Government face the same fate?

Politics aside, there are several other issues concerning this project. Chief among them is the cost of each of the 65,000 units now standing at US$ 15,230 (Rs. 2.1 million) and the ability to pay back the French loan on offer for the project.

Proponents say the cost comes complete with accessories like furniture, TV, gas, electricity and water supplies. They argue that the project is supported by a loan and that work can begin straightaway with Indian labour, if necessary; that each unit can be fitted in days and the long-suffering displaced can start moving in as early as this year itself. Opponents have gone on record to say each house is overpriced by as much as Rs. One million.

A report by the University of Moratuwa has conceded the speed with which the houses can be built and that local raw material like sand and timber could be dispensed with in putting up these pre-fabricated houses, but point to a host of negatives in the construction of these houses, not least the fact that they are unsuitable climate-wise for the North. The developers are yet to respond to this technical report. Already, ugly stories have started circulating about the ‘indecent hurry’ to get the project off the ground and if kickbacks to individuals and political parties are part of a ‘sweet deal’ as transparency seems to be in short supply.

Whatever the pros and cons, whether the war affected now living in mud hovels will get pre-fabricated steel dwellings; whether or not it suits the harsh climate of the North; whether these units are environment friendly; whether the North should be dotted with 65,000 houses looking like the line-rooms of the tea plantations (of course, much better in comparison); or whether world steel prices are low and the North is being used as the dumping ground for cheap steel, pale into insignificance with the financial ‘pay back’ option available to the Government. And especially so, at a time when the Government and the nation are facing a debt crisis of a very serious nature.

If the project gets underway now, the amortisation (repayment) of the US$ one billion loan will have to begin as early as in 2018 at the rate of US$ One hundred million a year (Rs. 14.6 billion) for ten years thereafter. This is when the cost of a house funded by the World Bank, the EU and India is estimated at Rs. One million in comparison to the Rs. 2.1 million house by the Anglo-French developer. It is difficult to justify the cost of a house built at twice the price for a relatively small group of families given the overall needy pool throughout the country.

There are a large number of conflict affected families in the North and East, but there are also a number of poor families in the rest of the country who are sorely in need of some kind of basic habitation and sanitation. The Housing Minister has launched a project ‘2025 Samata Sevana (Housing for all by 2025)” promising shelter to every citizen by 2025 illustrating the problem of housing in the country.

The Government has to deal in a fair and equitable way with the competing claims for the different sub-groups in the provision of basic housing amenities. It cannot wait for an ideal situation to many of the issues on cost, durability, new methods of construction, operation and maintenance aspects of new technology that the Anglo-French developer promotes to be resolved when the urgent provision of housing to conflict affected families is its priority.

It is therefore prudent for the Government to consider a smaller project of the size in the range of US$ 50 million (not One billion) to test the new technology being proposed under this project. The financier would have to trim the price in line with the revised scope of the project. The local construction industry that says it can do the job for cheaper can be given part of the revised project. The Government should be able to make a reasonable justification to go ahead with the project with the revised features and cost.

Otherwise, the whole exercise smacks of yet another ‘Rajapaksa style project’ which Government politicians so rightly condemned in Opposition, and the people were wary of – and where you leave the tab to be picked up by future Governments and future generations.