States of Jersey profligacy.

 

Year after year our States vows to get a grip of expenditure. And year after year it fails.
Election after election we hear candidates tell us that one of their main aims is to reduce expenditure. And what do they do? Exactly the opposite. When ministers propose the Strategic and Business Plans, these ostriches lift their heads just long enough to vote ‘pour’ – before going back to sleep. Some even propose new schemes that will add millions to our annual expenditure.
As an example, I recall a Budget of two or three years ago when ministers put forward proposals that reflected a £12m saving over what they had intended spending.
They then brought an amendment that added the £12m back!  If that wasn’t bad enough, the other goons you elected voted for the amendment!
And you wonder why Jersey’s spending is unsustainable?

The number of members who vote according to their conscience, as opposed to ‘collective responsibility’ , can be counted on the fingers of one hand.
Below is a copy of the speech I made at Budget time two or three years ago:

“A budget of desperation – necessitated by a mismanaged economy.

For decades now we have been going in the wrong direction – and this takes us even further down the wrong road.

When tourism was our mainstay, we drove it away with our self importance. We no longer wanted the ‘bucket & spade brigade’.

No, that wasn’t good enough for our image – we had to go upmarket.

-  we’ve gone so far upmarket no-one can find us anymore.

Then we had the bright idea of building a finance industry.

We had some good years – too good in fact – ‘money coming out of our ears’ was the slogan – a most unfortunate comment, because from that day forward the outside world considered everyone living here to be rich – 

So how come we have a budget today so detested by the public?

Today’s budget is a budget of failure, brought about by the inability of successive Assemblies to understand economics.
Basic housekeeping decrees that in good times one puts away for the bad. You paint your house, fix the roof – lest there comes a time when the job needs to be done but there’s no funds available.

Exactly where we are today.

When we supposedly had money ‘coming out of our ears’ what did we do?
Did we overhaul all our infrastructure? Get our roads into tip-top condition, build new schools, repair sea defences & so forth?

No – we frittered it away.

Now we’re left with a crumbling infrastructure –  almost everything in need of urgent attention -  not to mention a looming pensions crisis as a result of demographic changes that we haven’t budgeted for.
Because of the failure of previous incarnations of this Assembly, we are now facing all these problems at a time of reducing income.

It’s actually worse than that, because our so-called finance industry is actually an illusion – a manufactured grey area between tax avoidance & tax evasion.
This budget is a vain attempt to carry on pursuing the same, wrong direction.

Circumstances beyond our control – basically competition – (that process we embrace only when it’s convenient to do so) – has resulted in a forecast ‘black hole’ in our finances in the near future.

What happens when that competition gets more aggressive? What if some finance centres start predatory processes?

Those who think this downturn in tax revenue from the finance industry is a one-off delude themselves. It is just a first step in a race to the bottom, which we are in no position to challenge.

Why I’m so annoyed with this budget, is because it does the exact opposite of what is needed.
We need to be encouraging businesses other than the finance industry ready for the day it either leaves – or circumstances change so that it no longer makes an acceptable return to the treasury.

Instead, by raising costs and prices, this budget actually makes it harder for businesses other than the finance industry to survive – never mind flourish.
This Island can no longer afford the vast (and growing) public service we have.
If we cut costs – as any business would – we wouldn’t need to be raising taxes.

It is a self-defeating merry-go-round – and no-one in the Council of ministers appears to have the courage to turn Jersey away from this headlong rush into financial disaster.

The introduction of GST is the last straw. Not only does it offer an easy escape from the difficult task of bearing down on costs – just slap another % or two on GST will be the preferred option in future – and damage business generally – it demonstrates for the first time the weakness of our economy.

It’s easy to imagine the sale of JT and the introduction of GST are actually paving the way for a reduced – or non-existent – finance industry.

After all, the only reason for selling JT would be a predicted major loss in revenue – and the only cause of that would be lack of financial services traffic – which is immense. 
And GST would make up for the lost Income Tax.

Except someone’s not been doing their homework.
Such a major shift in our economy would trigger all sorts of changes – not least a reduction in population and a consequential reduction in revenue – GST included.

Jersey is like a sandcastle with the tide coming in. We haven’t checked our tide-tables and we sit around admiring our work, hoping for the best.
One has only had to observe the recent debates on GST to see this budget too, is built on sand.

No exemptions – well, maybe a few. Except not those ones. Well, OK perhaps yes after all. We can’t afford to exempt food – ah, but we can suddenly dispense with prescription charges – I think I got that right.

I’ve got to the stage I haven’t the slightest confidence in the Treasury or its minister. The sale of the Girl’s college, the sale of JT, the GST decision – it’s been a complete shambles – and getting worse.

It’s unfortunate there will be members who don’t support this budget, but will vote for it anyway – on the excuse ‘we have to have a budget’.

Of course, another anomaly has arisen since we changed our budgets from the previous model.

We now have business and strategic plans – where we agree what we’ll spend before we’ve got the money to do so.

A crazy way of operating – one could be forgiven for thinking the process had been devised specifically to pre-empt any chance of successfully challenging our economic direction.

Well, I’ve never believed in supporting things I don’t agree with.
Quite apart from the GST issue, which I simply cannot endorse, I cannot support the direction this budget is taking Jersey.

It is completely the wrong course of action to pull Jersey out of its reckless reliance on finance and broaden our economy. In fact, it does the exact opposite.

It will not get my support.

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