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Spending over the budget
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However, although the document – the first of its kind and officially entitled the Medium Term Financial Plan – looks forward, it must be read against the background of economic difficulties which, as far as Jersey is concerned, have been unprecedented. Initially, tax regime change led to a loss of revenue of £100 million. Then our problems were compounded by the global recession and consequent losses estimated to be on a similar scale.
When a deficit resulting from necessary corporate tax changes was forecast, three remedial measures were proposed – raising money through other taxation, modest economic growth, and a programme of spending cuts. Unfortunately, events that were below the horizon when this plan was devised ultimately meant that only the tax-raising measure was fully effective.
Nevertheless, as Treasury Minister Philip Ozouf has said, the Island has managed to weather the storm of recent years through the judicious use of reserves, notably through the Stabilisation Fund. He is also right to point out that we have fared far better than many other recession-hit communities.
The recent bout of quite desperate fire-fighting might well allow the budget to be balanced by 2015, but ministers and States Members in general must not be swept away on a wave of over-confidence. In particular, they must take another look at recent growth forecasts, which appear to be hopelessly optimistic.
They must also accept that, to draw on a biblical principle, balanced budgets are made for man and not man for balanced budgets. This means that efforts must be made not merely to stabilise the fiscal sacrifice made by middle Jersey – which has, to date, borne the brunt of the economic struggle – but to give something back.
Meanwhile, as Public Accounts Committee chairman Deputy Tracey Vallois has acutely observed, the idea that public sector cuts, efficiencies, economies and savings should be a key part of the way forward is in danger of being eclipsed in this latest round of planning.
This actually forecasts increasing expenditure. It also does little to address the failure of government to reach its cuts target of £65 million or to acknowledge that savings are not savings if the money allegedly saved is rapidly reassigned to fund other spending.
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