Will debt be Ozouf's legacy? - Jersey Evening Post

That is the kind of money which the States Treasury needs to find in the annual budget, this year’s version of which comes before the House this week – but it is only a start.

In addition to the routine running costs and standard capital projects, there is now also a requirement to find further enormous sums for two major initiatives which can be put off no longer.

Thanks to years of complacency and neglect by past administrations, the Island’s social housing stock has deteriorated to the point at which a £250 million rescue plan has had to be put in place. To make it reality, the Council of Ministers have armed themselves with an international credit rating and want to borrow from the market in a major break with long-standing, fiscally prudent policies.

To fund a new £500 million hospital, however, the States will next week be asked also to borrow public money. Finally – after many years of debate about just how rainy it would need to be before they did so – it will be proposed that they should dip into the so-called rainy day fund of the Strategic Reserve.

However hard Treasury Minister Philip Ozouf may care to spin this part of his budget proposals, it means that the previously sacrosanct fund will be depleted and newly reliant on unpredictable market forces for rising interest rates to top it back up.

Neither prospect can sit easily with a community which, for many decades, has been used to its government operating without recourse to borrowing at anything like this kind of level. The lessons learned from other jurisdictions which struggle with structural deficits and falling service levels as a result of having done so are all too obvious.

To justify this major break with budgetary tradition, Senator Ozouf will have to come up with some very persuasive arguments and promises in the States next week. Members will want cast-iron reassurances on the manageability of the proposed debts and the extent to which they might become a burden on future generations.

One of his tactics might well be simply to ask: what is the alternative? Jersey needs better social housing and it needs a new hospital. Senator Ozouf’s taste for taxation has already squeezed Middle Jersey to the point at which the proverbial pips squeak and any further increase in GST without exemptions for food and fuel would be politically unacceptable in the current economic climate.

Borrowing looks like a gamble, but unfortunately it also probably looks like the best bet.