This financial decision is a misguided folly, minister

From Roy Travert.

WITHOUT a shadow of doubt, Treasury Minister Philip Ozouf has just made the most dangerous financial decision in living memory. His misguided folly to borrow £500 million to build social housing in Jersey is a financial disaster in the making.

The States of Jersey have endorsed this ill-fated policy and voted it through, government thus creating a debt burden for generations to come.

Throughout his campaign to burden the public purse and the taxpayers of Jersey with this unnecessary and dangerous debt he has preached how good it will be for Jersey. His misguided and ill thought-out logic for this is that it is a ‘serviceable debt’ and will be paid for from the income from the proposed social housing projects.

What he has not told the public is that it is not £250 million he plans to borrow it is in excess of £500 million. What he has also omitted to tell the public of Jersey is what the interest payments will be and how long it will take to pay this money back to its lenders.

Interest payments of 4% are being thrown around at the moment but it could be much higher than this. This would equate to £40,000 for every million borrowed.

This would mean on his £250 million borrowing we are going to pay a minimum of £10 million per annum. Who is set to profit from this financial windfall?

This policy is ridiculous when you consider he reneged on his promise not to increase GST, and then did so by 2% to extract an extra few million from consumers’ pockets.

It is horrifying to think that the taxpayer of Jersey will be forced to pay interest to an unknown body when we could have borrowed the money from ourselves. The rainy day fund could have provided the funding and then replenished from a low rate of interest charged on the funds being borrowed.

Unfortunately our capital reserves are about to be plundered to pay for the hospital which should have been budgeted for over the past 20 years. Another fiasco in the making.

Spain, Portugal, Greece, France, America, the UK all thought the same thing when borrowing millions to pay for projects they could not afford. All of these countries have faced severe financial problems with many on the verge of bankruptcy. All have followed the same flawed financial policies that Senator Ozouf is now pursuing.

At the core of this problem is his inability to control public expenditure, coupled with the creation of public-private partnerships whose non- executive directors earn in excess of £250,000 per annum. These bodies are rarely if ever scrutinised for efficiency and value for money for the taxpayer.

How can Senator Ozouf be in charge of our assets and finances when he cannot control public expenditure and balance our books between income and expenditure? We have a decreasing tax take, a shrinking economy, rising unemployment set against an economic backdrop of stealth taxes and increased social handouts fuelled by low paid immigration. His tax and spend policies have dragged Jersey back to the dark ages as far as our finances are concerned.

Small businesses employ a substantial amount of workers in Jersey yet they are being systematically bankrupted due to the high social security payments they are expected to make along with high rents and stealth taxes. Middle income families have been hit the hardest by Senator Ozouf’s tax-all policies. If something is not done soon Jersey will find itself in the same position as the rest of the world. Economies that are run on debt payments create bubbles of economic activity which simply do not last.

What will Senator Ozouf do then? Borrow more money?