Speaking at the Institute of Directors Jersey Leaders Lunch, Michael Oliver said that the Island had to wrestle with a number of challenges, not least whether it chose to cut public spending or championed growth to pay for an expanding public sector.
The former government economic adviser said that it was imperative that the economy reached 2% growth after stagnating at 0.6% for too long. He described the economic growth performance of the Island over the past two decades as ‘shocking’.
‘We are now looking down the barrel of a gun and it’s not very nice,’ he said.
He explained that a more entrepreneurial culture needed to develop in the Island, advocating the introduction of an ‘Enterprise Tsar’ to encourage this, and warned that action to diversify the economy outside of the finance sector should have been taken decades ago.
Mr Oliver was one of four panellists at the IoD event, which focused on the need for Jersey to develop a vision. The other panellists were former Chief Minister Frank Walker, Chamber of Commerce president Jennifer Carnegie and Jersey Youth Parliament member Henry Humpleby.
As well as the economy, the panel discussed issues including housing, mental health, the environment, education and the need to attract talent and investment.
Mr Oliver said that a failure to act would leave the Island in a position where it was no longer able to afford its likely future levels of public expenditure, as the finance sector was much weaker than it had been two decades ago.
He said: ‘Gross Value Added [economic output] for [each] full-time employee has basically halved over the last 20 years for finance, which effectively means that we need to do something else. And what else do we do?
‘You have to talk about other small island states and where they’ve been successful. The problems we’re now facing are actually the result of our own success. Prices are far too high because of finance.
‘Where do we diversify? The blue economy is one big example. There’s agriculture and tourism. We can do some of those things, but the fundamental problem will be where the tax money comes from to pay for the enormous growth in the public sector over the next 20 to 25 years.
‘I doubt that, even in its heyday, finance could have actually paid the bill that is coming down the tracks. We either cut public expenditure big time or we have to generate income.’
Mr Oliver said the Island generated 80% of its revenue from personal income tax and it was ‘doubtful’ that it would keep producing the highly paid jobs required to sustain that. He proposed that ‘vision’ and ‘leadership’ were needed to address this issue and said the Island needed to decide where its future lay.
‘Does Jersey want to be Cornwall or Monaco? I take those two areas not to say we have to be either, but where do we want to go? Where’s the leadership with the vision? Who’s driving through the change?’ he asked.
‘Where are the rewards if someone succeeds with that change? Does the change come from the civil service, government or business? Government can’t create jobs except in the public sector. Government creates the framework for those jobs. We seem to have forgotten that.’ He added: ‘The top thing on our list would be how to increase the trend rate of growth price in the Island from 0.6% to at least 1.5 to 2%. The 2005 growth report aimed to double the rate of growth in Jersey from 1% to 2%. Now, after all that time, the trend rate of growth is 0.6%. That’s shocking.’
He proposed new measures to encourage entrepreneurship, including the establishment of an ‘Enterprise Tsar’.
‘I would not look at government to create a wealth strategy. I would look at the private sector to do that as an economy,’ he said. ‘One thing you’ve got to look at is the tax system. You need to create more entrepreneurialism and, to do that, you might have to offer greater incentives for people to come to Jersey. We certainly need to encourage entrepreneurialism through education and through a champion for entrepreneurs. We need an Enterprise Tsar in Jersey acting to drive business other than finance. Those sorts of initiatives would be quite useful but we are behind the curve. These things should have been in place 15 to 20 years ago. We’re looking down the barrel of a gun and it’s not very nice.’