‘Cut £345 million from borrowing’

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An amendment from External Relations Minister Ian Gorst would, if approved, prevent government borrowing from reaching heights of £1.74bn by 2025, up from the £250m it inherited in 2018.

‘I consider this to be too high, and not necessary,’ said Senator Gorst, in his report, adding later that ‘Jersey’s economic success has been built on low taxes, controlled and balanced public spending and no, or low, levels of public debt’.

If his amendment is approved at a States debate on 14 December, Senator Gorst said: ‘Our debt would be heading in the right direction, instead of continuing to spiral upwards.’

The £259m of debt to carry the Island through the pandemic ‘was largely unavoidable’, he said, but the repayment of this is ‘within our control’. The debt would be paid off in about 20 years under current plans, but Senator Gorst said the government ‘should be more ambitious to clear this liability, for what was a short-term economic shock, from its books’ and repay the debt by 2026.

He said: ‘My colleagues might view this as an ambitious proposal, but I again stress that having debt hanging on our balance sheet for longer than is necessary carries its own risks. It not only means we ultimately spend more on paying it back, but it leaves the government with less room to manoeuvre when we next face a crisis or the usual shocks and bumps that come with being heavily intertwined with the global economy.’

Senator Gorst also said he did not believe ‘now is the right time to be taking out a further £480m of debt to cover all of our long-term pension liabilities’.

Instead, he is proposing that borrowing should occur only to meet the £135m of liabilities linked with the Jersey Teachers Superannuation Fund retirement scheme, but there is ‘no need to borrow’ £345m to re-finance liabilities associated with the Public Employees Contributory Retirement Scheme ‘at this moment in time’.

‘To do so would be unnecessarily loading ourselves up with debt,’ he added.

If adopted, Senator Gorst’s amendment would reduce borrowing in the proposed Government Plan to £1.4bn. He added that, by 2026, the Island’s debt would be reduced again to £1.14bn.

Senator Gorst said that ‘in view of our strong balance sheet and the upcoming challenges we face’, he accepted a ‘level of borrowing is required’. He supported borrowing of up to £756m to finance the building of the new hospital as it was a ‘critical infrastructure project and a public asset that needs to be delivered without delay’.

There was nothing in the amendment which would impact the government’s ‘ability to deliver the core services and key infrastructure projects’, said Senator Gorst.

‘I do not wish to see generations of Jersey people saddled with a legacy of debt, especially when more sensible and balanced options are available,’ he said.

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