14 September 2011
I stand here today to present my last Annual Business Plan with a mixture of feelings, all of which I am pleased to say are positive ones.
Naturally after 24 years there is a twinge of regret that I am coming to the end of a long and generally satisfying political involvement.
On a personal level I have a sense of satisfaction that the plan before us today represents on ongoing step in our long term objective of maintaining the Island in the secure position it has enjoyed for many years. We are in a sound financial position thanks to the prudent policies we have adopted in the past.
I want us to return to balanced budgets as soon as possible. Our objective is to achieve that by 2013, and if we adopt this plan we will be on course to achieve a challenging, but necessary, objective.
We must not allow ourselves to be deflected by pursuing fleeting promises or by jumping on an electioneering bandwagon. The future of the Island is too serious to allow ourselves to be sidetracked.
Global pressures
Jersey starts from a sound position.
However we are not immune from global pressures, and the global market remains uncertain and fragile. We have to be firm in our resolve to pursue what looks like being a long and difficult road to recovery.
This underlines the importance of our objective of balancing our books and controlling our expenditure so that it does not exceed our income.
Challenges ahead
Jersey’s economy declined by about 6% in 2009 and is not forecast to increase significantly in 2010.
The Fiscal Policy Panel has told us to plan for a fragile and drawn-out global recovery and has estimated that growth will resume this year and next at relatively weak rates.
More recently, the European and American situation confirms that expectation. The fact that interest rates look set to remain at a historically low level will clearly not be helpful for our banking industry.
Economic Growth
The focus now must be on economic growth. We must improve the competitiveness of Island businesses and help them gain market share so they are well placed to benefit from global growth.
It is timely that the Economic Development Minister has published a draft Economic Growth Strategy for consultation and I hope Members have made their views known.
Jersey’s financial services industry remains a vital component of our economic prosperity. We need to develop new products, attract business from emerging economies like Israel, China and India and maintain our global reputation as a jurisdiction with the highest standards of regulation.
We must also create a more diversified and balanced economy by exploiting the growth in global e-commerce, putting ourselves at the forefront of the digital economy and investigating the potential to use the Island’s natural resources in a sustainable, environmental and commercial way.
We must work to create new opportunities for existing sectors by developing our tourism strategy and continuing to support growth in the rural economy.
I am sure Members will agree that in the current economic climate - having restored our public finances to a sound medium-term footing - securing future economic growth is THE challenge for our island.
Modernisation
The key to our future success will not just be the performance of our economy, it will also be the performance of our public services.
If we want to compete in the world, if we want a fair society, if we want to get real value for money while providing the decent, reliable public services that make life better for people – then we need to modernise.
That is why it is so important that funds have been earmarked for modernisation and restructuring, and why it is vital that we apply those monies for that purpose only.
If we fail to modernise, we cannot expect to achieve longer term sustainability. There will be no progress if we stick with the status quo.
This Business Plan maintains our commitment to saving £65 million by the end of 2013. As we continue our work to reach this target, we need to focus on developing a modern public sector that can meet islanders’ needs not just today, but in a future where we know there will be increasing demands on many of our core services.
This will involve changing the way our public sector works, harnessing new technology and making the best use of the people and resources we have available.
That is why the Council of Ministers is putting forward this vision for the future, based on a Business Plan which MUST ensure that we have balanced budgets by 2013. It is only when we have achieved this that we can go on to benefit from a recovering global economy.
Savings
Thanks to the forward thinking of our predecessors we have a Strategic Reserve to be used in the event of a real catastrophe, which we could not solve unaided.
Previous generations saw the wisdom of not letting our spending exceed our income. We must follow that good example and maintain our savings programme.
Last year we were looking at a structural deficit of around £100 million. This year we have brought this down by successfully removing £12 million from budgets in 2011.
Next year we will add a further £20 million to that figure.
In 2013 – another £33 million will be removed from expenditure, making a total of £65 million over those three years, just as the States agreed in the Budget last year.
We need to stick firmly to our long-held policy of facing up to challenges and finding the best solution for Jersey.
Amendments
I have been looking at the amendments before us today with some concern. It seems that some Members are still not thinking through the long term consequences of their short term priorities.
It takes courage to make decisions that are not populist; decisions which secure a successful foundation for our economy.
I was pleased that Members found the political resolve to approve measures in the 2011 Budget which are now being implemented and are beginning to bear fruit. I hope Members can maintain that courage today.
I hope we can all look beyond the next few weeks of frenetic electoral activity, to make the right decisions for a future that will present serious funding challenges for some of our most fundamental public services; a future in which tax receipts will not immediately bounce back to their previous levels.
3-part plan
This Business Plan is part of a structured transition from global downturn to economic growth. It is the latest step in an ongoing process and should not be viewed in isolation.
It proposes a continuation of the 3-part plan to deliver savings, support economic growth and deliver a flexible tax strategy to enable a return to balanced budgets by 2013.
It sets out in detail how departments plan to spend the funds we propose to allocate to them. We have been through challenging times and I believe we have put in place the right mechanisms to meet future challenges head on.
Today I am presenting a plan that is comprehensive and clear in its vision, and also flexible enough to withstand shocks along the way. The 2012 Business Plan is the right way to steer us clearly through the years ahead and is the rock of stability on which a sustainable recovery depends.
Looking to the future
We are in a good position for continued long term success.
We have strong finances, with no debt.
We have a resilient economy - thanks to successful long term strategic planning.
We have implemented a successful fiscal stimulus strategy, supporting local people through one of the most turbulent global economic environment in living memory.
We have been able to maintain comparatively high levels of employment and are taking action to reduce the impact of unemployment on the more vulnerable members of our society.
This Business Plan is well thought out. It is realistic. It allocates extra money where growth is needed and it cuts spending elsewhere. It acknowledges the pressures we face, but it is realistic about the way we need to address the future.
I hope my successors can build on these developing initiatives, to the benefit of all of us who are privileged to live in these islands. That is our task, our challenge, our opportunity.
I urge Members to endorse the proposals of the Council of Ministers, and support these measures to continue work to reform our Public Services and balance our Public Finances.
I hope Members will see the value of remaining resolute and prudent and will support this plan in its entirety.
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