12 July 2011
Good afternoon.
Last time I spoke to you I was in the midst of tacking the deficit that the Treasury predicted would occur by 2013 if we did not take corrective action. I regard today’s remarks as almost the report card on how we have done on dealing with that.
While the market screens yesterday and today are pixeled with red, and there are concerns about a number of countries' progress in dealing with their public finances, the news that I have for you today is, I hope, positive. I try not to talk things up for the sake of it. I do want to say that from where I am sitting in the Treasury engine room, Jersey is in good, potentially excellent economic shape.
New opportunities
Finance is, once again, beginning to grow. Exciting opportunities in new sectors are being developed and our plans for reform are well under way.
Unlike many other places, we started from a relatively positive position and have have taken tough decisions: -
- we used the Stabilisation Fund to support islanders and businesses through the downturn and to fund the deficit in 2010 and 2011
- we secured a necessary GST increase
- we proposed an increase in Social Security contributions for employers of higher earners
- we are getting people back to work with continued investment in skills and training
- we are working to control the pay and pensions bill in the public sector, alongside many other savings measures
Competitive position
In short, we have no debt, we have implemented difficult tax measures and we are on track to make our savings target of £65 million by the end of 2013. As a result our books will be balanced, as planned, by 2013.
I think this is the single biggest competitive advantage for Jersey, which can and will secure growth. I am absolutely committed to delivering the £65 million in savings. And this is not a short term plan. This is the start of a 5 to 10 year strategy to deliver savings and a revitalised, reorganised, rejuvenated public sector.
The 2012 Business Plan sets out more than 200 initiatives which will help us reach our savings target and reform the way we do things.
Our savings proposals include: -
- reducing the use of external consultants
- renegotiating contracts
- rationalising management posts
- redesigning services
Value Jersey
As we develop a public sector which continually reassesses the way it provides services, it is important to know what islanders think of how we are doing on savings. That’s why we have started to discuss the individual savings initiatives under one banner - Value Jersey.
Value Jersey will enable islanders to find out how we are doing on meeting savings targets, to give feedback on proposals and to offer new ideas for savings and efficiencies. Using social networking, islanders can learn more about our plans and offer their own savings suggestions, on Twitter, Facebook or the States website.
Investing in services
The Business Plan lists the growth requirements for areas that are critical to sustain our community, like Health and Social Services. It confirms our commitment to invest in skills training beyond the fiscal stimulus programme, so we can help people back into work as the economy builds to full recovery. And it explains how we intend to develop our tax policy and reform our tax collection system to improve compliance.
As ever, the finance industry remains a vital part of Jersey's economy. Government, in partnership with the JFSC, Jersey Finance, and the industry itself, must now work harder than ever to ensure future growth of this sector.
Trade Missions
I am delighted that missions to the growing economies of the world are now bearing fruit, as I myself witnessed during my visits last year to Mumbai, Delhi, Hong Kong, Shanghai and Washington. We must maintain this strong focus on emerging markets, especially while the UK, European and U.S. economies are finding the return to growth challenging.
There is good, reputable business to secure in Asia Pacific, the Middle East and the Commonwealth of Independent States. As we sign a series of Latin American tax agreements, starting with Argentina, I am also optimistic of significant new business from these growing areas of the world.
Critical to this is dedicated support for raising Jersey’s international profile. Ministerial expenses are published today and mine topped the list last year with trips to Hong Kong, Shanghai, Mumbai, the Gulf and Washington.
Frankly you can’t be Treasury Minister and Foreign affairs ministers and I am very pleased that Senator Freddie Cohen is helping in this area. Developing better links with these economies represents a huge opportunity for Jersey.
Business tax
Now that the States Assembly has approved changes to zero-ten’s deemed distribution rule, and as we anticipate proposed changes to the 11K system, we have secured a successful result for our business tax regime. This will support both the finance industry and new areas of diversification for Jersey.
Just last month the Chief Minister attended the signing of a Memorandum of Understanding between the Beijing-based international telecommunications company UTStarcom and Jersey Telecom. The 2 firms are working together on the research, testing and development of new products for global markets.
This partnership will make the most of JT's fibre-optic broadband, which provides the network speed, resilience and capacity necessary for UTSI to use Jersey as its European hub.
This is an example of how diversifying geographically can enhance not only finance but other high value technology opportunities. As a shareholder of Jersey Telecom we are discussing the roll-out of their exciting plans to ensure that Jersey is an international leader for businesses using fibre optic technology.
Reforms
Recently, the UK Chancellor said he wanted to ensure the UK remained one of the most dynamic commercial centres in the world. While we do not operate on the same scale, with these various reforms in place, with strong public finances and low tax, I believe we can say that from Sydney to Shanghai; from Singapore to the cantons of Switzerland and from St Petersburg to Sao Paulo, we are open for good quality business.
Within two weeks the States will be invited to vote on a major change to our Public Finances Law. This will allow the new States to introduce, for the first time, a 3-year budgeting cycle. This will encourage longer term thinking, give more certainty and flexibility for departments to plan ahead and will deliver better value for money within existing spending limits.
Economic growth
While there are real issues with the makeup of the States, and after sitting in the Assembly constantly for almost 4 weeks it is clear that some things have to change, it is also true that the next three years can be positive, exciting and good for Jersey.
The coming years need to focus not on tax but on developing the economy, building employment for islanders and sustaining the investment necessary to keep Jersey competitive, while also providing top quality value services.
The process of reforming our Health Service is now well underway and I would encourage you all to respond to the vitally important Green Paper on the Future of Health.
But we do need to do more. It is clear we need to restructure our education provision. And our challenges in Education are not just about finances. I think it’s the job of the Council of Ministers to ensure we provide the right education for every person, and value that education equally, whether it leads to International Baccalaureate, a degree or vocational qualifications.
So, to return to where I began.
Provided the States agree to the Business Plan and proposed law changes, I believe the report card for Public Finances shows we are in a formidably good position to compete with other jurisdictions for the opportunities that emerge as the global recovery continues.
I want to thank the members of the IOD for their continued support.
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