06 May 2009
The States needs to act quickly to help the Island through the economic downturn - delay may put Islanders’ jobs unnecessarily at risk.
That’s the Treasury and Resources Minister’s interpretation of the Fiscal Policy Panel’s latest report.
On receiving the Fiscal Policy Panel’s 2009 annual report, Senator Philip Ozouf said: 'I recognise another thorough and well-researched report and wish to commend the Panel for the independent and informed input into the management of the States’ public finances and the development of economic policy that it continues to provide.’
The Minister acknowledged the report’s recommendation that a significant economic stimulus is now appropriate, adding: 'The Panel appear to support the proposal to use the Stabilisation Fund to help Jersey’s economy through the downturn.
‘We have already put in place a process to ensure that only policies that meet the Panel’s criteria will be considered as part of the package. However, I believe the Panel is correct to point out that the States should act now.’
The States are due to decide on 19 May whether £44m from the Stabilisation Fund should be allocated to finance a package designed to boost employment, support business and assist low-income households.
The FPP’s report includes a realistic assessment of the economic outlook for the Island and notes that the Island is likely to experience a significant downturn in 2009 and 2010.
It notes there are risks that may mean the recovery is slower than many commentators have predicted. This, along with other long-term pressures on States finances, has led the Panel to conclude there is a possibility that the current fiscal stance is not sustainable, which may mean that changes to taxation or expenditure may be required in the medium term.
On this Senator Ozouf said: 'I fully support the Panel’s proposal that a strategy to deal with any permanent deficits that may arise in the future should be agreed over the next 18 months and I hope to work with colleagues and the States to achieve this. We must be prudent and follow the Panel’s advice that no actions should be taken in the meantime that could undermine fiscal sustainability.’
The Minister agrees in principle with the report’s recommendation that the working balance in the Consolidated Fund – essentially the States’ ‘current account’ - should be kept to a minimum to reduce the temptation to spend surplus funds in ways that might aggravate economic fluctuations or undermine long-term sustainability. The Minister will take advice from Treasury officials on the best way to implement this recommendation.
Fiscal Policy Panel
news release on second annual report
gov.je