Why this Budget is a real stinker

WHAT the heck is going on? I go on holiday to Crete and when I come home it's like I've fallen through a hole in the fabric of space into a weird parallel universe. Guernsey looks exactly the same, but its politics are completely different.

What am I talking about? The shocking draft Budget for 2016, of course.

The T&R minister says the swingeing measures being proposed are simply an exercise in realism. If so, it is a very different reality to the one being peddled just a few short months ago.

Remember how we were all told that the black hole in Guernsey's public finances was healing rapidly? That without any major tax rises we would see the deficit dwindle to next to nothing next year and could even expect a modest surplus in 2017? Challenges remained in the longer term because of demographics, but our public finances were heading firmly in the right direction thanks to laudable restraint in States expenditure. Cue much self-congratulatory back-slapping among deputies.

Now suddenly the tune has changed markedly. Those claims of balancing the books through spending constraint have proved utterly hollow. Either they were pure spin or a gross miscalculation. I'm really not sure which is worse.

Instead, Mr and Mrs Average Guernsey is going to be hit with a toxic mixture of budget measures to desperately try to bridge the gap in the island's public finances. These include a further freeze in personal tax allowances. Already a person on a low/middle income is paying more income tax in Guernsey than they would be in the UK. Did we ever expect to see that? Now that situation is going to be aggravated by another real-terms reduction in allowances. Shocking.

Then there's going to be a big hike in fuel duties which is bound to be passed on to consumers, not only at the pump but also when they buy any goods or services, because it's the kind of tax which puts up the cost of doing business. There's this new tax on retail profits coming out of left field which will also surely increase the cost of just about everything islanders buy, from cars to carpets and from fashion to food. A case of, 'you've stopped us bringing in GST so we are jolly well going to get one through the back door'?

I know that 'needs must when the devil drives', but it's all so different to the picture we were being peddled at the last budget. And talking about changes, what on earth has changed T&R's attitude so radically over the HSSD budget? Have they been put on some powerful mind-altering medication?

For more than three years they've controlled health spending with an iron fist. They've been parsimonious to a quite unrealistic degree, leading directly to the demise of two political boards at HSSD. Both the Adam and Dorey regimes were effectively brought down by the inevitable consequences of an unrelenting financial squeeze. Now, suddenly it's a case of, 'you want how much extra next year? £8m.? No problem, we'll just go away and dream up some new taxes to fund it. Don't mention it'.

I don't know, but I suspect that if either the Adam or Dorey committees had asked for an extra £8m. they would have been given a very short answer. I suppose as a critic of the unrealistic cap on health spending I should welcome T&R's epiphany moment, but I don't.

I would welcome their mad experiment in squeezing the HSSD budget being eased somewhat, but the sudden 180-degree swing from one end of the spectrum to the other seems illogical, unfair and as unsustainable as the old policy – not to mention the pain it's going to cause to ordinary Guernsey people on modest incomes, including all those pensioners who, remember, have just been told to expect lower increases in future.

How to explain the sea change in T&R's attitude? I hope they haven't fallen for that cliched old line of, 'We could save you tens of millions on this budget in five years' time by radically restructuring the whole service. But just now we really need a big injection of cash to overcome some immediate problems. It's a question of spending to save'.

If they have fallen for that line, they're greener than I thought. Such promises of Eldorado tomorrow usually prove to be fool's gold. Practical problems and public expectations get in the way of stripping out costs in ways which look so practical and doable in a consultant's report. What's more, when the savings fail to materialise, most of those making the promises will have moved on.

Actually it's not just former political boards who have a right to be aggrieved over the U-turn in policy over health spending. Mystery surrounds the departure of HSSD's last permanent chief officer, but the persistent word on the street is that he had to go for having the temerity to tell the 'political centre' that the spending cuts at health had gone as far as they could.

So it's ironic that the twin events of a new chief officer and, shortly afterwards, a new political board at HSSD have proved the catalysts for a sky-rocketing in demands for health spending. The biblical axiom goes, 'by their fruits you shall know them'. If so, then the current regime at HSSD is made up of supporters of a fairly extreme tax-and-spend approach to politics.

Perhaps we shouldn't be too surprised. After all, Deputy Luxon has a track record of a 'shopping list' approach to politics from when he was in charge at PSD. The real surprise is that T&R is seemingly four-square behind that stance, leading to the harshest Budget proposals we've seen since the 1980s.

Yes, of course, Guernsey has to balance the books, but is there really no option to soften the pain by holding down spending? Has all that crowing over States spending constraint we've heard for years been just so much hot air?

Actually, there are whispers that T&R believe the public finances aren't really such a basket case as they currently seem. That the black hole will close but it's just taking a bit longer for the expected rise in States income to come through. If so then hurrah, but, having heard it all before, we should believe it when we see it.

And perversely, if it's true then it makes this punitive Budget far less explicable. Sometimes pain is unavoidable, but make no mistake, this Budget is a real stinker and the States must be absolutely sure there are no alternatives before they even think about passing it.