The case for more States expenditure
Billed by the Chamber of Commerce as probably the key issue of today, the States of Guernsey's economist yesterday provided a specialist's view on government spending and the factors that have seen it increase nearly fivefold over the last 100 years.
Billed by the Chamber of Commerce as probably the key issue of today, the States of Guernsey's economist yesterday provided a specialist's view on government spending and the factors that have seen it increase nearly fivefold over the last 100 years.
And seen through the eyes of a Ph.D, it makes perfect sense that it should. If the main motivators of a bureaucrat (the term is used in a non-pejorative sense) are pay, power, prestige and promotion and those hinge on the size of a budget, then it is entirely rational that the drive is for bigger budgets and more spending.
It is one reason why there are, apparently, 17 academic economic models available to explain the relentless upward drift in expenditure.
While the underlying factors are many, varied and rational, the underlying message was that when people – and newspapers – talk about reducing such expenditure, it's far more complex than it looks.
Most would accept that, but a particular area of interest was the acknowledgement that the island needs a competitive tax regime to earn its money through the finance sector.
Although the talk to the Chamber of Commerce did not develop the theme, it's clear that while demand for increased public spending is, effectively, never-ending, the income to pay for it is not.
While the island has financial services, it cannot breach the 20p in the £ headline rate of income tax even if voters were willing to let that happen. And while, as we have seen in the need to fill the zero-10 black hole, there are other ways of taking money off residents, that, too, is finite.
Part of the demand for more and better services is fuelled by Guernsey demographic problems and the ageing population, which will have to be supported by fewer individuals who are in work.
There is no single answer to the problem, which is shared by other jurisdictions, but it cannot be ignored.
In Guernsey's case, a first step has to be an examination of what is being spent by existing departments and where it could be better used elsewhere.
