States has ‘dry powder’ for new infrastructure

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BUSINESS chiefs have criticised a lack of spending on infrastructure amid warnings it could lead to a ‘permanent reduction’ in the island’s potential output.

‘Improved landing capability’ at the airport and airline subsidies are among obvious cases for States investment via the bond issue, says the incoming local chairman of the IoD, but trust in the government’s use of the money might be an issue. (Picture by Adrian Miller, 20654657)

John Clacy, incoming chairman of the local branch of the Institute of Directors, said: ‘The lack of infrastructure spend, and the clear business case and appetite for this spend, was a dominant feature of the 2017 IoD conference.

‘The States have the “dry powder” from the bond issue and have obvious and needed investment cases, from the eastern seaboard, digital connectivity, improving landing capabilities at the airport, to airline subsidies, education and more. But here comes the caveat – do we trust the current States to spend this money?’

His comments come in the wake of the publication of the annual independent fiscal policy review 2017, which looks at the States of Guernsey’s strategy. It highlighted how the States has consistently struggled to meet its target of annual capital expenditure averaging 3% of GDP. Capital allocations budgeted for 2018 have been increased to meet it, but the restatement of Guernsey’s GDP for 2016 has resulted in a forecast that the target won’t be hit.

The report also warned against using the island’s capital reserve as a way to manage the size of Guernsey’s deficit on an ongoing basis, adding: ‘Continually reducing the funding is unsustainable in the long term and may lead to a permanent reduction in potential output of the island.’

Mr Clacy added it was time for an independent and urgent review of the machinery of government, with a departmental ‘silo mentality’ providing hard to shift and a lack of meaningful mechanisms for Policy & Resources – the States’ senior committee – to input in a meaningful and effective way into departmental policy.

‘This must be in place for the next elections or we fear a further dilution of leadership within the Assembly as those who could lead despair at the lack of opportunity to do so. An improved governance structure should also be a requisite for any increase in tax take and infrastructure spend,’ said Mr Clacy.

In its response, the local IoD branch also warned that the economy had still not recovered to levels last seen in 2012 and stressed the need for accurate statistics with independent verification being an ‘appropriate measure’.

Will Green

By Will Green
Business Editor


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