OPINION: Wallets, please…

WHEN, I wonder, will this island look back and question how the rot set in? The precise time or decision that set a 24sq. mile speck in the Channel on a journey of being unable to pay its bills, facing the collapse of the fund to pay its old age pensioners, failing to invest in essential infrastructure and abysmally failing to ensure all its citizens are affordably and decently housed?

Horace Camp touched on it here last week – ‘Why, then, are we encouraging the wealthy but making it harder for what Ross Le Brun would call the working man to hang on here?,’ he asked.

The reason is simple. No one speaks for vanilla folk any more. We have no working class conscience. Eric Walters and Dan Le Cheminant no longer champion ordinary islanders and John Guilbert is no longer the voice of reason and better conditions for his Transport and General Workers’ Union members.

True, Mr Le Brun sets out to speak for the working man, but what’s this? He’s a boss, an employer and a company director. In Eric’s day, Ross would be one of the enemy, grinding down the oppressed workers.

In fairness to Mr Le Brun, he puts his own money where his heart lies and pays staff more than minimum wage and is rightly disappointed that he has been unable to campaign more successfully for a living wage to be paid here as a proper minimum.

The point, I guess, is that the island has changed out of recognition from the days when 400ft of glass was a family unit and boys were pulled out of school at 15 to work in the spans. And that’s a good thing.

Most now have holidays, cars, homes with an inside toilet and central heating. Why, M&S even peel the vegetables for you and the butcher’s roundsman no longer leaves the weekly order in the outside meat safe.

The rising tide of prosperity and technology has carried many with it and those who failed to ride the wave are largely forgotten because, well, we’re all middle class now and don’t do poor.

Here’s the rub, however. Tides turn and levelling up becomes very much harder when government’s previously effortless financial surpluses become an £85m. shortfall each and every year. So much for Guernsey’s fabled financial prudence.

So much, too, for the ‘all in it together’ we’ve had so much of recently. Take the latest cut of the emperor’s new clothes, that 8% can be added to the cost of everything – including food, kiddies’ clothes and your gran’s heating bills – with all the pain magically kissed away. GST with mitigations, as it’s euphemistically termed.

In short, when government had the money to do something about inequality and the chronic shortage of what used to be called States houses, it didn’t. As a result, it now finds itself with a proper housing crisis, financial constraints, a labour shortage and no plan for growing the economy.

Best just hand over your wallet to Policy & Resources now, eh?

In case you feel I’m being unduly pessimistic, this week’s column is taken from international ratings agency S&P Global’s latest independent assessment of Guernsey’s prospects.

Its boffins rigorously analyse the available data and have dropped its view of the island from stable to negative and it has warned that it could lower its view again in the next 24 months.

Its ratings are forward-looking opinions about the ability and willingness of debt issuers, like corporations or governments, to meet their financial obligations on time and in full, so they are rather important.

And S&P isn’t upbeat about government’s ability to resolve some of these issues. It projects that the current deficit will worsen as a result of the capital expenditure envisaged under the Government Work Plan.

‘The program outlines £580m. (equivalent to 3.3% of GDP per year) worth of capital projects in areas such as housing, education, digitalisation, and transport, among others,’ it says. ‘Still, Guernsey’s track record of implementing capital projects has been somewhat lacklustre… For this reason, we expect that only around £380m. (2.1% of GDP per year) will be implemented over the period.’

Of attempts to raise more money, it says, ‘We note that previous administrations have attempted but been ultimately unsuccessful in implementing a GST due to strong local opposition.’

It comments on the current house-price bubble and notes that the ‘central issue of supply shortages is unlikely to be resolved soon, potentially supporting Guernsey’s inflated house prices’.

What this means is house prices will continue to rise and there are therefore likely to be further difficulties in filling existing labour shortages and what S&P says will be resulting drag on medium-term growth.

I’ll give you another quote too in the context of the S&P report: ‘It’s all well and good talking about our ageing demographics and the need to raise taxes to fund public services, but on its own it’s not a long-term solution.’

That’s from Dr Andy Sloan, the former States economist, who said capping the island’s population 10 years ago contributed to weaker economic performance over the last decade and directly added to the current financial deficit.

The moral of this, I suppose, is that looking back can help identify the cause of some of the current deep-seated problems facing the island but demanding that nothing changes in the future won’t produce the solutions we need.

In other words, GST of itself isn’t the answer. Economic growth is. But we’re not really looking for any.