Dark days are coming
WHEN even the great and unmatched wisdom of our own stable genius, Deputy Gavin St Pier, cannot stop or even slow down the relentless growth of our public sector, we must accept the good times are behind us now.
The apocalyptic world so beloved by Greta and XR, where hope has been consigned to history, is just around the corner. To paraphrase Harold Macmillan, ‘we will never have it so good again’.
Yes, you’ve guessed it – I am writing about the Budget.
States spending just spirals out of control and the only way to balance the books is to increase taxation and drastically reduce the amount normally paid into the reserves. The savings dividend promised so many times has not materialised and I doubt it ever will. Looks like spending now to save money for tomorrow really was smoke and mirrors with no real substance.
And given the rhetoric about tough times ahead, with the need to investigate sales and health taxes, I think the penny has dropped in St Pier Towers that banking on the savings from reforming the civil service and the digital upgrade is just pie-in-the-sky accounting.
You may not be aware that these are the good times, but you will look back on them with fondness as the time when the States of Guernsey left you with a smidgen of your hard-earned income to spend on the little fripperies of life that took your fancy. In the future far more of your money will need to be handed to the States, which knows far better how to spend it than you do.
On the face of it, pensioners have been targeted to bear a greater burden in 2020, but that is probably only fair because they bought their big houses when they were cheap and that’s why they should see a greater increase in TRP rather than highly paid millennials living in shoe boxes.
If you are concerned that the increased tax is regressive because it doesn’t take into account the income of pensioners in big houses, then don’t be because Deputy St Pier is working up an equity release scheme to help them bear the burden. Probably be useful for borrowing money to pay for health care in the future. After all, you can’t take it with you and the States will probably spend the money much better than your children.
Next year will be a tipping point for Guernsey, not only because the attempt to keep States spending in check has obviously been abandoned but also because a new equivocation of politicians will be elected in a novel and untested manner.
We know from the Budget report that the above-inflation 5% increase in States spending was significantly less than the committees were seeking, which hints at a deferment of that extra spending for the new 2020 Assembly to sort out. That in addition to the spending that new deputies will want for their pet projects and to fulfil their manifesto promises.
Deputy St Pier may or may not have control of our finances next year and, though he may have been unable to hold back the tide of big government, he has been our best option for the job of trying and without him we would be in an even more dire position. For that he deserves our thanks, even if his final budget of the 2016 Assembly is a capitulation.
What Guernsey wants from government has to become an election issue next year. Although Deputy St Pier is resigned to the view that the people of Guernsey expect a gold-plated set of services to be delivered at any cost, has he actually asked us what we want?
Perhaps the people of Guernsey do not have the sense of entitlement he thinks they have. We are a tiny community, inhabiting a tiny island and we have no economies of scale. Surely we can’t expect to receive the same level of services as those provided by the UK, which is the fifth largest economy in the world with a population a thousand times greater than our own?
In the 2020 Budget it has been assumed that we are prepared to open our wallets wider and to dig deeper for ever better services. But how sustainable is that? To maintain our current service levels we will have to dig deeper year after year until we have nothing left but fluff. Then, with the States in receipt of all our money, it will in turn provide for all our needs?
Does it have to be that way? Or can we accept a future where we cut our coat according to our cloth? Perhaps we revert to a government providing safety nets for those in need and not being a champion of equality for all. We need equitable government rather than equity release. Some hard decisions need to be taken, and taken soon, if we want to keep a good balance between the people and those who govern us.
Our policy on reserves at a time of global uncertainty, and just before we are committing hundreds of millions to upgrading schools and the hospital, needs to be firm and not allow the odd £20m. to be hived off to ‘rationalise’ the policy and coincidentally be almost the exact amount needed to balance the books.
At the top of the list for review, assuming we haven’t really thrown in the towel, must be health. If we continue to try to match the UK, it will bankrupt us. There has to be a Guernsey compromise between what we want and what we can afford. I can’t think of anyone in the current shower (collective noun for politicians) of deputies better qualified than Deputy Soulsby for keeping a lid on HSC expenses, but even she has failed.
This budget is a curate’s egg, good in parts. But in some parts it is absolutely awful and I don’t believe it will be uncontested when it is debated next month. I expect to see markers being laid down by those who believe the public are best placed to decide how to spend their hard-earned cash.
And there is no amount of mumbo jumbo that will have me believe we are a low personal tax jurisdiction. Final assessment: could do better. Could do much better.