States' sweeping statements are too often set on sand

A LEADING contractor last week used a platform at the IoD conference to argue that confidence in Guernsey was low.

Once the story had been published, Treasury minister Gavin St Pier came back quickly through Twitter to say that this was only the view of one large contractor and did not reflect business confidence more generally, which has become more positive.

Presumably that is based around the same tentative 'evidence' this year's Budget relies on for its positive outlook despite the massive shortfalls in revenue.

So let's take a quick look back at the annual business trends survey released in the summer to see where confidence is.

When questioned about the level of confidence in the island's economy over the next 12 months, just 14% said they were much more or more confident than this time last year, which was actually one per cent down on the previous survey, while 42% are feeling less confident – yes, that's 42%, compared with 28% last year.

It takes rose-tinted spectacles to come to the conclusion that confidence has become more positive from that.

And therein lies the rub with this government.

Sweeping statements of reassurance are easy to make, but dig beneath the surface and they are too often set on sand.

It has, at times, been like a giant game of call my bluff.

Like no other, this States has at times got swept up in the world of spin and half-truths, be it arguments about the seafront traffic experiment, about the course of the waste strategy, that the States would deliver a balanced budget, proposals for tax and benefits changes including a GST or claims that government spending is now under control.

The bond issue is another example of political obfuscation.

In itself the concept was mostly a sound one, if you have faith that the rules set would not be broken by future politicians.

The argument went that the States has been borrowing in a hotchpotch kind of way anyway, through entities such as the Guernsey Housing Association or Aurigny, for example, but not necessarily getting the best deals because these were for relatively small ad-hoc amounts.

Put all the borrowings together in a larger pot, add a bit more for some other projects on the horizon that have income streams and go to the market at a time when conditions are favourable and voila, a good deal all round.

That was how the bond issue was sold.

Where the silence was deafening when you look back on the reports was not only what the anticipated costs would be of the issue, but how Treasury tested whether a better deal could actually be reached.

The costs omission was a neat trick and should have been exposed earlier – is £14.8m. good, bad or indifferent? We have no benchmark to test it against, no predictions were made, so we can't tell – anyone involved in the scrutiny of the States, the media included, missed that.

That leads to the potential of spin by earlier omission.

The grounds for believing that better deals would be made were in the end blind faith.

It is a concept that sounds absolutely plausible.

Now the Budget has revealed that the new bond cannot better some of the deals.

Treasury argues this was chicken and egg, how could it know until the bond issue? – but that betrays a remarkable lack of investigation if it really was the case, something that given the undoubted talent working on these schemes just doesn't stand to reason.

It means the money is now available for other projects, as long as they fit the rules in place.

We are meant to take reassurance from that, but the concern will be that spending which otherwise would have faced much more scrutiny suddenly becomes feasible.

Given where this States will leave the next in terms of the capital programme, do not be surprised if these rules get relaxed over time as the money starts to burn a hole in the pockets of States members.

For an example of that natural hunger that takes over in these situations, just remember that the Assembly backed a £250m. issue, giving delegated authority to PC to add another £80m. if it was justified.

Surprise surprise, in November 2014 Policy Council backed borrowing another £80m. of 'cheap' money.

Next term we are being assured that changes to the structure of government and how it works alongside the public sector will deliver a more transparent system.

Key to this will be beefing up the scrutiny arm because without that, call my bluff can run with just the bluff and too few people doing the calling.

It is not just about getting the right minds involved who are willing to challenge and question the actions of their peers either – too much is hidden by the lack of robust data and information being published.

The tax, pensions and benefits review was one example where decisions were being made with potentially far-reaching consequences on the community which were masked behind a reliance on showing the impact on the average person – one that gives a much more favourable impression of what was happening, of course.

Those on the margins, which is where small impacts of things like costs have a disproportionately large effect, were hidden from the debate until the intervention of campaigners.

That cannot be allowed to happen again.