Mark Le Page: It’s time for party politics

Wouldn’t we all agree that Donald Trump’s tariffs were a fiasco? What is it that distances him from reality?

I will return to this topic later but, for the moment, please indulge me as I reflect on local matters. For the many readers who won’t know me, I worked at the Guernsey Financial Services Commission for nearly two decades and have recently served as vice-chairman of the Guernsey Investment and Funds Association. For one year I sat on the Council of the Guernsey International Business Association.

This experience gave me a resounding admiration for many leaders who have sought to do right by Guernsey, in both the public and private sectors. I have witnessed the regulator objecting to one policy, noting unequivocally that thousands of unemployed ‘was not going to happen on my watch’. I have, together with colleagues in what is now Economic Development, wrestled with a 180-page report until the extremely early hours of the morning. One official had a bigger struggle: he was an hour ahead, travelling by train to Brussels to present at an 8.30am meeting. All this was to ensure Guernsey’s economy remained sound, providing near full employment, and against the wishes of international authorities who, make no mistake about it, really do want to close us down. Recently, we know there have been robust defences of the island to Moneyval and the OECD. It has come at the cost of health to some employees in our authorities. We owe them our gratitude.

Yet despite these efforts – perhaps because they are performed unnoticed and, largely, unthanked – I see a socially divided island. In a recent private presentation I attended, there was an inspiring slide on initiatives to make the Guernsey economy grow. The first reaction from attendees was that this was biased towards the Guernsey finance sector. Finance was not mentioned anywhere on the slide. Yes, it is our core economic contributor, but the purpose of the slide was to ensure the economy grew through whatever opportunities there were, seen and unseen. I repeat, finance was nowhere on that slide. Social division.

In response to the recent launch of Forward Guernsey, one contributor to the Guernsey Press website suggested that it is a vehicle for the elites to pull strings behind the scenes. Social division.

Now we may well acknowledge that this division has always existed. It seems to me the divide is greater than ever. What has caused it? Undoubtedly, the unaffordability of housing for first-time buyers. For sure, recent inflation. Quite possibly, derogatory remarks with little substance to it – ‘the unsackable William Mason’, for example, was uncalled for and unfair. And, with that, the loss of constructive Hegelian debate.

Not all the reasons are within Guernsey’s control. First-time house prices were unaffordable in my generation’s time. However, back then, banks were able to on-sell our mortgages, slicing and dicing them into collateralised debt obligations. And so we could borrow at far higher levels than our children can. Why? Because the banks did not keep the risk. Today, the global economy having been damaged from this smoke-and-mirrors solution to unaffordability, borrowing levels are logarithmically lower. And our children are suffering. Yet we can increase the supply of housing. Future Guernsey’s manifesto produced compelling solutions for injecting life into the construction industry. It also proposed removing stamp duty to make it easier for first-time buyers.

Similarly, inflation was a global shock. Yet, amid the fattening prices spike, I was aghast that GST was even on Guernsey’s political menu. While the European Commission had decided that they should pause any changes to their VAT regime because of the price crisis, we were debating GST. As I probed, I became convinced there had been no detailed consideration of this measure. The courts, already stretched, would undoubtedly hear appeals. And this at the risk of timely administration of justice in more important matters.

I became even more worried that, as the European Commission was flagging its belief that the exemption of VAT on certain investment fund management fees was out of date, we were prepared to risk the future of our financial services sector by introducing GST. While I was assured that Guernsey would never impose GST on fund services, I felt we could not rule out that we would be forced by unfriendly international authorities to introduce it. Some UK investment fund lawyers were uneasy. I was proud to be vice-chairman of the Guernsey Investment Fund Association when we wrote to all deputies expressing concern that the impact of GST had not been thoroughly researched.

I do not dispute that Guernsey has a funding crisis. I agree that the can should not be kicked down the road. However, we have to know where the can is first to be able to decide whether to kick it. And, with respect to GST, we have no idea.

This is how I am defining Hegelian debate. An issue should be debated, from informed positions on both sides, to arrive at a solution. Debates should not be reduced to shouting articles of false faith. GST has been shouted as necessary to facilitate further investment, which research has shown generates growth. As Jon Moulton ably argued in this paper, that depends on what you invest in. I would go further and observe that, in economics, there is no consensus that government investment stimulates growth. Hayek disputed it deeply, arguing that taxation for government investment is merely moving money which was seized from the people in the first place. Businesses, it is shouted based on questionable statistical analysis, are beginning to welcome GST. Tradesmen tell me that, were GST to be introduced, goods here would become more expensive and therefore they would buy from the UK. Guernsey’s supply chain would be wrecked.

With this I return to the Donald Trump comment. The same people supporting GST decry Trump’s tariffs, for the same reasons that many of us have cautioned against GST: inflationary, wrecking supply chains, damaging wealth, costing jobs. To be clear, these are all people whom I know care about Guernsey, all of Guernsey. But their position on GST is not coherent because of the absence of a respectful forum in which to debate. By contrast, Future Guernsey’s manifesto opposes GST-plus, concluding it cannot be primitively wedged in without a review towards fairer taxation for lower/middle incomes. A start.

Call me naive, but I believe in Hegelian debate. Let’s call it liberal democracy. Proper, informed debate, produced by well-researched arguments. The industry associations, to my delight, are beginning to work more closely together, recognising that the challenges Guernsey faces require a combined thought process. It is time now for politics to go the same way, for people to combine their efforts based on their political philosophy. Yes, I am talking about party politics. That way, there can be well-researched positions and arguments on both sides, not the current pinball machine we are witnessing. All the public would hear their voices in the States Chamber.

And you know what? Tradesmen, civil servants, charity workers and financiers may just find they agree about many things. Who knows, there may just be less social division. And I may even drop my reservations about GST.