2019 Budget faces many amendments

Tuesday 06 November 2018

There's a risk Guernsey's 2019 Budget could leave the island with a deficit, depending on how the States vote when they discuss a number of amendments against the official proposals today.

So far 23 amendments have been placed, which could see a freeze on petrol duty, a step away from using profits from scratch cards to pay for Beau Sejour and an increase in personal allowances, among other things.

But, the Policy & Resources Committee said it will submit 16 amendments of its own against the Budget, "as it seeks to ensure that, whatever decisions the Assembly makes on amendments laid by States Members, the island continues to balance its books."

Pictured: The 2019 Budget proposals can be read in full here. 

When Deputy Gavin St Pier released his 2019 Budget proposals last month, he said that P&R had been able to produce a fully balanced Budget for the second year in a row and that the island's solid fiscal position and economic stability "will be the envy of jurisdictions throughout the world."

At the time he said, "Financial discipline and planning: both are absolutely essential for a government and whilst unlikely to capture popular imagination, neither can be taken for granted. Let's not pretend it has been easy. Imposing both on government has been met with both resistance and scepticism. But now we can reap the rewards and be proud that our public finances have stabilised and improved whilst other jurisdictions continue to struggle. That stability is vital as it allows the States to deliver the vital services on which we all rely."

Now, the P&R President is worried that if the 23 amendments formally lodged against the Budget are approved, it will disrupt wider plans for balancing Guernsey's books while delivering public services.

To counteract that risk, P&R is planning to submit 16 amendments of its own against the Budget, so that whatever decisions are made today, the island "continues to balance its books."

This is vital, the Committee said, to make sure the States comply with the rules they have set for themselves in the Fiscal Policy Framework, in particular not to increase government spending unless a balanced Budget is achieved.

Deputy St Pier said among his plans are efforts to increase spending, based on proposals to balance the books - but that can't happen if revenue raising methods are attached, cutting the amount of money the States raises each year.

"In our Budget proposals, the Committee recommended that spending is increased across several committees. This was proposed following requests from a number of committees in light of significant pressures. However it was only possible to do this within our fiscal rules by ensuring that the Budget overall was balanced. Several amendments from Members seek to reduce States’ revenue. The combined effect of these, especially if all were accepted by the Assembly, would be to put us back in deficit. 

"We understand why proposing amendments to reduce changes proposed to fuel duty or TRP may be popular with the public because they are presented as ‘cost free’, but everyone knows there is no such thing as a free lunch. Failing to replace that revenue is just plain fiscally irresponsible.  As such, we will propose several counter amendments that give the Assembly the option to agree the measures proposed, but replace the revenue lost by reducing the personal income tax allowances which we had previously recommended.  Whilst this retains a balanced Budget, it reduces the income tax cut delivered to low and middle income families proposed in our budget and also does not help reduce our over-reliance on income tax, so we’d rather the States just accepted our original proposals."

Pictured: Deputy Gavin St Pier who will lead debate on the 2019 Budget today.