States investment targets could be re-set

Thursday 19 October 2023

Public/private sector partnerships to deliver capital projects could be encouraged after the States agreed to consider looking again at how much of our GDP is re-invested back into developing infrastructure.

Deputy Sasha Kazantseva-Miller (pictured top) successfully argued that the States should look again at how much money the island aims to invest in things like new developments.

The current target is 3% of GDP - a target which hasn't been met in recent years.

Deputy Kazantseva-Miller said that might be too high as it was recommended based on comparisons with much larger jurisdictions like the UK and USA.

Both of those countries include spending on national defence in its capital spending, which Guernsey does not have to do as we fall under the UK's remit for defence.

"I think it's very important that we should be comparing ourselves against similar island jurisdictions," she said.

"We have been comparing ourselves through the fiscal panels to the OECD average, and countries like Mexico, but importantly as an island jurisdiction, and our current setup as a Crown Dependency, we don't spend for example, on defence. We don't have complex climates and wide geographies that need to be connected through complex infrastructure."

Pictured: Deputy Lindsay de Sausmarez seconded the successful amendment.

Deputy Kazantseva-Miller argued that the island should also be considering encouraging public-private partnerships with regards to capital infrastructure to reduce the pressure on the public purse.

"I don't know what really the right answer is, but I think we should develop a better understanding of what the right benchmark for us is because it will guide our our public expenditure, but also for longer term forecasting purposes," she said.

Backed by Deputy Lindsay De Sausmarez, the amendment suggested limiting capital expenditure budgets to potentially just 1.5% or 2% of GDP.

The pair said this could be decided by a thorough review of Principle 6 of the island's Fiscal Policy Framework and whether it is still relevant to the island and its finances.

They called on the States to compel Policy and Resources to do that work while developing a mechanism for monitoring the capacity of the industries affected by investments in capital infrastructure. This would predominantly be the construction industry, but would also include other sectors like technology.

Strong support for our amendment with Deputy @Lindsay_Gsy covering multiple points regarding capital expenditure, construction industry capacity and specifically looking to accelerate private and business investment. Whether it survives final substantive voting is another q! pic.twitter.com/sicnmFwjA0

— Sasha Kazantseva-Miller (@sashakmiller) October 19, 2023

Members of P&R said that work is already done and is included in other work streams.

Deputy Peter Ferbrache, P&R President was one who said that and reiterated that he is always open to conversations around amendments ahead of debates. 

"...we should be fluid and flexible enough to work with each other and say 'okay, if you think you could help and do that, by all means, go ahead and do it' etc, and I do think this amendment is well founded. What I am disappointed about and I've got to say so is that directing Policy and Resources to do something...there has not been consultation. I'm not sure why that was the case. Because if we're going to work together cohesively, you would have expected that."

Ultimately the States overwhelmingly backed the proposal with 36 members voting pour and just four contre.

Deputy Kazantseva-Miller said by putting this into the main set of proposals to be debated later this week, the States will potentially have other options in the future when large projects need funding.

"...there will be projects like the pool marina, which is a great example, which can start paving the way for being poster projects for different types of funding," she said, "and I really hope we can see more of that.

"If I remember correctly, at the first Government Work Plan debate in 2021 we had a resolution which was approved which said that P&R will look into a new types of public/private partnerships and I believe that this solution is still live. It hasn't been rescinded. And my understanding was that, I think and I said they will have to do something this political term.

"I really sincerely believe that this area of work for us is absolutely critical for our economy, for our community, for our governments.

"...by embedding it a bit more, that we look at public capital expenditure, private capital expenditure, and we really look at the levers we have as government to accelerate investment into public capital expenditure will be game changing."

The amendment was successful with 36 votes pour and four contre. The voting record can be viewed HERE.

The debate continues...