Tightening up spending shows realism, not austerity - Ferbrache

Saturday 01 May 2021

Guernsey's Chief Minister has dismissed suggestions that his comments about the state of the island's finances have sent out a message of austerity.

Economic Development Committee Member Sasha Kazantseva-Miller has spoken about the need to send a message of hope and optimism as the island recovers from the damaging effects of the worldwide pandemic and two local lockdowns.

P&R declared last week that all possible revenue-raising options - ranging from GST, to the securitisation of States' assets - are being reviewed, with the committee aiming to design a 'toolkit' that allows deputies to decide how to tackle worsening deficits in public finances. 

"The message is we simply cannot continue to increase spending in this term," said Deputy Peter Ferbrache, following further debate on the subject. "We will have to rigorously and ruthlessly prioritise the things we want to spend money on. There is no time or money for vanity projects.

"When we debate the Government Work Plan in July and consider funding and investment, we will need to carefully consider costs and benefits associated with our agreed priorities to ensure we can invest prudently and wisely within our scarce resources over this term."

Pictured: Deputy Kazantseva-Miller is a member of the Economic Development Committee. 

The need to address the island's ageing and falling population has long been recognised, said Deputy Kazantseva-Miller in response. She expressed a desire to speak up opportunities rather than "over-playing" the issues. 

"This sends a message of austerity to our community and business," she said in the States, before adding later on social media: "There are many ways to sell a turkey - I am choosing to focus on the opportunity and investment rather than over-playing the issues, all of which have been known and are addressable."

Deputy John Gollop agreed that there was a "tendency for austerity" from P&R, which Deputy Ferbrache rejected.

"No it doesn’t send a message of austerity," he countered. "It sends a message of realism. You cannot in your private life, if you want to lead it prudently, spend all the money you have got coming in over a long period of time.

"Sometimes in your private life, if you don’t have private means, you’ve got to borrow to buy your house, you’ve got to borrow to fund a business, but what you project over a period of time is a measure that you can repay those debts."

Pictured: Expected demographic changes between 2019 and 2040, which have been set out in a briefing to States members and the media. 

He continued: "There has got to be realism, which means that not everybody can get everything they want but there will still be - when compared to many other places - much that can be done."

Recent investigations into public finances, carried out by P&R and the States Treasurer, have led to the publication of a five-year medium term baseline.

The figures indicate general revenue deficits worsening year by year as the working population declines. With the current direction of travel, it is forecast that annual deficits will reach £56.2m come 2025.

P&R's Treasury Lead Mark Helyar said the States "cannot keep acting like the costs don’t matter" with Covid-19 making the need to act more pressing than ever.