12 October 2020
As Senator Le Fondré has mentioned, this year’s Government Plan is all about protecting the Island’s future.
One element of this is keeping Jersey on a responsible and stable course after what has been a turbulent year as we faced a global pandemic and economic downturn.
Since the lifting of many of the lockdown restrictions earlier this year, we have achieved a balance between protecting Islanders’ health from the immediate effects of Covid-19, while also making sure we protect our future health and wellbeing through appropriate economic support and investment.
It is also vital that we protect our future finances and ensure we prioritise the long-term financial sustainability of our Island.
This means that we must respond, in the short-term to the effects of Covid-19 by funding the essential public services needed to respond to the pandemic.
In the medium-term we must support the wider economic recovery.
In the long-term we must continue to invest in our future by delivering on our priorities, like education and healthcare.
This Government Plan sets out the expected costs for us to manage the virus in Jersey, without limiting, unnecessarily, normal economic activity.
This will protect the health and wellbeing of Islanders while also preserving their livelihoods and businesses.
We are though conscious that we need to balance the risks.
A second wave in Europe and the UK and a sharp slowdown in the world economy as a result of Covid-19, has to be balanced against the risk that we cause irreversible damage to our and our children’s future by introducing costly restrictions on our economy during a period of recovery.
In this Government Plan we’ll look to balance these risks by running deficits to support spending and investment in the coming years, with a return to balanced budgets by 2024.
It is our view that, in these uncertain times, we should not plug our financial hole by making damaging cuts to expenditure or by drawing on the Strategic Reserve.
Instead, and in line with the recommendations of the Fiscal Policy Panel, we are proposing to borrow up to a maximum of £336 million next year, in addition to the Fiscal Stimulus Fund of £50 million, to fund the cost of the response to the pandemic.
This will be possible because of our strong financial position, low debt levels and a high credit rating going into this crisis.
But, we are well aware that debt has to be repaid and we are proposing that, should the States Assembly approve my proposal to move Prior Year Basis taxpayers to Current Year Basis, the future payments of the 2019 tax liabilities for Prior Year Basis taxpayers will be paid into a ring-fenced sinking fund. This will repay much, if not all, of this debt.
These payments would be time limited and they avoid the need to raise taxes on Islander’s working hard to preserve their livelihoods following the necessary lockdown measures.
This approach would also ensure that the debts we incur to protect the Island from the effects of Covid-19 now, do not become a long-term issue for the next generation of Islanders and we do our best to protect their future.