States Meeting Transcript - 22/06/2006

STATES OF JERSEY OFFICIAL REPORT THURSDAY, 22nd JUNE 2006

PUBLIC BUSINESS (continued) ..............................................................5 1 Strategic Plan 2006-2011 (P.40/2006)....................................................5

1. The Greffier of the States (in the Chair):.................................................5

1. Deputy P.J.D. Ryan:.....................................................................5
2. Senator T.A. Le Sueur (The Minister for Treasury and Resources):......................8
3. Deputy S. Power of St. Brelade : .........................................................9
4. Deputy P.V.F. Le Claire of St. Helier:...................................................9
5. Deputy C.J. Scott Warr en of St. Saviour:................................................9
6. Senator T.J. Le Main:....................................................................9
7. Deputy P.J.D. Ryan:....................................................................10
8. Deputy R.G. Le Hérissier of St. Saviour:...............................................10
9. Deputy J.B. Fox of St. Helier:..........................................................11
10. Connétable D.J. Murphy of Grouville : ..............................................11
11. Senator J.L. Perchard:...............................................................12
12. Senator S. Syvret (Minister for Health and Social Services):........................15
13. Deputy G.P. Southern of St. Helier : .................................................17
14. Deputy R.C. Duhamel of St. Saviour:................................................19
15. Senator W. Kinnard (The Minister for Home Affairs):..............................20
16. Deputy C.H. Egré of St. Peter:......................................................23
17. Senator L. Norman:..................................................................23
18. Senator P.F.C. Ozouf (The Minister for Economic Development):..................24
19. Deputy J. Gallichan of St. Mary:....................................................27
20. Senator M.E. Vibert (The Minister for Education, Sport and Culture):..............28
21. Senator F.H. Walker (The Chief Minister): ..........................................29
22. Deputy C.J. Scott Warr en:...........................................................33
23. Senator T.A. Le Sueur (Chief Minister): ............................................33
24. Deputy K.C. Lewis of St. Saviour:..................................................33
25. Deputy P.N. Troy ofSt. Brelade: ....................................................34
26. Deputy G.C.L. Baudains of St. Clement:............................................34
27. Deputy J.G. Reed of St. Ouen:......................................................35
28. Deputy A.D. Lewis of St. John:......................................................36
29. Deputy G.W.J. De Faye of St. Helier : ...............................................37
30. The Deputy of St. Martin:...........................................................38
31. Connétable A.S. Crowcroft of St. Helier:............................................38
32. Senator P.F. Routier:................................................................39
33. Deputy P.J.D. Ryan (Chairman of the Corporate Services Scrutiny Panel):..........40
34. Senator T.A. Le Sueur (The Minister for Treasury and Resources)..................40
35. Senator W. Kinnard (Minister for Home Affairs):...................................40

36. Senator T.A. Le Sueur...............................................................40
37. Deputy P.J.D. Ryan:.................................................................40
38. The Greffier of the States (in the Chair):............................................42
39. Senator P.F.C Ozouf (Minister for Economic Development):........................42
40. The Greffier of the States (in the Chair):............................................43
41. The Greffier of the States (in the Chair):............................................44
42. The Greffier of the States (in the Chair):............................................45
43. The Greffier of the States (in the Chair):............................................46
44. The Greffier of the States (in the Chair):............................................47

2. The Greffier of the States (in the Chair):................................................49

1.2.1 The Connétable of St. Helier : ..........................................................49 1.2.2.The Greffier of the States (in the Chair):................................................50

3. Senator F.H. Walker :...................................................................50
4. Senator S. Syvret:......................................................................50

5. Senator F.H. Walker :...................................................................50

3. The Deputy Greffier of the States:......................................................51

1. The Connétable of St. Helier : ..........................................................51
2. Senator S. Syvret:......................................................................52
3. Senator M.E. Vibert (Minister for Education, Sport and Culture):......................52
4. Deputy P.V.F. Le Claire:...............................................................53
5. Deputy J.B. Fox........................................................................53
6. Deputy C.J. Scott Warr en:..............................................................54
7. Deputy P.N. Troy :......................................................................54
8. The Connétable of St. Helier : ..........................................................54
9. The Greffier of the States (in the Chair):................................................55

LUNCHTIME ADJOURNMENT............................................................57

4. The Greffier of the States (in the Chair):................................................57

1. Deputy C.J. Scott Warr en:..............................................................58
2. The Connétable of St. Helier : ..........................................................58
3. The Greffier of the States (in the Chair):................................................58
4. Senator T.A. Le Sueur:.................................................................58
5. Deputy C.F. Labey of Grouville : .......................................................58
6. The Connétable of St. Helier : ..........................................................60
7. The Deputy of St. John:................................................................61
8. Senator M.E. Vibert : ...................................................................62
9. Deputy S.C. Ferguson: .................................................................63
10. Senator T.A. Le Sueur : ..............................................................63
11. Deputy C.J. Scott Warr en:...........................................................63
12. Deputy G.P. Southern :..............................................................64
13. Deputy R.G. Le Hérissier:...........................................................64
14. The Connétable of St. Ouen (The Chairman of the Comité des Connétable s): .......64
15. Senator P.F.C. Ozouf :...............................................................65
16. Deputy J.B. Fox:....................................................................65
17. The Deputy of Grouville :............................................................66
18. The Greffier of the States (in the Chair):............................................66
19. Deputy J.A. Martin of St. Helier : ....................................................66
20. Deputy C.J. Scott Warr en:...........................................................67
21. Deputy G.W.J. de Faye:.............................................................67
22. The Connétable of St. Helier:........................................................67

5. The Greffier of the States (in the Chair):................................................67

1. Senator J.L. Perchard:..................................................................68
2. Senator F.H. Walker :...................................................................69
3. Senator W. Kinnard:....................................................................69
4. The Connétable of Grouville : ..........................................................70
5. Deputy P.V.F. Le Claire:...............................................................70
6. Deputy G.P. Southern :..................................................................71
7. Senator M.E. Vibert (The Minister for Education, Sport and Culture):..................71
8. Senator J.L. Perchard:..................................................................71
9. The Deputy of St. Martin:..............................................................72
10. Senator J.L. Perchard:...............................................................72
11. Deputy C.J. Scott Warr en:...........................................................73
12. Senator W. Kinnard: ................................................................73
13. Deputy A.D. Lewis of St. John:......................................................74
14. The Connétable of St. Helier:........................................................74
15. Senator J.L. Perchard:...............................................................74

6. The Greffier of the States (in the Chair):................................................74

1. The Connétable of St. Helier : ..........................................................74
2. Senator S. Syvret (The Minister for Health and Social Services):.......................75
3. Deputy P.V.F. Le Claire:...............................................................75
4. Deputy G.W.J. de Faye:................................................................76
5. Deputy G.C.L. Baudains: ..............................................................76
6. Deputy C.J. Scott Warr en:..............................................................77
7. The Connétable of St. Helier : ..........................................................77

7. The Greffier of the States (in the Chair):................................................78

1. The Connétable of St. Helier : ..........................................................79
2. Senator F.H. Walker (Chief Minister):..................................................79
3. Senator F.E. Cohen (Minister for Planning and Environment):.........................79
4. Senator S. Syvret (Minister for Health and Social Services):............................80
5. Senator F.E. Cohen (The Minister for Planning and Environment): ....................80
6. Deputy P.N. Troy :......................................................................80
7. The Connétable of St. Helier : ..........................................................80
   8. The Greffier of the States (in the Chair):................................................81

1. Deputy C.J. Scott Warr en:..............................................................81
2. Senator F.E. Cohen (Minister for Planning and Environment):.........................83
3. Deputy S.Power:......................................................................83
4. Senator B.E. Shenton:..................................................................83
5. Deputy J.J. Huet of St. Helier:..........................................................84
6. Senator P.F.C. Ozouf (Minister for Economic Development): ..........................84
7. Senator F.E. Cohen (Minister for Planning and Environment):.........................84
8. Deputy C.J. Scott Warr en:..............................................................85
   9. The Greffier of the States (in the Chair):................................................85

1. The Deputy of St. Ouen:................................................................85
2. Deputy G.W.J. de Faye:................................................................86
3. Deputy G.P. Southern :..................................................................86
4. The Deputy of St. Ouen:................................................................86

10. The Greffier of the States (in the Chair):................................................87

1. The Deputy of St. Ouen : ............................................................87
2. Senator T.A. Le Sueur (Minister for Treasury and Resources):......................87
3. Deputy C.J. Scott Warr en:...........................................................87

4. The Deputy ofSt. Ouen: ............................................................87

11. The Greffier of the States (in the Chair):................................................87

1. The Deputy of St. Ouen : ............................................................88
2. Senator T.A. Le Sueur (Minister for Treasury and Resources):......................88
3. Deputy A. Breckon of St. Saviour:..................................................88
4. Deputy C.J. Scott Warr en:...........................................................89
5. The Deputy of St. Ouen : ............................................................89
6. Deputy J.A. Martin of St. Helier : ....................................................90
7. Deputy S.C. Ferguson of St. Brelade:................................................90
8. Senator S. Syvret (Minister for Health and Social Services):........................90
9. Deputy J.D. Ryan of St. Helier:......................................................91
10. Connétable K.A. Le Brun of St. Mary : ............................................91
11. Senator P.F. Routier (Minister for Social Security):................................91
12. Deputy G.W.J. de Faye:............................................................91
13. Senator F.H. Walker (Chief Minister):.............................................92
14. Senator T.A. Le Sueur:............................................................93
15. Deputy J.D.Ryan:.................................................................94
16. The Deputy of St. Ouen:...........................................................95

12. The Greffier of the States (in the Chair):................................................95

1. The Connétable of St. Helier:........................................................95
2. Senator T.A. Le Sueur : ..............................................................96
3. Deputy A. Breckon:.................................................................96
4. Senator T.A. Le Sueur : ..............................................................96

13. The Greffier of the States (in the Chair):................................................96

1. The Connétable of St. Helier:........................................................96
2. Deputy G.W.J. de Faye:.............................................................98
3. Deputy G.C.L. Baudains:..........................................................100
4. Senator P.F.C. Ozouf :..............................................................100
5. Deputy P.V.F. Le Claire:...........................................................101
6. Deputy P.J.D. Ryan:................................................................101
7. Senator F.H. Walker : ..............................................................102
8. Deputy J.J. Huet:...................................................................103
9. Deputy J.A. Martin: ................................................................103
10. The Connétable of St. Helier : ....................................................104

14. The Greffier of the States (in the Chair):..............................................107

1. The Deputy of St. Ouen : ...........................................................107
2. Senator S. Syvret: ..................................................................108
3. The Deputy of St. Ouen : ...........................................................108

15. The Greffier of the States (in the Chair):..............................................108

1. Senator J.L. Perchard:..............................................................108
2. Deputy R.G. Le Hérissier:..........................................................109
3. Deputy G.C.L. Baudains:..........................................................109
4. Deputy G.P. Southern :.............................................................109
5. Senator J.L. Perchard:..............................................................109

16. The Greffier of the States (in the Chair):..............................................111

1. The Deputy of St. Ouen : ...........................................................111
2. Deputy S.C. Ferguson:.............................................................111
3. Senator F.H. Walker : ..............................................................112
4. Deputy P.V.F. Le Claire:...........................................................112
5. The Deputy of St. Ouen : ...........................................................112

17. The Greffier of the States (in the Chair):..............................................112

1. The Deputy of St. Ouen : ...........................................................112
2. Deputy S.C. Ferguson:.............................................................113
3. Senator P.F.C. Ozouf :..............................................................114
4. Deputy A. Breckon:................................................................115
5. Deputy G.P. Southern :.............................................................116
6. Senator F.H. Walker : ..............................................................117
7. The Deputy Of St. Ouen : ..........................................................117

18. The Greffier of the States (in the Chair):..............................................117

1. The Deputy of St. Ouen : ...........................................................118
2. Senator F.H. Walker : ..............................................................118
3. Deputy G.C.L. Baudains:..........................................................118
4. The Deputy of St. Ouen : ...........................................................118

19. The Greffier of the States (in the Chair):..............................................118

1. The Deputy of St. Ouen : ...........................................................119
2. Senator M.E. Vibert :...............................................................119
3. Senator P.F.C. Ozouf :..............................................................119

ADJOURNMENT............................................................................119

1. Senator S. Syvret:.....................................................................119
2. The Greffier of the States (in the Chair):..............................................119

The Roll was called and the Dean led the Assembly in Prayer. PUBLIC BUSINESS (continued) 1 Strategic Plan 2006-2011 (P.40/2006)

1. The Greffier of the States (in the Chair):

The debate resumes on the Strategic Plan and the amendments and in accordance with the decision yesterday, the Assembly will take firstly the 11th amendments in the name of the Corporate Services Panel, which is number 20 on the coloured running order of amendments. The amendment is quite lengthy, Chairman, you are content that it be taken as read?

Deputy P.J.D. Ryan of St. Helier : I am.

The Greffier of the States (in the Chair):

I will, therefore, invite you to propose the amendment.

1. Deputy P.J.D. Ryan:

The first thing I would like to do is to congratulate the Council of Ministers and their team of officers on an absolutely splendid job of producing the Strategic Plan in what can only be described as extremely challenging circumstances. To have produced it at the same time as a complete change of the machinery of government, and the first draft in less than 2 months for such a comprehensive piece of work, must have been challenging, to say the least. I know that for all the arguments over its contents, the fact that it was produced to at least give us a platform and basis upon which to argue must be applauded and I do so. Well, you are all waiting for the "but" and the "but" is; could it be better? So to our amendments. The amendment in front of Members is in 3 parts, rather like a sandwich with the meat in the middle. The top layer of the amendment, 1.2.2 is quite simple and is a clarification of a statement made in the Strategic Plan regarding budget surpluses. It simply clarifies that the early GST (Goods and Services Tax) receipts in 2008 and 2009 should not be paid into a Stabilisation Fund because they have nothing to do with surpluses as a result of growth. I do not intend to spend any more time on that. Before concentrating on the meat of the amendment, in the centre section, a few words on the new tables provided late yesterday and 2 things, I think spring to my mind anyway, from those new tables and the new financial forecast. The first is that the Council of Ministers, I think, is now proposing to move some capital spending from 2011 considerably forward to 2007. That may be right and I look to the Council of Ministers to confirm that during speeches and to tell us why they feel that is appropriate. It does mean that the spending growth in 2007 has risen to 5.2 per cent. The next thing is that we seem to be £30 million better off over the next few years than we thought we were. What does this illustrate? I think it illustrates that we are still unsure how big the black hole is going to be eventually. Unforeseen chunks of money, such as £30 million, can go both ways. They can go both ways. There it is, £30 million on the front page of the Evening Post. Nice timing, Chief Minister, nice timing. Now let us turn to the amendment itself. On page 2 of our report, I would like Members to look at the centre section of 1.2.3. That is page 2 of our report, details of the amendment itself. It might be useful if Members just had a pencil ready to make a couple of notes in the margin. It is split into 3 sections. Against 1.2.3, place in the margin, £32 million. Against the second section place, £15 million. Against the third section place, £27 million. When you add the numbers together, they come to a total of £74 million and, in fact, this is the total amount of funds affected by our amendment over the

period 2006 to 2011, or 6 years. Let me explain what the 3 are. The first one I think is self- explanatory. It has already been discussed at some length when the Deputy of St. Ouen had his amendment just recently. It involves the Dwelling Houses Loans Fund and what we think should happen to it. The second 2, number 2 and number 3, I think, might just require a little bit of explanation. The first one, the smaller amount, is to do with the capital receipts element of the £20 million efficiency savings that we have all had such a lot of information about. We have separated out from 2 and 3, the capital receipts element of the remaining £10 million, approximately, of unallocated efficiency savings out of the £20 million. The other £10 million having already been reallocated and agreed by the States in last year's Business Plan and Budget debates, so we are left with the remaining £10 million and 2 and 3 deal with that other £10 million; £4 million a year, approximately, of it being capital receipts and the remaining £6-odd million of the £10 million being in item 3, the true efficiency revenue savings part of that £10 million. I said to add them up to £74 million but to obtain a comparison with the 2006 budget it is necessary to remove from that figure the effect of the 2011 year numbers as this was not included in the 2006 budget. The 2006 budget went from 2006, as you would expect, to 2010. Of course, we are 6 months later on so another year has been added to the numbers. If we want to compare directly with the 2006 budget we have got to remove the numbers from 2011 to make a comparison. When this is done, and I hope Members will take my word for it that the arithmetic is right, the new total is £57 million over the same period, as illustrated in the 2006 budget. So, £57 million illustrates, I would say, exactly the amount of extra, extra spending, not just single extra spending, but extra, extra spending, over and above the extra spending already contained in the 2006 budget of December 2005, only 3 months before this Plan was formulated. Voting all 3 sub-paragraphs through Members would, therefore, take us back to the position agreed by the States at that time and a policy of overall spending increases, year-on-year until about 2011, roughly in line with, or even

marginally above, the inflation target, of 2.5 per cent. Now, how many newly elected States

Members included this kind of spending constraint in their election promises, I wonder. Each of these amendments, if agreed, would have the effect of committing, at least initially, and I emphasise the word initially, the sums you have noted, hopefully in the margins, into the new Stabilisation Fund, rather than to allow them to be used for increases in spending. Yet even this money is not locked away, as has been described, because the bottom piece of bread in the sandwich, that is paragraph 1.2.4, makes it clear that the States would, very shortly, be having a debate on how these funds would be used in the future and secondly, crucially, how big the Stabilisation Fund should be. Maybe the States will decide within a year, and long before it reaches the £74 million, that a smaller amount would be sufficient, thus releasing funds from future years for other purposes for whatever the States decide. The way that the amendment is designed, however, and the fact that separate votes on each element will be taken at the end, means that Members can choose through their voting on each subparagraph in the middle section, just how far they wish to go in earmarking funds to initially go into the Stabilisation Fund, rather than to be available to the Council of Ministers for extra spending. Also, the whole point of a Stabilisation Fund is that the money will be spent in the future but, crucially, at the right time in the economic cycle so as to stimulate the economy. Not in times of growth and already high inflationary pressure, such as now, when heaven knows we do not need extra stimulation and even more inflationary pressure, but rather in times of recession and times of increasing unemployment. Make no mistake, harder times will come again, sure as night follows day. Once it is spent, how does a Stabilisation Fund get replenished? Well, by putting funds into it at times of economic growth, perhaps as now, and as referred to in the Strategic Plan and in the Economic Growth Plan. I will not go into the technical details of the effect that increasing public spending above inflation has on inflation itself, particularly in a small jurisdiction such as ours. Section 6 in our report, together with its appendices and tables provides a wealth of evidence to illustrate that keeping a lid on spending growth over the last 3 years has greatly assisted in the fight to contain local inflation and help Jersey to become even more internationally competitive, something that has been needed for a long time. An essential plank of our financial plans for the future, though, is the achievement of 2 per cent real growth, that is above inflation growth, in order to get more tax income. If inflation goes up, this will become much more difficult to achieve in a sustainable manner and will inevitably result in the need to allow even more inward migration than perhaps is necessary to achieve the same growth. I have not even begun to talk about the inflationary effects that we are going to have to endure anyway as a result of new GST from 2008 onwards. Meanwhile, and since the Strategic Plan was lodged, let us take a quick look at what has been happening in the rest of the world. I would like to be able to claim ownership of a crystal ball. I am even tempted to say: "I told you so." To hell with reticence, I will say: "I told you so" because, in truth, the signs were all there to indicate that at some time very soon most governments around the world would pretty soon need to be raising interest rates to stop their economies overheating. Sure enough, they are all raising interest rates and taking money out of their economies to reduce inflationary pressure. The enormous balance of payments deficit in the US is a major worry and that may yet destabilise the world economy. If it does, we will need a stabilisation fund much sooner than we realised. Energy prices are going through the roof, Senator Shenton, and share prices have fallen sharply globally, and what are we proposing to do? The same as what we have always done in the past when times are good and confidence is high; spend more. The opposite to what most other enlightened and monetarily astute governments in the world are now doing. Sir, I do not intend to go on any further, I think there are lots of people that want to speak. I am going to close my opening speech at this point

and propose the amendment.

The Greffier of the States (in the Chair):

Is the amendment seconded? [Seconded]

2. Senator T.A. Le Sueur (The Minister for Treasury and Resources):

This amendment has been heralded in some quarters as the great debate on the Strategic Plan. I think, in truth, it is no longer quite so great debate as what might have been thought. That is because the proposer, unless I am mistaken, has agreed that we can vote on the amendment in parts. He is nodding there to confirm that is the intention. On that basis, rather like the curors egg, there are parts of this amendment which the Council of Ministers can quite happily support so I do not think that we need spend too much time on the first amendment or the last amendment, both of which I am happy to endorse. As the Deputy rightly says, the meat is in the second amendment, which is in 3 parts. I will, perhaps, preface my remarks by just talking about the updated figures that I produced yesterday. It is not that they were pulled out of a hat; in fact they arose from the 2005 accounts which were published some weeks ago. They had the effect of increasing the base point from which our future forecasts have been calculated. As a result of that, I am also pleased to confirm that since we are taking this vote in separate parts, the Council of Ministers could also accept part one of the second amendment and that really leaves the other 2 parts for serious debate. I think there is a danger here that we look at this amendment with 3 parts and treat it rather like an option paper. If we do not like the whole lot, take a bit of it and if you do not like that bit, take another bit. If you will forgive me, I recall at budget time a couple of years ago, a group of Deputies had 3 different amendments to vary the tax rate by varying proportions, starting with rather a large amendment which did not have a great deal of hope and coming down until we got one that we might be seduced by. I think this is perhaps the danger in this amendment here. I urge Members not to fall for that trick. Although we can accept part one, the Council of Ministers cannot accept parts 2 and 3. Either individually, or collectively, they strike at the heart of the Strategic Plan. They are wrong because they could take us away from our confident upward direction into a depressing downward direction because in round terms, as the Deputy has said, these latter 2 amendments effectively ask that the benefits of the efficiency savings that we are going to make in the future should be squirreled away, rather than spent; rather than reinvested. The effect of not doing that as far as capital is concerned, would be to strike at the heart of the capital programme, and could result in a failure to deliver some essential new services. Not reinvesting the revenue efficiencies would strike at the revenue budgets, the service we could provide and certainly kill off any chance in investing for growth. As the Deputy himself said, we need to invest for growth if we are going to solve part of our fiscal strategy. Both those amendments then, fundamentally, are negative and I urge Members to reject them. I am not going to go into the figures that we have got before us today; I think there are sufficient figures there to confuse anybody. What I will say, is that this is a debate about strategy, about the direction we are going. It is a simple choice. Do we want a strategy of reinvesting our efficiencies in order to generate better services, better facilities for our electors, economic growth, an exiting viable future, or do we want to hide them away under a stone because we might need them one day in the future? I think my intention, the direction

proposed in the Strategic Plan, is that we have confidence in the future, we have confidence in today, we have confidence that today we should invest for the future. On that basis, I have to urge Members to reject parts 2 and 3 of this amendment. As far as the last one is concerned, again as I say, I am prepared to accept that. I would prefer to start from a clean sheet of paper as far as an anti-inflation strategy is concerned. The Council of Ministers has indicated that we will be bringing forward an updated inflation strategy. This might be held to constrain us, I have no intention of being too constrained and I am sure that it was not the intention of Deputy that we should be constrained, and on that basis I am happy to accept that part of his amendment. So really, Sir, that boils it down to we can accept 3 parts of it but we have to vehemently oppose the remaining 2, and I urge Members to do the same thing.

3. Deputy S. Power of St. Brelade :

Very briefly. Members will be aware of the miracle of the 5 loaves and 2 fishes by Lake Galilee 2000 years ago, and when I see a reference to £30 million that has suddenly been found in States' resources in the last 24 hours, I am reminded of the quotation of President Ronald Reagan 25 years ago when he said that politics is the second oldest profession in the world and sometimes it bears a close relationship with the oldest. Thank you. [Laughter]

4. Deputy P.V.F. Le Claire of St. Helier :

Only just to say that I would like to support the theory behind the Corporate Services Panel in relation to making sure that we are preserving some money for the future. But on the words of Senator Le Sueur , I do believe, personally, that the confidence of the Island is only newly found and to take this amount of money away from the heart of what we are providing will send a wobbly signal to the people in Jersey, those that understand finance and those that do not. I think that in agreeing to parts one and 3, it is a bit of a no brainer but the steering we have got this morning from Senator Le Sueur gives us an indication that we have a halfway House and we have a confident House, so I would ask Members, like me, to support the parts that Senator Le Sueur has indicated and to send signals to the Corporate Services Panel that their work is not being put to one side and ignored, it is obviously being taken on board. A lot of members of the public have urged me, quite vehemently, to support them but, unfortunately, I believe in doing so it would take away from the heart of the services we are providing.

5. Deputy C.J. Scott Warr en of St. Saviour :

I would like some clarification regarding the Dwelling Houses Loan Fund and we heard from the Minister of Housing yesterday how important this Fund is obviously for the repair of the Social Housing in the Island. How, suddenly, can this now be put away in this Fund? Can I have that clarified, please? My speech yesterday really covers my views on the other 2 parts of this, that I feel that despite my concern that we have to be very prudent in future with our finances, I feel that we do need to spend money on the serious social and infrastructure problems we face.

6. Senator T.J. Le Main:

May I respond to that? The Council of Ministers have promised the Housing Department £7 million a year for the next 5 years and up until only a week or so ago it was agreed that the money would come out of the Housing Dwelling Fund Loan. I have now had a firm commitment that the money will be found by the Chief Minister and by the Treasury Minister, so I am more than happy now to go with it and I am sure that other Members of the Assembly that have been concerned for a long time about the lack of investment in housing our people in Jersey, particularly at this present time with cold winters and the heating and insulation, so I am more than happy that the assurances have been given. If the Housing Dwelling Fund Loan is to be put away, as I understand from Senator Ozouf now, £40 million of it currently is in an interest bearing account at the moment, separate, as part of that Fund, I am more than happy with that.

7. Deputy P.J.D. Ryan:

May I just ask who was being asked to clarify? Is it the Minister for Treasury and Resources or is it me as the proposer of the amendment?

The Greffier of the States (in the Chair):

I think the Minister for Housing has clarified the position. If any other Members of the Council wish to clarify it. I do not think it is being asked of you, Deputy .

8. Deputy R.G. Le Hérissier of St. Saviour :

We are all prepared here, rearing to go for the greatest debate of the century and clearly Senator Le Sueur has taken the skids, so to speak, from under us. He has done a wonderful job there. That is 2 miracles this morning; 3! So, things are really moving along. We have not had walking on water yet. The only point I would like to make and I intended to make it in Deputy Reed's, and I would like to congratulate him by the way for a very forceful presentation, which certainly kept us awake, if nothing else. What I would like to say, where Deputy Reed is concerned and Deputy Ryan's group is concerned, and again they have done excellent work and I must congratulate them on that even though it has not proved necessarily to be the debate of the century. What the concern is amongst the public is, for good or for bad, they do not really trust us. They really do not trust that we can handle reform of the public service, for example. There is this ongoing cynicism, there is this ongoing debate and every time, for example, they open the JEP and they see a few more positions added to the Chief Minister's office or to the senior echelons of the Health Department or whatever, they say: "Is this not terrible, look, bureaucracy is growing and growing and growing." Then explanations are given, all sorts of righteous indignation is expressed: "But look what we are doing, people are truly suffering, look at the pain that is being caused in the civil service and so forth." To an extent these things are right. I think there just needs to be an even more sustained campaign, I am afraid. Not a blood and thunder one, but a campaign that does bring across the message that we have got a grip on the way the public service is growing, that our priorities are right there, that, as Senator Walker has told us time after time the emphasis is on the front line services rather than on the growth of bureaucracy, and that as a joined up system we are able to see where waste can be controlled as opposed to just running off, doing well-managed but utterly futile projects. That is the word that comes across. When I hear the Housing Minister, whose sincerity is beyond doubt I would add, when I hear him say: "Look, I have got the money" he has to remember that it was he who gave up that money for years under the initial cut and slash programmes which, in a panic mode, we introduced. So, while we see this sort of great: "Look, you know, things are really turning around", I think in all modesty he has to say: "Well, maybe I contributed to the very problem which I am now on my white charger arriving to resolve, with the help of the Chief Minister." I have got no problem as long proper planning structures are put in place, as long as people do look much more honestly at the civil service, but where I think these, and Deputy Reed, I think, made the same mistake, I think trying to put an iron corset, so to speak, around a system and trying to make it squeak and scream, you often end up with these kinds of very iron corset type cut backs. You end up in cutting back the wrong areas, you end up in running off after the wrong targets and I think the emphasis ends up being very much the wrong emphasis. So I will be, in a very conditional way, reassured by the Minister of the Treasury, who as the Deputy for St. Brelade has said, has pulled the rabbit out of the hat or whatever, I will be conditionally reassured, but I think the message has to get across to the Council. While I do not want people counting paper clips and so forth, even though that is a very useful occupation for some of us, I think the message has to get across that the public still do not believe we have got a grip on these problems. They still do not believe it; that there is still a smoke and mirrors campaign. I know people are trying but I think they have to try harder; they have to make sure they are hitting the right targets. But the emphasis of these last 2 debates, I am afraid, is in the wrong area. You do not put a big iron corset around a system and hope that somehow it will squeeze it and squeeze it and squeeze it.

9. Deputy J.B. Fox of St. Helier :

The last speaker is quite correct, the public are extremely cynical, but their cynicism is in different perspectives depending on who you are speaking to and how it affects either the individual or a group of people et cetera. That is the point that we have to bear in mind; we are never going to be able to please all the people all the time. Yes, we have to be prudent with our money, we have got to recognise that in the foreseeable future there are going to be greater financial burdens placed on residents and individuals and groups, et cetera, that we have not had to experience before. The heydays have gone. But, on the other hand, there is a greater demand and if there is some money, whether it is capital or revenue that is available, it is important that we do some of the things that are still needed in the Island. You had the demonstration yesterday, or the plea yesterday, from young mothers in relation to Early Years. Last month I was standing here answering questions for my Minister on top up fees and the potential costs that are going to be coming our way from exterior sources with the increased charges for Universities, the increased demands for further education, increased demands for health, the increased demands for solving some of the utility problems which have been discussed in recent times not least that affect Bellozanne and La Collette, et cetera. All these things require to be dealt with, and all these things require that we have to make a judgment and that is what this House is here for; is to make a judgment. No, we must not waste money, but on the other hand I agree that this Stabilisation Fund will take out the peaks and troughs and I think that is very important because there is nothing worse in a small island community than having uncertainty. Uncertainty goes in a number of different directions. Obviously in the international part, the big finance part, the uncertainty can reduce the income to the Island which affects all of us and our jobs and everything else. But uncertainty also can affect the people and its workforce. The uncertainty of a stable permanent job as opposed to short-term contract and insecurity whether you are going to be able to pay your mortgage or whatever. The uncertainty whether the various plans that are brought in through Health, Social Security, et cetera are actually going to be providing the right support for the community as opposed to just giving out money that those that can afford it are still getting the same and we have gone past the days, I am afraid, when we can have the privilege of doing that. But we must not, and I think this is my final thing to say, be that prudent that we are saving now for the benefit tomorrow when there are genuine reasons why we should be

investing now which might save us a lot of grief in tomorrow.

10. Connétable D.J. Murphy of Grouville :

I must say that Senator Le Sueur has really made, to me, very large progress in not going ahead with taking out the Dwelling House Loan Fund monies for use in revenue and also, of course, the capital property sales, which I was very worried about indeed. These things are to me, and I think to a lot of people, they are the family silver. Those are the bits we have stuck away in the cupboard, they are useful, they are helpful and they are always there for the future. I am delighted he has found this money, the £30 million, which I would liken, if we are going into Biblical quotes, the Old Testament, to Moses tapping the rock in the Sinai Dessert whereupon there came the water. What I would do is say that for the future, after watching very carefully if they are going to try and sell off any other family silver, which, to me would include utility companies and various investments which produce an income for the States at the moment. These are extremely important to us; we are in growth markets, I think, in most of these utilities and it would be a very, very bad mistake indeed to sell those and perhaps just put the money on deposit.

11. Senator J.L. Perchard:

Firstly, could I comment on the Minister for Treasury and Resources olive branch that he has offered this morning and thank the Council of Ministers for withdrawing the proposal to invest the Dwelling House Loan Fund into implementation of the Strategic Plan. But I would like to persuade Members that perhaps they ought to consider parts II and III of 1.2.3 more carefully and not perhaps take the Minister's word on it that he will go no further. Because I would like to broaden the argument, if I may, and as I look to Members and particularly the Council of Ministers, I want to remind them of what I call the 3 shovels proposal. The 3 shovels proposal was the method debated and agreed by the previous Assembly in the Fiscal Strategy P.44/2005, in which to fill the 0/10 black hole. The first shovel was to be that of economic growth. This shovel is in the hands of Senator Ozouf , one of our recognised and more prolific shovellers. [Laughter] His Department, as we know, has been challenged to stimulate economic growth at a net rate of at least 2 per cent per annum which, it is anticipated and hoped, will provide an extra £20 million in revenue. The second shovel is that of tax reform, the brand new big taxation shovel will be wielded by the broad shoulders of my good friend, Senator Le Sueur . He has got the biggest shovel and it was proposed in the Fiscal Strategy that he make the primary contribution to the 0/10 black hole deficit; approximately £55 million of new tax yield targeted at individual tax payers through GST and 20 means 20'. The third shovel was to be the tool of reduced public expenditure with a welcome £20 million contribution to the black hole. However, it now appears that this shovel has been cast aside by the Council of Ministers. They are not even leaning on it. We no longer can expect the efficiency savings to contribute to the black hole deficit as it is now proposed that the £20 million efficiency savings should fund additional spending. I think the Assembly deserves, from the Chief Minister particularly, a full explanation as to how this is happening. We need to know why the Council of Ministers has dropped plans to part fill the 0/10 black hole with £20 million of efficiency savings. How is now the black hole to be filled? Not only was the Council of Ministers planning to spend the efficiency savings; it was, until just moments ago, planning to raid and spend the Dwelling House Loan Funds; a fund with total assets, at the end, of £52 million. Over the lifetime of the plan, £32 million was being proposed to be spent in revenue and capital. Miraculously, however, that has now been withdrawn; a great deal of opportunity for scope. What worries me is where will the funds come from to fill the 0/10 black hole? I can only see that it will be through the new methods of taxation, GST and 20 means 20' which is increased taxation. The proposals hot off yesterday's press confirms inflation busting increases in public spending. Inflation busting: 5.2 per cent per cent in 2007 and 3.2 per cent in 2008. It is a worry. In the last 2 years the States has been disciplined in controlling growth in public spending, limiting it to 2.6 per cent and 2.4 per cent which, to give credit, was below the level of inflation. The Business Plan 2006 to 2010, this one, which was approved in the States in the budget debate last autumn, outlined the spending framework for the next 5 years. It limited increases in total States expenditure to a target of 2.5 per cent growth per annum. This is confirmed in the addendum to the Budget Report in section 2.2. In section 2.5 of the same report, again approved by the States, the former Finance and Economics Committee clearly links the success in controlling inflation with constraints in States' spending, and I quote from the then President of F and E (Finance and Economics), Senator Le Sueur: "In this report the Committee is not able to control interest rates, however, it will continue to endeavour to reduce inflationary pressures by constraining the growth in States' spending to a level below the forecast of inflation. The expenditure framework" he goes on: "within the Fiscal Strategy approved in the States' Business Plan is intended to bear down on inflation." I repeat my question; what are the different circumstances now that motivate the Minister to disregard his own advice? At the same time as the Island is embarking on root and branch reform of our system of taxation, world markets are becoming twitchy about oil prices, the increased threat of global inflation and interest rate rises. Given this uncertain fiscal environment, as Jersey embarks on root and branch tax reform, is it wise to increase public spending to these record levels? Because if we are to achieve balanced budgets, which is an aim within the Strategic Plan, we can only assume that the Council are content to let Senator Le Sueur do more and more shovelling with his new taxes. As competitive pressure continues to bear down on local business from other jurisdictions and world markets our Minister of Finance and Resources will probably wear his shovel out with his policy of new taxes and a policy which he admitted in the 2006 Budget Report will fuel inflation, which in turn will cause our business sector to become increasingly uncompetitive. I ask Members if they could find the Corporate Services Panel amendment to turn to page 11 of it where they will find the financial forecast 2006 to 2010 approved after the 2006 budget debate last September by all the personnel who now make up the Council of Ministers, except for my good friend, Senator Cohen, who I will temporarily excuse as he was not a Member of the States at the time. This proposal on page 11 was approved by 9 out of the 10 Members of the Council of Ministers just months ago. I would like to draw Members' attention to the total States' net expenditure line for the period 2006 to 2010; then invite them to turn to page 12,

the next page, where they will see the Council of Ministers spending proposals (this was pre- yesterday's new information, but I will go on to talk of that) the Council of Ministers' proposal as per the Strategic Plan and compare the total net expenditure forecast line. We are looking at the line which does not include the parish transfer. To achieve an accurate comparison of the figures I ask Members to discount 2011 on page 12 as they are not present on page 11. Once done, as my Committee Chairman has said, the difference is £57 million. The Council of Ministers are proposing to spend an extra £57 million over the period 2006 to 2010 over and above what was agreed in this House last September. However, it is interesting to note that the updated financial forecast that arrived on our desks the morning of this debate was presented using a different layout to that of that in the draft Strategic Plan, and as a result was difficult to compare with the forecast on page 12 that I have just asked you to look at. If I did not know better I might be suspicious that there may have been an attempt by the Minister to confuse Members. However, on close examination I believe this new information that arrived like a googly delivered by Shane Warne confirms a similar level of increased spending to that proposed in the draft Strategic Plan. It is very similar. But the new financial forecast differs from the forecast in the Plan by being much more bullish with regards to States' income which is very good news. Which is great news for everyone except the taxpayer. Not only do the Council of Ministers have Shane Warne bowling at one end, I see that Muttiah Muralitharan is now bowling at the other in the form of the Communications Unit whose timely briefing of the press on the matter of States' finances can surely be no coincidence. Members will probably have read the front page of yesterday's JEP headline which said: "Better off by £30 million" as quoted by my Chairman and the States' finances

given a boost by duty receipts'. I cannot help thinking of the words "donkeys and carrots." Having got that off my chest, if Members support the Corporate Services Panel's amendments they will be endorsing the spending proposals as laid out on page 11 of the amendment and, as I have said previously, the very same proposals that were agreed in this place just months ago. I hope my good friend, the Chief Minister, will fully explain the reasons for the u-turn of 9 out of the 10 Members of his Council when and if he speaks. How could he justify this extra £57 million over 5-year period 2006 to 2010? What is it that has prompted most Members that make up the Council of Ministers to change their opinion with regards to spending? It is true that many Members who make up the Council of Ministers have changed their tune on maintaining a tight control of public spending. I was rummaging through some old papers the other day when I came across some old election memorabilia and manifestos and, if you will permit me, I would like to quote from some of them. The first one: "I am a team player", this is Senator Terry Le Main who stood for election just 6/7 months ago: "I am a team player who recognised a need to contain spending." Another politician who stood for election just months ago, Senator Cohen says: "The States have made some savings and a target of £20 million has been set for 2008 but this should be increased to at least £30 million." I have got one of the Minister for Treasury and Resources, his last election, again just months ago: "Keeping States' spending under control." My good friend, Senator Routier who is 3 years into his term says in his election manifesto: "The major challenge that faces the States is controlling expenditure, not just because we need to keep the Island's demands for services with what can be afforded, but also because we have an overriding responsibility to ensure that value for money is being achieved." This chap, Senator Ozouf , wrote, first line in his election manifesto: "The next 6 years are going to be some of the most testing times for Jersey with the need to reduce expenditure yet maintain core, essential services." 3 years ago. I cannot resist it, the Chief Minister in his election manifesto says in big bold type on the front: "Not afraid to forfeit popularity to balance the books." He goes on inside the document, and I will quote just one paragraph: "Since taking on the presidency of F and E (Finance and Economics) Committee, I have committed myself and my committee to controlling States' expenditure and stopping overspends." Having got that off my chest, if Members support the Corporate Services Panel amendment they will be endorsing the proposals laid out on page 11 of the amendment. I think I might wrap up, but as I said previously, the very same proposals that were agreed by this Council just months ago. Those policy manifestos, or these manifestos aside, the Council of Ministers' vision for the Jersey's future outlined in the draft Strategic Plan is praiseworthy and would be desirable in an ideal world. But is it sustainable? Is it really affordable in the longer term? With luck it may be, but what will be the price? Inflation? Well, yes. Population growth? Yes. A bigger public sector workforce? Yes. Greater costs? Well, definitely by definition. Increased taxation? Yes. Increased demand for services and improved infrastructure? Well, yes. A requirement for housing that will probably never be satisfied? Well, most probably. I believe if we do not break this cycle of spend and growth we will have a perpetual problem that will feed off itself. A problem created by the States where the economy is under pressure because of the burden of inflation, taxation and huge public sector costs. This proposed increase in spending is wrong and is, at best, being proposed too soon. I respectfully suggest that we wait until the full consequences of fiscal reform are evident before we consider this scale of spending, during which time the Council of Ministers should continue the good work they have started to drive in efficiencies from Government. No, not by hitting the soft targets as has been threatened by some; not the soft targets but by withdrawing from the provision of non-core services in the area where Government really has no business operating. By entering into partnerships with the private sector, enabling the States to slim down and become the authorising body and regulator rather

than the provider, and where possible, promoting the user pays principle. For example, very

topical, areas like 3 to 5 year old education, why are the States squeezing out private nurseries? Education, Sport and Culture are now offering a free 9.00 a.m. to 3.00 p.m. 39 week a year educational service for 3 to 5 year olds. The private sector offers a user pays 9.00 a.m. to 5.30 p.m. 50 week a year service. Why are we not subsidising and regulating the private nurseries? They offer, after all, a comprehensive and more relevant service to young families whose parents both wish to return to fulltime work. Why is Big Brother squeezing out these nurseries? Another area in which the States should consider withdrawing is Fort Regent. I see an opportunity at the Fort for a public/private partnership with the financing and entrepreneurial drive being provided by the private sector. There are many, many opportunities if we choose to look. However, the Corporate Services Panel resisted identifying areas or proposals to specifically cut the Council of Ministers' new spending plans on the grounds that it did not have the information on which to base a judgment and that it was the Council of Ministers' responsibility to co-ordinate its own plans once the States had agreed the policy. We must resist this proposal to increase expenditure, part one, 2 and 3 of the meat in the sandwich as the Deputy described it. In fact, this House should send a clear message to the Council of Ministers that we wish them to continue with the last Finance and Economics Committee's own primary objective as stated in the 2006 Budget, and I quote: "One of the committee's main objectives in relation to States' finances for the period 2006 to 2010 is to restrict increases in total States' net expenditure to affordable levels within the existing framework of the Fiscal Strategy and the States' Business Plan." I believe the Council of Ministers have got it wrong and should instead be pressing for meaningful reductions in spending. The Corporate Services Panel amendment, of course, does not go that far but it just recommends to this House that we revert to the spending limit as agreed in this Chamber, as I say, in the Budget debates last year. The Council of Ministers should recognise the importance of remaining competitive. We should be under no illusion if our industries are not competitive they will disappear, leaving Jersey with little tax revenue, an older and aging population and a giant hungry public sector to feed. I ask the House to support 1.2.2, 1.2.3 in total and 1.2.4 of the amendment.

12. Senator S. Syvret (Minister for Health and Social Services):

I have listened to some off the wall ideologically driven speeches in my time in 15 years in the Assembly, but that one probably about takes the biscuit. [Laughter] So far removed was it from the facts or any meaningful comparative analysis between the circumstances that Jersey finds itself in and neighbouring jurisdictions that it was frankly laughable. But the Senator rightly talked about the need for the Island to keep competitive and so on and to combat inflation; but in a micro economy such as Jersey you cannot attribute the same inflationary drives to public sector expenditure that you might in a large nation state like the United Kingdom. If you are looking at issues that cause Jersey to be not so competitive in a particular international market now you need, for example, as has been recently commented on by a senior figure who specialises in these questions, for example, charges levied by Jersey's lawyers. Jersey legal profession, I understand, is now the second most expensive on the face of the earth. Now if you are looking for issues of competitiveness to keep the Island's economy growing, that is where you start. But I have to talk about the kind of expenditure we engage in, in Health and Social Services, because we are, of course, the major spending Department of the States and I think that is rightly so, that is what the public would expect. But to listen to Senator Perchard and perhaps a few others, you would think that Jersey was some kind of a tax and spend environment like the old Labour 1970s Dennis Healey: "Let us tax the rich until the pips squeak" kind of approach. But, of course, if you look at the figures actually produced  by the Treasury  itself which  consider the Island's total tax take  as  a percentage of GDP (Gross Domestic Product), the average of European Union countries is 40.6, the OECD (Organisation for Economic Co-operation and Development) average is 36.3, the UK is 35.8, Guernsey 26.8, the USA 26.4, Jersey pre the tax changes 21.8, and as a total tax take as a percentage of GDP that will go down, in fact, to 20.9. So, if anything, Jersey is on the very, very bottom of the scale of tax in communities in terms of tax taken as a percentage of its GDP and that is a fact, you can compare the figures yourself with other jurisdictions. So the idea somehow that there is too huge a tax burden in the Island is simply fictitious, does not withstand most scrutiny. We have to consider then what do we spend that money on and are we efficient with what we do with it? Well, I believe we are, certainly for Health and Social Services; one need only look at the volume of work delivered by the organisation. For example, in the last 5 years outpatient attendances have risen by 28 per cent, again for the last 5 years, inpatient or day cases have risen by 36 per cent, operation procedures have risen by 11 per cent, pharmacy prescriptions have increased by 31 per cent, MRI (Magnetic Resonance Imaging) examinations have risen by 44 per cent, there has been a 92 per cent increase in CT (Computed Tomography) scans, the number of surgical patients waiting greater than 12 months has reduced from 181 in 2001 to 7 in 2005, a 96 per cent reduction. The total number of patients on the waiting lists has fallen from 1,942 to 1,085 by 2005, a reduction of 44 per cent. But we can see, not only from these figures, but from the independent benchmarking exercise that was carried out, that the Health and Social Services Department is, in fact, a highly effective and efficient organisation that does spend public money wisely. Again, contrary to the now, frankly, tediously inaccurate assertions of Deputy Le Hérissier about managers, the acknowledged benchmark level for managers as a percentage of staff in the average NHS (National Health Service) Trust is 5 per cent, in Jersey the figure is 3 per cent. That is an even more remarkable achievement given that we are not only running an NHS Trust, but we are also providing Social Services and also providing functions of a central government department. So, the organisation is certainly efficient. We have had no capital overspends, we routinely score extremely well on the States' internal auditing and, of course, there was the recent survey, which Members will have seen, demonstrating a very, very high level of patient satisfaction with the Health and Social Services in Jersey. So, this is quite a remarkable achievement by the public sector in the Island, especially given the internationally extremely low tax take that exists in Jersey as a percentage of our GDP, extremely low. So, I think we are doing okay. But what would happen if the kind of cuts on public expenditure that the Corporate Affairs Scrutiny Panel are proposing were to go through? Well, we would have to abandon the blood product standards that we are having to introduce in the Island to combat things like new variant CJD (Creutzfeldt Jakob Disease), we would have to start buying off Island, I expect. We would have to focus on core activity of treating particularly ill people on the basis of greatest urgency which would mean dumping frankly the waiting list initiative, which I have already referred to, and seen how the waiting list has gone down so successfully. We would have to kiss goodbye to the Independent Living Strategy, which so many people want, to help clients with special needs to be able to live independently in the community, an area of great investment. Forget it if you are going to agree with the Corporate Affairs Panel. We would have to quite probably close the surgical ward and we would have to abandon the convention by which we follow the NICE (Natural Institute of Clinical Excellence) recommendations on new and often expensive drugs that come on to the market. We, for example, recently took a decision, in advance of the NICE recommendation, concerning the breast cancer drug, Herceptin. At the moment, we are able to take those kind of decisions. With the ideologically extremist proposals of this Corporate Services Committee we would not be able to do those kind of initiatives. Senator Perchard says: "Rubbish". Well, it is true because the facts are plain. We have an excellent public health service provision here, just as we have an excellent

13. Deputy G.P. Southern of St. Helier :

It is pleasant to follow a rational statement coming from the other side of the House today. Well, last night somebody said to me: "You know all politicians are part actor. They have to be good actors" and somebody said: "And all teachers have to be good actors. That is what they do. They stand up and present." Deputy Ryan showed you a perfect performance this morning pretending to be a teacher with his [Laughter] looking over the top of the glasses. A teacher the like of which I have not seen in a school - Mr. Chips - for at least 50 years. Nonetheless, he did it well and it was effective and he spoke calmly and quietly and made us listen. I have to admit, Sir, I did not write down what he told me to write down. However, what I have written down is a single word "evidence". That is what I have written down "evidence". It has got a great big question mark after it because there is no evidence. It was very calmly presented and very effective but it was an act. I will continue the Biblical theme we started yesterday. At last, it seems to me, the Chief Minister has finally listened to repeated warnings from this side of the House, and from elsewhere, that running the Island is not like running a business. Government is more than business because we have the welfare of all our residents at heart. It is not about profit. It is not about bottom line. It is about delivering a good quality of service, as the Minister for Health has just said. I thought yesterday we were finally getting evidence that this was a genuine conversion. I hope it is; sincerely hope it is. It may be, and I hope not, that the Chief Minister is sailing under a flag of convenience to get through the next 2½ years. But let us hope so, hope that it is a genuine conversion and we have finally got welfare at the heart of our Government. Having spent years trying to make sure that that occurs, it seems to me that what we have got today, in this amendment, is likely to wreck that progress that we have made over the last 3 years. Yesterday I referred to the Deputy of St. Ouen 's amendment and I drew the analogy that he is riding into town to clean up the town and his aim was shooting from the hip and his aim was somewhat awry and he shot the town dog. Let us continue that analogy today. So what is the equivalent when the mild-mannered Mr. Chips, on our left do not be fooled by the disguise. This is a Mexican bandit [Laughter] with a team behind him, riding into town throwing dynamite sticks left, right and centre, to bandoleros, big Zapata moustaches, big Mexican hats. That is the equivalent. He is wrecking the town because the spending cuts of this proportion is sheer swivel-eyed madness. It would be insanity to accept cuts of this size on the budget we have got. Why do I say that? I say that because where have I been for the last 3 years - well, 2½ of those years anyway? I have been sitting on the Home Affairs Committee. I have presided over meeting after meeting where we have imposed cuts and

come back to one, 2, 3, 4, 5, 6 departments and said: "Where is your contribution to the cuts?" I will just pick on one of those, one of those cuts and it is the probation service. Tiny little service, minimally staffed, providing an essential service. If you want to see your criminal justice policy brought forward, if you want to do something about numbers in the prison, if you want effective rehabilitation as a result of our criminal justice system, you have to have a

well-resourced probation service. The thing falls apart without that. It is a key cog in the wheel, cog in the machinery. We arrived at the position where the Chief of Probation Service said, and he said it I believe honestly: "That is all I can do. The next cut is a member of staff. Once that happens then, effectively, I will not have an effective probation service and you will not have an effective probation service and, in fact, you may as well close the probation service down because by pretending to be a probation service and not being able to deliver, we will be doing damage. We better give up that initiative. We better give up sentence planning. We better give up the whole idea of rehabilitation because we will not be able to deliver." So I know what the next set of cuts is likely to bring and I am sure we can go shroud-waving, or the equivalent of, and I am sure that every Minister, in those pews opposite, is able to produce their own list. But that is a key and essential element that I am aware of. While I have been doing that for the last 2½ years, where has Deputy Ryan been? He has been in charge of Postal [Laughter]. Well, I am sure he has produced some efficiency measures in his time in Postal and I am sure they are more efficient than they were. But in his time it has been relatively easy to do because the postal service has been having a free ride on the back of massively expanding fulfilment business. It has been relatively straightforward. He has not been wielding the axe and making hard cuts left, right and centre. He has not been involved in that. Some of us have and we know what it means. If we look at his gang of Mexican bandits, look down the list, not many of them have been involved in this programme of cuts that we have already taken part in. So it seems to me that we have got here - and I will return to the question of evidence in a minute - is a political statement. It is a political wish and it is not evidence-based. The giveaway was not the quiet approach started by the Chairman but the speech of Senator Perchard which was laced with political statements and not evidence-based. The only bit of evidence referred to, by the Deputy was the Inflation Strategy and the Stabilisation Fund in 6, a piece of perhaps A' level - perhaps not – A' level economic theory that may or may not work and certainly may not in this particular case because in referring to 6 - thank you for that reference to Chapter 6 and I am grateful that he referred to it - it says here opening 6.3: "It would be wrong to anticipate the contents and recommendation of a properly researched report on the merits of a Stabilisation Fund. It is quite possible that the report's findings might not concur with the setting up of such a fund or the practicalities of using such a fund to help promote economic stability." So it refers to one piece of evidence in what is supposed to be evidence-based research and it says it would be wrong to suppose that the way forward, the Stabilisation Fund, is going to work anyway and this is not researched in here. Any such piece of well-researched piece of work may produce the opposite result. So the Stabilisation Fund itself not guaranteed to work and no evidence presented here that it would work, just an acceptance that it might. But worse still, in my book, is the fact that this document has been produced and lodged by the Corporate Services Scrutiny Panel. I have a fundamental and deep objection to that because I believe that has

been the politicisation of the Scrutiny function. This should not have been lodged on the back of the Scrutiny Panel. I do not believe there is research, there is evidence in here, to prove the case. What there is is their political wish to cut spending which has been hijacked and gathered support and some credence by the fact there are 6 names on it and not one. If this were lodged, as it should be, in the name of Deputy Ryan or perhaps - because he obviously feels deeply, passionately about it - in the name of Senator Perchard, which I suspect, then I would be on my feet arguing against it because it is politically the opposite part of the spectrum to me. But to have to stand here and argue against it when it is in the name of the Scrutiny Panel when the Scrutiny process, I believe, has been hijacked for political aims, I consider that that is an abuse of the Scrutiny process. We must be very careful that it does not happen again in future because there is not evidence in here to back up the political statements, the political intention, behind it which is to cut spending. In particular, the bit that is missing and, as you look at it and as I looked at it, everyone surely said: "And the result of this cut in spending is going to be what? Where do you see in here what may happen? What might be cut?" Any attempt to talk even to the Ministers concerned about: "And if we did this, if we slashed this particular sum from your spending in the next 5 years, where will your cuts occur?" Not even an attempt to find it. This is not evidence; this is politically motivated drivel. I urge every Member in this Chamber to vote out this drivel and I am surprised that Senator Le Sueur said he would accept even one or any part of it. I shall vote against every single bit of this because, quite frankly, it does not deserve to be before us and it does not deserve to be before us in the name of the Scrutiny Panel.

14. Deputy R.C. Duhamel of St. Saviour :

Live for today and forget about tomorrow. This is what this is all about. There is a huge omission from our thinking in terms of how we run our housekeeping. The States' housekeeping, in line with everybody else's housekeeping, is a stool with 3 legs. Those 3 legs represent capital expenditures, revenue expenditures and the third leg of the stool, which we are keen and setting about at the moment, busily sawing off to make the whole thing unstable, is savings. If you look at the financing programmes that have been put forward, the capital to revenue expenditure is severely skewed. We are talking about massive sums of money going into revenue expenditure and we are finding the ways to commit to spending higher and higher proportions on that one part of our expenditure. The amount of monies that we are putting into the capital projects are of the order of 40 million for 2006, revenue expenditure 440 million, 11 times bigger. Right? If you want percentage terms it is around about 10 per cent; 10 per cent on the capital, 90 per cent on the revenue, nothing on savings. It is not just myself, Sir, that is said on other occasions. Indeed, we have had it from the Chief Minister that, indeed, the strategic reserve should be maintained at levels to justify the opportunity, should there be a downturn in our financial fortunes, to offset any major things that might happen in the future. It currently represents less than what we are spending in total on our capital and revenue monies. It has been said that the monies are in no way enough. 400-odd million, 450 million whatever it is, barely represents one year's running of this Chamber. Picture ourselves ahead - let us do it and imagine Jersey as we were discussing the other day - global warming, climate change. Right, we have to find huge sums of money in order to protect the south-east coast. Where are these monies going to come from? We have committed ourselves to balance budgets so that means that we are spending basically everything that is coming in. We are not putting enough aside to counter any of these potential hazardous problems that are quite likely, or becoming more likely, to happen in the future. The Chief Minister told this Chamber in a previous meeting that if he had had his way, or could have his way, he would like to see the strategic reserve at perhaps 3 times the level that it is at the moment. Not £450 million set aside for the rainy day which, as I say, does not represent a full year's expenditure at current levels and, certainly from the projections that are being mooted today going forward to 2011, would become an even smaller proportion. That he would like to see it some 3 times bigger. Why are we not putting a sizeable chunk of the

monies that are coming in to the Exchequer aside for the rainy day? I do not know, Sir, but it is very, very easy to spend monies and that is exactly what we are doing. The property sell- offs, we have had a number of Members tell us that they think this represents the family silver and they are absolutely right. That is what is being proposed, if we do not go along with this amendment? It is being proposed that we put the money into revenue. We spend the money perhaps on helpful projects, right? We do not put it aside for the rainy day. What about the efficiency savings? Efficiency savings give us an opportunity to re-budget, reprioritise and to tailor the system to make it more efficient and more effective. What are we going to do with

those monies? We are going to reinvest them in finding ways to spend all those monies. We are not going to put anything aside. It is fundamentally wrong, Sir. Any society, any person in this world, puts money aside for a rainy day. We are not doing it - we should be doing it - if we do not support II and III which make some attempt to put monies into, they are calling it a Stabilisation Fund. A Stabilisation Fund is a rainy day fund of sorts. It is to smooth out the peaks and troughs. In addition, we should be setting aside even more, I feel, but that is not there in this particular amendment. So really, Sir, I feel that this amendment represents the bare minimum of what we should be doing in order to future-proof our particular society and how it spends into the future. If I had my way, Sir, I would be doing a lot more. I think there might well be opportunities to come to this House at a later stage in order to just do that when we are discussing Annual Business Plans. But, Sir, make no mistake if we are going to have a stable housekeeping stool it must have at least 3 legs and one of those legs is saving and, in my view, it should be the biggest. Thank you, Sir.

15. Senator W. Kinnard (The Minister for Home Affairs):

I think I might go back if I may, Sir, for a moment just to refer to the speech made by Senator Perchard. You notice, Sir, that he displayed a number of leaflets? Well, Members may note that he did not display one of mine. He will not find such comments in any leaflets that I have ever distributed because I will say that I have always found the Minister for Treasury and Resources not nearly as free with his favours as I indeed would have liked him to have been [Laughter] in terms of his financial resourcing. In terms of the actual prison, I would say that I have received assistance on occasions but not nearly enough. In fact, I will, for the benefit of Senator Perchard if I may, quote something that I said that might make this clear: "One-off funding has been made available to the prison to meet overspends in each of the years 2003, 2004 and 2005, amounting to £370,800, £1.7 million and £500,000 respectively. These sums simply address the primary task of incarceration. While this additional funding was most welcome  it was  not  nearly enough to  address the continuing budgetary pressures at the prison." Those, Sir, are words from my speech during the budget in December 2005. I think what we really need to address here is, in the real world, what does this amendment mean in terms of those of us who have a responsibility of trying to deliver essential services in an increasingly difficult financial climate? It is clear that the Scrutiny Panel's amendment seeks to reduce the funding that is going to be available for us to deliver the Strategic Plan by some £74 million. That means either tax increases, service reductions or a mixture of the 2. We do know the attitude of this Council of Ministers is that we do not want to raise any unnecessary taxes. If there is one amendment that might force us to change that view it is this amendment of the Scrutiny Panel because it would take so much out of the Plan that I really do honestly believe that we could not honestly go to the public with what would be left. It would not be acceptable. Further service reductions in my area, Sir, are completely unacceptable. You have heard a little bit from Deputy Southern and I am grateful for his words on that. Rather, also as the States of Jersey, what we are trying to do is we are trying to face up to international competition and in order to do that we have to present ourselves as a modern, functioning community. We have got to not only maintain the level of services that we have; we have to improve them. We have got to invest in social, environmental and economic initiatives to do that. £74 million taken out of our plan will not enable us to do that. We already know that there is limited scope for further efficiency savings. We have already made £20 million of those. In my view, Sir, there is just no justification for further reductions in the level of resources that are available to deliver the States' programme. If we think about it in practical terms, £74 million over the next 5 years, what does that mean in terms of the size of the cuts? 2007 probably 8 million; 2008, 15 million; 2009, 17 million; 2010, 17 million, 2011, 17