States Meeting Transcript - 18th July 2014

STATES OF JERSEY OFFICIAL REPORT FRIDAY, 18th JULY 2014

STATEMENT ON A MATTER OF OFFICIAL RESPONSIBILITY..........................4

1. The Minister for Treasury and Resources - statement regarding the Draft Budget 2015........................................................................................4

1.1 Senator P.F.C. Ozouf (The Minister for Treasury and Resources):.......................4

1. Senator S.C. Ferguson:..................................................................8
2. Senator S.C. Ferguson:..................................................................9
3. Deputy G.C.L. Baudains of St. Clement : ................................................9
4. Deputy J.A.N. Le Fondré of St. Lawrence : .............................................10
5. Deputy G.P. Southern of St. Helier:....................................................11
6. Deputy T.A. Vallois of St. Saviour:....................................................11
7. Deputy R.G. Le Hérissier of St. Saviour:...............................................12
8. Deputy J.A. Martin of St. Helier:.......................................................13
9. Deputy J.G. Reed of St. Ouen:..........................................................13
10. Deputy J.H. Young of St. Brelade : ..................................................14
11. The Connétable of St. Lawrence:....................................................14
12. Deputy M.R. Higgins of St. Helier:..................................................15
13. Deputy S. Power of St. Brelade:.....................................................15

PUBLIC BUSINESS – resumption ..............................................................16

2. Maternity leave: rights of employees (P.104/2014) - resumption ......................16

2.1 Deputy S. Pinel:........................................................................16

1. Connétable S.A. Rennard of St. Saviour : ...............................................17
2. Connétable P.J. Rondel of St. John : ....................................................17
3. Deputy S.Y. Mézec of St. Helier:.......................................................17
4. Deputy J.H. Young:....................................................................18
5. Senator A.J.H. Maclean:................................................................18
6. The Deputy of St. Ouen:................................................................20
7. Deputy J.M. Le Bailly of St. Mary:.....................................................20
8. Deputy R.G. Le Hérissier: ..............................................................20
9. Senator P.F. Routier: ...................................................................21
10. Deputy G.C.L. Baudains: ............................................................21
11. Deputy G.P. Southern : ..............................................................21

3. Draft Employment (Amendment No. 8) (Jersey) Law 201- (P.109/2014) ..............24

1. Senator F. du H. Le Gresley (The Minister for Social Security): ........................25

1. The Deputy of St. Ouen:................................................................26
2. Deputy J.P.G. Baker of St. Helier : ......................................................28
3. Deputy M. Tadier :......................................................................31

4. Deputy A.E. Pryke of Trinity :..........................................................34
5. Senator L.J. Farnham :..................................................................34
6. Deputy G.C.L. Baudains:...............................................................35
7. Senator A.J.H. Maclean:................................................................35
8. Senator P.F. Routier: ...................................................................38
9. Deputy S.G. Luce of St. Martin : ........................................................38
10. Deputy A.K.F. Green of St. Helier : ..................................................39
11. Senator F. du H. Le Gresley:........................................................40

2. Senator F. du H. Le Gresley:............................................................42
3. Senator F. du H. Le Gresley:............................................................43

1. The Deputy of St. Martin:..............................................................44
2. The Connétable of St. John:............................................................44
3. Senator F. du H. Le Gresley:............................................................44
   4. Senator F. du H. Le Gresley:............................................................46

1. Deputy J.H. Young:....................................................................46
2. Senator F. du H. Le Gresley:............................................................46

5. Senator F. du H. Le Gresley:............................................................46

1. Senator L.J. Farnham :..................................................................47
2. Senator F. du H. Le Gresley:............................................................47

LUNCHEON ADJOURNMENT PROPOSED..................................................48 LUNCHEON ADJOURNMENT................................................................48

4. Draft Social Security (Amendment of Law No. 8) (Jersey) Regulations 201- (P.106/2014)..............................................................................50

1. Senator F. du H. Le Gresley (The Minister for Social Security): ........................50
2. Senator F. du H. Le Gresley:............................................................50
3. Senator F. du H. Le Gresley:............................................................50

1. The Connétable of St. John:............................................................51
2. Senator F. du H. Le Gresley:............................................................51

5. Draft Charities (Jersey) Law 201- (P.108/2014)........................................51

1. Senator P.F. Routier (Assistant Minister for Home Affairs - rapporteur):...............52

1. Deputy M.R.Higgins:..................................................................54
2. Deputy J.H. Young:....................................................................54
3. Deputy S.Power:.......................................................................55
4. The Deputy of St. Ouen:................................................................55
5. The Connétable of St. John:............................................................56
6. Deputy S. Pinel:........................................................................56
7. Senator A.J.H. Maclean:................................................................58
8. Senator S.C. Ferguson:.................................................................58
9. The Deputy of St. Martin:..............................................................59
10. Senator P.F. Routier:................................................................59

2. Senator P.F. Routier: ...................................................................61

1. Deputy M.R.Higgins:..................................................................62
2. Deputy S.Power:.......................................................................62 Mr. H. Sharp Q.C., H.M. Solicitor General:..................................................62 Deputy J.A.N. Le Fondré:....................................................................63
3. Senator P.F. Routier: ...................................................................63

3. Senator P.F. Routier: ...................................................................63

1. Deputy M.R.Higgins:..................................................................63
2. Senator F. du H. Le Gresley:............................................................63

3. Senator P.F. Routier: ...................................................................64

6. Draft Criminal Justice (Life Sentences) (Jersey) Law 201- (P.113/2014)..............65

1. Senator B.I. Le Marquand (Assistant Chief Minister - rapporteur):.....................66
2. Senator B.I. Le Marquand:..............................................................67
3. Senator B.I. Le Marquand:..............................................................67

1. Senator L.J. Farnham :..................................................................67
2. Senator B.I. Le Marquand:..............................................................67

ARRANGEMENT OF PUBLIC BUSINESS FOR FUTURE MEETINGS ....................69

7. Connétable L. Norman of St. Clement (Privileges and Procedures Committee):........69

STATEMENT ON A MATTER OF OFFICIAL RESPONSIBILITY.........................69

8. The Minister for Economic Development - statement regarding Condor .............70

8.1 Senator A.J.H. Maclean (The Minister for Economic Development):...................70

1. The Deputy of St. Martin:..............................................................70
2. The Connétable of St. John:............................................................70

ADJOURNMENT................................................................................71

[9:30]

The Roll was called and the Greffier of the States led the Assembly in Prayer. STATEMENT ON A MATTER OF OFFICIAL RESPONSIBILITY

1. The Minister for Treasury and Resources - statement regarding the Draft Budget 2015 The Deputy Bailiff :

The Minister for Treasury and Resources has indicated that he wishes to make a statement, which is on Members' desks I hope. It would seem to be convenient to interrupt the debate before we get moving on the resumption of the debate on maternity leave if Members to so agree to have this statement, but I am in the hands of the Assembly.

Deputy M. Tadier of St. Brelade :

I know the Chairman of P.P.C. (Privileges and Procedures Committee) is not here. I have had indications from certain Members that they think it is poor etiquette to interrupt a proposition in the middle of it and that they would like the statement taken after, but obviously it is for the Assembly to decide.

The Deputy Bailiff :

It is for the Assembly and we have frequently interrupted a debate at the beginning of a session, but it is a matter for Members.

1.1 Senator P.F.C. Ozouf (The Minister for Treasury and Resources):

All I would just say is that there is a plan to release, this morning, of all of the documents associated with the Budget, so that is why I requested if it could be made the first item. There is a whole series of reports that are going to be made public that are planned this morning and I would be grateful, as has been in the past, if I could make the statement first thing.

The Deputy Bailiff :

Do members agree to take the statement first thing, kindly show? The appel is called for. I invite the Greffier to open the voting. The vote is on whether to take the Minister for Treasury and Resources' statement now.

The Deputy Bailiff :

So we will now go to the Minister for Treasury and Resources' statement. Senator P.F.C. Ozouf :

I am grateful to Members. Since the onset of the financial crisis, this Assembly has faced many different types of challenges, and Budgets of the last 3 years have reflected them. In 2011 we faced an extremely difficult Budget, where Members were asked to take tough decisions to address the deficit, make savings, reduce our public finances and protect Jersey's economy. The 2012 and 2013 Budgets that followed were focused on stability and targeted investment in infrastructure and particularly jobs and health. Last year, in the 2014 Budget we were able to start giving something back. Islanders will feel the more than £8 million financial benefit of the lower marginal tax rate and help for children at university in their pockets in 2015. This year's Budget has to consider one of balance. Balancing the continued support for the economy, jobs and business, balancing the need to continue to fund the unprecedented planned increase in health spending, while continuing to fund the tax cut in addition to fund the significant cost of the benefit deferral Long-Term Care change while introducing the benefit this year. Confidence in the global economy is now growing. There is renewed optimism locally, but Jersey's economy also remains under pressure. Business confidence is rising and earnings is growing unlike places are higher than inflation and I welcome this morning's announcement of the latest R.P.I. (retail price index) figure of 1.6 per cent. Higher earnings than inflation puts more money in people's pockets, which is why inflation control is so important. While our public finances, particularly our balance sheet, remains strong, continued weakness in the labour market, low interest rates and the consequences of the financial crisis, have resulted in the Independent Tax Forecasting Group revising their 2012 estimates further. This is not unexpected. While in 2013 this was offset by an improved business tax position, it would not be prudent to rely upon that for 2014 and 2015. While confidence is returning to the economy, interest rates are only expected to increase at a gradual rate next year. Notwithstanding this forecast, the Council of Ministers is determined to maintain capital spending and the planned increases in spending in particularly areas such as Health. At the same time the Public Finances Law rightly and prudently requires the Budget to balance the Consolidated Fund. The Fiscal Policy Panel were clear in their advice last year that, should the economy need it, all available resources from existing funds should be deployed to support spending.  We should continue to be spending more than we are taking out of the economy to help economic growth. We propose to do just that. In addition, as I briefed Members yesterday, and this is set out in the reports that Members have, we plan  to, not  only  raise  more  revenue  where  we  can,  but building  on  the  success  of  the Comprehensive Spending Review. I am extremely grateful for the Corporate Management Board for now being able to deliver better services, improved efficiencies, which are also contributing towards the savings that will be delivered in future years. Before I turn to the tax measures for 2015, I would like to say that none of this would have been possible without the outstanding performance of the Treasury team and colleagues across the financial family and the managerial family across the States over last 3 years. In particular, and I am pleased that she is in the public gallery; I want to pay a particular tribute for the incredible hard work of the Treasurer of the States, Laura Rowley over the last 4 years. [Approbation] If I could stamp my foot, I would as well. As Members are aware, the Treasurer has taken the decision to return to the U.K. (United Kingdom) and I would like to take this opportunity to thank her personally, on behalf of Members, for all her hard work and the exceptional results that she has achieved. She leaves with my, and I am sure clearly this Assembly's, thanks and very best wishes for the future. Taking each of the measures in turn, I will start with the marginal rate. The marginal rate will be maintained at 26 per cent. The Long-Term Tax Policy report, which will be published in September, will signal the goal of continuing to attempt to reduce that marginal rate to 25 per cent in the longer term. The income tax exemption increase is proposed at 1.7 per cent. The Medium-Term Financial Plan originally had an increase of 3 per cent because of inflation, and this represents about a £2.1 million improvement against the previous plan. We propose to freeze tax allowances. Today we are launching a major consultation on property tax. A well-functioning housing market, as we have been debating in the Assembly over the last few days, needs supply across all tenures. We also need a tax system that is joined-up and balanced. The Green Paper is an important document, which I hope will catalyse an informed and useful debate. One of the distortions that is identified is mortgage interest tax relief. While undoubtedly well-intentioned, this has helped offset the mortgage interest costs of house purchasers, it does nothing for renters and it does little to help those home owners at the lower end of the income scales. The advice is that it worsens the situation in the longer term by inadvertently boosting house prices. The measure proposed in the 2015 Budget seeks to take a first moderate step to flatten that inequality by proposing a cap on tax relief of the 5 per cent of the £300,000 mortgage interest tax relief, which is £15,000. This is above the current fixed and standard variable interest rates cost and, even with the expected rise in interest rates, this will remain so. This cap is

a modest one. [9:45]

It will have an impact on a very small number of home owners and, while not removing mortgage interest tax relief together, that is not a policy that we are endorsing, it does send a signal that we need to look at it. It is of vital importance that there is an informed debate as to the merits of maintaining this relief or the alternatives. To accompany this proposal, I would like also to change stamp duty on the cost of registering a mortgage. It seems to be unfair that a buyer of an average price with a mortgage pays more stamp duty than a cash buyer. For this reason I propose to remove mortgage stamp duty on properties under £400,000. After careful consideration, I propose to remove all duties on qualifying properties; that is properties at £400,000 or below, on the first £300,000 completely and to apply the lower rate of 2.25 per cent on any borrowing between £300,000 and £400,000. This will remove the burden of borrowing and will support the average homebuyer. To fund this, I have reviewed stamp duty on properties worth over £1 million. The second stamp duty proposal will be therefore to increase the rates of duty collected on higher-value properties and will affect properties with a transaction value of more than £1 million. I propose to increase stamp duty at the rate of 4 per cent on properties purchased between £1 million and £1.5 million' 5 per cent at properties between £1.5 and £2 million; 6 per cent on properties between £2 million and £3 million; and 7 per cent on properties above £3 million. These increases are modest and, as set out in the report that Members have, is designed to raise approximately £850,000, which is more than that of the cost of eliminating stamp duty mortgage relief. As Members will see from the report, the duty rates in Jersey still remain very significantly below those of the U.K. and other countries. Today I am publishing the Treasury's conclusion on how the States should pay rates and how that should be funded. Local taxpayers assessed at the marginal rate currently do not receive a

double tax credit. We have identified this as an unfairness and we are seeking in this Budget to remove it at the cost of £500,000. Turning to impôts. I propose to increase spirits, wines and strong beer at the rate of 1.7 per cent; I propose to align the cider duties to those for beer; I propose to increase the duty on a standard packet of 20 cigarettes by 4.7 per cent or 22 pence per packet; and I propose to put a penny on a litre of fuel and increase V.E.D. (Vehicle Emissions Duty) increase of 1.7 per cent. I am delighted that we are delivering the legislation for all of the modernisation and the simplification rules on pensions. These rules will give greater flexibility to pension savers and give Islanders greater confidence in the future pension provision. Taken together with the reform of P.E.C.R.S. (Public Employees' Contributory Retirement Scheme), this Assembly I think should be very proud of the significant changes that have been made on pensions during this term of office. Confidence is returning to the local economy, but it continues to need our support. Securing capital projects is now delivering better value for money. Included in the capital programme are: the second phases of the additional primary school accommodation; the infrastructure for the sports strategy ahead of the Island Games; and the second phases of the hospital project and the Liquid Waste Strategy that we recently approved. Members will recall the significant success of the Housing Bond in recent weeks, securing 40-year money at 52 basis points over U.K. gilts has been one of the proudest moments of my Treasury team's term of office. This will not only enable us to accelerate the refurbishment strategy with Andium Homes, but also deliver new homes on the sites that we approved in the last few days. I undertook to bring to the States the rules in this Budget for the Housing Development Fund and these are set out in Appendix 6 of the Budget report. I also committed to confirming the definition of the capital on the fund for the Strategic Reserve and also how that should be managed. We are proposing that the Strategic Reserve balance of over £651 million, which was the balance at 31st December 2012, should be defined as the Reserves' capital value. In future years that capital value should be maintained in real terms by using Jersey's R.P.I.Y. (retail price index excluding mortgage interest) for the inflation factor. In my report to the Fiscal Policy Panel's report of the 2014 Budget, which was laid before the States in January 2014, I made a commitment to set out clearly the rules for the Stabilisation Fund. These rules are set out in Appendix 6 of the Budget report for Members'

approval. I am also publishing today the Economic Unit report on the Fiscal Framework. Members will, I hope, forgive me for repeating the mantra that, while good politics is not always good economics, in my view good economics is always good, sound and sustainable, long-term policies. I commend the Fiscal Framework published today to Members. I am extremely proud of the work that has been done over the last 3 years and the work that is ongoing to modernise and improve our tax and spending. The principles that have guided previous Budgets have I believe proved their worth. The principle of balance, which underpins this Budget, now builds on a solid foundation for the next Assembly to build and improve upon. This Assembly should be proud that it has been one of the boldest, most reforming and innovative, and made decisions to plan for Jersey's future. The fallout of the global economic crisis is still in evidence and we need to do all we can in the coming year to secure and propel economic growth. I would like to thank warmly my Assistant Minister, Deputy Eddie Noel, for his unswerving and unstinting support, and also to my colleagues on the Council of Ministers, and especially the Chief Minister, for the support they have shown. So, we are putting money back into the economy; we are supporting low and middle- income tax payers; we have helped hundreds of people to get back into employment; we have provided the means for significant improvements in housing and healthcare and we have put significant funding into our infrastructure. I am proud of these achievements and I believe that this Budget maintains the position of strength and will help secure growth and I commend the statement to the Assembly and look forward to the debate in September.  [Approbation]

The Deputy Bailiff :

Thank you. I give notice to Members that it should be on Members' desks, the Draft Budget Statement 2015 - P.129 - lodged by the Minister for Treasury and Resources, and I am informed that copies of the accompanying Budget Statement Report will be delivered to Members later today.

Senator S.C. Ferguson:

I thought we would have question time. The Deputy Bailiff :

We are just about to, but I have not announced it yet. We now come to 15 minutes of questions, starting now, and starting with Senator Ferguson.

Connétable D.W. Mezbourian of St. Lawrence :

Excuse me, if I may, you just said that we have come to 15 minutes of questions. I think few can argue the importance of the Draft Budget Statement and I understand that we have a Standing Order, which allows me to propose that question time be extended to 30 minutes.

The Deputy Bailiff :

We certainly do, Connétable . I was expending somebody to make that proposition, but I wonder whether we might see how the first 15 minutes goes because you may find all questions are answered.

The Connétable of St. Lawrence :

I appreciate that. However, I understand that the Standing Order allows question time to be extended up to a total of 30 minutes and clearly, if Members do not have enough questions to extend it to 30 minutes then that is their option. However, if questions could be 20 or 25 minutes.

The Deputy Bailiff :

Very well, if you want to propose if you are entitled to do that and is it seconded? [Seconded] Those Members in favour of extending it to 30 minutes kindly show? Those against? Extended to 30 minutes. Senator Ferguson.

1. Senator S.C. Ferguson:

The income forecasts in the draft Budget show significant reductions in income for 2014 to 2015 with a reduction of just under £100 million for the period 2013 to 2016 compared to the Medium- Term Financial Plan, and a reduction of around £27 million compared to the 2013 Long-Term Revenue Plan. This raises questions about the accuracy of the forecasts. Were they too optimistic and would the Minister for Treasury and Resources like to confirm which set of forecasts the Standard and Poors rating was based on?

Senator P.F.C. Ozouf :

Rightly, income tax forecasts and estimates of our future growth in income are not decisions of Ministers; they are decisions of the Income Tax Forecasting Group, which consists of a number of the senior officials, including the Treasurer, Comptroller of Income Tax, the Chief Minister's International Adviser, Head of Tax Policy, and the Chief Economic Adviser. Members will know that there is a high level of transparency and these evolving income lines have been amended without any political interference, and rightly so, over the last 3 years. I think what Senator Ferguson is saying is that the income growth that was expected in 2012 has not materialised in the strength that we thought and frankly, when one looks back to 2012 and one considers that at that time we thought that the global economy was going to be growing, we thought that the financial crisis was coming to an end, interest rates were going to rise, and that did not happen. So, in fact, this is not unexpected from my point of view. We have taken measures clearly in line with the F.P.P. (Fiscal Policy Panel) advice that, if income was to continue to show stress, then one would not cut back on spending, rather that one would spend more. Spending more is what you do in a downturn and that is what we are doing. I just say one other thing, because this is the important side, there is also another side to the effects of the global economic crisis on our spending and that is that inflation rates were expected to be at 3 per cent by 2014 and 2015 and we have seen much lower inflation rates. That means that we can make some sensible adjustments in terms of Budget because of low inflation rates. I commend the Income Tax Forecasting Group for their work, they are prudent, and that is what we should be relying upon.

2. Senator S.C. Ferguson:

Yes, but surely the Minister takes responsibility. Last year, my panel, and particularly my advisers, advocated caution with regard to this year, but it does not seem to have been complied with. What caution is the Minister going to apply this year?

Senator P.F.C. Ozouf :

Caution, when economic growth is under stress, caution means that you realise that the economy needs further assistance and that means you do things like tax cuts; that means that you do things like the marginal rate tax; you do put more investment in infrastructure; you do not defer capital spending; and you stick to your plans. The F.P.P., now fortified by 2 new members, will produce their report next week. I am interested to know what they will be saying about the economic situation. I think that, even if I would have known these forecasts 12 or 24 months ago, I do not think many of the things we would have done would be any different. We are delivering tax cuts, more money in people's pockets, maintaining spending, and improving areas, and I have mentioned health care a couple of times. Ministers that say you cannot increase healthcare spending without consequences are not talking about reality. Senator Ferguson, I do not think agrees with that, and that is fine, we can agree to disagree. I think it would be wrong to now start cutting spending because income has not quite met the forecast, particularly when we can make those adjustments as set out in the Budget. So, notwithstanding lower income forecasts, we can still balance the books. That is a great position to be in. As far as Standard and Poors, they will make an annual assessment; they will have the income tax forecast adjustment, which is going to be published; and they will continue to do their credit rating. If anything, I think Jersey's credit rating is on the up, not on the way down.

3. Deputy G.C.L. Baudains of St. Clement :

I congratulate the Minister for Treasury and Resources on his presentation but I have 2 queries. Would he first of all confirm that the Housing Bond will, by maturement, have cost us in the region of £600 million, and would he also tell us his plans for G.S.T. (Goods and Services Tax), because I do not see a reference to it, if there is one I have missed it.

Senator P.F.C. Ozouf :

The Housing Bond, I have set out in this report for Members' approval, has strict rules about the way the Housing Development Fund will work. So it is ring-fenced. All of the facilities that are given primarily to Andium Homes have a repayment profile. Having secured that 40-year money means that we are able now to deliver. The Minister for Housing will be looking at Andium's business plan; it will be published as I understand it, and with Treasury support, and that means that we can recycle those repayments as they come in from Andium and we can deliver more in terms of refurbishments and improvements. Locking in that 40-year money at such a spectacularly low rate, which I believe will be regarded in many years to come as a very wise long-term decision, there is widespread acclamation for the fact that we have managed to secure that at such a low rate, means that we have the confidence to deliver the housing and affordable housing issues that we have been debating.

[10:00]

In terms of G.S.T. there are a number of administrative changes in G.S.T. but there are no radical changes in terms of G.S.T. What I have done is I have signalled to Members the fact that a de minimis level should be looked at, which is exactly in conformance with the Economic Affairs Scrutiny Panel report and I have communicated to Members on that. No decisions on that, but a sensible review, fairness on retailer, and off-Island, must be achieved in the longer term. But how you do it is really something that we need to see the development of how they deal with low-value consignment relief in other countries and that process is underway.

4. Deputy J.A.N. Le Fondré of St. Lawrence :

I do not know what reality the Minister for Treasury and Resources lives in but his definition .. I think he said income forecasts have not quite achieved what we were aiming for. "Have not quite" is to the tune of £95 million. That is not "has not quite"; that is a significant miss of every target we have been working on. To say: "If I had known in 2012 or 12 or 24 months ago", last night when I had fractionally calmed down after seeing the results, I dug out the Scrutiny Reports from S.R.18/2012. There is a question coming, Sir: "Expenditure proposals in the draft M.T.F.P. (Medium-Term Financial Plan) rely too heavily upon income and economic forecasts. There are doubts as to whether these forecasts will be realised, particularly in respect of 2014 and 2015. These doubts have been apparent for some time." That is 2012 and yet the Minister for Treasury and Resources has decided not to amend the draft M.T.F.P. despite downgrade of forecast for 2013. One of the other advisers: "Key assumptions integral to the M.T.F.P. should be stress-tested against the accounting concept of prudence. This is particularly relevant for economic growth assumptions where this may prove to be politically unpalatable." This has been coming for a long time. How can the Minister for Treasury and Resources even remotely justify the fact that he did not know about it 12 or 24 months ago and what we have done is spent to the hilt of over-optimistic forecasts. How does he respond?

Senator P.F.C. Ozouf :

He responds with, as he normally does, with a disagreement with Deputy Le Fondré. Perhaps he has calmed down from his rather enthusiastic criticism, which has been a persistent theme of the last 3 years. I am not an economist. I take a great interest in economics and I rely upon economic advice. If Deputy Le Fondré thinks he is right and it would have been right in the last 3 years to put more tightening in place, if he believes that it would have been right not to make necessary investments in health care, if he is right, as I see an email went around, that we should have been doing even more savings reductions and taking even more money out of spending, then fine, he is entitled to that opinion. He stood for Minister for Treasury and Resources 3 years ago. I have pursued a policy with the endorsement of this Assembly and with the backing I think broadly of the F.P.P. The F.P.P. are strong independent economists, some of the best economics brains of the United Kingdom and elsewhere. Let us see whether or not they think that his policy of tax and spending is correct or whether this is a carefully-judged appropriate economic response to the worst financial crisis. I do not know whether or not his crystal ball was better than mine, but in 2012 I doubt that anybody would have seen the scale of contagion and low interest rates environment. I would remind the Deputy that at the end of this term we are faced with a balance sheet that is stronger, we have one of the best positions in terms of public finances, and we also have one of the best planned future tax and spending policies with the issues document that will be in the Long- Term Revenue Plan. Never before has an Assembly seen such good long-term planning and preparing for all eventualities. There are political differences, but let us see what the economists say next week.

Deputy J.A.N. Le Fondré:

Can I respond? The point ..

The Deputy Bailiff :

No, Deputy . It is question time, not a debate. Not for response. Deputy Southern .

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

Measures to address the Consolidated Fund balance in 2014 and 2015, I note a 2 per cent proposed savings from all departments pay budgets. Is this another pay freeze or are we reducing staff or what are we doing to produce that?

Senator P.F.C. Ozouf :

I am grateful for the Deputy to identify this particular table as it is an important one. I should first of all say that the difficulty I suppose that the Treasury has is that we need to put a Budget which balances the Consolidated Fund. The experience of recent years has shown that we have exceeded income, but we always take, and I think the Income Tax Forecasting Group would take a middle, if not cautious, line. I mentioned earlier the lower inflation number compared to that was expected, so we can make some appropriate adjustments in terms of spending because of low inflation. I think we really need to reflect on the success of the Comprehensive Spending Review and the modernisation programme. He, I hope, went to the Hotel de France last week. We have thousands of public sector workers now engaging and making decisions themselves to deliver better services for the public. There are numerous examples of these and so there are some departments that can deliver some savings and they are real efficiencies and we should recognise that good work; we should recognise that our public sector workers are now doing more with less, and these planned reductions in Budget are possible and we are also, and I hope that he would welcome, the substantially similar, in fact increased, capital spending on infrastructure, which is giving the facilities improvement in terms of housing, healthcare, liquid waste, et cetera.

Deputy G.P. Southern :

Will the Minister please answer the question, which is what sort of savings are these, are they a pay freeze or what?

The Deputy Bailiff :

No, I am not going to require the Minister to answer that question. Standing Orders require that question time is on the contents of the statement and at the moment I cannot see anything in the statement that deals with pay freezes or anything else of that kind.

Senator P.F.C. Ozouf :

Sir, it is a legitimate question because I refer to it. All it is, is effectively it is a reduction where previously there has been pay estimates ..

The Deputy Bailiff :

Senator, sorry, I have ruled the question out of order and it is not for you to respond to that. Deputy Vallois.

6. Deputy T.A. Vallois of St. Saviour :

The Minister mentioned the capital expenditure with regards to the Budget and stated that we have increased the spending and managed to spend. But we were advised that there was £100 million unspent. Could the Minister explain the exact reasoning behind that and whether we have fulfilled our obligations during the recession in Jersey?

Senator P.F.C. Ozouf :

I think the Deputy is referring quite rightly to the carry forward of allocated capital spending, which is, as has been the case for a number of years, about £100 million of allocated but not spent capital. I think there is a case to be looking at the rules about the way we do allocate capital spending but we are in the uncomfortable position it is a very prudent approach to be allocating all of the money up front for projects that then inevitably, because they take time for planning, for example the Clinique Pinel changes, those were budgeted for and then the project took some time to deliver because of the decanting arrangements and I am sure many Members have seen Clinique Pinel. We have been doing an awful lot to try and accelerate capital spending. That has been one of the key efforts that we have been trying to do following the very successful fiscal stimulus. Some departments find it easier than others. T.T.S. (Transport and Technical Services) can be much more responsive; housing can play their part, but some of the more complicated capital programmes are difficult to deliver and there are also political issues when we have, for example, large allocations for a police station and we ended up with the longer-than-planned arrangements there. I can assure the Deputy , and give her the breakdown if she wishes it to be, capital spending, it is vital that we get on and we do everything we can to unblock where blockages exist. We have better reporting and I want to see capital spent, not sitting in the investment account that the Treasurer is getting a much better investment return on, but I want to see that with shovels in the ground, but we will give a breakdown.

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

I congratulate the Minister but I wonder if the Minister could tell us and confirm the sceptics who say, despite the gloss put upon the Budget, essentially we are in a long-term decline as regards income because of the kind of international pressures we are facing? Could he give his analysis of why he thinks we are not and where does he think that extra income will come from?

Senator P.F.C. Ozouf :

I think that I have some long-term planning up in the gallery; I know my niece is up there. Long- term planning is really important and the work that we have been doing on the financial framework and on financial services does, I think, give us real cause for some optimism. The future for financial services, which has really almost been the engine, as many Members would know, not exclusively, we need diversification and I will come on to that in a moment. The financial framework sets out a real hard analysis and change programme for each sector of the financial services industry and we are winning business. We are going to see jobs declining in terms of the never-ending change of technology, jobs of today are going to be in the ether tomorrow and we need to plan for that. We need to be creating jobs faster than we are losing them to technology and we need to reflect the changes that are happening in terms of the necessary compliance on tax. We are making a statement the week after next on our position on aggressive tax avoidance. I am confident, I am in fact more optimistic and, the Chief Minister is not here today, but I hope that the Minister for Economic Development, we are all in agreement that the outlook for financial services is growing. We are getting more 1(1)(k)s here now, a good pipeline of people bringing their businesses, bringing their wealth to Jersey. But it is going to be a different future, more smaller firms - boutique firms - operating in the niche areas, and taking advantage of our fiscal stability, our great trusts law, our good services, and our infrastructure. But we need to be vigilant and we need to do more. Middle East, Africa, opportunities in Europe, changing fund regimes: all of that has its role to play, and the work on the digital economy must continue with even more vigour than before, and that is why the Minister and I are doing a joined-up approach in working out what the digital strategy should be together with the regulatory strategy and eGovernment, and that is important. Income forecasts, they are not ours, they are our advisers, and they are there and you will get some more information on them.

The Deputy Bailiff :

Can I say to Members that the purpose of question time is to ask questions on this statement. It is not an opportunity for a debate on a Budget, which is to come, and it is not an opportunity for questions or any sort of debate upon the general economic situation, let alone the economic situation next year or the year after. It is question time on this statement.

Deputy M. Tadier :

Is it possible to ask why certain things have not been included in the statement? The Deputy Bailiff :

Yes, I suppose it is. You could ask almost anything, it appears, Deputy , but that is not the purpose of the question time. Deputy Martin.

8. Deputy J.A. Martin of St. Helier :

The Minister states there was an underspend of millions for a massive capital programme. Can the Minister answer, is there a budget under this to re-skill the local unemployed to work in the construction industry and, if not, how many local licences are they planning to give out?

Senator P.F.C. Ozouf :

I had to cut the statement because I could have spent 45 minutes doing some more granular detail on it, so, yes, the Deputy is right that one of the things I refer to in the statement is about the construction sector and getting better value for money. I also refer to back-to-work and I commend the work that the Chief Minister and the Minister for Social Security have been doing in relation to back-to-work, together with the Population Oversight Board, of getting people prepared. We are going to be spending a lot on capital. We are getting good value for capital projects, which is why we need to get on with spending it, as Deputy Vallois quite rightly says, and we need to skill as many of those people that are unemployed to prepare for that capital spending, to reduce in turn the requirement to bring in people, and that work is underway. If the Deputy wants more information on it, we will happily provide it as a joint Ministerial team.

9. Deputy J.G. Reed of St. Ouen :

I would like the Minister to explain how this Budget helps the many small businesses on the Island?

The Deputy Bailiff :

Do you mean the Budget or do you mean something in his statement?

The Deputy of St. Ouen :

His statement claims it is a balanced Budget that is aimed to develop the economy. Senator P.F.C. Ozouf :

Because it delivers construction projects, over £76 million of construction projects. It keeps the Minister for Economic Development's budget, notwithstanding the fall in revenue. It keeps the Minister for Economic Development's budget, it keeps the Minister for Social Security's budget to help people get back to work and give firms the people that they need to employ and skill them. That is why it is good. It sends a consistent message, we are in a good position, strong balance sheet, we can afford the tax cuts that we have given and we can afford to maintain our Zero/Ten rate with no signal of an increase in G.S.T. Tough decisions in the future, but that is not unlike other places. That is why it is good for business; it shows confidence.

10. Deputy J.H. Young of St. Brelade :

I congratulate the Minister on his very slick presentation. The statement, paragraph 17, says: "We are continuing to be spending more than we are taking out of the economy."

[10:15]

Is that coded language that we are now adopting a long-term policy of running on a deficit in view of the declining forecasts, as we heard in your answers earlier of up to £100 million decline? If so, how does that square with balancing the books? Where does the shortfall come? How is he doing it please? Can he tell us?

Senator P.F.C. Ozouf :

Those are excellent questions and when the Deputy has a chance to read under section 12 of the Budget report, which underlines this statement, there is the additional analysis provided by the Treasury on the total economic spending. In short, what we are doing is we are funding capital from existing resources. We are taking some of the uplift in the Strategic Reserve and deploying that in order to fund the £22.7 million. So, I have never been against investment spending, what I am absolutely against is long-term structural imbalance of income and expenditure on an annual basis. That is what I look for and that is why it is right to spend some more money because of getting people back to work, investing, we are doing all the improvements in health care, but this is not leaving with a structural position that is a problem for the future. There are certainly challenges in the ageing society, but investing now, bringing forward capital, is the right thing to do and of course the analysis in the Budget shows exactly how that is being funded. There are certainly some good ways that we are funding capital, like the redemption of the Jersey Waterworks preference share; that is the right thing to do. Fiscal Policy Panel said: "Use all levers, all available resources, to get capital spending and infrastructure spending", and that is what we are doing.

Deputy J.H. Young:

Can I ask for clarification of the Minister's answer? Can he then confirm please, to be specific, that we are not running a structural revenue deficit in this Budget? Can he confirm that specifically?

Senator P.F.C. Ozouf :

Over the last period of time, in the recession, we have been running a deficit. The Fiscal Policy Panel was critical that we probably did not spend enough last year and I want to secure and propel economic recovery. I do not want to see any further contraction in the scale and the size of the construction industry. It is appropriate to run deficits if they are funded, not by borrowing, in terms of economic downturn. I look forward to the vigorous debate that we should have with the Fiscal Policy Panel to see whether or not we have this balance right. It is good questions. I cannot really do it justice just in 30 seconds.

11. The Connétable of St. Lawrence :

I was not expecting to be called. The Minister said that he was going to cap mortgage interest tax relief I think at £15,000. Can he tell us how many families may be affected by that?

Senator P.F.C. Ozouf :

I do not have the number, I think it is about 250 families out of a total of 8,400 mortgage interest tax relief claimants. Mortgage interest tax relief is a really important tool. It has been very successful in getting people into home ownership. The difficulty is that it has the unintended consequence of allowing people to borrow more and that has been at the heart of the debate in the U.K. in cooling house prices. We are not at that position now, yet, but if we do see a return to growth we need to signal that we are going to take out some of the distortions of the housing market and this is a first step, it is putting a 5 per cent on the £300,000 cap, nothing more. There is a debate about whether or not we continue mortgage interest tax relief in the longer term. It costs the Treasury about £12 million. Is there a better way of helping people into home ownership than doing that? I think we all want to do more. I want to de-friction the housing market, I want it to work better. I think there are ways of dealing with registry arrangements, a centralised registry that allows, not only transactions in the Royal Court, if I may say, every Friday. There is a whole range of initiatives that need to happen to make a well-functioning property market work better and I hope the Green Paper informs Members about some of the policy options that could be done. It is also not designed to raise more revenue, just raise revenue better.

12. Deputy M.R. Higgins of St. Helier :

I must admit I am pleased to see the conversion of the Minister for Treasury and Resources to Keynesian economics over the last 6 years, especially when he was totally against borrowing and investment and so on, even borrowing for investment and so on, in the past. My question concerns the spending of money on building projects and so on. If we are injecting so much money in the economy, there is a danger, as private sector building projects come on board as well, that the economy will overheat in that particular area. What is the Minister for Treasury and Resources going to do to prevent the excesses of the past and make sure it is a measured increase in demand rather than just a free-for-all, which will be highly inflationary and also would draw additional workers into the Island because we cannot cope with the needs of the construction industry?

Senator P.F.C. Ozouf :

I sometimes think that the Minister for Treasury and Resources is in a juxtaposition, I have a Hayek supporter to my right and in front I have Deputy Higgins who is a Keynesian. Keynes was right, you should invest in a downturn, and I have never been against that. I have never been against borrowing for investment and that is what we have been doing. That is what the whole of the policy of the last few years has been. The Deputy is right about overheating in terms of the construction industry. That is what we must be absolutely alert to and we need to be now preparing for the capacity. We have lots of building to do. It is funded, it is financed, it is planned, and we need to make sure that we do not overheat and we put too much demand in the construction industry. I do not think that putting the hospital off is the right decision. We need to prepare for the capacity for that building. We have people out of work. We are going to have to see some limited import of short-term licences I think in the longer term, in discussion with the Property Holdings Department on that issue. This is an important debate and I understand why the Deputy is raising it and that is appropriate to have some proper vigorous debate in advance of the budget debate and of course right the way through next year. We need to plan now for that capital so that we do not see high building costs as we did so many years ago. Building costs are low, they are affordable, but we must not see any more contraction in building and contract suppliers. That will just mean prices go up.

13. Deputy S. Power of St. Brelade :

I think my observation on the Budget based on yesterday's briefing that it was probably more significant for what was not in it than what was in it, but this is my question and it is brief. The Minister for Treasury and Resources has mentioned 4 times how strong our balance sheet is. How long does he think it will last, a strong balance sheet, when we continue to spend more than we are taking out of the economy, which is another way of talking about deficit budgeting?

Senator P.F.C. Ozouf :

I think we need to be quite clear. We are setting a very strong rule on the Strategic Reserve. The Strategic Reserve, if Members approve the strategy - if I explain the statement briefly on that - is that we are fixing a capital value of the Strategic Reserve. We are then applying the inflation rate above it and the hospital will only be able to be funded by the amount above that over the planned period. So that is making sure that our balance sheet is being maintained in real terms. Gone are the days when there were calls on the Strategic Reserve every time there was a problem, and some Members of this Assembly said when we needed to put tax increases, they said: "No, do not do tax increases, take the money from the Strategic Reserve." They said: "No, do not do spending cuts, take the money from the Strategic Reserve." This Assembly backed those proposals. We prepared well in the downturn. We have not wasted the recession like lots of other places and that is why we are in a positive position. The investment returns from the Strategic Reserve have been spectacular. That meant Social Security is in a better position, our public sector pension is in a better position. That is a growing balance sheet, not a constraining balance sheet. If I may just point out, we are a jurisdiction with 100 per cent of G.D.P. (gross domestic product) on our balance sheet, most countries have the opposite.

The Deputy Bailiff :

That brings the questions on the extended question time to an end. We accordingly now are about to return to the agenda. But, perhaps before I do so, we sometimes are capable of forgetting, I am sure Members do not, but we are an Assembly for the whole of the community and speaking for myself I think it has been delightful to see, not only the past, but the future up in the gallery. [Approbation] Including, although I understand he has now gone, a future Greffier who would like to follow after his grandfather. [Laughter]

PUBLIC BUSINESS – resumption

2. Maternity leave: rights of employees (P.104/2014) - resumption The Deputy Bailiff :

We return to P.104, the debate on the maternity leave, rights of employees, and I would ask if any Member wishes to speak. Yes, Deputy Pinel.

2.1 Deputy S. Pinel:

Fourteen years have passed since the States first decided that family-friendly legislation should be introduced in Jersey, P.99/2000. New employment protections have perhaps not been introduced as quickly as was expected at that time, but it is important that we do not overcompensate for the passage of time by taking an excessive leap forward. We should follow the tradition of Jersey's employment legislation, which is to lay a minimum foundation of new rights to protect employees, but without being unmanageable for employers, especially in the large percentage of small businesses in Jersey. I have sympathy with the view that we could have gone further, but it is important that the law has a broad base of support and is accepted by businesses across the Island. Given the concerns that employers have expressed about our proposals for an 18-week maternity leave period, with a qualifying period, it seems unlikely that employers would say that they would tolerate 26 maternity weeks' leave with no qualifying period. A forum consulted widely on this issue and decided that a maximum of 18 weeks is the appropriate starting point. We must see it as just that, a starting point to build upon with a 26-week period as the next goal. Using Social Security data, it is estimated that 75 per cent of women had one year's service or more and 55 per cent of women had 2 years' service or more, so the majority of working women would qualify for the additional 10 weeks' leave. To emphasise what the Minister said yesterday, family-friendly legislation is extremely overdue. If Deputy Southern 's proposition is agreed the law will have to

return to consultation and redrafting. With a new Government in October, it may not receive the priority it deserves and more years would pass before we had the maternity and paternity protection that we urgently need. I ask Members to reject this proposition.

1. Connétable S.A. Rennard of St. Saviour :

I will be very brief. I had a lady call me last night and she said: "Please do not vote for this." She said: "I already work for a very small firm where I am the secretary, I answer the phone, I make the teas and I am quite happy and I am allowed to do job-sharing, I can do flexi-hours, and please allow me to make my own arrangements with my employer, and I do not think this is going to help women get or keep women of child-bearing age in the workplace." So I can just say what the lady phoned me about last night. She is just a little bit concerned that if this happens women will not be able to stay in the workplace because men or companies will not employ women because of these restrictions, and now we know that ladies can have children up until the age of 40, 45, it is going to take it even further. So I am just repeating what one of my parishioners has said. Thank you. So I will not be voting for this.

2. Connétable P.J. Rondel of St. John :

Over the years, I have run a number of what I call small businesses; I think the maximum number of people I employed was 40. Those businesses in fact would not have been able to survive because there is only so much money in the pot in any business and we have seen in particular over the last few years, and I am aware of 4 companies, small businesses that were employing between 8 and 16 people, some with just one or 2, who have gone to the wall because everything has been pared to the bone. To try and put in more legislation that will take money out of a business, we will see more of these small businesses - because the Island is run on small businesses - going out of business and there will be no winners. We have put so much legislation in place over the last 5 to 10 years that it is crippling many companies. I am aware of a small plumbing business that had half a dozen plumbers and the owner, in his middle-40s, decided to call it a day and gave the business to his staff. But at the same time he had to hand out something like £100,000 in equivalent to redundancy money. He walked away after that and then he spent the last couple of years doing part-time work and is just setting up a little business, a one-man band now, when he was giving employment to half a dozen people before. Really, it is all well and good going down the road of .. it is fine possibly for the big finance houses who can pass on their costs within the finance industry, but the Island is run on small businesses and I would ask that the House do not accept any additional legislation in this area. Thank you.

[10:30]

3. Deputy S.Y. Mézec of St. Helier :

Here we are again debating a basic social democratic principle that people across Europe take for granted, many countries even surpass what Deputy Southern is proposing here. Jersey absolutely must have a Maternity Leave Law, because to not have one in the 21st century is completely unacceptable. But, the Maternity Leave Law we have has got to be fit for purpose and has got to do what it is meant to do. The law that is being proposed by the Government, with a paltry 2 weeks paid leave, does not even come close to achieving what a modern Maternity Leave Law in a rich jurisdiction like Jersey should achieve. When the prospect of this first came up I remember having a conversation with my dad, who had just got back from a business trip to Macedonia. He had been there with the company he works for, setting up a branch over there. Macedonia is a former Communist country that many people probably could not even point to on a map. They have 9 months maternity leave at 100 per cent pay. I have got a list here of other countries and what they have. Norway has got up to 46 weeks. Albania has got a whole year. Bosnia and Herzegovina has got a whole year. Canada has got a year as well. Croatia has got a year. All of these countries go

far further than what Deputy Southern is proposing. Yesterday we had the Minister for Social Security saying that we have got to go slowly, so I looked at the U.K. to see how slowly they went. They first introduced a maternity grant in 1911, over 100 years ago, and there were periodic updates to that law after that. They had their first maternity leave legislation in 1975, which was then expanded by Margaret Thatcher in 1980. Then, finally, in 1993, when I was just a toddler, all working women were covered by maternity leave. That is over 20 years ago the U.K. has had this and I just think, if the Minister wants us to go any slower, we will just be going backwards, frankly. The whole of Europe has Maternity Leave Law. They have much better than 2 weeks in most other cases. Jersey is one of the richest places in the world. We can absolutely afford to do this. There are plenty of safeguards that can be put in for small businesses. Other countries manage and they have not completely collapsed all of their small businesses. It will not be doomsday if we go ahead with this. It is not a financial necessity. It is a political choice and so I ask Members to make the right choice today.

4. Deputy J.H. Young:

I have had 5 years managing a small to medium-sized law firm, around 50 people, and I think there are real issues of difficulty regarding medium-sized and small businesses in how they manage the absence of their key female employees during pregnancy. I think it is right that there is a long-term objective of moving towards having a decent period of entitlement to leave. Even if the proposal here, part (a) of this proposition, is without pay, in my reading it is still an objective, but I think there are real concerns about potential unintended effects. For example, it could happen that an employee that has not achieved 26 weeks employment announces they are pregnant and then that results in a dismissal because the employer simply cannot keep that particular job open for them to go back exactly into the same job at the end of the time, because there is a lacuna in the law. We have got that provision in the law, Article 67 of the Employment Law, at the moment, but the Minister has never got round to bringing the Regulations and so anybody bringing an unfair dismissal on grounds of dismissal for family reasons of pregnancy or childbirth who has not got 26 weeks would fail. I think that gap must be corrected, but there is also the situation that even for those that have longer periods of employment trying to guarantee, as the proposition requires, that they can go back in exactly that self-same job, that makes it extraordinarily difficult for managers in those businesses to ensure that they can keep their services going. I certainly know and I have certainly seen how profitability is often pretty marginal these days for small businesses. Yes, this Island has got rich capital, but businesses here have got very high costs. We have a really high cost of living here, which means that wage levels are way over the U.K.'s, and huge regulation, which impacts on them severely. I do not think it is easy at all for small and medium-sized businesses. With great regret, I cannot support (a). I think it is a long-term objective and I am not very content at the moment with what I am seeing in the Minister's law that we are going to debate afterwards, but I will save those remarks for then. On the question of part (b) of this proposition, maternity allowance is obviously going to be Social Security funding. I think if you are going to do that, to have a statutory maternity payment paid by the States, we would be looking at contribution rates into the fund of a U.K. level of something like 12 per cent and so on. We do not have that. That is a choice. If we have lower contribution rates then you are not able to pay those sorts of benefits. I agree that in an ideal world, a Utopian world, we could do this at one go, but I think the right approach is the step-by-step. Whether or not the Minister's proposals go far enough when we get on to that item, doubtful at the moment; so I put the flag up there, but this particular one I do not

think I am going to be supporting.

5. Senator A.J.H. Maclean:

We heard this morning the statement on the Budget from the Minister for Treasury and Resources. A moment ago we heard Deputy Mézec say that we can afford this. I think it is fairly clear from the fiscal position that we have challenges ahead. There is £100 million of revenue shortfall over the next 3 years. There is still, as the Minister for Treasury and Resources pointed out, weakness in the labour market - that is clear to Members here - and, as such, the impact of this type of legislation on small and medium-sized businesses is particularly relevant to Jersey. Members, I am sure, are aware that 90 per cent of businesses in Jersey employ 10 or less people. Three-quarters of businesses in Jersey employ 5 or less people, small businesses, and they are the ones ..

The Deputy Bailiff

Can you talk while Senator Ferguson finds her place, Senator? Senator A.J.H. Maclean:

Talk of the devil, Sir. [Laughter]

Senator S.C. Ferguson:

Unkind, very unkind.

Senator A.J.H. Maclean:

I will just invite Senator Ferguson to take her seat and I will proceed. As I was pointing out, the impact, clearly, of legislation of this nature on small and medium-sized businesses, particularly in a jurisdiction like Jersey where there is such a heavy reliance on those types of business, is going to be that much more significant. It is very easy to quote examples from around the world. Deputy Mézec used Macedonia and the generous benefits that are available in that particular state and there are other examples. Sweden: 480 days paid per child, any time up until the child is 8 years old. I can pick up lots of examples on that side. Equally, I could pick out, for example, Swaziland, which may not be Members' best choice, or Papua New Guinea that do not provide, probably not surprisingly, the sort of protection that we in this Assembly and we in this Island would expect. What is surprising, perhaps, is that the United States does not offer maternity leave protection. They have, from an economic point of view, been a powerhouse. I think we need to look into the future. I think we certainly need to be providing the right protection and, indeed, maternity leave is, without doubt, a key element in eliminating discrimination in the workplace. I think Members here would agree with that point. My concern, and it remains my concern and I will talk more about this on the main proposition of the Minister, is about the timing now, as we are hopefully coming out of a recession, but the economy is, without doubt, in a very fragile state. The impact on small businesses: I am concerned about the effect that it would have on those. We have to be in a position, surely, if we want to see a sustained recovery, of encouraging business, of encouraging enterprise, of ensuring that enterprise and businesses and the very heart of our economy, which is small businesses, are incentivised to employ people, to maintain employment and employ new people. Laying more and more and heavy regulation is obviously going to have a detrimental effect. That is why we have seen, in the United Kingdom, the Chancellor in 2011 sweep away a whole raft of regulations from small businesses in particular, recognising the disproportionate impact it has on those types of businesses. We have seen in Germany a good example of, again, liberalising the market; removing regulation; giving businesses in that economy the chance to flourish. From their very difficult position in 2005, the German economy has again returned to being the powerhouse of Europe. How have they done that? They have put the power back into the hands and the incentives to business to drive the growth of their economy, to employ people.

That is exactly the sort of lesson that we need to take notice of if we are going to have a long-term and sustained recovery here in Jersey. I would urge Members to consider the timing of this proposal from Deputy Southern , the extent of it. I understand the sentiment behind it and he is right, we do need to consider appropriate rights and protections for employees, but we need to do it at the right time and we need to do it in a proportionate manner so that we do not derail the very fragile recovery that is coming and drive more unemployment, which is obviously what Members, I am sure, would not want to see.

6. The Deputy of St. Ouen :

While our advisers were undertaking a review of the family-friendly legislation we did ask them to briefly look at the amendments that were being brought forward by Deputy Southern and debated today and I think I would just like to make a couple of comments. First of all, it is recognised that ultimately a 26-week period is likely to be brought in. However, I think there is a need to start somewhere and perhaps the most important thing is that there is a going to be a cost to this. The advisers not only questioned the financial matters that Deputy Southern raised but, equally, point out that there is going to be a need for increased Social Security contributions going forward in any event. So we are not just talking about a cost to businesses here. We are talking about an additional cost for every individual of working age, which needs to be properly understood. I think, for that reason, it would be wrong to support Deputy Southern 's amendment at this point of time because not only do employees need time to adapt to the introduction of any new legislation, but a detailed analysis needs to be undertaken of maternity rights to identify exactly what the financial implications are and a debate to be had on how they are provided for.

7. Deputy J.M. Le Bailly of St. Mary :

If a mother is employed by a large organisation, either private or indeed the States, then this proposition is great. It will have very little effect on that organisation because there will be someone available to fill that absent person's job, as cover needs to be provided to account for holidays and sickness anyway. Alternatively, a temp is brought in.

[10:45]

The concern here is for the small business. They have no one to fill the gap. They will be forced to employ a replacement. That will have to be short-term because that is what will be expected by the person taking maternity leave, as they will want their job available when they decide to return to work. It may be that the replacement is better suited to be the job or even more efficient. Maybe they would want to keep her. Then what does the owner of a small business do? Sack her - then he will be taken to a tribunal for unfair dismissal - or do they dismiss the previous employee? They will probably be taken to the tribunal anyway and also have to pay a redundancy package. The Deputy 's proposal is well-meaning, but he has never run a small business. He is not familiar with the implications of this. Many of the Deputy 's propositions fall into this category. He constantly complains with regard to zero hours, but fails to understand that many of his proposals and increased legislation have caused zero hours to happen. Small businesses, as an example employing certainly 10 or less people, should not be subjected to all the legislation which, at the moment, applies because it is not practical or affordable. If we were to reduce the legislation we would increase employment. On behalf of all small businesses, I shall not be supporting this proposition.

8. Deputy R.G. Le Hérissier:

It is a great pity and, so far, there do not appear to be grounds for compromise because I am going to ask Deputy Southern , as I think was asked yesterday by the Minister for Social Security, why he is running this proposition and why did he not basically seek a major amendment to the Minister for Social Security's proposition. I think that would have led to a better debate because I think, tactically, the result of how this has been sequenced is going to be that his is going to fall dramatically and yet, sadly, it is not going to bring, in my view, the necessary pressure upon the

Minister for Social Security to deal with what, quite frankly, are somewhat timid proposals. I do realise he is boxed-in by businesses interests, so eloquently expressed from the depths of St. Mary by the Deputy of St. Mary. There is no doubt that there is a major sticking point, which was addressed in the Scrutiny Panel's conclusion. Let us go significant parts of the way with small business, but let us see the areas in which we may need to compromise. Now, whether these compromises are temporary ones or whether they are permanent is a big issue, but they would, in my view, have to be temporary while the issues were analysed further. I would have wanted that to happen. Now, I know it brings in the danger of a 2-track approach and it does not suit people like Deputy Mézec who see that there should be an instant, almost absolutist approach to the issue. I would want to see a lot more done. I think we have dragged our feet, but I am really stuck between a rock and a hard place simply because the Deputy has not sought to bring major amendments to the proposition of the Minister. It would be good if there could be further thought. Whether it could move the parties along I do not know, but I would so much have liked the Minister to say: "Look, I am prepared to take a fundamental look at these issues to see whether I can move then along further." I do have this terrible feeling there is going to be a major rejection of Deputy Southern 's, but I do not think that will solve the problem of the, quite frankly, timid approach.

9. Senator P.F. Routier:

Members will be aware that I was a previous Minister for Social Security and was involved in bringing forward some of the employment legislation that exists today. I know that introducing employment law is a very tricky issue and we need to bring the community along with us because there are certain things which need to be improved for employees, but we also need to recognise that employers are the ones who are providing the jobs. It is not the employees who make the jobs available. It is the businesses and we have to ensure that the environment is right for the businesses. There was a claim - I think from Deputy Le Hérissier - that the Minister for Social Security may have been intimidated by business interests. The forum itself which the Minister has to take regard to is made up of employers and employees and it is a balanced approach that they look at. They look at all the issues regarding employment matters and I believe that they have proved themselves to be of value to our community and to the Minister and also to us as an Assembly. I am unable to support Deputy Southern 's proposition because there has been no consultation on this particular matter, in contrast to what the Minister is doing. He has looked at all the fundamental issues. If you look at his proposition very carefully, it covers all the areas in relation to family-friendly working and I would urge Members to reject this proposition and I will be supporting the Minister in what he is doing, which is an improvement in matters of looking after families and their children and others in the way forward, and I hope Members will follow suit.

10. Deputy G.C.L. Baudains:

I get concerned with this sort of proposition. It is obviously well-intentioned, but it does seem to me that those leaning towards socialism do not seem to be able to understand the more you impose on employers the more you risk the employee's job. For argument's sake, if this proposition was successful, then no employer would want to employ a woman of child-bearing age. Why would he run the risk of damaging his business? I also ask: why should employers and taxpayers suffer because someone has chosen to have a child? As I said a moment ago, this is a socialist-type agenda and I recall a comment that Winston Churchill once made that capitalism was the unequal sharing of prosperity but socialism was the equal sharing of misery. [Laughter] I do not want to go down the road that countries like Greece did by going too far. It is all very well helping people, but there is a limit to how much you can help people before you do more damage than good. I cannot support this.

The Deputy Bailiff :

Does any other Member wish to speak? Then I call on Deputy Southern to reply.

11. Deputy G.P. Southern :