States Meeting Transcript - 6th October 2015

STATES OF JERSEY OFFICIAL REPORT TUESDAY, 6th OCTOBER 2015

PUBLIC BUSINESS..............................................................................3

1. Medium Term Financial Plan 2016-2019 (P.72/2015)....................................3

1. Senator I.J. Gorst (The Chief Minister):..................................................4

2. Medium Term Financial Plan 2016-2019 (P.72/2015): fifth amendment (P.72/2015 Amd.(5))...................................................................................7

1. Deputy J.A.N. Le Fondré of St. Lawrence (Chairman, Corporate Services Scrutiny Panel):...................................................................................8
2. Deputy T.A. Vallois of St. John:........................................................11
3. Deputy S.M. Brée of St. Clement:......................................................12
4. Connétable C.H. Taylor of St. John : ....................................................13
5. Deputy J.A. Martin of St. Helier:.......................................................13
6. Deputy M.R.Higgins:..................................................................14
7. Deputy A.D. Lewis of St. Helier:.......................................................14
8. Deputy P.D. McLinton of St. Saviour:..................................................15
9. Deputy G.P. Southern of St. Helier:....................................................15
10. Senator A.J.H. Maclean:.............................................................17
11. Senator L.J. Farnham : ...............................................................18
12. Deputy J.A. Hilton of St. Helier : ....................................................19
13. Senator Z.A. Cameron:..............................................................19
14. Senator P.F.C. Ozouf : ...............................................................19
15. Connétable A.S. Crowcroft of St. Helier : ............................................21
16. Senator I.J. Gorst : ...................................................................21
17. Deputy K.C. Lewis of St. Saviour:..................................................23
18. Senator A.K.F. Green:...............................................................23
19. Deputy M. Tadier of St. Brelade:....................................................23
20. Deputy J.A.N. Le Fondré: ...........................................................24

3. Medium Term Financial Plan 2016-2019 (P.72/2015): twelfth amendment (P.72/2015 Amd.(12))................................................................................26

1. Deputy J.A.N. Le Fondré (Chairman, Corporate Services Scrutiny Panel): .............26
2. The Connétable of St. Helier:...........................................................27
3. Senator A.J.H. Maclean:................................................................28
4. Connétable L. Norman of St. Clement:.................................................29
5. Deputy J.A.N. Le Fondré:..............................................................29

4. Medium Term Financial Plan 2016-2019 (P.72/2015): second amendment (P.72/2015 Amd.(2))..................................................................................31

1. Deputy G.P. Southern :..................................................................31

LUNCHEON ADJOURNMENT PROPOSED..................................................37 LUNCHEON ADJOURNMENT................................................................37

2. Senator A.J.H. Maclean:................................................................37
3. Deputy M. Tadier :......................................................................39
4. Deputy S.J. Pinel of St. Clement:.......................................................42
5. Senator Z.A. Cameron:.................................................................48
6. The Connétable of St. Clement:........................................................48
7. Deputy J.A. Martin:....................................................................49
8. Deputy A.D. Lewis :....................................................................52
9. Connétable J.M. Refault of St. Peter:...................................................53
10. Deputy G.P. Southern : ..............................................................54

5. Medium Term Financial Plan 2016-2019 (P.72/2015) – eighth amendment (P.72/2015 Amd.(8))..................................................................................63

1. Deputy S.Y. Mézec :....................................................................63
2. Deputy S.J. Pinel:......................................................................66
3. Deputy G.P. Southern :..................................................................67
4. Senator P.F.C. Ozouf :..................................................................69
5. Deputy J.A. Martin:....................................................................70
6. Senator A.J.H. Maclean:................................................................71
7. The Connétable of St. John:............................................................71
8. Deputy G.J. Truscott of St. Brelade : ....................................................72
9. Deputy S.M. Brée:......................................................................72
10. Deputy A.D. Lewis : .................................................................73
11. Deputy M. Tadier :...................................................................73
12. Deputy J.A.N. Le Fondré: ...........................................................75
13. Deputy S.Y. Mézec :.................................................................78

ADJOURNMENT................................................................................81

[9:30]

The Roll was called and the Dean led the Assembly in Prayer The Very Reverend R.F. Key, B.A., The Dean of Jersey:

Before we start, may I just say that today marks my completing 10 years as Dean of this Island, and I just wanted to thank [Approbation] Members for their welcome and their endurance.

The Bailiff :

I am sure I speak for all of us, Dean, in congratulating you and thanking you for your service to the Island.

PUBLIC BUSINESS

1. Medium Term Financial Plan 2016-2019 (P.72/2015) The Bailiff :

The first item of Public Business is the Medium Term Financial Plan 2016-2019, P.72, and I will ask the Greffier to read the amended proposition, taking into account the decision of the States in relation to Ports of Jersey.

The Greffier of the States:

THE STATES are asked to decide whether they are of opinion to receive the Medium Term Financial Plan 2016 – 2019 and, in accordance with the provisions of Articles 8 and 8A of the Public Finances (Jersey) Law 2005 – (a) to approve – (i) the intended total sum of States income for each of the financial years 2016–2019, as set out in Summary Table A and being the central forecast of the States income forecast range for 2016–2019 as shown in figure 18, (ii) the total amount of States net expenditure for each of the financial years 2016–2019, being the total net revenue expenditure and the total net capital allocations, as set out in Summary Table B, in order to deliver a balanced budget by 2019; (b) to approve the following amounts (not exceeding the aggregate the total amount set out in paragraph (a)(ii) above) – (i) the appropriation of an amount to a revenue head of expenditure for each States funded body (other than the States trading operations) being the body's total revenue expenditure less its estimated income for the financial year 2016 as set out in Summary Table C, (ii) the amount to be allocated to Contingency for the financial year 2016 as set out in Summary Table D, (iii) the total amounts set out in Summary Table F that in a Budget for the financial years 2016–2019 may be appropriated to capital heads of expenditure, being an amount that is net of any proposed capital receipts, noting that the sum of up to £1 million of the 2016 allocation, up to £39 million of the 2017 allocation and up to £8,233,000 of the 2018 allocation will be subject to the States' approval of the intended transfer of funds from the Strategic Reserve Fund detailed in paragraph (f), and the use of funding from the Criminal Offences Confiscation Fund subject to the requirements of the Proceeds of Crime (Jersey) Law 1999, and noting that future amendments to the Medium Term Financial Plan and appropriate legislation, as necessary, will be brought forward for approval to facilitate the funding of the office consolidation project and a future hospital provision; (c) to approve the total estimated non-cash revenue expenditure for depreciation for States funded bodies (other than the States trading operations) for the financial year 2016 as set out in Summary Table C; (d) to approve the following, as set out in revised Summary Table G, as set out on page 5 of the amendment to the Council of Ministers dated 18th September 2015, in respect of each States trading operation for the financial year 2016 – (i) its estimated income; (ii) its estimated expenditure; (iii) its estimated minimum contribution to be

made to the Consolidated Fund, if any; (e) to approve, in respect of each States trading operation, the total cost of the capital projects that each is scheduled to start during the financial years 2016– 2019 as set out in revised Summary Table H on page 5 of the amendment to the Council of Ministers dated 18th September 2015; (f) to agree, in principle, that the use of the Strategic Reserve Fund income, over and above that required to maintain the real value of the Fund (namely, in accordance with their Act dated 23rd September 2014, its value at 31st December 2012 uprated in line with increases in Jersey R.P.I.(Y)), to be available to transfer to the Consolidated Fund and to be allocated for the measures identified in Summary Table J, and that withdrawals should be made from the Consolidated Fund in 2017 and 2019 to replenish the Strategic Reserve Fund and to request the Minister for Treasury and Resources to bring forward for approval the necessary report and proposition to enable the use of the aforesaid additional income of the Strategic Reserve Fund and the intended funds transfers.

The Bailiff :

Although the proposition has now been read, I propose to say something briefly which is not addressed to the proposition at all, but the Chief Minister has kindly pointed out to me that in the excitement of the Dean's announcement, I have overlooked to welcome His Excellency, and I am very pleased to do that now. [Approbation] Chief Minister.

1. Senator I.J. Gorst (The Chief Minister):

This debate is an important one for our Island. The decisions the Assembly makes this week will set the direction of the Island's public finances for the next 4 years and it is vital that we get it right. Now that we can see the economy recovering, we are turning our attention to investing more in priority areas: health, education and infrastructure. Departments are working to modernise essential services as we strive for maximum efficiency across the public sector. We are continuing to do all we can to boost our economy, as it becomes increasingly competitive, innovative and technology-driven, striving to provide the extra revenue that will help us balance our budgets by 2019. Our decisions this week will determine how effectively the Island manages the challenges and seizes the exciting opportunities that are emerging across the world. Economic power is shifting from traditional developed economies to the new emerging powerhouses in Asia, Africa and elsewhere. Rapidly changing technology is having an impact on every business and every government, however small. The population is ageing and working people are having to shoulder an increased burden. This Medium Term Financial Plan proposes how Jersey should respond to these challenges and it follows, of course, the advice of economic experts who say we should support the economy in the early stages of recovery, while also ensuring we balance the books at the right time. We want to keep Government costs under control. The Corporate Services Scrutiny Panel added sustainable finances to the Strategic Plan and therefore to the strategic priorities, and Ministers fully support that. At the same time, we need to invest in health, in education, in infrastructure and in economic growth. We want to regenerate our capital, St. Helier. That is why we are reprioritising, finding efficiencies, making sure our organisation is working as well as it can for our long-term future. Every department does important work, every department is doing its bit for Jersey and her citizens. We have a new housing strategy out to consultation and we have a new scheme to protect tenants' deposits. These measures help to improve the lives of our most vulnerable Islanders. In Home Affairs, the latest report on the States of Jersey Police shows

another 2 per cent drop in the overall level of recorded crime. [9:45]

Our Customs officers continue to protect our borders in ever-uncertain times, our borders here and in the U.K. (United Kingdom) and beyond. Social Security is getting Islanders back into work with the jobs fest, the Community Jobs Fund and industry training schemes. T.T.S. (Transport and

Technical Services) is investing in a new sewage treatment works, as the existing plant is old and in constant need of repair. The Minister for Planning and Environment is reducing planning restrictions. That is what reform means, and each Minister and each department is taking its place in reforming the institutions of Government and I thank them for the work that they are undertaking. We are making changes, doing things more efficiently so that we can use that money to save, that we save to invest in priority areas. That of course is where the money should go, on frontline services for Islanders, not on out-of-date, inefficient processes and backroom duplication. We are refocusing the work of the public sector to improve services for Islanders and to do more for less. We do not want to undermine our strong public finances by employing any more people than we need or by spending unnecessarily, because we are mindful that someone has to pay for the services we provide. I, and I am sure Members of this Assembly, do not want that burden to fall on future generations, so we are using technology, reducing staff, looking after our infrastructure and putting funds, as I have said, into education, health, economic growth and essential infrastructure. With a lean, nimble Government, we will and we can deliver more for less and I believe that is what taxpayers want. We should not be doing it slower or doing less of it. I believe that most Members of this Assembly want us to do more to drive out inefficiency and want us to do it faster. That is what all the Scrutiny reviews show us. We of course employ a panel of world-class economic advisers. The members of that panel have advised other international institutions: the Bank of England on monetary policy, they have held senior positions in the European Commission, and as I have said before, they advised us to keep 4 principles in mind when developing our long- term plan for Jersey. They were: balance the budget over the economic cycle; aim for long-term fiscal sustainability; be realistic in assuming future income and expenditure and plan spending, but at the same time be flexible. We believe that is what this plan does and they have agreed with us. It is this kind of financial prudence that led to Jersey receiving one of the best possible credit ratings from Standard & Poor's, a AA+ with a stable outlook. Our global reputation is built on a history of making the right long-term decisions and therefore we must continue to plan ahead, aiming to return to balanced books at the pace that best suits our economy. But it is not all about money. One of our main priorities in this plan is health and social care. We are living longer, and as the Minister for Health often says, that is great news. We all want to remain healthy throughout our lives, but as the working population is not growing as fast as our older population, that comes with a substantial cost. That is why we are choosing to allocate £96 million worth of extra funding for health and social services over the 4 years of this plan. Ministers ask Members to make that choice too in the best interests of the community we serve. That £96 million includes £46 million to meet rising costs of drugs, improve standards and ageing demographics. It includes £11 million on early intervention services for children, absolutely fundamental to setting the firm foundations for our future community and our future generation. We have said in this place before that we, in hindsight, should be ashamed of the amount of money over time that we have put into children's services. Great work was started with the previous Minister sorting that service out, bringing in experts to look at where it should go. In this M.T.F.P. (Medium Term Financial Plan) we are allocating money to deal with the issues that have been found, and I for one absolutely believe it is the right thing to do. It shows that at our fundamental core we will protect the most vulnerable members of our community. [Approbation] I went slightly off-script there. £850,000 on healthy lifestyle programmes, investing to reduce spending further down the line; £4 million to improve mental health services; £15 million on community health care, keeping people in their own homes for as long as possible; £20 million on acute services, keeping hospital treatment safe and sustainable as more older people need these vital services. This spending of course is in addition to more than £60 million additional investment agreed in the first Medium Term Financial Plan. When we debated the proposals for restructuring health services in 2012, the Assembly then recognised that this level of investment would need a new funding mechanism, and as the economy is beginning to recover and we are planning sustainable finance measures, we are now proposing a

new health charge. We plan to introduce it from 2018, by which time our economy will be more robust. Of course Members know that the detail of this charge will come to the Assembly for debate alongside the M.T.F.P. addition in June 2016. What we are asking people and Members for today is agreement on the principle that extra revenue will need to be found to invest in health if we are to agree this growth. If Members cannot agree that extra income is required, the extra funding we are proposing for health will not be sustainable into the future and I cannot think that there is any Member in this Assembly that is going to stand up and say that that list of funding .. they may disagree with some of the processes, but I do not think one of them would disagree with that list of funding for those absolutely necessary services. Investing in education has been one of our main priorities since our Strategic Plan was launched. Even so, all departments are looking for efficiencies. We can always improve the way we do things and every area of the public sector is contributing to our reform programme, and therefore education is no exception, but over the 4 years of the plan, education will receive an extra £27 million, that is £14 million to raise standards and fund the I.C.T. (Information & Communication Technology) strategy, £13 million to cater for the predicted increase in school-age children, and as well as that £27 million there is an extra £55 million for capital investment, £40 million for Les Quennevais School and £15 million for Grainville and St. Mary. Who could disagree that the work in capital investment that Education and Property Holdings have done is nothing short of marvellous when they look at the new school in St. Martin? All the investments we are making will support the economy through the associated economic activity and through the benefits that come from the investments. On top of that, we have set aside an extra £20 million for specific projects that boost economic growth and productivity. Economic growth touches all areas of our economy, for instance, skills development provides qualified employees for our main industries and helps our young people into high-quality jobs. Our financial services industry continues to lead the way among international finance centres in the global move towards greater co-operation and transparency. Only on Sunday we saw a similar small jurisdiction announcing that they would follow our model of register for beneficial ownership. We are setting the standard and we should be proud of that. We enjoy close working relations with all the major international bodies, such as the O.E. C.D . (Organisation for Economic Co-operation and Development), and I raise that this morning because Members will have received an email overnight about the B.E.P.S. (Base Erosion and Profit Shifting) issue which the O.E. C.D . produced yesterday. We do not need to be afraid of that. In fact, we have been involved in the process of change and we have been informed and knew what those announcements were going to be before they were made yesterday. As I said, it gives us no undue concern for the future success of our increasingly diverse finance industry. Members will know that it is due to be discussed in Lima later this week. Members may also know that the Assistant Chief Minister will be party to those discussions, as he leaves us to go to Lima this evening. My department worked closely with Economic Development and External Relations to attract new business and to encourage innovation in our existing firms. The first £5 million of the £20 million provision is proposed in 2016. The funding will support initiatives that will generate extra tax revenues in the future and contribute to our priority of sustainable finances. It will be closely managed, using similar governance to that used successfully for fiscal stimulus. As well as investing in health, education and economic growth, we are setting aside £168 million for capital projects over the term of this plan. As I have said, that includes £55 million for school building; £43 million for sewage works; £21 million for I.T. (Information Technology) systems; £8 million for the prison and £41 million on a number of other important projects. There can be no doubt that our investment in new and refurbished housing is transforming areas of St. Helier. Through Andium, more than £200 million is planned for the coming years, much of it in St. Helier, and of course the Jersey Development Company has plans to continue its work of investing over this period as well. To manage this investment, we are redesigning services, maximising efficiency, making savings and reprioritising spending. This work has involved looking carefully at the benefit system. I understand that for some these proposals are emotive, but it is right that we promote financial independence, that we target benefits on those who most need them and minimise the impact of any changes on individuals. But we are keeping the interests of older people at the forefront of our thinking.

[10:00]

That is what the ageing population is all about. In fact, we are investing in services. Effective health services are essential for an older population. Social Security will be providing more funding for the 65-plus health scheme and we are maintaining our benefits budget at the 2015 level throughout the 4-year period. It is right that every area of public spending makes a contribution to our long-term plan for Jersey. One of the most important aspects of this financial plan is its vision. It proposes our overall finances for 4 years, setting the spending limits for 2017, 2018 and 2019, as well as the detail for 2016. This is a sensible way to approach public finances. It maintains the important principles of medium term financial planning and avoids a return to annual budget and short-term thinking. It is vitally important that we have time to work with departments - as I have said, that work has already started - to develop a detailed plan for 2017 and beyond. It is also important that we have time to assess those detailed plans, their distributional impacts and their impact on public services. That is why we will present detailed departmental plans in the M.T.F.P. addition next June, but today or tomorrow or the day after we are asking the Assembly to agree caps on spending for 2017, 2018 and 2019 so that we can maintain control of our finances. We are not asking for approval to spend these funds. This is not a blank cheque. In fact, to use that analogy, the cheque has not even been signed. The decision on how to spend and allocate those funds will come in June next year, but to go back to the F.P.P. (Fiscal Policy Panel), in line with their advice, they said we must present balanced budgets. We are committed to delivering a balanced budget. We are committed to sustainable public finances and I believe that this Assembly wants to make those long-term decisions in the best interests of our Island. This plan addresses the challenges ahead without changing the fundamental building blocks of our tax system. We want to maintain our internationally competitive personal income tax regime, a corporate tax regime which delivers tax neutrality in a transparent and internationally-acceptable manner, and a low, broad and simple G.S.T. (Goods and Services Tax) regime. Maintaining these key building blocks creates the stability and certainty that business, especially the financial services sector, needs in order to continue to invest in our Island. Attracting new businesses and keeping existing businesses should result in greater employment and correspondingly greater tax revenues. We know we need to increase our income to tackle the growing costs of health care for an ageing population. We have been open about how we propose to raise an extra £35 million per year by proposing a new health charge. In this and all our proposals, we will be guided by the long-term tax policy principles that were agreed by the States as part of the Strategic Plan debate. In conclusion, I think this is right plan; Ministers think this is the right plan; our independent economic experts think this is the right plan. We have recognised the strategic challenges we face, that income is rising at a slower rate than in the past, that we must today start to address the effects that the ageing population is going to

have upon our spending and upon our community. We must continue to be mindful of the after- effects of the global recession. This plan proposes sustainable long-term solutions, it aims to deliver a balanced package of measures and it encourages independence, ensuring that people are always better off in work than on benefits. It enables us to invest in priority areas of health and education. It will encourage us to deliver a modern efficient public sector fit for the future. It will support economic growth and it will achieve balanced budgets by 2019. This is the right plan for Jersey's long-term economic and social future and I commend it to the Assembly.  [Approbation]

2. Medium Term Financial Plan 2016-2019 (P.72/2015): fifth amendment (P.72/2015 Amd.(5))

The Bailiff :

We now come to the first amendment, which is that of the Corporate Service Scrutiny Panel, and I ask the Greffier to read the amendment.

The Greffier of the States:

Amendment 5, page 2, paragraph (a) – for sub-paragraph (a)(i) substitute the following sub- paragraphs – "(i) the intended total amount of States income for 2016, as set out in Summary Table A and being the central forecast of the States income forecast range for 2016 as shown in Figure 18, (ii) the intended total amount of States income for 2017, as set out in Summary Table A and being the central forecast of the States income forecast range for 2017 as shown in Figure 18, (iii) the intended total amount of States income for 2018, as set out in Summary Table A and being the central forecast of the States income forecast range for 2018 as shown in Figure 18, (iv) the intended total amount of States income for 2019, as set out in Summary Table A and being the central forecast of the States income forecast range for 2019 as shown in Figure 18,".

Senator P.F. Routier:

Does the plan need seconding?

The Bailiff :

I suppose it probably does. [Laughter] Senator P.F. Routier:

I would like to propose we second it, Sir.

The Bailiff :

I am very grateful, Senator. Deputy Le Fondré.

1. Deputy J.A.N. Le Fondré of St. Lawrence (Chairman, Corporate Services Scrutiny Panel):

Just by way of starting, I suppose, depending whether Members have read our report on the Medium Term Financial Plan, they will note at the very front there is a table with some numbers on it. I may make reference to it briefly during my speech, but as people go on, they may wish to look at it because it does, in our view, summarise the position that we are being asked to approve, which is the important matter in terms of the first 2 parts of this proposition, (a)(i) and (a)(ii). In relation to the amendments that we are debating now, in theory it should be a very straightforward amendment. That is always the kiss of death, is it not? All we are asking at this stage for this amendment is to allow the Assembly to vote on each year separately. That is it. In theory, there is no reason why everyone in this Chamber should not be able to press pour for this amendment. The crucial decision is at the end of the debate when, if we have agreed this amendment which allows Members to vote on each individual year, as to which years Members approve. I do not think that is the attitude of the Council of Ministers from their comments, but in theory, this should be in itself an acceptable amendment and it gives States Members the opportunity to listen to the debate as we are going on over the few days and then make their final decision when we vote on the Medium Term Financial Plan and all of the amendments. However, I think it is appropriate to say why we think that this is necessary to suggest to the Assembly they should have that ability. I would like to make, I think, 2 points initially and then obviously go into the main parts of the speech. I draw to Members' attention, because the Chief Minister said, I believe, that they are not seeking approval of certain items, which was income and expenditure. There was certainly not approval in the latter half of his speech. Part (a) of the proposition starts: "To approve." Part (i) is: "The intended total amount of States income for each of the financial years" of the whole period, and that is as laid out in what was referred to as summary table A. Summary table A, as I am sure Members all know, is this: it is not all the words. What Members are being asked to approve as we

went through in our presentation yesterday is this very bottom line. That is on our crib sheet, as it were, at the front of the report. That is £2.9 billion. As we said, and I do not want to stray too much off the actual amendment per se, but this is just outlining what overall we are debating: part (a)(ii) is to approve the total amount of States expenditure. That is what is laid out in summary table B that is over the page. That is what is on our crib sheet, for want of a better expression, which is £3.1 billion of expenditure. The quick mathematicians may or may not have noticed that £3.1 billion of expenditure is bigger than £2.9 billion of income. Therefore your next position from 1st January of next year .. or, sorry, compared to 1st January next year to the end of the period is down £165 million. Yes, in 2019, if the Council of Ministers' plans go as they hope, there is a slight surplus in that one year. The net position is that we will be £165 million worse off. I thought that might hopefully get somebody's attention. That is why, and in the context certainly for the expenditure side, where there is no detail for 3 of the 4 years we are being asked to approve, that the Corporate Service Scrutiny Panel felt it was appropriate - and again, this is our opinion, but it also based on the opinion of our advisers - to suggest to the Assembly firstly that they might wish to have the ability to approve each individual year, and that secondly we should suggest to the Council of Ministers and to the Assembly: "Yes, start your plans, approve 2016, but before we approve the other years, come back with your full plans." It is in the hands of the Council of Ministers how quickly they come back. They have said no later than 30th June. It is in their powers to do it in January or before Christmas or whatever. It is in their hands. I now wish to switch to this particular amendment, which as I said focuses on the income side, and specifically we have got, I think, probably 2 major concerns. One is that we do consider, and again, this is supported by the advisers, that the income forecast is too optimistic. Do not forget we are, as a panel - and there is a corporate memory to the panel, as it were - obviously sensitive to the income forecast, given the experiences of the last Medium Term Financial Plan, when income forecasts were far too optimistic and the spending plans matched those income forecasts. Scrutiny of the day raised this as an issue. The usual excuses were run out, including the F.P.P. reports: "We have got our experts. They are telling us we are right" and all the rest. It was held out by Ministers that the forecasts were robust. One Minister: "I have personally assessed these to be robust." As we all know, it turned out that the predictions of the Corporate Services Scrutiny Panel were far closer than the prediction to reality in the predictions of the Council of Ministers. We are now living with the consequences of those over-ambitious spending plans. Our concern is that income tax forecast specifically - and there is a difference  between income tax and tax, obviously - are showing increases of 4.5 per cent, 5.3 per cent, 5.6 per cent and 4.1 per cent for the next 4 years, in our view, significantly above cost of living. We and our advisers, and that is the same advisers who assisted the previous panel last time around, are strongly recommending caution at this time on such forecasts, particularly where they are used to inform spending plans. So it is caution. The second issue is going back to what are we being asked to approve? As I indicated before, it is summary table A, it is the bottom line. That means on summary table A that we will be approving having a

mechanism to raise £35 million a year, a total of £50 million in the period of the plan for health care.

[10:15]

That may well be fine, but there is no detail whatsoever as to what that will be, what it will look like, what it will cost to run, who will be charged, et cetera, et cetera. We have absolutely no idea as to the impact on households. Our very basic calculation suggests it is over £1,000 a year for each and every household. To quote C.I.P.F.A. (Chartered Institute of Public Finance and Accountancy), our advisers, who have significant experience in these types of areas and plans, it is our view that a number of key assumptions principally around income tax and saving targets, including the £70 million of people savings, invite an unacceptable level of risk. The introduction of a health charge and user-pays strategy scheduled to bring a combined additional income of £45 million per annum in 2019, that is £35 million health care, £10 million user pays, including the sewerage charge, is considered to be insufficiently developed at this stage to validly incorporate within a meaningful plan designed to eliminate the structural deficit. That is obviously accountancy speak, it is a bit of a mouthful, but in other words, in their public professional opinion, it is not fit for purpose at this stage to be presented to this Assembly for approval. Now, I know there will be an argument that says: "This is what the States signed up to when it approved the amendment to the Public Finances (Jersey) Law." We as a panel supported the change in recognition of the gravity of the situation with which we as an Island and as an Assembly are faced and concluded that provided there was a sunset clause incorporated into the proposed changes, then it could support the amendment to the law as a one-off strictly time-limited amendment. Now, concerns were expressed generally, but it was quite a last minute proposal that came through, and the problem was at the time we did not have the M.T.F.P. in front of us, like all other Members, and we did not know what it would contain. We said at the time: "The panel recognises that extraordinary decisions will need to be made during this difficult time to help address this problem and acknowledges the necessity for the Minister for Treasury and Resources to bring these draft regulations. Our advice from our adviser does result in a number of issues. From interview evidence, we are led to believe that the level of transformation change is so significant that at the point in time that the M.T.F.P. is expected to be lodged, planning work to restructure services will be insufficiently advanced to enable meaningful working [et cetera, et cetera] to be introduced to a recalibrated M.T.F.P. While such an approach appears to be expedient, we would be concerned that the unintended consequences of the amendment may prevent adequate scrutiny of financial strategy." That is the point. So we insisted on a sunset clause, and despite our disagreements, we continue to recognise the difficulties that the Minister for Treasury and Resources and the Treasurer have inherited, just to be clear there. But also, as we said yesterday, we have a duty to this Assembly to report on what it is being asked to approve. That is the problem. We and our advisers do not believe that overall Members have enough information to know what they are signing up to and to what they are approving. [Approbation] All we are asking for generally is sound data upon which to make a decision. That is what you would normally expect in a Medium Term Financial Plan, to look and understand the whole package, because do not forget, this is approval. It is not in principle, it is not noting, you are approving some very significant sums of money, it is billions. As our advisers noted at the time of the Public Finances (Jersey) Law, it has been suggested to the panel that the amendment that the Minister for Treasury and Resources brought to the law will provide vital breathing space to allow the construction of a robust departmental estimate

reconfigured for both service delivery change structures and critical consequential cost reductions. That is what we are recommending. Let us approve 2016. Give yourselves, Council of Ministers, time to get the package right and then present it to us properly. That does not say stop to any of the wonderful things that the Chief Minister laid out in his speech. It is saying: "Let us see the package. Let us understand the impact" because at this point, I do not think we know. That is let us understand the impact before we approve it, not after. If the Council of Ministers are going to do this before June, then do so, because there is nothing preventing that from happening. Indeed, I will say our advisers are of the view it should have been possible, based on their experiences of a number of authorities in the U.K., to do this before Christmas. Obviously that was their opinion back in April/May time. If we do not know what the impact is on Islanders, if we do not know how acceptable that will be when we see the detail, if we do not know what the extra income is going to be spent on, because bear in mind it is just an addition to the total income line - for example, there is no detail on the corresponding expenditure line that we are being asked to approve - then how can we rationally approve those years? Remember, it is £1,000 per household per year. I want to make a very quick quote from the Medium Term Financial Plan itself, where it suggests that: "Some of the funding should come from a pensioner population that is on average better-off than its preceding cohort." That is a direct quote from the M.T.F.P., by the way. That will be, of course, the same cohort that we are taking the Christmas bonus from and the free T.V. (television) licences, and of course all of these comments without knowing what is coming down in the budget. Also bear in mind, by the way, that next year long-term care doubles from 0.5 per cent to 1 per cent. That is intended to increase to 3 per cent in the relatively near future. How much are we taxing Islanders? What is the impact? We simply do not know, but we are told that all of this will be no later than June of next year. As we have said, it is in the Council of Ministers' hands to bring it earlier if they have got the ability to do so, so why should we be approving 2017, 2018 or 2019 until we have that information? I am sure Members will hear this all the way through various speeches: I have had a variety of emails last night. I had one that struck a chord. I will try and anonymise it slightly: "We have in total a large number of rooms, all ensuite with kitchens, laundries, staff toilets and showers. Any waste water charges will have a major impact upon our budget. We are a charity providing excellent care at very reasonable rates." They also raise the point: "How will that charge impact, for example, the hotel industry?" This is obviously about user pays charges and surcharges: "Much has been said about boosting tourism. This will not help. The Island is already losing the Shakespeare, the Samarès Coast, the Metropole and the Old Court House Hotel already this year. Apart from Premier Inn, which is not [they do not think] aimed at the tourism trade, no one is adding any capacity." Again, it is not just individuals who are going to be impacted by some of these measures. If we do not know what those impacts are and therefore somebody comes and says: "We will exempt the hotels. We will exempt the restaurants" as soon as you start diluting, it means the impact falls on a smaller part of the population. As I have said, what, for example, is the impact going to be on the elderly? Why should we be approving something that the Chartered Institute of Public Finance and Accountancy is saying is not in a fit state to be used in a Medium Term Financial Plan? It is not fit to be approved by this Assembly. The answer, in the opinion of the Corporate Services Scrutiny Panel and its advisers, is that we should not be at this stage. I keep emphasising, it is at this stage. It is not never, it is not stop, it is saying: "Give us the proper information." As I said, in concluding on this speech, pull us right back to what this amendment does. This amendment is simply to allow this Assembly to have a direct vote on each individual year. I hope I have explained our rationale as to why, but at this stage in the debate, there is no reason why everyone in this Assembly should not be capable of supporting the amendment. Very naturally, when people get to vote on the consequences of that amendment in a couple of days' time, I am sure it will be completely different, but there is no reason at this stage that Members could not support this amendment as it is worded. There will be slightly different arguments on the expenditure side, I shall keep them for that debate, but I propose

the amendment.

The Bailiff :

Is the amendment seconded? [Seconded] Does any Member wish to speak?

2. Deputy T.A. Vallois of St. John :

As the M.T.F.P. establishes not only an overall resource envelope, but also allocations to departments, it impedes adaptability and responsiveness, a significant disadvantage in a period of both retrenchment and reform. As the Assembly are fully aware, the latest forecast for the period

2016 to 2019 shows that income will remain significantly below previously estimated levels and therefore we are required to make substantial sustainable changes in the way in which the States is administered in order to live within these revised income levels. The Council of Ministers is conscious that although there is an improvement in the longer-term economic outlook, there still remains significant uncertainty in the economic outlook for the Island and income forecast for the period up to and beyond 2019. Therefore, they require time to make difficult decisions on significant levels of efficiencies, reductions in services and benefits, and where there is a well- proven fully-justified case, the need for additional funding. It is for these justifiable reasons that

the Council of Ministers is not in a position now to propose detailed departmental revenue spending limits for the period 2017 to 2019. What I just said there was exactly an extract of the exact words spoken to seek the States support in approving the amendment to the Public Finance (Jersey) Law on 16th June this year. When I brought forward P.42/2015 earlier this year, I emphasised the need for us to learn from the first M.T.F.P. and also from the vagaries of the dynamic financial and economic world we live in and the implications, both positive and negative, that financial changes at this level can have on the long-term finances of the States in a very short timeframe. The Council has been open and honest throughout the development of this M.T.F.P. and has worked with the previous recommendations of Scrutiny, the Comptroller and Auditor General and with those of the Fiscal Policy Panel to ensure that it has produced a plan to place Jersey on a path to fiscal balance and short, medium and longer-term economic stability. Perhaps most importantly, the Council of Ministers is proposing a plan with the aim of addressing the structural deficit by 2019, which is in line with advice from the F.P.P, and more importantly, in accordance with the States Sustainable Public Finances Strategic Policy agreed in April this year. Throughout 2015, the Council has notified States Members of a reduction in income forecasts and a potential deficit in 2015 and future years. As the Assembly is already fully aware, the forecast for the period 2016 to 2019 has shown that income will remain significantly below estimated levels from 2014. We have formalised the Income Forecasting Group, whose purpose is to act as an advisory function on the forecasts of all States income derived from taxation, duty and social security contributions. This was from a recommendation based on the previous Corporate Services Scrutiny Panel. The role of this group is further strengthened by the fact that the F.P.P. must now either endorse or produce the economic assumptions used by the group for the income forecasting model used to produce the income figures used in the M.T.F.P. and includes external membership for the first time. More detail on the States income forecasts is included in the M.T.F.P. and the full Income Forecasting Group report has previously been circulated to States Members in July as an addendum to the M.T.F.P. As a further means of illustrating that we have learned from the past, the latest economic assumptions provide a range of assumptions for income higher, lower and central. The draft M.T.F.P. is prepared on the central line. The Council is acutely aware that there are still risks on the down side of the central scenario, the response to which will depend on the scale of any downside, but the Council has identified contingency plans which are identified in section 14 of the M.T.F.P., which can be seen on page 95. These income forecasts include provision to support sustainable mechanisms to fund the States payment of rates approved in the Strategic Plan and also

to fund the additional health costs reflected in the States support of P.82/2012. [10:30]

The Council of Ministers wishes to make it clear that it will bring these initiatives back to the Assembly for consideration prior to any implementation. I think it is important for me to remind States Members that they are not being asked to approve anything different from what was brought forward in the 2013-2015 M.T.F.P. As is the normal process, detailed proposals for changes in taxation will be brought forward by the Minister for Treasury and Resources as part of the States annual Budget debate. States Members will continue to have the opportunity to debate new taxation proposals in the 2016, 2017, 2018 and 2019 Budget debates. I ask all States Members to support the Council of Ministers to continue to support the Medium Term Financial planning framework and to reject the Corporate Services' fifth amendment. [Approbation]

3. Deputy S.M. Brée of St. Clement :

This amendment is totally logical, totally sensible and very prudent. This amendment is not asking you to throw out any income forecasts. This amendment is merely asking you to split apart the years. What is wrong with that? Why is the Council of Ministers fearful of that? While the Corporate Service Scrutiny Panel may be concerned that the income forecasts are over-optimistic,

that is irrelevant to this amendment. All this amendment is saying is that it is designing this debate so that Members can vote on each individual year. Do not get swayed by the arguments that if you approve this amendment you are disagreeing with all of the income forecasts that the M.T.F.P. has in it; do not get swayed by the argument that: "This is what we have always done." The previous M.T.F.P. had the detail in it for the years. This one does not. As the chairman of the panel stated, a rough estimate - and it is a rough estimate - is that the additional charges on households will be £1,000 per year per household, but there is no detail on that for the years that those charges will become applicable. The amendment itself is merely saying: "Let us be sensible, let us be logical and let us be prudent and look at each year so for 2016 we have the detail, we can make an informed decision on that." Then it is up to each individual Member of this Assembly to decide for themselves what they feel about 2017, what they feel about 2018 and what they feel about 2019. That is all this amendment is seeking to achieve. On that basis, I would urge every single Member to vote for logic, to vote for sense and to vote for prudency.

4. Connétable C.H. Taylor of St. John :

This amendment is terribly simple and it comes right to the heart of why we all are here in this Assembly. The one thing we wish to protect more than anything else is our right of choice, our right of freedom. When you get up in the morning, you have the freedom to choose whether you are going to have cereal or bacon and eggs, whether you are going to have tea or coffee. It is the right to choose. All this amendment seeks to do is to give you the option to choose whether you want to vote for just the first year, or just the first and second year, or the first, second and third year, or all 4 years, as proposed by the Council of Ministers. But it is that very simple and vital thing that we all hold so dear, our own freedom of choice, no more than that. You can vote for all 4 in 2 or 3 days' time when it comes. This will not make any difference to our proposition. It is simply giving you the option to say at the end of the debate, when you have heard over the 2 or 3 days or however long it is going to take, when you have heard all the arguments, you will be able to make your choice of whether you support one, 2, 3 or 4 years, but to narrow that choice down now and say: "No, we are only going to go for all 4 votes" without having heard all the arguments is defeating the very reason why you are in this Assembly. I must urge all Members to support this amendment.

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

Sorry, I thought you said, Maçon. I did look, but he is not here. Yes, I wondered why .. and I am always interested in listening to the Deputy of St. John and she had a great speech, but she did not make a speech anything to do with this amendment. It is a very simple amendment. When it was explained to me the other day, I said: "Surely the Council are going to accept that, because it does not tell anybody which way they are going to vote on those 4 years, it just gives them the option." "Oh, I doubt it." Then of course out comes the comments over the weekend: "Oh, strongly opposes", it goes into absolute detail. Changing something we have done for ever? No, this is the second M.T.F.P. They changed the rules. They decided just to bring the detail for 2016. Now I do not know even now which way I would vote yet, because there is a big debate to come, but I am absolutely amazed, I want to know what the Council are scared of. If they are absolutely sure, they have convinced everybody that years 2016, 2017, 2018 and 2019 are the best thing since sliced bread, why would you not want everyone to vote on it individually? There is nothing stopping it. I really think this is just a step too far. This is the Council again telling us: "We will not give you an inch." If I was bringing a proposition as a Back-Bencher and I was asked to do it in parts, if I said: "No, I will not let you vote on it in parts because it is my proposition" people would vote against me just for the principle of not letting people vote for the bits they like and bits they do not like. But no, this is exactly all this amendment is about: give us a choice. At the end of the day, we will have 4 votes instead of one, we will do each year as it goes. The Council are so convinced and so

is the Assistant Minister for Treasury: "This is the best thing." It is them who must convince us over the next few days that you are going to vote for every year. If you vote this amendment out, you might as well go home.

6. Deputy M.R. Higgins:

I will be very brief. One of my criticisms of this Assembly has been its failure to look at the evidence, get the information, and on many issues the Assembly has voted for things where people did not even understand what they were voting on. Let me just give one example: the French language. We have had different things that have come up in French and not all Members speak and read French and yet they have voted for the legislation, not having a clue what they were doing. We are dealing with masses of figures, masses of data on this particular one, and if this Assembly just votes in the same way that the Council of Ministers want them to do without looking at any sort of detail, then you are abdicating your responsibility. In fact, you should not even be here, because the public outside this Assembly hold us in not very high repute, in fact, I do not know where we come on the scale, whether we are above lawyers and the media or below, but the point is we know that we are not well-considered in the Island. If States Members are not prepared to look at the evidence - and there is no evidence obviously for the 3 years after 2016 at this present time, or information - and we have already heard from the chairman of the Corporate Services Scrutiny Panel there could be implications, for example, the elderly and others, which if we are not aware of what changes are coming, then we should not be supporting the Council of Ministers on that. I believe in evidence, information, and if it is not there, I will not support it. I hope that Members will go along with the Corporate Services Scrutiny Panel, because what they are asking is totally reasonable. Give us the information when it comes and then we will decide. I am asking you to support the Corporate Services Scrutiny Panel.

The Bailiff :

Deputy , members of the public listening to that speech might be under the impression that when legislation which is drafted in French is put before Members for adoption, Members vote for it without understanding what they are voting for. My experience is that whenever a French-drafted piece of legislation is put before the Assembly, there is an English translation with it. I just thought it was important to make that point. [Approbation]

Deputy M.R. Higgins:

With respect, Sir, that is not the case. There is at least one occasion when there was not.

7. Deputy A.D. Lewis of St. Helier :

I would just like to make a couple of observations which may be helpful to Members with this particular proposition. One needs to bear in mind that if you were to split all these years down, we would not have a plan, it would not be an M.T.F.P. any more, if indeed that is what people voted for, they would have the choice. I really do resonate with what Deputy Martin was saying in that this gives Members the choice and we remain to be convinced by the Executive, those that need to be convinced, that this is the right thing to do and I hope we will have a fascinatingly interesting debate over the next few days and be convinced. But it is quite interesting that both sides of this argument have had very good advice from very competent professional people. The F.P.P. has given advice; C.I.P.F.A. have given advice. These are credible organisations, and in other words, they are both right, so it is up to us to decide as to whether, what is right is right for Jersey, that both these organisations are right. One of the frustrations that I have, and it is articulated in the report that my committee published yesterday, is of course the speed of public sector reform, which is a debate that I guess we will have during the course of the M.T.F.P. It is painfully slow and has also been very slow in bringing forward information for the M.T.F.P. This has been worked on, a huge amount of work put in by the Treasury staff and others and accounting officers across the States to create this document, but it does not have all the information that some Members were expecting. If they are going to provide that information and it is going to be June, maybe that is too long. If, as I understand it, some departments are ready with this information now, present it as soon as possible. Maybe the Executive can say: "We can insist that departments do provide us with

information by February." If Members knew that, then they may be more convinced that the information will be there and we can have further debate in the future with the information about to come our way. I would just like to pick up on something that Deputy Le Fondré mentioned, for example, sewerage charges. I am sure we will get into this later on as the debate heats up, but just an observation: Ireland, for example, does not have a water charge. All water is free in Ireland. To us, we would think that was barmy, bizarre, but they do have sewerage charges, as they do across the rest of U.K. and America and so on. There is a reason for having these charges in different countries. As bizarre as it may seem to us not to pay for water, they do not pay for it in Ireland; bizarre as it is in Scotland where they pay for sewerage and we do not. They probably think that we should. But the big difference here is detail. Deputy Le Fondré mentioned a hotel or a care home perhaps - he was anonymous in his example - but in Scotland they have exemptions for care homes in the third sector for their service charge. That is detail that will be brought forward at some stage later, but why is it not there now? I had a quick look back through the points about the service charge and on page 78 it simply says: "Chief among these will be charges for solid and liquid waste. In many jurisdictions, charges are commonplace and go some way to encourage recycling." That is it. That is all there is. Now, that is an example of lack of detail. I am sure the T.T.S. Department have been thinking about this for a long time, so surely there has been an opportunity to give up some detail about exemptions for care homes, for example, exemptions for the third sector. They could have been in there, as could lots of other information. That is not necessarily numeric detail, as such, that the Deputy also asked for, but it is detail that is missing that could have been there. I think that is what Members are concerned about and I think if we have the opportunity of voting in the way that is being suggested by the panel that we will have a more informed debate.

[10:45]

The Executive will have plenty of opportunity in the next few days to convince us that this is the right thing to do, as the Assistant Minister for Treasury eloquently tried to a few moments ago; many more speeches like that, I am sure, to come. Let us have them, but have the opportunity at the end of it to vote on the bits that we want to vote on. We do this all the time with pieces of legislation and vote on sections and there is already sections within the M.T.F.P. that will be taken as such, so why not have this? I cannot see the harm and I would urge Members to seriously consider it as an option for the rest of the debate. I think we will have a better debate as a result.

8. Deputy P.D. McLinton of St. Saviour :

At the risk of dragging this debate back to the subject we are on at the moment, dividing the years, splitting them and voting on them separately, where is the harm? Let us get on with it. [Approbation]

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

The Corporate Services Scrutiny Panel have rightly focused on what is, I believe, quite dangerous practice in such an important debate, which will control the next 4 years, so a significant debate. That we should be offered a pig in a poke, as the Irish have it, is not tenable. I for one certainly cannot bring myself to vote for a health tax, a health charge - not even a tax, as far as I know, a health charge - that I have not seen either shape nor form nor anything, absolutely no detail. There is a vast difference between a charge payable at the point of delivery and something that may be

collected, like social security, with an ability to pay involved in there, like income tax, a vast difference between the one and the other. I am being asked to accept in principle that we will come along with something appropriate that I can support. The fact is that I have been in this House now for some 13-plus years, and the number of times I have been asked to vote in principle and recognised when it finally came to the detail there was absolutely nothing I could do about what was brought forward has been numerous. The reality is voting in principle for something, you will end up being given something that you cannot influence, which you may consider to be completely wrong. I cannot do that, and equally nor can I, at this stage, vote in favour of a sewerage charge on the same grounds. But my worries go even further than that in terms of this Medium Term Financial Plan and it is because of the Fiscal Policy Panel and their report in September 2015. I have yet to see - I have never seen - a report from the Fiscal Policy Panel so full of risks and dangers and: "Watch out for this. Can you do this? Is this feasible?" I will just take Members through a few of these and suggest that what we should be doing is we should not be coming with this vote when we do not know what we are getting. On page 8 it talks about the financial services sector, and I heard the Chief Minister, when he introduced the whole M.T.F.P., twice refer to: "The economy is growing." Nice smile on his face, so everything is all right. I wonder how often I have heard that before? Quite a few times as well, I think. Suddenly the economy starts growing just before serious decisions are made, everything is hunky-dory. However, the Fiscal Policy Panel says otherwise: "The survey of financial institutions reported that profits increased by more than 20 per cent in 2014. This was primarily due to significant changes for a small number of large banks due to the end of some restructuring exercises. This is therefore likely to be a one-off movement in profits, though the panel will continue to monitor future movements in this volatile component of G.V.A. (Gross Value Added) and its implications for a wider economy." Their suspicion is that this is a one-off, the economy is not growing and that will return to the norm fairly shortly. I think that is dangerous, because we are talking about fresh estimates of revenue produced by this so-

called growing economy. But then further on in section 2.9 there is a whole couple of pages - and I will just cover some of them - of risks to achieving this M.T.F.P. The first one: "There are several risks to successfully delivering the draft M.T.F.P. over the next 4 years: (1) controlling expenditure. First, the plans essentially limit total net revenue expenditure at 2015 levels until 2019 represent a challenging target. The plan proposes just 1 per cent growth in total expenditure in nominal terms over the next 4 years compared to 12 per cent growth between 2011 and 2015, for example. Bearing in mind inflation, the plan's proposed total expenditure in 2019, that is 9 per cent lower in real terms than in 2015." This is an austerity budget, an austerity plan. That is what is happening. Nobody grows an economy by making cuts. Nobody grows an economy by producing 9 per cent lower expenditure than previously.

The Bailiff :

Deputy , can I ask you to come to the amendment, please, which is whether to take these matters .. [Approbation]

Deputy G.P. Southern :

I am outlining why I will support the Corporate Services Panel, Sir, if I may be allowed to do so. The Bailiff :

It is really a very straightforward issue for the Members, but very well.

Deputy G.P. Southern :

The second reservation of the F.P.P. says that: "Departmental expenditure plans not outlined for 2017 and 2019. This is not ideal." It says: "There is clearly a risk that departments will not be able to develop achievable plans within the overall envelope set out in the draft M.T.F.P." The final

risk, and the one which is significant for me: "Proposed changes may not be sustainable. There is also a risk that the changes proposed in the draft M.T.F.P. may not be sustainable. The draft M.T.F.P. does not describe the distributional consequences of the proposed measures to address the funding shortfall, so there is a risk that these changes may not seem to be fair, particularly if the distributional consequences are that some groups in society face a larger share of the burden than others. As details of the proposed package of measures to meet the 2016 M.T.F.P. addition are developed, attention should be given to ensure that they are sustainable, including the potential distributional impact." That is the reason, because I do not believe we have had a distributional impact and I do not believe this Council of Ministers knows what impact these measures will have. Certainly we do not. Therefore I will be supporting the Scrutiny Panel in this particular proposition.

10. Senator A.J.H. Maclean:

I understand why Members find this particular amendment difficult and the position that the Council of Ministers are taking to be difficult as well. My Assistant Minister has already pointed out in an excellent speech, but also previously when the amendment was brought before this Assembly, some of the issues that we have to consider. We were surprised, I have to say, with the amendment from the Corporate Services Scrutiny Panel for a number of reasons, not least that they agreed with our approach to split the Medium Term Financial Plan in only June of this year. They agreed to support our amendment to the Public Finances (Jersey) Law, indeed making some very helpful suggestions themselves, which we accepted by way of their amendment, to allow us to make the Medium Term Financial Plan in 2 parts, as it is presented to Members today. The panel's support is clearly recorded on Hansard, when the chairman, Deputy Le Fondré, addressed this Assembly to confirm his panel's support for the approach that we were taking and the reasons behind it. My Assistant Minister made it clear in her speech to Members in June why we were proposing this unusual but necessary move. Let me be clear, is it ideal to be taking the Medium Term Financial Plan in 2 parts in this way? Absolutely not. But we found ourselves in extraordinary circumstances. Income had fallen even from levels forecast at the previous year's budget. It was clear that the scale of the challenge we faced was going to take time to address. A potential funding shortfall of £145 million by 2019 emerged. As Members are more than aware, this shortfall also includes significant investment of £63 million in key areas like health and education, or rather, £50 million of it is in key areas like health and education. But to balance budgets by 2019 and allow for such investment, it is not surprising that significant change is required to the way that we run public services, a fundamental rethink about how to reform the public sector at a scale and speed not previously envisaged. A lot of good work has been done on the Reform agenda in recent years, an agenda that has set a solid foundation for change, to modernise public services, delivering more for less, and that programme must and is accelerating. A change of course is difficult for everyone, and if it is going to be done properly and if it is going to be done sustainably it is even more important that we take our time and do it properly. But as my Assistant Minister pointed out in her speech in June when amending the Public Finance (Jersey) Law to allow this Medium Term Financial Plan split, she informed Members that departments were being asked to make such significant changes to live within revised lower income forecast while still prioritising growth that such a scale of change would take time, especially developing detailed plans that would be sustainable. At the heart of this amendment appears to be trust, but that, if I may say, is not the point. It is simply a matter of timing. I believe the split in this Medium Term Financial Plan has been misunderstood. The Corporate Services Scrutiny Panel make the point that Members are being asked to approve approximately £3.1 billion in expenditure over the whole period of 2016 to 2019 and that there is no detail beyond 2016. Of course they ask how can Members blindly support the years 2017 to 2019? We have heard Members repeat exactly that point. There is concern and I understand that, but if I could clarify some points. I do not believe,

first of all, the interpretation is correct. In fact, it is not correct, that that is what we are asking Members to do today. To be absolutely clear, the only expenditure being approved in this Medium Term Financial Plan is in respect of 2016. The years 2017 to 2019 only contain total expenditure, a total expenditure cap, in effect. Therefore, for no other year, 2017 to 2019, is the Council of Ministers proposing cash limits for departments and is therefore not seeking the agreement of Members at this stage to spend any amount. No departmental cash limits are provided for in the Medium Term Financial Plan for 2017 to 2019 and therefore no Minister or accounting officer can spend funds for that period, between 2017 and 2019.

The Bailiff :

Minister, if I may say so, the amendment is about income forecasts and not about expenditure. Senator A.J.H. Maclean:

Indeed, Sir. I will deal with that as well, if I may.

The Bailiff :

That is what the amendment is about.

Senator A.J.H. Maclean:

Yes, Sir. Therefore they will not be able to deal with the second part of this Medium Term Financial Plan by this Assembly next year, as the details come back. In all respects, the details will come back next year, when we return. The addition to the Medium Term Financial Plan for the period 2017 to 2019, with all the detail, will be presented to this Assembly by 30th June 2016 for debate in September 2016.

[11:00]

For the avoidance of any doubt, the detailed departmental allocations as well will be included in that particular period. The Council of Ministers is effectively asking the Assembly to agree to a maximum cap to ensure departments have to focus on redesigning services and delivering their efficiencies. It is important that that discipline is absolutely clear in every respect. I would ask and urge Members to give very careful consideration with this particular amendment and to ensure that when considering it in some depth, as the Council of Ministers have done, they bear in mind that confidence is important. There is a clear plan laid out, as far as the Medium Term Financial Plan is concerned, to ultimately return to balance budgets at the end of the period by 2019. As such, it is clear that we must stick, in my view, and in the view of the Council of Ministers, to the plan as laid out. By varying that plan, it makes it extraordinarily difficult to have the necessary discipline within departments, to be able to have certainty for the future and the confidence that we need in managing our public finances. I therefore strongly urge Members to reject this amendment.

11. Senator L.J. Farnham :

I just wanted to remind Members that if we do not agree with the amendment, we come back in 2016 with the detail. If the Assembly does adopt the amendment, we come back in 2016 with the detail, but without the spending limits being capped. Now, given the extraordinary situation we find ourselves in ..

The Bailiff :

Senator, if I may say so, this amendment .. Deputy J.A. Martin:

Could somebody interrupt the Senator and put him on the right path and discuss the amendment we are discussing, please?

The Bailiff :

Thank you, Deputy . Senator, the amendment is about whether or not to take the vote on income for each year separately. That is what the vote is about.

Senator L.J. Farnham :

Without the income levels being agreed I suggest that leaves us in a very difficult position. There is absolutely nothing prudent about that whatsoever. As for the details and principles relating to the potential charges, the Chief Minister made it absolutely clear in his opening remarks that the opportunity for Members to discuss those and agree and debate them and amend them accordingly will arise next year when all the detail is brought back. I would remind Members of the Minister for Treasury and Resources' remarks that we do face extraordinary challenges that require extraordinary solutions. I do urge Members to reject the amendment because moving forward without any ideas of what we are going to agree our income levels are going to be will severely compromise the Council of Ministers' ability to deliver the plan we need quickly.

12. Deputy J.A. Hilton of St. Helier :

Just very briefly, I do have a certain amount of sympathy for the public listening to this debate. I think the last 2 speeches probably did not assist at all. [Approbation] I really rise just to say that I support all the comments that were made by Deputy Andrew Lewis and Deputy Judy Martin. This is purely about choice and if Members agree to support the Corporate Services Scrutiny Panel, all it is doing is giving them choice at the end of the debate on how they vote after they have heard the debate. That is all it is about at the end of the day, so I would urge Members to support this amendment. [Approbation]

13. Senator Z.A. Cameron:

I believe that income forecasts in the current climate are extremely difficult to predict and we would be abdicating our democratic responsibility by approving 3 years' spending at this time.

14. Senator P.F.C. Ozouf :

I heard earlier in the debate that voting in favour of effectively single-year agreements or single- year votes was prudent. My simple position is this. This is a Medium Term Financial Plan debate. If we effectively turn our attention, as the consequence of this amendment would lead us, to be in a position that we would only approve one year, then effectively we no longer have a Medium Term Financial Plan. In fact, it should really be renamed a short-term financial plan because it looks nothing more than the return to the days of a business plan. That is really at the heart of this issue. Members are being asked to approve and not support the amendment. They are asked not to approve individual heads of expenditure for departments. We have heard comments about allocations being made and spending decisions being made. Not a penny, not a pound of money is being spent or given to a department as a consequence of later decisions for any year apart from 2016. What the Assembly is being asked to do is being asked to achieve a total, a maximum level of expenditure, which will then in subsequent years be coming back and then effectively an income issue. Now, I know, Sir, you are going to say that we want to have a separate debate on each year, but what I cannot understand is how we can possibly have a debate .. you are looking troubled, Sir.

The Bailiff :

I am just hoping you are going to come to the amendment shortly. [Approbation]

Senator P.F.C. Ozouf :

The amendment allows us to have individual votes on individual years, so where does that lead us? The Bailiff :

Income.

Senator P.F.C. Ozouf :

On income, so individual items on individual income years. Where does that lead us? Do we agree 2018 and not agree 2016? Do we agree 2019 only and leave the 2 years in between? It would make a complete farce. I am sorry if some Members are shaking their heads and being rather uncomfortable, but that is exactly what this amendment would allow us to do. There has been comment about previous income estimates and I just would reflect on the fact that it is important to make remarks in relation to previous estimates because the concern is we do not have enough confidence on the estimates of forecasts going forward and so we want more .. it is prudent, I think the use of the word was; it is prudent not to agree the income forecasts. Well, I think it is prudent not to agree them .. it is prudent that we do not have income forecasts to agree. How else are we supposed to go for an amount of money that we are to raise? Because I know Members will want to come later to the spending objectives. Now, as far as my responsibilities are concerned, I think the Chief Minister has asked Senator Farnham and myself to do everything we can in our departments to raise that income and ensure that income is met. If you do not have a target - and this is always the problem with life and the world - where are you going? I want a target. I want a target that has been reasonably based, properly assessed, properly looked at by experts such as the F.P.P. Let us not in his concluding remarks, if I may, have an observation that the previous estimates were different at different times. The previous M.T.F.P. of course had different income forecasts or different actuals as time went on. That is because the economy did a downturn and the result of it was that we should spend more, not spend less. The argument was, in fact, made that if we would not have put the income forecasts in, then, in fact, we would have spent less and we would not be in the position we are in now. That is completely wrong. In fact, the countercyclical economic arguments would have suggested that you spend even more. So, I do not understand how it is possible to disaggregate an income forecast debate. I think that this Assembly should hold the feet of the Council of Ministers and the income-generating Ministers who are responsible for creating the ecosystem and the climate to get business in and the Minister for Treasury and Resources and his excellent Tax Department to the fire to collect that revenue. That is what we need because we need the revenue. We need to meet these targets of revenue in order to fund our spending that we know is going to be required. We can have a debate about that later. It is a complete nonsense to start breaking this up and to end up with a position that we could have one year approved and one not. The final thing I will say is these income targets, no matter what people like to say and like to speculate, they are not just income forecasts that were ever simply jotted down by a previous Finance and Economics Committee or a previous Minister for Treasury and Resources with a pencil trying to work out what the spending plan should be. They are rigorous and, in fact, in this jurisdiction we have some of the most broken-down and detailed income forecast assessments that can be seen. Every line item is set out: house price indexes, inflation numbers, earnings growth, the whole lot is set out. I would say to Members respectfully please hold the Council of Ministers' feet to the fire. We need these income numbers. We need these income targets to be reached on what is now clear is a rising tide. We are not in the position that we were in 2012 when we had an M.T.F.P. and then the world went into recession. Yes, there are outside factors, but certainly as far as our main markets are concerned there is not a single economic commentator I think saying that in the areas where we are now getting our resources and our growing financial services sector that we are somehow going to see some tanking of an economic downturn. Is it prudent not to agree revenue amounts? We need to agree revenue amounts. They need to be taken together as a package and each year and not to have the nonsense of a pick and mix, effectively one year approved, one year not. No, I ask Members to hold the Council of Ministers' feet to the fire. Let us do the work necessary to get these income targets on