States Meeting Transcript - 27th September 2016

STATES OF JERSEY OFFICIAL REPORT

TUESDAY, 27th SEPTEMBER 2016

COMMUNICATIONS BY THE PRESIDING OFFICER ......................................3

1. The Deputy Bailiff :......................................................................3

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

2. Draft Medium Term Financial Plan Addition for 2017 - 2019 (P.68/2016) .............3

1. Senator I.J. Gorst (The Chief Minister):..................................................3

2. Draft Medium Term Financial Plan Addition for 2017 – 2019 (P.68/2016) - second amendment (P.68/2016 Amd.(2)).........................................................7

1. Deputy G.P. Southern of St. Helier:......................................................8
2. Senator I.J. Gorst :........................................................................8
3. Deputy G.P. Southern :...................................................................9

3. Draft Medium Term Financial Plan Addition for 2017 – 2019 (P.68/2016) - ninth amendment (P.68/2016 Amd.(9)) - as amended (P.68/2016 Amd.(9)Amd.)..............9

1. Senator S.C. Ferguson:.................................................................10
2. Senator A.J.H. Maclean:................................................................12
3. Connétable J. Gallichan of St. Mary : ...................................................15
4. Deputy M.R. Higgins of St. Helier:.....................................................16
5. Deputy J.A. Martin of St. Helier:.......................................................16
6. Deputy S.Y. Mézec of St. Helier:.......................................................17

7. Deputy J.A.N. Le Fondré of St. Lawrence : .............................................18
8. Deputy S.M. Brée of St. Clement:......................................................20
9. Senator P.M. Bailhache : ................................................................20
10. Deputy E.J. Noel of St. Lawrence : ..................................................22
11. Deputy A.D. Lewis of St. Helier : ....................................................22
12. Deputy M. Tadier of St. Brelade:....................................................24
13. Deputy R. Labey of St. Helier:......................................................27
14. Connétable A.S. Crowcroft of St. Helier : ............................................27
15. Deputy G.P. Southern : ..............................................................28
16. Deputy T.A. Vallois of St. John : ....................................................30
17. Senator I.J. Gorst : ...................................................................31
18. Senator S.C. Ferguson:..............................................................34

LUNCHEON ADJOURNMENT PROPOSED..................................................36 LUNCHEON ADJOURNMENT................................................................36

4. Draft Medium Term Financial Plan Addition for 2017 – 2019 (P.68/2016) – seventh amendment (P.68/2016 Amd.(7))........................................................36

1. Deputy M. Tadier :......................................................................36
2. Deputy R.G. Bryans of St. Helier:......................................................41
3. Connétable S.A. Le Sueur -Rennard of St. Saviour:.....................................43

4. Deputy M.J. Norton of St. Brelade:.....................................................44

5. Deputy G.P. Southern :..................................................................46
6. Deputy A.D. Lewis :....................................................................46
7. Senator L.J. Farnham :..................................................................47
8. Deputy S.Y. Mézec :....................................................................48
9. Deputy J.A.N. Le Fondré:..............................................................49
10. Senator I.J. Gorst : ...................................................................50
11. Senator P.M. Bailhache :.............................................................52
12. Connétable M.P.S. Le Troquer of St. Martin : ........................................53
13. Deputy S.M. Wickenden of St. Helier : ..............................................53
14. Deputy S.M. Brée: ..................................................................54
15. Deputy J.A. Martin: .................................................................54
16. Deputy P.D. McLinton of St. Saviour:...............................................55
17. Connétable D.W. Mezbourian of St. Lawrence:......................................56
18. Senator P.F. Routier:................................................................57
19. Deputy M. Tadier :...................................................................58

5. Draft Medium Term Financial Plan Addition for 2017 to 2019 (P.68/2016) - amendment (P.68/2016 Amd.)...........................................................62

1. Deputy G.P. Southern :..................................................................62
2. Deputy R.G. Bryans: ...................................................................66
3. Deputy L.M.C. Doublet of St. Saviour:.................................................69
4. Deputy D. Johnson of St. Mary:........................................................71
5. The Connétable of St. Martin:..........................................................72
6. Senator P.M. Bailhache : ................................................................73
7. Deputy M. Tadier :......................................................................73

ADJOURNMENT................................................................................75

The Roll was called and the Greffier of the States led the Assembly in Prayer.

COMMUNICATIONS BY THE PRESIDING OFFICER

1. The Deputy Bailiff :

On behalf of Members I would like to welcome His Excellency the Lieutenant Governor to the Chamber this morning. [Approbation] I have been asked to mention that the comments from the Education and Home Affairs Scrutiny Panel on the M.T.F.P. (Medium Term Financial Plan) were circulated yesterday by email and hard copies will be made available during the course of the morning.

PUBLIC BUSINESS

2. Draft Medium Term Financial Plan Addition for 2017 - 2019 (P.68/2016)

The Deputy Bailiff :

We now come on to Public Business and the first item of Public Business is the debate on the Draft Medium Term Financial Plan Addition for 2017 - 2019. I ask the Greffier to read the proposition.

The Greffier of the States:

The States are asked to decide whether they are of opinion: following the States approval of the Draft Strategic Plan 2015 – 2018, P.27/2015, as amended, adopted on 30th April 2015, and of the total income targets and total States net expenditure limits for 2016 – 2019 in the Medium Term Financial Plan 2016 – 2019, P.72/2015, as amended, adopted on 8th October 2015, to receive the Draft Medium Term Financial Plan Addition 2017 – 2019 and, in accordance with the provisions of Articles 8 and 8A of the Public Finances (Jersey) Law 2005 – (a) to approve the following amounts (not exceeding in aggregate the total amount of States net expenditure for financial years 2017 to 2019 which were approved in P.72/2015 as amended) – (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, including the in principle approval of the new user pays proposals, commercial liquid and solid waste charges, as set out in Appendix 1, for the financial years 2017 to 2019 set out in Summary Table B, with in relation to the head of expenditure of the Health and Social Services Department, the approval of £5 million in each of the financial years 2017 to 2019 dependent in accordance with Article 16(4) of the Public Finances (Jersey) Law 2005, on the approval by the States of the transfer of these sums from the Health Insurance Fund to the Health and Social Services Department; (ii) the amount to be allocated for contingency for the financial years 2017 to 2019 as set out in Summary Table C; (iii) the amount to be appropriated to growth expenditure for the financial years 2018 and 2019, as set out in Summary Table D; (b) to approve the following, as set out in Summary Table E, in respect of the Jersey Car Parking and Jersey Fleet Management States trading operations for the financial years 2017 to 2019 – (i) the estimated income; (ii) the estimated expenditure; (iii) the estimated minimum contribution to be made to the Consolidated Fund, if any; (c) to approve, in principle and in accordance with P.82/2012, the introduction of an income-based health charge to raise £7.5 million in 2018 and £15 million in 2019, with details of the charging mechanism and legislation to be proposed and debated as part of the Budget 2017; (d) to endorse the total estimated non-cash net revenue expenditure for depreciation for States-funded bodies (other than the States trading

operations) for the financial years 2017 to 2019 as set out in Summary Table B.

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

This plan is an important one for Jersey. It sets the direction of the Island's public finances for the next 3 years. It makes the right decisions for the longer term. It manages the challenges and seizes the opportunities that are emerging as the world around us changes at an ever faster pace.

Uncertainty is affecting developed economies and emerging power houses alike. Technology is having an impact on every business and every government, and we want to get maximum benefit for Jersey from these changes. Global trends are increasing competition for the investment, business and talent that every jurisdiction needs to remain successful. We are working to keep Jersey a great place to live, work and raise a family. Our population is ageing and working people are having to shoulder an increased burden. This financial plan proposes how Jersey should respond to these challenges. It supports investment in our priority areas of health, education and infrastructure. It sets out how we are reorganising departments to cut costs and increase efficiency, saving in some areas to invest in our priorities and maintaining the services Islanders need while working towards balanced books. The Brexit vote has added additional uncertainty to the economic climate. We have a small team that is determined to make Brexit a success for our economy. So while we are surrounded by uncertainty there are opportunities as well. We must maintain certainty and stability to make the most of these opportunities. I welcome the conclusion of our independent panel of economic experts. The latest economic assumptions from the Fiscal Policy Panel showed a slight downturn in our economy in the short term. Despite this post-Brexit drop in our forecasts they say the broad approach and package of measures proposed in this plan is appropriate. Their advice is clear. We have a plan and we should stick to it. We must avoid any kneejerk reactions and ill-advised decisions which would add to the uncertainty surrounding us. As we maintain the discipline of a 4-year plan we must remember that while we no longer have to lurch from year to year the plans for the third and fourth years will not be as detailed as for the earlier years. Economic security provides a firm foundation that benefits every individual and every business in our Island. Sound public finances and a robust financial system do not happen by accident. They require tough decisions, action and persistence. We are keeping government costs under control, investing in health, education, infrastructure and economic growth, and regenerating our capital, St. Helier. This plan provides an extra £168 million for capital projects over the next 4 years. It sets aside more for health, education and for projects that demonstrate they can boost

economic and productivity growth. This is all vital investment reflecting our strategic priorities. One of our main priorities is health and social care. We are living longer and 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 costs. While we have substantial reserves compared to elsewhere our States pension is still largely pay as you go with the cost of today's pensions met by the current generation of workers with a small contribution going into the Social Security reserve funds, helping us deal with the ageing demographic in the future. This means, of course, that as the proportion of older people is rising the proportion of workers funding their pensions and health care is falling. The Fiscal Policy Panel recommends a whole of government approach to preparing for an ageing population. We are thinking ahead, allocating additional annual growth funding of £40 million by 2019 to transform health and social care.

[9:45]

This money will be used to provide more services in the community, keeping people in their own homes for as long as possible, to meet the rising costs of drugs, improve standards and manage the ageing demographic. We are boosting early intervention services for children, improving the life chances of our youngest and the most vulnerable Islanders. We are improving mental health services and investing in healthy lifestyle programmes to reduce spending further down the line. This spending of course is in addition to more than an additional £22 million invested as we agreed in our first Medium Term Financial Plan. This level of funding requires a new funding mechanism. That is why we have proposed a new income-based health charge. Removing this funding from the plan would put our finances under considerable strain. The proposed health charge is a significant step towards a fully integrated funding mechanism for all health costs across the Island. The

proposed health charge is income based so that 30 per cent of Islanders whose earnings are below the income tax threshold will not pay anything towards it. Only taxpayers on the standard rate will pay the full 1 per cent by 2019. Most taxpayers of course are on the marginal rate and as they generally have an effective tax rate of less than 20 per cent they would pay less than 1 per cent for the health charge. The charge would use the same criteria as the long-term care charge, which is capped at £162,000. Using the same system means there are no new administrative costs. The economic adviser's impact analysis shows that this charge is a progressive step as the income it generates would be spent on health services. While spending on health and social services is generally considered to benefit all, the Institute for Fiscal Studies concludes that it most benefits lower income groups as that is where ill health is concentrated. Statistics show that spending on health care is especially beneficial for the elderly and vulnerable who generally have more need for such services. Investing in education has been one of the main priorities since the Government's Strategic Plan was launched in 2015. We want to maximise the potential of every child, support families and raise standards. Our proposals will see an additional annual growth funding for education of £11 million; to improve standards, to cater for the predicted increase in school age children and to help more students into higher education. Some of this increase in funding will keep class sizes down and drive up standards. There is also an additional £55 million for capital investment. £40 million for Les Quennevais and £50 million for Grainville and St. Mary. As well as investing in health, education and economic growth, as I have said, £168 million has been set aside for capital projects over the next 4 years. That includes, as I have just mentioned, £55 million for new graded school buildings. £43 million for the sewerage works. £21 million for new and improved I.T. (information technology) systems. £8 million for the prison from the Criminal Offences Confiscation Fund. Through Andium Homes, more than £200 million of government investment is transforming existing housing into decent homes standards. Building more affordable homes for Islanders, both to rent and to buy through assisted ownership schemes. Keeping to our programme of investment in infrastructure will not only provide better, more efficient services but also fiscal stimulus for our economy and employment for Islanders. Government departments are collaborating to improve living and environmental standards in St. Helier so the capital is an even more attractive place to live, work and visit. This regeneration work is being spearheaded by the Environment and Infrastructure Departments, together with the Parish of St. Helier. It will focus

investment in public space, travel and transport, improve standards for new and affordable homes, and high quality office space. It will identify opportunities to traffic calm streets and reclaim space for pedestrians, cyclists and shoppers while creating opportunities for new tree planting. Andium's £200 million over 4 years will deliver affordable quality housing that is also environmentally friendly and in line with the Island's long-term goals of reducing emissions and energy consumption. There will be 40 affordable shared-equity apartments and 40 social rented homes provided as part of the single development at College Gardens. All this investment is good but it needs to be paid for so we can maintain in the longer term sustainable finances. The solution we are proposing is an efficiency programme reforming the public sector, growing the economy and limiting additional revenue. We are redesigning services, driving efficiency, and reprioritising spending. It is right that every area of public spending makes a contribution to our long-term plan for Jersey and reforming the way we do things has been at the forefront of our thinking. How we deliver more for less. How we deliver quality in our public services. How we deliver genuine value for money. We recognise the central importance of both protecting the interests of taxpayers and seeking to deliver world class public services. We have spent time this year assessing the impact on services of some of the proposed savings and after a distributional analysis and ministerial review we have decided to focus on efficiencies which do not impact on Islanders experience of services. We therefore reduced the 2019 savings and efficiencies target from £90 million to £77 million and we have extended the period to deliver the remaining £13 million. This is so departments can find more efficient ways to deliver services rather than simply cutting services to the public. Every department is doing its bit for Jersey. Making sure our organisation is working as well as it can for our long-term future. The money should go on frontline services for Islanders, not on out-of-date, inefficient processes and backroom duplication. We do not want to undermine our strong public finances by employing any more people than we need or by spending unnecessarily. Someone pays for the services we provide and that burden should not fall on our children or on their children. We can deliver more for less and we can provide good value for taxpayers. We are starting to embrace the spirit of constant innovation. It is what drives our best businesses forward and it is what should drive government forward too. There are of course always ways we can improve. Ways we can be more efficient and ways we can provide better value for money. That is something that should never change. Whatever the Government, whatever the state of the economy. It is what the public will and should expect. Another part of the solution is to boost the economy so it becomes increasingly competitive, innovative and technology driven. Economic growth touches all areas of our economy. Skills development provides qualified employees for our main industries and helps our young people into high quality jobs. An extra £18 million has been set aside for specific projects that boost economic growth and productivity. The fund will support initiatives that will generate extra tax revenues in the future and contribute to sustainable finances. Government is working to attract new business and to encourage innovation in our existing firms. Our tax regime must not only compete with other international finance centres but also remain stable and certain. In their most recent report, the Fiscal Policy Panel stated: "The uncertainty created in the aftermath of the referendum result has the potential to put pressure on the finance sector as investment into the U.K. (United Kingdom) may slow, but also could create opportunities if Jersey is seen as a safe haven in uncertain times." Both these comments highlight that stability and certainty are key to the Island's success as an international finance centre. They are particularly important in the context of the Island's tax regime. Any

indication that the tax regime, particularly the business tax regime, is under fundamental review, will create uncertainty that may see business redirected to other finance centres not suffering from the same uncertainty. No tax system is perfect. The Council of Ministers is committed to improving the Island's tax system in a measured way that brings in those affected by any potential changes. I turn now to vacancy management and its impact on our reform programme. During a period of service redesign we need flexibility and posts that show up as vacant may not be. Some will be in the process of recruitment. Others may be filled with temporary workers, especially in areas like health and education, which use bank nurses and supply teachers. In areas where we are redesigning services some work is being done by temporary workers as it reduces the need for redundancies if work is contracted out. In some areas staff funding is used to pay external suppliers. For example, in the Department for Infrastructure, some of the staff budget will fund contracts for parks and cleaning services, with the remainder given up as savings together with the F.T.E. (full-time equivalent) saving. Improving vacancy management is a positive aim. But we must take care not to put services at risk or to remove much needed new investment. We have brought this plan to the Assembly because we want to maintain, even exceed, these positive results. We want our continuing spending reductions to focus on efficiencies so Islanders are not affected by service reduction. We want a healthcare system that is a model of efficiency. A new hospital under construction on an agreed site with an affordable budget. A St. Helier at the centre of a growing economy where people want to work, live and visit. A resurgent tourism industry that makes the most of our beautiful coast and countryside. An education system that prepares our young people for a variety of exciting employment opportunities. A housing market that provides decent homes for our community.

[10:00]

A lean 21st century public service that is respected and valued. An Island with strong public finances that Islanders are proud to call home. So we are on the right track and we are keen to keep it that way. Recent statistics show economic improvement. Staying visitors went up 3 per cent from 2014 to 2015. Retail sales were up slightly, 1 per cent in the year to December 2015. Earnings increased by 2.1 per cent in June this year. Total private sector employment is at an all- time high. While we want to see unemployment reduced further, Jersey's 4 per cent on the I.L.O. (International Labour Organization) calculation is one of the lowest unemployment rates in the world. So in conclusion, this is the right plan. It recognises the strategic challenges we face; income rising at a slower rate than in the past, an ageing population, the after-effects of the global recession and it proposes sustainable long-term solutions. It proposes a balanced package of measures enabling us to invest in our priority areas: in health, in education. To deliver a modern, efficient public sector. To support economic growth and broadly-balanced budgets. To invest in a flexible community-focused health and social care system while our society ages. It funds improvement in education so all our children can reach their potential and develop the skills they need to live fulfilling lives and follow rewarding careers. It keeps Jersey special by improving our town, preserving our outstanding natural environment and investing in our critical infrastructure. It maintains stability and certainty, which Jersey needs in the wake of the U.K.'s Brexit vote. It follows expert advice to stick to plan. Providing flexibility by using reserves in the short term and planning for sustainable measures in the future. What we need now is certainty to deal with uncertainties ahead. Certainty, sustainability and stability breed confidence. Both here in the Island and beyond. We should not put off difficult decisions today that will become even harder in the future. This is a plan which proposes vital investment. It reflects this Assembly's strategic priorities. It reforms, it restructures, it delivers achievable savings and efficiencies. As I said to you when we debated 2016 spending a year ago, making these decisions is not easy but it is the

right thing to do. Thank you. [Approbation]

The Deputy Bailiff :

Is the proposition seconded? [Seconded]

Senator S.C. Ferguson:

May I raise the défaut on Senator Farnham ?

The Deputy Bailiff :

Yes, the défaut is raised on Senator Farnham .

Male Speaker:

May raise the défaut on Deputy Norton please?

The Deputy Bailiff :

Yes, the défaut is raised on Deputy Norton.

2. Draft Medium Term Financial Plan Addition for 2017 – 2019 (P.68/2016) - second amendment (P.68/2016 Amd.(2))

The Deputy Bailiff :

We now come to the amendments to the proposition. There are 12 in total. They will be taken in the order set out in the revised running order document, which has been circulated by the Greffe to all Members. The first amendment to be taken is amendment number 2 and I ask the Greffier to read the amendment.

The Greffier of the States:

Draft Medium Term Financial Plan Addition for 2017 - 2019 (P.68/2016) - second amendment. Paragraph (a)(i) – after the words "in Summary Table B," insert the words "except that the net revenue expenditure of the Chief Minister's Department shall be increased in 2019 by £84,000 to fund the continued provision of 2 posts within the Statistics Unit." Paragraph (a)(ii) – after the words "as set out in Summary Table C", insert the words "except that the total proposed central contingency allocation for 2019 be decreased by £84,000".

The Deputy Bailiff :

Members should note that the second part of this amendment will fall away if the first part is rejected. Obviously it will stand if it is passed. Deputy Southern .

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

It is not my intention to keep Members any longer than I can help on this particular amendment because I have been talking to the Chief Minister and he has given me certain assurances about these 2 posts in the Statistics Department, which I believe meet the need required. But I will just briefly use the Chief Minister's words, not quite against him, but quote him extensively. He says in his comments: "At the same time official independent and high quality statistics are essential to the policy formulation and decision making, and demands on the Statistics Unit are sizeable. As such, the Council of Ministers recognises that the level of savings in the Stats Unit should be moderated, specifically the savings should be reduced from £84,000 to £40,000. This will enable the Business Tendency Survey to recommence." Not just the Business Tendency Survey, although that is an important survey done on a regular basis so we know where we are. But the retail survey also under the £84,000 cuts, not possible. The Jersey/U.K. cost of living comparison. Absolutely essential. We have just seen the level of the minimum wage brought up to below that in the U.K. and one wonders where that cost of living comparison has gone in the meantime, since it was last done. But when it was done we were 20 per cent more expensive than the U.K. on average and yet we have got a minimum wage which is below their level. It seems to me there is something wrong there and statistics that need analysis. Indeed, even the Jersey Annual Social Survey, which has been quoted at me 3 times in the past fortnight by the Minister for Social Security, I think the Chief Minister and others. People rely on those surveys to get the information about what is happening in our society, particularly the economy. Absolutely essential. They must be official, independent and of high quality. The risk in this case is that those surveys, those pieces of work, would not occur under the cut. What I seek from the Chief Minister, I sought it yesterday, it should not take too long, is that this concerns 2 posts in the Stats Unit. One has already gone. In 2016 somebody got promoted to another department and has not been replaced. The assurance I seek is that that post will be replaced straightaway. I was speaking to the head of the Stats Unit last night and he said clearly: "That will enable me to get on with the backlog, which is already there, that I need to in order to produce the right level of stats." I sought assurance from the Chief Minister, but I do not think he can give it, that the cut proposed to another post in 2019 will be mitigated. I wait to hear some words from him on that. But nonetheless, given that the head of the Stats Unit has said: "If I get my post back now I can continue the good work I am doing and people will be getting their

correct information" then I will probably withdraw following the words from the Chief Minister.

The Deputy Bailiff :

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

2. Senator I.J. Gorst :

I know it may not seem like it but the Council of Ministers has tried to consider, where they could meet proposers of amendments, plans to reach common ground, and this is one of those amendments where we have done just that. I can give Deputy Southern the assurance that I gave him yesterday. I have personally seen the paper which has been signed off to start the recruitment which we will see this week for the vacant post from last year. The Chief Statistician hopes to have that person in post before the end of this year to undertake the Business Tendency Survey and start work on the e-census as well. I said I cannot quite give the categorical assurance about the retirement that takes place from the health statisticians that are moving into the Statistics Department but what I can do is acknowledge that I understand entirely what the Deputy is trying to achieve and I will work with him and together with the Chief Statistician to try and mitigate any effects that that might have in 2019, because we are talking about something that will happen in 2019. If we cannot mitigate those effects then we will find the money in 2019. I hope that that gives the Deputy the assurance that he requires in order to withdraw his amendment.

The Deputy Bailiff :

Deputy Southern , if there is a question that you might wish to withdraw your amendment it is appropriate that you seek to do so, obviously you will need the leave of the Assembly, the debate having been opened.

3. Deputy G.P. Southern :

In that case, Sir, yes. With those assurances ringing in my ears, and I believe the Chief Minister will do exactly what he says, and I will be making sure he does, between now and 2019, I seek permission of the House to withdraw my amendment knowing that the Stats Department will be doing its usual high level of commitment and standards.

The Deputy Bailiff :

Do Members agree that this amendment can be withdrawn? Very well, the amendment is withdrawn.

3. Draft Medium Term Financial Plan Addition for 2017 – 2019 (P.68/2016) - ninth amendment (P.68/2016 Amd.(9)) - as amended (P.68/2016 Amd.(9)Amd.)

The Deputy Bailiff :

We now come on to amendment number 9 and I ask the Greffier to read the amendment. Senator, I have been informed that you might wish to take your amendment as amended in some manner or have I misunderstood? I have been informed that you may .. perhaps you could stand.

Senator S.C. Ferguson:

Sorry, Sir. It is a bit early in the morning. You mean am I willing to take Deputy Southern 's amendment?

The Deputy Bailiff :

I had been informed that you wished to move your amendment as amended by Deputy Southern 's amendment and the reason I ask you in advance is because you will need the permission of the Assembly to do that because Deputy Southern 's amendment has not been lodged in sufficient time to be debated today.

Senator S.C. Ferguson:

Right, Sir. Yes, on the grounds that Deputy Southern is merely requesting to find information then I will agree his amendment.

The Deputy Bailiff :

So you would wish your amendment as amended?

Senator S.C. Ferguson: Yes.

The Deputy Bailiff :

Deputy , do you wish to ask the leave of the Assembly to bring your amendment ahead of time?

Deputy G.P. Southern :

Yes, Sir. I did get the proposition to the Greffe in time on the Monday, however it took some time to process, and not my own fault I have to suggest, and therefore was technically late. However in the light that there is no objection to that from the proposer of amendment 9 I seek permission to have the amendment accepted, although it is one day short of lodging time.

The Deputy Bailiff :

Do Members agree that we can take Deputy Southern 's amendment today even though it was not lodged strictly in accordance with the timeframes? Very well. I ask the Greffier then to read the proposition as amended.

The Greffier of the States:

Page 2, paragraph (a)(i) – after the words "Summary Table B", insert the words – " except that the net revenue expenditure of the Chief Minister's Department shall be increased by £30,000 in 2017 in order for that department to commission an independent review of the tax system, including a quantification and explanation of changes in the profile of the taxpaying public since 2008 – (i) reconciling and explaining the changes in the number of taxpayers in the main bands defined as non-taxpayers, marginal band taxpayers and 20 per cent taxpayers; (ii) assessing the income generated from companies trading in Jersey or owned by residents of Jersey; (iii) assessing the potential additional tax revenue which could be generated from the introduction of progressive rates of tax for those households which fall into the top decile (10 per cent) of equivalised household income;

[10:15]

(iv) assessing the overall effects on the economy resulting from high levels of immigration; (v) including an economic impact assessment of how each income quintile would be affected by proposed user pays' charges, and from the changes already imposed since the implementation of Zero/Ten, which will be financed from the Contingency Fund and from other funds and reserves including the Strategic Reserve, and to consider the appropriateness of routing income from the proposed health charge directly to the Consolidated Fund; and (vi) reviewing the change in accounting treatment of income tax to assess the robustness of the tax estimate process and reviewing the model used for estimating tax, precise terms of reference for the review to be agreed with the Corporate Services Scrutiny Panel, and the revenue head of expenditure of the Department for Infrastructure shall be increased by £3,000,000 in 2018". Page 2, paragraph (a)(ii) – after the words "Summary Table C", insert the words – " except that there shall be a reduction of £30,000 in 2017 in respect of the independent review of the tax system and a reduction of £10.5 million in 2018 in respect of a delay to the implementation of the health charge and commercial waste charges during such time as the review of the tax system is completed, considered and implemented". Page 3, paragraph (c) – the words "£7,500,000 in 2018 and" are deleted.

1. Senator S.C. Ferguson:

Before I speak I would comment on the efficiency that the Chief Minister is so keen on. As it happens, I am very interested in efficiencies because my Corporate Services Panel was responsible for introducing one of the first efficiency consultants to Scrutiny. The Corporate Services Scrutiny Panel adviser comments that some of the aims in the Medium Term Financial Plan are aspirational and I have under Freedom of Information asked how the savings and efficiencies under Lean have improved throughput and outcomes, and nobody has got any record of these. So off we go.

Returning to the matter in hand, the Fiscal Policy Panel originally said no new taxes and so we have had a variety of stealth taxes proposed, such as the health, the hospital, the liquid waste, the solid waste and another one called the community infrastructure charge. The F.P.P.'s (Fiscal Policy Panel) full report lowers their revenue forecast and increases their risk assessment and their feeling is that the deficit will not be cleared by 2019 and a further £10 million in adjustment may be required. In 2014 the Corporate Services Scrutiny Panel called for a full debate on tax and the structural deficit and our advisers commented that if the States was a private company a profits warning would have been issued. We cannot impose these proposed charges until after this tax review and analysis of the system. The tax statistics are strange, bizarre even. We need that review desperately. In 2007 we had 14,989 people paying tax at 20 per cent. By 31st December 2014 that figure had dropped to 5,300. Where are they? I suspect, but we need the proof, that they have moved their assets into companies, our own in-Island tax avoidance scheme. I have been collating the figures issued by the Tax Department since 2007 relating to domestic taxpayers within the Island. These present some curious anomalies. The total number of people subject to tax, if their income is sufficient that is, was 69,000 in 2007 and by the end of 2014 this had fallen to 59,000. But the number of people in the Island has increased. So I do wonder about the theory that increasing the population will provide more tax to support the ageing population sounds a bit thin to me. It is also not clear where the 10,000 people have disappeared to. The population has gone up and we have lost 10,000 people. We are pushing taxpayers into the marginal rate relief band. By doing that we are giving them extra allowances and in order to meet expenditure we are going to have to put up taxes and stealth taxes and charges. We need to return to a simple straightforward tax system, which is fair. Currently it is not fair. We also need to remember that profits, to follow the general mantra at the moment, profits earned in the Island should be taxed in the Island. The proposed legislation on base erosion and profit sharing does do some of the ground work for us. But why is that not causing the uncertainty that the Chief Minister is worried about? He tells me it is an international standard. In that case it is general uncertainty all over the place. So the concern has been raised that my request for .. I am sorry, Sir, may I have a glass of water please? Thank you, Sir. The concern has been raised that this quest for information will cause uncertainty if the report is published in due course. At the hustings for the 2014 elections the same arguments were put forward: to talk of a structural deficit and financial problems would get the international world worried. So it was owned up to about 3 weeks after the election. Did the sky fall in? I do not think so. This is a review, not a massacre.  A quest for information, not immolation. To do such a review and keep it secret from the population would cause a great deal more uncertainty than being honest and straightforward. After all, it is the domestic taxpayers who elect and pay us who are concerned. The grand plan of the Council of Ministers was that more people in the Island equals more tax and more support for the ageing population. The current system which, as I say, is putting everybody into the marginal tax band, will require more increases in domestic tax to support government expenditure and the ageing population. The ageing population is suffering; middle Jersey. I am hearing tales of people in tears trying to get bank loans to pay their tax bills. What is more, people whose opinion I value, who are well placed financially, have contacted me to say that they are concerned with the growing inequality in the Island. I should remind Members that I and my friends are proponents of the middle of the road, small government politics. We are not left

wing, we are not right wing fanatics. We are just people concerned about fairness in the Island. Let me emphasise again the purpose of this amendment. It is to obtain information only. It proposes no course of action. It is a follow on to the proposals made in the Scrutiny Report in 2014 on the previous Medium Term Financial Plan. I have already mentioned that before the 2014 election there was a considerable amount of rubbishing regarding the panel's warnings about our financial position. I expect that the Council of Ministers will pontificate at length on uncertainty and what a dangerous proposition this is. In fact, I can hear the shrouds being unwrapped as I speak. Frankly, anyone who has been following the F.P.P. (Fiscal Policy Panel) reports, the

Corporate Services Scrutiny Panel reports, will have come to the same conclusion. It is time to get some solid data on the state of the domestic tax system, particularly when there have been 32 changes in the personal tax system since 2007 with no impact assessment of the effects on the taxpaying public. The Chief Minister has waved a shroud over the negative effect of changes in taxation. Well, as I say, we have had 32 changes. The other Crown Dependencies are equally suffering financial pressures. So are major centres like Singapore. This is not purely Jersey. This is not purely the Crown Dependencies. It is a worldwide thing. It is a time, yes, when large governments are concerned about uncertainty generally, and particularly about the Brexit vote, which is a much greater source of uncertainty. That is an uncertainty involving international bodies. So it is a good time to say: yes, we need to consider our local domestic matters because middle Jersey, which as I have said, elects and pays the salaries of everybody in this Assembly, is hurting and hurting badly. I emphasise again this proposition is to seek information, no more, no less. What happens after that will be a matter for the Assembly. But we do need to have the independent evidence on the state of our domestic tax scene, which is grossly unfair. This is a very quick review. I have been quoted 5 to 6 weeks for it, so that the delay in implementing the charges will not be something over which shrouds should be waved. It is a very reasonable cost. It will not take long but it is information. It is evidence we desperately need. I propose the amendment.

The Deputy Bailiff :

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

2. Senator A.J.H. Maclean:

I have said this before, I like Senator Ferguson. I am delighted that she was re-elected. If I stand here and I am honest, I would say that perhaps it would have been better if it was in October. But I do share, and she knows this, many of her ideologies. So I agree with the principle of what she is proposing in this amendment because, as I commented yesterday only, no tax system is perfect. But I do not agree with the method or the timing of this proposal. Mainly because much of what she wants is already being done or has been committed to be done. I will explain more about that in a moment. This is undoubtedly a seductive amendment at face value. Why not have a review? It seems perfectly reasonable, after all what harm can be done? It is a good idea, surely, to collect and have available as much data as possible for greater understanding about our tax system, how it works and how it is performing. Best of all, as the Senator has only just said to us, it is apparently only going to take 5 or 6 weeks to undertake this review of data gathering and at a cost of £30,000 only, or less perhaps. But I would remind Members of an old saying. If it looks too good to be true then it probably is. What do I mean by that? We have consulted ourselves with some experts who would undertake reviews of this nature, even on a data collection basis and the chances of it being completed, a meaningful review, within 5 or 6 weeks is remote. It would take months to do the job properly and it would cost considerably more. That does not mean the work should not be done, but Members should nevertheless be perfectly clear about the timescales potentially involved and the cost that would be involved in undertaking a meaningful review. I should also point out to Members that some of the data that is being requested as part of this review is simply not available at the moment and will take time to collect from taxpayers as the returns are changed. I will come on to that point again in due course. I would like to take this opportunity though to thank Senator Ferguson for agreeing to meet with the Chief Minister and I to discuss her amendment.

[10:30]

We had 2 constructive meetings last week. We understand the good intentions behind the amendment that she has tabled and have taken on board many of the concerns that she has raised, but in essence, she is proposing in this amendment that the plan for sustainable public finances, the M.T.F.P. Addition, is put at risk by deferring important decisions on future revenue-raising measures until some unclear point in the future. The Council of Ministers understand her desire for more information and clarity about the tax system, but do not feel that the potentially open-ended and far-reaching amendment recognises the fact that in light of changing international and domestic circumstances, our tax system is kept under regular review anyway to identify areas for improvement. Indeed, as I mentioned yesterday, reviews were undertaken in 2010, 2012 and 2014, following a carefully managed and appropriate process. Despite that, it still led to a front-page story in the Financial Times and that is something that we have to avoid at all costs. That is the risk associated if a review is not properly and carefully managed. It is critically important that any formal review process must be undertaken with the following very much in mind, that our economic success relies on fiscal stability. There is no doubt that business decisions could be deferred or abandoned if there is no certainty that the tax arrangements on which decisions rest will be maintained for the foreseeable future. Secondly, Jersey is currently faced, as the Chief Minister alluded to earlier, with the uncertainty arising from Brexit, which resulted, as Members will know, in the Fiscal Policy Panel downgrading the economic assumptions for the Medium Term Financial Plan period just a few weeks ago. It could be further damaging to the economy if that uncertainty was added to by a negative reaction to an announcement of a formal open and wide review of the tax system that gave rise to a fear of significant and far-reaching changes. Thirdly, any process of review should be undertaken by the Government, and in the first instance, without the glare of potentially international interest so as not to damage our long-term economic and competitive position. Fourthly, this should be based upon a proper process of internal review, as is presently the case, and when appropriate, this should lead to measured findings that are then subject to informed consideration by those likely to be affected by any proposed changes, and of course by Scrutiny. If, as this amendment suggests, Scrutiny are to approve the terms of reference of the review, how can they then be involved in the scrutinising of the outcome? It surely, to an extent at least, blurs the lines of responsibility between policy formation and the Scrutiny function. This amendment also removes £10.5 million from contingencies in 2018 or the associated delay of the health and commercial waste charges. Such significant reductions would remove all general

contingencies in 2018 and represent an unacceptable risk. Perhaps we need to consider to what extent there is a problem and what we are going to do about it. We accept that no tax system is perfect and although our Zero/Ten corporate tax system is criticised by some, it is not unique to Jersey and has ensured that our competitiveness has been maintained. Indeed, without its introduction, we would have lost much of our finance industry, and with it thousands of jobs and the ability to fund our high-quality public services. That said, the Council of Ministers supports the principle that no system or policy should be beyond review and recognises the advantages of continuously improving systems, practices and policies. As such, the Treasury and the Taxes Office have an ongoing programme of review to identify opportunities within the broad principles of each system to improve equity, increase yield and minimise tax avoidance. This can be demonstrated by the transformation of the assessment and collection systems currently being undertaken by the Taxes Office. The proposal to introduce independent taxation will require a review of the personal income tax system. This will involve carefully examining every aspect of the system over the next few years to ensure an equitable system that minimises unintended tax planning opportunities and maintains yield without creating hardship. Consideration of the interaction between tax and benefit will be included within this work, which I hope, among others, will please the Deputy of St. John , who has been pushing for this to be done for some time. Policy review work currently underway includes a fundamental rewriting of the tax compliance framework, the incentives, sanctions and penalties that affect taxpayer behaviour and encourage full compliance. This work will start to lead to changes over the next few budgets. A post- implementation review of the high-net worth taxation system is nearing completion. The results will be announced during the budget. Work is underway to reconcile the population figures with the population of taxpayers. This will address the apparent changes in the taxpayer population that Senator Ferguson was alluding to earlier and address the concerns that 10,000 taxpayers have been somehow lost. This is not the case. We do already know, for example, there are fewer taxpayers because of the way that we count them. The Taxes Office is being far more efficient, cutting out bureaucracy, and I hope Senator Ferguson would welcome that. To give an example to Members, previously tax returns were sent out to everyone, but in recent years the Taxes Office has taken a sensible risk-assessed approach, for example, by not sending returns to those who do not pay tax and who are never likely to do so. An example would be a pensioner on a very low fixed income. What is the point of continuously sending out a tax return, expecting it to be returned back in? It is just costly and bureaucratic and unnecessary. That has had one of the impacts of reducing the population of taxpayers that was referred to earlier. But the review will put the detail into the exact changes in number so that we can understand it and it will be reported. The Taxes Offices has also started to collect data on all local companies, including zero per cent companies, to better understand what shareholders are doing. Work has already been agreed to analyse the economic and fiscal impact of different levels and types of immigration. This work is being expanded to include an estimate of the impact on public finances. I hope that Members will appreciate that there is a lot going on, and to oversee the added work, some of it relating to points and concerns raised by Senator Ferguson, the Council of Ministers is establishing a ministerial subgroup, which I will lead. It will oversee a review of the personal tax system, as described in the Council of Ministers' comments that Members have before them, and will be supported, as necessary, by external expert advisers. Separate to the aforementioned, the Taxes Office is proposing to undertake a tax gap analysis in 2017, looking at the difference between what ought to be taxed and what is collected. In addition, a review of the model looking at the forecasting of personal income tax is also planned. I should just remind Members that it was only 2 years ago that we changed the Income Forecasting Group: we introduced 2 external members on to that particular group and I believe the quality and the breadth of the forecasting that we now get is improving all the time.

That should be welcomed, although I continually repeat the fact that forecasts are exactly that, they work on the best available data at the time and they need to be updated on a regular basis. But I would point out that this review into that particular model will be an additional benefit. Ministers recognise the aims, as I have said, of Senator Ferguson's amendment. If those who say that all her amendment proposes is data collection and analysis, then the proposal I and the Council of Ministers are making goes well beyond this: our work, with conclusions and recommendations, informed where necessary by external advisers, but led by those best able to pull that information together, our own excellent Taxes Office, ably assisted by statisticians and experts in our Financial Services Department. Why do we need to hire more external consultants to provide us with information that they will have to ask our own people to provide them in any case? If, on the other hand, we are right to be concerned at the open-ended and potentially far-reaching wording of the amendment and the associated threat to our economic stability, surely it is better to provide certainty as to the work to be undertaken and not to outsource such critical work to a single independent consultant. We hope the data collection already underway and the further work we have proposed in a careful and measured way will provide Senator Ferguson and Members with the information she requires, without risking the future prosperity of our Island in these uncertain economic times. Reports arising from all this work will, as I have already said, be made available to the Corporate Service Scrutiny Panel. To maintain a competitive financial services industry, an industry that employs, as we know, 13,000 Islanders, Jersey needs to remain a responsible, stable and world-class jurisdiction. This open-ended and far-reaching amendment would undermine our reputation for stability and certainty and could jeopardise future investment. I would also add that by adopting Deputy Southern 's amendment, it just makes the outcome even more uncertain, because for Members who had taken the detail of what Deputy Southern was proposing, among other things, he is asking for Senator Ferguson's review to cover the introduction of progressive rates of tax for the top 10 per cent households by reference to income and some other points. That just layers on top of the work that Senator Ferguson is seeking the Assembly's approval to get undertaken. That just creates an additional level of uncertainty. I would ask Members to reject this proposition.

The Deputy Bailiff :

Does any other Member wish to speak on this amendment? If no other Member wishes to speak, I call on Senator Ferguson. I am sorry, your light has only just come on. Connétable of St. Mary .

3. Connétable J. Gallichan of St. Mary :

This is certainly an amendment that I do not want to support, but I would like to make something clear at this stage. The last speaker said he understood why the Senator had brought it and what she was intending, hoping to see. When I listened to him speak, I heard 2 words in my head and they were "jam tomorrow." We have been told we will have this review: it is underway, it will happen in the next couple of years and the information will be made available. I completely understand the need for stability - I built my professional career on the need for stability - but having been told that the open-ended working of the proposition is a threat to our prosperity, I would just like to put one thing out into the ether. Introducing one new charge after another is not the way to give confidence to our population, because confidence cuts both ways. The Minister was focused on our looking out to the world and that is vital, but confidence cuts both ways. When our population are losing confidence because they are prepared .. I am talking here mostly about the taxpayers, who are working in the engine room of the economy that the Minister is saying that we need to protect and he is right about that. But these people who are working in the engine room of our economy are paying tax, and yet they are often not able to benefit from the services that we provide without an additional charge.

[10:45]

In my experience, having talked recently to a great many people across various levels of strata of the economy, shall we say, they are prepared to pay in when they know they are paying in fairly and when they know that if they need support, whether it is for education or for health or whatever else, they will be able to receive that support on the same basis as everybody else, no questions asked. Now, that is really the fundamental thing. When you are not giving confidence to our population about that .. I am not talking about confidence in the economy, I am talking personally, I think, about confidence in our Government. The Council of Ministers needs to consider that that is probably the primary concern in maintaining stability, maintaining the kind of structure of Government and the stability of Government that we have maintained, because if we do not do that, we are in big trouble, even if the economy is - as I believe it is - fully supportable and fully sustainable. I really am concerned that in the plan that we have before us, we are not giving that confidence. Does this proposition put the remaining revenue-raising measures at risk? I would just like to throw in that many members of our community are hoping that that is just the point. They are really uneasy about the way that we started off introducing just one additional charge for long- term care. We had never had that before, then we introduced one and all of a sudden it is the mode du jour: "Let us have a charge for this and a charge for that." The people that I am speaking to are saying: "We want to know what we are going to pay, we want to know that there is a rate of tax that we can pay that will guarantee the services that we want. We just want to know what the Government is doing to find out what that rate is and to help us plan for our futures. We do not want to have a charge for this and a charge for that. We want a simple system that costs less to collect and when are the Government going to do the research and let us know what the outcome is going to be?" All I have heard from the Minister today is: "It is going to be done. We will tell Corporate Services what it is." I just think the Council of Ministers needs to take note - and this is the place for me to say this - that the public are not happy without a simple system. They really are not happy, and if they are not happy, they will voice their unhappiness. That is the single threat that I am most concerned about.

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

I will be quite brief. I will be supporting Senator Ferguson on this proposition. The point I just want to make is that Senator Maclean said the review should be undertaken by Government. This proposition is calling for an independent review. How many times has the Government promised us reports on tax? I have been in the States almost 9 years and not seen them. Where are they? They commissioned many reports, which they keep to themselves. They say, for example, their reports are going to be given to the Corporate Services Scrutiny Panel. Look how often that panel has been gagged by confidentiality clauses, so the information cannot be given out any further. This proposition is calling for the information to be out there so that we can all see it.  I also heard Senator Maclean say: "Oh, it is going to damage our reputation. There was a story in the Financial Times." An independent survey should not damage confidence. When that report is published, we all know what the situation is. The only time that they can claim it might affect confidence is if we come to different conclusions than they do on the basis of the information. Even then, they would be over-egging it, as they always do. They mentioned Zero/Ten and the defects that are felt by others. The defects have been felt in this Island; because of Zero/Ten, no companies are paying tax, other than the finance industry at 10 per cent, other than utilities at 20 per cent. All the others are not. We have lost all that revenue. Who is picking up the burden? It is the ordinary taxpayer in this Island, the personal taxpayer, and they are feeling the pain. Therefore we need to just dismiss what the Council of Ministers are saying about an independent inquiry and so on. We need that information, it is vital, and this House should show courage and stand up to the Council of Ministers and say: "We want the facts. When we have got them, then we will decide what the policy is, not bringing in these stealth charges beforehand." I think that is most of the points I was going to make. No doubt I will think of others later, but I will join in later on in the debate. However, I do urge Members to support this. It is about time we took a stand, had independent information, to get all the reports that they have been promising us for 9 years and do not receive, and all the other reports that are confidential and nobody gets a chance to see anyway. Therefore

we should support Senator Ferguson.

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

I will be brief. The Constable of St. Mary did say a lot. I was thinking, just listening, as I was drifting off there about the jam tomorrow and toast and butter and everything. Yes, when are we going to see this? But the frightening thing that woke me up, it was the end of the Minister's speech .. and they never made a complaint about it. We were told to accept the amendment as amended by Deputy Southern , but then told by the Minister, and just for the icing on the cake, Deputy Southern has really put a nail in the coffin, because he wants to look at something else. That was not a decision to look at policy; that was a decision of the Council's political views. They say: "No, we will not look at the 10 per cent who have got the highest wealth, we will not look at changing our tax." So where does this review start and finish? This is what I heard, but if the amendment to the amendment was such an issue, why did we not have a debate on the amendment, which should have come from the Council of Ministers? But to then hang Senator Ferguson's amendment, because we accepted the amendment to it from Deputy Southern .. I am sorry, I am getting a bit confused here, but this is the path we were led down, and the Minister told us we definitely cannot accept it, because we amended the amendment and we agreed to it. I am very confused. I know there are a good few Ministers left to speak: if they can tell me where we are, why they are not considering this or this is the nail in the coffin, because we did accept it. A day earlier we accepted this amendment, we are told we cannot do it. I say it is because it is their politics. They do not want to look at this, they never want to look at progressive tax. They want to

spread it out across everyone else, but they do not know where 9,000 people have gone in the tax, having all different brackets. Again, if you were marking this even as homework done, presentation would be 9 out of 10, content 3. I am of the mind Senator Ferguson is asking for something that should be here now. We all need to know this before we start giving a bit more here and taking a bit more there and taking a bit more there; absolutely have not done it. The Minister's speech was well-written, well-presented, but no content.

6. Deputy S.Y. Mézec of St. Helier :

Can I start by commending Senator Ferguson for bringing forward this amendment in the first place? I of course had the privilege of hearing her make the case for this amendment 12 times over the summer and to hear it a 13th time in this Assembly is certainly not something that I resent. I think that she must be commended because, very simply, she stood up in front of the public of Jersey and said: "Vote for me and I will do this" and look, she has done it. That is more than a lot of candidates in elections can say and I think she has to be given credit for that. I will be supporting her amendment, not just because of the democratic mandate she has for this amendment, but because it is a good amendment, it makes sense and there is a very clear and I think obvious case behind it. Partially it is because the arguments against it that have been advanced by the Minister for Treasury and Resources just then are, I think, just absurd. It is this stability, we cannot possibly change anything because it will undermine our stability. The people who have undermined our stability are this Council of Ministers, who are advancing a series of proposals which they do not have the information to inform themselves properly about the consequences of, and worst of all, that they did not tell the public about at the last election. Elections are a good mechanism for achieving stability, because you stand up in front of the public, you make clear what the options are, depending on how they vote, and then business and then other communities, other sectors, can look at what those candidates are saying and say: "We know that one of these is likely to win and therefore be implemented" so they can come up with contingency plans for those eventualities. So this is an amendment which business, other sectors have had advance notice, because Senator Ferguson spent the whole summer going around and making the argument for it. The case that has been made by the Council of Ministers is not one that was ever put to the public, held under any sort of public scrutiny and now that is brought before the States Assembly, we still do not have the information we need to know what the real impact of their proposal is going to be.

They have, I think, opened the floodgates with their proposals for these stealth taxes. First, as the Constable of St. Mary I think very well said, it was the long-term care charge, now it is the health charge. The Minister for Treasury and Resources has also spoken about a hospital charge to pay for the hospital, again another concept that we have no idea what the detail behind it is. If you want to talk about undermining stability, surely that is it. What Senator Ferguson is proposing now is that we conduct this review, we get all the information we need and we can look at having a tax system which raises the revenue that we need to fund our public services properly and that does not have to resort to these stealth taxes, that can be a simple system, because simple systems are good because they are harder to undermine. When you have these stealth charges, there are all sorts of things you can do to manipulate how they get used or manipulate how people contribute to them and not do so in a way that is fair. The Senator is asking for information so that we can make these decisions in a more informed way. I cannot possibly understand how that can be a bad thing. I 100 per cent support this amendment. I support it even more that she has accepted Deputy Southern 's amendment to it to look at progressive tax, because that really I think is the issue behind it: our tax and spend model is broken. To be able to keep the tax system as it is and still fund the necessary improvements we need in our education and health system, to bear in mind the fact we have got a growing population, again, that is something else that this Council of Ministers has no grip on whatsoever and undermines our stability as well. This review that is being proposed makes sense and we must support a concrete vote in this Assembly to make it happen, because the Council of Ministers saying: "Oh, do not worry, you do not need to vote for it, because we promise we will do something equivalent anyway. Trust us. You can always trust us, because we always get things right, do we not?" Frankly, it is not good enough. The only thing that does it is a vote in this Assembly to make it binding and that is why I will very happily be supporting this and I congratulate Senator Ferguson for bringing it forward.

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

Yes, very briefly. I kind of was mulling over which way to go on this. I agree entirely with the comments from the Constable of St. Mary. Just for the avoidance of doubt, I will be supporting the amendment, but for very similar reasons, I am 10 per cent in the other direction from the Constable of St. Mary. It is a marginal decision, because one does take the point about how much of this do you do in the public domain, et cetera. I am looking at it from the point of view of gathering information from impact analysis and that sort of stuff. There were 3 things I wanted to pick up. One was - although I must admit, in my mind I have just been trying to find it and I could not - was the table that the Senator has included on the back of her amendment in the appendix on page 5. It is this point, that in 2008 the total number of taxpayers was just under 70,000 and in 2014, on her figures, they are just under 60,000. We have lost 10,000 taxpayers. Pay no taxes has obviously dropped quite considerably in that area, the marginal rate has gone up and paying 20 per cent has gone down. The reason the marginal rate will have gone up is because we dropped the marginal rate whenever it was, 2 or 3 years ago, which was not supported by the F.P.P. (Fiscal Policy Panel) at the time, and that would have made it less people in the 20 per cent bracket and more people in the marginal rate. That is just the way the calculations go. I am stopping there on the technicalities, but I think what really annoyed me, and I just wanted to make this point, in the comments from the Council of Ministers on page 6 and on page 7 they say: "Work already announced and committed to is the impact analysis of immigration. As set out in the recent written answers to States Questions" it gives a couple of numbers: "research analysis is being planned by the Economics Unit .. on the economic and fiscal implications of different levels and types of inward migration." Those were 2 questions I asked in August, because I have been wondering for a year at least what is the impact on increase in population, bearing in mind these changes in the taxpayers and bearing in mind, what was it, 1,500 people who came in and the breakdown on the licences and things like that? What is happening within the population - I do not like this word - and the mix of population in terms of people coming in and their contribution to our overall services that we provide? To an extent, that is why I feel we are in that position now, having the

various charges coming through. [11:00]

This possibly reinforces the argument, I do not know, about the Living Wage and things like that. There have been all sorts of discussions around that argument. But we have not done this work. It has been an elephant in the room for how long? Sorry, I should not say that. I was talking about flowers. It has been an argument around population and what is the actual cost to us of that population for I do not know how long. In fact, to be honest, I was very sad: I was clearing out some old newspaper clippings from I think it must have been the 1970s, and I have got a feeling there was a youthful Mr. Jimmy Perchard on there going on about immigration at the time; it was somebody like that. We know population has been around a long time, but surely by now we should have a handle on what those costs are. The other point I will make is there on page 7. It is some other review they are talking about, these are their words: "The scope of the review is as follows: to demonstrate the distributional impact of the proposed health charge and the proposed waste charges by reference to a representative sample of household types and the result of the most recent Income Distribution Survey, drawing on the work already undertaken for the purposes of

M.T.F.P. Addition 2017 to 2019." Sorry about the mouthful, I am just reading out what was in there. Contrast this to 5 questions I asked in June on this, which oddly enough were about from 2005 to date on a certain representative population, which was based on the ones when I was in the Treasury that we used in 2006 for assessing the impact of Zero/Ten and 20 per cent means 20 per cent and all that sort of stuff: "Update: what has happened with the impact on people of G.S.T. (Goods and Services Tax)? What is going to happen with the healthcare charge? What has happened in terms of the change to the income tax rates? Obviously people on the marginal rate may have benefited. Give us a picture." Their response to that point, okay, because it is obviously going to be a long piece of work, and I think I asked it in mid-June: "As such, this is a significant and intensive piece of work" absolutely, that is why I was not expecting a response within the 2 weeks: "towards which resources will be directed over the summer period with the aim of providing a practical, informative and representative response to Members at the beginning of September 2016 and prior to the M.T.F.P. Addition debate." Guess what, folks, what are we in at the moment and guess what we have not seen? Just to be really clear, because I was really optimistic, okay, I was asked in by the Income Tax Department or people running the tax before the summer recess, so I will say mid-July, and I was really impressed, no question about it. I think somebody had obviously got the bit into their teeth, they had done a massive piece of spreadsheet work and they were looking at my queries around the income tax and I think there were then bits around the taxation. As far as I could see, they were pretty well there for that element, but on record, I was really impressed by the officers who did that. It was what you would expect the civil service to be doing, they give you objective advice and it is up to you as politicians to decide on it. I will just say, from memory, and you can never do it on graphs, I had asked for a comparison from 2005 and if that is the line - this does not work in the audience, by the way - significantly above that was what tax had done over the period of time to the particular type of household we were looking at. So they were looking pretty good, as far as I could see, and obviously what they wanted to do with me is just check certain assumptions, because I am interested in what the tax impact is and how that works. My understanding is it was then going to go off to income support and they were going to come around and do their piece and carry on. But they had done that, they looked like they were pretty well there; there may have been a few more tweaks to do, 3 weeks-ish after me asking the question. Here we are in the end of September. I was quite surprised there was not a modelling set up in place already, because I can recall - in fact, I think I have still got them somewhere - the amount of work that was done when Zero/Ten, et cetera, was brought in. I have forgotten their name now, but the consultants at the time had done lots of graphing, they had done a lot of work with income tax, around how you could tweak allowances and all that sort of stuff and what the impact would be. Those kind of generate some of the graphs that you get on the distributional analysis. So I was very impressed at the time. I have been waiting. In fact, I asked the Greffier at some point to send a little reminder 2 weeks ago, which I understood was done. Not a dicky bird. Where is it? The reason I go back .. I am not too worried about me, if that makes sense, and hopefully it will come through and hopefully I will be really impressed and it will be informative, says he, optimistically. What I was disappointed about is in this state of change and in what we are being asked to vote on, we do not know the impact of the health charge, of the waste charge, of let us call it what just happened on the nursery education funding, because it will affect certain people and certain income levels. We do not know what is going to be the impact further on of the hospital funding charge. That is not in the M.T.F.P., but we know something is coming down the line and it will probably look like the health charge again. So this goes straight back to the point that the Connétable of St. Mary was saying: the data, we need it. We need to understand what is going on, because bear in mind as well, bluntly, the population is not stupid, and even more bluntly, there is an awful lot of them that work in an industry that deals with numbers. It is called the finance industry. They will know from their personal experience what is happening in some shape or form. So I accept the point from the Connétable of St. Mary and other people, who say: