TREASURY has gone on the offensive over alternative funding proposals for capital projects this term.
A group of five deputies are opposing the department’s plans to borrow £175m. externally to part-fund the £301m. wish list.
But Treasury has warned that one of the mainstays of the group’s plans, internal borrowing of £113m. from the cash pool, would reduce the States’ financial options in the future.
The cash pool consists of amounts held for capital accounts and the Corporate Housing Programme, deposits from the States’ trading companies and the working capital of the States.
‘The internal funding capacity not only provides a resource for future capital investment, it provides resilience against any shocks other than an economic downturn,’ said Treasury and Resources minister Charles Parkinson (pictured).
‘The contingency fund exists to help cushion an economic downturn, but non-economic emergencies are covered by the cash pool.
‘This is the resource we would look to if there was a flu pandemic or a breach of the sea walls resulting in major flooding.
‘This was the fund we used to buy the tank ships.’
Deputy Parkinson said that, following the tank ships debate, T&R had resisted the establishment of a separate ‘emergencies’ fund on the grounds that the States could cope with natural disasters out of its cash resources.
If these were to be depleted, the department would initially need to establish a separate fund to cover emergencies other than an economic downturn, he warned.
Deputy Parkinson added: ‘It is wrong to say that the alternative proposals are “inherently less risky, more prudent and more sustainable”. They would expose the States to any unforeseen risks.’
One of the group of five, Deputy Matt Fallaize, took positives out of the minister’s comments.
‘We are encouraged to hear Deputy Parkinson talking in positive terms about borrowing internally to fund capital investment,’ he said.
‘It has been used in the past and remains a sensible option today.
‘Our proposals leave over £100m. untouched in the contingency reserve while excluding external borrowing in its entirety.
‘When you compare like with like, it is clear that our alternative funding model would be more flexible and sustainable for future States and the island generally.’
The proposals from Treasury and Resources will be debated by the States at the end of May.
Deputy Roger Domaille, who is one of the authors of the alternative report, and is a member of the Treasury and Resources board, took no part in discussions over it at a board meeting yesterday.
Article posted on 29th April, 2009 - 1.00pm
3 Article Comments
So- if there is a breach of the sea walls will those ¨ships be used to ‘Plug’ the breach should they appear;
Of course the answer is NO; It therefore proves that there is money to spare, with out borrowing, if after buying these ‘Whims’ of a non professional CM, then there must be cash over, and therefore no need to borrow,
Sensible use of funds and suchlike is far more important than always running to the ‘Jam pot’ The Jam Pot being the people from heavier taxation.
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you’re not making sense Eric. Higher taxes are slow to collect and so cannot be used in an emergency, so we need an emergency fund.
If you use the cash pool (the non-economic emergency fund) and leave yourself short, then that is bad financial management. It is reserved for emergencies, not long term capital projects.
Now, if the fund is actually bigger than we sensibly need an emergency fund to be, then that is a different issue, or if we think that we can afford to “borrow” the money and repay it within a sensible time frame then that could also be prudent. (but how will the repayments be funded when we have a systemic shortfall?)
But to think that the money is sitting there “spare” is simply wrong in principle. The fact that someone thought it fit to buy a couple of ships with some of the funds, does not mean that the balance is now up for grabs – if anything it makes it less likely that it is sensible to use it.
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Exactly TL.
Therefore my note which you find no sense in, has proved to have that much sense that you choose to question it; thus bringing to light the blatant way in which funds can be used by whom ever is in charge; in other words
Cocking a snoop at all and sundry as he thinks I’M the boss. Pathetic!
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