Why T&R’s sums just don’t add up

Thursday 12th March 2009, 1:50PM GMT.

WHEN the States voted by 28 votes to 19 in June 2006 to adopt zero-10, the man who so vociferously opposed it with his own zero-20 package was bitterly disappointed.

Referring to the two-year wait until implementation, he said: ‘During that period we will see what growth in the economy there is and see whether the States manages to keep expenditure increases to 0% in real terms. We will know by 2008 whether this policy looks at all credible.’

Now, of course, Treasury and Resources, headed by the architect of zero-20, is saying that zero-10 is such a basket case that islanders have to find an extra £52m. a year in taxes to plug the

revenue gaps in what was clearly a flawed policy.

Leaving aside the earlier credibility prediction, the question is how can a deficit forecast by T&R as recently as November 2008 to be just £12m. suddenly balloon to £65m.?

The answer, according to a Fiscal & Economic Workshop chaired by the chief minister and discussed with the media yesterday, rests in the way T&R does its sums.

Instead of departments paying for desks and chairs out of revenue income, that now has to be treated as a capital item – which means that what was a grey hole immediately darkens by an additional £20m. a year while acting as a further disincentive to the States to reduce spending.

An extra £7m. a year is being lost to top up the public sector pension pot because it has fallen so much in value – but T&R yesterday would not

discuss by how much or what action it took to arrest the losses.

But the biggest single justification for the department demanding huge tax rises is its own forecast of how the economy will fare between now and 2017, a forecast based on previously never used assumptions and one that contradicts growth estimates that the Treasury minister has given to his Policy Council colleagues.

If someone were determined to make zero-10 fail, this approach would be an excellent way of achieving that.

Unfortunately, given the Treasury minister’s implacable opposition to the policy and the questionable nature of some of his latest sums, it is difficult to take T&R’s figures at face value.

View more: Treasury And Resources news, Zero-10 news.

1
Fast Robert

March 12, 2009 at 2:17 pm

Remember that one of the first statements made by Parkinson was that the States accounts were ‘not fit for purpose’. How can Trott possible have a case here?

Once again the GP Editorial is so biased in favour of Trott that it raises the question whether or not Trott’s PR team somehow overlaps with the Opinion writer.

As for the continual bashing of the public sector pension pot, remember it was the ineptitude of previous assemblies that has led to the deficit. As with the private sector in the UK, employer contributions were slashed during the boom times to maximise profits. The result of this short termism is now political pressure to hobble those loyal employees that have worked for years for the Government to have their only perk removed, and leave the position unfillable in competition with the private sector.

Guernsey has always been run by a cosy band of short termists. This ridiculous assertion by Trott that everyone is always wrong except for him just confirms it.

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2
Stephen John

March 12, 2009 at 3:21 pm

Fast Robert

I can also recall the recently appointed States Accountant remark that the States Accounts were not fit for the purpose.

So far as the Press being concerned about the questionable nature of the T and R Minister’s capacity to do simple sums; perhaps the Press might like to tell us why an alleged £70 million surplas discovered a day or so before the last election, vapourised within a year?

As I recall Charles Parkinson is a Chartered Accountant. No doubt his crtics will find something to criticise with that fact, but to most it does give his comments the semblance of credibility.

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