COMMENTING here yesterday on the 2011 Budget, we noted that deputies will have to be very disciplined indeed if the island is to avoid new taxes, notably GST.

Our reasoning was twofold: firstly, the States really has not cut its cost base to the degree and with the speed that the private sector would have and, secondly, while the economy here is holding up remarkably well, the surplus between income and government expenditure is slender.

That last point is echoed by Treasury and Resources in its Budget commentary, which says that expenditure restraint will have to be maintained despite the inevitable pressures that departments will face in relation to increased demands on existing services and the calls for new ones.

In fact, the minister goes further, warning that members will have to resist the temptation to spend the money liberated by the financial transformation programme and instead use it to pay down the current deficit.

That warning is necessary because T&R well knows how financially undisciplined States members are and how islanders have become accustomed to what its own advisers, Tribal Consulting, describe as ‘unbeatable’ services, an expression rather less emotive than ‘gold plated’.

The issue for islanders and taxpayers is how pain intolerant deputies are – the criticism they received, for the wrong reasons, over bowel cancer screening is not something they would wish to repeat on other high profile services – and how quickly the public sector culture can be changed to doing more with less and dealing with under-performing colleagues.

Government’s track record to date, of course, is poor, as a succession of independent reports have demonstrated.

Another test is looming, should Public Accounts ever get around to reporting back on its proposals for rectifying the governance deficiencies highlighted by the Wales Audit Commission.

In particular, how it deals with the executive government silos that are the individual departments will be very revealing – as will the Assembly’s reaction to that.

So while Guernsey’s economy has been surprisingly resilient, which led to yesterday’s soft Budget, the island is not out of the woods yet.