Jersey Chamber of Commerce - Medium Term Financial Plan – Comments and Observations from Kristina Le Feuvre, President of the Jersey Chamber of Commerce
Friday 24 July 08:49
Chamber welcomes the Medium-Term Financial Plan released recently by the Council of Ministers which contains some constructive efforts for reducing the seemingly ever increasing annual deficit. Chamber has long requested action and is delighted to see that some of this is now in the planning process band we very much hope that these initiatives will be followed through in a timely fashion.
Whilst the efforts of the Council of Ministers are noted and appreciated, Chamber would like to see further efforts and focus on the cost reduction exercise proposed by the Council of Ministers and in particular, the development and implementation of an e-gov solution which will be cost effective and fit for purpose.
Businesses have had to become leaner and more efficient in order to weather the effects of the recession and we would urge government to follow similar practices and increase productivity with lower costs and a greater sense of urgency than has been apparent thus far.
There is also some disquiet amongst Chamber members regarding the lack of a formally stated local procurement policy from the Public Sector, since this would in turn stimulate and increase local businesses and therefore aid economic growth. Additionally, Chamber would like to see the MTFP feed into a longer term strategy to enable businesses to invest and make longer term plans. Many businesses plan far ahead of 3-5 year cycle and there would be more confidence in a given industry if we could plan accordingly.
Whilst some work has been done on speeding up the planning application processes this could be improved still further, which would further stimulate potential investment.
Despite warnings over a concerted period of time, it is surprising that the future funding of the public sector pension scheme has not been addressed. Whilst there may be difficult decisions to be made, it is increasingly apparent that the Island is building up a substantial future debt which at some point will become unsustainable.
Business groups have long been advocates of some form of tax credit to encourage business investors. Schemes such as this represent a potentially strong and effective solution for government since they encourage investment risk being borne by the private sector but the rewards generated through increased employment, tax payments, social security contributions, etc., are tangible and provide a direct stimulus to the economy and to government’s coffers. The challenges posed by tax credits being applied to personal income rather than business profits are not insurmountable and there are numerous models operating in other jurisdictions that can be replicated or adapted in order to support such an initiative in Jersey. Targeted tax incentives serve to decrease the cost of capital for small businesses and start-up enterprises, ensure that the risk factor is lowered, whilst the ability to take advantage of tax credits for start-ups who may not be in a profit situation immediately could be deferred to ensure that benefits can be derived at a later stage in the development of a new enterprise.
Chamber is delighted to see some modest support for economic growth, but in order to realise the benefits of such support, there is a need for people to deliver it; the release of highly talented but surplus staff from the public sector will undoubtedly help, but it needs to be recognised that a more pragmatic approach is required with regard to the need to import people to help deliver the much needed economic growth that the government themselves would like to see, and from which the whole Island would benefit.