Budget speech to lay down tough stance on spending
Monday 7th December 2009, 2:57PM GMT.
Treasury Minister Philip Ozouf
THE urgent case for action on States spending will be spelled out by Treasury Minister Philip Ozouf in his debut Budget speech tomorrow.
The Senator will tell the States that unless they take action to close the deficit, they will be losing between £40m and £50m a year by 2012.
In his speech, Senator Ozouf will set out details for a revamped comprehensive spending review that will hit the four big spending departments – Health, Education, Social Security and Home Affairs – over the first six months of 2010.
And he will tell the States that only when all the possibilities for efficiency savings have been exhausted will he start looking at increased taxation to close the gap.
The Budget proposes a total States income of £558m for next year and a deficit of £60m, with the deficit growing to £68m in 2011 and dropping back to £49m in 2012.
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Why not tell it like it really is Phil, we are in deep brown stuff because you and your ilk cannot think of any way of sorting this mess out other than screwing the working class more and more!!!
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Money is flooding out of States depts faster than Cockermouth High Street. STOP SPENDING on rubbish – granite signs, pavement widening, 10-man jollies to ‘investigate’ foreign lands.
Wonder which service for vulnerable islanders they’ll scare us they’re “closing” this time so they can look good when it’s saved….and they wonder why we’re cynical??
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We could make great savings in Income Support if Senator Ozouf would stop newcomers to the Island taking jobs that local people are well qualified to do – even jobs in retail and care assistants are being filled by people just off the boat whilst local people apply in vain.
Senator Ozouf hedged the question once again in his Sunday radio interview.
Get real Senator and address the local issues -if you want greater States revenue let local people earn money and therefore pay tax – rather than increase the black hole via Income Support – most people would far rather be working!
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#2 JAB – You have hit the nail on the head, they will look for savings high and low and advise us that essential services will suffer and guess what; so guess who will pay!
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The trouble with regressive taxes is that hit the poorest proportionally more than the higher earners. This is part of the reason many more people over here are finding it harder and harder to cope financially now.
As others have said stop wasting money on granite signs pointed nowhere. Stop wasting money on useless statues. Stop wasting money on bollards. Stop employing more and more civil servents.
A simple and cost effective way to have raised much needed revenue would have been to take the cap off of social security. It would have meant zero extra staff to manage this. It would have left the most vulnerable in a better position than they are now. Those earning big wages wouldn’t have noticed much difference either.
As far as I am concerned we are on the rocky road due to bad fiscal policies that have been in place for the last 20 years or so. The policy of expanding the population to increase the wealth base over here is doomed to failure. One cannot keep sucking in more people to grow the economy.
Being dependent on one industry is bad enough but when this industry is now open to worldwide scrutiny etc, it looks like folly to me.
Unfortunately we also now have a lack of politicians with the skills required to manage this crisis from what I can see. We are therefore left with the likes of Ozouf and co to get by as best they can.
I would much prefer people in these positions who were in the same boat as the rest of us, as I believe their minds would be more clearly focused on getting us out of this mess. These people are somewhat insulated from this crisis and therefore are in a better position to survive when things go bad.
As to what to scare us with next maybe they could float the idea of shutting down Overdale or some such likes? Or if they really want to go to town why not float the idea of charging people directly for their offsprings’ education? This is the principle behind user pays afterall.
Or at the end of the day they can just put up GST to cover any shortfall. My guess is GST will be used as an easy way out of the problem. So what if the least well off are affected? Welfare can take care of that can’t it? However please bare in mind that welfare is paid for from taxes!! Robbing Peter to pay Paul comes to mind. However in this case both Peter and Paul are in the less well off bracket. The joys of capitalism for you!
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This will be just more of the same,the Govt.have ably demonstrated a total inability and lack of intent on spending restraint…No we must now have total reform.for this lot are as a staggering beast in it’s death throes,this hopelessly failed ministerial govt.must be done away with and a new and effective version of the old committee system installed with the attendant checks and balances we used to have, and a proper constitution….and new laws preventing the witholding of information from politicians by civil servants,punishable by jail terms.
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agree 1 and 2.
But they never listen do they?
What is it they don,t understand?
We have to tighten our belts in a recession they keep telling us.
So why don’t they do the same?
It wouldn’t be too bad if they spent the money on something beneficial to us all,instead of things we don,t want or need
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A squeeze on Health, Education, Home Affairs, Social Security eh? And when we can’t find nurses (not easy at the moment), teachers don’t want to work in an underfunded and declining service, there aren’t enough police on the streets, and our safety net for the vulnerable is gone….I’m sure we’ll all remember tough “hit the big spenders” Phil with gratitude. Except probably, like so many politicians, when the chickens come home to roost, he’ll be gone to. Services are not a cost to be slashed, they are an investment in the future.
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@ Thinknot #8
To suggest that the biggest spending departments stop wasting money, is hardly to underfund them. If these departments cut their waste and recieve the same level of funding will not services have been increased?
I agree 100% that the States need to stop wasting money on things like granite signs, poor re-design of road junctions etc. etc.
GST; I don’t see this as the evil that so many seem to, I’m still not able to see why so many people see it as an unfair tax?? I hope it doesn’t rise, I wish we didn’t need it… but what is a real and fair alternative?
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For a start, how much has been spent on the work done currently on the Esplanade? Every time you pass there you have 1 guy working and 2 guys watching the 1 man work! It seems to me that all they have done is re-do a path that no-one ever used.
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J Lamborrari what is real and fair is an equal distribution of taxes across the whole of society and not just the middle.
If this were to happen there would be no need for GST in my opinion.
Couple this with taking the cap off of social security and not wasting money on useless items like bollards and rafts of civil servents and then things would be made much more bearable for the average person over here.
I am pretty sure most fair minded people would agree with me.
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@Adrian #11
“…what is real and fair is an equal distribution of taxes across the whole of society and not just the middle…”
GST is 3% of the cost of your goods or service recieved, regardless of where in society you may find yourself. In practice the wealthy pay more GST than the poor.
You suggest that GST would not be needed in taxes were more evenly distributed, but don’t suggest how other than the removal of the cap on SS and not wasting money(although not wasting money isn’t a valid argument for distribution of taxes really)
I don’t disagree per se with the removal of the cap from Social Security, but only if the rate were dropped at the same time, as SS is meant to pay for specific services as I understand it, and I see no point in creating an enourmous ring-fenced fund without real purpose; I don’t think that it’s right to fleece the present workers to enable future workers benefits.
You call for even taxation; maybe this is the answer, take 20% from everybody then pay the civil servants to give the low paid their Income Support, it’d be interesting to be able to see clearly who costs the taxpayer more than they pay in taxation, and who is actually funding Jersey’s society.
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Dear JEP,
Budget should be on the top of the news list today!
It will affect all of us (unless you are fat cat on big States’ salary). States must STOP SPENDING in all areas! Working people will not handle any tax rise & employers in commercial sector will continue to lay people off.
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Well said to #1, 2 & 3
Also, there must be many situations that we could think of (between us) where money is being wasted on very simple things that it would take little bother to sort?
For instance, the other day I had an outpatient’s appointment at the hospital. It was completely useless because my doctor did not have good enough English to discuss what is a very complex condition. His English was perfectly good for asking the right questions, but not for understanding the answers or the questions I wanted to ask.
I’m not being xenophobic (I shouldn’t even have to state that, but it is This Is Jersey), my GP is from abroad but his level of English is perfectly suitable for the job he carries out. I can only assume that a nurse was also present during the consultation because the doctor did not have a good enough standard of English. On top of that I now have to write a letter asking to be seen again by someone who I can speak to properly about my situation, that will take up the time of hospital administrators. The same doctor will have seen numerous people before me so presumably the nurse’s time was also wasted all day.
I understand that Jersey is struggling to bring in Doctors, but it is an entirely false economy to employ doctors that cannot even converse properly with the majority of the population. It is also naive to think that patients are unknowledgable about their conditions, some of us have medical training and know exactly what is going on, any Doctor should be able to converse at this level. Basic English is fine for working in a shop but not for proper medical practice!
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J. Lamborrari Social Security funds are a tax in my opinion and like any tax can be moved around if required. This is a red herring peddled by the CoM as far as I am concerned. A bit like petrol tax being meant for road repairs etc but actually funding other items.
If the CoM had any gumption they would alter the social security law to say that any surplus above requirements for running that scheme could be used elsewhere. Who is running this island? Who has the power to alter laws if they so wish?
To say one can’t do anything about it is akin to saying we had no option but to bring in GST. There are always options. However maybe the CoM didn’t want social security used in this way? If this is the case this holds no water as far as I am concerned. Needs must I’m afraid.
As per even taxation everyone should pay the same there is no excuse for allowing some to pay what they want.
I believe you would find that the middle earners are paying proportionally more than either the poorest and the richest. In a fairer society both ends would be looked at to see where improvements could be made, and adjustments made accordingly.
As per GST I suggest you read up about regressive taxation and see why it is worse for the poorer members and better for the richest members in any given society.
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Sadly we will not see cuts where they will do the most good,to our bloated civil service which is overstaffed and underworked. No No the cuts will again come in essential services to hard pressed islanders as usual and to boot we will end up paying more in tax for the privilige!!
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@ Adrian #15
You’re right that the SS laws could be amended, and the funds management structure remodelled so that SS deductions could be passed into the general revenue pot, but that doesn’t sound like the simple solution you were selling the idea as originally.
Surely similar increases in revenue could be achieved more easily by increasing the Income Tax rate, without changing the way SS is administered?
I’ve heard the arguments regarding GST hurting lower earners more than higher earners: Is it really surprising that life is easier if you have more money?
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J Lamborrari in your honest opinion what is least damaging to the majority of islanders over here and what would have caused the least hardship?
It is as simple as changing the law. QED.
Just think once the law was amended there would be no need for extra beaurocacy and all the extra high paid posts to go with it. A win win for the island as a whole.
To amend income tax you would have to inconvenience a lot of people and go against the mantra of the CoM which is tax stability. They have often said it is impossible to alter our tax rate as it has been like this for a very very long time. What they omit to mention is the fact that origional it was a lot less than 20% and not that long ago.
Who do you think put it up to 20% by the way?
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18 Adrian
Do you really think you will catch many of the high earners by removing the social security cap ?
The directors/partners in law firms etc will merely reduce their wages to a bare minimum and remunerate themselves with quarterly dividends. These are taxed at 20% which is the same rate they pay on their indidual taxes. Their social security contributions will fall. You will increase the burden on the “middle wage earners”
A fair adjustment to the cap is more realistic and social security contributions should be for the purpose they are intended.
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Come on folks, between us all we can surely write a list of everyday matters where our money is being wasted?
These could be relatively small amounts of money but they are wasted frequently enough to make a big difference.
Get a list together, hand it into the States, do their job for them, problem solved!
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J Lamborrari #9
Completely agree !
Have you seen the new footpath being laid along the sea side of Victoria Avenue.
Just as before its so narrow when cars reverse park up against it their boots overhang, so any pedestrian using the said footpath has to walk into the road to pass them.
Another opportunity to improve pedestrian safety lost, TTS hang your heads in shame.
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Peter thanks for the input. Wouldn’t an answer to that be to take an extra 6% from dividends? If you plug the loopholes those trying to be clever will not be able to get out of paying.
Surely by doing this these people are actually taking from the system as minimum contributions have to be made up from general taxes I am led to believe? So this means you and I are funding these rich people in their old age, to get social security payments, if what you allege is true. Indeed how do we know people aren’t already doing this?
People need to realise that taxes are here for a reason and that by getting out of paying them they are in effect passing the buck onto others who cannot wiggle out of them.
Maybe you are unaware but the burden is already onto the middle earners as either end are paying less than they could be.
Why do social security contributions HAVE TO be used for one thing only? Petrol tax isn’t just used for the roads you know. If it were for the roads only, we would still have the best maintained roads in the world, unlike the third rate roads we have now. A lot of roads are full of pot holes and are a disgrace in many cases.
J.Lomborrari “Is it really surprising that life is easier if you have more money?”
More money can mean an easier life, however it shouldn’t lead to unfair loading towards certain groups in society.
What people need to realise is the system as we have at present isn’t working and is becoming more and more prone to failure. It is only with a complete overhaul of things that we might be able to improve things. The status quo is not an option and neither is relying on GST to plug the gradually widening gap between expectation and delivery.
Social security is a prime example of this. How is a largely elderly population going to be supported in old age by a few workers? The answer is it isn’t. So I expect to see fireworks in 20-30 years time, when the promises people were made in youth turn out to be worthless. Some might be happy to work till they drop but a lot won’t.
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@ Adrian #18
“…J Lamborrari in your honest opinion what is least damaging to the majority of islanders over here and what would have caused the least hardship?…”
First and foremost you reduce the waste of Public money.(see #21) Then you reduce the provision of non-essential services. You match taxation to the cost to society of what you’re taxing; for example there is a cost to maintaining roads, a tax on fuel should be set to met a proportion of this cost. Refuse collection should be funded by those who have refuse collected. You don’t put a penny on a pint of beer to fund a specific group with free TV licences.
Those necessary/socially responsible services that it would be unpractical/unfair to tax directly would then need to be met from general taxation, through Income Tax(education to 18years old, for example)
SS funds specifically SS services, mostly related to employed people, who find themselves unable to continue in their gainful employment.
What you propose would mean that those that work and receive high incomes would pay much more in tax to the general taxation pot than somebody on the same investment income, but would only receive the same benefits as that other high income person.
How is that fair?
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22 Adrian.
Generally if taxes are fair and equitable the majority of people will pay without trying to avoid payment.
A fair and simply structured tax system should always be the most efficient. The more complicated systems become the more people will try and find ways of circumventing the intention.
With the present “low cap” for big earners on social security contributions there is little incentive to circumvent it.
Currently for partners/owners/directors of Jersey companies it is easy to distribute the majority of remuneration via dividend. This enables directors/partners to freeze their salaries along with all non shareholder employees but still increase their effective take home pay.
Increasing the rate of taxation on all companies by 6 per cent would make Jersey uncompetitive with other offshore jurisdictions.
I agree that the social security contributions need amending but changes to a simple but effective system have to be thought through before implementation.
What we really need is the sort of spending cuts implemented by the Irish government this week.
Civil servants receiving pay cuts of 5 to 15 per cent (for higher earners). Pension contributions being amended downwards and social security payments increased.
We are spending too much and I agree with Leah that if we all concentrate our minds on reducing expenditure that the necessary savings can be made.
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Sorry Peter maybe I didn’t explain what I meant properly.
As per social security take the cap off as regards personal contributions only. Fix the cap for company contributions higher than it is at present so as not to affect business too much.
Why can’t people earning £100,000 p.a. pay £6,000 instead of around £2,500 at present? This has no impact on the business as they aren’t paying it, it is their employees who are paying.
Can anyone say this will seriously affect someone on £100,000?
As per dividends if this is being used as a method to circumvent the system then why not tax 6% on these payments?
I think it is about time that those higher up the food chain paid equivalent percentages of tax as the rest of the workers. This is one way to enable this. I also view this as fair and just. What you have outlined above in your example I view as grossly on fair on the rest of society, as these shortfalls have to be made up by other means e.g. GST.
As per cutting costs I totally agree on that. A good place to start would be import/export and travel costs. Reduce these and everything in Jersey would fall in price thus making the Jersey workforce more competitive with the outside world, as wages could then be pegged back as a consequence. Exports would then be more competitive as well. How can paying high prices to get things in and out of Jersey be good for the island as a whole and this includes businesses here as well?
As per government spending they need to simplify their structures and cut back on bureaurocracy, not keep adding new lays. There are too many overseers and not enough workers from what I can see. Maybe it is about time to have a cull of the management who are on high wages and pensions? This would cut costs significantly in my book.
Places like the hospital could then employ more workers instead of pen pushers/managers/foremen, thus saving money and increasing efficiencies.
If these things were implemented then social security contributions wouldn’t need to rise would they?
Why do you propose to push pensions downwards? Is this across the board or for the higher earners?
If it is the lower earners then you could find many more of these needing state aid to get through retirement. Unless your aim is to make people work till they drop and do away with retirement for all except the well off like company directors etc?
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J Lamborrari as per your comment ref fairness what is fair about someone on £38,000 paying the same amount of social as someone on ten times their wages?
In this example one pays 6% and one pays 0.6%. Where is the equality?
Or to put it another way say the one on £38,000 losses around £2,500 from their wages giving them £36,500 left before other taxes.
The higher earner has £380,000 out of which they loss £2,500 as well! Leaving them a nice £378,500 to struggle by on after other taxes etc.
Charge at the same rate and the person on £380,000 pays £25,000 stilling leaving a nice £355,000 to struggle by on after other taxes.
This to me isn’t right and needs addressing. It would also bring a lot more money into tax revenues and do little harm to those having to pay it, in comparision to GST which will only end up being leveed at 10% plus the way things are going.
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@ Adrian
“…In this example one pays 6% and one pays 0.6%. Where is the equality?…”
The equality is in the £2,500 they both paid; it’s exactly equal in both cases, fund the same amount of benefit in both cases.
What you seem to want to introduce is a 2nd round of Income Tax, which is only applicable to earned income rather than all income. If this is your intention then why not do away with SS all together, fund it’s services out of general taxation, and tweak the allowances for earned income?
You started claiming your argument was both fair and simple, it clearly isn’t simple, and I still don’t see what you propose as being fair.
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Having 6% taken from ones wages doesn’t equate to having 0.6% taken from ones wages as far as I am concerned, however you think it does.
GST is having a very negative impact on the poorer in society, as well as unfairly penalising the smaller businesses because they can’t waste time on doing the government’s job of tax collecting. I know of a few of the smaller businesses who have given up, or are about to give up, solely because of the implementation of GST.
Social security is already being collected, to alter it is much more cost effective, and much less time consuming to both business and the general public plus not having the adverse impact of a regressive tax.
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Mogit is right, we are in the brown stuff, but I would like to see states members outside of the council of ministers come up with some half decent suggestions of getting us out of the brown stuff for a change instead of moaning. I listened to the debate last week and many talk well but that does not solve the problem! Ib fact the left seem to be hell bent on spending more whilst totally ignoring the deficit.
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@ Adrian #28
“…Having 6% taken from ones wages doesn’t equate to having 0.6% taken from ones wages as far as I am concerned, however you think it does…”
You ask about equality, both % figures equate to the amount of money. It’s that simple.
I think the impasse is that you don’t really want equality of taxation, you want equality of income; you’d maybe see a tax of 1% on an income of £20,000; and a tax of 90.1% on an income of £200,000 as equitable.
“…I know of a few of the smaller businesses who have given up, or are about to give up, solely because of the implementation of GST…”
I simply don’t believe that any business has closed Solely due to GST. Care to offer any example?
“…Social security is already being collected, to alter it is much more cost effective, and much less time consuming to both business and the general public plus not having the adverse impact of a regressive tax…”
Income Tax is also already being collected, so the most cost effective way would be to ditch both GST and SS(and impot duties, rates, VRD VED etc. etc.) and just tinker with that, surely?
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#29 Philip, I’m guessing that’s because, as we’ve clearly seen this year, none of them have a backbone enough to suggest the unthinkable.
Much as Alistair Darling has been criticised for mentioning tax and national insurance rises, it was obvious that this would have to come. Our lot want to target drivers to bring in money but claim it’s about the environment. They want to keep people in jobs so bring in legislation making it difficult for small businesses to get rid of useless employees but, of course, big businesses can always restructure and get around such laws. They want to tax us for their failings but won’t admit or apologise for their failings. And they can’t even run a health service that doesn’t involve Jersey paying for the healthcare of people who have never contributed in Jersey!
It is time they started trying to gain our trust and show us some respect by admitting what we all know i.e. some form of tax rises will have to happen. And it is time they started tackling environmental (and transport) issues in a way that hits the rich as much as it does the poor. But they just don’t have the b**** to do anything decent.
So many savings could be made if they just had a brain between them, but instead WE are going to have to pay and they’ll continue to waste our money.
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I’d like to see the list of all persons and their “genius” ideas which have cost the most money along with a list of all persons and the list of all problems which have lost the most money.
We can then perhaps at least alleviate these persons from the States wage bill!
Other silly expenditure/costs….
Who’s idea was it to “red” tarmac Broad Street and why?
Why do parks and gardens employees water hanging flower baskets in town just after a rainfall?
Why do the same roads get dug up year after year after year (sometimes month after month)? What are the problems and why aren’t they fixed the first time?
Why does it take so many manual workers to oversee said road digging upping?
How much are we subsidising for a poor bus service? Have any tenders gone out to improve this or make it more competitive at least by using other companies too?
How much is crime costing this island and why aren’t there sufficient preventative or punitive measures in place to reduce this?
How can the services be made to work more efficiently (i.e. how many police officers are employed in this island and what exactly is taking upm their time)?
Benefit fraud…..how is this being tackled and what schemes are there to help encourage the workshy back to work or learn a new skill?
The list could go on and on, but at least this is a start!
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Problem in the states is duplication of resources and effort, sometimes not in the same direction i.e. they are workign against each other.
Its empire building and power grabbing by the politicians.
Why does every states department have a different computer system?
Why does every states department employ HR, Accountants etc etc
Why aren’t our Politicians held accountable?
Why does Nick Corbel have more clout than the chief minister.
If the CoM want to run the island like a business then they need to get some gumption.. otherwise Jersey Ltd is officially bankrupt!
Get rid of the unions.
Get rid of the jobs for life ethos.
Stop duplication
Stop waste – statues, bollards etc
Put out to tender all the services that we currently subsidise and stop subsidies! Connex was the lowest bid but we now pay more…
Bring in Visa’s.. stop the drugs, crime, benefit cheats etc.. OZ, NZ, Canada, USA, Thailand etc all have visa programmes (must prove wealth, health and no offences!)
I know of 7 families (24 people in total) all leaving or have left the island in the past 12 months because and all say it is no longer a nice place to live, too expensive and rotten to the core.
Will the last one out please turn off the lights.
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#32 Our road got dug up for planned electric works, then shortly after for planned gas works, then shortly after that a whole new development went in so everything was dug up again anyway, now it’s recently been dug up for water work (unsure if they were planned or not).
This all happened in the space of 6 months!
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Nellie Macon,
applause from the poor socially supported locals who can’t get jobs because the ‘foreigners’ take them all.
The fact is this, the locals could get the jobs if they tried, but some of them (and I highlight some of them) are far better off milking the Jersey Cow than working, and by george, do they take advantage of it!
It is sad that you fail to embrace ‘foreigners’ who are the backbone fo your economy and who without, your island, as you believe it is, would fall apart.
Why not reward the foreigners for having the nouse to get up from there often poorer economies for paying to come here and do the work for free. Australia had to pay for people to emigrate – you get it for free!
Instead of focusing on the foreign problem, get your own house in order – cut the massive handouts you currently give them (paid for by the foreigners) and you will soon see a miraculous recovery!
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35. Mrs Rosemary Bead – You’ve completely misinterpreted my comment.
Jersey inhabitants who have shown a commitment to the Island – whether “Jersey” or “foreigners” (it makes no difference – if you’ve lived and worked here and paid your dues then you’re “local”)should surely have priority when it comes to obtaining the few jobs available in this difficult financial climate over people who have just arrived in the Island.
It’s completely untrue to claim that people who have been living in Jersey for a long time would prefer to milk the system rather than work – obviously there are always some lazy people but most people would prefer to earn their keep if they can and aren’t choosy about what they do as long as it earns them enough to pay their bills.
Unfortunately some employers don’t even pay the minimum wage so it’s no wonder local people can’t afford to take up these jobs and are forced to accept income support in order to keep out of debt.
Senator Ozouf would do well to start making stringent checks on whether the minimum wage is actually being paid by all employers – that would be another step in the right direction.
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Great site and the information is unique.
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