IN all the fuss about finding ways to fill the ‘black hole’ in the Island’s finances, scant attention has been given to the best option available. It’s not cuts in expenditure, nor raising more taxes, nor even borrowing money – all of which might have their place, but they also have their downsides.

The best way out of our current problem is to grow the economy. It not only solves the immediate problem, but can also secure the future.

The attractions of the economic growth option are pretty obvious. It produces more jobs, so there’s less unemployment; it means higher wages and profits, so more taxes; it makes the Island’s economy fitter to cope with any future problems; and it ensures that we benefit from the competitive advantage we have over other jurisdictions struggling with even more severe problems.

There are a couple of difficulties, of course. Unfortunately, there is no magic lever marked ‘economic growth’ that the Treasury Minister or the Economic Development Minister can pull to put the economy into gear. Even if there was, it would take time for the economic engine to get up to full steam and produce favourable results, and we have some serious financial problems that need to be dealt with immediately. So this is no easy way out.

But it is an option which should be given much more prominence than it is getting at the moment. It should certainly be among the package of measures which will no doubt eventually be put together to get the Island out of its current mess. Let’s hope this happens quickly, before we lose any competitive advantage we might have had because of our stronger financial position.

At the risk of labouring the point, it’s not sufficient just to cut spending and/or raise taxes. It is certainly possible to wipe out any red ink in the accounts in this way, but what of the future? A balanced budget doesn’t necessarily produce jobs or wealth, although I acknowledge it might make a contribution.

What is really needed is investment in the future, and that, of course, requires money, which apparently we don’t have.

However, rather than ignore the need to invest in the future because we can’t afford it, we should make future investment as much of a priority as we are currently giving to cutting expenditure and raising taxes. The money simply has to be found.

To be fair, the fiscal stimulus package does address this issue. The Treasury Minister acknowledges that the best way to deal with a deficit is to grow ourselves out of it. So money has been made available to help with training and skills and for Jersey Finance to try to attract more business.

However, most effort has gone into preserving jobs, particularly in the construction industry, and by definition, it is all very short-term. Some very good work is also being done by Jersey Enterprise, but they have limited resources, and other attempts to grow the economy have been few and far between.

This is perfectly understandable because we don’t have much money to play with, and it’s logical to use what money we have where it will have most effect in the finance sector.

But there are other sectors of the economy which could benefit from a stimulus, and which could produce immediate results. We are, of course, back to my favourite subject of the tourism industry.

Apart from having interminable arguments about a public-private partnership, where is the help from the States to grow the tourism industry? The amount spent on marketing has actually gone down, although they are sometimes able to find a few extra quid down the back of the sofa when they really have to.

Very little stimulus money has gone to the hospitality industry, probably because someone forgot to tell the industry that they could apply for it. So we have an industry struggling to reinvent itself and cope with another fall in staying visitors of nearly four per cent last year. The all-important UK market, where most of our efforts are concentrated, was actually down by nearly seven per cent.

The apologists for tourism will point out that seven per cent down is not bad considering the depth of the global recession and the very much bigger falls suffered in other holiday destinations. But you only have to look across the water to see what can be done.

Guernsey saw that business needed a boost, so they injected extra funds (and not a lot of extra funds, at that) into some strategic marketing and ended the year two per cent up in visitor numbers. Can we not do the same?

No, we would rather concentrate on developing an events strategy, where we have yet to see any results, and sit back while we lose one of the Island’s heritage attractions. Sometimes I think we don’t deserve to succeed.

The bottom line in all this is that the States have to take the lead. We can’t just leave it to the private sector to grow itself out of recession. The very existence of the fiscal stimulus package is an acknowledgement that the States have a key role to play.

But the States are preoccupied with cutting spending and raising taxes. It certainly seems to be the only thing exercising the minds of some correspondents to this newspaper. They are all focused on the short-term problem of balancing the books. The future is, apparently, supposed to look after itself.

That’s simply not good enough, so instead of wasting valuable time debating whether cyclists need to be registered or not, the States should start tackling the big issues that affect us all and find the money to solve the problems facing us in the long term as well as the short term.

If that means borrowing, so be it. We shouldn’t be scared of taking on a moderate amount of debt in exceptional circumstances if in the process it means securing our economic future.
Peter Body is editor of Business Brief magazine