I’VE not always seen eye to eye with the Jersey Chamber of Commerce, although my criticisms have usually been targeted at a couple of individuals who express fairly extreme views.

One of them even warned me against criticising businessmen at all because they make up the readership of Business Brief, the magazine I edit. I would certainly not want to bite any hand that feeds me, but most businessmen I know can take criticism, and quite a few of them have a social conscience as well. So I hope they accept that all I’m trying to do is encourage serious debate, which is sorely lacking because of our peculiar political system.

So I was heartened to read the latest edition of the Chamber’s online magazine, because I agree with a lot of what it contains. Not all of it, but enough to feel as though I was on the same wavelength as some of our business leaders.

The Chamber know better than I do that Jersey needs to grow its economy if we are to get out of our current mess. They may not believe it but that is one of the main reasons I believe cutting States spending so dramatically and so quickly is dangerous.

I can’t see how having an Island that can only afford the public services of a third world country, can promote and foster economic growth. Cuts, savings, increased efficiency, re-engineering, change management, reform – whatever you call it – is needed, but the current emphasis is far too much on cuts and not enough on economic growth. Some in the private sector may believe that you can leave economic growth (and improving diversity) to them, but I think you’ll find that you can’t.

So it will be interesting to see how the Economic Development Department manages to introduce a new growth strategy when they haven’t got any money.
The Chamber newsletter points out that the former growth strategy which was designed to achieve 2% a year increase in GVA, was missed ‘by quite a margin’.

That’s hardly surprising when a large part of the global economy was crashing about our ears and as this week’s figures show, the UK is still not out of the woods and may be heading for recession again. But longer-term growth hasn’t been that great either, according to the anonymous writer in the newsletter. In fact it’s been non-existent. Figures from the Statistics Unit show that the economy was smaller in 2009 than it was in 1998, whereas the UK economy grew 22% over the same period, the newsletter says.

The author notes that there has been little discussion about this relative poor performance, but he believes the main reason is Jersey’s total reliance on the financial services industry, which in real terms was 13% smaller in 2009 than it was in 1998.

However, even after years with no growth, Jersey still generates very high levels of economic output per capita.

‘In my view,’ the newsletter writer says, ‘this has probably been both a blessing and a curse. On the one hand it has provided many well-paid jobs and lots of tax to fund the massive growth in public expenditure, on the other we have had little incentive to try and diversify our economy.’ That could have been a quote from one of these columns, except perhaps for the slight exaggeration about massive growth in public spending.

But what are we to do about this sorry state of affairs? Well the newsletter contributor goes on to suggest what should be in Economic Development’s new economic growth strategy.

He points out that here’s an obvious need to continue to support the finance sector – after all it’s almost the only game in town.

We should then take economic diversity much more seriously and urgently, and perhaps look at what Israel did with the government investing alongside the private sector. While I totally agree, I can’t see it happening. That would require much more intervention by government than the writer’s colleagues in Chamber would like to see.

There might also be continuing lip service paid to the need to diversify the economy, but with limited resources available, finance is always going to get first refusal for any attention, particularly as it could produce more profits more quickly than other sectors. That could change as the finance industry becomes much more difficult for an offshore finance centre such as Jersey, but at the moment it’s the only way we can relatively quickly satisfy our need for growth.

Then the newsletter contributor calls for less red tape, including regulation of undertakings and planning laws. I doubt whether there’s an Islander who would disagree that unnecessary red tape should be eliminated, but what is one man’s red tape, is another man’s vital protection.

Of course the writer calls for more effort in growing the tourism industry which, he says, we really need to love. Perhaps that will be addressed in the growth strategy, but I don’t hold out much hope that anything significant will be done about it.

The only suggestions I consider doubtful are claims about the public sector and taxes. The writer says that precious human resources are tied up in the public sector which makes them unavailable to generate economic growth. That’s true, but not many policemen or nurses want to work in a bank.

Those who manage to stay in the public service will make their own contribution to economic growth.

The writer concludes with an impassioned plea to stop raising taxes. Low taxes have been the fuel for economic diversity, he says, but he earlier pointed out that there hasn’t been much economic diversity so far so low taxes in the past haven’t helped much.

Low taxes will also be the fuel for growth in the future, he says. While you can’t deny that, we also shouldn’t lose sight of the fact that even with GST at 5%, Jersey is one of the lowest taxed jurisdictions on the planet. So perhaps we need something more than low taxes.

Peter Body is the editor of Business Brief magazine