STEP Speech 4 November 2011

Nov 6, 2011 3 Comments ›› Philip

1. Good morning, I’m very pleased to be here to open the STEP conference the finance sector is right said to be the engine of the economy it contributes to a great extent tax revenues and the profitability of the finance industry is in itself due to be activities of the trust sector. You are the engine of the economy and I was delighted to be invited to your dinner last night anteceding students receive their awards I congratulate all the winners but more importantly all of the students taking part in the examinations
2. We start this morning when Europe is again in the midst of a crisis which threatens the integrity of the Euro and Monetary Union.
3. At the same time as the UK, our most important trading partner is trying to rebalance its economy, the recovery is threatened by a global slowdown and concerns about the solvency of European Banks
4. The knock-on effects are reaching almost every corner of the globe
5. The Governor of the Bank of England recently explained that the UK needed to inject a further £75billion of quantative easing.
6. Quantitative Easing buys time to address the underlying problem of excessive debt
7. Countries have been borrowing to fund unsustainably high levels of consumption
8. Around the world, stimulus packages and unsustainably low interest rates, which are a powerful stimulus in their own right.
9. But the underlying problems of competitiveness, the balance of trade and over-borrowing have to be addressed
10. In the past, market-determined exchange rates have helped to rebalance world demand and trade
11. Exchange rates are the natural safety valve for limiting imbalances in trade surpluses and deficits between countries
12. The fixing of exchange rates in Asia and the Euro areas, contributed significantly to current economic problems
13. Whilst we are in the currency union with UK, we do not face the same problems as other jurisdictions.  In next week’s budget I will argue.
14. We have, though, been right to deal with our problems head-on
15. Treasury Ministers who did not deal with deficits have made it very difficult for their countries to recover from the downturn.
16. Governments that have borrowed to fund expenditure have a legacy of excessive debt
17. Financial markets are now asking not just about the solvency of banks but also about the solvency of Governments themselves and all of their debts included unfunded pensions.
18. Jersey has managed its finances well.
19. I do understand that households have faced a double squeeze on their incomes
20. First – the introduction of zero-ten and GST
21. Zero-ten was essential to secure the future of our financial services industry and our approach has been proved right
22. We now have a diversified tax system which is fit for the future
23. Second – the effects of the global financial crisis
24. Islanders are facing diminishing savings, job insecurity and higher living expenses
25. Two years ago we were forecasting a deficit of up to £100 million by 2013
26. The positive news is that we took immediate action and made the difficult decisions
27. We have restructured our tax system and will have balanced our books by 2013.  The deficit we have incurred has been funded n cash.  We have no debt in fact as balance sheet shows
28. We are cutting spending across the public sector to make it more efficient and have already delivered half our savings target of £65m
29. Now we need to focus on economic growth

Finance sector

1. We are starting from a strong position and are striving to do more
2. In the last 18 months I have led delegations to Shanghai, Mumbai and Abu Dhabi
3. These are the growing capitals of the world – where we are opening offices, winning new business and securing future growth. I  am delighted to say yesterday I signed the India TIEA
4. This year, Jersey retained its position as the highest  rated offshore international finance centre in the Global Financial Centres Index
5. In addition, Jersey climbed into the top 10 locations in the world for wealth management and private banking services (named in 8th position)
6. And we are the 5th highest ranked location overall in Europe – in the same group as major city centres like London, Zurich, Geneva and Frankfurt.
7. We are now, rightly, considered a ‘global specialist’ centre

Economic Growth

1. Now we have certainty over zero-ten and I’d like to thank your industry for the support on that.  ECOFIN will ratify the Code Group’s conclusions and that chapter of uncertainty  should be brought to an end
2. Now we are on the way back to balanced budgets
3. We are in the right position to invest in growth without incurring debt
4. We have capacity in the economy to invest in infrastructure and boost employment
5. We used fiscal stimulus funds to invest in valuable projects like upgrading the hospice, supporting Durrell and improving our sewage system
6. We can now bring forward some of the approved infrastructure projects to keep islanders in work while the economy builds
7. Projects like improvements to social housing

First time buyers

1. I believe in home ownership.
2. At the same time we can help islanders realise their dreams of home ownership
3. We can offer more opportunities for shared ownership and ease the way for first time buyers
4. I am proposing to extend the relief on stamp duty for first time buyers from a ceiling of £400,000 to £450,000

Gigabit Jersey

1. Another important element of the plan for economic growth is to rollout super fast broadband across the island.
2. I am convinced that fibre optic technology is the future more than that we can develop a complementary section to our economy.
3. It will position the island as a centre of excellence for technology services.
4. Fibre is the key, a gateway to a global online marketplace
5. Local people will be able to access innovative, ground-breaking new services – including telemedicine, e-learning and bespoke media
6. The importance of this new technology was brought home to me when I was in a hotel in Mumbai
7. I had faster access to my States of Jersey emails than I do sitting at my desk in Cyril Le Marquand House
8. That cannot be right
9. The investment needed to move from the old copper wiring to 100% fibre optics will put Jersey into a world beating position
10. As shareholder for JT we will actively support its progress
11. When it is in place, we can, I think promote Jersey in Silicon Valley and we will use our existing marketing resources to get the message out there . We are ??? to ?? that with pressures on them.

Supporting businesses

1. The final part of the economic plan is to support businesses by helping them get access to the funds they need to expand.  We have heard about enterprise ??
2. Jersey already provides the most business-friendly environment of any small island
   1. We offer a competitive tax regime
   2. We provide a skilled workforce, professionally trained
   3. Our regulatory framework is sound but low on red tape
   4. Our infrastructure is effective
3. But need to put it into businesses with good ideas
4. Social Security is changing the way contributions for new businesses are assessed – changes that will ease those important first 2 years of trading for every new enterprise
5. We know that participation in the workforce is critical to our success and to future economic growth
6. Parents need flexibility and support in raising the workers of the future.
7. In the 2012 Budget I propose to double the tax allowance for child care for working parents
8. I hope this will help parents make the right decisions for their family without being unduly hampered by the cost of good child care

Conclusion

1. When the new States Assembly meets for the first time we will have many important issues to deal with
2. Generating jobs, reforming Education, Health, Social Services and Housing
3. We have closed the fiscal gap and will return to balanced budgets by 2013
4. We are now ready to move forward
5. It is essential that we build a common vision that will benefit us all
6. We need to change the way the States Assembly and public sector operate
7. We have started this work – but there is more to do to develop a modern public sector that can meet the future needs of islanders effectively and efficiently
8. I know many people have experienced hardship that we’ve not seen for a generation
9. The good news is that we are now in the right position to take advantage of the recovery as it emerges
10. There is an opportunity for everybody to thrive in Jersey, supporting each other in a unified community
11. I remain confident that Jersey has a great future and that the next States Assembly can and will unify the Island