Falklands : Public Meeting Report (05/06/09) Part 3
Submitted by Falkland Islands News Network (Juanita Brock) 14.05.2009 (Article Archived on 28.05.2009)
Part Three focuses on fiscal management.
PUBLIC MEETING REPORT (05/06/09)
Part 3:
Commentary and transcript by J. Brock for 100X Transcription Service
A public meeting on the draft island plan for 2009/14 was held in the Court and Council Chamber of the Town Hall. Present were Councillors Cockwell (RC), Birmingham (JB), Robertson (JR), Stevens (RS), Summers (MS), Rendell (MR), Hansen (IH) and Clausen (AC).
Section 2: Sustainable Economy and Fiscal Management:
Mike Forrest (MF): In item 2.1- the Economic Development Strategy, can you clarify when, in actual fact that will be complete? It looks here like it’s not till 2010/11.
MS: I think that’s right. That’s the current thinking. It’s unlikely – well, it’s certainly not going to be completed in 2009. I think those of us that have been involved in the process and who appreciate the volume of work required to complete that on an evidence based basis know that it’s not going to be completed in 2009 and I think inevitably it’s something that will need to be reviewed and accepted by the new government after November, so 2010/11 looks like a reasonable target. It’s possible that it might be completed earlier in 2010, in which case it falls into 9/10. The 30th of June 2010 is at the moment a reasonable target.
Lewis Clifton (LC): 2.6 increase in local share ownership and more new local companies – do you have in mind the selling off of the Government’s share in Stanley Services? I just can’t get that topic to fit with the line that runs through to the end of the page.
MS: It’s a combination of things. We have in mind the SSL issue. We also have in mind the percentage ownership of joint ventures held by local people. We also have in mind over time encouraging the investment by local people in existing private companies along the Seafish model and CFL model. On the issues that we have to deal with here is that there is quite a high propensity to save amongst the population and there is quite a lot of money saved and a lot of people have their money invested in British Petroleum or Barclay’s Bank or whatever else in the United Kingdom through stocks and shares or indirectly through pension funds or simply in UK Banks or building societies. And, there is limited opportunity here to use money that effectively belongs to individual members of the local community to invest in their own economic development. And, what we are trying to encapsulate in this very small line is all of those concepts for being able to provide opportunities for people to invest locally without necessarily setting up their own business – so to become shareholders more broadly.
Dr Barry Elsby (BE): A couple of things – as a non economist at all, when you are talking about the proposals for in-house growth – rate of growth and GDP – 2.5% just is across the board. Is that a number that came to someone’s mind? How do you arrive at that 2.5%, especially bearing in mind the things that are happening in the world at the moment? Most people would consider that to be an overly-optimistic figure. I wonder if you plan to revise that in the light of what’s happening in the world?
MS: I can assure you that nothing in here is just something that came to somebody’s mind. I think it’s all had a good deal of cerebral maceration but can I give Sonny the opportunity to respond to that because it comes from his area?
Sonny Jose (SJ): A lot of debate came into this picture when we were discussing about the growth target we would like to achieve. The reason why I say 2.5 % is because historically we have been able to deliver 2.6% for the past 8 or 9 years on average. We are in an abysmally difficult position right now and it’s unrealistic to say we will deliver 2.5% this coming fiscal year but it is more indicative that there will be catch-up years when the markets turn around and the global economy will be in a better shape. But all in all, I think, it’s a very conservative figure given the longer turn-around time.
BE: You sound like a good salesman. Yes, it will go up.
SJ: Just picture ourselves in a different situation when the markets were all up and 2.5% is under-estimating it. So, everything else considered, I think it’s not a very unrealistic number if you consider the ups and downs.
BE: As I say, this is an aspiration.
SJ: At this point it is outside my control.
MS: To be fair, Barry, all economic growth is going to be an aspiration because in all the areas in which we deal there are so many elements that we do not control.
BE: My point has been that though your plans on how you are going to spend the money depend on what money you’ve got to spend. We said maybe 2.5% a few years ago or a year ago would have been a reasonable assumption, one wonders whether we are acting in a negative growth situation. I don’t know, I’m not an economist but it seems odd that whereas most economies are saying that they are not going to grow for some years to come and maybe even go into deflation, you are predicting a steady 2.5% progress across the board and I just wonder whether the recent events will make Councillors think otherwise.
AC: I mean, the problem is, Barry, that none of us have that crystal ball that tells us what’s going to happen next year and you are right that a lot of major economies are making those kinds of assumptions. But we are actually also probably in a bit of a lag from the rest of the world in that some of the things that are happening are hitting people faster elsewhere might not hit us for a year – well, I think they probably are hitting us in some areas already but you might not feel the full force until a year or two down the line. And what Policy Departments try to do is to weigh up all of that and come out with some balancing figure. Yes, we could change that but what Sonny’s department is trying to do is to look at where we’ve come from – and there have been lows in that period if there were, this is the average and let’s put this in as a starting point. We haven’t had figures like this in this sort of plan and that’s the purpose of reviewing it on an annual basis. At the end of the day we will hopefully have some kind of better indication of the next 12 months of how what is happening in the world is going to impact on our economy and will also have the work that comes out of the EDS. Hopefully we will have some kind of a framework for where we are going to go. And, those figures can be adjusted.
MS: In terms of our trade arrangements that affect growth, fish is the biggest issue and the down-turn in the world economies has not affected adversely the price of fish. So, to that extent, we are not affected. The influx of tourists is important. I think we do anticipate that there will be some reductions in numbers next year but the Manager of the tourist Board is happy with this level of aspiration because he sees opportunities to increase the take from smaller numbers. And, in terms of agriculture, again, there are always ups and downs in the price of those commodities. But to take a five-year average of 2.5% doesn’t seem unreasonable. And, Sonny’s made the point, I think, on a number of occasions that the GDP can fluctuate wildly actually depending on how many fish we catch. It wouldn’t make any sense in terms of this type of plan to try and predict when we are going to try and catch lots of fish and when we are not going to catch quite so many but to gather a trend and spread it through 5 years doesn’t look unreasonable.
Roger Spink (RS): Just on that the trend in agriculture has been a decrease in production because of the number of sheep in the Islands dropping so dramatically. So, the trend over the last 5 years has probably been in the opposite direction, hasn’t it?
MS: Not in financial terms – no (to Sonny Jose) do you want to deal with that?
SJ: The numbers he sees is pretty much static if not a slight decline but not a dramatic one. I am talking about in monetary terms.
Tim Blake (TB): If more emphasis were placed on sheep numbers rather than fibre diameter, you might find that you have a better return. I mean that basically if the inflation figure for the money, if you like, has more than out-stripped the decrease in the number of sheep. Though, in 1989 terms, I don’t believe that you could say that the agriculture industry is as well off today as they were then.
SJ: I agree with you, the point being the numbers have gone down definitely. Inflation may have propped it up.
TB: Not just they have gone down. They are going down.
SJ: Right. That’s why we are trying to diversify the economy from over-dependence on that industry and looking at other possibilities, even adding a 4th leg to the economy to be able to sustain all this fluctuation.
MS: We do need to come back to this figure because when we last discussed it with Tim, I think one of his actions was to go off and actually discuss with you and others whether this figure for agriculture was realistic. We are happy with the other two but not this one necessarily. So that is an action that remains with us.
BE: Again, in Section 2.7 when you are hoping to increase part B – 2.5% increase annual growth in bank deposits locally. People saving, I presume you mean. And, it’s 2.5% then up to 3% and up to 4% and at the end it says the financial implications – figures not to be divulged for confidentiality purposes. What does that mean?
SJ: I have had my own battles with the private sector in the fight to give us more information so that we can come up with sound economic policies. I am not equipped with the statistics or to be able to request information on even a strictly confidential basis and keep it confidential.
LC: May I just ask a question, please, in terms of 3.2 – the tax review that is underway at the moment? Is that part of an internal tax review or does that include members of the wider community given the completion time there? The report is to be completed by June – indeed next month.
AC: I’m not sure if that’s the right date, actually because I thought that the tax review was going to be stretched out longer than that given that we are very much in the early stages. Isn’t that right, Sonny?
SJ: The target date is June, as an aftermath of the Green Paper process so what I am working on is a white paper on tax and fiscal policy for June.
AC: That has been consulted upon, that’s not an internal Government Document. It is what will be the outcome from that green paper that everybody had opportunity to make comment and representation on.
MS: But as a white paper it would be back out for consultation.
LC: So what’s the writing I can’t read in the 5 blocks to the right in terms of targets for 10/11 or 11/12, 12/13, 13,14? Is that just a one-off process or...
AC: Well, we don’t know yet. The problem is we don’t know what the outcome is so we don’t know what’s going to go in there, do we?
LC: So it is invisible writing?
AC: It is invisible writing. It’s blank. You can’t put something in if you are in the middle of a consultation process and you don’t know what the outcome is going to be.
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