Falklands : Falklands - LEGISLATIVE ASSEMBLY MEETING THURSDAY, 28 MAY 2009
Submitted by Falkland Islands News Network (Juanita Brock) 03.06.2009 (Article Archived on 17.06.2009)
The second session of Legislative Assembly took place on Thursday, 28 May 2009 to finalise the budget process for the 2009/10 Financial Year.
Commentary and Transcript by J. Brock (FINN) for 100X Transcription Service
The second session of Legislative Assembly took place on Thursday, 28 May 2009 to finalise the budget process for the 2009/10 Financial Year.
LEGISLATIVE ASSEMBLY MEETING THURSDAY, 28 MAY 2009
Commentary and Transcript by J. Brock (FINN) for 100X Transcription Service
The second session of Legislative Assembly took place on Thursday, 28 May 2009 to finalise the budget process for the 2009/10 Financial Year.
MOTIONS
Motion number 2 /2009 by the Honourable the Director of Finance
It is resolved by the Legislative Assembly under Section 113 of the Customs Ordinance 2003 – No 9 of 2003 that:
a. The Customs order titled 26.1.2 is amended to increase customs duties payable for alcoholic drinks and tobacco products as follows
1. On Beer from 27p to 28p per litre
2. On wines from 70p to 72 pence per litre
3. On fortified wines from 82p to 84p per litre
4. On spirituous beverages from £5.60 to £5.77 per litre
5. On spirits from £10.23 to £10.54 per litre
6. On cigars from £213.46 to £219.86p per kilo
7. On cigarettes from £215.22 to £236.74 per kilo
8. And on tobacco from £140.30 to £144.51 per kilo
b. That this amendment of the Customs Order comes into force on the 29th of May 2009.
This is proposed by the Honourable Director of Finance.
The Hon Director of Finance Mr Keith Padgett (KP):
Mr Speaker, Honourable Members, this resolution will bring into force from midnight tonight (Thursday, 28 May 2009) the increases in customs import duties I proposed in my budget presentation on Tuesday. I beg to move that the resolution be adopted.
The Chief Executive Mr Tim Thorogood (TT) Seconded the Motion.
Honourable Members did not wish to debate the Motion so it was carried.
REPORT OF THE SELECT COMMITTEE ON THE 2009/10 ESTIMATES
Mr Speaker, Honourable members
1. This report covers both the Appropriation Bill and the Finance Bill referred to the Select Committee on the Estimates by this Assembly on Tuesday morning.
2. The Select Committee met on Tuesday afternoon, to conclude the budget process, following a series of special budget meetings of the Standing Finance Committee. The committee’s recommendations were approved by Executive Council earlier this afternoon and are now presented to Honourable Members for final approval
3. Although the committee debated the proposals at length, there were a limited number of adjustments made. Firstly, two adjustments were made to the operating budget, which compensate for each other financially; Secondly, it was agreed that operational responsibility for the Exercise Referral Practitioner post should be within the Leisure Centre rather than the Health Department (since that’s where the individual actually works); and thirdly, the detail of the original proposal to ‘means–test’ the pocket money element of Further Education maintenance grants was reconsidered.
4. I will address the ‘means–testing’ element first, since this is likely to be of most interest to the community. The published White Paper includes a table which indicates the level of Government contribution that would be payable towards Further Education students’ pocket money at various levels of household income. Following considerable debate, Honourable Members felt on reflection that the impact of the proposals in the White Paper might be too severe on some families. A revised set of thresholds was therefore agreed. This means that the levels of government contribution will now be:
· £40 per week for families earning up to £31,000 a year
· £30 per week for families earning between £31,000 and £46,500 a year; and
· £20 per week for families earning between £46,500 and £62,000 a year
5. These amounts will be payable in respect of each child in Further Education. No contribution will be made to families earning over £62,000 a year. I would add for clarification that this does not apply to students in Higher Education, since the grant made to them does not include a pocket money element.
6. Honourable Members also reconsidered the level of revenue that was included in the original budget, as presented on Tuesday, from Illex fishing licences. It was concluded that the original projection of £4.3 million might be overly optimistic and should therefore be reduced by £500,000. To compensate for this, the annual contribution to the Capital Equalisation Fund was reduced by the same amount. This is made possible since the cumulative capital programme is significantly below the £12M, three-year rolling programme, on which the original contribution was based.
7. The budget deficit for next year remains at £1,698,550. This is because, although the total appropriation for 2009/10 is reduced by £500,000 to £43,043,370, total revenue is reduced by the same amount.
8. Despite another tight budget round, all essential services are maintained broadly at existing levels. The Public Works Department continues to be allocated the largest share at £8.5 million. Next is Health and Social Services which is allocated £7.5 million. Education and Training, and the Fisheries Department are each allocated £5.3 million.
9. £3.5 million is allocated to Central Administration. This includes the services provided by the Secretariat, Treasury and Computer Section. Aviation, which covers Civil Aviation, Stanley Airport and FIGAS, is allocated £2.5 million and the Department of Agriculture is allocated £1 million. The remaining heads of service are allocated less than £1 million and details of the revenue and expenditure for all departments will be shown in the approved estimates booklet.
10. No adjustments were made to the transfer payments budget of £4.9 million. This budget includes the following allocations in the form of assistance to non-government organisations, social payments and other programmes:
· £400,000 for the holiday credit scheme. This represents the anticipated ‘withdrawals’ during the year from balances already accrued by individuals.
· £383,000 as a contribution to the Tourist Board to support investment in the promotion and development of tourism.
· £265,000 for improved TV and radio services.
· £209,000 for family allowances; encompassing the increase in the allowance and the means testing of recipients.
· £150,000 as a contribution towards defence in the form of funding for accommodation at MPA.
· £149,000 to support the Falkland Islands Radio Station.
· £100,000 to support the Pensions Board of the Falkland Islands Pensions Scheme.
· £70,000 for donations and subventions to support youth, sports and other charitable organisations.
· £70,000 to support the Museum and National Trust; and
· £67,000 to support the work of Falklands Conservation.
· A total of £2.6 million is also included for direct and indirect support to the camp community, relating to coastal shipping and ferry services, meat company subsidy, energy grants, agricultural business development, labour scheme, farm improvements and pension contributions.
11. It should also be noted that the subsidy allocation for FIDC has been restricted to £53,000 for the forthcoming financial year. This is because the corporation has sufficient accumulated balances to fund the remainder of its approved budget. I would emphasise that this is a one-off reduction and annual subsidy projections have been reinstated at more realistic levels for the future.
12. The committee also made some adjustments to the capital programme; deleting two schemes that are as yet undefined (and subject to Executive Council consideration first anyway); and re-profiling a further scheme to be more realistic on timing of anticipated spending. The revised capital programme for 2009/10 now totals £8, 071,420
13. As a result, the capital programme now includes allocations for the following major construction and improvement schemes:
· £2.27 million to complete the expansion of the wind farm.
· £1 million for the construction of a permanent sea terminal at Port Howard
· £765,000 for infrastructure development (with a further £1.7 million included in the projections for the subsequent 2 financial years).* A provision of £700,000 to fund the remaining improvements to the abattoir. It should be stressed that this project is subject to further consideration by Executive Council, following review of economic benefits, which is currently underway – and is not therefore approved at this stage.
· £500,000 for continuing the building, capping and repair of camp roads, on both East and West Falklands.
· £220,000 for repairs to Camp jetties and Sea Lion Island jetty
· £200,000 for major repairs to roads in and around Stanley.
· £200,000 for upgrading/resurfacing of Stanley Airport runway.
· £64,000 for improvements to the Bypass/Airport Road. And finally,
· £60,000 for improvements to the Moody Brook Road.
14. In addition to construction schemes, the capital budget includes the following allocations:
· £541,000 for medical equipment and hospital capital works;
· £494,000 for the purchase of plant for PWD and £200,000 for the replacement of other vehicles across the whole of government;
· £270,000 for Government housing, together with a further sum of £84,000 for replacement furniture.
· £91,000 to improve the hospital laboratory and gain accreditation to EU standards. This is required so that the fishery and agricultural exports can be tested before they are exported, in line with new EU requirements; and finally,
· £86,000 for the second phase of a substantial investment in information and communication technology for our schools.
15. The select committee approved all the proposals on revised taxes, fees and charges. I can also report that the committee approved the proposals on revised pension contributions, social payments and allowances. All the provisions of the finance bill to implement those revisions, where appropriate, were approved.
16. Although, for the reasons I mentioned on Tuesday, we have not been able to produce a balanced budget, a reasonable balance has been struck between expenditure across the full range of service provision for social purposes, economic development and capital investment.
17. A paper summarising the adjustments made to the draft estimates at select committee was presented to Executive Council earlier this afternoon. I can now report that Executive Council recommends to the Legislative Assembly, the necessary amendments to the Appropriation Bill to accommodate those adjustments.
18. Once again I would like to thank all who were involved in the budget process this year.
19. Mr Speaker, this concludes my report of the proceedings of the Select Committee on the 2009/10 estimates.
Response by the Hon Dr Andrea Clausen (AC):
Mr Speaker, Honourable Members, I would like to move that the report be accepted by this House. I would now like to speak to the report.
Firstly I would like to start by thanking Keith and all of his team. Their job over the past 12 months has been much bigger than over the previous years – purely as a result of the fact that we asked for the entire budget process to be extended to allow for wider debate and consultation in key areas of service provision. And as a result, Members have become much more closely involved in the budget process, which I, for one, think is a good thing. So, thanks to them all for their excellent work.
While setting a deficit budget is certainly not to be celebrated, I am pleased that we have managed to exceed the targets set and the Medium-term Financial Plan and set a slightly approved deficit of £1.7 Million. And whilst the forecasted budgets for the following three years also exceed the MPFP targets the final year doesn’t. And so there is much more work to be done to get us to a net balance position at the end of 2013/14.
So now is not the time to become complacent. Times are becoming ever more challenging and so elected Members as well as service managers will have to work hard to stay within the budgets that have been set. I am also pleased to note that we have managed to increase the ratio between Operational Expenditure and the Consolidated Fund from 2.08 for the current financial year to 2.33 for 9/10. Of course we have to achieve our target of a multiple of at least 2.5. But given the current circumstances we are, at least, heading in the right direction again.
Whilst it will be some time before an accurate picture of the out turn of 2008/9 is known, it is clear so far that despite setting a healthy budget for revenue, the collapse of both the financial markets and the 2009 Illex season have lead to a drop in revenue of around £11.7 Million so far. Thankfully this will be partially offset by a one-off increase in tax income over the same period.
We do, however, expect that the fall-out from the financial crisis and the subsequent world recession will continue to impact upon our revenue for at least the forth-coming two years. Indeed, this was the purpose of the review of the previously adopted Medium-term Financial Plan.
The subject of revenue collect from the sale of Illex licences continues to leave the Government Budget in an exposed position. I am therefore pleased to see that as well as £2Million we had proposed to remove from the original forecast, we have managed to remove another £500,000.00, resulting in the forecast revenue of £3.8Million.
Whilst this is certainly moving us in the right direction, there is also more work to do here. Many will recollect that one of the main aims of the Medium-term Financial Plan, which was approved in the later half of 2007 was to remove reliance on this volatile income stream by reducing expenditure and increasing other areas of revenue. This does remain a key objective of that plan despite the current setbacks , which are largely out of our control.
Whilst my Honourable Colleague was pleased to note on Tuesday that our proposed position on expenditure was only slightly higher than that found for the previous year, I hope that he is even happier now that we have actually managed to set operation expenditure at £850,000.00 less than that for the previous year.
This has been achieved despite the increasing demands for higher standards of service and the requirement to continue to provide resources, which will help to facilitate economic growth.
This year we have been able to partially mitigate against some of our expenses by changing the way in which some of those services are paid for. As previously mentioned, we have been able to use the outcomes from the Green and White paper process on wealth related payments and FE and HE funding in the setting of this budget. Outcomes from the Health and Tax Policy reviews will be, of course, considered alter.
The initiation of this consultation process was in clear recognition that it was not reasonable to make the necessary budget decisions on how to find key areas of service provision or to make significant changes to revenue raising measures in closed meetings and without first seeking public views.
As my Honourable Colleague stated, on Tuesday, whilst this change will be uncomfortable for many it does remain the policy of this Assembly to try and provide as reasonable and a fairer system to all and so that has been at the forefront of our minds during our deliberations.
You will note that there have been some significant reductions in some areas of transfer payments as well as some top-down reductions in expenditure for some of the larger Government Departments. There will be impacts from these cuts but we have bar one managed to deliver these savings without reducing the number of posts. It will, of course, be the task of managers to further organise and prioritise so that they can continue to deliver existing or close to existing standards of service.
Of course I, like many others, look forward to the day when our fortunes improve and perhaps only the Assembly of the day will be able to, again, reduce the financial burdens which we reluctantly had to implement over the course of this Assembly.
I would like to see the Falklands remain a country that can call itself first world, maintaining high standards and offering a wide range of services it currently does. Whilst for now we need to take steps to change ways in which these services are funded, I would not like to see the Country regress by purely reducing the standards of these services. This would do nothing to contribute to the valuable work that it’s been doing that is being done by the development of our economy, which will be intrinsically linked to the attractiveness of our country as a place to live and raise families.
Sir I support the Motion.
The Hon Mr Mike Summers (MS):
Mr Speaker, Honourable Members, in rising to second the Motion I would just like to make a few comments about the budget we have just set and it’s affect looking forward.
I think the introduction of means testing is an important stage of development for the community. It is, of course, not the first time we’ve had means testing in the Falklands. But we are in a position now where we are no longer able to pay purely from public funds for all the services that we provide and simply topping that up from fisheries licence fees is not sustainable within the longer term.
So the introduction of shared funding, if you like, for services is an important step forward. I was very pleased that we made some adjustments to the means testing thresholds for further education during the course of the meetings because what was being proposed was too draconian. And, it does make sense in introducing shared payment schemes to start at a relatively modest level to see how they go and then adjust it as we move forwards. I am pleased about that.
I am less pleased that it’s been necessary to increase the cost for providing services by about 5.1%, I think over the board for a wide range of Government Services. That is the rate at which inflation has been running and it wouldn’t be sensible not to keep on moving these things forward but again we do have to be conscious that simply raising the cost with inflation is not necessarily going to be productive in the longer term. And I am concerned and we had some discussion within the Select Committee about the cost of social housing in particular. And the decision to raise the level of rentals for social housing by 5.1% was accepted by Members but in having a discussion about that, I think we feel there is a need to review that. The very reason that the Government has a housing stock is to help those people who are less able to provide for themselves and also young people who are coming up through the system joining the housing market for the first time and trying to save for a mortgage. So taking all that money out from them in rent doesn’t make a lot of sense. Neve
|
