Monday, 5 July 2010

The Fiscal Stimulus Fudge

Half a million pounds of public money will be pumped into Jersey Tourism to boost flagging visitor numbers. This is the second time in a year that tourism has been given financial help by the States. The latest cash injection will fund a new marketing campaign to target last-minute business for the peak summer months. It will feature radio, national press and, for the first time this year, television advertising on channels including ITV. The money will come from the States fiscal stimulus package set up to safeguard the economy during recession (1)

Cash from the £44m fiscal stimulus fund has only reached 7% of Jersey firms, a Chamber of Commerce survey found. The research, in a quarterly business confidence survey, found 65% of Jersey businesses saying they had not felt any effects of a stimulus package. Chamber president Ray Shead said most of the aid had gone to States projects. The Treasury Minister has previously defended this, stating funding states projects would see the cash trickle down into the wider economy. (2)

I've been looking at a selection of items which have received money from the fiscal stimulus fund, and it seems that there are a lot of those relating to States spending, and very few indeed on private sector projects. Of the ten listed below, only the first two seem to be in the private sector. Elsewhere, I wonder if the fiscal stimulus fund would be better called the "fiscal stimulus fudge" as it seems to be a wonderful way of getting more money into States budgets while keeping it off the accounts.

Rather than "living within their means", or having - as in the days of Reg Jeune - a round of "supplementary" funds - the fiscal stimulus fund can be raided for States projects so that the departments don't have to worry about managing the costs within their present budgets. True, they have to "make a case" to the Treasury department, but is that so different to the cases made in the days of supplements to budgets?

Some of this is a matter of timing - much as it was when Reg Jeune, back in the late 1980s, offset the recession then by "bringing forward capital projects", but the unique nature of the fiscal stimulus fund means that it does not appear as a supplement to a budget asked for by Ministers as used to be the case, but as a supposed boost to the economy.

But of items 3 to 10, only (3) Highlands and (7) Jersey Finance have any real bearing on the economy, with (3) allowing retraining and more training locally of young people, and (7) helping the finance industry with overseas markets. The Tourism funds (as mentioned above) can also be added to that category for helping tourism (even if they also help boost the Tourism departments budget).

The others certainly help the building industry, but it is not at all clear how they help other local retailers and traders. The "trickle down effect" mentioned by the Treasury Minister seems to be a typical piece of rhetoric, unsupported by any actual facts - if they get any trickle down, it appears to be more like scraps from the rich man's table.

1) Jersey Hospice Care is to receive a £2.6 million boost from the States fiscal stimulus fund, to help redevelop Clarkson House.

2) Money from the fiscal stimulus fund is to be used to help Durrell Wildlife Conservation Trust develop a new visitor centre, including new retail and café facilities at the Trust's Trinity site. The Treasury Minister has given the green light to allocate £1.5 million to fund 50% of Durrell's £3million 2010 capital investment programme, on the condition that fiscal stimulus funding is matched pound for pound by Durrell's own fund-raising.

3) Continued fiscal stimulus funding will provide for more than 100 additional student places at Highlands College in the next academic year. Treasury and Resources Minister Senator Philip Ozouf has approved the allocation of £620,500 from the £44 million discretionary fiscal stimulus fund to enable Highlands to offer an increased number of full-time places, for the second year running.

4) More than £8 million of fiscal stimulus funds have been allocated to the Housing Department to build 49 new rental homes at Le Squez in St Clement.

5) Fiscal stimulus funds are being used to improve facilities in a hospital ward for people with dementia.

6) Money from the fiscal stimulus fund is being used to improve health and safety standards in Jersey's markets and a number of public buildings.

7) Jersey Finance Limited will also receive £100,000 to support its work in emerging markets as money continues to be distributed from the fiscal stimulus fund to protect and develop the Island's financial services sector.

8) The Transport and Technical Services Department has been awarded a total of £528,155 from the fiscal stimulus fund to complete work which will repair and upgrade a major foul sewer in St Brelade.

9) Money from the fiscal stimulus fund is being used to refurbish a former school and to replace windows and doors at two housing estates. The Housing Department has been allocated £80,341 to place new doors at Les Cinq Chenes estate and £129,888 to replace windows at Brighton Close. Although both projects had been planned for the next few years, they have now been brought forward thanks to the extra funding.

10) Further essential road rebuilding and resurfacing on Victoria Avenue and St Aubin's Road has received the go-ahead for funding from the States' fiscal stimulus fund. £2.3m has been allocated from Treasury and Resources to complete the final phase of the repair and replacement of road, drains and lights on Victoria Avenue, from First Tower to West Park. £0.24m has also been allocated for deep reconstruction and resurfacing works on St Aubin's Road from the West Park roundabout to the junction with Cheapside.


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