Roger Bale Achieving a balance, States in danger of over-whelming private sect

[boatyboy]

ACHIEVING A BALANCE

Comment by Roger Bale.

Offered to readers of planetjersey with Roger Bales full permission.

THERE are only three things the States can do which people individually, collectively, corporately or co-operatively cannot do better themselves.
These are defence (ie the protection of our borders, including island sea defences); Law and order (including courts and prisons); and the enactment of legislation to ensure fair play.

The States have the legal right to raise taxation and Jersey residents have a legal obligation to pay these tax demands. But in recent years the States have turned Parkinson's Law (Expenditure rises to meet income available) on it's head, by ever increasing tax demands to cover expenditure commitments which are proposed, but not limited to income. The more money the States sector absorbs the greater the taxation required to fund it.
                                   
                             MORE PUBLIC MONEY PUT AT RISK

Do we want more public money put at risk and made hostage to projects which should clearly be in the private sector? Why not let the private sector have the risk and the losses, and let the revenue have its 20% of the profits?

Few people entering the States are qualified experts able to take decisions
with other people's money (yours and mine). To contract and engage in activities and capital expenditure is far better left to the private sector.

The Jersey States could pioneer a world first, if they said that the long term objective of States policy was to have a balance sheet with no uncovered liabilities and few or no fixed assets. Tax revenues would be brought into balance, states expenditure and the whole budget would be capped at some where below the latest figure of £480 million for 2007 expenditure, which I read was 88% higher than the £225 million spent ten years ago.
By owning assets, the States need to employ countless civil servants, many of whom are better educated, and with more skills and experience, than the politician to whom they answer. It is widely believed that some civil servants run rings around the elected people's representative, to whom they answer, thereby creating for themselves ever-growing empires. They are not subject to market force disciplines and can call for ever increasing budgets to fund inter alia  their departments increased salary requirements.

If I am wrong? Why is it that the remit of the JCRA (the competition watchdog) does not include States monopolies? Whenever we read of the costs, charges or staff ratios of these, in comparison with their equivalent in say the UK, the results are adverse.

With GST we are all taxpayers now. Do we need to have ever increasing sums of money taken from us to pay for salaries, office accommodation and the ever-growing number of civil servants ? The sum of £33 million plus is being paid to just 464 of them!

The States do not need to own offices,car parks etc, The States do not need to own the airport or harbour's which the island needs. The States do not need to own a hospital, but they do need to ensure that every Jersey resident is entitled to access without charge to a hospital and medical care. The States do not need to own schools; they need to ensure that every child resident of the island is properly educated, regardless of the means of the parents.
Start with the simple things: car parks, for instance. These are a natural investment for pension funds and could readily be sold. There could be a condition of sale of any States asset that people employed in that asset are taken on by the new owner on terms equal to their current employment the new owners would factor this cost into the purchase price. Jersey residents will benefit from lower costs from hitherto States owned (and over staffed?) facilities and the end of a de facto parking monopoly.
What, then, to do with the proceeds of sale of assets and revenue above the expenditure cap?  Firstly the pension scheme for States employees  should be closed to new entrants and subject to an actuarial review with the object that these pensions should be fully funded. New States employees should thereafter be recruited on the pension terms now current in the private sector. Any States employee, whose occupation is transferred by sale or ceases employment, takes with him a fully funded pension entitlement, thus equitably ending the present anomaly that the majority of the population will be taxed to provide a minority with retirement benefits which they, the taxpayer cannot enjoy.

                           DISTRIBUTED BACK TO THE POPULATION

The proceeds of the sales, after fully funding existing pension obligations, should be distributed back to the population. This is the only way that these proceeds will not find their way into some politician's pipedream, like the recently suggested non-viable tramway. Refunds can be delivered by a mix of rebates, raising tax thresholds, reductions in GST and impot duties etc.

Unless a budget ceiling is set and the objective of returning tax paid to taxpayers is embraced, the continuing growth and encroachment by the States sector is endanger of overwhelming the private sectors ability to generate enough employment and revenue to ensure Jerseys continued prosperity.
                                    ---------------------------------

Roger Bale has had a corporate association with Jersey for 40 years and lived in the island for almost 30. A keen supporter of enterprise and entrepreneurial activity, in recognition of which he was awarded an honorary doctorate of business administration in 2003, he cares passionately about Jersey's finite resources and their protection.          

An example maybe ? reply  35

http://planetjersey.co.uk/forum/index.php/topic,585.msg12389.html#msg12389

[Voltaire]

Roger Bale is correct in his view. Why do the states employ divisions of companies that would be better suited to private enterprise. For example, how many do the states employ to do architecture? all of that is dead money for if it was privately owned from states funds there would be no wages to pay, no pensions to pay, the money would be coming back into the coffers from taxes and the states have always used outside contractors for architecture anyway on top of the cost of running their own see the waterfront to confirm that.

Heritage and the dukws is another one, paying around £250,000 plus a year to run something that not only provided the service for no cost, but the people earning a wage from the previous owners paid taxes.

It'a really a simple but effective way of reducing cost but still providing services.

[boatyboy]

As  Jersey is now running a deficit, helped by big payouts and  ever rising remuneration for states executives and managers, whatever quality of work they turn out, again opens the debate. The 2010 States official accounts show that Jersey spent around £70 million more than it earned.

All private firms employed by Government, need to have strong  checks and balances in place through a Government watchdog with actual teeth. Then the taxpayers money could indeed be spent prudently. Paying people regardless of there out put or efficiency in several areas of Government administration is becoming more unrealistic by the month.

Roger Bale's letter at No1 above is a powerful message and not one I fully agree with. However paying States quango and department executives more than the head of the IMF is pure bonkers and of little value to general population.

Please have a look at Roger Bale's article and it seems he has support from PM  David Cameron who features below.

Mail.

David Cameron was yesterday told he faced the 'fight of his life' after announcing plans to open up nearly every part of Britain's public services to competition from the private sector.
Union leaders reacted with fury as the Prime Minister vowed to press ahead with the biggest reform of public services for more than 50 years.

The long-awaited White Paper contains plans for private and voluntary organisations to be able to bid to run every part of public service except national security, frontline policing and the judiciary.
Mr Cameron warned that the 'old narrow, closed, state monopoly' was dead and the State would be forced to justify why it cannot be opened up to outside competition.

 http://www.dailymail.co.uk/news/article-2013723/Ill-drive-Big-Society-reform-services-vows-Cameron.html
 
BB

[David Rotherham]

No! Roger Bale is wrong in his starting axiom. Wherever and for as long as there have been formal civilised states, rather than tribal domains, general infrastructure has been the core business of the state governments. Car parks are just as much the propoer business of the public sector as police forces. Re-enacting the corrupt sale of the state to robber barons by medieval kings, with the veneer of modernity provided by plcs is a much a rip-off now as it was then, and should be resisted, not encouraged.

[boatyboy]

I partly agree with you David, and agree with Roger Bale on several of his excellent points.

First lets come to your perspective. I see no reason on an island to sell off  essential utilities like telephone, car-park's, electricity etc  as these took time to build and have a monopoly and should offer very good returns. The deal should be that they are well run offer value excellent services  and fair charges. If this were the case then the profits would go back to the Government giving a healthy income stream. In a perfect world this would happen.

Where I agree with Roger Bale, is there is absolutely no need for a large room of architect's at planning or for planning to do the work they do. A planning Ministers and his assistants would have a clear cut Island plan and an A to Z of what can and cannot be built rather similar to that lovely city of Bath all decided by Government and run by a  private company.

There is no need to have an army of gardeners, bin men or maintenance people. This work would be put out to local firms who give value for money and as Roger says take the risks. Schools are another area. Look at the mess and cover up of  results that the Jersey Government does not want you know about, but happy to charge parents more money in so called private schools.

The private sector thrive ( or go under ) on results. I take on board that all kids are not cut out to be doctors and lawyers but I see no reason why Jersey schools privately run could not produce the best electricians, carpenters plumbers and other trades with certificate results. In the UK as in Jersey many teachers are excellent and should be paid substantially more, but the useless ones are close to un-sackable dragging down standards as are many Government employees this is very different from the private sector.

I am not the only person sick of Government overspends, ridiculous golden handshakes, and States departments over staffed and being run more for the departments sake rather than the shareholder and ultimate owner ie the public

To quote Roger Bale, we by law have to pay taxe's, they by law do not have to supply an excellent service and in many cases don't, look at the state of the roads and the waiting lists at the hospital not to mention some poor school exam results. A Government watchdog with teeth would make sure contracts given are fully serviced and work to an agreed high standard.

BB

[Mark Forskitt]

Interesting debate, more please! My inclinations are with David on matters of public infrastructure not least because they are decisions that have huge consequences for subsequent generations - just look at the huge benefits we have had from our Victorian built docks and sewage systems, and the costs of replacing them today. The pressure on private enterprise to make short term returns can easily militate against the best long term solution. It is too high a risk that your water supplier goes out of business, as BB notes is what happens in private enterprise. Duplicating the infrastructure of pipework to mitigate that would be insane. But I am prepared to venture towards BB's side when looking at non infrastructure issues, where quality alternate suppliers can easily be found to replace a failing one without material disruption to public services.  All of that has be read against a general background of realising that current economic orthodoxy is fundamentally flawed !

[boatyboy]

Guernsey States treading a path that CM Gorst and the CoM should and need to follow, regarding the expensive gold plated public sector final salary scheme that the private sector fund through taxes, but the majority of private sector workers cannot afford themselves.

Guernsey press.

FINDING the right time to change the final salary pension scheme for States employees is a key challenge for the public sector pension review group, the new Treasury and Resources minister has said.

Deputy Gavin St Pier said how the group managed negotiations with the unions would also be a major factor.

The new minister said he fully endorsed the examination of the current defined benefit scheme.

Guernsey’s private sector, which largely ditched final salary pensions years ago, has long criticised the States for holding on to the ‘unaffordable’ model, which places all the risk on the taxpayers rather than the employee.

And Deputy St Pier said it was essential the review came up with a solution that was sustainable.

http://www.thisisguernsey.com/news/2012/05/16/gavin-st-pier-on-pensions/

bb