I was delighted to have been given the opportunity to talk to the Jersey Chamber of Commerce outlining my policy and position on growing Jersey’s economy and attach my speech (below).  I would like to thank the Jersey Chamber of Commerce and all who attended.

 

Draft Speech to the Jersey Chamber of Commerce – 11th June 2015

“Economic growth – no stone unturned”     

Chief Minister, ladies and gentlemen, good afternoon

As ever, it is a great pleasure to address Chamber and I am particularly glad to be one of the first speakers during the reign of the current president – I think Kristina is the first person to have served as both Miss Battle and Chamber President.

This speech is entitled “no stone unturned” because quite simply we must make sure that government does everything it can to ensure every business in every sector has the right environment in which it can increase productivity, turnover and profitability.

In Economic Development we have swept away the old mantra of high value and low value because I believe every business adds value and has the potential to grow and, in doing so, increase the economic and social well-being of the island and all its residents.

I can say with confidence that Jersey is returning to growth, not least aa that is what our independent economic experts – the FPP – expect.  Even though economic growth was flat in 2013, a number of sectors had already returned to growth.  More recently employment grew strongly at the end of last year and in most sectors and is at an all-time high, average earnings grew in excess of inflation last year for the second year in a row and unemployment is the lowest for over three years.

Optimism across the economy, measured by the business tendency survey, is on the up and the headline business activity indicator is at the highest level since the survey was introduced in 2009..

Retail sales for quarter 1 2015 show that the trends in the last 2 quarters of 2014 have been maintained into 2015 and this is the third quarter that sales volumes have been higher than a year ago.

Of course there is no room for complacency and we remain exposed to trends in the global economy where risks remain particularly regarding the Eurozone. We can expect conditions to remain positive but challenging so government will do what it can and what it must to ensure recovery is seen across the whole economy.

Government has a clear growth agenda and as you know, the Strategic Plan approved by the States earlier this year reinforces the fact that Council of Ministers are totally committed to improving productivity and profitability across the whole economy.

Economic growth is good for islanders as it raises the standard of living, provides better jobs and supports the quality of life we all enjoy. It is good for businesses too, particularly where it is built on improved competitiveness and innovation as it helps generates new sales, increased turnover, more job opportunities and higher profits.

Through taxation economic growth provides the income necessary to provide the public services that factor so heavily in the quality of life enjoyed by those who live here.

Much has been said in recent weeks and months regarding the imbalance between income and expenditure in the public finances.

For the avoidance of any doubt, with no change in the fiscal system, income through the period 2016-19 is forecast to increase, but if we do nothing expenditure, particularly in health and social services will exceed income in the period.

But just as challenging is the challenge beyond the MTFP period where the FPP have pointed out that if we do not raise competitiveness, productivity and economic growth over the long-term, the ageing society will mean that expenditure could start to outstrip income again.

It is for these reasons that we cannot afford to leave any stone unturned in raising economic growth.

Let me address the issue of reducing States spending over the next MTFP

The strength of our public finances is important in providing businesses and investors with the confidence that Jersey is a stable and sound economy in which to operate.  We cannot and we must not allow sustained imbalances in the public finances

This is why we have set aggressive savings and funding targets of at least £130million in the period to 2019

In achieving these targets (and achieve them we will) there are no sacred cows, no hiding places and no dark corners into which we will not shine a light.

Staff costs make up 50% of States spending and of the £130million savings to be made, we are planning that at least £60 million will be made from reductions in the wage bill.

How?

Rigorous vacancy management, effective pay restraint, moving to a far simpler system of terms and conditions and finally taking active steps to reduce the scale of the public service.

Last week we announced the first stage of this process with the offer of voluntary redundancy to ALL States employees, an offer that is open until the end of this month.

All those whose applications are approved will know by the end of August and will have left the public service by the end of 2015 allowing the full savings to be realised in 2016

Indeed, the question now being posed is “to what extent should the public sector be directly engaged in the delivery of the public service”

I am pleased to say that, following last week’s States approval of Ports incorporation that process is almost complete.

Alongside Jersey Finance, we have created Digital Jersey and Jersey Business and most recently, Visit Jersey.

All of these organisations are delivering vital components of the economic growth and diversification agenda and, if I may say doing a great job.

Does this save money?

Let me give you an example in 2015 the projected full year staff budget for the old jersey Tourism was in excess of £1.1 million. Figures received last week from Visit Jersey indicate that in 2016, the first full year of Visit Jersey’s operation staff costs, including the Board total some £995,000.

A saving of £150,000 that along with other efficiencies will see Visit Jersey being able to do more with less.

This saving is realised from one section of one relatively small department – food for thought.

So, we are closing the gap between income and expenditure by reducing costs, let me now turn to income generation.

Following last year’s election, the Chief Minister announced certain changes to Ministerial portfolios that, subject to States approval, will become effective later this year.

These changes put clear focus on enterprise and inward investment and key sectors such as tourism, the rural economy, retail and construction whilst giving a dedicated political lead to the financial services, digital, competition and innovation agendas.

Senator Ozouf has been given responsibility for Financial Services in a move wholly consistent with the recommendations of the McKinsey review that called for a single point of political accountability for the sector  McKinsey implementation has resulted in greater alignment between government, industry and regulator.  This has seen growth in business and jobs in the sector with subsequent benefits to the wider economy. In addition, Philip also assumes responsibility for Competition (where a full review of the competition framework is underway), the Digital Sector and Innovation (where a review has been commissioned on the state of innovation in Jersey being undertaken by Tera Allas, a prominent economist and member of our Fiscal Policy Panel).

“Digital” is an often used but rarely fully comprehended term.

Many people may ask: what should the impact of “Digital” be in Jersey?

The answer is simple we want to see the development of a digital sector that has a development-led rather than purely service based make up.

In simple terms we want to create products not simply deploy those developed elsewhere, we want to teach children the skills to allow them to start their own digital development business or work in research and product development for Microsoft not just use the latest version of “Microsoft  Office”

Secondly, we want a digital economy within which all businesses in all sectors extract the greatest benefit from digital technologies.

And finally we want a digitally enabled society, exploiting Gigabit and the 4G networks for the benefit of every resident.

In EDD our portfolio will be enhanced by responsibility for sports and culture, a natural fit with our oversight of the tourism sector.

These changes allow the Education Department to focus solely on education and I just want to add that the new Education Minister, Deputy Rod Bryans and his team are doing some really great work which you will no doubt hear about when it is his turn to address you.

Rasining skills is critical if we are to raise productivity and that is why the Strategic Plan sets out that we will review and upgrade our Skills Strategy

Inward investment, in the form of businesses or high net worth individuals relocating to the island, is a key income and employment generator.  But if we are to raise productivity and economic growth we must do even more.

Recognising this, Locate Jersey was created within EDD in 2012 as a team dedicated to inward investment and attracting high net worth individuals.

In 2014 Locate Jersey dealt with 163 enquiries from businesses looking to relocate that resulted in 43 licences across a diverse range of sectors being awarded,  providing 368 job opportunities, 82% of which were for local people.

Of course Locate Jersey is not simply about attracting new businesses to Jersey.

In 2014 Locate facilitated 20 high net worth licences being granted of which 14 relocated in that year.

Remember, each high net worth individual who relocates to the island pays a minimum of £125,000 every year in tax and the 14 who relocated in 2014 bought property of a total value of £90million and by doing so paid £4million in stamp duty.

I am pleased to say that, consistent with the jobs and growth agenda, in 2016

I plan to increase Locate Jersey’s budget to increase its activity and deliver on a revised inward investment strategy allied to an increase in what I expect them to deliver.

Jersey Business, also created in 2012 through the merger of Jersey Enterprise and Jersey Business Venture, is increasingly successful in its endeavours to support business start-ups, SMEs across the economy but must also support businesses with high growth potential.

Jersey Business will serve what I call the Community Economy and I am particularly keen to help small businesses overcome the everyday challenges that arise by providing a range of services from financial advice to guidance on re-structuring and recruitment and I have specifically asked Jersey Business to assist and support businesses with the process of obtaining licenses under the Control of Housing and Work Law.

Jersey is an export led economy but we must up the game and raise competitiveness and drive increased levels of export activity. To do this businesses may need help and support to get “export ready” to allow them to access markets through trade shows and other events – this is what we will now provide.

Today I am pleased to announce that Locate Jersey and Jersey Business will work together on the development of the “Jersey Export Initiative” which will be deployed before the end of the year.

Turning now to the rural economy, a term that grossly underplays the importance of agriculture to the Island’s environment and well-being remains a high priority within EDD.

We work closely with Deputy Steve Luce and the environment department to increase the profitability and productivity of the rural economy whilst ensuring that environmental standards are met and exceeded.

In 2016, EDD’s MTFP submission, allocates £1.7million to the sector which is a significant sum in the context of our overall budget, second only to Visit Jersey.

For many years this support has, in the main, been subsidy based, guided by the Rural Economy Strategy laid before the States in 2011.

Much has changed since 2011 and the time has come for this strategy to be reviewed, a process that is ongoing and has already involved industry consultation.

One thing is clear, the new RES must take a more radical approach to support for agriculture driven by a need to increase exports, increase productivity through increasing levels of automation and innovation and increase profitability in the dairy and other sectors.

The Jersey Royal still enjoys a strong UK market but it’s very future is threatened by disease borne, at least in part, by the approach to crop rotation which has to be addressed in the new RES.

Jersey Dairy and the producers are seeing increasing export success but the dairy industry faces significant challenges.

Jersey Dairy is now in a break even position but average farm profitability is not what it should be and whilst there are producers making a reasonable return, there are many who are not.

Again, the new RES needs to tackle this mix of threat and opportunity head on.

This position is challenging at the very least and government cannot, indeed should not, do this alone

So, to assist in the development and implementation of a new strategy by early 2016, I propose to form a ‘Rural Jersey’ Advisory Board, drawn from across the whole rural sector.

Working alongside the EDD and Environment departments, the Board will report to Deputy Luce and I and will be empowered to recommend a new strategic direction for agriculture in Jersey.

I also hope to see more collaboration between the rural and visitor economies where we must exploit the opportunities to promote our island jointly whenever possible.

Finally, let me turn to Tourism.

The creation of Visit Jersey and the proposed integration of sports and culture within the ED portfolio are vital to the delivery of sustained growth in our tourism sector and at this stage I just wanted to give a brief mention and thanks to my assistant ministers the Connétable of St Brelade Steve Pallet who is responsible for Sport and Deputy Murray Norton who has been delegated responsibility for Culture and Heritage both of whose help and support has been invaluable.

Visit Jersey has a new Board, new CEO, a new team and a new approach to the market place.

The organisation, which will publish a new tourism strategy in the summer months, has a clear and unambiguous remit – market the island in the UK and elsewhere to attract more visitors and generate more spend and economic value.

Do this within a budget but without constraint on the way Jersey is marketed and promoted, take calculated risks, work with industry, work with the Ports and deliver an increase in our visitor numbers.

Our incredible island’s scenery, coastline and attractions are a big draw for visitors from the UK, France and other countries.

This is greatly enhanced by the breadth and depth of the cultural and sporting programmes that we, as residents enjoy.

Bringing this together within EDD means that, for the first time, we can fully integrate tourism, culture and sport to their mutual benefit.

I could not leave the subject of tourism without addressing Events.

For the avoidance of any doubt, funding for our key community events, the Battle of Flowers and the International Air Display is secure – that is not to say that I do not expect positive changes to be made to both events because I do.

What Jersey needs is a comprehensive, broad based, year round programme of events that are well run and provide Visit Jersey with a good “product” to market.

Helping to develop and stage events is not the responsibility of Visit Jersey – promoting them is.

This is why, in EDD’s 2016 budget submission, I have made a significant financial provision for what has been termed “Events Jersey”

Why?

Not only to build on the legacy of the island games which, by the way, will deliver somewhere in the region of 25,000 bed nights,

Or because the Barclays International Boat Show has in a few short years, become one of the key events in the annual calendar,

Or because the Jersey Open European Pro Seniors golf returned to the island last week for the first time since 2010 and is being broadcast on Sky Sports and Euro Sport and the footage of the island is stunning!

It is because these successes can and must be replicated and Events Jersey will work very closely with Visit Jersey to provide the operational resource to further establish the island as a world leading venue for sports, festivals and events ALL year round.

 

Of course, ultimately, it is not government that delivers growth, it is you, the

people and the businesses of Jersey that will deliver the jobs and the growth

that the island needs to continue to flourish.  However, government can make

a difference and we must ensure that we are efficient and effective in our

responsibilities and it is vital that the increasingly effective collaboration

between the public and private sector is propagated if we are to deliver and I

and the Council of Ministers are determined to deliver.

 

Thank you

 

One Response to Economic Growth – No stone unturned

  1. David Beuzeval says:

    Well done.

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