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Hansard of Oral Evidence: 28 Apr 2016 Chief Minister And S T A N D I N G C O M M I T T E E O F T Y N W A L D C O U R T O F F I C I A L R E P O R T R E C O R T Y S O I K O I L B I N G V E A Y N T I N V A A L P R O C E E D I N G S D A A L T Y N ECONOMIC POLICY REVIEW COMMITTEE CHIEF MINISTER AND CHIEF SECRETARY HANSARD Douglas, Thursday, 28th April 2016 PP2016/0083 EPRC-CM No. 1/15-16 All published Official Reports can be found on the Tynwald website: www.tynwald.org.im/business/hansard Published by the Office of the Clerk of Tynwald, Legislative Buildings, Finch Road, Douglas, Isle of Man, IM1 3PW. © High Court of Tynwald, 2016 STANDING COMMITTEE, THURSDAY, 28th APRIL 2016 Members Present: Chairman: Mr M R Coleman MLC Mr G R Peake MHK Mr J R Turner MLC Clerk: Mr J D C King Contents Procedural ........................................................................................................................................ 3 EVIDENCE OF Mr A Bell, Chief Minister, and Mr W Greenhow, Chief Secretary ............................. 3 The Committee adjourned at 3.31 p.m. ......................................................................................... 16 __________________________________________________________________ 2 EPRC-CM/15-16 STANDING COMMITTEE, THURSDAY, 28th APRIL 2016 Standing Committee of Tynwald on Economic Policy Review Chief Minister and Chief Secretary The Committee sat in public at 3.30 p.m. in the Legislative Council Chamber, Legislative Buildings, Douglas [MR COLEMAN in the Chair] Procedural The Chairman (Mr Coleman): Good afternoon. Welcome to this public meeting of the Economic Policy Review Committee, a Standing Committee of Tynwald. I am Mike Coleman MLC and I am the Chairman of this Committee. With me are Mr Juan Turner MLC and Mr Ralph Peake MHK. Also with us is our Committee Clerk, Jonathan King, who 5 will participate as a part of the Committee. If we could first of all ensure that mobile phones are switched off. Failing to do so will cause interference to the recording equipment. Also, for the purposes of Hansard and the Tynwald Listen Live facility, I will endeavour to ensure that we do not have two people speaking at the same time. 10 The Committee is taking evidence today from the Chief Minister, the Hon. Allan Bell MHK, and the Chief Secretary, Mr Will Greenhow. This is their annual oral session, the previous session being on 15th April 2015. Good afternoon, Chief Minister; good afternoon, Will. 15 The Chief Minister (Mr Bell): Good afternoon. Mr Greenhow: Good afternoon. The Chairman: We intend to hold the final part of the oral session in private, simply because 20 we just do not want to harm anything generally. Welcome, Chief Minister; welcome, Chief Secretary. EVIDENCE OF Mr A Bell, Chief Minister, and Mr W Greenhow, Chief Secretary Q1. The Chairman: First of all, I think you have had a rough idea of what we want, the schedule we would like to go through, and the first thing I think we would like to have is a sort of 25 end of term report – well, a getting towards end of term report! – from the Chief Minister, and if he could cover the highlights of what he thinks has been achieved and the things that perhaps he looks back on and says, ‘Well, I wish we could have done that better,’ or something like that. So I hand it over to you, Chief Minister. __________________________________________________________________ 3 EPRC-CM/15-16 STANDING COMMITTEE, THURSDAY, 28th APRIL 2016 The Chief Minister: Okay. 30 I have to say I apologise first of all, I have not had a chance to go through all this. With the pressure we have been under the last few days, frankly, I have really not been able to do any research or give any real thought to the questions, so this is a few off the cuff comments. At the start of this administration we drew up our priorities and started to develop our strategy, but I think I made it very clear at the start that the scale of the work which we needed 35 to carry out would need to be spread over at least two terms if we were actually going to be able to achieve it. I still believe that and it will be for the next administration to pick up the baton and, I hope, carry on with many of the initiatives which are on the way. As you know – and it seems to have been very easily forgotten at times – we started this administration having lost a third of our income: £200 million a year had gone. We were still in 40 the midst of a world recession from the banking crisis. We were still suffering from the impact of that and the new VAT agreement had not been completed, so we were still unsure of where we were going with our income. It was a very difficult birth to this administration and – I have said this on a number of occasions – I have been in every Council of Ministers since it was formed at the end of 1986- 45 1987, and by some distance this has been the most challenging administration, in terms of problems which we have had to confront, that I can remember at any time during that period. It has been a very difficult challenge for all of us. At the start we set three main priorities, which I am sure have been well recorded by now. That is, the priorities were to balance the Budget, grow the economy and protect the vulnerable. 50 Balancing the Budget was absolutely fundamental and has informed, really, most of what we have had to do over the last four and a half years. Unless we can get some control over our finances – having lost £200 million per year – then our ability particularly to protect the vulnerable was always going to be in jeopardy. A great deal of work has been carried out to that end and we, last year, managed to create a 55 small balance surplus in our revenue budget. That was well ahead of where I expected to be and unfortunately there was a fair degree of pain to get to that point, but we did at least begin to stabilise the finances there. That, though, I freely admit, was only part of it and we still have a £75 million, or thereabouts, structural deficit which we have to deal with. That will continue over the next five 60 years and I am hopeful that we will be able to achieve full rebalancing within the next term. So we have laid the foundations, I think, for getting our fiscal stability back and established. Alongside that, the growth in the economy obviously has been the other key point, because without economic growth we are not going to generate the new revenues we need to deliver that balanced budget. We have been very fortunate, I think, in the sense that we have 65 strategically, over many years, planned for a diverse economy. We have some 21 different economic sectors now, and because of that diversification we have been able to maintain growth over all in the economy, whereas other jurisdictions more focused just on financial services over the last few years have been in recession for a number of years. With that diversification we have been able to maintain economic growth – and I think currently it is 70 around about 4½% net, which is, by all comparisons, a very healthy growth figure. However, there is no question that the growth in the economy does not necessarily reflect growth in Government revenues. Particularly when we had to introduce the zero rate of corporate tax in 2006, there was a gradual detachment from the growth in the economy. That link between the growth in the economy and growth in Government revenues was broken and 75 the Government revenue growth has not been at the same rate as economic growth, and I fully accept that. We have, though, also maintained very low levels of unemployment. I think on average over this period unemployment has been at or below 2%. I think currently it is at 1.8% which is, again, a very healthy position for us to be in. We are pursuing other initiatives to bring down the 80 numbers of long-term unemployment, to tackle youth unemployment. To help us alongside all __________________________________________________________________ 4 EPRC-CM/15-16 STANDING COMMITTEE, THURSDAY, 28th APRIL 2016 that, we have introduced – or are in the process of introducing – our new economic development fund, the Enterprise Fund – £50 million – which is really just about to be rolled out as we speak, and we are hoping now to use that to build on the success and the expansion and diversification we have enjoyed over the last few years. 85 So a great deal of work has gone on within the economy and will need to continue to go on, but, again, to enable us to deliver that, we have had to be very focused on the international debate which has taken place on tax transparency and tax co-operation. Currently, as we all know, we are in the middle of the firestorm related to the Panama Papers. It has been absolutely vital that over these five years we have been very active off-Island 90 promoting the Isle of Man politically, in Westminster, at the European Union, further afield, the OECD, to ensure that the Island’s reputation is protected and that we are not damaged by the changing international attitudes towards offshore.
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