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REPORT OF PROCEEDINGS OF COURT

Douglas, Tuesday, 18th March 1997 at 10.30 a.m.

Present: Income Tax (Capital Relief) (Commercial Buildings The (the Hon Sir Charles Allowance) Order 1997. Kerruish OBE LLD (hc) CP). In the Council: the Attorney-General (Mr J M Kerruish Q C), Mr B Barton, The Registration of Business Names (Fees and Duties) Hon C M Christian, Messrs D F K Delaney and E G Lowey, Order 1997. His Honour A C Luft CBE, Hon E J Mann, Messrs J N Radcliffe and G H Waft, with Mr T A Bawden, Legalisation of Documents (Fees and Duties) Order Clerk of the Council. 1997.

In the Keys: The Speaker (the Hon N Q Cringle) Companies (Fees and Duties) Order 1997. (); Mr L I Singer and Hon A R Bell (Ramsey); Hon R E Quine OBE (Ayre); Mr J D Q Cannan (Michael); Non-Resident Company Duty (Amendment) Hon H Hannan (Peel); Mr W A Gilbey (Glenfaba); Regulations 1997. Mr S C Rodan (); Hon D North (); Mr P Karran, Hon R K Corkill and Mr J R Kniveton (Onchan); Messrs J R Houghton and E A Crowe (Douglas BUDGET SPEECH — MINISTER FOR THE North); Hon D C Cretney and Mr A C Duggan (Douglas TREASURY — DEBATE COMMENCED South); Mr R P Braidwood and Mrs B J Cannell (); Messrs J P Shimmin and A F Downie (Douglas The President: At this stage, hon. members, I advise West); Hon J A Brown (Castletown); Hon D J Gelling you that, in accordance with the resolution of this Court, (); Sir CBE LLD (hc), Manx Radio has again chosen to broadcast the budget and Mrs P M Crowe (Rushen); with Prof T StJ N Bates, debate in its entirety. . I call upon the Minister for the Treasury now to move item 2 on the order paper. The hon. member for Onchan. The Chaplain of the took the prayers. Mr Corkill: Mr President, I beg to move: APOLOGIES FOR ABSENCE That the Budget proposals for the year ending 31st The President: Hon. members, we have apologies for March 1998 be received and necessary action be taken to absence from the Lord Bishop, who is representing the give effect thereto. diocese at a conference in London. I rise to present this, my first budget, with a mixture of emotions, emotions which I am sure accord with those of ORDER PAPER NO. 2 - hon. members: excitement at the opportunity available to PAPERS LAID BEFORE THE COURT us to make our Island a more prosperous place to to live and work and to protect and enhance our quality of life, The President: Now, in keeping with standing orders but tinged with a degree of trepidation at both the enormity 2.2(4) and (5), we now turn to the order paper number 2 of the tasks we face and the volatility of the global economy and I call on the learned Clerk to lay papers. within which we must increasingly live and work. I suppose those emotions coalesce into a determination to do the best The Clerk: I lay before the Court: I can for the long-term benefit of our Island and its people. I emphasise the long-term benefit because I believe there The Isle of Man Budget 1997-98. will be times when we will face strong pressures to take a short-term or narrow view. Income Tax (Deductions) (Prescribed Cases) I am grateful for the range of private sector bodies who (Amendment) Order 1997. have provided me with submissions for consideration in formulating the budget: bodies such as the Trades Council, Income Tax (Car Fuel Benefits) Order 1997. the Chamber of Commerce, the Institute of Directors, the

Apologies for Absence Order Paper No. 2 — Papers Laid Before the Court Budget Speech — Minister for the Treasury — Debate Commenced T228 TYNWALD COURT, TUESDAY, 18th MARCH 1997

Fund Managers'Association and the Association of Manx almost 2,000 over the last five years and with employment Bankers. in a range of sectors from banking and insurance to As my predecessor used to say, all budgets involve manufacturing, to transport and communications, all seeking an appropriate balance between competing showing significant increases. pressures. It is only in seeking that balance that one realises One area in which I am pleased to say there has been how difficult a task it is to produce. It will never be possible negligible employment growth over this period has been to produce a budget which fully meets the aspirations of public administration, as defined in the census. This is hon. members or outside bodies. However, I hope and testimony to the last administration's tough controls on believe that in the budget I present today I have produced government employment, a policy that will be continued. a budget which hon. members will be willing and able to The immediate outlook is for continued economic support. growth of around 6 per cent, although government's central To my mind the Isle of Man budget's purposes are: to planning assumptions do build in a slow-down towards put into financial terms the plans and priorities of the next millennium. We can therefore expect a further government as defined in the policy report; to seek tightening of the labour market. We should be concerned Tynwald's authorisation to those financial plans in terms if the consequence of this is simply higher wages paid in a of both spending and taxation proposals; and to provide few sectors and a rise in demand for imported labour. If, an opportunity to focus attention on both the need to give on the other hand, labour market conditions serve to make priority to the raising of revenue through economic employers even more efficient and effective in their development as a precursor to spending decisions and, on deployment of labour and other resources so that labour the steps government continues to take, to put into effect becomes even more productive, then the outcome can only the development and diversification of the economy. help to improve the competitiveness of the Island's I must stress, hon. members, at this point that whilst I economy. Regulations will be introduced this year appreciate that a general election took place in November, extending income tax relief on vocational education and the Council of Ministers has not yet had an occasion to training. These will add to the initiatives already established present Tynwald with an opportunity to debate policy. and aimed at easing labour market pressures. Consequently, departments have had to frame their Whilst government's central planning assumptions spending requirements on existing Tynwald policy and the concerning economic growth and population change have Treasury has had to budget accordingly. Obviously the been borne out in recent years, the assumptions concerning Treasury will take into account subsequent changes in tax revenues have been less accurate. The translation from policy in future budgets. economic activity to tax receipts is neither automatic nor I intend to break my speech into four sections dealing straightforward. Many reasons can be forwarded for this: with, firstly, the Island's economic situation in the context for example, the time lags between company revenue of the global economy; secondly, government finances and generation and the subsequent payment of resultant tax spending proposals for authorisation by Tynwald; thirdly, liabilities; the generosity of our capital and tax allowances; direct taxation proposals; and finally, the budget in the and the scale of tax exemptions provided to a number of context of government's objectives. key and expanding sectors. Accordingly, government Firstly, then, the economic outlook. There can be no cannot afford to relax its control over public expenditure; doubt that the Island's economy is in its best shape since indeed, there is a need for extra caution to ensure that the end of the previous decade. This budget is presented current planned expenditures do not over-commit us in against a background of sustained economic growth, low future years. It is a case of recognising that element of and falling unemployment, price stability, and low interest income that might be classified as core income and is rates. Unemployment currently stands at a rate of just 2.7 relatively assured against the more volatile elements of per cent of the economically active population, a rate last our tax sources. It must be wrong to plan all spending on seen in 1990. Annual inflation is presently running at below the basis of projected or actual total tax receipts. Rather, 3 per cent and has now been below 31/2 per cent for over spending should relate to core revenues only. four years. Interest rates also remain at low levels not seen Similarly, the use of the tax system to encourage in the last 30 years. business investment and economic activity must be Treasury estimates current annual economic growth to responsible, affordable, and likely to generate its own be around 6 per cent. This is satisfying in itself, confirming stream of revenues in the future. Whilst, as with the recent the achievement of the objective of a sustained and exemption from VAT for fund managers, tax measures will manageable development of the Island's economy. But always be a consideration in attempts to stimulate extra equally satisfying is the achievement of the diversification economic activity, I feel it is going to be more productive objective of economic policy, for whilst the financial for the Island's economic development and future security services industry continues in the vanguard of the Island's that we look towards other aspects of the business and expansion, growing by an estimated 7 per cent in 1996, commercial environment. The anticipated success of activity has also expanded by an estimated 5 per cent in initiatives relating to limited liability companies, manufacturing, whilst there has also been significant international partnerships and the redomiciliation of captive growth in the utilities and in the professional services insurance companies are all examples of the way forward. sector. Initiatives in, for example, international pensions will The census results provide further confirmation of the likewise stress the quality of the opportunities for Island's diversified growth, with total employment up by international business to locate in the Isle of Man, albeit

Budget Speech — Minister for the Treasury — Debate Commenced TYNWALD COURT, TUESDAY, 18th MARCH 1997 T229 against a background of relatively low taxation. Whilst making preparations in response to the challenges posed the Island has low direct taxation it also has a superb quality by monetary union and some of the initial internal of life; it has well-developed and tested commercial arrangements are already in place and operating. legislation; it has a fair, flexible but rigorous regulatory The position of the Manx Government was first made regime, advanced telecommunications, a magnificent publicly clear in the Treasury press releases which professional services infrastructure designed to support and accompanied commercial coin issues for the currency then facilitate commerce and business, political stability, and a called the ecu. Subsequently, Tynwald and the public have whole host of other advantages and attractions. Increasingly been advised in a preliminary report from the Council of these are the factors that have an impact on business Ministers dated August 1995. For those countries decisions. They are the assets that I feel we can continue participating in a transition of their national currencies to to successfully market into the future in selling the Island the euro, a quick changeover period has been adjudged as a centre of excellence. impractical, and three phases of transition are planned with The twentieth century is promising to end on a distinctly a three to four-year gap between the decision to join and interesting and uncertain note. We have the strong the final physical introduction of the euro notes and coins. likelihood of a change of government in the United Obviously we will have to follow the same timescale. Kingdom for the first time in 18 years and also the prospect At this stage I simply wish to reassure hon. members of the creation of a single European currency. Arising from that we are keeping a close eye on developments, and I the former there may be some change to UK tax policy, would like to issue a general reassurance that the Treasury possibly to national insurance. Undoubtedly we can will be fully committed to make strenuous efforts to make anticipate further strengthening of UK legislation designed any forthcoming currency transitions as simple and to heighten the attractiveness of the United Kingdom to understandable as is possible for all concerned in what inward investment and make investment in offshore will perhaps be difficult and confusing circumstances. locations less so. On the other hand, increased investment At this point I would like to touch upon some of the opportunities in the United Kingdom often can have a activities and developments which provide tangible beneficial spin-off for the Isle of Man. examples of our continuing commitment to the The budget I present today will not attempt to pre-empt development and diversification of the economy. Last any such manoeuvres. The Treasury is fully appraised of year's budget speech made reference to the additional publicised labour policies and will be in a position to resources which were to be provided for the purpose of respond, if deemed necessary, with considered proposals promoting the development of the Island's finance industry rather than off-the-cuff reactions. Similarly, we will not through the commercial development division. I can now be caught unawares by the introduction, with or without report that the activities undertaken to implement the Britain's participation, of the euro. Already a great deal is strategy are now substantially in place. known of the implications of monetary union, and the It is worth reminding hon. members what those entailed: Treasury has now established a working party to further firstly, the recruitment of two additional marketing study the subject and to advise on how the Isle of Man executives and the undertaking of an international visit Government might gear itself up for the task of advising programme to sell the Island to the targeted areas of the and educating the public and business on the effects of United Kingdom, Europe, North America, South Africa change. and the Far East; secondly, the establishment of a marketing I would like to briefly touch on the subject of our plans and PR Liaison Committee to encourage ongoing liaison in the event of European monetary union proceeding in and teamwork between industry and the government; and just under two years' time. There are many aspects of thirdly, the engagement of a city PR agency. A significant monetary union which await determination, but it is unwise increase in favourable press comment has been observed to assume that it will not take place and, given the scale of since the contract commenced. the upheaval its implementation would cause, it is already Subsequent developments have included the publication appropriate to consider now what action or planning can of a financial services newsletter, The Isle of Man Financial or should be undertaken. So far as the Manx Government Review. Three issues have already been produced. The is concerned, the immediate issue is to see if the United normal circulation is over 6,000. Coupled with this has Kingdom Government intends to proceed to stage 3 of been the establishment and development of an in-house monetary union, either in January 1999 or at some later contact database. Finally, roadshow conferences were held date. If it does, the Island for practical reasons will almost in London and Manchester in early October. Future plans certainly have to follow with a parallel change to Manx include roadshows in Edinburgh, Leeds, Europe and Hong currency and to other local arrangements, albeit outside Kong. the European Union. Even if the United Kingdom does To assist in further developing the marketing strategy, not join its European partners in monetary union in two a market research firm is currently undertaking research years' time, there will still be implications for the Manx for the division, and the firm is expected to report in mid- Government, and of course the United Kingdom may have 1997. This study will assist us in evaluating government's only deferred its eventual entry. current investment in promoting the Island and to act as a There are two distinct areas of Treasury's responsibility: benchmark against which to measure the value of future firstly, the practical implications for the Manx Government investments. and, secondly, the needs of the Manx public and business The commercial development division has, of course, for information, education and training. Treasury is already continued with its other activities, such as media campaign

Budget Speech — Minister for the Treasury — Debate Commenced T230 TYNWALD COURT, TUESDAY, 18th MARCH 1997 in the offshore press, the production of its brochure suite, case. The result of those negotiations has been agreement the initiation of business facilitating legislation and the to a one-off payment by the United Kingdom of £5.7 provision of logistical support for shipping promotions by million, which accounts for 29 per cent of the extra receipts marine administration. Shipping is one of the Island's this year. success stories, and I believe it has the potential for Secondly, a short-term gain has accrued over the past significant further growth. It has our continuing support. year or so, flowing from a delay on the United Kingdom The Department of Trade and Industry, through the Film side in introducing a new sharing arrangement negotiated Commission, has made significant steps in developing the by my customs and excise division. However, I am Island's fledgling film industry and it has been heartening informed that the United Kingdom will be implementing to see that the attraction of films to the Island has been in full the new arrangements from the first of next month. quicker than originally anticipated. The initial method of Therefore that short-term gain will not continue. pump-priming this industry has been through the use of These two factors account for the substantial part of tax credits. This has been successful, but the opportunity the difference between the probable out-turn for the current has been taken to assess how best to develop this industry year and the original estimate. Their one-off or short term in the longer term. The creation of a Manx film and nature also accounts for the estimate for receipts next year television fund identified by and under the control of the being lower when compared to the current year's probable Department of Trade and Industry has been recognised as figure. In line with existing policy, I propose to use these an appropriate method, and additional funding has been one-off or short-term gains to increase reserves. I believe included within the development of industry capital vote it is financially prudent to do so, indeed would consider to enable such a fund to be established. Additional doing otherwise to be imprudent. resources have been made available for marketing within With regard to the factors or influences on customs and the Department of Tourism and Leisure, and I am confident excise receipts which are more sustainable, these are more in the ability of the minister and members of that numerous. Our share of many of the taxes and duties is in department to convert those resources into additional direct ratio to the numbers of people arriving or landing visitors. on the Island, both as new residents and as visitors, be Now, I turn to government finances. The information they business people, visiting family and friends, or on both spending and taxation proposals are set out in the tourists. The dramatic changes over the past 12 months in document entitled 'The Isle of Man Budget', or pink book. the number of people flying and the recent and hoped-for Within that document I have included a narrative report growth in the near future in those travelling by sea should on government's finances. help develop our receipts over the next few years. However, The budget strategy has been refined over recent years it is not all rosy in the garden and, just to prove that receipts and is as stated in the pink book. I have sought to produce can go down as well as up, the Island's receipts from the a budget in the context of that strategy and develop from betting duty on the football pools has halved over the past the sound financial platform that I inherited from my few years and our customs duties are showing a substantial predecessor. decline following the world GATT agreement, part of In summary, I propose budgeting for a surplus; I propose which required a reduction in tariffs. modest increases in tax allowances; I propose to maintain I am conscious of the interest that there is in the customs the operating balance at a level sufficient to provide a and excise agreement and I propose to take this opportunity contingency reserve; I propose increasing the reserve fund to set out my own views. The current agreement between and the public service employees' pension reserve; and I the United Kingdom and thus, to a degree, the larger propose to add further increases to spending above those European Union has been in place since 1979 and replaces planned within the 1996 policy report. earlier agreements dating back to the last century. The Before taking each of these elements separately, I wish agreement and the arrangements thereunder have therefore to mention the position for the current year. As hon. seen substantial change and development, more so in recent members will have seen from the pink book, our probably years. It is an agreement freely entered into by both sides, receipts for the current year are some 8.8 per cent above and each party has a right to terminate it at relatively short the original estimate. Without explanation there might be notice. The fact that it has been in existence for so long criticism about that situation; therefore I propose taking a and subject to numerous reviews, certainly by our side at short time to explain the reasons for this, why they are least, goes to show that both partners have been satisfied one-off in nature and why they are to be treated in the with the relationship. manner I propose. From our own point of view, which is of course more One-off items have made a considerable contribution important in this context, the agreement has yielded to our receipts this year. The two main elements relate to significant benefits whilst apparently not unduly affecting the discovery by my economic affairs division of an error the United Kingdom. The financial benefits to us are in the statistical information used by the United Kingdom numerous, such as a share of customs duties and authorities over a number of years in the compilation of agricultural levies which the United Kingdom would the VAT account. Resolution of this error has taken normally collect and pass on to Europe and which amounts considerable time in my customs and excise and economic to some £2.6 million a year. Another example is football affairs divisions, who have had to negotiate with and pool betting duty, where we are the only country to get a convince various United Kingdom departments and the share of the duty raised from the British pools, although National Audit Office of the correctness of the Island's they are played across the globe.

Budget Speech — Minister for the Treasury — Debate Commenced TYNWALD COURT, TUESDAY, 18th MARCH 1997 T231

More recently air passenger duty was introduced in the members are more that welcome to visit our customs and United Kingdom. Whilst I realise that this is an unwelcome excise division to gain a wider understanding of its burden, we are the only country which gets a share of this operation and the workings of the agreement. revenue. For example, a person leaving the Isle of Man or The capital programme remains broadly as set out in the Channel Islands by air for a return trip to the United the 1996 Policy Report. Additional resources have been Kingdom will pay air passenger duty of £5, increasing to included for the Department of Trade and Industry as £10 in November. Under the current arrangements, in the mentioned earlier. One area which does require mention case of the Isle of Man departure, we receive the full is the new hospital. The delays being encountered in respect amount of the tax on that departure and the United of the planning process will have a financial consequence. Kingdom not a penny. Conversely, in the case of the Once all the planning issues are resolved and the total Channel Islands trip, the governments of the Channel financial impact of such delays quantified, a decision may Islands receive no revenue whatsoever; it all flows to the need to be taken as to whether those consequences require United Kingdom Exchequer. Therefore, under the Customs review. and Excise Agreement, we receive the revenue and can In terms of revenue spending I have been faced with choose how to use it. This is being used to ensure that the choice of seeking to reduce it from the level envisaged there has been adequate funding to meet our overall at the policy report to produce the level of surplus then spending proposals. projected or to retain spending broadly at the overall level In January this year both partners changed their set out in the policy report, acknowledging that it would legislation as it relates to the VAT liabilities affecting open- mean being unable to budget for a surplus at the level then ended investment schemes, in our case the restricted projected. I chose the latter course to maintain the level of scheme sector. This additional change negotiated under services expected. Overall proposed government spending the agreement has brought into effect a change long sought for 1997-98 is estimated at £240.6 million, an increase on after by fund managers. It should assist this sector of the the current year's estimate of £14.7 million or 6.5 per cent. economy to compete more favourably on the world stage. The increase includes the £5.7 million costs of increases However, one must not forget that, as far as the Treasury in pay costs, £1.6 million for additional loan charges and is concerned, an estimated tax income of £800,000 a year £1.9 million allowance for net inflation. In addition to these has been forgone through this measure. items, £4.2 million of increased spending was identified The actual Customs and Excise Agreement, which is in the 1996 policy report. This includes meeting the costs set out in 25 sections, is styled to outline the principles of in 1997-98 of £1.5 million associated with dealing with how our two countries will oversee a common system for BSE. For the budget I propose that these increases be indirect taxation and customs matters whilst many of the allowed to departments plus further increases of £2.2 actual procedures can be agreed and developed between million. the two parties. This enables the relationship to develop The pink book identifies how these increases have been and keep pace with the changing environment and allocated between departments and other bodies. I do not economy. Recent changes include the new sharing propose to go through those increases in detail in my arrangements and the fine tuning referred to previously speech. However, I do propose summarising the major and reflected in this current year's receipts. However, I increases and this government's thinking in proposing must always bear in mind the need to maintain our revenues them. But, before doing so I think it is vital that I make at a level necessary to finance public services, to fulfil the some general comments about government spending for requirement to budget for a surplus and to maintain the forthcoming and future years. certainty and stability for our local businesses. Examples We all face differing and contradictory pressures. We of the non-financial benefits of the agreement to our all want to see government expenditure in general businesses and population lie in the ability to do business contained and possibly even reduced, yet there are many in, from and with the Isle of Man with the free movement pressures for increased spending on specific services across of goods, services and people without the added all the departments with which we are involved. There is complications of a further tier of indirect taxation or an understandable temptation to focus on single items or customs and excise procedures. Nor should we issues without giving consideration to the overall picture. underestimate the perceptions in the minds of those with Like most temptations it may be attractive but needs to be an interest in the Island. It is reassuring to the people of resisted. I am moving a budget where we are spending all the Island and to those doing business with the Island that we anticipate receiving. I believe that it is the most there exists a stable, strong taxation and customs regime appropriate budget for this time. We must acknowledge to look after their interests should they for some unfortunate that it includes spending on areas where the cost will reason encounter difficulties with indirect taxation systems increase significantly in future years when the full revenue in other jurisdictions. and staffing implications come into effect. I would like to emphasise that the stance I take in relation A very good example of this is the DHSS's capital to the Customs and Excise Agreement is that I believe it scheme for phase 5 of community homes for people with remains in the best interests of the Island but that it must learning difficulties. This is a scheme developed within be kept under continuous assessment to ensure that it the strategy agreed by Tynwald for the DHSS in 1991. remains so. I fully intend to keep it under that continuous Excluding the loan charges on this scheme the additional monitoring and continue to look for advantageous running costs for this scheme in 1997-98 are £150,000. opportunities within it whenever appropriate. Hon. However, for the following year the additional costs will

1;1 Budget Speech — Minister for the Treasury — Debate Commenced T232 TYNWALD COURT, TUESDAY, 18th MARCH 1997 be £650,000. Upon completion of the scheme the additional services that we have been unable to fund and we know revenue costs arising from that scheme alone will be £1.1 there are major spending pressures arising in the future million a year more than we are paying at the moment. from the capital programme. There are many items of additional spending which For all these reasons I propose that the additional many of us would like to introduce across all areas of receipts produced from customs' one-off items or short- government but which we simply cannot afford unless we term gains be put to reserves. A £6 million transfer to the are prepared to sanction tax increases. Indeed, there are reserve fund was originally estimated for the current year. areas of future spending arising from necessary capital I propose to increase that figure to £11 million. A further schemes which may require financing by means of some transfer to reserve is estimated at £7.4 million for next form of new charge. Let us be in no doubt, we face a period year. In addition I propose making a transfer of £5.7 million in office where we cannot avoid considering and making to the renamed 'public service employees' pension difficult decisions in terms of quantity, quality and reserve,' at which point I think it might be useful to explain financing of services. I make no apology for flagging this the background to both that reserve and the rationale for up for us all at this time. We will all face difficult decisions the proposed transfer. in the forthcoming five years. This is a reserve set up in recent years to mitigate the In terms of where spending has increased in our impact on government revenues of possible major proposed estimates I have already mentioned one item fluctuations in the annual requirements of operating a pay- within the DHSS merely as an example of an essential but as-you-go scheme for public service employees' pensions. expensive service. For 1997-98 DHSS net spending is In the last three years excesses in respect of transfer values estimated at £98.3 million, an increase of £6.5 million or paid to government above the estimate and underpayment 7.2 per cent over the current year's estimate. And £5.9 of transfer values out have been transferred to this reserve million of that increase relates to health and social services. and, together with this substantial one-off payment, it will This includes, amongst other things, increased spending be used to smooth the annual impact of growth in pension on enhanced child care services and facilities for those payments in order to minimise their impact on the funding with learning difficulties mentioned earlier. Only £733,000 available for other on-going services. of the increase in DHSS funding relates to social security, I wish to emphasise firstly that the money going into reflecting current economic conditions. Pressures on the this reserve is of a one-off nature and, as such, it would be DHSS for increased spending are enormous and it has to financially imprudent in the extreme to use it to start be acknowledged that even increases of this level do not spending on areas which are of an on-going nature fully meet the aspirations of that department. This is before involving the introduction of new services, the expansion one takes into account the future impact of increases in of existing services or the recruitment of additional staff. revenue costs identified as flowing from the new hospital Secondly, in doing so I am following a policy explicitly development. spelt out in last year's budget, and I quote:- ' Reserves need Law and order is rightly an extremely high priority for to be bolstered to accommodate any loss of income from us all. There are a number of reviews under way and we the volatility present within the taxation system. Likewise, have sought to make prudent financial provision for areas where such volatility produces windfall receipts, every such as additional prison officers and police civilianisation effort should be made to transfer such receipts to reserves without pre-empting the results of such reviews. and this is a strategy we intend to follow.' The hon. member I have mentioned previously examples of areas of for Council, Mr Radcliffe, emphasised the point last year spending to stimulate economic growth and I will not when he said:- 'I would reassure members... of the labour those areas again. The net result of the overall Treasury's resolve to build these funds to a reasonable level spending proposals is that I have been able to achieve the and... that any windfalls which may come our way go into objective of producing a surplus, albeit small, of £99,000. the reserved funds and, more importantly, stop there.' I have indicated earlier that in future years spending on Thirdly, this reserve is to assist in smoothing out possible both existing services and any new areas will need to be fluctuations in the cost of all public service pensions: those put under even more rigorous scrutiny, because I give for police, teachers, nurses, manual workers and civil notice that I do not intend to budget for any deficit, however servants. As such it is a prudent use of a one-off receipt to small, in future years. Therefore, if we are to retain our reduce future pressures on other areas of on-going taxation strategy - and it is my intention to do so - we will expenditure. have to be prepared to put government spending under The net effect of my proposals enables me to make even firmer control, and that may not be a pain-free provision for an operating balance of £12.3 million, being exercise. 5 per cent of net spending, which is the level set within the I wish to deliver that message in no uncertain terms budget strategy. The operating balance is necessary to allow because the financial position must not be misconstrued. for the impact of pay awards during next year and to allow Yes, the economy is doing well, but that has not yet government to cope with unforeseen events. Government's converted directly into government receipts; yes, we have ability to handle the costs associated with BSE without a significant surplus on the current yearof £17.4 million, recourse to the reserve fund illustrates the financial but that has arisen from one-off or short-term gains; yes, prudence of this approach. we have produced a break-even budget for next year and I now wish to turn to direct taxation issues. In overall in doing so have taken account of the previously unforeseen terms, taxation revenue at £240.7 million for 1997-98 is costs of BSE, but there are many aspirations in terms of almost £15 million, or 6'12 per cent, above the 1996-97

Budget Speech — Minister for the Treasury — Debate Commenced TYNWALD COURT, TUESDAY, 18th MARCH 1997 T233 estimate but is £5.3 million below that projected in the would be fair to say that the industry has not grown as 1996 policy report for the years 1997-98. This is as a result much as Treasury would have wished. I am therefore of the factors identified in the policy report and alluded to pleased that this year Treasury has been able to give the earlier, namely that economic growth is not always industry a further boost as the result of a favourable ruling converted directly into government revenues. As might be over the VAT changes referred to earlier. I have been expected with the Island now enjoying full employment, encouraged by the positive response which this change the biggest growth has been in receipts from employed has engendered. Fund management is an important industry persons. In the current year MP payments will have and one which I should like to encourage. I shall therefore increased by 12 per cent to just over £30 million, or be monitoring closely the impact of the VAT change to approximately 29 per cent of total direct taxation. In 1997- determine whether any future further incentive is called 98 a similar rate of growth has been forecast. Whilst this for. is very welcome on the receipts side I am conscious that One area where I am able to extend the income tax relief as well as increased employment this may be reflecting in this coming year is that of training. The Income Tax Act increased labour costs and, as stated earlier, we must guard 1970 contains provisions which enable an individual to against this if we are to remain competitive. Company and claim relief for the cost of undertaking a training course non-resident taxation is dependent upon a number of which is neither wholly nor mainly for recreational factors, not least of which is the distribution and asset purposes or as a leisure activity. This particular relief is purchasing policies of companies. However, with an given in a most beneficial manner in that any unutilised overall growth in this sector of 6 per cent it has kept in relief is available to be carried forward to a later year. The line with Treasury expectations. For 1997-98 the regulations being laid before Tynwald today extends the underlying growth is expected to be similar but, because qualifying courses to include NVQ level 5. This brings of one-off adjustments, this will not be immediately the higher level courses such as the masters in business reflected in tax payments. This means that overall income administration within the field of relief. tax receipts for 1997-98 are expected to be £107.2 million, An order which is also before Tynwald today gives or an increase of 2.4 per cent for the year. Let me reiterate formal authority to the relief which has been available that the underlying or core revenues show a higher rate of throughout the year in respect of maintenance payments growth, but one-off adjustments, combined with an made to or for the benefit of a child of unmarried parents. anticipated increase in relief for capital expenditure arising This ensures such payments are now on equal footing with from earlier actions to stimulate economic activity, similar payments made between divorced or separated combine to depress the growth in terms of income tax couples. receipts for the coming year. Turning now to the income tax rates and allowances I Turning to relief for capital expenditure I shall today am able to announce that for the income tax year 1997-98 be seeking Tynwald approval for the Commercial Buildings the rates of income tax will remain at 15 per cent and 20 Allowance Order. This gives legal form to the allowance per cent. There will, however, be an increase in both the available for new buildings and structures developed within thresholds and personal allowances broadly in line with the special planning area of Douglas. As announced last inflation. This will result is the personal allowance for a year, this will be coming to an end although again, as single person increasing by £200 to £6,800. The combined promised, for qualifying developments it will have a run- allowance for a married couple will rise by £400 to off period up to and including 5th April 1999. Full details £13,600. The addition to the personal allowance for a single are set out in the practice note available today from the parent will increase by £135 to £4,650, whilst for a income tax division. I shall, in conjunction with the Island- registered blind person the additional allowance is to be wide review being carried out by a sub-committee of the increased by £60 to £1,860. The threshold at which a single Council of Ministers, be considering whether such an person will be liable to the 20 per cent rate of income tax incentive should be introduced for other parts of the Island. is being increased by £270 to £9,270 and for a married Another initiative which has had similar success has couple living together the threshold will now stand at been the transferable tax credit for the film industry which, £18,540. There will also be an increase in the benefit-in- for the reasons outlined earlier, is now being replaced by a kind charge for car fuel benefits to keep it in line with the Manx film and television fund. Incentives of this kind, VAT limits. No change is being made to any of the other whilst not intended to be of a permanent nature, can be scale rate charges. The appropriate motions and orders for useful in pump priming a particular sector of the economy. Tynwald approval are contained in order paper number 2. Care needs to be exercised with such incentives. Although Currently there are over 18,000 individuals, married and they may have no immediate cost, they have to be paid for single, resident for income tax purposes with no income some time. This earmarking of future income tax receipts tax liability. This is 33 per cent of the total within the must be handled with care if we are to avoid eroding options income tax system. The package of changes which I have for future public spending programmes. just announced will ensure that the balance is maintained In April 1992 the rate of income tax on fund managers for individuals whose income has increased in line with was reduced to 5 per cent. This change was intended to inflation. assist the development of the Island's fund management The pink book contains full details of all allowances industry as a strong third leg to the finance sector. It is a and rates of income tax and sets out examples of income very competitive industry and has been subject to extensive tax liabilities with United Kingdom comparisons. Hon. marketing by both Dublin and the Channel Islands, and it members may wish to note that a single person who has

Budget Speech — Minister for the Treasury — Debate Commenced T234 TYNWALD COURT, TUESDAY, 18th MARCH 1997 average earnings in line with the 1996 earnings survey of the budget but brings them forward whenever appropriate. £328 per week will be paying approximately £25 per week However, as I draw my maiden budget speech to its close less by way of income tax in the Isle of Man compared I would like to take the opportunity to reiterate some of with the United Kingdom. If mortgage relief is taken into the many ways government seeks to put economic account the difference could well be even greater. development into effect. I have mentioned the continued Hon. members, the direct taxation policies followed by development of the film industry by the DTI. This is in past governments have placed the Island in a good position addition to its work in stimulating and supporting both to face the future. I am conscious, however, that we cannot new and existing manufacturing businesses. Additional afford to sit back and rest on what we have achieved. It is money has been made available to and within the a very competitive market that we find ourselves in and Department of Tourism and Leisure to market the we must seek every opportunity to sell the Isle of Man, be opportunities presented by both the current fare structures it at political or business level. We must ensure through and our enhanced facilities represented by the new Peel the prudent use of appropriate regulation we are a centre heritage centre and the National Sports Centre facilities. of excellence which attracts only desirable business. With The very important work in effectively marketing the Island this in mind I shall await with interest the latest proposals in the finance sector through the commercial development from the FSC in respect of corporate agents and the division continues a pace. One further area to highlight is comments they stimulate. It will have to be seen whether the potential which is created by the links with Liverpool these will prove sufficient to counter the criticism which University recently negotiated by the Department of has come my way about some of the activities of non- Education and which are given concrete form by the initial resident companies. If it does not, then further steps will phase of redevelopment at Glencrutchery, which that be taken. I have in any event reviewed the situation in department intends to bring to Tynwald in April. The respect of the duty paid by non-resident companies as well current and previous ministers are to be applauded for their as the fees for exempt and international concerns. In order sterling efforts in these areas. to retain competitiveness and to encourage their use I do In summary, this budget estimates a surplus for the year, not propose to change the exempt and international fees. provides an increase of reserves, allows an increase in However, I do propose increasing the non-resident taxation allowances and thresholds, funds a targeted company duty by £60 to £660. This is effective from 1st increase in spending in excess of inflation. Includes new June 1997. This duty was last increased in May 1993 and and continued spending on economic development and therefore the increase is still below the increase in the RPI diversification and provides for a continued reduction in since that date. external debt. Fees charged for the incorporation of companies and To conclude, I would like to publicly thank my Treasury the annual filing of returns at the General Registry have colleagues for their advice and unstinting support historically normally been reviewed every two years. No throughout the production of this budget. I would like to increases have taken place since 1994. Therefore I have extend those thanks to all my ministerial colleagues and taken the opportunity to review these fees. The full details all departmental members. Mr President, I beg to move of the increases are contained. The full details of the the motion standing in my name. increases are contained in the Fees Order which will be subject to a separate motion subsequent to this debate. All Mr Radcliffe: Mr President, I beg to second and reserve the changes are due to come into force on 1st June 1997 my remarks. with the exception of the fees in respect of business names and the legalisation of documents, which will come into Mr Singer: Mr President. I wish to move an amendment effect in two days' time. which is now being circulated to members: The government's budgetary objectives have become much more explicitly stated in recent years and are set out Immediately before the words "the budget proposals" in the budget documentation. I believe they provide the insert "(1)"; and at the end add - appropriate broad framework within which we can, indeed need to, all work together during the next five years to "; and improve, develop and diversify the economy, deal with the problems we do face on the Island and, as a result, (2) Tynwald: increase standards of living and create an even better quality of life for the people of the Island. (a) is of the opinion that the transfer of £5.7M to I am conscious that the budget addresses a number of the public services employees' pension reserve different groups which may have different priorities or even at this time is excessive having regard to other conflicting requirements. I am conscious also of the expenditure priorities, and concerns of business at the level of government spending in terms of its potential future impact on taxation levels. (b) notes the absence of funding provision, or Likewise I am conscious that there are many pressures for adequate funding provision, for certain aspects new or enhanced services, focused for me through my of health and social security services." contacts with all hon. members present here today. It has been said before, but bears restating: government As a newly elected member of this hon. Court and does not store up economic development initiatives for experiencing the presentation of a budget for the first time

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I must say that I am disappointed. The purpose of a budget, fantastic opportunities for the local people; in fact, the I would have thought, is to make changes to ensure that facilities are so well used the playing surfaces are being the Island and its people, depending on circumstances, worn out. However, it is unreasonable and impossible to share the good times and in difficult times to provide a expect young people to travel from Ramsey, Castletown, blueprint which would plan for a reversal of fortune. I Peel and other areas of the Island to the National Sports would have thought that the primary purpose at all times Centre, particularly in the evenings, to use the training would be to work for the people, to protect the weak and facilities. There is the obvious difficulty with public vulnerable in our society, to encourage initiative, thus transport and the fact that youngsters would be late home, seeking to better our living standards, and basically to lead which is obviously again not acceptable during school from the front, to lead by example. terms. This budget does none of these. It is a 'sit back, haven't In Ramsey we have great enthusiasm for sporting we done well, lads?' budget. There is no added protection activities, but we cannot offer any other facilities other for the weak and vulnerable, the low earners and those in than grassed surfaces, and hon. members are well aware difficult circumstances. There is no forward planning to of the effect of inclement weather on the pitches at all times provide better services and there is definitely no of the year. We do not have enough pitches available and encouragement for people to develop a confidence factor therefore the ones available are over-used and become worn which makes them want to be contributing positively to out and have to be rebuilt at considerable cost, and I believe create a strong and bright future for themselves and for this is also the case in the south and the west of the Island. the community in general. It does not matter whether one's For two years now the Department of Tourism and Leisure personal political views are to the left, in the centre, or to have requested that provision be placed in the capital the right. There are different ways of approaching a subject, estimates for all-weather pitches in Ramsey, Castletown but the people do expect their elected representatives to and Peel, and each time Treasury has said no. An all- have a social conscience and, minister, this budget is sadly weather pitch these days is no longer a luxury. Why should lacking in this respect. sportspeople all over the Island not have equal opportunity, The budget, as you say, minister, is your first and I would albeit on a smaller scale, to share what their sporting say to you, 'What a time this could have been to have colleagues in Douglas and Onchan now enjoy? In the north shown that you are in control.' You and your predecessor, of the Island we have a very enthusiastic athletics club now the Chief Minister, are saying that the Island is which meets at Ramsey Grammar School and uses the grass booming. What a perfect opportunity to show that there is running track. However, it is often the case that poor foresight and enthusiasm in this government's thinking. weather curtails the training for obvious reasons, and You have a windfall of £5.7 million. There is the towards the end of the summer the grass has to be cut ready opportunity to look at options to further improve this for the new school term. The youngsters cannot take part Island's living standards and services. Of course there is a or try to attempt to break national records unless they travel need to be prudent, but there is also the chance, perhaps a to the National Sports Centre, which can be a difficult once only occasion, to introduce new options and policies, proposition if transport by car is not available. I am sure to do something of real merit for this Island. Unfortunately, that if consideration had been given for an all-weather pitch minister, you have taken the normal Treasury line of saying to be placed within the curtilage of Ramsey Grammar no before you hear the question. Placing this £5.7 million School it would not be too difficult to attach a limited windfall into the public service employees' pension reserve athletics training facility alongside the pitch. The facilities shows lack of foresight. This decision is not even indicative would be available during the day to all the schools of the of a 'Steady as you go' budget, but rather an abdication of area and in the evenings to other sporting associations, responsibility to all the people of this Island, unless of making the under-used school premises into an active course you are awaiting a public service employees' community centre. pension. Those of us who were in contact with the people at the I would like personally to mention just two areas where recent general election, and certainly those of us who chose Treasury has behaved, I feel, more like the faceless gnomes to listen to the electorate, know that the people have many of Zurich than the representatives of the people, failing to expectations of this new government. Two of the main recognise the wishes of the Manx public. The first is under items that were mentioned were law and order and under- the aims of the Department of Tourism and Leisure. There age drinking, and candidates were asked, 'What could be have been requests from areas of the Island for the done to interest those young people who aimlessly drifted provision of all-weather sports pitches, these requests from round the streets at night with nothing to do, thus schools and sporting associations. We have a wonderful encouraging vandalism and involvement with drugs and National Sports Centre, and the government is continuing alcohol? Surely part of the answer is to give these young to spend millions of pounds on further expansion and people something positive to do. What better than to improvement of the facilities. I certainly have no quarrel provide all-weather pitches, floodlit sporting facilities and with that policy, and if I lived in Douglas or Onchan I suitable sites with youth leaders and volunteers would be delighted that my children and all sports encouraging the young people to take part, to work orientated people of different skill levels could use the together, to channel their excess energy into acceptable sports centre during the day, the evenings, at weekends, and rewarding activities, such as team sports? Of course, taking part in arranged training courses and organised and minister, this is going to cost money and it will not be supervised activities. The National Sports Centre offers cheap, but I believe that we in this hon. Court are here to

Budget Speech — Minister for the Treasury — Debate Commenced T236 TYNWALD COURT, TUESDAY, 18th MARCH 1997 make decisions, to decide how and why something can be The patient receives £250.66 supplementary benefit, done, and not, as Treasury seem to be doing, applying the £86.88 retirement pension and, if applicable, £48.50 supposition that if you do not make a decision you will attendance allowance, a grand total of £385.54. This leaves not make a mistake. We need forward financial planning that patient with the princely sum of £25.54 weekly to pay and a vision to provide for not only our generation but for for luxuries like hairdressers, newspapers, stockings and the next, and I would want to be part of an elected body essential chiropody treatment - not a lot of money, and if which is involved with our communities, not a body which attendance allowance is not payable there is a shortfall is isolated from the community and becomes a debating which has to be made up by the family. chamber. Hon. members, does it not prick the conscience of those The second subject that I wish to approach - and I make people in the DHSS that someone should have to plead for no apologies for returning to it - is the subject of chiropody these old people to be treated fairly and equally by the and the unfair discrimination against a section of our state, and this could have been provided quite easily within community who are denied the services offered on a free this budget? I cannot believe that the DHSS Minister or basis within the National Health Service to those people the Treasury can condone this iniquitous discrimination assessed to be in need as long as they do not live in a against a section of our society which cannot fight for its nursing home. I am dismayed that, despite the arguments own rights, cannot develop into a pressure group, does not and facts brought before this Court a couple of months have union representation and cannot threaten to withdraw ago and the expressed view that the DHSS would look at its services and who were the backbone of this Island during its provision, the minister has decided it is not of a high the war years. The provision of £10,000 for this service enough priority and that the sum of £10,000 cannot be would produce more good to more people who in their found to provide this service to stop the discrimination twilight years are entitled to our protection, and I would that is taking place against both private and DHSS assisted ask members not to forget the debt we owe them. patients in nursing homes. I hope that hon. members will not be fobbed off this I would like to briefly list the facts of the case to refresh time, will not allow this matter of importance to our senior the memories of hon. members. Firstly, any person citizens to be pushed to the side again, and that you will regardless of means who is over the age of 72, a person speak up for these old people and support the provision of living at home or in a DHSS home, will get free chiropody this service. If only one or two people can receive this treatment if assessed as being in need. A person aged 72 chiropody treatment and be prevented from needing or over living in a nursing home assessed as being in need hospitalisation, then money is already saved, and I would of chiropody treatment has to pay for themselves whether reject the argument that there would be difficulty in finding they are a private patient or a DHSS-assisted patient. the £10,000 for future years. Unlike many major priority Secondly, any person of any age in the community who demands, this £10,000 can be found for many years without suffers from certain high-risk diseases such as diabetes, making a dent in the £5.7 million windfall. neuropathy, circulatory diseases, rheumatoid arthritis or Minister, I welcome your comment that you will be who are on steroid medication are entitled to free chiropody giving consideration to the provision of incentives for treatment because of the risk of serious complications such development of businesses outside Douglas, which is as gangrene and loss of limbs - any person, that is, except something that this Court accepted and is very important, a person who is resident in a nursing home either as a but the particular circumstances that the Treasury has private or a DHSS patient. encountered this year with the £5.7 million windfall has An hon. member of this hon. Court has stated to me opened an unexpected window for looking ahead: to be that patients in nursing homes should not be entitled to a able to have the ability to make decisions that are forward- free chiropody service because they receive attendance thinking, decisions that would right injustices, decisions allowance. Many people who live at home or in DHSS that should encourage the people of the Island to work homes get attendance allowance, yet they are still given together and decisions that could improve the situation of free chiropody treatment on the NHS. Working people in all people in all sections of our community. It does seem, the high-risk categories quite rightly receive free however, that this budget will be seen in the future, unless preventative treatment, although it could be argued that you are a recipient of a public services employees' pension, many of them could afford to pay out of their own pocket. to regretfully have been a missed opportunity. A budget in The hon. member's argument only reinforces the fact that our present financial requirement should, I feel, reflect the discrimination is being endorsed by the Minister for the government's aspirations; unfortunately it has shown the DHSS, and I would like to just present a few further facts lack of inspiration. Thank you, Mr President. regarding the argument concerning attendance allowance. Firstly - and I have checked this fact - not everyone in a Mrs Cannell: Mr President, I am happy to second the nursing home for various reasons receives attendance amendment moved by the hon. member for Ramsey, and allowance. Secondly, looking at costs, not every private in so doing I have to agree with every comment that he patient in a nursing home has large financial savings. Often has made today in this hon. Court. I too and I believe other the family home has been sold when the person can no hon. members share the view of disappointment, the view longer look after themselves, and the proceeds of the house almost of 'is it worth writing a speech on this today? Is it sale pay for the nursing care, which costs between £360 worth putting schemes forward, putting proposals forward? and £500 a week. And thirdly, the DHSS pays £360 weekly Is it worth speaking on behalf of the social requirements to support a patient in a nursing home, for that is the charge. needed for the Manx population?' Such is the budget that

Budget Speech — Minister for the Treasury — Debate Commenced TYNWALD COURT, TUESDAY, 18th MARCH 1997 T237 to my mind it lacks sparkle, it lacks imagination and is quite wrong, and I think any respectable financial most disappointing. More disappointing is the fact that establishment on the Island would agree with me in saying there is no provision for an increase in supplementary that at least a portion of this £5.7 million should go back pensions, no provision to soften the financial burden for to the people; whether it is a one-off payment or whether those seeking residential care who have to relinquish their it is put into a fund to help finance future provision which homes, and yet we know that a statement will be made is so needed, then it ought to be done and this hon. Court very soon by the hon. Minister for Health on this subject; ought to consider that. there is no provision for those who fall below the tax In looking at the amendment which has been moved by threshold, and yet this particular item has been raised year the hon. member for Ramsey, there is mileage in this; there after year in this hon. Court, and yet little if anything has is potential in this. It is not an unrealistic amendment; it is ever been achieved to eradicate that situation. There is also not a particularly radical amendment but, to my mind, it is no provision for improved social development of our young a very practical amendment and I do hope that members people, and the hon. member for Ramsey has touched upon will support it. this this morning and made a suggestion of improving Now, I realise that we may well be in this hon. Court school facilities, but there are other such social for the next three days - hopefully not but possibly we will developments that this government really ought to be be - debating the budget and other items that will follow, providing for our young people. But no provision has been but could I just remind all hon. members - and I am sure made for the young, no provision for the elderly. really that they do not need to be reminded if they think Moving on to the capital expenditure, it is shocking, to about this - that we have have very recently returned from put it mildly, to realise that Tynwald has already approved a general election, something which happens only once £34.3 million prior to myself and other new members being every five years. At a general election the people have the elected last year, but even more shocking to realise that in opportunity to speak to their candidates, to speak to their approving this budget this hon. Court is also giving in to sitting members, to relay to them their aspirations, their further expenditure which is being proposed, that being of wishes, their desires, their concerns. It is then, to my mind, £17.6 million, which brings us to a total of £51.9 million, up to those who are successful at a general election to go nigh on £60 million if you look at further proposed in with the true mandate from the people and a commitment expenditure. What kind of capital programme is that for a in seeking to address those things that have been pointed government - £60 million to provide what? out to you. This budget, by any means at all, does not I see that there is no provision again for the completion provide for any of the concerns raised at the general of IRIS. This hon. Court debated the issue of sewage many election. It does not address or provide, as I have pointed years ago and adopted a strategy which has begun, and out, for the needy areas to improve the social fabric of very soon hopefully we will see the completion of an those who live on the Isle of Man. I appreciate that the improved management control of sewage for Onchan and hon. member for Onchan, Mr Corkill, the minister, has Douglas, but that is as far as it looks as though it is going only been in his position a very short while, I appreciate to go. There is no further financial provision in this budget that this new government has only been in power a very for a sewerage treatment works out at Santon or indeed short while, but I do not accept that the hon. Treasury anything else, so are we to be satisfied that Douglas, yet Minister could not have provided a sweetener or two in again, is going to be the dumping ground for not only its this budget, particularly as there is an unexpected windfall, own sewage but that of Onchan? and I feel sure that something could and should have been I believe that this government, when embarking upon done about that. capital projects, should complete what it sets out to achieve So let us not forget those in need, as the hon. member before embarking upon other ambitious capital for Ramsey has highlighted. But can I add further to that, programmes. There is the saying that if you have too many that also there are those in need who are awaiting pots on the cooker then one is going to burn, and I can see operations. We have a very long operating list. Occasionally this happening in a few years' time if this capital a member will move in this hon. Court a supplementary programme is not reviewed. I welcome the hon. member vote, a vote in addition to money already provided for in for Onchan, the minister, in his budget speech - there was previous budgets to help to reduce waiting lists by sending slight reference to the fact that the hospital for one may patients off-Island to centres of excellence. I may suggest have to be reviewed, and I welcome that. to hon. members that part of this windfall of £5.7 million There is mention of a potential review when all of the could provide a reduction in waiting lists for those seeking financial implications of the planning delays have been operations. I have mentioned quite a few things where this ascertained, and that is one that this hon. Court and its money could go but obviously, when you look at it all and members ought to be looking at very closely. you list it all, it comes under the heading of health and It has also, of course, been proposed by the hon. minister social services. That is where the biggest need is and, if that the VAT windfall that the Island has enjoyed, which we ignore that need, we ignore those calls at election time equates to some £5.7 million, is prudently going to be put from the people who elected us to this hon. Court, then we into a pension provision for Civil Service workers, police, are letting those people down very badly. Where is the teachers, manual workers et cetera, and yet the people who caring, sharing government attitude so described in have actually produced the increase in one way, because previous policy documents of this government? Where is they are the ones that have to pick up the VAT on goods, it today? There has been no mention of the caring, sharing are getting little if anything out of this. To my mind that is government. The feelings of the public have been made

Budget Speech — Minister for the Treasury — Debate Commenced T238 TYNWALD COURT, TUESDAY, 18th MARCH 1997 clear and it is our duty to ensure that they are heard in this 12 areas, key objectives of the current budget strategy, and hon. Court and, more important, that action is taken. I have to tell you, there are 12, but 6 of those 12 are there I will not labour any more because I do understand and for infill, because they bear no resemblance to what is in I would hope that there will be many other hon. members this budget. If you turn over to page 4, you will see: 'To who will wish to get to their feet today to speak on the take and keep out of the income tax net those on modest amendment and also to speak on the budget, but I would incomes.' This budget does not do that; it does not pretend implore members, please consider the amendment to do that, in fairness to the minister. Inflation - it just keeps seriously. It is not designed to undermine the budget at the status quo and so therefore it says in his budget, I think, this moment in time but merely to expand the potential there were 16,000 people, individuals who are not in the and the possibilities of having a better use for the £5.7 income tax net. Therefore, as the hon. member for East million windfall. Thank you, Mr President. Douglas says, there is nothing in this budget for them. What I can tell you which will be in - and it goes on, the next Mr Lowey: Mr President, may I first of all congratulate five: 'generally to reduce the impact of income tax from the minister on his presentation this morning. I wish him time to time' - the budget does not do that. It may be our well. However, (Laughter and interjections) could I just aim, but this budget does not do that; 'to develop flexibility say, first of all, I think the budget speech could have been within the Customs and Excise Agreement' - well, that is shortened by an hour, because really in essence his budget an objective but this budget does not do that; 'to recognise is 3 per cent on allowances, £60 on the non-resident the volatility within taxation receipts resulting from companies and that is your lot. When you strip it of all the external factors' - well, yes, that is recognising the niceties, all the very nice phrases, that is the budget for inevitable and the reality, but the budget does not do 1997. In fact, that could have been done by the computer anything about that; 'and to promote the economic, efficient and I noted that the Treasury Minister in his speech said and effective provision of the services and infrastructure that we were going to spend £1.1 million over two years necessary to meet the Island's needs' - that is standard on providing a learning handicap centre at Glencrutchery practice. So there is the strategy itemised in 12 key areas, and 6 of them do not apply to the budget but it is in the Road and was warning, really, these are the expensive budget pink book of estimates. items. That, I may remind hon. members, is about a third Hon. members, we are not in this Court, really, to recite of what the Treasury spent two years ago on installing problems but to offer solutions, and while I can understand computers for the benefit of running the Treasury - so much the necessary caution and steadiness that the minister has for the ability to prioritise expenditure! to display in a new job - and that goes for any new minister But seldom have I heard a budget which held all the - I have to say that the 1997 inertia that this budget displays seeds of being good news for the people of the Island betters anything that I have witnessed in the last two pre- produce such a dismal outcome. I have searched very hard budgets. Now, there was a budget in 1987 and there was a for the words to describe the 1997 budget and I must budget in 1992, immediately after general elections. Now, confess I am being generous when I use the words 'limp, I do not want to bore hon. members with it but it does lifeless and totally uninspiring'. It will not give confidence make interesting reading. In 1992 for example, there was to the man in the street that his voice, his concerns have an initiative introduced into that first budget resulting in been listened to or acted upon. Quite apart from accepting £2 million worth of support given to employers for the continuing legacy from the previous administration employment, because that was a priority in those days. which is inevitable at this particular time, I did not expect Initiatives were taken immediately after the general to see the total exclusion of any new ideas, initiatives or election so there was no inertia which has been shown attempts to resolve ongoing problems facing many here today, and they are there for the record. I, like every families, individuals and groups on the Island. member of this Court, have a wish list too and if I was to I think it is wrong to suggest, as the pink book does, support this proposed budget today - and this applies to all that budgets are not really that important any more. We members of this Court - you are putting on hold for at give out good economic news throughout the year - we do least another 12 months any chances you have of seeing not 'store it up', I think is the phrase used. But the budget any of those things advanced. is vitally important in that it gives you the finance to carry Just what is in this budget for anyone who does not pay out the departments' agendas, objectives and desires and income tax? Sorry, nothing. I posed that question at the sets the general economic policy for the government for preview meeting and there was a deafening silence, and I the next 12 months and, if you judge it on that, I feel it has have heard nothing this morning to give me answers to failed at the first fence. that. This budget does not claim, and neither can it, as I If I can illustrate what I mean, by turning to the pink said, take any numbers out of the tax net, but the hidden book of estimates on page 3 and the budget strategy: 'The rises - and these were the points I was alluding to earlier - Government's overall approach remains to seek to diversify that they will all experience or enjoy, whichever adjective the economy and to stimulate sustainable economic growth, you care to use, is that if you live in a council house, the generating employment opportunities' - now, that is almost rents are going up by 5 per cent. Prescription charges too like something for Christmas. We all say 'Amen' to that. will be going up in the next few months, and I do not notice And then it goes on: 'while seeking to safeguard and that in the pink book of estimates. They will go up. The enhance those elements that are essential to the Island's gas prices have gone up 15 per cent, electricity charges quality of life.' Look for that in the budget if you can. It is are going up because of the surcharges on the fuel oil and pretty thin on the ground. And then it goes on to itemise also the water rates are going up -

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Mr Cannan: Well, that is a shambles. and you can spend some. You can inject that money into the economy. It will be good for the economy of the Isle Mr Lowey: - so these are going to have an effect on the of Man as well as being good for the individuals, the people of the Isle of Man who we represent. These will families, the handicapped, the elderly, the young, to keep affect the family purse. How does the family who does them occupied which will have a knock-on effect to the not pay tax benefit in this budget? There are a lot of them, Department of Home Affairs and policing. I am certain and I have to repeat, the help for them is nothing - plain, that is the way to be doing it - investing in preventative unadulterated 'nowt'. measures as opposed to dealing with it at the other end Now, the handicapped. Well, we passed a Chronically when the problems have arrived. This budget, I am afraid, Sick and Disabled Act in the 1980s and we have failed to has not shown any imagination and, in view of these major implement it, and the reason has always been the lack of omissions and in my desire - believe it or not, hon. minister finance. Let me pose this question to the Minister for the - to assist the Treasury and his team, I am going to move Treasury and his colleagues: when will the financial an amendment to refer his budget back for one month to surpluses ever be big enough to honour those commitments let them ponder on the concerns that have been expressed that we gave when we passed that particular Act? Those not only here today but at the briefing meeting last individuals, their families, their carers, deserve better from Wednesday, where not one voice was raised in support of us than this, because we are proposing not to do anything. this budget. The enhanced surpluses including the one-off payments Finally I would just say that the Island is not a vehicle are going into reserves. Nothing for you this year either, for expansion for expansion's sake. We have expansion to boys. Surely we can do better than this? benefit the . The Manx people will see little Pensioners - what is in it for the pensioners? Another if any benefit from the proposals that are being offered to group of people who are under pressure as they get on, you today in the 1997 budget. I regret having to say to the having to, in many instances, sell their homes to pay for new Treasury Minister on this his first budget that his nursing care and whether they are or whether they are not, budget is limp, lifeless and uninspiring, but that - I am like a sword of Damocles it hangs over their heads and being charitable to the hon. member - is what the end result blights their lives. I do not see anything in the budget about of his proposal will be to the man in the street. Quite this and I know that the DHSS is looking at this problem honestly, I think they deserve better. I beg to move the and will be coming to this Court with options next month amendment standing in my name, sir: but only if those options will require finance. Many of them will, I suppose, but we will be told, 'Sorry, not this That debate be adjourned to theApri11997 sitting. year because you have voted for the budget and there ain't money in the budget. You will have to wait for next year The President: Is there a seconder? to implement it' - unless we go to the reserves and that will be a first, and we have already been told, as the hon. Mr Houghton: I beg to second and reserve my remarks, member Mr Radcliffe was quoted last year, 'Put them into Mr President. the reserves and keep it there.' That is the policy. I also would like to point out to hon. members that when The President: Now, hon. members, if we just pause we have been dealing in the past, we have all been before for a moment, we are now going into an adjournment the Treasury in recent weeks with our estimates for the debate, and in an adjournment debate a member may speak pink book of estimates and I am sure we were not treated for five minutes and it will be confined solely to the subject any different than any other department when we went in matter, which is the adjournment of this debate. Now, hon. and we were told times were pretty tight and we were going members, who wishes to speak to the proposal? The hon. to be very marginalised. Six weeks later - lo and behold! - member for Council, Mr Delaney. the Treasury have done it once again. They have produced a surplus. Notwithstanding the extra money, the one-off Mr Delaney: I listened with great interest to my hon. payments, they actually created a bigger surplus, so we colleague and the two previous speakers, and we all listened are now being asked to congratulate the Treasury for getting to the first presentation to this hon. Court of the new their sums wrong yet again, albeit on the right side. I do Minister for the Treasury. As the last speaker indicated, not want to dwell too much on that, because if that is the we had a private meeting, which is the habit and the right way treasuries work, then I am sure we will know how to principle of meeting in private and discussing the budget deal with them when we go before them next year with before we get here, and I make no apology for making it our estimates. clear how I felt at that meeting about what is contained As I have tried to explain to hon. members, I believe and, more importantly, what is not contained. the budget is lacking in initiatives to deal with current Now, whether we adjourn or not, it is quite obvious problems, real problems that are being faced by real people from what has been said today that there is not a lot here now. We do have the resources which we can choose to for those people who are the less well off, and listening spend. Now, I too, like the hon. members for East Douglas carefully to my colleague, Mr Lowey, and having listened and for Ramsey, am not a spendthrift and I can genuinely now to the speech of the Treasury Minister, it came say that I do support the principle of saving some but I do somewhat as a shock to me to see mentioned in his speech not believe in saving at the expense of the people who are that he intends - wonders of wonders! - to put £60, just at the sharp end at this moment in time. You can save some £60, on persons who have non-resident trading companies

Budget Speech — Minister for the Treasury — Debate Commenced T240 TYNWALD COURT, TUESDAY, 18th MARCH 1997 in the Isle of Man, and, as he mentions in his speech and Mr Delaney: Well, why haven't we done it? in this document, that does not even keep up with the retail price index, and I wonder why that was put in. Here we Sir Miles Walker: Now, the £10,000 which it is are, saying that these companies are here and we are going suggested could be used for chiropody is easy to fmd and to put up £60 increase but it is not going to be keeping rate nobody would suggest otherwise in a budget of £185 with the retail price index. We have heard this morning million, whatever. (Mr Delaney: Yes, hear, hear.) As I see from elected members about a measly £10,000 a year it, hon. members, the difficulty is that the DHSS do not required for the maintenance of persons of age who have accord this as a priority item, and if they were given extra problems with their lower limbs and we have had it resources this is not what they would use it on. (Several indicated to us that this money is not available. Maybe my Members: Hear, hear.) I can inform hon. members in this mathematics is quite wrong, but having taken the Court that as a member of Treasury I do not see it as my opportunity to see how many of these companies there job to say to a minister, 'You have got to assume this as a are, had he increased that by £100 - because I am sure priority and here are the resources for it.' I think that if they will not need their computers out, these people that Treasury took on that responsibility, well, it would be on a run these companies, and the large fees they pay for getting worse hiding than it is on today (Mr Gilbey: Hear, hear.) lawyers to register them et cetera - it will not bankrupt because every single minister would be either hiding behind them for that small amount of increase to these people Treasury or blaming Treasury for according a different sort who take advantage of our offshore status, and that would of priority than they themselves want. So, if it is about bring them roughly up to RPI, so that this money then £10,000 and if it is about chiropody, that is a matter for would be available to treat this necessary and needy group this Court and the Department of Health and Social of people with this problem. Security, and they need to convince that department that Now, that is just one. We are talking to an adjournment. that is where their priorities are. Now, if the Court decides on adjournment, that simple matter of this £10,000, which must shock a lot of people Mr Lowey: The Council of Ministers. in this Island at this time, could be addressed. A simple Sir Miles Walker: Perhaps the Council of Ministers, change of the figure and the money would then be there to as I hear the hon. member Mr Lowey saying. The Council carry out what most of us in this Court, I hope, think is a of Ministers, of course, can influence any department. It necessity for these people to have equal rights in relation may well be a responsibility of theirs. They may have tried to this necessary care. And I would believe that if it is it, they may not; I do not know. What I do know as a possible for even a commitment from the minister in member of Treasury and what I am convinced of is that speaking on this debate on adjournment to address this for this budget we have divided and tried to allocate the one to get the funds for that small matter without going resources that are available in the fairest way and a way into the other problems which I am sure are going to be that can be sustained. The suggestion that we should not highlighted here today, the Court would take comfort in put £5.7 million in reserves is a nice one. Why not? The that. But I was surprised to see that small item high on reason why not is that there are very few things that that this, some step forward, at the same time looking at the could be invested in that do not give a commitment in problems of the real people who are resident on the Island, subsequent years, and hon. members know the difficulties not non-resident traders, who have been, as expressed by there are with the revenue incomes and outgoings. Let us the member for Ramsey, the backbone of the Island and not just dismiss it, and anybody who says that the only now need equal rights, the equal opportunity to have this people that will be pleased about this will be those people treatment, as explained by the member for Ramsey. It could in public service who will be expecting their pensions - have been addressed with a small mathematical equation again, I ask hon. members to dismiss that entirely. change in this budget. Somebody is certainly not thinking (Mrs Hannan: Hear, hear.) As a government, as a this one out, and before we get any deeper I believe that a parliament we have a commitment to paying pensions for commitment from the minister even would ease people's employees. They will get their pensions whether or not minds in this Court on that matter, and I hope during this there is a resource set aside to pay it in due course. The adjournment debate the Treasury Minister will address us difficulty will be for us, hon. members, if we do not set again and please point out that with such a small move in this money aside while we have it because we have a this huge budget that this Island of 72,500 people has, we commitment for pensions which will be paid down the have got room to get a few bob to do what the member for road and in those years where these pensions are peaking Ramsey put to this Court. And we have been told now we it is departments and hon. members themselves whose have not got £10,000 a year to do it. I would expect the budgets will have to be trimmed to take on that commitment minister to speak on this adjournment debate and give us which we are legally responsible for. (Mr Brown: Hear, some room for comfort. hear.) It is a serious matter. I think it is a prudent way of dealing with some resources that we have available to us Sir Miles Walker: Mr President, I am obviously going at this time. to - well, I hope it is obvious - vote against this motion for As far as a deferment is concerned, I said it would be deferment. I think it would be absolutely disastrous, hon. disastrous and I really mean that, and if hon. members are members. And if, as the hon. member who has just resumed really thinking about the ordinary working people out there, his seat intimated, it is about £10,000, well, what a load of the employees, then there is no quicker way to damage nonsense! confidence, to stop investment -

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Members: Hear, hear. by that 30 per cent of the community who get no relief from the increases of their daily family budgets and costs Mr Lowey: Rubbish! that they have to bear. I regret I will not be supporting the adjournment because Sir Miles Walker: - by new companies that are coming I do not believe it would serve any useful purpose but what into this Island every day. Thank God they are coming will serve a useful purpose, is to make clear to the minister here. They are investing against a background of increasing that he cannot afford to ignore 30 per cent of our population, difficulty of setting up business, increasing wage costs - I those who are not in the income tax net, those who are not go for that; I do not mind that as long as increased enjoying the good life, the well-paid jobs. Yes, we want a productivity comes with it as well - increasing high-wage economy with low taxation. That is the establishment costs, increasing costs right across the board; fundamental basis, but never forget those who are not as they know the sort of commitments they are taking on. We well off as ourselves. need to encourage them to invest, and I believe that involved in this budget is that encouragement. We are Mrs Christian: Mr President, I would just like perhaps investing millions, hon. members - not Treasury, not a to make a brief comment here because I would like to department; we as a parliament are investing millions in reserve most of my remarks to the main part of the debate, the infrastructure of this Island, encouraging private but on the question of adjournment I think it would be enterprise to invest millions, encouraging private enterprise ludicrous in the extreme to put forward this issue of to take on more employees, to drive up those wage costs, chiropody as a reason for delaying consideration of the to increase the standard of living for those people Mr budget. Lowey identifies, quite rightly, who do not receive direct The hon. member for Ramsey knows full well that the benefit from a budget such as this. The way to benefit them department is aware of the iniquities in the system at the is to give them a choice of jobs, greater incomes and so present time, has had a review of the chiropody situation on, greater opportunities. This budget does that. and has a plan for its further development of those services. I believe, hon. members, if we go for this deferment I can say to the hon. members of the Court that we are also today we will cripple this Island's economy (Mr Brown: very conscious of the resolution in another place relating Hear, hear.) at a time when it cannot afford to be crippled to this issue and we have made a commitment to try and - a very dangerous move, hon. members. Do not go for the address this issue as and where we can. The fact that it is deferment. If you want to go for something, the amendment being bandied as a small sum of money is one which would from the hon. member for Ramsey is less damaging than encourage people to think that it would not be hard for us this one and I hope hon. members do not go for that either! to do. That is so. It would not be hard to find £10,000 from Thank you, Mr President. somewhere else, but let us remember that the people who are working in the service have also been consulted as to Mr Cannan: Mr President, much of what the hon. what their requirements are and their priorities are in member for Rushen has said is correct. We cannot afford providing services to our community, and it is on the basis to cripple the Island's economy; we cannot afford to let of those in the field that we are also cognisant of the fact the outside world see that we are in a period of instability that they feel there are a couple of pages of priorities which in putting forward a budget. But while the budget benefits we should be dealing with prior to this one. I am concerned 70 per cent of our people, there are 30 per cent who will that single issues will dislodge and upset particular areas see no benefit and to them it will be an irrelevance because, and I think that the hon. member might concede, as would as was already said by the member of the Council, Mr others who have hinged onto this particular issue, that they Lowey, they do not pay tax but they are going to pay more are looking at single issues and not at the broad panoply for their water, their electricity, their gas, their rates, their of the services which the health and DHSS provide. rents and everything else. And just as we have a concern We are being asked to defer consideration of this on the to have stability in our economy we have to bring in basis that no help is being given to those who do not pay investment because two things are clear in this budget: income tax but there have really been no positive one is that in order to sustain this level of public expenditure suggestions as to what might be offered. In fact, if we go we have to have a full commitment to sustained economic back to last year we know what sort of blunt instrument growth for the foreseeable future. We are committed in tactics were used to try and provide some support in that capital terms, we have major capital projects and there has area. to be sustained economic growth to ensure that these things are paid for. But we also have a commitment, as I have Mr Gilbey: Hear, hear. just said, to the 30 per cent who will get no benefit from this. They are part of the people of the Isle of Man. This Mr Lowey: For nothing. budget is great news to the 70 per cent that are in good jobs, highly paid. It offers stability, it offers everything Mrs Christian: A blunt instrument of the universality that they can look forward to - high wages, low taxation, of certain benefits which spread so thin that they really living the good life in the Isle of Man, and quite rightly so. contributed no help to anybody of any significance and But in doing that and supporting that 70 per cent, no deprived those areas which were in much greater acute government, I believe, can cast aside and consider of no need of moneys they could well have used. We should not consequence the greater economic burdens being borne defer consideration of this and get on with the debate.

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Mr Brown: Mr President, I have to say I am somewhat certainly a substantial amount of the people I represent in disappointed ind surprised at my hon. friend and colleague, my own town and further afield within the Island will be the member of the Council, Mr Lowey, moving such a - adversely affected. I have no doubt whatsoever about that. what I would class as - dangerous amendment. (Mr Gilbey: I will be saving what I wish to say about the main budget Hear, hear.) The hon. member for Rushen, Mr Walker, I when hopefully this adjournment is put out but, please, think, covered most of it but I think we should not whatever we might battle against - because that is what underestimate the importance of such a resolution before we are in politics for, we are here to represent the people, us. If this adjournment was to be carried the reality is - put our case over, fight for our corners - I am just extremely and I know it might be argued it will not be, but it is - that sad that my friend and colleague, who has been a person I as of 31st March the government will have no funds to have worked with for many years, should move such an continue to provide services because Tynwald would not amendment, because he of all people has certainly said to have authorised a new budget. That will mean that salaries me on many occasions, 'The Isle of Man is important, will not be paid, benefits cannot be paid, pensions cannot stability is important' - be paid and all the things that we are fighting here for to ensure that our people have and that we want to see Mr Lowey: It still is. continue and enhance and provided and so on. I know it is possible someone is going to say, 'No, that will not happen. Mr Brown: - and giving out the wrong signals can be That is not what we want.' It happened in America, and if very dangerous. I have to say to my hon. colleague, 'Sir, Tynwald does not authorise a budget then departments you are giving out the wrong signals' and I hope members legally cannot expend money. So on 31st March, if this will reject this amendment totally. carries and then we do not come back until the April sitting, there will be a vacuum of money with no authorisation The President: May I call on the mover to reply, hon. and we are not able to spend it. members? But, as important as that, because that would affect over 6,000 employees of government, it also affects people Members: Agreed. living in the Island, but also the main thing is it will give all the wrong signals out, as has been said by the hon. The President: Thank you. member for Rushen, Mr Walker, to the very people we are working so hard to invest in our Island. Those same people Mr Lowey: Hon. members, signals - can I refer you to we are trying to say to out there, 'Come to the Isle of Man what I said in my speech? I said, if you support the budget because we have a stable government, because we are you will in effect be putting in hold any of the desires you doing extra' et cetera. But also, with the greatest of respect, may have for the next 12 months, because the same people we have a budget book here which is quite a substantial who are warning you now will be telling you that you just document; it is 149 pages and it lays out all the revenue voted for the budget last month. You know that will be the expenditures of departments, all the capital expenditure reality. And may I say straightaway that I do not wish to of the departments, how much money we are going to send out any wrong signals and, if practising parliamentary provide for pensions, how our pension supplements and democracy and trying to get the machinery right at the the premiums are enhanced, how to provide winter heating initial stages of the start of the new financial year is wrong, schemes, Christmas bonus, free prescriptions, education then I am afraid I am in the wrong business. This is the for our children - all in there, totalling something like £234 place, this is the platform for expressing those views, and million and over that, to provide all the things that we want. the signals are that I believe that anybody that would be And let me make it absolutely clear, there has not been put off because we are discussing actually improving the one budget yet since I have been in this hon. Court - that lot of Manx people with our own resources, then I would is, since 1981 - where everything I have wanted has been suggest that we are in the wrong business. So I would tell in it, and realistically I know that is not possible. But I will you to the newer members - you are getting what I would tell you, I hope I have been successful since that time, call the traditional frighteners: 'Do not rock the boat, do along with other members, in having developed things that not dare challenge accepted practices.' Well, when you have been of benefit to the people of the Isle of Man by have been around a few weeks you will find that you getting them incorporated into future budgets over a period become immune to them. of time. Can I come to what I would call the issue of the feet, Some members are hanging their hat on £10,000 for a the £10,000? I did not raise the issue of the feet. My hon. certain service and I have a lot of sympathy with that, but friend Mr Delaney raised the matter of the feet, and the I can also pick out for people I represent in my own town, hon. member rightly in his amendment which you will be people where f1,000 might make a difference, £200 might discussing later, from Ramsey. I actually raised it on a broad make a difference in certain areas, and we have a front, a raft of proposals where I think that we are not responsibility to balance all the services and demands that being as proactive as we could and should be, affecting are on us to try and ensure that as far as possible, with the the families, affecting the disabled - and I make no resources available to us, we are able to supply and meet apologies for underlining those - and we have the resources the demands of the people we represent, and the one thing to do it, and I come back to it. You are deciding today to I am absolutely sure of is that if this amendment for an put that money into the reserves and sterilise it. That is adjournment went through, if not all the people I represent, what you are doing about it.

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If I can come to Sir Miles, he says that the Treasury A division was called for and voting resulted as follows: cannot tell and it would be wrong of Treasury to tell a department. He did pick it up. It was loud enough in my In the Keys - whisper that he should pick it up. If the Treasury cannot, then certainly the Council of Ministers can direct, and For: Messrs Houghton, Duggan, Mrs Cannell and therefore I am only sorry because there has been a Council Mr Singer - 4 of Ministers' meeting since the meeting of the members when this was put to us and still the message did not drift Against: Messrs Gilbey, Cannan, Quine, Rodan, North, through. There was still time to put in the budget if they Sir Miles Walker, Mrs Crowe, Messrs Brown, Crowe, Cretney, Braidwood, Shimmin, Downie, Mrs Hannan, wished single items (Mr Delaney: Hear, hear.) or some of Messrs Bell, Corkill, Kniveton, Gelling and the the other things that did. Now, I do not know whether it is Speaker - 19 a macho thing or not, but the reality is they have chosen not to do so. The Speaker: Mr President, the motion fails in the I take on board, and on the chin, what my hon. friend House, 19 votes being cast against and 4 for. and member of the Council, Mrs Christian, the Minister for the DHSS, said about last year's effort. I make no In the Council - apologies. I got up here last year and defended the family allowance, because I asked the question in the Council of For: Mr Lowey -1 Ministers last year when I was in that august body: 'What is in it for the family?' And we had to accept last year that Against: Messrs Barton, Waft, Dr Mann, Messrs Radcliffe, in last year's budget there was nothing in for the family, Luft, Mrs Christian and Mr Delaney - 7 and last year we had the same problem of how we get something to the family. It did not send the inward The President: Hon. members, in the Council the investment down. We did it and we only had a blunt voting is 1 vote in favour of the motion, 7 votes against. I instrument to do it. I am sure the Council of Ministers of declare the motion has failed to carry. We proceed now the day realised and we did realise, consciously realised, with the debate. The hon. member for Onchan, Mr it was a blunt instrument. I would love to be able to say in Kniveton. this Court today, having reflected on it, that there is a better Mr Kniveton: Thank you, Mr President. Firstly may I instrument for doing these things that we wish to do. I congratulate the minister and all those responsible for cannot, because there is not at this moment in time, and I presenting to hon. members this pink book of clear and sympathise with the hon. minister but there are ways, if precise information. We have had it to study for six days the will is there, to achieve it and, if it means using blunt or so and no doubt some of us may still be scratching our instruments, then we must use blunt instruments. That is heads and wondering what it is all about and what is new. the difference, not to abdicate your responsibilities, and I do not think for one minute that I can influence Treasury, that is what I am afraid is in this budget. Put the reserves... supported by the Council of Ministers, to change anything They become the totem pole. 'Put it there, boys, and the within this book, nor would I want to deprive the people rest will flow and we will deal with the problems of this Island of their budget today in trying to make any tomorrow'. Tomorrow is not good enough. You were big changes. Nevertheless, I do want to comment on a elected here and we are here to act today for today's people. number of points which may or may not be noted by those As I said, I have no wish at all to damage the Isle of that matter for future discussion. Man and its prospects. I have a vested interest, like the Most people, wherever they live, are interested in their Council of Ministers and every member of this Court, in own country's finances and in the annual budget and, most the success of the Isle of Man and I work for that. My particularly, in how the budget affects them. This is contribution here today is to make sure that the Isle of certainly true, I believe, of the people of this Island. When Man does project to its people that we care about them we look closely at this budget it is decidedly a quiet, very and that we are prepared to do something about it, not sit dull affair, but most certainly it is a budget favouring those here like nodding dogs just because the establishment says who have rather than the have-nots, and that is something to us we must do this. Here is the forum; these are the that saddens me because particularly the have-nots do not appear to have any improvements whatsoever in their lot opportunities that present themselves. Do not be put off at all. In fact, I would suggest that the gap between the by challenging accepted practices. Vote for the amendment, haves and the have-nots again, as usual, appears to widen. vote positive and show the people out there that you mean It is okay for those who have because they pay tax on what you say. I beg to move, sir. relatively good forms of income, and this budget gives to them increased thresholds and allowances which keep them The President: Hon. members, I will now put the financially steady, whereas the have-nots who do not pay motion standing in the name of the hon. Mr Lowey for the income tax get no particular benefit from this presentation. Council that debate be adjourned to the April 1997 sitting. I know there are those who say that the worse off, in some Will those in favour of that motion please say aye; against, cases, do not make any attempt to fend for themselves, but no. The noes have it. I hasten to say that there are many who would truly love to

Budget Speech — Minister for the Treasury — Debate Commenced T244 TYNWALD COURT, TUESDAY, 18th MARCH 1997 improve their position but, for one reason or another, cannot relevant costs which we are being told will have to be met escape from what we might call the poverty trap. in the near future just the same. I think that is just a joke. There are those who have said that the less well off Nevertheless, I trust you will let me continue on this theme should seek to improve their standards, and that it is easier because it is all very relevant to this budget. to do so now on this Island because of the low figure of Hon. members, I believe we are going to spend unemployment. That is all very well, but if all these bottom- something like up to £40 million too much on a costly of-the-scale people, as we should call them, move around traditional, brick-built, rather than a modern conventional from job to job pushing up their rate of pay by a little bit and acceptable building. As usual, as all too often, we ask every time they move, this then leads to increased inflation the consultants, the design team, to plan a hospital for us. and, equally important, lack of loyalty. We do not tell them what sort of building or how much we I find it a great pity that Treasury, through the minister want to pay. We should tell them what we want. Not ask and this budget, have not found any way at all to improve them to tell us what we want. Their first priority is to realistically the lives of the lower paid and have taken that themselves, sharing a percentage of whatever cost height very easy way out of just simply increasing tax allowances they can lift the project to. The present figure in the pink and thresholds which only, as I have said, affect those who book is near enough £100 million, but it is not a ceiling are in the tax bracket. figure, hon. members. As a private member, Mr Gilbey Now, my main concern is on the massive capital will tell you, as he has told us on the radio, £130 million spending programme of this government. I have to go along nearer the true figure, and I believe that figure from what and accept what is already committed, and I accept the I consider the most honourable of hon. members here. requirements for the incinerator. I do support incineration. (Mr Quine: Hear, hear.) I am well aware that the new I accept we require new schools for the education of our hospital in its present form is a festering sore in the minds young people; we need new houses; the sports centre to of some ministers and members here today, and much sleep 011 attract visitors to our Island; car parks; requirements for is being lost on account of it. I am delighted to see, at the industry and what is being done through the department; bottom of page 8 and the top of page 9, that the minister computer systems; land acquisition; local authority acknowledges that due to planning problems, cost increases sewerage and other projects. But I cannot accept the policy and so on, we may again have to look at this subject and I towards IRIS and the new hospital. There is no doubt that hope that that is the case. I beseech of the Treasury Minister basically IRIS has been killed off in the five-year to move away from this glossy, glamorous edifice and to programme in order to satisfy the hospital funding. We all settle for a new realistic working hospital and let us save need IRIS just as much as we need a new hospital. In the this Island many millions of pounds (Mrs Cannell: Hear, case of IRIS, I believe it is a disastrous decision to rather hear.), enough to satisfy so many other requirements which kill the strategy because we have a declared programme, are now in front of us particularly, I have got to say, because unless we have a declared programme then kill it including IRIS and all those other subjects looming on the we will. I am well aware that there may be a revised plan horizon, such as undrinkable water - for IRIS to come forward soon, full treatment included, but with some reservation I might well have to support Mr Cannan: Hear, hear (Laughter and interjections). that, but let us wait and see. All those involved in IRIS to date have truly performed wonders. All work finished Mr Kniveton: - or the need for decent housing in lower before time and it is going to be again, in the months that Pulrose. I have got to put in here, as a senior Treasury lie ahead, all within contract price, something like £12 member of staff said to me just two years ago, when he million spent, but leaving us now with just a glorified pipe was aware of my attitude to the expenses, 'Keep fighting along Douglas promenade to the Conister outfall. To break this hospital. We cannot afford it.' up this team of consultants, architects, quantity surveyors, So I plead with my hon. colleague, Mr Corkill, who executives, contractors and sub-contractors, and virtually sits beside me here, the Treasury Minister, to think about all Manx labour, nearly all profits and wages being retained these words and remember, when he was the member within this Island is absolutely crazy. We should continue responsible for IRIS, as I am today, how his announcement in some form. But perhaps, hon. members, this is the price of the IRIS strategy was so well received and how he of success as so often happens, especially within looked forward to solving the problem of serious pollution government. and health hazards on our beaches - yes, and in our rivers I have said I have always been in favour of the new today. He was the hero of the day on that day. hospital, but not on the selected site. That, I suppose, I now have to accept. This budget, as far as capital Mr Cannan: He is the villain. of the day today! expenditure is concerned, is totally dominated over the next five years by the creation of what one might describe Mr Kniveton: Let us continue to go forward on these as an exorbitant and ostentatious huge bungalow, so two subjects as I have indicated today and I ask you, sprawling in its layout as to suggest the need for roller Treasury Minister, to grasp the nettle and let the people of skates or go-carts to get about the place - a hospital we this Island see that you can prove yourself to be a were persuaded to agree to without it being pointed out to progressive and, yes, brave, Treasury Minister who is us how the infrastructure was so seriously destroyed or impartial enough to take a fresh look at these costings and affected. I am referring to the roads, the countryside, the not just be led. Everybody appreciates that our Treasury sewage and the possible relocation of schools and all the Minister has been in office for just two or three months

Budget Speech — Minister for the Treasury — Debate Commenced Ii TYNWALD COURT, TUESDAY, 18th MARCH 1997 T245

and, whereas he has presented the budget to us today in and regulations for every industry which trades with his usual capable manner, let us not be deluded. This is Europe. We appear to be having to comply with everything, mainly the budget of the office of the Treasury with just a yet our ability to obtain derogations seem to be diminishing. little dash of political flavour. The people of this Island We appear to be having to do exactly as we are told by our elect us and expect us to lead and to form this budget. European Union for trading purposes, and yet their ability Finally I would say to the Minister for Treasury, if we to export to the Island goes on unquestioned. have got to continue the present plans for the hospital then We are constantly reminded of the need for this let us at least keep the main proportion of that money on mysterious level playing field, yet this only seems to be the Island. Let us have Manx architects, quantity surveyors, mentioned when imports are impinging on our own consulting engineers. A Manx lead consultant team using manufacturers. The global village we now live in gives us Manx suppliers and Manx contractors and sub-contractors no control whatsoever over oil, gas, chemicals, and, like the IRIS scheme, Manx workers employed, and pharmaceuticals, textiles, construction materials, industrial let us consult with the Isle of Man Employers' Federation. machinery and many other commodities we have to import. That is what this budget is all about - the Manx economy. Those prices are subject to world events, and our inflation Thank you, Mr President? rate has to be a reflection of what is happening in other lands and jurisdictions. The President: Hon. members, the Court will now However successfully we are able to manage our own adjourn and the adjournment will be until 2.30. the first economy does have direct significance on our ability to hon. member I will call upon to speak will be the hon. pay our way and maintain our quality of life. There can be member of the Council, Mr Waft. Thank you, hon. no doubt that our ability to export into Europe and make a members. profit is directly influenced by the strength of those European currencies. We have advocated time and time The Court adjourned at 1.04 p.m. again from within this Court we must diversify our economy and restructure our existing industries, but what use is there in supporting local people and industries if in BUDGET — DEBATE CONTINUED the future we find ourselves being swamped with goods from a European Union eager to get any price at all for The President: Resuming our debate, I call upon the their surpluses? hon. member of the Council, Mr Waft. We have to ask ourselves, what ground rules should we be putting in place to protect our own labour workforce? Mr Waft: Thank you, Mr President. I would just like How are we to protect our own industries? Our obligation* firstly to repeat my request that the Council of Ministers under protocol 3 to allow free movement of people and give consideration to the policy debate being included in goods could be the road to an economic breakdown if we the the budget debate. This happens every year and it only are not allowed to protect ourselves from the consequences doubles the agony. We are going through the same agenda of high European unemployment, increased harmonised virtually. and uncontrolled VAT and the inability to protect our The constraints on our ability to be master of our own citizens from the European Union which has set out for finances are becoming more and more obvious. We must removal of technical and physical barriers. continue to meet our obligations under the Customs and We have seen the problems faced by the agricultural Excise agreement while continually trying to develop sector, the fishing industry and other industries which have flexibility. These comments have been phrased within all been as a direct consequence of our relationship within the past budgets but in real terms just what have we Europe. The Island expects the Treasury and the Council achieved? What benefit has the economy derived from the of Ministers to set out a budget which realises that the modest changes in value added tax on tourism, for instance? European Union can change its policies which can directly This benefit has taken many years of consultation. affect us. It will be no use the Island remaining within the The abolition of trade barriers within the European free trade area if we are going to be left with nothing to Community and their expressed wish of value added tax trade after being swamped with inferior imports. The necessary rebuilding of our infrastructure, partly harmonisation, their ability to mass-produce manufacturing due to the population increase, can have a crippling effect goods, taking advantage of low-wage economies within on our economy if we do not proceed with caution and Europe, can and will ultimately affect our own industries introduce residency controls. This budget, like many on the Island. previous budgets, is an annual pastime of raising or Europe has the ability to undertake protectionist policies lowering thresholds to keep apace with inflation, having against the USA, the Pacific Basin and Japan who are seen little or no effect on the family budget. The financial as an economic threat. Yet we appear to be unable or cascading throughout the economy down to those who unwilling to protect ourselves from the problems that can really are in need would seem to be getting soaked up by a be created for us by the European Community. We have level of social strata which is demanding and getting seen quite vividly the effects of having to comply with the financial help as and when they claim it, leaving very little European Union regulations regarding the meat plant, left for those in most need. regulations which seem to be totally disregarded within We say to one sector of the Island's businesses, their Europe itself. We will be faced with ever-increasing rules community, 'Yes, you can have grants and loans'; to

Budget — Debate Continued T246 TYNWALD COURT, TUESDAY, 18th MARCH 1997 another we say, 'Yes, your industry can have protection'; comparisons with their facilities. I would remind members to other large multinationals we say, 'Yes, you can have a of our reciprocal agreement. It affects widows' pensions, franchise agreement for X number of years'; to others we retirement pensions, unemployment benefit, the say, 'Yes, you can have tax-free credits to pump-prime jobseeker's allowance, the disabled worker's allowance, your industry'. Then we do a quick about-face and say to the disabled living allowance, maternity allowance, so we other industries, 'No, I am sorry, we cannot stop those have handcuffed the minister in those areas. What he can imports coming onto the Island. This is a level playing help us with is supplementary benefit thresholds, family field. We cannot be seen to be supporting your particular income supplements, resident nursing home thresholds and industry as it would be against European legislation.' To the Manx pension supplement and maybe the Christmas our pensioners we say, 'We are faced with this reciprocal bonus. agreement and we can only give you any Manx supplement I would put it to hon. members that future budgets will if you have lived on the Island for X number of years.' To be exactly the same until we give some serious our disabled we say, 'Yes, we did pass a Bill. The hon. consideration to our position with regard to protocol 3 and Minister for Tourism, Mr Cretney, put it through in 1992 our Customs and Excise Agreement. Let us have another which enabled you to receive much more assistance than look at our constitutional position. Thank you, Mr you are getting at the moment but unfortunately it has not President. been signed yet because there is not enough finance available to cover the possible implications.' Anyone can Mr Shimmin: Mr President, as a newcomer I feel a see the dangers of proceeding too far down this road. We little bit entitled to talk to another new boy this afternoon, will be giving fuel to those who feel we are creating a the hon. Treasury Minister. I have got some observations divided society, some of whom are saying, 'Yes, I am doing and, as appears to be the habit, I will go on to some of my quite nicely, thank you', but then there are others, the priorities and say where I would like to get his consideration pensioners and those on low incomes, whose situations is both now and in the future. deteriorating. We have broadly been following the UK As a newcomer into government I have realised very policies over the years and the gap between the haves and early on that the amount of flexibility which is afforded to the have-nots is distinctly widening, as research has proved. you as a member of a department is very little in these The ability to transfer £7.4 million to the reserve fund, early days. The budget that I have inherited with the two in addition to the £11 million we placed in it last year, is departments I am now responsible for working within, commendable but we should ask ourselves, at what cost those budgets were organised by the previous to the present population are we able to do this? We are administration. When we had the estimates meeting there pledged to increasing this fund to a level equivalent to was very little that could be done to actually influence half government's annual revenue funding gross spending. what would be done over the next 12 months, and Mr I would like to ask the minister what amount he would Lowey mentioned this morning that that means newcomers like to have in this reserve before we can again think about have to put on hold any of their new ideas they might like an up-to-date examination as to the advantages and to bring in. I wonder how much flexibility was afforded to disadvantages of our Customs and Excise Agreement and the Treasury Minister in taking on his new role, and many protocol 3. Events have changed dramatically since the colleagues have already said today and previously that this last review was done in 1979. We have over 70 per cent of budget is one which introduces no change to existing that objective and we have little or no dedicated use for policy. the possible £200 million apart from it being nice to have I agree with Mr Brown's comment this morning, the in reserve. We have never been so well off in our financial hon. member for Castletown, when he said that the role of position than at the present time and it is opportune to re- the person should be to work from within the departments examine the situation and report back to this hon. Court. to fight for things not just today but for the future, and I The minister has considered the budget within the usual will take that on and try and work within my departments constraints placed on all previous ministers, that of trying for the times ahead, to try and get my priorities a greater to work it within our agreements. What I would like ask is level of influence within the responsibilities of the that we take a fresh look at those agreements and see if department. they are still working to our advantage or not. We must But what is this policy which is complained about, there allow the minister to be in a position where he is able to is no change in existing policy? Having gone back through apply financial help to those who really need it, without the 1996 annual policy review again, I would just pull out continually having to look over his shoulder at what the two areas which seem to shout at me every time, where UK will or will not allow - having to follow blindly any the previous Chief Minister talked about the development increase in VAT on any further range of goods when our of a prosperous and caring society and maintaining the own politicians would not even contemplate such a move. essential qualities of Manx life. I agree that this budget, We need to examine thoroughly our position not only for from all that has been said so far today, may well help the the business sector in our society but how these agreements development of a prosperous society. A caring society - I affect also the quality of life of the whole of the people of am not convinced. The essential qualities of Manx life - this Island. again at this stage I am not convinced. We would all agree We have heard many requests for different sectors, with the worthy sentiments but it is a matter of how we especially within the DHSS. Whilst we maintain existing achieve those sentiments. The policy might be correct but ties with the United Kingdom there will have to be close how do we achieve it?

Budget — Debate Continued TYNWALD COURT, TUESDAY, 18th MARCH 1997 T247

My difficulty with no change in this budget is that, money being taken to fund students being educated off- having just come back from the election, ordinary people Island. want change. They want to look towards government to There are care facilities required. Cummal Shee has see changes being made that benefit them. commonly been talked about in this chamber. Cummal The Treasury Minister, in his briefing last week, Shee is being asked to do something at the moment which identified a high priority to three particular areas - law and is beyond its power: to deal with different types of students order, the DHSS and education - and these three in the same facility. We need secure accommodation for departments have all been afforded a higher budget than those students or those juveniles who have gone beyond might be afforded to other departments. These are core the confines of all other alternatives and at present we have issues in my opinion. The difficulty as I see it is, by adding the facility at the prison, but that is one which fails to be on extra money into those departments, it tends to give used by the magistrates when many people wished it were. rise to problems which were described by Gerald Kaufinan Family work. There are questions down for later today as forming `departmentalitis' or `rninisterialitie, something regarding working with families. Yes, the responsibility which I am already becoming aware of but that is where of the DHSS. There is already an amendment down on the we get a budget within our department and we then fight floor which talks about the inadequate funding provision. our corner for that department without trying to look at There will always be an inadequate funding provision for the whole picture. We have an obligation to those most of these areas I am talking about. It is not a bottomless departments and the people who work within those pit but if we continue to look at it the same way we will departments and therefore we will constantly want more. merely be trying to stop the floodgates without sufficient We can tend to focus, if we are not careful, on self-interest means to ever achieve that. rather than looking at the whole picture and that whole Some starts have been made, there is much good work picture tends to be the responsibility of Treasury and the going on, but I believe that new money will be required, Council of Ministers, and I will leave it to others to not a bit more each year, not a bit added onto the budgets. determine how interested the Council of Ministers are in We need more money in a specific fund which can then be looking at the whole picture. I am sure we differ in our utilised to benefit the young people of this Island so that views on that. we can identify the problems at source, young people, pre- I do not believe that the quotes about a caring society school, primary school, secondary school age, to prevent and the qualities of Manx life can be achieved within the an escalation of the difficulties that they will cause to our present compartmentalised departmental system. We need society in the future. to look wider. If more money is just tacked on to My concern, which does involve this budget, and this departmental budgets, that disappears or tinkers with the is also a warning to members here, is that the writing is on issues without actually solving the real points. the wall. The social problems that we are encountering are The policy document goes on to talk about the main not a hiccup, they are not going to go away; they are here, areas of future investment: there will be the new hospital, the writing is there and we must respond. Failure to do so sewage disposal, refuse disposal and the water will lead us into a situation similar to the present one we infrastructure. We have already had some discussion this are experiencing with the water infrastructure, the sewage morning about capital projects and the only way that any and refuse positions, where, through a lot of talking over of these items will actually get off the ground is if extra many years and I dare say a degree of inactivity many money is found for them. If they were just tacked onto the years ago, we have failed to respond when necessary and budget year on year they would never be achievable. are then left to try and deal with crisis intervention or crisis I believe that there is a need to establish a specific fund management which then determines that we need a great which is in order to initiate projects across departments, deal of capital expenditure all in a short space of time. those areas which deal with social issues which cannot be I would like, following from this budget and over the compartmentalised into one department. This budget does months ahead, for the Treasury and the Council of Ministers nothing to address this. to acknowledge that there is a need for a fund, to act now What social issues am I meaning? Well, no surprises in order to prevent some of these situations escalating. In with my background but much of it will look at the effects the same need that we have to put money into the reserves, on the young, whether we look at the educational disruption we have the need to put money into the film industry. I experienced in our schools and the juvenile crime levels, have no objections with those. But it strikes me as being the family backgrounds which lead to social difficulties. counterproductive if we fail to recognise the need which These are often linked and we cannot expect to solve that is now and if we leave it much longer it will make the problem if we just look at it within individual departments. We must work together or, preferably, have a new look at battle that much harder to achieve success. There will be many obstacles. I am not proposing to try •I• how we address some of these issues. There will be a need for facilities, some form of off-site and establish a new department, heaven forbid, but if we educational facility. At present it costs over £100,000 a do have this social fund, who administers it, who controls year if we have cause to send a disruptive or special needs it, what is it called, who decides the priorities, which part student off-Island to be educated. Our schools are already of the Island would like to have some form of off-site saying that there are a growing number of these young educational facility or, dare I say, a secure unit? There are people and unless somewhere is designated that we can many issues which somebody will have to deal with. do it on-Island we will increasingly get more and more Because it is difficult, that is no excuse to delay.

Budget — Debate Continued T248 TYNWALD COURT, TUESDAY, 18th MARCH 1997

This budget does not recognise these issues. I am not young people. We have received capital moneys for the surprised by that. I would like to bring it into the domain building of a separate unit so that we can split the offenders for in the future, that we look towards trying to find some from the offending, the abused from the abusers at Cummal means by which we can fund those areas which are of grave Shee. This extra funding is that which has been desired, I concern. The windfall money we have heard talk of this think, by the community both in terms of the report by morning was a possibility. I do not believe that that McManus and the law and order reports and this is money possibility is lost but I believe that will be a decision by going where people have expressed a wish that we put the Council of Ministers, discussion with the Treasury, to new moneys. It is enabling us to tackle some of the issues see where the moneys can be put to one side to try and which the community is expressing concern about. develop some of the capital parts of this initiative. The other major area of new moneys for us is the I will not presume to tell anybody how to operate such community care programme which is an ongoing a scheme. In a few years' time I might try it but at the programme, referred to by the hon. member for Council, moment I shall allow that to the more experienced Mr Lowey. This is an expensive option, there is no doubt members, to understand the difficulties from a wide range about it, but it has, in our experience and the experience of of areas. But I do believe it is incumbent on Treasury to those who have seen it in action, improved immeasurably find a vehicle to address the social issues that concern the the quality of life of those people with learning disabilities people of our Island. I believe the voters expressed this who have been moved from an institutional setting to, as desire. I have as yet to see little that recognises it but I am far as possible, a normal homelike set of conditions, and I optimistic for the future. make no apology for our department selecting those two I would look forward to the Treasury and the Council areas as priority areas of concern for the additional moneys of Ministers showing a commitment to look for a new we have been given. approach to this issue. It is very complex. It is something We have of course new moneys for the breast screening which is going to be with us for years to come and I programme which has been promoted by this Court and is personally would prefer to see that we acknowledge it now obviously something which the Court wishes to be carried rather than leave it to any later date. I am not in favour of through. single items being discussed at the Treasury. Our budget has increased by 7.2 per cent. Now, that I am not interested in universal benefits or sweeteners, looks like a very generous increase: £6.6 million over last I want a budget to look towards policy, priorities and new year's budget. But it has to be remembered that we have approaches where necessary. not so long ago come to the Court for a supplementary Although I have a great deal of sympathy with some vote of £2.2 million and have had wage increases on top parts of this amendment, I will not be able to support it. As of that, so that the increase over last year's costs as opposed I stated, there will never be sufficient funds but what we to last year's budget figure is of course much lower than as a chamber have to impress upon our colleagues in the the superficial reading of the numbers would suggest. Council of Ministers are our priorities and I hope that the The growth in the demand-led services of the messages that are being made by myself and others today department has meant that new moneys are swallowed up will be taken on board by the Treasury Minister. by existing services and we have very limited ability to I will listen with interest to the rest of the debate and develop other services as we would wish. In terms of our the Treasury Minister's summing up and hope that we can request for new funding, we will be able to progress some move forward in the future. Thank you, Mr President. four or five items from a list of two pages of priority 1 items. That is only the priority 1's. There are priorities 2 Mrs Christian: Mr President, a number of people have and 3 after that. This illustrates I think, hon. members, the referred to the provision or otherwise, adequate or not, of growing cost of the DHSS provision and we have to the DHSS and for their interest I am very grateful, but I recognise that inflation in some areas of health service care think it is worth going through the proposals within the is greater than general inflation. This too eats away at an budget in relation to my department and to explain perhaps element of our funding which is then not available for other a bit of the background to the increase in the figures. services. This is not to say that we do not have a good The Treasury Minister has referred in his speech to two service in respect of health care. I believe we do. But there major issues from the perspective of my department. One are certainly areas in which we would like to do better. is the cost of services in future years and the other is the The personnel budget is an area of particular concern department's aspirations which have not been met in their and sometimes applies constraints which paradoxically entirety, and I think the latter point is certainly true for all lead to inefficiency and additional expense. I know that departments but I would like to highlight our particular this policy is being examined and I look forward to the area. results of that examination. First, what has been done in this budget? There are new There is no doubt that this budget will give us extreme elements of expenditure which have been introduced. The problems in relation to personnel and I have no doubt at major element of new moneys is into the social services all that we will have to approach the personnel sub- area, particularly into child care, and here I would concur committee for an increase in the numbers attributed to our with my colleague who has just spoken on the importance department, though we are doing our very best to find the of having cross-departmental consideration of these additional numbers within the scope of our present budget. particular issues. We have, within the budget, received new Overall I think the Island has seen in this budget an moneys to provide for disturbed, troubled and difficult increase in percentage terms which many countries would

Budget — Debate Continued TYNWALD COURT, TUESDAY, 18th MARCH 1997 T249

envy. Whilst I would have welcomed more money for my Some comment has been made in relation to the hospital department, as would every department, I do not think that vis-à-vis IRIS and so on. I do not think that this government we should be too critical of the fact that one-off payments or this generation should be ashamed to say that they are have been put into reserves, and in respect of the tackling these major issues in terms of our infrastructure. amendment before us, moved by the hon. member for The timing perhaps is difficult in the sense that many major Ramsey, whilst accepting the second part of his schemes are coming on-stream together. But nevertheless amendment, noting that there are areas of health and social I do not think that there is any harm at all in saying that we security services where we would liked to have had more have done some work towards IRIS, we do need to improve funding, I think that we have to be prudent about the future the sewage infrastructure for the Island, we also need to and I feel that this particular proposal covered in his item provide a hospital for the future. We are embarking here (a) is a prudent step, given the demographic projections on building something which will be a hospital for the into the not-too-distant future as well as those further into next century and I would say that I am getting a little tired the next century which will present us with very of the negative attitude towards this provision which is for challenging positions in relation to revenue. our generation and the next generations (Mrs Hannan: I think we have to avoid the myopic approach to this Hear, hear.) and we should be supporting those people who budget and give cognisance to the fact that there are serious have worked so hard and long to bring to fruition the plans developments ahead in terms of venue demand and if we which will enable us to provide a good health service for wish to increase resources in some areas, there has to be our people into the future, and I would endorse the view greater consideration given to reallocation as opposed to that has been expressed that as far as possible we should the introduction of new moneys. If we do not give this try and spend the money in relation to this project within consideration, we are going to seriously overburden the the Island and that is why the schemes are being devised working populations of tomorrow. However, I also believe in the way that they are being devised. that the reallocation should not be from the needy to the There are a number of areas where we have been pressed needy, nor even from the needy to those who do not need, perhaps in terms of single issues, and I can understand as sometimes happens now with universal non-contributory people having particular concerns. I would say this, though, benefits, by way of example, and although we will that there may be other members in the Court who might endeavour to continue to identify and eliminate inefficiency like to press us on plans to improve paediatric services or and waste in the department, I have to say that our psychiatric services or surgical services, community or department is one whose whole purpose is to service need ambulance services, foster care which needs more money, and it is not easy for us to vire or move funds about or child-care services and family support. The list is not reallocate without there being some pain caused in some inconsiderable. There are needs in our service which are service provision. driven by reviews which we have had, indicating that there There has been comment that the social provision in are areas which certainly need strengthening and I am this budget is lacking. If we look at our gross expenditure conscious of them. I am also conscious, as has been said in my department alone of f185 million, a net figure of by members who have spoken earlier, that when we are a £98.3 million, I think it is reasonable to say that there is a member of a department, we do become departmentalised, fair measure of social service provision in the overall scale we do recognise that even within our own departments, if of things, though I do recognise that people's priorities we are charged with doing a job, we seek support of the may be different from mine and I too would like to see government and the Treasury to give us the money to do it further provision in certain areas. with. The difficulty lies in the allocation of the funds. It is Certainly we have experienced difficulty in the past and up to Tynwald to decide whether the distribution of I would concur with the hon. member for Council, Mr resources is appropriate. Lowey, who has referred to the Chronically Sick and I am not going to support the amendment because, Disabled Act where we have not yet been able to implement though I would like more money for my department I do some of the provisions of that piece of legislation, but I have concerns that (a) we should not be spending one-off have to highlight the difficulties which the department finds moneys on services which are to be ongoing; (b) we need itself in in meeting budgets. Our priorities are constantly to look further ahead to our revenue expenditure in coming usurped, whether we like it or not, by needs which develop years before we are too liberal - perhaps that is the wrong perhaps unexpectedly. We have seen the social word - but shall I say that we need to be cautious about development in relation to problem children which is what we are doing now for fear of burdening future emerging in the Island and not unreasonably we are trying generations; and (c) I think that the Court needs to bear in to focus our attention and our resources on those areas. In mind that there are serious issues here which should not the last year we saw a need for resources to be poured into be sidetracked by the word of the day, 'sweeteners'. The our blood transfusion unit, by way of another example. serious issues do need to be considered and I would ask We have seen demands placed on the expenditure which hon. members to reject the amendment but to support the we need to give people the specialist care they need in budget so that we then can have an opportunity, if members United Kingdom specialist hospitals and social placements. of the Court are concerned about distribution, to tackle All these are things which we cannot turn away, which we the reallocation of funds rather than trying to meet the have to provide for but which essentially move other issues of the day with demands for further new moneys demands back down the list in terms of our budget. which are not easy to conjure up.

Budget — Debate Continued T250 TYNWALD COURT, TUESDAY, 18th MARCH 1997

Dr Mann: Mr President, I feel this afternoon that this in some direction and certainly in anticipation of the report debate has given members a lot of political difficulty, as is concerning juvenile delinquency, for instance, we are being evidenced by the speeches that have so far been made, allocated sums of money at least to start moving towards and while I listened with interest to the member of Council, an improvement which will ultimately be subject to a Mr Lowey, he was kind enough not to quote my speeches debate in this chamber next month. So there are strong in a similar situation in the last two new governments positive reasons for supporting this budget. because they would have been very similar to his own and Now, we would all be very foolish indeed if we ignored I have to admit that to be true. the groundswell opinion amongst a lot of members, First of all, if I can look at the immediate position, I particularly those who have just been elected, that we need have been in the same position as the hon. Treasury to do more and I think if you look at the proposed Minister. I know how difficult it is to produce a budget amendment, that amendment in no way damages the almost immediately after a general election in political positive aspect of the budget, it in no way wishes to damage terms when you inherit the policies and commitments of the positive support for the services that are being proposed. the previous government, irrespective of whether you have It does vocalise the disquiet, the uneasiness that in fact strong views or you do not, and certainly as the forward some resources do exist which could be used in other planning has been developed over the last 10 years, the respects, and in the same way as it is being vocalised here, straitjacket that a new Treasury Minister is in is even greater members need not worry - ministers themselves have been than in past years, so we should not have been led to expect vocalising these things within the Council of Ministers but really, seriously, any change of direction, and so I have to in the end we have had to accept that the positive things feel for the hon. Treasury Minister because he is catching that are in this budget do actually exceed the negative and it in the neck, as you might say, for things that at this certainly from my point of view, as long as we are looking particular moment he probably cannot alter even if he to changes in the future, this budget should most certainly wished to. be supported. Now, as to whether one should also include But the political situation has changed. We do have a in that, by amendment, a suggestion that the disquiet of new government and that new government set out right new members should actually be attributed also to the from the very beginning to be a consensus government, resolution remains to be seen but certainly the amendment that is, it brought within its Council of Ministers all those is not going to take away either the support for the budget factions that had previously been, as you might say, in as it exists or the strong positive reasons that support the opposition. This was a bold move to try and alter the services of the health department and the Department of situation that had developed in the last 10 years and it has Education in particular. to be given the chance to succeed. The fact is that of course the Treasury Minister is having Mr Bell: Mr President, I suppose the one predictable to produce a budget based on the existing policies and the thing about a budget debate is its predictability. It seems new members of the Keys are looking for the change of to go more or less along the same lines, I think, in every direction as a result of a new consensus, and the fact is year that I have been involved in it and the comments this that the budget is being produced before the policies have morning really made me think back to my first time in this been realigned. I know the Chief Minister has it on his hon. Court, certainly my first budget in 1985, and I suppose priority list, a get-together to work out new ways in which my views in those days were every bit as critical as any policies can be adjusted in the coming five-year period, that were put forward this morning. But there was a very and of course there are positive moves to bring together big difference, I think, between the position I found myself policy decision and budgetary provision. At the moment in in 1985 and the situation we find ourselves in today. In we have a Treasury that is having to produce a budget 1985 the government was struggling with very great without the guidance of a new policy to be proceeded with difficulty to keep afloat financially. The Island had been in the next five years. So once again I feel for the Treasury going through an extremely difficult time economically, Minister in these difficulties and I am sure that we will unemployment was very high, there were all sorts of reconcile the changes such as they will be achieved in difficulties with the government finances and our reserves, policy-making in this period. I think, were little more than £1 million or £2 million in But if we come to the budget itself, first of all let us those days and therefore it was with very great difficulty look at the positive things. The positive thing is that we that the Treasury Minister, or chairman at that time, was are maintaining existing services and not only are we trying to put a budget together which would please all maintaining the existing services but within the Treasury members. itself there has been a response to demands to improve, if Now, listening to the comments this morning in possible, areas of health and social security and in areas of particular, I was left with an overwhelming feeling of education, and I think both my fellow minister in the gloom and despondency about this Island, that somehow department of the DHSS and myself in the Department of we have drifted into some crisis, which of course is the Education accept that these additional resources have been fault of the Council of Ministers. We heard that the budget allocated and I think all of us ought to acknowledge that was lacklustre, limp, that there was nothing in the budget, services in those two main departments producing services that there was nothing for the low paid, there was nothing that help the public are going to improve as a result of the for the pensioners, there was nothing for the young, no decisions within this budget. Now, they are never going to planning for the future. If that were the case, then those answer all of our requirements. Certainly they have moved adjectives used to describe it were absolutely apt. But I

Budget — Debate Continued TYNWALD COURT, TUESDAY, 18th MARCH 1997 T251

had to scratch my head when I heard these comments of, not to deride. We have done a very good job, I think, because right alongside me I have the document issued by collectively in ensuring that the concept of a National the Treasury which actually shows the budget estimate for Health Service in the Isle of Man has been protected and 1997-98 running at £240,606,000, all to be spent on maintained and developed and that again this year we have improving the standard of service which the Isle of Man another 7.2 per cent increase in this budget, £61/2 million proudly has sustained and developed over the last few more has gone into the DHSS this year. We are successful years. How can that be described as nothing for our people? in achieving what we have tried to aim for over the last We are spending £98,343,000 on health and social security, few years. £45,883,000 on education. We have substantial increases The budget of £240 million this year will mean that we right across all the departments which are providing vital will be spending something in the region of £3,500 for services for our population. In every single area of social every man, woman and child on the Island. That is not a benefit where government is involved there has been an sign of failure. We should be proud of that, that we have increase. How can we say that there is nothing in that for achieved it and that our economy has been encouraged to the people of the Isle of Man? grow in such a way that it can produce those revenues to We are showing 6 per cent growth in our economy. Very enable us to improve and expand on our services. few countries in the western world can match that figure We are told that there is no sign that this is a caring and certainly the United Kingdom would be delighted if government. I find that totally baffling, that comment, quite the chancellor of the exchequer, at his budget presentation, honestly, when you relate that to the expenditure that I could make the claim that the UK budget had grown by 6 have just described in health, in education, social services, per cent. It would be classed as an economic miracle - social security and other areas, housing et cetera. I think (Mr Downie interjecting) Possibly soon, yes. But we have the Isle of Man, given that we are a small country of 70,000 lived with 6 per cent growth now for a number of years. It people, has done remarkably well to maintain the standard has almost become the norm in the Isle of Man, not the of service that we have been able to provide over the last exception, and yet we constantly decry ourselves, we say few years. And that is in no way being complacent. It is that we are doing nothing for our people. The 6 per cent simply a recognition of the fact. It also recognises of course growth means that we now have 2.7 per cent that we have got a great deal of hard work to do to maintain unemployment. It means that are young people now can that position and that is why I certainly welcome the stay on the Island instead of having to go away to find emphasis in the budget today on economic growth because work. It means that our young people can buy their own without that economic growth we do not produce the houses on the Island. It means that the general standard of revenue required to not only maintain the current services living of our people has improved immeasurably over the but to promote any further expansion which we might wish last 10 years and we should not decry that fact and we to see further down the road. should not try to create the illusion with the people outside There is no doubt also that we have committed ourselves that this government has failed simply on the basis of the to a very major capital programme over the next few years. fact that £10,000 has not been found for chiropody services, It is the biggest capital programme that the Isle of Man which is what this has been brought down to. We need to Government has ever conceived of and obviously we have be honest and realistic in our assessment of this budget, to fund that and that in itself, from time to time, is going to and I fear that that has not been happening. cause problems. But the capital programme is based on One of the main concerns - and I have to say I have real need. It is based on the requirement to refurbish our shared it myself, having been on the department - is the sewer system, our refuse disposal system, our hospitals, funding for the health services in particular and there are our roads, our water network, all these various things. And no doubts that there are major problems in there with it is not a negative thing that I see that we are embarking balancing the books. I spent the best part of two years on on at the moment, it is a sign that the government over the that department recently and had my eyes opened, I have last few years has had both the resources financially and to say, at just what a nightmare it is in balancing the budget the bottle politically to grasp these problems and start to of the DHSS and keeping everybody happy at the same tackle them. They are not something that has just cropped time. So there are problems, there is no question about up overnight. They have been there for a great many years that, and there are areas which the department would dearly and for one reason or another they have just not been like to fund and to improve if the money was made tackled. available. Now, the government has had the initiative over the But I say once again, instead of decrying the last few years - and, I have to say, the ability because of shortcomings of the Isle of Man health service, and that is the financial situation - to start to respond to these without being complacent about it, we should just take problems. Now, if that had not been taking place, then all one look at what has happened to the health services in the hon. members would have an absolute right to be on their United Kingdom over the last few years, over the same feet slamming the government of today for not having period of time, and we should recognise just how successful grasped these nettles because they are vitally important. the Isle of Man has been, with limited resources in its own Unless we get the infrastructure of this Island right, way, at maintaining the standard of health service that we whatever else development we wish to promote would not have in comparison to what appears to be a crumbling take place. So I think it is a major step forward that we are health service and a creeping privatisation of the health doing this. We obviously have, though, to make sure that service in the United Kingdom. It is something to be proud we get best value for money out of those capital projects

Budget — Debate Continued T252 TYNWALD COURT, TUESDAY, 18th MARCH 1997 and I would hope that this hon. Court, through its various million square feet of offices will accommodate 10,000 scrutiny procedures, will ensure that that will take place. people. That is the scale of the development we are looking Within the health services or DHSS itself I would like at at the moment if all the present proposals go ahead, and to just comment on a couple of small points. First of all I that is 10,000 office workers we are talking about. That is wish to congratulate the hon. minister in fighting to ensure quite apart from the army of construction workers which a considerable increase in financial provision for the child are going to be needed to build these office blocks in the welfare services of this Island. This has been an issue very first place and this development, if all things go as planned, close to my heart over the last couple of years. Again with will coincide equally with the development of the hospital being in social services it has made me painfully aware of and one or two other government capital schemes. There just how very seriously underfunded this section of is going to be a massive, and I mean massive, demand for government's activity has been over the last few years. labour over the next two or three years if present proposals Indeed so underfunded it was very close to the point of continue as structured at the moment. collapse last year and I think the money which has been We have 2.7 per cent unemployment, less than a made available this year will go a very long way to thousand people are unemployed at the moment and that restoring, I think, the public's faith in these services and figure is dropping and certainly now that the spring weather indeed in the standard of provision which is made available is here it is likely to drop quite rapidly, probably down to for a great many of our vulnerable younger people on the 600 or 700 people by this summer. Many of those will be Island. As I think the member for West Douglas stated, unsuitable, I suppose, for various reasons, for work. So to prevention of youth problems is far and away better than all intents and purposes the Isle of Man at this point has the cost of the cure at the end of it and money spent in this virtually no unemployment and yet over the next, certainly area will save great cost to my own Department of Home five years, we may well have a demand for 10,000 new Affairs in the long run and indeed to the community at office workers plus a considerable number of construction large if we can identify those children who are under threat workers. at an early stage and guide them back onto the straight and Now, in the past the Isle of Man has been very lucky. narrow again, should I say. Well, it has been fortunate in the respect that we have been The provision of services, both by the social services able to draw in labour from outside. 'Lucky' may not be itself and indeed by the private sector, are to be commended the right description for that, but when there has been a and I think they do a wonderful job under very difficult shortage of construction workers on the Island we have circumstances and, as I say, I am sure they will be delighted been able to draw on labour from southern Ireland in to know that a more realistic level of funding is going to particular and indeed from the north-west of England. be available for them from this year onwards to be able to Now, the UK economy is picking up quite rapidly and achieve what we all wish that they will in fact ultimately the construction industry is starting to pick up quite rapidly achieve. and because of the extended recession in the United And simply on a comparatively minor note in my own Kingdom there are already signs of a major shortage of constituency, I would also like to thank the minister for skills in the construction industry in England, because the assurance that the new operating theatre at Ramsey obviously new people have not been drawn in, there have Cottage Hospital and Bonwick House will now be opened been no apprentices and therefore the workforce has shrunk and be maintained over the forthcoming period. That was by many hundreds of thousands over the last few years. a matter of some concern and I am heartily reassured now The situation, for the first time, probably, in history, in that both those facilities will actually be operating shortly. Ireland has gone much the same way. Southern Ireland is Now, whilst on the theme of trying to recognise that the now the boom economy of Europe. Its growth last year Manx economy is in fact functioning very successfully at was 10 per cent-plus, this year it is nearly 8 per cent. The the moment, there are just two points I would like to population of Ireland, for the first time in living memory, introduce which I think we ignore at our peril. There are has seen a net immigration into Ireland rather than the usual two time bombs, I think, ticking away under the success exodus, and a lot of that is building workers, Irish workers story that we have had so far. who previously have worked in Britain and Europe coming Now, I stated earlier that I am convinced, and I am sure home. all members are as well, that economic growth is essential So we are going to find, possibly, ourselves in a major to the Island if we are going to pay our way and be able to hiatus in the next few years where we will not be able to pay for these capital schemes et cetera in the not-too-distant get the construction workers, either from Ireland or from future, but we should just stop and think at this juncture, I England, to carry out a lot of the projects that we are think, about the implications of some of this economic proposing to put forward. Our own construction workforce growth and if it goes ahead unbounded the problems that is nowhere near big enough to handle the volume of work it is going to cause for the Island. that is likely to hit it over the next three or four years. So If we just look in Douglas alone at present, planning we are probably left in the situation where either (a) the approval has been given for in excess of half a million work does not take place at all because you cannot get square feet of offices. Some of them are being constructed construction workers to build it or (b) as long as the demand at the moment, some in various stages of development, holds, inflation is going to be rampant within the but presumably in the not-too-distant future these construction industry, and a lot of the projections which developments will take place and they will be providing we have made in our budget today in relation to the revenue workplaces for a large number of people. Now, half a implications et cetera of our capital scheme will be thrown

Budget — Debate Continued TYNWALD COURT, TUESDAY, 18th MARCH 1997 T253 out the window. Some of the projections will be seen to be benefits which have accrued from that. Now, that has or may well be seen to be extremely conservative in two undoubtedly acted as a catalyst for the development of the or three years' time if my vision of what might happen finance industry, and retailing seems to be coming along finally materialises, and I think we should bear that in mind on the back of it as well, but that is fine. Now, it is due to because there will be very real consequences on the rest of officially run out later on this year, I think - the budget in the not-too-distant future if that comes about. We, as I have said, have somewhere approaching nil Mr Downie: This month. unemployment at the moment, so most of the new jobs which will be created in the finance industry are likely to Mr Bell: - and I would urge, though, the Treasury require some wholesale immigration once again to fill Minister in his future planning to recognise the success them, because we are not going to be able to produce the that this particular exercise has been in the centre of size of workforce locally to fill all the vacancies which are Douglas and look at ways at utilising its benefits elsewhere going to be created. on the Island, because what I am describing at the moment The estate agents on the Island are already telling me as what may happen in Douglas in five or six years' time that the sale of property is speeding up rapidly and indeed is the total opposite of what is happening elsewhere on the in some areas now they are already experiencing a shortage Island and the likes of Ramsey, Peel, Castletown, Port Erin, of property for demand. Now, if that is happening now Laxey will be heading into a rapid decline commercially and we see even a couple of thousand new people coming while Douglas is expanding beyond our ability to contain in in the next three or four years to fill these new jobs, it. The biggest challenge, I think, which faces the Treasury where are they going to live? Who is going to build the Minister and indeed Tynwald is to find a way, a mechanism, houses to accommodate these people? of redressing the total imbalance which exists at the moment in economic development throughout the Island. Mr Delaney: It feeds off itself. We have the ability to accept commercial development, even to accept housing development, outside of the Mr Bell: Within five years, hon. members - Douglas area and I think we need to take a very proactive approach from now on to redress this balance and to ensure Mr Downie: Put them all in Ramsey! that Douglas itself does not grind to a halt under the weight of its own expansion in the very near future, by spreading Mr Bell: - I am convinced, if we continue without some it more evenly, more effectively all round the Island. If it form of check on this, Douglas certainly will need another is handled in a sensitive manner it will be less painful for development on a greenfield site at least the size of everyone concerned if this could be achieved. Dandara's development at Governor's Hill to accommodate So I would ask the hon. minister to look at the the new people, (Mr Downie interjecting) who will have commercial buildings allowance order, which I think is to be housed somewhere, and this is the consequence, to a the official title of it, and see how it can be applied to certain extent, of putting all your eggs in one basket in the Ramsey and to all the parts of the Island because we now centre of Douglas. very badly need that assistance. Now, these are very serious concerns and I have to say On a more positive note I would congratulate the one area which does concern me in the budget, which I minister, and indeed the Minister for Local Government think we may need to have a look at again, may well be and the Environment, for agreeing finally to include funds the provision of funding through DoLGE for more houses in the budget to stimulate the Ramsey harbour regeneration to rent in certainly five years down the road, five or six scheme. It is the one project which we in Ramsey believe years down the road I think we are going to need to look at very strongly in and one which can actually start to have increasing our provision there because once again we may some economic impact on the area in a fairly short period well find ourselves going back to the situation that we of time and I think the marker, or the marker of support, I found ourselves in in 1988 and 1989 where, because of suppose, which has been put down by Treasury and by the rapid price inflation of houses, the rapid rate of DoLGE at this stage will give a great deal of confidence immigration into the Island, our local people will not be to the developers themselves to continue with the project able to keep abreast, and I think we need to bear that very and indeed to the people of Ramsey who might realise at much in mind in our planning, in our projections for the long last government is aware of its predicament and is next five years, because there is a time bomb ticking away prepared to take positive steps to do something about it. there which, if we are not careful, if we do not address it On the economic development front, I suppose, I would in time, is going to leave us in a very sticky position, also like to congratulate the Minister for the Treasury, and certainly by the turn of the millennium. indeed the Minister for Trade and Industry for continuing Part of the success that I am referring to and I am only with it, for the support that they have given to the film laying this down as a warning at the moment, I am not fund. It has taken many years to get the concept of a saying we should put the brakes on immediately and stop possible Manx film industry accepted by Tynwald and to all economic growth because that would cause problems actually get it launched and to see some end benefit from of its own as well, but part of the success of that it. It has now been going effectively for a couple of years. development has been the policy decision of Treasury and We have had five or six films already made on the Island. by Tynwald a year or two ago to establish the international Certainly when I left there was a queue of people waiting finance zone in the centre of Douglas, with all the various to have the opportunity to film on the Island. The word is

Budget — Debate Continued T254 TYNWALD COURT, TUESDAY, 18th MARCH 1997 spreading internationally very quickly about what we have Now, it may be some while down the road before this to offer here, not just in terms of financial incentive, but comes, but these are forms of taxation; no matter how you the general welcoming environment that the Isle of Man dress it up, it is a supplementary tax we are putting on the displays for would-be film makers. But we need to be people. I know all three areas are very, very difficult areas innovative in this industry, we have to change our to deal with, there is no question about that, and there is incentives to suit the market, and it is a very volatile and no easy solution to it and whatever solution there is is going fast-moving market and we have to be prepared to move to be very expensive. We have read that we need £30 just as quickly as the market demands. I think the million for the new water infrastructure. IRIS is anybody's establishment of the film fund is a very major statement to guess. It could be round £100 million. The refuse is another film makers to look at us more seriously, to come back £20 million or £30 million. We are talking about very big and talk with us to see what we can do to put their projects numbers indeed and somehow it has got to be financed. together. It gives the Isle of Man, for the first time in a Now, I think we need to be honest with people if this is great many years, I think, a new dimension to its economic how Tynwald intends to go eventually and to identify development programme. It broadens, I think, the honestly that these extra charges are in fact a supplementary perception of the Isle of Man internationally. It takes us tax, and these three areas are going to hit the lower paid away from simply being a tax haven to something a lot more than anyone else, and this is the time, I think, where more interesting. - and I have to say it - some of the posturing that we have But I would like the hon. Treasury Minister perhaps in heard on helping the low paid really comes into play the next few months to underpin the film fund, to consider because we need now to forget about these bland statements the facilities which are available in Ireland to encourage that we need to do something to help the lower paid, we artists, writers, performers et cetera to settle in this case in need to find some effective measure to alleviate in advance Ireland, but to persuade them to come to the Isle of Man, the impact of these extra charges which are going to be through tax exemptions and other assistance. It has worked brought in over the next few years. We have time to very effectively in Ireland and because of the location of a consider the issue in a proactive way rather than our usual number of producers and directors in particular living in reactive way, reacting, that is, after the taxes have been Ireland, and writers, that in itself has encouraged further imposed. We have time to think about it and I would urge film development in the Irish economy. It was a key all the relevant departments in this area to look at it very ingredient in the relaunch of the Irish film industry and it carefully, because this more than anything over the next seems hard to believe, but it is only five or six years really few years is going to be a minefield for this government. since the Irish film industry got going again, it was very It is not just the physical problems we have had over the much in the doldrums prior to that, but that stimulation last few years in putting the capital scheme together, it is came from the fact that a lot of key people in the industry how the public are going to be asked to fund it. That is actually physically lived in Ireland, and I think there is a where the time bomb is ticking away and we must not lose great opportunity here for the Isle of Man to follow suit. sight of that fact and we must act quickly to address the So I would ask the hon. Treasury Minister to look at that problem before it blows up in our faces. for me. I have probably gone on a bit longer than I planned to Now, if I just come back to my second time bomb which this afternoon, (Members: Hear, hear.) but there are a I think we need to be aware of, the boast which we have number of issues which I think need airing and the budget made is that we are maintaining our direct tax levels and debate is a good time to do it. I think we should not be indeed our tax allowances at the same level as they were, pessimistic at all about the content of this budget. I think with a provision for inflation, and that is absolutely right, the Island has done very well, given the circumstances. but there is an increasing problem starting to identify itself, There are always going to be areas that we can polish up which we must not lose sight of. While we are talking here on, that we can improve on, and hopefully over the next today about direct taxation, about our success in keeping year or two we will be able to identify them and react to that at a competitive level, there is bubbling under an them, but overall it is a neutral budget. I do not think anyone indirect direct taxation which is increasing annually. We honestly thought it was going to be anything else. Anyone have heard this morning someone else, I forget who it was who has been in this Court for any length of time would now, but one hon. member who mentioned the water rates. recognise that almost every post-election budget is the Now, the water rates this year have gone up by 91/2 per same. You cannot expect miracles from any Treasury cent. I understand the proposal over the next two or three Minister within a month or two of taking office, but a lot years is for increases of much the same order. These now more, no doubt, will be asked of him in 12 months' time. over the next few years are going to provide, certainly for As for the amendment I really do not see the point of it. the lower paid, a very major burden and it is going to It seems to me a totally irrelevant suggestion. It means increase. nothing if it is passed. I will vote against it because it is Now, alongside that we have the other hidden taxes, as irrelevant, it does not say a thing. It is merely an expression I see it, potentially of a refuse tax, based on the need to of opinion. It will not alter the budget one way or the other. fund the incinerator and its services, and a sewer tax. Both So I will certainly be voting against it and would suggest these are very real possibilities and when the Sewerage other members just vote for the budget. Bill comes along later on there will be a provision in that which, without actually fixing a rate, will enable a rate to Mr Luft: Mr President, first I would wish to be fixed. congratulate the hon. Minister for the Treasury and his able

Budget — Debate Continued TYNWALD COURT, TUESDAY, 18th MARCH 1997 T255

staff on the budget which was presented this morning and, Many of the speeches this afternoon have emphasised what if I may say so, presented so ably by the minister. It is a we will be needing in the future and it is a good example budget which is most satisfactory in my view, providing to take, I feel, the Department of Health and Social Security. the means for continued improvement in the economy Just think of the advances we have made in medical whilst maintaining stability, which is the prime requirement science, research and knowledge so that today we can have of this Island government, particularly, I feel, whilst we cures for all sorts of things, cures, however, which cost are so dependent on the fmance sector. The stability is enormous sums. It might cost a hundred thousand pounds something which if it goes, then our reputation abroad is to remedy someone's ailment and it is very difficult of diminished, maybe gone, and it could have the most course to refuse those costs, and the other fact that this harmful effects on the whole economy of this Island. advance in medicine has meant we are all living much Now, the main criticism which has been levelled against longer. Again, you see, we are going to have more pensions the budget today seems to be from those who say that to pay out. This is not a problem peculiar to the Isle of nothing is done for those unfortunate people who are not Man, it is one felt in Canada, the USA, Europe, everywhere, in the happy position of paying income tax. Paragraph 12 every civilised country. Unless we have the reserves, on page 11 of the Pink Book sets out the benefits which dependent as we are so much on the financial sector, we are paid at a level exceeding that in England and they show, could be in a position where it was impossible to even those benefits, that despite all the pressures for increased maintain the services we do today on a reduced scale. expenditure from various sources and in other spheres, Therefore to put windfalls into the reserve, I think, is a these benefits have been maintained to ease the lot of those very good solution to this problem of how do we build it most disadvantaged. That to my mind is an achievement up without hurting the economy too much, and besides, if in itself. you take a sum of £5,700,000 and divide that up amongst, What I feel is apparent, though, is that no-one seems to what, 23,000 people who do not pay income tax it does have suggested how we could better serve the community not come to very much. It is very much like the millionaire who are disadvantaged. That is an important point, because who was once asked, 'Why don't you distribute your wealth one must have sympathy with those people. It does appear to the rest of the poor people in the world?' He said, 'If I on the surface that very little is done to improve their lot, did I calculated they would get one farthing each', and we and the hon. member for Ramsey, Mr Bell, has spoken of have got to bear in mind a sense of proportion, I think, in the prospective increases in various rates and I am these things. wondering if we should not keep in mind perhaps some Now, as Chairman of the Arts Council I wish to method of rate rebate in the future for those who will not emphasise that we seem to concentrate on very material be perhaps as able as they might be to pay these extra things and of course, important as it is, the acquisition of charges. money, the economy are all very important, but there are The question of the pension supplement amount and other matters which greatly affect the quality of life and I the further help for residential and nursing care, which are am very pleased that the treasurer has managed to allow important matters, I recognise, and things which naturally an increase in the grant to the Arts Council which equates new members have seized upon in their election sojourns to the inflation over the year. I am pleased because last and those, we are assured, are going to be dealt with when year we had quite a substantial increase and I am very the reviews are completed. I feel we should wait until then glad that the present treasurer, our new treasurer, has to deal with those matters. managed to keep that up in line with inflation. There is one small point I wish to refer to. The hon. The item is under the finance division on page 118 of member for Council, Mr Delaney, was rubbishing or the Pink Book, and I should like to assure hon. members scornful of the increase in the non-resident companies tax. that the Arts Council is using this grant to very good I think it should be understood what exactly a non-resident advantage in improving the quality of life in this Island by company is. It is one which is not allowed to trade in the making available art in a wide variety of spheres to the Isle of Man and therefore those who want to form a non- community, emphasis being on benefiting the young resident company can choose any one of the financial people. And the hon. member for West Douglas is so right offshore centres in the Channel Islands, Gibraltar or go when he says we should do so much for the young people. further afield or even, I think, southern Ireland is engaging They are the people who are going to come up and govern now in offshore facilities, because all they need is us and deal with all that matters in the Isle of Man in the somewhereto register a company and not to pay any yearly future. tax apart from this fairly low annual sum. So therefore we We not only support a great number of societies and have always been in competition and our fees have been organisations in the good work that they do but we organise fixed from the time we first started non-resident companies and stage major events which could not possibly be at a slightly lower figure than pertains, say, in the Channel undertaken in this Island without the Arts Council. For Islands. Now, if we are going to increase that we assuredly example, the visit of the Vienna Boys Choir last November, will lose the business, for people will go where it is cheaper the visit of the London Philharmonic Youth Orchestra in of course, and I think that is a point to be borne in mind, it January were very successful, they were very well attended, is a tax which is largely profit, all that has to be done is the but they still cost a very great deal of money to meet the clerical work in the Isle of Man at the registry, otherwise deficiency because you cannot expect us to be able, in the the whole of the sum paid is pure profit to the exchequer. Isle of Man, to pay for these out of the takings at the door. It is of course, I think, important to bear in mind that it Those who attended those events will recollect that they is absolutely necessary that we should build large reserves. were memorable occasions.

Budget — Debate Continued T256 TYNWALD COURT, TUESDAY, 18th MARCH 1997

Next month there will be a notable production of Island. They are an unseen, unpaid think-tank for which Shakespeare'sA Midsummer Night's Dream. That has taken we should be grateful. This continuing commitment by over a year to prepare. The cast is coming from all over the members of the consultative committees to assist the Island and the producer is professional, the costumes government and the Treasury on an ongoing basis is to be are being specially designed, the sets are being designed commended. and it is taking place in April. I do trust that many hon. I feel sure that legislative changes or tax changes can members might be able to spare the time indeed to see it be introduced into Tynwald at any time during the year if because it will be, I am sure, worthwhile. they are seen to be beneficial to the Island. Knowing that There are many other activities that the council stage changes can be made during the year will, I am sure, be which all aim to enlighten, to entertain and to encourage good news to the private sector. I would not like the private participation in worthwhile, satisfying pursuits sector to feel that if a proposal is not in this year's budget it is not being seriously considered. Measures can, and I Mr Downie: Tynwald does all that! am sure will, be introduced during the year. We must always seek to invest for the future and direct Mr Luft: - and what better for the youth than to give our resources into those sectors which will give the best them things to do which will be with them all their lives, financial returns. I make this point because all countries which will enlighten them, which will give them something in the world seek to attract business operations. Job creation to act in themselves because art covers a very, very wide is the name of the game and we must always be ready to sphere. cope with and adapt to change and always be aware that I do pay tribute to the enthusiasm, expertise and we live in a very competitive world. We must never become knowledge of the members of that council who do work complacent. so hard and are not paid anything at all and they manage We are all aware that the Treasury, in formulating this that work with the help of two professional staff. budget, is restricted in many ways by existing agreements such as the Customs and Excise Agreement and the health Mr Crowe: Mr President, I have listened to the debate and social security agreement. Fortunately, we are in a good financial position to pay a range of benefits over and above with a lot of interest today and first of all let me congratulate benefits payable in the UK. Mr Corkill stated this morning Mr Corkill, the Treasury Minister, on his maiden speech. I do not think anybody has paid tribute to the efforts he has that his staff in the Treasury keep the Customs and Excise Agreement under review and this year in particular is a put into the delivery and the presentation, so thank you for time when it may need to be scrutinised even closer. I am that. of course thinking of the general election which will taken Any budget - and this one is no exception - is two-sided: place in the UK in a few weeks' time, the results of which income generation to meet the Island's capital and revenue will provide both opportunities and threats for the Isle of expenditure. We have to consider the future as well as the Man whichever party in the UK gains power and forms present and we have to direct our efforts in investing in the next UK Government and all the time we must keep a industries that seek to achieve the best returns for the future. weather eye on what is happening in Europe and the effects I believe in the maxim that we must earn the money that monetary union may have on the Isle of Man. before we can spend it and the Isle of Man must continue We are facing major capital expenditure during this year to create a climate of opportunity for business ventures to and I am pleased that we are able to fund this capital grow and develop. This would provide the tax revenues expenditure without recourse to external borrowings. We that are needed to finance the wide range of government can take satisfaction from the fact that the Isle of Man is services that a modern society such as ours needs and now in a very strong position by having virtually no demands. Overall we must exercise good financial external debt. disciplines and make practical long-term plans. This budget In regard to income tax, although there has been no continues the broad thrust of previous budgets. This is to reduction to the standard rate, the increases in allowances diversify the economy and stimulate sustainable economic will, I am sure, be welcomed by all taxpayers and those growth, objectives which I strongly endorse. that will now become non-taxpayers. Over the last few years the financial services sector has The moves in the budget to discourage non-resident been the engine of growth for the Island and we also have companies and promote exempt companies will be seen a strong industrial sector. The measures in this year's as a gradual move to phase out non-resident companies. It budget to help our emerging film and TV industry are is worth noting that the contribution from non-resident positive for the Isle of Man and should further diversify companies is about £6 million a year to the Isle of Man, so our economy and provide additional employment we should not overlook that contribution. opportunities. It will also be interesting to see at some time in the near It was interesting to hear Mr Corkill state that economic future the draft proposals to regulate corporate developments are not stored up for budget announcements administrators, proposals that the Financial Supervision but are introduced whenever they are considered Commission are presently formulating. appropriate. As part of this ongoing process, the Island is I would ask the Treasury Minister in his reply to detail fortunate in having a wide range of consultative committees the gross receipts of fees and duties for 1995-96 which and trade bodies that assist government in many ways. were received by the companies registry for company and These committees assist the formulation of legislative or corporation management in order that we can recognise tax measures that can generate economic benefits for the the valuable contribution from this sector.

Budget — Debate Continued TYNWALD COURT, TUESDAY, 18th MARCH 1997 T257

To summarise, I see this budget as a step in the right pitch and it is something that we have been striving for for direction for the Island from a commercial viewpoint where some considerable time, but my constituents quite clearly our main objective is to have planned sustainable growth. tell me what they want and they want a swimming pool, A budget surplus is forecast for the fiscal year 1997-98 and isn't it strange that Ramsey has a swimming pool, isn't and, if achieved, transfers to reserves will be made. This it strange that Douglas has a swimming pool, a wonderful budget is part of the planning process and includes the swimming pool which is being developed at no extra cost Chief Minister's policy statement in October. Until we have to the ratepayers in Peel. So we all have our own shopping a situation where the policy document and the budget can list. be reviewed together we will remain in the situation of With regard to chiropody, yes, it might only be £10,000, considering the two documents six months apart and it but my constituents would like a day centre. What has would be useful to have one document which brings Ramsey got? Ramsey has got a cottage hospital. It seems together the budget and the policy statement. that give areas something and they want something else. With possible political changes in the UK shortly and continuous changes in the European Union, it is important Mr Singer: A heritage centre we would like. We would that the Island has a strong financial foundation and like a heritage centre. exercises prudence and strict financial disciplines over the months and years ahead. Mrs Hannan: You would also like Peel Castle, I realise At the present time the Island has low direct taxation, that, but you are not having it. (Laughter) low unemployment, low inflation, a minimal amount of external debts and is well placed to achieve sustainable Mrs Hannan: I would say, Eaghtyrane, yes, we are a growth. As I remarked earlier, Treasury may need to re- caring society. I would say that members should turn to examine the Customs and Excise Agreement this year page 11 where there is a list here of supplementary benefit, because without fiscal independence we can never have of winter heating supplement automatically paid during true independence. the months of January, February, March, unlike other places I will be supporting the budget. I will not be supporting where they have to wait until temperatures fall below the amendment. I will be voting for the budget. Thank you. nought degrees Celsius for one week. Rent and rates costs for people in public authority housing accommodation who Mrs Hannan: Eaghtyrane, I do believe that this is a receive supplementary benefit will continue to be met in positive budget. With growth for departments of £14.7 full. Free public transport for pensioners and continued million or 6.5 per cent I do not think it could be described concessionary fares for the disabled, schoolchildren and as anything other than that. Government - very little money the unemployed; free television licences for pensioners on is borrowed and we are living within our means. Any family supplementary benefit; free eyesight tests and dental expenditure has to live within its means and I do not see examinations on the health services, which are subject to the government of my country as being any different. various charges in the United Kingdom; funeral payments Many of the discussions today have been about - a standard rate of £150; christmas bonus of £65 - only additional services and I would suggest to this hon. Court £10 in the United Kingdom. We do not hear anything about that if we do want something different, then it is up to us that. And we also have the Manx Electricity Authority two- to make savings in some areas so that we can afford to monthly standing charge of £7 rebated in full. This is develop services in other areas: I think the point made by something that we have not heard about today when we the member of the Council when she related to reallocation are asking for increased services. Are members prepared of funds. But I think it is up to us all to look at spending to give any of these items up? Certainly when I was within departments. We are now all within departments, canvassing - because I think some members think that it we can all look to see where moneys can be reallocated was just the new members that were elected in at the last and where savings can be made so that what some of us election, but I also stood for election - my constituents consider as being other services could then be developed. were very grateful and wanted the free public transport to Now, the amendment before us actually states that this continue. They felt that was something very positive magic f.5.7i million that has been procured because of a directed at them to give them mobility. different interpretation of our customs and excise should be spent in a different way than is suggested and it is Mr Delaney: Hear, hear. I was delighted with that. suggested that we should have all-weather sports pitches, mainly at Ramsey I think it was suggested - Mrs Hannan: So, yes, we are caring and I do believe that we have been developing a prosperous society as well. Mr Singer: And Peel. But economic development comes with a cost. We heard some members speaking today about the development in Mrs Hannan: I think the member also mentioned Peel Douglas. People do not want development in Douglas. as a possibility. They do not want the inconvenience of people driving through Douglas, driving through areas. So there is a Mr Singer: Yes, and Castletown. concern that has been expressed by a number of people about this added development that is needed for the Mrs Hannan: What I would suggest is that some of us prosperity to pay for these extra services that we want all have other priorities. Peel, yes, would like an all-weather the time. And I believe that, in expressing the care and

Budget — Debate Continued T258 TYNWALD COURT, TUESDAY, 18th MARCH 1997 concern we have for families and for child care, finances and because of that the agricultural industry is able to trade do need to be available for these areas to allow us the with Europe. Mention was made by the member of the options for developing some of these provisions. Council. He has obviously become a Euro-sceptic. But Now, Mr Singer, when he was speaking, spoke about protocol 3 does allow us to trade freely with Europe, not people living in nursing homes and the amount of money just on agriculture but also fisheries and industrial products, that they had and he ended up by saying that people in but it has to be to a standard and if we expect standards nursing homes only had £25 left for spends. I can tell you when people import here or we expect people to operate that many low-income families would be delighted to have to a standard, surely if we are going to trade with a huge that sort of money for their spends, for their luxuries. I organisation such as this, then we should not balk at them think Mr Singer spoke about hair et cetera but why have asking for standards and we certainly want those sorts of money for hair and not feet? I find it quite difficult to come standards for our people here. to terms with. (Interjections) Derogations are addressed from time to time and we I have mentioned before that I think we all fought an have been successful to date at being able to secure election in November and I fought that election for political derogations. Other derogations are being looked at but will stability plus financial stability and I believe that is what not be progressed unless we have the support of the this budget is bringing to us today. I am concerned that it industry, and we are still progressing that at the moment. was suggested this morning that that political stability But it is important that we are able to trade with Europe should be shattered, could be shattered and should be and it is important for our industries that we are able to shattered, by the member of the Council, and I am glad continue to do that. I would liken us really to be being that that amendment did not succeed. trading partners. And I think the member of the Council Concern has been expressed about young people, about was suggesting that it is all one way, that they can import the care that we should be providing for young people, or at least import here. I hope the member was not young people with difficulties, and I believe the way ahead suggesting that certain things should not be imported. That for families, for support, for low-income families, is to again might cause us problems in other areas. But I believe diversify the economy, to offer alternative options for that we should continue to have a positive approach to the improved incomes and that means improved employment European Union and certainly my department, the opportunities so that people can leave jobs, can look for agricultural and fisheries industry, does have a positive improvement in various areas and can do that through approach to that. training, through retraining and through development of Fishing within the industry itself always has a difficult themselves, whether at school or whether through later on time. It always relates to the weather and it always relates training or retraining to take up different employment, and to catching and it also relates to quotas, and talks on the I believe that is the way ahead that we should be aiming fisheries management agreement are ongoing and at. hopefully we will get a settlement within the next 12 Another area which I feel extremely concerned about months on quotas. is that while giving people this opportunity for changed Before I do leave my department I will mention forestry. employment to improve family incomes, we should be I do believe that the forestry area, which includes amenity aiming that all our people should pay income tax because and forestry, is important for the sustainable provision of if all our people paid income tax they would be much better materials for our community and I do believe that it is off than they are today and it would take people's incomes important when it comes to rural employment and I do higher up. So that is an area which I believe that we should believe that it is something that this hon. Court should not be aiming for so that people are better off, they can pay forget. more, and I would hope that the low-wage economy that I If I could just mention another couple of issues, I think believe could be developing, especially as something which the member for Ramsey, Mr Bell, spoke about increased is developing in the United Kingdom, and we do tend to costs of waste disposal and sewerage. I think I would pick up influences from there, is that people will be pushed remind the Court that it is not so long ago that the local into low-return employment, they will have poor incomes authority paid for waste disposal out of their rates and there just so that they are able to be at work, and I think we was also a provision in local authority rates for sewage should be aiming to improve opportunities so that they do disposal. I think probably this is where government ought have a greater income for spending. to be reminded from time to time that when it takes over I will just briefly mention my own department with responsibility for areas such as this it also should look at regard to ways of restructuring support schemes and these funding. It is not something that we can take over for ever are being investigated at the moment to fulfil the aspirations and ever without there being a cost. So while there have that have been expressed by Tynwald Court and it is an been savings in local authority rates over probably about area which we will be seeking over the next year to address. 15 or so years, if my recollection serves me reasonably The BSE problem is ongoing. The department will be well - probably a little bit longer than that - the taxpayer continuing with talks on the future of the beef industry. has picked that up, whereas in the past the ratepayer picked This is part of the agreement that I explained when we that up, and so I think it is something we should not forget were discussing the future of the beef industry in relation whenever we take over services from local authorities. to the BSE problems. Also, in other areas, green taxes have been introduced, Contrary to what has been said in recent times, the meat greenhouse gas to try and attack the problem of greenhouse plant is serving the agricultural community extremely well gas emissions and also landfill tax in the UK. So it is not

Budget — Debate Continued TYNWALD COURT, TUESDAY, 18th MARCH 1997 T259

something that we have a problem with alone. It is something is wrong you have a duty to say it is wrong and something that has to be addressed by other areas. to work to change it and that brings me round to the I would just, in finishing, say that I would be opposed amendment, because there are none so blind they do not to the budget and the policy debate coming together. I do want to see. They have only got to listen to what has been believe that the policy debate is something which all said today by members opposing the amendment, and members can influence on each individual policy that is anyone who has listened will realise that they do not want addressed by that document. The budget is a different thing to understand exactly what the hon. member for Ramsey, altogether. The policy document is introduced by the Chief twice, not once, but on two occasions has brought to the Minister as the policy of government. The budget is attention of this hon. Court. It is a simple word much found addressed by the Treasury Minister who has put together a in the world but he has found it and I am grateful to him budget and that is the Treasury Minister's responsibility. for that if nobody else is. He found an injustice, and that is If we are going to bring the whole thing together as one, is what I always thought Tynwald is all about. I thought that that going to be the Chief Minister's document and it would was our duty - if we come across an injustice we have a not be addressed specifically by the Treasury, or vice versa: duty to resolve it, and the hon. member for Ramsey, doing are the policy and the budget to come together under the the job he was elected to, brought to our attention an Treasury and not form the Chief Minister's policy? I do injustice that some people, depending on their location, see that this is a problem. If it is suggested that they should received free medical treatment and those in other come together I would be opposed to it coming together. I situations did not get it. They were having an injustice do believe that each individual member should be able to perpetrated against them, and he pointed this out twice. discuss policy at a different time than when the budget is Now, the situation is if you accept there is an injustice finalised. Because we have the policy document, the policy we have a duty then to try and resolve it, and I accept that statement being made in October, Treasury then has the he indicated quite clearly twice that this injustice was being time to sit down and discuss with departments from the perpetrated, and I for one will not accept that, pretending policy statement about what has in actual fact been said, that £10,000 a year will not solve that injustice, you should and therefore I would hope that members will not support perpetrate it for another financial year. If £10,000 will solve one document, one policy. It might seem a little bit tedious an injustice in the multi-hundreds of millions we are talking having to be here today and to hear all of us talking about about, I am, for one, going to support that alteration to get a budget, but why not? That is what we have been elected that injustice resolved, and I would suggest those members to do. We have been elected to look after the best interests who came to this Court, within their minds trying to get of the public of the Isle of Man and constituencies and some fairness for the people of the Isle of Man, contemplate therefore I would hope that when that is discussed, if it is that amendment because that is what he was talking about discussed as something which should be done at one time, and that is what he has got in this amendment, trying to we would resist it. I will be supporting the budget. Thank resolve that position and I want to see it resolved. It could you, Eaghtyrane. be your parent, it could be one of your constituents, it could be one of our friends who could find themselves in the The President: Hon. members, with the possibility of same circumstances and how would you face up to them, perhaps in excess of three hours' work ahead of us still knowing that it had been pointed out to you but you were today, I think it is appropriate that the Court should take a not prepared to act? No, I am grateful to the member for break and we will resume at ten to five by the Court clock. Ramsey and I will support it because I think it is justice to The first speaker will be the hon. member of the Council, do so. Mr Delaney. The budget, depending on what view and what position in the administration you take and you are in, is depending The Court adjourned at 4.30 p.m. on how you will react to it, and nobody is saying in this debate that we are not going to spend more money. Nobody is saying in the Pink Book there is not more money to be BUDGET — DEBATE CONCLUDED spent. What some of us are saying is, is it being spent fairly? — MOTION CARRIED And the member of the Council, Mr Lowey, this morning, if nothing else, achieved what I thought he would achieve. The Preisdent: I call upon the hon. member of the He pointed people's minds to that group of people in the Council, Mr Delaney. Island who he rightly says - and nobody has denied it today; no minister, and they have got up one after the other, has said that he was wrong - that there is not 30 per cent of the Mr Delaney: Thank you, Mr President. I would open people out there who are going to get nothing in real terms my remarks by congratulating our colleague Mr Luft on out of this budget. Not one of the ministers has denied managing to get William Shakespeare into this debate, and that. So therefore he had a case to put and he put it and I am quite certain that he was looking down upon us, but I other members following him have again highlighted what am sure he is, whoever he might have been. He is probably their belief was for those people who are not receiving looking at two of his plays being acted out here: from the anything, and if nothing else, we should be looking at those ministerial side As You Like It and from the opposition people who are least capable of surviving in this high- side Much Ado About Nothing. But the fact of it is that you powered society that this wonderful environment is take a stance and you have to stick with it and if you believe creating and which we keep applauding. They have a right

Budget — Debate Concluded — Motion Carried T260 TYNWALD COURT, TUESDAY, 18th MARCH 1997 to enjoy the prosperity of the Island and it is our duty to I want to address another remark, which I want to try and attempt to make sure they get their share of the support, by the member for Ramsey, Mr Bell. He has rightly fiscal cake, and even the member for Ramsey, Mr Bell, in identified, on two occasions, reading past records, the the latter part of his speech got round to that situation and situation in relation to the so-called building boom. Now, pointed out the dangers for the future. But it is no use now some of us have been here long enough to know that what saying to the people outside for this year, 'You are in danger he says is totally right and some of us have had to address in the future if we have the opportunity now to do the problems that have been brought with such booms. something foi this fiscal year.' He is quite right. There are We know that large numbers of people are doing well. new charges going to come at them and they are not Their houses will be sold for higher prices. New houses equipped, this 30 per cent, to be able to meet those charges, will be built if they can find the land to build them on, but and what are we saying, that they will have to survive I cannot identify the land with the services, by the way, as another year when these charges are going to be an ex-minister. I could not then and I think that this minister implemented against them and we are going to do nothing is going to have difficulty as well. But when it happens about it? Is that fair? Is it proper? And the answer has to there will be a knee-jerk reaction, which was referred to be no. today, because it is our people, a large block, who will The minister Mr Bell rightly pointed out the dangers suffer the consequences. As the price of houses goes up, that are coming, and we all know he is right, but some of the limitation on the number of houses on the market goes us want to make sure that these people who will have a lot down, who suffers? Our sons and daughters, grandchildren, of these charges to pay... We know about the water rates. nephews, nieces, the sons and daughters of our constituents We know about the increase in ordinary rates and we know and the people we represent. They suffer. And the member about the other increases. We know about the gas charges. for Ramsey, Mr Bell, the minister, is perfectly correct to These things are debated, are questioned in the House of say at this moment in time you can hardly get a third-rate Keys and sometimes in the Legislative Council week in labourer in the building industry. So where are all these and week out, and yet at this time when we are laying out tradesmen and labourers going to come from? They are the ground rules for the finances of the Isle of Man we are going to come into the Isle of Man to carry out the works not prepared to address them for those, in his words, who which we in part are going to finance and we know a large are least equipped to pay them. I am delighted he is there block of those will stay on the Island, they will meet their as one of the ministers because maybe he can convince his future wives, they will settle here and they will not all be colleagues, as he has not been able to do this time, that we able to have big houses, they will not all be working in should be addressing that issue. Athol Street or any other office block, and they will expect Mr Luft, our colleague, asked if there were any council houses. So I will expand on Mr Bell's proposition suggestions. Well, I am sorry, yes there are and one of the and say you will have a problem in five or six years' time suggestions put forward this morning was, not all of it, with a lack of council houses and houses for our people but the £5.7 million. Do not put it all into the reserves for because by that time a lot of these people will be ours, and the pensions. If we had not got the windfall we would not it is well worth addressing now and looking at. have had the money and we would have been taking it out The budget is good for those who have got the money in smaller portions each year. That is the truth. But because and will have the money to pay the taxes and they will be they got the windfall by a mistake, an error, call it what grateful for the extra £400 for a married couple. They will you It was not in the policy document. It was said be grateful for that. But for those who have not got the that we would put money into reserves and we have all money to start with, they will be ungrateful because they accepted that as good, proper and frugal organisation of will have nothing to be grateful about. Their situation the Isle of Man's welfare and finances, but that does not tomorrow morning will not be improved one iota in what mean that when they get a windfall it is grabbed by one is coming into their household. It will be affected by what section with the co-operation of a handful of ministers and is going out in the new bills coming to them which they put for their benefit only. A little part of that could have have to pay, and when they look back on this budget they been easily earmarked for those people who we have will say quite clearly, 'It was our representatives, it was identified here who will be getting caught by the increased the Tynwald chamber that supported this theory that the charges of the Isle of Man, the cost of living in the Isle of Island is being run for those 70 per cent who are doing all Man, but that seems to be pushed to one side. So be it. right.' What is our answer going to be? 'But they are the Maybe some of us will have to keep on month after month people who are making the wealth. They are the people putting resolutions down and we will probably keep getting who are in the commercial and the financial world.' No, told there is no money available because the budget has they have a right to be looked after as well and there should gone through and the money is being ringfenced for other be some members of this Court who are prepared to look purposes, but we will keep trying. This is not the end of after them and I count myself amongst that number. the debate on the finances of the Isle of Man, I can assure you, far front it. This is just a big act. There are many Mr Rodan: Mr President,.if it were ever thought that sideshows going to be performed and there will be because politics was the art of looking for trouble, finding it the public expect us to do that. This is not the be-all and everywhere, diagnosing the problem wrongly and applying end-all of running the Isle of Man. It cannot be, not when the wrong solution, then I think certainly the response of you know that there are so many people in danger of going the early part of today's debate would bear that out this backwards in a booming economy. morning.

Budget — Debate Concluded — Motion Carried TYNWALD COURT, TUESDAY, 18th MARCH 1997 T261

I would firstly congratulate the minister on his very low position comparatively and although we have presentation of this his maiden budget speech. It has been got fast economic growth and all the rest of it, we still, in a book-balancing exercise with his colleagues, ultra- terms of gross national income per head of population, are cautious to the point of being worthy but dull, this budget, no more than 77 per cent of that of the United Kingdom. but nonetheless it was presented against a backdrop of We have, according to the 1994-95 figures, a GDP per economic indicators which the Treasury Minister clearly head of £7,637 against the UK £9,923, and our level runs outlined to us - indicators of economic growth of 6 per at half that of the Channel Islands: Guernsey, £12,771; cent, full employment, inflation below 3 per cent, a Jersey, £17,867. Now, we accept that the economies of the balanced budget, no external debt and welfare benefits way Channel Islands are different from ours. They have a much above levels of the United Kingdom: economic conditions smaller industrial base, manufacturing sector and a much that, if they are not the envy of Europe, ought to be and smaller agricultural sector. So there are historical reasons certainly the sort of conditions which British Governments perhaps why this should be so. Although we have made have been aspiring to for years and will never be able to great improvements in the last 15 years, we are still running achieve, and any potential government in the adjacent isle less than half that of the Channel Islands. entering an election with that backdrop to their economy Now, to my mind there ought to be a clear statement of would be very well placed indeed. So it is time we woke intent by government that the aim of this administration up to the fact that we have a very, very strong economy must be to take this Island's wealth and standard of living and we are well placed in terms of our economic conditions up to and beyond that of our nearest neighbour and the for to provide a structure of social support for the less well- trick for government is how to pursue the strong economic off members of our society. growth that has begun in the last year or two, how do we So with that in mind, why was this budget greeted with aim for a high wage economy? Because I quite agree with undisguised gloom tinged with indignation? I think the Mrs Hannan: there is no virtue to be had in a low-wage reason for the gloom and the indignation is the political economy, an economy that pays low wages to its people, system under which we operate and under which this presented as one of the advantageous costs of doing budget was produced. We are back from an election but an business here. I am not interested in that. I would like a election fought on the basis of individuals with individual high-wage economy with, as has also been said, generating manifestos, with individual aspirations which of course high tax receipts for its exchequer, and an economy that could not be realistically met within the first budget of can support strong social services and a high standard of this new government because there was no government- living for all our people, not just the 70 per cent that has in-waiting before the election, presenting a case to the been referred to, and we do this, and it has again been people for which the budget would have been the first touched on, through economic diversity and greater internal opportunity to bring into being a manifestation of its productivity and it has to be that way because if we bring political ideals and a mandate on which it had fought. There this about simply by bringing in people from external was no government-in-waiting. sources, with pressures on our population and services, When President Kennedy came to office the talk of the we are destroying the very society we are trying to promote. time was 'a hundred days of frenzied activity'. Well, we So how do we achieve these desirable objectives? There have had, because of our political system, a hundred days are a number of things: education, training and of inertia. Now, I do not say this disparagingly to the Chief entrepreneurship. And we are well placed to capitalise on Minister because it is a fact of the system, the way we those particular methods and apply those to the present operate, that governments do not, after an election, come economic base, coupled with a global outlook to the into being with a programme of action and policies they Island's expertise in financial services, and that should be can implement, with the first budget of that government the basis for our economy and that has been reflected to a being the showpiece occasion, that is not the way it operates degree in the budget. here, and that coupled with the fact that last October the How does it meet those particular tests - education, policy document, the annual programmes of policies by training, encouraging financial services? We have in the government, was laid before Tynwald and was not even budget income tax relief for vocational training and the subject of a debate, it was never debated, the policy, it education, which was very pleasing to see; development is hardly surprising that there is frustration on the part of and incentives for the selling of financial services. The individual members who, when faced with a budget which film fund and tourism marketing incentives were they would like to have seen put into effect some of their specifically mentioned by the minister, as was continuation hobby-horses or pet aspirations or genuine convictions, of of relief for capital expenditure with the commercial course we do not have that. The time to have done it would buildings allowance, and this of course is in the context of have been if there had been a proper policy debate, but the Douglas 2000 planning scheme and I think highlights even for those new members, even had they been here in the value of forward planning such as the Douglas 2000 October, there would have been no opportunity to planning scheme in directing economic development in contribute to that debate for which the budget then becomes this Island, which is something that ought to be duplicated the practical expression of putting those policies into effect. in other areas of the Island, as Mr Bell referred to when So no wonder there is frustration and frustration certainly. we seek to develop direct economic development. Now, the reason for the gloom - well, we have heard a But, worthy as that particular objective is, and the special little bit about the haves and the have nots. Despite our tax arrangements for commercial buildings allowance, we enviable economic circumstances we have started from a do have, I am sorry to say, a problem in the UK budget last

Budget — Debate Concluded — Motion Carried T262 TYNWALD COURT, TUESDAY, 18th MARCH 1997

November because under new proposed VAT tax convenient for government to be the beneficiary of windfall arrangements the exemption currently enjoyed by certain tax because of decisions that have been made in London. sectors for letting of new development, that particular VAT So that is one of the long-term aspects of our economic exemption is to be removed and the effect of that will be situation. discouraging development in the very sort of areas like Now, what I was very surprised to hear nothing about Douglas 2000 which we are seeking to promote through at all was what I and, I think, Tynwald considered at the tax incentives, and this may well have the effect - I do not time to be a blueprint document for our future economic know, perhaps Treasury could tell us - of a developer in an growth which was the document 'Prosperity Through area zoned for regeneration having to find the foregone Growth' published by the Central Economic Strategy Unit VAT up front, which will of course add to its costs. But all as a framework for the economy to develop, with all sorts that of course does highlight is a small example perhaps of implications for tax generation and economic of the long-term situation we are in whereby the majority development and incentives. Now, it had some 70 of our revenues which accrue to this Island are set at levels recommendations in that report, of which as of a year ago over which we have no control, which brings to mind the at least 20 were still receiving active consideration. But absolute necessity for clear statements on where we are given that that was accepted as our framework for our going in the longer term as an economy. developing economy in every sphere, what further progress Now, the minister was quite right to highlight the fact have we in fact made and would the minister be able to that in 18 months' time we might wake up to find that the give us an update on the proposals contained in that pound sterling has been abolished and with it the Manx document which were designed with the promotion of our pound note. Eighteen months' time this could happen and economy in mind? that has severe implications for our economy, which the One of the policies in that document would, to my mind, minister has indicated that Treasury are looking seriously address the serious objection which is often raised to what at. But what he did not mention of course, and it has been is simplistically called abrogation and this is the position raised previously in this Court, is the other long-term of the important manufacturing sector in the Isle of Man danger, and it could well be a third time bomb to add to which naturally wants the ability to respond quickly to the Mr Bell's previous two, of the harmonisation of indirect United Kingdom market in terms of selling its products taxation, and VAT in particular, throughout Europe. And without customs barriers and without undue bureaucracy the United Kingdom will have regard, quite possibly under and the rest of it. Now, the 'Prosperity through Growth' a new government, to its European commitments and we highlighted that what we should be aiming for was not shall be obliged to follow suit whether or not it is in the tying slavishly our indirect tax rates to the United Kingdom interests of the Isle of Man, and what we are talking about but seeking an approximation of our indirect tax rates with here are at least 15 per cent VAT tax rates on food, the European Union, so not an exact alignment but an children's clothes, books, newspapers et cetera. So I would approximation to see if, by negotiating this position to our like to hear something about how we propose to mitigate advantage with Europe, we could achieve barrierless trade the effects of that. between the Isle of Man and the United Kingdom and hence The haves and the have-nots - well, it is the have-nots with Europe, and I believe we should be, if it is possible, who are paying VAT. (Messrs Delaney and Cannan: Hear, negotiating bilaterally with Europe on the possibility of hear.) They are paying the VAT, less than half our taxation. this flexibility. We can juggle about with the rates in direct taxation but So I have deliberately, notwithstanding the important the majority of our revenues are raised from sources where local questions highlighted by this budget, tried to raise it is the poorer parts of society which pay the most, and perhaps some of the longer-term objectives for the that situation is not going to be helped if there is 15 per economy and the wider picture. But generally speaking cent on food and all the rest of it, to say the least. the budget, despite being dull, would have my support Now, of course this has implications for the old chestnut because it is a good framework for future policy initiative, of the Customs and Excise Agreement, and Mr Waft, I I hope, by this administration and it is none the worse for think, was the first to touch on that, and while it was good having been compiled against a backdrop of there being that the minister referred to the Customs and Excise no policy in place for the budget to implement. Thank you, Agreement, he did so in terms of defending it and in terms Mr President. of the benefits that it offers the Island still. Now, I do not know why he specifically mentioned but the share in the The Speaker: Mr President, I intend to be brief this pools, the passenger duties were mentioned, as well as its afternoon. I would like just very quickly to say a big thank potential for VAT errors, it would seem, and a windfall you to the hon. member who has just resumed his seat. I accruing to the Island because of that. There are other think that he has put his finger, probably, on the single tangible benefits in terms of our net benefit and the VAT point which I feel that this hon. Court some day will have that is collected centrally and sent over to the Island but to come to grips with: are we going to govern the Isle of nonetheless there are long-term dangers, I believe, for the Man and be responsible therefore for our own taxation Manx economy in having all our eggs in this particular policy or are we going to go along for a ride? It has been basket because one of the advantages of the agreement staring us all in the face for a long, long time and at some that I could add to that list is the fact that it absolves the point that single issue, will have to be decided, and I would from political responsibility for simply say to the hon. member for Garff: thank you very the decisions it has to make in raising tax and it is very much for introducing that to the debate. Until that point

Budget — Debate Concluded — Motion Carried TYNWALD COURT, TUESDAY, 18th MARCH 1997 T263 arrived I tended to feel that today's debate was basically a dear in its society and in its art - simply get £2,500, and monotone on the one level that in fact there was very little the reason that we only get £2,500 is that we start from a enthusiasm for it, but we were all - and I mean all - going much lower base, and that is the problem of playing the to support what in fact is a very sound, a very secure and a percentage games. That little example there, that little very safe budget, and if you add up those three things cameo, I am sure, hon. member, shows you the difficulty together and acknowledge that with the safety and security of when you play percentage games, and in fact I pay tribute that is there it is a budget that is sustainable, there is not also to the members who served with me on the Manx one hon. member in this Court that will vote against it. Foundation, because they are equally as determined as the Even the amendment as moved by the hon. member for Arts Council members to push forward Manx culture in Ramsey this morning is in effect supporting the budget. this Isle of Man, into our nation, into the nation out there So what have we been talking about? If you strip it from which Tynwald Court is supposed to represent, and I would all the words which have been said today, what we have simply say, in closing, that if you think on that little cameo really spoken about is the lack of a little bit of sugar or a and think of that percentage game of playing 3 per cent, little bit of enthusiasm put into the budget for the general those with the most end up with the most and again we are public's perception of what a budget should be, and that is back to the haves and the have-nots. If you are not in the where we simply went astray by not being confident field when you have got a bigger allowance, you have not enough as a government to put a little bit of perception to won anything and those getting a percentage increase at the general public out there of what a budget should be the top of our scales are getting more now, probably, in about, and frankly we are told that we have been very good, total increase per annum than some of those on the lower and so we have, by having additional money to put to end of our scales are getting in total wage per annum. reserves and additional money, £5.7 million, to be able to put alongside a pension fund - excellent! Every one of us Mr Radcliffe: Mr President, I will be fairly brief but is proud and should be proud of that achievement and to just confine my comments to one or two portions of what know that in fact we have lived, as the hon. member for has been said during the course of the day. It has been an Peel rightly said, within our budget means - excellent, first interesting debate. Interesting to hear members say how class. But would it not have been nice if instead of saying, uninteresting and lacklustre the budget was. Perhaps to `Right, we will put £5.7 million to one side,' maybe we the outside world that may be so, but I think we have got would have put £4.7 million to one side and, with a little to say surely that is a pragmatic and practical and prudent bit of single-minded perception and confidence of budget that we have had before us today. government, been able to have led those people out there, A lot of criticism has been made and comment about the have-nots, as have so often been referred to in this the decision to put £5.7 million into this employees' hon. Court today. pension reserve fund and a lot of comment again about I was basically rising to my feet not really to discuss there being a fund for civil servants' pensions - a thing the budget; I was really rising to my feet as a result of the that is very easy to say but very misleading. Civil servants vision which went across my mind of Puck tripping lightly do benefit from that fund, as do doctors, dentists, teachers, along the bench behind me having a midsummer afternoon policemen, manual workers - and there are many of those; dream, really, and in fact the comments there were all about indeed, former members of this hon. Court are entitled to bringing to the Isle of Man the Vienna Boys' Choir, the draw on that particular fund, so it is a very wide reaching Liverpool Philharmonic Society and introducing fund which covers all sorts of former employees. Midsummer Night's Dream and Shakespeare to the Isle of We have heard a lot about the 30 per cent who are outside Man. Now, I pay a single tribute indeed to the hon. member, the tax net, and the question has been asked by many His Honour on the Legislative Council bench. He has in speakers, what is the budget doing for them? Many every debate on a budget to my knowledge over the last contributors have said that. They have asked the question few years been strong in his pushing forward of the Arts but there have been no answers whatsoever coming from Council, and I pay tribute to that because each and every hon. members as to what should or should not be done for one of us would find life, I am sure, very tedious indeed if this particular section of the community. In fact one hears, there was not art in society; if there was nothing of music `They should do something.' But who are they? Is it to be and dance and theatre in society it would be a dull place the Treasury, the Department of Health and Social Security, indeed. We need it. But last year the Isle of Man Arts some other department? Who or what is going to do Council got an additional sum in their grant of some something? No real suggestions. £150,000 plus, and the hon. member there today is making The hon. member for Garff has said, and rightly, that comment and thanking the Treasury Minister for being able there has been no policy debate in this past year. There are to sustain that level and of course add to it the 3 per cent - no real priorities identified and there will not be, hon. in other words the nice, straightforward economic figure members, until we do have a full policy debate and we can which everybody has got. What it amounts to is that the get the arguments sorted out on the table. Members have hon. member, the chairman of arts, has ended up with an had their moans, albeit in a modest sort of a way, about additional amount this year of £8,000 in his slush fund what they have or have not got for their particular whilst I, as now Chairman of the Manx Heritage departments, but I think, until we do have a full-blown Foundation, the statutory body which is responsible for policy debate, Treasury and the Council of Ministers will art, culture, music, dance, Manx language, Manx literature have no real aims to go for, and it will be just a state outside - all the things of Manxness that this Isle of Man holds that of people saying we should be doing this, should be

Budget — Debate Concluded — Motion Carried T264 TYNWALD COURT, TUESDAY, 18th MARCH 1997 doing that. Until we have a full day's policy debate, there I pay tribute to my predecessors on this for the work that will be no set course at all. they did in making sure that this new industry for the Island I think this budget has demonstrated to people in the had an established base. The Isle of Man is now known Island and outside of the Island that there is both political within the industry and is recognised as a practical and, I and financial stability here. An Island which is free of would suggest, an attractive location for film making which external borrowings - and there are not many places that is developing its own infrastructure and local skills base can say that - and showing, as required by statute, a surplus all the time. of income over expenditure, albeit a very modest one this The fund which is to be established will operate on an year. The thing is, hon. members, that we have people ongoing basis, not only supporting investment in film outside looking in, and what we must do is encourage production but also seeking to recoup the investment and, potential businesses and businessmen to opt for the Isle of where appropriate, a share in any profits that may be made Man in the face of stiff and very aggressive competition by the projects which it supports. The department will be from other quarters. I urge members to support the budget working, as it has up to now, very closely with the Treasury in its entirety, Mr President, as I shall be doing. to ensure that the costs incurred by the fund are exceeded by the overall benefit which accrues to the Island's Mr North: Mr President, I would like to associate the economy through such local benefits as local spending, remarks made by several other members on the Treasury tax receipts and the general increased economic activity Minister on his obvious daunting task, his first budget; I and publicity which this industry actually creates. Part of would also like to congratulate the hon. member for Garff, the new capital funding allocated will be used to progress Mr Rodan, on his contribution. I think it really added a lot our aim of attracting television production to the Island. to this particular debate. Talks are well advanced with some of the major I understand where the hon. member for Ramsey, Mr broadcasting companies in the United Kingdom, and I am Singer, and the hon. member for East Douglas, Mrs hopeful that these will come to fruition in the near future. Cannell, are coming from, straight from the hustings in The intention is to use a similar strategy to that which has their first big budget debate, and also one has to admire been successful in relation to attracting film makers. So a the tenacity of the hon. member for Council, Mr Lowey, degree of grant support will be involved in getting this with his resolution for an adjournment. Surely the hon. part of the initiative up and running. member for Council would admit that in the many years I am aware that much of this information is new to hon. that he has been in this hon. Court the budget has changed members. I have to say that when I was appointed Minister dramatically in that we used to expect handouts and of the Department of Trade and Industry I was somewhat surprises in the budget. We do not get that now because skeptical about the film industry and I have had to learn the system is different, it has changed, and I would suggest all about it. I am sure that the interest that has been created that under the system where the departments... and I just and the developing aspects of this within the department do not agree with him that things will not happen during are really going to progress dramatically. I would just like the year because they are already a lot of those in the to take this opportunity to say that I intend to arrange a budget. But the budget debate, as it is now and in my short full briefing for members of Tynwald in the not-too-distant time within this House - the surprises and the sort of future because it is a complex matter, and I am sure my handouts that one used to expect just are not there any predecessors will agree with me that unless you actually longer. It has gone. have to sit down, study it and understand it, it is a very I obviously support this motion and, in doing so, I would complex subject and can be misleading at first glance. So wish to take the opportunity to give the members just a the proposals will be explained in rather more detail. very little more information about the funding proposals My final comment, however, is to stress the importance in relation to the Department of Trade and Industry. The of the Island using some of its income to reinvest into the department is effectively charged with the encouragement wealth-creating sectors of the economy. It is only by doing of industrial investment and economic development in this that we can possibly look forward to maintaining order to broaden the economic base and, whereas the government spending programmes and, as is always the traditional role of my department was restricted almost case, attempting to meet the apparently never-ending exclusively to the manufacturing sector, I think it is demand for more and better services. acknowledged that it now has a much wider remit relating Reference was made earlier on by His Honour Mr Luft to economic development generally. about non-resident companies, and I have to say that I Members will also be aware of the progress made over personally would have liked to have seen the non-resident the past two ypars in relation to the encouragement of film company tax increased tenfold today, but I accept that the production activity. This has been achieved through the FSC is investigating this, examining it and I certainly will use of tax credits but now, as mentioned by my hon. await their consultation process to take place. I know there colleague the Treasury Minister, the opportunity is to be is £6 million income from non-resident companies, but I taken to allocate specific funding within the department's would certainly like to see the non-resident companies capital budget to support the creation of the Manx film given a free transfer to exempt companies, let us give them and television fund. This shift away from tax credit, or two to three years' advance notice that we are going to up effectively grant-based support, is seen as being possible the rate up to what it is with exempt companies and, quite due in no small measure to the success achieved in the honestly, those who do not want to transfer to exempt past two years in attracting film makers to the Island, and companies I would suggest we do not want on this Island.

Budget — Debate Concluded — Motion Carried TYNWALD COURT, TUESDAY, 18th MARCH 1997 T265

The sooner they go the better, and I think we have to accept particular department and division that he was responsible that there will be a loss in revenue on some of that but I for, and I think this is the very point certainly that has personally am very confident that the FSC, under the come home to me, that that is all very well, members do chairmanship of the hon. member for Glenfaba, will do a have that contribution into their own department and the proper job on this one and consult and investigate fully concerns and the worries of that department, but we do the implications of such ideas. have that piece of the jigsaw missing of that member having I believe that the Treasury should be applauded for the something to say about another department of government commitment to this philosophy in the budget and which it prior to having a situation like we have today of a budget has shown in the proposals before members today. I have in front of us where members were given a private no hesitation in commending them to the hon. Court and I introduction to it, and I can say also for the new members hope that other members will do likewise. Thank you, Mr that up until a few years ago there used to be a vote taken President. within that private sitting, so important is the budget to make sure that the budget did not fail. Mr Gelling: Mr President, first of all, obviously I will Now, here we are today with a budget that has been be supporting the budget, and I would like to begin by described as dull and not very interesting. Well I can assure congratulating the Treasury Minister on not just the way the hon. Treasury Minister he should not get in any way he presented it this morning but also knowing the hard upset about that, because I think that is probably how the work which has gone into it over the last three months. It last three, certainly in the last administration, were is no easy job to come into a Treasury situation, and I go described by the private sector, not that they were in any immediately back to this morning when the hon. member way displeased, but that is how they like to see the budget Mr Lowey suggested that in 1992 after the election we of the Isle of Man and the economy of the Island with no were able to do much more for the lower income people, huge swings but something stable from which they can go but of course at that time it was an administration that was out and sell their products from the Isle of Man. coming back and it was the same administration and it Also I was struck by the comments of the hon. member was the Treasury Minister who had then been in office for for Garff, who highlighted many of the points which I 18 months. So what I am really saying is this: here we are know, because he has repeated them on every occasion he in a position of having an outgoing administration; we have gets the opportunity, about his concerns on Europe, now got a new administration. I can assure you that the concerns about VAT and so on. Now, what I would like to hon. members who are new members may be frustrated, say is that the Minister for the Treasury this morning in but in three months we could honestly have done with 12 his contribution gave out an invitation to members to go because we too get frustrated in bringing together an along to Customs House, go along to the Customs and administration where we are trying to bring forward Excise people and talk to them, because I think there is an consensus and to bring people into that programme of awful lot to be learned about this agreement. making decisions, and therefore I would suggest that had The other thing I would say is that if that agreement is we presumed and come forward with a budget that was not in the best interests of the people of the Isle of Man, extremely radical we would have been criticised for having yes, I would put two hands up for doing whatever was taken these steps without due consideration, although necessary to change it, but until that time I believe that taking on board we also accept that there has got to be that agreement is such that without it, without disclosing decisive decision-making and leadership. But the situation any figures, I am quite sure that the Treasury Minister we have today - we have a budget which is stable, and I would be here today doing exactly what someone else think it was raised by one member that it was a platform commented upon, asking members to ask in fact for an from which the Isle of Man can move and I think this is increase in tax because there will be a shortfall, as sure as extremely important that we have stable government, we I am standing here at this present time. But that does not have a stable economy, because that is why people invest take away the fact that we should always be reviewing it in us here in the Isle of Man. and looking at it to make sure that it does still fit and is in I was interested in one of the new members who himself the best interests of the people of our Island. said that this was the first time he had had the opportunity, Also - I am concerned about responding to members obviously, of making a contribution, and that was the hon. because the Treasury Minister is very capable of responding member for West Douglas, Mr Shimmin, and he put himself - if I could just take the point on the one that was forward quite a number of points that concern him. Now, I mentioned by again the hon. member for Garff, Mr Rodan, think this is absolutely right and proper and that has been on the CESU and 'Prosperity through Growth.' Now, that listened to and recorded, but then he made the statement, was a private sector think-tank situation that brought of course, that the writing is on the wall, there are many forward to government their proposals as they saw it for issues and someone has to deal with them, and that is the the way forward, prosperity through growth. But of course point, that someone has to deal with them. This again I at the end of the day this is the government, we are the took from his contribution the fact that as a new member people who eventually make the laws and we make the you come into this Court, you become a member of a decisions. That was considered in great depth by the department, very quickly you go native, you learn about Economics Committee of the past administration. The your own department, you know the problems, you can report was actually sent to them for their comments before understand them. Mr Bell, the member for Ramsey, was it was produced and given to members. The election came in the DHSS, soon learnt the problems that were in that along and of course everything stopped at that time, but I

Budget — Debate Concluded — Motion Carried T266 TYNWALD COURT, TUESDAY, 18th MARCH 1997 can assure members that I have met with the thinkers of suggested there was a lack of leadership. I would say today that think-tank situation, we have discussed the way is probably - it is the first major debate of the new forward, we have had a meeting of the Economics administration - where the leadership starts. I would urge Committee and I can assure hon. members that that report hon. members to come on board the budget as it is and I will be along very soon and again will be used as a base would ask them not to support the amendment. from which we can gather further information as things The arguments the hon. member put forward were have changed since that document was put forward. So backed up by the request for all-weather pitches - very what I am saying is it has not been lost because the past desirable, but in what context? I would say that as the administration has gone; it is still there and that report will debate has gone on we have seen that in the context of the be coming forward. overall budget there are very many important issues which, Again, very interesting to hear many of the contributions as the debate has gone on, have actually put that in context. from new members in particular and not-so-new members, My son last Saturday enjoyed a rugby match at Ramsey because obviously it differs from area to area what the Grammar School on a very good grass surface, much better concerns are of our people. If I can just go back onto than what he is used to at Ballakermeen. He was part of an another point that was made that at the end of the day the Island team playing a school team from Cheshire. He Treasury have to make a decision, we come to the actually ended up playing with the opposition team because percentage game as introduced by the hon. Mr Speaker, they were a man short (Laughter), but what a wonderful but if we go back seven years ago that is what was done; if environment to entertain guests because, well, I grew up it was a 3 per cent increase it was 3 per cent across all in Ramsey, I know it is a nice place. I went to Ballakermeen, departments until we started to investigate into departments I went to Ramsey Grammar School; I know their pitch is to see really did they need 3 per cent or was it 8 per cent, better than our pitch or is our pitch better than their pitch? or in fact did they need anything at all? So we have moved I do not know; I can never remember which school now I I I) on. I would suggest that the budget process is much more have the most allegiance to. I do not make little of the detailed and much more thorough, but someone at the end comment; we all want the best for our community, that is of the day has to prioritise all the demands and all the the point. What I would like to point out is that in this requirements of departments of government. So therefore budget, if the Department of Tourism and Leisure have it is not an easy job, it is a difficult job, and I believe that this subject of all-weather pitches at the very top of their the budget as we see today is good, sound, solid, steady- priorities, then if members refer to page 97 of the pink as-you-go, as has been said by Mr Radcliffe, and I think it book there is a figure in there of £432,000 for minor capital is somewhere which we can use as a base as we discuss works. In other words, if schemes are worked up in this policy and then, for next year, as someone has said, 'Well, area of all-weather pitches, I would suggest that that he may not get away with it,' but I would suggest to all department has some capacity to go forward on those all- members: give the Treasury Minister your support today, weather pitches. let us get off from this budget and look forward to the The hon. member's view on team sports I future. wholeheartedly agree with. It is a good thing that our youth are wrapped up in this sort of involvement. Mrs Hannan: Hear, hear. I think also, as the day has gone on, the subject of the £10,000, which has been the hub of the argument over a The President: The hon. Minister for the Treasury to period of time in this budget with regard to the chiropody reply. service, has also been set in context. As hon. members know, the DHSS has got those pages, and the hon. minister Mr Corkill: Thank you, Mr President. It has been a showed them to us, of the wish list, the number one long day since I rose to speak initially today, and certainly priorities. They are not a wish list, they are services that I would wish to thank all the members for their are regarded as very worthwhile to our community, but I contributions. It has been a privilege for me to present this, hope that hon. members will be able to see that the £5.7 my first budget, and certainly it still feels so, although million, which is another part of the hub of the argument perhaps a little punch-drunk as the day goes on. of today's debate - that putting that to a pension reserve If I could deal with the amendment first in the name of for all our public employees' pensions, whether it is bus the member for Ramsey, Mr Singer, I would wish to point out that I think the argument behind his amendment is drivers, police, teachers and, yes, civil servants... But narrow. It is focused narrowly because of the arguments whoever they are I believe they deserve consideration. We that he put forward to support it and, in the way that it is have 2,738 pensioners in that position at the moment. There written, it is declaratory and could be argued that, in fact, are 6,000 full-time public service employees. We anticipate has little impact, but the arguments that the hon. member a bulge in the pension requirement, and the moneys now put forward were, I believe, restrictive in terms of the global proposed in that reserve are only one step in providing and the overall view that a budget has to put forward. He that. So I would hope hon. members realise that that is the was critical of the Treasury and the stance that we have message behind that £5.7 million. taken, but I think it has become clear today that all hon. Turning to the wording of the amendment I simply members in this Court have a social conscience and that disagree with the hon. member's approach. Part (b) is we are all trying to provide the best for the community, to imprecise, because what are the certain aspects of health utilise the resources available to us in the best way. He and social security in the amendment as worded?

Budget — Debate Concluded — Motion Carried TYNWALD COURT, TUESDAY, 18th MARCH 1997 T267

Mr Delaney: Chiropody. objective of Treasury. A budget is about priorities. We all know what we need to do; we all know what should be Mr Corkill: Chiropody we have heard of and many done. It is a matter of how those are arranged in time in a other items from other members, but I know the hon. space of how they are progressed. The end result, I would member is as concerned about the spiralling drugs bill as I suggest - every time we talk about capital programmes, am. I would suggest a small percentage of improvement by the time we have added in what people want and what in that area would pay handsome dividends to the DHSS they do not want we always seem to have a higher figure, budget to allow for other health aspects, and I know the and that is where the policy debate is lacking in this debate minister and the department are addressing this very issue. today. It is some time since we had a policy debate, as The hon. member for East Douglas, Mrs Cannell, says other members have referred to. Last October, prior to an she is disappointed and quoted, 'Is it worth speaking at all election, is light years away in political terms. on behalf of social requirements?' and spoke of sweeteners. I thank the hon. member for Council, Mr Waft, for his I find that disappointing, because this is the very place to contribution. He was first to raise the item Protocol 3 and speak of those social requirements and I know that in our customs agreement. Certainly, that is an issue, as I previous times she has stood up for those causes and said in my opening comments, that has to be kept under therefore I would expect her to continue that. review. He also referred to training and education and I On other members I was pleased that the motion to thank him for those supporting comments which I know adjourn this morning failed; pleased because of the message are dear to his heart. The member for West Douglas, Mr it gives to the community out there, the business Shimmin, in his contribution and he has spoken to me prior community, I cannot stress too highly the need for business to the debate about this, I think has come up with an confidence in this Island. In promoting his argument the interesting suggestion as I actually have a social fund in hon. member of Council, Mr Lowey, overlooked that the reality. This is something I would certainly expect the hon. interest earned on reserves is being used to fund essential member to raise further at policy debate time and within services and to generate the small £99,000 surplus that is his own departments, but I would ask him the question, in this budget at the end of the day. That interest is worth who directs it? Are we talking about another department? £7.3 million. In reality the hon. member was suggesting You said, sir, you did not wish to have an extra department, by his actions that we budget for a deficiency. That is the but I understand the subject of departmentalitis. I used to way it would have worked out and I cannot accept that as have it in the singular and now I have got it in the plural an approach. By the way, hon. members, the strategy for (Laughter) and I understand, because in my previous the budget, dull as it is, is the same as last year, and that department at Home Affairs I was guilty of a blinkered was supported by the hon. member for Council at this approach. I knew what I wanted; I came to Treasury as the sitting last year. hon. Chief Minister now knows. I had a fixed view on With regard to capital expenditure the hon. members - what I wanted. I only got some of it, which I was very and I quote from the contributions from the member for pleased to have at that time. So the subject he raises, though, East Douglas, Mrs Cannell, and my colleague from of specific cross-departmental budgeting is an interesting Onchan, Mr Kniveton - have referred to doubts about IRIS. one because it will break down those barriers, and I thank They are at risk, I would suggest, of undermining what I him for that contribution, because that is something that I believe is a most important and worthwhile major think can be quite productive in the future. I would also infrastructure renewal situation. The situation with IRIS suggest that there is a law and order sub-committee of the is not as has been suggested. If one looks at page 115 in Council of Ministers at the moment and these sort of the pink book and page 147, you can see that moneys are contributions I am sure would be well received by that there. There will be moneys to progress, there are moneys committee. to establish the feasibility of the next stage, and on page The hon. member of Council, Mrs Christian, who has 147 it shows moneys to be expended in various parts of probably a more difficult job than the Treasury Minister the Island in sewage infrastructure renewal. My hon. (Several Members: Hear, hear.) - without a doubt I colleague from Onchan said 'Grasp the nettle.' I can tell sympathise greatly; there is that growing cost of the DHSS, you, I am doing that and I do not intend to let go. Mr Treasury is there all the time saying you cannot have more Kniveton referred to the capital project being enormous. than a certain amount and yet there is all this demand for It is something that we have to manage. He said it has got service need, social provision. As the hon. member said, schools, incineration, housing, sports facilities, car parking, `Priorities get usurped.' It is difficult, but a point that she industrial development, computers, land, sewerage, as made in a more general area was with regard to IRIS and areas of the capital programme, which I suggest and hospital - that is, renewing our basic infrastructures. The understood he supports. He does support a new hospital, hon. member of Council, Mrs Christian, said 'It falls to although we have differences of opinion in that area. What this generation and we should not burden future he was really suggesting, I would suggest, is in short a generations' and I have to wholeheartedly support that. I value-for-money hospital. Hon. members, I agree with him believe that through this century previous generations have totally. The capital programme is ambitious, we need to had other battles to fight: they have had world wars, they have value for money in all those areas, but what I did not have had recessions. Today I am reporting a 6 per cent hear from the hon. member was priorities. Which one do growth economy, full employment at less than 2.7 per cent. we do first? Which one do we do last? In my book we We are talking about a renewal of the infrastructure by need to progress them all. Value for money is a prime private sector and by the government itself. We have a

Budget — Debate Concluded — Motion Carried T268 TYNWALD COURT, TUESDAY, 18th MARCH 1997 duty in this generation to put the infrastructure that the aspect is something that can be fed into that area. He also Victorians put in a hundred years ago, when I am sure perhaps set a hare running in terms of other taxes for the they had similar thoughts about the future. future. How do we pay, whether it is a water rate or a The hon. member of Council, Dr Mann, mentioned that sewerage rate? There is a sewerage rate at the moment; in we have to give consensus a chance. It gets difficult at fact, it is set at zero. Maybe it will not be set at zero in the times to do that, but I think it is a worthwhile concept. We future. That is not part of this budget today, but it is certainly obviously have to. I was elected on the basis in my something that policy will have to decide in the future, manifesto that I would push for consensus government. because if you improve services there is a cost. If you treat Consensus politics is where I come from and I will certainly your sewerage instead of putting it in the sea there is a try, whilst I am in this position, to do that, but it creates cost. If you incinerate your refuse instead of throwing it in political difficulties, as the hon. member said, when we a hole in the ground there is a cost. It has to be borne have a change of membership of the House, as we have somewhere. just had. I would also thank him for the positive points he I think the only hon. member who raised the subject of put forward, because in a budget it is the positive things increasing taxation was the hon. member for Council, Mr we need to sort out. We can always do more, there are Delaney, who said non-resident company duty could have always things that we cannot manage, but then of course gone up more. Well - we miss the point sometimes of the good things and certainly the hon. member for Ramsey, Mr Bell, changed Mr Delaney: And one of your ministers agreed with that round during the debate and I would thank him for his me. contribution - A little bit too long (Laughter) but perhaps not quite as long as my opening remarks where the hon. Mr Corkill: - that is an aspect that can... obviously we member of Council, Mr Lowey, accused me of having a can put taxes up. computer script. Well, I can assure the hon. member I had about 10 drafts, but maybe the first one did come from a Mr Delaney: One of your ministers agreed with me. computer. The hon. member for Ramsey, Mr Bell, did in fact raise The President: Hon. members! Proceed, sir. a great number of issues and I think he rounded the debate up very well at that time, because he pointed out that the Mr Corkill: - and certainly it was an acknowledgement, Island's success has its downside, and we must be very I believe, that when you have these expenses and much aware of what is happening with that, the pressure government provides these services they have to be paid in the system of economic growth. There is, in fact, 600,000 somehow. I do not favour tax increases if we can avoid it. square feet of office accommodation in the pipe line, which Therefore we make the economy grow. That is the message is even more than the hon. member said. The people that in this budget. will be required to work in those areas will have to come The hon. member of Council, Mr Luft, as was pointed from somewhere, but as technology changes, as people's out by another hon. member, Mr Speaker, is obviously a jobs change, we have to be in a position to make sure that very hard worker in support of the Arts and I would they are trained to take on the next generation of jobs as compliment him on the work he has done over the years in information technology will perhaps replace their job, as that area and, I am sure, for years to come and I would has happened in banking and may happen in other sectors. thank him for his support of the budget as printed. But he Therefore one of the key points behind this budget is to raised, as other members raised, how do we better serve make sure that training, education, incentives in this area the area of low paid within the community? He thinks that are given as much of a lift as possible and certainly I hope a rate rebate needs to be examined. That is certainly an links with Liverpool University in the Department of issue that will have to be addressed and have to be Education and training at the DTI are involved in this area. examined, and certainly that is a commitment I can make Mention was made of the IFZ, the kick-start mechanism without much difficulty. that government employed a few years ago to make things The hon. member Mr Crowe, the member for Douglas happen in the middle of Douglas, when things were looking North, I thank for his kind comments, and he certainly very tired in the middle of Douglas, and what a change we was coming at it from the commercial side of the business have seen on the promenade, in Strand Street and in areas sector and certainly was talking about income generation still to come. But, as I announced in the opening comments, and best returns. He was proud, as I am, to say we have no that scheme has now been terminated and there is a run- external borrowings to speak of. With regard to non- off period and the details of that are available in the practice resident companies, which I mentioned previously, there notes, so that people involved in that part of the industry is a feeling and a fear, I think, that certain non-resident know exactly where they are. There will be no detriment companies are not used correctly. We must realise that a to people who have been attracted by this exercise, who vast majority of them are used correctly, but I await the now have things in planning and are ready to start. But the comments from the Financial Supervision Commission for hon. member for Ramsey said 'Why not somewhere else a consultation exercise to see how they think it should be on the Island?' Why not indeed? The Island-wide best addressed, and I have answered questions on this prior Economic Development Committee, the sub-committee of to today and certainly consultation, something that Council, is looking at this very issue at the moment and government gets accused of not doing enough of, will have that is as a result of a motion to this hon. Court and so that to be the way forward. But certainly, by flagging up that

Budget — Debate Concluded — Motion Carried

TYNWALD COURT, TUESDAY, 18th MARCH 1997 T269

there is a concern, that feeling can be fed into the way forward where every member of this community consultation and in due course we will see what comes up, contributes in a meaningful way, and I am talking now in but one has to acknowledge that they raise over £6 million terms of the taxation system, because obviously people of revenue, revenue that we have found hard to deal with contribute in their day-to-day lives in all sorts of ways. today. We are only budgeting for a very small surplus at But I think it is important that we realise what those tax the end of the day. The hon. member, Mr Crowe, did ask thresholds actually mean, and when we adjust them by for some information and I can tell him that the total inflation, as we have done this year, it will not actually General Registry receipts are £10'/2 million. Of this around take any more people out of the tax net unless their salaries £6 million will come from non-resident company duty and happen to reduce. But with unemployment at 2.7 per cent the total surplus made by the Registry is £8.2 million. I and with the information that Treasury is gleaning from can furnish him with further details later on. the private sector, I think we are in a position where there The hon. member for Peel, Mrs Hannan - 'We have to is wage inflation about to happen. That is double-edged. It live within our means.' Absolutely right and 6.5 per cent is good because we have full employment. We need, as growth. I think this is an amazing economic growth. We the hon. member for Garff said, to raise that income per have had it in previous years. We are projecting it for at capita because we still lag behind the UK - only 50 per least the short to medium term. She referred to page 12, to cent, I think the hon. member said, compared to Jersey. say the benefits. Page 12 in the pink book actually lists the We need to drive wages up and we can do that with a benefits over and above what people receive in the UK, buoyant economy, and therefore this budget is certainly and I think it is very helpful for members to refer to that constructed to make the most of that economy. from time to time to get a view on how much better we are The hon. member for Garff, Mr Rodan, said the already, and with this budget we can at least maintain that. economy would be the envy of Europe and Britain. I am I am conscious of the time as well and I do not want to sure he is right. And he also said that the dilemma we were reiterate items that members have gone over more than in today was because of the political system we operate once. The hon. member of Council, Mr Delaney, said that under. The hon. member I think is quite clear, in previous this hon. Court is the place to address injustice. I would speeches to this hon. Court, that a party system would in say to him that I totally agree with that. I do not agree that fact deliver a different approach during election time and this amendment will actually resolve that injustice, and I during policy time. What I would say is that the economic believe that the way that the £10,000 in the chiropody issue growth we have today and the successes that some has already been dealt with prior to this sitting is a members have been talking about have actually been built commitment that that will be put right when the money is up in a consensus government situation, and so perhaps available because, as he went on to say, the hon. member that is an argument against his. said 'Is it being spent fairly?' `Is the money in this budget Tax harmonisation he pointed out as a threat from being spent fairly?' Well, that of course is open to Europe. Can I say that this is obviously an area where, interpretation depending on which stance you wish to take, because of this situation, this is the very reason why I said which area you represent and where you are coming from. we must monitor the VAT and customs agreement so that Like a lot of members, he mentioned low-paid situations, we know how things are changing because of the European low-paid citizens. We are all concerned with those, I am influence. But with regard to the proposals that were most sure, but not one member in this hon. Court has suggested recently put to the UK on tax harmonisation, and I quote - a mechanism whereby we can actually change that as to what the probable United Kingdom line would be - situation, and we had exactly the same debate last year ' the United Kingdom is promising to play a full and and the hon. member for Council, Mr Lowey, nods his constructive role in the forthcoming debate' - this is the head and agrees. We need to search for that mechanism. I debate about tax harmonisation. 'It is determined to see am committed to carry on looking. I have not got that subsidiarity principle rigorously applied, to preserve answer. Maybe with this hon. Court's help we can get there flexibilities available to member states and to protect key and find ways forward. UK interests such as zero rates and unanimity voting.' He also mentioned, the hon. member of Council, Mr There is absolutely no indication from the United Kingdom Delaney, that we need to make the fiscal cake bigger. This Government that they will wish to move away from zero rings a bell from last year's debate. If the cake is bigger rating on items such as food; in fact, for that to happen, we all get a bigger slice, but of course in percentage terms, changes would have to occur in the European scenario, as the hon. Mr Speaker said, playing the percentage game and in fact the veto vote would have to be removed. These people can fall behind. are major constitutional issues for the United Kingdom With regard to people in the tax net, this budget is herself. I would also add to that part of the debate that it is specifically designed to keep those people out of the tax important to remember that all such EC VAT issues are net in line with inflation. In other words, if their salaries subject to unanimity - sorry, I repeat myself there. There and wages have only gone up by inflation, then in fact is a paper available and I can circulate it to hon. members they are in the same position as they were last year. But, of about that situation. But it was an interesting point that he course, if salaries and if wages have increased, they will made that Manx politicians can absolve themselves from then start to come into the tax net. I would like to see a lot making decisions on indirect taxation, and that is certainly more people paying taxation in this way because a rise in the case. I cannot disagree that in fact, bringing this budget, salaries and a rise in wages, a high-wage economy which I have not had to think about the price of a number of other members have spoken about, I am sure is the right commodities because of changes of duty, and perhaps that

Budget — Debate Concluded — Motion Carried T270 TYNWALD COURT, TUESDAY, 18th MARCH 1997 is one of the reasons why this is a dull budget - because I who came to the Treasury meetings to help with the cannot say, 'Tuppence off, tuppence on a pint of beer'. I priorities. We have not got them all right but we have got cannot say, 'Bottles of whisky are 50 pence cheaper, even the vast majority of the priority spending right, I believe. I if it is Glen Kella next week'. I wish I could. (Interjections) would like to thank them, my colleagues on Treasury who Perhaps the time may come in the future when this hon. have been very supportive and I would thank the Council Court and the politicians of the Isle of Man can in fact of Ministers for their support and commend this budget to take those decisions, if abrogation were to occur at some this hon. Court, Mr President. stage in the future. But I would say that certainly if we talk about the way we have talked about other parts of the The President: Hon. members, the resolution is set out budget, it would certainly be a much longer debate if we at item 2 on the order paper. To that resolution we have an had all the indirect issues to talk about as well. But I take amendment tabled in the name of the hon. member for that point; it does in a way make things tidy and easy and Ramsey, Mr Singer, as has been circulated to all hon. therefore political points do not necessarily come through members on the white paper. I will put the amendment to on indirect taxation the same way as the whole political the Court first of all. Will those in favour of the amendment issue as to whether we should directly tax or whether we standing part of the resolution please say aye; against, no. should indirectly tax. That is a political stance that in other The noes have it. countries parties divide on. We do not have that, and I accept that. Perhaps in a small community, though, that is A division was called for and voting resulted as follows: a good thing. The hon. Chief Minister answered the point about the In the Keys - CESU report and so I will not repeat on that. The Speaker said, 'Are we going to govern or are we For: Messrs Cannan, Quine, Houghton, Duggan, led by the nose?' But he also added, 'This a sound, safe Braidwood, Mrs Cannell, Messrs Singer and and secure budget.' I would commend it to this hon. Court Kniveton - 8 that in fact it is definitely that, definitely sound, definitely safe and definitely secure. But then he started talking about Against: Messrs Gilbey, Rodan, North, Sir Miles Walker, the Arts Council slush fund - I certainly do not regard it as Mrs Crowe, Messrs Brown, Crowe, Cretney, Shimmin, that but I would be very interested to hear more, Mr Downie, Mrs Hannan, Messrs Bell, Corkill, Gelling and Speaker! (Laughter) But I understand that there are the Speaker - 15 competing interests, and he pointed out that in fact the Manx Heritage Foundation, of which he is the chairman The Speaker: Mr President, the amendment fails in in his capacity as Mr Speaker, perhaps has seen a shortfall the House, 15 votes being cast against, sir, and 8 for. in that area, and I take the point and I have read the letter that the hon. Mr Speaker has sent to me on the subject. In the Council - Before I close, I would like to draw members' attention to what was introduced in previous times, the budget extract For: Mr Lowey, Dr Mann, Mr Delaney - 3 document, which is available from the Treasury and which is very useful for hon. members to hand out to constituents Against: Messrs Barton, Waft, Radcliffe, Luft, and people who are interested. I know it is a very useful Mrs Christian - 5 pocket guide and I would thank the hon. member for Middle, the Minister for the DTI, , who I think The President: In the Council, hon. members, 3 votes is on a charge; I think we had better inform the Cannes have been cast in favour of the amendment and 5 votes Film Festival, 'Watch out, Minister North's about!' against. The amendment fails to carry. (Laughter) His enthusiasm, I am sure, will take the film I will now put the resolution. Will those in favour please industry and the television fund forward, and this is an say aye; against, no. The ayes have it. area where - we make no bones about it - we are trying to diversify the economy. It has shown already successful A division was called for and voting resulted as follows: signs, more successful than anticipated. It is a cautious approach but, with the budgetary Manx television and film In the Keys - fund proposal in this budget, we think we can attract more business and that is not just good from a financial point of For: Messrs Gilbey, Cannan, Quine, Rodan, North, Sir view; there is training, there are jobs relevant to that Miles Walker, Mrs Crowe, Messrs Brown, Houghton, industry whi0 broadens the base of the economy on the Crowe, Cretney, Duggan, Braidwood, Mrs Cannell, Island. Messrs Shimmin, Downie, Mrs Hannan, Messrs Singer, Mr President, I will close now. I hope hon. members Bell, Corkill, .Kniveton, Gelling and the Speaker - 23 can support the budget without amendment. I would say to members, it is sound, it is safe, it is secure. I am sorry if Against: None it sounded dull; that was not my intention. They say a week is a long time in politics; certainly the last three months The Speaker: Mr President, the motion carries in the have been, and I would like to thank all those members House with 23 votes being cast for, sir.

Budget — Debate Concluded — Motion Carried TYNWALD COURT, TUESDAY, 18th MARCH 1997 T271

In the Council - (b) That Tynwald approves of the expenditure detailed in column 2 of the capital estimates of For: Messrs Barton, Waft, Dr Mann, Messrs Radcliffe, Luft, government departments and other bodies on Mrs Christian and Mr Delaney - 7 pages 20 to 23 of the Isle of Man Budget and authorises the Treasury to expend during the Against: Mr Lowey -1 year ending 31st March 1998, from capital transactions account, sums not exceeding those The President: In the Council, hon. members, 7 votes set out in column 2, totalling £17,638,840. have been cast in favour of the resolution, 1 vote against. I declare the resolution carried. (c) That, upon Tynwald approval to such projects Now, hon. members, we defer to standing order 1.2(2), being obtained, the Treasury be authorised to which requires me to consult with you about the time that expend during the year ending 31st March we conclude this sitting. May I suggest we carry on with 1998, from capital transactions account, sums the budget provisions and try and wipe them off? not exceeding those set out in column 3 of the capital estimates of government departments Members: Agreed. and other bodies on pages 20 to 23 of the Isle of Man Budget, totalling £8,664,910. The President: Thank you. (d) That Tynwald sanctions borrowings not exceeding those set out in column 4 of the capital estimates of government departments GENERAL REVENUE AND CAPITAL and other bodies on pages 20 to 23 of the Isle PAYMENTS 1997-98 — MOTION CARRIED of Man Budget, totalling £33,902,000, being made by government, such borrowings to be The President: Item 3, then. I call upon the Minister repaid within the appropriate period as set out for the Treasury. in column 5.

Mr Corkill: Thank you, Mr President, I beg to move: Mr Radcliffe: I beg to second, Mr President.

(1) That the Treasury be authorised to expend during The President: I will put the resolution, hon. members, the year ending 3 I st March 1998 sums not standing at item 3 on the order paper. Will those in favour exceeding those set out in column 3 of pages 14 to please say aye; against, no. The ayes have it. The ayes 17 of the Isle of Man Budget, being the amounts have it. required by the revenue funded government departments and other bodies after deduction of the receipts of the said government departments and INCOME TAX RATES AND ALLOWANCES other bodies (estimated at the sums set out opposite — MOTION CARRIED their names in column 2) to enable those departments and other bodies to expend sums not The President: Item 4. exceeding those set out in column 1 totalling L383,465,400 for the purpose of carrying into effect Mr Corkill: Mr President, I beg to move: the services approved by Tynwald That, in accordance with section 119 of the Income Provided that a department or other body, having Tax Act 1970, it is hereby resolved - the duty to administer expenditure out of moneys provided by Tynwald, may transfer savings on any (1) That in accordance with section 1(2A) of the Income main heads to meet additional anticipated Tax Act 1970 - expenditure to be incurred on any other main heads of its vote, subject to the conditions set out in (a) the standard rate of income tax shall be 15 per financial regulation FD 15 - Virements, issued by cent on every pound of taxable income; the Treasury in July 1996. (b) the higher rate of income tax shall be 20 per cent on every pound of taxable income. (2) (a) That the Treasury be authorised to expend during the year ending 31st March 1998, from (2) That the income tax payable on every pound of capital transactions account, sums not exceeding taxable income derived by any person not residing those set out in column 1 of the capital estimates in this Island, or any association not registered in of government departments and other bodies on this Island from any trade, profession, employment pages 20 to 23 of the Isle of Man Budget, totalling or vocation carried on by such person or association £34,289,850 (being expenditure on projects in this Island and from any other source within this already approved by Tynwald). Island, shall be at the rate of 20 per cent.

General Revenue and Capital Payments 1997-98 — Motion Carried Income Tax Rates and Allowances — Motion Carried 1272 TYNWALD COURT, TUESDAY, 18th MARCH 1997

(3) That the personal allowance - INCOME TAX (DEDUCTIONS) (PRESCRIBED CASES) (AMENDMENT) ORDER (a) in respect of married men under subsection (1) 1997 —APPROVED of section 35 of that Act shall be £13,600; The President: Item 5. (b) in respect of individuals under each of paragraphs (a), (b), (c) and (d) of subsection Mr Corkill: Mr President, I beg to move: (3) of that section shall be £6,800. That the Income Tax (Deductions) (Prescribed (4) That, in accordance with section 1(2A) of that Act, Cases) (Amendment) Order 1997 be approved. the threshold for the payment of the higher rate of income tax shall be - Deductions from income tax are allowed for qualifying maintenance payments made between husband and wife 1. (a) for a single person .f9,270; in respect of the children of the marriage, subject to the same conditions. This order extends the income tax relief (b) for a married person who for that year of for maintenance payments to include payments made in assessment is not living with his or her spouse respect of a child born to unmarried couples. Another £9,270; deduction which may be claimed is the payment by the parents or grandparents of a student of a deed of covenant (c) for a married man who for that year of for the educational benefit of the child. The limit was set assessment is living with his wife £9,270; at £4,000 in 1991-92. That limit is being increased from 1996-97 to £4,500 and is sufficient in most cases to cover (d) for a married woman who for that year of the cost of the parental contribution towards the student's assessment is living with her husband £9,270; subsistence whilst away at university or college. Mr President, I beg to move. 2. For the purposes of paragraph 1, a husband and wife shall be treated as living together unless - Mr Radcliffe: I beg to second, sir. (a) they are separated under an order of a court of competent jurisdiction, or by deed of The President: Hon. members, I will put the resolution separation; or set out at item 5 on the agenda paper. Will those in favour please say aye; against, no. The ayes have it. The ayes (b) they are in fact separated in such circumstances have it. that the separation is likely to be permanent.

3. If the threshold of a married person under INCOME TAX (CAR FUEL BENEFITS) ORDER paragraph 1(c) or as the case may be 1(d) is not 1997 —APPROVED exhausted, the threshold of that person's spouse shall be increased by the unused balance. The President: Item 6, sir.

4. Any increase under paragraph 3 shall be made by Mr Corkill: Mr President, I beg to move: the assessor That the Income Tax (Car Fuel Benefits) Order 1997 (5) That the allowance in respect of registered blind be approved. persons under subsection (1) of section 35A of that Act shall be f1,860 and the further deduction under Section 2J of the Income Tax Act 1970 requires that subsection (2) of that section shall be £1,860. where in any year fuel is provided by reason of a person's employment for a car which is made available for private (6) That the additional deduction in respect of single use, the employee concerned is deemed to have received parents under section 39A(1) of that Act shall be an amount of income calculated in accordance with the £4,650. cash equivalent tables A and B contained within the section. (7) That this resolution shall have effect in respect of This order revises the existing tables and increases the cash the income tax year commencing on 6thApri11997 equivalent figures to retain parity with the private use and subsequent years. figures already approved for value added tax purposes. The revised tables will apply from the income tax year Mr Radcliffe: I beg to second, sir. commencing on 6th April 1997. I beg to move.

The President: I will put the resolution set out at item Mr Radcliffe: I beg to second, Mr President. 4 on the order paper, hon. members. Will those in favour please say aye; against, no. The ayes have it. The ayes The President: Hon. members, I will put the resolution have it. set out at item 6 on the order paper. Will those in favour

Income Tax (Deductions) (Prescribed Cases) (Amendment) Order 1997 — Approved Income Tax (Car Fuel Benefits) Order 1997 — Approved TYNWALD COURT, TUESDAY, 18th MARCH 1997 T273

please say aye; against, no. The ayes have it. The ayes Mr Lowey: Could I speak, sir, on this particular - have it. The President: The hon. member for has caught my eye, sir. INCOME TAX (CAPITAL RELIEF) (COMMERCIAL BUILDINGS ALLOWANCE) Mr Crowe: Thank you, Mr President. I would just ORDER 1997 — APPROVED mention to the Treasury Minister that I have compared these rates with the current rates and, although some stay The President: Item 7, sir. the same, there are some increases of 7 per cent, 12 per cent, 17 per cent, 50 per cent and in one case 100 per cent, Mr Corkill: Mr President, I beg to move: and the one that has been doubled, albeit from £60 to £120, is the fee to register a foreign company in the Isle of Man. That the Income Tax (Capital Relief) (Commercial Now, I know there is talk of a redomiciliation of foreign Buildings Allowance) Order 1997 be approved. companies to the Isle of Man and that is to attract further business to the Isle of Man, but I think, if we are going to This order modifies the existing capital allowance attract foreign companies to redomicile here, we have to provisions for industrial buildings and extends it to include make sure that we do not make it unattractive for them to retail shops, showrooms and offices constructed within the register. designated area of the Borough of Douglas. In addition, it modifies the group relief provisions to restrict relief to a Mr Lowey: That was the point I wished to make. maximum of 50 per cent of any initial allowance given as a result of this measure. Qualifying capital expenditure on The President: I understand the hon. member for the construction of a commercial building will be eligible Council's point has already been made. Are there any for relief if application for planning approval for its further observations from the floor? If not, reply, minister? construction has been made before 6th July 1997, and payment becomes unconditional between 6th April 1994 Mr Corkill: With regard to this item, Mr President, I and 5th April 1999. There are provisions allowing the am wondering if perhaps the hon. member is referring to a Assessor to apportion expenditure where it falls either side different order. This purely is the Registration of Business of the two dates. The construction has to be a new one and Names (Fees and Duties) Order, which relates to payments must be within the area set out in the Isle of Man Planning of no more than £25. Some of these have not in fact been changed in many a year and are basically costed in shillings Scheme (Development Plan) (Douglas 2000 Area) Order and pence, therefore they have been uprated. The 1994. Treasury will be authorising the assessor to allow opportunity has been taken to change them into more claims for earlier years. Mr President, I beg to move. reasonable amounts, so they range from £2 to £25. I beg to move, Mr President. Mr Radcliffe: I beg to second, Mr President. The President: Hon. members, I will put the resolution The President: Hon. members, I will put the resolution set out at item 8 on the order paper. Will those in favour set out at item 7 on the order paper. Will those in favour please say aye; against, no. The ayes have it. The ayes please say aye; against, no. The ayes have it. The ayes have it. have it.

LEGALISATION OF DOCUMENTS (FEES AND REGISTRATION OF BUSINESS NAMES (FEES DUTIES) ORDER 1997 — APPROVED AND DUTIES) ORDER 1997 — APPROVED The President: Item 9, sir. The President: Item 8, sir. Mr Corkill: Mr President, I beg to move: Mr Corkill: Mr President, I beg to move: That the Legalisation of Documents (Fees and That the Registration of Business Names (Fees and Duties) Order 1997 be approved. Duties) Order 1997 be approved. This order increases with immediate effect the charge This order increases the nominal fees currently charged made by General Registry for the legalisation of documents in connection with the registration of business names to a from £10 to £12. The purpose of legalisation of documents more realistic level to take account of the administrative is to satisfy foreign authorities of the authenticity of a costs incurred at the General Registry. I beg to move item signature appearing on a document. The fee was last 8, Mr President. increased in 1995. I beg to move, Mr President.

Mr Radcliffe: I beg to second, sir. Mr Radcliffe: I beg to second again, sir.

Income Tax (Capital Relief) (Commercial Buildings Allowance) Order 1997 — Approved Registration of Business Names (Fees and Duties) Order 1997 — Approved Legalisation of Documents (Fees and Duties) Order 1997 — Approved T274 TYNWALD COURT, TUESDAY, 18th MARCH 1997

The President: Hon. members, I will put the resolution These regulations increase the fees charged to non- set out at item 9 on the order paper. Will those in favour resident companies from £600 to £660 with effect from please say aye; against, no. The ayes have it. The ayes 1st June 1997. These fees were last increased in 1993. This have it. increase is being made partly as an incentive to businesses to move to exempt companies or international limited partnerships, and I beg to move, Mr President. COMPANIES (FEES AND DUTIES) ORDER 1997 — APPROVED Mr Radcliffe: I beg to second, sir.

The President: Item 10, sir. The President: Hon. members, I will put the resolution set out at item 11 on the order paper. Will those in favour Mr Corkill: Mr President, I beg to move: please say aye; against, no. The ayes have it. The ayes have it. That the Companies (Fees and Duties) Order 1997 Now, hon. members, a suggestion from the chair, and be approved. that is that we adjourn and start afresh tomorrow morning with order paper number 1. Is that acceptable to all hon. This order increases certain fees charged at the General members? Registry with effect from 1st June 1997. The fee to companies incorporated outside the Island will be brought Members: Hear, hear. broadly into line with the incorporation fee charged to local companies, and the charges for the late filing of annual The President: Thank you. Hon. members, the Court returns and other documents will also be increased. In will now adjourn. The adjournment will be until 10.30 addition the opportunity has been taken to increase the tomorrow morning. Thank you very much. fees for the issue by General Registry of certain certificates and copies of documents to a more realistic level to reflect The Court adjourned at 6.45 p.m. the administrative costs incurred. I beg to move, Mr President.

Mr Radcliffe: I beg to second, sir.

Mr Crowe: Mr President, I thank Mr Corkill for pointing out that I was talking at the wrong agenda item, but I would still make the point that if we are to encourage companies to redomicile here, we must not make it unattractive financially for them to do so. Thank you.

The President: Reply, sir?

Mr Corkill: Yes, I take the point the hon. member makes, Mr President, with regard to being attractive when looking in from outside and businesses that we wish to encourage to the Island, and note the member's comments.

The President: Hon. members, I will put the resolution set out at item 10 on the order paper. Will those in favour please say aye; against, no. The ayes have it. The ayes have it.

NON-RESIDENT COMPANY DUTY (AMENDMENT) REGULATIONS 1997 — APPROVED

The President: Item 11.

Mr Corkin: Mr President, I beg to move:

That the Non-Resident Company Duty (Amendment) Regulations 1997 be approved

Companies (Fees and Duties) Order 1997 — Approved Non-Resident Company Duty (Amendment) Regulations 1997 — Approved