Arbory, Castletown and Malew MHK Jason Moorhouse has labelled the gov decision to seek to borrow £400m as a ‘radical change to the island’s core financial principles’ and that the decision should be left for the next administration.
Last week it was announced that Treasury Minister Alf Cannan will be seeking Tynwald support to borrow up to £400m for a period of up to 40 years. Part of this money will allow for the refinancing of the Steam Packet and internal debt owed to the gov by Manx Utilities.
In a post on Facebook, Mr Moorhouse said that the island has a global reputation and has been ‘one the most prudent and financially conservative governments in the world’, this £400m would, he says, change that.
He added: ‘When making this type of decision, timing is of crucial importance. This fundamental shift is going to be actioned at the penultimate Tynwald of the Quayle Government. Interest rates are low, but they have been since 2007. I accept that concerns about imminent inflationary pressures make borrowing an option at this moment in time, but it would be wrong simply to buy something because it’s cheap!
‘The fundamental reason why I question this decision is: That the debt of two independently managed elements of the Manx economy are about to have their debt shifted onto the Government’s balance sheet – Why?
‘After avoiding such a situation for many years, I would argue that now is NOT the time for such a dramatic change in government financial policy. It will also limit what the next administration can do; in terms of their ability to borrow or issue bonds.’
Mr Moorhouse, who was an economics teacher, before being elected, said he raised his concerns at a members’ briefing on the plans last week and that he believes the Steam Packet and MUA should take on the debt rather than the gov. He said he is also wary of the MUA’s historic debt and its ability to pay back this money.
While most of the money will be going into refinancing the two taxpayer owned companies, the gov will still have over £60m to use for immediate projects, however Mr Moorhouse is concerned about where this will be spent.
He said: ‘Is this simply going to provide additional funding for Douglas Promenade and the Liverpool Ferry Terminal? Both projects need to be completed, but is CoMin simply doing ‘a bit of tidying up’ in readiness for the arrival of the island’s next administration?
‘I know that one Member of Treasury speaks favourably about the attractions of Sovereign Debt, but I am genuinely concerned about the current proposal. From my perspective if debt cannot be justified and serves a good purpose then it must be avoided. In two weeks’ time Members of Tynwald will vote on this – I am currently concerned that rather than increasing options for the Island’s people, the proposals will restrict what can be done for many years to come.’
Instead, Mr Moorhouse said he would rather see the gov invest in education, providing schemes to help local people buy their own home, the health service or ‘an offshore financial or e-business hub of global significance’.
He added: ‘If something with such vision and magnitude was being proposed I would probably be excited by the possibilities and recognise the potential benefits of such an investment in the Island and its people. Instead these proposals appear to be an attempt to ‘grab some cheap money’ to restructure the cost of essential housekeeping and the worrying shift of responsibility for the debt from quasi-independent businesses and onto the government’s balance sheet.’