The Scrutiny Review of the draft Medium Term Financial Plan (MTFP) has been completed and the report is being presented to the States yesterday.
In the report, the MTFP Sub-Panel has found that there is much to commend about the plan but that there remain some significant issues to be addressed. In particular, the Sub-Panel has found that the spending proposals in the MTFP rely too heavily upon the delivery of income which, in current economic circumstances, it is not certain the States will receive. The Sub-Panel is therefore concerned that insufficient flexibility has been built into the plan for 2014 and 2015 and that the States may not be able to react well enough if income is lower than expected.
Chairman of the Sub-Panel, Senator Sarah Ferguson said: “The economic outlook has deteriorated since the draft MTFP was first published. We have reached a point where States income and States spending are finely balanced. If expected income is not achieved, this could have serious consequences for the spending plans put forward by the Council of Ministers. We would like to have seen more flexibility built into the plan and, in particular, a more prudent approach taken to contingency and growth expenditure in 2014 and 2015. We have also found that there are a number of practices and procedures which need to be made more transparent, for example in respect of how funding is carried forward from one year to the next.”
The Sub-Panel has made 11 recommendations for consideration by the Minister for Treasury and Resources, including that he should develop a reporting mechanism for the plan to ensure the sound management of States finances.
Scrutiny of the draft MTFP has involved a co-ordinated approach from all five Scrutiny Panels. Each reviewed the plan from the perspective of individual Ministers and Departments and reports on each Department have been presented to the States over the last week. The Sub-Panel included a Member from each Panel and has been looking at overarching, corporate matters.
The MTFP will be debated by the States on 6th November 2012 and will, once approved, set spending limits for three years in order to meet the objectives of the Strategic Plan.