HERE is Chief Minister Tony Brown MHK's state of the nation speech - which he gave to the Alliance of Isle of Man Compliance Professionals' Manx State of the Nation event this morning (Wednesday) - in full.
Mr Brown was the first speaker at the all-day event at the Mount Murray Hotel and Country Club, Santon.
He said: "Ladies and Gentlemen, may I say what a pleasure it is to be here with you again to bring you to up date on the State of the Manx Nation.
"I can report that the Manx Nation is in a sound condition, despite the impact of a difficult external environment, and that government is continuing our work to secure the future of our Island in partnership with the business community.
"In the year since I last spoke to you, the Isle of Man has taken the first steps on the road to readjusting its finances and services following the revision of our VAT revenue sharing arrangements by the United Kingdom.
"That revision, as you will recall, was instigated by the UK and was as unwelcome as it was unexpected.
"As we all know, the Isle of Man is not alone in facing a fiscal challenge however, we are in a relatively strong position to deal with it.
"Whilst the situation we find ourselves in is difficult, it is one that I am confident we will, as we have done in the past, work through the challenges and seize new opportunities to secure our future.
"In both our public and private sectors we have the resources to manage this situation, becoming much leaner and fitter, utilising the many assets we have at our disposal, which can help us compete effectively in this very competitive world environment.
"The process of readjustment of our finances, which we have started, will take time, there will be a need for patience and understanding; undoubtedly some of the changes that government will have to make will require robust decisions and may on occasions be unpopular, but if they are the right decisions then we must make them.
"During the last year government has endeavoured to minimise any adverse affects on our community, it has continued to support and invest in businesses; however, decisions have been made that have been difficult for government, and we have implemented changes that are driving greater efficiencies within the provision of our public services.
"I can confirm that our fiscal readjustment programme is going ahead in line with the five-year strategy we set out in the Budget approved by Tynwald last February.
"That 2010 budget was the first instalment of a five year programme of change, and the budget being presented to Tynwald next month by the Treasury Minister will be the second stage.
"As always in such circumstances there are those with a keen appetite for deep 'cuts' within the public sector, they would like to see the readjustment process accelerated.
"To them I say yes, we accept there must be change and change is happening.
"But importantly such changes have to be managed carefully so as to not damage the wider economy; changes whilst difficult have to be publicly digestible, economically, socially and, politically.
"Government is taking a careful, planned and phased approach to this major task of fiscal readjustment in order to avoid unnecessary disruption to the Island's economy.
"Given the significant role that government plays within the local economy and in relation to employment, then it is vital that we avoid actions that could have a destabilising effect to the broader economy.
"You may find it helpful if I review some of the measures that government has taken so far as part of our programme:
"The Budget delivered to Tynwald in February 2010 reduced government’s overall net revenue spending by 6.5 per cent or £37.1 million.
"Government increased the higher rate of personal income tax from 18 per cent to 20 per cent, and we implemented a 1 per cent increase in employee National Insurance contributions; we transferred £15 million from Reserves as part of our readjustment programme to help transverse through the change, and minimise the impact of the loss of some £70m worth of the income to government, due to the change in our VAT receipts.
"However, at the same time we increased the Personal Allowance Credit for the less well off in our community, by 18 per cent, and the income tax personal allowance was increased by 1 per cent.
"Also announced during the 2010 budget was a freeze on staff salary budgets and, the loss of nearly 100 Government posts through non-replacement of vacancies, this being achieved through a new assessment process that the Council of Ministers introduced.
"I announced that departments were required to seek to make a 10 per cent reduction in staff costs – resulting in a £30m saving if achieved, and this work is ongoing.
"Also a notable aspect of the planned response agreed in last year's Budget was the provision of a substantially reduced, but still effective capital spending programme, totalling £96 million.
"The continued development of the social and economic infrastructure of our Island is important to us all, and a realistic level of capital investment in the Island's future infrastructure not only provides confidence and improved facilities, but it also provides much needed work for the local construction industry, especially at this time when private sector construction has slowed down.
"Government believes is important that we continue to feed much work into the construction industry, which, as we know, is a major employer and an important part of our economy.
"However, such investment is not just for the benefit of that industry, but it also benefits the wider community. It is part of our programme of improvement.
"The government’s overriding priority is to drive forward, develop and safeguard the Island's diverse economy, to generate the revenues needed to pay for public services, to sustain employment levels and opportunities and most importantly to safeguard a sustainable economy and community which can enjoy a good quality of life within the Island.
"It was these imperatives that also lay at the heart of the restructuring of government departments introduced in April last year, which was centred on the creation of a new Department of Economic Development, to provide a department with the responsibility to co-ordinate the support and promotion of key business sectors.
"Bringing together, for the first time, the different economic strands of government within one department, so that one minister along with his department is charged on behalf of government, with the responsibility to develop, promote, support and secure our economy.
"Clearly this is a vital task and whilst change will take some time, it is more important than ever in the current fiscal climate to make such a change.
"Other changes being progressed during the year reflect the identified need by government for change. I stated at the start of the present fiscal situation, that there would have to be a change of mind set, both within the public service and politically within Tynwald, it is therefore imperative that we adjust to the new realities and modernise and streamline our approach in how we provide good and efficient public services into the future.
"A few examples being – more extensive use by Government of IT; changes to work practices, through introducing greater flexibility and efficiencies within our workforce; ensuring government can provide the services required by our community, safeguarding a good quality of life for all.
"A significant change which has started to make a difference, which was introduced by government in 2010, is the new Procurement Policy, initiated by Treasury and approved by the Council of Ministers, which effectively co-ordinates Government's buying of the goods and services, an area where we spend millions of pounds a year.
"An early result of this joined-up approach to procurement is the negotiation of a single contract for the supply of ultra low sulphur diesel to several departments, saving an estimated £165,000 over two years; this is just the first of a number of procurement projects which will achieve better value for taxpayers' money while maintaining support for the local economy.
"As I have indicated the Island's economy continues to hold up remarkably well, despite tough trading conditions in the UK and overseas markets, and there is further evidence of this in the recent news that unemployment in the Isle of Man actually declined during the course of 2010, ending the year at a rate of 1.9 per cent.
"The economic performance of the Isle of Man is a tribute to the diversity, resilience and enterprise of our business community, many of whom are here this morning, and if I may, I would like to take this opportunity to thank you all, because without the support of our business community, their confidence, commitment, and contribution to our Island's well being, we could not do all that we do, and the Island would not have the standard of living and quality of life that it currently enjoys.
"I am also pleased to report that my government's major regeneration project, which we initiated in 2008 to revitalise our town and village centres, is making good progress.
"Considerable work has been undertaken to develop the projects involving local authorities, local businesses and the communities and we will soon see all the base work coming to fruition within many of our town and village centres.
"This is an important initiative, which I have taken a personal interest in, which should further enhance the quality of life, our environs and stimulate local economies within our communities throughout the whole Island.
"To pave the way for further economic success in the future, so that we can sustain employment, and our public services, it is essential that the Isle of Man nurtures its international relationships and its reputation as a responsible, co-operative nation.
"External engagement is a priority area for my government and we have committed considerable resources in recent years; this work will continue on a number of fronts throughout the year.
"Members of the Alliance of Compliance Professionals will know, perhaps better than most, that the Isle of Man has received key external endorsements as a well regulated centre for international business.
"You will also be aware that at the same time the international environment remains challenging and uncertain in the aftermath of global financial turbulence.
"One issue of particular interest to the local business community is the future of our business tax system, aspects of which are being looked at by the EU in the context of its Code of Conduct for Business Taxation.
"Government has continued to robustly argue its legitimacy to our present business taxation and we have directly represented ourselves at the group, and also to the UK.
"The EU assessment process has yet to reach a conclusion, but when it does we will give the outcome close and careful consideration before responding.
"This clearly is a very important issue for the Isle of Man and we are well aware of the real concerns around it. In the meantime I can assure you that government will continue to keep working hard, and do what it can to protect the best interests of our Island.
"Back at home, the values that underpin the Isle of Man's Freedom to Flourish strategy – resourcefulness, resilience, and innovation - are clearly alive and well amongst our businesses, and long may they remain so.
"With a robust and diverse economic base, a sound infrastructure, and a sound international reputation as well as a strong sense of community teamwork, the Isle of Man is well placed to overcome the current challenges and to move forward into a confident and secure future.
"No-one is pretending that the journey ahead for the Island will be an easy one; it will demand commitment and a focus on national priorities, and decisions that are responsible and realistic, rather than easy and popular.
"This year, in September, the Island goes to the Polls for a General Election, and by its nature that means that the months ahead will, on occasions be politically difficult however, I can assure you that myself and my Council of Ministers will continue to lead and be focused on carefully managing our finances, developing, and supporting business community, along with employment opportunities, whilst ensuring that we can care for the most vulnerable in our society.
"This is not an easy task, but it is an important one for the well being of our Island.
"When you consider everything that has been thrown at us in the last 12 to 18 months, the Manx Nation continues to be in a sound condition, we have good reserves, no external borrowings and, government is optimistic about our future.
"The next few years will, without doubt, be difficult for us all, but with a continuing commitment, as we have witnessed over recent years by both the government and the business community, with us all working together for the good of our Island, the future of our Island community will in the long term be secure.
"Thank you."
Also see: Chief Minister thanks private sector in state of the nation speech
