Deputy Lindsay De Sausmarez said the island's financial industry could play a "lucrative" role in funneling capital to fund environmental projects worldwide.

Discussing proposals to give £300,000 pounds to Guernsey Finance to its green finance initiative, Mrs De Sausmarez argued that it was essential the States do what it can to fund green projects.

"Transformative change on this scale required will cost a lot of money," she said.

A recent report by the Global Commission on Adaptation, external concluded that an investment of $1.7 trillion in green projects over the next decade could return up to $7 trillion.

Mrs De Sausmarez said: "Governments alone will not be able to finance this transition, so the green finance sector plays an absolutely key part."

Debate will continue from 09:30 on Wednesday about a two-part motion to grant £300,000 for the island's green finance sector and a review of the area and all of the States promotional agencies.

A revised amendment requiring Policy and Resources (P&R) to bring recommendations on equal pay and the terms and conditions for public sector workers by March 2020 has passed unanimously.

The amendment obliges the committee to submit a policy letter addressing the findings of a review into terms and conditions.

They will also be required to make recommendations on achieving "fair and equal" pay for workers, including "if appropriate" a timeline for achieving this policy goal.

Some concerns were raised over when it would not be appropriate to ensure fair and equal pay, however P&R's President Gavin St Pier argued it would force them to undertake a policy decision before its impact was fully understood.

The motion had been reached as a compromise between the presidents of Policy and Resources, Employment and Social Security and Health and Social Care committees, amid concerns over nurses pay negotiations.

An amendment specifying the approach the States should take in developing an air strategy framework was approved 29-8.

President of the Policy and Resources Committee Gavin St Pier did not object to the amendment in principle.

Deputy St Pier said during debate the need was to "crack on and get on with" finalising an air link framework after four years of debate.

His committee has some expressed concerns with the proposal, saying it could limit the scope of the framework and was not necessary.

What the amendment was actually achieving caused some confusion in the chamber, with some deputies questioning what it achieved and described it as "gilding the lily".

In response, Deputy Dawn Tindall defended her amendment, emphasising that it was designed to ensure that all available information was used when developing Guernsey's air strategy.

Deputies Dawn Tindall and Laurie Queripel have tabled an amendment to expand the scope of the development of an air route framework by Policy and Resources.

Mrs Tindall said her amendment was to create a "collation of reviews" and ensure the framework did not just focus on "bailing out Aurigny".

"It has got to wider than what P and R scope of review."

"It collates the information out there and comes up with recommendations so we can conclude... it feels like a merry-go-round," she added.

The proposal would oblige the committee to ensure that their framework would address four key areas:

• Identify strategic goals to ensure reliable, sustainable and affordable air links
• The nature and quantity of support required to achieve the goals
• Analysis of potential ways of operating lifeline routes
• Specific shareholder objectives for Aurigny consistent with identified objectives

Any direct or indirect costs relating to the Alderney-Guernsey and Alderney-Southampton route and for Aurigny will be included in the policy letter produced from the public service obligation (PSO) tender process.

The call for the change from Deputies Mark Dorey and Emilie McSwiggan was approved unanimously.

Two deputies are trying to force the States to debate the financial implications of tendering a public service obligation (PSO) for Alderney's air links.

Currently there is a process underway of awarding a PSO to secure the lifeline Alderney-Guernsey and Alderney-Southampton routes.

If successful this would replace two propositions that would guarantee a temporary £5m overdraft to Aurigny if they were unable to service either Alderney routes.

The amendment also directs the committees involved in creating an air routes governance framework for States-funded air routes to include the sustainability of the proposed PSO model for Alderney.

Among the items the States is discussing are:

• Updated benefit rates and excise duty
• Increases in TRP (tax on real property)
• Report into the findings of public sector workers terms and conditions review to be submitted by March 2020
• Review into appropriate limits on tax and social insurance, changes to corporate taxes and introducing new taxes such as a health or consumption tax
• Approve the budgets for departments and other areas of the States
• To use £3.34m from reserves to increase the 2020 budget of the Committee for Education, Sport and Culture by about £3m and the Committee for Home Affairs by £275,000
• Overdraft limits for Aurigny
• Creating a coordinated and coherent framework for air routes
• To include the licensed cultivation of cannabis plants in the 20% company tax rate
• To include running an aircraft registry in the 10% company tax rate
• Agreeing public service reform must deliver savings after a shortfall in the £26.1m projected savings

• To set annual tax‐free lump sum limit for a pension scheme at £203,000
• Approve limits for Policy and Resources authority on spending the Transformation and Transition Fund
• Create a £1.3m pooled budget for tackling economic crime

The States of Guernsey will resume at 14:30.

The move from Deputies Mark Dorey and Emilie McSwiggan called for no more money to be released for subsidies for air routes until a coordinated approach for air links had been agreed.

Subsidies for the current Heathrow route - being run by Flybe until 28 March 2020 - and the previously run Cardiff route came from the Future Guernsey Economic Fund.

The proposition failed by a vote of nine for and 29 against.

Deputy Barry Brehaut told the States that airline subsidies were incompatible with the States carbon emissions targets.

Deputy Brehaut argued that the "reality is air travel is simply too cheap" and that the impact of running "half full aircraft burning tonnes of aviation fuel" should be considered.

"It's plainly ridiculous that you can fly from Southampton to Guernsey for £20 and not even cover the cost of the biscuits on the flights."

He added that it was important to acknowledge the "environmental cost" of air travel in discussions of its financial implications.

"Commentators who complain that Guernsey does not have an air transport strategy I'm afraid are simply being disingenuous," Deputy Charles Parkinson has told the States.

"We do have an air transport strategy, but what they really mean is that our air transport policy does not always suit the interests of Aurigny, and that cannot be our objective."

He said: "The States have responsibilities to the market, we are fortunate that Guernsey is served by several regional airlines... Economic Development is working in partnership with all of these airlines to improve Guernsey's connectivity.

"If the private sector airlines thought Guernsey would always favour Alderney regardless of whether its offer was the best or the most cost effective they would soon divert their attention to other markets.

"The Guernsey market is not a plum prize for them."

President of Home Affairs Mary Lowe argued in favour of "sensible" subsidies for air routes and harbours because they are the "gateway to our island".

Deputy Lowe said that it was critical to keep fares reasonable to bring in tourists that Guernsey "desperately" needs.

"Tourism numbers have gone down and down and down, painfully so. Look across the water to Jersey and they're going up."

She pointed to the price of air fares putting off potential visitors and business people, even with current subsidy levels.

"We want Guernsey as an open door to get as many people here for our tourist industry and business community," she added.

Deputy Lyndon Trott said the States must determine whether the cost of subsidising the Heathrow air link was of "economic value" for the island's "bragging rights".

"By that I mean the ability to promote ourselves as being a better place to do business than some of our competitors."

Mr Trott pointed to the fact that Jersey does not have a Heathrow link and said Guernsey's marketing organisations were able to take "significant advantage" of that.

"It's a judgement call as to whether these very material losses are worth the bragging rights," he added.

Two deputies are calling for no more money to be spent on subsidising air routes until a coordinated approach to air links has been agreed.

The Future Guernsey Economic Fund has paid out £1,325,000 to support the Heathrow route and £44,000 towards the Cardiff route, which ended last year.

Deputy Peter Febrache expressed his concern with calls to increase public expenditure without carefully considering the impact of raising taxes.

He said the States must "discuss how to proceed" with balancing raising tax revenue and increasing public expenditure.

"We cannot keep on spending," he added.

Mr Febrache added that in raising taxes the States could risk "squeezing the juice from the lemon that is dry."

President of Policy and Resources Gavin St Pier laid out the challenges of funding Guernsey's public services within the confines of the current tax structure.

He said: "Due to the exceptional narrowness of the existing tax base, there is very, very little opportunity to raise additional revenues from the current structure."

As a consequence, the budget includes a proposal to begin a review of options to increase tax revenues.

Deputy St Pier said that among the changes to be explored were changes to current corporate tax rates and the introduction of new taxes, like a ringfenced health tax or consumption taxes.

"We are going to need to carefully consider the level of public services that is affordable and realistic," he added.

The States has put aside £6.7m to cover Aurigny's projected losses for next year.

"This excludes any funding in respect of operating the Alderney routes, which are currently subject to a public service obligation tender process, and therefore provision has been made within the general revenue account reserve," Deputy Gavin St Pier told the States of Guernsey.

"Whilst it is completely correct that as the States are 100% shareholder the annual budget should make prudent and transparent provision for the Aurigny losses, these provision do directly mean there is less funding available for allocation to committees."

President of Policy and Resources Gavin St Pier joked "it is an honour, but it is not a pleasure" to present this "very difficult" budget.

Deputy St Pier described what he has presented as a "realistic" agenda, given the "substantial" demands on States resources that are expected for 2020.

"This is the antithesis of the pre-election giveaway budgets that we have become used to witnessing in other jurisdictions."

These are the topline figures from Guernsey's 2020 budget report.

Image source, States of Guernsey