response statement that Government should have allocated surplus to debt reduction rather than to capital expenditure. Yesterday Mr. Cox said: "The idea of spending capital for infrastructure has been logical and reasonable.

We could use the money to pay off debt, but then we still have these problems out there.'' In a review of the Budget PricewaterhouseCoopers said: "The firm is disappointed that the Government has failed to control expenditures and has not used the higher revenue generated by the healthy economy to any debt reduction.

"This is evidenced by an 11.1 percent increase in per capita expenditure and a 124 percent increase in per capita capital expenditure.'' Tom Miller of PricewaterhouseCoopers explained: "We can't argue with a lot of the projects he wants to undertake, but to try to get it all accomplished in one year is a bit too much. The money must come from somewhere and we would have liked to see some cuts elsewhere to pay for it.

"We didn't see addressed anywhere which commitments are short, medium or long term. Here is an opportunity, when the economy is good, to squirrel something away.'' But Mr. Cox pointed out that Government is trying to put an infrastructure in place that is appropriate for today's Island.

"We have to have things such as new schools to allow our students to gain the background to maximise their potential and utilise the jobs that have been created. We have to guide and protect our children from day one of their lives and some of the motivation to aspire to a good education for them seems to have been lost.'' Earlier this week Mr. Cox pointed out that when Sir David Gibbons was premier a government surplus was used to pay off the Island's debt and in order to do this half the capital projects that should have been done were not.

Cox defends Budget spending "It doesn't make sense to take the surplus and pay off the debt when so many issues need to be addressed,'' he said.

The current account surplus in the budget is $56.5 million, but capital expenditure of $112.3 million means there will be an overall deficit of $55.8 million. An additional $50 million borrowings will increase Government debt to $215 million. Last summer Government passed legislation to increase the statutory limit of debt to $250 million, so this year's Budget keeps debt within that limit. Another major accountancy firm is not surprised by Government moves. Roger Titterton, of Deloitte & Touche, said: " We believe that the borrowing and expenditure reaches the Government goals as stated in their election platform.

"Our concern is that the additional taxes and borrowing should be spent so as to add significant value to our daily lives. The public will decide whether or not this additional expenditure is wisely spent.'' Finance Minister Eugene Cox TAXES TAX