GSD MP Roy Clinton set out a 10-point roadmap to get Gibraltar’s public finances “back into shape”, in a Budget address in which he criticised the Gibraltar Government’s “dishonest” estimates and said Gibraltar was in a “dangerous financial tailspin”.
In a detailed analysis of the Budget numbers, Mr Clinton said the Government was seeking to “mislead and deceive” the public about the real state of Gibraltar’s public finances, which the GSD said should factor in over £1.3bn borrowed through opaque Government-owned companies that put the real figure of public debt at nearly £2.2bn.
He accused the Government of a “disingenuous and inconsistent” presentation of the budget numbers to “pretend” it has produced a small surplus in 2023/4 when in fact it should be reporting a deficit.
“The truth is that the outturn for this last year should, using their own numbers, reflect a deficit of £ 25.7 million and next year a further deficit of £26.7 million, not the small surpluses the Government suggest,” he said, adding that that “true deficit” for 2023/4 according to the GSD’s calculations was in fact higher at £44.7m after adjusting for “flattering accounting”.
“I regret that this debate will, if the Government maintain their pretence, descend into a parody of the famous Monty Python ‘Dead Parrot’ sketch whereby the general public and the Opposition can see the self-evident truth that this budget is dead, a dud, and the Government will maintain that it is alive and well,” Mr Clinton said.
A key theme in Mr Clinton’s analysis was that the Government had changed the way it presented funding of Government-owned companies, reverting to a method it had itself changed when elected in 2012 and criticised on the basis it was “wrong and flattered the results”.
He said this resulted in “a cynical representation of the numbers” to conceal “the evident dangerous tailspin” of Gibraltar’s public finances.
Mr Clinton noted that financial support to Government-owned had been booked not as a contribution, as in the past, but as an “advance”, meaning it was not included in the surplus calculation.
“If the Government had maintained the same presentation as anticipated last year the £27.6 million would have reduced the forecast surplus of £1.9 million [for 2023/4] into a forecast deficit of £25.7 million,” Mr Clinton said.
It was, he added, “accounting sleight of hand” and that Sir Joe Bossano, the Minister for Economic Stability and Inward Investment, had recognised despite having criticised it in the past.
“The Government it would appear will now go to any length, including ignoring their own convictions, to disguise the fact that its recurrent expenditure was significantly underestimated last year as we warned, and in addition evidently dangerously out of control, as witnessed by the admitted overspending,” Mr Clinton added.
Mr Clinton was critical of the “incredible” £65.1m departmental overspend, which he said showed the situation was getting worse, given the previous year’s overspend was £53m.
The GSD had warned before the election that the healthcare budget was unrealistic, he added, repeating the same warning for the year ahead.
“As the Leader of the Opposition has pointed out in his address the estimates for 2024/25 are just as unrealistic as we pointed out last year even without the favourable treatment accorded the contribution to Government companies,” Mr Clinton said.
And he added: “The Government’s spending budget across the board continues to be unrealistic and it is evidently unable to control costs.”
Mr Clinton highlighted too other issues he said were conspicuous by their absence from Government budget statement and the estimates book, including any reference to Community Care by Sir Joe or the £10m Care Agency settlement.
Without a more rigorous approach to the Budget debate and the legislation that stems from it on public spending, Mr Clinton said the Government might as well enter £1000 notional figures across the estimates book.
Mr Clinton bemoaned too what he said was an absence of a “credible plan” to repay public debt.
The GSD’s analysis is that Gibraltar’s direct and indirect debt - the latter including money borrowed by Government-owned companies now totalling “well over” £1.3bn – stood at just under £2.2bn.
“This Government cannot continue with the pretence that it is not borrowing,” he said.
He was critical too of Sir Joe Bossano’s National Economic Plan – much of it funded via the Gibraltar Savings Bank - describing it as “a shambles”.
He highlighted projects such as the £38m Rooke Nursing Home which is facing delays and problems, and the Eastern Beach sheds for which he said there was no economic rationale.
Sir Joe, Mr Clinton said, “…continues unchecked to use savers’ money for whatever pet project he considers fit.”
“His financial jungle continues to grow unabated and out of control with no regard to giving full information to this place,” he added.
Sir Joe was not an investment manager and the use of savers’ monies without accountability in Parliament “should not be allowed”, Mr Clinton said.
And he questioned too Government “boasts” of the bank having a £76m reserve, adding there was no practical purpose to maintaining the surplus since the Savings Bank was guaranteed by the Government.
“Unless of course the Government are worried that their so-called investments run a real risk of loss such as the Rooke project,” Mr Clinton added.
“The Savings Bank has been the lender of last resort for the Government and as such means that we in Opposition have to maintain a constant scrutiny on its activities as it distorts public finances.”
Mr Clinton said Gibraltar had “a serious problem” in its management of public finances and would likely continue to face budget deficits, meaning “we cannot keep on piling up indirect debt as if it doesn’t exist or matter.”
“It is time for an honest conversation between us, and with the electorate,” the GSD MP told Parliament.
“I’m tired of the financial nonsense that is presented regularly in this place.”
“We have limited financial resources and infinite demands.”
“Fudging the numbers is not going provide solutions no matter who is in Government.”
To address this, Mr Clinton suggested a 10-point roadmap that called on Gibraltar to:
Look at how Bermuda has established a fiscal responsibility panel and ask the same questions of ourselves. How is an aging population going to be looked after given that healthcare costs are constantly increasing?
Ensure we follow up the Principal Auditor’s reports such that failings are addressed and not ignored.
Establish a public accounts committee to consider value for money and other questions. Identify waste and eliminate abuse actively.
Consider revising the estimates to include a five-year projection.
Have a finance bill such Parliament can properly debate fiscal measures all at one time and provide certainty to businesses.
Separate the finance ministry from the Chief Minister.
Start setting an example on how money is spent. Consider the question of sustainability.
Commit to full transparency, audit and publish the full accounts of all Government-owned companies as they are public interest entities.
Gazette promptly the full audited accounts of the Gibraltar Savings Bank.
Critically review the National Economic Plan on a value for money and risk basis.
And he concluded his Budget address with a stark message.
“We are running out of financial road and the issues as to financial stability have not been addressed,” Mr Clinton said.
“The Government is failing to be honest with the people of Gibraltar and has presented what I can only describe as a dishonest budget.”
“Dishonest in that it pretends there are surpluses when there are in fact deficits.”
“Dishonest in that it fails to properly budget for costs realistically.”
“But this is the hallmark of this GSLP/Liberal Government in consistently failing on honesty, transparency and accountability.”