In final budget speech as CM, Picardo defends record and dismisses GSD’s ‘scaremongering’

Chief Minister Fabian Picardo dismissed the Opposition’s portrayal of Gibraltar as facing a financial and governance crisis in a budget reply, adding the UK/EU treaty, economic growth and sustained investment in public services demonstrated a markedly different picture.

The Opposition’s arguments and criticism of the Government failed to grapple with the detail of the estimates book and amounted to political rhetoric riddled with contradictions, he said.

Mr Picardo was speaking in Parliament on Thursday after two historic days for Gibraltar in which the treaty was signed and immigration controls were lifted at the border at midnight on Tuesday, and where he and Prime Minister Pedro Sanchez watched the gates being removed the following morning.

“On the ground, everything has changed,” he said.

“We’ve gone from words in meeting rooms, to words on a page, to real and lasting change.”

“Gone are Franco's gates, forever.”

“Gone is the fear that a Spanish senior politician talking to, let alone touching, hugging, holding the hand of the Chief Minister of Gibraltar might somehow be taboo.”

“We have changed the state of the nation for the better and that's just in the last 48 hours.”

Mr Picardo said the Government had “worked very hard to cheat Brexit” alongside negotiating partners in the UK, Spain and the EU over many years.

He put that success in part down to relationships developed over many years through the GSLP’s and Liberal Party’s international political networks, which had provided access to politicians in London, Brussels and Madrid at critical moments.

He contrasted that work with the GSD’s position, arguing the Opposition had not established comparable links with political parties overseas and should do so in Gibraltar’s wider interests.

But the Opposition, he said, “haven’t got the energy”.

Mr Picardo accused the Leader of the Opposition, Keith Azopardi, of repeatedly misjudging Gibraltar’s international agreements, citing earlier GSD criticism of the Withdrawal Agreement, the tax treaty with Spain and the New Year’s Eve framework that formed the foundations of the final treaty.

He said GSD predictions that the tax treaty would damage employment and economic growth had not materialised.

Gibraltar had instead recorded more jobs and a larger economy, while its removal from Spain’s tax blacklist showed the agreement’s value, Mr Picardo told Parliament.

He also rejected Mr Azopardi’s previous view that Gibraltar should have been included in the wider UK-EU Trade and Cooperation Agreement, describing that agreement as “the worst possible option for us”.

Responding to concerns about the impact of new treaty procedures on businesses, he said guidance had been issued and meetings held with commercial representatives, while acknowledging that the first days of treaty implementation would be difficult as traders adjusted.

But Mr Picardo said that while Main Street and the wider retail sector remained central to Gibraltar’s community, the challenges facing shops were driven primarily by online competition rather than the treaty.

“The scenes that we saw on Tuesday and Wednesday morning also go beyond just the prospects for the nation, or how the economics of the nation may change,” he told Parliament.

“They also speak to what really mattered, which was the use of the art of politics to be put at the service of the people.”

“To be able to deliver that real change, not because it's going to produce more income for the public finances, and of course our view is it will, not because it will be better for the economy, which we think it will be, but because in those ways these new arrangements will be better for people.”

“And in other ways too, in terms of interpersonal relationships, the ability of people to go about their lives without bureaucracy getting in their way, all of that has now changed forever.”

PUBLIC FINANCES

Turning to the public finances, Mr Picardo challenged the Opposition’s assertion that his Budget address had been marked by hubris and was detached from reality.

He cited an estimated GDP of £3.2bn, GDP per person of £85,000, record employment and three consecutive Budget surpluses. Net debt, he said, stood at 21.4% of GDP, while aggregate debt was 27.5%, below the statutory ceiling of 40%.

“That’s not cloud cuckoo land. That’s not hubris. That’s reality,” he said.

Mr Picardo said the figures had been certified by the Financial Secretary under legislation introduced by the former GSD administration.

He also defended senior officials after the Opposition questioned the reliability and presentation of the Government’s financial information.

“We’ve got the professionals who tell us what the numbers actually are,” he said.

“None of them are people who do what they are told.”

“They hold the office that they hold because they are not people who do what they are told.”

Mr Picardo rejected the Opposition’s calculation placing gross direct and indirect debt at more than £2.6bn, noting that successive Opposition estimates had increased significantly over the years.

“That’s not analysis. That’s an auction,” he said.

He dismissed GSD calculations of public debt, arguing they included money owed between public entities without properly accounting for the assets created through that borrowing.

Mr Picardo described the GSD’s analysis of public debt as “absolute fiction”.

“This is just an attempt to scare the public,” he said.

Mr Picardo defended the Government’s use of public money for investment and accused the GSD of offering an overly cautious alternative that would reduce economic activity and leave taxpayers funding the Gibraltar Savings Bank’s interest payments.

He focused heavily on what he described as “disgracefully wrong” criticism from Opposition MP Roy Clinton of investments made with Gibraltar Savings Bank funds under the oversight of Sir Joe Bossano.

He said Sir Joe’s approach to public money was centred on investing funds to generate returns for Gibraltar, rather than leaving cash idle and requiring taxpayers to meet the cost of interest payments.

Mr Picardo placed Sir Joe at the top of Gibraltar’s public-finance hierarchy over many decades, arguing his stewardship had grown the Savings Bank, maintained returns to depositors and generated investment for the community.

He said abandoning that approach would have left taxpayers meeting hundreds of millions of pounds in costs.

Mr Picardo illustrated the argument by recalling how Sir Joe had considered buying Gibraltar an interest in Canary Wharf in 1995 but withdrew amid GSD criticism over debt and spending.

The opportunity was now worth billions, he said, presenting it as evidence of the long-term cost of excessive caution.

Mr Picardo said the Government was determined not to repeat that mistake and would continue backing investments intended to build assets, generate income and protect future public finances for the wider Gibraltar community.

Mr Picardo said the Opposition had not explained how the bank could continue paying interest to depositors if it stopped investing its funds, estimating that taxpayers could face annual costs of between £40m and £50m if the bank simply held deposits without generating returns.

That money, he said, would then not be available for health, education, housing or other public services.

On criticism about the use of government-owned companies, he argued the former GSD administration had itself spent £273m through companies while in office.

Mr Picardo also rejected criticism of the sovereign wealth fund, on which the Opposition had expressed concerns about risk, transparency and legality.

He said he was taking legal advice on whether the Opposition could be provided with the full suite of documents relating to the transaction or whether these would be subject to confidentiality, adding he had no objection to providing them subject to the advice received.

The Chief Minister dismissed suggestions that the arrangement amounted to gambling with public money or was outside the Gibraltar Government’s legal powers.

He said lawyers involved in the transaction had concluded it did not contain a government guarantee requiring parliamentary approval.

“There is no such thing as a risk-free life,” he said.

Mr Picardo also addressed criticism that departments had exceeded their original spending estimates by £79m, arguing the Opposition had focused on expenditure without considering additional revenue received during the year or explaining which services should have received less funding.

“They just say ‘you’ve spent more money’, but they don’t say ‘you’ve brought more money in’,” he told Parliament.

He said £31.8m of the additional departmental expenditure related to health and care, including services for elderly people.

Higher revenue allowed the Gibraltar Government to meet needs as they arose, rather than delaying expenditure simply to remain within an initial estimate, he said.

“They never tell us which pay rise we should not have agreed to,” Mr Picardo said.

“They never tell us which new treatment we should not have supported.”

Mr Picardo said the Opposition could not simultaneously support workers, patients and protesters seeking additional resources while criticising every increase in public expenditure.

He also challenged Opposition descriptions of spending on rented public-sector offices, St Joseph’s School and elderly residential services as unnecessary or wasteful.

Those criticisms, he said, showed where a future GSD administration might seek savings.

“If you’re going to save the money, you have to cut it somewhere,” he told Parliament.

The last GSD Government had spent 16 years in office, the same period as the current GSLP/Liberals, and Mr Picardo used that similarity to contrast their records.

On power cuts, he accused the GSD of adopting contradictory positions by criticising the Government for bringing in external expertise while saying a GSD administration would commission expert resilience assessments after taking office.

He defended the Government’s record on energy infrastructure and said external technical support was intended to strengthen resilience, not replace political responsibility.

There were more outages under the GSD on average every year, he told Parliament.

“They know they made no investment in the grid,” he said, adding the GSLP/Liberals had invested £20m on the grid since 2012 compared to the GSD’s £5m during 16 years in office.

“They are the party of power cuts, not us.”

Mr Picardo referred too to £9m invested on the sewage system compared to £300,000 by the GSD while in office.

“And we’re doing the wastewater treatment plant that they didn’t even start,” he said.

Mr Picardo made similar observations about housing, contrasting the Government’s construction record with that of the former GSD administration.

“All I've heard in reply have been 15 failed prophecies of doom,” he said.

“And yet here we are.”