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Opinion & Analysis

A financial and political crisis worsened by Government

By Keith Azopardi, the Leader of the Opposition

On behalf of my colleagues and myself I wanted to wish you and your families a happy, healthy and peaceful 2022.

This will be a year of some major challenges – whether we can finally secure a safe and beneficial agreement with the EU on a new relationship; whether we will emerge from the COVID pandemic and regain our full freedoms; whether we will prosper economically and emerge from the serious financial crisis we are in; whether our public services will deliver efficiency when you need to see a doctor, have your housing problem dealt with or hope your son or daughter finds a job.

Last Monday the Chief Minister spoke to you for 19 minutes in a long address that was high on empty calls for unity and low on actual substance.

This was a request for economic solidarity from someone who over the last decade has presided over the most reckless ratcheting up of public debt ever seen in Gibraltar’s history.

This was a speech from someone who wants support only when the Government has walked us to the political cliff edge of no deal.

This was a protestation for unity from someone whose way of operating in politics is often one of division, name-calling and the squashing of any criticism by personalisation.

Having done all that Mr Picardo’s two basic messages to you were – first – rally round me in this year of difficulties and don’t criticise me.

Secondly – don’t complain to me that I won’t spend too much money in the future because I have spent a lot in the past.

But we aren’t here to give Mr Picardo a blank cheque and those basic messages show that the Chief Minister is both seeking to pull the wool over your eyes and missing the point.

After all, the reason we still have uncertainty on whether we will have freedom of movement [mobility] in Europe or a deal that protects us politically, socially and economically is because of his Government’s failure in landing a safe and beneficial deal yet.

And surely it cannot be lost on anyone that we are the only part of the British family that had been in the EU that still does not have a new agreement. How can this be?

The UK successfully negotiated a new 1000-page agreement for itself by the end of the 2020 deadline.

Instead, Mr Picardo remarkably proclaimed the failure of a flawed eight-page non-binding Political Framework as a “success” at the end of 2020.

And you were asked then to suspend your belief and still give him a final chance to land a deal which would take six months – by June last year. We are still waiting.

Mr Picardo did then what he does best – the high drama of convening a press conference at the shortest of notice creating huge expectations only to announce very little or dash hopes while at the same time telling you that he has achieved a great victory.

That tactic is wearing thin.

If we had been so successful then why do we still have no safe and beneficial Agreement and why are we the only ones in this uncertain position?

The reality is that we have been warning about lost opportunities in the negotiating process following the Brexit referendum for some time.

At the Withdrawal Agreement stage in 2018 frontier workers secured freedom of movement and other rights in Gibraltar but the opportunity was not taken to secure enduring rights for Gibraltarians or British people resident here.

Instead, Mr Picardo entered into MOUs with Spain that gave some economic and other controls away.

He also entered into a permanent Tax Treaty by which major economic and political concessions were made to Spain.

One that treats some residents of Gibraltar as Spanish tax residents even though they actually live here or that subject some of our companies to the Spanish tax system even when they do all their business here.

That Treaty was harmful and against our interests.

So while Spain obtained benefits for itself and its workers we languished in the promise by Mr Picardo that it wasn’t the right time to get our lasting benefits.

But when the UK bagged a permanent deal for itself two years later we still didn’t and here we are still without a permanent agreement and facing continued uncertainty.

And what of the contents of such a proposed deal itself?

Mr Picardo has, so far, been very restrictive with what he has put in the public domain.

While the skimpy Political Framework was published in December 2020 inevitably there would have to be much greater detail in any final agreement if it emerges.

There are plenty of potential economic and political trojan horses in the margins and details of the agreement contemplated by Mr Picardo that could conceivably affect our sovereignty, jurisdiction and control.

We will all need to judge any deal which is finally put on the table. It would need to be safe and beneficial. We hope there will be one.

But no deal should be entered into before it is published in draft so there can be full public scrutiny and debate in Parliament of the proposed deal before it is signed.

Together with our political future 2022 is also about our economic future.

While COVID has hit the economy hard the reason we are at the financial precipice is because the Government has put us there after years of racking up a legacy of debt and allowing huge and reckless expenditure.

The public debt of Gibraltar has been tripled.

The cost of the public sector has grown tremendously and there has been no semblance of real control of waste or abuse in public contracts.

That is why it is so hollow for Mr Picardo to now try to dress himself in the clothes of responsibility and call for unity having first emptied the Government coffers, showed no willingness to control expenditure or abuse for a decade and borrowed to the hilt.

We have been calling for economic prudence and responsibility for years.

In successive elections in 2015 and 2019 we have been warning about the economic policies of the Government and their handling of public finances.

In our 2019 manifesto we had a clear programme of measures to improve accountability and controls of the spending of your money.

When Mr Picardo calls for unity around this new so-called culture of responsibility we view this with deep scepticism because it is his Government that had created a culture of entitlement and burnt the people’s monies as if there was no tomorrow.

The deficit is now £51M a year - £1M pounds a week.

That is like you having to borrow money every month just to pay the food bills.

Sooner or later that is unsustainable because money borrowed has to be paid back and all Mr Picardo is leaving successive generations is a legacy of debt, debt, debt.

We are running at a loss in a way that has, in the words of Sir Joe Bossano, never been seen before and is the worst deficit in our history.

Judge for yourselves who is to blame for that.

It is easy to put the blame on COVID. But the reality is that we were already neck high in debt [1.2Billion gross debt] before the COVID pandemic arrived.

That has cost about £300M so far but we had lost most of our financial leeway before it arrived on our shores.

So when the clouds grew dark there was little left to borrow and not much in the bank by way of savings for a really rainy day.

It is now raining hailstones and there is no cash left because Mr Picardo has spent it.

Those are realities of the way the Government has handled our finances – your money.

It is certainly true that the economic reality of the deficit of £1M a week needs to be dealt with fast. And there needs to be consistency in the approach.

The greater controls and efficiencies we have been talking about for years now need to be applied.

But do we trust Mr Picardo in delivering such a consistent strategy?

Even though he recognised in his New Year’s Message that on average private sector salaries are lower than the public sector he still has put further pressure on the private sector with social insurance hikes that may tip some businesses over and can lead to the loss of jobs or stall the creation of employment.

And only a few days ago Sir Joe Bossano was saying that despite the financial crisis some Government departments are still not keeping to the discipline of their budgets and that they expect that they will have to find an extra £40M because of the disregard of the budget limits.

The political Government – the Ministers – led by the Chief Minister are responsible for and accountable to you for those further excesses.

Mr Picardo cannot on the one hand preach responsibility only to then not be able to keep to his own budget and allow departments to spend £40M more than had been approved. Certainly not in a crisis year like this one.

There has to be a real and enduring commitment to value for money and Government needs to become more efficient with less money.

Financial recklessness by the Government hurts the people who can least afford it – those on insecure private sector contracts, those on the minimum wage and those who are on the edge of financial survival every day.

The single mother affected by the higher electricity charges. The small business finding the higher social insurance charges overwhelming in a difficult year and now feeling under pressure to lay off staff. The worker in a small company on the minimum wage worried about being laid off.

So we have the irony that the Government says tighten your belts because it mismanaged your money for 10 years and now may have to increase taxes – in other words ask you for more money.

But do you normally allow someone who has lost your money a bail out so they can spend more of your money or let them carry on in charge when they are blowing your life savings?

It’s time to stop trusting those who have handled your money badly for 10 years.

Of course, COVID hit hard and we do not underestimate that but if they hadn’t been so reckless for 10 years we would have been better placed to weather the storm.

We aren’t afraid to tighten our collective belts but if there is a need to do so it has been worsened because of Mr Picardo’s policies for a decade.

If there is a need to fasten our seat belts because we are still in political uncertainty it is because Mr Picardo’s Government has so far failed where the British Government has succeeded only for itself.

And to talk only about money or tightening your belt is not only rich coming from the Government that has put us here financially but shows it also fails to appreciate what some of the key complaints about public services are and that they don’t need a lot of money to fix.

When someone has been on the social or medical priority housing lists for a long time – sometimes years - then they rightly do not understand why it takes so long to offer them a house.

When mental health patients do not receive calls or follow-ups; when appointments are cancelled and not restored for weeks; when letters aren’t answered; when promises aren’t kept; when simple applications for anything – whether they are to amend details in a system or for renewal of ID cards take weeks or months people rightly cannot understand those failures in services.
Those issues are not about money.

They are about the Government failing to organise its services, not respecting that it administers resources for the people it serves, not ensuring that it is efficient and not embracing technology fast enough to make those services work and work more quickly.

So when the Chief Minister calls for people to be understanding in a tough year what is he doing to understand that many complaints are not about money and need solutions now.

And the lack of money, uncertainty and the breakdown of services is the tip of the iceberg.

This is a Government not just running out of steam; directionless and speaking one economic language but then doing something completely different.

This is a Government that has far too often been willing to trade in influence and conduct its affairs in an opaque way raising questions as to the special interests that wield influence within the heart of Government and its relationships with a privileged few.

So when the Chief Minister said in his New Year Message that his Government always tells the truth it would be laughable if it were not so serious.

Just in the last 12 months there has been a catalogue of half-truths, spin and downright lies that cascade off the Government’s press releases and statements in an unstoppable waterfall.

When TNG were announced as the successful party that would get the Bayside-St Anne’s site we were treated to both fiction and special interests.

First we were told by Mr Picardo that they had been the highest bidder in the expressions of interest process for those valuable sites.

This was plainly untrue because TNG did not even exist when the expressions of interest closed. The company was incorporated years later.

Then of course we all became aware that while they were negotiating the allocation of valuable land for luxury development a sister entity had made a £3.75M donation to the Government to bail it out from its financial excesses.

Only a few days after they were awarded the Bayside/St Anne’s site that same entity was also awarded the whole Eastside development.

So while we are in a financial and political crisis it is one which Mr Picardo’s Government has worsened and contributed to.

And one that we have little faith they can overcome because beyond the shine and glamour of the media spin they are politically bankrupt of ideas.

We remain hopeful however for our future because Gibraltar has always been resilient and has many hard-working people in the public and private sectors who with your sheer effort will contribute your time, energy and ideas to helping navigate Gibraltar through challenges despite the failures of the Government.

The GSD will also be here ensuring that we hold the Government to account during this crucial year ahead which will influence our economic and political future and providing the alternative Gibraltar needs.

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