Azopardi focuses on debt and spending: ‘Gib is in financial ICU’

The people of Gibraltar should not be called on to “bail out” the Gibraltar Government after years of “economic recklessness”, the Leader of the Opposition, Keith Azopardi, told Parliament on Tuesday, as he said the GSD cannot not support the Chief Minister’s budget for the forthcoming year.

Mr Azopardi said the budget did not “give a true picture of public finances” and that his party did not endorse Chief Minister Fabian Picardo’s “approach to economics or the management of public finances”.

“We do not support [the Chief Minister’s] direction of travel of our nation,” Mr Azopardi said.

“We think the financial and economic approach is wrong and setting generations of Gibraltarians up with a legacy of debt.”

Against a backdrop of Brexit and the Covid-19 public health emergency, Mr Picardo announced that Gibraltar would report a £158m deficit for 2020/21, and projected a deficit of over £50million in the next year.

Mr Picardo had presented an aggregate debt figure of £678m as of March this year, but Mr Azopardi said the figure was “artificial” because it did not reflect borrowing “off books” by government-owned companies. The figure, he said, could be closer to £2 billion.

Mr Azopardi said last year’s deficit “is unsustainable and needs rectification by economic growth and by efficiencies in public services”, with a clear understanding of where savings can be made.

“Taxing the people should be a last resort,” he said, in response to the increase in costs to the public in a areas such as social insurance and electricity hikes, even while personal taxes and pensions remained untouched in the budget.

“The people should not bail out the Government for its historic mismanagement.”

It is the people’s money, Mr Azopardi said, adding that the Government has a duty to inform the public of where it is spent.

During his address he questioned “how good a shape” Gibraltar was in when the pandemic economic crisis arrived, adding that it “cannot be glibly dismissed”.

He referred to Sir Joe Bossano who had issued a “health warning” for the economy even before the pandemic.

“We are no longer at the health warning stage,” Mr Azopardi said.

“We are so beyond the health warning that we are in the financial ICU.”

“The state of the public finances when we arrived at the crisis was of the Government’s own making and they left us exposed and without any other option but to borrow heavily and with little leeway for the future.”

But borrowing “must be tempered with prudence”, he added.

The Covid pandemic has cost the Government £252 million since last year, Mr Azopardi said, with the main revenue streams of company tax, income tax and import duty all having been affected by the global health emergency.

He repeatedly questioned the government’s focus on Covid as the root cause of the damage to the economy over the past year, insisting the government’s spending prior to the pandemic was a critical factor too.

“Covid cannot be used as a shield for the years of disarray and debt addiction,” Mr Azopardi said.

Mr Azopardi said the Government had “already tripled gross debt instead of halving it” since the start of the pandemic.

“Mismanagement, borrowing, recklessness and waste” has brought Gibraltar to the “precarious position” it finds itself in today, Mr Azopardi said.

He said efficiencies, control of waste, control of abuse and corruption, transparency with real visibility of the economy and actual debt, prudence, targeted business assistance, borrowing only to invest and to create economic activity and a programme of reduction and management of borrowing will help.

The GSD believes in “value for money, and not austerity”, he added.

Mr Azopardi said that instead of commending controls or greater efficiencies, the Chief Minister was now looking at the people to bail him out.

“And why should the people bail him out from his own economic recklessness?” Mr Azopardi asked, in a scathing critique of the Chief Minister’s budget address.

“This is a Government that does not understand that public monies are not theirs.”

“It is not your money. It’s the people’s money.”

He said it “beggars belief” that people are being requested to “hand over their hard-earned money to a Government that has systematically proved it cannot be believed when it has made economic promises about debt or taxes or management of the economy or value for money in the past”.

The Social Insurance hikes have been sudden, ranging from 20% to 107% in “one brutal stroke”, while voluntary contributions have increased by 142%, he said.

Mr Azopardi said students, the elderly and the disadvantaged “will be the ones to suffer”, and not the “party apparatchiks and the friends who are close to the Government”.

BUSINESSES

Mr Azopardi said this year’s budget was “bad for businesses and bad for workers”.

During the height of the pandemic, the GSD backed the Government’s decision to introduce BEAT measures to support businesses.

The BEAT measures to date have cost some £32million, with the bulk of this paid during the first lockdown in March to June 2020, and in December 2020 to February 2021.

While the financial assistance packages got businesses through “difficult times at a relatively modest price”, Mr Azopardi asked what assistance is being offered to businesses in this budget, adding that the “fall out is still felt” by those in the hospitality and tourism sector.

He warned about the time it would take to restore activity in areas most affected by the pandemic, adding that it “won’t be over like a magic potion” and the restoration of activity to pre-Covid levels “will not come any time soon”.

And he added that Gibraltar “needs to learn how to live with this virus and ensure freedoms remain”, because another lockdown “will be unsustainable”.

The increase in social insurance, he said, had hit those businesses that are already struggling hardest, while also discouraging job creation.

Mr Azopardi said business groups had already warned of the effect this could have on “fragile businesses” which are also being deprived of the BEAT measures.

Mr Azopardi said the Government should have been able to “spot curves” and be “able to respond ably when sudden events hit you”.

“If Brexit was the curve, then Covid is the falling meteor from the sky,” he said.

“For all events we need to be ready and not be placed in a fragile financial position.”

On Brexit, Mr Azopardi said the Government has faced a “loss of momentum” for a treaty on Gibraltar and that this had come at a price.

He said Gibraltar still does not have a deal some seven months since the New Year’s Eve Agreement, and will continue with uncertainty “while everyone else knows where they are”.

He said that while the UK “gorged” on its own 1,400-page treaty, the Chief Minister came back with an eight-page agreement which “objectively was a serious failure to land a permanent and secure deal”.

Mr Azopardi said that all this did was “buy more time”, but it lost the momentum to achieve a deal.

‘THE FALSE DAWN’

It has been 10 years since the GSLP-Liberal Government has been in power, but the Chief Minister “is still looking back and pretending it is someone else’s fault”.

Mr Azopardi said for many people, this is a “false dawn” for those who have “been left behind by this Government of broken promises”.

Mr Azopardi said “people expect responsibility for the Government’s actions”.

“The overall picture of our public finances is that he has massively increased public debt of Gibraltar when he said he would lower it and in that he has to account to the people of Gibraltar for a massive failure, a massive breach of promise or worse still, a political lie,” he said.

“And why is that important? Because of precisely where we find ourselves.”

“In a fragile economy, in a small place, without many natural resources other than its people and our endeavours, facing a hostile Spain and an unhelpful EU and a lethargic United Kingdom.”

“We have to do much of this on our own.”

“So we cannot endanger our ability to survive and prosper.”

“If there’s something we surely have learnt over the last 12 months is that there can be future uncertainty and as such that the warnings that we have been giving about the unsustainability of the Government’s approach should be heeded.”

“This is a message we have been giving for years.”