Clinton attacks Picardo’s ‘financial trickery’
The Gibraltar Government has failed to meet basic standards of transparency and accountability in public finance, GSD MP Roy Clinton said this week, as he accused the Chief Minister of “financial trickery”.
Mr Clinton said the government was running two sets of accounting books, one public, the other “hidden and secret”.
It amounted, he said, to “a travesty to our public finance system”.
“We have no visibility as to what the financial position of government companies is and importantly what is happening to the £300 million by way of mortgage over six of our housing estates which house thousands of families,” he told Parliament in a budget address.
Mr Clinton’s dire assessment of the state of public finances was in stark contrast to the cautious yet optimistic sentiment expressed by Fabian Picardo during his opening budget address.
With that in mind, Mr Clinton echoed the Chamber of Commerce and said he would welcome an external review by a specialised body such as the UK Chartered Institute of Public Finance and Accountancy to resolve the “perennial” disagreements over the size of Gibraltar’s public debt.
He estimated that Gibraltar’s direct and indirect gross public debt amounted to £1.25 billion and said the government did not have an adequate plan in place to manage and repay it.
The GSD MP dismissed the government’s argument that debt was low as a ratio of Gibraltar’s growing GDP, insisting that legal borrowing limits should be linked to revenue as was the case in the past.
Quoting from a report by the Institute of Chartered Accountants in England and Wales, he said GDP was not always reliable and was not available to governments as a source of income.
“A better approach is to calculate public debt in proportion of the revenue that governments actually receive and use to service their debts,” he said, quoting the report.
Mr Clinton repeated longstanding concerns about transparency in the financial information provided by government-owned companies such as Credit Finance, adding there was very little data available and that this was “unacceptable in a modern democracy”.
He was critical too that the government’s budget contained no provision for the construction of the new schools, which Mr Clinton said could cost up to £142m at a conservative estimate.
Money was being spent on these and other major projects, yet they were not detailed in the budget book, he told Parliament.
“The evidence of our eyes tells us money is being spent on the schools, the university accommodation block and even the Midtown carpark, but according to the government’s financial records we are dreaming because they do not officially exist,” he said.
“When we ask for the cost of these mirages, we are told it is all commercially sensitive.”
Mr Clinton accused the government of “financial alchemy” and said the public deserved to know Gibraltar’s “true” financial position from the Chief Minister.
“I have asked him publicly to explain how the schools are being funded and he sidesteps the issue,” he said.
“I have asked about what is being done with the £300 million mortgage proceeds and the Chief Minister talks nonsense about having a ‘war chest’ and ‘Sovereign Wealth funds’.”
“He obviously has no concept of what these are and he hopes no one else does.”
“The Chief Minister either doesn’t know the answers to these questions or simply cannot bring himself to tell the people the truth, which is that we are borrowing heavily to pay for his concept of utopia.”
Mr Clinton cautioned too that while recurrent revenue was down from March 2017 to March this year, recurrent expenditure as a proportion of that income was up and projected to rise further over the coming year.
“This is a worrying trend that does not allow for much of a buffer should government revenue suffer a downturn next year,” he said.
He also raised concern about a projected decrease in cash reserves and an increase in net debt in 2019.
“We are ominously seeing rising recurrent expenditure, rising net debt, decreasing revenue and decreasing cash balances,” he said.
“We are it would seem heading for a sober reckoning with financial reality and we need to wake up to this now.”
Mr Clinton told Parliament that the GSD’s decision not to back the budget was not about “petty partisan politics”, but rather because he believed it was neither accurate nor complete.
“The lights will not go out, schools will not close and people will not die as the Chief Minister suggested last year because of our voting against his budget,” he said.
“We have a duty to hold the government to account on behalf of the people of Gibraltar and we would be negligent in that duty if we turned a blind eye to the Chief Minister’s financial trickery.”