Govt hits back at GSD in row over budget estimates

The Gibraltar Government yesterday sought to explain the process of preparing expenditure estimates, responding to criticism on budget figures described by the GSD as “a hopeless fiction”.

The Gibraltar Government had previously stated that its estimates were prepared by officials with long experience in the Treasury, prompting the GSD to accuse it of hiding behind officials instead of taking political responsibility for its estimates.

The GSD said too that the government had in the past acknowledged that its estimates sometimes went against the advice of officials.

But on Wednesday, No.6 Convent Place said no government had ever blindly accepted every proposal from departments without juxtaposing them against the revenue estimates provided by the Treasury.

Based on available resources, policy decisions were made to prioritise certain proposals over others, No.6 said, adding that to interpret rejecting certain proposals as simply dismissing officials’ advice was misleading.

In a statement, No.6 said controlling officers at each department proposed service enhancements and estimated their costs, after which political decisions were taken depending on revenue estimates provided by the Treasury.

“No Government has ever accepted each and every proposal made by the departments without taking into account the estimates of revenue provided by the Treasury,” No.6 Convent Place said in a statement.

“In the context of the estimated resources a policy decision is normally taken about which proposals should be given priority and which proposals should be deferred.”

“Since the proposals for each head of expenditure is made and costed by a controlling officer without regard to the detail of requests that others would be making, it has always meant that the Government would have to make a policy decision to say yes to some and no to others.”

“This is what the GSD calls rejecting ‘advice’.”

“The alternative would mean saying yes to everyone on everything irrespective of the ability to meet the cost.”

“So that fact that the choice in selecting what is to proceed is determined by the elected Government does not mean that the departmental expenditure is calculated by a minister instead of an official.”

“If the opposition does not understand this, then why have they been accusing the Government since 2012 that it has been spending too much when spending less, according to them, is failure to accept the ‘advice’ of departments.”

The three-page statement quoted extensively from a budget address by Sir Joe Bossano, the Minister for Economic Stability, in which he explained controlling officers had been told estimates for the forthcoming year should be as close as possible to the figure provided in the approved estimate of the preceding year, “…that is to say zero increase, even if the forecast outturn for the current year is expected to be higher in the year when the estimate is being prepared”.

“This part has not always been so, but it has been introduced since we have had to borrow to fund recurrent expenditure and bridge the gap, as a matter of policy,” Sir Joe said at the time.

“This is done to comply with the golden rule on public finance, which I know members opposite share, given their concerns over borrowing incurred to bridge the gap that is produced when there is a deficit.”

The Treasury's directive to Controlling Officers emphasises the need for offsetting savings to accommodate any budgetary increases not resulting from agreed pay awards or annual contract price hikes.

“This concerted effort must be maintained in order to assist the Government, like all other world economies, to recover from the financial effects of the COVID-19 pandemic,” the Treasury directive states.

To illustrate the different roles carried out by officials and politicians, the government said that during the GSD’s time in government, some 47 learning assistants were employed in schools to give support to pupils with learning difficulties.

The Department for Education then identified an increased need in this area and this was accepted as a political decision by the GSLP/Liberal government, with some 215 learning assistants now employed.

“The cost in the book is calculated by the treasury now for 215 and was calculated for 47 in 2011,” No.6 Convent Place said.

“The implication of the accusations of the GSD is that the funding provided in the estimates book give a false picture and it is not the first time they make it, implying that the officials knowingly do not show the true cost of the increased provision.”