Reality strikes on public finances

By Robert Vasquez

It cannot be clearer, the Cabinet, in short, the GSLP-Liberal Government headed by Chief Minister, Fabian Picardo, has instructed Chief Secretary, Darren Grech, and Financial Secretary, Albert Mena, to control strictly public spending in order to diminish the effects of Covid-19 and Brexit on public finances. This is too little too late. It is an admission from our Government, for the first time, that Gibraltar’s public finances are in a bad place.

POLITICAL RESPONSIBILITY

It is important to emphasise that this step is down to a political decision by the Government, given the impression could be wrongly gained that it is administrative, because emphasis is being placed on the instruction coming from the Chief Secretary and the Financial Secretary.

It is the current GSLP-Liberal Government that must take full responsibility for past extravagances and large borrowings. Only it is responsible to answer for what will likely happen over the next months and years.

MISMANAGEMENT

Further, this instruction is a huge admission of past mismanagement of public finances. Strict controls on spending should exist at all times; not only now, just because Covid-19 and Brexit are having an adverse impact.
Such controls must also exist in respect of expenditure on any non-essentials, which should be the order of the day when public moneys are engaged and, surely, supplementary spending should always have ministerial approval and fall within limits permitted constitutionally or by laws passed by Parliament. It is worth noting that there are 3 years’ worth of outstanding supplementary appropriation bills outstanding on the order paper of our Parliament.

The warning that public servants are personally liable financially for any unauthorised spending is also significant. As a result, is that an admission of past wrongs that have gone by without repercussion?

Seemingly, are the reminders to stop the ‘common practice’ of spending any remaining budget funds before the close of each financial year, to stop all discretionary overtime, with the requirement that essential overtime be approved in advance, and stop substitution of public officers amounting to temporary promotion are admissions of past laxity, if not of past mismanagement of public finances.

The scenario painted by the Government also begs the question: will cuts be made to the huge salaries paid to the Financial Secretary, the Attorney General, the Chief Minister and other Ministers, who receive individual salaries, some running into the hundreds of thousands of pounds?

All in all, it is a sad picture that is painted of how our public finances are run. We need a crisis, in this case one provoked by Covid-19 and Brexit, for those responsible for our money, yes public money is our money, to be managed properly.

OBLIGATION AND RESPONSIBILITY

Efficient financial management of public moneys is an obligation and a responsibility of our elected Government, currently the GSLP-Liberals. It cannot be ignored whilst the going is good. It is not one that kicks in only when there is no spare money to waste and misspend.

Remember our Chief Minister boasting about our economy, based on GDP per capita, to the extent of being the fourth largest in the world, plus rivalling the oil rich Arab states? Well, what now?

The admissions of past financial mismanagement need serious investigation.

PRUDENCE AND CARE

There are some of us who have for many years been advocating the reality of the existence of misspending and overspending of public moneys. There are some of us who have for decades being advocating more prudent and careful use of public money but to no avail.

In this context, Danny Feetham’s GSD in the 2015 General Election, of which I am proud to have been part of the team, backed a far more prudent and careful public spending policy, with my full support and my initiative, as I had been promoting in my blogs on ‘Llanito World’ for years.

That policy and initiative was derided by the then GSLP-Liberal candidature, who were elected into Government.

WHERE NOW?

Where does that leave us now? Whose policy was right? Well, GSLP-Liberal Government, let us see you get us out of this situation, where even your Sir Joe Bossano has spoken of our public finances being “unstable” and of having to take “hard decisions”, and who has now agreed to break his Golden Rule of never borrowing to fund recurrent expenditure.

The circulars from the Chief Secretary and Financial Secretary are but just a start!

POWER OVER PUBLIC GOOD

It was more important for those seeking Ministerial posts to ensure their election and re-election (under the current imperfect system) by handing out ‘goodies’ paid for by public money and excessive borrowings, ignoring the common good, including the Opposition and those who are not yet in Government.

Well, reality now strikes! Those who are responsible, be they politicians or senior public servants, need to be called to account in due time by an independent Public Inquiry. That is if we can afford one by then!

Hopefully, the responsible politicians, namely GSLP-Liberal Ministers, will in any event be dealt with adequately by the electorate at the next election.

DIRE FINANCES

The dire position facing Gibraltar was explained by Roy Clinton in his recent Opinion piece in terms that:
“It is fundamental to our wellbeing that our economy prospers and grows because without the tax revenues it generates Government cannot provide services such as healthcare and education.”

Additionally, “… the Government has already overplayed its hand with excessive development and borrowing over the last eight years and has little room for manoeuvre. All it can do now is to manage its spending according to priorities and target it to those that produce the maximum public or economic benefit.”

And, “so we face some harsh realities of life … we are suffering the immediate human and financial cost of Covid-19 which in itself will require years to recover from compounded with Brexit.”

WISE POLICY

Covid-19 was unforeseen, Brexit was not. It is important, however, to bear in mind, in this context, that those of us who promoted financial care and prudence did so in the context of providing for unforeseen situations arising. This in the setting of Gibraltar’s constant threatened position due to Spain’s unrelenting sovereignty claim: an argument that is bandied about, more and more, now in the context of the EU framework agreement with Spain.

An agreement that is intended to lead to an EU-UK treaty over Gibraltar that, hopefully, will not be overly influenced by our financial situation.

Robert Vasquez, QC, is a barrister. He is a former chairman of the GSD who stood as an independent candidate at the last election on a platform of democratic reform.