Jan 16 - Feetham's New Years Message Touches Upon Public Expenditure and Culture of Entitlement
In his New Year’s Message, broadcast last night on GBC TV, Opposition Leader Daniel Feetham touched upon a variation of key issues for the GSD, including Credit Finance Company Limited and Government expenditure, relations with Spain and how the Opposition would deal with a host of matters.
The full text of Mr. Feetham’s Message is as follows:
‘I hope that you have all enjoyed a very good and restful festive period with your loved ones.
It is now just over three years since Gibraltar decided that it was “time for change”. This year, you will be given the opportunity to decide whether the Government has brought about the kind of change you expected and equally as importantly, the kind of change that provides the basis for a viable and sustainable economic and political project for this community.
We did it before, we can do it again
The kind of project that the GSD, with your help, undertook during 16 years’ of Government.
A project that included the transformation of Gibraltar’s reputation, its physical appearance and many of our institutions; the conduct of our external relations intelligently, but safely; the creation of thousands of new jobs; huge increases in the standard of living; very healthy public finances despite the Big Lie at the last election.
The Big Lie and Gamble
Who could possibly believe that a £100 m black hole existed in December 2011 or that our public finances were in a ruinous state, when within months of the General Election Mr. Picardo started spending money as if it had gone out of fashion, whilst at the same time freezing rents, rates, electricity, cutting income tax and donating every penny of Government surpluses to Community Care.
That not only raises the question as to why you should trust Mr Picardo on anything he might say about the public finances, but it also explains why the Government is gambling with the public finances, by keeping significant public borrowing off the books of the Government by using the GSB and Credit Finance Company to create the illusion of less debt even though the Government guarantees all debt incurred by the GSB.
And this has all given rise to an economic and political project by the Government that is neither VIABLE nor SUSTAINABLE nor PRUDENT.
Expenditure and Direct Debt
Annual Recurrent Expenditure has risen since March 2012 by £95.6m; an increase of 28%.
Inevitably, even direct debt is increasing.
Net Public debt is at the highest it has ever been in the history of this community at £372 m; an increase of £94m from March 2013. Gross Public Debt has increased over that period by 76m to £452 m.
Over recent months, Mr Picardo has undergone a Damascene conversion to GSD policy arguing that although Net Debt is the highest in history it is only 26% of GDP and therefore prudent.
But, of course, when the Net Debt stood at 25% of GDP in 2011, Mr Picardo claimed that the GSD was addicted to debt. If the GSD was addicted to debt then, he must surely be addicted to debt today.
The Gibraltar Savings Bank and Indirect Debt
But as we have constantly emphasised these figures do not provide a complete picture of public debt.
Over the last three years the Government has been transferring Government debentures, which rank as Government debt, into the GSB where it does not, even though the Government guarantees that money.
Nearly half of all the money in the GSB, some £400 m, has been invested in Credit Finance Company and the Government has invested a further £30m.
Credit Finance and Government expenditure
£82 m of that total has been spent in providing loans to the Sunborne, housing estates, individuals or entities to allow them to pay Government arrears (including taxes) and in paying the commuted pensions of Civil Servants. None of this appears in the accounts of the Government and none of it is approved by Parliament.
To say that Credit Finance does not pay for Government projects is wholly misleading, when the expenditure it is incurring is properly that of the Government. If the Government chooses to provide loans to third parties, it should do so directly and not use savers money as its unaccountable credit card.
The Balance Sheet
Disclosing what the Chief Minister described in his New Years Message as a “balance sheet” for Credit Finance is another attempt to pull the wool over your eyes.
Only Mr Picardo could describe it as a balance sheet.
It contains the most minimum information, and does not show who is benefiting from substantial loans, in what amounts and on what terms. That is the information any open and transparent Government would provide to allow us to assess any risk in these loans.
Gibraltar Investment (Holdings) Limited
Moreover, the remainder of the money in Credit Finance, some £347 m, has been invested in Gibraltar Investment (Holdings) Ltd, a company used by Governments to fund all other Government companies and the projects undertaken by them.
Why would the Government procure the investment of £347m from Credit Finance to Gibraltar Investment (Holdings) Ltd when it has no intention of using that money to fund other Government companies or their projects?
We will wait and see.
Trust
But when Mr Picardo asks you to TRUST him; look at his track record. The Big Lie at the last the election. The way he created Credit Finance, secretly without telling anyone, including Parliament, and then the way he secretly started pouring millions of savers money into in it and making loans to third parties. The way he lied to Parliament when he said the Government had not directly or INDIRECTLY provided loans to the Sunborne. Only coming clean the day after the by-election. Ministers in other countries have been forced to resign for far less.
These levels of direct and indirect debt, have the potential to be a real millstone around the necks of our children and our children's children.
The Threats
This is not the time to be taking blind gambles.
David Cameron, the UK Prime Minister, has said there are red lights flashing on the global economy. We are also going through some very difficult times in our relations with Spain. We do not know where the EU debate is going to end up in the UK and there has been very little inward investment.
Our dependence on tobacco revenue is increasing. Import duty (the bulk of which is tobacco revenue) today accounts for 33% of all Government revenue.
Finally, all this spending is cranking up a culture of expectation and entitlement that is wholly irresponsible and not sustainable in the long run.
WHAT WOULD THE GSD DO?
We would bring all expenditure incurred by Credit Finance into the books of the Government so that people can see the true picture of public debt and we would publish who has benefited from loans and in what amounts.
Culture of Entitlement
We need to change how we see the role of Government. That means tackling the culture of entitlement which is a rot at our core.
For example, we cannot continue with a policy where anyone, regardless of wealth, can expect to be entitled to Government-subsidised accommodation at the expense of others who are less fortunate or the resources of the community generally.
That is why we announced our means testing policy for FUTURE applicants on the housing waiting list.
This forward-thinking policy is one which we believe will be supported by the majority of fair minded and hard-working Gibraltarians.
Employment
We must also encourage those who want to better themselves and not create obstacles to self-improvement. It is fundamentally wrong for the ETB to refuse people access to job vacancies simply because they already have a job. It is also wrong to condemn an entire generation of our youngsters to no or no adequate training as the Government is doing with the Future Job Strategy; an issue we will remedy with properly focused training schemes in the skills needed by the private sector.
Responsible Government
In addition, responsible Government requires us to not behave as if the good times will last forever and we need to prepare for inevitable pressure on tobacco revenue.
Our own capital projects must be focused on those that are socially and economically necessary and important. A new power station, the tunnel under the runway, which we hope will be substantially paid out of damages from OHL and the relocation of Bayside, Westside and Technical College to the Rooke area which would then release land in all those areas for other uses.
Building new schools is necessary. Spending money on a plush extension of No 6 Convent Place is not.
The Stadium
Moving Bayside would also allow for the redevelopment of Victoria stadium into a UEFA Cat 3 or 4 stadium so that GFA home games are played in Gibraltar. That will also increase training facilities for use at all levels which we believe is the real problem affecting grass roots football.
We are not against the GFA having its own stadium and we are prepared to sit down and consider alternatives but, to be crystal clear, if we are elected, we will not allow a stadium to be built at Europa Point and we will not fund a new stadium.
The GSD is ready
Over the last year we took the unprecedented step of publishing many of our policies well in advance of the next election.
We intend to continue doing that and I am confident that over the next few months you will be able to judge for yourselves that the GSD is the party to be trusted with the responsible, prudent and safe stewardship of our affairs and our economy: without which, the Gibraltar economic and political project would falter. My party looks forward to the challenges and opportunities that 2015 will bring with great enthusiasm.
On behalf of myself and my family I wish you a very happy, healthy and prosperous 2015.’
