Budget shows lack of planning and vision

The Budget announced by Government reveals both a lack of financial planning and a lack of vision of how to address the real domestic issues of concern to our people, says the PDP headed by Keith Azopardi.

While the Government points to a picture of sustained economic growth and claims exclusive ownership for that success the fact is that the building blocks for the economic success that Gibraltar enjoys have been contributed to by successive Governments and by a number of people through the years. It is right to acknowledge that.

The party adds: The situation is not as black or white as the Chief Minister would have us believe nor is the success of Gibraltar down to the efforts of any one man or administration.

The fact is that the GSLP administration contributed to the strengthening of our business infrastructure during their first term of office but then badly lost their way and allowed Gibraltar?s reputation to be significantly damaged during their latter years in office. The GSD repaired Gibraltar?s reputation and consolidated the economy of Gibraltar but have over the last three years demonstrated an inability to vigorously tackle the necessary social agenda.

It is also true that success over a number of years previously is not an indication as to this particular budget. This must be judged on its own merits and this reveals a marked lack of planning.

Gibraltar can go much further and secure continued economic success and achieve significant progress on issues like housing, social services, the environment or youth policies.

THE ABSENCE OF PLANNING

To do that there has to be a combination of solid economic management and a clear vision for the future.

The PDP says it welcomes the tax cuts announced by Government. Any measure that can decrease the burden of taxation on businesses or individuals is something that the PDP will broadly support.

"However far from being part of a deliberate plan to provide tax cuts quite the opposite has happened to make these possible," they say. "It is clear that this has been unplanned and only results because of the Government?s receipt of an unexpected windfall in revenue.

As such the Government cannot proclaim it is down to its successful economic management. It is nothing of the kind."

The reality is that Government had forecast a relatively small budget surplus for this year. This follows from a budget deficit of a couple of years ago. Quite clearly over the last three years the Government has felt the need to tighten its belt, reduce or better control departmental spending, slow down some capital projects and increase taxation on business.

This picture was in sharp contrast to the period prior to the last election where annual surpluses of around 10-15% on recurrent expenditure were regularly announced and these fuelled capital projects.

STRINGENT CONTROLS

Since 2003 the management of public finances has required the introduction of much more stringent discipline and controls. This has been matched by Government?s much more conservative forecasts on budget surpluses.

Of course, says the PDP,the Government has benefited from the fact that while, of late, its economic management has not been as effective as it had been previously the economy and job market has grown. As such it has been able to receive more by way of tax to balance the spending areas that have been more difficult to control.

If anything therefore the economic growth ? mainly in gaming ? and the sale of land is saving the Government from embarrassment on this issue.

The party insists: It is only through an unexpected and unforeseen increase in revenue that Government has been able to lower tax. This is not part of a master-plan but rather the fruits of an unexpected windfall.

One-off sales of land produce an artificial and distorted picture of the solidity of Government finances for the simple reason that once sold they cannot be re-sold. The PDP supports the reinvestment of land premiums on infrastructure and services but the overall economic picture should be considered in this light.

While the PDP welcomes that the money should be returned to the tax-payer, seen in its proper context, it raises more questions about the Government?s current economic management than it answers.

It also brings sharply to the fore the fact that the Government has little vision to deal with the real issues of the day ? in the housing, social or environmental fields. Very little ? if anything ? by way of a road-map or vision of where the Government intend to lead Gibraltar or that it will do to tackle these issues accompanied the Chief Minister?s speech.

"What has become clear is that the budget was an analysis presented after the event. It was not based on a plan or a programme before the event. The tax-cuts are introduced on the receipt of unexpected income and it is impossible to assess where the Government expect to take Gibraltar economically. It is also impossible to establish whether these are sustainable against the backdrop of the current revenue and expenditure picture," says a Press statement.

It adds: If all that Government have as a strategy is the conservative management of the budget and the hope that economic growth will produce a tax-cutting windfall then people may be forgiven for thinking that the economy is now running on remote control and has little to do with specific Government objectives.

As such the PDP says they are concerned about long-term sustainability and suspends its judgement on this. It is also dismayed about the lack of palpable vision or strategy that Government display.




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