Gibraltar: Chief Minister Outlines Plan To Save Finance Centre

Joe Garcia, Panorama

08 January 2001

This story is reproduced by kind permission of Panorama at http://www.panorama.gi

The Gibraltar chief minister Peter Caruana has confirmed the government plans to try and save the finance centre in the wake of international threats.

In his New Year message, Mr Caruana said: "The Finance Centre continues to grow and prosper, despite the threats and challenges that all Offshore Finance Centres are now facing from international organisations like the OECD, G7, the EU and others."

He added:"No one in Gibraltar, whether they work directly in the Finance Centre or not should underestimate how important the Finance Centre is to the economic, and therefore to the social and political prosperity, and indeed survival, of Gibraltar."

Probably as many as 5000 jobs depend, directly or indirectly, on the Finance Centre, he said. The Finance Centre is an important mainstay of the private sector and therefore of the economy.

And he then insisted on his plans to try and save the finance centre. "In order to protect the Finance Centre from the consequences of the international initiatives that I have referred to, Government will be obliged to take certain measures, especially changes to our tax system, to enable the Finance Centre to continue to flourish and thus sustain the direct and indirect employment that it currently provides.

The objectives of the Government are "to develop a viable and sustainable economy and to maintain a climate which ensures its continuing prosperity into the future."

He saw some sectors of the retail trade continuing to suffer the consequences of what he termed "the strong Pound." It made many of Gibraltar's shops uncompetitive for local and visiting shoppers. However, there were signs, at long last, "that the Euro may be strengtheneing" and if this continues "it will offer some relief to those local businesses affected."

Here is the full text of the Chief Minister's Message:

Good evening, I hope that you have had an enjoyable and restful Christmas and New Year festive period.

This time of the year serves to highlight just how important the family and traditional family values are to us here in Gibraltar. The family is the bedrock upon which our unique community is built. Therefore, you can be sure that, whatever may happen elsewhere in Europe or the world my Government will never voluntarily introduce any laws or measures that undermine our family values. Indeed, during this year we hope to introduce measures that will support the family and traditional family life and values.

2000 has generally been a good year for Gibraltar, although, as always, there have been many difficult issues to deal with.

The objectives of the Government are really very simple. To develop a viable and sustainable economy and to maintain a climate which ensures its continuing prosperity into the future; to continue to improve the quality of all aspects of life in Gibraltar; and thirdly to do all that we can to uphold our political and EU rights and promote our aspirations as a people. Through the careful balancing and advancement of all these objectives we ensure a prosperous future for this very special place, which is our homeland.

To achieve these overall objectives we need to make steady progress on a broad front of issues: social issues, physical development issues, economic issues and international political issues. In all of them our by-words have been transformation, regeneration and modernisation.

Social Issues

My colleagues in Government, and I, firmly believe that social justice and the way that we provide for our elderly and for the least privileged groups in our society are fundamental to our confidence, happiness and success as a modern community. Much progress has been made.

Anyone who has visited Mount Alvernia in recent months cannot but have been struck by the complete transformation of the place brought about by the new Elderly Care Agency. The whole approach to the provision of care has changed beyond recognition.

Similarly, the establishment of a very impressive and already successful, Drug Rehabilitation Centre at Bruce`s Farm has been an extremely valuable new addition to Gibraltar`s care services. The Social Services Department itself has also undergone training and additional resourcing and is in the throes of further change to ensure that it is able to meet the needs of today`s society. Dr Giraldi Home is being converted into small units that will result in homelier, more appropriate living conditions. 2001 will also see major construction work at Mount Alvernia, the establishment of a new residential home for extremely handicapped people, the establishment of small homes within the community for children in care and the establishment in Gibraltar of child fostering. None of these things are politically spectacular, and they all cost extra money, but they are essential to the modernisation of our care services and to providing properly for those most in need. During 2001 we will continue to invest in upgrading and modernising our social care services.

Last year also saw the coming on stream of Bishop Canilla House, specially designed for elderly tenants. This has been hugely popular with tenants and we will build more. This type of housing not only provides ideal living conditions for elderly tenants, but also frees up larger housing in other Government estates for allocation to younger families.

The introduction of the Elderly Persons` minimum income guarantee will also provide a decent income safety net to many hundreds of elderly persons who have been living on very very low incomes. The abolition of tax on income below £7,600 for pensioners has provided another targeted boost to those most in need of it. We will shortly raise the number of pensioners who will benefit from tapering relief above the level of £7,600.

This year will see work start on Gibraltar`s new and modern hospital at Europort. Before the new hospital opens all existing practices and procedures at St Bernard`s will be externally reviewed to ensure that the new Hospital starts life with the most up to date and reliable practices and procedures.

A priority for 2001 is the reform of the Government Housing Rules. I am particularly concerned that the present system is not sufficiently sensitive to the needs of young married couples on low incomes and other deserving cases. The current system seems to be heavily stacked against young people at a time in their life when they are most in need of help with housing.

Through these and other measures Government will continue to invest in the modernisation of our social and care services and thus ensure that the benefits of Gibraltar`s economic success is fairly shared and reaches right down to those most in need of it.

Physical Refurbishment and Modernisation

An important aspect of our efforts to transform Gibraltar is improved cleanliness and the physical refurbishment and modernisation of Gibraltar itself, of our physical fabric. Areas of Gibraltar that have benefited so far have been the Town Centre, Queensway and Waterport. Gibraltar already looks a lot better. This programme will continue this year. Work starts soon in Catalan Bay and the southern end of Main Street. The programme is not limited to streets and squares and entry terminals. A major programme of refurbishment and beautification of Government housing estates is also under way. Glacis Estate and Calpe are well in hand. 2001 will see the commencement of Laguna Estate, Varyl Begg Estate and other blocks around Gibraltar.

During 2000 Government was able to finally extract a huge settlement of £24.5 million from the Spanish builders of Harbour Views. For nearly five years we have grappled with litigation, with trying to find methods and designs for remedial works that would be effective and could be carried out without evacuating the estate and finally with addressing the emergency and safety needs of residents. The very long suffering residents of Harbour Views have shown remarkable resilience and patience for which they are now receiving their just reward. We are also helping the residents of Brympton Estate, another 50/50 scheme project that was never properly finished.

2001 will also witness the start of two quite ambitious projects. One is the very comprehensive Upper Town Urban Renewal Scheme, which will seek to transform the quality of life in a regenerated Upper Town area. The other is the launch of various new housing schemes by Government to ensure the availability of low cost, reliable quality housing at affordable prices.

Another important measure of the quality of life in Gibraltar is the extent to which we can provide for our leisure and recreation needs. I know that many of you want more done to offer improved leisure and recreation to our young people here in Gibraltar. The greatly enhanced Victoria Stadium Sports Complex is already underway. This will offer sports and leisure facilities in many activities. Construction work has also started on the new Skate Park. Planning work also continues on the proposed King`s Bastion Youth Leisure Centre. The new Casemates Square project will also soon provide increased leisure facilities in the form of cafes, restaurants and quality bars.

During this year Government also hopes to be able to announce a major project to upgrade our beaches, which are such an important part of our summer way of life in Gibraltar.

Another priority this year is the establishment of a modern, reliable and high quality public bus service in Gibraltar.

The Economy

Of course, all of this investment in our social and care services, in our health service, in our housing and in our physical fabric and in our leisure facilities is only possible because our economy continues, thankfully, to perform well, on practically all fronts: the ship repair yard, port services and tourism all continue to grow. The gaming industry continues its successful consolidation as an important part of our economy. And the Finance Centre continues to grow and prosper, despite the threats and challenges that all Offshore Finance Centres are now facing from international organisations like the OECD, G7, the EU and others. We are particularly pleased to have secured the re-establishment of the Heathrow Service.

No one in Gibraltar, whether they work directly in the Finance Centre or not should underestimate how important the Finance Centre is to the economic, and therefore to the social and political prosperity, and indeed survival, of Gibraltar.

It would therefore be a huge mistake for anyone to misinterpret the Government`s nurturing and protection of the Finance Centre as pandering to the interests of business or the privileged.

The Finance Centre provides vast numbers of jobs in Gibraltar. Probably as many as 5000 jobs depend, directly or indirectly, on the Finance Centre. These people are, in turn, customers of other businesses. Finance Centre companies are themselves customers of many other businesses in Gibraltar. The tax and PAYE collected by Government from the Finance Centre pays for many public sector jobs, for many public services and for much public investment. The Finance Centre is an important mainstay of the private sector and therefore of the economy.

I say all these things because in order to protect the Finance Centre from the consequences of the international initiatives that I have referred to, Government will be obliged to take certain measures, especially changes to our tax system, to enable the Finance Centre to continue to flourish and thus sustain the direct and indirect employment that it currently provides. You may however rest assured that these measures will not involve the raising of direct or indirect taxes payable by residents.

Even though tourists continue to visit Gibraltar in record numbers, some sectors of our retail (and therefore also the wholesale) trade continue to suffer the consequences of the strong pound. This makes many of our shops uncompetitive for local and visiting shoppers alike. There are however signs, at long last, that the Euro may be strengthening. If this continues it will offer some relief to those local businesses affected.

One of the purposes of the economy is to provide money to Government to fund public services and public investment. The other important purpose is to provide jobs. Thanks to the continuing success of the economy, unemployment remains below the historically low level of 300. It finished the year at 287. The monthly average over the whole year was 313. These encouraging figures will not however lull us into a false sense of security. We will continue to focus on job creation and on modern training and apprenticeship facilities and opportunities. We are also building two new industrial parks to provide opportunities for business expansion and new start-ups.

Political Issues

2000 has also been a positive year on the political front even though we have had the usual dose of difficult issues to deal with, ranging from Harbour Views, to the Incinerator (which together represented a financial threat totalling 65 million pounds), the EU-related agreements in April and of course HMS Tireless.

Other noteworthy events were the opening of the expanded and upgraded Gibraltar Government Offices in London and the staging of a highly successful Gibraltar Day in London.

You are all, of course, well aware of all the issues relating to HMS Tireless. The Government`s position on the matter has been from the outset, and continues to be, based on the absolute priority of public health and safety. We are, as you also know, being advised by a panel of nuclear experts. We will not hesitate to oppose and prevent the works being carried out here if our experts advise us that the risks exceed those posed by a routine recreational nuclear submarine visit. In any case, the MOD and the British Government remain responsible for the safety of all their activities in Gibraltar. Our natural instinct is to help the UK if this can be done without undue risk to public health and safety. We should be wary of some Spanish politicians who use the Tireless for political purposes beyond safety concerns. One said last week that they sought Tireless` removal not on safety grounds but for reasons of sovereignty.

I devote a very large amount of my time to EU related issues. The Government does all that it can to ensure that our EU rights are respected and upheld. But of course, this is fundamentally the obligation and responsibility of the British Government at Member State level and as the country responsible for our external affairs. I was therefore very glad to see that in his Christmas Message, His Excellency the Governor, who is HMG`s most senior representative in Gibraltar, asserted that Gibraltar`s EU rights must be upheld.

In this respect we urgently await effective action to uphold and enforce our rights on the Eurovote, on border delays and on telephones. On all of these issues the Gibraltar Government has done all that it can to press and lobby for action. For example, on border delays I believe that the results of the Frontier Complaints Office and of the Gibraltar Government`s direct lobbying in Brussels have been instrumental in bringing the Commission to start formal proceedings. It seems that action by the Commission on telephones is also imminent. It is regrettable that, if it materialises, it will have been left so late in the day when Gibraltar is already suffering the very damaging day to day economic consequences of this problem. Ultimately only HMG can deliver effective pressure on Spain and the EU to take effective remedial action on such issues.

The Gibraltar Government, for its part, stands ready to be reasonable and practical so long as Gibraltar is not expected to compromise our fundamental and established rights and interests, simply to gain access to what is ours by right.

And so we are very happy with the result of the lengthy negotiations that led to the April Agreements relating to EU competent authorities, police cooperation, ID Cards and Schengen participation. Although the agreements were formally signed between UK and Spain at Member State level, the Gibraltar Government was intimately involved with the UK, on a line by line, word by word basis, in the negotiation of those agreements. They are all of them good agreements for Gibraltar. We have secured acceptance and recognition of our competent authorities for EU purposes, formal relations for the purposes of cooperation between the RGP and Spanish law enforcement agencies, and recognition (as passports) of our ID Cards. And all of this without conceding any political or constitutional ground, nor any political or administrative autonomy. One immediate and important result of the agreements has been our ability to exercise our financial services passporting rights into the EU markets. Our contribution to the agreements has been a simple recognition of that which is in any case a self evident and obvious reality, that the UK is responsible for Gibraltar at Member State level within the EU and that Gibraltar is not a Member State in its own right.

Take for example the ID Card Agreement. ID Cards will continue to be issued in Gibraltar, by the Gibraltar Government under our own Ordinance, just as before. They will remain a local and locally issued document in every respect. The Opposition has tried to make a fuss about the fact that the card will no longer say that it is issued by the Gibraltar Government. The card will, of course, continue to be issued exclusively by the Gibraltar Government. However, the 1993 Ordinance, under which the cards are issued, passed by the then GSLP Government, says that the cards must be issued by a Government official to be designated by the Chief Secretary. The card will now specify the title of the issuing official. It is of course an official of the Gibraltar Government.

These agreements have solved a whole raft of past, present and future EU related problem issues. Once the Eurovote, the telephone and the borders issues are resolved, upon which progress is also being made, the main area of remaining EU related difficulty will be aviation measures. Since this is an area of expected high EU activity in 2001, it is sure to keep us busy in the coming year. I will of course keep you all carefully informed of important issues in this respect as they arise.

2001 should also see the House of Assembly Select Committee on Constitutional Reform make its report to the full House. It is not reasonable for anyone to expect Gibraltar to remain permanently static in terms of our constitutional and political evolution in the face of anachronistic intransigence on the part of those with historical ambitions over our homeland. To remain static is simply to pass the problem onto our children and our grandchildren and to saddle future generations with the problem. We owe it to our future generations to show imagination and confidence in the search for possible, democratic and modern solutions to our problems acceptable to the people of Gibraltar, in the exercise of our inalienable right to determine our own future.

I am sorry that this address has been so long, but I think that the time is right to refocus on our broad vision for Gibraltar as an economically successful, socially modern, just and fair and a peaceful and politically stable community. This is the best legacy that we can bequeath our children.

One of my continuing regrets is that Gibraltar continues to be so highly politicised at a day to day level. It has never been, and will not ever be, this Government`s political style to use Gibraltar`s international problems as a means of keeping this community in a permanent state of political anxiety. Life is too short and needs to be enjoyed. I see one of Government`s jobs in Gibraltar as managing Gibraltar`s problems and interests as best and as safely as possible while at the same time allowing the community as a whole to go about their daily lives as prosperously as possible, with as much peace of mind and sense of security as possible. Politics should not dominate peoples lives. If finding acceptable solutions to some of our international problems contributes a little to normalising our lives, as the April Agreements have done, we will not hesitate to seek such solutions. We do not subscribe to the view, apparently held by some people who appear to prefer to see Gibraltar immersed in interminable crisis. They contribute nothing to the enhancement of your quality of life.

I am therefore confident that 2001 will be another successful year for Gibraltar which will see Gibraltar continue to make good, steady and sustainable progress and improvements in many areas of life.

I wish you all and your families and friends a healthy, happy and prosperous 2001.(04.01.01)

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