The Government welcomes the list of questions raised by the GSD in respect of the Gibraltar Savings Bank’s investment for the financing of the new GFA Victoria Stadium.
Although some of the questions are largely based on a remarkable misunderstanding by the GSD of how the Savings Bank works, they provide an opportunity for the Government to provide even more information and transparency on this exciting and important economic opportunity for the GFA, for the Savings Bank and for Gibraltar as a whole.
In fact, the Government trusts that, once they consider the public answers to the public questions raised by them, the Opposition and Together Gibraltar will, in fact, support the Savings Bank’s investment in the GFA’s new stadium project.
The answers to the Opposition’s questions here are in addition to the information already provided to the media yesterday.
THE USE OF UEFA / FIFAA FUNDING
Firstly, the GSD ask what happened to the GFA’s statement that the stadium would be built using UEFA funding.
The answer, as far as the Government is aware, is already in the public domain, and is that UEFA/FIFA funds will continue to pay for aspects of the development of the stadium. In fact, the initial capital available from UEFA was used to fund the initial purchase of the stadium from the Government. This was for £16.5m.
Additional sums required for the development of the stadium would always come from further injections of capital from UEFA / FIFA to the GFA and from the income the GFA would generate. Both of these sources of income would be used to run the operations of the GFA and service the borrowing it would always have needed to seek for the development of the stadium.
As far as the Government is informed and concerned, that remains the position.
The GFA will therefore continue to receive funds from various UEFA / FIFA programmes which it will use towards aspects running the GFA and of the financing to be provided by the Savings Bank by way of investment. This will be in addition to the rental and capital income that the project will be the principle generation of funding for the GFA in the ancillary facilities being developed and that in effect permit the financing of this exciting opportunity.
NO USE OF TAXPAYERS’ MONEY
Secondly, the GSD ask how it is that taxpayers money is going to be used to invest in the stadium project, given the state of the public finances.
In fact, no sum of taxpayers’ money is going to be used for this purpose at all. The money that will be invested will be the money depositors have placed with the Savings Bank.
THIS IS NOT TAXPAYERS’ MONEY. The development of the stadium with the GSB Investment will therefore continue to deliver the project “with UEFA funds [and] at no cost to the taxpayer”.
THE RETURNS ON THE INVESTMENT
Thirdly the GSD asks that the Government provide assurances on what community benefit will be derived by it and that savers monies are being properly used for a clear and guaranteed return.
The Government is happy to provide that assurance. The benefit to the community will include, but will not be limited to, the development of the stadium for the GFA. In addition, the development will now provide for a hotel and residential elements which will assist the GFA in funding the project and will create ongoing economic activity. The project will therefore create jobs and bring economic growth through the addition of these commercial elements to the scheme, as well as the sporting facilities required to take Gibraltar football to the next level and allow the GFA to play its home games in Gibraltar as soon as possible.
Additionally, the depositors in the Savings Bank will have a first class asset as security (Gibraltar land and Gibraltar property) whilst the financing is repaid and redeemed. The GSB’s capital is secure and, in fact, the returns on its investment will be more secure when related to Gibraltar property than they are in respect of any other asset class in which the Bank invests depositors money. In fact there is NO RISK AT ALL to depositors as a result of this investment.
The public will recall that the Savings Bank had reserves of only £1,000 when the GSD were last in Government and that Sir Joe Bossano and the GSLP have ensured that the investments made in the past ten years have produced a reserve under the GSLP Liberals of £55,000,000. That level of reserves under the GSLP Liberals is a great assurance to the depositors already which they did not have during the GSD’s period of administration of the Savings Bank.
Additionally, as all depositors in the Savings Bank know, Sir Joe Bossano has always been recognised as one of the greatest stewards of the monies of the people of Gibraltar and of the Savings Bank in particular, which he transformed after 1988 and which has been a source of wealth for Gibraltarians since then.
Moreover, the public will also recall the GSD’s complaints about the investment the Savings Bank made in the Sunborn and their doomsday predictions about that investment. In fact, and contrary to the GSD’s doomsday predictions at the time, the Savings Bank was fully repaid the money it Invested in bringing the Sunborn to Gibraltar and made a return of in the region of 10% (when interest rates were at zero) on the monies invested. Additionally, the Savings Bank’s investment, which the GSD bitterly opposed at the time, delivered Gibraltar’s first and so far only 5* hotel, over 100 additional hotel beds and over 200 jobs for our economy.
The GSD previously used to pay pensioner debenture interest from taxpayers’ money at a loss to the taxpayer of over £9m per year. This would be even greater given the increased deposit base of pensioners in the Savings Bank and would literally amount to throwing taxpayers’ money away, which is what the GSD is advocating for.
The GSD will, therefore, no doubt not want to make the same mistake again of coming out all guns blazing against a Savings Bank investment which then turns out to be as safe and as positive as the GSLP Liberals predicted.
GSD ASKS ABOUT OTHER SAVINGS BANK PROJECTS
Fourthly, the GSD also asks, why, given the public finance issues Gibraltar and the rest of the world faces, “should savings bank monies be dedicated to this scheme when there could be better projects for which monies should be directed?”
In fact the Savings Bank is considering investing in other projects which would be entirely safe and secure for the depositors, would produce steady and reliable income and would have community benefit and which can also form part of the National Economic Plan.
These projects are specifically permitted by the law that governs the Savings Bank. In fact, the GSD itself voted in favour of amending the law to permit such investments.
Ironically, if the Savings Bank do not invest in projects like the GFA Stadium and the Sunborn (which are both 100% secure and are lucrative) to get a return on money, it would THEN be the taxpayer that would once again have to loss money – as it did under the GSD administration – by subsidising and fundIng the interest payable to depositors in the Savings Bank at a huge and unaffordable cost each year. So it is by not making these types of safe and secure investments, ironically enough, that the depositors would be a greater risk given the difficult state of public finances at the moment!
QUESTIONS RELATED TO THE SIZE OF THE STADIUM
Questions raised by the GSD related to the number of persons that the stadium will sit and it’s football facilities are for the GFA and not for the Government. The Government however support the decision of the GFA to seek this size of stadium, given the international matches the Gibraltar team will face at home on the Rock in future.
THE PREMIUM PAID BY THE GFA
Finally, the GSD ask whether the premium paid by the GFA for the land to develop the stadium is still the correct amount given that the use permitted now will go beyond sport.
It is correct to say that the premium paid by the GFA was for the land only for sporting use. The fact that the land will now permit for the operation of a hotel and residential aspects has been agreed only in order to make the delivery of the stadium financially viable given increased development and building costs and as a result of the wider economic benefit to Gibraltar. This will be achieved through a new permitted user clause that will allow the hotel and residential elements but only as a result of all profits and income received by the GFA as the owner of the facilities being applied to repay the outstanding to the Savings Bank and thereafter exclusively for the development of football in Gibraltar. For that reason, given the continued “not for profit” element of the profits and income to be derived by the GFA, the premium has not been altered despite the change in the permitted user clause.
GOVERNMENT PROJECTS DELIVERED
The Government notes that the GSD criticises the GSLP Liberals for not completing projects. This is untrue and also a completely different tact from the one that the GSD was recently deploying when it was saying that the Government had done too many projects at too high a cost.
In fact, the GSLP Liberal Government has completed all the projects it has committed to until COVID made it impossible to proceed. This includes Gibraltar’s brilliant new schools, with three more to be delivered in 2023, and magnificent new sporting facilities as well as more new homes than the GSD ever delivered in office. In fact, the irony is that it was whilst Mr Azopardi was in office with the GSD that they delivered no new affordable homes, no new schools and no new sporting facilities. The Island Games projects have all been completed and only one, the Lathbury Facility, has been inordinately delayed. Ironically, that facility is a huge success story as it is partly funded by the provision of space for a local business that supplies the United Nations and has created almost one hundred new jobs in Gibraltar as a result. The new affordable housing projects are underway already although unavoidably delayed by the reality of COVID and we are completing discussions for the development of the Eastside, part of which is already underway with the new Hassan Centenary Terraces and the revetment works required. The new National Theatre is underway as part of a privately funded Trust set up by the Minister for Culture with the Governor as Patron. Mr Azopardi should therefore not think he can get anywhere criticising the GSLP Liberals record of delivering projects for our people – especially as he has constantly, and contradictorily, criticised the fact that we spend to deliver those projects.
TOGETHER GIBRALTAR STATEMENT
The information the Government has put in the public domain already addresses all of the issues raised by the Together Gibraltar statement. All investments of the Savings Bank are guaranteed by the Government and are all therefore ultimately underwritten by the taxpayer. The investment in the GFA’s stadium is no different to all the other investments held by the Savings Bank, many if them much more remote and none of which Together Gibraltar have seen fit to question. Together Gibraltar are therefore wrong to single out for questioning the GFA’s stadium project is creates zero risk for depositors and is lucrative in producing the income necessary for the payment of interest to depositors, which would, ironically, otherwise have to be paid from the pockets of the taxpayer! Together Gibraltar have therefore failed to understand that undertaking a zero risk project such as the GFA stadium project protects the taxpayer from having to pay the interest rates due to depositors.
OPPOSITION SHOULD NOW SUPPORT THE STADIUM PROJECT
The Chief Minster, the Hon Fabian Picardo KC MP, said: “The Government accepts that it is the duty of the Opposition to seek answers to the questions they believe they should ask. The Government hopes that the Opposition, having received these answers, will now support this project which is good for football, good for Gibraltar and both lucrative and 100% safe for depositors in the Savings Bank. Sir Joe Bossano has an exemplary record of producing income for the Savings Bank, paying it’s depositors interests rates without fail and building up the reserves of the Savings Bank to historic and unprecedentedly high levels. Instead of losing £9m a year as the taxpayer was doing under the GSD, the Savings Bank now issues the pensioners’ debentures and takes other deposits, makes safe and secure investments and delivered a record profit and record reserves for the People of Gibraltar under the stewardship of Sir Joe Bossano! Just those massive reserves which the Bank has never had before will create great confidence for depositors. Sir Joe therefore deserves the support of the whole community for this project that will deliver the stadium and create lasting economic activity as well as protect the taxpayer and the depositors in the Savings Bank. The GSD voted in favour of a change in the law to permit projects exactly like this and I hope they will now support the GFA and this project and I call on them and on Together Gibraltar to do so.”