Increases in electricity prices are understandable given the rise in oil price although it would be easier for business planning purposes, if such costs were adjusted annually by inflation rather than having larger but more infrequent hikes. Similarly, the rises in the minimum wage and social insurance charges will be hard for some members to cope with, but these have not increased for a number of years. We welcome the phasing-in period for the former, as it will enable member companies to plan ahead and budget for the increase when it is introduced in January 2009.  We would urge that future rises in social insurance are also phased-in with a six month notice period to enable firms to plan and budget accordingly.
The Chamber naturally welcomes the accelerated cut in corporation tax from 33 to 27 per cent.  Our members would also like some indication of next year’s likely corporate tax rates ahead of the sharply lower rate envisaged in 2010/11. Many members plan their business more than 12 months ahead and often two to three years in advance and having some guidance on next year’s likely rate, would greatly assist them with this planning.
The news that the top rate of income tax was being cut from 40 to 38 per cent was helpful although it only affects the small number of people using the Gross Income Based (GIB) system and only if they earn over £100,000 per annum. Twinned with the progressive erosion of allowances available, implies that Government policy is looking to encourage taxpayers to migrate to the GIB system over time and thus the Government should be able to reduce income tax rates for all, over the medium term.
In its statement the Government said that in 2007/08 Government revenues increased by £19.5m on the previous year and that this was despite the tax cuts made in the previous year.  Such a case for reducing taxes further could not have been made more clearly.
However there are also causes for concern. The flow of investment into Gibraltar has made the prices of many goods and services rise way ahead of inflation. Tiger economy growth rates of 12.7 per cent may sound impressive but therein lies a danger that if the economy continues to expand at this rate, inflationary pressures will merely exacerbate cost increases for local business. With a full schedule of public and private sector building projects in the pipeline, this investment flow looks set to increase substantially. The impact of this will add to the inflationary spiral. What is more, the Government does not possess the monetary policy tools to control this growth and must rely instead solely on the blunter fiscal measures of tax, spending and allowances to manage economic expansion.
We do not share the view of the Government that reductions in interest rates, a fall in the oil price or a weakening Euro are distinct possibilities in the short-term. The evidence in recent weeks in fact, shows quite the opposite. Such external factors should certainly not be relied upon as a basis for managing inflation.
The Chamber welcomes the changes to the tax treatment of occupational pension schemes so that directors and shareholders of companies will be able to participate in approved schemes. In a similar vein, we look forward to the introduction of concrete measures to rein in the costs of public sector pensions.  These continue to act as a significant burden on local businesses and prevent many firms in the private sector from providing staff with pension schemes of their own.
The Chamber is glad that the Government has acknowledged that there are unacceptable levels of absenteeism in the public sector and hopes that this will be properly addressed.  Such levels are another unnecessary cost, apart from being deeply unfair to those workers with high work attendance records.
As the Government has announced its intention to increase its borrowing powers greatly to fund the planned investment programme in public infrastructure, the Chamber looks forward to sharp reductions in Government arrears.  The scale of public and private sector investment is a clear sign of the level of confidence in Gibraltar’s future. However, in a rising interest rate environment, it would be prudent to collect money that was owed first before borrowing further to spend on these projects.

In one department, Buildings and Works, industrial workers were each taking an average
of 25 days sick leave a year, more than the normal annual holiday entitlement for private-sector workers.
In other departments the average number of sick days taken by workers was around 18 days a year.
Last year, the Principal Auditor took the issue up with the Human Resources Manager, who was asked to issue a circular asking heads of departments to ensure compliance with the regulations on sick leave.
But as recently January this year, the Principal Auditor found that eight out of 10 departments continued to perform badly in this respect and “certainly below acceptable standards”.  His obvious conclusion was that such high levels of absenteeism had “a serious negative impact both on the cost and delivery of the service being provided.”
To tackle the issue, he recommended setting out guidelines to manage sickness absence and address issues related to long-term absences. Among other recommendations, he said interviews should be held with staff returning to work after certain levels of absence.
Mr Posso also said line managers should be required to monitor and record absence levels, warning employees who take excessive leave that the concession may be withdrawn, leading to requiring a doctor’s certificate even for uncertified sick absence. He also said government should produce reports analysing sickness tendencies.
Speaking in Parliament during the recent budget session, Chief Minister Peter Caruana acknowledged that there was an issue with absenteeism in certain departments and that the Government was committed to tackling the problem.
However he cautioned that the vast majority of civil servants were hard-working and also disliked to see the system abused.

Record numbers of visitors are crossing overland, cruise arrivals are at an all-time high and tourists spent an estimated £230.58m last year.
Faced with cut-throat competition from rival destinations, Gibraltar must ensure it continues to evolve and develop its offering to visitors in order to sustain continued growth. The Upper Rock Nature Reserve is becoming increasingly congested and few can deny that many sites are in dire need of a radical facelift.
In town, Main Street is buzzing with activity but traders nonetheless complain they are not selling enough. Cigarettes and alcohol remain popular purchases, but most visitors whizz in and out in the space of day, leaving little time for more leisurely – and thus more lucrative – tourism. Gibraltar is successful as a tourism destination, but what is being done to improve the product and maximise the economic impact of this vital sector?
Corporate trend
The Gibraltar Government’s tourism policy focuses on selling the Rock as a short break destination, which in the travel industry is defined as a three-night stay. The latest Government tourism statistics show that the average stay during 2007 stood at 3.1 nights, so in that respect the policy appears to be working.
Yet despite the fact that hotel arrivals rose from 59,194 to 63,691 last year, room occupancy and sleeper occupancy fell during the same period. In historical terms, this dip is a blip in an otherwise upward graph. Total arrivals at hotels have risen by 38.03% over the past decade, while room nights sold in that period increased by 53%. Room occupancy rates also rose significantly from 43.3% in 1996 to 57.8% in 2007. But a number of underlying factors are changing the nature of hotel business in Gibraltar and the broader implications have yet to become clear. Hoteliers say that a one-off factor that hit the figures in 2007 was the demise of Monarch’s thrice-weekly service to Manchester, an important cachement area for short-break visitors. Monarch’s decision to reinstate that route as from later this year following the Government’s move to slash airport landing fees, should help redress that situation in the medium term.
More significant perhaps is the trend toward increased corporate custom, where stays are normally shorter. This is good news for hotels, which continue to report higher yields largely on the back of this lucrative type of business. But there is some evidence that this income is coming at the expense of all-inclusive tour business and, with hotel capacity a finite resource, this has prompted some concern at political level about the need to understand how it will affect the Government’s planning on tourism.
Chief Minister Peter Caruana said recently that the Government suspected that hotels preferred to set aside rooms for business traffic rather than assign them to tour operators for sale as part of all-inclusive deals, even at the risk of ending up with an empty room.
“They are sacrificing occupancy rates for yield per guest,” he said during this year’s budget debate. “We need to get to the bottom of this, not because they are not entitled to do it, but because we need to understand the economic implications.”Tourism Minister Ernest Britto, who only recently took over this portfolio from Deputy Chief Minister Joe Holliday, said that in order to ensure more hotel beds were made available to other market sectors such as the all-inclusive tour business, the Government is encouraging the hotel industry to continue upgrading and updating its facilities. It is also anticipating the construction of new hotels and is in discussions with parties keen to do just that. Through the Gibraltar Tourist Board, the Government is also continuing its partnership with the AA of the UK for the official grading of local hotels, an important bench-marking and marketing tool.
Other political parties in Gibraltar share similar concerns to the Government.
The Progressive Democratic Party raised the issue through its tourism spokesman Henry Catania, who has wide experience of the sector. He noted that “the travel-experience of today’s  visitors and an increase in visitors travelling for business is bringing pressure for change within Gibraltar existing accommodation sector.”
“The PDP considers that the supply of accommodation must be increased,” he said, adding that the party would support and assist projects that are aimed at providing increased and better facilities in this area.
Infrastructure investments
For years, the distinctive and unique Charles V wall has lain in a state of disrepair and neglect. Despite its prominent position zig-zagging from the top of the Rock to town, this  defensive historical wall has been abandoned to its fate, slowly crumbling away before the eyes of visitors. In recent years access to the wall has been barred for safety reasons. This year the Gibraltar Government announced a refurbishment project – backed by the Bonita Trust and EU Funding – that aims to repair this iconic heritage feature and open it up to visitors who fancy the challenge of walking up its steep steps.
This has the second major Upper Rock project supported by the Bonita Trust, which was involved in the rehabilitation of Mediterranean Steps and turned this isolated part of the Rock into a wonderful place in which to escape to nature, a rare luxury in Gibraltar.
The Government is also embarked on its own ongoing program of investment in the Upper Rock Nature Reserve.
Several projects have been completed on the Upper Rock over the past few months, including infrastructure work for new – and much needed – toilet facilities. A new sewage system has been installed linking Princess Caroline’s Battery to the Upper Town network, while the sewer line from St Michael’s Cave to Jew’s Gate has also been refurbished. Princess Caroline’s Battery and Moorish Castle – recently revamped too – have also been provided with potable and brackish water. While these investments are out of sight, they are nonetheless vital to the overall product and comfort of visitors to the nature reserve. Along with Mediterranean steps and Charles V wall, work has been carried out at several other sites too, including the Great Siege Tunnels, the Lime Kiln near Princess Caroline’s Battery and the Military Heritage Centre.
“This Government believes in the tourism industry and has, since 1996, invested in an unprecedented manner, particularly in human resources, in providing a sound support base for the local industry,” Mr Britto said. “This Government’s belief in tourism now makes this industry one of the largest generators of income to our economy.”
The investments were not only in the Upper Rock, he said, but also at key tourism sites around town. The Gibraltar Coach Terminus had been fitted with new toilets and a new information counter was being built. Beaches were being refurbished, with work complete at Camp Bay, and Catalan Bay also to be equipped with new railings and public toilets. The sea wall is also to be repaired at Eastern Beach.
As ever in Gibraltar, however, not everyone believes sufficient investment is being channelled into tourism projects.The Opposition tourism spokesman, Dr Joseph Garcia MP, said the  latest budget proposals fell short of the mark and that income generated by Upper Rock access fees - over £3m last year alone - should be channelled into improvements to the reserve rather than into general Government coffers. By contrast, he said, only £25,000 has been earmarked for improvements to Upper Rock tourist sites this year.
“These funds (£3m in entry fees) could have been used to improve the environment of the Upper Rock, the access, the roads and the facilities,” Dr Garcia said. “This would have been in the interests of both visitors and residents.” “Whatever the Government proposes to do with the £25,000 will be very limited by comparison.”
Land, sea, air
Gibraltar registered a sharp increase in the number of cruise visitors this year, as a record number of passenger ships called at the Rock. The trend toward larger vessels also helped prop this figure up even further.
Nearly 276,000 cruise passengers disembarked at the Port of Gibraltar last year, a rise of 31% over numbers in 2006. Although most were on short half-day visits, the average expenditure per passenger in the cruise sector was nearly £39, making this one of the more lucrative of the various tourism segments in Gibraltar.
In order to accommodate more than one large cruise ship at a time, the Government is embarked on a major project to dredge the interior berths of the Western Arm and extend the existing cruise terminal by demolishing adjacent warehouses and relocating those businesses.
The income generated by cruising activity has climbed steeply over the past decade, from £1.8m in 1997 to £10.7m last year.
Analysis of Government figures shows that by far the largest segment contributing tourism revenues to public coffers, is the frontier excursion sector, where expenditure last year reached £230.6m compared to £210.5m in 2006.  But that figure was largely the result of volume: on an individual basis, each tourist on a day trip from Spain spent on average just £22.58. Finding ways of increasing that average spend per visitor, or attracting them to longer stays, will be a vital element of the tourism strategy looking ahead.
Excluding frontier workers, around eight million visitors entered Gibraltar by the land frontier with Spain last year, representing an increase of more than 14% on 2006. “This increase was in spite of a continuing downturn in the traditional package tour market in Spain, which is the source for the majority of the day trip visitors to Gibraltar,” Mr Britto said. “Gibraltar continues to be the top selling day trip destination from the Costa del Sol.”
Consumer patterns continue to change and an increasing number of visitors to Southern Spain and Gibraltar make their own travel arrangements via the Internet. As a result of this, coach arrivals continued to drop last year by 1.2% compared to 2006. But this is more than balanced out by the increase in the number of private tourist vehicles visiting Gibraltar and the increase in air and sea arrivals.
Arrivals at Gibraltar airport were also up last year to 159,666 according to Government figures, more than double the figure in 1997 and up from 143,914 in 2006.
The acquisition of local carrier GB Airways by lowcost airline EasyJet means that, together with British Airways and Monarch, there are now three airlines linking the Rock to the UK market. Iberia also continues to operate a weekly service to Madrid and may increase frequency during the peak summer months.
With landing fees now reduced and major infrastructure works planned for the airport in the coming years, the long-term forecast is positive despite the short-term logistical difficulties that the construction phase will inevitably pose. Indicative of
this positive trend is the announcement by Spanair that it had appointed a General Sales Agent in Gibraltar, coupled to a medium-term commitment to explore launching flights from Gibraltar to Barcelona.
The Government continues to encourage airlines to provide more services from Spain to Gibraltar, “albeit with realistic schedule timings that would benefit the leisure and business markets,” Mr Britto said, which also reflects the Chamber’s view.
The aviation market is also bullish in the corporate sector, to the point that a local businessman has invested in setting up Gibraltar’s first company operating private jets.
Changing face of gib
All around Gibraltar, new facilities are being constructed and old ones refurbished that, taken holistically, will further strengthen Gibraltar’s offering
as a tourist destination. In the short-term, the construction phase has often proved painful, with heavy vehicles clogging roads and much of Gibraltar resembling a construction site.
However as projects come to fruition, so too are the benefits being felt.
The King’s Bastion Leisure Centre, while largely aimed at the local market, proves what can be achieved. The refurbishment of this forgotten bastion has created top-notch recreational facilities and opened up another area of Gibraltar’s historical defensive walls. More will follow as the refurbishment project focuses now on Wellington Front.
Elsewhere, the first phase of the mega-development Ocean Village, has opened for business and is set to become a centrepiece of Gibraltar’s social life.
In the longer term, it will also provide much-needed marina capacity and enable Gibraltar to compete as a key yachting centre in the western Mediterranean.
Work has also started on new road infrastructure in the border area which, while no doubt chaotic in the construction phase, will eventually smooth the flow of traffic in and out of Gibraltar.
Over on the east side, the Development and Planning Commission recently gave overall planning permission for a massive project to construct new luxury residential homes and hotels on this undeveloped side of the Rock.
There are other projects on the cards too that will increase the heritage offering to tourists visiting Gibraltar.The Tower of Homage has recently been refurbished but construction of a new prison will enable development of the remaining areas of the Moorish Castle to be restored and opened up to visitors, a medium-term project linked to work to open up parts of the northern defences as a tourist attraction.
Physical projects aside, Gibraltar is also enjoying a growing number of cultural events that will appeal to both locals and visitors alike.
They range from world-class classical music and opera events at St Michael´s cave, to cosmopolitan food festivals and live music in Casemates Square.
While there is always room for improvement across any number of areas, the tourism sector - and the physical and social structures that underpin it - is well placed for the future.

It is midmorning on Main Street in Gibraltar and tourists are walking up and down looking for something to do. A couple of off-licences are open, a leather shop and also a couple of bars. All of them are busy.  The trouble is that today is Good Friday and as a predominantly Catholic community most of the shops are closed.
Everybody in Gibraltar knows and understands this apart from the tourists. Their arrival has created a long queue of cars waiting to enter Gibraltar from Spain stretching down past the second roundabout by the Club Marítimo de La Linea. This same scenario is played out on every Bank Holiday and to a lesser extent, on Sundays.
In Gibraltar, Bank Holidays are seen by many as an opportunity to get away for the long weekend. At Easter we see the big rush to the shops on Maundy Thursday followed by a mass exodus to leave the Rock, resulting in long traffic queues at the frontier to get into Spain. The quiet long weekend in Gibraltar is then followed by another surge to the shops on the following Tuesday as people return to restock.
Spain has become a magnet for Gibraltarians on these long weekends, presumably because of the wide range of shops, bars, restaurants and other leisure activities which are available there.  Many of these are also now available in Gibraltar.
So how does Spain, another predominantly Catholic country, cater for this influx of people on such days?
As we travel around the Campo area we find that, as in Gibraltar, many shops are closed. However, from Estepona and beyond it is a different story. Carrefour, the large French-owned supermarket group, is closed in La Linea and Los Barrios but is open and busy in its Estepona store. All retail outlets in Marbella are open for business as usual and packed, as are many other resorts along the Costa del Sol.
On a public holiday or long weekend break, many people want to go to places like Carrefour and to other shopping malls to enjoy shopping facilities. They have more time on their hands.  Staffing does not appear to be an issue at any of these locations. It appears that in Spain businesses have taken a much more pragmatic approach towards Bank Holidays: maximising business opportunities and at the same time satisfying their customers’ obvious demands.
So where does this leave Gibraltar?
There is no doubt that plenty of people are keen to come into Gibraltar on such holidays. Many of these people expect facilities to be open. Gibraltar is increasingly marketed as a tourist destination and particularly its shopping facilities!  This expectation has been actively encouraged in recent years.
This year Gibraltar has also added a new leisure centre and the Ocean Village complex, which will augment the shopping facilities which exist in Main Street, and our heritage offer. What other tourist destinations close on holidays when people want things to do?
Many local businesses will argue that they have opened once before on holidays or Sundays and that the low sales did not merit doing it again. But the problem is that these attitudes create self-fulfilling prophecies. Gibraltar has never been in a better position to capitalise on these opportunities - but the trade needs to be built consistently over time.  Those staff who due to their religious beliefs, do not wish to work are able to opt out of working on these holidays, or from going out themselves.  Whatever they choose, everyone should have the option to spend time with their families and friends to do as they wish.
Times change. Both the UK and Spain view these holidays as opportunities to develop trade on many fronts. We need to take stock of our own position as a tourist destination and decide how best to meet customer needs - surely then, this will mean being open for business?
This article was submitted by Gary Chant, General Manager Wm Morrisons, Gibraltar.

•    Have you told all your clients and suppliers about the new dialling code?
•    Update your website with new dialling codes
•    Remember to change numbers when ordering new stationery
Just to remind members, the main changes in the new plan are:
•    the introduction of fixed numbers which are 8 digits long; the same length as mobile numbers.
•    all 5-digit numbers will be extended by adding 200 (two zero zero) in front of the five digit number. So to call the Chamber you used to dial 78376. From now on you need to dial 200 78376.
The changes are being phased in over a period of 14 months but that period is coming to an end shortly.  The changeover will be completed to coincide with the publication of the 2008/2009 Telephone Directory in September 2008.
If you have not yet got into the habit of dialling eight digit numbers, it’s not too late, but in October all dialled numbers will need to be eight digits.
Mobile numbers will remain unchanged.