Government is using up credit stored up by the previous administration, Shadow Finance Minister Grant Gibbons warned yesterday.

He said storm clouds on the horizon could spell trouble in future for a high-spending and borrowing Government.

And he cautioned that still-declining tourism coupled to a near-standstill in growth in international business and other economic alarm signals could leave the Island in the lurch down the road.

Dr. Gibbons said: "Bermuda's bottom line has changed from black to red. We have gone from a Budget surplus to a Budget deficit in just one year.

"For now, there is a UBP-generated safety net because this PLP deficit has been covered by the UBP surplus from the prior year, eliminating the need to resort to even futher borrowing.'' And he singled out a jump in inflation by almost one percent between February and December last year, and a four-year low on the balance of surplus payments -- down $22 million -- for the first three-quarters of 1999 as warning signs.

He added that a drop in the Island's Gross Domestic Product -- down from 4.3 percent to 1.5 percent between the last two financial years -- was also a worrying trend.

Dr. Gibbons told MPs that -- even though the economy was still relatively buoyant in 1999 -- the latest Budget figures suggested a trend towards "a widening gap between expenditure and revenue''.

And he said: "This trend is ominous given an economy whose growth began to moderate in 1998 and it suggests complacency and lack of discipline in the budgeting process.'' He claimed: "The community is no longer relieved. The mood is uneasy.

Self-indulgent Government spending at taxpayers' expense irritates the people of Bermuda.

"Our seniors, small businesses and hotels in particular felt betrayed by last year's unexpected Land Tax increases. Recently announced restrictive immigration policies and bureaucratic de facto affirmative action programmes are perceived as threats to the economic well-being of companies and employees alike.'' Dr. Gibbons added air arrivals had hit rock bottom with the worst air arrivals rate for years -- despite a multi-million dollar marketing blitz by Government.

He said that the only bright tourism ray of sunshine was an increase in cruise ship passengers -- who spent six times less than an on-Island guest and did little to support Bermuda businesses.

Dr. Gibbons added: "The bottom line is $5.7 million more spent in 1999 to attract 10,000 fewer visitors.'' And he added: "The dismal tourism performance in 1999 must be enormously disappointing to the thousands of Bermudians who work in the industry.'' Taxpayers' money being wasted on `extravagant' roadshows -- Gibbons He said: "Considering the minimal mention that tourism is given in the Budget statement, we are concerned about the lack of a clear vision for this industry.

"The much-vaunted `100-Day rescue mission' has apparently come and gone with nothing to show.

"Of the $22 million spent on marketing this year, too much emphasis has been placed on promotion. Too much taxpayer money has been wasted on extravagant roadshows.'' Dr. Gibbons added that international business, the other pillar of the economy, had shouldered more tax burdens through increases in Payroll Tax and Land Tax, as well as company fees.

But he said that was combined with delays in work permits and tighter restrictions, including proposals for a time limit, and "increasing bureaucratic interference''.

Dr. Gibbons added that "de facto affirmative action programmes in hiring and promotion'' and the all-round higher cost of doing business in a country already known as expensive could hurt the driving force of the economy even more.

He said: "We express grave concern about the signals the PLP Government is sending to the private sector and international business in particular. The direct or implicit messages contained in policy speeches, Press conferences, interviews and intemperate remarks in this Honourable House have not gone unnoticed.

"They are as closely analysed by the international business community -- both here and abroad -- as are the signals sent by central banks, financial markets and regulatory bodies.

"Collectively, these signals influence the level of confidence that international business has in Bermuda and we have seen erosion in business confidence over the past year.'' Dr. Gibbons added that experts said that "human capital'' -- against a backdrop of declining executive talent worldwide -- would become even more important in the future and that the PLP's first Budget underlined the importance of bringing international business to Bermuda.

But he said: "An increasingly restrictive immigration policy is a sure signal that the PLP Government fails to recognise the importance of human capital to the continued success and presence of international business in Bermuda.'' And he warned: "The United Bermuda Party suggests that Government look very carefully at these global trends before closing Bermuda's doors in response to politically inspired xenophobia.

Grant Gibbons