And she demanded greater efforts to make up the shortfall from the overseas military Bases' pullout.

"We have to look at diversifying our economy -- or otherwise we are talking about serious taxation,'' said Ms Webb on Sunday.

She spoke out following news King Edward VII Memorial Hospital was $2 million in the red.

Hospital budgets have reportedly been hit by spiralling costs, forcing department heads to tighten belts.

Staff, for instance, who quit or retire are no longer replaced automatically.

Management has blamed the cost of out-patient services, and maintenance and repairs to the 30-year-old hospital.

Ms Webb said the hospital's problems reflected a wider cash crisis in Government.

"There seems to be a shortfall with Government funding.'' She added: "I know of people on social assistance who have had it reduced or cut back.

"This points to a general lack of funding, for which the $52 million loss in revenue from the Bases' pullout is largely responsible.

"I think Government is trying to keep quiet about being strapped for cash.

"It doesn't want to be seen not to be managing the economy effectively.

Tourism figures are down and so far Government hasn't made up the shortfall from anywhere. Government departments are feeling the pinch.

"There is a lot of wastage in departments, as is the case with the prisons.

"Government has to start seriously managing resources more effectively. We have to increase revenue from outside sources.

"We have the hospital levy, which is a general form of taxation. It is clearly used for other departments and should be renamed.'' Ms Webb said Government had to find ways of being creative.

"They put extra money in the Tourism budget and that has failed. We have to look at ways of diversifying the economy.'' She added: "More effective management of resources will be a big help. The hospital should be one of the last departments feeling the pinch.

"It makes one wonder what is happening with other departments? They are definitely having crisis with respect to money. The signs are everywhere.'' GOVERNMENT GVT