[Pre-budget statement from the Bermuda Democratic Alliance, by Michael Fahy, financial affairs spokesperson]
We are of the view that this is the toughest budget ever for the Minister of Finance. However this is of her own doing and she must accept responsibility for the state of the country’s finances. Paula Cox has, after all, had control of the country’s finances for quite some time.
It is important that the voting public remembers that if cutbacks happen, public sector job losses are made and/or civil service hours reduced and public services cut that the reasons for this fall squarely at the feet of the now Premier. Be ready for the Premier to blame a worldwide downturn for the problems we face, rather than her own failings to manage the public purse. The Premier will rely on rating agency gradings to boost her credibility and sweep under the carpet the cog in wheel approach she took in managing the taxpayers money under Premier Brown.
Be ready during the budget debate for the Government to blame everyone and everything but themselves to explain their overspending, terrible oversight of capital projects, qualified audits and a ballooning civil service without regard to proper and sound fiscal management.
We can also look forward to the Government saying that everyone else is predicting doom and gloom, especially those in the opposition, and that the Government is practically perfect. We truly hope these predictions are wrong.
The BDA believes that a number of things need to happen to save Bermuda’s economy. First and foremost the Government must acknowledge that they have done a poor job in fiscal management in the last number of years. Our view is that you must recognise the problem to be able to fix it. We wish that we could say the Government should invest heavily is social programs. We wish we could say that the Government should spend money to improve our crumbling infrastructure. We wish we could say the Government should give free health care for all. However our wish list is of little consequence.
Wishes are a far cry from the reality we now face as a country. Instead we believe that the Premier must show leadership by making hard and unpopular decisions. Bermuda simply cannot afford to go on with business as usual. The obvious starting point, which is, and will be politically unpopular, will be to slash the size of the civil service and/or cut back the hours of the civil service to save money. When approximately 50% of the budget is spent on salaries this is a starting point. Private business is doing it without corresponding moves by the Government. A reduced private sector work force means less payroll tax collected. A complete freeze on civil service new hiring is also obvious and a slashing of consultants is an absolute necessity across Government.
Ministers must lead by example. Pay cuts and pay freezes will need to be put in place. A reduction in the Government car fleet, a freeze on non-essential travel and caps on all personal expenditure reimbursements will show the people of our country that the Government can lead by example. If we are demanding that our police drive in used, clapped out cars, why should our Ministers drive around in pristine vehicles and park with impunity around the City of Hamilton?
We have made the following points repeatedly and they have fallen on deaf ears – but make them again. We would support the following
- (i) Undertake a competitive analysis of other similar jurisdictions; review the work permit process, seeking ways to improve results for Bermuda, Bermudians and Bermuda-based companies.
- (ii) Revert to a duty system that defers duty collection until goods are sold to stimulate the retail sector.
- (iii) Establish a ‘Low Income’ Payroll Tax bracket for businesses with employees making $50,000 Annual Salary or less, with a reduced percentage tax on both the employee and employer.
- (iv) On an ongoing basis conduct an effective analysis of the budget and its impact on Bermuda’s future financial position. i.e. 5-year planning process.
- (v) Introduce worker cooperatives and promote new industries in an effort to diversify the economy, employment, and Government revenue streams.
- (vi) Support development of Hamilton as a dynamic residential and cultural hub enabling continued growth whilst limiting environmental impact to the rest of the Island.
- (vii) Consider a provision of incentives for companies who have workers living in Hamilton.
- (viii) Relocate Government services to St George’s and Southside to boost the income of the town and reduce Government rental of office space in Hamilton.
We also believe that a payroll tax freeze or even a roll back on payroll tax will encourage spending locally to boost the retail sector and demonstrate to international business that Bermuda is serious in wanting companies to remain in Bermuda. Incentives must be given to the International Business sector so as to increase our foreign currency reserves through higher earnings.
There can be no further raise in Foreign Currency Purchase tax. We would support a raising of the sin taxes (cigarettes and alcohol) and consider a raise in property tax with certain limits. All in all however Government spending must slow down to match the actual revenue being collected. Indeed more accurate forecasts would also assist.”
Overall we need honesty. Honesty as to the true state of our economy. Leading NGO’s, business people and politicians have had to make best “guesstimates” due to completely out of date or non-existent or unreliable data. We will support austerity measures – if they are done correctly. If reports are correct that the police for example will truly be underfunded, then the budget debate should be very interesting indeed.
Typically when economies start to fail, crime goes up so it does not make sense to irritate the police too much – however we will wait and see on what effect the budget is on individual ministries.
The Premier says she will cut $150 million from the budget. That is pretty easy when you take into account the massive waste that is easily identified. More will need to be done than a $150 million cut – that is where the going gets tough and the tough get going. We will scrutinise the budget and give the people of Bermuda alternative ideas during the debate.
It is no time to be a cog in the wheel.
- Videos: Minister’s Post Budget Statements
- UBP’s Kim Swan: Pre Budget Statement
- Premier Cox: Pre-Budget Report
- Video: BDA’s Fahy Responds to Budget
- Video: Minister Minors On Job Creation
- Document: Government Financial Statements