BDA Alliance: Pre-Budget Statement
[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.
If only the people who made the decisions thought like Mike. I don’t think anyone in the entire cabinet is as smart as this man, but he must sit on the sidelines and watch the PLP dig the hole bigger, one day at a time.
The problem in a nut shell is that he’s white IMO.
LOL
I can’t LOL…..this situation is not funny
Excellent article Mike!! Keep up the good work. Maybe one day Bermuda will give you a chance to clean-up the mess the PLP has brought about.
Right because the economic downturn has absolutely nothing to do with bermuda since we are so conveniently disconected and shielded from global affairs.
If a volcanic eruption threw lava on one of Dunkley’s cows it would be the PLP’s fault.
Destruction of the environment to shift things and cause a natural disaster yes your right it just might be …………………..
LOL could not resists
“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.”
Are you serious Mike? Do you really contend that the economic climate has presented a specific challenge?
“…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.”
Correct me if I am wrong but you seem to accept and agree that such cutbacks would be unpopular and detrimental to our infrastructure as a whole…and that the blame for this should be laid at the feet of the Premier. Yet…..later in the same spiel you say this:
“…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.”
Wow Mike! That sounds a bit contradictory! So what are we to do with all of these unemployed people Mike? You gonna come down into the trenches out of your ivory tower and practice some hardcore criminal law when they start climbing in everybody’s windows? Probably not. Lets just fire half of the workforce of the nations biggest employer shall we…..brilliant stuff Mike….just brilliant…..
Look, without taking sides we need to be real about this. Economically things are crap all over the world. Thats a fact. It is a burgeoning problem which we will need to combine our thoughts to solve, but mere political rhetoric is unhelpful.Does this government have all the answers? Nope. Have they made all the right decisions? Nope again. But who has?
Whatever this budget is it cannot be a mere number crunching exercise. Real people across the entire social spectrum will be affected. Those at the lower ends of the scale will suffer the most if serious cut backs like you suggest are made. I cannot imagine the misery that many families would suffer if your “slash the civil service” recommendation were to be implemented…..”politically unpopular” you say? LOL Thats a euphemism if ever there was one…..we have to come up with better ideas than this…..
Mr Richardson has identified one of the major problems after wastage – Government is the Island’s largest employer. This is probably unique in the World and unsustainable and riduculous for what is basically a small town, or large University. The Private Sector cannot support such a bloated bureaucracy.
has not presented a specific challenge (correction)
Its the BDA who hoodwinked all to believe they were a new party and now the truth begins. MDunkley started the process long time ago.
I do however agree that the consultancy budget could be reduced. I have always been an advocate of using our own homegrown sources. We have enough talented, smart people here to solve this ourselves….we just need to talk and share idea more….open an idea up to honest criticism and you will find that before the discussion is done that all sorts of other ideas will have been born…..so please dont take my strident opposition to some of your positions as a sign that I dont think you guys have some good ideas……peace.
Charles, I don’t think that the present Government will ever take consultancy from anyone whom is not hired by them or within their own ranks. I think that Mike has the right ideas, despite your views on the Civil Service reduction. Which I understand it’s socioeconomic impact, but at the same time it also taxes the private sector, which has shed jobs to cope with an increase in payroll along with other reasons. That increase in payroll I can assure you was in direct relation to the mismanagement of the finances by the present government of which the civil service is one of the bigger trenches. Some Bermudians have become far too comfortable under the PLP, hence why most of our hospitality work; waiters, cleaners etc are taken up by foreign workers. Because Bermudians were basically handed out jobs to win and keep votes. So they voted PLP, now they should take a downfall for voting the PLP! Sorry that’s how it should work, if you love your government so much and your private sector tax payer is footing the bill for your employment, then when the Sh** hits the fan, who should take the blame, who should loose their job? There is work in Bermuda for Bermudians, the problem is that they don’t want to do the types of jobs that are available, otherwise work permits for half of the foreign workers would not exist. I don’t believe the civil service should be dramatically slashed, but it needs to be trimmed and streamlined for efficiency, which scares me because Bermuda is a highly inefficient place when it comes to controlling costs.
With all respect Charles, to blame the economic climate for our mess is misleading. The economic climate (ec) didn’t make us massively overspend on almost every capital project we undertook. The ec didn’t make us forego transparency in the spending of the people money. The ec didn’t force us to spend on capital projects in a already overheated construction economy, despite warnings from our own economist Craig Simmons. Now, when we need to spend that money, in the downturn, there is none to spend. The ec didn’t make us allow Dr Brown to force through all sorts of questionable deals tha we are now paying the price for. No. Mr Fayh is right on that one. The PLP must own their failures as much as they own their successes and his one is theirs to own.
With respect to the proposed job cuts hurting the lower end of economic spectrum, perhaps that is exactly what needs to happen. For the most part, the grass roots have been disengaged with the failings of their Government. That is unhealthy for all of Bermuda as we all know and agree that Governments must be held accountable. Not only held accountable by the opposition but more importantly by the electorate but that simply doesn’t happen in Bermuda. The people simply fail to connect the dots between poor government decisions and the hardships in their lives ( not that Govt is responsible for all of it). Nevertheless, few things get a persons attention like a little suffering. I believe that if the lower end are heavily impacted it will force them to pay attention to the Country’s finances and not take this nonsensical approach that somehow Govt is not spending their money.
We did have some talented and smart people, Dr. Brown for one, but where to we draw the line, when do we say enough is enough and vote the PLP out. Wouldn’t that be a good idea Rich a new start, maybe you like many others couldn’t handle that. Hey! How deep!
Can you decode that for me soldier? I would like to respond but I don’t know what you are trying to say.
(ii) Revert to a duty system that defers duty collection until goods are sold to stimulate the retail sector.
I think this gets sugegsted every year. Simple idea. The retailers have been crying out for this for years…does anyone listen?
Mr. Fahy makes some good points, as usual. It would do well for the government to take some of these into consideration, especially the duty issue which comes up repeatedly and could make a world of difference.
I feel like a broken record on this one, but I would love to see the government step up and accept some responsibility for Bermuda’s financial mess. No one is denying that outside factors had a hand, but it’s ridiculous to suggest that Cox, Brown et al did not play a significant role, and I’m an advocate for personal responsibility.
While some of Mr Fahy’s points have merit, nowhere has he or the BDA ever detailed how these points will cost enough savings to have the desired effect of large cost savings. my comments below.
(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.
- this is fine and while reviewing other juridisctions is fine in theory, from a simple revenue/expenses perspective, this does nothing. work permit process has been reviewed and monitored consistently. everyone knows we are at the mercy of IB but the govt also has to ensure some level of fairness and opportunity for Bermudians.
(ii) Revert to a duty system that defers duty collection until goods are sold to stimulate the retail sector.
- ok so this may help the retail sector, but then how does this help the government coffers?
(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.
- in theory sounds fine…but does this then mean that employees/employers will likely freeze some salaries at $49,999 just to ensure that both parties’ contributions are less? in addition, while this assists these workers, how does it in turn help government?
(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.
- fine, but no cost savings.
(v) Introduce worker cooperatives and promote new industries in an effort to diversify the economy, employment, and Government revenue streams.
- does the BDA/UBP have any suggestions as to new industries and revenue streams. A government in waiting would perhaps be able to identify these opportunities not just say they need to exist.
(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.
- nice idea but low on specifics again…Hamilton has a corporation that runs it day to day.
(vii) Consider a provision of incentives for companies who have workers living in Hamilton.
– ok this will encourage workers to live in hamilton, but what will this do for govt at large?
(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.
- good initiative, and one that is already in the works of government.
So while these are good points, and can be well utilized going forward where are the large cost savings that Mr Fahy has spouted we need to have?
Well, they’re not all about cost savings they are about liquidity and ultimately revenue. He doesn’t go far enough in my view, Charles Richardson is way off the mark.
For example, to answer one question:
” ii) Revert to a duty system that defers duty collection until goods are sold to stimulate the retail sector.
- ok so this may help the retail sector, but then how does this help the government coffers?”
What it does is give retailers move flexibility. IT encourages them to be competitive and generate revenue by getting people through the door. It generates liquidity becasue it gets people spending again. It helps keep staff employed, and it generates payroll tax. Those employees in turn have money…as so on it goes. Granted, it’s only one small thing in a huge mess but it all helps. It’s pro business and sends the correct message.
If you were less negative, perhaps you could big picture.
This pre-budget statement isnt just about how to save money.. its about our budget and how it relates to our economy..
There is no point cutting from govt expenses if the people and businesses still cannot run.
The problem is that our debt/spendign got so high that taxes had to be raised… now we need to get into a position where the govt can get back to a workable spending rate, as well as support it with a workable tax rate..
Whereas some of the things you’ve mentioned will reduce govt tax revenue, they will allow the economy to warm up again by giving the people more money to spend..
It works both ways… reduce spending, and reduce taxes.. obviously not to a level where we still build debt
It is interesting that you criticize these points but lets look at things which were published in the BDA economic platform over a year ago that government has adopted in some way during both last years budget and this years budget:
1) Project bidding system
2) Local debt sales
3) Giving relieve to lower income or smaller businesses
4) More detailed and timely govt reporting
5) Consolidate ministries with the view of reducing costs and fostering cooperative relationships between govt and businesses
6) Explore privatization of sectors of the civil services – she announced this was being done at the chamber of commerce breakfast this week.
7) Support the Development of st geo and somerset
8) 2-5 year strategic planning by the government
I guess someone has been listening to the BDA.
Suffering succatash sounds like Crystal Ball Bob talking.All original thoughts and ideas? Come on Mikey,You could do better than that.Or are You just a cog in a greater wheel?
Doesnt matter if he says original ideas or not.. Bob was right to begin with.. so why would his ideas not be worth repeating? The govt ignores all they hear, so whether an idea is new or old, it would still be somethign that hasnt be done yet..
stop worrying about the politics of the matter and worry about whether govt will actually put in effort to fixing our situation.
Simply encouraging Mikey “he likes it” to allow himself to be more autonomous,and don’t get comfortable expressing twice told tales and ideas.Let Bob be Bob.
Well, the budget is tomorrow and we shall all see. I am not expecting much in the way of innovation: why would I? This is the government of EB, the man who has brought us to the brink and whose policies have and will continue to hobble this country because they were made for the wrong reasons -his reasons. Reducing numbers in the civil service must be in the plan moving forward (a 50% payout ratio is just too high) however jobs have to be created in the private sector for them. Will there be a plan for this? From this government I suspect not.
Business as usual? I am not aware of any broad consultation on the budget within the business community, which is a shame. We do have access to some of the best business brains on the planet….for now. Pity we ignore them.
It’s a tough budget. I blame EB and would still like to know where all those 100s of millions went.
I agree with most points that Mr Fahy is making and suggesting. @Mr. Richardson, Agreed so many people have already lost their jobs, Its a tragedy (my household has been affected by this as well). I personally know of a few freinds that have lost their jobs or had their hours cutback and spend most of their time crying. I myself an barely serviving.
I do however, agree with Mr Fahy with cutting civil service and government hours and pay. It’s happening to us all why not them too. In light of the strike last week, there is much time wasted and money lost, not to mention alot of the abuses have come to light. I think these cutbacks should start at the top. I have said before that the salaries of our dear MP’s should be cut. There is no reason they should be making as much as they do (and yes some of the have other income that we could only dream about). Another cutback should be to GP cars. Not only have they purchased these cars but how much is spent on gas for ALL of these vehicles? Sell these off to caribean countries or countries in need to recoup some of the loses.
Where there is a will, there is a way. Now governement needs to find the will to enable them to tighten their extravagant belts and stop living the “Life of Riley” on our purses, while we suffer. If Bermuda needs to tighten it’s belt, WE ALL (including MP’s) need to tighten our belt and cut back……
I think Mr. Fahy is giving us a heads up on what excuses we can expect to hear tomorrow and I have to agree with him. Alot of buck passing will be taking place tomorrow.
How about all those foreign QC’s Charles that the taxpayers get lumbered with financially with all these high profile cases. That would be a start!!!
I agree. Not all cases merit the appearance of Queens Counsel.
I agree. But I would assume any changes to the legislation that allows for a QC at taxpayer expense would have to be tabled in the House and are not directly Budget related? Perhaps you can expand Charles?
Thank you sigh. I did some more investigation and had posted it in a response and just lost the entire thing. But here is a website you might want to Take a look at. And maybe my use of MP’s was incorrect, i meant ministers.
http://www.bermuda-online.org/bdagovt.htm
But but but, The Great Fearless Leader, Premier Brown said that everything was going to be OK. He said Bermuda is in its Platinum Period. Premier Cox said we are coming out of recession. WHAAAAAA! WHAAAAAAAA! I can’t make my payments on my ‘almost legal’ new class girt beeg car. I really NEED big rims & low profile tires. How can I go to Vegas a couple times this year? WHAAAAAAA, WHAAAAAAA, WHAAAAAA! The PLP said everything was going to be fine. They told me the finances are in good hands. Whaddya mean this $1B plus debt is real & I am responsible for it? WHAAAAAAAA,WHAAAAAA, WHAAAAAAAAAAAA. Whaddymean you don’t know how to deal with it? Where did all that money go? Who is accountable? Who put these people in power? WHAAAAAAAAAA, WHAAAAAAAAA, WHAAAAAAAAAAAA.
Not surprised,
You do realize if we cut the civil service significantly then will we just have to foot the bill in other areas i,e. financial assistance, because people will not employed.
Also you suggest MP’s salaries be cut. Do you realize that an MP only makes $50K a year before deductions? I think there is a gross misrepresentation that MPs are overpaid.
Could you please provide a link or where I could see for myself what MPs make as I seem to recall atleast double you figure. emeber the raise MPs past when EB came to power.
LOL
Senators – $29,426.00
MPs – $54,287
Ministers – $108,575
Ministers get their MP and Minister’s salary combined, Senators who are Ministers make the same as MPs who are Ministers. Different offices held (President of the Senate, Speaker of the House etc pay an additional also added onto the basic salary)
err i believe they make a bit more then that eh? Cabinet makes $150K dont they? accroding to the articles relating to their increases.
Personally they should be on performance based salaries.. somehow create a quantitative scale.. if they fck up, they dont get paid…
My figure was for MPs.
Ministers yes make significantly more than general Members of Parliament. I believe Ministers make approx $100K plus the $50K as MP.
@ sigh Yes MP’s seem to make in the 50k range whilst ministers makes significantly more. And as such, a reduction in salary should be at the forefront, as this is a secondary job for most and they are in fact in servitude to their country in accepting these posts. They make a Base and then if they are an MP they make an additional XX dollars and perks galore……? Doesn’t seem right does it, Especially if the country and the world are suffering with these bad economic times. Perks should be cut out at this time period. Why should they have cars and their gas paid and we are footing the bill. I have hell pay my own gas! If they are serious that they care for their country and it’s people, then NO PERKS. and Drastic cuts to well lined pocket needs to be considered.
Financial assistance! Lol! Was probably a bad idea to get rims on the Kia Sportage, oh and that $350 pair of shades and all dat der. Financial assitance should be minimal if anything and people should do their utmost to find work. If you start offering welfare as an option, people will be lazier than they already are.
But are not most of the MP’s employed elsewhere? Thus the additional $50k received is simply a secondary income source?
Sigh. I’m sorry this is what i get for rushing. I comment on your post above but it was related tto this one.
Here is a link that in support of some of my suggestions.
http://www.bermuda-online.org/bdagovt.htm
So much amnesia. All of these good points made by Fahy ignore the realities of Bermuda. Remember the Corporation of Hamilton? The toothless Municipalties Act changes nothing that would encourage a developer to do anything in the city. Who can get a plan across Charlie and the boys? As for reducing the Government’s rental bill (which is $12m annually by the way), when that plan was on the table this Minister of Finance KILLED it. Remember? Promote new industries and diversify the economy ? Perfect…how sir, how? The revenue stream of gaming was also KILLED by this Minister of Finance. And oh yeah, where will you be sir when the Unions protest at moving their people to Southside? For the record, there is no commercial space in St. George’s; none whatsoever so that’s a non-starter. Everyone is so quick to embrace the latest critic without so much as an analysis of what is being said. Finally, what currency does Fahy have when his fractured, fledgling Party is negotiating its way to relevance? Its three MPs have said nothing of consequence for months, its members and “spokesmen” are resigning daily BUT they can still be taken seriously? I hope Jinx issues a statement soon; he’s the only only left to comment.
Will the BDA and UBP hurry up and ‘merge’ already? These tactics are so lame.
#1 They hope we’ll see them as separate entities by the suggestion of a ‘merge’.
#2 They hope to win over disgruntled PLP supporters to the BDA and then voila merge with the UBP. Brilliantly diabolical.
What’s diabolical about trying to win over supporters?
Isn’t that how parties get elected?
I’ve got problems with how the BDA do business, but hoping to win over PLP supporters is part and parcel of the job.
Unless you’re accusing them of being party to a plot and this was all planned for in advance…
In which case, I think you might want to back that up.
Calling them the ‘BDA Alliance’ is like saying ‘ATM Machine’, or ’7am in the morning’.
Drives me nuts.
We don’t disagree per se, but we do that, as labeling them in a title as “BDA” draws complaints, as we use BDA for Bermuda in titles so much, that people say they get confused.
“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.”
Looks like this statement was right!
Really interesting that all the commentary is here on the OBA’s Pre-Budget Statement and none on the Premier’s! At least there wasn’t any when I went there first.
I am for first and foremost Ministers, Cabinet and especially the Premier taking a pay cut. If my math is anywhere close to correct, she is taking home about $4000 a week!! That is OBSCENE in this economy.