Sir John: Bermuda’s Economy in Crisis
[Written by Sir John Swan] Bermuda’s Economy in Crisis
“Tourism contributing less to Bermuda’s economy”
“Don’t expect food prices to fall any time soon”
“Government to allow access to pension funds for tenants in rental arrears“
“Immigration policy threatens recovery”
“Lost dividends cut off income stream in Bermuda economy”
“If anyone knows of jobs, even if it’s part-time … Please let us know’”
These are just some of the headlines that we have been seeing in the media which are reflecting the current economic crisis that Bermuda is facing. Most Bermudians are hurting and are looking for some guidance and relief. The following information is an honest look at Bermuda’s economy and it is designed to educate you, the public, in making informed decisions about where we are, how we got here and what we need to do in order to make Bermuda the viable economy it used to be.
What is happening…
- Businesses are closing or laying off people
- Rapid decline in jobs
- Increase in homes for sale and empty rental properties
- A growing number of people cannot pay mortgages and other bills
- Charitable donations are on the decline
- Rapid decrease in money for travel, school fees, medication, etc.
- Rapid decrease in money for public infrastructure improvements
- Dividends & profits from businesses have declined considerably
- Civil servant pension funds are underfunded by 65.8%
- Crime is on the increase
- Money for maintenance of public services – buses, ferries, etc. has decreased
- Money for renovation of commercial properties has decreased
- Home foreclosures are increasing
- Tourism income is declining
- International Business is relocating to other jurisdictions
- Risk of downgrading of the country
Why is this happening?
Two Pillar Economy
Bermuda has two pillars to its economy:
- International Business
- Tourism
These sectors are what earn us our Foreign Currency Exchange which is the US dollars that are earned by Bermuda and is used to pay Government debt, private sector debt and all overseas transactions. Our Bermuda dollar is strictly for domestic use. All other transactions are done in US dollars.
International Business represents 85% of our economy generating foreign exchange earnings of over $1.9b in 2010.
Tourism represents 4% of our GDP and generated only $384m in 2010.
As we can clearly see we need to embrace International business and its workforce as it is where we obtain the majority of our foreign exchange, the lifeblood of our economy.
Population and Workforce
There are approximately 64,186 residents in Bermuda of which approximately 50,533 are Bermudian.
As a result of past experience, in order to maintain a viable national economy, the national workforce (NWF) count must be a minimum of 40,000.
At 40,000 NWF count Bermudians comprise approximately 27,000 and non-Bermudians approximately 13,000.
In 2011 the NWF is dropping below 37,000 and we are unsure of the figure for 2012. Therefore, we have already dropped below a number that maintains the basic viability of our economy.
The population of 50,533 Bermudians includes:
- Men
- Women
- Children
- Retired Seniors
- Physically challenged
- Mentally challenged
Our birthrate has been steadily decreasing with only 572 Bermudian babies being born in 2006. Our aging population has been increasing.
When we take all of these different aspects of the Bermudian population into account, we cannot fill all the jobs that are necessary to maintain a viable national economy. Non-Bermudians must be employed to fill the gap.
In 2009 and 2010 guest worker manpower declined by an average 4.5% each year and it continues to decline in 2011.
What we need to do is to increase the employment level to 40,000 from its current and decreasing level of about 37,000. Since there is a limited pool of Bermudians from which to draw upon, we have no other alternative but to turn to the foreign workforce in order to stop the decline in the standard of living that Bermudians now see in jeopardy.
Government’s Financial Position
Assuming that Government can collect all funds due to it, 71% of Government’s current revenue goes to service payroll, personnel costs and debt. This compares to 48% in 2002/03 and before.
(Dollar figures in millions)
- Revenue: $977.2
- Debt service
- and Personnel costs: $692.8 (71% of revenue)
- Left for all other services: $284.4
(These figures are extracted from 2009/10 Financial Statements of the Consolidated Fund and from the Budget Statement of 2011. The figures do not include the servicing of the $200 million Loan Facility taken up in June of this year.)
The residual of $284.4m is what is left to use for maintenance of all public services, consultancy services, shortfalls in other revenue generating areas and planned capital expenditures.
With the increase in civil servants, debt borrowing, decrease in revenue, and Government’s current budgeted debt commitment of $262,000 per day, according to the Auditor General, this residual will not be enough for Government to meet its commitments.
In February 2011, $95,800,000 was budgeted for interest payments plus Sinking Fund contribution for fiscal year 2011/12. When the $200m is fully taken up, this will add about $16m to this year’s budgeted debt service costs which will then increase to about $111.8m per year or $306,000 a day.
National Financial Position
Government’s accumulated debt including obligations to underfunded pension funds and other Government controlled entities is $4.6 billion.
The private sector has an accumulated debt of $5.2 billion. This debt is not Government’s responsibility but it is still debt that needs to be serviced and repaid.
If we take all of the financial commitments that are owed both by the private and public sectors:
- Each Bermudian (every man, woman & child – population 50,533) has approximately $193,900 worth of commitments owning to Bermuda’s economy
(Government debt is payable by taxes collected from the general public therefore it has to be considered as owing by each Bermudian.)
Graphical Representation of Revenue and Spending
The following graph shows the Government’s revenue, spending, national debt and the national debt service cost.
Between 2000/01 to 2009/10:
- Government revenue rose 47% (from $623m to $917m)
- Government spending rose 93% ($582m to $1.12b)
- National debt rose over 700% (from $138m to $969m)
- Annual debt service costs rose over 230% (from $15m to $35m*). It is expected to rise 745% by mid-2012
* Full debt service cost is made up of interest payments + 2.5% Sinking Fund contribution. The figure of $1.7m (found on the graph) for this period from Government is an anomaly and does not give an accurate assessment due to Government delaying the contribution to the Sinking Fund (sum set apart periodically from the income of a government or a business and allowed to accumulate in order ultimately to pay off a debt) as well as interest on long-term debt being paid from the Sinking Fund for that period. In order to get a balanced view of the debt service cost the Auditor General’s figure was used.
The preceding has been prepared to provide you with general information. In organizing this report, we have used figures provided by Ministry of Finance, Auditor General’s reports and Department of Statistics.
Recommendations on how to stimulate the economy…
With public and private debt rising and revenue decreasing, we are running out of options to look after our people and meet our financial commitments unless we find ways to stimulate the economy.
Recognizing the financial constraint on Government and the financial state of the country, the following recommendations can be implemented with the legislative and policy support of the Government without any financial outlay.
The following recommendations are not intended to be the ultimate answers on how to stimulate the economy and surely they will not all be popular, but they can go a long way to restore the growth of our economy which would increase GDP, reduce our necessity for borrowing and provide jobs, rent and dividends in the private sector.
Airport
- Increase air traffic flow through our airport to retain US Pre-Customs clearance
- We have to implement an “ease of entry” procedure for business and high net worth individuals as well as tourists to minimize time spent waiting to clear immigration
- Improve the private jet facilities and procedures
City of Hamilton
- Development of the Waterfront to include:
- Convention/Entertainment Center
- Casino
- Restaurants
- Retail shops
- Allow high end retail shops managed, financed and owned by non-Bermudians
- Extend the city limits to allow for the development of high rise condos by International Business for “key” employees. This would be the only area this would occur which would help keep congestion out of the rest of the Island
Economic Zones
- Look at making the following economic zones
- Dockyard including Ireland Island
- Southside
Environment
- Give tax incentives to people who import and utilize environmentally friendly products/services
Financial Services
- Initiate legislative reform to encourage trust companies, non-retail banking and fund management to establish here
High Net Worth Individuals
- Provide permanent residency and/or domicile status
- Allow private possessions and assets to be imported without duty
- Reduce property purchase tax to ½ its current assessment
- Allow for approval in principle to bring “key” employees, both professional and domestic, with them
Infrastructure Projects
- Infrastructure projects such as Waterfront, Airport and any other revenue generating project could be allowed to be privatized (majority ownership by non-Bermudians) which must be listed on the Bermuda Stock Exchange (BSX) or should be private/public structures
- Projects that are without revenue should be developed in a private/public partnership in concert with a revenue generating project – e.g. the causeway in conjunction with the Airport
International Business
- Make it easier, more efficient and welcoming to do business in Bermuda. Bermuda has to realize the competitive environment is different and cannot do business on its own terms – we have to adjust to our customer’s needs and wants
- Remove the 60/40 rule
- Any public utilities or broad service organizations that impact on the general Bermuda public which are exempt from 60/40 should be listed on the BSX
Property Ownership
- Relax ownership restrictions on married couples where only one is the Bermudian. Purchase of the 1st property would not require government approval
- Lift ownership restrictions on PRC holders to allow for the purchase of one property
- Liberalise immigration policy to allow for Bermudians to sell to non-Bermudians where property is above a set ARV
- Change condo ownership policy to allow for Bermudians to sell to non-Bermudians where property is above a set ARV
- Restrict land ownership of companies after 60/40 removal to:
- Major Infrastructural Projects: 100% foreign ownership of the facility with long term leasehold on the land. Company must be listed on the BSX
- Major Service/Utility Companies: Foreign ownership of real estate for the purpose of operation and management of the business. Company must be listed on the BSX
- Commercial/Retail Business: Foreign management with Bermudian’s retaining real estate
Status/Residency
- Grant Bermudian status to a limited number who:
- have lived in Bermuda for a minimum of 10 years and
- demonstrate that their continued presence would enhance the employment opportunities and skills of Bermudians
- Open residency rights to a wider qualifying group
Tourism
- Reintroduce local entertainment back into the hotels
- We also need to market Bermuda as:
- Diving destination
- Fishing destination
- Historical destination
- A tax holiday should be given to any investors/developers who have approval for a project to begin in the next two (2) years or a project with existing approval and a determined completion date
- To encourage the development of new properties, a pre-established incentive package should be drawn up so that developers know exactly what they are getting and avoid frustration during the negotiation phase. Some of the incentives could include:
- Free payroll tax
- Import duty relief
- Free licensing fees
- Establish a fund for the purpose of promoting tourist establishments that wish to participate. The fund would be supplied by equal contributions from the Hotel Occupancy Tax, the Tourism budget and matched in total by the individual establishment. Government would have oversight over the expenditure of the fund
Taxes
- Decrease taxes on sale of fractional units
- End senior benefits such as free land tax above a set ARV
- End senior benefits of free car license
- End senior benefits of free car registration above a set vehicle class
- Payroll taxes should be reduced to zero for at least three years for employers paying full-time Bermudian employees and self-employed individuals (e.g. Taxi drivers) receiving less than $50,000 per annum
- Offer a two year payroll tax holiday for:
- new international or local business which hires Bermudian employees
- new Bermudian employees hired by existing businesses
- Remove tax on boats and increase mooring fees to enable Bermuda to become an international boating centre
Telecommunications
- Bermuda should free up the telecommunications market to maximize new opportunities in technology and minimize cost as a result of competition
Work Permits
- Allow companies during the incorporation process to apply to immigration for approval in principle of “key” employees and both processes should be executed in a prescribed time period
- If someone is “key” and is moving to Bermuda consider granting their corporate and/or domestic employee a permit in concert with the “key” employee
- Remove term limits on work permits
Are you prepared to change and support?
The traditional mindset of doing and seeing things is no longer applicable or working in today’s environment. There are some quantum leaps in policy changes, business changes and overall attitude changes that must happen if we are to survive. Are you prepared to embrace change that will continue to offer you the comfort and standards that you have enjoyed? We can either help to make a change or when Bermuda fails; we will have no one to blame but ourselves. All of us have a vested interest in Bermuda and we all need to participate in this discussion to help enact change and make the future more positive.
This is a collective effort and we need your support, comments and ideas. For further information or to express your comments email us at economy@challengerbanks.bm or visit us on Regeneration of Bermuda’s Economy.
Many thanks to the several members of the local and international Bermuda business community who made submissions in response to the question, “What can the Private Sector do to kick start the economy with Government only being called upon to change policy and legislation and not make any expenditure?” The majority of their views in response to the question are expressed in this document. Special thanks to Larry Burchall who provided the financial statistics included here.
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Articles that link to this one:
- BermudaFirst Response: Sir John’s Column : Bernews.com | October 24, 2011
- ABIC Backs Sir John’s Economic Initiative : Bernews.com | October 24, 2011
- Foreign Workforce Effect on GDP : Bernews.com | October 28, 2011
- ZBM Let’s Talk: Swan & Burchall : Bernews.com | October 31, 2011
- ZBM Let’s Talk: Swan & Burchall : Bernews.com | October 31, 2011
Bermuda’s strength is its size. It gives us (and I mean US, all of US) the ability to be quick, nimble and flexible; we can take advantage of opportunities and avoid threats because we can change direction quickly.
Unfortunately, our massive, slow moving, bureaucracy-loving, infighting, “cog in the wheel”,confused government is the exact opposite of what Bermuda requires to shake us free of the chains of incompentency, revenge and corruption of the past 10 years.
It is a time for change.
This is a typical response that demoonstrates why we have not made as much progress as we should and can as Bermuda. At some point we will realize that we are ‘all in this together’ and we will only ‘all come out it together’ when we work for a common solution.
A great analysis, and an absolutely essential list of recommendations for getting Bermuda back on track.
Can you imagine if the PLP just said “This is a great plan. We will implement all of these recommendations, and we will do it in the next six months!”
That would truly be a case of resetting the dial. I’ve got my fingers crossed.
Sir John, thanks so much for writing this article today and not only telling it like it is but explaining just what we need to do in order to turn our beautiful Island home around, politically, socially and economically. Please just do us all a big favour and become our Premier one more time…PLEASE !!
Really, Bermuda needs YOU.
It doesn’t matter which party you run with…we just need a knowledgable, passionate, business minded leader to take control of our country and re-create the beautiful, prosperous home we were once so proud of some years ago.
There is no one more qualified than you Sir John, and I’ll bet a lot more like minded people would get involved once you were back in charge as well…I know I would…just saying…
Cf… I agree with you … Sir John was the best Premier Bermuda has ever had…he was and still has Bermuda first….I love Sir John….
the cog….can not compare to this great man….
Yep, I also agree, honesty, integrity, diplomacy, he should have came back 10 years, he should have stept in when Brown and Burch were on their payback rampage, but now it’s too late, IB will continue to drizzle away and more jobs will go.
Don’t be a fool, what John done back in the day was for his self.
How many houses did he build when he was premier for his own pocket.
What has he done for his own people which are black just in case you don’t no.
He said young black men are a problem back in the day, to who? white people.
Young black men are killing one another were is John swan the same place he was 30 years ago making money for his self.When John swan was premier the blue clour works suffer in this country.
AND YOU WANT HIM BACK YOU MUST BE WHITE.
UBP ARE FINISH GIVE UP THE GAME IS OVER.
BLACK PEOPLE ARE ON TO YOU
Maddog, I sense just a bit of anger and hatred in your words, but then again it might just be me as nobody else responded to your post.
However I can tell that you are highly educated by your deductive reasoning, I am white, the UBP is finished, and black people are most assuredly on to me…not.
Every time a plan is talked about that involves foreign revenue that will lead to an increase in Bermudians overall wealth some people seems to assume it is a black – white thing.
It simply isn’t, rather such ridiculous fear mongering and nonsense from my fellow Islanders is what has lead us to this economic crisis where we are today. Peace and love Maddog.
Maddog smells his own fears. He is so afraid of white people..
LOL
call me a cynic but all I see in many of those suggestions is opportunity for the wealthy to become even more wealthy and have the ability to grant their foreign rich friends a piece of the rock
can someone point out which parts will benefit the growing lower class other than a job in a casino or a salesclerk in a foreign owned high end retail establishment?
@ hmmmm – your comment is similar to ‘d reader’ below.
We have to accept that Sir John will always respond from the perspective of a businessman – that is what he is, has been and always will be. No problem there!!
The role of the government (currently the PLP) is to evaluate his comments and any others to see how they will affect Mr. and Mrs. Everday Bermudian. If the recommendations increase the economic class distinctions, displace other Bermudians or otherwise cause hardship, the government should modify the proposals. That is why it is necessary to talk about any suggestions before they are finally considered for implementation. That is also where Mr. and Mrs. Everday Bermudian must be involved in the process to ensure that their views are heard by the government.
So Bermuda.. get up and get involved in the discussions that will move us all forward – TOGETHER.
Well said Anthony, at least that is how we hope it should work…together.
I agree with some of his suggestions, but I do raise an eyebrow at a few in line with what you’re saying. For example, why would you allow wealthy individuals to import without duty, while the average schmuck gets hammered coming through the airport??
The “lower class”, as you put it, will benefit from an economy that is growing rather than shrinking. They might be able to get and keep jobs, for example. They might benefit if crime reduces. They might benefit if the tax and economic environment is not unpredictable. Some of them might even be able to start a business and empty others, and thereby do better for themselves.
You need to understand that if the pie gets bigger everyone benefits. If the pie gets smaller everyone loses. This situation cannot be remedied by shrinking the pie (out of either incompetence or spite against expats) and at the same time trying to divide the smaller pie differently. That’s the current experiment, courtesy of the current government, and it has been a disaster.
an economy that will be no different than now, the wealthy will still get 99% of the pie while joe bermudian fights over the scraps of 1%
go through each of his points and make a scoreboard. bermudian on one side and wealthy foreigner on the other. give a point each time one of his suggestions benefits a bermudian trying to feed and house his family and each time one benefits a wealthy foreigner. then talk to me.
the “red flag” that should be glaring at you is his suggestions on ending seniors benefits, as if they don’t have enough problems – that speaks volumes on his community values
Bermuda has no natural resources so at this stage the only way to grow the economy is through foreign investment which in turn requires us to be more welcoming, efficient and hospitable at all levels including the regulatory, social and legislative branches of Government.
The PLP supporters who regulalry post on this site keep asking for suggestions to improve the economy. Sir John has put forward dozens of them above that will benefit all Bermudians. If you’re not in agreement, what solutions do you have? What has the PLP Government done to stem the massive exodus of jobs from the economy for which they have ultimate responsibility/blame.
Bermuda needs a minimum of 40k employees on the payroll to keep us afloat. What has the PLP Government done to bring back the loss of 3k jobs that were eroded on their miserable watch? Where are the PLP’s solutions?
They have none.
The PLP have a fundamental knowledge gap when it comes to job creation. They’re idea of growing the economy over the last 10+ years was to simply employ more people in the civil service. That doesn’t work as its an unsustainable model – as has been proven with the massive increase in true Government debt to $5b.
Bermuda needs foreign investment and Sir John has offered some very useful suggestions as a way to get us there. Hopefully someone in the PLP is more than just a “cog” and actually understands these issues because 13 years of simply riding the wave of success they inherited from the previous Government isn’t going to be sufficient going forward.
Bermuda needs intelligent, dynamic and successful people to lead us out of the PLP doldrums. This is the way forward.
Think about it, if the pie gets bigger, my little 1% also gets bigger. I might not get rich, but I will have a job, pay my mortgage, and save a little. That’s better than what we have now with the whole pie shrinking and my 1% shrinking along with it.
You wanted to know how Sir John’s suggestions might benefit ‘lower class’ people (your words), and I gave some answers.
Your response is, essentially, that you don’t want to do anything that might make anyone at all any better off than they currently are. Interesting.
I guess under your system everyone accepts that they all live equally in poverty.
As long as everyone knows that’s what they’re actually voting for, I guess that’s fine.
Sir John was a great Premier – with the highest popularity rating of any Western leader. I loved the way he walked around Town and talked to everybody who wanted a word with him. That’s class. You don’t see that from the PLP. In fact the Brown One needed body guards and never walked around town. What about Paula?
Great article….. impelement them now!
sp!!! implement
I agree. Can we please have one more dance with you pah pah pah please! You’ll do us a great service!!! One more dance I say!
looks like economic class division
Spot on Sir John,
@hmmm jobs in foreign companies have supported Bermudians for a number of years. The PLP has no alternatives and currently Bermuda’s unemployment rate is rising
Yup I agree and the COG was supported for many years by a foriegn company she of all people has first hand knowledge of how important IB is for our island.
Thank you for posting this article and making it not only easy to read, but also easy to understand. John Swan was a wonderful Premier and continues to be a wise and savvy businessman. Although I may not agree with everything that he says or does, I have the utmost respect for him.
In this article, I can see the point, but I also see where once again, a lot of these suggestions are geared to provide support to a sector of the community that has the means to support their lifestyles while taking away from a sector that needs assistance, i.e. the seniors. This article suggests relaxing certain expenditures for high-means individuals (who receive a huge amount of money per month, hence their classification as high-means) while ending benefits for seniors, the majority of who are on an extremely limited budgets and already have to choose between food and medication. Seniors that cannot afford to license or register their cars, or pay land tax will need to lean on their younger family members for assistance. This will cause a knock-on effect as more people struggle to support their own homes as well as assist the seniors in their lives.
Unfortunately, in some of the above suggestions, there is the sense that Bermuda will again be pricing it’s own average people out of the island. We have seen a departing of international business and a departing of average Bermudians who are finding it too stressful and too expensive to live and raise a family at home. If we are going to incorporate some of the above-mentioned ideas, we should ensure that the middle income and lower income families are not tossed to the side and forgotten about.
Additionally, tourists speak about how expensive the island is now, so adding (more) high-end shops in Hamilton may not attract the tourists; however, the shops will lean on the locals to shop there during the off-peak tourism months. It is my humble opinion that rather than catering solely to the high-means visitors we should look more closely at encouraging the average-joe visitor to our shores with budget-friendly all-inclusive and Bermudianised resorts and shopping experiences. Bermudians like to visit America for a weekend of shopping, Broadway shows and the like, but how many Americans can do the same when hotel prices for two nights is far more than the airfare? What incentives do we offer to encourage the average East Coast American to consider a weekend hop-over to the island? What will they do for the weekend?
People like to visit Bermuda because of our uniqueness…we are close in proximity to America, but are not Americanised and although we are a British colony, we are not a mini-England. We are Bermuda…and this makes us unlike any other country in the world. If we are to build living spaces near to Hamilton to accommodate IB’s executive staff and visiting clients (which I completely agree is needed), it would be a marketable opportunity to ensure that the structure resembles a Bermuda cottage (obviously on a larger scale), and does not look like another concrete and glass monstrosity that takes away from our beauty and uniqueness.
As I said, I do agree with a lot of suggestions listed above (except the casino) and only want the best for my island and people. As the world shrinks, we will see more and more visitors and workers to the island. However, the visitors and workers will come and go, but the Bermudians will remain. We need to ensure that they are taken care of first.
Unfortunately, Sir John’s plan makes far too much sense for the PLP to consider. Plus it’s not their idea. The PLP never take good advice from the experts No, they’d rather introduce a stupid ideas which they have to backtrack on later. The PLP never met a dumb idea it didn’t like. But the good ideas, like Sir John’s, are dismissed…
Clowns. Jeebus, I’ll be glad when these lot are gone from government!! Anyway, they make a much better Opposition Party, where they have years of experience, and we are gonna give them that opportunity to excel again. Aren’t we nice?
A general thank you to Sir John,
He still clearly commands the support and influence in the community to get certain members of the community to respond to his periodic requests for economic commentary. From my perspective, several of the suggestions merit further discussion and exploration but many have already been announced by the PLP. It is, however, instructive to have everything in a single document.
I am sure the document will generate lots of discussion in the community and I trust the discussions will result in constructive action. My hope is that Sir John will now take the appropriate steps to present the information in a constructive manner to the Premier and other relevant Government Ministers to initiate further exploration about how some of the suggestions can be implemented, with an appropriate timeframe.
One fundamental challenge to the recommendations is that the basic premise of being able to implement the recommendations without any financial outlay by government is flawed. Readers will note that several of the recommendations require government to reduce existing fees and charges for payroll taxes, residential and condo purchase fees and import duties.
Sir John will know that a reduction in any government revenue will require alternative revenue sources or increased government debt thus there will be a government financial outlay to implement the recommendations.
One glaring omission from the recommendations is that the general cost of living and doing business in Bermuda must be reduced. Two primary factors in this regard are the cost of government regulation and the cost of money – i.e. interest rates from the local banks are arbitrarily high.
Notwithstanding the challenges as noted, I do not think the overall suggestions are fatally flawed.
A cautionary note… some of the suggestions do not accord with previous policy statements of the government on land ownership by non Bermudians, work permit policies and the potential displacement of non Bermudian nationals. Constructive dialogue should be able to resolve these differences.
One final comment – Bermuda needs to solve the challenge (real or imagined) of qualified Bermudians being denied the opportunity for gainful employment at their full potential in the international business sector. Whilst we cannot expect to produce qualified Bermudians for every job in the sector, every qualified Bermudian must be fully employed.
“From my perspective, several of the suggestions merit further discussion and exploration but many have already been announced by the PLP.”
But in the context of Sir John’s suggestions what components have the PLP not simply “announced” but also followed through on and implemented. An announcement means nothing if it’s not acted on.
@32n64w
examples of existing PLP initiatives that have been announced publicly and are underway:
– Increased air trafic flow through a partnership with a new airline
– improvements in private jet facilities in Bermuda
– consideration of Dockyard as a revitalized economic zone
– new financial services legislation
– relaxation of property ownership regulations where one spouse is not Bermudian
– relaxed term limit policies for certain individuals that can demonstrate the ability to create jobs and employ Bermudians over a 10 year period
– the Hotel Concessions Act
– Payroll tax exemptions for the retail sector and any company that hires Bermudian trainees in an approved training scheme
– telecoms reform
– ‘one stop shopping’ for immigration needs for new start up companies
The real problem is that we are interpreting the message through the messenger rather than a more direct analysis of the message. If the same article was attributed to the PLP, there would a lot more negativity about the contents.
@VfM:
– Increased air trafic flow through a partnership with a new airline
Agreed, but at what cost exactly. How much has Bermuda spent on MRGs? Why do these new air links typically dry up less than a year after they start? Well, for one reason, the DoT has no clear road map for the product.
– improvements in private jet facilities in Bermuda
Sort of … let’s not forget the illegal Sovereign deal has ultimately cost the taxpayer millions in legal fees and awards. Any new service facilities have been the result of private sector investment.
– consideration of Dockyard as a revitalized economic zone
Consideration is not action. Show me the results.
– new financial services legislation
New legislation promulgated by the PLP Government has in fact made compliance more burdensome and onerous on existing businesses and perhaps, more importantly, potential new start-ups. Regulation is an ever growing business (just look at the size and budget of the BMA) and the Bermuda Government has embraced the idea of significantly increasing the cost of doing business in Bermuda. This isn’t productive, helpful or competitive.
– relaxation of property ownership regulations where one spouse is not
Bermudian
Relaxation exactly how? By introducing fees and complications which disadvantage a Bermudian/non-Bermudian couple in the bidding process by adding months and months to the approval process.
– relaxed term limit policies for certain individuals that can demonstrate the ability to create jobs and employ Bermudians over a 10 year period
The PLP have danced around the issue but nothing has been documented or finalised. I challenge you to find anything on Immigration’s website that provides clear guidance on this phantom policy that appears to exist only in media sound bites: http://www.immigration.gov.bm
– the Hotel Concessions Act
Agreed, however, the back room manipulation of potential deals (Club Med & Par-la-Ville come to mind) have left a foul taste in the mouth of investors. Total bed count under the PLP Government has reduced considerably.
– Payroll tax exemptions for the retail sector and any company that hires Bermudian trainees in an approved training scheme
The retail sector tax exemptions have yet to be defined so this is still a WIP.
– telecoms reform
Um, I guess you hadn’t noticed the recent court proceedings which are a direct result of the PLP Government’s inability to effectively and clearly introduce much needed reform.
– ‘one stop shopping’ for immigration needs for new start up companies
Show me the link where this has been documented. It simply doesn’t exist.
@32N64w
Your comments make the point of my response. If RECOMMENDED by Sir John, we must all accept.. if announced with an implementation date by a GOVERNMENT MINISTER, you have all sorts of incorrect and negative comments. Time does not permit me to address all of your comments but i have copied the Ministerial statement on 10 year permits for ease of reference. FYI – all Ministerial statements can be accessed on the goernment website and the PLP website at http://www.plp.bm.
Economy Minister Announces 10-Year Work Permits to Come into Effect Next Month
Press Release 19 October 2011
Minister Wilson: “The ten-year work permit policy is an important step towards gaining the balance that we need to strike with regards to work permit holders.”
In maintaining a promise made several months ago, the Minister of Economy, Trade and Industry, Sen. the Hon. Kim Wilson, JP, confirmed today that as of 1st November, 2011, longer term work permits will be made available to key employees of companies with a significant presence in Bermuda and who meet a set of criteria.
Residents will recall that the longer term work permit was approved for implementation in 2009 however a decision was taken at that time to refrain from issuing such permits. The long-term work permit is available for up to a 10-year period.
Over the course of the past several months, Minister Wilson has frequently spoken about Government’s intention to revise the work permit policy.
Minister Wilson said, “At one level, we need to evolve how we strike a balance between work permit holders and the Bermudian workforce.
There are many experienced non-Bermudian executives in companies who do much to contribute to the Bermudian economy and have done so for many years.
“We want to keep these individuals thoroughly involved in investing in our economy and we do not want to disrupt the business continuity of their organizations.”
She continued, “On the other hand, it is our responsibility to make certain that qualified Bermudians are carefully considered for jobs that become open for which they have the necessary skills and experience. Part of the balance is for international business to create opportunities for Bermudians. One of our roles as a Government is to make certain that international companies advertise posts when a work permit reaches term. This is particularly important for those knowledge workers who are seeking employment.”
Minister Wilson pointed out that the implementation of the ten-year work permit policy is an important step towards gaining the “balance that we need to strike with regards to work permit holders”.
However, she also cautioned that the ten-year work permit should not be looked at in isolation. It is linked to meeting specific criteria to make certain that those holding the permits are in positions that will help build the Bermuda economy.
Positions eligible for a long-term work permit are those who are responsible for making decisions that are critical to the continuity of the company in Bermuda and where it can be demonstrated that Bermudians are unlikely to have the qualifications to fill the position and, historically, no Bermudians have applied for the position.
The standard work permit application form and process will apply for the longer term work permit. The associated fee is $20,000 and all applications in this category will be adjudicated expeditiously.
Employers who hold such work permits will be required to provide, on an annual basis, a report on their organization to demonstrate that they continue to meet certain requirements. It should be noted that the Government is also working on initiatives that will increase foreign direct investment and create jobs. We will continue to do all that we can to facilitate projects that will provide employment opportunities, training, and retraining for Bermudians.
Minister Wilson said, “We continue to listen carefully to the concerns of businesses and we continue to seek to understand their needs to secure the right staff to enable them to compete effectively in the global market place. International business is critically important to the economic well-being of our people, particularly in terms of job creation. A part of our economic success is dependent on our ability to attract foreign investment. To achieve this we must all work together to make Bermuda more attractive as a premier business jurisdiction. We believe this modification this policy will assist in achieving this objective.”
Private sector organizations who may have questions regarding the ten-year work permit can contact their respective Industry Relationship Officers at the Work Permit Section of the Ministry of Economy, Trade and Industry.
“If the same article was attributed to the PLP, there would a lot more negativity about the contents.”
Agreed – but that’s because the PLP Government has a poor (and well documented) track record of putting red tape, vanity projects, cost over-runs, abuse of process, self-dealing and insider deals ahead of genuine growth, job creation and the tax payers’ best interests.
The Premier wants the electorate to only look forward but unfortunately her abysmal performance as Finance Minister reminds voters every day and every pay check (if you’re fortunate enough to have one) of the PLP’s fundamental inability to run anything … much less a recovery from the hole they’ve dug us all into.
Vote For Me, these things are mainly either figments of your imagination (one stop shopping for immigration needs, relaxed property ownership regulations), things which benefit very few (improved private jet facilities), or last-minute knee-jerk reactions to the extremely poor state of the economy (payroll tax exemptions, 10-year work permits, telecoms reform).
The problem is the current govt has no plan. The things it has done have made everyone in Bermuda poorer, including working men and women.
What we need is a sensible plan and people in charge with the sense to implement it.
@ Rick Rock
34n64w provided a more substantive comment and my response is included therein. My challenge to you is to genuinenly examine what has been implemented by the government before offering commentary.
43n64w did provide substantive comment, but your response was inadequate. The only thing addressed in your response was the 10-year work permit policy. A policy which will affect a small number of permits, and will not on its own address the economic decline presided over by the government in the past 13 years.
I’m fed up, actually, with “genuinely examining” the things this government does.
For example, the payroll tax / import duty debacle, where Cox announces the measures are to start ‘tomorrow’, and then realises she did not have the legal power to do such a thing, and then ‘postpones’ it until Nov 4 so that Customs officers can be trained to work out how to ape 35% into their calculators. Pathetic incompetence. Another half-baked knee-jerk action.
At least John Swan put some thought into the issues before writing this. He has some decent ideas, and comes at it from a unique perspective.
In the meantime, you and others attempt in a rather pathetic way to justify the ridiculous incompetence of the current government.
Dear Sir John,
It is time to re-enter the political scene here in Bermuda. This country needs thinking men like you who are not afraid to lay it on the line. I think a lot of Bermudians would support you and the OBA team to correct the disasterous direction and blind thinking of the PLP and their goals. There are only a few Bermudians who want to see our country fail, the rest must start thinking for themselves and stop be spoon fed policy from this government. Before we can no longer correct the fall we are experiencing, PLEASE, my fellow Bermudians. Start thinking for yourself and look around!
So many so quick to divide….do you not understand that if the white collar worker does not get ahead nor will the blue collar worker. Blue color workers depend on income derived out of the expenses of the white collar worker. The two go hand in hand. Many of these suggestions should be looked at more closely and implemented as soon as possible…..or would you rather sink divided than rise united….can we not for the love of our Country stop being such opposers simply because of who the messenger is? Thank you Sir John for this article. It is true that Sir John really is wealthy enough and doesn’t have to care..but he does…
True.
Censored.
@ Erica
Your message goes both ways… do not ignore a realistic plan simple becuase it is proposed by the PLP. Note also that exisitng wealth does not negate the desire for more wealth – in fact at some level, once you attain a certain level of wealth, the attainment of more wealth becomes more of a competition than the actual desire to gain more wealth.
why is this sort of conversation not coming from the government hmmmm wonder?
I agree with Sir John and do think that Bermuda is in crisis and it is going to a painful period for us to come out of this organized mess. One point I disagree with is taking away the senior benefits. Seniors paved the way for us younger generation. They have made valuable contributions to this island and many are short changed in their reclining years and are left to struggle. Sir John please think about this as a Senior yourself and put the shoes on of the average senior who is without the basics I.e. lights, food, medication, accommodation, etc. I think that the kids should pay for public transport as they are the larger group that travel daily. Returning them to paying would put a good bit back into the budget and at least get the busses repaired.
We are looking for a change but we as Bermudians have to define the word change for ourselves. We aren’t forceful enough in standing up against what we don’t like. I applaud the students at the Bermuda College for taking a stand against the Buzz restaurant. That was a clear message to us adults that if you want change you will have to make it happen. We all should do that throughout the island as the restaurant costs are way over the top and the little portions you get are ridiculous.
Bermuda is on a collision course with disaster and we are going to feel major pain when we hit. However, if we want to return our island to a more stable position we may need to ponder a bit more on Sir John’s ideas (not the part about Seniors). We need more community dialogue on these ideas. Perhaps a few towhall meets so that the average Brmudian understands clearly where we are and the truth about how many unemployed Bermudians there are at this time and what the way forward will cost us. This is not a PLP or OBA thing it is a Bermudian thing. We put to much faith into these elected officials to chart our way forward, we need to think for ourselves and stand up as a people to fight this battle.
Politics is not going to put us back to the good old days, investments will, we need to find good investment that values this little island. We the people need to invest in our island. We are talented people and highly educated so I don’t understand why we are afraid to use what we have in our hands? The island needs a cleaning there is overgrown trees and grass everywhere. We need to bring back the pride that we had and organize island wide cleanup days across the island. That would also help the obesity problem Mr. Desilva! We sit back and wait for works and engineering to do it and clearly they are overwhelmed with the amount of work to be done. We need to dust off our tools and equipment and get out and clean up our island. Maybe that would help bring the community together. We spend to much time sitting at the computer, on Blackberry, watching tv and just being plain old lazy. That is one thing that our Seniors didn’t have and you would often find them outside puttering in the garden, clipping hedges etc. kids walked to school and back each day but we now have free busses so they don’t want or need to walk anywhere.
In closing, I ask each Bermudian to take some quiet time to look at where we are and truthfully think about where we are headed. Once that is done, we can formulate a plan to take us forward together.
I would just like to say that Sir John Swan is correct on every point that he made. I am a young Bermudian Male is at the age of 36 and for the last 13 years I have seen a decay in Bermuda’s Society. I beleive that the root of all this Financial mess goes back to our education system and our collective psyche on a whole. First the schools are still in the Industrial Age System where Acadamic and Professional Education was very important. Mind you it still is important to have a good foundation but we are now living in the Information Age in which in addition to those first two requirements the Education System needs to infuse poper Financial Education. People need to know the diffirence between a Real Asset and a Liabilty. I mean you have the Banks telling people that their house that their paying heavy mortgage on out of their own pocket is an asset, how? It’s actually taking money out of your pocket. Bad debt!Liabilty. We can’t look to any Government. It starts with us. We have to educate ourselves and our children. Right now in Bermuda it’s like the Blind leading the Blind in the Financial Arena and than you have Sir John who is holding the torch in this Financial Darkness. Oh and by the way Sir John is my Mentor.
@ Edward
Sir John is clearly not correct on every point. Neverhteless, I agree that some of his suggestions require further discussion and analysis with the PLP government. Whether we agree or not, the PLP will be the government at least until the next General Election and they are the only ones that can make legislative changes.
Note also that Sir John is the same Premier that wanted Bermuda to become independant and was ostracised by the UBP as a consequence. He seems to have found a ‘new life’ in recent times. I only make this comment to demoonstrate that ‘politics makes strange bedfellows’.
I appreciate that you took the time to make a comment as a relatively young Bermudian. Please remain engaged.
Another thing is that Bermuda on a Collective has to get out of the intitled mentality. This creates mental laziness and and stunts creative thinking. We need change in Bermuda. We have to seriously start thinking outside the box. Bermuda could be a good Sporting destination for a whole lot more sports then stated.We have to stop looking only to the U.S. for most of our tourist. Yes, it is close but this is the 21st century, every country is closer now through efficient Air Transport. What about So uth America, Carribbean Direct Flights, Point to point destinations, forget about hubs.You have Asia. We can have some type of direct flight lets say to Dubai which will link you with the rest of the world. Maybe we can tal to Emirates Airlines. What about our own Airline. There’s always talk about it but no action. We could perhaps use the Embraer 190/195 series aircraft. Their efficient,quiet, and have good range. Bermuda should be able to havew its own Cruise ship like it used to. I mean it seems like the island’s regressing in these areas instead of progressing. I mean we Register other countries Aircrafts and Ships so we should be able to have our own. Just remember, to change the Fruit you must change the Roots. Bermuda, Stop Trying To Change the Fruit, Lets Work On Changing The Roots and then the Fruits Will Have Changed. A POSITIVE CHANGE.
Well laid out and plain to see – except to those who will not see. Let’s hope the will to change direction exists to a high enough degree to make some of it work. The powerful inertia built up during our juggernaut years of runaway success must be countered by an equally powerful will to reinvent ourselves again. The looming election will be the real bell weather.
The only thing this lot will change are the light bulbs. And then only after a pretty damning public exposure.
Hahahahahah – brilliant comment!
Let’s not end like the Caymans! Here is an interesting read and the similarities are quite astonishing. http://www.highbrowmagazine.com/story-rise-and-fall-cayman-islands
@ oops – I think we are already as bad
This is a great rich get richer and poor get poorer plan.
Trickle down economic. When are we going to wake up and realize that model does not work anymore, unless we stimulate from the bottom up nothing will succeed, in this country.
The bottom will destroy it. ie. drugs, shooting, robberies shall I go on.
amen. glad someone can see behind the flash and mirrors and i’m not just talking about his lovely new bldg.
Most of it, I can agree on. I do think we need casinos, but not in town. they should be at the hotels.