Video: OBA’s Review Of Bermuda’s Finances

It has been customary at this time for us to review the Bermuda economy for the first half of the year.

The issue of jobs is foremost on most people’s minds:
$ The loss of one’s job,
$ Finding a new job,
$ Creating new jobs,
$ The risk of losing the job you already have,
$ Or the risk of losing that second job that enabled you to make ends meet or pay for Johnny or Janey’s college tuition; something some of my constituents have told me about.

These are the top issues of our time here in Bermuda; issues that scream for real solutions.

The role of government is not to create jobs by hiring more people, because the money to pay those people ultimately comes from taxes. In Bermuda, wealth, growth and prosperity cannot be created that way.

The proper role of government is to create an environment that encourages people in the private sector to invest capital in Bermuda, and in doing so, create more jobs and increased prosperity for all.

It is that increased prosperity that will provide the government with more revenues to fulfill its mandated functions plus pay down the debt.

Inconsistent policies by government have caused an erosion of trust. Businesses are reluctant to invest their capital in Bermuda under such circumstances and without that investment we cannot grow jobs.

So let us not forget when we analyse the various sectors of the Bermuda economy we do so, not just for the sake of analysis, but to seek and find answers as to how we can create more jobs in Bermuda and how Bermudians can look to the future with confidence and security.

Last week the Minister of Finance declared that the recovery had begun. It is not responsible for a finance minister to make such a declaration that is not backed up with hard data.

So today we will look at some of that hard data regarding how Bermuda and the various economic sectors are performing and how this performance has to change if we are to bring back job opportunities for Bermudians. We will also touch on a few points on what we would do to help make that happen.

G3- Shows international company formation, with the trend shown by the downward sloping black arrow. This is a negative trend that needs to be reversed.

OBA sets as one of its objectives to decisively change this trend in the direction shown by the rising red arrow. Bermuda needs a change in government to restore the confidence and trust international business used to have in the government.

That lack of trust breeds uncertainty which is the biggest enemy of business formation and, by extension, job creation.

G4- Shows the long term trend in tourist arrivals by air. This graph shows second quarter air arrivals for the last 31 years. This is a very difficult thing to reverse, because it is so well entrenched.
That long term decline corresponds with the steady contraction of jobs for Bermudians in tourism.

This trend will not be turned around by half measures, like the new Tourism Board, which is not a Tourism Authority, or the latest advertising campaign.

It will only be corrected by the OBA approach, which requires strategic and structural action by government, like the formation of an independent Tourism Authority which will employ professionals who will be held accountable for their performance; along with an approach that is centered on the requirements of investors of new capital in tourism.

Hotels in Bermuda must make a profit if the present ones are to survive and new ones are to be built. Jobs for Bermudians in tourism depend on hotels being profitable. The OBA approach to the tourism problem is a real world business approach.

G5- Shows Retail Sales. The downward trend, shown by the black arrow, needs to be changed decisively in the direction of the red arrow. We will institute policies and plans to change the trajectory of retail sales in Bermuda.

It’s hard to grow retail sales with fewer and fewer customers. We will increase the number of customers with our policies to expand international business, increase tourism and increase the number of Bermudians that have disposable income because they are working.

Increasing retail sales will support more jobs for Bermudians

G6- Shows the Value of New Construction projects started. The black arrow shows a sharp drop in construction. The OBA will provide a plan to decisively change the negative trajectory of this industry. Such a trajectory change will provide new jobs and business opportunities for many Bermudians.

Many people who formerly worked in hotels turned to construction as tourism declined. The double whammy of weak tourism and weak construction has had a devastating impact on jobs.

Add to that double whammy, softness in international business, and you get the unemployment we have in Bermuda today. OBA redevelopment plans for all of Hamilton & St. Georges will address this issue.

G7- Shows the performance and trajectory of the Government’s Current Account Balance. i.e. whether government has sufficient revenues to pay its day to day expenses: like a household’s ability to pay its electricity, food, rent and other monthly expenses.

This graph shows that up till 2007 government was able to pay its day to day expenses. However after that there has been a yearly deficit which has deteriorated dramatically thereafter. This trajectory is unsustainable.

It is critical that this deficit trend is reversed. OBA’s objective is to change this trajectory to where government is able to pay its current expenses, just like we would expect any household to do.
This change is highly dependent upon the other changes that we have described earlier.

Reduction of wasteful government spending is the one key factor that we have not mentioned so far. OBA will fulfill its promise to cut wasteful government spending.

I have heard some critics ask, “Well, what would you cut?”; as though that was some sort of trick question . Well one government statistic recently jumped out at me as an indicator of amount of fat in government: In the years, between 2007-2011, the number of GP cars on the road has soared from 91 to 247.

This is during a time the Minister of Finance was supposed to be cutting back!! This tells me that there’s a whole lot of wastefulness throughout the public sector available to be cut by a new OBA government.

However, I have said it before and I’ll say it again, an OBA government will not lay off civil servants. The fact is we will ensure the sustainability of government employees’ jobs by cutting wasteful sending.

G8- Shows the trend in government debt. This is well documented, spiraling into the stratosphere. This trajectory is also clearly unsustainable, currently costing Bermudians $234,000 per day in interest. It is crucial to decisively alter this trend in the direction of the red arrow.

It is reckless and desperate for the government to try to justify their bad record on public debt by claiming this represents investments in infrastructure. One look at our crumbling roads, rusting ferries and broken buses will confirm this claim as nonsense.

The reduction of public debt is an explicit objective of an OBA government. The achievement of this objective is highly dependent upon all the other changes that we have described earlier.

John Woolridge’s wonderful song, “Proud to be Bermudian” has come to the fore at a crucial time in our history. We Bermudians have never in our lifetimes faced economic challenges of this magnitude. During canvassing many of my colleagues and I have encountered widespread hopelessness and despondency among our people.

Where is the Bermuda that was the mouse that roared? Where is that national optimism and pride? Where is that confidence that enabled us to be players on a world stage in spite of being just a dot on the map?

Well, it’s still here with all of us, just beneath the surface.

In the history of human events, action is always preceded by attitude.

We at the OBA intend to change our national attitude.

So we say, “Take heart, Bermuda, change is coming.”

As leaders of the country, it is government’s responsibility to set national objectives and then make plans to achieve those objectives.

As the future government of Bermuda, today we will talk about some of those objectives relating to our economy.

First, let us do a brief review. The information in the two graphs I will be referring to was taken from government’s own published prospectus for the latest bond issue, where government borrowed $472 million dollars from capital markets.

The first graph shows Bermuda’s GDP which is a measurement of the country’s economic activity, or in other words, it shows how well we are doing ecomomically. As you can see Bermuda’s GDP growth of minus 2% was the worst when compared to the other islands in the graph.

The second graph shows Bermuda’s 2011 GDP when compared to countries who are our major trading partners. As you can see the only country with a worse GDP than Bermuda is the UK. All other countries shown had positive GDP growth.

Keep in mind, these aren’t my numbers, these figures came straight from the Bermuda Ministry of Finance.

In a recent address, the Prime Minister of Antigua and Barbuda stated that all of Bermuda’s economic woes are solely the result of the global recession. However, we have noted that in 2011, his country’s GDP actually grew by 2% as opposed to Bermuda’s GDP which shrank by 2%.

The truth is this. Government’s own data confirms the OBA’s long stated position that there are powerful factors stifling the growth of Bermuda’s economy and that these factors have a “Made in Bermuda” label firmly stamped on them.

This current Government is not going to fix these home grown factors, that are holding Bermuda’s economy back, if they fail to first acknowledge that they even exist! The world outside of our shores is not going to bail Bermuda out. It will be up to us to fix this situation and get our economy right on track.

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