SAGE’s Recommendations To Cut Govt. Costs

November 15, 2013

[Updated] Raising the retirement age to 68, reducing the House of Assembly from 36 to 30 seats and Cabinet to a maximum of 8 Ministers and closing all post offices but three and reducing staff are some of the cost reduction measures contained in the SAGE Commission report which was tabled this morning [Nov 15].

The Commission said expense reductions in the first year should equal $65 million; in the second year $80 million; in the third year $85 million; and in the fourth year they should equal $90 million.

“The Commission’s recommendation for a four-year time frame is based on the fact that almost every dollar eliminated from the budget will mean a corresponding decrease in Bermuda’s economy of $1.28. This is called the multiplier effect,” the report said.

cut costs reduce expenses (2)

SAGE said each Department must look at reducing general operating expenses beginning with non-Bermuda dollar expenses such as foreign consultants and other overseas expenditures, as well as look at reducing funding of grants and contributions.

On staff reductions, SAGE said: “Ultimately, staff downsizing would not necessarily be a reflection of the performance or quality of Government workers: it would be a sad and necessary requirement to contain a Government cost structure that is unsustainable and out of control.

“For the past several years, Bermuda has had to borrow money to pay public sector wages. Unless significant reductions are achieved in non-personnel cost expenses, Government cannot afford its personnel costs and pension burden.”

The full report is 140 pages, some of the highlights are below and the full report is here [PDF]

Reducing Size of Cabinet/House of Assembly

  • Cost of Bermuda Legislature reduced by 15%, approx. $911,000 of $6,079,000.
  • House of Assembly be reduced from 36 to 30 seats.
  • Size of the Cabinet be reduced to a maximum of 8 Ministers, including the Premier.
  • It is anticipated that these reductions represent $730,000 savings in salary and benefits.
  • The Premier can accomplish the reduction in the size of the Cabinet now
  • Until both of these recommendations are implemented, we recommend that the Ministers and Members of the Legislature take an immediate reduction in salary equal to the reduction in salary and wages of the Civil and Public Service

Possible Privatization

  • In alphabetical order, we recommend that the Authority consider part or all of the following services for privatization or for placement in a quango: Airport Operations, Civil Aviation, Highways Management, Maritime Administration, Public Lands & Buildings, Waste Management, Water & Sewage Management
  • Government remain an equity investor in all privatisation ventures to both maintain some influence over future service delivery and pricing and encourage the hiring and training of Bermudian staff.
  • The report called Highways, Ministry of Works & Engineering a “prime candidate for privatisation” saying they employ 12% of the Ministry’s total staff of 571 and expenses are 10% of the Ministry’s operating costs which total $61.4 million.
  • The Department consistently fails to meet annual objectives for resurfacing Bermuda’s roads. Union agreements present obstacles to scheduling efficiency and productivity. For example, while road workers are scheduled to commence work at 7:30 am, road repairs usually can’t start until after 9:00 am to allow for rush hour traffic.

Pensions

  • The stark reality is that promises made regarding pensions will have to be broken
  • A strategy should be implemented immediately for a graduated increase in the retirement age to 68
  • If continued in their current form, due to the low funding levels, all of the schemes will run out of funds in the next 35 years.

Sick Days

  • Patterns in sick day leave in Government that require urgent review
  • High proportion of Government workers [33%] who take an unusually high level of sick leave.
  • Group is responsible for the bulk of the almost 42,000 sick days taken in 2012/2013.
  • Sick days cost Government over $10 million
  • Data suggest a large abuse of sick leave, combined with a poor monitoring of sick leave by senior managers

MAWI

  • Duplicated services are provided at the King Edward VII Memorial Hospital (KEMH) and at MAWI because the two facilities are operated on two separate sites. Substantial savings would be generated from operating both facilities on one site.

Post Office

  • The Post Office is at least 80% overstaffed [over 100 too many staff]
  • Last decade saw cumulative losses of $56 million [compared to $7m loss and $1m profit in prior decades].
  • It is clear that the Post Office’s current business model is no longer sustainable
  • If no action is taken, losses of approximately $134 million are projected over the next decade.
  • Close all post offices, but leave 3: one in Hamilton, one in the East and one in the West.
  • The buildings in which they are located should be sold, rented or repurposed.
  • Cease mail delivery to houses and businesses; construct cluster boxes in each parish.
  • Reduce staff to the level needed to service 3 post offices and deliver mail to the cluster boxes.

Marine & Ports

  • Maintenance of the ferry service, tendering operations for cruise ships, and government-operated ship slips and cradles be outsourced.

TCD

  • Eliminate testing of vehicles by TCD
  • Outsource to licensed garages who would charge customers & pay Government a fee to be licensed to do so.
  • Government would still receive the vehicle licensing fees, but the garages would compete for the testing revenues.
  • This arrangement delivers more convenience to the consumer
  • Will save the government $2.3 million on the emissions contract.

Prisons

  • Average cost per inmate per year is approx. $80,000; the average daily inmate population is 283.
  • We also see merit in employing non-violent prisoners wherever possible to reduce expense, provide them with earning and learning opportunities, and prepare them for a return to civilian life
  • As an alternative to continued confinement, we recommend the use of electronic tagging of non-violent offenders (such as for traffic offences and other minor offences where a fine is insufficient) and also for offenders nearing the end of the periods of imprisonment where such restriction of liberty and the ability to move freely is an appropriate punishment. This would have the effect of reducing the prison population and the high costs associated with each prisoner.
  • Recommend that a secure van for transporting prisoners be purchased
  • Support greater use of the video link between Westgate and the courts to reduce transport activity.

Personnel Reduction

  • Terminate poor performers first.
  • If more savings are required: Require personnel who are past the retirement age to retire.
  • If more savings are required: Incentivise personnel who are eligible to retire (and can access their pensions) to retire.
  • If more savings are required: Reduce salary and wages of all personnel to achieve the required savings. We recommend that reductions are not applied across the board but are levied, least on the lower paid and more on higher paid, in an amount sufficient to reach the required amount of savings.

Update 12.03pm: The statement made in the House of Assembly by the Minister of Finance Bob Richards regarding the tabling of the SAGE Report is below.

Mr. Speaker, in accordance with section 14(7) of the SAGE Commission Act 2013, I am pleased to table the SAGE Final Report.

Honourable Members are aware that the “Spending and Government Efficiency Commission” (the “SAGE Commission”) was established via Clause 3 of the SAGE Commission Act 2013.

As you may recall, the Commission’s primary objective was to advise Government on the most efficient and cost-effective government organizational structure in order to improve delivery of services, introduce cost saving measures and greater transparency and accountability.

The Commission was charged with conducting this work and delivering their recommendations to the Minister of Finance within a six-month period.

Mr. Speaker, Members are aware that the SAGE has completed their final report which was submitted to the Acting Minister of Finance on October 31st, 2013.

Mr. Speaker, the SAGE Final Report follows an interim one which was submitted to me on July 23. Both documents are the product of thousands of hours of review, analysis and discussion. Much of this time was on a volunteer basis for which I am grateful. The process has been both collaborative and productive, and a broad, diverse cross-section of the community has been involved in this important initiative.

I would like to formally congratulate and thank the Chairman, Mr. Brian Duperreault, and the rest of the SAGE Commission; indeed all committee chairs, committee members and contributors, for the excellent quality of this report, a report which stands as testament to what our invisible resource, i.e. intellectual capital, can accomplish when it is generally accepted that something has to be done.

Also the Commission is to be commended on the open and transparent manner in which it went about its business. The keen interest that the public has taken in this process speaks to the level of concern among Bermudians about how their Government is run.

Mr. Speaker, the Government will now conduct a full review of the SAGE Final Report with the intent of implementing those recommendations which will make Government more efficient and cost-effective with the ultimate aim to reduce overall Government expenditure. It should also be noted that I plan to make a “Take Note Motion” on the SAGE Report to allow for a full debate of the SAGE Report in this Honourable House.

Thank you, Mr. Speaker

Share via email

Read More About

Category: All, News, Politics

Comments (100)

Trackback URL | Comments RSS Feed

  1. Say Say Say says:

    The Post Office is at least 80% over staffed. Wow, the secret is out!

  2. Time for Change says:

    Particularly keen on 4th from bottom, which should have been instigated years ago. Too many jobs for life. Even when annual reviews highlight poor performance time after time, all the underperformer has to do is run crying to the union, or send an anonymous letter of complaint to immigration to get rid of the manager. Time for change.

    • Mazumbo says:

      Do you have something personal against the Union?

      • Mike Hind says:

        4th from the bottom:

        “Terminate poor performers first.”

        Are you saying the Union are poor performers?

      • Time for Change says:

        No, I’m saying that they defend their members at all costs, even when they are useless.

        • turtle says:

          totally agreed with Time to Change!

        • yesman says:

          You are right about that one!

        • Mazumbo says:

          Kinda sounds like lawyers! LMAO

        • Mike Hind says:

          That question was to the racist, “Mazumbo” – a name he should not be allowed to have, as the REAL Mazumbo would be disgusted with the filth that he posts.

          • Mazumbo says:

            The “whites were nasty to say the least”, he stated. They felt secure in their ability to control all facets of the island’s economic , political and social affairs through merciless intimidation, victimization and abuse of the political and legal process. Their most potent weapon was the limited ,land-based franchise that for generations they brazenly manipulated and rigged in devious ways during parochial and parliamentary elections.
            Dr. E.F. Gordon (the REAL MAZUMBO)
            The History Of The Bermuda Industrial Union(page 16 third paragraph)

            • Mike Hind says:

              Thanks for the proof. NOTHING like the nasty filth you’re saying.

              The difference is that he was pointing out facts and educating people. What you’re doing is twisting these facts to use in hate-filled political propaganda.
              Nowhere does he blame people for the actions of their forefathers, nor does he blame people’s actions on their race.
              He understood that “white people do bad things” doesn’t mean “white people are bad”.
              You don’t.

            • Mazumbo says:

              What he would be disgusted with is the same Oligarchy Political Party he spent part of his life fighting against his very own …………I don’t think you want to go there!!!!!!!!!!

  3. swing voter says:

    but listening to Foggo ask supplementary questions on UCC is depressing me! jus let it go Lovie, yur flogging a dead horse, similar to Browns decision to close the indigent clinic

    • watching says:

      If Premier Cannonier had reduced the size of Cabinet rather than INCREASING it to a number larger than the PLP cabinet, then the government would have either saved or had access to more funds in this fiscal year. Reducing cabinet was a campaign pledge of the OBA, and a SAGE commission report was not necessary to take that initial step.

    • Mazumbo says:

      The indigent clinic cost 4times more to operate and they want to open that back up ???????????????

  4. Navin R. Johnson says:

    80% over staffed and still lousy service……….

  5. swing voter says:

    Public Servants aka Permanent Secretaries are ‘earning’ private sector salaries…

  6. CBA says:

    It’s sad for anyone to lose a job, but something needs to be done about the post office losing so much money. The problem is, if jobs are lost then personal bills can’t be paid. But if jobs are kept, Government can’t pay its bills. Either way, things aren’t looking good for Bermuda.

    Maybe those Beyonce concerts, millions spent on tourism marketing campaigns that gave us very little, trips to India, etc etc were a bad idea all along…

    • Bermy says:

      I.e. The Post Office

      In the past couple of years the UK Post office has been shutting branches across the country, as rent etc was too costly, instead of towns and villages going without a post office, they have instead moved inside other shops and supermarkets and shared the cost

      Why can’t we do that here? Why don’t we shut the small post offices down, leave the big 3, I.e. West end, Hamilton, east end, and then have small counters within shops like Belvins or Lindos, Supermart etc where you can buy stamps and send parcels?

  7. sonso says:

    the sick days makes me laugh! 33% of all workers take an unusually high level of sick days! W&E anyone?!?

    • Inside Track says:

      What private business could tolerate such high sick leave? Uncertified sick leave for ALL Government employees should be reduced to less than 5 or 3 days per calendar year, the remainder to be certified. Doctors need to evaluate better too while an incentive for a flawless record can be considered.

  8. Suzie Quattro says:

    It’s like reading sense for the first time.

  9. Cow Polly says:

    A good start

  10. Mazumbo says:

    Union Busters! BE WATCHFUL ALWAYS!!!!!!!!

    • Mike Hind says:

      *sigh*

      Here we go again.

      • Mazumbo says:

        You and your historical lineage had been probably very limited or non- existed in the labor movement in Bermuda so I guess you wouldn’t understand. *SIGH* LMAO

        • Mike Hind says:

          Racist statement. You are disgusting and should be ashamed of yourself.

          • Mazumbo says:

            What’s racist is your conscious, I haven’t mentioned nothing about black or white just historical assumption which sounds like it may be a fact and ya getting bent all out of shape! SMH

            • Mike Hind says:

              No. What’s racist is you and your dishonest and cowardly backpedaling on the things you’ve said.

              And yes. I DO get bent out of shape when I see racist demagogues spreading hate and lies.

  11. Malachi says:

    Bullet Point 2 under the heading Personnel Reduction reads:

    “If more savings are required: Require personnel who are past the retirement age to retire”.

    Bullet Point 2 under the heading Pensions reads:

    “A strategy should be implemented immediately for a graduated increase in the retirement age to 68″

    Given that it is highly likely that “more savings are required” these statements appear contradictory. (or is my comprehension faulty?)

    • sonso says:

      the latter is correct, and your comprehension is faulty. notice how personnel reductions come after penisons ? so raise the retirement age to 68, and then if anyone is over 68, mandatory retirement.

    • Mike Hind says:

      As far as I see it:

      Raise the age to 68.

      If more savings are needed later, make it a requirement for them to retire at 68.

      • frank says:

        if the age is raised to 68 the people who are close to 65 will they now have to wait untill they are 68 just a thought

        • Mike Hind says:

          I’m sure there will be concessions made.

          Just a thought.

    • terry says:

      Just another way for Government to save todays money re pensions.

  12. Sisu says:

    No mention of the regiment anywhere… Interesting. It’s a waste of $7,000,000 each year. But I guess that’s par for the course when you have regiment guys running the SAGE show :(

    • Mike Hind says:

      Huh? Who are you saying is “running the SAGE show”?

      • Sisu says:

        A former ADC…
        I think 99% of Bermudians would agree the regiment budget is a waste. Why didn’t SAGE say the same?

        • Mike Hind says:

          So… Not “guys”? Just a guy?

          I don’t disagree with you that perhaps it should have been mentioned, but surely the reason isn’t because of some conspiracy of “regiment guys running the SAGE show”. As far as I know, there are a BUNCH of people on SAGE, and most of them aren’t “regiment guys”.

          And I’m curious where you got your 99% number…

          • BigMike says:

            Sisu was correct. Of those ‘in charge’ of the SAGE Commision there were two with very strong ties to the regiment. How cutting the regiment budget was overlooked is mind-boggling. It should have been addressed. Why wasn’t it?

        • frank says:

          amen

    • standby says:

      You’ll probably need the regiment in full riot gear if gov actually has the testicular fortitute to make the recommended cuts.

      The regiment is the island’s insurance policy which is why its not going to be done away with. They may get rid of conscription but not until they know the regiment can sustain itself.

  13. Sara says:

    I hope the OBA just get this over and done with and actually do these recommendations instead of just wasting money on a paper and not implementing the recommendations like we saw of the last administration.

  14. Ricardo Cardoso says:

    Over 20 sick days on average per government employee. That involves being “sick” for a month out of each year… are you nuts!! That is clearly unsustainable. I barely use up half of my 7 allotted sick days per year.

    @Sonso singled out W&E, but if you look at the table included in the report Home Affairs is up near 30 days on average!!

  15. Triangle Drifter says:

    My my my, the chickens have come home to roost & there are hundreds of them. Money does not fall from the sky, contrary to what those who voted for the PLP believed time after time.

    If you voted PLP & your job is now at risk, don’t blame the OBA, blame yourself. You put an inept bunch of people in power time after time. If you got that job since 1998, the party is over. Trouble is, some long serving people will lose jobs too.

    Those who are hard working, don’t abuse sick leave days, can make time & have a good attitude towards work need not fear privatization. You will get the new jobs that privatization will bring. The fat that has been barely putting in time will be getting a reality check. Taxpayers don’t owe them a paycheck.

    Y’all knew this was coming. Let the whining begin.

    • Joonya says:

      So true Drifter. The thing that gets my blood boiling is the sick days.
      How can management continously allow exorbitant sick days, and then signoff on overtime that same person draws in order to make up for the work which was being missed when he/she was layin off?! Really p*sses me off when I here situations like that. Then their lazy #sses have the b*lls to complain when they get fired. PATHETIC!!

  16. Dee says:

    14 weeks sick leave entitlement after 16 years employment for a BIU Member!! I have worked for my current employer for 24 years and I doubt that I have had any more than 7 days sick leave in any one of those 24 years!!

  17. Realist. says:

    Thanks PLP,for taking care of yourselves as the rest of us will be made to struggle!

  18. $80,000 for a prisoner! WOW! How is a prisoner worth more then the average hard working Bermudian?

    • Triangle Drifter says:

      Frightening. Over $1500 per week. Over $6000 a month. They are lining up to get in. No work. The best health care. 3 meals a day. Shucks Bye, what could be better? Where is that sheriff from Arizona when you need him?

      • Real Deal says:

        If they follow this garbage there is going to be alot more them 300 in the prison.

        • Toodle-oo says:

          I don’t believe that there has been any corresponding increase in the ‘regular’ admissions at Westgate with the already considerable number of people in the private sector who have either lost their job , had hours cut or had to take a pay decrease.

          These are the people who have already made the sacrifice.

          What do you perceive is the difference between their behavior and the government workers who will now have to make their shared sacrifice ?

    • Media says:

      Because they have to pay prison officers high bermuda salaries and benefits to look after the prisoners.

  19. Malachi says:

    Seems clear to me – Government jobs make people sick!

    • Family Man says:

      LOL – we should offer them early retirement to improve their health!

  20. Victor says:

    Duperreault for Premier!

    • Impressive says:

      certainly smarter than the current character in that role

  21. shut them down says:

    There was a time when the people who did not care for the average person kept it to themselves or between people of like minds.

    I am glad that they can now be blog supermen and say what they have always felt.

    As people lose their jobs I hope they find your doors and show the same compassion.

    • Triangle Drifter says:

      Oh boo hoo! The productive civil servants should have no fear of being out of work. They are the ones who will get the jobs in a much more efficient private enviroment.

      The seat warmers, the people bovine dropping their way to a paycheck every month are the ones who will need a serious attitude change if they expect to retain a job. The civil service has been the dumping ground for the otherwise unemployable for too long.

      Look at the post office. Over 100 people overstaffed! Are you kidding? Go past any W&E road crew. How many are working? Overcrewed ferrys. See how tourboats are crewed with fewer people who have much more to do than open a gate & maybe tie a line.

    • Victor says:

      The issue is about productivity. On the present course, there will eventually be no national wealth as it will all be consumed by Government borrowing to pay civil service salaries so that this Mandarin Class can keep all their perks at the expense of the private sector, the Wealth Creating Class. On the other hand, if all that money was invested in new business, we would in short order be out of this downward spiral. Cannonier and fiends, Stay The Course! My experience from the Thatcher/Reagan era is that when it turns the corner, it happens very quickly.

      • Victor says:

        Oops, hope it is not subliminal, please read Friends not Fiends above…

  22. Alvin Williams says:

    I have said it many times that the Sage Commission is nothing more than a Trojan Horse for the policies of the OBA government.
    Now that the OBA Trojan Horse is now in the court yard now begins the destruction of Bermudian workers and their families; But I maintain that the resistance of Bermuda’s workers in this effort to force them to bear the full blunt of this so-called shared sacrifice will make the workers labour’s struggle of 1981 seem like a school yard fight between children.

  23. Ex PLP voter says:

    I will never vote PLP again.

  24. Come On Man says:

    Some of these recomendations are rediculous.And idiodic at best.

    • Come On Man says:

      *idiotic

    • Mike Hind says:

      Such as?

      • Victor says:

        Some of the Post Office ones are extreme Mike. They may not have considered how many older contracts require formal communications by post. Post Offices are a bit like railways elsewhere, money losers that help create a lot of wealth elsewhere in the economy. Same could be said for Public Transportation. I’m guessing the report was deliberately made extreme so that something more moderate can be presented as a compromise.

        One aspect that surprises me is that there were no dissenting voices on the committee? In particular, I am surprised that Dame Jennifer has not suggested more palatable alternatives, some ideas to help the transition be softer.

        • Sandy Bottom says:

          Victor, Post Offices do almost nothing. They don’t help the economy to an extent that justifies having it overstaffed by 80 people. People use email and couriers these days to communicate. The day of the letter as a principal means of communication is pretty much over.

          The Post Office partly did this to themselves. The silly rules about where your letter box must be. Sending back thousands of letters for petty reasons. Failure to deliver when it’s raining. So we found other ways to do it. We all got Mailboxes and Zipx accounts and the internet, and we now use the PO 5% of the time, rather than 100% of the time 20 years ago.

          • aceboy says:

            Those silly rules made this island look like a banana republic to all the business people that had sent mail with a slight error on it. I was asked to explain “what the hell is going on down there?” a number of times when important documents were returned. We instituted a policy of ONLY sending documents by courier and told clients to do the same, simply because our postal service showed itself to be unreliable.

            These facts are lost on Mr. Williams. He deserves a job for life and to be paid for NOT delivering mail because….(I’ll let him finish that)

        • Mike Hind says:

          What alternatives would be more palatable?
          The post office isn,t going anywhere, so all the concerns you are raising aren’t valid. Contracts that need to be done by post will still be able to do so.

  25. JUNK YARD DOG says:

    You may think that Governments owe a pile of money.

    What about the Peoples debt.

    In some countries people live well beyond pay check to pay check.

    Why do business go bust ? Is it mismanagement of money?

    Makes you wonder how much the private sector owes in mortgages ;loans and credit card debt.

    Balance the books !

  26. Funny says:

    The pension piece is the scariest to me. They are seriously underfunded while the contributory fund hasn’t been audited since 2005!

    Looks like my generation won’t be seeing a dime of our contributions when we retire.

    Someone’s head needs to roll.

  27. SMH says:

    The time has come to save Bermuda for all and not a select few. Education will be key in helping those who don’t understand economics. OBA must do a serious simplified campaign to get the dismal facts nailed in the heads of those who stay in denial.

  28. Scotty says:

    Why has Bermuda College never been looked at? This is a college which has become a bureaucracy. Administratively they are highly over staffed. Just do a comparison with any private school. The financial award from government is around $20 million per annum, why did SAGE not look at the taxpayers ROI for this mismanaged facility?

  29. Ruthless says:

    I know police officers who have been on sick leave and stress leave for 5 years straight with full pay! How can we be paying for this!

  30. bermuda boy says:

    How much do we pay in benefits and pensions to ex premiers?
    Do any of them really need 2 pensions?

    • Werner says:

      A few years of service – on the gravy train for life!!
      Give me a break.

  31. outkasted says:

    OMG the SAGE report is RIFE with incorrect so called facts! Who the hell proof read this documebnt. The damage has been dine and everyone has made up their minds.

    • Mike Hind says:

      Such as…?

      • outkasted says:

        Airport Operations. Gross miscalculations. However, I will wait for the official report for the corrections to be presented.

        • Mike Hind says:

          And you can show that they miscalculated?

          I’d love to see that.

  32. outkasted says:

    This increased competition, monetizing of everything but the kitchen sink will lead to our downfall. Increased competition will cause scarcity. Those that ARE GREEDY SHOULD KNOW. The private sector no longer has the foreign investment it once had thus they are looking to government and hungry for the chance to get the outsourcing work of those Government jobs once held by our so called “FAT” civil service.I see you chomping at the bit to get at those ‘juicy’ government contracts while at the same time bringing in foreign workers for cheaper labour to get a higher profit. Forget about the social impact. Well you will reap what you sow if you do not get this right the first time around. Government does need a shake up and restructuring but its doing it now at the worst time. Austerity to rule de land buh’.