Govt: “Avalanche Of Misinformation” On Airport

August 26, 2015

The debate over the new airport terminal building project continues, with the government saying that the “public should be aware of some basic facts” amidst an “avalanche of misinformation.”

The airport deal was announced in late 2014, and has been the subject of debate since that time.

In a statement today, a government spokesperson said, “Amidst an avalanche of misinformation being provided to the media by uninformed, and in some cases, misguided sources, the public should be aware of some basic facts.

“Any continued claim that ‘the Bermuda Government is giving away $620 million in profit’ on the airport redevelopment is false. Although it is being repeated often, it demonstrates a lack of understanding of the nature of finance.

“No one is giving away anything. Bermuda is buying a new $250-million terminal.

“Fees paid by users of the airport will go toward paying for the construction, financing, operation and maintenance of a new terminal. Bermudians would be familiar with such arrangements used in other countries, such as those levied as bridge or highway tolls.

“Much has been made about this projected new revenue of $17.7 million from the increase in the Departure Tax and the Airport Improvement Fee [AIF].

“Pundits have simply multiplied that figure by 35 years and come up with about $620 million. However, the concession period is for 30, not 35 years,” the spokesperson added.

“The new AIF and increased Departure Tax were recently levied specifically as increased user fees to help finance the new airport. Otherwise this funding would not have been raised.

“Therefore to say that this revenue is being diverted from their normal destination, i.e. the Treasury, to the airport project, is false. These funds would not have been raised at all if there were no airport project.

“The government’s primary objectives at present are to spur new jobs throughout the economy and strictly control government spending with an ultimate objective of starting to reduce government debt.

“Any major project must meet these overriding public policy objectives. That rules out debt-financed public sector spending to create jobs, such as borrowing the money for this project.

“A model of using a 100% owned government airport authority as the borrower won’t work either. Lenders would require the guarantee of the government and with the consolidation of government’s financials now in train, such a guarantee would be viewed as public debt.

“If the tender process was the only way to go, there would be no possibility of a new airport terminal for Bermuda.

“The CCC/Aecon model the government has chosen is an example of meeting the twin objectives of job creation and spending/debt control,” the spokesperson concluded.

In response, Shadow Finance Minister David Burt, who held a press conference about the matter earlier today, said, “The Minister of Finance has once again mislead the public. The Minister himself has told the public that the OBA’s privatisation deal with Aecon will be for 35 years.”

“Given that the Minister has now corrected his past statements, maybe the Minister will now tell Bermudians why the OBA still refuse to put the project out to tender despite the recommendations raised in the independent Deloitte Report.

We also put the following questions to the Minister:

  • 1] How much money has the OBA committed to giving Aecon in this latest agreement? We know that this deal contains penalty clauses; the taxpayer deserves to know how much they are spending as we understand the figure is significant.
  • 2] Logic would dictate that we should examine the alternatives before signing a contract with Aecon; therefore why has the OBA committed Bermuda to spending money with Aecon before examining the alternatives as has been recommended by the Deloitte Report?
  • 3] When does the OBA Government intend on fulfilling the terms of the Letter of Entrustment that they agreed to, as that letter requires the OBA to “publish a written and evidence-based assurance that the required measures have been taken”?
  • 4] Did the OBA receive permission from the Accountant General to sign this 2nd agreement with CCC/Aecon? The first permission contained conditions, were these conditions met?

“Bermuda’s largest capital project should meet the highest standards of transparency and good governance. To date this project has earned a failing grade on those 2 measures,” added Mr Burt.

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  1. kangoocar says:

    Thank you OBA for once AGAIN correcting the plp!!! The plp constant verbal diarrhea and miss information has now become NUASEATING !!! The only reason the plp is against this airport project is simply because there is nothing in it for them???

    • TRUTH says:

      Unfortunately, the OBA has not corrected The PLP. The Deloittie Report highlights some serious concerns, just as Burchall did in his article. I think that based on the data provided in the reports, Government needs to do a re-think on this Capital project. This Airport Deal will not be good for Bermuda at this particular time.

      Fix the Airport up, make it workable until there is a time when our debt levels look more manageable.

      • kangoocar says:

        Truth, I hear what you are saying and I have read both of Burchall and Deloitte reports!the problem with your last sentence is, we have NO money thanks to the plp to ” fix up ” our airport? This plan of Min Richards actually injects a huge amount of FORIEGN money and also puts a lot of Nermudians back to work with the construction and after ongoing full time employment with no Capitol out lay from us!!! Our airport is a total disgrace and I know this because I use it somewhere between 10 and 12 times a year. We are actually killing two birds with one stone on this one?? We put many unemployed Bermudians back to work and we get a new airport for no cash outlay!!! I am one that lives very much within my means ( no debt ) and believe we should all pay as we go, ( as I do ) but thanks to the plp we have a huge problem with bermudians not being able to find jobs!!! We now have a way to fix that problem and though it all our debt situation will not increase!!! I only scratch my head at why the Canadians are willing to do this?? The net profit at the airport is small???

        • Who the F!@# you calling a Nermudian you misfit !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
          And there is no GUARANTEE that MANY Bermudians will be hired and what’s the sense of building a building for me and then when you give it to me the value of it is DEPRECIATED and we’ll have to spend Millions to fix it.
          That’s like me buying a car for you, I drive it and when its used up its life span I give it to you and you have the headache’s of trying to get it TCD tested.
          FOOL

        • Vote for Me says:

          @ Kangoocar

          You have shown us why your posts are not accurate…
          ” I only scratch my head at why the Canadians are willing to do this?? The net profit at the airport is small???”

          CCC will receive an estimate net $620m over a 30 year period. That is the simple answer to your question.

          Whether CCC use their own money or borrow the money, there will be an expected return on the investment. That is the underlying motivation for their interest in the contract.

          CCC are not altruistic!

          They see an opportunity and are hoping to capitalize it. If my memory is correct, they had the same plan for Cayman and were refused by the UK government.

          I also want to emphasize that the oft repeated statement that the redevelopment is ‘not costing Bermuda’ is fundamentally not true.. there is no free lunch!!

          Bermuda is effectively giving up gross revenue approaching $2bn over the next 30 years ($620m net), to be directed by CCC. This has to be concerning for even die hard OBA posters when you realize that the amount is close to the full amount of Bermuda’s existing national debt.

          • kangoocar says:

            You obviously have spent to much time drinking the special plp tea and have been sucked into their nonsense because of it??? The fact is, we need a new airport and the reality is, because of the plp were are totally broke and can in no way finance it on our own!!! Even if we could finance it, how much interest on the loan do you think we would be paying?? If you had had any smarts, you would realize the compound interest would be MORE!!! and let’s not forget another credit downgrade that would be put on us, there raising our debt obligations even more!! There are far to many Bermudians out of work thanks to the plp and this is a way to put them to work therefore INJECTING money into the economy from OUTSIDE sources!!! Therefore reducing your rediculous notion that this is costing us $2 Billion in revenue and $620 million in net revenue!! How thick are you plpers?? Or do you already know this and would rather play political football with all those people lives that are out of work and are having trouble feeding themselves, just for your plp gain??? May I remind you that the mostly uneployed are plp supporters!!! you can’t fix stupid with you lot????

        • Reality says:

          The reality is, the PLP camp out there know that this project is going to benefit the whole country, and and will greatly reduce the chances of the PLP winning an election.

      • serengeti says:

        The Burchall article was based on wild guesses, assumptions, the wrong length of time, it confused revenues with profits, it ignored the real (maintenance for 30 years) cost of doing nothing, and it compared apples to oranges. It was a fluff piece dressed up to look like it was intelligent.

        So what did the PLP do? Checked nothing, just used the numbers in the Burchall piece as though they were ‘facts’.

        The PLP wouldn’t know ‘facts’ if they hit them in the face.

  2. TRUTH says:

    “Deloitte Report” Take time out folks and read the “Deloitte Report”. It merely highlights the expected protocol and procedures that the government should follow in regards to the development of the AIRPORT DEAL. It also spells out the problematic concerns in regards to this Airport Deal and the possible concerns.

    This report removes the political bias on this matter. It does raise some concerns, that all of Bermuda need to be concern about.

    Based upon my review of the Report, I believe at this time, government needs to hold their roll, and stop and reflect on this project once again. I do not think Bermuda should build an airport at this time, nor give it away for 35 years. The large lost of revenue at this time is something Bermuda can not afford at this time.

    Read, Its long report, but worth it. Inform yourself.

    • um um says:

      We need more information on this. Given the difficult times we live in – I agree with Truth on this.

    • Build a Better Bermuda says:

      I read the report too, at it doesn’t say we should stop where we are going, it raises concerns but also mentions what concerns the government is addressing and what concerns they need to address. It was commissioned by the government to do just that, so that they can know what concerns they need to address. It was established by the government to a basis that is above what local requirements are, so that they could create a deal that is elevated above past practices. As for the loss of large revenues… they would be lost in any case to redevelop the airport, and we need a new airport, sooner rather than later.
      Tendering does not guarantee a better deal; Cedarbridge, Berkley, the cruise ship docks, Port Royal Golf Course, the courts building… all tendered, all overrun, all came with issues. The guarantee for the best deal comes with the ‘build-to’ contract, and only once there is an idea of the ‘build-to’ requirements, will we understand just what the expenses are going to be for the running of the airport and the exact economics of of the financial concessions contract. The reason that this particular style of PPP hasn’t been put out to tender revolves around a couple of things, one is that they were the only party to come forward with an option that meets the core requirement of zero public debt. This also feeds into the other reasons, how do you put such an option out for tender when it requires over a year to just create an understanding for them agreement and another year+ beyond that to develop a ‘build-to’ spec to even be bid on. That it would require the input of the competing parties to actually build those frameworks that they would then bid on… how many companies do you know that would invest that much time and money for a project they may not get. It is not the tendering that will determine the value we get, but what they will be expected to build and the government has employed people to ensure their is an independent view of what it is we will get for value. Kind of like how they employed Deloitte to provide them with the gaps that needed to be filled.

  3. Mr. JiF says:

    “Amidst an avalanche of misinformation being provided to the media by uninformed, and in some cases, misguided sources”

    This is only possible because the government, OBA, has not been forth coming with information or painted a complete picture for anyone.

    If the OBA truly wants to do damage control maybe they should look in the mirror and address the root of the problem.

    • The Truth and Nothing but the Truth says:

      The root of the problem is the PLP !

      • That’s the easy way out to justify alleged corruption, notice how the media and investigations were all over Cedar Beams now we have MAJOR allegations and the silence is so obvious.
        Goes to show you all over the world not just in Bermuda that those who are lest suspected or portrayed as trustworthy are the ones that get away.

    • Build a Better Bermuda says:

      NDA’s, the difference is the PLP aren’t in negotiations on this, so they can run on with whatever they want about it, but while the government is engaged in negotiations of this nature, they would be bound under NDA’s to not discuss un matters that are not finalized… standard practice. Can’t take what the PLP as ‘informing the public’, when what they are doing is trying to pass off speculation and any dramatic numbers they can produce as actual facts in the matter… kind of their standard practice too.

  4. Charlly X says:

    As the saying goes ” liar liar pant on fire ” ! If the One Bad Attempt just stuck to the truth maybe they wouldn’t be suffering from 2nd degree burns ! The Truth is an Ofence but not a Sin !

    • How can you tell the Truth when the Truth is not in you, from their inception they LIED.
      Now I know how the Pilgrims pulled it off.

    • Bermystyle says:

      Dont you think the Pretty Lame Party should also try telling the truth? Bunch of whining liars themselves…misinforming Bermudians for political game. It’s all a sham with self interest at heart. Politicians (including the opposition) do not care about Bermudians…they care only for their own political gain at the expense of the average Bermudians. I’m not having it anymore…

  5. just build the damn thing!!!! If any of these brilliant soles are around in 35 years then you can say I Told You So.The plp screwed us out of 800 mil with no problem so get on with it. At least we will have something that works with no Friends or Family interest. Plus it will put some of us back to work. BUILD BUILD BUILD like the P<P SPENT SPENT MIKSS PLACED. Piss off and bet on with it. With global warming we probably won't be around in 35 years anyway. I am sick and tired of the political crap that the PLP spews forth on a daily basis.They screwed us once never again.

  6. Ms. Poli Tician says:

    Shouldn’t we have more guests and carriers before we even consider a new airport? My assessment of the current facility is that it is perfectly adequate in proportion to the number of travelers passing through. I will concede that it is terribly dirty and shabby, but that can be remedied with renovations and a decent janitorial service.

    Government may want to focus on remediating some of its derelict buildings before they embark on this project. The derelict buildings at Dockyard are an eyesore and embarrassment. What must cruise passengers think of us as they exit Dockyard?! And don’t get me started on that embarrassment on Cedar Avenue just after the Tennis Stadium. I sometimes wonder if our Cabinet Ministers, specifically the Minister of Works and Engineering, travel on the same roads as the rest of us? Don’t they notice the dereliction of Government buildings? Noses must be too high up in the clouds. Back to earth please. Do your job, for which you are overpaid, and raze the useless buildings in your inventory before you start erecting new ones. You have shown that you cannot take care of the people’s physical assets – why should we trust you with something new?

  7. Vote for Me says:

    “Any continued claim that ‘the Bermuda Government is giving away $620 million in profit’ on the airport redevelopment is false. Although it is being repeated often, it demonstrates a lack of understanding of the nature of finance.

    “No one is giving away anything. Bermuda is buying a new $250-million terminal.”

    Oh, the irony. I trust the Minister does not believe his own words. Many of us are quite clear on our understanding of finance.

    If anyone truly understands finance, the cost of the airport will really be the initial cost of approximately $250m plus the interest cost over the 30 year concession period. Based on the numbers being bandied around, the total cost of the airport, in purely financial terms is $620m. Therefore all future comments should refer to our new $620m airport!!

    Given Bermuda’s current financial status, Minister Richards should also admit that if we do not spend so much on the airport, there would be more funds to pay down the existing (and growing) debt.

    Final point for the Minister to answer. What is the current estimated profit from all airport related revenues for the year ended March 31, 2015? Whatever the number, it represents funds that are currently going to the Consolidated Fund that will be ‘diverted’ to cover a portion of the new airport costs. He certainly cannot have it both ways.. CCC or any other entity that enters such a contract will be solely motivated to earn a profit.

  8. RileyBKing says:

    Mr Burt is proving the old Chinese phrase that “an idiot can ask more questions than a genius can answer”.

    They make themselves look ridiculous.

  9. Coffee says:

    I say let the deal go through on the condition that any successive government over the next thirty five years have access to the shareholder roster of any company that has any involvement in the building , maintainance or funding of this project . We would have privy to the before , during and after construction shareholder information on demand !

    If there is a hint of malfeasance then , we the Bermudian people will have the right to sue any OBA/UBP friend or family for financial misconduct . Now go ahead and build the airport !

  10. smh says:

    So Bobs telling me a Canadian company is going to build the airport on the terms it runs and operates the terminal for 30 years keeping any money made in that time? Well I might not be a rocket scientist but does he think a company which purpose is to make a profit is going to sign a contract that they feel wouldn’t make them money? As a concerned citizen of Bermuda I believes the PLP n OBAs political methods are outdated. USA legalizing the ganja has made Millions of tax money and also lowered crime rates, but nooooo the Milk man is more worried about his milk selling… Politicians are about themselves simple as that. The sooner ppl in Bermuda realize that, the better!!!

  11. Everett Outerbridge says:

    Assuming we need a new airport, there appears to be at least three ways to achieve it.

    One way is to borrow the $200million and “give away revenue” to the loan providers over a 30 year period, the principal and the interest which will end up costing us about $600million.

    Another way is to not borrow and use the yearly revenue generated from the airport to ‘renovate, repair, rebuild’ the airport over several years be it 5 or 10. But, we don’t have the money. We cannot balance the budget which means any revenue generated from the airport has to be used elsewhere to pay government and service our current debt. We don’t have a dime to purchase anything.

    Third method is the disputable method, the public-private one with CCC and Aecon. This is really a similar setup to the first method of borrowing to get a new airport. In this method, we get a new airport and ‘give away’ airport revenue to CCC over 30 years which appears to be an equal amount of payments (‘give-away revenue of perhaps $600million) as the first method. This method is basically borrowing monies to build a new airport with the exception that the monies are given to the public-private lenders as opposed to the usual loan providers.

    I am of the opinion that we need a new airport as opposed to a renovated one. Think about how it is to visit Bermuda as a handicapped person in a wheel chair and having to be transported off the plane in a fork-lift truck as opposed to deplaning in a normal way i.e. through a covered jet-way. Think of how it must be for a senior to navigate steps to and from a plane in the rain and cold. Additionally, capital projects in Bermuda typically run over budget and could end us costing us a similar amount to building a new one.

  12. Spilt milk says:

    Ok so if true take away 5 years you’ll still get a half billion plus dollars.
    The key is not to panic though. When PLP get back in they’ll use legislation that allows gov. To…… Cancel any contract they enter…. passed by OBA gov… while I think that would make us look bad,it maybe necessary to hold on to what little property Bermudians hold through our gov.

  13. Benu Bird says:

    The PLP is a poison and only exists to poison the minds of the gullible, and sadly it pollutes the ears of the intelligent!

    SPIT OUT THE PLP!

  14. Triangle Drifter says:

    It is quite amazing, maybe not, at the number of people who are not paying attention.

    The question is not whether a new terminal is needed. It is. The PLP was all set to build a new grand terminal years ago, at no less than double the price of what the OBA is estimating, but they found that they had raided the piggy bank too much & there was nothing left so it was dropped.

    Ask anyone who has to work in that terminal if a new one is needed?

    Many people do not understand in the slightest what is involved in designing & building a modern day terminal, never mind the world of financing.

    What part of BROKE do you not understand? The very people spewing the noise over the terminal are the same one who got us into the situation where we have to pay for it this way.

    Yeah, if you want to look at it that way it is like going to a loan shark.

    We NEED the new terminal. What we have is not the best deal but it is the best deal we can get.

    It is pretty darned good considering we are BROKE.

    • LOLOLOLOLOLOLOL says:

      Spoke with several people who have worked at the airport for years and they say we don’t need it. Im just saying cause you said ask anyone who works down there.

    • Y-Gurl says:

      We don’t need a new terminal we Ned people who can maintain stuff at the airport

  15. UmJustSaying says:

    I wonder what the answers to the 4 questions would have been when applied to past projects. LOGIC must be a NEW WORD in politics.

  16. Axelrod says:

    This airport “project” is a scam. This project will result in the Island taking on more liabilities (i.e. debt) for a long period of time exposing us to more risk of debt default down the road. The airport deal is the equivalent of a mortgage on a house, except we are letting someone else borrow the money for us in their name and we PROMISE to pay them back with our airport revenues (assuming that there will be sufficient) A “promise”, a contract to pay, a lien on revenues, is a liability for the pledger!! A liability is the equivalent of DEBT!This deal will hasten Bermuda’s move to Bankruptcy and default. Once it is finalized and the rating agencies see that we have allowed a lien to be placed on revenue that could have been raised to lower our deficit and service our debt(we pretended that we could not raise taxes to lower our debt position, remember Bob’s statement that we cant raise taxes!??)the island will be down graded and our cost of debt financing our weak economy will increase yet again!

    Rating agencies will not be happy! Bermuda on suicide watch!

  17. desmondp says:

    There is no thought behind any of this. We have a lot of construction starting at this moment. Why would d gov not put any gov projects on hold to after 2017 wen there may not be any real projects going on. If the plp didnt have the hospital project going on at the time of the recession it would have been twice amount people un-employed so that would be the intelligent thing to do. WAIT FIX UP WAT WE WE HAVE PROB ABOUT 10 -15 million n wait

  18. clearasmud says:

    The Minister to this day has not made the business case to justify putting us further into debt. We have not seen any structural engineering report that suggest that we have to do this NOW! He refuses to answer any questions on actual cost but makes arrogrant claims that others dont understand finance. And even if we agree that the PPP method of financing the airport is the best method that still does not justify only getting one bid when other canadian firms offer the same services. There are too many unanswered questions about this project and the Minister refuses to do anything to help the public understand his actions. He expects us to take his word because he says so!

  19. Y-Gurl says:

    The airport fiasco, which is what it is, it’s probably the most stupid idea that’s come out of this Goverment, I’m with Larry…save up for it and in the meantime why not throw money at the temporary bridge that spans the causeway, no matter how much you spend on an airport if the bridge that’s built on boulders gives way (which it will) the airport will be of use to no one (unless you live across there) this airport is going to be the PLP’s Police station which was part of their undoing!

    • Watcher55 says:

      Don’t forget about the half billion dollar hospital!!

  20. Sailboat says:

    A brand new $620M airport and a washed out Causeway to prevent you from using it. Well done, Minister. Well Done.