Shadow Finance Minister David Burt delivered the Progressive Labour Party’s official response to the 2017 Budget in the House of Assembly today [March 3], and extracts, as well as the full speech, are posted below.
Minister Of Finance Delivered An “Election Budget”
Last week the Minister of Finance delivered an election budget…a budget cynically designed to reinvent the OBA yet again. It seems the OBA wants Bermudians to forget what they did in 2013, 2014, 2015 and 2016. It seems they want us to forget about the cuts to scholarships, education, training, the Bermuda College, and programmes to assist at-risk youth.
They want Bermudians to forget about the $18 million dollars they assured us would be safe yet went missing, or the tens of millions of dollars they have spent on their friends and families through lucrative and untendered contracts. They want us to forget about the lack of investment in public education and the $30,000 trips to Rio de Janeiro.
Now all the OBA wants to talk about is how they are cutting taxes and putting money in people’s pockets.
Where Are The Jobs
All I can ask is what happened to that plan? Four years later, there are 2,068 fewer jobs in Bermuda than there were in 2012. The Minister heralded the fact that a decline in jobs stopped last year and that there was an increase in the number of people working in 2016.
The only increase in jobs has been for nonBermudians. Every year since the One Bermuda Alliance has been in office, the number of Bermudians working has fallen and there are 1,631 fewer Bermudians working than in 2012. At the same time, just like last year, the number of guest workers employed in Bermuda has increased. This is not the way to build an economy.
Domestic Wealth & Income Not Taxed, Fosters Economic Inequality
In Bermuda, if you are privileged enough to have inherited wealth-generating passive income, you keep it without taxation. However, if you happen to be born into a family who may not have centuries of wealth or a trust portfolio of mortgage-free real estate to inherit, you pay taxes on your labour income because the only income you have is from your labour.
For example, if a person makes $100,000 a year from their day job and another makes $100,000 a year in trust dividends, our system taxes only the earnings from work and not the earnings from other sources. There are vast swathes of domestic wealth and income that have never been subjected to tax, which by its very construct fosters continued economic inequality.
This is why our taxation system promotes and fuels economic inequality. This is our challenge, and this is what we, as a country, must get to grips with. While we may look to make our taxes more just, which the One Bermuda Alliance tried to do with the payroll tax changes, the fact remains that we are taxing jobs at a higher level, which may lessen our competitive advantage as a jurisdiction and lead us into more trouble.
Quite simply, we could tax ourselves out of being an attractive jurisdiction. The OBA’s tax increases place an increased burden on the job creators and the investors who have chosen to bring their capital to Bermuda and create jobs in Bermuda. At the same time, those Bermudians who enjoy the spoils of international business’s continued presence in Bermuda and collect commercial rents from their properties in the City of Hamilton never see an increased burden of taxation.
Tax reform and broadening the tax base cannot be effective if they are unwilling to look at taxing the passive income of the privileged persons in society.
Creation Of A Bermuda Fund
If we are to create long-term economic growth, we need to use every tool at our disposal to invest in and generate economic activity in Bermuda. There is a high level of investment expertise in Bermuda, and the next PLP government will take advantage of this expertise by creating a “Bermuda Fund”.
This fund, which will be seeded with a small portion of the pension funds that are under the control of the government, will allow Bermuda to tap into the investment expertise on the island, while providing an additional outlet for our large pension funds to invest more of their monies in Bermuda-based equity investments.
The Bermuda Fund will not be exclusive to pension funds and other institutional investors; it will be listed on the Bermuda Stock Exchange to allow Bermudians to invest and contribute to the development of Bermuda.
This fund will have strict governance controls so that it will not be subject to political whims, and will be run for the specific purpose of generating positive returns while investing in the development of Bermuda-based businesses. The fund could invest in industries identified by the Economic Development Unit to diversify the economy.
The Bermuda Fund could also be used to attract job creators to our shores while we invest in emerging global industries, such as cyber-security, FinTech, InsurTech and mobile application development.
This is not exclusively the PLP’s idea. It is one of many ideas recommended by respected members of the local business community. Similar plans in both Singapore and Ireland have delivered positive results for their economies and the PLP will advance this initiative to create jobs in Bermuda.
Establishment Of A Technology Incubator To Become An Intellectual Property Hub
To grow our economy the PLP will develop a technology incubator at Southside. This will allow start-ups in the technology field that require little more than a computer and an Internet connection to use our regulatory environment while developing their new products and services in Bermuda. The vision is to transform Southside into a technology-based community with living facilities as well as an active office community.
This incubator would be a centre of excellence, and we would create a village in which people can participate together as if they are in a development centre, and share ideas in an open-source environment.
Additionally, we would attempt to attract a second round of funding for operations that set up in Bermuda by offering a consistent course for well-supported Bermuda-based angel investors to grow and develop out of Bermuda.
A successful technology incubator could lead to other well-established global technology companies setting up a physical presence here.
Performance-Based Pay For All Civil Servants
Previously, the PLP has called for performance-based pay for senior managers to incentivise and reward managers for increasing department revenues, reducing department expenses, and increasing the performance and efficiency of a government department or ministry.
After consultation with the Bermuda Trade Union Congress, we have modified this proposal so that it better reflects the responsibilities of the civil service. The PLP will extend this proposal to cover all civil servants in a department, as all workers should be rewarded for meeting efficiency targets within a government department. Managers cannot do it alone, and increased efficiency will be a civil service-wide, department-by-department effort
A few weeks ago we were chastised for telling Bermudians the truth about how much the America’s Cup will cost taxpayers. In the latest budget, the estimated direct cost is $71 million, and that does not include the expense of the land reclamation at Cross Island.
Mr. Speaker, the America’s Cup is a good thing for Bermuda. It is a significant series of events that will provide some benefit to the island. Where we take issue with the event is the One Bermuda Alliance’s consistent refusal to acknowledge the event for what it has been and what it is: an event that appeals to a narrow segment of society. The numbers, in terms of both the ratings and the ages of those who follow the sport, demonstrate that this is an event for what was Bermuda, not for what is Bermuda and certainly not for what we hope to become.
While the BTA speaks of the future, youth and vibrancy, the OBA clings to an ethos that matches its Mid Ocean Club comfort zone. And so to shore up the lagging sponsorship deals that were promised and to create a buzz that the event cannot generate on its own, the people of Bermuda are treated to a campaign that makes their attendance and support of this tourism generating event critical to its success.
If the America’s Cup is everything the One Bermuda Alliance says it is, why then is it the most heavily subsidised event in the island’s history and why is it unable to draw international sponsorship to capitalise on its supposed allure? Its inability to attract sponsorship means that Bermuda will be paying 80% or $20 million of the $25 million sponsorship guarantee.
The America’s Cup will create economic activity, but that activity comes at a cost of $71 million. That price tag is certain to rise as the cost of $12 million for buses, ferries, security and emergency expenses is not fully captured in those figures.
However, Mr. Speaker, let us also be clear about what the America’s Cup is not: the America’s Cup is not a long-term plan for jobs; the America’s Cup is not a long-term plan for economic growth; the America’s Cup will not solve the problems of our education system; and the America’s Cup will not make the social changes required to reverse the trend of black men gunning each other down.
It will be a great big party and many residents will visit luxury yachts, sip mimosas at sunrise and snap selfies with members of the royal family. The real question is what happens when the competition is over.
What happens to the temporary jobs and the people who no longer have work? Our schools will still be underfunded, our people will still require the upgrading of their skills, our seniors will still be struggling and our country will still experience inequality of opportunity.
Yes, the America’s Cup is many things, but what it is not is something that will solve the problems in our society that urgently need solving. Bermuda needs a government that can give urgent attention not only to hosting events like the America’s Cup, but to the items within our society that require fixing and
Transform Our Education System
The next PLP government will ensure that the education of our future leaders is a priority. Unlike the OBA, we will not pay lip service to our students while reducing our investments in public education. Our People’s Budget will make public education a priority, and ensure it is the first choice for Bermudian taxpayers.
We will phase out middle schools, and implement a curriculum with an increased focus on science, technology, engineering and maths. In collaboration with educators, the Bermuda Union of Teachers, parents and community stakeholders, the PLP will reshape our school system with one better suited to the needs of our youth and the wider community.
A key initiative of the PLP’s reforms will be the development of “Signature Schools” at the secondary school level, focusing on the learning styles and interests of our children, including academic, technical, arts, business, sports and special needs education.
We will also invest in technology to ensure our students are sufficiently prepared for postgraduate education and/or employment in a future when technological ignorance will be a barrier to success.
Extended Maternity And Paternity Benefits
The Employment Act guaranteed all mothers eight weeks of paid maternity leave. The next PLP government will re-examine what we have done and look to extend that leave to 13 paid weeks, while also making allowances for paternity leave.
The next PLP government will consult widely on this proposal; however, we will ensure that the duration of paid leave is extended so that mothers and fathers will have more time to bond with new additions to their families
Create A Lottery to Support Our Athletes
Our People’s Budget will also create a local lottery, which will benefit sports development on the island. We have recently been heartened by the exploits of our young men and women around the globe and it is important that we are able to invest in the hopes and dreams of the next generation by providing sufficient resources to advance their skills.
A lottery that is dedicated to sports funding around the country will be a good step in this regard and will be something that the Progressive Labour Party will implement within the first two years of their next term.
Reducing The Cost of Health Care
The cost of health care is a major expense for the government and private employers which reduces our global competitiveness. As a country, we must work to reduce these costs, which will lead to savings that will promote economic growth. We must also take action as a community to reduce habits that lead to the high incidence of chronic disease in Bermuda.
Our People’s Budget will fund the following programmes to promote a healthier society, which will lead to reduced health care costs:
- Implement a sugar tax, with the revenue derived to be used for health education and early intervention.
- Increase community health education and require nutritional information to be published in local restaurants.
- Increase competition in the local insurance market. Competition drives down costs so the consumer is the beneficiary.
- Mandate insurance companies to include coverage for established complementary and alternative medical services such as, but not exclusively, traditional Chinese medicine, homeopathy, mind–body stress management, kinesiology and naturopathy.
- Promote medical tourism to increase utilisation of our new health care facilities that provide cutting-edge treatments approved in the UK but not yet available in the United States. Increased use of our facilities can lead to reduced costs.
- Implement incentives for businesses that offer staff wellness programmes and healthy living initiatives.