Column: Nick Kempe On Economy & Finances

October 8, 2018 | 32 Comments

[Written by OBA Senate Leader Nick Kempe]

When the One Bermuda Alliance was elected to be the Government in 2012, Bermuda was staring into the abyss of financial ruin. Our national debt was spiraling, jobs were disappearing and without swift and focused intervention the only economic direction was down.

Six years later, it feels that once again, the economy is teetering on the edge. One slip and Bermuda could once again enter into a recession.

The business community does not require GDP reports to know what direction the economy is moving and it’s telling that business confidence has fallen dramatically – to the lowest levels since the Bermuda Business Confidence Index was started in 2014. It has actually plunged by almost 20 points in just 12 months.

This is what the report says: “The majority of businesses [six in ten] are pessimistic about Bermuda’s economy, with almost half saying it is not moving at all, and more than one in ten saying it is moving in a negative direction. Fewer than four in ten – half the number from two years ago – say it is moving in a positive direction.” I’ll repeat this: ‘half the number from two years ago’.

Another part of the report says: “Four in ten businesses say the economy is in worse shape today than a year ago. Another four in ten say the economy is the same, while only two in ten consider it in better shape – a considerable drop from 2016, when three-quarters said the economy was better than 12 months previously.” In 2016, we had a different government.

1-Nick-Kempe-Bermuda-oct 8 2018

Along with business confidence, the volume of retail sales in June also fell, almost back to pre-2015 levels. Employment income has fallen by more than $15m, despite a rise of more than $7 million in civil service income, and at the same time the cost of living for Bermudian consumers will be driven ever higher by new taxes like the Sugar Tax and the commercial land tax.

Our cost of living – despite Government promises to the contrary – shows no sign of coming down, nor does the cost of health care, another broken PLP promise.

Despite all this, the Premier seemingly does not have the time or interest to proactively reach out to the business community. A dismissive “my door is open” is all that is offered. Perhaps the Premier should hand over the reins to someone who can focus exclusively on this critical Ministry while he travels the world chasing the Fintech dragon.

This PLP Government has broken its election platform promise to balance the budget by 2019 having budgeted for a deficit again this fiscal year. Time will tell if even the budgeted target of a modest deficit reduction will be achieved given the increase in Government spending and the retail sales slump.

Meanwhile our national debt continues to rise and the repayment costs are currently our second largest ‘Ministry’. Bermuda is now paying over $500,000 a day to service its debt. Yes, you read that right: half a million dollars every day is sucked out of our economy to pay back mostly foreign creditors.

Imagine how much good could be done if we had an extra $500,000 a day to spend on education, healthcare and seniors or to reduce the burden of taxes. Despite this daily financial hole we have to fill, despite seniors suffering and charities shuttering, this Government diverts taxpayer money to fund attacks on LGBTQ rights and to subsidise politically connected private businesses. Talk about priorities.

I am sure that nobody is surprised that no gold bullion has arrived either. All the jobs and investment promised during a succession of Memorandum of Understanding announcements rolled out in a blaze of publicity have come to nothing. It appears there has also been no investment in training programmes that Bermudians were promised. Fool’s gold, perhaps…

I also have concerns that all the new taxes added in the last year to our already high cost of living will drive the touted compliance jobs in this globally-fluid, digital industry to other jurisdictions and we will simply get some crumbs in the form of company registration fees.

It is also ironic that Burt’s Billionaires are somehow more palatable than the billionaires behind the America’s Cup given the racial undertones behind the political criticism of the Cup when the PLP was in Opposition.

Depressing, isn’t it? I find it depressing and even more so because of the opportunities and inherited economic momentum this Government had – which it has, for its own selfish reasons, decided to ignore.

While the Premier is pursuing a one-track policy on business development and job creation – and don’t misunderstand me, I and the OBA support any initiative that will help bring new jobs, opportunities and wealth to this Island – other job creating opportunities have been lost.

Remember the promise to create an Events Authority to replace the ACBDA? Remember the Bermuda Tourism Authority’s plea to bring in super yacht legislation to encourage more superyachts to come to Bermuda? Remember who the Minister of Tourism and Economic Development is? I can’t.

Because they used it as a tool to bash the OBA, the PLP simply cannot bring themselves to build on the impetus of an event that injected $350 million into the economy. They have let slip a golden opportunity to create jobs over the last 18 months.

What else has failed to materialize? Gaming. Do I have to say more? No regulations and not one chip cashed, not one dice rolled. No jackpots have been won, unless you happen to run a certain health clinic, that is.

Zero construction projects have been announced. Fortunately, however, some of the ones started under the OBA are still on-going, providing much need jobs. Others that have been completed, such as the Loren which is also providing jobs as well as more beds for visitors.

Speaking of jobs, figures released earlier this year showed that the number of Bermudians in the workforce increased under the last year of the OBA Government after 11 years of a shrinking Bermudian presence in the workforce. Remember, the PLP was in power from 1998 to 2012. It has been in power for 15 of the last 20 years – what we are seeing now is a direct result of their poor economic policies.

Dismissive attitude towards the business community’s concerns, lost job creation opportunities related to America’s Cup legacy and diversion of taxpayer money to political insiders all typifies this Government’s arrogant approach to our economy. Bermuda deserves better.

- Nick Kempe

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Comments (32)

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  1. 2 Bermudas says:

    Cue Chris Famous with a Bob Marley quote to make this all go away. Ha ha ha!! De titty milk is real!!

  2. Ok says:

    Lol…oba ripping into the PLP and the trolls like onion juice say nothing…imma get my popcorn

  3. watching says:

    many of Kempe’s criticisms are interesting. I do wonder, though, what would the OBA plan to right all the wrongs be?
    Let’s see the next PLP throne speech and Budget.
    It is interesting how one leader is dethroned, an old leader is returned, and now Kempe is the great hope and the saving grace. I don’t recall him making a huge impact as a senator before, and the people of C18 clearly didn’t place their confidence in him.

    • Thanks OBA says:

      Shoot the messenger, ignore the message. PLP 101. Our economy is heading down the drain, the PLP are in Government. You should be concerned and demand better performance from Government. WHAT IS THE PLAN?

    • 2 Bermudas says:

      The funny thing is that Bermuda had a party doing all the right things to get the economy going again. Why aren’t you upset that your party has ruined the economy yet again?

      • watching says:

        but they haven’t…

        the confidence index for some reason that we all know, but won’t admit is largely based on which party is in power, separate and distinct from the policies being implemented. It is apparent that big business in Bermuda prefers the OBA and that is largely because historically they (the OBA and UBP) have protected and encouraged big business, to the neglect of the average Bermudian. So of course, when they are not in power, there is lack of confidence, simply because they may not be able to get every single thing they want.

        What PLP policies under this administration have caused a lack of confidence? Is it the policies or is the people making the policies?

        • Double S says:

          Retail sales down for consecutive months…

          Employment income down over $10mn…

          Q2 GDP negative…

          Real estate market flat…

          Statistics don’t lie my friend, no matter how much you try and spin it.

          The economy is reverting right back to 2012 levels.

          Congrats.

          • red rose says:

            add to that list: taxes up (sugar tax, commercial land tax, dividend tax); no economic plan other than fintech (and we have seen nothing from that yet); rising health care costs (hence a rise in the cost of doing business) and you can see why business confidence is so low.

        • Retro says:

          It is a lack of acknowledgement that growing the tax base is the best way ,and probably the only way, to improve the economy that concerns local businesses.

        • Politricks says:

          Here are a few:

          - The constant talk of independence (hint: businesses don’t like instability and this topic is a huge source of these concerns).

          - Rising taxes and the continued increase of business costs in Bermuda.

          - Time it takes for immigration to respond to work permit applications (it actually has resulted in an increased pace of outsourcing).

          - Embarking on a living wage implementation whilst not including the businesses in the the talks that will be impacted.

          - General anti-business/anti-immigrant rhetoric stemming from the PLP and their support base (see BTUC press release from yesterday).

          - The erosion of independence and exertion of tighter political control within various regulators.

          There are several more, but these are the main drivers as it stands now.

        • OB says:

          You look weak when all you can do is play the race card

        • 2 Bermudas says:

          - Talk of independence
          - Giving public money to political insiders within their party
          - Increased cost of doing business (i.e. healthcare, social insurance and sugar tax)
          - Increasing payroll tax on higher income earners
          - Implementing dividend tax on local companies
          - Anti- foreigner rhethoric
          - Taking rights away from the LGBTQ community
          - Telling private companies (i.e. Belco) how to run their companies
          - Threat of introducing a ‘living wage’ which will only drive costs higher for employers
          - Threatening to put price caps on certain foods
          - talk of taking of The Corporation of Hamilton
          - Making the Gaming Commission political

          That’s just a quick list. I’m sure others will add to it.

          The old ‘oligarchy’ excuse is so old and boring. Take your blinders off!!

          • Politricks says:

            One I forgot to add is the inability to reign in the debt situation which will lead to a rating downgrade which impacts not just the Government’s finances but also locally domiciled businesses.

  4. Daren says:

    I’m glad I left bermuda me and my family will never come back but the people still left there they don’t seem to care about the future

  5. Joe Bloggs says:

    “Employment income has fallen by more than $15m, despite a rise of more than $7 million in civil service income”

    Yes, qualified Bermudians have to be employed somewhere!

    ” what we are seeing now is a direct result of their poor economic policies.”

    Sorry Nick. I happen to believe the economic theory that economies take 3 to 5 years after political decisions are made (save for immediate impact decisions such as raising taxes) to react to those decisions. If If the theory I accept is correct, the OBA is currently on the hook for much (not all) of Bermuda’s present economy.

    • smh says:

      And the fact the the PLP have been Government for 15 out of the last 20 years makes the PLP blameless for our tanking economy? What about the level of our debt? At sound point, the PLP are going to have to be held to account by their voters.

      • Joe Bloggs says:

        I am perfectly aware of the debt run up between 2000 and 2012 and the fact that my grandchildren will be paying that off long after I am gone. I was speaking of what is happening now, in 2018, and what the economy is reacting to now.

    • Time Shall Tell says:

      This is the exact thing I stated a week or so ago. Now flip the situation that the economy was going up guess what opposition party would be in the background taking the credit for it being their past policies.

      Where I do fault PLP is in the lack of acknowledgment of the present financial trend with a clear and active focused plan on how to reverse it.

    • red rose says:

      except the PLP has been in power for 15 of the last 20 years – the OBA four and a half years in power was never going to be long enough to reverse the consequences of the PLP’s policies

    • 2 Bermudas says:

      Ok, so let’s assume the theory you believe is correct. So now tell us what things the PLP have said or done to stimulate the economy and to give investors comfort in order for them to invest in Bermuda? I’ll give you one – the PLP have secured a $100m Infrastructure Bond from private investors albeit this can be viewed as more debt too.

  6. Dready says:

    The PLP is making their supporters poorer. But that is okay long as Ewart gets his!

    • He’s one of de lucky ones to recieve REPARATIONS for 400 years of FREE labour.

      • Joe Bloggs says:

        Does it matter to you that Bermuda has not had 400 years of slavery or anywhere close to that figure?

        • Toodle-oo says:

          His usual revisionist history . You know , make up big lies , repeat them often enough and so on.

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