Column: Kempe on Economy, Govt & Policies

October 18, 2019 | 16 Comments

[Opinion column written by Nick Kempe]

As we see yet another local business closure make headlines, I am deeply concerned that the Government is still not heeding the warning signs.

The real problems ailing our economy are being ignored and misguided ‘reforms’ are repeatedly missing the mark causing more damage than good.

Bermudians and businesses alike have felt the burden of increased taxes, all the while this Government grows the size of the civil service. On the personal side, with wages being eaten up by more and more taxes and costs [land, sugar, health insurance, vehicles, etc.], there is less money to spend on goods and services.

nick kempe 2019

The public’s lack of faith in this Government’s ability to manage our economic futures, as reflected by historically low levels of consumer confidence, means that what is left to spend is instead being deferred.

Confident spending has been replaced by fearful hesitation.

This national underconsumption has only been worsened by a shrinking workforce. The last 19 months of retail sales are therefore no surprise and a representation of the contraction being felt throughout the local economy.

Online shopping has also declined in the latest retail sales figures so scapegoating changing consumption habits is misleading at best.

On the business side, lower overall demand has made it very difficult for many local business sectors to pass on the many new taxes and fees being thrust onto them by the Government [land tax, health insurance cost shifting with more to come, Bermudian business dividend tax, etc.].

Low inflation is symptomatic of the business sector’s fear to pass on various and increasing layers of Government imposed costs. Therefore, without other mechanisms to protect squeezed margins coupled with less dollars in fewer consumers’ pockets, businesses are inevitably closing.

Bermuda’s prosperity and particularly that of the local economy relies on the Island’s ability to attract money from overseas that will be spent on our shores.

I believe that most people now recognise that we need to attract foreign job creators and investment in order to stimulate our stagnant economy and alleviate the increasing pressures caused by a growing imbalance between our active workforce and our retired population.

Unfortunately, instead of having strategic national conversations about how many guest workers are needed for sustainable growth and what it will take to anchor them here, the public political discourse surrounding immigration has been reduced to whether immigration is good or bad.

With a declining birthrate and a declining workforce, increasing the working age population enough to sustain the Baby Boomer generation in retirement can only be achieved attracting new employees to Bermuda.

With more guest workers also come employment opportunities for Bermudians still on island and those that have left seeking opportunities overseas to return.

The stagnation of the immigration reform process aptly mirrors the stagnation of our economy.

Increased taxes are more easily absorbed during periods of sustained growth. It is a shame that the Government did not use the increased taxes to pay down the debt, redistribute wealth, fund new employee benefits or subsidise healthy food choices, instead choosing to sharply increase the number of civil servants.

Government must find ways to incentivize greater private sector employment. With taxes and the cost of the Public Sector growing, it is high time that the Business community get some relief.

Targeted incentives to reduce the cost of employment are key, especially after the recent transfers of health insurance costs from Government to the private sector.

I urge the Government to heed the signs and change course before it is too late.

- Nick Kempe

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Comments (16)

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  1. burt onomics says:

    change course?! LOL, about as much chance as the Titanic (what a fitting analogy)

    • wahoo says:

      You are right. This government know they do not have to do anything now that they have a majority of people who either don’t care or don’t understand.

      • FACT says:

        The majority do care but they don’t care about the oba aka UBP.

        Jet Gate Craig is a joke and you have selected the worst representative to be your LEADER.

  2. inna says:

    What a concise summary of the current state of affairs on our little island.

    Real estate is another indicator of consumer confidence; the amount of houses for sale right now has to be at an all-time high. It seems like every day 2-3 properties are listed on the market.

    • Yes says:

      Yes! Houses are coming down so we young people can afford one!!

      • One Who Escaped says:

        Yes, but can you afford to keep it? Why do you think the prices are dropping? It’s not generosity. People can’t afford the upkeep.

      • wa says:

        How are you going to pay for it?

      • Born Bermudian and annoyed says:

        Hold off a bit more. They be real cheap soon.
        Feel sorry for the people with mortgages though as their house values will soon be less than their mortgages.
        That will be quite a problem . But you’ll still get a cheap house so I guess all is well . Poor banks too. They will lend even less money than they do now to buy a home.
        Oh well. Whatever right?

        • Joe Bloggs says:

          “Feel sorry for the people with mortgages though as their house values will soon be less than their mortgages.”

          That has been happening for the last 3 years or so. It is sad to see hard-working Bermudians facing bankruptcy like that.

      • Joe Bloggs says:

        Many homes in Bermuda are now worth less than the money secured against them. That means that banks foreclose on homes and the former homeowners still owe the bank money. That is a recipe for bankruptcy. Not a good thing.

      • wahoo says:

        Your parents invested in a $1M dollar house that is now worth $500K so family are now ou

      • aceboy says:

        So destroying the economy is a good thing? You must be a student of Burchanomics. All those For Sales making you smile. Thing is, you might be able to afford a house but without a job and costs being so high you won’t be able to maintain it and it will crumble around you.

        • Yes says:

          Nope we are just fine thank you for your concern though

          • wa says:

            Then why do you complain so much?
            You haven’t a penny to scratch your a$$ with, you give what you have to your homophobic church, and then complain about the cost of living….

      • Safety says:

        But less people on the island, which means more businesses will close, so you probably won’t have a job to allow you to pay the mortgage.

  3. Dready says:

    The “sheeple” will have their say and the politicians will have their way!

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