2010 Budget: PLP and UBP Response

The cost to Bermudian families, now and for years to come, will be severe:

Ms Cox’s budget will impose over $100 million in additional taxes, including $77 million in payroll tax increases – that’s money coming out of the pockets of all working Bermudians.
Ms Cox is not doing anything to reduce the burden of debt on future generations, a debt that is now costing an astounding $39 million in interest payments alone for the year. Instead of committing to a debt reduction plan, she is content to push debt repayment out to younger generations.

While Ms Cox preaches austerity for the people, she increases Government spending by 9%. In other words, she wants Bermudians to buckle down and foot the bill for Government while her colleagues carry on without restraint.

This failure to tighten Government’s belt carries over from past years. Despite ordering a 10% cut in Government spending last year, she and her colleagues spent $56 million net of revenues more than planned.

Ms Cox’s Budget says this Government will not change its ways. The minister is taking people for granted and is content to tell them “Do as I say, not as I do.” We think people should step forward and say this not acceptable, enough is enough.

We can’t go on piling up debt year after year. We owe it to ourselves as a matter of self-respect, and we owe it to our children and their children not to leave them with a legacy that hamstrings their ability to meet the challenges in their own times. We must be fair to them. This budget, this minister and this government are not being fair to them, nor are they being fair to hard-working Bermudians today.

Let me be the first to commend the Minister of Finance on skillfully performing the balancing act required in these difficult times. As she has said on many occasions hard times cannot be used as the excuse for Government to contract and fold its tents. In these times we must lead with robust and prudent plans that keep this economy going. With this budget we have done that.

Let me first address the Cabinet Office and those areas for which I am responsible as Premier. Much has been made of the Government’s Washington DC Office and it should be noted that the funding allocated in this Budget will allow us to establish the staffing complement required and to move the office to the point where it mirrors the success of our London Office.

I am also excited that we will continue to train and expose Bermudians to careers in the public sector through the Jumpstart Programme which is funded within the allocation for the Central Policy Unit. This internship opportunity has been afforded to almost 20 young Bermudians. These numbers will continue to grow as we seek to increase the attractiveness of the Government of Bermuda as an employer of choice and to advance the career prospects of young Bermudians.
We are less than three months away from a national event in the form of Census 2010. The additional funding provided to the Department of Statistics to conduct this exercise is a sound investment in Bermuda’s future. From this valuable information will come a clear picture of current needs and trends in the community which will be used to great effect by the Government in making policies for the benefit of the people of Bermuda.

True to our promise of reform and our mantra of change, the first phase of the important task of reforming the Island’s Municipalities is funded to the tune of $400k in this coming fiscal year. I echo the Minister of Finance in saying that this is a promise that must be kept as the synergies that are demanded in this economy make efficient government a necessity.

Before I turn to the Ministry of Tourism and Transport let me reflect on some of the punditry that has surrounded the whole budget process. Warnings about what not to do have their place but Bermudians are people of creativity and innovation. I have encouraged my Cabinet and challenged technical officers to identify new revenue streams for Bermuda.

With regard to the Ministry of Tourism & Transport -

We must examine the paradigm through a variety of lenses and not be afraid to consider different options.
The diversification of this economy into areas that are not infrastructure and resource intensive should at least be examined and should form part of the useful feedback we receive from all of those “economists” out there.

I am pleased to provide highlights of The Ministry of Tourism and Transport’s budget for the fiscal year 2010/11.

You will note that the operational budget will increase by 9% from just under $111 million in this fiscal to $121 million in the 2010/11 fiscal.

This increase in operational expenditure is largely driven by significant budget increases in two specific areas:
- Tourism;
- And Civil Aviation.

Legendary investor Warren Buffet said, “Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can’t buy what is popular and do well.”

If we are to do well in the coming fiscal year and beyond, we must invest in our revenue generating industries now.

The Ministry of Tourism and Transport’s anticipated revenue is projected to increase by 8% next fiscal. That increase is largely driven by revenue from projected new business at Civil Aviation as well as fee increases for vehicle licenses and moorings.

Some will of course argue that the new fees associated with moorings are dramatic. However, when compared to the market value of moorings, the taxes remain relatively low and are not at all disproportionate.

The bulk of the Tourism revenue is of course indirect revenue that will stimulate the economy. The economic impact of the Tourism industry in 2009 was $400 million.

Despite the challenges of 2009, Bermuda’s total visitor arrivals rose over the previous year. This was fuelled by a productive cruise season where total visitors were up by 1% over 2008, realizing 559,000 people.

Granted, in 2009 only 235,000 air visitors came to Bermuda, down 10.6% compared to 2008. However, I can share that 2010 is showing significant signs of rebounding.

In fact I can reveal today that hotels are reporting increases in group bookings. Additionally, one of our airline partners providing daily service to Bermuda, has reported just this week that bookings from February 2010 through January 2011 are up 30%.

This is encouraging news but we cannot rest on our laurels and expect the business to simply show up. We must invest in the restoration process. To this end the Department of Tourism’s budget will increase by 19% from just over $30 million in the current fiscal to $38 million next year.

The increased allocation will be used to aggressively promote Bermuda and will underwrite the cost of both brand awareness and tactical promotional programmes. We cannot have one without the other.

Ministry staff has begun the process through discussions with the executive members of the Bermuda Hotel Association to explore how a portion of the incremental funding will be applied against joint tactical promotional programmes subject to the establishment of a Tourism Mega Fund.

These programmes will be jointly developed and funded.

The infrastructure to realize this joint-venture is already in place via the Bermuda Alliance for Tourism. Our goal in ensuring its success relies upon the private sector arriving at an innovative solution that establishes a sustainable revenue stream to contribute to the Tourism Mega Fund. Such a solution should not rely on waiving, redirecting or depleting existing tax revenue.

Now I’d like to turn my attention to Civil Aviation.

Certainly some will have noticed that in the current fiscal year, the Tourism budget (Head 33) was decreased by $2 million. You may have also noticed that there was a corresponding increase of $2 million realized by the Department of Civil Aviation (Head 57). This was the direct result of a strategic decision within the Ministry to capitalize on the demand for Bermuda’s aircraft register in a year that no amount of spending was likely to generate incremental visitors, not only in Bermuda but globally.

The net result of this decision was a growth of 22% in the register. Ninety-two (92) new aircraft were registered and revenue is projected to be around $16 million at yearend up from $13 million last year.

Bermuda’s aircraft register has experienced record growth in the past few years generating increasingly more significant sums of revenue for the Government. We expect to continue to grow the register in 2010 while being ever mindful of the safety and regulatory oversight that such growth will necessitate.

Finally, I’d like to highlight the Transport Control Department (TCD). You will note that TCD will not receive an increase in the 2010/11 fiscal. However, our commitment to road safety and educating and protecting road users remains a top priority.

Therefore, I am pleased to announce that effective April 1st, 2010 the Auxiliary Bicycles (No. 2) Act 2009 will come into force.

On that day, a Bermuda Youth License will be issued to applicants aged 16 years only after they have completed Project Ride.

Additionally, several restrictions will apply to both the Bermuda Youth Licence and also those holding a Bermuda Driver’s license who are under the age of 18 years. Individuals who fall in this category will not be permitted to ride between the hours of 1:00 am and 5:00 am on any given day; and they may not carry a pillion passenger at any time.

It’s this Government’s view that the introduction of the Bermuda Youth Licence will have a positive impact on road safety by not only developing, but encouraging healthier behaviours in our young people on our roads.

The long-term benefit is the reduction of carnage on Bermuda’s roads in the future.
This concludes my presentation on the Ministry of Tourism and Transport’s budget for 2010/11.

During the 2010/11 financial year, the Ministry of Education will focus on achieving the objectives of the Strategic Plan for the Bermuda Public School System.

This plan, which will be released to the public shortly, is being produced by the Board of Education and the Department of Education as a guide to improving the outcomes of the Public Education System.

After consulting with as many stakeholders as possible, the Strategic Plan will clearly articulate the outcomes that we wish to achieve for our students.

How the outcomes are to be achieved will be detailed via a number of strategic priorities which will include:

• Effectively implementing the Cambridge and related curricula in 2010;

• Strengthening and distributing leadership;

• Improving the quality of teaching and learning in the classroom;

• Facilitating the improvement of standards via accountability and transparency;

• Improving the efficiency of delivery of the educational product;

• Maximizing the contribution of parents and the community; and

• Improving school culture and school climate.

In turn, the delivery on the strategic priorities focuses on four different dimensions:

• People;

• Curriculum;

• Alignment and accountability; and

• School culture, climate and infrastructure.

During the next financial year, the Department of Education will continue to provide professional development for teachers so that they can enhance their talents, skills and experiences.

This is undoubtedly one of the most important priorities of the Department – to improve the standard of teaching in our schools.

The Department will also continue to develop the Principals of our Public Schools into world class leaders.

This will be achieved by building on the very successful workshop facilitated by the Association of Bermuda International Companies which involved Public and Private School Principals as well as business leaders in a forum on turning around schools and school systems.

The Board and the Department of Education will continue with the restructuring of the Department Headquarters to transform it into an effective central service centre.

This will be done in conjunction with initiatives to devolve autonomy for the control and management of schools to school Principals.

The Cambridge International Curriculum will be delivered to ALL students by ALL teachers in ALL Public Schools starting in September, 2010.

The Department has acquired support from Cambridge to ensure that teachers, principals and officers have as much information as possible to effectively deliver the curriculum in September.

Let me make it clear that my intention is to deliver on the vision of “providing a world class education system that meets global standards and ensures that students reach their full potential”.

And now more than ever I am cognizant of the need to keep costs under control as we seek to achieve the education reform that the entire community deserves.

We must improve the efficiency of delivery of the educational product. The cost of educating our children cannot continue to spiral upwards.

We, as an educational system, and a community, must find ways to maintain and improve standards while also containing costs and ensuring that our students meet the highest expectations.

This is what we will achieve during the upcoming financial year.

As we approach the start of a new financial year in an increasingly challenging economic environment, the Government seeks to uphold its commitment to provide greater safety through higher police visibility, international support and training, increased use of community intelligence targeted at apprehending the perpetrators of criminal acts.

Concerns about the escalation of gang related crime, and the negative impact it could have on our key areas of International Business and tourism, requires urgent, decisive and vigorous action and the budget of $65.7 million for the Bermuda Police Service reflects this intention. Additional funding has been provided for full time monitoring of CCTV operations to assist in gathering information and recording evidence of crime; professionally accredited training for investigations of serious crimes; and forensic accounting services to increase capacity to investigate complex financial and money laundering crimes.

At the same time a national task force will be established to coordinate cross departmental efforts to tackle this negative behaviour in our society. These initiatives will also seek to provide better trained and equipped officers in the Bermuda Police Service with enhanced technical support and proactive intervention to fight deviant behaviour.

The fruits of the Bermuda Police Service’s Problem Orientated Policing and Partnership (POPP) operational approach, along with the Service’s commitment to Police With the Community, are now being seen. A focus on partnerships will see engagement with area MP’s, Parish Councils, and other community representatives; meetings with key partners; increased involvement of Community Action Groups; advisory groups in each of the three geographical areas to provide feedback to local Area Commanders; school programmes; and community impact assessments.

In response to the increasing security concerns regarding drug addicted inmates in the Department of Corrections’ facilities, the Ministry will introduce a therapeutic community programme aimed at providing an opportunity for inmates to free themselves from the ravages of addiction. Under this model, participants will be housed together, separated from other inmates, and undergo a treatment regime that is primarily a peer-driven 24-hour living environment in which offenders with similar problems learn to work and live together, thereby learning the skills they need to work and live outside the institution without drugs.

As some key indicators suggest, there is cause for hopeful optimism with regard to the health of the economy. However, a full recovery is likely to be gradual. It is unlikely that we have seen the full effect of the slowdown and as the recession adversely impacts our economy, the trend of rising unemployment and income loss dictates a need for on-going support for Bermudian families at risk.

Therefore the Ministry of Labour, Home Affairs and Housing will provide re-training and cross- training opportunities for youth and persons seeking to re-position themselves in the job market. In addition, the Department of Labour and Training, with a budget of $8.6 million, will continue its Summer Employment Programme and accelerate its National Certification and Apprenticeship Programmes.

The availability of affordable housing remains in the forefront of Ministry initiatives for the coming year. BHC will provide interest free loans to qualified individuals who are first time home buyers, to work with private sector property owners to provide units to BHC clients, and to expand the Rent Geared to Income Initiative.

Given the impact of the economic downturn, the Interest-Free Loans initiative will provide first-time home owners with an opportunity to purchase a home that otherwise would not be possible.

Major developments will continue throughout 2010-2011. The highly successful Loughlands development continues apace. Thus far, three of the four phases have been completed, with 66 Bermudian families now owning a piece of the rock.

The fourth and final stage will be completed this Spring, and will enable another 30 families to own a home.

The Rent Geared to Income initiative will take a giant leap forward with the completion of the Perimeter Lane Development. This development will provide homes for 38 families with rents determined as a percentage of the family income. Harbour View Village will provide 58 homes to families that had won homes through the Bermuda Homes for People programme. This Government is honouring the commitment of that project. We expect these homes to be ready by the end of 2010.

The Department of Immigration continues with the implementation of its system automation, thereby streamlining the application and approval process for work permits, land licences and passports.

The Bermuda Regiment continues to develop our young people to support the country in times of need, and to support our regional partners when necessary.

The Bermuda Fire and Rescue Service, the unsung heroes of the Ministry, continues to quietly and efficiently provide emergency support to all of Bermuda, including the L.F. Wade International Airport.

Thus the funding provided to the Ministry of Labour, Home Affairs and Housing in these tough economic times will be used for the benefit of the people of Bermuda in providing services via the 7 departments of the Ministry.

Thank you.

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