House of Assembly: Bob Richards Budget Reply

The Shadow Minister for Finance Bob “ET” Richards delivered the official Opposition reply to the budget in the House of Assembly this morning. The 2010/11 budget was revealed last week, and has come under fire from various members of the community.

Mr. Richards’s speech lasted for almost two hours and touched on numerous aspects,  including the debt, spending, international business, taxation, tourism, gun crime, FutureCare and more.

The full text of the speech is printed below the excerpts, or you can download the entire thirty page PDF here
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Excerpt highlights from Mr. Richards speech:
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Government debt is budgeted to mushroom to an unprecedented $973 million, meaning that Bermudians under the age of 35 – those people who will have to pay it off – will inherit a debt of $36,000 per person. In 1998, that debt per capita was $5,602.

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The 235,000 air visitors to Bermuda in 2009 – 40% of whom were business people and people visiting relatives and friends – is the lowest tourist total in more than 40 years. The decline in visitor arrivals has meant hundreds of millions of tourist dollars not spent on the island; dollars that would have supported wages, jobs and businesses.

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Consultants now account for an astounding $100 million in spending, nearly 10% of the Government’s budget. That’s costing taxpayers more than $30,000 a day. Many of these consultants are from overseas, taken ahead of Bermudians – a state the old PLP would have been screaming about – to run, for example, our hospital, rewrite our planning laws and advise on the takeover of the corporations of Hamilton and St. George’s

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We believe in the concept of FutureCare, but plans need to work. In addition to reforming FutureCare, we would reform HIP to include a prescription drug allowance for seniors. It was dropped from HIP and only applies to seniors in FutureCare.

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Now we disagree with some of the economic policies of this government but we all must unite against the destructive forces of crime, gangs, gun violence and drugs; forces which are threatening to rend this community asunder. This criminal behavior is squarely contrary to the values we hold dear in this country and we must unite to stop it.

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Class and racial polarization is a cancer that is eating away the very substance of our society and if we are to survive and overcome our problems we must cast those outmoded notions into the dustbin of history, where they belong.

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Our economy depends on a deal (a contract of sorts) that we have made with certain people who wish to conduct business or vacation in these islands. The deal is they would spend their money on our shores if we provided an attractive environment within which these folk could either conduct legitimate business or have a relaxing vacation.

An essential component of this deal is personal safety. Historically, one of the key attributes we have touted was that Bermuda was safe. Safe for business people and their families and friends as well as safe for vacationers.

We as a community are breaking our contract with our foreign client because Bermuda is no longer safe. Public safety is critical to the maintenance and growth of international business as well as tourism.

I have heard it said that 80% of Bermuda’s economy is directly or indirectly attributable to international business. Most of that 80% is attributable to those international companies that have a physical presence on the island. That means companies that have an office and employ people, people who are vulnerable to bullets.

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The full text of the Opposition’s reply, scroll down to read:

Mr. Speaker, Honourable Members of the House of Assembly,

I will start out this Reply to the 2010/2011 Budget by putting a simple question to the people of Bermuda: Does this Government have Bermuda on the right track?

My colleagues are sure most people would say ‘No, we are not on the right track.’ Indeed, we think most people would say Bermuda is on the wrong track, and emphatically so.

Why do I say that, Mr. Speaker?

Let’s look at a few key facts to understand why doubts are hardening about the performance of this Government:

Government debt is budgeted to mushroom to an unprecedented $973 million, meaning that Bermudians under the age of 35 — those people who will have to pay it off — will inherit a debt of $36,000 per person. In 1998, that debt per capita was $5,602.

* Insurance company incorporations and new annual insurance registrations — key indicators of our economic health — have fallen by half over the past few years.

*The 235,000 air visitors to Bermuda in 2009 — 40 percent of whom were business people and people visiting relatives and friends — is the lowest tourist total in more than 40 years.

The decline in visitor arrivals has meant hundreds of millions of tourist dollars not spent on the Island; dollars that would have supported wages, jobs and businesses.

*The 2009 Mincy Report revealed the education drop-out rate for young black males was 50 percent, meaning the education crisis identified three years ago by Professor Hopkins continues unabated.

* Since May 2009, 22 people have been shot, five of whom have died of their wounds.

Mr. Speaker,

This is a grim list. It indicates that in key categories of island life this government has presided over declines that, taken together, are making Bermuda weaker not stronger.

The Budget put forward last week by the Minister of Finance is a case in point, reflecting all aspects of a style of leadership that is failing Bermuda — slow to act, given to spin, undisciplined, self-serving, hypocritical and careless with the people’s money.

Mr. Speaker,

We see this Budget as the start of a public reckoning with the Government’s mismanagement of the public purse. I say that because the Government no longer has the cash to squander without care. The cupboard, as they say, is bare. But instead of changing their ways, instead of tightening their own belts, they are coming after the people to pay for their cars, their travel, their overseas consultants, their bloated budgets, their expense accounts and their cronies — to the tune of more than $100 million in new taxes.

This Government does not practice what it preaches. The Minister of Finance preaches austerity — her Government makes sure hotel workers accept a wage freeze — and then she increases Government spending by nine pecent. This is the same Minister who announced a ten percent cut in Government spending in 2009 only to stand by and watch her colleagues spend a net of $56 million more than planned.

Bad habits, Mr. Speaker, run deep, and this Government is showing no willingness to change. But change they must because the path this Government is taking Bermuda down is simply unsustainable.

Let’s look at a few more facts to see what I mean:

* For the past two years, the Government has run a deficit on its current account. In 2008/09 they spent $41.2 million more than they took in and last year the deficit was $53.5 million. This is unprecedented for Bermuda.

* Interest payments on government debt are now pegged at $38.4 million a year, more than double what it was just two years ago.

*The surge in debt since this Minister took office has been startling and troubling. Since the 2004/05 budget gross debt has gone from $175 million to $830 million last year — an increase of more than 400 percent. This year the Minister has forecast the debt to rise to $973 million.

The Minister titled her Budget “The Road to Recovery”, but under the weight of these unsustainable numbers we believe the Government is taking us down the road to ruin.

The bottom line here, Mr. Speaker, is leadership. Bermudians have to ask themselves if this is the right leadership for the island. Is this leadership that adheres to values that put the public interest first, values that ensure we live within our means and values that inspire us to pass on a stronger country to our children?

We say no, this is not the right leadership for the Island.

One of the components of good leadership, particularly for a Finance Minister, is strength — the strength to enforce one’s plan, the strength to say no, the strength to put country before colleagues, the strength to stand on principle.

Unfortunately, the Minister lacks that kind of strength and the country is paying a big price for it. Here are three examples of what happens when there is not a strong hand on the wheel:

1. The Minister in this Budget has not put forward a plan to reduce Government debt — something that would have meant imposing real discipline on her colleagues.

2. In the past two years, the Minister has ordered cost-cutting measures that were effectively ignored by ministers and senior managers.

3. Two weeks ago in a press release, the Auditor General reported that audit findings from previous years revealed a “pervasive lack of accountability” in the halls of Government. The Auditor cited her predecessor’s concerns about the “negligence of senior management to carry out their oversight and fiduciary responsibilities, thereby creating an environment conducive to error, misappropriation and fraud”.

Mr. Speaker, bad things can happen without a strong Finance Minister at the helm. Bermuda needs more than a cog in the wheel. What is perhaps most galling about this year’s Budget for everyday Bermudians is the double standard practiced by the Government. While the Minister preaches austerity and “spending responsibly”, she increases Government spending. In other words, she wants Bermudians to buckle down and foot the bill for Government while her colleagues carry on without restraint.

As a result, working Bermudians and businesses are hit with higher payroll taxes. The cost of living will rise with the doubling of the foreign currency purchase tax. And then there are the seniors who enrolled in FutureCare. Those who qualified last year face a 25 percent hike in their monthly premiums to $300 while those eligible for the programme this year will pay twice as much as the first group — $600 a month — for the same coverage.

Mr. Speaker,

It costs a lot to feed the beast. We think it is time for people to step forward and say this not acceptable, enough is enough.

Mr. Speaker,

I would now like to switch tack to review the broader issues that affect this Budget. One year ago, we were assembled in this same place, discussing the financial calamity that had engulfed the world, how it would affect Bermuda and what our course of action should be in the face of that challenge. Today we face many of the same challenges because “The Great Recession” is not over yet. In fact, for us in Bermuda, much of the pain is only now being keenly felt by our people. Thus there will be marked similarity between my remarks from a year ago and today. To some extent they will serve as a “report card” on how well, or otherwise, the Government and the Country have dealt with these economic challenges.

Mr. Speaker,

After a long period of denial, the Bermuda Government is now eager to place all Bermuda’s problems squarely at the feet of The Great Recession. Certainly many of our problems are directly connected to the global recession but many have a “Made in Bermuda” label firmly affixed. To understand the issues facing our island one must be able to differentiate between issues that are locally driven and those that are a result of external factors. We will analyse both these components and show the effect on the local economy.

We all now acknowledge the recession that is upon us, but many questions remain:

* Will it get worse?

*When will it end?

* What will it mean for my job, my family, my business, my taxes, my savings, my healthcare, my pension?

THE GLOBAL ECONOMY

It is easy to quote the lifetime of the average recession. But averages can be misleading. Some recessions last just two quarters while others, like the depression of the 1930s lasted a decade. So averages are not very helpful and not nearly good enough to answer the foregoing questions people are asking. We really need more insight than that.

Mr. Speaker, when you’re in a hole not only do you have to throw away the shovel, you also need to know how deep the hole is before you can have an idea of how much climbing you have to do to get back to level ground. So let’s look at how deep a hole the world economy is in. For simplicity’s sake we will use the US economy as a proxy for the world.

Figure 1 shows total employment as a percentage of total population, going back to 1950. While the line is choppy you can see a rising trend that started during the 1960s. This was when more women started entering the workforce. The trend peaked at the turn of the century and has collapsed during this recession. This represents a vicious blow to the earning power of American families and it is showing no signs of recovery yet.

Many will have heard of the robust 5.7 percent fourth quarter GDP growth number that was published recently. While this was very good news, it may also deceive casual observers to think that we’re in the clear. I’m afraid this is not the case. While corporate profits have rebounded from the extreme weakness associated with 2008, the component of the US economy that concerns us most, i.e. consumer spending, is still quite problematic. The ultimate reason for the provision of most goods and services in the private sector is to provide a consumer product or service. Without robust consumer spending no recovery can last.

Many of us have heard that US unemployment had reached over 10 percent and has now retreated to 9.7 percent. Figure 2 shows the Consumer Confidence Index has rebounded from the depths of a year ago but the Index is still around the levels of the depths of the recession of 1991, and the latest data point was down. So we’re still not out of the woods.

Figure 3 shows the annual changes in US Personal Consumer Expenditure. This chart is somewhat encouraging as consumer expenditure has rebounded from the extreme lows of 2008 and consumption is now expanding once more, albeit at quite a modest rate.

Figure 4 shows the annual rate of change in consumer credit outstanding. If consumers are going to spend more they will likely increase their use of credit cards and other consumer loans. However, the chart shows consumers are very reluctant to borrow and are reducing their use of credit. Notice the timing of this chart coincided with the onset of the recession, so we can look at the use of credit as a key indicator of the beginning of a lasting recovery.

Moreover, in spite of the many billions of taxpayers dollars mobilized to stabilize and liquify US banks so that they may resume lending to businesses and consumers, the banks are not lending, showing the ratio of US bank loans to deposits still falling.

Mr. Speaker you will have heard President Obama speak of the lack of bank lending, particularly to small business. Here is the evidence. Small US business expansion will be critical to reducing the unemployment rate and raising consumer confidence.

As we pointed out a year ago, the principal asset most people own is their home. The plunge of house prices has traumatized many consumers. Figure 6 shows that fall and indicates that although prices are still falling, the rate of decline is no longer accelerating and is starting to ease off. However, until we see that line above zero we cannot say the housing market is improving. This is just another indicator that we are not out of the woods yet with the US consumer and therefore the sustainability of this recovery is uncertain.

The robust GDP growth of the December quarter was the result of companies replenishing depleted inventories and although it is an encouraging development it does not mark the end of economic weakness. In fact the robust number for GDP growth is connected to the massive stimulus package that the US government enacted to restart the economy. And to a limited extent it has worked. It has mostly affected corporate capital spending.

You can think of the stimulus package as a car’s starter motor on a cold morning. When you turn the key the starter motor turns over the engine, and so long as you keep the key turned the starter will turn over the engine, but it is not until the cylinders fire that the engine really starts. Most of the growth we have seen in the US is from the starter motor, i.e. the stimulus. Some cylinders are starting to sputter to life but not enough for the engine to run on its own. Consumers are the real power behind the US economy and the indicators of their return to the malls is not yet convincing.

President Obama is going to have to keep his starter key firmly turned on to get the US engine to roar back to life. The bottom line, insofar as Bermuda is concerned, is that our economy is not likely to receive much help from our giant neighbour this year. This has particular negative implications for tourism and tourism development.

It also has implications for international business because weak US economic growth, employment and consumer spending places extreme pressure on US government tax revenues. That pressure is finding its way to Bermuda and other jurisdictions in tax proposals that will be injurious to our economies.

The scale of US fiscal problems is so enormous, the projected deficit being measured in units of trillions of dollars this year alone, the extension of the US tax net to Bermuda-based reinsurance companies would yield amounts far less than a drop in the bucket for Washington. So why would they do it? Politics, of course. However, what is less than a drop in the bucket for Washington could be devastating to Bermuda-based reinsurers and the Bermuda economy.

So Bermudians should not expect to see an immediate snap back in our economy. While the reinsurance sector has reported handsome earnings, these have come after substantial losses the previous year. Moreover, there doesn’t appear to be a line up of new capital waiting to come to our shores. The uncertainty of the tax and regulatory situation is mostly responsible for that. No one is going to make major decisions until there is more clarity on this front.

The world is still wounded from 2008 and it will take some time to heal. The deeper the wound the longer the healing time. This means 2010 will be difficult, as we already forecast a year ago. There are time lags between the US and the Bermuda economies and even though the US has bottomed out, I do not believe we have reached the bottom here yet. Hopefully 2011 will see some improvement but it too is likely to be slow, nothing dramatic. The expectations of Bermudians about the prospects for the Bermuda economy should be formed within this context.

Mr. Speaker this is the world we live in.

THE DOMESTIC ECONOMY

PUBLIC SAFETY

Mr. Speaker,

The protection of one’s family — to keep them safe — is fundamental and instinctive. We, as leaders of this Country, must now come together to protect the Bermuda family from the evil within our midst. This evil poses a danger to all of us on many levels.

On a personal level crime, drugs and gun violence are a threat to the safety of all of us and our families irrespective of where we live or what race we happen to be. We are all at risk.

But let us look at this issue in terms of the economy. It is widely acknowledged that one of the principal advantages that Bermuda has over competing offshore jurisdictions, particularly in the area of insurance and reinsurance, is the fact that a core of what is known as “intellectual capital” has grown and developed on island. It is this intellectual capital that allows the industry to react quickly to changing market conditions and events. It is this intellectual capital that is creative and innovative, coming up with new and novel solutions to evolving business problems and threats.

Despite all the challenges from the US and the UK, resident intellectual capital is Bermuda’s edge in the insurance/reinsurance world.

Mr. Speaker, this capital does not reside in bank accounts, stock certificates, or safe deposit boxes, nor does it reside in memory banks of silicon. This capital resides in the most powerful computers in the history of the world, human brains. And these brains are housed in human bodies that, like the rest of us, live in these islands along with their families. As Bill Gates once said, “The primary assets of Microsoft walk in and out of the office every day.”

In modern fighter aircraft there is a screen that shows the pilot the location of all the threats to his aircraft and prioritizes them, i.e. it tells him which threat is the most urgent and requires his immediate attention. This gizmo is called a Threat Board and is designed to save the pilot’s life.

What is on Bermuda’s Threat Board?

Mr. Speaker, there are many threats, but of all the threats to Bermuda’s economy, society and people, the issue that poses the most immediate and greatest threat is the issue of gun crime. Our economy depends on a deal (a contract of sorts) that we have made with certain people who wish to conduct business or vacation in these islands. The deal is they would spend their money on our shores if we provided an attractive environment within which these folk could either conduct legitimate business or have a relaxing vacation.

An essential component of this deal is personal safety. Historically, one of the key attributes we have touted was that Bermuda was safe. Safe for business people and their families and friends as well as safe for vacationers. We as a community are breaking our contract with our foreign clients because Bermuda is no longer safe.

Public safety is critical to the maintenance and growth of international business as well as tourism. I have heard it said that 80 percent of Bermuda’s economy is directly or indirectly attributable to international business. Most of that 80 percent is attributable to those international companies that have a physical presence on the Island. That means companies that have an office and employ people, people who are vulnerable to bullets.

There’s no comfort in the fact that, so far, the gangsters have confined their fire to each other. Bullets are not guided missiles. They can hit innocent bystanders who could be members of my family, your family, the family of a CEO of a Class 4 reinsurer, or that of a vacationer.

Bermuda is not New York city or the City of London where senior executives who make decisions that affect thousands of people’s livelihoods can segregate themselves into separate safe enclaves. In Bermuda, we’re too small for that. We’re all in this together.

Mr. Speaker, let me spell it out. If the so called intellectual capital becomes frightened enough they will leave for somewhere safer and Bermuda will lose its edge. The companies whose infrastructure is built around this capital will follow them. Jobs will be lost in the sector and in sectors that support international business or sectors that service people who work in international business, in a kind of cascading effect.

The hotel sector will be negatively affected as many of their guests are business people. More layoffs will take place there. Property values will fall with fewer expatriate tenants who have housing allowances. Some properties that are highly leveraged and dependent on rents from expatriate staff will default on their mortgages, some will lose their houses.

Government revenues will fall dramatically as payroll tax is a main source of revenue and Government’s ability to help those in need will be severely curtailed. Many people will be plunged into poverty and the lustre of that beautiful gem of the Atlantic will grow dull. What had taken six decades to build can be ruined in a few short years. No one wants to see this story played out in real life, but the risk is growing.

There was a time, not long ago, when some Bermudians would have dismissed the scenario I have just described as mere scare tactics. But after the violence of 2009/10, and as the recession drags on, even these skeptics will get an uneasy feeling in the pits of their stomachs. This is why gun crime represents the greatest and most urgent threat to our economy and our way of life. In the words of Tom Clancy, it is our “clear and present danger.”

The United Bermuda Party will support any effective measures to eliminate guns and gun violence from our midst.

ECONOMIC SECTORS

INTERNATIONAL BUSINESS

The dominant insurance/reinsurance component of the international business sector has rebounded impressively from the difficulties of 2008. Recently reported earnings from the major players have contained record profits in some cases, a situation which augers well for the industry and Bermuda. The sector has shown itself to be recession resistant. Figure 7 shows trends in net premiums, total assets and capital and surplus up to the end of 2008. Total assets are edging toward the magic ½ trillion dollar mark while capital and surplus and net premiums show the effects of the global recession.

We expect these aggregates to resume their climb in light of recently reported profits. However, a cloud of uncertainty hangs over the industry, uncertainty as to what measures the United States will enact that might be damaging to Bermuda-based companies. We have pointed out in previous budget debates how Bermuda is an easy target for Washington. So while the recent performances of reinsurance companies are encouraging, the cloud of uncertainty surrounding tax and regulatory issues in the US should temper our enthusiasm.

Any conscientious observer cannot help but notice that we still have major Bermuda international companies moving parts of their corporate apparatus to domiciles other than Bermuda. Switzerland and Ireland continue to be beneficiaries. The reasons appear to be global as well as Bermuda-centric. More and more companies are hedging their bets not just because of uncertainty over US policy but because of displeasure over Bermuda Government policy. In the recently debated Bermuda First report, the most important issues cited by international and local business leaders were:

* The presence of skilled workforce

* Government responsiveness to business needs

* Government accountability

* Strong educational system

* Public safety and low crime

The catch is that Bermuda was seen to be weak in each of these issues. More to the point, all of them fall within the responsibility of the Government. I understand that delays for work permits have been significantly reduced. That is good news, but the term limit issue is still a problem for business and the Government’s public statements about the policy sound more like religious dogma than any attempt to approach the issue in a pragmatic fashion.

Term limits cause enormous uncertainty in the affairs of corporate resource planning, not to mention the affairs of family life. Business abhors uncertainty and will go to great lengths to reduce or avoid it. Government needs to take a more pragmatic course, as recommended in the Bermuda First report, i.e. to remove term limits for job categories with 100 percent work permit approvals.

The Hedge Fund sector proved to be very sensitive to the vagaries of global stock markets. Figure 8 shows that assets under management plunged during the market crisis but appears to have leveled off, albeit at a level at about 70 percent of what it was early in 2007.

There is uncertainty in this sector as well, but of a different sort; uncertainty that may result in a future opportunity for Bermuda. In the US, the hedge fund industry and hedge funds within regulated banks, have been lumbered with some of the blame for the 2008 crisis. This was certainly the case with AIG, although AIG is not a bank.

Nevertheless Congress is still in a mood to curb or penalize or tax or regulate onshore hedge funds. We just don’t know what the outcome will be, but it is not likely to be positive for investors. This could create an opportunity for Bermuda to get some of these assets back. This will require Bermuda to be aggressive and innovative because many other offshore jurisdictions want this business as well. Once again we are competing with Switzerland and Ireland.

RETAIL

The retail sector continues a trend which is clearly unsustainable. Figure 9 shows total Retail Sales volume declining for its eleventh consecutive month. Struggling retailers need tax relief from Government. Purchases of goods overseas by residents are not as resolutely negative as are local retail volumes, suggesting that there is an appetite on the part of residents for retail items. However, for whatever reason, the appetite favours foreign goods as opposed to those purchased locally.

There might be a gap between the local and foreign goods insofar as the value proposition is concerned. This is where government can help by reducing customs duties or at least changing when they have to be paid. Figure 10 shows sales of building materials. These have declined sharply since 2008 indicating the increasing weakness in the construction sector.

TOURISM

We have already outlined some of the external negative factors militating against the tourism industry during the coming fiscal year. Our targeted visitor profile is the affluent traveler and it is clear that many such people have generally not become unemployed or bankrupt, but, like everyone else, they are not spending. This is part of the consumer confidence phenomenon whereby consumers are saving more and spending less even if they have the money to spend. It is not clear what the catalyst will be that will break this mood or when it will occur, but there is likely a pent up demand for vacationing. Until then our hotels will be suffering mightily. The official hotel occupancy figure for 2009 was 51 percent, the lowest since the Second World War (some in the industry believe it was even lower) and that was with a significantly reduced number of rooms as a result of hotel closures. This winter has witnessed some weekends where some of our hotels were virtually empty.

Mr. Speaker,

What the industry needs now is the clearest possible understanding of what to expect. But, once again, this Government, and especially this Tourism Minister, is not giving it to them. Just last week the Minister spoke of a “turnaround already being in place”, but nothing we have heard from the hotel industry gives us any comfort that this year will be anything but a desperate struggle to survive. And it is not just hotels hanging on for dear life. Small businesses from cycle rentals to restaurants to dive boats will struggle to keep it together until numbers improve. Unfortunately the minister’s commitment to spin has always come before inconvenient truths — and this has been nowhere more apparent than in tourism where obfuscation has trumped truth, clarity and accountability.

This is unfortunate because the Government, and this Minister in particular, is no longer seen as credible or trustworthy by the industry, and the industry needs a minister it can believe in.

CONSTRUCTION

Figure 11 shows the decline in the construction sector. As members will recall this sector became severely overheated in the middle of the decade and Bermuda became overbuilt. We are now in the other side of this cycle. The chart only goes up to 2008 but anecdotal evidence strongly suggests the downward trend is continuing. Many jobs have been lost in construction and while we have surely sent many expatriate workers home, the number of Bermudian construction workers out of work has grown appreciably. Unfortunately we do not have any reliable data for unemployment in Bermuda. Nevertheless as a small community we know that there is a growing problem in this area.

PUBLIC DEBT

What it means to you. Figure 12 shows public debt per Bermudian under the age of 35 years. With this budget every Bermudian under age 35 will inherit a debt of over $36,000. The debt ceiling will be raised to one and a quarter billion dollars about 21 percent of GDP. The Minister of Finance says the building of long-term infrastructure, is an investment in so-called hard assets. This, she says, justifies the explosive increase in public debt. Accordingly, these assets will be used by and paid for by our children and grandchildren.

While this is true, it is not the whole truth. Firstly, if there are frequent large cost overruns in constructing these hard assets and these overruns involve the “Houdini Effect”, (i.e. the unexplained disappearance of money or materials or improper bidding practices resulting in higher costs), then the hard assets’ true value is far less than the actual cost of making them. When this happens our children and grandchildren will be paying for, not only the hard assets, but for the “Houdini Effect” as well. Is that fair to them?

Secondly, if the Government had been prudent with current spending then it would have had excess funds left over, particularly during the high revenue years after 9/11 and Katrina, to either save towards the infrastructure build-out or pay down existing debt so that when they did have to borrow the total debt would be much less. But that did not happen. In our reply to the Budget of 2008/2009 we said:

“This Government, in its last five budgets, has collected $317.6 million more revenue than it budgeted for. What happened to all this money? Has the Government given it back to the people in the form of tax cuts? No. Have they made extra payments on their debt? No. What have they to show for all this current spending? The truth is that they have nothing to show for it except just bigger government.”

Mr. Speaker, we sure could use that $317.6 million now. If prudence had prevailed during the period of plenty then the Government would have had reserves to bring to bear during these lean times, just like in Pharaoh’s dream in the Old Testament. It is easy to imagine where Pharaoh would have been if he hadn’t listened to Joseph. He would have been in the same awkward position of this Government, having consistently ignored the warnings from this side of the House. But instead, the Government felt compelled to spend this bonanza on a myriad of things from fruitless initiatives in tourism, to globetrotting limo-riding ministers, to a legion of high priced consultants, to swelling the size of the civil service. So when the lean years did come the cupboard was, as I’ve said, virtually bare. The only course of action left was more borrowing. Thus future generations will have to pay for this generation’s wastefulness. Where’s the fairness in that?

Thirdly, interest is payable on debt. Not only will future generations have to repay our debt but they will have to pay taxes to pay bankers their interest. These interest payments will reduce the amount of money future governments have at their disposal to meet the challenges of their time. So the operations of future governments will be made more expensive because of this Government’s wastefulness. Is that fair to future generations?

Fourthly, where is the plan to repay all this debt? Are we merely waiting for an improvement in the economy? Assuming that the economy does eventually improve, this Government’s track record has been to waste money in good times, so one cannot just assume that debt repayment would be their priority. Perhaps the plan is just to roll it over ad infinitum. Is this the responsible thing to do?

Therefore, Mr. Speaker, this is not just a financial issue, this is also a moral issue. Fairness and responsible conduct are moral issues and the policies and practices of this Government have unfairly lumbered the next two generations of Bermudians with unacceptable levels of debt to repay. It is unfair because they will not benefit from the waste of today nor did they have a say in causing or preventing it.

THE BUDGET

Mr. Speaker, this is the third budget that I am formally responding to on behalf the Opposition and this is the third time that the Government has made a major error in its assessment of the macro economy. Three years ago the Minister of Finance endeavoured to stimulate a local economy that was already overheated, thus stoking inflation and making housing even more unaffordable than it already was.

Last year the Minister completely failed to anticipate — or, more concerning, completely disregarded — the oncoming recession. She continued Government’s spending spree, while revenues plummeted, and ratcheted up our public debt even further. In this budget the Minister is anticipating a recovery while following the wrong policy measure for the scenario she is anticipating.

The budget process forces you to peer though the fog of the future. The Minister said it herself, “Budgeting reflects the ability to think ahead to years in the future…” It is ironic that the Minister has put her finger directly on one of her ministry’s greatest weaknesses: the ability to anticipate oncoming events. In its “Economic Report 2009”, the Ministry of Finance states: “The prognosis for the Bermuda economy is one of cautious optimism.” Even if you believe that outlook, an across-the-board tax increase is the wrong policy action under those conditions. These tax increases will act to suppress whatever recovery is on offer.

The analysis we showed earlier in this speech clearly shows that the odds heavily favour the continuation of economic weakness this fiscal year, yet the Government is expecting a recovery. Amazing! The usual time lag between US recovery and Bermuda’s has not been taken into account. Unrealistic economic forecasts have cost Bermudians millions in the past and will do so again in the upcoming fiscal year.

Government’s inability to anticipate economic developments caused them to grossly overestimate revenues and underestimate expenditure in 2008/09 and 2009/10. In 2009/10 revenues were overestimated by $35 million and expenditures were underestimated by $21 million, a net error of $56 million. This error was a result of unrealistic expectations for the Bermuda economy coupled with hopeless inability to control government costs. We believe the same errors are continuing this upcoming fiscal year.

Last year we recommended that Government follow the tenets of the medical profession, “First, do no harm.” Raising taxes during a time of economic weakness is, in fact, doing the Country economic harm. It will reduce the amount of money individuals have in their pockets and their ability to spend it in the economy. The same is true with business. Some may shed workers as a consequence, thus swelling the ranks of the unemployed. We have already heard this week hardpressed retailers express their concerns on this point.

The removal of $77 million from Bermudian’s pockets by way of payroll taxes penalizes the average working person for Government’s own irresponsible past spending. Overall tax increases exceed $100 million. The wrong policy at the wrong time. But, of course, the Minister was between a rock and a hard place, both of her own making. The rock is her Ministry’s inability to control costs and the hard place is the public concern over the spiraling debt. So the minister had to raise taxes or hugely increase public debt. It appears she has chosen to penalize today’s taxpayers for ministry mistakes as well as future taxpayers by the increased debt.

Of course, the one thing the minister could have done would have been to curtail Government spending, but we all know that although this alternative is talked up by ministers it remains just that — words without action. They have never done anything but grow the government — now more than 30 percent bigger than it was in 2000. Their talk of cutbacks from year to year is nothing more than lip service, something they dole out to calm the public. Every household has a budget and most of us have to face up to the fact that we have to live within our means. It’s called responsible behavior and is part of the dominant Bermudian value system. If we don’t live within our means we end up in trouble with the bank, the credit association or (heaven forbid) our spouses. This Government has refused to come to grips with the realities of cost containment and live within it means, like you and I must do, Mr. Speaker. If I blow the family budget, the family gets in trouble. When the Government blows its budget, as it has two years in a row, the entire Bermuda family is required to pay for their transgressions. How fair is that? And the likelihood of Government blowing the budget placed before us now is indeed very high.

With the rise in Government debt the sinking fund replenishment of $28.6 million, plus interest of $38.4 million, almost eats up all of the $77 million increase in payroll taxes. This demonstrates that the tax increases that working Bermudians will be required to pay now is for yesterday’s indiscretions. There is not a scintilla of evidence that any lessons have been learned. So how and who will pay for tomorrow’s indiscretions?

Mr. Speaker, the answer to half that question is self evident: we know who will pay — the people of Bermuda. The rise in taxes on international companies also has its risks. Many of us will look at the impressive profits of the big reinsurers and reckon that these increases will not even be material items for them. For some that will undoubtedly be true. But for those who are weighing the decision whether to outsource a unit overseas, this fee increase, coupled with the payroll tax increase, could be the deal breaker for keeping it here. The outsourcing was already on the table

because of the expense of doing business in Bermuda. These tax hikes makes it even more expensive. There is no up side to these tax increases for business.

So, Mr. Speaker, there are four strategic points in this Budget with which we disagree.

1. The Government is banking on a recovery taking place this year. We believe recovery this year is unlikely.

2. Imposing tax increases at this time is the wrong thing to do. Not only does it penalize Bermudians for the Government’s mismanagement of the public purse, it could well suppress any nascent recovery.

3. Government spending is out of control and shows no real signs of slowing down. Its lack of discipline, responsibility and control are the root causes of the mess we’re in.

4. It is wrong for the government to foist its spiraling debt on our children and grandchildren.

5. The last point is not one of disagreement but of emphasis and it is that gun violence is the greatest threat to the economy.

WHAT WE WOULD DO

Mr. Speaker, there is no way Bermuda’s finances would be in this predicament if the government were under the guidance of the United Bermuda Party. There is a fundamental difference in our approach to finance from that of this Government. We have tried to make it crystal clear to the public, with the analysis and commentary in this and previous budget responses, that there is another way to manage the public purse, a better way, a pragmatic and prudent way. Our approach is based upon widely accepted family values like living within one’s means, the judicious use of debt and sound judgement.

Having said that, what would we do now given the precarious state of public finances this Government has put us in? Last year we laid down some principles of our approach and I repeat them here:

1. Be realistic, don’t try to wish or spin away the facts

2. Do no harm. Don’t make things worse by our own actions

3. Minimize the impact on those most vulnerable in our society

4. Manage government expenditure with utmost care and in relation to resources available

5. Sustain, help and protect sectors that generate foreign exchange and jobs, sectors that are vital to generate growth in the future.

Be realistic:

Budgets need to be made on the basis of expectation not a wish list. We all wish that a recovery takes place in Bermuda this year, but to make a forecast on that basis is not realistic.

No tax increases:

Tax increases fail the “do no harm” test. The proposed tax hikes — more than $100 million in total — will harm working Bermudians and business, particularly small business. Raising taxes at this time threatens to snuff out any recovery that may be in the economy. Our emphasis would be on cutting costs and postponing many of the initiatives presently underway in Government.

Help those in need:

We would look to enhance financial assistance wherever possible to those most in need. It is government’s duty to do so. The construction industry is still softening and jobs are being lost. In international business jobs are being outsourced and the ability of Bermudians to cross the street and get another job is rare these days.

Set the stage for tourism recovery:

Just last month the Tourism Minister traveled to India to promote Bermuda as a tourist destination, among other things. We won’t get into the absurdities of this venture other than to say it typifies the capricious, off-the-wall leadership that one can get with one-man rule. Tourism is facing its most challenging year ever. Virtually all hotel operations are hanging by the skin of their teeth, the industry is in terminal decline and the minister is committing time and taxpayer dollars to building tourism a world away. The trip to India will not help Bermuda tourism this year and that, Mr. Speaker, is the only thing this Tourism minister should be focused on, because right now this year is all that matters. If we don’t get through it, if we don’t drive enough visitors to our shores, we may well be left with a shattered industry.

Therefore the first order of business for the Government is to make sure hotels survive. We need to do what we can to reduce their costs and, in turn, the cost of a Bermuda vacation. To help them, Government needs to waive all taxes that arise in the sector: hotel occupancy tax, land tax, payroll tax, customs duties and duties on fuel. It is essential that hotels survive this industry depression so that when consumers do resume spending they will be in business to welcome them.

Jobs depend on it.

The second order of business is to prepare the market for the upturn when it occurs. This means there needs to be an all-out marketing push — total focus — to rebuild the Bermuda brand in our core US and Canadian markets. This is not a simple matter. I say that because this Government has presided over a catastrophic decline in awareness of Bermuda in markets that for decades sent the lion’s share of visitors to Bermuda. People will need to be educated. Their sense of Bermuda has been lost — where it is and what it offers. We saw a measure of this last year when an industry survey revealed that just ten percent of potential customers were aware of Bermuda as a vacation destination. Nothing we have heard or seen since indicates this unacceptable situation has improved.

We support the idea of a special fund to join government and the private sector in cooperative marketing. This is in keeping with our call last year for such coordination. Our support, however, is contingent on there being a real working relationship between the two groups with cooperation and joint decision-making.

To underline our commitment to getting more visitors here to Bermuda, we would commit the $800,000 earmarked for the corporations takeover study to the special fund. We would also put a sales force back on the ground, something Bermuda Tourism used to do to great effect. We want to get Bermuda “out there”, to build greater awareness among travel agents. We used to do it but don’t anymore, and one cannot dismiss the more personal approach we once took with the results we once had. Whenever US attitudes towards vacationing breaks, and that pent up demand is released, we need to be in a position to capitalize on that change. Will we be ready? Will people think of Bermuda when the travel decisions are being made? That’s Bermuda’s challenge and we need to be on top of it.

Work with international business

We continue to be mystified by this Government’s hamfisted relationship with international business. After 12 years in power — years in which the collapse of tourism underlined the international sector’s overwhelming importance to the economy — one would have expected the Government to make sure it established the best possible working relationship with international business. But such is not the case, even as competitors work overtime to lure these companies to their shores. Irritations continue to fester, impediments remain and ministers alienate. The relationship could be so much better.

It is vital that Government improve its relationship with international business. Despite Government’s protestations, the IB sector has a list of valid issues that should be addressed. Most of them can be summed up in the phrase lifted from the Bermuda First report that says “Government’s responsiveness to business needs” is weak. Improving Government responsiveness — improving its diplomatic skills — is key not only because it should do so as a matter of character and respect, but also because, in the main, the issues with international business are not ones that will cost a lot of money to fix. Rather, they are matters that require a review of practices and policies to make it easier or more efficient for businesses to operate here.

We reiterate the term limit policy change that was recommended by Bermuda First: waive term limits for job categories that receive 100 percent work permit approval. That would be an excellent first step to getting the government-international business relationship on more solid footing.

Cut red tape, boost construction

There was mention of using infrastructure development to stimulate the economy, but the practicality is that any project not already in planning will not be started during this fiscal year. But I have a constituent who is just trying to build a wall and his application has been in Planning for 18 months. There are many private sector projects that are mired in the Department of Planning waiting for approval. Instead of authorizing new Government-financed projects why not streamline the Department of Planning to significantly increase the throughput of that department. No one is advocating a lowering of standards, just a raising of efficiency. In this way more projects could be started sooner and this would have the same effect as an economic stimulus package, except a lot cheaper for the taxpayer.

Control spending

* Freeze civil service hiring

Mr. Speaker, Bermuda cannot continue to grow its government year after year, as this one has done since it came to power. This is especially so since the costs of Government and the pressures of recession have imposed significant burdens on the taxpaying public. Yet with this budget the Government continues to grow the civil service, sending the wrong signal to the community. The public is looking for leadership they can believe in. They don’t want their government operating by a separate set of rules. We would impose a hiring freeze in the Civil Service to cap spending and signal to Bermuda that we are serious about budgetary restraint.

* Cut consultants

We have long expressed our concerns with this Government’s over-the-top reliance on consultants, many from overseas. Bermuda has the largest government in its history — more people in its ranks than ever before — yet ministers have hired what is, in effect, a shadow government, accountable to no one but them.

Consultants now account for an astounding $100 million in spending, nearly 10 percent of the Government’s budget. That’s costing taxpayers more than $30,000 a day. Many of these consultants are from overseas, taken ahead of Bermudians — a state the old PLP would have been screaming about — to run, for example, our hospital, rewrite our planning laws and advise on the takeover of the corporations of Hamilton and St. George’s.

The waste in spending is phenomenal. Just consider the $900,000 a year being paid to Colorado-based Greeley Company for the hospital Chief of Staff and, as the Health Minister said last week, “any off- or on-site help” the hospital needed. This vague wording represents the kind of hole in the public purse that our Auditors General have expressed such concern about. Or how about the millions spent on Atlanta-based Ambling International Consulting, which was picked over two local groups to rewrite Bermuda’s planning laws and to provide “general consulting” on the Southlands-Morgan’s Point land swap and the St. George’s hotel development. That multi-headed contract cost taxpayers a minimum $115,000 a month.

The reliance on consultants suggests the Government lacks confidence in Bermudians. How else to explain this extraordinary move to outside expertise? We wonder who made the decision that Bermudians were no longer capable of running their own hospital? We have to wonder who made the decision that Bermudians could not rewrite our planning laws. This Government shows little faith in their own civil servants and Bermuda’s own private sector expertise. It’s a shame and a scandal.

Lead on public safety

We think all Bermuda understands in its gut how serious and implacable is the problem represented by gang-related gun violence. It is the tumour in the tissue of our body politic. Clearly, it will not be diminished, let alone eradicated, without a sustained community-wide effort involving all manner of people and organizations. The problem is too diffuse, too entrenched for solutions from Government alone. And so we are encouraged by the emergence of citizen groups in the aftermath of shootings and the shared understanding that the threat posed by gangs is not just a Police problem, it is not just a government problem, it is everyone’s problem.

Leadership nevertheless is crucial to how well we organize and support helping agencies and citizens who want to make a difference. Government must adopt a strategy that commits its resources over the long and short term to confronting the origins and the dynamics that grow and perpetuate the gang problem.

We are encouraged that the Government after a prolonged period of denial recognized the seriousness of the situation and ended its tiresome constitutional sideshow with Government House over control of Police operations. In the time since, the working relationship between the Governor, the Police Commissioner and government appears to be making progress.

We do have ongoing concerns, however, and this Budget provides the opportunity to express them. We think it is vitally important for the Government to demonstrate wholehearted support for the Police and call on it to provide them with all the space necessary to set up their command centre in the new police and courts building in Hamilton. Reports of Government ministers wanting space in the new building, including private bathrooms ensuite, undermine the original purpose of the project and reflect the continuing “me-first” mindset that has damaged the integrity of Gvernment decision-making and spending over the past decade.

By the same token, we urge the centralization of the courts system in the new building, as originally planned. Much has been made of an increase in the Police budget, but we are sceptical one has actually been given. The budget indicates Police will get $65.7 million this year, $5 million more than last year. But we know the final spending figure for 2009/10 is not yet in and believe supplementary spending for overtime and unplanned operations will add significantly to the final figure. The final spending tally in 2008/09 was $8.8 million more than the original budget.

The point here is that the government once again is spinning reality to the public — making a big show of a budget increase that is not there — particularly in light of the fact that the budget still remains $4 million below what it was three years ago – well before gunfire became a constant on the streets of our Island.

Mr. Speaker, The stakes are as high as they can be. Bermuda’s reputation as a safe place to visit and conduct business is on the line. We need the clearest signal that Bermuda is unequivocally doing what is necessary to control and choke off gun violence.

Reform FutureCare

We would take FutureCare back to the drawing boards and reform it to include all needy seniors over 65 using a means test to determine need. FutureCare was hastily devised in the midst of an election and with the promise to provide every Bermudian above the age of 65 with guaranteed health care for the remainder of their lives. But it was a promise made without a plan and without a strategy for how to pay for it. The programme as it stands is unfair, discriminatory, unaffordable for many and ultimately unsustainable. It is unfair to those who did not qualify and who remain outside the programme. It is discriminatory towards those who have to pay double for the same benefits that others are paying.

It is unsustainable because the long-term costs could seriously undermine Bermuda’s financial stability. We believe in the concept of FutureCare, but plans need to work. In addition to reforming FutureCare, we would reform HIP to include a prescription drug allowance for seniors. It was dropped from HIP and only applies to seniors in FutureCare.

End the education crisis

Education reform under the Government has been too slow, too little and too late for thousands of Bermudian schoolchildren. An entire generation has been disadvantaged by an education system undeniably in crisis and by a PLP government that says the right things yet fails to deliver. Back in 2003 the Government said it was on course to make the public education system “first rate, first choice and first class.” Has it happened? Not yet. In the spring of 2007, the Government promised that the first round of changes from the Hopkins Report would “be implemented in September 2007.” Did it happen? No, it didn’t. In 2008, the Government “pledged to restore the pride in our public education system.” Are we there yet? Not by a long shot. In 2009, the Government promised to “raise the achievement of students in the public school system to the highest level.”

It’s just more words, Mr. Speaker. So when the Finance Minister tells us that the 2010 Budget will “provide the opportunity for every child to have a world-class education,” we have good reason to be sceptical. The United Bermuda Party believes that education reform — a process everyone on this Island recognizes and supports as critical to both equality of opportunity and our island’s economic future — is mired in a muck of dysfunction created by eight different ministers and a revolving door of consultants, commissioners, and committees.

Now, three years after the Hopkins Report, the Education Ministry has finally prepared a five-year strategic plan. From the briefest of outlines provided in the Budget Statement, we can see that, yet again, the objectives are commendable. We wholeheartedly support components of education reform like strengthening principal leadership, improving the quality of teaching, and improving standards. But if the record of the past decade shows that very little meaningful and quantifiable change has been achieved, why should we believe that this will be any different?

The United Bermuda Party will continue to support the objectives of education reform, and when the Government turns talk into action — as it did with the Cambridge curriculum — we will acknowledge those good decisions. But we make no apologies for being critical where necessary, because every year that passes without significant change means that the opportunity for more productive and rewarding lives diminishes for Bermudian schoolchildren and Bermuda’s economic future grows dimmer.

Mr. Speaker,

Without more transparency and disclosure from the Education Ministry, it is difficult to predict the full impact of their budget cut of 4 percent in the 2010/11 budget. We know that enrollment in the public system dropped by almost 800 students in the last five years and the average cost per student rose from $16,500 to $23,000. We hope that some of this budget cut reflects a restructuring of the Ministry as recommended in the Hopkins Report. But the crux of education reform is effectiveness in the classroom and ensuring that the considerable funds being spent by taxpayers result in superior student outcomes. This will continue to be our focus as we push this Government to make progress on reform.

Help The Town of St. George’s

Mr. Speaker,

We believe there is a connection between government policies and decisions that have hurt St. George’s over time and its recently revealed intention to eliminate the Corporation of St. George’s. The decisions to close the St. George’s golf course, the deliberate reduction of cruise ship visits, which are critical to the health of the local economy; the signing of a contract for a ship that can’t fit through the Town Cut, the decision to develop a mega-yacht facility in Dockyard, even the cancellation of the Old Town’s New Year’s party reveal a government that is taking down the Corporation by plan or by negligence. The United Bermuda Party does not want to destroy the Corporation of St. George’s. We believe locally based government is essential for maintaining the special qualities of the Old Town.

To help restore its operational viability, we would use the fuel tax to ensure the Corporation and its partners have sufficient income to balance their budgets and provide for capital improvements. We would facilitate the development of an income-producing business and create an endowment for the St. George’s Foundation to support the continuing development of the Old Town as a World Heritage Site.

Raise standards of governance

Mr. Speaker,

It is unacceptable that the government has not moved more quickly and with more commitment on good governance measures to strengthen our democracy. We are prepared to support the longawaited freedom of information legislation, but there is much more that can be done now to give the people of this Island a more transparent, more responsive and more accountable government. The United Bermuda Party would implement a legislative programme that could assure the public their tax dollars are being responsibly managed. These include:

* Whistleblower legislation to protect the right of public servants to speak out against corruption without fear

* Integrity in Public Office legislation to define corrupt practices and set minimum standards for disclosure of financial dealings by parliamentarians

* Anti-corruption legislation

* A Contractor General to ensure proper and fair handling of government contracts

* A Code of Conduct for all parliamentary members, and

* A stronger role for the Legislature’s Public Accounts committee

It is long past time for Bermuda to get serious about implementing higher standards of governance.

THE CHALLENGE OF THE FUTURE

Mr. Speaker, Despite the uncertain outlook for the economy for the coming fiscal year, it is important for Bermudians and residents alike to be optimistic about our long-term future. Optimism is essential to economic growth. It helps:

* The recognition of opportunities, both personal and business

* Capital to finance enterprises to exploit those opportunities

* The creation of new jobs

* New opportunities and careers

* Dollars spent by companies, their management and employees to flow and be multiplied throughout the community creating a rising tide that raises all boats.

Mr. Speaker,

We cannot ignore the challenges before us and merely wish them away. True optimism is facing up to the challenges, actively prosecuting those challenges in the secure belief that we will eventually overcome them. You may say how can I talk about optimism when my economic forecast is so pessimistic? It is not pessimistic, it is realistic. The truth is I am not pessimistic about Bermuda, I am, as I have always been, bullish on Bermuda. Being bullish on Bermuda doesn’t mean one should ignore the reality of the short-term prospects. Ignoring clear economic indicators, or sugar coating them for political reasons, is an exercise in deception, and I will have nothing to do with that. Despite the difficult quarters ahead we, as leaders of this Country, must not let our fellow Bermudians slide into despair, cynicism and hopelessness. We must keep hope alive.

How do we do that? We must, by our own example, lead the way in terms of integrity, straight talking, prudence and caring, because these are the values that we all had infused in us as children. From this solid foundation we can reinforce the idea that there will be a better day for us all, if we work hard, giving our very best at whatever we do, in the belief that if we do things right, things will work out right.

Mr. Speaker,

Our giant neighbour, the USA, has a multitude of reasons why they are a great nation, the richest most powerful nation in the world. One of the key reasons is something called a “Can do” attitude. It’s why candidate Obama’s mantra of “Yes we can!” resonated so deeply during the election campaign. Today we have many challenges: as an economy, as a law-abiding peaceful society, as a Country, but I truly believe that we “Can do” too, with diligence, imagination and intelligence, we can overcome the challenges before us. Former Premier Alex Scott said that, “Bermuda works best when we work together.” And I believe that is a key place to start to march toward our future success. If we waste all of our energy fighting each other, how much are we going to have left to meet the real challenges facing our entire Island. Now we disagree with some of the economic policies of this Government but we all must unite against the destructive forces of crime, gangs, gun violence and drugs; forces which are threatening to rend this community asunder. This criminal behavior is squarely contrary to the values we hold dear in this Country and we must unite to stop it.

Class and racial polarization is a cancer that is eating away the very substance of our society and if we are to survive and overcome our problems we must cast those outmoded notions into the dustbin of history, where they belong. If we do, our spirit and combined talents will find pragmatic and perhaps even innovative solutions to move our Island forward.

Mr. Speaker,

I am bullish on Bermuda because I know that we can find that unity amongst ourselves to work together to emerge from this dark period in our history stronger, leaner, more competitive, more accepting of change and more accepting of our diversity. We know deep down inside that we have to change our way of doing things, how we treat each other, our attitude toward work, our expectations for compensation for our efforts. These are all things that must change if we are to emerge better able to compete in this very tough world.

Mr. Speaker, the Bible says faith is empty without works. Accordingly, we must have faith in our future success but make sure we work together diligently to make it happen.

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