DeSilva’s Speech On Municipalities Reform Act

The Municipalities Reform Act 2010 saw extensive debate in the House of Assembly yesterday [July 24], which lasted into the evening. A group, estimated to be a few hundred strong, had marched from City Hall to protest the bill. Prior to the House debate and passage of the Bill, Minister Zane DeSilva delivered a Ministerial brief to Members of Parliament.

The full text follows below:

Mr. Speaker, the Bill before this Honourable House represents the ultimate challenge to us as legislators. The challenge presented is whether we will consider, debate and vote on the Bill or whether we will join the manufactured hysteria that does not match that which we are required to consider today.

In rising to this challenge Mr. Speaker, we are confronted by polls that indicate that 82% of Bermudians are against what the Mayor told them we would do. That is the Mayor’s responsibility and I hope that in the week since the Bill was tabled he has told them that his crystal ball is also out of order.

Mr. Speaker, this Bill is the takeover that takes over nothing. This Bill is the land grab that does not affect any land. This Bill apparently hurts residents by giving them the vote. Mr. Speaker, the people of Bermuda have been misled by the hype and hysteria and the responsibility of Honourable Members is to focus the discussion in this House on reality and not the fiction of the Corporation’s PR efforts.

Mr. Speaker, the principal purpose of the Bill before the House today is to reform the Island’s Municipalities. From the announcement of this Government’s intentions in the Speech From the Throne in November 2008, we have engaged in a comprehensive exercise designed to bring to bear experienced hands in the area of municipal reform.

Mr. Speaker, in a campaign reminiscent of Delaey Robinson’s face in the bulls eye in 1998, distinguished, professional men and women, engaged to advise on this Government’s plan were subjected to personal and false attacks on their integrity and ability. This was wrong and is the first of the apologies the Corporation of Hamilton should make.

Mr. Speaker, Honourable Members will be aware that an RFP was issued in June of last year by which proposals for an open and transparent scope of work related to the reform of the municipalities were sought. Mr. Speaker, bids were received and a committee of technical officers, mainly senior and experienced civil servants, conducted a series of interviews, entertained presentations from the bidders and thoroughly examined the proposals. It is important to note, Mr. Speaker that while overseas entities were free to respond to the open tender, evidence of local partnership was a requirement for consideration. I am pleased to say that each of the respondents met this criteria and the vote of confidence in the local legal fraternity that that indicated was a source of some pride.

Mr. Speaker, that committee made a recommendation to the Minister who was then responsible, the Honourable Member Mr. Roban.

The Minister then brought that recommendation to Cabinet, who while supporting the Minister’s recommendation, directed that the precise terms of engagement be vetted thoroughly to ensure that best value for money was achieved. Mr. Speaker, after a presentation to Cabinet by the recommended bidder, Cabinet approved the engagement of McKenna, Long & Aldridge with Attride-Stirling & Woloniecki as their local partners.

Mr. Speaker, from the time of their engagement, the team of consultants set about interviewing a wide variety of stakeholders to glean the sentiments of those affected and not by any proposed reform. The need for wholesale reform of the electoral process was unanimous. Many respondents were simply unaware of the intricate nature of the Corporations’ holdings, ability to tax and levy fees and the manner in which their operations were enhanced legislatively.

Mr. Speaker, jurisdictional reviews were conducted as part of the research. In Barbados, the local government structure was abolished in 1967 with full absorption of local government into the central government in 1969. In St. Lucia, local government structures have been suspended since 1979. Mr. Speaker, throughout the Region countries and territories have wrestled with this issue of local government but even where there have been moves to decentralize certain of the functions, the model adopted has been one of best practice in democracy and efficiency without prejudice to the function of the national government.

Mr. Speaker, in an interesting footnote to this entire exercise, the development of Hamilton’s waterfront was a constant feature in the discussions with interviewees. When pressed about a transformational impact on tourism in Bermuda the development of the waterfront was raised. Even those suspicious of the aims of this reform effort admitted that the protracted manner in which the development of even a plan for the waterfront had been conducted to the exclusion of the duly elected government of Bermuda, responsible for the economic pillar that tourism represents was in a word, odd.

Mr. Speaker, perhaps at this stage some history of the formation of the Corporations will be useful. Both Corporations are bodies corporate, created by statutes in the 1790s. All powers and rights the Corporations enjoy, such as the power to hold and purchase property, levy rates and operate generally, were granted to them by statute enacted by the Legislature. As a matter of general principle, therefore, these powers and rights can be varied in whole or in part by the same Legislature that created them.

Mr. Speaker, the Municipalities Act 1923 consolidated all the legislation related to the Corporations and repealed all previous Acts.

Mr. Speaker, Hamilton was formally established as a town in 1790 and under a statute of that same year, 145 acres of land were purchased using public funds and vested in the Government of Bermuda for the use of the new town of Hamilton. The land was eventually divided into lots and sold at auction with the exception of 44 lots on the waterfront designated public lots.

In 1793 Hamilton was incorporated by statute with a Mayor, three Alderman and five common councilors to be elected by the freeholders only of Hamilton. Once established, the land in Hamilton was to be vested in the Mayor and those other officers of the Corporation for the use of the city.

Mr. Speaker, St. George’s was incorporated by statute in 1797, with a similar structure. In 1814 the courts were moved from St. George’s to Hamilton and in 1815 Hamilton replaced St. George’s as Bermuda’s capital.

As Hamilton’s boundaries were extended through the acquisition of two islands in Hamilton Harbour and other properties west of Front Street, the lands were vested in the Mayor and the officers of the Corporation for public uses. Hamilton became a city in 1897.

Mr. Speaker, the history of the franchise in Bermuda is familiar to Honourable Members. It includes such unenviable eras of slavery, age restrictions, dual seat constituencies and eligibility to vote based on property ownership. Mr. Speaker, our national democracy has emerged from these discredited methods of electoral politics to the point where we now enjoy single seat constituencies and one man, one vote; each vote of equal value.

The same cannot be said for several acres of this country we know as Hamilton and St. George’s. Mr. Speaker, the requirement that voters in Corporation elections be landowners was retained after the property qualification for voting in national elections was removed in the 1960s concurrent with the introduction of The Bermuda Constitution Order 1968 and the introduction of Cabinet-style Government. In 1978 the qualification for voting in Corporation elections was extended to the leaseholders as well as freeholders and also to local businesses and to this day remains based on property ownership.

Mr. Speaker, this Government rejects the contention that the exercise of a democratic and fundamental right such as voting should be based on the ownership or other commercial interest in land. There cannot be hybrid forms of true democracy. The Bill before this Honourable House seeks to correct ancient wrongs and establishes a principle recognized throughout history’s struggles; that those who are bound by the laws ought to have a voice in making them.

Mr. Speaker, I am able to summarise the findings of the considerable work that has been conducted. Mr. Speaker, the current framework of the Corporations as reflected in its modern operations under the 1923 Act is not in the best interests of Bermuda. Mr. Speaker, this can be seen in three main ways:

1. the absence of a democratic governance structure has disenfranchised the majority of the Corporation of Hamilton’s residents;
2. the advancement of the basic principles of accountability and transparency that are at the core of good government are left to the discretion of an undemocratically elected group of representatives; and
3. the fragmented system of service delivery and policy integration in a limited geographical area inhibits the opportunity for advancement of a fully integrated economy.

Mr. Speaker, I thought it important to provide Honourable Members with the considerable background that gave rise to the Bill before turning to some of the specifics of the legislation itself.

Mr. Speaker, the Bill confirms the municipal boundaries. It is useful to add at this point, that in his haste to further his ill-informed campaign, the Mayor of Hamilton reacted to and supplied to the Royal Gazette a DRAFT of the Bill whose maps were different to those in the Bill before this Honourable House. Yet another example of hype and hysteria bred of misinformation.

Mr. Speaker, it is a mark of shame on Bermuda’s democracy that into this second decade of the 21st century unjust electoral processes continue to be permitted under our laws. The disenfranchised residents of the municipalities could not match the vested interest of business. Even as the Mayor of Hamilton leaves the city to lay his head at night, leaving those residents behind, he and many others do so having greater electoral power than the men and women who live in the City. That, Mr. Speaker, is not right.

I hope for unanimous support on this Bill, Mr. Speaker, because when the history of this country is written the people of Bermuda should reflect on our actions today with pride as we remove the last vestige of a system designed to preserve an unnatural imbalance in favour of the few. I referred earlier to the challenge that is posed by this Bill, Mr. Speaker. The challenge is crystallized in this section headed electoral reform. This Government is the Party of Universal Adult Suffrage and one man one vote each vote of equal value. This Government is the home of Dame Lois Browne-Evans, Dr. Barbara Ball, Freddy Wade and Roosevelt Brown and any vote or action that preserves this unjust system is an insult to their legacy.

Mr. Speaker, for Honourable Members opposite, the challenge is real also. The judgment of history will also rest upon their shoulders. Is their cry of reform, openness and transparency only for some or is it universal in its application? Mr. Speaker, having an Honourable Member who speaks for “public administrative reform” is one thing; but the commitment to such reform is manifested in a vote for it.

Mr. Speaker, this Bill seeks to repeal and remove the ability of the Municipalities to levy wharfage and port dues. Mr. Speaker, as an island, there is precious little that we do not import. Every Bermudian is affected by the activities at our ports and the effects are seen in the price of every bottle of mayonnaise or child’s toy that we purchase. Mr. Speaker, by the time an item reaches the warehouse and before it hits any shelf, its price reflects all of the charges that a supplier has had to pay before factoring in his profit margin. With that it is then made available for the consumer.

Mr. Speaker, unlike customs duty which is levied by the elected Government in accordance with a formula reflective of the nature of the item and the need to raise revenue, port dues and wharfage are levied on every Bermudian without question and are culturally accepted as the price of doing business. This too is not right; it is taxation without representation.

The Honourable Member, the Minister of Finance regularly entertains requests from industry to waive or defer the payment of customs duty. The Honourable Premier as the Minister responsible for tourism is charged with overseeing concessions for hoteliers and hotel developers. The represented appeal regularly to their representatives and owing to the relationship their appeals are often allowed.

In spite of their ability to do so nationally, these Honourable Members have virtually no mechanism to affect the imposition of fees and wharfage on goods coming into Bermuda. It is not right that a reduction in customs duty be the only alternative Mr. Speaker, because the responsibilities of the taxing entities are poles apart. This Government has the responsibility to its citizens for the paving of roads island-wide, for free day care for hardworking families and healthcare for its treasured seniors. These deserved benefits cannot be sacrificed to preserve the Corporation’s desire for a healthy balance sheet.

Mr. Speaker, the Mayor of Hamilton has referred to this provision as “death by financial strangulation”. Mr. Speaker, as I indicated in my ministerial statement when the Bill was tabled, these provisions do not come into force until 1st April 2011. In the interim period, as much as it might pain him, it is the responsibility of the Mayor to cooperate with the duly elected Government of this country and determine how best to ensure that the City of Hamilton can continue to receive the services it needs and run efficiently as a centre of commerce, employment and residency.

I look forward to that discussion because it will open doors to better management and it is likely to accelerate the pace at which people north of Church Street have their concerns addressed.

Mr. Speaker, the Bill also requires an independent audit to be performed on the Corporations. This process is mandated and certain of its provisions are mirror images of the Audit Act 1980 that governs the activities of the Auditor General for Bermuda. Mr. Speaker, as impressive as the balance sheets may be, they have not contained full details of the financial position and in the absence of that information the best decisions cannot be made.

Mr. Speaker, the non-payment of land tax by the Corporations, without more, is a historical anomaly. The estate of the Corporations must be assessed to ensure that again, fairness is applied. It cannot be right that sites used for turning a profit enjoy an exemption from land tax while other businesses in this country must factor that charge into their annual operating expenses.

Mr. Speaker, it is important to note that, like other entities who make the appropriate case I expect that the Honourable Member responsible for land valuation will entertain considerations of land tax issues for buildings like St. George’s Town Hall, whose existence and use is as much a tourism novelty as it is headquarters.

Mr. Speaker, I wish to commend the Chief Parliamentary Counsel and the entire team of the Attorney General’s Chambers, whose exhaustive research is symbolized in the considerable consequential amendments that are required to give effect to this Bill and which form the balance of its provisions.

Mr. Speaker, as I close this overview of the Bill and open the general debate on its merits, I again urge Honourable Members to debate the Bill and not the phantom allegations made in the public domain.

Mr. Speaker, this Bill presents opportunities on both sides of the House. For the Government it represents the chance to recapture the spirit of 1998; the mandate of change for the improvement of the lives of all Bermudians. This Bill is another step towards perfecting the vision of those of our forbearers who lived and died for justice and fairness.

For Honourable Members opposite it represents the opportunity to demonstrate that they are not wedded to business for business’ sake and that the people do matter to them.

Mr. Speaker, I have taken the increasingly personal attacks on me in stride. They are unfortunate and hurtful but if this is what I must endure in the name of providing the dignity of the vote to men and women in the City of Hamilton and the Town of St. George’s then I am equal to the task.

Thank you, Mr. Speaker.

CLAUSE BY CLAUSE EXPLANATION OF THE BILL

CLAUSE 1

Madame Chairman, clause one is the standard citation clause and cites the Bill before the House as the Municipal Reform Act 2010.

CLAUSE 2

Madame Chairman, clause 2 provides for the municipal areas of the City of Hamilton and the Town of St. George to be as shown on the maps in the new Schedules A1 and B1 to the principal Act.

The maps are attached as part of the Bill before the House and I wish to thank those technical officers from the Ministry of Works and Engineering who produced these versions for the purposes of the Bill.

Madame Chairman, as the legend to the maps indicate the series from which they are reproduced is available for inspection at the Ministry of Works and Engineering during office hours.

CLAUSE 3

Madame Chairman, this clause is the franchise provision and reforms the electoral process within the municipalities to provide that all persons meeting criteria for eligibility to vote in national elections, who are resident within the municipal boundaries, are eligible to vote in municipal elections.

Honourable Members are invited to take note that in anticipation of the requirement to assign ministerial responsibility for municipal matters, the responsible minister will have the ability to make orders under the Parliamentary Election Act 1978 as may be necessary. Madame Chairman, contrary to assertions this is not unchecked power as the exercise of this ministerial responsibility is proposed to be subject to the review of this Honourable House via the affirmative resolution procedure.

Madame Chairman, Honourable Members will be familiar with the provisions of the Parliamentary Election Act 1978 and will readily appreciate that at its heart the Act applies to elections to this Honourable House and may require modifications in its applicability with respect to municipal elections.

Finally with respect to this clause, Madame Chairman, it is important to note that it does not come into force until 1st April 2011 and so there is no question of immediacy in its impact to the prejudice of the existing Corporations.

CLAUSE 4

Madame Chairman, clause 4 amends sections 18 and 19 of the principal Act to provide that all persons eligible and registered to vote in Bermuda may stand for election to the various municipal offices.

This provision is designed to encourage those committed to genuine service to Bermuda to enter elected politics even at this level. The business interests of municipal officeholders have been the unifying theme of their service and few residents have had the confidence that their interests are being served.

The manifest conflicts of interest are such that the various committees of the Corporations, charged with oversight of various functions have been staffed and in most cases chaired by those with a direct business interest in the activity. Madame Chairman, widening the pool of potential officeholders taken with opening the franchise will serve to reduce the likelihood of conflicts of interest in the running of the municipalities.

CLAUSE 5

Madame Chairman, clause 5 repeals certain provisions of the principal Act and thereby removes the power of the Corporations to levy wharfage and port dues. It is proposed that these provisions come into force on 1st April 2011.

Madame Chairman, as I indicated in my ministerial statement of 16th July, the Collector of Customs presently performs the entire administrative function required in the collection of these levies and for a modest fee. At the end of the exercise the funds are forwarded to the Corporation.

Madame Chairman, subject to mature discussions between the Government and the Corporations it may well be that this arrangement continues uninterrupted. The important point is that this Government must be satisfied that the taxes imposed on its people are just, reflective of the nature of the service provided and based upon a formula that is not motivated solely by profit.

Madame Chairman, I had occasion to share the nature of the existing arrangement with an eminent West Indian politician, whose policies when in Government bore resemblance to the Opposition’s than our own and her reaction was “man, what….you have two governments in Bermuda?!”. That is the heart of it Madame Chairman, two tax policies, two entities exercising the function of national government but only one with the responsibility for national issues and affairs. The arrangement is outdated; ill suited to modern governance and must be reformed.

CLAUSE 6

Madame Chairman, again in anticipation of the requirement to assign ministerial responsibility for the municipalities, this clause amends section 41 of the principal Act so that the annual statements of account, which are already a requirement, are forwarded to that minister as opposed to the Minister of Finance. This is essentially a housekeeping matter in the entire scheme of the Bill.

CLAUSE 7

Madame Chairman, clause 7 provides for a special audit of the assets, liabilities, income and expenditure of each Corporation to be carried out by an auditor appointed by the Internal Audit Committee within three months of the coming into force of this Act.

Honourable Members will note that unlike the much-vaunted balance sheet showing only income and expenditure of the Corporation of Hamilton, this audit will require an accounting of the assets and liabilities. Thereafter, the auditor will provide a report to the Internal Audit Committee and to the responsible Minister.

Madame Chairman, clause 7 (4) – (8) contains language lifted from the Audit Act 1980 which Honourable Members will know governs the activities of the Auditor General for Bermuda.

Madame Chairman, were the relationship between the Corporations and the Government founded on adult terms, there would be no need to mandate these provisions. Honourable Members will recall from my general comments in the House that there has been no such cooperation to date and the continuing ad campaign is indicative of the need to legislate openness on their part.

CLAUSE 8

Madame Chairman, clause 8 amends section 3 (1)(f) of the Land Valuation and Tax Act 1967 to remove the exemption from inclusion in the draft valuation list and therefore land tax, of valuation units owned and occupied by the Corporations.

Madame Chairman, this provision will require the Land Valuation Officer to conduct an assessment of the estate of the respective Corporations and advise the Tax Commissioner with respect to the Annual Rental Value (ARV) of those units with a view to a determination being made with respect to the payment of land tax.

Madame Chairman, this Government has been creative with the payment of land tax and a statutory framework exists whereby these payments can be assessed. That same framework will be applied to these units. In fairness, however, the people of Bermuda have a right to know what revenue goes wanting from this historical exemption and moreover, a right to hold someone accountable if the land tax burden thereafter is not equally and fairly applied.

Hardworking families and small businesses all across this Island are required to include the payment of land tax in their operational budgets annually and it is only fair that this be applied to other entities raising money through the ownership of their buildings.

Madame Chairman, I cannot estimate the amount of revenue this might generate as the holdings of the respective Municipalities is not known. Those facts have not been among the recent open books and meetings.

CLAUSE 9 – 11

Madame Chairman, Honourable Members will have noted that for the purposes of the Explanatory Memorandum attached to the Bill these clauses have helpfully been grouped together.

In adopting that practice these housekeeping measures represent necessary consequential amendments in light of the impact of clauses 2 and 5 previously dealt with in Committee.

CLAUSE 12

Madame Chairman, in furtherance of the necessary consequential amendments to give effect to the Bill before the House, clause 12 provides for the responsible Minister to make further Orders as necessary.

Again, Madame Chairman, this is not unchecked power as the Orders proposed to be made under this clause are subject to the approval of this House via the affirmative resolution procedure.

This section is required because I am advised that the body of laws on the national level has grown up around the functions of the Corporation Hamilton. One might be forgiven for observing that as a parody for the history of Bermuda…….the interests of business and Front Street seem to have preceded things like universal adult suffrage and other social causes.

In any event, Madame Chairman, this clause is required as the housekeeping requirements related to the many Ordinances, Regulations and other such matters may arise from time to time as the evolution of this new relationship between the duly elected Government of Bermuda and the municipalities evolves.

Thank you, Mr. Speaker.

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