Municipalities Bill Seeks Reform, Defer Elections

The Municipalities Amendment Act 2018 “proposes to defer elections for a year until May 2019 while the Government undertakes consultations with the Corporations of Hamilton and St. George,” Minister of Home Affairs Walton Brown said in the House of Assembly today [March 9].

“During this period, Government will determine the most appropriate method to strengthen and modernize municipal governance for the benefit of Bermuda,” the Minister said.

Minister Brown said, “Further governance reform of the municipalities is now necessary as a result of:

• Failures of accountability and proper due diligence and governance in the awarding of contracts. Honourable members will recall that the proposed Hamilton waterfront and Par-la-Ville hotel developments resulted in a highly critical report by the Bermuda Ombudsman, legislative intervention by the Government of Bermuda, the assumption of temporary stewardship, and an arbitration that has cost many millions to the public purse. This saga continues in the case of the Mexico Infrastructure Finance [MIF] vs the Corporation of Hamilton where, as you will recall, $12 million went missing. The case is now headed to the Privy Council;

• Inadequate resources to undertake important public infrastructure projects such as the needed upgrade to the sewerage system;

• Policy and operations that need to be aligned with Government policies and legislation, and lack of consultation with the relevant Government Departments in relation to infrastructure. Reform is needed to assure collaboration between Ministries of Public Works and Public Safety and Home Affairs before embarking on projects that impact traffic control and the making of ordinances;

• Breaches of protocol, for example, the Corporation invited the Taiwan Government to contact the Bermuda Government to enter into a tax information exchange agreement without first speaking to the Premier and Minister of Finance; and

• The need to coordinate with Government in major developments because financial resources of the public purse, whether of the Bermuda Government or the Corporations, are limited.

‘This bill seeks to provide the following:

• allow officers, when necessary, from relevant Government departments, to participate in discussions regarding infrastructure repairs or maintenance to avoid such issues as concerns about road closures, traffic flow, planning issues, etc. in order to provide advice to the Minister;

• allow for the Minister to provide directions to the Corporations if he considers that it is in the “best interests of Bermuda” and ensure that the Corporations gives effect to any such directions. This would have allowed, for example, the Minister to directly intervene in issues such as the recently announced closure of the docks, a problem that has developed over time.

• Allow the Minister to direct the Corporations to undertake projects that will provide economic benefit to the whole of the island, such as the Hamilton waterfront or the St. George’s marina. We have learned that the 2016 Court of Appeal judgment in the matter of the Mexico Infrastructure Finance [MIF] vs the Corporation of Hamilton ruled that the development [Par La Ville hotel] could not be progressed because “the development would be something which would clearly be for the benefit of the whole Island, but does not relate to the functions of the local government of the City of Hamilton in particular” and was therefore ultra vires.

“The existence of municipal governments in Bermuda may have raised concern in times when there were examples of inefficient allocation of resources in such a small jurisdiction,” the Minister said.

“However, the impetus for changing this arrangement has never been very strong particularly when the Corporations have largely been able and had the resources to govern their affairs properly and efficiently. The Government believes that this can no longer be sensibly argued, and the case for changing the status quo has become stronger in recent years.

The Minister’s full statement follows below:

Mr. Speaker, it is with pleasure that I rise to table in this Honourable House, the bill entitled Municipalities Amendment Act 2018.

Mr. Speaker, this Bill proposes to defer elections for a year until May 2019 while the Government undertakes consultations with the Corporations of Hamilton and St. George, and the residents and ratepayers in each municipality, and with the general public of Bermuda. During this period, Government will determine the most appropriate method to strengthen and modernize municipal governance for the benefit of Bermuda.

Mr. Speaker, Honourable members will recall that reform in respect of municipalities in Bermuda has been undertaken by successive Government administrations, with extensive amendments to the Municipalities Act 1923 in 2010, in 2013, and in 2015.

Mr. Speaker, Honourable Members should note that local governance and financial accountabilities have been extensively reformed in other jurisdictions; such as:

• the creation of unitary authorities for local government that has seen the creation of larger municipal areas and improved financial accountabilities; and

• consolidation of legal authority to levy taxes to assure that the needs of local authorities are met.

Ongoing reform is likely to be evolutionary. Municipalities in Bermuda do not deliver social services, which are the exclusive authority of the Government of Bermuda, although the need for social services within the municipalities are growing and the only recourse is to Government.

The two levels of taxation and the segregation of authority between the municipalities and central government while necessary in larger jurisdictions, may not be justifiable in a geographic area of 22 square miles, the size of Bermuda, having regard to current fiscal realities.

Mr. Speaker, further governance reform of the municipalities is now necessary as a result of:

• Failures of accountability and proper due diligence and governance in the awarding of contracts. Honourable members will recall that the proposed Hamilton waterfront and Par-la-Ville hotel developments resulted in a highly critical report by the Bermuda Ombudsman, legislative intervention by the Government of Bermuda, the assumption of temporary stewardship, and an arbitration that has cost many millions to the public purse. This saga continues in the case of the Mexico Infrastructure Finance [MIF] vs the Corporation of Hamilton where, as you will recall, $12 million went missing. The case is now headed to the Privy Council;

• Inadequate resources to undertake important public infrastructure projects such as the needed upgrade to the sewerage system;

• Policy and operations that need to be aligned with Government policies and legislation, and lack of consultation with the relevant Government Departments in relation to infrastructure. Reform is needed to assure collaboration between Ministries of Public Works and Public Safety and Home Affairs before embarking on projects that impact traffic control and the making of ordinances;

• Breaches of protocol, for example, the Corporation invited the Taiwan Government to contact the Bermuda Government to enter into a tax information exchange agreement without first speaking to the Premier and Minister of Finance; and

• The need to coordinate with Government in major developments because financial resources of the public purse, whether of the Bermuda Government or the Corporations, are limited.

Mr. Speaker, this bill seeks to provide the following:

• allow officers, when necessary, from relevant Government departments, to participate in discussions regarding infrastructure repairs or maintenance to avoid such issues as concerns about road closures, traffic flow, planning issues, etc. in order to provide advice to the Minister;

• allow for the Minister to provide directions to the Corporations if he considers that it is in the “best interests of Bermuda” and ensure that the Corporations gives effect to any such directions. This would have allowed, for example, the Minister to directly intervene in issues such as the recently announced closure of the docks, a problem that has developed over time.

• Allow the Minister to direct the Corporations to undertake projects that will provide economic benefit to the whole of the island, such as the Hamilton waterfront or the St. George’s marina. We have learned that the 2016 Court of Appeal judgment in the matter of the Mexico Infrastructure Finance [MIF] vs the Corporation of Hamilton ruled that the development [Par La Ville hotel] could not be progressed because “the development would be something which would clearly be for the benefit of the whole Island, but does not relate to the functions of the local government of the City of Hamilton in particular” and was therefore ultra vires.

Mr. Speaker, the existence of municipal governments in Bermuda may have raised concern in times when there were examples of inefficient allocation of resources in such a small jurisdiction.

However, the impetus for changing this arrangement has never been very strong particularly when the Corporations have largely been able and had the resources to govern their affairs properly and efficiently.

The Government believes that this can no longer be sensibly argued, and the case for changing the status quo has become stronger in recent years.

Thank you Mr. Speaker

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