Column: Inflation, Spin, Economy & More

[Opinion column written by OBA Senator Dr Douglas De Couto]

In recent opinion pieces, PLP politicians have tried to paint a rosy picture of Bermuda’s economy. However, everyone knows that over the years the PLP has presided over a general decline in the economy and a ballooning national debt.

And no amount of out-of-touch spin by the PLP can solve the problems that Bermudians are wrestling with every day.

PLP Senator Arianna Hodgson urged Bermuda to be optimistic, stating that “Consumer Spending is up!” and “GDP is up!”

She also writes that the “general economic performance of Bermuda is good”.

MP Jache Adams touted the PLP’s “swift” actions on 31 priorities.

Unfortunately, those PLP viewpoints don’t match reality. Although the Government refuses to admit it, and continues to use misleading or useless statistics, we are facing a time of high inflation. Annual inflation in the United States, our major trading partner was 8.5% at the end of June. It is clear that Bermudians must be experiencing at least that, given that the majority of our goods and services come from the US.

Bermudians feel this in their wallets at the grocery store, buying school uniforms, or maintaining their homes. If Government can’t even be honest about this basic fact, how can they possible work on solutions?

Energy prices have risen massively. Bermudians feel this in their fingertips too as they pay their Belco bills. The August Belco Fuel Adjustment Rate is 20 cents per kilowatt-hour, out of a total charge of 44 cents per kilowatt-hour, or 45% of the total. This up from last August’s fuel adjustment rate of 13 cents out of 36 cents in total per kilowatt-hour, or 38%.

Put another way: the total cost of energy from Belco has risen 23% in the past year, and the Fuel Adjustment Rate, which moves around with global fuel prices, has risen from 38% of the total to 45% of the total.

Those facts and figures are why consumer spending is up – because costs are up. In general, economic measures will rise with inflation, and the Government will make more money due to inflation. Imported goods cost more, therefore duty dollars are higher. The PLP Government should not pat itself on the back for higher taxes!

As for the 31 “priority” initiatives, everyone knows that’s impossible – you can have one priority, maybe 2 or 3 – but 31 means the PLP Government is just throwing ideas at the wall to see what sticks.

And for most of us, nothing’s sticking.

So far, in 2022, the PLP Government has failed to make significant progress on any major initiatives that could turn the country around.

Now we are in September, and there is no news about the rushed Fairmont Southampton deal, there is no news about the Tax Reform Committee, there is no news about immigration reform, and there is no plan to tackle the debt. PLP is close to pushing Bermuda’s national debt to an eyewatering $4 billion; which will be crippling to our economy.

With a 30-6 majority in the house, if the PLP Government cannot take bold, principled action now, when would it ever?

You now know the answer: Never.

This double-speak and lack of honesty by the PLP Government is a symptom of their muddled thinking, poor decision making, and all-around lack of leadership across the entire cabinet. Most Bermudians are not experiencing a good economy, and the PLP Government refuses to even acknowledge that basic truth. And without facing reality, it will be impossible for the PLP Government to create honest, achievable solutions for the problems facing Bermuda today.

A taxi driver told me the other day, “I guess I’m just old fashioned, but I learned that if you managed to make a little more than you thought, you paid down some debt!”

But this PLP Government is busy giving away whatever small improvements they could find in the budget. One problem with these giveaways is that they are not targeted to those most in need – the rich and the poor will all get the same free lightbulbs.

But an even bigger problem is that the Government doesn’t even know what its deficit will be at the end of the year, so how can it spend “savings” on the deficit? For example, around $500 million of Bermuda’s $3bn+ debt will need to be refinanced by the end of the year, at higher interest rates that in the budget, and therefore higher spending by the Government. This will likely contribute to the deficit.

Bermuda, don’t be shocked when we get a ‘surprise’.

- Dr. Douglas De Couto

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