WEDNESDAY, MARCH 21: The economic crisis will not be solved by massive cutbacks, Senate Finance spokesman David Burt said today.
Sen Burt said that Government was committed to supporting Bermudians hit hard by the continuing global recession – and defended its record on spending.
He said the $1.08 billion budget for the next financial year was a $56 million or five per cent decrease on the current year.
Sen Burt told Senate: “It is my view that the actions of the Government over the past four years were correct and softened the impact of the recession.
“The actions of this PLP Government over the past few years softened the impact of the great recession on the people of Bermuda and had we not taken the decisive actions that we did, our economy would have suffered even more pain.”
Sen Burt said the 2008 global financial crash was “the worst recession in 80 years” and that Bermudian unemployment had risen to its highest levels in nearly two decades.
But he added: “In the 2009/10 and 2010/11 budgets, this Government continued the investment in its people as noted by its capital expenditure plan.
“Had the Government pulled back spending in 2009, as members of the Opposition continue to suggest, the five per cent reduction in nominal GDP that Bermuda witnessed in 2009 would have been even worse.”
He said: “The economic activity provided by Government borrowing and the resultant spending and investment lessened the impact of the recession.
“Had the Government not borrowed money, our economy would have been in worse shape.”
Sen Burt added: “It is no secret that over the past four years, Bermuda has seen a significant increase in its debt.
“This was a direct result of the decision to maintain demand in the economy via borrowing.”
And he said: “Governments need to make choices and this Government chose to invest in its people. It is a simple difference of approach between this party and the Opposition when it comes to economic governance.”
Sen Burt said that the PLP had also invested $105 million in building homes that Bermudians could afford, and added the number of owner-occupied properties had risen by 13 per cent between 2000 and 2010.
He said that, in addition to housing investment, Government had budgeted nearly $60 million for the Heritage Wharf cruise ship pier, spent $230 million on the educational system and $50 million on buses and ferries.
He added: “This PLP Government has invested in our people and invested in Bermuda. These are investments in our people’s future and, just like a mortgage, will be paid over time.”
Sen Burt said interest payments on long-term debt are estimated at $85 million, with $35 million to be paid from the Consolidated Fund and a further $50 million from Government’s savings account, the Sinking Fund.
Sen Burt added: “It is important to note that despite recent increases in debt levels, the level of public debt as a percentage of Gross National Product (GDP) is still moderate when compared to other countries and remains one of the lowest debt policy ratios among developed modern economies.
“… The 2012/13 Budget funds the major programmes of the Government as highlighted in the 2011 speech from the Throne and maintains the commitment of this Government to avoid further disruption to our economy by causing reckless redundancies in the civil service and cuts to services for the vulnerable in our society.”
But he said Government had formed an “efficiency team” to help make sure that Government cash was not wasted.
Sen Burt added: “In this Budget, the Government is projected to spend $179 million less than it did two years ago. This Government has tightened its belt and will continue to do so.”
The Opposition, however, remains unconvinced and accused the Government of ‘phantom budgeting’.
OBA Senator Michael Fahy said: “We see repeatedly this reference to the great depression and that everything in Bermuda and the problems we have been facing economically has been solely due to external sources.”
He added that Sen Burt’s speech failed to address how Government “had mismanaged things in the last number of years”.
Sen Fahy said: “It seems to me that during tough times, tough decisions must be made and, simply put, I didn’t see any evidence of that in this statement. “
He added that Bermuda had gone from a debt of $200 million to more than $1 billion under the stewardship of the PLP while a money-saving pensions contributions holiday was storing up problems for the future.
Sen Fahy said: “We have seen growth of overestimates of revenue and underestimates of expenditure. They have invested in Heritage Wharf — it’s falling apart. That was a $30 million overspend while the police station was over-budget by $14 million.”
And he added: “While the Government may budget to spend less, they don’t. The proof of the pudding is in the eating. Phantom budgeting is what I call it.”
Sen Fahy said: “The more you spend on debt servicing, the less you have to spend on people and local services. Nobody has been held accountable for what has gone wrong – nobody says anything.”
More stories to follow on Senator Burt’s speech.