Battle lines laid down as economy looms large for voters

FRIDAY, MARCH 23: Government appears to have laid down its general election battle lines — with the emphasis on spending to protect Bermudians from the economic storm rather than on the level of debt.

Senator David Burt — seen as one of the rising stars of the PLP — made a keynote speech in Senate on Wednesday as the Upper House prepares for its Budget debate.

He said: “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 added that spending on major building projects, like the new hospital and the Heritage Wharf docks for big cruise ships, had cushioned Bermudians and provided work.

Tax breaks to the struggling hotel, restaurants and retail sectors have also cost around $70 million in lost Government revenue.

But Sen Burt, the junior Finance Minister, added: “The economic activity provided by Government borrowing and the resulting spending and investment lessened the impact of the recession.

“Had the Government not borrowed money, our economy would have been in worse shape.”

Sources have speculated that a General Election could be called as early as May, but Government must go to the polls by next spring.

Opposition 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.”

But 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.”

Sir John Swan, a top businessman who was Bermuda’s longest-serving Premier while leader of the former UBP, said he would not become involved in political mud-slinging.

He added his sole interest was the country’s economic well-being – and that a strong economy was crucial in paying for Government programmes.

Sir John said: “All I see at the moment is the eyes of a deer with headlights coming round the corner – we’re dumbstruck by what’s happening. There is a disaster waiting to happen — it’s not that the books need balanced, they are too unbalanced. That’s what I’m worried about.”

Sir John said that the expense of the Civil Service could no longer be supported and called for a four day week or three week month to cut staffing costs by 20 per cent without lay-offs.

He added: “You can’t sustain an economy and a budgetary process where the economy has been shrinking at a pretty good clip every year. We remain in recession and the US is now working its way out of recession.

“We’ve got to make some structural decisions, which the Government has to be able to confront. If you wait for an election, you could end up with a downgrading by rating agencies.”

Sir John added: “We need to put more support into our economy to where we can start re-employing our people, reduce our debt exposure and look after the infrastructure which continues to deteriorate because we can’t afford to maintain it.”

Recent polls show the OBA has edged ahead of the ruling PLP and pollsters and politicians agreed that the state of the economy was a key worry among voters.

A poll carried out for the Bermuda Sun and published earlier this month showed that nearly 45 per cent of those surveyed reckoned Premier and Finance Minister was not doing a good job, compared to 37.6 per cent who did and 17.5 per cent who were unsure.

The personal favourability rating of Ms Cox, however, remained at more than 50 per cent, compared to 35 per cent who did not like her style and 13.2 per cent who were unsure how to rate her favourability.

But Cordell Riley of Profiles of Bermuda, which carried out the Bermuda Sun poll, said the large number of undecided voters — almost a quarter and likely to be disillusioned PLP voters – would be the key to victory.

Craig Simmons, an economics lecturer at Bermuda College – who wrote a column for the Bermuda Sun on Wednesday arguing now was not the time to try to cut back or shed public sector jobs.

Mr Simmons said: “Senator Burt’s comments could be construed to be in line with my comments.”

Mr Simmons wrote: “As is the case with most econonomic policy-making there are trade-offs. By providing mild stimulus, public debt will inch closer to the debt threshold, deficit-financed government spending will crowd out some private investment spending and the process of market correction will face some headwinds.

“The alternative, fiscal chastity, would add unnecessary social costs to the economic contraction, which is why I argue ‘but not just yet’.”