Budget paper earns incomplete grade

SATURDAY, FEBRUARY 19: “Shared sacrifices and financial discipline… that will help us to win the future and reset the dial,” is how Finance Minister the Hon. Paula Cox described her first budget as Premier.  In laying the foundation for what was to come, Premier Cox painted a picture of a world in much deeper financial turmoil than Bermuda in an effort to disprove, contrary to the late Hubert Smith’s song, “Bermuda is another world.”

In probably what was the most anticipated budget in recent memory, Premier Cox kept Bermuda waiting as she built up her case that we are in deed a part of the world. When she finally dipped into her bag of goodies, the first recipient was civil servants -no job cuts- in response to salary and other concessions obtained from their unions.  The next goodie went to supportive corporate citizens who were creating entry-level jobs for Bermudians.  But exactly what they got is unclear as the Minister is still “exploring incentives to benefit” them.

To assist tourism, the Minister said that the Government is “working closely” with the developers of the Park Hyatt and Morgan’s Point.  Apart from assisting Park Hyatt with the use of St. George’s Golf Course, no details were revealed about what ‘working closely’ looked like. However, payroll tax relief and tax deductions for refurbishments, already in place, will continue.

After much criticism of the increase in payroll tax last year, Minister Cox rolled back the two percent increase.  But for workers, it was a partial roll back as it went from 5.75 per cent to 5.25 per cent and not back to the 4.75 per centwhere it was before last year’s increase.  However for high wage earners, the $750,000 cap will remain in place. The Minister estimates that some $50 million will be returned to workers as a result – Government’s version of a stimulus package. In addition, there will be $12 million set aside for repairs that small businesses can do.

Minister Cox stated that she had kept her promise to the public of cutting $150 million from the budget by cutting $90 million from the current account and $60 million from the capital account.  For example, temporary posts will be abolished and overtime payments will be curtailed.  That said, there will still be a current account deficit in this budget of some $147 million. And no details were provided as to how and where the other cuts will be made.

The Minister underlined the Government’s willingness to help as well as its inability to do all things for all people.  She stated that her Government had spent some $300 million in funding and contributions since 1998 and then using an American-style, State of the Union address to underscore how current economic difficulties are affecting everyone, she mentioned Steven from Crawl who walked to work at 5:30am because the buses were on strike and Annie Young whose store ‘True Reflections’ will close at the end of the month.

The Minister made reference to generally leaving all other taxes at current rates, with the exception of Government fees, and made some promises for the coming fiscal year, including support for employers who hire young people and those less experienced.  But again details were hard to come by. 

The Minister did explain that she will allow her Ministers to provide the details in the coming days but at the end of her statement there was still a real need to exhale. While there will be no job losses in Government, a reduction in hours would have seemed reasonable.  

An estimated $50 million dollars in salaries could be saved by just closing all non-essential Government offices one hour early.  

It is a pay cut, but people are not losing their jobs.  

Innovative cuts like these will have to be made, and may well be on the books, but we simply do not know. 

A grade cannot be given to the Minister for this budget because the paper is not yet complete. We await the details.