Letter: Let's be clear, debt ruins job opportunities

Dear Sir,

Jason Hayward, who is a VP at the BPSU, wrote a column which you published on March 16, entitled ‘Let’s talk about job opportunities now and debt later’.

In the article Mr Hayward first tries to convince readers that Bermuda’s debt is manageable and to support this thesis he states that because Bermuda’s debt to GDP ratio is in the 30 per cent range, the debt has no bearing on the ability of its economy to grow.

He also suggests that this debt should not influence Government’s ability to collect revenues (taxes) to repay the debt…

Now I don’t know where Mr Hayward studied his finance and economics, but it bothers me that senior people in the BPSU would write articles supporting Government’s decision to expand Bermuda’s debt obligations when one considers that such debt growth will actually damage and ultimately jeopardize the financial stability of Bermuda and by extension the very membership of the BPSU.

Mr Hayward also states that research has shown that economic growth only slows when the debt to GDP ratio approaches the 90 per cent level. I contend it a dangerous policy indeed to adapt other’s research and apply it to Bermuda’s narrow economy. Research cannot be viewed in a vacuum.

Bermuda’s debt obligation creates annual interest costs of over $100 million.

This financial burden, which the Bermuda taxpayer is liable for, actually destroys growth potential in the long term and therefore limits employment growth.

What Mr. Hayward needs to appreciate is that our International Business sector (IB) which produces up to 90 per cent of our GDP, has other options available to them.

As such, should Government pursue “revenue raising strategies” (such as increase taxes) this sector can and will look elsewhere to conduct their business.

Combine the tax question with bad government policy such as the work permit issues and what you get is an exodus of IB to other jurisdictions and more destruction of jobs in Bermuda, affecting Bermudians.

These are facts that we have already witnessed in Bermuda.

Unfortunately Mr Hayward may not be aware of these real life facts, as he works for the union representing the public sector and there have been very limited layoffs there, which is part of the problem.

Under the PLP Government the civil service employee count has increased by around a third and over the years this has increased the cost structure that the private sector now suffers under.

The results are closed businesses, downsizing and growing unemployment. The only growth we’ve seen, unfortunately, is Bermuda’s debt and the only way to correct this is through pro-growth strategies which should allow Government revenues to grow.

The big question is whether this PLP government can be trusted by the private sector to deliver pro-growth strategies.

Based on their legacy which has pushed Bermuda towards financial ruin and mortgaged future generations of Bermudians I doubt whether the PLP can provide the leadership required.

The island needs a change of the guard. In the meantime, public service union officials should be focusing on the bigger picture of preparing their members to move into the private sector because we will never fix Bermuda’s financial challenges until the public sector downsizes.

Writing columns supporting our debt levels is counterproductive in my view.

With regards to the latter part of Mr Hayward’s column where he suggested Bermudians prepare themselves to enter the hospitality sector, which has a very large number of imported labour, I wholeheartedly agree with him.

Allan D. Marshall

St George’s