The OBA's economic vision

WEDNESDAY, MARCH 7: Bermuda’s Budget deficit could be as much as $255 million by the end of the coming financial year, according to shadow Finance Minister Bob Richards.

Mr Richards said the OBA estimate was well above the near $60 million predicted by Premier and Minister of Finance Paula Cox.

And he added that would mean the overall estimated borrowing would stand at $393.4 million, adjusted for the likely saving from a year-long break in payments to the civil service pensions fund.

Mr Richards said: “The Budget fails to commit to cutting costs of running the Government, despite the fact that it is spending more than the public can afford.

“The Minister has not even committed to freezing the size of the civil service as we would.

“In saying that, I reiterate our pledge not to lay off any public sector workers. We would reduce the size of Government by attrition.”

Mr Richards said that Ms Cox had said there were only two choices — growth or austerity.

He added: “This is sheer nonsense. There is no such trade-off in the real world.

“The Government can stimulate growth without spending more money. Growing the economy, creating jobs and opportunity does not necessitate growing Government.

“You can stimulate growth through policies that enable and encourage the private sector to expand, such as the policies we have already outlined.

“The Government’s Budget has not done this and every Bermudian should demand its Ministers explain why not.

Mr Richards said that Government debt had grown by 700 per cent since Ms Cox became Finance Minister in 2004/05.

He added: “That is not only astonishing, it is indefensible, particularly when you consider the Government shows no compunction about pushing its repayment on to the shoulders of future generations.”

Mr Richards said the annual cost of repaying Bermuda’s national debt stood at $115 million, which affected “our ability to respond to emergencies not already known.”

He added: “The fact that interest rates remain at historic lows deepens our concerns. When they will start to rise is anyone’s guess, but rise they will.”

Cutting the cost of Government

Among the measures proposed by the OBA, in addition to a freeze on civil service hiring are;

• A spending and government efficiency (SAGE) commission;
• Cutting the use of consultants and Government overseas travel;
• Reducing the size of Cabinet and cutting Ministerial pay by 10 per cent;
• Axing the Grand Atlantic housing project because of low sales for already-built homes;
• Establishing a new and independent Contractor General to ensure transparency and best value for government contracts;
• Setting up car pooling and cutting the number of GP cars;
• Move, where possible, Government offices out of rented property in Hamilton and into Government-owned property elsewhere on the island;
• Extend the schedule of major building projects according to their affordability.

Immigration

Suspend term limits on work permits for two years pending a review and streamlining the work permit process.

Encouraging local business

• Payroll tax exemptions for new Bermudian staff;
• Speed up the planning process to encourage new projects;
• Incentives for hi-tech generators using waste energy to cut power costs for hotels;
• A 20 per cent slice of Government’s spending cake for small businesses and a 30 day limit on paying bills.

Encouraging International Business and Overseas Investors

• Streamlining company incorporations and making incentives for job creators easier to understand;
• Allow work permits at incorporation stage and implement a concierge service for new businesspeople;
• Change the current 60/40 ownership rule for local business to encourage outside investments in major projects like the redevelopment of Hamilton’s waterfront.

Tourism

• Set up a Tourism Authority, independent of Government and abolish the post of Tourism Minister;
• Bring forward a short-term marketing plan in advance of the National Tourism Plan, due to be unveiled later this year.

Education

• Introduce a technical curriculum from middle school, backed by cash and extra careers guidance counsellors;
• End the practice of bringing in foreign experts in a bid to improve education and use local talent instead.

Police and Public Safety

• Take steps to address the 15 per cent shortfall in police numbers;
• Introduce a central social policy coordinator, possibly a Cabinet Office role, to deal with crime and gangs;
• Encourage more community action against guns and violence;
• Introduce the US-based Operation Ceasefire as soon as possible.

Health

Mr Richards said a proposed cap on the annual Government grant to help run the hospitals was unlikely to work.

He questioned what might happen to patients if the money ran out before the end of the year and whether Government would be able to take care of seniors as Bermuda’s population greyed.