We need more cuts in personnel costs, more residents

Sometimes ‘official’ language conceals. Sometimes it reveals. Friday’s House of Assembly session provided an excellent example of ‘official’ language achieving both — at the same time, as though it was scripted for the comedy show “Yes, Minister”.

The Minister for Finance’s five-page Ministerial Statement and the one-page Explanatory Memorandum used the equivalent of over 30 Twitter ‘tweets’ to deliver the equivalent of this one ‘tweet’ : Because there are insufficient funds, retired Civil servants and Parliamentarians will no longer get biennial increases in their pensions.

To get that tweet, you’d first have to wade through six pages of print. The printed words do reveal, but their laborious presentation conceals.  How many people have the time to wade through six pages just to get the one key bit that matters — that all-important 140 character ‘tweet’ that captures the complete essence?

Now, what I first wrote about in December 2010 is in the open and is confirmed.

In December 2010 [on Bernews], I wrote that Government needed to cut its Personnel Costs by 15%.  Since then, national finances have worsened. Now, in mid-2014, Government has to look at making 20% - 25% cuts in its Personnel Costs.

For FY 2012/13 the Auditor General reports that Government’s total Personnel costs were $600.95 million [$583.62 million in 2011/12 and $599.75 million in 2010/11].  In FY 2012/13, Government’s total revenue was $866.58 million [$914.18 million in 2011/12 and $996.73 million in 2010/11]. For 2013/14, revenue is said to be $893 million. For 2014/15, revenue is projected to be $902 million. You can see, for yourself, what the base problem really is.

That’s arithmetic, not politics.

In concert with the Unions, Government made a 4.6% cut in September of 2013. However, the completely cold, completely uncaring, and completely arbitrary laws of simple arithmetic show that the 4.6% cut was much too small. The cut still needed to be at least 15%. Now, however, the need eclipses 20%.

That’s arithmetic. Not politics.

Minister Bob has said that financially, Government is “tapped out”. The figures I’ve shown you confirm that. The need to cut Personnel Costs is even more necessary in 2014 than in 2010 when I first called for that 15% cut.

So more cuts in Personnel Costs must come. That’s arithmetic. Not politics.

After wading through the six pages and 30 plus tweets of the Ministerial Statement and Explanatory Memorandum, I uncovered that Minister Bob is taking just one more teeny-weeny step towards cutting Personnel Costs. He is cutting Pensions paid to retired Civil Servants and Parliamentarians.

He’s doing that because the Pension funds are under-funded and Government cannot use today’s effectively de-valued Government dollars to top-up the pension pay-outs so that the legislated biennial Cost Of Living Adjustments [COLA] can be made. This means that there will be no COLA adjustments until Minister Bob or some future Minister reinstates or allows reinstatement of the process.

When is reinstatement likely?  The figures deliver the same message. Not this side of 2020, or even 2024.

One thing, one thing only, can resolve this and turn Government’s shrinking revenue stream into a growing revenue river. That one thing is an increase in GDP.

One thing, and one thing only, can move GDP higher. That’s an increase in on-Island demand.

One thing, and one thing only, can increase on-Island demand.  That’s an increase in R-----. [You must fill in the blanks.]

One way, and one way only, to increase R-----. That is to import p-----. [Again, you must fill in the blanks.] 

Instead of big bold moves, we seem to have settled for tentative teeny-weeny steps. Over the next five years, this teeny-stepping will prove unwise. Clarity, honesty, and strong action are needed. This current “Yes, Minister-ish” approach is not a good approach. As well and importantly, the general public needs to be far, far, better informed about all the real issues that stare at Minister Bob every day — and that probably cause him the odd nightmare.

So in one ‘tweet’, what must happen? “Cut Personnel Costs and increase ResPop by getting more Business Residents to come to Bermuda and push GDP over $7.0 billion.” n  
Note: As a retired Government employee, I receive a Government Pension. I am personally and negatively impacted by the Ministerial decision to end COLA.