February 2010 Archives
So Budget Day arrived, and we got more of the same plus more, which is really quite depressing.
Otherwise a few things are notable as an early reaction.
Firstly, I was surprised at the lack of detail in the document, although I probably shouldn't be. This was classic Paula Cox: a whole lot of words and verbosity masking a lack of substance and seriousness.
Secondly, it seems that the PLP has become desperately out of touch. To say that Bermuda "cannot have a Reid Street-doing-fine mentality and a North Street that suffers" is true and makes for a nice sound bite.
The reality however is that neither Reid St. nor North St. are 'doing fine'. Retail is dying. Reid St and Front St for that matter are both shadows of their former selves, St. Georges is a ghost town. (It should be apparent that Government intends to starve St. George's until they perform their takeover.)
What was really amazing however was that after all the talk of 'austere' Government cutbacks, by the Government themselves, it was completely insincere as evidenced by a 9% current account increase.
The payroll tax increases will be hard for everyone to swallow, local and international business alike. In a time when international business is moving jobs out of Bermuda due to cost and hostile immigration policies, Government increases payroll tax by 2 percentage points (or a 14% increase) and raises the cap dramatically which will have a much bigger impact on the international business sector.
I'm never a big fan of tax increases, because unlike most things they go up but almost never down and it doesn't require Government to share in the pain.
Thirdly, every time Government justifies their over-spending and resulting borrowing as an investment in infrastructure an angel loses its wings. Stop it. It's cruel.
Unexplainable overspending on just two projects, Berkeley and the cruise ship pier, amount to almost $100M, the amount taxes were increased this year. That's real money now isn't it?
Ethical government spending would be an investment, putting tens of millions of dollars in the pockets of a couple of cronies is stimulative, but not for the general public or economy.
Fourthly, Bob Stewart is correct in today's Letters to the Editor that Government is deploying Enron-esque accounting gimmicks to hide hundreds of millions of dollars in debt. The hospital will be funded through a Public Private Partnership and the Causeway replacement is proposed to follow in that path. In both cases Government has chosen a more expensive method to finance Capital expenditures through off balance sheet tricks in an attempt to hide about half a billion dollars in debt.
This budget suggests that the PLP either lack the ideas or the realism to position Bermuda for a recovery and are simply continuing to defer the pain for future generations. This is deeply deeply irresponsible, the result of which is that instead of punching above our weight as we have prior to the PLP we're fighting with one hand tied behind our back.
The waste and abuse of the public purse of the past decade means that Bermuda is responding to the global recession from a position of weakness. The un-budgeted revenue surpluses of the past decade, fueled by two catastrophic events in the US, are gone, never to be recovered with nothing to show for it.
When Government could be deploying those hundreds of millions of dollars for counter cyclical spending they're reaching their hands into the pockets of every resident and business in Bermuda, further eroding the case for investing in Bermuda.
Someone once told me that a former Premier said in the 90s that "Bermuda can afford 5 years of a PLP Government but not more". That seems very prescient.
Say what you will about the UBP, but they understood the fundamental principle that you have to have a robust and sustainable economy to fund your social policy. The UBP were economic realists.
To call this the 2010 budget "The Road to Recovery" is delusional. "Road to Ruin" is more appropriate. If Bermuda turns this around it will be in spite of the PLP's economic policy, not because of it.
If you can all indulge me an off topic rant for a moment on one of my favourite topics, Bermuda TV.
In a lot of way the local TV stations are much like Bermuda politics, we have been conditioned to accept an inferior product and performance.
On Feb. 8th I posted on twitter the following:
Completely fed up with local network and Cablevision signal quality. Thinking about some guerilla tactics. Anyone want to join in?
Shortly afterwards I got a phone call from Cablevision's Terry Robertson who saw my post and offered to help. We had a good conversation, with the thrust of my complaint being that the signal and picture quality on the Fox channels (10 and HD) were terrible and that the local channels (7 ABC, 9 CBS and 11 NBC) are terrible, channels 7 & 9 being the worst.
Terry conceded that Fox was an issue for Cablevision, but that it is now resolved (which it appears to be) and the pixelation at night on the Fox HD was caused by us being on the edge of the satellite footprint.
Then there's the local channels, which are not good, Bermuda Broadcasting's in particular. Channel 9 is pretty much unwatchable and the audio is low relative to the other channels. I've previously spoken with Rick Richardson at BBC about this and he conceded a problem which was connected to the out of sync audio and video late last year (fixing that involved lowering the audio levels).
Much of this is technically above me, but ultimately we've all witnessed both BBC and Cablevision pointing fingers at each other over signal quality.
All that I can say on that topic is that the over the air signal for channels 7 & 9 sucks and you can't pin that on Cablevision. And I've also been in ZBM's studios enough to know that it looks like some sort of a history of broadcasting exhibit. The equipment has to be 30 years old at least, and I'm not exaggerating. So the prospect of HD for the US networks (so I can get my sports in HD) is never going to happen at this rate - and the local channels should be providing that over the air as well as cable.
You might recall that BBC wants Cablevision to pay per channel for carrying the local channels, something alot of people think is an outrage when you consider the quality of the product. I would tend to agree.
I think there is a solution here, but it's going to require the applying of some pressure.
Firstly, the local channels should be given a timeframe to start providing HD for the US networks (ABC, CBS and NBC). I'm sure the networks would be appalled at how their product looks in Bermuda, but we're small enough that it's not enough to expend much energy on.
Secondly, on the topic of Cablevision paying a per station fee for the local stations (75 cents per station per month I hear). This will obviously get passed through to the customer, because no business is going to voluntarily take that hit.
I could take a $1.50 increase in my bill a month. But there's an if. A big if.
If the local stations can't or won't upgrade their equipment to offer HD, or even fix their below standard definition signal that they currently offer, the Telecommunications Minister should allow Cablevision to offer an HD option for each US network in their HD tier ion exchange for a $1.50 per channel compensation to the local affiliates.
This is obviously not so simple to get done due to legal issues and exclusivity agreements, but the economic model for 3 local TV stations all trying to sell ads and generate a local news broadcast is really being strained if not already broken.
I don't think Government has helped this situation with CITV. A better arrangement in my view than running a station (with great equipment I might add) would be to create or subsidize the creation of local programming which then runs on the private stations. That gets Government out of the TV business, although the PLP are unlikely to do that because they want to control the content of CITV to maximize exposure for themselves and their issues (ie. press conferences which don't broadcast the questions, only the MInisters' prepared remarks.)
I'd be interested in others thoughts on this topic. One other avenue to pursue is for people to start filing complaints with the Consumer Affairs department.
But all the broadcasters and carriers better get with the program fast, because in the past week I've testing a Slingbox feed from NY (great but a little hard to integrate in a living room), Boxee which is a surprisingly good little open source application that includes Netflix (if you use a US proxy or VPN) and there's a lot more out there on the horizon.
The sudden re-emergence of the Southlands/Morgan's Point saga, which is morphing into a scandal of potentially major proportions, is getting ugly fast.
You knew something was up when the Special Development Order Premier, the one who approved an original Southlands plan that concreted in a huge section of coastal cliffs on South Shore, proclaimed that the Morgan's Point plan had too much concrete.
So today we have the Premier coordinating a rather cowardly rebuttal behind an 'anonymous spokesperson' in the paper with some pretty low attacks on the ability and acumen of the Southlands group. I must say that I'm a bit surprised that the Gazette played along with the 'anonymous spokesperson' game.
There's a lot to unpack in this story just from the past two days. Nelson Hunt was throwing around some serious allegations/implications on Everest Decosta's radio show today, including the Premier advocating for a Turks and Caicos developer implicated in the Turks and Caicos corruption inquiry, but suffice it to say that this thing reeks of impropriety.
Brian Dupperreault is arguably Bermuda's greatest individual business success story, heading ACE, one of our flagship companies (the Finance Minister's employer), and directing it to great heights and investor returns. He is currently the head of one of the world's largest professional services and insurance/reinsurance intermediaries. 2009 income for MMC was over $10 Billion. So for the Premier to dismiss the Southlands group as amateurs is weak.
Mr. Duppereault didn't make his many, many millions by making un-thought out investments and picking fights with politicians. He has generally kept a pretty low key profile and lets the results do the talking.
Of course he isn't a pushover, but you can be sure that all of Bermuda's international business executives will be taking note of the tone and personal element of the Goverment's rebuttals.
Here's the thing. While this might seem like huge money to a lot of people, to a guy like Mr. Duppereault it isn't. It's certainly real money, it's not peanuts, but this investment is not going to make or break him, so he has nothing to gain from getting into some pissing match with politicians, but nor is he beholden to them. And that must make the Premier more than a little nervous to have someone with Mr. Dupperreault's character, stature and influence sending a strong message that something stinks at 105 Front St..
It also means that Mr. Dupperreault isn't going to jeopardize his hard earned reputation and position as the head of a publicly traded company messing around with shady deals.
Nelson Hunt has taken a different approach, and declared that he has nothing to lose and isn't going to hold back. If this wasn't so serious and have such implications for Bermuda's reputation and future, I'd recommend grabbing some popcorn and pull up a chair.
If you read the timeline laid out in the Gazette yesterday, and listened to Nelson Hunt today, the Premier's behaviour is very suspect and shady.
One element jumped out at me, which seemed to really sum up how the Southlands group were trying to keep the politicians at arms length. For this they were criticised for being out of their depth:
He [Anonymous spokesperson] claimed the Southlands directors would not take advice from Government's consultants. "They just wanted to fight with these guys," said the spokesperson. "They [Southlands Ltd.] spent a whole heap of money spinning their wheels."
And he said they refused offers of assistance in attracting partners, including having the Premier and Cabinet Secretary attend meetings. "It would demonstrate to the development partner the Government's commitment. We made that offer on more than one occasion; they never took us up on that."
There's a perfectly good reason why reputable developers and investors don't want politicians sitting in their business meetings and business plans.
It screams of corruption.
They weren't out of their depth, they were protecting their reputations and credibility.
Politicians should not get this involved in development deals in this way. It is completely inappropriate and should set off all sorts of alarms.
When you see politicians cozying up with developers, the developers look to be in bed with the politicians and the politicians look like they're on the take.
That the Premier can't see that, or doesn't care, and that his colleagues permit this should be very, very worrying to every Bermudian.
With a very important budget looming I've been thinking about what the individual parties can get out of it.
For the PLP, I don't expect much because they continue to deny reality and pretend that the economic woes and tourism are in a mess because of the global recession, rather than their squandering of opportunity and huge tax windfalls of the past decade. Politically they can't concede that just about everything the UBP forewarned has come to pass.
I hear that Paula Cox has been preparing people for a 'tough but fair' budget, but this is really a tale of what could have been.
On a personal level Paula Cox has been getting hammered, and rightly so, over the past few months in particular. if she aspires to the leadership of the country she'll be looking to regain some of the credibility that she has lost (although she remains somewhat of a Teflon politician).
In the UBP's case I think the challenge is summed up quite simply, but is harder to execute. The UBP need to not just be right, but be persuasive. All 3 of the UBP's Shadow Finance Ministers from Grant to Pat to Bob have been on the money year after year. But they're not persuading. Bob Richards has been devastatingly accurate in his predictions, but he's a tad academic.
Bob needs to tell a story, not teach. I've loved his replies, but they're overly academic. And he doesn't have to convince me or those like me. We get it.
The story to tell is what could have been, but also what can be.
The BDA need to accomplish a couple of things.
Firstly they need to articulate their economic vision and continue to build momentum on the heels of their well attended conference. In Parliament they don't have the kind of economic expertise the UBP do in Grant, Bob and Pat.
Which leads to my second point. I was surprised that the BDA did not prepare a more formal and distributable Throne Speech reply as the the official Opposition does. That was a missed opportunity to deliver a prepared speech and show some professionalism with a printed document, although Shawn Crockwell did deliver a good presentation.
If I were in the BDA I'd make sure they prepared their own Budget Reply document and deliver a formal reply. There's a lot of low hanging fruit in the way the PLP have mismanaged the economy and denied their role in putting Bermuda on the back foot, rather than responding from a position of economic strength.
It's critical that they step up now in Parliament and maximize every opportunity, particularly these big Parliamentary events. I thought they missed a great opportunity with the Throne Speech.
I received the Rent Commission's flyer in the mail today.
It might seem trivial, but the increasing use of the PLP's signature green in Government documents continues to proliferate (check the budgets of the past few years. 2007 was the last year it was not printed in green).
This the most visible demonstration of partisan messaging overwriting policy. (The other is of course the move to name public buildings after partisan figures).
Government mailers and PLP election materials are becoming indistinguishable.
The civil service is apolitical (hence the heavy use of consultants - they're loyal to their patron and bypasses checks and balances).
The blatant and not-so-blatant infusion of political branding is insidious and indicative of the the rampant politicisation of public policy and the Civil Service.
STAGE 1: HUBRIS BORN OF SUCCESS
STAGE 2: UNDISCIPLINED PURSUIT OF MORE
STAGE 3: DENIAL OF RISK AND PERIL
STAGE 4: GRASPING FOR SALVATION
STAGE 5: CAPITULATION TO IRRELEVANCE OR DEATH
Without action - a repositioning and reinventing of Bermuda ...pronto - our economy will be in Stage 5 before we know it.
It's happened with tourism. In the words of T.S. Eliot:
This is the way the world ends
This is the way the world ends
This is the way the world ends
Not with a bang but a whimper.
Will complacency and denial do the same to our sole remaining economic pillar?
No surprises here.
The Premier's overseas trips cost an average $29,400 a month from May 2009 to the end of last month -- up from $26,600 a month during 2008/09, despite promises to cut back during the economic crisis.
Dr. Brown's personal ground transport bill came to $33,300 -- including $7,900 during a four-day stay in Washington, D.C. -- with his companions charging for their own ground travel on top of that.
Image is everything.
It's up to the public to decide that they no longer will let this too pass.
An aspiring young PLP politician wants senior PLP MPs in safe seats to step down so new blood can step in.
That is one of the dynamics that shredded the UBP.
Good luck with that.
A couple of readers understand what Minister Burch is referring to when he talks about 5 year limits, with the RG's use of 'term limits' being technically incorrect when it should be 'work permits'.
The 5 year limit refers to the maximum period an individual's work permit can cover (vs. 1, 2 or 3 years) before it needs to be renewed. Most top execs are on (renewable) 5 year permits.
Nonetheless he's so caught up in policy bull$hit he confuses everyone with his
nonsensical and contradictory statements.
I read your article and think you're confusing term limits with the length of work permits. At present the longest work permit issued by the department has a five year term. When they expire they can be renewed subject to the usual restrictions.
Term limits are a separate question - that's the six/nine year bit.
What Burch is saying is that the department is considering issuing work permits with
longer terms than five years - that has no impact on term limts.
While the PLP and Minister Burch are talking about being flexible on term limits, since when was term limits five years? It has always been six. Always.
So when did they lop a whole year, 17% of a work permit limit, off the policy? Does the Government not even know what their signature policy is or did they amend it without telling anyone?
The truth is that term limits is nothing but window dressing anymore. It's a failure of a policy so patently obvious by the claim to override it so easily. But it's continued existence, even in name only, is so hostile to Bermuda's continuing success as a business domicile that the PLP are just as culpable as any foreign threat to our international business economy.
Term limits persists because the PLP can't reverse the policy without losing serious face and they'd rather continue to hurt the island than admit their policy was wrong from day one.
An important comment today about local Government:
We were very proud to announce that the city is debt free and has been for more than 15 years for all of its operational purposes. And our financial affairs are audited every year by independent auditors, and without fail the reports are clean and unqualified.
That'a the Corporation of Hamilton, not the Government. What would the Corporations finances look like 5-10 years after the PLP got hold of it?
Probably something like this:
There is really nothing left to say about the outgoing Premier's personal party otherwise known as The Love Festival and other events which possess no economic value to Bermuda. But the self-indulgence grows.
The use of the Tourism portfolio as a vehicle for Dr. Brown's obsession with celebrity - both creating his own and worshiping at the altar of others - cannot be denied.
Dr. Brown's time in Tourism and as Premier are lost years for Bermuda.
It's so bad that his paid boosters can only point to free Bermuda College tuition and free child care as accomplishments on his watch (neither of which the Government can now afford by the way). That's it. Not quite trans-formative leadership is it? Controversy, debt and division will be his legacy.
The silence of so many PLP MPs and members amazes me. The loyalty to party over principle is not good for their party or Bermuda.
I suspect at this point they, like many others, are just counting down the months and hoping that this will all seem like a bad dream.
If it were only that easy. Bermuda is going to be cleaning up this mess for years.
Something jumped out at me while reading that Government is looking to re-table the Internal Audit Bill, establishing a new internal Audit Department:
The Internal Audit Act will set up a new Internal Audit Department to provide an overview of the managing and cost of Government activities.
Dr. Brown introduced the bill on December 4, but made the rare move to "rise and report progress" -- effectively postponing the bill -- after the UBP and BDA said it didn't give enough independence to the overseeing team.
Yesterday, the Premier told this newspaper regarding the internal audit bill: "We have made a few amendments that should meet the favour of both sides of the House."
Two weeks ago The Finance Minister claimed that The Office of Internal Audit was part of the accountability framework.
In addition, there is an accountability framework that includes the office of the Accountant-General's Department, the Office of the Auditor-General, the Office of Internal Audit, and the Ministry of Finance HQ.
The Office of Internal Audit doesn't exist yet.
May I suggest that before the trade delegation to India leaves, the outgoing Premier and Minister of Travel takes a Cabinet delegation across the street to Pitts Bay Rd and Par-la-ville Rd - where Bermuda's bread is buttered - and address the self-inflicted wounds on our international business sector.
Prosperity, like charity, begins at home.
A reader extends the Parental Responsibility legislation to the political arena:
Statutory provision will be made to make the voters civilly liable for the actions of their Ministers in circumstances where the voters have failed to exercise reasonable care, supervision, protection and control towards their Ministers when it is found to be a contributing factor to the offences committed by the Ministers.