So Budget Day arrived, and we got more of the same plus more, which is really quite depressing.
On the positive side, the document wasn't green, but the Finance Minister's outfit certainly was. We'll call it a push.
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.
