If you could indulge me a moment of pedantry, for one of my language pet peeves, this one courtesy of the B.D.A.:
"Our information is that the payroll tax increase has seen a number of well known high profile international companies seriously consider looking elsewhere to relocate their operations," he said. "We are literally on a knife edge in terms of flight.
We're not literally on a knife edge, we're figuratively on a knife edge. If we were literally on a knife edge, well, the island would be sitting on top of a knife.
My pedantic quirks aside, I agree with the assessment that the economy is in a bad way with no real impetus on the horizon to start growing again. The only people still blissfully unaware of this is the Government.
There is simply no way around the fact that government revenues are shrinking, the economy is losing jobs (and the PLP is further force-ably contracting the economy by chasing out non-Bermudian workers after 6 years), and government spending is increasing at a rapid rate.
This is a recipe for disaster.
A few days ago the BDA's Michael Fahy had an op-ed entitled 'How the BDA would save the economy'.
There's some interesting ideas in there, including privatisation of some government services and the proposed Ministry of Commerce (Tourism and Finance), but a fundamental problem exists in the piece.
The BDA proposes 4 'obvious examples of expenditures' they would cut:
1.Reducing the purchase and use of GP cars and restricting the number per Department and making more use of car pooling.2. Ensuring strict adherence to the limits of spending and use of Government Credit Cards especially overseas. Set limits on hotel and travel costs regardless of who is incurring them.
3. Cease sending teams of senior Government officials on overseas trips unless there is a predefined cost/benefit.
4. Cutting costs by demanding discounts and promotional events from outside parties such as advertising agents.
All worthy of cutting I concur. But this is going to have an immaterial impact on the total Government budget. There's plenty of waste in there, but those savings would be in the hundreds of thousands or one or two million range.
The cuts that are needed in order to match revenues with expenditures over the foreseeable future need to be in the tens of millions of dollars, not hundreds of thousands of dollars.
I suspect the BDA knows it, but don't want to stick their necks out and admit that the public need to scale back their expectations of what Government should provide. Government has made promises they can't keep. The BDA should have called them on that but chose the path of least resistance. A mistake in my view.
Further complicating the issue is that the bulk of Government expenditure is on salaries, so departmental budget cuts that get tossed around (but rarely followed) are usually on a small share of the overall Government budget which excludes the people part. It ain't easy to lay off civil servants, and it brings with it all sorts of knock on effects of unemployment.
The spending versus revenue gap is that extreme; hence the $500M bond sale.
