If the PLP's policies weren't responsible for deepening Bermuda's economic problems as they insist, why then are the solutions to our economic problems partial reversals of those very same policies?
Recently in Economy Category
Methodology change or not, would Bermuda's credit rating have been downgraded if the PLP hadn't racked up $1B in new debt over the past 5 or 6 years?
Just asking.
Kevin Comeau's OpEd in today's Gazette (unfortunately buried deep down on the opinion section of rg.bm) is a must read on the issue of smart immigration policy for job creators. The core problem with this new policy is that the offer is of no real value and the price tag is an insult not an invitation:
Government thought that by offering CEOs and other top job creators the opportunity to obtain Permanent Residency, these executives would be persuaded to remain in Bermuda. What Government failed to recognise was that effectively each of these top executives can already work and stay in Bermuda as long as they like we'd be crazy not to renew their work permits, and they know it. So in effect they are receiving very little when they obtain Permanent Residency.More importantly, the offer of Permanent Residency at a price tag of $120,000 risks turning a gesture of inclusion into an insult. From the executive's point of view, the Government is saying that we want you to live in Bermuda and create lots of jobs for us, but we don't want you to be one of us. Instead, we will offer you and your family the right to become second class non-citizens for which we will charge you $120,000.
I've heard this sentiment directly from people who would be the targets of this new legislation.
The policy was created from a defensive stance, trying to give away as little as possible. The end result of long discussions between the private sector and government was a policy so narrowly targeted that it applies to almost no-one, and in reality offers nothing that they don't already have.
Per my last post about the legislation for the airport duty increase not yet being passed, I received a quick response from the Collector of Customs.
The Provisional Collection of Customs Duties Act allows the Minister of Finance to apply duty rates before they are approved by the House of Assembly once a bill is read a first time.
In the event the legislation fails refunds are then issued.
I'll consider it a charitable donation to an organization in financial difficulty.
So I arrived back from a trip on Friday night and was hit with 35% tax on the few items I'd purchased while overseas.
I politely advised the customs agent that this was not in effect until the legislation passes Parliament - which it has not yet.
I paid the duty at the 35% rate as it isn't the officer's fault and his hands are tied. But I will be writing to the Collector of Customs to receive my refund and would encourage others to do the same as well.
Apologies for the lack of activity, I don't have a lot of time for posting so it will probably be light for the time being. In the interim, I recommend the following article entitled The Story of the Rise and Fall of the Cayman Islands.
In case you're keeping track, the PLP's latest post on their site has flipped yet again back to saying that term limits was put in place to protect Bermudian jobs from evil, scheming bosses - at least for this week - not that it was to prevent long term residency claims which is what then Minister Burch definitively claimed it was designed for, categorically denying it as having anything to do with job creation or preservation for Bermudians.
One day it's about long term residency. The next about not letting expats steal jobs from Bermudians. Just pick one already will you.
Today's post:
These UBP/OBA economic policies would result in fewer jobs for Bermudians and put more of our land in the hands of foreigners.
Their commitment to end term limits for foreign workers would be nothing short of disastrous for the Bermudian worker. If implemented, employers at all skill levels would no longer be incentivized to hire Bermudians. So many of us have seen our resumes passed over not because of skill, but, because the bosses wanted their overseas man in the job. The OBA/UBP policy would mean more unemployed Bermudians and would cause many Bermudians to give up trying to even look for work.
The PLP act as if abolishing term limits would abolish the Department of Immigration. Removing term limits doesn't mean that jobs just get handed to non-Bermudians. They still would have to be advertised as normal and vetted by the Department of Immigration. That is unless the PLP don't believe that the Department of Immigration does its job properly.
And in case they haven't noticed, as our non-Bermudian workforce has declined, the Bermudian impact has been greater. Unemployment didn't exist in Bermuda before term limits, and right now there are few buyers for land in Bermuda - Bermudian or otherwise.
The PLP's reality bending alternative universe stuff continues to remind me of Stephen Colbert's concept of 'truthiness' and his comment that 'reality has a well-known liberal bias'.
In Bermuda's case it's that reality has a well-known anti-PLP bias.
It appears that as usual the PLP response to weakness is to go on the attack. In this case they are doubling down on term limits with an election coming. This is very dangerous for Bermuda. They appear willing to disparage the remaining job creators and investors who have stuck by Bermuda despite the PLP's hostilities. To escalate it further would be devastating.
Do they have no sense of responsibility, or would they rather sink the ship than make a change in course.
Saving face cannot be allowed to take precedence over saving Bermuda's economy.
I came through the airport today with a number of people excitedly awaiting a 35% duty hit on anything bought overseas. I wasn't totally surprised when it wasn't applied, and this evening a statement comes to confirm that the increase has been postponed until Nov. 4th, as well as just what qualifies as 'retail':
On the customs duty changes at the airport, given the time required to make system changes, including the changes to bank kiosks at the airport that are used for payment of customs duty, the recently announced changes to the customs duty on goods accompanying residents when they return from overseas trips will have effect from November 4, 2011."
Hmmm. November 4th you say? That also just happens to be the day Parliament reconvenes, which suggests that the 'system changes' line is a convenient cover for the fact that financial changes require an affirmative resolution from Parliament. I'll bet 35% of my next overseas purchase that a bill will be hastily presented to Parliament that day.
You see, the Finance Minister doesn't have the authority to change duty rates overnight, nor waive payroll tax, although it was suggested to me that with a little calendar sleight of hand she might have been able to pull a bit of a fast one to buy a couple of months head start.
I was discussing this with some people at the airport this morning, and it seems that someone might have pointed this out to the Premier.
All of this confirms one of my long term criticisms of the PLP: they don't have a plan. They really have no idea what to do, can't see what is coming and are just lurching from short term gimmick to short term gimmick.
Retail hasn't been in distress since the global recession, the PLP's favourite excuse for everything. Retail has been in trouble for a long time.
There are structural problems with retail in Bermuda that need addressing but have been amplified by the reduced population on the island, lower demand, rising Government costs etc.. Retail has been asking for duty relief, duty at the time of purchase etc. for years.
The problem Ms. Cox has is that she's loaded Bermuda up with so much debt that she can't give up too much on the revenue side for Government or she won't be able to service her 9 digit debt.
What Bermuda needs is a plan. Multiple plans actually: a retail plan, an international business plan, a tourism plan.
Investors and business owners need to know what the environment is going to look like for the next few years. They need stability not knee jerk overnight policy changes, even if they are temporarily in their favour (this time - previous payroll tax change was not).
Six month payroll tax holidays are fine, but they're stop gap measures not a plan.
It's time for the Premier to fire her Finance Minister.
The Royal Gazette
30 September 2011
Recently The Royal Gazette's columnist, Government consultant and former PLP Senator declared that 'there are no simplistic solutions to our immigration problem'
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While this is perhaps useful as a political redirect, Mr. Brown's simplistic analysis failed to acknowledge or address a number of critical facts.
Perhaps most glaringly, Mr. Brown's party has been implementing solutions looking for problems, the most simplistic of which were the six year term limits - no exceptions - and the discriminatory land licenses for mixed status families.
Mr. Brown's statement on immigration appears to be a doubling down on his previous week's claim that 'It is without question that the global economic crisis has more significantly weakened our economy than anything done locally by this Government.'
With PLP partisans such as Mr. Brown becoming increasingly isolated in their defence of the PLP's economic policies, they are having to resort to progressively more tenuous yet more definitive claims such as these.
Both of Mr. Brown's columns are shockingly uninformed and demonstrate a fundamental lack of understanding of Bermuda's sole economic pillar by an aspiring policy maker. It is by no means 'without question' that external forces drove Bermuda's rapid economic contraction since term limits came due.
That the jobs exodus occurred as term limits were triggered surely can't be written off as coincidental. This lack of coincidence is illustrated simplistically by the following questions:
If the global recession is the primary driver of Bermuda's economic downturn, and financial services is our sole remaining economic pillar, why is Bermuda the only place that has seen a contraction in (re)insurance jobs and capital during the global recession?
If global issues contracted Bermuda's (re)insurance industry, why then did Ireland and Switzerland both see gains in capital, company formation and (re)insurance jobs during this period; gains which are offsets of Bermuda's contraction?
If these global issues were hurting (re)insurance, why were these positions not eliminated but relocated outside of Bermuda?
If global financial issues were the driver, why did Ireland - a country with far more severe public sector financial problems than Bermuda had at the time (but perhaps not now) see an inflow of investment and jobs?
Why did these gains come as the first round of term limits kicked in?
Why did the global recession not hurt the balance sheets or capital adequacy of the (re)insurance industry, which remains well capitalized even after multiple natural catastrophes in 2010 and 2011?
These questions demonstrate that it is not without question that the PLP have contributed - perhaps even triggered - a rapid contraction in the Bermuda (re)insurance and its affiliated industries.
There are plenty of other questions, and data points, as well as statements by company managements which point directly to the PLP Government's actions as having done harm to Bermuda's economy and Bermudian jobs.
The lack of a US tax treaty with Bermuda certainly is one factor, but those of us in the local financial services industry watched from the inside as companies accelerated their Plan B's in direct response to the PLP's term limits policy, anti-International Business rhetoric and general unwelcoming tone.
The PLP was warned from the outset that precisely what has happened would happen. Yet now they want to absolve themselves of culpability and lay it at the feet of the global economy?
Bermuda has lost, and is continuing to lose, the vitally important critical mass of intellectual capital which established one square mile within Hamilton as the innovation centre of global insurance and reinsurance. We cannot thrive without a concentration of intellectual capital on the island with long term stability. Term limits prevents precisely that.
Cayman's now looks to be experiencing a come to Jesus moment over their own term limits misadventure. However, here the PLP remain doggedly wedded to a slightly watered down version in the face of as close to a universal chorus as you'll ever get to abandon it.
The PLP seem more interested in trying to preserve the depleted political capital they've invested in term limits than retaining and growing the real investment that Bermuda is losing every day because of it.
Furthermore, and not unrelated to our economic decline, Bermuda has an 'immigration problem' because we choose to have one.
Decades old politics built around envy and a national inferiority complex created our immigration problem. These have manifested themselves as a fear of outsiders taking our opportunities and our wealth, rather than actually creating and expanding them as is the case. Our immigration policy reflects that misunderstanding.
Bermuda politics should be aspirational; built around a deserved national confidence as a result of historically punching above our weight.
Our immigration problem exists because amidst a declining Bermudian population we no longer provide a path to citizenship, nor an environment for the retention of intellectual capital - the most important asset any company possesses in an increasingly competitive world.
The past few years should have made it self-evident that immigration and Bermudian prosperity, social stability and economic growth are inextricably linked.
Immigration policy has become our economic policy. Term limits promotes a high turnover transitional job model for our international companies, rather than a secure environment for those who are contributing socially and economically to our community.
We want the jobs, but not the people. And we want it all on our terms.
Those days are over.
Our companies are global. Where they locate their staff is a choice for most roles now and not something determined by local legislators and civil servants.
Recently the Premier head-faked to this political reality with overtures to a very narrow opening of PRC grants to long term job creators. While a positive sign, this alone is not a solution, particularly as it adds another layer of subjectivity, selectivity and complexity to a policy which needs to be clear, fair, stable and reasonable.
Bermuda's immigration policy has become little more than a political lever to pull at election time, and is therefore subject to the rapidly changing whims and moods of the governing party, and latest Minister.
The Premier recently bizarrely claimed that our immigration policy was 'dynamic', 'nimble' and 'flexible'. This kind of denial or delusion isn't productive.
Our immigration policy is arbitrary, subjective and uncertain. Not to mention that it's the greatest threat to Bermuda's economic recovery and long term prosperity.
Most importantly however it is also something completely within our power to address.
If, as PLP columnist Walton Brown says, immigration 'issues are complex and intertwined and do not lend themselves to simplistic solutions', why did his party put in place a simplistic solution of term limits, of which version 1.0 said everyone out after 6 years no exceptions?
The recent article on Cayman looking to end term limits demonstrated Paula Cox's propensity to resort to the blind em with BS approach in the absence of a solid argument:
"The benefit of the Bermuda immigration model is that it is dynamic and this highlights the flexibility of our policy."It is not enshrined in statute and so more absolute. Our approach differs from Cayman as they embedded their rollover policy in legislation, so it lacks the nimbleness of the Bermuda model.
"In our model the Minister responsible for Immigration can identify any additional carve outs, the ten-year work permit and the incentives for job makers, while continuing to keep the promise to Bermudians that we will not create additional long-term residents.
"This resonates further at this time when the Minister can send people home when their term limit expires to free up jobs for Bermudians. In addition, as work permit holders at the lower end cannot bring their families, many do not have an interest in settling in Bermuda.
"It should be noted that persons in key positions are granted waivers and we do facilitate those that cannot afford to recruit from overseas by granting extensions.
....
An anonymous businessman with companies in both Bermuda and Cayman swatted away some of her redirects.
The Premier and Finance Minister is either delusional or disingenuous - or both - if she seriously believes her own press release.
If you were to play a word association game with "Bermuda Immigration" as the topic, only the PLP could come up with "dynamic", "nimble" and "flexible".
Normal people not cranking out overly verbose press releases that say very little but contain a lot of words would come up with 'arbitrary', 'bureaucratic' and 'subjective' I suspect.
Bob Richards has it right although he was too gentle; this is about putting political pride before country, but the policy isn't just not working for Bermuda nor enhancing our attractiveness as he says, it's exporting jobs, costing everyday Bermudians their jobs, chasing away international investment and making us less attractiveness as a business centre.
They know this. They just don't want to admit that the centre-piece of their economic policy has drastically deepened and prolonged the recession. Hence, why this is not a global recession but the PLP recession.
Cayman's ends term limits:
"It is my opinion, as Minister for Financial Services with responsibility for economic development, and it is also the view of the government, that the policy needs to be re-examined," Bush told the Legislative Assemblyin a statement delivered at the end of the most recent meeting.He said that he believed the continuation of the term limit has led to a decline in all sectors of the economy and negatively affected jobs for Caymanians.
Meanwhile in Bermuda....the PLP's Walton Brown pens a howler of a column:
It is without question that the global economic crisis has more significantly weakened our economy than anything done locally by this Government.
Without question? Really.
Here's a question:
Did Switzerland see a decline in (re)insurance capital, jobs and company formation since 2008 as Bermuda has? And remember, it's a global financial crisis that hit reinsurance not anything specific to Bermuda's political environment.
What was the Swiss contingent touring Bermuda's pitch to prospecitive redomicilers:
A) Actively soliciting highly skilled highly paying executive jobs
B) Stable political environment
C) Low tax jurisdiction (but higher than Bermuda's)
D) All of the above
Here's another:
Did Ireland, whose economy is far more fragile than Bermuda's was at the time, see an exodus of reinsurance jobs, companies and capital since 2008 as Bermuda did?
Or did Ireland and Switzerland benefit from the corporate and job exodus from Bermuda which just so happened to coincide with the due date of term limits on their key executives, the knock on effect being massive associated job losses in all sectors of the economy, particularly construction and international business?
It doesn't bode well for Bermuda when people in positions of influence and policy making proximity are so uninformed or disingenuous.
It's time for some honesty. Cayman's just engaged in some.
Time for our Government to do likewise.
Their signature policies have hurt Bermudians. Time to fess up.
The proliferation of labour unrest on the island is very concerning, but not surprising and probably only beginning I suppose.
The PLP intentionally went out to reduce demand in the economy. It was kicked off in earnest at the 2003 election with term limit talk, and amplified by the predictably disastrous and self-serving term of Ewart Brown which Bermuda will be paying for for many, many years.
The PLP's job killing policies (term limits, land licenses) and crony enrichment driven overspending directly reduced government revenues by driving out investment and infrastructure (ie. jobs) and now the economic pie is shrinking.
While the bus dispute appears to be just more of the usual dysfunction and brinkmanship of the BIU with a government which has always caved to their pressure tactics, the prison officers and docks issue seems to be about reduced demand in the economy and the not totally unrelated social knock on effect of the exploding anti-social behaviour under the PLP.
It seems to me that it is self-evident, and somewhat ironic, that labour's interests were - and are - better served by an enlightened pro-investment party in power for an island which can offer only services; not an allegedly labour party which set out to kill demand in the economy prior to the double whammy of a cyclical economic downturn (albeit extreme).
The continuing and probably accelerating economic contraction in Bermuda is somewhat cyclical, but mostly structural. The attacks from within courtesy of the PLP's self-destructive economic policies have done far more damage than any attacks from without, or Paula Cox's crutch of a 'global recession' excuse.
The overspending and pre-recession deficit spending blew the nest-egg which could have been deployed as a social safety net and stimulative capital post-2008. That money could have been earning interest and appreciating in a Bermuda Sovereign Investment Fund rather than our current position of about 10% of Government revenues going to service structural debt.
The structural change, a changing Bermuda financial services model, is something which the PLP have not recognized and/or acknowledged was occurring because of them - prior to the economic crash of 2008. Politically they will never say it of course, but it's patently obvious.
The PLP really has no ideas, but were just riding the crest of the economic wave they inherited in 1998 which swelled due to external circumstances in 2001 and 2005. But that isn't enough anymore. The wave has hit the shore - and as Buffett said, the tide has gone out and we're seeing that our Finance Minister and her party were swimming naked. Now they're begging for time hoping for an external lift from a global economic recovery. That is a long way off.
The only answer is a complete repudiation of their own policies and a complete embracing of the warnings and ideas of the Opposition (many which they are trying to co-opt, albeit watered down to the point of useless and called something different).
The dockworkers, civil servants and blue collar workers are the canaries in the coal mine of Government's plummeting revenues. But this is exactly what was bound to happen based on the PLP's policies. This shouldn't be shocking to anyone. Many people warned these policies were economic suicide and undercut Bermuda's economic position of strength. It should be obvious that the PLP's policies are not pro-labour but anti-everyone.
But to threaten labour action for example if you aren't paid to sit on empty docks which can no longer justify the hours of the past decade for example is just not based in reality. They are presumably just trying to buy time, but layoffs are inevitable otherwise (and maybe either way). The existing labour model on the docks is completely unsustainable if demand has been slashed by 30% over the past 3 years.
The laws of economics are taking root in Bermuda in a negative way for the first time in a long time.
We can all thank the PLP for this.
Not sure that populist Paula will wear well; it lacks credibility after years of prolix Paula, particularly as the single biggest driver of cost in Bermuda's private sector was prolific Paula and her pork barrel politics, not margin.
But it does signal for sure that the PLP is in pre-election image rehab mode, the consultants know they've lost the public, and has been busy testing some themes over the past weeks to deflect responsibility for making Bermuda Progressively worse over the past decade.
Sure there's some crazy prices around, but there's also some been some crazy overspending under her watch, which, to borrow the Premier's rather unpleasant language, 'economically raped' the taxpayer.
And, as people keep saying: she cut the checks.
