Dickinson pressed on immigration and debt
Curtis Dickinson was pressed on topics ranging from burgeoning government debt to immigration policy, as he spoke about his Budget before a business audience yesterday.
The finance minister, speaking on a panel at the Chamber of Commerce Budget Breakfast at the Hamilton Princess&Beach Club, also defended the proposed flipping of the 60:40 rule to 40:60, while retaining the requirement to have a 60 per cent Bermudian board of directors.
Pushed on why the Government has chosen to run a deficit of nearly $20 million for 2020-21, adding to its $2.65 billion debt, Mr Dickinson said his focus was on stimulating the economy and on making badly needed infrastructure upgrades.
Arthur Wightman, moderator of the panel and territory leader of PwC Bermuda, the event sponsors, set the tone for a frank conversation with his opening remarks.
“There is universal recognition that a bigger population, more equitably participating in more jobs is one of the primary solutions to the challenging circumstances Bermuda faces,” Mr Wightman said.
“A component of this broader solution is immigration reform. Much work has been done to sensitively and appropriately consider the social and economic issues.
“Based on feedback from the business community this morning, they are looking to the Government to move with speed on this issue.
“That all being said, the business community also needs to step forward to help to identify and develop investment opportunities to grow and diversify the economy.”
Mr Wightman said a lack of substantive economic growth was creating “a good deal of fear among Bermudians and immigrants alike”.
He added that it was clear “investment, foreign or local, and diversification of the economy are sorely needed and we must have strategies to create myriad opportunities, not just a handful.
“This requires a greater collaboration between the public and private sectors to achieve meaningful progress. Responsible economic growth will improve the lives of Bermudians.”
Mr Dickinson said the Government had increased its budget by about $5.7 million to “help some of the most vulnerable in our society”.
The Government had chosen to borrow to fund a $20 million increase in capital expenditure to help pay for maintenance of roads and public buildings, as well to build IT systems to improve efficiency.
Mr Dickinson said this would prove to be money well spent. “We decided to borrow some money to make these long-term investments,” he said. “If we don’t do it now, we run the risk of borrowing greater amounts to fix these issues later.”
Nathan Kowalski, chief financial officer of Anchor Investments Ltd, said international businesses in particular were concerned by the size of the debt burden. Bermuda still had an A+ sovereign debt rating and could refinance its debt at a decent rate, he said, but “we’re still not paying it down”.
“What happens when we do need fiscal stimulus as the economy contracts and we want to go out and spend?” Mr Kowalski said. “I think we should be, as the Fiscal Responsibility Panel suggests, running a surplus of about $50 million a year.”
Mr Dickinson said: “If we can get this economy moving and grow the size of the pie, that’s the best strategy to tackle the debt. I know I cannot come out tomorrow and say we’ll raise an additional $100 million of taxes from all of you. It wouldn’t work. It would seize the economy up.
“So I have to use the tools I have to effect the outcomes I want. I want surpluses. We missed this year. I can’t fixate on that. I have to try to keep the economy moving and if that happens then the other things I want are more likely to happen.”
The proposed changes to the 60:40 rule also generated discussion.
Mr Kowalski said: “I can see people thinking, ‘I’m putting my money into this company, but I’m not really getting control at board level’. I think it’s a partial fix.”
Mr Dickinson said: “Today, anyone who wants to make an investment greater than 40 per cent in a local company can do so. All they have to do is contact my office and make a request for an exemption from the 60:40 rule. I can tell you that people aren’t beating paths to my door.
“I don’t accept that Bermudian directors of a company majority owned by someone not from Bermuda cannot put their national interests aside to exercise their fiduciary responsibilities.”
The intention was to ensure local representation on the board, he added.
Panellists also had introduced immigration into the discussion.
Kirsten Beasley, head of healthcare broking, North America, at Willis Towers Watson, said international business’s principal concerns were in the areas of immigration, heathcare and payroll tax.
On immigration, Ms Beasley said any effort to increase the population to help the economy was not simply about headcount gain, but about increasing the working population.
Referring to a survey conducted by the Association of Bermuda International Companies, Ms Beasley said: “Fifty per cent of international business leaders view immigration policy as an obstacle to job creation.
“I think we need to be viewing our immigration policy from a position of balance. It needs to be contextually grounded. It needs to be a policy that accounts for Bermuda’s history and Bermudians’ legitimate concerns.
“And it needs to provide Bermuda’s businesses the much needed flexibility to support growth and innovation to everyone’s benefit.”
She cited the BermudaFirst group’s recommendations as offering insight into how a balanced immigration policy that addresses the needs of business and serves the interests of Bermudians might look.
Mr Dickinson said he was well aware of Bermuda’s demographic trends and the need to address the situation.
“The challenge is that there is a rich history in Bermuda around issues like immigration that need to be addressed. We are having conversations that are reflective of the concerns expressed by a large number of people in Bermuda that they have not been able to take part in Bermuda’s economic miracle. How do we address that?
“That part of the conversation is essential. People are concerned that they have not been taking part and that they’re not part of the future of this country and, as a result, the gulf that exists between those who have and those who have not is only increasing.
“It’s a difficult challenge, but I think we’re making progress. We are facing challenges from the decreased birth rate and ageing population.”
Edward Ball, general secretary of the Bermuda Public Services Union, said that in light of the declining birth rate, which meant fewer people over the years, “one way or the other — and the immigration minister may be surprised to hear me say this — we need more people from somewhere to keep the economy ticking”.
He added: “There has to be balance and the BPSU is happy to work with the Government to help come up with a solution with the balance necessary to ensure that Bermudian rights are adhered to.”
Having said that, he added that he hoped Bermuda would not open up to the extent that the Cayman Islands had. Many Caymanians, Mr Ball said, would argue that they had “sold the country”.
Mr Wightman said there appeared to be a consensus that the social issues were as important as the economic ones. “What the business community is saying loud and clear though is that we need speed, because the absence of certainty here is impeding the economy’s ability to thrive,” he added.
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