Sir John: open economy and grow social support

  • New thinking needed: Sir John Swan, former Premier of Bermuda (File photograph)

    New thinking needed: Sir John Swan, former Premier of Bermuda (File photograph)

Bermuda can emerge from the Covid-19 crisis as “a more just and equitable society” that looks after its people better, a former premier believes.

But Sir John Swan argues that to generate the resources to enable that to happen, the island will need to open up its economy, lowering barriers to foreigners and their capital.

Broad support for economic reforms would come only from locals being convinced of tangible benefits for themselves, he said.

He suggested that this could be achieved through a government-run trust that would grow with an open economy and that could provide financial help to lower-income Bermudians.

Sir John said the crisis was changing society as the consideration for others that came out of wearing masks and social distancing reminded us that we were all bonded by nature.

“This virus has taken nine lives in Bermuda and, hopefully, it’s teaching the other 60,000 of us how to look after your fellow man,” Sir John said in an interview.

“I think we will emerge from this a much better country and a much better people.

“The community is rising to the occasion in a way I’ve never seen.”

Sir John, who served as premier between 1982 and 1995, commended the Government for doing “an excellent job” during the crisis.

The loss of lives from Covid-19 and the sacrifices made by frontline workers risking their own lives must not be in vain, he said.

A more just society, with a conscience, could be the outcome of the crisis.

“We can’t just go back to the way we were, having cocktails and taking out our big boats: we have to think more about those who work hard but struggle to pay the bills,” Sir John said.

Solutions for economic recovery could come from all parts of the community, he said, and he urged everyone to put forward their ideas.

He added that he had worked with a group to submit some thoughts to the Economic Advisory Committee set up by Curtis Dickinson, the finance minister.

“I hope the committee is given a very short leash to come up with strong recommendations that will be followed to free up the economy and get it moving again,” Sir John said. “We can’t stay in recession and solve our problems.

“We need to make a quantum leap outside of what we’re used to doing as a country and do things quite differently if we’re going to pull ourselves out of this.”

Sir John said the economy needed to open, to encourage an influx of wealthy individuals and entrepreneurs, with their capital and ideas.

He added that history had showed Bermuda thrived when it embraced things from the outside.

“That’s what we used to do, but we got away from it,” Sir John said. “Things went well and then we locals thought we should have all the biggest houses and be the big guys on the block — what happened is that the block got smaller and we shrunk with the block.”

Bermuda needed investment from outside to rebuild that block, he argued, and to build a tax base large enough for the Government to meet growing social needs.

A serious challenge was the island’s indebtedness, he said.

It was not only the Government’s debt burden, now about $5 billion when liabilities on the hospital, the airport and unfunded pension plans are included, it was also private-sector debt, such as bank loans, car financing and mortgages, amounting to another $5 billion or so.

“That’s about $10 billion debt on an economy of about $6.2 billion,” Sir John said. “That should tell you that we’re overburdened.”

Everything purchased from abroad is bought with foreign currency, of which the island is not earning enough to maintain itself, he added.

International business and tourism had been major sources of US dollars, he said, but both sectors would come out of the crisis changed.

International business was likely to use less office space and cut down on travel, while tourism would probably contract.

“The Minister of Finance has a mammoth task and I think everybody should put forward their ideas to the Government,” Sir John said.

“The Government says it’s going to listen and it’s not going to kowtow to any particular faction of the community.”

The pool of working-age people paying into the system needed to grow, he said, because government finances were already under strain and would be more so as the growing number of seniors used more medical services.

With statistics showing a greater number of Bermudians dying than being born, the strain would become more acute over time without an increase in immigration, he said.

To gain broad public support for immigration reform, the Government would have to convince doubters that it was about more than creating jobs and wealth for an elite group.

Sir John said the average Bermudian may be thinking: “What’s in it for me? At the end of the day, I’m no better off.

“However, I could benefit if the economic activity of the country rose and the Government had a facility by which some of the wealth that was created were passed back to me.”

He referred to Singapore, an offshore financial centre whose government has set up endowments and funds to provide a social safety net for locals, and Scandinavian countries with progressive systems.

Sir John said: “It’s not something that’s alien to the world, it’s alien to us who have been completely sold on the capitalist system.”

Over the years, wealth attrition had occurred in Bermuda, particularly in the black community, he said.

Representation of blacks on local boards of directors, for example, was too low and there were very few large, local, black-owned businesses.

“When you take that wealth attrition and on top of it, you can’t even get a hustle, you’re going to say, Mr Rich Man, you’ve told me how it will work for you, now tell me how it will benefit me,” Sir John said.

“I think that’s what the Government has been wrestling with. I think the Government recognises it can’t be a one-sided society.”

Generous support from governments for the unemployed had been a feature of the crisis worldwide, he said. “So why can’t we say at other times, if you can’t pay your bills, then we will help you?” Sir John said.

Backing for reforms to open up the economy would come if Bermudians felt sure the Government had a conscience in ensuring locals would not have to suffer financial hardship, Sir John said.

He added: “We’re so small that we can make anything we want work here.”

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Published May 20, 2020 at 8:00 am (Updated May 20, 2020 at 6:44 am)

Sir John: open economy and grow social support

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