Richards calls for Govt. to get real on the economy
By Alex Wright
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Shadow Finance Minister Bob Richards
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Shadow Finance Minister Bob Richards has called on Government to take Bermuda's economic situation seriously and to get a grip on the reality of what is really happening.
Mr. Richards, was speaking out on a survey by Research.bm commissioned by The Royal Gazette into confidence in the direction of the Island's economy and those who have lost a job in the past year, said that Premier Ewart Brown and Finance Minister Paula Cox needed to stop blaming all of the problems with the country's economy on external forces and to look closer to home for what they could do to address the issue.
The study of 400 people aged 18 or over conducted during the third quarter revealed that five percent of the country's residents polled lost their job over the past year and were still unemployed, while 22 percent of registered voters were confident in the way the economy was heading — down five points from the previous quarter.
Mr. Richards also warned that the growing number of international companies leaving Bermuda's shores for rival jurisdictions as a result of political instability and the trend of rising crime scaring off firms from moving to the Island could prove detrimental to the country's economy.
"The Finance Minister and the Premier are blaming all of the problems in Bermuda on the external forces, which is quite deceptive — yes, there are major factors outside of our control, but there are things which are within our control and that is a ball they have fumbled, so you just cannot blame it all on the global recession," he said.
"The Government has some control on the local economy and they have not used that wisely."
Mr. Richards said there were three main areas which Government needed to deal with — international business, tourism and construction industries.
He said a number of companies had left Bermuda citing political instability as the reason for their departure.
"Dr. Brown can give all sorts of ridiculous reasons for this," he said. "Either all of the companies are in cahoots with each other or this is real data.
"I think that Government is in denial of their leaving as a reflection of the Government of Bermuda and its policies."
Mr. Richards said tourism was also suffering from a lack of investment to redevelop the ailing industry, as witnessed by last week's announcement of the decision to close Elbow Beach Hotel's main building, leaving approximately 50 percent of its workforce jobless at the end of next month.
He said the Park Hyatt development at the former Club Med site in St. George's had the best chance of being completed of all the hotel and resort properties currently being built, but it needed to get off the ground first, which would in turn boost the construction sector.
Mr. Richards said the construction industry was starting to see some significant lay-offs, including both Bermudians and expatriates, which was detrimental to the economy, with fewer guest workers to spend their money on goods and services from Bermuda's businesses, while big firms were turning to smaller jobs and squeezing the small contractors out as they try to stay in business.
"Unemployment is not something that Bermuda is accustomed to having to deal with," he said.
"The problem for the Government was going to be the timing of any of their projects that may start to soak up this excess labour is going to be very difficult now, with a planning process that may take years.
"This is a cause of major concern and remembering that we are in a lag situation to the US and, even if it does pull through, it is not going to have an immediate effect on Bermuda."
In addition to this, Mr. Richards cautioned that an escalation in crime could deter overseas companies from setting up or investing in the Island, with the shift from career professional criminals who committed the majority of crimes prior to the economic downturn toward those displaced by the crisis as the main perpetrators.
"Crime has to be seen as a major threat to international business because overseas companies are not going to come here as a result," he said.
"We have to take this very seriously and not be in denial and paint a rosy picture when that is not the reality of the situation."
Mr. Richards, who said that the unemployment figure may be higher than the survey showed, said the reason behind more black residents being more likely to be confident in the economy's future direction may be that a large proportion of the black community works in the public sector, believing their jobs were secure, while Government refused to cut its budget expenditure despite the UBP proposing a hiring freeze and reducing their numbers by attrition.
Mr. Richards said Ms Cox needed to be realistic as well as optimistic about the state of Bermuda's economy, pointing to the fact that while the US economy had stopped plunging, there was no real strength to sustain it, including a falling housing market which had failed to bounce back, and interest rates set at zero percent by the US Federal Reserve.
He added that the stock market did not give an accurate reflection of the global and US economic situation due to being driven by relative value and corporate earnings, which were only strong because major corporations had cut their costs rather than boosting their revenue.
However, Mr. Richards said that unemployment was a key indicator for the performance of the economy and while it was not rising as fast as it had previously, initial claims for unemployment insurance were on the up, with the possibility of unemployment in the US hitting 10 percent.
"We are all hopeful that the Obama administration's stimulus package will be successful, but most of its hasn't been spent, so that is what we have to look forward to next year and hopefully it will start to circulate through the US economy and bring things back," he said.
"It is like the analogy of stimulus as the starter motor in the car driving the economy in the form of the engine, but the starter can only do so much and the engine has got to spring to life itself."
