Review of Revenue and Expenditure Revenue Mr. Speaker, Bermuda's relatively buoyant economy has provided a good foundation for Government revenues. We estimate that the original targeted revenue of $591.8 million will be exceeded by some $6.2 million. Therefore the revised revenue outlook for 2000/2001 is projected to be at the $598 million mark, about one percent above the original estimate for the year.

The increased revenues are expected to come from two primary sources: Payroll Tax which is currently some $11.2 million above estimate and fees from international companies which are roughly $3 million ahead of the original estimate. Land Tax receipts are expected to hold firm at the original estimate of $35.5 million.

The increases have been offset by reduced expectations from Customs Duties, sale of land to non-Bermudians, Passenger Tax, Stamp Duties, Post Office receipts and vehicle licences.

Expenditure Mr. Speaker, the social focus of the Progressive Labour Party Government is demonstrably shown by the increased resources channelled into human service areas such as health, education, housing and social welfare.

In 1997/1998, the last complete year of the United Bermuda Party administration, the combined portfolios of the Ministry of Health and Family Services and the Ministry of Education amounted to $159.3 million and accounted for 35 percent of total current account expenditure. In 2000/2001 the revised estimate of planned expenditure for the two Ministries amounts to $197.4 million and accounts for 37 percent of the total current account budget.

Increased resources have been devoted to education to reduce class sizes and thereby raise the instructional quality of teacher-student interaction.

Libraries have extended their hours to accommodate the needs of a hard-working public, and resources in this area have increased by 50 percent over the period.

Support for public health services, including the hospitals, has risen from $68.2 million in 1997/1998 to $81 million in 2000/2001, an increase of nearly 20 percent over the period. Some of the additional resources were used to help design and develop disease management and prevention programmes for asthma, heart disease and diabetes, all of which are major causes of hospitalisation in Bermuda.

In the area of housing, additional resources were directed to the Bermuda Housing Corporation to assist its programmes of increasing the stock of housing for lower income families. Since this Government took office, 134 residential units have been added to the Corporation's rental stock as a result of the renovation of derelict units, the new building programme and the private sector rental programme.

Mr. Speaker, this Government has also enhanced the protection available to those who are financially vulnerable in our community by increasing the allocation for financial assistance from $10.9 million in 1997/1998 to $15.4 million in 2000/2001.

Mr. Speaker, I spoke earlier of this Government's defence of Bermuda's economic interests in relation to challenges from the OECD, the FATF and the FSF and I have just provided a thumbnail sketch of the progress of our social policy objectives.

I should like now to review for Honourable Members the items of supplementary expenditure that were incurred during 2000/2001. These supplementary estimates are included in the revised estimates of expenditure for 2000/2001, which now stand at $532.3 million.

The supplementary estimates on current account for 2000/2001 totaled $11.2 million. However, $5.7 million of this total are "technical supplementaries'' in that they are simply the reallocation of existing appropriated funds. Such "technical supplementaries'' arise from the reassignment of Ministerial portfolios that took effect from April 1, 2000. The departments affected were Human Affairs, Parks and Works & Engineering. None of the "technical supplementaries'' will cause the total expenditure on current account to be exceeded in 2000/2001.

The balance of $5.5 million of additional current expenditure is largely accounted for by the following items. The Inquiry into Serious Crimes cost $235,000 and covered fees for the Chairman and Commissioners, travel and accommodation services and legal services. The Office of the Tax Commissioner was reorganised to provide sufficient resources to support the core functions of tax audits and compliance. Four staff was added and one temporary post was created. The cost of the reorganisation in 2000/2001 was $185,000. A sum of $285,000 was required to settle litigation costs arising from a civil suit under the USA - Bermuda Tax Convention Act 1986. The civil action was initiated during the previous United Bermuda Party administration but was only settled in April, 2000. A sum of $447,000 was required by the Department of Education to support the addition of nine teachers and four paraprofessionals for the start of the 2000 school year. A sum of $760,000 was required by Marine and Ports to provide for additional staff at the Registry of Shipping ($370,000), seaport security in Hamilton, Dockyard and St. George's ($160,000), reactivation of the small tug Forceful ($60,000) and the cost of the extended ferry service to the West End ($170,000). The Public Transportation Board required additional funds totaling $1.3 million to cover higher operational costs for the running and maintenance of the bus fleet. The Prisons Service required additional funding of $1.4 million for increased food and health care costs for inmates and overtime.

Mr. Speaker, there was a requirement for supplementary expenditure on the capital account in the amount of $3.36 million. A sum of $166,000 was required to pay for improvements to HM Customs Air Cargo facility. The balance of $3.2 million was essentially a "technical supplementary'' representing the reallocation of the capital development costs for ferry docks and public landings from the Capital Acquisition Account to the Capital Development Account.

Capital Borrowing Mr. Speaker, in June, 2000, Government refinanced its US $110 million five-year syndicated loan facility and replaced it with an US $150 million five-year facility. The new revolving credit facility was led by Bank of America and the senior co-arranger was The Bank of Bermuda Limited. Other banks participating in the syndicate were: BNP Paribas; The Bank of NT Butterfield and Son Limited; Commerzbank Europe (Ireland); Dexia Project and Public Finance International Bank; and the New York Branch of Westdeutsche Landesbank Girozentrale. The additional capacity of $40 million provides Government with the resources to complete its programme of major capital projects.

Looking now at internally provided funds for capital purposes, the revenue balance on current account for 2000/2001 is estimated to be $65.6 million. The cash in hand at the beginning of the financial year was $23.8 million and after deducting debt service and sinking fund contributions of $15.6 million, a total of $89.4 million of internally generated funds were available for approved capital expenditures of $76.9 million.

The cumulative debt position projected to the end of March, 2001, is expected to be $166 million. The net debt position after applying the Sinking Fund balance of $26.6 million will be $139.3 million. Government guarantees of $4 million will raise the total of utilised Government loans and guarantees to $143 million.

Mr. Speaker, with this overall debt position, Government is $107 million below the statutory borrowing limit of $250 million. There are no plans to revise the statutory ceiling and Government will continue to manage its financial affairs in a prudent manner.

Estimates of Revenue and Expenditure 2001/2002 Mr. Speaker, I began by stating that the capital programme would feature as a highlight of the Budget for 2001/2002. The Government's commitment to education is firm and resolute. We are keeping the promise of a second new state of the art senior secondary facility for the education of our young people and site preparation for the new Berkeley Institute has now commenced.

A number of other projects have been scaled back or re-phased in order to focus on the top priorities. In addition to the new Berkeley campus, other priority projects or capital acquisitions include new accommodation for the Hamilton Police Station and Magistrates Court and the purchase of the new ferries.

The current account is projected to generate a reasonable surplus to assist in funding the capital works programme but there will be a residual borrowing requirement of $50 million in 2001/2002.

Capital Expenditure Projections Mr. Speaker, the Capital Expenditure Plan has been thoroughly reviewed and pruned to include only essential projects. For these, Government plans to invest a total of $112.3 million in educational plant, transport infrastructure, new office accommodation and other forms of social infrastructure in 2001/2002.

Investment in public education facilities will amount to $35.3 million in 2001/2002. The new Berkeley Institute is the major project in this sphere and $26 million in capital outlays is planned for the coming year. The Total Authorized Figure (TAF) for the new senior secondary school remains at $71.2 million. The TAF to complete the work on middle schools has been increased by $1.4 million to $43.6 million and an investment of $7 million is planned for 2001/2002. The TAFs for school safety and primary school class size reductions have also increased, from a combined total of $1.4 million to a new total of $2.6 million. An investment of $1.7 million is required to complete these two initiatives in the coming year.

The construction of the new purpose built facility to house the Magistrates Court and the Hamilton Police Station is scheduled to commence in 2001/2002 and an allocation of $6.3 million is provided for this project. In addition, $1 million will be invested to outfit the St. George's Police Station in a new location at Southside. This work is scheduled for completion in the coming year and the newly equipped station will be the hub for the policing services and operations in the eastern parishes.

Mr. Speaker, Government's commitment to the preservation and enhancement of open spaces is demonstrated by the allocation of funds for the upgrade of parks and environmental improvements in 2001/2002. A total of $1.5 million is allocated for this purpose. In addition, $2.2 million is set aside for the work on the new Education and Administration Building at the Aquarium in Flatts. This project is expected to be fully completed in 2002/2003.

Mr. Speaker, the site search for a new St. George's Parish Rest Home is in the final stages and $458,000 is included in the 2001/2002 capital budget to cover design fees and preliminary drawings. Construction of the long awaited purpose designed Residential Care Facility for at risk adolescents is planned to commence in the coming year and $4.2 million is provided for this development.

The total investment for this new Youth Village is estimated at $9 million and the target completion year is 2003/2004.

Work on the National Sports Centre has been progressing steadily and the latest phase of the new facility is scheduled for completion in the coming year. An amount of $6 million is included in the capital budget as a grant to the Trustees. This grant represents the final instalment of $19 million in capital grants that the Government has invested in the Centre. The sporting community and the general public have waited patiently for this project to conclude and the Trustees have taken measures to ensure that the facility is completed to international competition standards.

Mr. Speaker, the Bermuda International Airport is our lifeline to the rest of the world and Government plans to invest some $4 million in runway upgrades, new approach lighting, apron replacements, associated works, and improvements to the terminal building in 2001/2002. This work is required to maintain international standards and to ensure the highest level of safety and security for visitors, residents and airport workers. The apron replacement programme is a new addition to the Capital Expenditure Plan and has a TAF of $7 million.

The work undertaken in 2001/2002 will allow for the major replacement of concrete aprons to be phased in from 2005/2006.

The Ministry of Works and Engineering is allocated $22.4 million for an array of capital projects that include: the refurbishment of ferry docks and public landings for the new ferries ($7.8 million); capital refurbishment of the Causeway and the Swing Bridge ($2.4 million); further work on the Pembroke Marsh ($1 million); and $6 million for office redevelopment and relocations for public sector workers. The last mentioned project is a continuation of Government's efforts to provide efficient and healthy work environments for our dedicated and hardworking employees.

The Bermuda Land Development Company is allocated $6 million in 2001/2002 for its ongoing development work at Southside.

Mr. Speaker, turning briefly to major capital acquisitions, Government will complete its initial programme to upgrade computers in public schools by investing a further $1 million in this area in 2001/2002. Similarly, $2.6 million is to be invested in technology to support administrative, managerial and planning functions carried out by Government officers. $3.8 million is allocated for replacements in the bus fleet and $4 million is included in the 2001/2002 capital budget for the first pair of new ferries.

Current Expenditure Projections Mr. Speaker, Government's total planned expenditure on current account for fiscal year 2001/2002 is $570.8 million including Sinking Fund contributions and debt service. This is an increase of $38.5 million or 7.2 percent over the Revised Budget Estimates of $532.3 million for 2000/2001.

For ease of reference, all Government Ministries with planned aggregate expenditure exceeding $5 million in 2001/2002 are ranked below in descending order.

Estimated revised expenditures for 2000/2001 are given for comparison.

2001/2002 2000/2001 1. Ministry of Health & Family Services 124.2 million $111.7 million 2. Ministry of Education $91.7 million $85.7 million 3. Ministry of Finance $80.1 million $76.0 million 4. Ministry of Labour, Home Affairs & Public Safety $74.3 million $68.8 million 5. Ministry of Transport $46.8 million $46.4 million 6. Ministry of Works & Engineering $46.2 million $43.3 million 7. Ministry of Tourism $37.6 million $36.8 million 8. Ministry of Environment, Development & Opportunity $26.9 million $24.6 million 9. Ministry of Youth, Sport & Recreation $6.6 million $5.9 million 10.Ministry of Telecommunications & E-Commerce $5.7 million $5.0 million Mr. Speaker, Government has responded to the demands of the community to address issues of educational standards, health care, public safety, housing and inmate rehabilitation within the prison system. I shall highlight those Ministries whose programmes and services are designed to address these issues.