Economic diversification, tourism and solutions for the civil service were high on the agenda in Shadow Finance Minster David Burt’s Reply to the Budget.

In his delivery in the House of Assembly yesterday, Mr Burt also outlined the PLP’s long-term economic recovery plan Vision 2025.

Mr Burt challenged Minister of Finance Bob Richards on his assertion that stimulus from transport and tourism would amount to 20 per cent of the Island’s GDP, suggesting that it would be the case only if all the proposed tourism projects were to take place within a one-year period.

“Assuming all of the projects happen over the three-and-a-half year time horizon, we can expect 4.8 per cent annually,” he said.

Many of the hotel projects on the cards “do not have plans let alone planning approval” he said, warning that “it is reckless to put our eggs in the basket of hotel development”. Mr Burt raised a “flag of caution” to Government’s extension of $160 million guarantee to the Ritz Reserve development at Morgan’s Point saying that a guarantor is only needed when there is some doubt as to the ability to repay. The move “exposes the Government to a $160 million liability should the project be unsuccessful,” he said.

Air arrivals sank to the lowest level since 1966, a fact that should come as no surprise, Mr Burt said, given the OBA’s lowest tourism spending in 34 years.

“We heard the Minister talk about unprecedented investor interest in hospitality.

“While we appreciate investor interest, investors will not build a hotel if they cannot get a return on their investment. It is not enough to declare that new hotels will be built; we have to ensure that conditions on the ground allow these hotels to be built.”

Mr Burt was upbeat about the formation of the Bermuda Tourism Authority. “We are confident that the BTA will succeed in their mission to execute the National Tourism Plan and increase visitor arrivals, but only if they are given the required level of investment.”

Mr Burt also jibed the Minister on “his own novel plan” for economic diversification, a case he said he put to the minister long ago.

Setting out his vision on the matter, solutions included developing the “blue economy” with mention of the controversial exploration of deep sea mining in Bermuda, establishing an online gaming industry and regulating and taxing cannabis.

Establishing new trade partners and strengthening existing ones was presented as a solution.

The contentious issue of improving the civil service was a subject that stirred emotions in the House. Mr Burt lauded the work of Bermuda’s civil servants, to which feet were stamped on the floor from both sides, but he added that streamlining was necessary all the same.

“The suggestion by some in the community that all that ails Bermuda could be cured by simply firing civil servants is not only foolhardy, but it is crude and nasty … The hiring freeze that is now in place will assist by requiring increases in productivity.”

He suggested that non-performing employees be dealt with by streamlining the grievance process so that managers can deal with them more efficiently. He also suggested performance-based pay and fixed-term contracts for performance based pay for senior managers and training for civil servants at all levels.

Instead of privatisation of public services, Mr Burt suggested the formation of Crown Corporations.

He explained: “Instead of selling Government assets to the private sector, assets and employees are transferred to a Crown Corporation that is wholly owned by the Government.”

Mr Burt urged the Government to put a hold on the airport redevelopment questioning why it was such an immediate priority in the current climate.

He told of his party’s “strong” opposition to Aecon being selected without a “proper RFP process” pointing out that Government faces a $90m lawsuit for voiding a contract due to lack of this process.

There were audible sighs on his side of the House when he reminded the Minster it was “hugely coincidental that the chairman of a prominent local construction firm [Michael Butt] sits on the board of Aecon — the company set to receive a contract with revenues in excess of $1b without having to compete.”

“What happened to good governance?” he begged.

He said the Bermudian taxpayers will end up footing the bill for money borrowed for the project. “Revenues that normally accrue to the Government will be used to repay those loans.”

The airport is expected to turn a $11.5m profit while it will cost $225m to redevelop. Mr Burt said it would translate to cutting costs and “costs are people”.

As for the debt, Mr Burt said his party would go “one step further” than the current Government to balance the budget, he said, by implementing pay-go rules to

ensure that if spending increases in a budget period then cuts could be made elsewhere.

He welcomed the Minister’s declaration of a need for monetary and banking reform to “deal with external shocks” including the consideration of Bermuda having a lender of last resort or a central bank to deal with issues such as regulating interest rates.

Speaking on tax reform he criticised the recent increase in payroll tax saying “it’s not the type of taxation that would tend to increase the number of jobs”.

He did propose a rethink of social insurance policies to make them “fairer in line” with countries where contributions are based on earnings and he welcomed a roll back in payroll tax concessions in the hotel, restaurant and retail sectors which costs Government $30m.

Branding Bermuda’s immigration system “outdated and broken” he called on Government to consider the formation of a Joint Select Committee on reform.

Speaking on road safety he questioned cutting the grant to the Road Safety Council by 78 per cent saying it “sends the wrong message”.

Government’s progress on cannabis decriminalisation was described as lacking in movement.

Mr Burt said he believed the Government’s pledge to reduce current spending for Bermuda by $70m was too much too soon saying a more measured approach would have been taken by the PLP over a longer period of time.

• For the full Reply to the Budget, click on the PDF file under “ Related Media”.