Government has been spending beyond its means for many years now and has failed to heed the warning signs of rising debt.

That is the view of Shadow Finance Minister Bob Richards, who said that with public debt rising to $850 million, including the Butterfield Bank guarantee of $200 million, Government was getting perilously close to the $1 billion ceiling approved last year.

This follows comments from the Auditor General Heather Jacobs Matthews on the Government's consolidated fund audited financial statements, in which she highlighted the fact that expenditure was significantly outstripping revenue, resulting in increased long-term debt.

Mr. Richards said that Government had acquired a habit for spending during the boom years of the Island's economy — but had not pre-empted the global economic downturn which has hit so hard over the past year — and was continuing to outlay big expenditures on unnecessary projects such as the $800,000 study of the Corporations of Hamilton and St. George's.

"In the early years when the Bermuda economy was quite frankly in overdrive I think Minister Eugene Cox allowed unprecedented spending to take place and it was masked by these large revenues coming in, particularly from employment tax from international business, so the spending habit was formed then," he said.

"As the economy slowed the spending habit was still there and I think that is pretty much what has happened to this day because no discipline was implemented early in the game, so it is hard to be disciplined now."

He said Government should have been disciplined with its approach to spending even during the prosperous years.

"As we publicly anticipated one year ago, the Government has almost used up the extra headroom Parliament authorised last march," he said.

"We stated during last year's budget debate and during the year that the Minister of Finance's projections of Government revenues were hopelessly unrealistic and were bound to be much higher than actual revenue collected. The Auditor General's report indicates we were right.

"The bloodletting of red ink in public funds is highly likely to continue into the upcoming fiscal year, as we have seen very little real determination on the part of government to change its spend thrift ways. Thus there is a real probability that the $1 billion benchmark ceiling for public debt may be raised again this year. If it is not it will be based on more unrealistic projections.

"The allocating of $800,000 for a municipal takeover is a case in point. At this time there is no economic imperative for this action on the two municipalities, there is only political power lust. Government is going ahead with this even though it clearly cannot afford it. Hamilton balances its books and therefore does not need Government help."

Mr. Richards pointed out that Government's debt had remained steady at just below $200 million between 1998 and 2004, before rising incrementally from 2005 onwards, shortly before Premier Ewart Brown came to office, and projected to reach a shade under $700 million this year.

"I think that under Dr. Brown they have just had this 'money is no object' philosophy and the ability to just hope or presume revenues would mask the whole issue," he said.

"They didn't anticipate the recession and by doing that they got into this position and they still don't want to admit it."

He said that the Auditor General had highlighted some troubling trends that the UBP had been beating the drum about for a number years, adding that a bad number for just one year could be dismissed as a one-off, an outlier or an aberration, but those trends indicated habits, tendencies and proclivities and ultimately a "corporate culture of excess".

"What we have here is a fast car with no brakes," he said. "We all know where that story ends. Perhaps Bermudians will now start to take these tends seriously."