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Last minute budget talks criticised

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With just ten days to go before Budget Day, Bermuda's public sector workers have yet to agree to an unprecedented pay cut/pensions contributions freeze proposal.

And the Opposition One Bermuda Alliance is criticising what it sees as 11th hour budget planning.

“So, in 11 days we are going to have a Budget presented to the Bermudian people.

“What are we doing still in negotiations with public sector employees?” asked Shadow Finance Minister Bob Richards on Monday.

“What are we doing here? Eleven days before the Budget is presented. This is unprecedented in the entire history of Bermuda. One wonders what is going on in the Finance Ministry.”

The OBA is also calling on Government to come up with a solid restructuring financial package as an alternative which does not impact the pension funds even if it means more debt.

“If the Government puts forward a package of measures to make a structural change in the expenses of the Government, then an increase in debt to fund that structural change would be acceptable,” said Mr Richards.

“Because you would make your changes and thereafter the Government expenditure would be in control. But what we have here is no plan at all.”

Premier Paula Cox's unprecedented proposal to public sector workers to take an eight percent pay cut to be matched by a freeze in pensions contributions is in the final stages of consideration among Government workers.

If accepted, the deal, which is for one year only, will free up more than $60 million for Government spending money which would otherwise go into the pension fund. Public sector workers could lose a year's worth of pension benefits but will see little change in their take home pay.

The Bermuda Public Services Union membership meet this afternoon, following a meeting between its executives and Government representatives on Monday.

It is understood the unions making up the Trade Union Congress have already met with their memberships as has the Bermuda Industrial Union.

Government has confirmed that the Budget Statement, which will kick off several weeks of debate in the House of Assembly, will be read on February 24. The next fiscal year begins on April 1 and the Budget must be passed by Parliament by then.

If the unions accept the Premier's proposals, legislative amendments will have to be passed in order to implement the agreement.

Government is also proposing a similar arrangement with respect to MPs salaries and pensions of MPs who have a separate pension fund with 12.5 percent contributions.

But the Premier's proposal goes further and asks MPs to take an additional net five percent pay cut, in addition to a 12.5 percent cut matched by a freeze on the 12.5 percent in pensions contributions.

The OBA has characterised the proposals as a “raid on the future” which will adversely impact the civil servants' pension fund and younger taxpayers.

“They're diverting money from pensions to exist basically, to pay their bills,” said Mr Richards.

“And when you juxtapose that to the borrowing limit and the fact that we are in an election year, you kind of get to the answer of why we're doing this.”

While it has rejected the proposal to freeze pensions contributions, the OBA says that its MPs and Senators will forego five percent of their salaries, starting next month, and contribute it to charity.

Mr Richards views the Premier's proposals as a strategy to allow the government to “avoid borrowing more money and having to raise the debt limit in the process”.

And he says that diverting money from the pension funds is a similar but “more elaborate” tactic to delaying payment into the Sinking Fund which Government did in 2010.

But he said, it is important to protect Bermuda Government's funded pension plans because taxpayers are eventually going to be forced to make up any deficits.

“The current system is the cheapest way because we get investment returns out of that pool of money. If it came straight out of government coffers, you will get no investment returns, you will just have to pay whatever the rate is.”

OBA leader Craig Cannonier noted that “not one Government official has attempted to explain this”.

“All they are saying is we are going to dig into the pension fund. Tell us why?”

The pair noted that despite holding pre-Budget town hall meetings over several weeks, the pension freeze/wage cut plan was not discussed.

A Government spokesman issued the following statement this morning: "The Government of Bermuda presently is in discussions with the public sector unions and as such it would not be appropriate for the Premier to comment publicly.

"It should be noted also that the national Budget will be delivered at the appointed time in the month of February, as is the norm, and all comments surrounding the Budget will be reserved until that time."

Shadow Minister of Finance ET Bob Richards
Shadow Finance Minister ET (Bob) Richards

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Published February 15, 2012 at 1:00 am (Updated February 15, 2012 at 6:42 am)

Last minute budget talks criticised

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