Island’s debt source of clash in Senate
Senators clashed over Government’s soaring debt once more as the Budget debate came to an end last night.
One Bermuda Alliance Senators Michael Dunkley and Michael Fahy criticised Government for treating the Sinking Fund as a piggy bank, mismanaging funds and wasting money before the recession.
Junior Finance Minister David Burt argued the Progressive Labour Party has spent money looking after its people during the tough times, claiming the OBA would prefer instead to save cash.
Government will raise the debt ceiling by $200 million to $1.45 billion on Sunday, up from $375 million four years ago, while taking $50 million from the Sinking Fund to help make interest payments this year.
Speaking during the Upper House debate on Finance yesterday, Senator Dunkley lamented that Government now has to pay $85 million a year on debt interest.
Sen Dunkley said while the OBA doesn’t have a problem with borrowing for capital spending, he regrets how Government borrowed heavily before the recession and during it, and expressed concern at the speed the debt ceiling has risen.
He pointed to a lack of accountability in spending on public projects, highlighted in Auditor General reports, and costly incorrect estimations on expenses and revenue in each of the last four years.
And when Government had a $350 million surplus in previous years, that money should have been used wisely, said Sen Dunkley.
He asked why, if Government is so comfortable with its debt management, civil servants now have to forgo pension contributions.
“Debt for some is an investment in the future but, for everyone, it’s a bet on the future,” said Sen Dunkley.
“You bet on one’s ability to pay back the debt and the interest.”
Senator Fahy said the Sinking Fund was set up for repayment on the principle of borrowing, but will now be used to pay off interest.
He said he couldn’t believe this was the plan all along, and suggested the PLP had figured: “My Lord, we have so much debt, how are we going to pay that interest?”
Sen Fahy predicted things would get worse, saying: “Where are we going? That’s what I’m scared about.”
Senator Burt said the debate had illustrated the philosophical difference between the PLP and the OBA.
He said every country in the world had borrowed more during the recession, and asked how the OBA would make the savings it talks about.
“If you are not going to spend the money, that means you are going to cut salaries, or cut jobs, or turn people away from the hospital, or not pay teachers or the police,” said Sen Burt.
“In recession, Governments are not businesses. They must protect citizens.”
Voters at the next election have a choice, he said, between “a party that has said it would not take care of the people and one that did”.
Speaking to The Royal Gazette after the debate, Sen Fahy said the OBA had demonstrated throughout the Budget that if funds had been properly managed, without cost overruns, Bermuda would be in a much better financial position today.
Also during the debate, Sen Dunkley asked a number of questions about the proposed scanner to be installed at Hamilton docks, a project which has repeatedly been delayed since it started in 2009.
“There seems to be an increase of guns coming into the Island. We know this is a way we can get on top of them,” he said.
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