OBA: more economic woe and job losses on horizon unless action is taken
A fall in the island’s gross domestic product last year will lead to more job losses, the Leader of the Opposition warned yesterday.
Cole Simons, also the One Bermuda Alliance’s shadow finance minister, said that GDP was expected to drop by seven to nine per cent for 2020 and called for a change of direction by the Progressive Labour Party to avoid more damage to the economy.
He added: “What the reduction in GDP means for Bermuda is more job losses for Bermudians, especially small businesses, which play a vital role in Bermuda’s economic engine.”
Mr Simons was speaking as he delivered the Opposition’s Reply to the Budget unveiled by Curtis Dickinson, the Progressive Labour Party finance minister, last Friday.
He said businesses such as beauty salons, gyms and the hospitality sector would “continue to bear the brunt of job losses”.
He added that other sectors, including clothes stores and service stations, would also continue to suffer – and that tourism and construction had been hammered.
Mr Simons said: “These businesses face the threat of closure due to the added Covid-19 restrictions placed on them.
“They will likely not be able to pay their overhead costs, rents and other expenses due to the dramatic decline in revenues.”
Mr Simons highlighted that lower-income workers, such as cleaners and restaurant staff, had also been hit hard by the pandemic.
He said: “They will experience the most job redundancies and will be hit with increasing unemployment.
“For those who keep their jobs, they likely have not had a wage increase for years or are faced with reduced working hours.”
Mr Simons added that the Government should “gradually remove” cash allocated to “targeted support” of affected sectors and use it for public investment, including in renewable energy, improvements to power transmission and renovations to buildings to cut their carbon footprint.
He said a reallocation of staff and resources to sectors less affected by social distancing requirements should also be undertaken.
Mr Simons added: “Moreover, as lifelines are unwound, social spending should be expanded to protect the most vulnerable and, where gaps exist in the safety net, authorities could enhance paid family and sick leave, expand eligibility for unemployment benefits and strengthen healthcare benefit as needed.”
Mr Simons blamed David Burt, the Premier, for the lack of progress in the introduction of casino gambling – which he said could provide a shot in the arm to tourism.
He highlighted that the PLP had failed to introduce gambling, despite “two provisional licences to two world-class resorts” because a legislative and operational framework had not been set up and the problem of banking services for the sector had still to be resolved.
He claimed: “I have been advised that the delay in gaming lies at the feet of the Premier and that banking matter can be resolved if the Premier does what is required.”
Mr Simons added experts had said that gambling should be removed from the Premier and Cabinet Office portfolio and transferred to the finance ministry.
He said: “Senior international bankers also have indicated that they are not aware of any advanced nation where gaming is under the control of, or under the purview of a country’s head of state – that is, the premier, prime minister or president.”
Mr Simons added there had been “a reliance on several OBA projects” over the past three years to boost GDP and create jobs.
He said Mr Dickinson had in 2020 pledged to target a return to a balanced Budget inside three financial years.
But he asked: “How exactly will this happen? Where is the detailed plan? Why should we believe them this time?”
Mr Simons said: “It appears that Bermuda is destined to further increase the size of our national debt, which is well on its way to almost $4 billion.”
He warned: “A debt of that size will undoubtedly cripple our ability to put money where it is most needed, which is into social support networks, into stopping violence and into improving the healthcare and the wellbeing of all Bermudians.”
Mr Simons claimed that Bermuda had seen “the lowest business confidence levels ever” under the PLP and that debt had risen by $1 billion in just 12 months.
He said that new and increased taxes had hit small businesses, who could least afford them, and the retail sector had suffered an “implosion”.
Mr Simons added: “It is important to note that none of these casualties were as a result of Covid-19.”
He said a healthy economy was dependent on ease of immigration.
Mr Simons added: “For years, the One Bermuda Alliance tried to revise the current Immigration Act, but we could not do so because of the civil unrest in our community – but today the Progressive Labour Party is finally seeing the light.”
He said that commercial immigration had been championed by Michael Fahy, a former OBA immigration minister, and it was “close to impossible” to boost an economy without population growth.
Mr Simons said the Fiscal Responsibility Panel report had recommended revisions to the tax system.
Mr Simons said: “In real terms, this may mean more taxes for the people of Bermuda, given that they believe that a reasonable tax revenue, as a percentage of GDP, should be around 19 to 20 per cent.”
He added that would produce about $190 million over three years.
But Mr Simons ruled out income tax because it would be too expensive to collect – and too easy to avoid.
Mr Simons suggested Government could boost its revenue stream by imposing value added tax on internet business profits earned in Bermuda.
He added the country could become “a centre of excellence for an international climate change risk market” if it organised a summit.
And he criticised the Government for signing up to an infrastructure investment fund that had cost the taxpayer $5 million over the last four years but realised commitments of only $66 million.
Mr Simons said: “It was supposed to be about $250 million in size.
He asked: “Where do we stand today? What value has the country received for the $5 million payment?”