The Progressive Labour Party government has failed to meaningfully address “an unprecedented shrinking of Bermuda’s population and the associated long stagnation of the local economy”, MPs heard yesterday in the House of Assembly.

Douglas De Couto, the shadow finance minister, responded to the Budget statement delivered a week ago by David Burt, the Premier, with a caveat that the Government had achieved some measure of fairness for those in need.

He highlighted the support plans of the One Bermuda Alliance, such as customs duty breaks for construction materials, adding that the Opposition was open to collaboration with the Government on reforms that would address the urgent need for more affordable housing.

However, the Reply to the Budget accused the Government of being disingenuous on the financial performance of the island.

Dr De Couto, whose initial reaction to the statement last week had been to call it “misleading”, told the House during the reply that the record of the ruling party had been one of “economic control and financial shell games”.

Pointing to the Government’s call in 2022 for a dramatic increase in the working population, he said: “Here is the short version — you can’t grow the economy with a shrinking population; you can’t reduce the cost of living with a shrinking population; and you can’t properly fund healthcare and pensions with a shrinking, ageing population.”

Dr De Couto said that the island’s choices amounted to either having “more people, each paying less tax, or fewer people, each paying more tax”.

Much of the demographic dilemma was cast in terms of pension funds.

While the Government was commended for reforms to the Public Sector Superannuation Fund, Dr De Couto said that the OBA had been left “puzzled” by the decision to put off reforms to the Contributory Pension Fund until next year.

He reiterated the view of the Opposition that gains from the corporate income tax needed to be applied to wrestling down Bermuda’s $3.3 billion national debt — with its attendant $128 million annual burden of interest payments.

Dr De Couto cautioned that the CIT was “no silver bullet and brings its own challenges”, highlighting uncertainty over future gains and the need for conservative budgeting.

He also branded the Premier’s insistence that a budget surplus had been achieved during 2024-25 a “charade” reliant on off-balance-sheet spending and dipping into the Sinking Fund.

Citing concerns raised in the independent Fiscal Responsibility Panel 2024 report, Dr De Couto suggested that “if any chief financial officer in international business manipulated their results like this, they would be fired”.

He added: “Putting aside Government’s misrepresentation, and properly adding up the spending, last year’s finances came in at a $54 million deficit, the year before had an $80 million deficit, making a $134 million cumulative deficit over two years.”

Dr De Couto said spending for last year was expected to come in $70 million over budget, driven by “unbudgeted healthcare subsidies and support for housing”.

He “debunked” the Government’s high marks for its fiscal performance, maintaining that “the parts of it that have been good” were riding “solely” on international business.

The MP also took aim at the Government’s budgeting for staff increases that it “cannot hope to fill in the financial year, explaining that this will create extra funds that can be used elsewhere”.

“We would suggest that this is not, in fact, how budgets are supposed to work,” he said.

Dr De Couto urged caution over CIT revenues, adding: “It is far better to be over-conservative in our use of CIT funds, only to find we have more than expected, than to craft a Budget of promises around high estimates, which then cannot be funded.”

He added: “We support the Government’s medium-term plan to repay debt, and would go one step further, setting the CIT funds aside into a dedicated fund, so the public can be confident they will be used for the best results in the medium and long term.”

The reply was dismissive over plans to create a sovereign wealth fund as “politically attractive” but said that the money would be better spent on debt reduction and tackling liabilities such as pensions shortfalls and the $270 million guarantee on the hospital.

Dr De Couto called the financing of the hospital through a block grant “a bad idea” with a knock-on impact on healthcare.

The OBA backed giving more power to the Regulatory Authority to address energy costs.

The Opposition also urged for the dropping of the sugar tax, and cutting down the “regressive” foreign currency purchase tax.

The reply, themed “Empowering the Bermudian Dream”, accused the Government’s policies of largely catering to special interests while ignoring the reality of emigration, with a vision for the future that “extends no farther than the most recent election”.

It pointed to faltering retail performance, high youth unemployment and costs that outstripped many residents’ incomes.

Dr De Couto said tourism recovery had come at “a snail’s pace”, and warned that the economic driver of international business faced headwinds in an insurance sector where “cycles don’t last much more than a few quarters in today’s market”.

He added that the Opposition was “very disappointed” at the lack of a gaming industry or “reforming or eliminating” a Gaming Commission that had failed to yield results.

“As in most of the other areas of our economy, if we want a better result, we are going to have to change how we do things,” he told the House.

“We say, get gaming going, or shut it down.”

Dr De Couto said the OBA would concentrate on expanding opportunities through the “three pillars” of local business and economy, tourism and international business.

He said the Opposition’s philosophy was that Bermudians had to be empowered to “achieve our dreams and success in whatever ventures we choose”.

Dr De Couto added: “While we want to ensure the appropriate social safety net is in place, we must aim for fewer and fewer Bermudians to need it.”

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