Cox: Govt is acting to aid economy
Government has taken a raft of measures to aid economic recovery, including efforts to preserve Civil Service jobs and help private businesses both small and large.
This from Premier and Finance Minister Paula Cox and her Ministry yesterday.
“We have a responsibility in these difficult times to adopt and craft policies that are both sensible and sensitive to the changing economic circumstances,” Premier Cox said.
She pointed out a payroll tax reduction this year had injected $50 million into the economy, “keeping more money in people’s pockets to spend”.
“Also for small construction works, about $12 million was injected into the economy by the Government as a stimulus,” Premier Cox said.
She added: “Clearly commercial institutions do not wish significant impairment to their bottom lines. Yet governments do not have the luxury of just considering bottom lines with no regard to the human cost. That is why there was the commitment given in the National Budget 2011/12 to do what we can to preserve established jobs in the Civil Service.”
Noting the downgrading of the US’s credit rating has reinforced fears of a further slowdown in economic growth, the Premier said: “While this heightened level of disarray and uncertainty in the financial markets is disturbing, especially given the signs of a sluggish recovery, it was not totally unexpected.
“As outlined in the Budget statement in February this year, the Bermuda Government made it clear that it did not expect the Island’s economy to begin to fully turn around until 2012 at the earliest. We predicted that the recovery in 2011 would be sluggish and there was a downside risk to growth from fragile private sector investment and consumption. We also advised that households will remain constrained in 2011 by job losses and pay curbs.”
On the key sectors of international business and tourism, the Premier said there is cause for optimism.
“Longer term, it is entirely possible that Bermuda’s tourism market will benefit if the US dollar shows signs of weakness, particularly in continental Europe and the UK, as more Americans are likely to favour holidaying in a dollar-denominated economy rather than incur less favourable exchange rates further afield.
“While there have been positive developments on the tourism front ... the good news is that important air arrivals were up by four percent for the second quarter.
“There is the continuing interest in Bermuda as a premier financial services domicile and there are ongoing expressions of interest in Bermuda on the tourism development front.”
The Premier supplied these answers on the question of what the Government is doing to allay economic concerns:
1. Promoting Bermuda
“In North America and the EU, our two most significant trading partners, there are significant concerns as to the pace of growth and debt reduction efforts. Their economic health drives financial market activity, which in turn drives the availability of capital for new investment, and disposable income for luxury items like vacation travel overseas.
“We will continue to pursue our efforts in these areas, because given the size of our economy on the international business side, in terms of scale, five to ten physical presence companies can significantly impact the economy. In fact, you may recall a report on ABIR company membership that indicated the significant contribution 23 global companies had on jobs for Bermudians, and our GDP.
“When one fully appreciates the context, it underscores the importance of a sound regulatory and legislative framework for the international business sector. It also reinforces the importance of the need to engage in economic diplomacy and the outreach, whether by negotiating tax information exchange agreements, lobbying efforts and a deliberate and concerted effort to be active participating in global regulatory standard-setting bodies so that we actively contribute to setting a policy agenda that is compatible with Bermuda’s national economic interest.
“When we travel to meet with global regulators and policymakers to tell the Bermuda story this is to ensure that the story of a credible and transparent jurisdiction that is a leader in global finance is what is top of the mind. We are working to ensure that the reference point is of real business, substantive regulation, a stable legal system, and sound governance.”
2. Good Governance
“I note the passage of the Good Governance legislation, the creation of the Procurement Office and the refinements proposed to Financial Instructions to ensure there are more enhanced internal controls and the plans to establish a Procurement Code of Practice. I can also note that we are currently engaged in addressing the plans as stated in the 2011-2012 Budget for rolling out the Open Budgeting framework. Further there has been a commitment to enhanced monthly budget monitoring and control exercises which compares actual spend against budget allocations.
“Also the efforts to obtain best value for taxpayer’s dollars is ongoing. That was how we were able to revise the expenditure by legitimate cost containment efforts ($150 million cut in expenditure, and to find more innovative ways to reduce expenditure further).
“While we needed additional revenues in 2010/11 because of the extensive social agenda programmes such as the child day care credit and Future Care, I was comfortable with the roll back given the commitment to reduce Government expenditure by $150 million. The ratings downgrade of the US, based on the S&P assessment that their deficit reduction plans were not feasible, supports the Bermuda Government’s strategic decision to control deficits in order that we remain in good standing with the rating agencies.”
3. Speed Up Reforms
“In an effort to introduce structural reforms in the Civil Service, the National School of Government was commissioned to conduct a Civil Service Review and steady progress is being made on that front.
“Additionally the government will seek to lessen unnecessary regulation and duplication where possible in an effort to reduce bureaucratic red tape.
“National Health Plan one aim is to reduce the cost of healthcare thus reducing business overheads. Lower overheads for business increase the business’ ability to expand.”
4. Develop our Workforce
“These efforts make it clear that the PLP Government is committed to fostering a sustainable and partnering relationship with the international business sector. We’ve also extended the tax guarantee for exempted companies to 2035.
“In addition the Bermuda Economic Development Corporation, formerly referred to as the Bermuda Small Business Development Corporation has signalled its intent to expand the Economic Empowerment Zone initiative to the eastern and western ends of the island.
“The Government has recently announced a raft of measures to assist in some short-term relief for the unemployed, both in terms of making available summer employment for students as well as for the unemployed. In the first instances through the efforts of the Ministry of Finance monies allocated for unemployment insurance are being allocated to the Ministries of the Economy, Trade and Industry, Government Estates and Information Services, Community Development, Youth, Families and Sports, and Cabinet Office to fund various shovel-ready and job training initiatives.”
She added: “In terms of consumer and investor confidence we need to learn from what has taken place in US Congress. We must not allow electioneering to get in the way of appropriately dealing with matters of significant importance like the economy.”