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Economic legacy

Asked to assess Dr. Ewart Brown's performance as Premier over the last four years, many people have dodged the question, saying history will decide, not them.

That may be so, but the likelihood is that historians will be as divided as people are now over Dr. Brown's period in office. However, in one area, there is likely to be little disagreement, now or in the future. As Dr. Brown departs from power, he leaves an economy and Government finances, in vastly worse shape than the ones he inherited.

Where money seemed to be no object in 2006, now lack of money is an obstacle wherever one looks. Where Bermuda had full employment, a booming construction sector and an international company sector that was the envy of the world, now Bermuda has unemployment, a moribund construction sector and a weakened international business sector.

Where Government ran a Budget current surplus of $73 million in the 2006 financial year and had $250 million in debt, in the 2010 financial year it ran a current account deficit of $53 million and had built up debt of $989 million. In the current year, that debt will exceed $1 billion.

And the economy, which expanded by 5.7 percent in 2006, shrank by 2.5 percent in 2009. The outlook for 2010 is not much better. Dr. Brown has frequently stated that he cannot be held responsible for a global recession and that is inarguable. And in fairness, Finance Minister Paula Cox must take responsibility. But the truth is that Dr. Brown and his Government were consistently warned about worsening global financial conditions from 2007 on and largely ignored the warnings with a blitheness for which the Island is now paying dearly.

The most apt analogy is that of preparing for a hurricane. When a hurricane is coming, no one knows when it will strike, how long it will last or how severe it will be. But you know it's coming and you prepare for the worst. That means checking and closing the shutters, laying in supplies, cutting down branches and putting loose items away.

No one knew for sure just when the current recession would start or how severe or long lasting it would be. But by late 2007 it was obvious to most people that it was coming. What was happening globally was unsustainable. In economic terms, preparing for a recession means reducing spending now, so that there's money available later when tax revenues fall. It means gearing up, but not starting, public works projects for the time when work is needed.

It means guarding the public purse jealously and being sure that the taxpayer gets value for money. It means nurturing and making those business sectors that drive the economy feel welcome. None of this was done.

Instead, public services which had been paid for in the past became free. That may have been done with the best of intentions, but it had the effect of reducing revenue and shifting the cost of the services to the taxpayer. Public projects, some run by the Premier's own Ministry, were executed poorly, with cost overruns in the tens of millions of dollars.

International companies were alienated, in word and deed, and now are increasingly voting with their feet. Government grew, both in terms of employees and in terms of highly paid consultants. Pay increases in the public sector outstripped the private sector. That in turn increased the tax burden on private businesses and individuals at a time when they could least afford to pay.

Those were decisions and actions that were made on Dr. Brown's watch. However else Dr. Brown will be judged, this will be his legacy as he leaves office.

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Published October 22, 2010 at 1:00 am (Updated December 10, 2010 at 10:12 am)

Economic legacy

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