Government got slammed last week for underestimating by $10 million the amount of money that would be required for financial assistance in the current financial year.
Estimating claims in a weakening economy is always going to be difficult. But the failure to predict the economic decline was systemic, begining with the flawed forecast that the economy would only shrink marginally last year. Instead it plunged by more than five percent in nominal terms and by more than eight percent after accounting for inflation. What is to be hoped is that Government will now learn from its mistakes.
Premier and Finance Minister Paula Cox has admitted that she does not expect to see recovery until 2012. Given the recent indicators, it seems likely that the economy is still weakening, and that means that there will be more people looking for assistance. On that basis, it is hard to believe that the $27.4 million allocated for financial assistance this year which is less than last year's original estimate, will turn out to be accurate. And preventing fraud will not achieve it, even allowing for the likelihood that there is some.
Still the real answer to the problem is to get the economy going again and to reverse the current downward spiral, in which each job loss causes the next one. This is caused largely by lack of confidencse which makes people reluctant to borrow and spend money or to invest in Bermuda.
Turning this around requires realism, and it is here that Government should recognise that there will be more demand for financial assistance, not less, in this financial year. The second priority is to rebuild the economy by making Bermuda a more competitive jurisdiction both in terms of costs and quality of service. Third, tourism and intrernational business need to be aggressively courted and it needs to be made clear that they are welcome in a sustainable and high quality jurisdiction.
And part and parcel of that must be more and better training and education to ensure that Bermudians have a meaningful role in these industries.