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Bermuda’s ticking time bombs

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Bermuda faces two time bombs — one demographic and the other fiscal. One solution to both problems is easing immigration restrictions

Minister A: “In order to combat the harsh realities resulting from a population decline we need positive net immigration; that is less emigration or people leaving the country to live elsewhere, and more immigration or people entering the country to live.”

Jason Hayward is using language today in the quest to address immigration that is indistinguishable from what Michael Fahy espoused during his ill-fated Pathways to Status campaign five years ago (Photograph by Blaire Simmons)

Minister B: “Put simply, the more people who are resident on the island, the stronger certain aspects of our economy will be — such as gross domestic product, retail sales, capital expenditure and the size of the workforce — and hence the greater the scope for personal opportunity.”

Michael Fahy, the architect of the ill-fated Pathways to Status

Can you can pick which of the two ministers above was in charge of immigration policy when the One Bermuda Alliance was in power and which was under the present Progressive Labour Party government?

Readers with fresh memories will recognise that Minister A was in fact Jason Hayward, the present Minister of Labour. Those with longer memories would identify Minister B as Michael Fahy, who was the minister responsible for immigration in the OBA government and the person who failed to steer the Pathways to Status policy into law in 2016.

While Mr Fahy was waging an increasingly uphill battle, it was Mr Hayward, as a founder of the People’s Campaign, who was — literally — standing on the top of the Sessions House hill preventing the legislation’s passage.

At that time, they were divided by a seemingly unbridgeable gap. Five years later, their words are virtually indistinguishable.

Immigration is one of the most charged topics of all in Bermuda politics. But what Mr Fahy said then and what Mr Hayward has said in recent weeks is that a demographic time bomb is about to detonate in Bermuda.

In 2019, there were ten more deaths — 535 — than births, and this was the second year that more people died than were born. Bermuda’s population is shrinking and will do so at a faster and faster pace unless people come — or, rather, come back.

For decades, there have been warnings that people living longer and having fewer babies means fewer people of working age will be called upon to support more older, non-working people.

The timer sped up in 2008 when the global financial crisis triggered a recession that led to large numbers of expatriates and Bermudians of working age leaving the island. The recent Covid-19 pandemic accelerated the timer again.

In the meantime, the PLP when in Opposition, and Mr Hayward’s People’s Campaign opposed most attempts by the governing OBA to use immigration to reverse this trend, bring about immigration reform and, in doing so, stimulate the economy and reset the growing ageing population.

They argued that any immigration reform needed to be comprehensive and based on consensus. So Pathways to Status died and when the PLP came to power in 2017, it set about its own comprehensive reform. The committee formed to look at reform was bipartisan, but after three years, it had little to show for its efforts.

The PLP has always paid lip service to the need for immigration. And in certain areas such as financial technology, any and all fears have been waved aside for the Premier’s signature project.

Nor is the reluctance to embrace immigration a matter of pure xenophobia. Black Bermudians have a justified fear of displacement and in the past the arrival of new workers, often White, has stoked that fear. In recent years, the PLP has been at pains to describe a policy that would allow immigration but would benefit Bermudians, and there has always been the hope, based on little more than wishful thinking, that Bermudians abroad would come home if conditions changed.

What seems to have finally focused minds is that Bermuda is facing a second time bomb — this one is fiscal.

If Bermuda cannot expand the economy and thereby increase tax revenues, the debts accumulated since 2009 will come due. The time is coming when Bermuda will not be able to service them, let alone pay them off.

Thus Mr Hayward has come, in words if not deeds, to admit what the PLP has been loath to accept, although it still comes with the caveat about benefiting Bermudians: “As we know, a high number of skilled and talented workers who contribute to the economy by way of paying taxes, paying rent, purchasing houses, etc, benefits the economy. In that vein, the aim of this immigration policy is to increase opportunity for Bermudians and to help improve Government’s current fiscal position.”

The idea that expatriates do not increase opportunity for Bermudians has always been a false one. Even those expatriates who do not directly generate jobs through their own work do so through the economic activity they generate in rents, shopping, entertainment and more.

And the bottom line is that there are not 5,000 Bermudians desperate to come home to create the working population Bermuda needs to both grow the economy and to support the growing numbers of people who are dependent on working people.

So far, Mr Hayward has gone further with his words than with his policies. The major policy change is as vague as it is big — a proposal for an Economic Investment Certificate that entitles a person to reside in Bermuda while contributing to the economic development of the island.

This is not a new idea; individuals and businesses that create jobs or invest in Bermuda already have various waivers for work permits and for residence. But the policies are often convoluted and patchwork, and have not achieved the basic goal: to expand the economy and increase opportunities, directly and indirectly, for Bermudians.

A simple and straightforward economic investment certificate should accomplish this. The most valuable asset of the 21st century is not some kind of rare metal or manufacturing process; it is human capital. In an increasingly automated world, the countries that can attract innovators will be successful. Those that cannot will suffer.

Thus countries will increasingly compete for human capital. Certainly, as the rise of anti-immigration policies and populism has demonstrated, there will be pushback to these developments by those who feel threatened.

But in the long run, those who want to invest in a country, or bring their business to a country, have a stake in its success and will want some security, probably including right of residence, in return for the benefits that they bring.

Immigration is not a panacea for all of Bermuda’s problems, or the sole means of stemming economic decline. But, as the late Larry Burchall noted, Bermuda’s economy functions better when the population is closer to 70,000 than 60,000, as it probably is now.

Mr Burchall’s other insight was to look at expatriate workers not as people taking Bermudians’ jobs or driving up the cost of real estate, but as long-term tourists whose incomes are spent in Bermuda. As such, they are a positive for the economy, not a negative.

If Mr Hayward and the Government now recognise this, that is welcome. Certainly, Bermudians’ rights need to be protected and Bermuda cannot simply throw the doors open to all and sundry. But Bermuda has to recognise that its existing policy is unsustainable and a change of course is needed.

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Published February 12, 2021 at 8:01 am (Updated February 11, 2021 at 11:40 am)

Bermuda’s ticking time bombs

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