Our debt? It’s not rocket science
March 7, 2014
How did we get in so much debt?
Simple: The government increased spending by 83% or $590 million between 2004 and the end of 2011.
The deficit truly began in the year 2004-2005 when the government increased spending by 82.8 million, or around $1,250 for each resident. This increased the per-resident spending from $11,000 in 2004 to $12,250 in 2005. By the time spending peaked in 2011 the government spent $1.3 billion, or $20,000 per resident.
The below table outlines the dramatic year after year increases:
Increase in Spending
Year $(millions) %
2005 82.8 12%
2006 121.0 15%
2007 94.2 10%
2008 129.1 13%
2009 43.3 4%
2010 95.5 8%
2011 26.0 9%
Total 591.9 83%
Interestingly government’s income reached a record high in 2010-2011 of almost $1 billion, up from $705 million in 2004.
The debt and the recession are two completely different issues. Bermuda’s debt would be massive even without a recession and was caused by dramatic un-budgeted spending increases in the years 2005-2011. The debt exploded despite record government revenues.
Claims have been made that the deficit was a response to the recession. However, if the spending was intentional then it would have been budgeted for - they were not. Had the Government stuck to its budgets we would have virtually no debt.
Also, had the spending been a response to the recession then deficits would have started years later. With deficits starting during the boom in 2004-2005 and budgets being overspent by up to $180 million in a single year, we can only conclude that the government had lost financial control.
For all the political theatre, if the OBA are successful in getting the government to stick to its budgets then they have won a great victory for the people of Bermuda and for all our sakes we should hope they succeed.
Bermuda must never allow this again.