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Burt Math – a new academic field of study

Dear Sir,

Shadow Minister of Finance David Burt has created an entirely new academic field of study — Burt Math. Accepted rules and practices do not apply to Burt Math. It is based on false assumptions, half-baked analysis and fanciful ideas of how finance and economies work.

In criticising the proposed new airport terminal project, and relating it to the recently completed hospital wing, Mr Burt said last week: “The revenue and profits earned by the hospital are the property of the people of Bermuda.”

What Mr Burt fails to mention is that the hospital does not make a profit. In fact, taxpayers are on the hook for hundreds of millions of dollars that must be paid back during the next 30 years. The $247 million hospital wing is backed by a government guarantee, so any shortfalls will be paid by taxpayers.

Not only did taxpayers have to come up with approximately $10 million to make the down payment on the new wing after the Bermuda Hospitals Charitable Trust failed to raise the required $40 million, but in the first year after the new hospital wing was officially opened, the Bermuda Hospitals Board (BHB) had to make payments of $2.5 million per month. Using non-Burt Math, that is $40 million plus $30 million for a total of $70 million in year one.

The BHB likes to report that it operates at a profit — income for the financial year 2014-15 is reported as approximately $300 million, with expenses at approximately $284 million (as well as a provision of $2.5 million for redevelopment), leaving a surplus of roughly $13 million. However, the BHB receives a government grant of $37.5 million per year, which is used to pay for the Mid-Atlantic Wellness Institute. Without this grant, the BHB would run an annual deficit of more than $24 million.

On the subject of the new airport terminal, Mr Burt insists we could borrow to pay for the project, which is what got us into trouble in the first place under the former government — debt incurred from project overruns.

Burt Math also produces fanciful numbers concerning future revenues at the airport, which he claims could be a couple of billion dollars during the next 30 years. And he tries to convince the public that all this money is profit going to a Canadian company.

What he does not include in his calculations are the costs to pay for the debt incurred by building a new airport terminal as well as running it, staffing it, maintenance and upgrades — costs that will be borne by the developer, easing the burden on the Bermuda treasury. Finance minister Bob Richards has repeatedly said the numbers are still being crunched, so Burt Math relies on speculation.

So if Burt Math is so woefully inadequate in describing the hospital finances, why should we, the taxpaying public, believe a word he says when it comes to financing the new airport terminal?

One can only hope that Burt Math is simply more of the Progressive Labour Party's campaign of misinformation and disinformation. For if Mr Burt truly believes his math is correct, we can be assured that if returned to government, the would-be finance minister seems certain to pick up where the PLP left off and charge full steam ahead down the road to financial ruin.

E-CON-OMIST

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Published September 05, 2015 at 9:00 am (Updated September 05, 2015 at 2:12 am)

Burt Math – a new academic field of study

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