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When they show you who they are, believe them the first time

Black hole: more than $200 million has been spent on Caroline Bay

Dear Sir,

As expected, the Premier delivered a briefcase full of promises to the people. If Utopia was what you were hoping for, you should be happy. We have been promised a balanced budget with a surplus, more new affordable homes and a freeze on health insurance rates.

While much of each ministry’s additional funding was owing to “salary uplifts”, I do see some new funding earmarked for road repaving, a new asphalt plant, ferry replacements and public school renovation projects. Also, the Ministry of Finance will extend a grant of $800,000 to supplement the revenue from the operations of the Bermuda Gaming Commission. Why? I don’t know. We have no gaming industry. (Last year, the Government gave the BGC a guarantee of $9.8 million to allow it to borrow money to keep operating.)

The upcoming corporate income tax legislation will come into effect in 2025 and the Premier is expecting a windfall of on average at least $750 million in additional revenue each year, and initial payments from the CIT could commence by July 2025. That money is already being “spent” in the Premier’s mind — on things such as the long-promised universal healthcare initiative, which will get high priority, using the yet-to-materialise CIT windfall to seed a new health insurance fund. We are being promised that the CIT will allow for reduced customs duties, relief on employer payroll tax rates and also go towards topping up pension funds, and there is some thought being given to debt reduction.

I have to make mention of one item listed that is glowing red and sends shivers down my spine. It is the Morgan’s Point mixed-amenity luxury village project, which our government is now taking on at full throttle — once again at the expense of and at high risk to the taxpayer. As if we didn’t get burnt badly enough from the first try by the One Bermuda Alliance government, this administration has promised to do it all over again, but this time “do it better”.

I think there is a serious bout of forgetfulness happening on this island, with both our politicians and the people. Let me remind you of something: there are very few instances in our political history, where any government has been successful — ie, fiscally prudent/responsible/with project delivery on time and on budget — when it comes to spending on capital projects using our money. Governments’ records are atrocious as you will see from the sample below:

2001: TCD testing facility

Budgeted: $5.3 million. Cost: $15.2 million. The Auditor-General’s report described a lack of accountability and a general disregard for established policies and procedures in the use of public funds.

2008: Dame Lois Browne-Evans Building

Budgeted: $72.9 million. Cost: $89 million. The 2016 Auditor-General’s report stated: “During the course of the audit, we were denied the right to audit material expenditures related to this capital project.”

2007-2009: Heritage Wharf cruise ship dock

First refurbishment: Estimated: $39 million. Final cost: $60 million. Then there was an additional repair project in 2010 re: hurricane damage costing another $30 million (engineers found original thruster walls were in poor structural condition). Referring to that Heritage Wharf project, the Commission of Inquiry counsel Narinder Hargun said: “The project was being designed as it was being built; that is a recipe for huge expenses.”

2007-2011 Port Royal Golf Course refurbishment

Initial budget: $6.5 million. Cost: $24.5 million. The 2017 Auditor-General report said the [golf course] project was flawed because of “lack of oversight, cost overruns and inadequate accounting”.

2011: Grand Atlantic affordable housing and adjacent hotel

Initial budget: $40 million. This affordable housing project failed and there was no hotel. Cost: $92 million spent so far — public works minister Lieutenant-Colonel David Burch’s estimate — on the conversion of the housing blocks to a boutique hotel. This project is still under construction with final costs yet to be determined.

2013 Bermuda Aquatics Centre at National Sports Centre

Original estimate: $15 million. Cost on completion: $23.4 million. The pool has only eight lanes. Ten are required to meet Olympic standards.

2016 Carolina Bay/Morgan’s Point luxury residences

The Government provided a financial guarantee of $165 million for this private-sector project. The project failed, and in 2019 that $165 million guarantee was bought by the Government to give it more rights than just exercising the guarantee as well as leaving the Government with a claim on much of Caroline Bay’s assets. So far, $217 million has been spent on the failed Caroline Bay development.

While these are all significant contract spending amounts, according to the Auditor-General’s 2015 report, we can find equally egregious cost-overrun examples over the years for much smaller-sized capital contracts that went significantly over-budget, including, in 2010, the renovation of the Department of Human Resources, which had an original contract sum of $257,000 but ultimately cost the public $958,000.

Another 2010 example was the Central Laboratory Building project — originally estimated to cost just $46,000 and eventually amounting to $902,000 of taxpayers’ cash. Don’t believe me? Look it up. Remember that 2014 North Shore roundabout, which took 14 months to finish and cost us $1 million?

I’ll stop now.

Can someone please convince me that the present government’s Morgan’s Point village project, with its initial government borrowing of $130 million — for just the first phase — will be a good risk/return of our taxpayer dollars? Why is the Government entering into luxury housing and retail development? How can we be sure of miraculous improvements in its planning abilities, administrative oversight, accountability and strict adherence to financial instructions? Why should we expect a different outcome when history shows us that there is irrefutable evidence there won’t be?

The essence of the Government's role is to use our tax dollars prudently for essential capital infrastructure, which forms the basic necessity of every functioning economy. Roads, bridges, waste facilities, hospitals and airports should always be at the top of that list, and it is clear that little focus (money) has been directed towards the first three of these items, which we all use every single day. Apparently, borrowing for a luxury, mini-village on steroids takes priority over rusting bridges, roads full of potholes and a waste facility held together by a boatload of Band-Aids.

This type of ignorant stubbornness towards a feel-good “end goal” reminds me of all those proponents of dreamy socialism who claim that it didn’t work, because it “wasn’t done right”.

Well, here we go again, welcome to the Government’s second attempt on the redevelopment of Morgan’s Point, where we the taxpayer are embarking on investing heavily in a non-essential capital project, but this time we are told it will be “done right”. It’s our borrowed money, our risk, neither of which we can afford.

A fiscally responsible government would find a way to entice the economic engine of the private sector to take on Morgan’s Point because governments should not be in the “development” business. They have repeatedly shown us why.



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Published February 27, 2024 at 8:00 am (Updated February 26, 2024 at 7:55 pm)

When they show you who they are, believe them the first time

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