Comparison of the 2015/20 16 Bermuda Budget Statement and the Reply to the Budget between Government and the Opposition — Part 1.

It is tough being a politician any day — but particularly so in the electronic age we live in of constant exposure: texting, Google search, Twitter, Instagram, selfies, Facebook, and whatever the next connectivity device is imminent to be flashed across vapourware. Everything a politician does or doesn’t do, says, acts, reveals, or is purported to conceal, is fair game. The scrutiny comes, as we all love to say, with the territory.

Politicians are alternately (and together) respected, vilified, lauded, criticised, lambasted, accused of bias, lack of patriotism, partisan conflicts of interest, self-aggrandisement and enrichment, lack of moral fibre, and numerous other passionate or vehemently descriptive terms. Be among those that sort out the country’s finances, or pass particularly important legislation and suddenly, politicians are heroes of the first order.

An individual seeking the political spotlight must have a thick skin, be impervious (but receptive, too) to constituent critical analysis of his/her performance, constant media exposure, have the very real courage of his/her convictions in serving the country and the intestinal and physical fortitude to get to stay up almost all night in debating important country decisions.

It is within that context that the annual Bermuda Budget Scene has been playing out for the last three weeks. After more than four hours of annual budget presentations (accompanied by the cumulative 76 pages of detailed financial information) over two very, very lengthy Parliament-convening Fridays — February 20 and 27, 2015 respectively, this week residents of Bermuda have been treated to daily countless hours spent in wrangling, and fiercely reckoned debates about the validity of and passing of the 2015/2016 proposed budget items. The at-times no-holds discourse and dissent may make us uncomfortable, but these are all vital (and necessary) hallmarks of a free, open, democratic society, I might add.

If readers have the patience to wade through the entire 76 pages of these two budget reports (prepared by Government and the Opposition), you will find that they are carefully prepared, chock full of:

• Financial figures.

• Assumptions and projections.

• Largesse items in tune with economic theory but short in details for accountability practice.

• Biblically-inspired guidance.

• Passionately committed perspectives.

• Hindsight bias such as would have, should have, or could have done something different with different results.

• Constructive criticism and concrete recommendations.

• Hope raising, and the interesting individual political theatre that is all part of the fascinating process of English Parliamentary debate.

Then you, dear readers, are a group of brave, committed, concerned Bermuda residents.

You care enough to be an informed responsible participant in our domestic affairs. You can download both reports here.

Government of Bermuda Ministry of Finance Budget Statement http://www.govsubportal.com/dci-documents/item/2214-2015-%E2%80%93-2016-budget-statement

Opposition Shadow Minister of Finance Reply to the Budget http://www.parliament.bm/uploadedFiles/Content/Home/Reply%20to%20the%20Budget%202015-2016.pdf

Bermuda Budget 2015/2016 Summary Comparison Primer. Perhaps, it is fair to state that everyone truly wants to understand the new budget proposals and final bottom line, but many families are far too preoccupied managing their own family budget and financial survival to take the time for perusing in any depth, the two budget proposals as presented by Government and the Opposition.

Moneywise will attempt to provide a Bermuda Budget Summary Comparison Primer for you that may be easier to digest and more aligned with the way a family manages their finances.

We will review the country’s financial plan in the same manner that every family has a financial plan, formal or very informal to help them achieve financial success. As quoted directly in the reports, and the mantra for the financial planning industry for many years, “If you fail to plan, you plan to fail,” a statement that is ever true, since the first anonymous person coined the phrase.

We will begin with the Mission Statement of both parties to the budget. Note that all comments, quotes, figures and relative information are taken directly from both reports.

1. Mission statement

2. Goals and objectives

3. Assessment of where we are now — reviewing the country’s financial status: balance sheet and income statement.

4. Analysis of the biggest challenges — strategies and recommendations from the budget proposals for financial growth and success.

5. Planning, processes and implementation of recommendations for the road to recovery.

6. Monitoring and review of the budget recommendations.

In my opinion: Debt reduction is the absolute biggest issue impacting our Government, our people, our economy, our country. How we handle our public purse, our revenues, our expenditures and our financial debt responsibilities is highly visible to the outside world. The amount of inward hard currency investments contemplated by new foreign investors to allocate for investment in Bermuda’s economy is directly affected by their confidence in our government’s ability to manage our financial affairs.

Nevertheless, a government’s fiscal conservatism, political stability, high-calibre juridical support and flexible regulations are significant components of inbound investment decisions by foreign investors. A country needs new foreign investment to be the driver and the successful key to begin to create new infrastructure and more jobs, not cash to be used to reduce current debt.

From a financial planning perspective, you cannot plan for the future adequately when you are attached to major debt liabilities. Payment of the debt becomes the overriding concern, stress-point and severe cash-flow dampener to any other future plans. A country, locked in a debt-borrowing cycle plan can be compared to a family who cannot make their current mortgage interest-only payments.

When approaching their banker, they seek to borrow more money — cash to make payments on that same mortgage without realising that the principal balance has just been increased!

You and I know exactly what the answer will be there.

Stay tuned for Part 2.

Note, however, that all salient points and objectives cannot be covered due to understandable RG space constraints, but the full article set of article commentary will be posted (as soon as I overcome Dreamweaver challenges) on the Moneywise: Bermuda website for future reference.

Martha Harris Myron CPA PFS CFP JSM; Masters of Law: International Tax and Financial Services; Appointed to the Professional Tax Advisory Council, American Citizens Abroad, Geneva, Switzerland. The Pondstraddler* Life™ Consultancy providing planning for international tax, immigration, investment, retirement, legacy, and related financial challenges to the lifestyles of internationally mobile individuals and their businesses residing, working, crossing borders, and straddling ponds in the North Atlantic Quadrangle. Specific focus for residents of Bermuda, the premier international finance centre.

Contact: martha@pondstraddler.com