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Trying to avert a terrible legacy

When the members of the SAGE Commission and I accepted Finance Minister ET (Bob) Richards’ invitation to conduct a review of Government expenses, we all thought long and hard about why we would want to take on such a daunting task.

Minister Richards asked us to look at how Government delivers services to the community and come up with recommendations for reducing what many consider to be runaway costs.

There was no doubt that we’d have to give unpopular guidance about how to cut Government spending. Given the size of our community, it was likely that this advice would affect our neighbours, our friends — perhaps even members of our family. We knew the review would require our full attention for six months, a significant commitment on top of the other volunteer work we’re all involved in.

But as Commission member Cathy Duffy says when she explains why she said “yes” to Minister Richards, how could we say “no”? This issue is one of the thorniest problems Bermuda has ever faced. How could we, who love this Island, turn down the chance to be a part of the solution?

How could we say “no”, knowing that to do so meant we were tacitly agreeing to pass on a terrible legacy to our children, and to our grandchildren, and to our great-grandchildren?

All Bermudians want their children to inherit a country that is economically, culturally and socially healthy. None of us wants to gift them a burdensome debt that has them staggering for years to come.

We had to say “yes”.

Since starting our review, we’ve become even more convinced about how critical it is to address Government costs and to address them now.

We knew from the start that Bermuda is currently running an annual deficit of more than $300 million. We knew that by the end of 2014, we will owe banks and other lenders $1.7 billion. This means that on top of whatever debt Bermudians carry personally, every single working Bermudian has been saddled with an additional $65,000 because of money that’s been borrowed to meet the cost of running our Government.

But in the last few weeks, the six members of the Commission, the four committee chairs and the 35 committee members — a total of 44 Bermudians, supported by analysts from the Island’s accounting firms and by Civil Servants throughout the Bermuda Government — have delved into hundreds of pages of statistics, graphs and reports. We’ve poured over a decade’s worth of information that charts the increasing cost of providing services to our community.

As we’ve discussed our preliminary findings and grappled with what we need to do to produce our final report, we’ve realised the extent of the problem is far greater and far more complex than we first understood.

We said at the start of our review that Bermuda is in an unsustainable position. But it’s worse than that. In reality, we are at the point where if we don’t demonstrate that we can solve this problem ourselves, we will have it solved for us by the creditors to whom we owe money.

The message is simple. We are spending far more than we are earning, and it has to stop. Consider this:

- For every dollar the Government earns, it spends $1.24. If you take into account funds spent on capital projects and money set aside to repay our debt, Government is spending $1.38 for every dollar it earns.

- 70 cents of every dollar earned by Government is spent on salaries and employee benefits, and on debt interest. That leaves 30 cents for everything else.

- This year, the Bermuda Post Office is estimated to lose $8.9 million; Marine and Ports, which operates the ferry service, will lose $12.4 million; and Public Transportation, which operates the bus service, will lose $12.9 million.

- As of March 31, 2012, Government was owed $204 million in taxes and fees.

No one running a household in Bermuda would manage his or her money this way. No one would continue to borrow to meet basic expenses like food, rent, electricity and clothing. But that’s how we’ve been running the Bermuda Government.

When we introduced the SAGE Commission to the public, we said that Bermuda was facing a financial hurricane. We said we’re being battered and that we all need to work together to clear away the debris, repair the damage and make things whole again.

We need everyone to help Bermuda emerge from this financial crisis. Work with us to come up with your best ideas for cutting Government costs, and send them our way so that they can become part of our review.

And after all the data and suggestions have been considered and recommendations have been made, show us the strength and resilience that Bermuda is famous for and support those recommendations, as painful as some of them may be, for the greater good.

It’s during times like these — when we know we must pull together as a community — that Bermuda’s ability to get things done shines through. If we get this right, we’ll leave our children, and our children’s children, a legacy that we can be proud of.

* Brian Duperreault is chairman of the Spending and Government Efficiency (SAGE) Commission. Information about the Commission is available at www.sagecommission.bm or by phoning 299-0210.

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Published June 13, 2013 at 9:00 am (Updated June 12, 2013 at 11:55 pm)

Trying to avert a terrible legacy

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