Home Affairs Minister David Burch yesterday questioned the "credentials" of XL Capital chief Michael McGavick, who last week issued a stark warning about the threats to Bermuda's status as an international business jurisdiction.

Senator Burch was responding to a speech in the Senate by Opposition Senator Michael Fahy, who quoted XL's CEO as saying that the threat of punitive US tax law changes was now "extremely real" and a united effort was needed to counter that threat.

Sen. Burch asked: "His credentials are what?"

Sen. Fahy replied that Mr. McGavick was head of one of the biggest companies in Bermuda, that it was inappropriate to question his credentials and that he had been recently appointed by shareholders.

During the afternoon session, Government Senator Walton Brown commented on Mr. McGavick's warning.

He said the XL chief, who unsuccessfully ran for a US Senate seat as a Republican in 2006, was "incorrect" and that he had "either been misinformed or misled".

Sen. Brown said discussions were ongoing between officials in Bermuda and "significant players" in the US and a full comment about the outcome of those talks would be made in due course.

Mr. McGavick was quoted in The Royal Gazette on November 19 as warning insurance bosses at a meeting the day before that "tax regimes that are punitive to Bermuda and other countries will become law".

Sen. Brown said: "The comment on the front page represented an unfortunate view that does not exist in reality. There is no imminent threat to Bermuda."

Sen. Burch said later that international business was free to try to tell Government what to do regarding the economic downturn.

"Can I just confirm that we are, and then some, doing those things," he said. But the Government Senate Leader added that he'd like to see the industry, "particularly in cases where they have done in business some pretty dreadful things that have affected and negatively affected Bermuda's reputation", explain what it was doing to improve its own and the Island's reputation.

Earlier in the day, the Minister, who in a 20-year career worked as an underwriting manager for several reinsurance companies including AIG, said he had been impressed in meetings with international business about the contribution it was now making.

"A little known fact is that many provide housing allowances or mortgage subsidies to their Bermudian staff and are providing a wide variety of training opportunities to Bermudians," he said.

He praised the new initiative from the Marsh Group to recruit recent graduates for entry-level jobs.

He said: "If I had one criticism of international business it is that they don't do enough to get the good message of their activities out to the wider community — but I will continue to help them."

Opposition Senate Leader Michael Dunkley told yesterday's session that he was disappointed in Sen. Burch's comments about Mr. McGavick.

He added that Mr. McGavick was well placed to comment on issues effecting Bermuda, as XL's core business market is also Bermuda's.

Mr. Dunkley also suggested that Government needed to cut any non-essential spending, eliminate payroll tax for low earners, give taxi drivers duty relief, cap any Government hiring and review all financial and social assistance programmes.

He said the current drastic situation meant Government needed to be "more than prudent".

Sen. Brown said Government had already embarked on a "bold initiative" to cut $100 million – or ten percent – of its budget and that we might expect to see the number of work permits cut, as happened during the last recession when the number fell from 8,000 to 5,000.

Senate President Carol Ann Bassett said the main pillar of Bermuda's economy in a hundred years was unlikely to be international business.

"There are things we have no control over," she said.

Attorney General Kim Wilson, who is also Junior Finance Minister, said: "It's important for us to recognise that Government must still function.

"We must ensure we provide the services that we were elected to do.

"For all departments and ministries were told to reduce and yesterday was a painful exercise when we were forced to look at our budgets to ensure that we could (curb) our spending but make sure we operate."