A new pay package for civil servants will short-change social programmes an estimated $2.5 million, Opposition Leader Grant Gibbons said yesterday.

Dr. Gibbons added that he would be surprised if Finance Minister Paula Cox did not share his concerns about the salary increases.

Government announced on Wednesday that civil servants are receiving a 4.5 percent salary increase effective October 1, 2004 until September 30, 2005.

However Dr. Gibbons, the Shadow Finance Minister, said the increase could cost taxpayers an estimated $2.5-$3 million ? money which will not therefore go on social programmes like housing or seniors.

?(Bermuda Public Services Union general secretary Ed Ball has done a great job for his members,? Dr. Gibbons said yesterday.

?However, I do have concerns ... and I would be surprised if the Finance Minister did not share some of them.?

The pay increase is well above the current rate of inflation (3.3 percent), he said. The difference between the pay increase and inflation ? 1.2 percent ? could lead to the estimated $2.5 million in additional Government expenditure this year.

?That means that?s money that won?t be going into housing, healthcare for seniors, or other social issues.?

The problem is not a new one, he said. In February, Ms Cox was forced to use the money the US paid to Bermuda when the Baselands agreement was terminated for social programmes. ?She was hamstrung by the consequences of the Progressive Labour Party Government?s failure to that point to negotiate successful wage settlements, manage projects like the Berkeley project efficiently, and keep Government costs from spiralling out of control.?

Of last year?s $35.4 million increase in expenditure, he pointed out, some $26 million went to increases in salaries, wages, ?the increasing cost of an ever-expanding Government ... not new social programmes?.

Had the increase been pegged to the rate of inflation, he said, aside from costing taxpayers less it also would have been less likely to put increased inflationary pressure on the economy.

Inflation in Bermuda is already rising at a faster rate than in the US, he said ? something Bermudians should guard against.

Fast-rising costs here will have a clear impact on both visitors and the international business sector, he said.

?This will clearly impact inflation and other wage settlements.?

The Island?s teachers have argued vigorously for pay parity with civil servants. Yesterday Bermuda Union of Teachers General Secretary Michael Charles said that he could not immediately comment on the news of the increase for civil servants because the BUT membership had not yet had a chance to meet and discuss the issue.