The surge in social spending outlined in the new budget had a lot of people celebrating over the weekend, but Chamber of Commerce President Peter Everson is preaching a cautionary tale.

He said: “Everybody wants better social programmes, but the crucial point is that the Government needs to review each new programme.

“And before asking for new revenues and taxes to fund the new programmes they should review all current programmes to see if any can be scaled back or cancelled.”

The economist suggested the best way to pay for bold new social programmes is to cut the olds ones that are no longer working efficiently.

Mr. Everson may have the chance to relay his message directly to Minister of Finance Paula Cox as she is the guest speaker this morning at the Chamber’s breakfast meeting.

Last night Minister Cox was a guest on the radio programme “Bermuda Speaks” which is hosted by her Cabinet colleague Minister David Burch and is aired on Hott 107.5 FM.

On the subject of controlled spending, she told the host: “You’ll notice there is a significant scaling back of a number of capital programmes so that you are living within your means.”

Mr. Everson also voiced concern about the Government workforce which he believes is growing too quickly.

By his calculation Bermuda’s biggest employer may balloon another ten percent by the time the 2008/2009 budget rolls around.

Mr. Everson said: “Government is becoming a bigger part of the economy. That’s bad news.

“The economy is already over stretched as noted by Craig Simmons, economist at the Bermuda College.

“If it gets bigger it means we have to suck in more people from overseas because we have an employment rate of minus 30 percent, where for every five Bermudians there are seven jobs.

“You can’t manufacture more Bermudians, you have to wait for them to come out of school.”

Premier Ewart Brown has promised to visit Bermudians studying overseas in hopes of convincing them to return home and join the workforce.

Mr. Everson’s argument suggests those students aren’t graduating fast enough to keep up with the rate of growth in the Government employment ranks.

He’s also cautious about a slow down in the Island’s economy.

He said: “Government revenues have been rising steadily but we all know business growth goes in cycles and one has to expect at some stage there will be a slowing in the economy.

“When that happens Government revenues will decline.

“So at some point Government has only three choices: spend less, raise taxes, or borrow more — all of which are unattractive in a weakening economy.”

Minister Burch asked Ms Cox about new taxes last night.

She said: “The tax position is fairly innocuous. What I mean is we’ve really tried to contain the tax increases.

There are no increases for bus fares, etcetera. The tax increases you see are in the business section. Most of the other fees, to be honest, have stayed mainly flat.”

Ms Cox also explained that the highest earners, above $235,000, will face taxation on more of their earnings than in previous years.

Overall Mr. Everson believes the pace of spending and hiring by Government leaders is far outpacing the rate at which the economy is growing.

Chamber president urges caution on spending