take on the unenviable task of redeveloping the Island's major hotels.

The agreement between Government and Bermuda Properties Ltd. last Friday will provide a $30 million guarantee to those financing the redevelopment of the East End property. In addition, a raft of tax breaks on land tax, payroll tax and Customs duties have been made available.

In principle, this is all to the good. The cost of construction and labour in Bermuda are so high that it is hard to see how any hotel can offer reasonable prices or hope to make a decent return on their investment without breaks or incentives.

But Friday's announcement creates as many questions as it answers. Many of these breaks remain tantalisingly vague -- it is not known how long they will last, or how big they are.

Nor is it clear how the guarantee will be funded. According to Government, it will come from the sale of licences to overseas buyers of the luxury homes built on the site.

If the money is to come from the sale of licences, it could take years to build up the reserves, which it would seem, would require the sale of more than $100 million in homes, all to overseas buyers. Does that mean that the hotel will not be redeveloped until then? And is it worth it to Bermuda to "give'' that much property away? The alternative is equally unappealing: Government could set aside $30 million out of the current budget and then draw down on that fund as it is replenished from the licence sales. But that means that some existing spending plans will have to be put on hold, taxes will be increased or the money will have to be borrowed.

Most importantly, there is the question of who else will be in line for a similar deal. Fairmont is planning a much needed revamp of both Princess hotels. Anyone planning to redevelop the still-empty Club Med property will also be seeking incentives and tax breaks. The Sonesta Beach Hotel needs to be modernised. The owners of Elbow Beach, who have spent tens of millions of dollars on improvements, must be kicking themselves.

Incentives are a good approach to encouraging developers to come to the Island. But a better one would be for Government to take a hard look at the whole question of Customs duties and to move, with the unions, to slow down wage inflation.

In the meantime, care needs to be taken that the Government does not run the Budget into the red by giving so much away that the benefits to the Country are negligible.

A balance needs to be struck in which breaks now will be repaid through revenues from a growing economy. The lack of detail in the proposals unveiled fail to make it clear if this a deal which will set tourism on the road to recovery or will put it over the edge.