Bermuda's economy will worsen unless there is "substantial reform" according to a report released yesterday.

The Bermuda First report interviewed 66 leaders in commercial, non-profit and public sectors on the Island with the idea to plot a path of continued success.

The leaders rated Government performance as "weak" and "in need of significant improvement" when it came to accountability and meeting the needs of companies two areas they said are of "very high importance to businesses".

The report listed mechanisms that could benefit companies, which it stated could help the Island remain prosperous over the next six years extending the corporate tax exemption past 2016, implementing an independent tourism authority, waiving term limits and work permits for certain occupations and increasing government transparency.

The recommendations were just some of the 32 suggestions the Bermuda First committee unveiled at a meeting at the Fairmont Hamilton Princess.

But already it appears some of the key recommendations may not be followed through.

"For the first time in our living memory, a non-partisan group of leaders has collaborated to reach consensus on how we chart our destiny," said Premier Ewart Brown, who chaired the committee with Opposition Leader Kim Swan and ArielRe chairman Don Kramer.

"While we have not agreed on every suggestion or recommendation, we have agreed that fundamental change is necessary in order to overcome the unprecedented threats we are facing, both internally and externally."

One of the key tourism initiatives put forward was the implementation of an independent tourism authority.

The report stated: "While tourism authorities vary in terms of organisation, financing and oversight, the most attractive model for Bermuda is likely to be a stand-alone authority run by a chief executive officer, funded by a portion of the hotel occupancy tax, and overseen by a board made up of members of the tourism industry, nominated by the private sector, and appointed by the government for fixed terms."

When asked about the recommendation Dr. Brown, who is Minister of Tourism, said he had agreed to look at it but added: "[The Government] have always said that we do not think that is necessary at the moment.

"It is not what we call it, it's who we have doing the work and their latitude to make decisions."

Another key recommendation in the report — that the corporate tax exemption be extended past 2016 — is "under consideration" according to the Premier.

The report stated: "The exemption of international business from corporate tax is one of Bermuda's most powerful appeals. The exemption will remain in effect until 2016, but businesses are uncertain about whether it will be extended or allowed to lapse, and policymakers have not provided definitive signals in either direction.

"As a result, some businesses have begun factoring the risk of losing the tax exemption into their current decision making about how much capital and how much of their business operations to commit to Bermuda."

Opening remarks in the report, signed by Dr. Brown, Mr. Swan and Mr. Kramer, stress the Island's dependence on the insurance sector for future success.

"In the past decades, we have relied on growth in the insurance and reinsurance sector to drive our economy, but we cannot take continued growth in these sectors for granted," they noted. "We are not enjoying the success in tourism that we once did. We now face greater competition from year-round getaways, and we have far less overnight capacity than we used to.

"Meanwhile, we continue to face difficulty creating attractive opportunities for all Bermudians, with naggingly persistent school drop-out rates and far too few Bermudians who are qualified for middle-class jobs. The most recent global financial crisis and economic downturn have accentuated many of these challenges, showing cracks in Bermuda's economic and social foundations."

The committee believes that if its recommendations are followed, Bermuda will still be a premier international financial centre, tourism will have been reinvigorated, the economy diversified and all Bermudians will get a slice of the economic pie by 2015.

Without these changes, the report stated: "More than two-thirds of the respondents thought that Bermuda's economy would be dramatically worse or somewhat worse in five years.

"Furthermore, more than 60 percent of the survey respondents said that either 'transformation' or 'substantial reform' would be required for Bermuda's economy to continue to thrive."

Areas that need "significant improvement" were outlined as the presence of skilled workers, government responsiveness to business needs, government accountability, the education system, and public safety.

However the Island got top marks when it comes to having a fair and predictable legal environment for businesses, attractive regulatory environment and having high-quality professional services such as lawyers and accountants.

But yesterday Mr. Kramer said that just because industry leaders have singled out areas where Government can improve to better meet the needs of businesses, does not mean Bermuda has been "failing" in those areas so far. He said that he, personally, has always found Government to be responsive.

Mr. Swan added: "When the Bermuda First initiative was launched earlier this year, a member of the media commented that it represented a rare show of unity between the Government and the Opposition. The process of frank discussion that has characterised this Bermuda First initiative has proved that a show of unity need not be rare, and we are committed to making sure it becomes the norm rather than the exception."

Mr. Kramer added: "Bermuda can't control the global recession. What can be controlled is the country's response to it. Bermuda can address its own social ills. I am convinced that if Bermuda takes that control, Bermuda will emerge stronger than before.

"Now the report's recommendations are in front of us, the hard work begins. For our part, we will continue to provide the Premier and his Ministers with any support we can offer. We have established four subcommittees, each of which has responsibility for a set of recommendations."

To see the complete report, click here

Industry leader David Ezekiel speaks on term limits and further stories on Bermuda First report in Business