United Bermuda Party leader Kim Swan called on Government to axe frivolous spending and spread the wealth to those in need as the downturn begins to bite.

In his official reply to Government's Throne Speech he said the Progressive Labour Party had ignored the looming recession and was idly boasting about hotel plans which were doomed in the credit crunch. Mr. Swan urged tax cuts for the poor, payroll tax cuts for small businesses and further relief for hoteliers already reeling from a decline in tourism spending of 14 percent — with the worst yet to come.

To fund the tax cuts Mr. Swan said Government must eliminate non-essential spending and impose a disciplined austerity plan, including an immediate cap on public service hiring.

He blasted Government for its expensive addiction to overseas consultants with a shocking $79 million budgeted for professional services this year.

"It is possible to believe that consulting this Government is now the fastest growing industry in Bermuda."

"The practice is stunting our ability to grow expertise and experience, depriving the island of homegrown skilled hands that can help keep the island going in tough times."

For too long the Government had spent wildly on public projects such as the Berkeley school while indulging in excessive travel, larger GP cars and open credit cards, said Mr. Swan.

He added: "People understand the need for cost-cutting in lean times, but they also need to know that everybody's doing it and that it starts at the top.

"Imposing austerity measures on itself will give the Government credibility to ask others to sacrifice. This is what leadership by example means."

In 1990 the United Bermuda Party Government had implemented an anti-recession plan as the signs of a downturn in the United States economy had become obvious, said Mr. Swan.

"The measures enabled the government to meet the surge in demand for social assistance and to create Bermudian jobs as the recession settled over the island while positioning the country for a relatively quick recovery when conditions eventually improved."

But he said Friday's Speech from the Throne had scarcely mentioned the economic crisis yet the signs were clear with:

• new company registrations in Bermuda down 13 percent in the first quarter of this year and down 40 percent in the second quarter ending June

• New insurance incorporations down more than 50 percent in the second quarter compared to the same period in 2007

• The mid year company incorporation total is the lowest since 1991.

• Retail sales in Bermuda have fallen to a point that the industry is now closing shops and laying off workers.

• Tourism air arrivals fell 9.6 percent in the first half of the year, while their spending dropped nearly 14 percent — $32 million fewer dollars coming into island businesses than the same period last year.

Mr. Swan said: "With inflation at 5.9 percent – the highest since 1992 – it illustrates the ongoing challenges facing people, particularly those on fixed incomes.

"In the face of recession, the Government should consider direct measures to leave more dollars in people's hands.

"Tax relief is an efficient way to put dollars in people's pockets. Our proposal to eliminate the payroll tax for lower income earners can ease pressures on families while also helping to stimulate the economy. Our hard-pressed taxi owners should receive duty relief on fuel."

But he said government had blown $318 million in unbudgeted, unplanned windfall earnings between 2002 and 2007 virtually all from international business to the point that Bermuda had its highest ever debt level.

Under the current Finance Minister, who came to the post in 2004, the gross national debt mushroomed from $160 million to $456 million while interest payments on debt rose from $8 million a year to $26 million a year, said the Opposition leader.

"These years also witnessed stunning growth in Bermuda's budget deficit before borrowing from $26 million to $131 million.

"Those figures suggest that Bermuda's capacity to borrow in the tough times ahead – borrowing that might be used to support the needs of families – will be constricted by the spending spree of the last few years," said Mr. Swan.

Social support programmes must be prepared for increased demand for assistance, said Mr. Swan. "Precious time has been lost. In particular, we urge the Government to set aside additional money for Housing Assistance and Social Assistance, two programmes that saw significant demand increases in the last recession.

"The Government should plan to keep people employed. Adjustments must be made to replenish its capacity to start public projects over the next period."

He said there was no immediate need to move Government projects forward because the construction industry is still fully employed. But when Government moves projects forward, it needed spread the wealth, said Mr. Swan.

"Why should more than $100 million in current Government contracts have been handed over to an 'axis' of two or three construction bosses close to the Premier? "After all, this is not the Government's money; it's the taxpayers' money, though we are not sure the Government sees it that way. Government must play fair with other contractors, both large and small. We say: Stop playing favourites. Openly tender the jobs. Spread the business."

He said many small businesses are hanging by a thread, in part because of the decline in tourism. "Lay-offs are starting to happen. To help them survive and keep their staffs employed, the government should prepare to cut their payroll tax."

Government adversarial approach international business need to stop said the Opposition leader.

"The divisive racial politics seen from the Brown Government in the last election, as well as the constant sabre-rattling on independence are deeply unsettling to members of the international business community.

"The Government must also do a better job in Washington." Said Mr. Swan who said Bermuda was often a target. "Once-a-year photo-ops in the corridors of Congress are not doing the job."

Mr. Swan said the Opposition recommended a ban on corporate inversions in Bermuda – a practice where companies physically based in the US headquarter in Bermuda to avoid tax.

"This is a practice that has upset US legislators. It is our view that the risks inversions carry for Bermuda far outweigh the benefits."

Mr. Swan said it was time Premier Ewart Brown came clean about the lack of results in reversing tourism's slide and resigned as minister.

"On the hotel development side, the lack of results continue to fly in the face of the Premier's sunny pronouncements that hotels will be built. And so we ask: 'Where is the Park Hyatt? Where is Jumeirah? Where is the Par-la-Ville Ritz-Carlton?' Where indeed? For too long, the Premier has given people a false sense of security about the state of tourism. We have called on him to replace the hype with truthful language."

He said Government should extend relief to hotels wherever possible to help them keep people in work. "We therefore urge the Government to review possibilities for additional relief including land tax, fuel tax and the summer payroll tax."

He said the PLP Government was failing on the implementation of education reform and was doing nothing to make Bermuda safe again.

"The long-delayed renovations on the St. George's Police Station are continuing and expect it to finally re-open in the new year, some five years after the promise to do so. It leaves us wondering, Mr. Speaker, where this project would be had we not pushed hard for it."

He said a Warwick police station was needed. "We expect to see a commitment to day and night patrols in every parish.

We also urge the restoration of a fully-manned community beat officer programme, Police consultative community groups and increased support for Crime Stoppers and Neighbourhood Watch programmes."