Bermuda on the road to ruin, say SAGE
Close to 100 residents filled a church hall to hear clear warnings that Bermuda is heading for bankruptcy if the country continues on its present financial course.
The first of the final leg of public meetings by the SAGE Commission was held last night at St James Church Hall.
Economic Analysis Committee Chairman, Nathan Kowalski, illustrated the rapid rise of Bermuda's deficit at a yearly rate of about 20 percent.
“It's that rapid escalation of debt that is really worrisome because that speed in this sense simply cannot continue,” Mr Kowalski said. “It's on the road to bankruptcy for the nation if we keep escalating at this level.”
“And this is kind of the whole reason why we're going through this process so we can arrest that, slow that down, and deal with the overspending.”
He noted the economy shrank by 4.9 percent and was heading for a fifth consecutive year of no growth.
“There was only four countries that I know of that had slower growth than us, and this puts us in the same class as South Sudan and Greece. It's not a club that's an attractive club to be a part of.
“If you look over the long span of growth for Bermuda now the ten-year growth rate is essentially zero,” he said.
“We had a few great years, as we all know, but now we've gone into the fourth year, probably the fifth year of negative growth.
“If we count 2013 it will probably be our fifth year of a down year. We can't keep going at the rate we're going. If we keep going at that rate we're going to have debt-to-GDP ratios in about ten years of about 80 percent and the debt is going to be about $5 billion.
“Remember that our economy right now is about $5.5 billion and this is assuming the economy grows so this is a little bit scary.
He noted that the last time Bermuda ran a budget surplus was in 2002.
“We've gone a long period now where we haven't been raising revenue for what we spent. We might still get lending but the rates could go up significantly which compounds the interest on the problem which makes it more difficult.
“I can't tell you what will happen, no one knows when that big bang moment happens and that lending market shuts down.
“But the market also appreciates when you have a plan because they see you're concerned about the problem and they realise you have a constructive plan and that actually does help financing,” he said.
“We do need to start looking at balancing this budget so we have a stable base and a stable situation that won't cripple future generations.
What we're doing now is borrowing from the future, it's taking what you don't have, spending it today so that the future has to pay for it.
So if we don't deal with the problem now someone in the future will.”
Chairman Brian Duperreault warned wage cuts may be inevitable.
“It is inevitable that we have to do something about salaries, some cuts have to be made.
“We are borrowing to pay salaries, if we don't do something about this deficit we will get to a point, it won't be that far away where we can't borrow any money.
“We've been in a situation where we haven't been able to make payroll a couple of times in the Government by the way.
“When all you have is that then you are forced to reduce salaries because you have no choice. If I have no cash I can't pay you. So we have to address this before our ability to borrow is gone.
“The biggest single thing we need to address is the economic situation in this country. We need to get revenues and we need to get work and we need capital.
Major Kenneth Dill gave an overview of the methodology used by the commission for this “mammoth task”.
“We knew that we had to review all of the relevant Government reports and data that was out there, some 30,000 pages.
“We also understood clearly that there was no need to reinvent the wheel because many reports have been done already, some made public, some were not made public.
“But we've had an opportunity to look at all of those and we know that it's vitally important for us to do that.”
After six public meetings there were over 400 submissions made in addition to a host of extensive private interviews.
Said Maj Dill: “We understand like you understand that members of the public are taxpayers and as taxpayers, you and I have already paid for Government service. And therefore we expect to get what we pay for.
“That's why we are having these meetings to get the input from you.
“The findings of SAGE will be based primarily on existing reports and the input from a diverse group of individuals and organisations.
“The findings and recommendations will be a reflection of what Bermuda, our Bermuda, have told us.”
The next meetings will be held tonight at Penno's Wharf in St George's and again on Thursday, September 19 at Mount Saint Agnes Auditorium in Hamilton from 7pm to 9pm.