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Economist links population growth to wealth

Peter Everson

A failure to increase the population will result in everyone getting poorer, according to economist Peter Everson.

“For Bermuda, the reality is stark,” Mr Everson told The Royal Gazette as he reflected on a poll showing more than half of people do not want the Island to grow its population to stimulate the economy.

Noting the Bermuda Government’s debt is costing about five per cent annually, he continued: “To get ahead of the interest bill, the economy must grow by at least five per cent.

“Failure to do so means that the next year more of the economy has to be diverted to paying the interest and everyone in the economy, meaning Bermuda, is poorer. This has been our reality since 2009.

“The current position is even bleaker because the Government has been unable to close the annual budget gap and must borrow an additional $200-plus million each year to cover these excess costs over taxes raised. So we are going deeper into the mire each year.”

Mr Everson, the president of PE Consultants, said that raising productivity was a necessity, but that “doing more with less” would not suffice by itself.

“Reducing the number of employees, or asking the same number of employees to work fewer hours, while it raises productivity, does not do so at a rate that will lift us out of recession,” he said.

“It has the bad side effect of decreasing employment income which is the opposite of what Bermuda needs. Thus all people who review Bermuda’s position come to the same conclusion — Bermuda must have a larger population.”

Mr Everson called the securing of the America’s Cup “a small step in the right direction”, pointing out that it had brought more people to the Island.

“Their numbers will build through to July 2017,” he said. “This is good, but it is neither permanent nor large enough.”

New hotel construction, he added, would create jobs over an estimated 30 months, followed by permanent jobs once the hotels opened for business.

“These new jobs will be filled by Bermudians and contract workers — the latter increasing the population,” he said.

Population growth has been a contentious issue, particularly commercial immigration — a topic raised for consultation in the 2013 Throne Speech, and promptly labelled “a red line we will not allow to be crossed” by the Progressive Labour Party.

Michael Fahy, the Minister of Home Affairs, subsequently acknowledged that the right to vote was a topic of particular concern, and said it should not be extended in cases of “economic citizenship”.

A variety of such models exist around the world: the United States offers green cards, equal to permanent residency, to entrepreneurs and their families if they invest in a commercial enterprise and intend to create ten full-time American jobs.

Others countries offer citizenship in return for purchase of property, including Latvia, Spain, Greece and Portugal.

St Kitts and Nevis have run a “citizenship by investment” initiative for more than 30 years. Citizenship can be effectively purchased through a donation of $250,000 to the St Kitts and Nevis Sugar Industry Diversification Foundation, or an investment of $400,000 in real estate. Similar initiatives were recently adopted by Antigua and Barbuda.

Malta set off fierce controversy in 2013 by offering citizenship to high net worth individuals who invested the equivalent of €1.15 million, roughly $1.57 million. Under pressure from the European Union, the Mediterranean island republic added an extra condition: applicants would have to live there for at least one year to qualify.

A poll released last month by Profiles of Bermuda found that six Bermudians in ten were opposed to commercial immigration.