Fahy brands Bill to slash interest rates ‘bad law’
Senator Michael Fahy yesterday branded an opposition Bill to slash the statutory interest rate in half as “bad law” orchestrated to curry favour with voters in the run-up to an election.
The government senator was responding after the legislation, which will cut the rate for those with judgment debts from 7 per cent to 3.5 per cent, was passed in the Senate.
However, Progressive Labour Party Senator Renee Ming welcomed the Statutory Interest Rate Reduction Act, which enjoyed the support of both independent senators James Jardine and Joan Dillas-Wright.
The Bill was approved in the House of Assembly last week, partly prompting Opposition leader David Burt to table a vote of no confidence in the One Bermuda Alliance Government.
Ms Ming said: “It is important to note that this Bill passed without any objections and did not require a vote,” she said.
“I'm pleased with the result, but I was disappointed by some of the comments made by the Government. The PLP first talked about this reduction in November 2012 and it is something we have raised again since.
“We were committed to push this forward and we know and can understand those people who will benefit from this reduction. It also speaks to the vision we have for implementing change.”
Earlier in the debate, Mr Fahy had described the piece of legislation as “a political Bill brought for political reasons”.
He added: “What I did not hear about in this presentation was who the PLP consulted with in relation to this particular Bill.
“I am also wondering what statutory interest data in other jurisdictions was examined by the Opposition in coming up with this proposed new rate.
“What has been missing from the brief are all the other regulations and acts that have been passed by this place over the years will be affected by this change.”
Mr Fahy said the reduction could have a negative effect on businesses that are owed money because those owing the money would have less incentive to pay it back given the reduction.
“A 7 per cent to 3.5 per cent reduction in the statutory interest rate is cheaper than a bank loan. This will in fact encourage people not to pay”.
The Bermuda Monetary Authority is usually responsible for prescribing the statutory rate but the Opposition has made the argument that the organisation failed to do so despite falling interest rates elsewhere.
The Opposition has said halving the rate would help those struggling to pay debt — although it would not affect interest rates for bank loans, mortgages or any other contract in which another interest rate is specified.