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OBA blasts Govt over state of finances

The Opposition One Bermuda Alliance has harshly criticised Government over its latest financial results.

And it has charged that a proposal to public sector workers to freeze pension contributions in exchange for a pay cut is a strategy to avoid raising the debt ceiling.

Speaking at a late morning press conference yesterday, Shadow Finance Minister Bob Richards noted that the Auditor General had not given the Financial Statements a clean bill of health, and that the Government had been grossly inaccurate in its Budget estimates.

“This is the fourth consecutive report that has not received a clean audit from the Auditor General, meaning that there remain serious questions about the integrity of the numbers,” Mr Richards said.

“These questions, these doubts and uncertainties about the handling of the people's money have become the norm for the Government. It is disgraceful.”

He noted that Government revenue was $62 million less than forecast and expenses were $67 million more.

“The current account deficit which was forecast to be $67.5 million turned out to be a deficit of $128.7 million.

“That's not just a miss, that's a big miss a 90 percent difference, or $61 million.”

And he pointed out that employee costs, healthcare, financial assistance and interest on debt were all over budget.

“In the corporate world this type of financial planning would get the planners fired,” he said.

“Voters will get that chance soon.”

He added that the Auditor General's report called into question the Government's credibility and ability to manage the country's finances.

“Who can believe what this Minister will say in her Budget speech this coming Friday when the Auditor for four years running has not approved the numbers, or when the Minister's directives to cut back spending are ignored by her own colleagues?” he asked.

“The missed forecasts, the ever deepening debt suggest the Government has lost control of the budget, and in the process weakened Bermuda's ability to control its own destiny.”

Mr Richards noted that the Government was close to breaking the debt ceiling of $1.25 billion.

“The stark debt situation explains the Government's eagerness to get its hands on $62 million from employees pension contributions to fund its day to day operations.

“Without this diversion there would have been no way to avoid raising the debt ceiling before the election. It may still be unavoidable.”

He said: “Government is using employees pension contributions to avoid this embarrassment at this politically sensitive time because even though the $62 million is essentially borrowing from the future, it will not be classified as debt.”

At question time, Mr Richards indicated that the public would have to wait for the Budget debate to learn of the OBA's fiscal policy.

“Our approach to Bermuda's problems is based on two fundamental principles,” he said. The first was economic growth.

“We'd be very decisive in our growth strategy for the Bermuda economy. The second area is we would also be decisive and strict as it relates to the expenses of running the government. Let me emphasise we're not going to fire civil servants. But there's a lot of fat in this Government and we will be going about our business to be very strict and decisive on that. What we've had so far is a lot of lip service to austerity and no action. We will be an action Government.”

But he did say that an OBA Government would freeze the size of the civil service.

“The Government has still at this late stage not committed itself to freeze the size of the civil service,” he said.

“The only thing we've got from the Minister of Finance is that they would freeze the size of 'non-essential' civil servants. What does that mean? We're committed to freezing the size of the civil service.”

He said: “We've had a lot of lip service from this Government but no action, no discipline, no accountability. It's amazing what those things will do once they're put into action.”

On the pension fund proposal he offered that it did nothing to “solve the problem”. “All other things being equal we could be here next year and they would be diverting another $60 million from the fund.”

Last night Junior Finance Minister David Burt responded to Mr Richards' comments. He said the Government would not be drawn into a Budget debate before the Budget is revealed on Frida, but added that it was “important to stick to the facts”.

Sen Burt said: “The qualification in this and the prior fiscal year was based on the Auditor General's opinion that there were issues in internal controls in the management of certain capital development projects. The Auditor's opinion states, 'except for this particular matter the financial statements present fairly in all material aspects, the financial position of the Consolidated Fund of the Government of Bermuda'.

“To state 'that there remain serious questions about the integrity of the numbers,' as the Shadow Minister of Finance has stated, is a gross exaggeration of the facts.”

Sen Burt stated Government would work with the Auditor General to ensure that such qualification is removed in the future, as had been done on qualified accounts in 2000 and other occasions.

“It should be noted that the annual accounts of the Consolidated Fund have been qualified before November 1998. The March 31 1998 accounts were qualified by the Auditor General for two reasons as the Auditor was unable to verify:

Ÿ Stamp duty revenue

Ÿ PSSF pension liability and pension related expenditure for the year.

“But the misrepresentations by the Shadow Minister don't end there. The Shadow Minister then goes on to claim that employee expenses were 16 percent over budget when in fact they were five percent under budget.

“It is also interesting that he criticises overspends in health and financial assistance. If he was in charge, would he turn people away from the hospital, or refuse support for those that may have fallen on tough times due to the worst financial crisis since the great depression?”

He added: “It is easy to play skipper one year later; however 2010/2011 was a year of extreme economic challenge for our country. This Government views it as its obligation to assist the vulnerable in times of need and we will not apologise for taking care of the people of Bermuda when they need it.”

OBA press conference: ET Bob Richards on Government financial results.(Photo by Akil Simmons)

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Published February 21, 2012 at 8:00 am (Updated February 21, 2012 at 8:43 am)

OBA blasts Govt over state of finances

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