The issue of how to reverse the rapid deterioration of public finances is politically touchy.Neither public spending cuts, nor increasing government revenues will be popular and so if the parties have any plans for either, specifics and numbers have been lacking during the campaign so far.Debt management, spending and revenue are clearly the big issues in public finances. However, measures to promote economic growth are also part of the debate.Debt managementCo-chair of the Bermuda Chamber of Commerce Economic Division, Diane Newman, came up with some suggestions.Ms Newman noted that when Fitch Ratings downgraded Bermuda;’s sovereign debt from AA+ to AA in June this year, it noted the “lack of a credible fiscal consolidation strategy” as one of the reasons for its action. The Chamber has already offered its own debt management plan to Government, as part of a fiscal strategy.“The logic is that a comprehensive, long-term public debt management strategy could allow Bermuda to access the best possible rates for credit; to balance the risk and duration of its debts; and to encourage the development of Bermuda-based debt instruments to make up part of the national debt,” Ms Newman said.“It is clear that the existing level of accumulated public sector debt is not going to be paid off entirely within the next 20 years and therefore will continue to affect future Government budgets and the overall economy,” Ms Newman said.“This also presents a potential risk when Bermuda is being considered by rating agencies and outside investors.“A long-term strategy would also inform current and potential creditors and rating agencies, as well as international business and citizens about Bermuda’s short, medium and long objectives and plans going forward.”RevenueNo party is suggesting tax increases. The Chamber’s view is clear — that more revenue needs to come in from overseas and that this is intertwined with growth.“The key to addressing the debt is to raise more foreign revenue,” Ms Newman said. “The way to do this is to attract more foreign investment and international business to the Island.“Policy changes that would attract and tie international businesses and investors to Bermuda would include abolishing term limits, extending the 60-40 rule to allow investment in local companies, and opening up the real estate market to foreigners by cutting the taxes to be paid on purchases of houses.”The Chamber is also conducting a study on value added tax (VAT) and its suitability for Bermuda.“VAT continues to grow in popularity internationally and is seen as a powerful revenue-producer for governments,” Ms Newman said. “In Bermuda, the customs duty for imported goods already is in place, but, apart from mandatory tipping in restaurants, there is no ‘tax’ on services.”SpendingOn this score, we know more about what the parties won’t do than what they will.We know, for example, that neither party will make public sector redundancies; both parties have vowed not to reduce the benefits for seniors from FutureCare; and each party has tried to portray the other as being the party of cuts.Both parties have described plans to improve efficiency and have mentioned hiring freezes.And then there’s the mountain of unfunded liabilities lurking in public pension and healthcare benefit programmes, something that although it is an enormous issue facing the Island, is unlikely to get more than a passing mention on the campaign trail.As commentator Nathan Kowalski points out: “If one attempted to quantify unfunded government entitlement programmes (pension, healthcare etc) which amount to over $1 billion at this stage, it is apparent that funding trends are unsustainable and benefits will need to be reduced and taxpayers will be asked to make increased contributions to these programmes over time.“At the end of the day, the value of government debt must equal the future stream of discounted government surpluses. If at some point, the market feels the future stream of revenues and surpluses is insufficient to service these growing liabilities, it will revolt and force up the interest rates at which the country can borrow.”