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New ways to pay for government projects to be considered

Curtis Dickinson, the Minister of Finance (File photograph by Blaire Simmons)

Private sector partners could be signed up to help pay for major government projects outlined in the Throne Speech, the finance minister has said.

Curtis Dickinson added it was part of his job to help develop creative ways to fund the Government.

He asked: “Does the Government have the money today, in a conventional sense, to pay for all of the things in the Throne Speech? The answer would be no.

“But that assumes that we look at conventional financing and part of my job is to kind of help to develop strategies around financing that may be innovative and creative.

“So all things may not need to be necessarily funded by the Government. There could be opportunities where some of these initiatives are funded in conjunction with partners.”

Mr Dickinson was speaking after he was asked if money was available to cover proposals like island-wide CCTV coverage or a financial commitment to the island’s sports talent, both promised in last week’s Throne Speech.

Rena Lalgie, the Governor, who delivered the speech on behalf of the Government, said that the Ministry of National Security would modernise and expand the CCTV system and that it would “include newer features to assist the police in tackling Road traffic offences and violent crime“.

She added that the Government would “lead the drive to ensure that even more funds are invested in our elite athletes”.

Mr Dickinson said this week that a Throne Speech “should be ambitious”.

He added: “I think the general public expects them to be so.

“But governments also have an obligation to kind of set priorities and consider the fiscal implications of those initiatives.”

Mr Dickinson said last Wednesday that he was not prepared to promise that there would be no new taxes in next year’s Budget.

Mr Dickinson explained that the Budget process started only recently.

He said: “What I’m not going to do is make a pledge today until I’ve had an opportunity to give some further thought to what the Budget for next year looks like.

“Inasmuch as there is an opportunity for us not to raise any new taxes, I will certainly make that statement at an appropriate time.”

But he added: “My own view is that, in an economy that is still struggling to regain its footing, the introduction of new taxes would only add additional brakes on the economy.

“However, in my Budget last year we didn’t raise taxes but for a select few fees.

“We will probably have a look at implementing something similar for next year but we have not yet decided, it’s still in the early stages of the process.”

Mr Dickinson said that the Throne Speech outlined a proposal related to private pension plans “or more specifically, private defined contribution plans”.

He explained: “These are the pensions most employees in the private sector have in Bermuda, where periodic payments are made into the plan by the employee and/or their employer.

“In these plans, the retirement income that a plan participant receives, upon retirement, depends on how much is paid in and how it is invested over time, rather than a formula based on number of years with your employer.

But Mr Dickinson said: “The return on the investments that are achieved by an individual participant’s plan is a critical factor in the affordability of their retirement.

“However, the return that a participant receives is after all fees have been paid.

“This may include management fees and expenses charged by fund managers, but also includes fees charged by service providers, such as administrators, trustees and custodians.”

He added: “Often the breakdown of these fees is not easily discernible.

“More importantly, many people do not understand the impact that the size of the fee makes on their future income potential.

“Transparency and investor education related to this area should therefore form part of any financial conduct regime.”

Mr Dickinson said an assessment was expected to determine if costs to pension plan participants could be cut.

The minister said that he had not heard any concerns about price gouging in pension fees.

But he added: “I have some anecdotal information with respect to fees, which has prompted us to want to have a closer look at it.”

Mr Dickinson said he could not say what level of fees would be classed as reasonable.

He added: “We’re getting to work now and over time we will capture all the data.

“Once we have the data we can make an assessment and then have a view on what we think should happen going forward.”

Mr Dickinson said that his ministry would "continue its work to strengthen financial oversight and governance arrangements“.

He added: “As part of this work, we will be reviewing the requirements for all boards and quangos under our purview to ensure that experience criteria are appropriate and that persons appointed are equipped to carry out their responsibilities.

“Where necessary, this will involve mandatory fiduciary training or professional accreditation in disciplines such as legal, financial or accounting and may be mandated through legislation as necessary.”

Mr Dickinson said: “In addition, as part of the reviews, the Ministry of Finance will also assess governance procedures and financial controls in place to ensure that they appropriately conform to best practices.

“Reviews will also be extended to other entities for which the Ministry of Finance is required to give approval of budgets and work plans.

“It will also include any entities where the Government is deemed to have a significant financial interest or exposure.”

* To read the minister’s press conference remarks in full, click on the PDF under “Related Media”.

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Published November 12, 2021 at 7:57 am (Updated November 12, 2021 at 7:57 am)

New ways to pay for government projects to be considered

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