Balanced Budget pushed back a year as battered businesses beg for break
A balanced Budget has been pushed back a year to 2024-25, the Premier said last night.
David Burt, who is now also the Minister of Finance, explained that the postponement was needed to let the Government implement its economic recovery plan and fund capital investments.
Mr Burt, speaking on the eve of the Budget statement, said: “In the last Budget presentation, the Government was projected to balance the Budget by the next fiscal year, 2023-24.
“However, people still need help and our most vulnerable will continue to need support.
“We will also continue to implement the Government’s economic recovery plan, reform Bermuda’s healthcare and education systems and fund necessary capital investments to replace and repair ageing infrastructure – all of which means that meeting this target will not possible in the next fiscal year.”
Bermuda is braced for a tough Budget as the island continues to battle with the economic consequences of Covid-19, increased inflation and debt.
Mr Burt will present the financial blueprint for the new financial year after the shock resignation of Curtis Dickinson, who was finance minister.
The Premier warned earlier that the Budget would be a “difficult” balancing act as the country grapples with a string of problems.
Keith Jensen, the president of the Bermuda Employers’ Council, insisted the business sector needed urgent help.
He said: “After two years of hardship experienced by the restaurants, clubs, hotels, wholesale, vehicle rentals and retail, they may be hard pressed to recover during this year’s short season to ensure that they can get through this fall and winter.”
Mr Jensen added: “The first thought among businesses is to have no new taxes so that the economy can stage a recovery and thrive again and the second thought is for government expenditure to be contained, if not reduced.
“An important revenue source for government is customs duties and that revenue will likely increase during the year as businesses invest in importing products with increased prices, while dealing with shipping and supply chain challenges – assuming businesses have the confidence to import similar or greater quantities compared with last year.”
Mr Jensen said: “Unfortunately, we see that increasing taxes on businesses will negatively impact the drivers of the economy and push inflation even higher.
“For example, if the tax on foreign exchange transactions increases, that in time would add to and be embedded in the island’s inflation rate.”
The government is worthy of praise for the excellent handling of the Covid-19 pandemic – these are indeed difficult financial times for many nations around the world. It is clear however, that many more challenges lie ahead locally and worldwide.
Subsequent sound and balanced, fiscal, and humanitarian decisions must consider the wellbeing of current and future generations.
In a recent survey of 389 of our members, comprised of persons aged 50 and older, more than 75 per cent of respondents indicated that they are extremely concerned about Bermuda’s Budget this year.
More alarmingly, more than 50 per cent of respondents, rated a score of “10”, representing the highest level of concern.
In the same survey, the top three areas of concern regarding the upcoming budget were as follows: the cost of living, 90.2 per cent, healthcare, 79.9 per cent, and pensions, 65.8 per cent.
Other repeated and notable areas of concern included: the size and sustainability of the national debt, increased taxation, safety and security of older adults and the qualifications and integrity of Members of Parliament to carry out their responsibilities.
There remains an expectation that the current Government will deliver on its promises to address the cost of living, food, and housing in particular and to implement national health and ageing plans.
Unfortunately, however the country has yet to see tangible results in either of these areas.
As concerned citizens the seriousness of the financial situation ahead is most daunting. These concerns will intensify with the backdrop of the threat of a world war.
As advocates of older adults, we reinforce the voice and concerns of our members. The resignation of the finance minister is deeply worrying to a wide variety of Bermudians, including older adults.
As a result, all eyes and ears will be on Friday’s Budget.
We wait with hopeful anticipation that our fears are unfounded and that the budget will reflect meaningful prioritisation in addressing these critical issues.
Questions about some elements of the government’s Economic Recovery Plan are still unanswered, such as a promise to increase the stocks of affordable housing.
Government support for the $200 million Fairmont Southampton hotel redevelopment is likely to feature in the statement.
It is understood that disagreement with Mr Burt about how to deal with the stalled redevelopment was the key reason for Mr Dickinson’s resignation.
Mr Burt said after he took over the finance portfolio: “This will be an extremely difficult Budget as we strike the balance required to stabilise public finances, promote economic growth, deliver on our election promises, and provide relief and services for the people of this country.”
A pre-Budget report promised for January did not materialise.
Mr Dickinson warned before he quit his post that, although revenues for the 2021-22 financial year would be $8 million higher than predicted, expenditure would be $56.9 million greater than anticipated.
Kelly Hunt, the executive director of the Coalition for the Protection of Children, appealed for a focus on the young in the wake of the Covid-19 crisis.
She said: “If we do not place an emphasis on the impact that Covid-19 has had on our children, we will be dealing with serious social implications for generations to come.
“Prioritising allocations for education and child safeguarding are going to be imperative. Educational assessments, additional support in the classroom, technological advancements, and an improvement in behavioural support systems will help to bridge the rapidly growing gaps.”
Ms Hunt added: “A child-friendly justice system that includes litigation guardians also calls for funding.
“In terms of a ‘wish list’ for this year’s budget, the implementation of a Child Rights Commission focusing on internationally recognised standards of care would be significantly beneficial, not only to all children living in Bermuda, but for our social fabric as a whole.”
Sandy De Silva, the executive director of Family Centre, said: “We are also working with the Bermuda Gaming Commission to update the Lotteries Act to modernise the legislation with regards to raffles, a major source of revenue for many registered charities in Bermuda.
“Additionally, with lotteries looking to be launched in the near future, the non-profit division is eager to work with the BGC on how non-profits can apply to be recipients of lottery profits.”