Calling people in IB whiners is not likely to be a great source of growth.

Sadly things are looking less and less positive for our future with each passing day.  I had faith that this time would be different but that faith is fading quickly.  We desperately need growth alongside realistic cost cutting.  We certainly aren’t cutting costs and we’re shooting ourselves in the foot when it comes to growth.  I have no idea how referring to international business as whiners is encouraging for growth.  It is frightening how most people don’t recognize how truly fragile our position is right now.  These are exactly the kinds of statements we don’t need.

In today’s Royal Gazette (emphasis added)

Walton Brown, Minister for Home Affairs, said the international business community was “one of the impediments” to a fair tax system in Bermuda.

 

He added: “There are elements in international business who just whine when you talk about a fair taxation system. Our system means that the wealthier segments get a tax break.

The sad truth is that we need more immigration, a lot more.

The sad truth is that though we may certainly feel like the island is over-populated, we have burdened ourselves so heavily that we need more people, not less.  We either need to massively increase immigration to the island or face the reality that health care will get incredibly more expensive to maintain and the government pension fund will dry up.

Many people really don’t understand the crisis we’re facing regarding population and demographics.  Above is a chart built from the Bermuda’s Population Projections 2010-2020 report provided by the statistics department in 2014.

The key takeaway?  That red line representing people aged 65+ is growing substantially while the grey line representing young healthy workers is declining.

This is incredibly important because our health insurance costs have for years been buoyed by young healthy expats who largely paid far more into insurance than they withdrew which helped drive down premiums.  This is especially important when consider the Standard Health Premium which drives the base of private and government insurance rates.

Also important is the consideration of the Bermuda Government’s Contributory Pension Fund.  The more aging seniors we have, the greater the burden on  a scheme that as of 2014 only had 43% of the funding required to pay out pensions and contributions not increasing this number.  With a lower ratio of workers to pensioners, this will get worse until there are no more pensions.

These are incredibly important points that many people don’t understand when they buy into populist notions that we are “over-populated” and we need to restrict immigration.  This is the exact opposite thing we truly need to be doing or we need to be prepared to face the reality that life in Bermuda will get quite a bit more expensive from here on in.

The first 90 days: according to plan or a plan forgotten?

Have the first 90 days of the new PLP government shown that they have a plan and are credibly executing on it or has it seemed like the plan is forgotten?  Premier Burt has been busy on US and European tours promoting Bermuda.  Meanwhile at home, each minister seems to have different priorities, rushing to make progress and implement change.  In the midst of this, the PLP’s original 100 day pledges seem to have been forgotten.  Is there a steady hand guiding the direction of the Bermuda government or is it a free for all where everyone does their own thing?  If there is no plan or the plan is ignored, what does that mean for our future?

Premier Burt has been busy selling Bermuda externally and ensuring we’re on the right page for important issues such as our OECD rating and have a voice in Brexit.  This is absolutely applauded as we need to ensure we send the right message to our international community.  He has also been busy promoting Bermuda to potential investors in hopes that we can reignite real growth in our economy.

In Bermuda ministers have been racing in the first 90 days to deliver changes.  While some have certainly been welcome, the pace of it has at times seemed rushed and not well thought through.  Each minister seems eager to deliver but the direction seems lacking in guidance and structure indicative of an overall plan.  As a result we’ve witnessed a series of gaffs that risk damaging the island’s reputation and sending the opposite message than what the Premier has been trying to send with his tours.

For example, there have been a number of concerning developments thus far:

  • The prospect of independence being raised at an inopportune time may have cooled investor enthusiasm.
  • Recipients of financial assistance being attacked as having a “culture of entitlement”
  • Bermuda is more than golf, rugby and sailing” which seemed to discount the valuable contributions these activities make and the rumor that America’s Cup was referred to as a “Mickey Mouse Event” on the Sherri J show by Tourism Minister Jamahl Simmons just as the prospect of hosting future similar events is bubbling.
  • The seemingly endless stream of “unfilled budgeted positions” now being filled without clear evidence of how they’ll be paid for and how we’ll possibly balance the budget with an expanded civil service.
  • The rushed tabling of the immigration reform bill which looks to basically remove consideration of any non-constitutional human rights protections on immigration issues.  This certainly doesn’t look good from the outside looking in.

So it can’t be said that nothing is happening, but what of the PLP’s plan for the first 100 days?  Has it been forgotten?  Thus far only 4 of the 21 pledges of the PLP’s first 100 days have been completed with only 10 days remaining.

Some of these likely just need a communications update so it is rather surprising that they’ve seemingly been forgotten about.  Others have shown progress and likely are on track but communication on progress is lacking.  Others still, such as the good governance pledges, have been concerning in their mysterious absence from being mentioned since the election.  The PLP made a plan to complete these pledges in the first 100 days.  Having completed so few and paid so little attention to it in the first 90 days is discouraging and not exactly a great omen for our future.

This leads to one of the biggest concerns raised pre-election about the prospect of what each possible government could yield:

Protectionist populist notions seem to drive the PLP’s agenda which can be good for short term political gain but disastrous for long term growth.  To their credit, the PLP have quite a few ideas in their Vision 2025 but they are short on details and feasibility when implementation is the hard part. To lead effectively, you have to do more than come up with the idea. You have to execute on it.  Execution of ideas is where the PLP struggles.

The lack of progress on the PLP’s 100 day pledges in the PLP’s first 90 days is a tremendous concern for what it says about the next few years.  Execution of ideas is essential.  Having well thought out plans to do so is essential.  Following those plans and communicating progress at every step of the way is essential.  Having everyone coordinated and working from the same page of the plan is essential.  We haven’t seen evidence that this is happening.  Premier Burt is admirably selling Bermuda off island as a modern, progressive, world leading place to do business while at home we’re sending out messages that counteract his efforts.  It leaves one to wonder where is the steady hand guiding the direction of the Bermuda government to ensure we have a plan and execute effectively on it?

The massive risk of jumping straight to tabling the immigration bill

In absence of the availability of the actual proposed “Bermuda Immigration [No. 2] Act 2017” one can only speculate as to what is being proposed. We’ll have to wait until it is publicly available to make a more concrete judgement.

However, the optics are plain terrible. Why rush straight to proposing a bill with no prior warning, announcement or “bi-partisan immigration reform” consultation?

Let’s be honest. The PLP have a mandate to fix the loophole regarding discrimination based upon place of origin. That’s wholly understandable and it isn’t a surprise if their aim is to fix it. The problem is if we mess up the approach such that we send a message that we’re promoting discrimination against non-Bermudians. This would be a massive misstep and could be terribly damaging.

Why in the world is this going straight to a bill? Why the rush? There are many 100 day pledges unfulfilled, this wasn’t specifically listed as one nor listed as part of the platform. Why do we urgently need to table a bill on this?

The risk here is massive and I don’t think that should be understated. It doesn’t matter what the underlying intentions are, the problem is that if you don’t manage perceptions it can blow up in your face. This was the OBA’s biggest failing and frankly, the PLP have shown a few times now that they didn’t learn from the OBA’s mistakes.

By contrast – take a moment to review how Col. Burch outlines the mail processing facility situation. The way he’s outlined the problems, how we got here, the options and the reason why an urgent solution was chosen is impressive. That’s an example of how an urgent situation should be handled, and minus a urgent solution, it’s also an example of how non-urgent situation should be handled.  Why risk controversy unnecessarily when we’re already in such a fragile position as an island?

Opportunities for Bermudians to replace non-Bermudians

These sorts of comments are interesting:

“With jobs for non-Bermudians continuing to grow while Bermudian jobs are lost in the tourism industry, it is clear that a new approach is needed to ensure that Bermudians come first in jobs and opportunities in our own country,” the Minister continued.

“The Government, working in tandem with the Department of Immigration, the Department of Workforce Development and stakeholders, will conduct an industry-wide skills and needs assessment of the tourism industry to identify areas where unemployed or underemployed Bermudians can be trained to fill or be promoted into jobs currently held by non-Bermudians.

“For Bermuda to realize its fullest potential we must have a well-trained, highly-qualified Bermudian work force where the only limit to growth and advancement is the ones that individuals put on themselves. To achieve this goal, we must ensure full alignment between the worker skill sets, industry demands, and the education and training being offered. (emphasis added)

Sometimes these things are made out to be big projects when really they can take just a few minutes of data analysis.

For example.  If we look at the Employment Surveys over the last few years, “Service Workers, Shop and Market Sales Workers” category is most fitting of the majority of “tourism” jobs.  We can look at the numbers filled by non-Bermudians to determine where there is demand that we could be providing improved training.

Here are the top 10 jobs filled by non-Bermudians in the category.  Note that the largest categories saw massive declines in the recession and are only starting to recover.

Looking at these numbers, the biggest areas of growth are inside kitchens in the form of chefs, cooks and kitchen assistants as part of wait staff and as cleaners/nannies.

Blaming the OBA won’t balance the budget

The PLP are hiring for a raft of new positions, announcing spending initiatives and solving pressing issues by increasing spending. They say they are spending money that was already budgeted for and are blaming the OBA for un-budgeted spending. This is all fine and nice if you ignore the bottom line. Will we see a reduction in the deficit this year and a balanced budget next year as promised?

In opposition, the PLP liked to highlight the growth in the debt under the OBA.

PLP: ‘OBA Doubled Debt, Lost 2,000 Jobs’

This was politically convenient as it ignored the rather sizable deficit the PLP left behind from their last time in government.  It ignored how impossible it is to prevent the debt from increasing when you have a considerable deficit.  It ignored that in order to quickly reverse the trend, massive cuts would have had to have been made.  The PLP held the OBA to account for all increases in debt regardless of the cause and this could come back to haunt them.  Not only do we have more interest payments to make but if we can’t manage to balance the budget, the problem will only get worse.

The PLP blamed the OBA for our increases in debt.  The PLP are blaming the OBA for un-budgeted expenses.  However using this to excuse budget overruns and an inability to reduce the deficit may seem convenient, but it won’t change the bottom line.  The OBA didn’t win 2/3rds of parliament and they aren’t the ones now holding the purse strings.  The OBA aren’t the ones in the position of having to make the hard decisions of where not to spend money in order to reduce the fiscal burden  The OBA also didn’t convince the population that any increases in debt are unacceptable.  Blaming the OBA is all fine and good, but it won’t balance the budget.

Political communications in the pull-refresh era

One of the big criticisms of the OBA’s period of governance was poor communications. They simply failed to keep the people informed of what they were planning and what they were doing. Two months into the new PLP government and people are starting to make the same complaints. The problem likely is that the internet has vastly changed the people’s expectations for levels of communication and governments haven’t yet managed to adjust.

The always enjoyable to watch local video commentators “It’s That Type of Party” laid out pretty well what the problem is.  A lack of trust and transparency.

“The government needs to treat Bermuda like an emotionally damaged girlfriend or boyfriend. We need to be reassured that in choosing you, our needs will be met. We need to be updated with what is going on. We need progress reports. We need a call at 3 O’Clock in the morning to know ‘hey this is what I’m doing, I’m just letting you know whats going on'”

 

“We need to know whats going on because if we’re left in the dark we’re going to be like, ok, umm… what’s going on, I don’t hear anything. I put my trust in you but I don’t see where my trust is going. Whether or not my trust is being put right. Whether or not I made the right decision in voting for you. Whether or not you are going through with the policies that you are trying to put forward. We don’t know what you’re doing.”

 

In the new age of the internet where much of the world is at your fingertips and new information is a google search or a pull-refresh update away, the people are restless. We have seen years of governments who haven’t delivered.  We simply don’t trust our politicians to deliver anymore.  The government needs to take a modern approach that makes progress a living thing that is regularly updated and the people are kept informed.

It is incredibly difficult to stay on top of what the government is doing.  The OBA loved press conferences.  It seemed like everything was a video press conference with a long winded statement.  It is simply too much.  One shouldn’t have to sift through endless video or text to figure out the status of initiative.  It should be clear and concise.  We need simple transparency with clear references of what the status of each initiative is.

What does that mean?  The government needs to create pages like this that clearly illustrate the status of every initiative undertaken pledged by the party as well as initiatives by government departments.  We need to know and be reassured that the our government is focused and delivering on what they set out to achieve.  Simple bullet point lists and summaries are enough.  Easy to access pages that can readily be referenced and referred to but link to further information.  Something like this:

So, in absence of the PLP and the government creating such pages, there is a new link in the menu of this site that links to a page dedicated to the PLP’s 100 days plan.

The aim is to track the progress and status on each initiative so we can ensure that the government is delivering on their all of their pledges in time for the celebration of their first 100 days in office.

 

The problem with Casinogate

In Bob Richard’s last public interview he suggested that the public doesn’t know the full story behind the Jetgate scandal.

Mr Cannonier sensationally resigned in May 2014, to be replaced by Michael Dunkley, after being involved in the Jetgate controversy along with Cabinet colleagues Mark Pettingill and Shawn Crockwell.

 

Mr Richards would not divulge the full story behind the scandal, but told The Royal Gazette: “The public doesn’t know what happened. Craig was made to be the fall guy.”

This is a problem for the OBA that they simply just don’t get.  They don’t have the trust of the public.  They gain nothing trying to point fingers at the PLP for Casinogate while they have no actual evidence of any wrongdoing. If anything, it damages their cause.

The optics of trying to make a huge deal out of “Casinogate” are at the moment terrible and unlikely winning them any support.  Was there a trip?  It certainly looks like there wasn’t. Was one planned? Possibly. Is there any evidence that money or bribes were taken in exchange for future concessions?  At the moment, no.  Is there any evidence of any unsavory actions?  At the moment, no.  There is seemingly no evidence that it was anything more than a trip.  Is there more to it, there sure could be, but at the moment there is no evidence.

Many OBA supporters are up in arms suggesting the OBA should attack the PLP with the same fervor as the PLP attacked the OBA with regards to Jetgate.  The problem with that reasoning is that when the former Deputy Premier and Finance Minister comes out and says that there was more to their own scandal that hasn’t been revealed then it leaves people with a bad taste in their mouth.  The OBA needs to clean out their own skeletons before focusing on the PLP’s.

Let’s talk about the state of the economy

The economy is not as good as some would have you believe.

The OBA’s “recovery” was largely stimulus driven. In layman’s terms this means it was mostly temporary.  Growth was driven by the projects like the America’s Cup, hotel construction, the airport and other temporary projects.  This means that as America’s Cup ended, so did the stimulus it brought.  The airport and hotel projects are helping keep things going, but we haven’t seen a real recovery in terms of job growth in industries that drive the foreign income we are desperately reliant on.

Seriously, let’s look at the state of job creation over the last few years.

Let’s filter this down to the core areas that have shown growth over the last couple years:

The only industries that supply much needed foreign income and economic growth locally are under represented.  International business has barely seen a bump, same with financial intermediation.  Business services is the only area that has seen reasonable growth.  The rest of the areas showing growth are local services like restaurants that could suffer as the temporary stimulus eases off.  Other sectors are flat-lining or in decline.

The problem we face is that we haven’t seen real growth.  The America’s Cup brought a whole bunch of long term tourists to the island who have now left, taking their on island spending with them.  Hotel projects provide a temporary boost to construction but likely won’t result in tremendous amounts of jobs.  The airport project will help, however the fate of it is uncertain.  We’re still waiting to see the full details of the deal released so we can find out truly how bad of a deal it was and what will be done about it.

We’re not in a good position right now.  There’s lots of talk of creating new industries, diversification and creating tech hubs.  This is great in theory, however we’re competing with the rest of the world on these things.  Trust me, competing on global scale is incredibly difficult, especially when your competitors have far better resources and a much larger market than you do. Nearly every place on the planet is trying to create tech hubs.  So how can we possibly be competitive as an extremely high cost destination that is a difficult and painful place to do business?  That needs to change and unfortunately change is incredibly difficult.  In order to be successful we need all hands on deck, the entire island united behind making ourselves competitive to attract new industries and create new jobs.

This is why distracting ourselves with independence or trying to force through discrimination against gay marriage are so risky and get people worked up.  Right now it is the absolute worst thing we can do as we are in such a fragile state we need to be incredibly focused on the task at hand.  Any risk of disrupting business confidence in the stability of our island can have devastating impacts on our ability to grow and could put us into further decline.  No business will want to come here to help us diversify if they have doubts about our stability.  Worse, we’ll continue to be divided as an island fighting against each other rather than united in progressing ourselves back towards prosperity. Thus it is incredibly important that our new government takes swift action to immediately put to rest any concerns that arise like independence and resolve issues like gay marriage in an amicable fashion.  Our economy is simply too fragile.  It is likely quite a bit worse off than you’ve been led to believe and we need to do everything we can to avoid the risk of making it a lot worse.

Quick thoughts on the Bernews interview with the Premier

Interesting interview with the Premier. Very articulate and composed responses to good interviewing. It seemed like he avoided providing personal opinions in most cases and deferred decisions to the appropriate committees and bodies that will be setup. I look positively on this as it suggests his intent to lead by enabling decision making rather than dictating specific decisions.

Good that he pledges to stick to the OBA’s budget. Also good that he suggests any unbudgeted spending will need approval and will be publicized. Interesting that he avoids admitting what areas will see cuts. Encouraging remarks regarding commitments to balancing the budget.

I think growth will be alot harder of a task than is being suggested. As Jeremy Deacon suggests, there will likely be a time lag and no clear answer was given of how it will be achieved within the timeframe, only that they will live up to their commitment to balance the budget without details on how.

Encouraging answer on independence. Wish he’d come out immediately after Senator Hayward’s speech and said exactly that.

I tend to agree that the OBA did not take a position on same sex marriage. They abstained from challenging the rulings but did not take a firm position.

Very interesting remarks regarding the company formed with ties to AECON, will be interested in hearing more as it becomes available.

It will be very important that the government is transparent as possible when it comes to any contract reviews and changes.

Great question with regards to the definition of a living wage. Can’t say I’m surprised with the response as I don’t think it has really been defined and the Premier is best avoiding the definition and letting their committee determine the most feasible solution given our circumstances. Such as what Craig Simmons had to say regarding it.  I would rather see us take a pragmatic approach than force through an unrealistic one.

Unfortunately much of the commentary in the Bernews live feed was disappointing in that they attacked the interviewer vs. evaluated what was being said and the responses provided.