We could be doing more to support our own channels and ensure tourist dollars stay in Bermuda but I fear we put too much priority on growth.
I suspect AirBnb Experiences will be great for a small operator who runs tours part time but for those trying to make a full time business out of it will be another pay to play channel expecting preferential treatment at a hefty premium.]]>
The 2014 review of the Contributory Pension Fund predicted that in a best case scenario, the money would run out in 2049. As a stark example, this suggests that those born in 1984 who would turn 65 in 2049 would effectively spend their entire working lives contributing to a pension system from which they would not draw a penny. This is wholly concerning in that as our population ages and our elderly live longer, it places significant burdens on our younger working population to sustain a scheme that will be of no benefit to them.
It is worthwhile to understand that this is in relation to the social insurance fees taken off your paycheck each week of $34.47 each from you and your employer. This does not mean your private pension which accounts for 5% of your paycheck matched with an additional 5% from your employer. Your private pension is dependent on the management arrangements and directions you make with your pension provider.
Some changes have been made to increase contributions however at the same time, increases in pension payouts have also been made. Both the OBA and the PLP increased contributions and payouts in the last couple years.
In order to make it more sustainable in the long run we will need to make hard choices of cutting back on pension payments, increasing the amount workers need to contribute, increasing the retirement age and finally, increasing our resident population. None of which are very palatable for many Bermudians. Whether any of these changes will make the pension system ultimately sustainable for future generations is uncertain. The sad reality is that Bermuda’s population is aging and as a result of our elders living far longer than expected when this pension scheme was originally devised means that it is very likely that eventually it will run out of money without drastic measures taking place.]]>
Seeing as I haven’t posted recently I thought it best to post my responses.
– – –
One operator questioned the fact that in lean economic times, the former administration came up with millions out of the public purse for a boat race – the America’s Cup.
This is coming up now, 11 months into a PLP government, as justification for why the government should throw money at the transportation system or risk a strike. This is a sentiment that came up regularly that many PLP supporters latched on to. That the OBA spent money on the America’s Cup when they should have been spending that money on schools and buses.
It was a big theme used to fuel the belief that the OBA had money to fix the buses but spent it instead on a boat race for the rich. The trouble though is that now that the PLP is in government, this rhetoric may be coming home to roost.
It is not all surprising that there is now a misconception that there is money to be found to fix the buses and that the PLP should come up with it. The trouble is, the America’s Cup spending was on economic stimulus that drove investment and spending on the island and created at least temporary jobs. Buying a new fleet of buses will hit government’s bottom line hard but will do very little to boost the economy.
So, with the suggestion that the BIU has given a strike notice for June 29th, what will the government do? Hold firm, take the unpopular route of forcing some real changes to our transport system or cave and put us in the likely position of having to raise more debt just as interest rates are rising, the US fed is engaged in quantitative tapering and emerging market yields are rising.
This may be the haunting reality of encouraging people to believe that there was money to be found but it was spent on America’s Cup rather than the buses. Where will that money be found now?]]>
My understanding is that in 18+ years the bus drivers have yet to agree to and ratify any substantial changes to the bus schedules.
There have been numerous attempts over the years to restructure the schedules to reduce reliance on overtime, make routes more efficient and reduce wear on the buses.
In some cases, the union negotiators have agreed to the changes but when put to a vote among the bus drivers it has failed. It has been suggested that the requirement to put any schedule changes to a vote for approval for the drivers was part of the collective bargaining agreement of 98 or 99.
This would suggest that the bus drivers are a key roadblock to the very things that they’re complaining about but it would mean cutting back on overtime.
Perhaps I’m mistaken, but it’d be good to know the full story behind why it seems like we’ve had numerous announcements regarding a new schedule but one never seems to have appeared.]]>
I guess in the end, rushing to scrap term limits didn’t bring the desired results after all.
While I am a supporter of the government’s overall efforts to embrace fintech and drive innovation in the cryptocurrency and blockchain space, it is absolutely essential that we take steps to uphold our reputation in the financial industry.
The launching of a “pre-ICO” by a company founded and run by someone who sits on the blockchain and cryptocurrency task force before the new ICO law has passed and been made effective is exactly the kind of thing we don’t need.
How can we possibly tout ourselves as an upstanding, reputable jurisdiction looking to bring a prudent and respectable regulatory approach if the people tasked with guiding it forwards can’t wait a few weeks for the legislation to be in place?]]>
This is what I was asked
What jumped out at me personally was the disparity in annual personal income between white and black members of the public. Do you think this is part of the reason why the PLP’s emphasis on “two Bermuda’s” resonated with the public? What should government do to address this imbalance, and are they on the right track?
Below I have included a complete copy of my response.
Income inequality is a major factor in political movements all around the globe. Lower income people feel left behind and disadvantaged by globalisation and economic policy that rewards the rich. The PLP’s emphasis on “two Bermuda’s” certainly contributed to their electoral success as not enough was done by the OBA to bridge this divide. The same could be said of the previous PLP government as the reason for the OBAs meager victory in 2012. Bridging the divide is a generational issue that requires long term focus on measuring the right statistics and addressing the root causes.
It is rather obvious that we have a troubling divide of income inequality in Bermuda, especially between the races. We certainly didn’t need the census to tell us that. However, one of the challenges we face is thoroughly understanding and addressing the root causes of these divides. Too often we sensationalize misleading statistics without accepting that they tell an inaccurate and incomplete story.
The vast majority of our statistics and trends are published comparing black and white or Bermudian and non-Bermudian. Our reliance on a large expat workforce can distort these numbers and turn people against the very things that could help address the root causes of our problems. Unfortunately we rarely compare statistics and trends by race and status such as black Bermudian vs. white Bermudian. By not doing so we distort the picture of true income inequality which makes for an easy target for short term political gains but an impossible problem to solve in the long term.
For example, let’s consider the PLP’s recent announcement that cryptocurrency exchange Binance will create 40 jobs on island. It has been suggested that 30 of those jobs will be Bermudian so 10 of them will be non-Bermudian. The likelihood is that the majority of those 10 non-Bermudian jobs will be highly skilled, highly paid positions filled predominantly by white people. While Binance has made a very welcome pledge to invest in training and education, that will take time and the 20 Bermudian jobs are more likely to be support roles. While those support roles are likely to be more representative of our local demographics they are unlikely to be as well paid as the non-Bermudian jobs.
Now let’s consider the PLP has considerable success in attracting cryptocurrency and fintech businesses to the island and generates many, many jobs. In a few years time, when the next census comes out, what would we read? White incomes rose considerably while black incomes rose modestly. Would that be a fair analysis? Should the PLP in that case be blamed for not addressing income inequality and making whites richer? Personally I think that would be unreasonable.
The challenge we face is that we are reliant on foreign investment and skilled labour to create jobs on island. We could certainly insist that these new cryptocurrency and fintech businesses recruit non-Bermudian staff that match our own demographics, however that would act as a deterrent to those businesses creating jobs here. We desperately need growth and new jobs.
So, solely comparing black and white is a poor means to measure our racial income inequality problem when we rely on foreign investment and workers who distort those numbers. Instead we need to focus on measuring the Bermudian racial inequality problem so we can identify whether or not we’re achieving our aim of reducing racial income inequality. Very thankfully, the 2016 census contains a breakdown of income by race and by status. What this means is that by the time the next census is complete, our benchmark for success should be whether the income gap between black Bermudians, mixed/other Bermudians and white Bermudians has narrowed or has widened.
Narrowing the racial income inequality gap among Bermudians needs to be the target of any Bermudian government. Focusing solely black and white numbers is great for political rallying but poor for driving long term results. We cannot solve global inequality but we can most certainly do more to solve Bermudian inequality. As such, I am very encouraged and hopeful that the pledges to incorporate funding and support for educating Bermudians on this proposed new fintech industry will do more to provide opportunity for all Bermudians and help narrow the gap.]]>
Honestly, I’m very wary of what I know of Binance. They’ve basically risen to prominence by taking a wild west approach to avoiding regulations. It raises red flags when articles in Bloomberg include quotes like this:
“Binance lacks regulation and transparency,’’ said David Shin, president of the Singapore-based Asia Fintech Society. “It’s like a van stopped in front of an office building selling coffee while the legit coffee shops on the street suffer.’’
However, as I’ve long suggested, Bermuda’s greatest opportunity is providing a stable reputable and streamlined regulatory environment for new industries to flourish. It isn’t Bermuda’s place to judge whether crypto, blockchain and DLT tech is the future, it is Bermuda’s place to align itself to provide the right regulatory environment that legitimizes it in a way that is compliant with existing financial regulatory standards.
We could certainly take the approach of avoiding all risk and watching as our island stagnates as we keep trying to kick the can down the road. Or, we could embrace the opportunity and stand firm on remaining a top tier reputable jurisdiction knowing that there are companies out there very keen to find such a place to do business. In that regard, I’m about half way through the consultation document the BMA has produced and so far I wholesale and very impressed with what I’m reading.
One can only wonder though, if the photo above represents how pleased the Binance representatives are in finding out that we’re very set on remaining a reputable jurisdiction. We’re certainly not Malta in that regards.]]>