February 17, 2023

There are none.

ANNOUNCEMENTS BY THE SPEAKER

MOMENT OF SILENCE
[In memory of Mr. Arthur Hodgson , former MP]

The Spe aker: Yes, this morning, Members, I would
first like to start with our rising to our feet again and having a moment of silence for one of our former
Members of this Chamber, the Honourable Arthur
Hodgson.
So, join me as we stand for a moment of s ilence.

[Members rose and observed a moment of silence.]

[Announcements by the Speaker, continuing]

Members , I also would like to read a
brief statement this morning, and it reads as follows: I
wish to remind Honourable Members to exercise r estraint when speaking during debate and to be as statesmanlike as possible. While we do get very passionate and worked up at times, I wish to remind all
Honourable Members of Standing Order 19(11), in
particular using “offensive and insulting . . . language”
which can “bring the House into disrepute.”
I would also like to remind Members that, al though the matter relating to conflict of interest is not specifically ad dressed in our Standing Orders, Standing Order 50 speaks to “rules in cases not provided
for.”
I wish to draw your attention to Erskine May’s
[Parliamentary Practice] , which states that a Member
is required to declare “any relevant pecuniary interest
or benefit of whatever nature, whether direct or indirect, that he may have had, may have or may be expecting to have. ”
Declare your interests, please, Members.
That is it for Announcements by the Speaker.

MESSAGES FROM THE SENATE

Good morning.

2022 NATIONAL ECONOMIC REPORT
OF BERMUDA

FINANC IAL STATEMENTS OF THE
CONSOLIDATED FUND FOR THE
YEAR ENDED 31 MARCH 2022
Hon. E. David Burt: Mr. Speaker, I have the honour
to attach and submit for the information of the Honourable House of Assembly the 2022 National Ec onomic Report and the Financial St atements of the
Consolidated Fund ending March 31, 2022.

Mr. Speaker, I move for leave to
introduce the following petition: the petition of BDA Frontline seeking enactment of wider statutory powers
to be able to raise money , in particular by carrying o n
a business , and to have the ability to own more land,
as more specifically set out in the Bill entitled BDA
Frontline Amendment Act 2023, which accompanies
the petition.
I ask that the said petition be referred to the
Joint Select Committee on Private Bills for consider ation and report.

Sure.
Hon. E. David Burt: Prior to the introduction of my
remarks , I certainly want to thank the dedicated public
officers in the Ministry of Finance led by the Acting
Financial Secretary, Ms. Cheryl -Ann Lister; the Budget Director, Ms. Tina Tucker; MP Jache Adams; Junior
Minister of Finance, Senator Arianna Hodgson; and all
of the teams that have worked tirelessly over the past
month to put together budgets —ministers, permanent
secretaries , controllers in various ministries.
And we are pleased today that we are able to
present it complete with books and everything on
time.

I am sure there have been a lot of long
nights and a lot of candle oil burnt long to produce
what is here today. And I have said earlier, the country is anticipating, and we look forward to hearing it
ourselves this morning.
Sergeant , if you can get a copy up to the O ppositi on Leader, we can possibly get it rolling if we can
get some of this done.

[Pause]

Hon. E. David Burt: All right. There you are, Cole.
You have got yours.


Bermuda House of Assembly The Speaker: Fine.
Sergeant .

[Pause]

Mr. Premier.
Hon. E. David Burt: All right, Mr. Speaker.

BUDGET STATEMENT
IN SUPPORT OF THE ESTIMATES OF
REVENUE AND EXPENDITURE
2023/2024

INTRODUCTIO N
Hon. E. David Burt: Mr. Speaker, Bermuda stands at
more than the dawn of a new fiscal year. No society has been immune to the socioeconomic impacts of
the pandemic, foreign wars, inflation and disruptions in supply chains. These are the realities of life today,
and culturally, though we may have shed ourselves of our masks, the freedom of that change and the return to normality that it should have represented has been
short -lived. Our growth aspirations and the promise of
renewal have been somewhat fr ustrated by these li ngering trials, but even in the midst of such unprec edented challenges, Bermuda —the jewel of the Atla ntic—has demonstrated a determination to defy the
odds.
Mr. Speaker, am ongst the very real hardships
that our people are experiencing there is cause for
hope. This Budget will use the mechanism of public
financing to harness that hope by investing in people,
advancing critical infrastructure projects and continuing the work of change demanded of this Government
by our successive histori c election victories. Mr. Speaker, the Bermuda Progressive L abour Party Government has always been about the
politics of hope. It is a mantra set out by the first PLP Premier, Dame Jennifer Smith, and has been the guide for all those who would offer them selves for
public service under our banner. In a 1997 speech to the then International Companies Division of the Bermuda Chamber of Commerce, Dame Jennifer said
this: “A Progressive Labour Party Government will
create a Bermuda in which the Government will not
only serve the people, but we will rekindle hope —heal
its present divisions —and replace apathy and alienation with vigour and a feeling of oneness and unity.
We will work steadfastly to create a Bermuda in which
one can grow [ up] healthy —enjoy old age —and live to
see children and children’s children do better than they did. We will work for justice in the workplace. We will work for a more peaceful and peaceable comm unity, so we can once again feel safe on our streets
and in our homes.” [UNVERIFIED QUO TE]
Mr. Speaker, that call to action, that vision
applies equally today as it did 26 years ago when
Dame Jennifer said it. This 2023/24 Budget addresses
the complexities of the 21
st century’s changed demands while staying true to the core ideals that the
people of Bermuda have endorsed in five of the past six general elections .

GLOBAL ECONOMIC REVIEW

Hon. E. David Burt: Mr. Speaker, the year 2022 was
one of many challenges. Geopolitical conflict, inflation,
a food supply crisis, supply chain bottlenecks and the
lingering effects of the COVID -19 pandemic have
caused shockwaves across the global community .
Mr. Speaker, the International Monetary Fund
estimates that the global economy will grow by 3.4 per
cent in 2022, slow to 2.9 per cent in 2023 and the n
rise to 3.1 per cent in 2024. Growth in advanced
economies is expected to decline sharply from 2.7 per
cent in 2022 to 1.2 per cent in 2023 before rising to
1.4 per cent in 2024. The United States’ growth is pr ojected to fall from 2.0 per cent last year to 1.4 per cent
this year and 1.0 per cent in 2024. On the other hand,
growth in emerging markets and developing economies is projected to rise modestly, from 3.9 per cent in
2022 to 4.0 per cent in 2023 and 4.2 per cent in 2024.
Global inflation is expect ed to fall from 8.8 per cent in
2022 to 6.6 per cent in 2023 and 4.3 per cent in 2024.
Mr. Speaker, in addition to projections of slo wing economic growth and lower inflation for 2023, it is generally expected that there will be higher global i nterest rat es and tightened monetary conditions. F avourable scenarios include a boost in spending from pent-up demand and faster disinflation. Overall, infl ation is expected to continue on a downward trend as
international fuel and non- fuel commodity prices decline d ue to weaker global demand. The tightening of
monetary policy is expected to continue putting
332 17 February 2023 Official Hansard Report

Bermuda House of Assembly downward pressure on core inflation. An easing in
advanced economies’ labour markets is expected to
moderate wage inflation. As consumer preferences
revert to ser vices, prices of goods are expected to fall.
Mr. Speaker, the pandemic has created an
environment of higher debt levels, lower growth and higher borrowing costs, placing many emerging and
developing economies at high risk of debt distress.
This exacerbates the vulnerability of these economies
as global interest rates continue to increase. Further, an escalation of geopolitical tensions could lead to disruptions in the global supply chain, resulting in upward pressures on the prices of goods such as energy
and food and the possibility of tighter monetary conditions. Navigating 2023 requires the prioritisation of actions to reduce inflation, contain the re- emergence
of COVID -19, ensure financial stability, restore debt
sustainability, address supply chain constraints and
strengthen multilateral communication.

LOCAL ECONOMY HIGHLIGHTS

Hon. E. David Burt: Mr. Speaker, I will now focus on
the domestic economy. Bermuda’s gross domestic
product [GDP ], the primary indicator for economic
growth, is estimated to have grown between 3.4 [per
cent] to 3.9 per cent in 2022. In 2022, Bermuda saw
signs of economic growth supported by a rebound in
quarterly GDP data in the first half of the year. Pos itive economic performance was fuelled by new inter-national business registrations, visitor spending, higher employment income, greater levels of household
consumption and increased construction activity, ind icating a continued trajectory of economic recovery.
(And, Mr. Speaker, I know there has been
some commentary about second quarter GDP growth.
The revisions will be issued by the Department of St atistics shortly. In the second quarter GDP growth, the
economy did in fact grow. That is the reason I am stating that in this Honourable House today.)
Mr. Speaker, Bermuda continues to see
growth in international business. In 2022, [there were]
812 new company incorporations and a 5.2 per cent
increase in jobs in international business with 230 new
jobs being filled. I am happy to report that for the sec-ond consecutive year the majority of the new posts in
international business were filled by Bermudians r ather than guest workers, proving that the balanced
policies of the Progressive Labour Party Government
create the catalyst for growth in international business
and ensure Bermudians benefit from that growth. This
sector now provides 4,642 jobs within our economy
and is the single largest economic activity group.
Mr. Speaker, with the continued easing of
border restrictions, the travel industry globally showed signs of a rebound in 2022. A nd Bermuda’s tourism
sector reflected that, as demonstrated by a significant
improvement in air visitor and cruise visitor spending.
There was an increase in employment levels by 6.3 per cent , bringing the total number of jobs in the
acco mmodation and food services sector back to
3,629.
Mr. Speaker, in 2022, there was a decline in
both building permits and planning applications. Ho wever, during the first three quarters the value of new projects started grew from $83.4 million in 2021 to
$100.6 million in 2022, an increase of 20.6 per cent .
This figure for the first three quarters of 2022 surpasses the last three years’ annual totals and is above
the pre- pandemic levels of 2019. This signifies a
strong recovery in the sector, which also sa w jobs i ncrease by 1.0 per cent [in 2022] .
Mr. Speaker, despite the increasing inflationary pressures experienced throughout 2022, Berm uda’s overall rate of inflation remains relatively low compared to advanced economies, as reflected in the Consumer Pri ce Index, which indicates an annual i nflation rate of 3.8 per cent for November 2022. The
overall rate notwithstanding, food price inflation is still
registering at 10.4 per cent . However, the current
trend of inflation indicates that it has peaked and is
beginning to abate.
Mr. Speaker, Bermuda’s balance of payments
continues to record relatively large current account surpluses, which are an important strength in the
Bermudian economy. Bermuda’s total current account
surplus over the first three quarters of 2022 was recorded at $926 million. This figure is 25.8 per cent
more than the $736 million recorded over the first
three quarters of 2021.
Sustainable economic growth cannot be
achieved without an expansion of jobs within our
economy and a reduction of unemployment levels. In
2022 the total number of jobs filled in Bermuda i ncreased by 402 posts , or 1.3 per cent . This rebound in
employment levels in the Bermudian economy com es
as a result of the robust growth in the international
business sector, our recovering tourism sector and the professional, scientific, and technical sector which
collectively represented 76.1 per cent of the total new
jobs filled in 2022. For the second consecutive year,
however, Mr. Speaker, the job positions in public administration have declined. The number of jobs filled
went from 4,008 in 2021 to 3,883 in 2022, recording a decrease of 125 jobs, or 3.1 per cent .
Mr. Speaker, strong growth was obser ved in
employment income for the first three quarters of 2022. It is estimated to have increased by 6.6 per
cent, or $180.6 million, when compared with the same
period in 2021. This increase was driven by the inter-national business sector, which saw an inc rease of
$94.3 million, or 8.9 per cent .
Despite the uptick in inflation, both personal
consumption and the retail sector showed signs of
growth in 2022. Household personal consumption for
the first three quarters was estimated to be $2.97 bi llion, refle cting an increase of 17.5 per cent , or $441.7
million , over 2021. Total gross turnover in the retail


Bermuda House of Assembly sector stood at $990.6 million, which represents a
3.1 per cent increase in the first 10 months when
compared against the previous year .
Mr. Speaker, the positive growth across many
major economic indicators signals a reversal of the
downward trends experienced during the midst of the
pandemic, with many indicators now nearing prepandemic levels. The growth of employment levels in
our key sectors is evidence of increas ed confidence in
our economy. Inflation is downward trending, and
tourism is on a trajectory to reach pre- pandemic levels. However, we face several external risks: higher
global interest rates, supply chain disruptions, geopolitical tensions and the impact of climate change and
its correlation with our insurance industry. We must therefore remain focused on creating sustainable
growth through economic diversification and the
strengthening of our core sectors such as international
business.

The Value of International Business to
the Local Economy

Hon. E. David Burt: Mr. Speaker, the international
business sector, in particular the insurance and rei nsurance industry, continues to be the bedrock of our
economy. In 2020, it showed its resilience by avoiding contraction, and then followed that in 2021 with its
fastest year of growth in 15 years.

Hon. Zane J. S. De Silva : Would you say that again?

Hon. E. David Burt: In 2021, international business
recorded its fastest year of growth in15 years! It
should be acknowledged that much of Bermuda’s
economic stability during the peak of the pandemic
and subsequent recovery, as evidenced by the consecutive quarters of GDP growth, is largely a result of
the contributions of our most significant economic pi llar.
Mr. Speaker, in 2021 the international bus iness sector contributed over $2 billion to the Island’s
economy, with the largest direct contribution being
$235 million in payroll tax. But the impact of the international business sector flows beyond pa yroll tax , as it
also spent more than $74 million on rent , $7 million on
local entertainment, and donated $14 million to char ities. It critically also provided educational scholarships
and internships to young Bermudians.
The international business sector is also a
significant contributor to job growth. Since 2019, Mr.
Speaker, jobs in international business have consis tently increased, with 591 additional jobs created in the
international business sector in the last three years, representing a growth rate—yes, yes, yes —

[Inaudible interjection]
Hon. E. David Burt: Mr. Speaker, this augurs well for
the future and continues to reinforce our place as a
leading international financial centre.

Credit Ratings

Hon. E. David Burt: Mr. Speaker, an important a spect of credit rating reviews is that they provide an
independent and non- political evaluation of Bermuda’s
ability and willingness to service its financial obligations —unbiased, as you would say, Mr. Speaker .
These ratings are viewed as global affirmati on of
where we are economically and a metric to sustain existing business and attract new business to the I sland.
Mr. Speaker, we were pleased to see that in
May 2022 the ratings report from S&P reaffirmed
Bermuda’s A -plus long-term sovereign credit rating
and senior unsecured debt ratings, as well as its A -1
short -term rating and its A-plus [transfer and] conver tibility assessment as stable. Within their report, S&P
highlighted that they expect Bermuda, over the next
several years, to continue to benefit from the growth in
the international financial sector and a pickup in tourism and that this growth will lead to reduced deficits
and less borrowing.
We were then further encouraged to see that
in June the report from Moody’s affirmed Bermuda’s
A2 issuer and senior unsecured bond ratings, along
with a stable outlook, once again indicating that Bermuda’s bonds are seen to be of good quality . The
stable outlook reflects Moody’s expectations that fiscal
consolidation efforts will stabilise debt around current
levels due to the rebound in tourism activity and
strong growth in the international business sector.
In October of 2022 KBRA’s [Kroll Bond Rating
Agency ] ratings report solidified the assessments of
S&P and Moody’s , as they affirmed Bermuda’s longterm credit rating with a stable outlook. KBRA stated
in their report that their decision was based on their
expectation that Bermuda will be largely resilient to
global corporate tax reform.
Mr. Speaker, these ratings are an objective
endorsement of the Government’s fiscal and economic policies, which are aimed at strengthening the
economy as the country rebounds from the COVID -19
pandemic.

OVER FIVE YEARS OF PROGRESS

Hon. E. David Burt: Mr. Speaker, this 2023/24 Budget is not made in a vacuum. There is a context and a
framing to the fiscal decisions made by this Gover nment. That context demands that we conduct a careful
examination of the past in order to better understand
this present and the future.
Mr. Speaker, it has been the greatest honour
of my p olitical life to serve as Bermuda’s Premier. It is
humbling to know that my constituents, the Progres334 17 February 2023 Official Hansard Report

Bermuda House of Assembly sive Labour Party and the people of Bermuda have
entrusted me with the often difficult task of leading this
Government. I do not take it lightly and commit myself
to giving my all every day in their service. The unique-ness of politics in Bermuda means that as the Oppos ition, or anyone who opposes this Government, you
can often choose your fiction, repeat that fiction, and
engage others to do the same in vari ous avenues,
and some people will even believe it. Such efforts are
enhanced by a willing media whose sensational and
often wrong headlines fuel innuendo and falsehoods that distort this Government’s record of success and
progress for the people.
Therefor e, Mr. Speaker, I will not rely on ot hers to tell the story. So in framing this Budget, I wish
to reaffirm the record of the Progressive Labour Party
in managing the fiscal debacles left by the One Bermuda Alliance. And I want to do that because that
context is critical to understanding just how significant
this Budget is to Bermuda and her people. So, Mr.
Speaker, I will use this speech as an opportunity to remind the people of this country of the progress
made on their behalf, despite the hand that we wer e
dealt in 2017 with the failed Morgan’s Point project
and an unwise airport privatisation that have jointly
cost taxpayers $250 million.

[Inaudible interjections and desk thumping]
Hon. E. David Burt: Over $250 million! I will use this
speech to remind the people of Bermuda of the pr ogress that has been made despite a once- in-a-century
pandemic. And, Mr. Speaker, I will use this speech to
make clear the difference in philosophy between this
PLP Governm ent and the Opposition.
Mr. Speaker, in July 2017, the people of Bermuda voted to change the direction of this country and
entrusted the Progressive Labour Party to bring about
that change. The people chose to put an end to one of
the most divisive periods in recent memory and elec ted this Government to build a better and fairer Bermuda. We are proud of what we have accomplished
thus far. However, we are equally aware that more can, should and must be done to ensure the dreams
and aspirations represented by that resounding win at
the polls in 2017, and to a greater extent in 2020, are
realised.
Mr. Speaker, in 2017, Bermudians wanted a
Government that was rooted in fairness for its people, a Government that would bring the change that Bermuda needed in a fair and non- divisive fashion so that
as a country we could all advance to our full potential.
Mr. Speaker, governing through these unpr edictable times has not been easy. And just as I can humbly admit that we have not got everything right, I
can assure the public that we have not lost sight of the mandate we were given over five years ago. Further,
we have made progress on the issues that matter to the people of Bermuda whom we all represent in this
Honourable House.
Mr. Speaker, Bermuda’s high cost of living
has been the primary issue of concern for voters well
before the recent price increases due to factors large-ly outside the control of the Government. The world is
experiencing the highest rate of inflation in 40 years,
and though our overall inflat ion [rate] may be less than
many other countries, we are already starting from a
higher base price, and therefore working people in this
country feel the impact just as much as the rest of the world. The people of Bermuda expect their Gover nment to act to provide relief for many hard- working
Bermudians and their families. Mr. Speaker, that is what we have done, and that is what we will continue
to do in this Budget.
Mr. Speaker, that is why we reduced payroll
tax for working families from its highest level in history in 2016 under the Opposition to the lowest level in
history under this Government. That is why in 2018
we reduced the duty on essential grocery items, and
in 2022 we eliminated duty on essential goods while working with importers and grocers t o ensure those
savings were passed down to the customers. That is
why we amended legislation to address banking fees
to help put an end to unjust banking practices. That is
why we provided direct financial support to parents of
public school students and delivered a payroll tax r ebate for workers earning $96,000 [or less]. We elim inated payroll taxes for disabled workers and eliminated land tax for registered charities and nursing
homes.
Mr. Speaker, that is why, while gas prices
were soaring throughout t he world, we acted to freeze
local fuel prices to protect families and businesses
against record oil prices. If we had not acted, families
would have paid $20 more each time they filled up their vehicles. Taxi, drivers, $35 more, Mr. Speaker.
And that is w hy this Government has also launched a
flagship Mortgage Guarantee Programme which will
reduce mortgage rates for hundreds of Bermuda’s
families.
Mr. Speaker, seniors may have seen many
decades come and go, but they have not forgotten
that when requesting a pension increase to maintain their standard of living, the former Government told
them that, and I quote, “Money doesn’t grow on trees.”
Our seniors can vividly remember being cast aside by
the OBA during their 55 months of governing. And that
is why i n 2017 our seniors voted for a Government
that understands the challenges they face and will
fight to ensure they can live out their golden years in
the comfort they so richly deserve.
Mr. Speaker, that is why this Government
continues to increase our seniors’ pensions at the rate
of inflation and amended legislation to provide better
standards of care in our care homes. That is why we expanded the personal home care benefit and intr oduced local radiation therapy coverage for FutureCare


Bermuda House of Assembly and HIP. That is w hy we increased the FutureCare
prescription drug benefit from $2,000 to $3,000 a year
and introduced interest -free loans of up to $15,000 for
families who need help modifying their homes. And that is why this Government also recently approved funding to increase the stock of affordable housing for
families generally and our seniors. And yes, Mr.
Speaker, we recognise that we must continue to do
more to help our seniors live in dignity.

[Desk thumping]

Hon. E. David Burt: Mr. Speaker, in 2017 our parent s
and students were discouraged by the state of the
country’s education system and the lack of opportuni-ties the former Government provided Bermudians to
enhance their skills and further their education. Let us
not forget that it was the former Government that rei ntroduced fees at the Bermuda College while cutting
scholarships and shortchanging our public education
system.
Mr. Speaker, this Government has been
committed to undoing the damage done by the Oppo-sition and restoring faith in our public educatio n system. That is why we installed high- speed internet and
Wi-Fi in all primary schools and middle schools and
supplied all primary and M1 students with Chrom ebooks. That is why we provided funding for new
mathematics programmes, resulting in significantly
improved outcomes for all of our primary schools .
That is why we advanced the most significant public education reform in a generation and have successfully launched signature schools this year. And that is why we ensured that every Bermudian who wants access to further education at Bermuda College can do
so. That is why we increased scholarship funding for
students attending overseas institutions and amended
legislation to allow Bermudian students with an ACCA
[Association of Chartered Certified Accountan ts] designation to be fully recognised as registered account-ants in Bermuda However, Mr. Speaker, we recognise
that more can be done, and this Budget will do more
for public education.
Mr. Speaker, in 2017 the call from our union
partners and other stakeholders was for their Gov-ernment to put forth policies to protect the workers of this country, as they are the driving force of our economy. That is why we provided hospital workers and
teachers with their first pay rise since 2011 and why we will implement a minimum wage for the first time in
this country’s history, ensuring that all receive a basic
level of pay for their work. That is why we have i mplemented the Youth Employment Strateg y to facil itate greater opportunities for young Bermudians. That
is why we introduced work permit moratoriums on 52
categories, the most in Bermuda’s history, and that is why we passed new labour legislation that strengt hened trade unions while also increasing [employee] protections against bullying and sexual harassment. Mr. Speaker, we recognise that still more can be
done, and the Budget presented today will do more to
support the advancement of workers’ rights in this
country.
Mr. Speaker, we have dec riminalised possession of up to seven grams of cannabis , and introduced
a tax on dividend payments for the first time in history.
We are the first Government to implement roadside
sobriety testing and the first to provide public notific ation when sex offenders are released from their prison sentence. Our record will show that we have awarded over $1 million in capital development grants to community clubs, breathing new life into these facilities
from the East End of the Island, Mr. Speaker, all the
way to your place, Somerset Cricket Club.
I could go on, Mr. Speaker, as we have made
great progress despite the challenges. But as I have said, we recognise that more must be done. And this
Budget presented by the Government today will do
more to advance the pro gress that voters expect from
their Government.
Mr. Speaker, the people of Bermuda still vivi dly remember the One Bermuda Alliance doubling our
national debt, having the largest deficits in Bermuda’s
history and being downgraded by independent rating
agencies. Bermudians are still feeling the effects of
their failed Morgan’s Point project, bad airport deal, and let us not forget, furlough days. In 2017 Bermudi-ans looked to the Bermuda Progressive Labour Party
to reduce our deficit, maintain our reputation as a
global financial centre, diversify our economy and encourage more economic parity.
Despite the bad hand we were dealt, and the
devastating blows caused by the pandemic, this Gov-ernment is proud to see the policies that we have put
in place since returning to office begin to bear fruit
with a growing economy, declining deficits, the
strongest growth in our international business sector
in 15 years and sustained stable outlooks from rating agencies. We are also pleased to see our net debt
position low er than forecast, and, Mr. Speaker, we are
still on track for a balanced budget in 2024/25. But
what is vital for this trajectory to continue is for this
Government to be laser -focused on creating the conditions for continued economic growth in Bermuda.
And that, Mr. Speaker, is the title of this Budget
Statement.

SUSTAINABLE ECONOMIC GROWTH IS THE
GOVERNMENT’S GOAL

Hon. E. David Burt: Mr. Speaker, our continued mi ssion and goal is to further advance the cause of bal-anced and sustainable economic growth f or the benefit of the people of Bermuda. Last year, Mr. Speaker, I
spoke of the need to focus on economic growth, and
that is what this Government has delivered over the past year. The economic growth we have seen this
year has been built on the economic growth we had
336 17 February 2023 Official Hansard Report

Bermuda House of Assembly last year. This means that we are successfully executing Bermuda’s Economic Recovery Plan [ERP], and in
line with that plan it is expected that Bermuda’s GDP
in 2022 will return to pre- pandemic levels.
Mr. Speaker, although that is good news , let
us be clear. This economic recovery is not touching all of our residents, and many feel that they are going
backwards. It makes no sense to speak about positive
economic statistics when people do not feel positive
about their economic situation. Econ omic growth does
not matter when any gains in wages are eaten up by
increasing food prices or increases in monthly mor tgage payments.
Mr. Speaker, Bermuda’s economic future is
bright. Having returned to where we were before the pandemic, we must now look forward to growing the
economy to ensure that it works for all Bermudians. We must move forward with optimism, knowing that
Bermuda has weathered the economic storm of the
pandemic, despite the challenges in our tourism sector due to the closure of our largest hotel. All facts and statistics indicate that our economy has continued to
grow.
And that, Mr. Speaker, that is what this Bud get is about —economic growth. It is about making sure
that we invest in our infrastructure, which is suffering
from years o f underinvestment. This budget is about
ensuring that the people of Bermuda can build on the
successes of the past, build on our successful navigation of the coronavirus pandemic, build on the successful execution of Bermuda’s Economic Recovery
Plan and build a secure future for all Bermudians.

Our Economic Recovery Plan is
Delivering for Bermuda’s Economy

Hon. E. David Burt: Mr. Speaker, the Economic R ecovery Plan is a key feature of the Government’s
comprehensive economic development strategy which
will be unveiled by the Honourable Member, the Mini ster of Economy and Labour, in the coming months.
The economic development st rategy will provide a
strategic framework that will guide Bermuda to sustainable economic growth and development. The ec onomic development strategy contains strategic prior ities and initiatives that will provide direction and drive the work plans of Bermuda’s economic development
organisations. It is important to note this, Mr. Speaker—that is, the economic development strategy is in
addition to the Economic Recovery Plan. It is just one part. In addition to the execution of the Economic R ecovery Plan, other strategic priorities include the r etention and expansion of local and international bus iness, increasing foreign direct investment, marketing Bermuda’s value proposition and business ecosy stem, developing local entrepreneurship, increasing the
working population, and workforce development.
Mr. Speaker, the Economic Recovery Plan
combines fiscal responsibility with a clear path to sus-tained economic growth, employment and greater
economic development. The plan was developed in
[2020] in response to the i mpact of the COVID -19
pandemic and has progressed to phase 3 of its i mplementation.
Mr. Speaker, it is worth noting that a dedicated Project Management Office was established last
year to ensure that the 31 priority initiatives under the
Economic Recover y Plan are implemented efficiently
and in a timely manner. The team have been instr umental in progressing these initiatives as they monitor, track, report and lend assistance where required.
Mr. Speaker, when discussing the Economic
Recovery Plan, it is also critical that we acknowledge
the plan’s benchmarks, which suggest that the successful implementation of the 31 priority initiatives
should deliver between 1.3 [per cent] and 1.5 per cent
growth per year above baseline economic growth from
2023, the ye ar that we are in, leading to an improv ement of Bermuda’s fiscal position.
Mr. Speaker, I am encouraged to see the
mentioned priority initiatives advancing well with
80 per cent on track and many already demonstrating
positive results —for example, the Ec onomic Inves tment Certificate, which to date has generated over $369 million through direct investment to Bermuda’s
economy, and the Work from Bermuda programme,
which has seen 1,139 applications approved. And as of November last year, Mr. Speaker, 259 Wor k from
Bermuda Certificate holders remain on the Island,
positively contributing to our economy.
[Desk thumping]
Hon. E. David Burt: Yes.
Mr. Speaker, almost nine years after the pr evious Administration passed the Gaming Act, Berm uda does not have a c asino. Amendments made since
that time have not been enough to address the obst acles that seem designed to prevent this industry from
taking hold in this jurisdiction. What is clear, Mr.
Speaker, is that having the integrated resort model as
the only avail able option for casino operation is a flaw
in the inherited regime. The law must be amended to permit [potential] casino operators to choose the model that best suits the intended venue for their c asino. Likewise, the law must be amended to permit the
Gami ng Commission the flexibility to consider and
grant licences on that basis.
To reinforce the regulatory responsibilities of
the Gaming Commission, Mr. Speaker, these
amendments will be accompanied by a revised defin ition of “Minister” in the Act to establ ish the Minister of
Finance as the Minister, similar to the Bermuda Mon etary Authority. It is anticipated that these changes will
address impediments to operational and business
support for gaming in Bermuda.
Mr. Speaker, the number of [patients] seeking
medical care outside their home country, popularly


Bermuda House of Assembly called medical tourism ,” is growing at a rapid rate
around the world, and Bermuda is uniquely positioned
to take advantage of this opportunity. A committee of
stakeholders, along with leading professional s, inve stigated the opportunity further and, given Bermuda’s
proximity to the United States and Canada, its desir able climate for medical treatment recovery and its positive reputation for quality and standards, Bermuda
was determined to be an ideal locati on for a worldclass medical tourism facility.
Mr. Speaker, this facility will create emplo yment during the construction and operational phase. It
will also benefit existing hospitality facilities and restaurants and lead to increased usage of the airpor t
and ground transportation. This will have a positive
impact on Bermuda’s GDP from the financial benefits
of thousands of new tourists, resort fees and medical
professionals moving to and living on the Island. It will
also create opportunities for trainin g of Bermudians to
fill technical positions within the new medical facility.
We are pleased to have received interest from leading US academic medical centres and foreign investors,
and we anticipate making a further announcement on
this key initiative dur ing the third quarter of 2023.
Mr. Speaker, this Government continues to
support small and medium enterprises through the Bermuda Economic Development Corporation, which has provided over $6 million in support to 334 local
businesses in the form of loans , grants and guara ntees.
The office of the Uptown Development A uthority officially opened in September 2022. The interim project team has been engaged with the Economic
Development Department and the Bermuda Business
Development Agency on the approved residential
schemes and is in the early stages of connecting d evelopers and investors with opportunities within the
country’s economic empowerment zones.
Mr. Speaker, this Government is also acutely
aware of the challenges we currently face concerning
hous ing and is pleased to see the interest from developers in the approved residential schemes. The
guide lines of the scheme allow for large- scale res idential and mixed- use developments in Bermuda’s
economic empowerment zones and also provide the opportunity f or restricted persons to purchase units
within these schemes.
Mr. Speaker, the Government also recently
published a position paper regarding a minimum wage
in Bermuda, which outlines what a minimum wage is,
why it is necessary and the proposed minimum wage
rate of $16.40 to come into force on the 1
st of June
2023. The Government has also put in place a Mor tgage Guarantee Programme, which I will speak about later, Mr. Speaker, as part of its work to lower interest
rates.
Mr. Speaker, we have invested in the construction of electric bus charging facilities at the Doc kyard, St. George’s and Fort Langton bus depots in support of the fleet electrification programme. Additionally, both the National Re- employment (Jobs)
Strategy and Youth Employment Strategy ar e currently being implemented.
And, Mr. Speaker, if people are asking why I
am going over all of those matters, it is because those
are all of the things that are included in the Economic
Recovery Plan. And I want to make sure that Honourable Members are clearly up to date with what is ha ppening.
Mr. Speaker, the Government, along with the
Project Management Office, will continue to work with
the private sector and other stakeholders to ensure
that the 31 priority items progress forward. The continued suc cessful implementation of the Economic
Recovery Plan initiatives will create better conditions for sustainable economic growth.

Bermuda is a Global Leader
in Digital Assets

Hon. E. David Burt: Mr. Speaker, Bermuda’s inves tment in digital assets is already showing steady pr ogress. This year will mark five years since the passage of the Digital Asset Business Act. In that time,
Bermuda has been gradually attracting companies,
building experience in navigating the risks of this i nnovative new industry and r efining its regime. This
strategy is bearing fruit as Bermuda has developed a reputation for a clear, well -thought -out approach to the
industry that differs from other jurisdictions attempting
to build industries in this rapidly changing space.
Many juris dictions have set their eyes on developing a digital asset industry, and some of those have already come and gone. Bermuda set the tone
early by being one of the first countries in the world to
have a comprehensive licensing regime for the digital
asset industry, and since 2018 we have been acc umulating unmatched experience globally, Mr. Speaker, in regulating the associated risks. Innovators want clear and stable rules within which they can demonstrate that they are appropriately managing risks while
not b eing stifled. Bermuda’s only weakness, Mr.
Speaker, in terms of attracting more companies —a
limited banking market —will be addressed by the
launch of Jewel Bank.
Bermuda now has sixteen licensed digital asset businesses, with six of those licences having been issued in 2022. Early indications are that 2023 will be a strong year of growth with more companies getting
licences as Bermuda has become more attractive to
those players seeking to differentiate themselves through strong regulatory oversight. In par allel, Be rmuda has seen strong growth in the digital asset i nsurance business through the innovative insurer r egime introduced in 2019 with eight licensed insurers
working with digital assets. Four of those licences
were issued in 2022, and they include what may be
338 17 February 2023 Official Hansard Report

Bermuda House of Assembly the world’s first licensed insurer for digital asset life
insurance.
As businesses in this sector become established, we have also seen job growth. Crucially, exis ting companies have shown a promising and welcome
commitment to Bermudian job grow th. Companies
such as Relm Insurance and Bittrex Global have i nvested in all -Bermudian staffing with 13 and 6 local
employees, respectively. The impact of a strong
commitment to Bermudian hiring cannot be understated, as these Bermudians are receiving trai ning and
experience that will be invaluable as this industry
grows. These businesses are hiring Bermudians because, unlike other industries, Mr. Speaker, this sector
is changing so quickly that it is not possible to simply hire experienced people from other jurisdictions. That
rapid pace necessitates investment in the training and
development of new hires, and it is encouraging to
see strong investment in the training of Bermudians.
These individuals are getting in on the ground floor of
the new industry and will likely be the future leaders of the local and global digital assets industry.
Mr. Speaker, this Government has never been
more confident in the future of the digital asset industry in Bermuda. The fact that we are attracting the attention of the t op global players in this area and that
our regulation is referenced in the United States, the
European Union and in Asia as the gold standard of
digital asset regulation is something of which we
should all be proud. Our excellence in insurance inn ovation has transferred to digital innovation and, thanks
to the stellar reputation of the Bermuda Monetary A uthority, Bermuda will become home to major partic ipants in this industry.
Mr. Speaker, many people have criticised or
even mocked the Government’s decis ion to establish
Bermuda as a home for the future of digital finance. Yet Singapore, a well -regarded jurisdiction, is advancing their own digital asset regulation, in many ways matching what we have had in place in Bermuda
since 2018, while other jurisdict ions, who are seen as
innovators in this space, are copying our regime.
Mr. Speaker, I would caution Honourable
Members who make a habit of criticising Bermuda’s decision to embrace the opportunities that digital f inance offers for Bermuda’s future. Companies looking
at making Bermuda their global home want to know
that Honourable Members on both sides of the polit ical divide support economic diversification and are
able to embrace the future. I invite the Honourable
Leader of the Opposition in his Reply next week to
make clear his party’s support for the growth of this industry in Bermuda.

Modernising Banking Services in Bermuda

Hon. E. David Burt: Mr. Speaker, Bermuda’s economy relies heavily on the international business sector,
in particular the insur ance and reinsurance industry, thus making it vulnerable to external shocks. In an
effort to make Bermuda more resilient to such risks,
the Government will further diversify the financial services on the Island, including the expansion of banking services that support key initiatives within Berm uda’s Economic Recovery Plan.

Banking Sector Reform

Hon. E. David Burt: Mr. Speaker, it is understood that
some of the existing local banks may be unable to
service some Economic Recovery Plan initiatives
without t hreatening existing correspondent banking
relationships. However, that does not mean that the
status quo is acceptable, Mr. Speaker, and the Go vernment is firmly committed to the modernisation and diversification of the banking sector in Bermuda. The aim is to develop and implement a revised banking
model for our country that reflects its uniqueness and
is consistent with our reputation as a quality intern ational financial centre.
Mr. Speaker, in keeping with the Finance Mi nistry’s core objective to achiev e financial stability and
promote stable economic growth, it was determined that a review would be needed to determine the a ppropriate way to balance national interests against
commercial interests in the banking sector. The r eview was completed by the Ber muda Monetary A uthority last year. And that review’s report is intended to assist the Government in managing not only the risks
that confront our economy but also the challenges that
consumers face from a lack of diversification in the banking sector.
In support of the aforementioned, the report
envisions that Bermuda’s banking sector will include
the following:
• domestic and full -service banks, which would
be required to offer services that meet the full
range of domestic and retail customers’
needs;
• narro w-purpose banks, which would be permitted to service sectors that are currently associated with higher reputational risk, such as
gaming;
• specialised international banks, which would
be permitted to focus solely on providing
global solutions internationall y, including to
underserved areas; and
• credit unions providing services under the
Credit Unions Act.
Mr. Speaker, the Government is fully suppor tive of the introduction of these initiatives, and while
incumbent banks have the competitive advantage of
being more familiar with regulatory requirements, it is
accepted that different innovations are required to enhance the banking experience in Bermuda. This is
supported by the number of related banking sector
initiatives currently underway within the Ministry of
Finance, working together with the Bermuda Monetary


Bermuda House of Assembly Authority. In addition to banking sector diversification,
work to further strengthen transparency and conduct -
related obligations are at advanced stages of the pol icy development process, with rules due to be tabled
this year. Additionally, the Government will support the Bermuda Monetary Authority in advancing open
banking standards in Bermuda to provide better services to local consumers while enabling new digital
banking services to be offered.
Mr. Speaker, work on the Government’s flagship initiative to create a Bermuda Digital Bank in which Bermudians will have an ownership stake is
progressing. The Bermuda Digital Bank is critical, as it
is not only in keeping with the Government’s pledge of
building a nation of owners but also aims to diversify
the banking services and products available on Island.
The initial business plan presented a number of pat hways to implement the Bermuda Digital Bank, and the Ministry of Finance continues to work with the Berm uda Monetary Authority to determine the best path forward to execute this project in the near term while en-suring the bank meets the standards for being l icensed in Bermuda.

Mortgage Guarantee Programme

Hon. E. David Burt: The Mortgage Guarantee Pr ogramme, Mr. Speaker, is an important issue for lots of
persons in Bermuda, especially with interest rates ri sing.
Mr. Speaker, in October of last year the Government proudly launched its Mortgage Guarantee
Programme, a pilot programme where the Gover nment provides a partial guarantee in support of local
mortgages with the Bermuda Commercial Bank. The
Government’s support reduces the risk to the bank,
and in return the bank is offering not only a reduced
interest rate starting at 5 per cent, but also a reduced
down payment requirement from the standard 20 per
cent down to 10 per cent. As we are currently in the
first of three phases where first -time home buyers under the age of 40 are eligible, we are encouraged to see that to date over 135 applications have been r eceived with 12 applicants having been approved thus
far. That is 12 Bermudians under the age of 40, and
counting, who are able to own their own piece of the rock, who would not have been able to do so otherwise, Mr. Speaker.
With that said, I am pleased to announce that
beginning on the 1
st of April 2023, we will be trans itioning into phase 2 of the programme where public
officers with mortgages at other institutions will be el igible to transfer them over and to participate in the
programme. It should be noted, Mr. Speaker, that this
does not apply to mortgages where public officers
may own multiple properties or do not reside in the
home. Also, as part of phase 2, Mr. Speaker, we will
be removing the age restriction so that any Bermudian regardless of age may be able to apply for a new
mortgage for their first home.

REBUILDING TOURISM

Hon. E. David Burt: Mr. Speaker, after two challen ging years in the world of tourism, 2022 became a pi votal year for the sector. Following the wide- scale deployment of COVID -19 vaccines and boosters, visitors
began to take advantage of the resurgence in both
domestic and international travel.
While Bermuda has not yet returned to 2019
visitor volumes, the Island saw significant year -overyear growth in 2022 across k ey tourism measures,
including air capacity, leisure air visitors and cruise
travel. When comparing 2022 to 2021, the total number of leisure air visitors was up 80 per cent, air c apacity was up 50 per cent and cruise arrivals, understandably, Mr. Speaker, were 2,735 per cent higher.
Though significant increases were seen in 2022, year -
end statistics underscore that more work remains to
be done before reaching the baseline numbers of
2019.
Mr. Speaker, in 2023 this Island can expect a
historic increase in cruise arrivals, which will positively
impact the tax revenue and generate more visitor traf-fic to businesses at each port. The record cruise sea-son will provide more funds to the Bermuda Tourism
Authority’s budget to execute the National Tourism
Plan.
Mr. Speaker, the Island’s hotel inventory has
been a limiting factor contributing to the challenge of securing a full return to 2019 air capacity levels. American Airlines’ service from Charlotte and British
Airways’ London Heathrow gateway were bright spots in 2022, allowing visitors additional connections
throughout the United States and Europe. The Bermuda Tourism Authority will continue to support the
Ministry of Transport through the Air Service Devel-opment Committee to identify needs, engage new and
familiar partners and create demand in order to make
the case for expanded airlift as more hotel properties
come online.
Mr. Speaker, there is the continuing work to
open the Bermudiana Beach Hotel, the completion of phase 2 for the reopening of the St. G eorge’s Club
and the progress of the Ariel Sands property, in add ition to work taking place in your neighbourhood, Mr. Speaker, at Cambridge Beaches. It is clear that there is significant potential for increases in employment in
the hospitality sector in t he [coming years].
Mr. Speaker, as indicated in November’s
Throne Speech, to support additional investment in
Bermuda’s tourism economy, the Government will
make amendments to the Tourism Investment Act to permit the Government greater discretion in the granting of relief under the Act to developers and those
investing in attractions, restaurants and hotels. The aim of these amendments is to provide incentives for
340 17 February 2023 Official Hansard Report

Bermuda House of Assembly establishments to invest in upgrades and refurbis hments for their properties and in turn create jobs while
enhancing the overall product available to visitors.
The mission of this Government is to create sustainable growth in Bermuda’s economy, and to do that we must be competitive with other jurisdictions competing
with Bermuda for tourism inves tment. As I have said
before, Mr. Speaker, right now we are not competitive.
And these changes will ensure that we attract inves tment to grow jobs and provide a brighter future for Bermuda’s tourism sector.

Fairmont Southampton

Hon. E. David Burt: Mr. Speaker, the redevelopment
of the Fairmont Southampton hotel is eagerly awaited.
In the months since this Honourable House consi dered the legislation to support the project, lawyers, development consultants, bankers and technical offi cers have been heavily engaged in the preparation of
the various agreements that will provide the fram ework for financing and development. Honourable
Members will no doubt be aware that the process for
the consideration of a revised Special Development
Order has begun with the fi rst public consultation
meeting with the neighbouring residents set for early
next week.
Further, Mr. Speaker, Honourable Members
will be invited to consider amendments to the Public Treasury (Administration and Payments) Act 1969 to
strengthen the protec tions for the Government of
Bermuda in the provision of the $75 million guarantee
of local lending to support the redevelopment project. The unique arrangement for the repayment of that
loan requires our legislation to be modified to facilitate
the structure of the loan agreement.
The proposed changes will add necessary
certainty and security, as the Government is deter-mined to ap ply best practice and fulfil all necessary
due diligence as it is the people of Bermuda who are supporting this critical redeve lopment project. (Yes,
Mr. Speaker, due diligence in the provision of guarantees. Something that others may have been, you know, wise to [have done])
Mr. Speaker, confidence remains high that
construction will begin in the second quarter of this year. And i n preparation for this commencement, the
developers have been repricing construction costs.
The volatility in capital markets delayed the confirm ation of financing, but it is a testament to the develop-ers and their investors’ confidence in Bermuda that
the capital for the project’s completion has been s ecured.
Mr. Speaker, 2024 completion remains the
target, and I can assure the people of Bermuda that all parties have demonstrably committed to advancing this project. Its economic importance has been magnified in recent years, as we struggle to maintain key airlift and grow Bermuda’s market share in the meeting and large- group business.

REIMAGINING MORGAN’S POINT

Hon. E. David Burt: Mr. Speaker, late last year in this
Honourable House we were pleased to pass the Morgan’s Point Company Act to enable the people of
Bermuda to take control of the property. Today, as
part of this Budget Statement, I am pleased to share
with the public the reimagined vision led by the Ber-muda Progressive Labour Party Government, which
has been approved by the Cabinet.
Mr. Speaker, in light of what was previously
proposed at the site, we should begin with what the
project will not be. Phase 1 of the redevelopment plan
will not involve the construction of a hotel. We are also not proposing at this stage that there will be cond ominiums for sale. Both concepts have been thoroughly
vetted by our advisors, and as a Government we have
determined that neither represents the best use of the
site at this time. Instead, Mr. Speaker, we hav e targeted this mixed- use site for the development of a
range of residential rental apartments, including a
component for seniors’ housing, with an active and
engaging amenities district filled with commercial retail
and restaurant opportunities at its cen tre.
To be clear, Mr. Speaker, the newly proposed
Morgan’s Point [project] will not be operated as a gat-ed community, and the amenities district will be open
for all Bermuda residents. The new enterprise will not
only put the site into productive use but will also a ddress several long- standing key goals of this Gover nment regarding economic stimulus and increasing housing supply. At the centre of this redevelopment,
Mr. Speaker, is the concept of live, work, play—all
onsite.

Goals and Plan

Hon. E. David Burt: Mr. Speaker, the goals moving
forward are simple: We want to put the site into pr oductive use and generate cash returns that more than
cover the costs of construction so that Bermuda can
recoup the funds that were paid out for the $165 mi llion guarantee agreed by the former Government. Our
job is to recoup the funds that were paid out for the
$165 million guarantee. (And as you know, Mr.
Speaker, we paid a lot more than $165 million. I think
we are at $210 million and counting— and counting,
yes, for the guarantee agreed by the former Gover nment.)
The vision for operating the site is to provide
opport unities in the hospitality, retail and services sectors while also offering a concentrated residential comm unity for the taxi, minibus and, in due course,
water taxi and ferry industries to target.
So, Mr. Speaker, how do we get there?



Bermuda House of Assembly What We Will Have Post -Transition

Hon. E. David Burt: Mr. Speaker, Honourable Members will be aware that at present the assets of
George’s Bay Limited comprise mostly compl eted
high-end residential buildings and six concrete shells,
with one yet to be erected. Between these two sets of
partial structures is a wide expanse of land that had
been intended for use as amenities for the hotel. U nder the new plan, the residential buildings will be completed as high- end rental residences as intended.
Completion of these units is the highest return exercise on the site, as they were substantially complete
when the project went into financial distress. The nonerected concrete shell wi ll be erected along with the
other six functionally identical shells, and they will be
reconditioned as ocean- facing residential duplex
apartment units. Although there is capacity for 42 units, at this time only three blocks consisting of 18
units will be completed. This is, of course, subject to
existing real estate demand, which could increase and support the completion of all 42 as part of phase 1.
Mr. Speaker, the centrepiece of the project
will be the reimagined amenities district. Placed between the two existing structures, it will consist of a
diverse series of commercial retail, restaurant and
services provided at ground level, and built on top of them two floors containing 48 residential units. These
central amenities district apartments will be i n the affordable range for most Bermudians and will consist of
one-, two - and three- bedroom apartments. Further, an
additional percentage of these amenities district
apartments will be priced at a further discounted range to expand opportunities for young Bermudians.
Mr. Speaker, we see the 37- acre Morgan’s
Point site and plan as based on commercial princ iples. However, it should also be viewed through an economic opportunity lens in the sense that this pr oject will generate economic activity for the country, especially in the western part of the Island. Investment
in phase 1 will serve as a platform for future phases
around the Morgan’s Point land, and it is expected
that future phases will likely drive a higher commercial output for the Bermuda Government.
A stylish pedestrian- and bicycle- friendly int egrated boardwalk supporting 19,000 square feet of amenities district rentable area will include unique restaurants and bars, branded and boutique shops, and
other stores offering conveniences and necessiti es.
Together these will become the “ draw ” factor for res idents and will increase commercial activity on the
western side of the Island. Additionally, the repurpos-ing of the existing back -of-house shell for a potential
farmers’ market and local food hall wi ll provide anot her 13,000 square feet of rentable concession space, for a grand total of 32,000 square feet of active retail, dining and commercial options. The design of the
boardwalk and future bridge element will also provide
integrated outdoor seating and gathering spaces evocative of New York’s High Line walkway park.
World -class facilities will unlock the value and demand
for the 101 residential units proposed in phase 1.

Key Factors Driving Project Success

Hon. E. David Burt: Mr. Speaker, we recognise that
projects of this size and complexity come with challenges, and the public would be well within their rights
to express scepticism over the execution of gover nment contracts. To address this we have put a comprehensive process in place.
Mr. Speak er, to oversee governance and control a selection of management team and independent directors on the board will be critical and should have
the relevant expertise in hospitality, project management, finance and infrastructure development. The independent board of directors will conduct regular
meetings with the Project Execution Team in order to
receive periodic key performance indicators on pr ogress and quality. Full requests for proposals [RFPs]
with independent scoring will be issued for key par tners in the execution of this project, with experience in
large- scale, on Island projects seen as a must.

Project Financing

Hon. E. David Burt: Mr. Speaker, the initial cost est imates for this first phase are $130 million. Discussions about the fundraising proc ess will be run in parallel with the design and definition of cost elements.
Our present assumptions on financing consist of two debt tranches: a combination of a senior debt tranche
secured against Morgan’s Point land and applicable
assets as built, and a subordinated debt tranche pr ovided by a local Bermudian bank, backed by a go vernment guarantee. Both tranches will be backed either by security of the property or sovereign guarantee, thus minimising interest costs. Importantly, the construction and opera tion of phase 1 will increase
the value of the remaining land assets under the co ntrol of the Government and will serve as a land bank for future development.
Moving past tourism development, Mr.
Speaker, onto matters close to finance and taxes.

GLOBAL MINIMUM TAX AND TAX REFORM

Hon. E. David Burt: Mr. Speaker, one of the most
important and challenging matters that the Gover nment has to tackle this year is the effective implementation of the Global Minimum Tax initiative, which has
been advanced by the O rganisation for Economic Cooperation and Development [OECD]. To achieve this
aim, the Ministry of Finance has formed an International Tax Working Group consisting of specialists in
international tax matters and representatives of var ious bodies whose members may be directly impacted
by this work. The group is tasked with examining how
342 17 February 2023 Official Hansard Report

Bermuda House of Assembly Bermuda can appropriately implement this global
agreement, taking into account the diversity and complexity of our international business sector.
Mr. Speaker, the Global Mi nimum Tax will
represent a fundamental change in the way that Ber-muda does business and the way that Bermuda’s
Government raises revenue; however, it is not without
its risks. Mr. Speaker, Bermuda does have the E xempted Undertakings Tax Protection Act 1966, and
8,000 exempted companies in Bermuda are in possession of a certificate from the Bermuda Government that states that they will not be charged taxes on their
income until 2035. However, Mr. Speaker, what is i mportant to note is that possession of this certificate
does not mean that companies will not be subject to the Global Minimum Tax. The international agreement
requires that for companies in scope, if the country
where the company is domiciled does not charge a
15 per cent minimum tax, then that com pany will be
required to pay appropriate taxes to another jurisdi ction.
Therefore, Mr. Speaker, upon implementation
of the framework by all key countries, the Global Mi nimum Tax will be paid. The question is, to which country? Mr. Speaker, it is too early to estimate what i mpact the Global Minimum Tax could have on Berm uda’s future tax collections, and many complexities will
have to be addressed in the development of the appropriate framework for Bermuda. However, it is my
view as Minister of Finance that any fundamental shift
in the nature and/or level of tax receipts in Bermuda
should be used to benefit Bermuda’s residents collectively rather than representing a way to increase over-all tax collections.
Bermuda’s system of taxation and our primary
revenue earners of employer payroll tax and customs
duty increase the cost of living and the cost of doing business in Bermuda. Any tax windfall that may accrue to the government from implementing the Global
Minimum Tax must result in a reduction in those taxes
that increase the cost of doing business and the cost
of living in Bermuda. Therefore, with a successful i mplementation of a Global Minimum Tax, residents and
businesses can likely expect further reductions to employer payroll taxes and customs duties. In t urn, this
will decrease the overall cost of doing business and
the cost of living in Bermuda to ensure the Island r emains competitive.
Mr. Speaker, it is also important that Honourable Members note that a Global Minimum Tax on
international companies’ in come is not a given in any
year. Bermuda’s main sector of international business
is our world- leading insurance industry. Yes, over time
most insurance companies make profits. However, in
years where there are major catastrophe losses,
these companies may not report a profit and therefore
will not be subject to the Global Minimum Tax. Further, any losses in one year may offset future years’
profits with regard to the Global Minimum Tax. So, whereas payroll taxes and customs duties are always
paid and repres ent a certain stream of tax revenue to
the government, the same cannot be said for revenue
that may come from the Global Minimum Tax.
Mr. Speaker, the International Tax Working
Group is set to report its findings and provide recom-mendations to the Govern ment in July. After that, as I
explained previously, the Tax Reform Commission will
then be empanelled to look at the changes necessary
to our existing system of domestic taxation to ensure
that it is in line with the requirements of the Global Minimum Tax while also examining what other changes to our local taxes are needed to ensure that Bermuda’s economy remains competitive.
Mr. Speaker, notwithstanding the perceived
benefits, there will be risks to Bermuda’s economy
with the implementation of the Global Minimum Tax, as there will be some companies that decide that [being in] Bermuda is not the best option for them. Ther efore, it is essential that we advance the reforms si gnalled by the Honourable Member, the Minister of
Economy and Labour, to grow Berm uda’s working
population. Bermuda is regarded by some as an of fshore jurisdiction, but as the Global Minimum Tax sets
standard tax rates throughout the world, we must
adapt and become a mid- shore jurisdiction.

GROWING THE RESIDENTIAL POPULATION

Hon. E. David Burt: Mr. Speaker, when I refer to becoming a mid- shore jurisdiction, it means that Berm uda must be a place where talented people from
around the world desire to live and work. Simply put,
we must make Bermuda a place that is more attractive for global talent looking to relocate so that they
can assist in powering our Island’s economic growth
into the future.
Mr. Speaker, I know that this perspective may
cause fear in the minds of some Bermudians, and I
understand why some may feel that way because
Bermuda is a difficult place now to live and thrive. Our
costs are high, our labour market is tight, and people
are nervous about their futures. However, Mr. Speaker, we cannot allow this fear of change to prevent us
from doing what is necessary to ensure that the Government and this country can fulfil their obligations to
future generations.
Mr. Speaker, the Honourable Member, the
Minister of Economy and Labour, has made it painfully clear what will happen if we are unable to grow our
working population. Mr. Speaker, instead of further
reductions in taxes as we are able to deliver in this
Budget due to our economy growing and our working
population expanding, taxes in the future will increase
if we do not grow our working population. Mr. Speaker, an increase in taxes will mean an increase in the
cost of living in Bermuda, something that we know Bermuda’s residents and businesses cannot afford.


Bermuda House of Assembly But, Mr. Speaker, it is important that Honourable Members in this Chamber today and those who
are listening to th is speech or who will read it in the
coming days understand the difference in approach between this PLP Government and the Opposition. There are some who comment that the Government’s
approach is similar to that of the Opposition, but, Mr.
Speaker, I could not disagree more. Why do I say
that? Because this Government has carefully and m ethodically engaged in wide consultation while dealing
with reforms to Bermuda’s immigration system. During its time in office, the previous Government determined
its course of action and basically said that how it was
to be achieved, or how our citizens felt about, did not
matter. It sprang changes upon the electorate without consultation. Indeed, we all remember too well the
results of their lack of consultation and the poli tical
instability that it caused.
Mr. Speaker, compare that record to the a pproach of this PLP Government. We kept our election
promise to form a bipartisan committee on immigr ation reform, something I called for in this Honourable
House in March 2013 wh en the Progressive Labour
Party was in Opposition. That bipartisan committee
worked through the first stages of comprehensive i mmigration reform that enabled us to make sure that we
eliminated the problem of mixed status families, made it easier for Bermudians born overseas to claim Bermuda status and extended permanent residency to all
long-term residents for the first time in this country’s
history. These changes have had a positive effect, but
as the statistics show, we must do more, and we must
move mor e quickly.
However, Mr. Speaker, in this Statement, understand that I am not going to pronounce what Go vernment policy will be regarding immigration because
we are currently engaged in the vital process of consultation. Instead, I encourage all persons, especially
the Opposition, who have had a lot to say in the m edia, to participate in this process. Because it is vital that all views are heard as we expand our working
population in Bermuda in a fair and balanced manner.

Housing Required to Support Econom ic Growth
Hon. E. David Burt: Mr. Speaker, given the need to
grow our working population, we must ensure that there is more housing for more people to live and
work in Bermuda. Currently, there is an acute housing
shortage, which is being driven by the gr owth that we
have seen in international business over the last three years. Mr. Speaker, that is why the Government committed to providing $15 million over the next three
years to build more affordable housing units, and that
is why it has also delivered 4 8 units of affordable
housing over the past five years —48 in the last five,
Mr. Speaker, 117 in the next three. The transition of Morgan’s Point to a residential community and the
initial plan for 101 residential units will also provide additional housing in Bermuda for an expanding midshore economy.
Mr. Speaker, in 2019, the Government
changed the Economic Development Act to allow for the building of approved residential schemes to further expand the housing stock. Currently, approved res idential schemes are restricted to the economic empowerment zones in Somerset, St. George’s and
Northeast Hamilton. However, those areas have not
seen the progress that I sincerely desired for this init iative designed to provide more housing units. Though
the team at the Bermuda Economic Development
Corporation continue to work diligently to advance this
initiative —and I mentioned some of the progress
which they are making, earlier —it is necessary, given
the growth, that we expand the areas where approved
residential schemes can be constructed.
Therefore, Mr. Speaker, in this parliamentary
session the Government will advance a Bill that will
amend the Economic Development Act to expand the
eligibility for approved residential schemes from solely
the economic empowerment z ones to the entire City
of Hamilton. We must do everything in our power to
provide a base for additional private sector investment
to develop additional housing in Bermuda to compl ement the Government’s efforts to provide affordable
housing.
Mr. Speaker, this change does not mean that
we are abandoning our vision for a vibrant Northeast
Hamilton economic empowerment zone. There will
still be benefits to building approved residential
schemes in Bermuda’s economic empowerment zones that will not apply throughout the City of Hami lton. However, units in approved residential schemes in the City of Hamilton will be able to be purchased by
residents, businesses and international persons wit hout restriction.
Mr. Speaker, it is the duty of the Government
to look at what is working and to see what can be
done better. As we take concrete steps to increase
the working population in Bermuda, we must ensure
that this does not further raise the cost of housing,
causing distress for many working families. This
change will increase the available spaces that can be
developed for approved residential schemes and i ncentivise the private sector to start developments that may have been stalled due to a lack of possible purchasers.
Now, Mr. Speaker, on to dollars and cents.

FISCAL PERFORMANCE
Hon. E. David Burt: Mr. Speaker, from a fiscal perspective, the primary focus of this Government is to
continue on our path toward a balanced budget and
meet the target set by the Fiscal Responsibility Panel
of a $50 million surplus by fis cal year 2026/27 —all
while ensuring fairness in our tax system and promoting economic growth to increase Bermuda’s tax base.
344 17 February 2023 Official Hansard Report

Bermuda House of Assembly To achieve this, we must continue to make the difficult
and sometimes unpopular decisions [required] to
demonstrate to external stakeholders that the Go vernment of Bermuda can be trusted to exercise fiscal prudence.

2021/22 Actual Financial Performance

Hon. E. David Burt: Mr. Speaker, earlier today I t abled the annual financial statements of the Consol idated Fund for fiscal year 2021/22. Mr. Speaker, I am
pleased to report to this Honourable House that the
Auditor General has issued a clear and unqualified
audit opinion for the last fiscal year. A key highlight for
this fiscal year was that the budget deficit narrowed significantly, with the actual budget deficit recorded at
$66 million.
Mr. Speaker, total revenue for [fiscal year]
2021/22 was $1.086 billion, which was $87 million [or
8.6 per cent] higher than estimates and $87.4 million
[or 8.7 per cent] higher than the previous ye ar’s rev enue of $998.3 million. Total [current] account expend iture (inclusive of debt interest) on a modified cash
basis was $1.076 billion, which was $9.1 million less
than adjusted estimates. Total capital account modified cash expenditure was $75.9 mil lion, which was
$16.9 million lower than the original budget estimates.
Total capital and current account modified cash expenditure for 2021/22 was $1.152 billion, which was
$28.0 million [or 2.5 per cent] higher than the original
budget estimate [of $1.124 billion.]
Mr. Speaker, as a reminder, the deficit for fi scal year 2020/21, during the peak of the global pa ndemic, was $184.2 million. The following year, Mr.
Speaker, ended with a deficit of $66.0 million despite
the continued payments to Skyport and despite the
costs incurred by the Morgan’s Point project. The
$118 million improvement is reflective of the Gover nment’s policies pursuing economic growth and commitment to effectively managing the public purse.
However, as I will address later, this excellent budget
performance masked significant underfunding of the
hospital, which this Government has remedied in this current fiscal year and will address further in the next
fiscal year.

2022/23 Fiscal Performance

Hon. E. David Burt: Mr. Speaker, prior to commenting on the estimates for the new fiscal year, I would
like to take this opportunity to provide an update on
the Government’s financial performance and the r evised forecast for the current [financial] year that will
end on March 31, 2023.
Mr. Speaker, based on the latest revised estimates, the Government is projected to earn $1.1 bi llion in revenue in 2022/23, which is 3.1 per cent, or
$33.2 million, higher than the original estimate. This
increase in revenue is primarily due to better -than-expected tourism -related revenues, payroll tax and
stamp duty. Mr. Speaker, this increase helped to of fset the $17.8 million loss in revenue from the aircraft
register as a result of the Russia/Ukraine war, also despite the $11.6 million of forgone duty to freeze fuel prices and $700,000 to date of forgone duty as a r esult of eliminating duty on essential goods. (Mr.
Speaker, I must remind Honourable Members that this
revenue performance was with no tax increases last
year. We actually cut some taxes last year —important
to note, Mr. Speaker, because some people seem to
not be able to keep the facts straight.)
Mr. Speaker, total current account expend itures, excluding debt service and guarantee man-agement, are now projected to be $965.7 million,
[which is] 2.2 per cent, or $20.6 million, more than the
$945 million originally budgeted. The primary factors
for this increase in current account expenditure are an
unbudgeted $15 million grant provided to the Berm uda Hospitals Board, an additional $10 million in con-tinued COVID -19-related expenses and the Gover nment’s relief package.

[Desk thumping]
Hon. E. David Burt: Oh, yes.
Mr. Speaker, in 2018 the Government agreed
for the hospital to receive $322 million of combined
funding from government sources annually. It saddens
me that the Bermuda Government has never fully
honoured that commitment, and as a result our hosp ital has gone from a position of h aving cash reserves
to one where they now have an overdraft facility for
daily operations.
Mr. Speaker, I commend the Bermuda Hospitals Board for going to great lengths to reduce their
expenses while remaining inside the fixed funding
model agreed upon w ith the Bermuda Government in
2018. However, Mr. Speaker, just as the Government
keeps its commitments to our bondholders, we must
also keep our commitments to the Bermuda Hospitals
Board to ensure our country’s only hospital is properly
funded. Therefore, the Cabinet approved a $15 million
supplementary allocation to the Bermuda Hospitals Board in this fiscal year and will increase funding next year to ensure that our hospital is able to continue
operating soundly.

[Desk thumping]
Hon. E. David Burt: Mr. Speaker, the $10 million of
additional spending on COVID -19-related expenses is
a result of the effects of the pandemic lasting longer than originally expected. The additional COVID -19related spending included testing staff at the airport
and laboratory , along with additional PPE [ personal
protective equipment ] and testing equipment.
Mr. Speaker, in addition to the relief package
which provided support to hard- working families, last


Bermuda House of Assembly year additional funding was given to the Bermuda P olice Service, Bermu da Fire & Rescue Service, mental
health services and independent living coordinators
for young people ageing out of care. Additional r esources were also deployed to support local entertainment, boost youth employment and expand summer camp slots.
Mr. Speaker, when considering the revised
revenue figures along with the revised current account expenditure for 2022/23, we are encouraged to see
the primary surplus of $145.4 million, which is a 9.5 per cent, or $12.6 million, improvement on the
$132.7 million in the original estimates. The primary
surplus is important because it indicates that the pr ojected revenues can support the day -to-day running of
the government and also cover our interest costs.
Mr. Speaker, as a result of one- time costs
associated wit h the recent debt refinancing, the latest
revised interest and guarantee management costs are projected to be $143.4 million, [which is] $13.7 million,
or 10.5 per cent, more than originally budgeted. Also,
as these are one- time costs, it is anticipated th at
these will decrease to $130.4 million in the upcoming fiscal year.
Mr. Speaker, the original capital expenditure
budget for 2022/23 was $73.0 million. However, as a
result of the $7 million of additional funding approved to fund critical refurbishment s to the Tynes Bay
Waste -to-Energy facility and the approval of $4.1 mi llion of additional funding for affordable housing for
Bermudians, total capital expenditure is expected to
increase to $79.3 million. This amount is less than the
$85 million expected in the mid -year update due to
supply chain challenges delaying the implementation
of some projects.
Mr. Speaker, given the aforementioned factors, the latest revised estimate of the overall deficit is
$77.4 million, [which is] 10.5 per cent, or $7.4 mill ion,
more than originally estimated. As a reminder, this increase is primarily driven by the $15 million suppl ementary allocation to the Bermuda Hospitals Board.
But it is also a testament to the Government’s management of the public purse that, despite pr oviding
additional funds for economic relief and affordable
housing and millions forgone on freezing fuel prices
and the reduction in customs duties for essential goods, we are able to provide additional funding to our
hospital, Mr. Speaker, and still remain close to the
budget targets.
It is important to note that if it were not for the
one-time costs of that debt refinancing, Mr. Speaker,
we would have met this year’s deficit target while also
providing this needed support to the hospital.
Mr. Speaker, let me move on to what ever yone wants to hear, the 2023/24 Budget Estimates.

2023/24 Budget Estimates

Hon. E. David Burt: Mr. Speaker, the budget for the
upcoming [fiscal] year 2023/24 projects revenues to
reach $1.16 billion, which is 7.2 per cent, or $77.7 mi llion, above the original estimates for this current fiscal
year. This level of increase is largely a result of
changes to payroll taxes, increases in tourism -related
revenues and increases in certain fees, combined with
expected continued economic growth.
Mr. Speaker, total current account expend iture is forecast to increase by $27.5 million, from the original 2022/23 budget estimate of $945.1, to $972.6
million.
Mr. Speaker, based on the projected revenue
and current account expenditure figures, the estimated primary surplus before interest on debt and capital expenditure is anticipated to be $179.9 million in fiscal
2023/24. The estimate for interest and guarante e
management is expected to be $130.4 million, which is $600,000 more than the original estimates from the
previous year. With this, the current account surplus is budgeted to be $50.4 million. This figure is near prepandemic levels, demonstrating the Gov ernment’s
continued commitment to fiscal prudence, effective
management of the public purse and moving toward
achieving a balanced budget. Mr. Speaker, the Government also understands the value of sound capital investments that will
revitalise the countr y’s infrastructure, support economic growth, create jobs and improve our everyday qual ity of life. The projected capital expenditure for
2023/24 is $96 million, [which is] $23 million, or 31 per
cent, more than the original 2022/23 estimate.
Mr. Speaker, when considering the aforementioned, the Government plans to run a budget deficit
of $43.5 million, [which is] $9.9 million higher than
predicted last year. However, taking into account the
2021/22 actual deficit, the projected deficits for 2022/23 and 2023/24 and the sinking fund balance,
Mr. Speaker, the net debt at the end of this fiscal year
will be $90.5 million lower than anticipated in last
year’s budget.
Highlights of Current Expenditure

Hon. E. David Burt: Mr. Speaker, moving to current
account expenditure. As I mentioned, current account
expenditure for fiscal year 2023/24 is estimated at
$972.6 million. This figure represents an increase of
2.9 per cent over last year’s original estimate. What is
interesting, Mr. Speaker, is that this increase i s in line
with the figure projected by the Fiscal Responsibility Panel, which stated that a more realistic level of
spending for this year’s budget would be $973.4 mi llion.
However, Mr. Speaker, where I disagree with
the Fiscal Responsibility Panel’s ass essment is in
their statement that spending discipline will be difficult
to maintain in future years given past performance.
346 17 February 2023 Official Hansard Report

Bermuda House of Assembly When making that assessment, they were looking at
increases in current account expenditure in previous
years that were a result of the ending of emergency
cost-saving measures put in place during the COVID -
19 pandemic, such as one- time wage reductions and
reductions in travel or other expenses not possible during the pandemic. Additionally, unexpected conti nuing costs of the pandemic, such as the Airport Min imum Revenue Guarantee, factored into the spending variances seen in prior years. As those cost pressures
abate, the pressure to keep up that level of spending also decreases, allowing the Government to realist ically plan expenditur e in future years.
Mr. Speaker, the Cabinet is aware that the
current expenditure level this year will carry over to next year and that any new programmes will need to
be offset by revisions to existing ones, which in essence makes this a two- year budget . Current expenditure is expected to increase by 1 per cent over the
next two fiscal years, which has been inserted solely to take into account possible negotiated salary i ncreases for public officers.
Mr. Speaker, all ministries except for Home
Affairs received a boost to funding levels this year.
The level of current account spending sets this year
as a realistic baseline for future budgets, as it adequately funds government services that have not been properly funded in previous years, including public
works, national security, public transportation, ec onomic development, health care/hospital funding,
youth services, the judiciary or services for our seniors. This level of spending is necessary to advance
key government initiatives such as health care r eform,
education reform, continued implementation of Bermuda’s Economic Recovery Plan and the implement ation of Bermuda’s privacy protection legislation. This
budget increases the child day care allowances for
parents, transitional living for young persons ageing
out of care, and care homes. It also funds the reintr oduction of public health scholarships and air -quality
monitoring for those affected by BELCO emissions,
while expanding social protections for families via f inancial assistance.
Moving on to capital expenditure, Mr. Speaker.

Highlights of Capital Expenditure

Hon. E. David Burt: Bermuda’s infrastructure has
been challenged due to years of underinvestment.
This underinvestment can be seen in simple ways
such as when the Government lacks the capacity or the equipment to pave roads or clear seaweed off our
beaches. This inability to maintain basic infrastructure
is not in keeping with an island that has become an
important international financial centre and aspires to have an even greater impact in the future. Mr. Speaker, we cannot keep starving our Island of needed i nvestments in infrastructure in the name of achieving a balanced budget. For this reason, Mr. Speaker, this
budget contains $96 million in planned capital account
expenditure, the highest budgeted capital spending in
13 years.

[Desk thumping]

Hon. E. David Burt: Let me give you an example, Mr.
Speaker. Honourable Members, and especially Ho nourable Members from constituency numbers 1 and 2,
will remember what happened in St. George’s last
year where the infrastructure necessary to safely di sembark ferry passengers to St. George’s was inoperable. That failure resulted in the suspension of ferry
services during the critical summer season and negatively impacted businesses in St. George’s .
Mr. Speaker, the reason why we must i ncrease spending in this area is to ensure that our vital tourism industry is not further held back due to failures
in our civil infrastructure and that our citizens can
have confidence in that infrastructure. This budget
therefore contains funding for a number of projects
that have been delayed for many years where infr astructure has passed its useful life and needs to be
urgently replaced. Because there have not been suff icient funds budgeted, key infrastructure and equi pment continue to fall into disrepair, causing the Go vernment to spend excess funds on repair costs while
the delay in replacing infrastructure increases the risk
of catastrophic failure.
One such example is the floating dock at the
Hamilton Ferry t erminal. It is not an exaggeration to
state that we are one strong hurricane away from that floating dock being inoperable. Mr. Speaker, just i magine what would happen if we were not able to di sembark passengers safely at the Hamilton Ferry terminal and the impact that would have on the residents who commute into the city using the ferry and those
visitors who use ferries to get around the Island. Lack of infrastructure investment poses real challenges to
our successful future, and hoping things will not br eak
is not a sound strategy for governance. In time they
will not be operable, and just like the temporary landfilling Pembroke residents endured last year, failure to
invest in infrastructure has serious consequences.
The most significant items of capital develo pment expenditure in the 2023/24 Budget relate to further investment in the Tynes Bay Waste- to-Energy
facility, additional affordable housing units, 40 new
and additional electric buses and infrastructure to
support their recharging, refits to our fast ferries, and investment to accommodate students at Bermuda’s
two new parish primary schools at Francis Patton and
Purvis Primary.
Additional funds have also been allocated to
develop a new community health clinic in Somerset
(Mr. Speaker, that might even be in your constitue ncy); purchase new public works equipment to reduce
maintenance costs while providing key services like


Bermuda House of Assembly clearing seaweed from beaches; upgrade facilities
that house public officers at the Government Quarry,
DPT Depot, and Marine and Ports work shed; and
replace ageing vehicles and equipment for the Bermuda Police Service, the Fire & Rescue Service and the Department of Corrections. Finally, Mr. Speaker,
this capital budget funds upgrades to Bermuda’s court
facilities, additional inv estments in the Government’s
IT systems and, most pleasing to motorists and Honourable Members, an increase in funding to repave
roads in Bermuda.

[Desk thumping and cheers ]

Hon. E. David Burt: Mr. Speaker, in October of last
year the Government announced its support for a
$21.6 million grant to the Bermuda Housing Corpor ation to refurbish 137 [older] housing units inclusive of 77 additional units, which represent the entire vacant
and derelict inventory owned by the corporation. We
are encouraged by the progress made thus far on this project, as this project will not only create jobs and
stimulate economic activity but also ultimately i ncrease the stock of affordable housing as promised in
both our 2017 and 2020 election platforms.
Mr. Speaker, to preserve the Tynes Bay
Waste -to-Energy facility until major refurbishment can
begin, a stabilisation programme has recently been
approved. This programme consists of projects that
focus on replacing t he critical systems required to
bridge the gap between their current condition and the
newly renovated facility, with an estimated cost of $22
million. These projects specifically target failed or ob-solete systems that can be replaced while working to
main tain operations as best as possible and will be
integrated into the overall refurbishment works to
avoid wasted expenditure. These upgraded systems
are intended to assimilate seamlessly with the larger
refurbishment works.
Now moving on to revenue measures in the
2023/24 Budget, Mr. Speaker.

Revenue Measures in the 2023/24 Budget

Hon. E. David Burt: Mr. Speaker, the following items
are the revenue changes that form part of the revenue
estimate for fiscal year 2023/24:

PAYROLL TAX CHANGES

Hon. E. David Burt: Mr. Speaker, the payroll tax
changes in this budget that I am about to announce
come as a result of meaningful consultation that has
taken place following the release of the pre- budget
report. With our commitment to a transparent budgeting process, it was essential that the Government shared its considerations and the challenges faced
when putting together an annual budget that mai ntained our path to a balanced budget in fiscal year 2024/25. It must be remembered that the revenue
proposals cont ained in the pre- budget report were
made against the backdrop of the loss of revenue
from the aircraft registry due to Russia’s invasion of
Ukraine and the lost funding as a result of ending the travel authorisation. Those two items alone represent
approxi mately $40 million in revenue that will not accrue to the government during the next fiscal year.
However, Mr. Speaker, this is a budget for
growth. And what is necessary for growth is that you
support the businesses that can provide growth in the economy . That means not just international business
but also local businesses large and small, our tourism
establishments and our retail outlets.
Mr. Speaker, before I go into the details, let
me get to the headline: No business in Bermuda will
pay any more in employer [payroll] taxes in this budget than last year.

[Desk thumping]

Hon. E. David Burt: All employer rates will either stay
the same or will go down. Small businesses, the lif eblood of most economies, will see their payroll tax li ability decline by as much as 43 per cent. We will deli ver payroll tax reductions to retailers, gyms, convenience stores, construction companies and truckers.
Our hotels and restaurants, which are still recovering from the impact of the pandemic, will see their payroll
tax liability decline by 17 per cent.
Mr. Speaker, moving to the employee payroll
tax, the headline is this: Any individual making
$132,000 or less per year will pay less in payroll taxes
next year. Yes, Mr. Speaker, this represents 86 per
cent of Bermuda’s w orkforce. Eighty -six per cent of
the workers in our economy who give their time and
talents to produce for their employers will pay less in
payroll taxes next year.

[Desk thumping and cheers ]

Hon. E. David Burt: Mr. Speaker, as I said at the start
of my presentation today, this is a budget for growth. It
is a budget that reflects [the fact] that Bermuda must
position itself to be a place that is attractive to bus iness owners and business creators who will power
the economic growth required for the Bermuda economy to succeed.
(Mr. Speaker, I have to chuckle because I
heard an Honourable Member behind say, Sounds
like an election budget. You know what is funny, Mr.
Speaker? They said the same thing last year, that it
was an election budget.)

[Laughter]
Hon. E. David Burt: We delivered well, we grow. If
you put forward a good budget, it does not mean elec348 17 February 2023 Official Hansard Report

Bermuda House of Assembly tion is coming. It means that you have competent fi scal policies for economic growth, Mr. Speaker.

All right. Thank you.

Hon. E. David Burt: Employer payroll taxes. [The
following changes will apply]:
• Businesses with an annual payroll of up to
$200,000 will see their payroll tax rate move
from 1.75 [per cent] to 1.0 per cent, reducing
their payroll tax liability by 43.0 per cent .
• Businesses with an annual payroll between
$200,000 and $350,000 will see their payroll
tax rate moved from 3.5 per cent to 2.5 per
cent, reducing their payroll tax li ability by
29.0 per cent .
• Businesses with an annual payroll of
$350,000 to $500,000 will see their payroll tax
rate moved from 6.5 per cent to 5.25 per cent,
reducing their payroll tax liability by 19.0 per
cent.
• Businesses with an annual payroll between
$500,000 and $1 million will see their payroll
tax rate move from 9.0 per cent to 7.5 per
cent, reducing their payroll tax liability by
17.0 per cent .
• (And, Mr. Speaker, this was not in the prebudget report —) Businesses with an annual
payroll of $1 million or more will see their pa yroll tax rate move from 10.25 per cent to
10.0 per cent, reducing their payroll tax liabi lity by 2.0 per cent .

[Desk thumping] Hon. E. David Burt: Now, MP Dunkley, let us take
down some of those prices, please.
• Exempted businesses will see no increase in
tax liability, with their payroll tax rate remai ning at 10.25 per cent .
• Self-employed farmers and fishermen will see
their payroll tax rate move from 1.75 per cent
to zero, eliminating their employer payroll tax liability completely .
• Education, sport and scientific institutions
(these are some of our community clubs, Mr.
Speaker) will see their payroll tax rate move
from 1.75 per cent to 1.0 per cent, reducing
their payroll tax liability by 43.0 per cent .
• Qualifying retail businesses will see their pa yroll tax rate move from 7.0 per cent to 6.0 per
cent, a reduction of their payroll tax liability by
14.0 per cent .
• Hotels and restaurants with an annual payroll
of $350,000 or more will see their payroll tax
rate moved from 6.0 per cent to 5.0 per cent,
reducing their tax liability by 17.0 per cent, Mr.
Speaker.
Yes, this Government will support the bus inesses of this country.
Moving on to employee payroll taxes.

EMPLOYEE PAYROLL TAXES

Hon. E. David Burt: Mr. Speaker, Berm uda’s system
for employee payroll taxes is regrettably complex.
One of the hallmarks of a good system of taxation is that it is simple to understand. Unfortunately, the current structure of our employee payroll taxes is an ything but simple. Although the Government desires to
simplify this tax system in the future, while we are in
the midst of a review of our tax policies due to the r equired implementation of the OECD Global Minimum Tax, that necessary simplification will not be delivered
this year.
Mr. Speaker, there has been much convers ation regarding the Government’s proposals to make
our employee payroll taxes more progressive. It is
important that Honourable Members recall that employee payroll taxes are not the liability of employers under the law. C hanges made to the payroll tax sy stem in 2016 created two separate and distinct entities responsible for the burden of the payroll tax: the employer and the employee. I am cognisant that some
businesses in the country may choose to cover their
employees’ payroll tax obligations. However, Mr. Speaker, that choice cannot be used as an argument
against ensuring that we have a more progressive
system of taxation in Bermuda for income from labour.
Mr. Speaker, based upon the feedback that
the Ministry of Finance has received and following conversations with Cabinet colleagues, the following payroll tax system will be in place for employee payroll
taxes for the tax period commencing April 2023. Mr.


Bermuda House of Assembly Speaker, to ensure that increases to higher brackets
of taxation are not as dramatic as proposed in the prebudget report, the Government of Bermuda has elec ted to introduce a fifth marginal tax bracket. Whereas
previously there were four different tax bands, there will now be five. Again, Mr. Speaker, I understand the
complexity of this tax system and the difficulty that it
places upon employers to calculate the rates of tax ation for their employees correctly. And I want business
owners to know that the Government recognises how
challenging that is. One of the aims and objectives for
the review of the tax system, following the recommendations from the International Tax Working Group on
Bermuda’s implementation of the Global Minimum
Tax, will be to look at how to simplify this marginal tax rate system.
Mr. Speaker, as I stated earlier, the headline
of the payroll tax reform for employees is that any employee making less than $132,000 a year will pay
less payroll tax this year than they did last year. And
as I have said, Mr. Speaker, this amount captures 86 per cent of B ermuda’s workforce, which means
that today this PLP Government is delivering a tax cut for 86 per cent of the workers in this country.

[Desk thumping]
Hon. E. David Burt: Now to the details, Mr. Speaker.
As I have just stated, prior to this year there w ere four
marginal tax brackets; however, for the tax period ending June 2023, there will be five. The new tax
brackets will be charged at the following marginal
rates:
• For the first $48,000 of income, the employee
payroll tax rate will be 0.5 per cent .
• For the next $48,000 of income, the employee
payroll tax rate will be 9.25 per cent .
• For the third marginal tax band, income
earned between $96,000 and $200,000, the
employee payroll tax rate will be 10.0 per
cent.
• For the fourth marginal tax band, income earned between $200,000 and $500,000, the
employee payroll tax rate will be 11.5 per
cent.
• For the fifth marginal tax band, income earned between $500,000 and $1 million, as we i ncrease the cap to $1 million, the employee
payroll tax rate will be 12.5 per cent.
Mr. Speaker, it is essential for all persons to
recall that these are marginal rates, meaning that all
persons will pay the same rate for income in a band. So, someone making $250,000 will pay 0.5 per cent
on their first $48,000 of income just as someone ma king only $48,000. Alternatively, someone making $96,000 does not pay 9.25 per cent on all of their i ncome; they pay 0.5 per cent on the first $48,000 and
9.25 per cent on the amount between $48,000 and
$96,000. With these revised marginal rates, the highest
effective employee payroll tax rate will now increase from 9.0 per cent in the current fiscal year to 11.2 per
cent in the next fiscal year, and the total amount est imated to be collected in fiscal year 2023/24 from e mployer and employee payrol l tax is $504.5 million.
Mr. Speaker, before this Government was reelected in 2017, workers making $48,000 a year were paying $2,280 a year in payroll taxes. Since then, this
Government has steadily reduced the tax burden on
Bermuda’s workers, and we hav e continued to do so
in this budget. Next year, Mr. Speaker, that same
worker will pay only $240.00 [0.5 per cent] in payroll
tax, a reduction of $2,040. Mr. Speaker, this means
that since this Government was elected, workers
earning $48,000 have paid near ly $7,000 less in pa yroll tax. And the average worker in this country, based
on the median income, Mr. Speaker, would have paid
$4,500 less under this Government. That means more
money in their pockets to spend on things that they
and their families need.
Mr. Speaker, to summarise the payroll tax
changes, there are no employer payroll tax increases for any business in Bermuda. Every local business will
see their payroll taxes decrease, and 86 per cent of
the workers in Bermuda will see their taxes decreas e.
More money in the pockets of workers and more relief
for local businesses —that, Mr. Speaker, is how you
deliver sustainable economic growth, and that is what
this PLP Government has delivered and will continue
to deliver.
[Desk thumping]

MATERNITY AND PATERNITY LEAVE EXEMPTION
FROM PAYROLL TAX

Hon. E. David Burt: Mr. Speaker, this Government is
proud of its record of expanding employee rights, and
we are also proud that we extended paid maternity
leave from eight weeks to thirteen weeks and paid
paternity leave from none that existed to five days.
However, during maternity and paternity leave, employers are subject to paying payroll tax for their employees who are not currently working in their bus iness. Therefore, the Government will exempt emplo yers from paying payroll tax on the salaries paid to their
employees while on maternity and paternity leave.
Mr. Speaker, moving on.

Customs Duty Changes

Hon. E. David Burt: Customs duty is the secondlargest revenue source for the government and is pr ojected to generate $227 million in fiscal year 2023/24.
The Government has approved the following changes
to customs duty this year:

350 17 February 2023 Official Hansard Report

Bermuda House of Assembly EXPANSION OF CUSTOM DUTY RELIEF FOR
CAPITAL UPGRADES

Hon. E. David Burt: There is additional relief that the
Government wil l deliver to local businesses. For many
years restaurants and retailers have had the benefit of
customs duty exemptions for equipment used to upgrade their facilities. Investments in plant and equi pment are vital for continued economic success. Restaurants that invest in more efficient equipment i ncrease their productivity and therefore the health of
their business, allowing them to continue to employ
staff and serve customers.
Mr. Speaker, these are not the only busines ses that need to constantly invest in the upkeep of their
equipment to ensure they continue to remain viable. Therefore, as proposed in the pre- budget report, the
Government will extend this customs duty exemption for investments in plant and equipment to the personal
care sector —but also, Mr. Speaker, not in the prebudget report, to the personal fitness sector as well.
Spas, beauty salons and fitness centres serve locals
and visitors alike, and we must support them in
provi ding new and updated equipment for the enjo yment of their customers without the burden of add itional customs duty when they seek to upgrade their facilities. Customs duty charges for upgrades to equipment represent a disincentive for business ow ners to invest. Business investment is key to economic growth, and this change will make it easier for our l ocal businesses to invest for the future.

DUTY -FREE SCHOOL UNIFORMS

Hon. E. David Burt: As an additional item of relief for
parents of school -aged children, the Government will
exempt all school uniforms imported into the country
by local businesses for resale from customs duty.
Moving on . . . (You are welcome, Minister of
Education.)

REVISIONS TO THE SUGAR TAX

Hon. E. David Burt: Mr. Speaker, the sugar tax is
something that this Government pledged to implement
in its 2017 election manifesto, and [the Government] has kept its promise to do so. Mr. Speaker, we all
know the background of the consumption of sugar and
the long- term health impacts on our local population.
Bermuda has one of the highest rates of non-communicable diseases in the world, and it is incumbent upon governments to act to reduce these pres-sures over the long term. However, Mr. Speaker, the
application of the sugar tax via the customs tariff has
led to many items which may contain minimal added
sugar being subject to the sugar tax.
Therefore, we will table in this session chan ges to the Customs Tariff Act that will ensure that the sugar tax is focused on sodas and drinks with signif i-cant amounts of added sugar; my favourite thing,
candy made primarily from sugar; and chocolate.
However, items that may have a small amount of additional sugar, such as nutritional bars —we are talking
about protein shakes, protein bars —low -sugar drinks
with a little bit of added sugar, or non- dairy creamers
will see their customs duty rates reduced.

ELIMINATION OF DUTY FOR
AGGREGATE IMPORTS

Hon. E. David Burt: Mr. Speaker, Bermuda is running
out of limestone aggregate. Typically, aggregate is not
imported into Bermuda. But as the need is increasing,
it is important that we act to minimise the increase to
construction costs. Therefore, Mr. Speaker, the Government will eliminate customs duty on aggregate i mports used to manufacture conc rete and concrete
blocks.

[Desk thumping]
Hon. E. David Burt: Southampton Princess, approved residential scheme . . . maybe even an expa nsion to your house, Cole. You know what I am saying?
It is for everyone, goes for everyone.

[Inaudible interjection]

Direct your comments this way.

Hon. E. David Bur t: Thank you, Mr. Speaker. My
apologies.
Moving on.

Other Revenue Measures
Hon. E. David Burt: This budget contains further
changes to fees, charges and taxes that will collect
additional funds to meet the revenue target.

SELECTIVE FEE INCREASES

Hon. E. David Burt: Mr. Speaker, 2018 was the last
time that the PLP Government implemented the biennial fee review, which saw all government fees and
charges increase by 5 per cent. I am pleased to report
that we will not be implementing an across -the-board
increase in fees that would impact all government services such as vehicle licensing, passport renewals,
annual business licences, customs charges and rental
of government facilities. There will, however, Mr.


Bermuda House of Assembly Speaker, be adjustments to fees to support the go vernment’s necessary infrastructure investment. The
following fees will increase by 5 per cent:
• Stamp duty;
• Trademark fees;
• Fines;
• Solid waste dumping fees;
• Immigration fees (with the exception of pas sports);
• Planning fees; and
• Seaborne shipping fees [tugboats, et cetera].
These increases in fees are estimated to yield an ad-ditional $3.3 million for the government.

INCREASE IN THE TOP TWO BANDS OF
LAND TAX

Hon. E. David Burt: Mr. Speaker, during consultation
with various groups of industry, when suggesting a lternative proposals to the Government, it was pointed out that Bermuda’s land taxes for high- value properties are comparatively low when compared to other
jurisdictions. To provide additional revenue to the
treasury while not increasing the burden on t he vast
majority of homeowners, the Government will increase the top two bands of land tax by 5 per cent each. This
increase will only affect 4 per cent of the top properties, those persons with ARVs [annual rental values]
of over $90,000, and is expected to yield an additional
$2.4 million.

REGULATORY FEE FOR CORPORATE
COMPLIANCE

Hon. E. David Burt: Mr. Speaker, during the new fi scal year the Registrar of Companies will introduce a
new corporate regulatory fee. The fee, which is
planned to be [$150] annually for local companies and
$500 annually for other entities, is expected to generate approximately $6 million.
Historically, the primary responsibilities of the
Registrar of Companies have been to effectively administer the registration and regulation of all corporate
entities in Bermuda and ensure the provision of current and accurate registry information. But as the Re gistrar of Companies has assumed additional regulat ory responsibility, from overseeing adherence of com-panies to changing global regulatory requirements
such as economic substance, it is necessary to ensure that these compliance costs are appropriately
funded by the entities that they will now be regulating.
Consultation with industry has been ongoing over the last two years, and the new regime will be effective in
2024.

VACATION RENTAL REGISTRATION FEES

Hon. E. David Burt: Mr. Speaker, vacation rentals are
part of our tourism matrix. However, it must be noted that the initial vacation rental programme was intr oduced in 2018 when Bermuda’s economy was still
recovering and there were no limits placed on properties that were s ubject to rent control being converted
to vacation rentals. In the many jurisdictions globally
where vacation rentals have reduced the amount of
affordable housing, governments must act to ensure
that vacation rentals do not exacerbate housing shor tages. T hough the Government is not proposing a limit
on vacation rentals at this time, there will be a fee i ntroduced to register properties as vacation rentals,
which will be based on the ARV of the property. This
new fee is expected to generate $500,000 in addi tional revenue.

PATI FEES

Hon. E. David Burt: Mr. Speaker, the public access
to information [PATI] regime is a proud achievement of the PLP Government and [serves as a way to] ensure that the public has access to the information that
the government keeps on them and is better able to
understand the reasoning for government actions.
PATI increases the government’s transparency and
accountability.
Despite this, the regime can be cumbersome
and expensive. As an example, Mr. Speaker —no exaggeration whatsoever —a single government author ity spent in excess of $320,000 responding to a single
PATI request —$320,000, Mr. Speaker! These are
funds that could have been used to advance the well -
being of Bermuda but were instead spent researching
information. High level s of expenditure on requests
are not uncommon, as many government departments have had to halt vital work or actually hire short -term
consultants to assist in responding to PATI requests.
That is what we have going on right now in the Mini stry of Finance. We want to advance legislation, but
here we are making sure that we are fulfilling this.
Therefore, Mr. Speaker, the Government will
implement a nominal fee for PATI requests that are
not from private individuals requesting information
about the data that the government holds about them.
This nominal fee will not nearly cover the extraord inary amount that researching PATI requests costs the government. But the Cabinet has deemed it necessary to implement a fee to ensure that at least some
of the costs of t hese requests are recouped.

INCREASE IN COURT FEES
Hon. E. David Burt: Mr. Speaker, an assessment has
been completed comparing Bermuda’s court fees to those in other jurisdictions, and Bermuda’s fees were
found to be considerably lower than competitor juri sdictions. As Bermuda’s international business sector has developed and grown, the number and complexity of court matters have increased significantly. A new
scale of fees, which will impact matters being con352 17 February 2023 Official Hansard Report

Bermuda House of Assembly ducted in the Magistrate’s Court , Supreme Court and
the Court of appeal, has been developed. It is antic ipated that these changes will yield an additional
$750,000.

PATH TO A BALANCED BUDGET

Hon. E. David Burt: Now, Mr. Speaker, let us talk
about a balanced budget, if we can. Last year in this
Honour able House I stated that the Government
would reach a balanced budget by fiscal year
2024/25, and I am proud to share with Honourable
Members and the public that we are still on the path to
achieving that goal. However, it is vital that I provide
some cont ext, Mr. Speaker, as I know there will be
some who will comment that the Government should
use the additional revenue to balance the budget this
year.
Yes, it is true that we could have achieved a
balanced budget on paper this year, but to do so would not have been an economically wise choice.
Mr. Speaker, the Ministry of Finance could have held
Ministers to the $75 million dollar capital expenditure
target set last year, which would have resulted in the
continued deterioration of Bermuda’s infrastructure
and further delay of critical projects. The Ministry of
Finance could have held to last year’s current ex-penditure target rather than increasing current expenditure to ensure that we deliver on key initiatives in
the Government’s platform and Bermuda’s Economic
Recovery Plan to improve the lives of residents. The
Ministry of Finance could have chosen not to reduce
taxes on persons making less than $132,000 a year and chosen not to reduce taxes on local businesses
while working families and local businesses struggle
with the highest global inflation seen 40 years.
Yes, Mr. Speaker, in theory I could be pr esenting a balanced budget on behalf of this Gover nment today. But if we had made that choice, there
would be more badly paved roads in Bermuda; our
hospital would likely default on its government -
guaranteed debt; critical infrastructure would go unfixed; the government would not be able to build more desperately needed affordable housing; the airport
would be at risk of being shut down due to the inability
to fund the firefighters necessary to keep it open; the
Tynes Bay Waste- to-Energy facility could fail and we
could go back to landfilling at Pembroke Marsh. In
addition, we would not have the resources to be able
to advance vital projects such as education reform
and universal health care. Mr. Speaker, these are the
choices you face in government.
And rather than presenting budgets to please
armchair critics or naysayers, we are determined to
ensure that the people of this country know that they
have a Government that is committed to delivering for
them. Bermudians want to know that the government
can balance the difficult choices to ensure that we
execute our election promises in a fiscally responsible and prudent manner. And, Mr. Speaker, today’s
budget demonstrates our ability to do just that.
Mr. Speaker, with the path for growth that has
been laid out in this budget, with the investments we
are making to ensure that our infrastructure can be solid; with the investments we are making to advance
critical issues like universal health care and education
reform, which are so vital to our Island’s future; and
with the investments we are making in affordable
housing, parish primary school conversion and health
care facilities throughout the Island, all while i mproving government efficiency, we will meet the target set
last year to have a fully balanced budget in fiscal year
2024/25. With a balanced budget and sustained ec onomic growth, this Government will be in a position to
start reducing its public debt.
Speaking about debt reduction, Mr. Speaker,
debt reduction will start this year —

[Desk thumping]

Hon. E. David Burt: —when the Government repays
a $50 million bond from the balance in the Sinking
Fund, which will see interest payments decline by
$2.4 mil lion next fiscal year.
[Desk thumping]
Hon. E. David Burt: You know, Mr. Speaker, I hear a
lot of chirping from the Opposition. They seem to for-get that a lot of that debt we are having to deal with
was racked up under them when they doubled it in havin g to deal with Morgan’s Point. Understand, Mr.
Speaker, that is what we got. But it is okay.

[Laughter and i naudible interjections ]

Yes.

Increasing Tax Compliance

Hon. E. David Burt: Mr. Speaker, monies owed to the
government but not paid reduce the government’s
revenue and cause an unfair tax burden on the rest of
the community. Therefore, as part of its path toward a
balanced budget, this Government will make a more
concerted effort toward tax collection through en-hanced enforcement of policies and processes. It will
also continue infrastructure investment within the O fBermuda House of Assembly fice of the Tax Commissioner to better equip its staff
in their debt collection efforts.
Mr. Speaker, it should be noted, however, that
while the outstanding balance recorded at the end of the fiscal year is high, it includes the taxes to be paid at the beginning of the next quarter, which represent
approximately 35 [per cent] of the annual [payroll] tax
revenue. Therefore, the $314 million in Office of the
Tax Commissioner [OTC ] receivables balance recor ded in the [2021/22] financial statements that I tabled today include payroll taxes of more than $130 million, which were actually paid [on time] a month later. This
is required by accounting standards, but it overstates
the amount that is subject to active debt collection
efforts.
Mr. Speaker, that much being said, there is
still a significant amount of funds owed to the gover nment, and we intend to take further action with legisl ation that will place further restrictions on businesses,
individuals and landowners who are not current with
their tax obligat ions or current on their tax payment
plans. These restrictions can include denial of contracts, grants, permits, licences, passports or other
government authorisations.
Mr. Speaker, the Office of the Tax Commi ssioner will also work more closely with the Department
of Public Prosecutions and the courts to create a
pathway for efficient adjudication of claims, including
designated days each month for the court to consider
cases for recovery of outstanding taxes. It is important
to note, Mr. Speaker, that this option will be reserved
only for taxpayers who have the means to pay but
refuse to communicate and/or work with the Office of the Tax Commissioner. Mr. Speaker, the Office of the
Tax Commissioner is committed to working with taxpayers to establish payme nt plans and decrease pe nalties for those willing to adhere to payment arrangements as agreed. Penalties and interest often form a
sizable amount of outstanding tax debt and can di scourage taxpayers from attempting to pay off amounts earned.
The Office of the Tax Commissioner has begun implementing a new debt management system
that aims to improve its processes and procedures,
ensure consistent collection activities and train its staff
on best debt collection practices. Their system will also be used to enable data- driven decisions and
practices that will result in more efficient and effective
collection of tax arrears. Mr. Speaker, the Government
has set a target of recovering $7.5 million of past due
taxes during this fiscal year, which is reflected in th e
payroll tax revenue projections.

Ending of Payroll Tax Concessions

Hon. E. David Burt: Mr. Speaker, there is no need to
belabour the profoundly negative impact the COVID -
19 pandemic has had on Bermuda and our local bus inesses. As previously stated, the Government intr o-duced a number of measures to provide short -term
support to those businesses, including temporary tax
concessions. It must be emphasised that these concessions were always intended to be temporary, as
there is a strong likelihood of distor ting the economy
while reducing efficiency and productivity if they were
to remain in place for extended periods of time.
Mr. Speaker, as we continue to move t his
country beyond the pandemic the Government will no
longer be extending these payroll tax c oncessions and
those businesses will be expected to recommence
their payroll tax payments. It is important that these
businesses do not build these concessions into their
business models and make the necessary adjus tments required to thrive in this evolving economy. A dditionally, in many cases, Mr. Speaker, these concessions were issued across industries and sectors, and it is recognised that some companies received the
subsidy despite its not being needed.

Future of Payroll Taxes

Hon. E. David Burt: Mr. Speaker, just as pandemic
tax concessions are set to come to an end, the payroll tax relief for new hires is set to expire in March of
2024. This programme, introduced in 2018 in the first
Budget Statement that I gave in this Honourable House, has been rem arkably successful, and currently
there are about $350 million of taxable remuneration
that is not subject to employer payroll tax due to this
exemption. This means that since the exemption was
created, there are $350 million being paid to emplo yees of mos tly international businesses, where their
business is not responsible for the employer portion of the payroll tax. If this concession comes to an end
next year and if current employer payroll tax rates stay
where they are, the government can expect a minimum of $30 million of additional payroll tax revenue.
Mr. Speaker, though it is unlikely that this
successful relief which has boosted employment numbers will come to an abrupt end, it must be modified, as it cannot be fair for exempted companies that
started in 2018 to not pay any employer taxes after
2024 while our long- standing exempted companies
continue to pay taxes on employees hired before 2018. Given the size of remuneration that is subject to
this relief, it is likely that the Government will be able
to further reduce employer rates in all payroll categories including exempted companies in next year’s
budget.
Mr. Speaker, with the additional revenue from
payroll tax that can be expected from the revision of the new hire relief, combined with new hotel projects
to come online in 2024 and continued expansion of
our economy supported by the growth measures contained in this budget, it is expected that revenue will
increase by 4.7 per cent in fiscal year 2024/25 to hit
the revenue target required to b alance Bermuda’s
budget.
354 17 February 2023 Official Hansard Report

Bermuda House of Assembly GOVERNMENT REFORM

Hon. E. David Burt: Mr. Speaker, the government
reform plan sets the direction for how the public service, as a collective, will support a future- forward go vernment for the people of Bermuda. The reform plan
for the period of 2019 to 2023 focused on foundational
[system -wide] public administration initiatives in the
people and technology components of the pr ogramme. Capacity and capability were strengthened
in the people component, and the technology compo-nent focused on digitisation.
Mr. Speaker, in 2022/23 ministries facil itated a
public value assessment of their services. The data were considered, and specific services have been identified for alternative service delivery. In 2023/24
the ministries will work with internal and external consulting resources to complete revie ws, establish the
cost savings associated with alternative methods of
delivery and, subject to consultation and the requisite
approvals, implement wide- ranging service delivery
changes across the government. The alternatives
could include mergers, public -private partnerships and
potentially the cessation of certain services.
Mr. Speaker, we have heard a lot from the
Opposition who, as I said earlier in this speech, repeat
baseless falsehoods in an attempt to score cheap po-litical points. One of the favour ite punching bags of the
Opposition is Bermuda’s hard- working and dedicated
public service which Members of the Opposition r epeatedly state is [overstaffed], and they accuse the
Government of expanding the size of the public service. Mr. Speaker, once agai n the Opposition is completely misleading the public. As I have said in this
Honourable House time and time again, there are
fewer persons on the government’s payroll today than
there were when we took office in 2017. I repeat —
fewer employees today than when this PLP Gover nment took office 67 months ago.
In fact, Mr. Speaker, if you look at the employment numbers for 2022, you will see that the number of jobs in public administration fell again. This
is not just what I am saying, Mr. Speaker; it is what the data show. Mr. Speaker, in July 2017 the total
number of persons employed by the government stood at 4,661. At the end of December 2022, that number stood at 4,483, a reduction of 178 positions,
or 3.8 per cent.
[Inaudible interjection]
Hon. E. David Burt: We had quite a few during
COVID -19; yes, we did.
Yes, Mr. Speaker, that narrative being pushed
by some that this Government has increased the size
of the public service is blatantly untrue. The data show the exact opposite and demonstrates yet again that
this Government is managing public finances of Ber-muda prudently. However, Mr. Speaker, you will note that there was an increase in funding for positions in
this year’s budget. That is for sure.
Mr. Speaker, we must stop using the public
service as a punching bag! No, it is not perfect, but
most public officers go above and beyond to provide services to the public. As the data I have shared
show, public officers are delivering with fewer people,
often doing double duty to ensure that vital gover nment services continue to be provided. However, Mr.
Speaker, this is not sustainable. Pay scales in the
public sector have fallen behind private sector coun-terparts, and the government struggles to retain its
best employees who can receive more lucrative o pportunities elsewhere.
Therefore, Mr. Speaker, this budget funds a
review of special ist roles in the public service allowing
pay scales to be adjusted commensurate with expertise, to ensure that the government can attract and
retain experienced talent in ar eas such as legal, eng ineering, compliance, information technology and f inance. This review is vital and will save money in the
long term as specialised roles that cannot be filled currently require the use of external consultants,
which costs the public p urse more, Mr. Speaker.

PENSION REFORM

Hon. E. David Burt: Mr. Speaker, the gap in funding
of Bermuda’s pension liabilities for the Contributory
Pension Fund [CPF] and the Public Service Supera nnuation Fund [PSSF] has been highlighted as a key
issue by both the Government and its advisers. R ecent projections have estimated that unless the issue
is addressed on a timely basis, the pension funds will
not be able to pay future generations of pensioners.
This has primarily resulted from the reality that Bermuda’s population is ageing, our workforce is not as
large as it needs to be and the amount of benefits
paid is not matched by the level of contributions.
This is why it is vital to not only grow the wor king population, Mr. Speaker, but also to enact reform s.
The Government has been working with the Public Funds Investment Committee and an international
consulting firm with expertise in this area to update
the framework for Bermuda’s pension system. In par-ticular, it has been determined that Bermuda should
be consistent with most major financial centres that
have individual social insurance contributions based
on a percentage of income and not a fixed amount. In
addition, the consultants are assessing the other key
levers to reform a pension system, namely, r etirement
age and benefits to ensure that the pension system is
sustainable into the future. The proposed changes,
coupled with the significant work being done to build
the working population, will be critical for ensuring that
Bermuda stems the tide of continually increasing def icits in the funds which are so critical for future reti rees.


Bermuda House of Assembly Mr. Speaker, these changes are vital, and
they are overdue. And I look forward to finalising the
consultation with trade union and business representatives to enact these necessary changes. However, it
is important to note that the intent of these changes is not to put a further burden on employers. Sudden
changes to our social insurance system could see
marked changes in company budgets and could be
detrimental to business health and local employment.
It is expected that while there may be some adjus tments to employer contributions to social insurance,
the contributions as a percentage of income will apply
to employees.
As we have seen in this budget, the Gover nment is intent on reducing taxes for employers so that
they can power additional job creation. However, Mr. Speaker, before I close, I would like to let all of Bermuda’s pensioners know that this Government will
keep its promise, and we will increase social insurance benefits by the rate of inflation this year!
[Desk thumping]

CONCLUSION
Hon. E. David Burt: Mr. Speaker, I began this Stat ement with a reference to the politics of hope. The trials
of this present age dominate our thoughts and to
some extent the de velopment of our public policies. In
such an age it is easy for governments to be infl uenced by the most topical issues and fall into a reac-tive cycle that relegates vision and optimism to the
back seat. But now more than ever, governments must not just ta ke the easy path. It is the gover nment’s responsibility to do the hard work of both overcoming present challenges while also laying the fou ndations for a better future.
The hope of the people we serve transcends
age, race, gender, religion and sexual orientation. There is a collective desire to realise the best for
Bermuda, and a common theme emerges from social
media encounters, constituency clinics and canvas sing, and even protests on the Cabinet Office lawn.
People want this Island to thrive. They want to witness
growth and prosperity. People want Bermuda to inn ovate and open up. People want our education system
to educate our children to the highest standard,
equipping them for the jobs that drive this economy.
People want to enjoy life and see their children and
grandchildren doing so as well.
Mr. Speaker, almost 25 years ago the people
of Bermuda embraced the politics of hope and for the
first time elected a Progressive Labour Party Gover nment. Those of us who toil day after day in the field of
elect ive politics do so based on the trust that is repr esented by each and every vote that we received. And
having offered ourselves for public service, we understand the covenant into which we have entered with
the people of Bermuda. Mr. Speaker, 25 years on, that hope is undimmed. The vision is as clear as ever,
and no pandemic, no global inflation, no foreign war
can come between this Progressive Labour Party
Government and the sacred trust of delivering on the
mandate of hope granted to us by the people of B ermuda.
Mr. Speaker, I am immensely proud to commend to this Honourable House a budget that will stay true to that mantra of hope set out in those early days
of Dame Lois Browne- Evans, L. Frederick Wade, E ugene Cox, David Allen, Arthur Hodgson, Nelson Bascome, Walton Brown and so many others who dedicated their lives to service and the pursuit of that fairer
and better Bermuda that we continue to build.
Mr. Speaker, as an heir to those giants of
hope, I am humbled and yet immensely gratified to
commend to this Honourable House the Estimates of
Revenue and Expenditure for fiscal year 2023/24. I do
so with the greatest conviction that this budget repr esents another step toward the even better and fairer Bermuda that we all wish to build and our path toward
continued economic growth. Thank you, Mr. Speaker.

[Desk thumping]

There is one Bill to be introduced this
morning by the Minister of Education.
Minister.

FIRST READING

EDUCATION (PRIMARY SCHOOLS)
TEMPORARY ACT 2023

Hon. Diallo V. S. Rabain: Thank you, Mr. Speaker.
Mr. Speaker, I am introducing the following
Bill fo r its first reading so that it may be placed on the
Order Paper for the next day of meeting: Education
(Primary Schools) Temporary Act 2023.