February 25, 2022

Yes, thank you. We have confirmation
that they have been circulated on SharePoint so all Members can now follow the Premier as he reads this year’s Budget Statement.
Members of the public in the listening audience, we apologise for that technical difficulty, but we had to get it correct in ord er that the proper record of
proceedings is done for the House. Yes, we like to
have the public listening in, but the House is what is paramount here , and we have to have the proper rec-ord so that the history of proceedings of what was
done and how it was presented is correctly recorded.
So I ask for the listening audience to accept our apo logies on the hiccup that we had to resolve. It all
seems to be resolved now and we will have this year’s Budget Statement read by the Premier, Minister of
Finance.
Prem ier, you have the floor.

Hon. E. David Burt: Whenever you are ready, Mr.
Speaker. Good?

Yes, I’m ready. You are good. You are
good to go.

BUDGET STATEMENT
IN SUPPORT OF THE ESTIMATES
OF REVENUE AND EXPENDITURE
FOR 202 2/202 3

INTRODUCTION

Hon. E. David Burt: Mr. Speaker, the Bermuda of
2022 has known two years of pandemic trials. Public
finances have been strained to meet the community’s
need for public health and economic support. Families have experienced unprecedented pressures to meet
their commitments, educate their children, and combat
the isolation brought about by the times in which we
live.
Mr. Speaker, extraordinary measures have
had to be adopted to meet the most unique challeng-es in a generation. In the bleakest hours, when hope
has seemed in short supply, we have drawn strength
from a community that has rallied to the aid of those in
need, providing food, mental health support and spi ritual enrichment. It has not been easy, but through our community spirit and resilience, we have overcome obstacles and disappointments in our path from the
coronavirus pandemic.
Mr. Speaker, it is important to recognise that
the obstacles and disappointments we have faced and
continue to face are finite, and I remind us all of the
words of Dr . Martin Luther King, [Jr.] “We must . . .
never lose infinite hope.” That statement eloquently
reiterates that our hope must outlast our challenges.
Thus, in presenting this Statement in Support of the
Estimates of Revenue & Expenditure for the Fiscal
Year 2022/23, the Government is determined to r estore some measure of hope to the people of Berm uda.
Mr. Speaker, Moving Beyond the Pandemic
means more than ending the use of SafeKey or elim inating the need for large group exemptions. For the Government, moving beyond the pandemic means renewing its focus on delivering on this country’s most
progressive platform ever, and the Budget tabled t oday will support that delivery.
420 25 February 2022 Official Hansard Report

Bermuda House of Assembly Mr. Speaker, the Honourable Member for
Pembroke South East, the former Minister of Finance,
brought to this role a unique acumen that served this
country well. It is through his considerable effort s, and
the diligent work of Bermuda’s Cabinet and Public
Service Executive, that I am pleased to advise this
Honourable House that this Budget is delivered having received an unqualified audit of the Consolidated
Fund for the fiscal year 2020/21. Additionally, our
budget performance has Bermuda’s net debt $68 mi llion lower than was forecast just last year, giving this
Government the ability to provide relief to hardworking families and support struggling businesses
while making investments in Bermuda’s economic
recovery.
Mr. Speaker, due to political rhetoric, issues
can often be distorted. Given that our Westminster system has a Government and an Opposition whose
job it is to criticise the current Government, sometimes
the facts can get lost, or at the very least, overshad-owed. It is therefore more useful to rely on independ-ent assessments from persons who have no political
agenda. One such body is the Fiscal Responsibility
Panel whose report for 2021 was released on
Wednesday , and, Mr. Speaker, tabled in this Honourable House earlier today. The comments and observations included in that report will be referred to in this
Statement, as it is important for our country to understand what independent observers are saying about
Bermuda’s economy.
Mr. Speaker, in the Statement that I deliver
today on behalf of this Bermuda Progressive Labour Party Government, I will be frank and honest with the people of this count ry regarding the challenges that
we face. However, my Statement today will highlight
the Government’s commitment to support Bermuda’s
families by providing additional relief and continuing to
fund core social programmes. The S tatement will
highlight the ec onomic progress achieved, a path for
sustainable growth, and the need for this Government
to push the envelope to ensure economic success for
future generations of Bermudians.

PROGRESS MADE OVER THE LAST FIVE YEARS
Hon. E. David Burt: Mr. Speaker, the ho pes of 2017
have been set back by the coronavirus pandemic, and the issues that we wished to address then are no less
real and no less urgent now. However, it would be
disingenuous to say that there has been no progress
made on critical issues under this P rogressive Labour
Party Government.

A SOLID HISTORY OF FISCAL MANAGEMENT

Hon. E. David Burt: Mr. Speaker, history will recall
that the One Bermuda Alliance, during their tenure in
Government, doubled Bermuda’s debt from $1.2 bi llion to $2.4 billion. This significant debt increase left the Progressive Labour Party, upon returning to Go vernment in 2017, with virtually no room for further borrowing. Thus, it was anticipated by many that our new
Government would be required to increase the cou ntry’s debt ceil ing which was, at that time, $2.5 billion.
However, Mr. Speaker, much to the surprise
of those that think the worst of the Progressive Labour
Party’s fiscal capabilities, we held true to our 2017
election commitments, reprioritised our spending, and
not only avoided increasing the debt ceiling in 2018,
but also reduced our deficit from $182 million under
the former Government to $70 million in just the first
year.
Mr. Speaker, shortly thereafter, in April 2018,
the rating agency Standard & Poor’s published its review of Bermuda and improved its outlook rating from
stable to positive, stating that it viewed the prudent fiscal policy of the new Progressive Labour Party
Government as positive. Those are not my words , Mr.
Speaker ; they are the words of a respect ed, sound
and unbiased credit rating agency on the performance
of the Progressive Labour Party upon returning to Government.
Mr. Speaker, in February 2019, this Gover nment delivered the 2019/20 Budget Statement, where
we projected a budgeted surplus for th e first time in
over 20 years. It is worth noting that after the first six months of that fiscal year, it was reported in this House, based on our projections, that we were conf ident we would meet our targets and achieve a modest
surplus by the end of the fiscal year.
So, Mr. Speaker, this Government immediat ely reduced our deficit and was given a positive outlook
from Standard & Poor’s, had us on a path to a surplus, and did not raise the country’s debt ceiling.
However, Mr. Speaker, much of the hard work
and efforts of this Government were quickly undone
as later that year we received a notice of default relating to the Caroline Bay project at Morgan’s Point. As a result of the default notice, the Government was r equired to raise the debt ceiling by borrow ing $200 mi llion to honour an obligation that the former Gover nment had committed us to with a guarantee that the
Progressive Labour Party while in Opposition had v ehemently opposed.
Mr. Speaker, we have spoken about the Morgan’s Point guarantee on numerous occasions. Ho wever, it must be clear that the debt ceiling was not
raised until we were required to honour the guarantee
issued by the One Bermuda Alliance Government.
Further, Mr. Speaker, shortly thereafter, Bermuda and the world was faced with a once- in-acentury pandemic. Given the uncertainty surrounding
the pandemic and the profoundly negative impact it
had on our health care system, our economy and especially tourism, and overall way of life, the Gover nment raised the debt ceiling to borrow additional funds to cover COVID -19-related expenses and to provide
support to residents who were suddenly without work.


Bermuda House of Assembly Mr. Speaker, there is no disputing the facts I
have laid out. Upon returning to Government in 2017,
the Progressive Labour Party was executing its age nda and laying the foundation for long- term economic
growth before having to address two major events beyond our control, namely the Morgan’s Point guarantee and the COVID -19 pandemic.
In light of those challenges and the other potential risks loomi ng, such as the new OECD global
tax agreement, a challenging tourism market, inflation
in the United States, and the continued drainage of
public funds to cover the Skyport minimum revenue
guarantee, this Government is committed to making
the difficult, and sometimes unpopular, decisions r equired to steer us back to a path of economic recovery. Mr. Speaker, Honourable Members, w e did it b efore, and we will do it again.

UNPRECEDENTED SUPPORT FOR THE PEOPLE
DURING THE PANDEMIC

Hon. E. David Burt: Mr. Speaker, no review of what
this Government has done since it was elected to office is complete without recognising the unprecedented support it has made available to residents and
businesses in response to the coronavirus pandemic.
Over the last two years, this Government has
spent in excess of $100 million in direct assistance to citizens and businesses, including over $80 million of
direct assistance to individuals. This started immediately after the declaration of a pandemic and conti nued into this fiscal year due to the outbreaks that the
Island has experienced. Additionally, support has
been given to small, medium and large businesses
through the Bermuda Economic Development Corporation, and there have been a number of tax rebates
and concessions that have been made to support various industries in Bermuda. The narrative that this
Government has not helped its people is simply not
true.
Mr. Speaker, as part of emergency measures
related to the pandemic, the Government provided $6.7 million in payroll and l and tax relief to our local
hotels, bars and restaurants as an additional measure
of support for an industry that has suffered the most
during this pandemic.

STABLE PUBLIC SECTOR EMPLOYMENT

Hon. E. David Burt: Mr. Speaker, one common r efrain that is hurled t owards this Government from
many quarters is that the Progressive Labour Party
Government keeps expanding the size of the public
service. It is something that is often said, but it has no
basis in fact. The most accurate measure of the persons employed in the public service comes from the Government’s payroll records. These reports are
compiled quarterly and show a vastly different picture
than the common refrain from the Opposition. At the end of June 2017, three weeks before
the Progressive Labour Party w as elected, the number of persons paid by the Government was 4,625.
Four years later, at the end of June 2021, that figure
stood at 4,642 (which, Mr. Speaker, is inclusive of
staff that were part of the coronavirus response), an
increase of just 17 staff over that four -year period .
We can also look at the December numbers,
as that is the most recent quarter. At the end of D ecember 2017, the number of persons paid by the
Government was 4,438. Four years later, at the end of December 2021, that figure stood at 4,362 (which,
again, is inclusive of staff which were part of the cor onavirus response), a decrease of 76 staff over that
four-year period.
Mr. Speaker, the numbers fluctuate throughout the year as during the summer you have seasonal
employees, like lifeguards, however, the figures speak
for themselves. Since 2017, the Progressive Labour
Party has been prudent in hiring and has made i nvestments in technology to make the government
more efficient. We have not expanded the size of the
public service, and we continue, as always, to manage the I slands’ affairs with our extremely delicate
financial situation in mind.

DELIVERY ON PLATFORM PROMISES

Hon. E. David Burt: Mr. Speaker, since our election,
this Government has been laser -focused on executing
the pledg es made in our election platform, which were
endorsed overwhelmingly by Bermuda’s electorate.

Higher Education and Retraining
Hon. E. David Burt: Mr. Speaker, in 2017, we
pledged that every Bermudian would be provided access to the Bermuda College, regar dless of their f inancial status. Since 2017, a total of 174 students
have graduated or earned a certificate as a result of
us keeping that election promise. Students who benefit from new programmes often contribute to our eco nomy by joining the local workf orce and putting their
skills to work. In 2019, the “College Promise” merit
award programme was introduced, allowing public school students to attend Bermuda College tuitionfree, provided they graduate with a GPA of at least
3.0. Since its introduction, 69 students have taken
advantage of this award and four have already grad uated from the Bermuda College.
Mr. Speaker, our success in providing i ncreased access to Bermuda College can be seen in
the enrolment figures. In 2016, enrolment at Bermuda
College st ood at 926 students. I am pleased to report
that it now stands at 1,305, an increase of some 379
students —379 Bermudians who may not otherwise
have had the opportunity to further their education
without the support that this Government promised it
422 25 February 2022 Official Hansard Report

Bermuda House of Assembly would pr ovide. And this Government delivered on that
promise.

Unlocking Access to Capital and Boosting
Entrepreneurship

Hon. E. David Burt: Mr. Speaker, the Bermuda Ec onomic Development Corporation (BEDC) is respons ible for providing financial support and techni cal advice
to local small and medium -sized businesses, overse eing the Economic Empowerment Zones, growing outside vendor markets, and issuing vending licences.
Mr. Speaker, with increased funding support
from the Government, the BEDC continues to deliver on initiatives such as its direct lending microloan, f inancial grants, and loan guarantees that provide
greater access to capital for our local entrepreneurs.
The BEDC also recently increased its maximum guarantee capacity from 50 per cent to 75 per cent to enhance financing opportunities and through its new
Start -ups Payroll Tax Relief programme introduced in
2018/19, the BEDC has facilitated 73 businesses
starting up resulting in 110 new jobs.
Mr. Speaker, the BEDC also develops new f inancial partnerships, such as with the Bermuda Credit
Union Co- Op Society, to develop additional financial
products to support our local businesses and amplify what the BEDC, and local banks have provided.
Mr. Speaker, the Government appreciates the
importance of local small and medium -sized bus inesses and will continue to facilitate and support the
BEDC in their efforts to grow Bermuda’s entrepreneurial ecosystem.

Economic Recovery Plan

Hon. E. David Burt: Mr. Speaker, the Fiscal Responsibility Panel Report for 2021 acknowledged the pos itive momentum around Bermuda’s economic recovery
efforts. On the subject of Bermuda’s Economic R ecovery Plan (the ERP), that report stated, and I quote,

“We welcome the Government’s commitment
to the ERP. We are encouraged to not e that signif icant progress has already been made with projects in
several areas, particularly economic diversification, immigration, renewable energy and red ucing medicine
costs.”
The Economic Recovery Plan is focused on a
strategy of economic diversific ation, reducing soci oeconomic disparities and leveraging Bermuda’s nat ural resources and geographic advantages. This ap-proach will gradually help solidify the country’s ec onomic structure. The goal of each initiative is to generate stimulus by increasing G DP, job creation and
investment, improving income, quality of life and the
business environment, reducing economic disparity
and, of course, improving public finances. While the expected economic impacts will
vary by initiative, work has commenced on virtu ally all
of the 31 initiatives included in the Plan. Some initi atives have progressed to an advanced stage and ot hers, such as the Economic Investment Certificate,
have been fully implemented. To date, the Economic
Investment Certificate has generated over $45 million
of new investment in the Bermudian economy.
Further, Mr. Speaker, the Project Manag ement Office [ PMO ] has determined the means to align
action plans to accelerate the improvement of ec onomic outcomes. While all initiatives are deemed to be key contributors, four initiatives have been ident ified as those likely to generate a significant socioe conomic and employment impact in the short term. The PMO will give additional focus to those four initiatives,
which will be referred to as lead initiative s, to accele rate these projects and realise significant economic
benefits during this fiscal year.

FinTech Has Been a Success and Will Keep Growing

Hon. E. David Burt: Mr. Speaker, thanks to this Government’s vision, Bermuda is now a recognised global leader in the FinTech industry. In 2018, we passed the
Digital Assets Business Act in this Honourable House
and leveraged Bermuda’s history as an innovative
business jurisdiction and the stellar reputation of the Bermuda Monetary Authority to create a new in dustry
in our country.
Mr. Speaker, of the 13 digital asset busines ses currently licensed by the BMA, six were licensed in 2021 and three licences have already been issued in
2022. Momentum in this industry is growing and the
number of licensed FinTech companies is expected to
double this year while existing entities continue to expand their operations.
FinTech companies are investing in Bermuda,
creating jobs for Bermudians and contributing to the
local economy and our local charities. This industry
will o nly stand to benefit Bermuda, and it demonstrates why the Government must keep the end in sight as it aggressively pursues policies that will make
Bermuda an early leader in this field. Despite constant
criticism from the Opposition, we have persevered, and now Bermuda is reaping the benefits of this Go vernment’s vision and persistence.

THE LOCAL ECONOMY

Hon. E. David Burt: Mr. Speaker, I will now focus on
the domestic economy. In 2021, Bermuda saw signs
of economic growth supported by a rebound in quarterly gross domestic product [ GDP ] data. Positive
economic performance was fuelled by new international business registrations, visitor spending, greater
levels of household consumption and increased con-struction activity, indicating a gradual shift towards
economic recovery.


Bermuda House of Assembly When compared to 2020, Bermuda’s GDP,
the primary indicator for economic growth, is estimated to have increased between 3 [per cent] and 5 per
cent in 2021. However, while we are seeing the early
stages of economic growth, th is Government recognises this increase in GDP is not being felt by all segments of society and therefore understands more
must be done.
Mr. Speaker, Bermuda continues to see
growth in international business. [In] 2021, [we] saw a
27.4 per cent increase in new registrations, with 934
new companies arriving on our shores, and a 4 per
cent increase in jobs , or 171 new posts. I am happy to
report that last year there were more positions added
for Bermudians than for guest workers, [ proving] that
the balanced policies of the Bermuda Progressive Labour Party can grow international business while
Bermudians benefit.
It is also important to note, Mr. Speaker, that
since 2019, jobs in international business have con-sistently increased, with 391 additional posts added to our econ omy, representing a growth of 10 per cent .
This sector now provides 4,411 jobs within our econ-omy and is the single largest economic activity group.
The Government will continue to work collaboratively
with [our] international business [ sector ] to promote
Bermudian employment and advancement.
Mr. Speaker, with the rollout of vaccines and
the relaxation of border restrictions, the travel industry
globally showed signs of a comeback in 2021, and
Bermuda’s tourism sector reflected that, demonstrated
by a 77.8 per cent improvement in air visitor spending
and a 27.7 per cent improvement in the length of stay
of leisure travellers. Despite several COVID -19related setbacks, Bermuda was also able to host m ajor international sporting events in 2021, such as the
Butterfield Bermuda Championship and SailGP, with
the latter alone injecting $5.7 million into the economy.
Mr. Speaker, with regard to the construction
industry, it is pleasing to report that new Planning a pplications increased from 402 in 2020 to 668 in 2021 ,
amounting to a 66.2 per cent improvement. During the
first three quarters of 2021, the value of new construction projects grew from $47.1 million in 2020 to $57.5
million in 2021.
Mr. Speaker, headline inflation continues to
remain low in Bermuda, as ref lected in the Consumer
Price Index, which indicates an average inflation rate of 1.5 per cent in 2021. Bermuda’s balance of pa yments continues to record relatively large current ac-count surpluses, which are an important strength in
the Bermudian economy. B ermuda’s total current account surplus over the first three quarters of 2021 was
recorded at $768 million. This figure is 19.8 per cent
more than the $641 million recorded over the first three quarters of 2020.
Mr. Speaker, sustainable economic growth
cannot be achieved without an expansion of jobs wit hin our economy and a reduction in unemployment le v-els. With a decrease of 3.9 per cent in employment
levels in 2021, from 32,427 filled positions to 31,250, this Government fully understands that a humancentred recovery is required.
Mr. Speaker, this Government delivered on
increasing the number of jobs in the Bermudian econ-omy in 2018 and 2019. However, the impact of the
pandemic on the labour market has been severe, r esulting in job losses across most indus trial sectors
over the p ast two years. The return to pre- pandemic
job levels will heavily depend on the success and r ecovery of Bermuda’s tourism industry.
Mr. Speaker, the closure of the Fairmont
Southampton hotel and the global decline in the travel
and tourism industry are key factors for the acco mmodation and food service industry recording the largest job declines of any industrial sector in Berm uda, with a loss of 696 filled positions in 2021. The
banking and financial sector also continued to see a
steady decline in employment, with 322 fewer jobs, or
a 14.1 per cent decline, since 2017.
Mr. Speaker, I must also note, however, the
increase in employment in the international business
sector, from 4,240 filled positions in 2020 to 4,411 in
2021. For the second consecutive year of job decline,
Bermudian employment levels declined by 3.4 per
cent, non- Bermudian employment declined by 4.1 per
cent and spouses of Bermudians’ employment d eclined by 4.9 per cent .
Mr. Speaker, the early indications of recovery
are encouraging and signify a return of confidence in
the economy. However, with lagging recovery in em-ployment levels, this Government recognises that
more must be done. The Government remains f ocused on implementing Bermuda’s Economic Recov-ery Plan and executing initiatives contained in the plan
such as the National Jobs and Youth Employment
Strategy, designed to get Bermudians back to work.
Mr. Speaker, while we manage the local
economy, Bermuda’s status as a top- class intern ational financial centre is u nder constant threat from
external forces. These include the OECD global minimum corporate tax initiative, a possible resurgence of
the coronavirus, the impact of climate change and its
correlation with our local insurance and reinsurance industry, geopoli tical tensions, rising global interest
rates and increasing global inflation. These risks must
be managed and addressed head- on and be mitiga ted.

THE CONSISTENT GLOBAL THREATS
TO BERMUDA

Hon. E. David Burt: Mr. Speaker, as has been hig hlighted on a number of occasions in the past, the nature and scope of the external threats to our financial
and economic stability have changed significantly over the years. In particular, there has been a considerable
expansion in the international and regional standards
424 25 February 2022 Official Hansard Report

Bermuda House of Assembly that we have to comply with in the areas of tax governance and cooperation, supervision and regulation,
and combatting money laundering and the financing of
terrorism and proliferation.
Mr. Speaker, as a jurisdiction committed to
cooperation, transparency, and high levels of compl iance, we are working tirelessly to address the challenges in those areas. Currently, we are involved in no
more than 10, yes, Mr. Speaker, 10 different types of
assessments or follow -up reports. We are working
with the OECD Global Forum on Transparency and Exchange of Information for Tax Purposes on reviews
of tax information and exchange agreements, cybersecurity, and common reporting standards; the OECD
Forum on Harmful Tax Practices on assessment of our economic substance regime and the Caribbean
Financial Action Task Force in relation to our anti -
money laundering regime.
Mr. Speaker, the European Union Council and
Commission also undertake assessments in any or all
of these areas. They can then decide to take action if there is a need for further strengthening in any area,
as evidenced by their recent decision to require and publicly record a high- level commitment from Berm uda in relation to actions to enhance our economic
substance regime.
Mr. Speaker, we also anticipate in the upcoming year, we will be subject to a review of our country -
by-country reporting regime which is another tax -
related assessment. Failure to reach full compliance
in any of these areas can expose us to reputational
challenges and could even have financial and ec onomic consequences.
Mr. Speaker, we will also continue to be i nvolved in discussions with all of the above- named
bodies as well as the OECD Inclusive Framework r esponsible for the Base Erosion and Profit Sharing In itiative, the Financial Action Task Force and key trad-ing partners, including the United Kingdom , the United
States and the European Union in relation to changes
in the development, updating and implementation of
international and regional standards with which we
are, or will be, required to comply. Along with all of
this, Mr. Speaker, we continue to take the necessary
steps to update and strengthen our regime and to en-sure effective implementation.
Mr. Speaker, the requirements related to the
recent agreement by the G20 to approve what is
commonly referred to as the “OECD Global Minimum
Tax Agreement” will be an area of even greater focus and risk for us in this upcoming year. Determining the
right “construct” will not be easy, but achieving success in this regard will be critical for our ongoing ec onomic stability and security. Through appropriate co llaboration with our industry partners and ongoing di scussions with the various external bodies, and through taking prudent and considered action, we must and
we will ensure that Bermuda’s value proposition as a
domicile for international business remains strong. THE HARSH REALITY OF BERMUDA’S
TOURISM ECONOMY

Hon. E. David Burt: Mr. Speaker, Bermuda’s tourism
industry has been battered by the pandemic. Our i ndustry suffered from underinvestment, and the collapse in travel exposed its fragile state. The outlook
right now is bleak, and there are many who may pr edict that our tourism industry will never recover. I am
not one of them.
Mr. Speaker, hospitality development pr esents a difficult paradigm f or Bermuda on account of
the high cost of labour and doing business. The concession framework within which we operate is simply
not competitive. We will not have new or redeveloped
hotels, or attract superior events, with the current
structure. Our competi tors understand this, and we
see elsewhere branded hotel development which positions them favourably for thriving arrival numbers in
the very markets that match Bermuda’s price point.
Mr. Speaker, there are some who will blame
last year’s tourism numbers on Bermuda’s strict border controls, comparing our country to other jurisdi ctions that had simpler border regimes and who have
seen tourism numbers return to pre- pandemic levels.
However, that comparison only tells part of the story.
Our fellow overseas ter ritory Turks and Caicos saw excellent numbers last year, but Mr. Speaker,
it is important to understand why. In 2016, the then
newly elected Premier and Minister of Finance of
Turks and Caicos committed to expanding concessions for hotel development on the island. The result
of that decision is that, over the last five years, a si gnificant number of new hotel properties have been constructed with new hotels opening last year.
Most of our competitor jurisdictions offer tax
concessions far in excess of what i s offered in Bermuda. That is counterintuitive as Bermuda has a high cost of business operations and additional support is needed for success. This , Mr. Speaker, is the crux of
our tourism issue—it is difficult to make money in the
hotel business in Bermuda, and we must change that.
Those who have dollars to invest take their money to
jurisdictions where it is welcomed and where they can
make a better return. Bermuda, on the other hand, presents challenges to investors with high energy
costs, increased cost s of doing business, a cooler
winter and the historic collective bargaining agreement with the Bermuda Industrial Union [BIU], which
reduces efficiencies and increases operational costs.
Mr. Speaker, crisis often brings change. The
pandemic forced the clos ure of our largest hotel, the
Fairmont Southampton, with a loss of about 700 unionised jobs. As a part of the planning for the hotel’s
reopening, the Bermuda Industrial Union has negot iated a new Collective Bargaining Agreement with the
owners of the hotel which will apply efficiencies as a
precondition for approval of overseas lenders to invest
in Bermuda. It is the Government’s hope that this new


Bermuda House of Assembly Collective Bargaining Agreement can be the baseline
for future tourism growth in Bermuda. And today, Mr.
Speak er, I would like to publicly thank the Bermuda
Industrial Union for coming to the table as it will take a
true tripartite effort to make tourism successful again in Bermuda.
However, operational efficiencies are not
enough when Bermuda must compete against other
jurisdictions that are offering additional incentives for
the building of new hotels.
Mr. Speaker, you would have heard me speak
previously in this House regarding a special act for the Fairmont Southampton. This recognises that for a hotel to be de veloped in Bermuda and to attract signif icant capital, we must be prepared to compete with
other jurisdictions. When this Government came to
office in 2017, we passed the Tourism Investment Act, which upgraded the old Hotel Concessions Act 2000
to extend c oncessions for hotel developments.
Mr. Speaker, we doubled the length of concessions from 5 years to 10 years, but it is evident
that there is still more work to be done. Mr. Speaker, you will remember me mentioning Turks and Caicos
and the fact that they have seen an increase in the
number of hotel beds in their country. That is because, in 2016, the new Premier and Minister of F inance expanded their hotel concessions to 25 years.
And, Mr Speaker, those are not even the most generous hotel concessions, as there are more jurisdictions
in the Caribbean that offer 30 years or more of tax
concessions in order to attract branded five- star hotel
developments to their shores.
Mr. Speaker, hotel concessions of that length
may seem extreme, but governments have recognised that the revenue from direct taxation of hotels
pales in comparison to the money and employment generated for the country through having hotels open
and operating. Hotel employment is vital, and al though tourism only contributes 5 per cent to our gr oss
domestic product, it contributed approximately 14 per
cent of the jobs in Bermuda in 2019.
Mr. Speaker, this Government will introduce
this year amendments to the Tourism Investment Act to increase the duration of concessions available to
hotel developers in Bermuda.
Mr. Speaker, doing what is required to attract
hotel investment does not mean that we will be rec kless. We have seen what a desire to develop hotels at any cost can mean to the taxpayers of this country.
The former Government’s failed bid to support the
Caroline Bay project has had dire consequences for our public purse.
In that deal, the former Government guara nteed virtually all of the debt for the project, and construction was started before sufficient funding was in place to support its completion, with the project reliant
on real estate sales to fund the balance of the development. Mr. Speaker, that was an unacceptable risk for a massive undertaking involving persons that had
no comparable experience in hotel development.
What is most egregious is that in 2017, while
the former Government was fi lming election advertisements at Morgan’s Point, the developers had already breached the commitments that were made for
the guarantee, as they had agreed to sales targets
that had not been met.
Mr. Speaker, it is now clear that the former
Government should have never entered into the
agreement as it was structured. That has been made
evident as the guarantee was called and taxpayers
have now paid over $210 million for the previous administration’s poor judgment . Yes, Mr. Speaker, $210
million.
By contrast, this PLP Government has taken a
different approach. We have ensured that guarantees
extended to hotels, like the one provided to the new
St. Regis property in 2018, or the 2019 agreement
between t he former Minister of Finance and the d evelopers of the Fairmont Southampton, do not overexpose the Government. We are making sure that all hotel development is fully funded so that taxpayers
are not left bearing the cost.
Properties like the Fairmont Sout hampton,
which was the largest private employer in Bermuda,
are a national priority. So much in this country d epends on a successful tourism industry. Without it we
do not have sufficient visitor numbers, our attractiv eness as an international business jur isdiction is r educed and all the businesses that support it suffer,
including food services, transportation and entertai nment. Tourism is essential, and it is the responsibility
of the Government to use all of the tools at its disposal, including appropriate guarantees where necessary,
to facilitate successful hotel development.

BERMUDA’S DEMOGRAPHIC AND POPULATION
PROBLEM

Hon. E. David Burt: Mr. Speaker, we have a dem ographic challenge in Bermuda, and that challenge will
not magically resolve itself. It requires strong leadership to implement policies that address the issues
while ensuring Bermudians benefit from economic
progress.
Mr. Speaker, it is expected that last year will
mark the fourth consecutive year that deaths exceeded births in Bermuda. The latest projections, based on
recent statistics, state that 25 per cent of our popul ation is expected to be senior citizens by 2026. Add itionally, residents have left Bermuda due to the ec onomic challenges that we currently face, especially in
our tourism i ndustry with the closure of our largest
hotel. Mr. Speaker, if we do not reverse these trends,
it will lead to economic disaster for Bermuda.
Mr. Speaker, population growth is not simply
an option for Bermuda; it is a necessity for our survi val. It is not possible for Bermuda’s economy to grow
426 25 February 2022 Official Hansard Report

Bermuda House of Assembly while our population declines and ages. A declining
population in a small I sland state increases the cost of
living. An ageing population increases the cost of
health care. A shrinking workforce puts future pe nsions at risk. These trends must be reversed; our
population and workforce must grow , and for that to
happen, we must create jobs through domestic or foreign investment.
Mr. Speaker, this growth of jobs does not
mean that all persons need to be imported for the
roles to be filled. If we do our job to make Bermuda a
fairer place to live and work, there are Bermudians
who will return. However, it is vital that we shift from
the false choice of , is population growth good or bad?
to a mind- set in this country that growth is essential —
how do we ensure that it benefits Bermudians who
live in Bermuda?
Mr. Speaker, immigration policy may be co ntroversial, but economic and demographic realities
should not be. In a modern and globalised economy,
where people do not need to l ive in Bermuda to work
for Bermudian companies, and with an ageing populace and infrastructure, we will not fix the burning i ssues of high taxes, high cost of living and weak bus iness demand without increasing the number of people who live and work in Berm uda.
The other side to the economic argument for
population growth is the desperate need for small businesses to survive and thrive. We see that small
businesses in Bermuda are hurting and traditional l ocal retail has been severely impacted by the pandemic. They welcome temporary assistance from the Bermuda Economic Development Corporation, but what
every business owner wants, whether large or small,
is more customers to whom they can sell their goods
or services.
Mr. Speaker, if our economic pie does not expand and our local entrepreneurs are fighting over the
same 60,000 customers there will be little collective
growth. More jobs and a growing population lead to more opportunity for entrepreneurship, more opportunity for growth, and more opportunity for wealth cr eation.
As an example, Mr. Speaker, Economic I nvestment Certificates modified an existing policy to
ensure it better benefited Bermudians. It changed the existing policy to require those who wished to reside
in Bermuda to make investments that benefit res idents, either through support ing education, sporting
clubs, charities, debt reduction, new businesses, real
estate or other vital investments.
Mr. Speaker, this Government knows and understands what is required to build the economy, but
we also know that economic growth cannot leave
Bermudians as spectators to success . Jobs can be
created through local investment as well. In 2019, I
pledged that this Government would allow Bermudians to access their pension funds that are invested
overseas to invest in local Bermuda companies. I made that pledge because I have faith that Bermudians can look at what they have, assess the risks and
decide, if they wish to do so , to make a bet on their
future. If they are confident in their plans, they should be allowed to pledge a small portion of their pension
savings to invest in starting a business or to invest in
a business start -up to further the Government’s goal
of creating a nation of owners.
Just as we have opened up avenues for additional foreign investment, w e must make it easier for
Bermudians to pool their resources and invest in their
own Island. These changes will be implemented this
year to increase domestic investment that will create
jobs, and in turn, stabilise and eventually increase
Bermuda’s domesti c population.
Mr. Speaker, changing these demographic
trends will not happen overnight . It will take time. And
while there will be an economic boost this year with
increased business from tourism, this Government
recognises the challenges being faced by residents
who need additional support and relief from Berm uda’s high cost of living now.

RELIEF NOW AND MORE RELIEF TO COME

Hon. E. David Burt: Mr. Speaker, this Progressive
Labour Party Government has a history of reducing
the burden of taxation on those who can least afford
to pay. We did that in 2018 and in 2020, and we are
doing it again today.
Make no mistake Mr. Speaker . There is a di fference of philosophy. And that can be seen not just in words but in action. It must be remembered that while
the for mer Government had the highest payroll tax
rate in the history of this country for workers, Mr.
Speaker, since returning to office, the Progressive
Labour Party has reduced the burden of payroll taxes for all persons earning under $96,000 twice, and we
are doing it again today.
Mr. Speaker, I mention this because there are
many persons in our community who, in some way,
shape or form, have become disillusioned by politics
and government. They believe that there is no difference between political parties and their philosophies.
But, Mr. Speaker, nothing could be further from the
truth.
The contrast could not be starker, and this
Government will continue to be true to its core princ iples—that we must build a better and fairer Bermuda.
One of the most important aspects of this is that individuals who have more should pay more, and those who are at the lower end of the economic spectrum
must have relief, especially given the high cost of li ving in Ber muda.
While the Government has not made any major tax system changes for this budget year, relief must be provided to Bermudians who will be cha llenged over the next year with the increasing cost of living.


Bermuda House of Assembly Mid-Year Review to Return More of Your Tax Dollars

Hon. E. David Burt: Mr. Speaker, I want to assure all
persons listening, and those who will read this Budget
Statement over the next few days, that the Gover nment is committed to reducing the tax burden and
providing additional relief during this fiscal year for
residents and businesses beyond the relief that will be
announced today.
Over the last few years, our discipline in
spending and strong revenue receipts have made our
budget deficits lower than anticipated. During this upcoming fiscal year, the Government will commit to a
mid-year review that will take plac e in September. If
our conservative revenue estimates are exceeded and
spending remains in line with estimates, we will pr ovide additional tax relief to residents.
First, Mr. Speaker, we will return 50 per cent
of any additional surplus to the taxpayers of this cou ntry. This means that if the projected defi cit for 2021/22
comes in below the estimates, 50 per cent of those
funds will be used to reduce taxes on fuel imports to
reduce the cost of electricity in Bermuda.
Mr. Speaker, the Government understands
the cost of living is a major challenge. Though we cannot control many of the factors that contribute to
the cost of living (as we import most of our goods ) we
can control the amount of taxes that are charged for
those items as they enter the country. And, Mr.
Speaker, history, again, is very important. As i t is important to note that the former Government raised taxes on fuel by 110 per cent during the time that they
were in office. Mr. Speaker, 110 per cent! It is the goal
of this Government to reduce the taxes on fuel imports
to reduce the cost of electricity.
Mr. Speaker, the current conflict between
Ukraine and Russia is likely to put further pressure on
electricity prices due to the increase in the price of oil.
Reductions in duty for fuel imports will reduce electricity bills and provide a cushion for Bermudian
households and against further cost and inflation
pressures from increasing energy prices.

Reduction of Private Car Licensing Fees
Hon. E. David Burt: Mr. Speaker, it has long been a
known irr itation in Bermuda that the birthday gift from
the Government of Bermuda for those persons owning
a private car is a very large bill for your annual licensing fee.
This year, to provide further relief across the
board to all residents, the Government is c utting the
vehicle licensing fees for private cars by 10 per cent .
Let me repeat that again Mr. Speaker . The Gover nment is cutting the vehicle licensing fees for all private cars by 10 per cent .
No Across the Board Increase in Fees

Hon. E. David Burt: Mr. Speaker, there is a reason
why vehicle fees are as high as they are, and that is
because, as far back as the 1990s, it was the practice
of governments to increase fees for all services and
licences by 5 per cent every [other] year. That was
known as the Biennial Fee Review. The last such r eview was in 2018.
Since that time, this Government has halted
that prac tice. And we have not implement ed across
the board increases in fees as we are committed to
reducing the pressures on Bermuda’s families and
Bermu da’s businesses.

Payroll Tax Reductions for Workers Making Less
Than $96,000

Hon. E. David Burt: Mr. Speaker, in this Gover nment’s 2020 election platform, we committed to elim inating payroll taxes for earnings under $48,000. Mr.
Speaker, we are not able to meet that en-tire commitment this year, but we will get started.
Since our election, we have steadily reduced the pa yroll tax burden on those persons making less than $96,000, and there are further reductions in store for
those persons in this B udget.
In 2017, before this Government was elected,
a worker earning $48,000 a year would pay $2,280 of
those dollars (or 4.75 per cent ) in payroll taxes. Next
year, that worker will pay only $720 ( or 1.5 per cent ),
a reduction of $1,560 (or 68 per cent ) since this Government took office, and a reduction of $240 compared to last year. Mr. Speaker, that same worker will
have paid almost $5,000 less in taxes during the time
that this Government has been in office, and for a
family, Mr. Speaker, that amounts to $9,840 in sa vings over five years.
Mr. Speaker, today’s reduction brings more
relief for workers , to assist with the burden of the i ncreased cost of living. Finally, Mr. Speaker, there are
no tax increases in this Budget, and anyone making
more than $96,000 will not see their payroll taxes i ncrease.

FURTHER RELIEF MEASURES

Extension of the Supplementary Unemployment
Benefit Programme

Hon. E. David Burt: Mr. Speaker, I’ll now touch on
further relief measures in this Budget. Mr. Speaker,
the initial Supplementary Unemployment Benefit
(SUB) programme was created and implemented via
the Public Treasury (Administration and Payments)
(Supplemental Unemployment Benefit) Regulations
2020 and provides assistance to unemployed persons
who do not qualify for f inancial assistance.
428 25 February 2022 Official Hansard Report

Bermuda House of Assembly This legi slation had a commencement date of
17th of September 2020. The initial expiry date of the
programme was 31st of March 2021. However, there
have been two extensions to this programme, and the
current expir ation date is the 31st of March this year .
From its ince ption in September 2020 to now , 172
individuals have received this assistance, provided by
this Government to people unable to find work in the
wake of the pan demic, for a total cost of $1,743,460.
Mr. Speaker, thankfully the trend analysis
points to a continued month- on-month decrease in the
number of Supplemental Unemployment Benefit applications submitted by the public. However, we will
not remove this safety net at this time, and I am
pleased to advise this Honourable House and the
public that the Cabinet’s approval will be sought to
extend the Supplemental Unemployment Benefit programme until 31st of April 2022.

Extension of Relief for Hotels
and the Restaurant Industry

Hon. E. David Burt: Mr. Speaker, since the onset of
the pandemic, hotels, restaurants, bars and nightclubs
have enjoyed relief from payroll taxes. These payroll
tax concessions will be extended for at least another
six months to support these businesses and their em-ployees, as they look to recover during this summ er
season.

Extension of New Hire Relief

Hon. E. David Burt: Mr. Speaker, in 2018 the Pr ogressive Labour Party introduced incentives for bus inesses to employ more persons in Bermuda. This r elief was targeted at international businesses and large
local employers to create jobs in Bermuda. This n ew
hire relief was further extended in 2020, but it is set to
expire on March 31, 2022.
This relief will be extended for a further two
years to support hiring in the local economy and is
applicable to local companies and international companies with an annual remuneration of $500,000 or
more.

Clarified Relief for the Charitable Sector

Hon. E. David Burt: Mr. Speaker, some charities are
having difficulty claiming relief from land taxes due to
the fact that they rais e significant funds from intern ational business. The Government wants to encourage continued giving from our international business community to our local charities. As such, we will
make amendments to the Land Valuation and Tax Act
to make it explicit tha t registered charities who earn a
majority of their funds from donations are exempt from land taxes.

Land Tax Relief for Care Homes

Hon. E. David Burt: Mr. Speaker, care homes look
after those in our society who most need our assi stance, but the pressures of the pandemic have
stressed the finances of many of Bermuda’s care
homes. Therefore, the Government will make
amendments to the Land Valuation and Tax Act to remove land taxes from registered care homes.

Final One -Time Pension Withdrawal

Hon. E. David Burt: Mr. Speaker, over the last two
years, the Government has allowed persons to have voluntary access to their pensions in case they are
having difficulty making ends meet due to reduced
hours or reduced business. In 2020, residents could
withdraw up t o $12,000, and in 2021 they could wit hdraw up to $6,000. This voluntary withdrawal for up to
$6,000 will be extended a final time to provide an additional avenue for relief for those Bermudians who
really need it.

Tax Reform Commission to Make Short -Term
Recommendations

Hon. E. David Burt: Mr. Speaker, in line with the recommendations from the Fiscal Responsibility Panel,
the Government will empanel a new Tax Reform
Commission before the end of April. This commission
will have the long- term work of appropriately adjusting
Bermuda’s local system of taxation, in line with the
requirements arising from the new OECD global tax
agreements.
Additionally, this commission will be as signed
the task of near -term changes to our system of tax ation to ensure that the recommendations f rom the Fiscal Responsibility Panel for a more progressive sy stem of taxation in Bermuda are implemented swif tly.
We must also acknowledge that an essential
benefit of changing our system of taxation is to deal
with the most pressing issues in Bermuda—the cost of
living and the cost of doing business.
The main taxes that Bermuda uses to collect
revenue—customs duties, payroll taxes and taxes on
fuel—increase the cost of living and the cost of doing
business. A fairer tax system can help us reduce our
cost of living, which in turn will boost economic
growth . And that is why it is essential that it be advanced.

MAKING OUR FINANCIAL SYSTEM
WORK BETTER

Hon. E. David Burt: Mr. Speaker, while I will not pr ejudge the result of the Tax Reform C ommission’s
work, the Ministry of Finance must advance policies
that make our financial system fairer. Therefore, this


Bermuda House of Assembly Government will introduce the following policies to
make our financial system work better for consumers.

Financial Conduct Legislation a nd
Mortgage Protection
Hon. E. David Burt: Mr. Speaker, banks are a vital
part of the financial system and play an important role
in our domestic economy. The Government is on record regarding its desire to diversify the banking sy stem and is excited that the Bermuda Monetary Authority is set to issue its first licence for a new bank in 21 years.
However, banks and financial institutions can
also place citizens at a disadvantage, and it is the r esponsibility of the Government to ensure a level pla ying fie ld. As such, this Government will bring legisl ation to give courts the power to postpone the exec ution of an o rder of possession in appropriate circumstances where payment plans can be established.
The legislation will also give the courts the ability to adjudge and grant appropriate relief to customers who
can show that their loan agreements were unfair.
Additionally, amendments to the Banks and
Deposit Companies Act outlined in the 2021 Throne
Speech will be advanced this s ession to create co nduct rules for the local banking sector, including crea ting limits on the fees charged for customers to access banking services.

Bermuda Digital Bank

Hon. E. David Burt: Mr. Speaker, one of the priority
items in the Government’s 2020 e lection manifesto
was the creation of a Bermuda Digital Bank. The r eport from the Fiscal Responsibility Panel discusses the benefits and possible risks of such an institution.
The Government commissioned a business plan for
the Bermuda Digital Bank, and that plan lays out a number of preconditions that are required for digital
banking to be successful in Bermuda.
One of these issues is open banking, to ensure that bank operations are interoperable, and i nformation is able to be readily exchanged. This is the underlying infrastructure th at allows for technological
solutions to be deployed in banking. This year, the
Government will advance, through the Bermuda Monetary Authority, open banking standards that will lay
the foundation for the creation of digital banking in
Bermuda.

BERMUDA’S NATIONAL BUDGET

Hon. E. David Burt: Mr. Speaker, I will now turn my
attention to the financial performance for the current
fiscal year and next fiscal year. I will also lay out a path to a balanced budget and to how the Gover nment will meet the target set by the Fiscal Respons i-bility Panel of achieving a $50 million surplus by the
fiscal year 2026/27.

Actual Performance for Fiscal Year 2020/21

Hon. E. David Burt: Mr. Speaker, before I get to this
year’s numbers, I must make a brief mention of the perfor mance for the last fiscal year, 2020/21. During
last year’s Budget presentation, the revised deficit for
the fiscal year 2020/21 was projected to be $245 mi llion. However, the actual deficit according to the final
numbers, which were reported in the Financ ial Stat ements tabled today, shows that the deficit was $61
million less than that figure, coming in at $184 million.

2021/22 Fiscal Performance
Hon. E. David Burt: Mr. Speaker, before proceeding
further on the estimates for the 2022/23 budget , I
would l ike to provide an update on the Government’s
financial performance, the continued impact of the
COVID -19 pandemic and the forecast for the current
fiscal year 2021/22.
Mr. Speaker, the latest revised forecast pr ojects that the Government will earn $1.03 billion in revenue in 2021/22. This is $31.3 million (3.1 per
cent) more than the $998.9 million in the original budget estimates. This is primarily due to Customs Duty, Passenger Tax, Civil Aviation Receipts, and
Travel Authorisation Fees performing better than expected, although those increases were somewhat of fset by lower collections in Land Tax, International
Company Fees and Passenger Taxes.
Mr. Speaker, the projected 2021/22 operating
expenses of the Government, excluding debt service
and guarantee m anagement, are $904.3 million, or
$16.3 million (1.8 per cent) more than the $888 million
originally budgeted. Significant contributors to the i ncrease in anticipated current account expenditure i ncluded the additional $11.1 million to the Bermuda Hospital s Board to meet the funding shortfall. To of fset additional operating expenses, the Government
realised savings in salaries, wages, and employee
overheads, materials and supplies.
Mr. Speaker, it is also worth noting that the effects of the coronavirus pandemic lasted longer than anticipated a year ago, with multiple variants of the
virus reaching and spreading throughout the Island.
Therefore, the cost of COVID -19-related expenses for
this fiscal year is expected to be $35.1 million, [or] $20.1 million (134 per cent) more than the $15 million
that was originally budgeted. Included within these
expenses are unemployment benefits, coronavirus
testing and lab operations, the vaccination pr ogramme, quarantine facilities and, Mr. Speaker, the
$16 million airport minimum revenue guarantee. Mr.
Speaker, $16 million!
The increase in revenue was not enough to
offset the increased COVID -19-related expenses and
430 25 February 2022 Official Hansard Report

Bermuda House of Assembly operating expenses. Therefore, the Government also
reduced its capital expenditure budget from the $92.9
million originally budgeted to $75.5 million.
Mr. Speaker, given the high levels of public
debt and the continued costs incurred by the Caroline Bay project, debt service and guarantee management
costs are estimated to be $132.8 million for this fiscal
year—$5.1 million (or 4.0 per cent) above the original
estimate of $127.8 million. This increase above budget is a result of $5 million spent on costs related to the
Morgan’s Point/Caroline Bay project.
Mr. Speaker, given the figures outlined above,
I am pleased to report that the revised estimate of the
overall deficit for fiscal year 2021/22 is $117.4 million, or $7.3 [million] (6 per cent) less than the $124.7 mi llion deficit that was originally projected. This result
demonstrates our commitment to prudent manag ement of taxpayer funds.
As of 31 March 2022, net debt is projected to
stand at $3.1 billion, with the Sinking Fund balance to
be approximately $231 million, which is sufficient to fund future deficits.

Fiscal Year 2022/23 Budget Estimates

Hon. E. David Burt: Mr. Speaker, I will now turn my
attention to the budget estimates for the upcoming
fiscal year 2022/23.
The highlights of the 2022/23 budget forecast
a $78.9 million (7.9 per cent) increase in revenue and
a $50.1 million (6.4 per cent) increase in current account expenditure when compared to last year’s orig inal estimate.
As a result, the current account balance, before debt service and guarantee management costs,
is budgeted to be a surplus of $132.7 million. The current account balance, after debt service, is projected
to be a $3 million surplus, representing a $34.9 million
improvement when compared to 2021/22. The overall
deficit, inclusive of capital expenditure, is projected at
$70 million, a $54.7 million (43.9 per cent) reduction
from the 2021/22 original estimate of $124.7 million.
Mr. Speaker, the projected current account
balance, excluding debt service costs, indicates whether revenues can support the day -to-day running
of the Government. This year’s budget with a current
account surplus of $132.7 million indicates that, according to projections, the Government will generate
sufficient revenue to cover not only the day -to-day
running of government but also interest costs —a major financial milestone as we restore public finances.

Revenue

Hon. E. David Burt: Mr. Speaker, the estimates for
2022/23 project government revenues of $1.08 billion,
which is $78.9 million higher than the original estimate
for the previous year. This increase in the estimate is primarily a result of projected stren gth in tourismrelated revenues, customs duty, and stamp duty.

Expenditure

Hon. E. David Burt: Mr. Speaker, the Government
has set the overall 2022/23 budget for current account
expenditure at $945.1 million, $57.1 million higher
than the original 2021/ 22 estimate. Key factors for the
increase are the discontinuation of austerity measures involving the pay of civil servants. Additionally, there is no separate line item for COVID -19, so all pandemic -
related expenses, such as the operation of the Molecular Diagnostic Laboratory, are now captured within
various Ministry budgets. The level of expenditure d elivers on the commitments laid out in the 2021 Throne Speech regarding funding for health care reform, i mplementing Bermuda’s first two signature schools, and
establishing a regulated cannabis regime.

Debt Service

Hon. E. David Burt: Mr. Speaker, debt service cost
for the 2022/23 budget is projected at $129.8 million,
1.6 per cent higher than the 2021/22 initial allocation
of $127.8 million. Although interest payments are estimated at the same level of $127.8 million, $2 million
of guarantee management costs projected related to the Morgan’s Point/Caroline Bay project and the Fai rmont Southampton project.

Capital Expenditure

Hon. E. David Burt: Mr. Speaker, the capital expend iture component of the 2022/23 budget is set at $73
million; $19.9 million lower than the 2021/22 original
estimate. Of this $73 million, $51 million is for capital development and $21 million is for capital acquis itions. The most s ignificant items of capital development expenditure in the 2022/23 budget relate to the $7 million towards Tynes Bay Waste Treatment upgrades and to the $3 million to be spent on the
maintenance of our public schools to ensure that their
buildings are safe for our students to attend.
Mr. Speaker, when looking at the $21 million
for capital acquisitions, $9 million, or 42 per cent of
that figure, is to be invested in information technology
upgrades throughout the Government of Bermuda and
in our schools. These investments will make the Government more efficient while upgrading technology in
our public schools. [Mr. Speaker,] $5 million has been
budgeted to purchase additional new buses and to
refit one of our fast ferries. Additionally, the Gover nment has all ocated $1 million to commence the installation of the new Island- wide CCTV system that was
promised in this year’s Throne Speech.
Mr. Speaker, before I move on, I would like to
advise Honourable Members and the audience watc hing or listening at home, that I will not be providing


Bermuda House of Assembly individual highlights for the 12 Ministries of Gover nment in this speech. We have 56 hours of debates on
these estimates over the next three weeks in this
Honourable House, and the Ministers of the Gover nment will take the time to share the plans and policies
that they will put into place.
There is no need for me to steal their thunder
today, Mr. Speaker.

The Path to a Balanced Budget

Hon. E. David Burt: Mr. Speaker, I know that there
will be some in the community, and I am sure in the
Opposition, who will look to the increased spending
and deficit this year, and the one- year delay to the
return to a balanced budget, as a reason to criticise
this Government’s fiscal management. However, I
promised at the beginning of this S tatement that I
would be realistic with where we are financially.
Therefore, I would like to quote from the 2021 Report
of the Fiscal Responsibility Panel. And I quote, Mr. Speaker:
“However, after cutting expenditure by 5.1% in
the teeth of the pandemic in 2020– 21, the 2021 budget increased current spending, excluding debt service
and the now discontinued contributions to the Sinking
Fund, by around 1% a year, barely enough to cover
inflation, in each of the next three years to 2023– 24.
Such continued austerity ma y be challenging to
achieve, particularly against the background of the
ambitious policies set out in the Economic Recovery
Plan, and the need to renew and modernise Berm uda’s public infrastructure.” End of quote.
Mr. Speaker, in the last Budget presentat ion,
the Government was projected to balance the budget
by the next fiscal year, 2023/24. Mr. Speaker, this is
not possible due to the need to continue to implement
the Government’s Economic Recovery Plan, reform
Bermuda’s health care and education systems , and
fund necessary capital investments to replace and repair ageing infrastructure while continuing to support
programmes for the vulnerable. And Mr. Speaker, I
might add, without i ncreasing taxes on our residents .
Given that full ec onomic recovery will not be
able to occur until the Fairmont Southampton is reopened the new target for achieving a balanced bud get
has now been delayed by one year to the fiscal year
2024/25.
Last year, the deficit target for this fiscal year
2022/23 was set at $41 million. Mr. Speaker, the Fi scal Responsibility Panel was clear when it stated that
continued austerity would be difficult to achieve in the near term given the Government’s ambitious Economic Recovery Plan. That $41 million target estimated
that current account sp ending would increase by just
1 per cent from $888 million to $896 million, inclusive
of any COVID -19-related spending.
Mr. Speaker, $896 million dollars in current
account expenditure for this fiscal year would have been impossible to meet without sending a significant
number of public officers home or cutting services
even more than the reductions that will be necessary
in this Budget. When examining what $896 million
represented, it became clear that there would have to have been redundancies to police, fire, prison services and throughout many critical government departments.
In addition, it would have required severe cuts
to the social services that protect the vulnerable in our
community and provide support for our seniors. And, Mr. Speaker, the $896 million projection did not take
into account the fact that the $888 million estimated
for this current [ fiscal ] year contained a number of
one-time measures that expired during the year, such
as the salary reductions for all public officers that were
in effect for three months of this current fiscal year ,
and in the Bermuda Police Service for half of the fiscal
year. That projection also did not anticipate further
payments to Skyport for the minimum revenue guarantee.
Mr. Speaker, the $945 million of current a ccount expenditure for the next fiscal year 2022/23 will still require a significant number of reductions in services in order to meet that target. Cabinet Ministers
will detail these measures during the Committee of
Supply. The reductions can be seen across the board where grants have been reduced in certain areas, services will have to be limited and hiring will be fr ozen. This $945 million is an accurate baseline for f uture current account spending, but it will still require significant spending disci pline in order to ensure that
this target can be met.
Mr. Speaker, revenues are projected to i ncrease by 4 per cent next year, which represents a
further recovery of Bermuda’s tourism sector, al though that will be offset by the ending of the Travel
Author isation Fee, which is projected to cost the Go vernment at least $22 million. In theory, Mr. Speaker,
we could have had a balanced budget next year with
additional tourism growth, but that would require keeping the Travel Authori sation and accompanying fee in
place for a further year, which goes against the Government’s commitment to ending both on 31 March
2023.
However, Mr. Speaker, what is important to
note is that the level of debt when we balance the
budget in 2024/25 will be less than was projected during last year’s Budget presentation. This is due to the
fact that our deficits over the last two fiscal years are
$68 million less than projected.
That strong financial performance means that
Bermuda is on track to beat the debt targets set up
last year, m eaning our debt profile is improving and
that, Mr. Speaker, should be celebrated.



432 25 February 2022 Official Hansard Report

Bermuda House of Assembly Returning to Surplus to Reduce Our Debt

Hon. E. David Burt: Mr. Speaker, I would like to
quote from the Fiscal Responsibility Panel’s Annual
Assessment, which stated : and I quote, Mr. Speaker:
“The Government’s commitment to budget
balance by fiscal year 2023/ 24, and the Minister’s
commitment to sticking to the 2021 /22 spending all ocations, are very welcome. However, we are concerned that there is no clear guide to policy t hereafter.
We therefore recommend that at the next Budget the
Government commits to a further set of specific timebound objectives for revenue and budget balance after 2023 /24. Consistent with our previous reports, we
recommend the Government target a bud get surplus
of $50 million per annum, to be achieved by fiscal
year 2026/ 27, and continued thereafter, to pay down
the debt and to demonstrate real progress towards meeting the debt -revenue target.”
Mr. Speaker, the Fiscal Responsibility Panel
called for near-term metrics to be put into place in order for the Government to generate a $50 million sur-plus in the fiscal year 2026/27, four Budgets from
now. The Government has responded to that recommendation by setting out a path that will get us to a
$50 mil lion surplus in the time that has been recommended.
Mr. Speaker, this means that expenses will
have to be controlled while we continue to grow rev enue. Most of that revenue growth will come from ec onomic growth. However, the Tax Reform Commission will be e mpanelled, and we are expecting that its
near-term recommendations will see revenue uplifts
next year of 4 per cent and the following fiscal year of
5 per cent.
After those two years, revenue is expected to
increase by 3.0 per cent per year. On the expense
side, we have projected an increase of 0.5 per cent for the next fiscal year, followed by a 1.5 per cent i ncrease in the three subsequent fiscal years. This glide path will meet the target of having a $50 million surplus in the fiscal year 2026/27.
Mr. Speaker, our public officers have gone
two years without pay increases and continue to pr ovide services under incredibly difficult circumstances.
In that context, I am pleased to state that the increas-es that have been projected in the fiscal years
2024/25 and 2025/26 will be able to provide an uplift
in salaries for public officers.
We are all in this together, and part of the
Government’s mandate in its negotiation with public
officers is to enlist them to ensure that savings are met. It would be difficul t, however, to ask public offi cers to wait a further two years for any salary increases. Therefore, salary increases for the near term will
have to be funded by efficiency savings that exceed the budget targets that have been set, and we will r equest our public officers and union partners to work with us to identify and implement those savings. MANAGING BERMUDA’S DEBT

Hon. E. David Burt: Mr. Speaker, I will now touch on
the issue of managing the debt. Again, Mr. Speaker, I
would like to begin my remarks with a quotation from
the 2021 Fiscal Responsibility Panel Annual Asses sment, which said, and I quote:
“Given the scale of Bermuda’s debt, the possibility of a large, sustained rise in global interest rates
remains one of the most serious risks facing Berm uda. The Government should be alive to opportunities
to refinance debt . . . [due within] the next few years
while bond yields are still close to historic lows and
spreads on Bermudian debt relative to Treasuries r emain low.”
Mr. Speaker, this Budget St atement has hig hlighted the serious challenges that Bermuda is facing
in many areas. In relation to the management of debt,
the key upcoming challenge is the need to refinance
almost $1 billion in debt over the next two years, with
approximately $500 milli on of it maturing in the upcoming fiscal year. As noted previously, there have
already been positive developments with actual and
expected deficits coming in at lower levels than orig inally estimated. Thus, it is expected that with careful,
continued fiscal management as detailed in this
Statement, the Sinking Fund will be sufficient to f inance the anticipated deficits until we achieve a budget balance.
However, Mr. Speaker, the current market environment for the required refinancing clearly presents risks in relation to effective management of future debt
servicing costs. Interest rates in the United States and
other key countries have begun to trend higher, with
further upward movement expected. Therefore, to address those risks, this Government will take steps to
access the market —the debt market —earlier to ensure that we can refinance our debt at historically low
interest rates in line with the recommendation from the Fiscal Responsibility Panel.

TACKLING UNDERFUNDED LIABILITIES AND
SUSTAINING PENSIONS

Hon. E. David Burt: Mr. Speaker, regarding pension
reform, the 2021 Fiscal Responsibility Panel Annual
Assessment stated, and I quote:
“Pension reform in Bermuda will, as els ewhere, require a combination of measures, including increased contributions (whether through raising contribution rates, the number of contributors, or some combination of the two), adjusted benefits, and higher
retirement ages, reflecting increased longevity and
working lives; all this is simply arithmetic. The alternative is that the funds will simply run out of money to
pay future pensions.” End quote.
Mr. Speaker, this Government, recognized the
importance and need for reform of our social insur-ance and public sector pension plan to ensure that


Bermuda House of Assembly pensions are there in the future for those who need
them. Therefore, we commissioned McKinsey & Company, a global management consulting firm, to define
a pathway for Bermuda’s pension system that will a llow us to achieve sustainability.
Mr. Speaker, progressing such an initiative is
critical to address the funding gaps that have conti nued to increase at ever -growing rates over recent
years in both the Public Sector Superannuation Fund [PSSF ] and the Contributory Pension Fund [ CPF]. The
recently published 2020 Contributory Pension Fund
Actuari al Report highlighted the importance of the
CPF in providing a basic pension benefit to approx imately 14,000 persons, of whom nearly 11,000 are senior citizens.
The Government also recognises that for
some people in our community, social insurance ben-efits are a much- needed component of their retir ement income. And for many public sector employees,
the pension derived from the Public Sector Supera nnuation Fund is their primary source of income when
they retire.
Mr. Speaker, similar to many countries around
the globe, Bermuda is having to deal with challenges
related to an ageing population. This reality, along
with a shrinking workforce, has resulted in benefit
payments growing at a much faster rate than contribu-tions to these funds.
Mr. Speaker, although t he investment performance of these funds has exceeded the relevant
benchmarks, this has not been sufficient to stem the
growth in the funding deficit of the Contributory Pe nsion Fund and the Public Sector Superannuation
Fund.
The Contributory Pension Fund Actuarial R eport also estimated that the CPF is projected to decline steadily until it is exhausted in 2044, under the
best time estimate scenario, which is three years earlier than estimated in the previous review. A similar assessment of the Public Sect or Superannuation
Fund determined that without appropriate intervention,
the fund would be depleted in 2041.
Mr. Speaker, in this Budget Statement we
have already highlighted the concrete steps that this
Government has taken to demonstrate our commi tment t o and our focus on taking care of our seniors.
Commissioning McKinsey & Company to undertake
this critical work was yet another positive and necessary initiative in this regard.
Mr. Speaker, under the leadership and gui dance of the Ministry of Finance, as well as the Public
Funds Investment Committee chaired by Mr. Barclay
Simmons, McKinsey & Company has undertaken
considerable work to develop a plan to strengthen the
Bermuda pension system. To date, it has assessed
the scope of the issues to be addressed and deter-mined an appropriate strategy for achieving the desired objective. There has been considerable dialogue with
key stakeholders including M inisters, union leaders,
and public sector employees, as well as international and local business leaders to understand their perspectives and appetite for change. Through this r eform process and the relevant analysis, McKinsey &
Company has formulated a discrete set of reform
combinations using three main levers, which are
changes in benefits, contributions and r etirement age.
Mr. Speaker, in the upcoming year, it is antic ipated that using the feedback received and additional further assessment, McKinsey will be able to further
refine its reform combinations and through further
consultation, communication and education, will be
able to finalise proposals for stabilising and strengt hening the CPF and PSSF. Successful completion of this initiative will resolve a long- standing issue and be
extremely positive for Bermuda, both from a domestic
perspective, for our seni ors, as well as from an international one.

CONCLUSION

Hon. E. David Burt: Mr. Speaker, I will now conclude
my remarks. Mr. Speaker, the opportunity to connect
with individual voters is among the most fulfilling aspects of politics and public service. I canvass my co nstituency because it grounds me. It keeps me con-nected to those things that concern the people we
were all elected to serve. Our constituents are candid
and honest, and through my regular interactions with them, I hear a constant refrain, we know how hard
you’re working but keep going; keep working hard because we are counting on it.
Mr. Speaker, I venture to say that this is not
unique to constituency 18, and that up and down this
country Honourable Members may hear similar sent iments. When I am tired and wonder if we will ever see
our way out of the pandemic, or when I become frustrated because the pace of change is not as fast as I
would like it to be, just a few hours in my constituency
renews my energy. I draw on the hopes that others
have for us as a Government and on the trust that has
been placed in us by such an overwhelming majority. It is inspiring.
The wisdom of our constituents, Mr. Speaker,
is mirrored in the Report of the Fiscal Responsibility
Panel which concluded by saying the following, and I
quote:
“Bermuda has now largely emerged from the
worst of the pandemic; in our view, with the right pol icies, the prospects of the Island are bright. The potential of the Island and its people should not be in doubt.
While many long- standing challenges remain, policies
to address them are being developed, and we were
impressed by the sense of urgency on the part of the
Government and the shared commitment of other stakeholders.” End of quote.
434 25 February 2022 Official Hansard Report

Bermuda House of Assembly Mr. Speaker, the challenges of the moment
are r eal, but this Government has provided a solid
platform for economic growth through the implement ation of Bermuda’s Economic Recovery Plan. The continued strength in the international business sector demonstrates that Bermuda remains an attractive
domicile for this vital economic pillar. We are continuing to invest required resources in a prudent and co nsidered way, to protect and expand our revenue base. We are diversifying the economy through growth in
FinTech and related digital asset business. We are on the cusp of a redeveloped Fairmont Southampton hotel, which will create jobs and play a significant part in
the renewal of tourism.
There is hope for the future, Mr. Speaker; not
a vain hope, but one that is tangible and visible, and
one in which the peopl e can have faith and trust.
Today, Mr. Speaker, this Bermuda Progressive Labour Party Government has delivered a budget
that funds the critical programmes that we committed
to in our election platform and in the most recent Throne Speech, while providing relief to hard- working
families and businesses. We remain on track with our debt targets and have a clear path to a budget surplus. We are making vital investments in our future
while transforming our economy and education sy stem and delivering on the pledge of universal health
care.
Mr. Speaker, the last two years have been
tough, and I know that there are so many Bermudians
that feel that they are losing hope. We have been
tested like we have never been tested before, but just
like we have done before, as a country we will pers evere. Bermuda has always innovated in order to survive. We have always adjusted our sails to ensure that
we are on the right course, and a once- in-a-century
pandemic will not stop us from doing what we have
always done as a country —coming together to build a
better future for our children.
Mr. Speaker, we are building a Bermuda for
the future. A Bermuda that is a leader in renewable
energy; a Bermuda that is a leader in financial tec hnology; a Bermuda that is at the forefront of financial
services; a Bermuda with a renewed tourism industry
that will deliver jobs and opportunities for residents; a
Bermuda that welcomes foreign investment; a Berm uda that creates a nation of owners; a Bermuda that
has a fairer tax system; and a Bermuda where affor dable health care is a right, and not a privilege.
Mr. Speaker, we listened during our time in
Opposition and executed our policies when we became the Government. We demonstrated that we are a Government that put Bermudians first during the
pand emic. We will, Mr. Speaker, build a better and
fairer Bermuda for our children to call home, and this Government is one that will continue to deliver the strong leadership that is required to transform our
economy for the future. Mr. Speaker, I am pleased , therefore, on behalf of this Bermuda Progressive Labour Party Go vernment, to commend to this Honourable House the Estimates of Revenue & Expenditure for the Fiscal
Year 2022/23.
Thank you, Mr. Speaker.

[Desk thumping]

Are there any objections?
There are no objections.


Bermuda House of Assembly No Members wishing to speak to that . So, the
House now stands adjourned. Members , we will stand
adjourned unti l next week Friday at 10:00 am.
And for the listening audience, next week we
will hear the [Reply] to the Budget Statement from the
Opposition. And then we will start the . . . have the
open debate on the economic debate for this year’s
Budget. And the fol lowing week we will start the ind ividual debates on the various heads and departments.
So, stay tuned for next week for the Reply and the
open debate.
Members, have yourself a good weekend. Be
safe and stay well. The House now stands adjourned.

[At 12:0 6 pm, the House stood adjourned until
10:00 am, Friday, 4 March 2022.]

436 25 February 2022 Official Hansard Report

Bermuda House of Assembly


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