February 26, 2021

Good morning. Thank you, Ms. Beale.
Members, the House is now in session for this
morning. Just before we get into the business, let me
just give a little briefing. Today is Budget Day. And
indeed we are not in Chambers. The Minister is going
to be reading from the Press Room, which means
their feed has to be absolutely quiet when he is
speak ing. So once the Minister —once we turn the
microphone over to the presentation for the Minister to
read the Budget, all other microphones must be muted or we will have some serious feedback, which we
do not want to happen.
The reason it is coming from there, CIT is
covering it, which will mean they will be out on CITV’s
feed over the channel 2 on the TV stations or on F acebook as well for the public to see and hear the
presentation. So let us just mute ourselves for him.
And I will remind you again as we get to that point.

[Crosstalk; Feedback]

The only Statement this morning is that
of the Minister of Finance giving his Budget Stat ement.
And, Members, just to reiterate what I indicated just now, we need to make sure all microphones
are muted at this time so that the audio going out to
the airwaves, the audio that is going out to CITV, the
audio going out to Facebook will be clear of any feedback. So please, Members, keep all microphones muted other than that of the Minister of Finance. A nd
if you would like to follow, you can also see him on screen on CITV while you are listening here as well.
For our public, CITV or Facebook, as well as
the airways that we normally broadcast on, the radio station [are all presenting the Statement] .
With that said, Minister of Finance, are you
ready to present your Statement?
HOUSE VISITORS

Hon. Curtis L. Dickinson: Thank you, Mr. Speaker.
Mr. Speaker, before I begin delivery of the
Statement, I would like to acknowledge this morning
the presence of the family of the late Anthony Ma nders, Mrs. Teresa Manders ; FS Manders ’s sons Jekon
Edwards , Jaiden Manders and Jamori Manders who
are here with me today in the Press Room .

Thank you.
And we acknowledge their presence.
BUDGET STATEMENT IN SUPPORT
OF THE ESTIMATES OF REVENUE AND
EXPENDITURE FOR 2021/2022

INTRODUCTION

Hon. Curtis L. Dickinson: Mr. Speaker, the International Monetary Fund [IMF] has described 2020 as “A
Year Like No Other ,” and a truer statement has never
been made.
On March 24 this Government passed regul ations so that we could get immediate cash to our
working population who had to sacrifice their own abi lity to earn a living for the greater good. With very little warning, one in three income- earning adults were unable to w ork for the good of the many —one in three.
Only 10 months ago, our Island home was for
the first time in modern history shut down. No flights.
No restaurants. No shops. No school. No sports. Curfews. Quarantines. Grocery shopping by last name.
And for so many of us, no earnings. To all of those
individuals and businesses who have lost so much, I
say thank you. More importantly, your pain and sacr ifice will not be forgotten. You will work in our economy, and our economy will work for you.
Mr. Speaker, onc e the decision was made to
shut down our Island economy, we had less than one
week to get money to our people who were sacrificing
so much. It is no exaggeration to say that we had to
break it to make it. Bureaucratic machinery is not
made for quick pivots . However, we achieved our objective —to provide timely and much- needed help to
our people in an unprecedented crisis. We did not ex-ecute perfectly , and for this I make no apology. As
Voltaire said, “The perfect is the enemy of the good.”
Approximately 2,00 0 people received $1.8 million by
the end of that week. We learned, we built, we grew and we ultimately delivered $56 million to over 10,000 workers. This Government extended the original 12week benefits to 18 weeks and then added a further
safety net of supplemental unemployment benefits
that will continue until June 2021. Additionally, the Government extended benefits to employees of bars,
members ’ clubs and nightclubs when their activities
were restricted due to the uptick in COVID -19 cases in
November.
Mr. Speaker, we know that the public health
emergency meant that the steps we took to protect
public health had a devastating impact on our econ omy. Our local and international businesses, our hosp itality and tourism sector, our schools, and our pe ople’s lives and livelihoods have been put on hold or
restricted in ways we could not have imagined 12
months ago.
I am enormously proud of our community
which has, with humanity and discipline, risen to the occasion and responded with grace and fortitude to a ll
of the public health measures requested. As challen gBermuda House of Assembly ing as th e time has been, we have navigated this
pandemic well and avoided some of the devastation
and confusion that have plagued so many of our i nternational neighbours large and small. Nonetheless, this has been an incredibly difficult year for this coun-try and for our people.
In the past year we have worked with our u nion partners, the Chamber of Commerce, the BTA, banks and financial institutions, our international bus iness community and others to respond to the signif icant challenges our businesses and our people have faced. We have reacted to the economic shock by
creating infrastructure and capability, sometimes from
scratch, to answer the urgent needs of our people and
our business community while ensuring the stability of our public finances. Through all of this we have been
looking forward strategically and thoughtfully planning
for our economic recovery. We worked together to
work for the people of Bermuda.
Mr. Speaker, we must continue to meet the
moment , bringing that spirit of collaboration, developing the new skills to build better infrastructure and
fanning that innovative spark to not only bring our
economy back, but bring it back stronger and better
than before.
Mr. Speaker, let us be clear. We are not looking backwards seeking to rebuild our economy to its
pre-pandemic state. This is not close to good enough.
We must do better than that —and we will. We must
harness the intellectual capital, the spirit of collabor ation, the backbone and grit of our resilient I sland
community who know how to work together and most
importantly want to get back to work. Mr. Speaker, the Estimates of Revenue and
Expenditure for the Fiscal Year 2021/22 are designed
to support Bermuda’s economic recovery. Our shared
success as a community in dealing with the pandemic uniquely positions the I sland for a renewal that can
build a strengthened foundation for existing busines ses and launch the innovation and growth that will be
the next wave of economic activit y. We stand on the
cusp of a clear path to recovery, and the Government
will provide the leadership demanded in these times to
set the right course for the country. For all of you who
invest in our economy, our economy will work for you.

THE GLOBAL CONTE XT

Hon. Curtis L. Dickinson: Mr. Speaker, I have a lready noted that the IMF describes 2020 as “ A Year
Like No Other .” The pandemic has had a severe and
worldwide impact on health and global economic activity. The IMF expects the world economy to contract
by approximately 4.5 per cent over 2020 , an outcome
worse than after the global financial crisis and un-precedented in modern peacetime. All countries have had to implement the same tools as best they can to
protect the health of their populations. The economic impact, like the virus, has not respected national
boundaries , as shown by the following:
• Extensive lockdowns and social distancing
measures have caused large contractions and
unemployment in sectors such as hospitality,
entertainment, travel and tourism; and
• Economic uncertainty has impacted consumer
sentiment, with overall spending lower and f ocused on essential purchases , while rising
cases and workplace closures have reduced
labour productivity and disrupted supply chains.
Given the severity of the economic dislocation
caused by the pandemic, governments around the
world have unleashed a massive fiscal response. I nterventions are estimated to total upwards of approx imately $14 trillion (approximately 14 per cent of global
GDP) , well above levels seen in peacetime economic
crises.
The bulk of the support has been targeted at
health care systems and vulnerable households and
businesses through a mix of additional spending or foregone revenue (including temporary tax cuts), f inancing support ( for example, loans and guarantees)
and public sector equity injections. The fiscal r esponse has largely been funded by increased government borrowing. Globally, fiscal deficits have
reached approximately 12 per cent of GDP for 2020
(up from 3.8 per cent in 2019), and government debt
has risen to 98 per cent of GDP ( up from 83.5 per
cent in 2019).
For 2021, the IMF currently forecasts a r ebound in global economic growth of approximately
5.5 per cent as economies bounce back from the ravages of 2020. It acknowledges that this forecast is
subject to considerable uncertainty linked to the pace
and efficacy of vaccine rollout worldwide. With a view
to debt affordability, it is expecting countries to reduce
deficits from their current levels and to concentrate resources to fund policy actions that will stimulate
economic recovery and employment.
The IMF calls for a particular focus on policies
that raise potential output ( for example, infrastructure
inves tments), ensure participatory growth for all and
accelerate the transition to lower carbon dependence.
The IMF’s forecasts for GDP and the evolution of government debt are shown in the [accompanying]
charts .
As the world economy recovers, lenders and
international institutional investors will increasingly
compare Bermuda to countries that have a similar
sovereign credit rating as us. Over the past year our
peers have followed a comparable path to the global economy and increased their debt levels to fund f iscal
stimulus. By the end of 2020 their gross debt -to-GDP
will be approximately 58 per cent (approximately
46 per cent in 2019) and gross debt -to-government
revenue will be approximately 180 per cent versus
[approximately ] 140 per cent experienced in 2019.
502 26 February 2021 Official Hansard Report

Bermuda House of Assembly Mr. Speaker, as daunting as this sounds,
many countries, including ours, are viewing the pandemic as a once- in-a-generation opportunity to address diversity and inclusion, improve access to and
participation in the economy, enact fiscal reform and
focus on climate change. We must focus and invest in
key infrastructure projects intended to stimulate
growth, enhance climate resilience and equip our economy for the future of working in an accelerated
digital economy. History shows that following pandem-ics, human societies rebound with accelerated innov ation and development. Out of past pandemics came
the Renaissance, public sanitation and huge advances in health care, changing those societies perm anently for the better.
Bermuda’s economy, like that of all small
countries, is vulnerable to external events. We have
limited levers to address economic shocks and disrup-tion. This requires us to be both realistic and strategic.
Thoughtful and innovative. Disciplined and creative.
Agile and adept.
Global pandemic s aside, we are still conten ding with the familiar challenges to our international
business sector and economic growth. There has
never been a better time for us to face these challenges head- on, courageously and with an open mind,
consciously using the to ols and knowledge we have
built over decades and honed during the crisis of the
last several months.
Mr. Speaker, the most pressing threat to Bermuda’s international business sector, and therefore
Bermuda’s economy, remains the Organisation for
Economic C o-operation and Development’s [OECD ]
focus on Base Erosion and Profit Shifting [ BEPS ], and
the European Union’s list of non -cooperative tax juri sdictions. Brexit too is creating challenges and uncertainty, particularly in our reinsurance industry where
there is a new competitive landscape emerging for
global reinsurance business —a market we must pr otect.

THE LOCAL CONTEXT

Hon. Curtis L. Dickinson: Mr. Speaker, approximat ely 6,000 jobs left our shores following the global fina ncial crisis of 2009. Bermuda had since been growing
at a modest 0.8 per cent and diversifying its economy,
but not with sufficient pace or time to fully recover b efore the pandemic. With the onset of the pandemic,
Bermuda’s economy suffered a huge shock which
increased local unemploym ent. The Government r esponded by creating for the first time in its history an
emergency unemployment benefit to make sure that
people who had lost income due to public health
measures could still function and survive.
The impact on our hospitality, restaurants and
retail sectors may be easy to quantify in economic
terms, but impossible to measure in its human cost.
New start -ups using technology to enable restaurant kitchens and retail to continue to deliver food and
goods are the perfect example of innov ation and
community working together. Our community must
continue to do all it can to support these sectors ; there
is nothing more essential to our economy than buying
local.
The hospitality industry received a shock like
no other. Despite the devastating impact of the pa ndemic to their bottom line, some of our hospitality
partners turned their kitchens to producing food for
seniors unable to get out , and others in need. They
also collaborated with the Government to keep their
employees working, notwithstanding the difficult operating environment, and extended a helping hand in
other mutually beneficial ways.
Still other hoteliers found that their operating
revenue had been so badly hit that they could not
make timely redundancy payments to their staff. Mr .
Speaker, it was not acceptable that our people should
bear the burden of poor planning by one of the country’s largest hospitality employers. We stepped in, ensuring that our people would not be left without in the
midst of an economic and public health crisis. Mr. Speaker, it is now public record that these sums have
been repaid to the Government, with costs. This was
not a matter of good luck, but the result of a prudent
and well -advised plan thoughtfully executed, meeting
our people’s needs while protecting the public purse.
Mr. Speaker, in terms that speak to the need
to stimulate the economy and promote economic
growth, I would invite Honourable Members to take note of some additional stark realities:
• GDP fell by an average of 8.1 per cent in real
terms in the first three quarters of the calendar
year 2020, a decline fuelled primarily by si gnificantly reduced expenditures on goods and
services in the tourism sector;
• Total visitor air and cruise arrivals fell by historical proportions in the calendar year 2020
(84.4 per cent and 98.3 per cent , respectiv ely), and spending was only $69.8 million (a
decline of 86.6 per cent ); and
• The total value of new construction projects started during the first three quarter s of the
calendar year 2020 fell by 45.4 per cent, from
$88.9 million to $48.5 million, and the estimated value of construction work put in place
fell by 42.2 per cent from $182.3 million to
$105.9 million.
In contrast, the international business sector—in particular, the insurance sector —has remained
resilient during 2020. In 2020, the international bus iness sector provided 4,199 jobs in the economy, r eflecting a growth of 4.5 per cent year over year, or an
increase of 179 posts. During 2020, there were 733
new international companies and part nerships regi stered in Bermuda, representing a 7.6 per cent increase compared with 681 registrations in 2019. The
total number of international companies and partnerBermuda House of Assembly ships stood at 11,874 at the end of 2020, representing
growth of 0.5 per cent . Over the fir st nine months of
2020, the foreign exchange earnings of the international companies increased by $16.7 million to $1.58
billion, representing growth of 1.1 per cent .
Mr. Speaker , we responded aggressively to
counter the health care and economic crisis:
1. We implemented a phased and adaptive
approach involving remote working, shelter in place,
border closures and curfew. A robust programme of testing and contact tracing was also implemented. As
highlighted previously, these measures have largely
been successful in minimis ing the impact on human
lives, but other measures were necessary to address
the economic impact .
2. We built from scratch a 12- week unemployment benefit programme to assist individuals who
lost their jobs and those whose income earnings were
impacted significantly due to restrictions imposed as a
result of the pandemic. This programme was extended by an additional six weeks and paid over 10,000
people [for total] payments of approximately $56.8
million .
3. We provided payroll tax relief to the resta urant and bar sector, taxi drivers and the hotel sector ,
in addition to extending the deadline for all relevant
entities for filing payroll and corporate services tax
while waiving penalties and late fees .
4. We provided $12 million of additional funding for the Bermuda Economic Development Corpor ation [BEDC] to provide support for small and medium -
sized enterprises .
5. We introduced the Work from Bermuda
Certificate to allow individuals to come to Bermuda to
work or study remotely from the Island.
Mr. Speaker, in May of 2020 we formed an
Economic Advisory Committee [EAC], who gave their
time to provide insight and expert advice aimed at pr otecting and growing jobs , and stimulating economic
activity during and after the pandemic. Since its fo rmation, the committee has played an important role in
providing the Government with their expertise,
knowledge and advice to support our economic r ecovery.
Work to address our economic future is ongoing, but there are serious challenges. Today we have
significant financial commitments, including approx imately $3 billion in net public debt, financial guarantees for the new airport and the Acute Care Wing, and
the block grant which covers health services. There
are also significant actuarial funding gaps in the Public
Sector Superannuation Fund, the Government E mployees Health Insurance Fund and Bermuda’s Contributory Pension Fund.
As I will outline shortly, increased spending
resulting from the pandemic and funding economic recovery is driving further near -term deficits and i ncreased pressure on public finances. Mr. Speaker, we were trending in the right
direction, although at a slow pace, and the pandemic
has forced us to urgently recalibrate. We must act
now. Otherwise, as so powerfully put by the young
poet laureate Amanda Gorman on the steps of the US
Capitol just a month ago, “we know our inaction and
inertia will be the inheritance of the next generation. ”

RISKS ON THE HORIZON

Hon. Curtis L. Dickinson: Mr. Speaker, in addition to
the financial fragility I have set out, Bermuda faces
some broader risks over the coming years. The most
imminent threats in the next 12 to 24 months include
the following:
Economic fragility . Consistent with many other
countries worldwide, our recovery will be negatively
impacted if global growth rates do not recover and if countries find themselves in a continuing round of aggressive pandemic outbreak responses. The same is
to be said regarding tourism, which is inextricably
linked to the performance of other c ountries in the
public health sphere and economically.
Geopolitical risks. In the name of achieving a
level playing field between sectors in Bermuda and
elsewhere, other countries, standard- setting bodies
and/or trading blocs have insisted on commitments
that actuate a competitive disadvantage to Bermuda’s businesses. Nonetheless, our key trading partners
together with relevant international organisations have
demonstrated their willingness to engage on these
matters. In this regard, we continue to activel y engage
with the UK Government, the OECD, the Financial
Action Task Force [FATF] and the European Union,
together with other countries, to make the case in
support of Bermuda’s commitments as a responsible
global citizen.
The work of the future. More people may need
to transition to a new job in the post -COVID -19 env ironment as companies review strategies to accelerate
automation, increase their technology use and reduce
their physical footprint. This Government has passed
legislation to attract more busi nesses and workers to
the Island, but we must also remain cognisant of the ability of companies to quickly move resources anywhere in the world as we have witnessed the wid espread adoption of video conferencing tec hnologies
when normal business travel was interrupted.
Climate risk. The existential threat of climate
change wrought by global warming is having an i mpact on countries around the world, and Bermuda is no exception. Because of our isolation, Bermuda cannot afford to ignore the threats to our deli cate ecosy stem. As a result, we continue to enforce a robust
planning and environmental protection framework. In
addition, we have formed a partnership with the Waitt
Foundation and the Bermuda Institute of Ocean Sc iences [BIOS], named the Bermuda Ocean Pr osperity
Programme, to introduce a sustainable, vibrant blue
504 26 February 2021 Official Hansard Report

Bermuda House of Assembly economy while protecting 20 per cent of our exclusive
economic zone [EEZ]. We are also working with the
UK Government to highlight Bermuda’s strategies for
progressing its measures to mitigate and address the
impact of climate change pursuant to the 2020 Joint Ministerial Conference.

CAROLINE BAY

Hon. Curtis L. Dickinson: Mr. Speaker, in my last
Budget Statement I provided an update on the Go vernment’s actions in response to demands made on
guarantees by the lenders of the Caroline Bay development. At that time the Government had completed
purchases of the loans to satisfy its obligations. Addi-tionally, we had purchased claims from the main contractor dck Bermuda, Ltd. (“dck”), in order to facili tate
payment to many Bermudian subcontractors who had remained unpaid for an extended period of time, in
many cases for more than a year.
Mr. Speaker, the Government was supportive
of the developers continuing to seek financing to r epay the Government and restart the project. However,
it became crystal clear that it was not feasible without
the people of Bermuda bearing substantial increased
financial risk, which I was not prepared to accept. Furthermore, after such a massive financial outlay of pub-lic fu nds, it was imperative that we both ascertain
what happened with the financial management of the project and seek a return of as much value as poss ible.
Mr. Speaker, in March of 2020 the Gover nment successfully petitioned the Supreme Court of Bermuda to appoint Joint Provisional Liquidators
[JPLs] over the project companies. Over the course of
the last year, the JPLs have ensured that emergency
remediation work has been carried out at the site,
which has employed several local contractors. Add itionally, t he JPLs have been engaged in the necessary work to prepare for transfer of these assets to a
government -controlled entity. The Government expects this process to be completed in the coming
months, at which time a decision will be made on the way forward.
To date, the financial impact of the Gover nment’s guarantee for this failed project has been s evere. Close to $200 million of public funds has been
unnecessarily tied up and at risk. Not only is there an
ongoing interest cost, but this has also significant ly
reduced the Government’s capacity to fund productive investments that could be critical to Bermuda’s ec onomic recovery. However, the Government met its
commitment under the guarantees as it must, and we
are equally committed to using all means necessary to
return as much value as we can to the people of Bermuda.

THE WAY FORWARD

Hon. Curtis L. Dickinson: Mr. Speaker, the urgency
of the economic situation demands action. But with
the need to respond to the direct impact of the COVID -19 pandemic comes an opportunity to elim inate the obstacles that have blocked Bermuda’s
growth for years. We can address the fiscal challen ges and reinvent our jobs economy. Bermuda can not
only recover but also have a renaissance.
Mr. Speaker, the way forward is an ambitious
but achievable plan for economic recovery. The plan combines fiscal responsibility with a clear path t o
growth, employment and greater economic equity.
Derived from the Government’s 2020 platform and
November’s Throne Speech, informed by leading
practices from similar economies and the latest i nsights taken from successful COVID -19 recovery
strategies internationally, our plan will deliver an
economy that will work for all.

The Economic Recovery Plan
Hon. Curtis L. Dickinson: The development of the
Economic Recovery Plan [the Plan] has been a
whole- of-government effort and has incorporated d etailed input from across the various ministries. Over the past six months, key stakeholders have been con-sulted as part of the Plan’s development, and there
has been extensive input from around the Cabinet
table. The EAC [Economic Advisory Committee] has
also provided detailed and valuable advice throughout the process, and input from the Financial Policy
Council and the Fiscal Responsibility Panel has also
been sought. I want to thank all of these stakeholders
for their constructive engagement and challenge during this process.
Our Economic Recovery Plan is underpinned
by a set of guard rails, key financial metrics and ratios
that are closely monitored by rating agencies and
global creditors. The Plan creates a way forward that
enables this Government to stay within these guard
rails through a disciplined approach to spending on
targeted initiatives with the highest expected economic impact, highest probability of successful execution and lowest relative cost.
The Plan will address the impact of the pa ndemic together w ith the structural and systemic issues
that have been constraining growth. It is intended to
expand the existing pillars of our economy while also
diversifying into other potential growth sectors. Mat-ters related to reform in the areas of immigration,
health, pension and education are already underway,
and there is appropriate phasing of the plans to allow
for effective implementation.
Mr. Speaker, the development of the Plan has
been guided by six key principles which echo the
commitments this Government has made to the pe ople and when executed will further demonstrate both


Bermuda House of Assembly our determination and ability to deliver on our promi ses. These principles are as follows:
1) Combatting COVID -19 as a priority. A conti nued focus on public health is paramount,
without w hich we jeopardise our ability to
move our economy forward. Testing and vaccination, monitoring progress and mitigation
efforts are integral components of our ec onomic recovery.
2) Reducing the cost of living. Reform initiatives
will be targeted at reducing t he cost of living
for all Bermudians.
3) Fairness and equity. Stimulus and economic
policies will ensure that access to economic
growth and opportunity is enjoyed across all
segments of our society, including those most
in need.
4) Financial viability. Funding to support our
small and medium -sized businesses will be directed to those that show strong prospects for viable long- term success.
5) Fiscal prudence. Fiscal discipline will continue
to be exercised in managing the government’s
finances, mindful of existing borrowing levels.
6) Timeliness. The time is now. Where possible,
we will accelerate the implementation of the
highest -priority initiatives to quickly improve
Bermuda’s economic situation.
We will execute this plan mindful of the two key com-mitments that w e made to the country early this year:
Firstly, that Bermuda will return to a balanced budget
in three fiscal years once tourism has fully recovered
from the pandemic; and secondly, that Bermuda will maintain the current ceiling on total government debt.
Mr. Speaker, as part of this Plan, we developed a long list of initiatives and policy changes to
accelerate medium -term economic growth. In making
tough decisions , we have prioritised those initiatives
that focus investment and resources in areas th at will
have the most significant impact on Bermuda’s medium-term economic growth and employment. With extensive input from across Government, we narrowed
down almost 80 policy proposals to 30. Mr. Speaker, the priority initiatives cut across a number of t hemes
including the following:
1) Economic diversification. The goal is to diversify Bermuda’s economy by encouraging
growth of new industries.
2) Financial markets. We will focus on increasing
affordable access to capital for businesses
and consumers , including through measures
supporting greater competition within the
banking sector. The BEDC will continue to
provide support to small and medium -sized
businesses that demonstrate strong business
plans and long- term viability in the post -
pandemic economy.
3) Infrastr ucture investments. Building critical
new infrastructure and enhancing existing systems —this provides direct and immediate
stimulus for our economy, and we have ident ified projects including the construction of a
shoreside fishing facility, necessary upgrades
in the development of a new waste and water management facility and investing in the necessary recharging infrastructure for electronic
vehicles.
4) Expanding the resident population. More pe ople means more economic activity, more
know -how, more diverse b usinesses, more for
everyone. Every retail business, restaurant,
landlord, contractor, landscaper, telecom pr ovider and school wants more customers. More
customers means more business, leading to
more competition and lower prices.
5) Labour market reforms and social development initiatives. These will be achieved
through the execution of Bermuda’s national
jobs strategy and youth employment strategy,
education reform, re- establishing national u nemployment insurance and implementing mi nimum wage legislation and a living wage
framework. Simply put, we will ensure that our
youth have a way forward to future emplo yment, our people have a safety net for the unexpected, and everyone can expect to be paid
at least a minimum wage.
6) Health care. The introduction of affor dable
universal health care and the Bermuda Health
Plan will lead to the much -needed reform of
health care delivery in Bermuda.
7) Regulatory framework. We will through legi slation and regulation create an environment
that encourages innovation, entrepreneurs ,
businesses and start -ups. Examples range
from an energy regulatory sandbox that will a llow Bermuda to benefit from innovative tec hnology in the energy sector, a marine development zone and exploring options to encourage FinTech and digital players to innovate on the I sland.
The importance of environmental sustainabi lity and the economic opportunities afforded by green
growth cut across many of these initiatives. Further
work will be undertaken over the coming months to
build on the Government’s existing commitments in
this area in a way that also leverages Bermuda’s
world -class expertise in insurance and international
business to establish Bermuda as a world leader in climate risk management.
Mr. Speaker, the Government knows that a
good plan poorly executed can be worse than no plan
at all. We will have a dedicated project management
team independent from the day -to-day operations of
the government and staffed with people with the right experi ence, mind- set and knowledge so that we can
progress these initiatives as quickly as possible to put
the economy back on the path to growth. We will ap506 26 February 2021 Official Hansard Report

Bermuda House of Assembly propriately manage and mitigate the risks to ensure
that our reputation and environment for quality bus iness are not compromised.
Mr. Speaker, Honourable Members will recall
that I recently renewed the remit of the Tax Reform
Commission. Their conclusions will also form a critical
part of the economic recovery and be integrated into
these economic and social policies for the future. Mr.
Speaker, we still have some consultation to conduct.
There remain valued partners in other areas of society
who must also be invited to share their views on what is recommended.
Mr. Speaker, it is important to note that the
Economic Recovery Plan will complement and support the mainstays of our economy —tourism and i nternational business. While the latter has weathered
the storm of global conditions and now the impact of
the pandemic, the former has been battered by these
same storms.
Mr. Speaker, tourism will need every ounce of
good fortune and skill to carve out its share of the i nevitable pent -up demand that will be released when
we finally get to the new normal. Leisure travel will
return, and conferences will again be i n person. I have
every confidence that Bermuda will build on its reput ation as a safe place to stay, and our visitors will again enjoy all that we have to offer.
This is a tall order, but with the welcome news
of the opening of the St. Regis on 22 May and the
commitment to redevelop the Fairmont Southam pton— incorporating expanded event capabilities to
minimise seasonality —tourism’s renewal can be accomplished.
Mr. Speaker, another example of target stim ulus is the planned development of a branded tourism
property ideally located on Bermuda’s South Shore at
the site of the former Grand Atlantic. This economic
activity will put Bermudians to work in construction
and spark the hiring of Bermudians to run the hotel.
Having satisfied myself of the tourism need as
well as the proposed plans for the remainder of the
development, I am pleased to advise this Honourable
House that I have executed a $10 million guarantee to support funding necessary for the completion of the
next phase of works. The scope of work has been the
subject of an open tender, and pending the award of a contract, work will start early in March with a view to
completion in late summer.

THE PUBLIC SERVICE
Hon. Curtis L. Dickinson: Mr. Speaker, the machi nery of the public service often operates invisibly in the background, quietly delivering services to the people
of Bermuda day in and day out. These past 12 months
have seen many of the men and women of our public service reinvent t hemselves, developing skills and
services they had neither trained nor planned for. The public service has been front and centre this [past] year. They have been the front line of our public
health emergency, processing our friends and family
safely throug h the airport, delivering COVID -19 tests
and protecting public health. Those are a few exam-ples, but there are many more. Without the hard work and selfless dedication of so many of our public offi cers, Bermuda would not have been able to effectively
meet the challenges of COVID -19. Notably, in less
than a year we have developed core competencies
and expertise that simply did not exist before. We
should have confidence that our public servants will continue to meet the challenges of this time for the
benefi t of all.
Mr. Speaker, I would like to take this opportunity to acknowledge the significant contribution of Mr. Anthony Manders, the former Financial Secretary
[FS] in the Ministry of Finance whom we unexpectedly and tragically lost last month. The void he has left has
been keenly felt as we have worked through this
budget process for the first time without him. We have
lost a colleague and a friend who possessed unpara lleled knowledge about the workings of the gover nment and who will be missed by all who knew him.
Everyone who has worked with FS Manders
knows that he was dedicated, hard- working and sel fless. Anthony was one of my most senior and trusted advisers. He played a key role in advising the Cabinet
during the pandemic, helping us navigate the unprec-edented economic crisis.
I will miss him. We continue to keep his wife,
Teresa, and his sons Jekon, Jaiden and Jamori in our thoughts as they come to terms with such a profound loss in their lives and for the country.

2020/21 FISCAL PERFORMANCE

Hon. Curtis L. Dickinson: Mr. Speaker, before co mmenting further in detail on the estimates for the fiscal year 2021/22 Budget, it is important that I provide an update on the Government’s financial performance
and the forecast for the current financial period, which
has been dramatically impacted by the COVID -19
pandemic.
Mr. Speaker, the Government is forecast to
earn $960.6 million in revenue in 2020/21. This is
$161.6 million (14.4 per cent) less than the $1.1 billion
in the original estimate and is due m ainly to the impact
of the COVID -19 pandemic on just about all of our
government’s revenue sources, the primary impacts
being lower payroll tax, customs duty, and the loss of
most tourism -related taxes and levies. However, this
is an improvement of $46.5 m illion over the original
revision of $914.1 million contained in the Pre- Budget
Report.
Mr. Speaker, the projected 2020/21 normal
operating expenses of the Government are $880 mi llion, or $55.6 million (5.9 per cent) lower than the ori ginal budget of $93 5.6 million. This was accomplished


Bermuda House of Assembly by a number of government cost -saving initiatives,
including the following:
• a freeze on the funding of vacant posts not
required to address COVID -19 nor to protect
Bermuda’s national interests;
• a ban on non- essential government travel;
• reductions in discretionary spending, including
grants, consultancy, training, materials and
supplies, clothing and uniforms, et cetera; and
• temporary payroll or government employee
overhead savings as a result of negotiations
with the unions and including the decision to
temporarily suspend matching contributions
into the pension funds.
We thank those public service unions who
participated in the cost -savings initiatives for fiscal
2020/21 and advise that at the conclusion of each i ndividual agreement there is no intention to extend
these initiatives.
However, the Government is estimated to
have spent $127.2 million in unbudgeted COVID -19related expenses, including the following:
• payment of unemployment benefits;
• purchase of PPE;
• provision of COVID -19 testing, quarantine f acilities and vaccination services;
• embodying of the Royal Bermuda Regiment;
• entering into enhanced cleaning contracts;
• providing grant funding for the BEDC [COVID -
19] Business Sustainability & Continuity Fun ding Programme; and
• funding the Bermuda Airport Authority to hon-our the airport minimum revenue guarantee with Skyport.
Including these expenses related to COVID -
19, the current account expenditure for 2020/21 is projected to be $1 billion, or $71.6 million (7.7 per
cent) higher than budgeted. The original capital ex-penditure budget for 2020/21 was $85 million. Follo wing the onset of the COVID -19 pandemic, it was i ncreased to $93 million to help fund essential and other
certain capital projects to support economic recovery,
provide employment for Bermudians, and improve our
quality of life.
However, due to delays relating to COVID -19,
capital expenditure for 2020/21 is expected to be
$70.1 million, lower than the original budget by $14.9
million (17.5 per cent).
In the 2020/21 Budget Statement, I advised
that the Ministry of Finance intended to take ad-vantage of relatively low interest rates to refinance the
loan agreement arranged to satisfy the Caroline Bay
obligations and other existing, more expensive go vernment debt . Mr. Speaker, in August of 2020 the
Government accessed international capital markets to
execute on this strategy and also to fund the unbudgeted and ongoing COVID -19 expenses and reforecasted budget deficits. Due to Bermuda’s credit profile, the offeri ng
was in high demand by global institutional investors.
Not only did we achieve record low spreads to treasuries, but demand was such to allow Bermuda to upsize the issuance to refinance more debt than initially
planned at much lower interest rates. Addit ionally, we
issued Bermuda’s first -ever 30- year public bond.
Overall, the Government achieved a 58 basis points reduction in average interest rates and an 8.4- year
extension of Bermuda’s debt maturity profile.
Mr. Speaker, this is a validation of the
strength of our international reputation and this Government’s stewardship of the country and its finances
in the most perilous times in a generation. However,
while we reduced the Government’s average borro wing costs, total borrowing has increased in order t o
fund the re- forecasted deficits, as I just mentioned,
which offset the interest savings on the existing debt.
As a result, debt service costs for 2020/21 are for ecast to be $128.8 million, or $7.4 million (6.1 per cent)
above the original estimate.
Mr. Speaker, given the aforementioned pr ojections, the revised estimate of the overall deficit for
2020/21 is $245.5 million, or $225.7 million more than
the $19.8 million deficit that was originally projected.
As of the 31
st of March 2021, net debt will stand at $3
billion. The Sinking Fund balance will be approximat ely $348.8 million, which will be used to help fund f uture deficits.

EXECUTING ON THE AGENDA

Hon. Curtis L. Dickinson: Mr. Speaker, I have alluded several times in these remarks to the fiscal cha llenges that have been caused by the pandemic. This
will be a particularly challenging year for us; however,
it will be one in which the public will be able to marry
our fiscal allocations directly to the promises we have
made and hold us accountable for their delivery. The
jobs and economic benefits of the Economic Recovery
Plan are expected beyond this [fiscal] year, but we
must invest now for our future. Our room for manoeuvre is limited; we must make difficult choices now to avoid even harder choices i n the future.
In line with international growth expectations,
we expect economic growth to experience a modest
bounceback this year. With significant expert input
from the EAC and others, our central projection is for
conservative economic growth of approximately 3.5 per cent with a modest rebound across all major
domestic and international business sectors, but with a conservative view of the recovery of tourism and air
travel.
Mr. Speaker, a targeted approach has been
taken to analysing the government’ s current outlays
and identifying potential areas where efficiencies
could be made. Areas of most substantial efficiencies
have been identified, and these align well with broader
508 26 February 2021 Official Hansard Report

Bermuda House of Assembly programmes of reform that are underway to identify
more efficient and effecti ve delivery models.
Mr. Speaker, ministry budget [ceilings] have
been achieved through an arduous and introspective
process led by ministers, permanent secretaries, heads of department and controllers. For the avoi dance of doubt, this Budget
• does not reduce any scholarship allocation
across ministries;
• does not require any redundancies or further
reductions in staffing; and
• does not reduce or eliminate critical pr ogrammes like the child day -care allowance,
the summer student employment programme or suppor t to seniors in rest home care.
Mr. Speaker, as the estimates of expenditure
will reveal, the largest Ministry allocations are in Health, Education, National Security and Labour. The
largest increase year over year is within the Ministry of
Social Development and Seniors.

2021/22 BUDGET ESTIMATES

Hon. Curtis L. Dickinson: Mr. Speaker, the 2021/22
National Budget allocates $1.1 billion in total spen ding. This level of spending represents an $18.6 mi llion, or 1.6 per cent, decrease over the 2020/21 orig inal estimate and an $82.7 million, or 6.9 per cent, decrease over the 2020/21 revised estimate. Given the
sustained impact of the COVID -19 pandemic, rev enues are forecast to decrease by 11 per cent, or
$123.3 million. Before interest on debt and capital expenditure, the current account balance is budgeted to be a surplus of $95.9 million.
The current account balance, after interest, is
budgeted at a deficit in the amount of $31.8 million. This represents a decrease in the current account surplus of $97.1 million when compared with the
2020/21 Budget, but a $143.5 million improvement
over the revised budget estimate for 2020/21.
Given the aforesaid, Mr. Speaker, the Go vernment plans to run a budget deficit of $124.5 million in 2021/22, which is $120.8 million less than the r evised estimate of a $245.5 million deficit for 2020/21.
Mr. Speaker, the projected current account
balance (excluding debt service) indicates whether
revenues can support the day -to-day cost of running
the government, excluding interest on debt and capital
expenditures. This year’s Budget, with a current account surplus of $95.9 million, has sufficient revenue
to cover the day -to-day costs of running the gover nment.
Mr. Speaker, as already mentioned before,
the Government has no plans to borrow in order to finance this fiscal year’s deficit of $124.7 milli on. The
deficit will be financed by using a portion of the funds that currently sit in the Sinking Fund.
Mr. Speaker, as at the 31
st of March 2022, it is
estimated that gross public debt will remain at the same level as March 31, 2021, at $3.35 billion, a nd
debt net of the Sinking Fund will be $3.1 billion,
$370.0 million below the debt ceiling.

Revenues

Hon. Curtis L. Dickinson: Mr. Speaker, as I signalled
in the Pre- Budget Report, some revenue- raising
measures were under consideration. I am pleased to
advise this Honourable House of the following:
• Payroll tax relief to troubled sectors will be
continued through the 31st of March 2022;
• The Tax Incentives to Grow Jobs programme
will be continued through 31 March 2022;
• The Retail Shops (Temporary Customs Duty Relief for Capital Investments ) Act 2008,
which provides a zero rate of customs duty on imported capital goods intended for renov ations and refurbishment of retail shops, will be
extended for a further five years through the 31
st of March 2026;
• The 2015 land valuation list will remain in
force for a further 10 years, and as such there
will be no increases to land tax and the bands
will remain as is;
• To further strengthen the regulatory oversight
undertaken by the Registrar of Companies
[ROC] and to support the digitisation of the functions of the ROC to meet changing international obligations and increase efficiency,
there will be increases within the fee structure
of the ROC which will take effect in the co ming fiscal year. Bermuda cannot fail to compete with other jurisdictions , recognising the
bedrock of our revenue generation is the very sector supervised by the ROC.
Mr. Speaker, there are no other meaningful
increases to the cost of government serv ices or other
fees and taxes. There is a fragility to local finances
that cannot be further strained by increased taxes.
Mr. Speaker, the revenue estimate for
2021/22 is $998.9 million, $123.3 million, or 11.0 per
cent, lower than the original estimate for the previous year and $38.3 million, or 4.0 per cent, higher than the
revised budget for 2020/21. The most significant d ecreases will be in relation to the continued impact of the COVID -19 pandemic on the global economy
through the lack of cruise and air travel (forecast to be
down $20.7 million versus the 2020/21 original budget), as well as customs duty and payroll tax (forecast
to be down $34.4 million and $19.3 million, respectiv ely).

Expenditure

Hon. Curtis L. Dickinson: Mr. Speaker, total expenditures including debt service of $127.8 million and ca pital investment of $92.9 million are estimated at
$1.1 billion, $18.4 million, or 1.6 per cent, lower than


Bermuda House of Assembly the original estimate for 2020/21. The primary reason
for this decrease relates to the Government’s proactive approach to cutting expenditure across all ministries by an average of 5.1 per cent and a lower spend
on COVID -19-related expenses as the COVID -19
vaccine is more widely distributed locally and globally.
Mr. Speaker, this level of spending will enable
the Government to execute on its prior ities of improving the quality of education for our children, improving the health care system and providing adequate support to our citizens who are less fortunate and more vulnerable. It will also allow us to provide targeted i nvestments to grow and diversify the Bermuda economy and to recover from the impacts of the COVID -19
pandemic in as fiscally prudent a manner as is poss ible. Operating expenditure for 2021/22 is forecast to
be $888 million. This amount represents a decrease
of $47.6 million, or 5.1 per cent, when compared to
the 2020/21 original estimate of $935.6 million.
Mr. Speaker, to properly manage and allocate
public finances in support of the Government’s man-date, the public service must be the right mix of human resources, programmes and prudent spending.
Achieving this is no easy task, but in this coming fiscal
year we will renew this effort. Therefore, in fiscal year
2021/22, I have determined to defund any vacant post
unless the funding for it has been allocated in support of delivering a service or [unless] active recruitment
for the post is underway. This results in estimated savings to the public purse of approximately $20 mi llion. This will mean that the public service will trim its
sails to meet the actual tasks required, managing p ublic expectations accordingly, and the funding that r emains will be put to better use achieving greater value for money.
Budget processes will require policy prioritis ation at the start to facilitate a better alignment of the
allocation of limited resour ces with the Government’s
overall policy initiatives and objectives.

Debt Service

Hon. Curtis L. Dickinson: Mr. Speaker, debt service
costs for the fiscal year 2021/22 are projected at
$127.8 million. Approximately $5.4 million of this is
due to the debt related to the Caroline Bay project. As I mentioned earlier, in August of 2020 the Government
borrowed additional funds to refinance and pre- fund
unexpected expenses and deficits due to the impacts
of the COVID -19 pandemic. Had we not had to do so,
debt service for 2021/22 would be forecast to be
$111.2 million, meaning the capital markets transac-tions would have resulted in a savings of approximat ely $16.6 million next year and $17.6 million lower than
interest expense for 2020/21.
Mr. Speaker, in Apri l 2020 in anticipation of
the negative impacts of the COVID -19 pandemic, the
Government raised the debt ceiling by $150 million to
$2.9 billion to ensure that it could raise the necessary liquidity to fund a variety of public health and emergency financial measures to support Bermuda’s people and economy. In July, in anticipation of accessing
the capital markets, as I mentioned earlier, the Government further raised the debt ceiling by $600 million to $3.5 billion.
Mr. Speaker, while we accept that increased
debt was necessary due to COVID -19 and the Car oline Bay obligations, the current debt ceiling is set as
an important guard rail in our economic recovery plan
that we do not expect to breach. In fact, we expect that a surplus budget beginning in 2023/24 will allow
Bermuda to continue with our pre- pandemic debt
management strategy, which included (1) balanced
budgets, (2) no further increases in the debt ceiling
and (3) applying surpluses to reduce debt.

Capital Expenditure

Hon. Curtis L. Dickinson: Mr. Speaker, the Gover nment’s capital expenditure plan is a collection of
maintenance, remediation and new works intended to preserve the integrity of the government estate, e ncourage infrastructure improvement and provide a
measured economic stimulus in times like these. The
capital plan for fiscal year 2021/22 is set at $92.9 mi llion and will achieve these broad intentions, playing a vital role in economic recovery. The highlights of the plan include:
• the development of a shoreside facility to
support a new fishing co -operative;
• renewed grants to community clubs and community organisations;
• desperately needed upgrades to the physical
plant of the Mid Atlantic Wellness Institute
consistent with this Government’s approach to
the importance of mental health; and
• long-awaited upgrades to the Marine & Ports
workshop and the Department of [ Public ]
Transport Headquarters , both of which a ddress long- standing concerns around worker
safety and working conditions.

CONCLUSION

Hon. Curtis L. Dickinson: Mr. Speaker , ther e is an
understandable fatigue in our society. Compliance
with rules and guidelines that dictate our actions down
to the very distance we must keep from one another
have shredded our nerves and tested our patience.
We have all weathered a year of unforesee n change
brought on by this pandemic; everyone’s lives have
been impacted. Whether working from home or being
forced to wear a mask around people we consider friends or even our families, we are tired. But, Mr.
Speaker, we cannot lose heart now. In fact, as we
witness the unprecedented challenges being exper ienced by other countries, Bermuda should be proud. The energy to push the extra mile should be found in
510 26 February 2021 Official Hansard Report

Bermuda House of Assembly the fact that we are in the top five in the world for tes ting and have a vaccination programme that is the envy of other countries. Our unity of purpose, followed
by action, has enabled us to persist and reopen our
economy. This Government’s leadership combined with much- needed programmes by churches, the third
sector and the private sector have reached far into
society to provide the support and relief required for
our people to soldier on.
Mr. Speaker, I am the son of parents who
worked hard and sacrificed so that I could have oppor-tunities they did not have. I have a strong and dedicated mother who made sure that after graduating
from Berkeley, I went off to college. I worked hard,
really hard, and now thankfully I hope that I am able to give back to my country what I have learned in my
years working both internationally and locally.
Mr. Speaker, I am also a husband and a f ather of three wonderful children, one of whom is now a
young adult. I want my children’s future in Bermuda to
be one of opportunity and full of possibility. I want for them what all parents want —a future where they will
each enj oy the dignity of work and the ambition to
pursue their passion, raise their family and live a life of
meaning. So I know what it is like to have a parent
who sacrifices for my education, and I also understand how to make sure that we manage our debt, balance a budget and do not spend more money t oday that our children will have to repay tomorrow.
Mr. Speaker, yes, we are still in a pandemic.
But we are focused now on building the economy with
a view to the future— all of its many and unknowable
possibilit ies. Part of that is continuing our world- class
COVID -19 testing platform and delivering vaccines.
Protecting the public health is an essential and necessary part of our economic recovery. And our new
economy cannot look like our economy of the past. It
must be better. It must not only be diversified but must
actively engage diversity. It must not only be stable but must cultivate innovation.
If there are obstacles to growth, we must r emove them quickly. This future economy requires all of us to dig deep, collaborate, listen and most of all not fear change. If you do fear change, face that fear.
Have courage and press on. This is not a time to be
timid. These are the ingredients that it will take to suc-cessfully execute our Economic Recovery Plan and
build an economy that all can participate in, an economy that works for all of us .
During this pandemic we have welcomed
close to 400 new people to our shores with the oneyear residential certificate, and we must welcome more. We must welcome newcomers not onl y to buy
our groceries and use our services, but also to bring
us new skills, knowledge and capital. That so many
have come in the midst of a pandemic is the ultimate compliment to our Island nation. Their arrival
strengthens us and diversifies our communi ty and our
economy to the benefit of all. Yes, the new way forward requires us to be
open to change, but have confidence that these
changes will have the welfare of our people and our
future generations embedded in all that we do.
Have confidence that w e have the right leadership, the right mind- set, culture and work ethic to
turn adversity into opportunity as our forefathers did. If
we bring the same confidence, discipline, skill and
resilience to resetting our economy as we have to
tackling this pandem ic, our future will be very bright.
So take the opportunities that we will work to
create. Seize them. Work hard. Play your part in the renewal of Bermuda’s promise so that you are not just
surviving, but thriving.
Mr. Speaker, I humbly present for the consi deration of this Honourable House the Estimates of
Revenue and Expenditure for the Fiscal Year 2021/22.
Thank you.

Are there any objections to that?
There are none. Does any Member wish to
speak to that?
There are none.
Members, the House now stands adjourned
until next Friday at 10:00 am.
Have a good weekend, Members. Thank you.

[At 11:17 am, the House stood adjourned until
10:00 am Friday, 5 March 2021.]

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