February 22, 2019

Yes.
As the Minister sets himself up, the Stat ements will be distributed, momentarily.
Minister, you can begin.

BUDGET STATEMENT
IN SUPPORT OF THE ESTIMATES OF
REVENUE AND EXPENDITURE
2019 –2020

Hon. Curtis L. Di ckinson: Mr. Speaker, this stat ement is a unique one in our parliamentary democracy.
It is a statement made in support of the Estimates of
Revenue and Expenditure for the Government of
Bermuda in any given year. It is a statement centred
on facts and figur es and is the guide for how a go vernment will fiscally govern itself in the com ing year.
But, Mr. Speaker, that basic description bears
no resemblance to the significance of this process to
all sectors of this country. This statement must pr ovide the confi dence necessary for investment in this
country; it must speak of stability and competence to businesses small and large; it must ease the golden
years of seniors; it must bring hope and inspiration to
the young people who stand to inherit this country ;
and, most of all, it must signal to the most vulnerable
that they are not forgotten and can be made whole.
Mr. Speaker, in this , my first
Budget Stat ement , I am m indful that I represent a legacy of social
justice and a struggle for equality in this country that,
while not yet perfected, has been advanced through
the work of icons like Browne- Evans, W ade, Smith,
Scott, Allen, Brown and Cox —and countless others
whose names we may not speak today , but whose
values guide what we do for and on behalf of the people of Bermuda.
Mr. Speaker, it is no exaggeration to say that
we live in one of the most challenging economic eras
in modern times. Delivering on even a modest agenda
would be considered difficult, but the agenda set by this Government is not modest; it cannot be because these extraordinary times demand that we take strides
that may not match conventional wisdom and may
defy the understanding of those who do not share our
vision or indeed even our common purpose.
Mr. Speaker, in his message to Congress in
1862, President Abraham Lincoln said, “We can succeed only by concert. It is not ‘can any of us imagine
better? ’ but, ‘can we all do better? ’ The dogmas of the
quiet past, are inadequate to the stormy present. The occasion is piled high with difficulty, and we must
rise—with the occasion. As our case is new, so we
must think anew, and act anew. We must disenthrall
ourselves, and then we shall s ave our country.”
Mr. Speaker, this call to action was made in
the throes of the US Civil War and the impending end
of slavery. It was a morally and economically challenging time which demanded that their country examine itself and decide if they would c ommit to living up
to the purported values of their founders. Although no
war threatens us, we face similar challenges. The
question for us, the call to action on the cusp of this third decade of the 21
st century, is whether we can do
more than imagine bet ter: Can we, will we , commit to
doing better?
Mr. Speaker, we must grow our economy. We
must balance our budget , and we must reduce our
national debt. We must evolve our system of taxation to one that is more equitable, and we must concurrently fulfil th e promise of November’s Speech from
the Throne to reduce the cost of living for Bermudians.
In the face of modest economic growth and manifes ted resistance to efforts at diversifying this economy,
this is no easy task. Add to that external threats to our
business model and the mainstay of our existing revenue base, and the enormity of the challenge b ecomes clearer. But, Mr. Speaker, I am proud to report
to this Honourable House and the people of Bermuda that their Government remains steadfas t, determined
and is making steady progress in delivering on those promises.
Mr. Speaker, in this budget , I have struck a
necessary balance between fiscal prudence aimed at
promoting job creation, and economic growth. Our
approach to the 2019/20 n ational budget includes a
combination of modest revenue enhancements de-rived exclusively from the existing tax code, coupled
with the freezing of g overnment expenditure at the
fiscal 2018/19 spending levels and a small increase in capital expenditures. This fiscally prudent and balanced approac h will move us towards a small b udget
surplus and, consequently, a reduction in net debt.

[Desk thumping]
Hon. Curtis L. Dickinson: Mr. Speaker, this budget
has been achieved following the widest possible consultation. Those groups and people most affected
have had the opportunity to express their views on our
proposals. Democracy can sometimes be inelegant


Bermuda House of Assembly and disheartening to some, but , Mr. Speaker, the pr ocess since the Pre- Budget Report and the hosting of
various meetings has been an enriching experience
that has informed the preparation of this Gover nment’s fiscal policy.
From end to end, the people of Bermuda have
voiced their concerns, their fears and [most] helpfully ,
their ideas and suggestions. We have heard how ordinary, hard- working women and men have been i mpacted by the economy since 2008, and how they
have done extraordinary things to still provide for their families, to care for ageing loved ones and to preserve
property legacies for future generations. In their sharing we have found inspiration and validation of the
need to diversify this economy, to run th is Gover nment more efficiently and to start the exercise of fair
taxation by collecting what is owed. Mr. Speaker, the
voice of the people will be heard in this budget , and
what they have demanded of their Government is
what we aim to deliver.
Mr. Speaker, the public service is the engine
on which we as a community rely to provide services
and value for money in the management of various
agencies that impact the people who call Bermuda
home. The men and women of the public service
share the same concerns, responsibilities and aspir ations as all other citizens. Public Sector Reform will
form an important part of this year’s fiscal efforts at
streamlining the operations of government to suit the
modern service delivery standards demanded of any
organisation.
Mr. Speaker, this budget will demonstrate this
Government’s determination to invest in our people. From nursery through mature learning and retraining,
we will invest in the building of capacity in our people
so that success in economic diversification finds them
ready to assume the jobs created locally. Bermuda
cannot simply be cutting- edge in legislation and ec onomic ecosystems. We must present job creators with a population that can meet their business needs.

ECONOMIC OUTLOOK

Hon. Curtis L. Dickinson: Mr. Speaker, like the
economies of many small countries, Bermuda’s econ-omy is highly vulnerable to external events, underli ning even more the need for financial and fiscal pr udence. With our open economy, fixed exchange rate,
high levels of government debt and other potential
liabilities , from guarantees and underfunded pension
and health care schemes, changes in global financial market sentiment could also have a maj or impact. The
preparation of the 2019/20 Budget takes into consi deration these global and domestic economic conditions. As the Government has limited economic tools
available to influence economic activity, we have a responsibility to act prudently and to support sustai nable economic growth.
The Challenges We Face
Hon. Curtis L. Dickinson: Mr. Speaker, the Gover nment has carefully identified and assessed these risks, among others, when framing the 2019/20 Budg-et. Bermuda faces several challenges globally , and
these must be considered when planning our national
budget and charting our economic course for the f uture. Many of the challenges are international, but
there are also domestic challenges that can pose significant risk to our economy if not managed judiciously.

The European Union’s List of Non -Cooperative
Tax Jurisdictions

Hon. Curtis L. Dickinson: Mr. Speaker, the most
pressing threat to Bermuda’s international business sector and to Bermuda’s economy is the European
Union’s (EU) list of “non-cooperative tax jurisdictions .”
Mr. Speaker, on the 5
th of December 2017, the Cou ncil of the European Union [ the Council ] adopted and
publi shed its conclusions regarding “ non-cooperative
jurisdictions for tax purposes ,” together with a list of
“non-cooperative jurisdictions .” The final list was determined by the Council following an evaluation, by the EU’s Code of Conduct Group, of the tax regimes
in those countries on the basis of a set of specified
criteria.
Bermuda was not listed as a non- cooperative
jurisd iction; however, the Council has stated that tax
regimes exist in Bermuda, among other countries,
which facilitate offshore structures that attract profits
without real economic activity. Since December 2017, the Government has been meeting with various
stakeholders at home and abroad and has impl emented reforms. On 17 December 2018, the Economic Substance Act 2018 was passed by Parliament.
The purpose of this legislation and its accompanying
regulations is to ensure that Bermuda remains off of any EU list of non- compliant jurisdictions and that it
will continue to thrive as an in ternational business
centre.
The Government will continue to engage the
EU in constructive dialogue and we are confident that
the EU will continue to recognise Bermuda’s leadership in the area of global tax transparency and compliance.

Caribbean Financial Action Task Force
Assessment

Hon. Curtis L. Dickinson: Mr. Speaker, the Caribbean Financial Action Task Force’s [ CFATF ] assessment
of B ermuda’s anti-money laundering and counter -
terrorism financing regime is in progress. The first
draft of the report has been received, and the Berm uda team has provided a detailed response to the ratings and analysis in order to seek to ensure that the
582 22 February 2019 Official Hansard Report

Bermuda House of Assembly report is revised to reflect the Bermuda regim e appr opriately. The second draft is due shortly and the team
is preparing its strategy for analysis and response. It
has now been confirmed that Bermuda’s report will be
discussed at the CFATF’s November 2019 Plenary, to be followed by the CFATF’s quality and consistency
processes. It is therefore anticipated that Bermuda’s
Mutual Evaluation Report should be finalised and ready for publication in early 2020.
The Bermuda team continues to work in
unison to present Bermuda’s best case and to ensure that iss ues already identified by the CFATF assessors
are evaluated and strategies are developed for dealing with them in a timely manner.

US Tax Reform

Hon. Curtis L. Dickinson: Mr. Speaker, the tax r eform legislation eventually passed by [the US] Co ngress does not appear to have had any significant
negative impacts on Bermuda’s insurance and rei nsurance industry; this risk has therefore diminished
significantly. Nevertheless, we will need to ensure that
we maintain our comparative advantage as a place to
do bus iness and keep a close eye on developments in
Washington.

Brexit
Hon. Curtis L. Dickinson: The legal basis for the
relationship between the Overseas Territories and the
EU is set out under the Treaty on the Functioning of
the European Union. Accordingly, Bermuda benefits
from special arrangements with the EU , including
most favo urable treatment in relation to measures affecting trade in ser vices and other trade- related matters. While most of Bermuda’s trade in goods and ser-vices is with the US, the EU exports a sizeable
amount of goods and services annually to Bermuda.
Annual two- way trade is normally $30 bil lion. Given
that the w ithdrawal agreement primarily provides for
an orderly exit from the EU, there should be limited direct impact on Bermuda if an agreem ent can be
reached prior to 29 March 2019.
The Government of Bermuda has been wor king with the UK Government to ensure that issues r elated to Bermuda are considered. However, to the
extent that the UK acts to defend Bermuda’s interests
in the EU, particularly in relation to financial services regulation and tax policy, Bermuda may find it difficult
to make its case in Brussels.

Bermuda’s Ageing Population

Hon. Curtis L. Dickinson: Mr. Speake r, Bermuda’s
ageing population —a certainty, not a risk —will result
in serious medium - and longer -term pressures on
public spending and challenges to growth. The recent
census throws these issues into sharp relief, sugges t-ing a sharp rise in the old- age d ependency ratio in the
near future. While demographic trends are, by their nature, slow -moving and may not be immediately vis ible to the public, this is perhaps the single most ser ious long- term issue Bermuda faces. It will not be possible for the Government to meet its obligations to our
retirees and pensioners without significant structural
reforms to our economy. We must have [ more] Bermudians working in Bermuda, and have more jobs
located in Bermuda, to ensure that we collect the re venue necessary to fund our pensi ons and care for our
seniors.

The Domestic Economy

Hon. Curtis L. Dickinson: Mr. Speaker, I will now
turn my attention to the domestic economy. A narr ative has been advanced that Bermuda is in a recession. However, the facts simply do not bear that out.
Over the last several months , we have seen signs that
Bermuda’s economy is improving. Many of the major
economic indicators —such as employment, construction, and air visitor arrivals and spending —increased
in 2018, indicating some improvement i n the Berm udian economy. However, while we are seeing some evidence of growth, there are other indicators showing
signs of softness that may have a negative impact on
economic growth.

Employment

Hon. Curtis L. Dickinson: Mr. Speaker, preliminary
data from the 2018 Employment Survey indicates that
the total number of jobs in Bermuda grew by 144,
from 33,653 in 2017 to 33,797 in 2018, a 0.4 per cent
increase. The year 2018 represents the third consec utive year in which there has been an increase in the number of jobs available in Bermuda. Much of the
growth was fuelled by an increase in jobs filled in the construction and hotels sectors, which added 131 and
105 posts , respectively. The report also shows that
there were employment increases in the following sectors: retail trade and repair, real estate and rent, bus iness services, public administration, education, health and social work, and, most importantly, international business . These increases were offset by declines in
transport and communications, which shed 69 jobs,
and other community, social and personal services,
which shed 57 jobs. Other losses in positions occurred in agriculture, fisheries and forestry; electricity,
gas and water supply; who lesale trade and motor v ehicles; restaurants, cafes and bars; and financial i ntermediation.
Mr. Speaker, one of the major headwinds in
our growth prospects is the level of employment. Al though employment numbers are marginally positive,
the pace of job growth must increase if we are to have a sustained economic recovery. In the first three quarters of 2018, employment income decreased by $16.4


Bermuda House of Assembly million to $2.61 billion, a modest decrease of 0.6 per
cent.

Tourism

Hon. Curtis L. Dickinson: Mr. Speaker, [ 2018] turned
out to be another record- breaking year for the number
of visitor arrivals when cruise, air and yacht figures
are combined. The previous record was 692,947,
achieved in 2017. In 2018, that number grew 11 per
cent, to finish at 770,683. Air arriv als in 2018 grew by
4.6 per cent, while the number of cruise passengers
increased by 15.9 per cent. Total visitor arrivals i ncreased by 11.4 per cent over the previous year. Total
visitor spending in 2018 rose by $74.3 million, or
17.2 per cent, settling a t $505.3 million.

Other Economic Indicators

Hon. Curtis L. Dickinson: Mr. Speaker, total retail
sales for 2018 decreased by 2.1 per cent , or $24.7
million , to settle at $1.15 billion. Despite this decrease,
jobs in the sector rose by 34 positions , or 1 per cent. It
should be noted that the value of goods included in
the Retail Sales Index does not include the significant
number of goods shipped to Bermuda that are purchased online by residents. The Department of Stati stics will begin to include this information as part of their monthly report on retail sales, as only goods that
come through the airport with returning residents are
currently reported. Declining retail sales can, in part,
be traced back to the fact that over the last year many
families who have mortgages have seen their monthly
payments increase, and so they are forced to spend
more money paying the ba nk than eating out or shopping.
Imports decreased by 5.9 per cent over the
first three quarters of the year , to register at $798.8
million. T his decrease was due mainly to the return to
more normal levels following the large increases r elated to the America’s Cup. The largest decreases
were seen in the importation of transport ation equipment and finished equipment, which saw declines of
34.4 per cent and 19.7 per cent , respectively. The estimated value of construction work put in place i ncreased from $133.9 million in 2017 to $156.8 million over the first three quarters of 2018, an increase of
17.1 per cent. The majority of the increase can be attributed to an increase in the levels of work performed
on roads, bridges , and the airport project.
Mr. Speaker, headline inflation numbers continue to remain low in Bermuda, as reflected in the
2018 Consumer Price Index, which indicated an average inf lation rate of 1.4 per cent. This rate is below the
UK (3.3 per cent), the US (2.4 per cent) and Canada
(2.3 per cent). Bermuda’s Balance of Payments r emains a strength in the Bermuda economy and, over
the first three quarters of 2018, recorded a surplus on
the cur rent account of $727 million, an increas e of $59 million over the same corresponding period’s surplus
in 2017. The increase in the current account surplus
was mainly due to changes in the services account ,
reflecting higher fees and commissions earned on the provision of financial services to non- residents. Some
827 new international companies and partnerships
were registered in Bermuda during 2018, representing
a 5.5 per cent increase compared with 784 registr ations in 2017.

GDP Estimate 2018

Hon. Curtis L. Dickinson: Mr. Speaker, considering
all economic indicators and the recent Third Quarter
Gross Domestic Product (GDP) publication released
by the Department of Statistics, the Ministry of F inance is lowering its 2018 GDP growth estimate by
1 per cent , from 1.5 per cent to 2.0 per cent, to 0.5 per
cent to 1.0 per cent. The reduction follows an increase
in GDP of 2.5 per cent in 2017. The GDP estimate
highlights the urgency of the need to invest in creating a more diversified economy, which will create stronger economic growth for the I sland, as our ability to r educe our debt depends upon growth of our economy
and the creati on of more jobs in Bermuda.

BUDGETING IN UNCERTAIN TIMES
Hon. Curtis L. Dickinson: In uncertain times, fiscal
rules must accommodate volatility in the funds avail able for future budgets. Sluggish international growth
may continue to limit Bermuda’s ability to increase GDP, generate or sustain employment opportunities
and increase government revenues to support the
provision of services. There is a financing gap b etween the stimulatory policies that we would like to
see in place to protect jobs and the policies that we
can finance from revenues. Governments either must
borrow funds to bridge this financing gap or [they] must c ut spending to accommodate actual revenues.
Spending reductions ultimately result in public sector
downsizing, which creates weakness in the private
sector.
Over the last decade, Bermuda has exper ienced recurring budget deficits and a growing national debt, coupled with periods of negative economic
growth. Significant attention has been focused on
Bermuda’s approximately $2.5 billion of debt, with
calls to reduce expenditure and deficits, and, cons equently, the debt. The Government is mindful of the effects of the debt burden on the country’s fiscal posture and is taking the necessary steps to prudently
manage our debt through strategic refinancings and
repurchases designed to lower interest costs, extend
maturities and reduce debt, while providing the Go vernment with the space to execute its economic
growth strategy.
Mr. Speaker, due to the uncertainty facing the
Bermuda economy, mainly in relation to the economic
584 22 February 2019 Official Hansard Report

Bermuda House of Assembly substance requirements, the Government has reco nsidered our fiscal strategy for the 2019/20 B udget as
laid out in the Pre- Budget Report. We have concluded
that it is not prudent to raise an additional $50 million
in revenue at this time. Additionally, the Government will suspend the mandatory annual contribution to the
Sinking Fund rather than bor row additional monies to
make this annual contribution.

GROWING OUR ECONOMY

Hon. Curtis L. Dickinson: Mr. Speaker, it is incumbent upon the Government to create the conditions to foster economic growth, which will increase jobs, i ncrease income and raise the standard of living for
Bermudians.

Executing Our Plan

Hon. Curtis L. Dickinson: Mr. Speaker, during last
year’s Budget Statement, this Government laid out a
path for economic growth that relied on targeted i nvestment by the Government while stimulat ing the
Bermuda economy by reducing barriers for inves tment.
Last year’s increased investment in tourism
marketing via the Bermuda Tourism Authority, i ncreased business marketing via the Bermuda Bus iness Development Agency and increased support for entrepreneurs via the Bermuda Economic Develo pment Corporation have borne fruit. In 2018, the Bermuda economy witnessed an increase in international
company registrations, an increase in local company registrations, an increase in jobs located in Bermuda,
an increase in insurance companies setting up in
Bermuda, and an increase in tourists visiting Berm uda.

[Desk thumping]

Reducing Interest Rates

Hon. Curtis L. Dickinson: Mr. Speaker, despite these
positive signs, our economy remains in a fragile state.
For instance, the value of retail sales has declined in
eight out of the last twelve months. Some of this de-crease can be attributed to the differences due to the
one-off stimulus of 2017’s America’s Cup. However,
we must also recognise that retail sales will continue
to be impacted by increased online shopping, as more
overseas firms reduce or eliminate the cost of shi pping goods to Bermuda. Additionally, the increase in
interest rates charged by local banks for mortgages
and other loans means that many r esidents have less
money to spend in shops, as they are paying more in
interest.
Bermuda’s interest rates are tied to the US
economy. This means that the rate increases put in place to slow the US economy have the effect of slow-ing the Bermuda economy, which needs stimulus, not
slowing. The negative impact of high interest rates
must be combated directly. Over the last year, the
Government has worked to attract new banking inst itutions to Bermuda. Although we are making pr ogress, Bermudians who are struggl ing to make ends
meet do not have the time to wait for new banks to set
up in order to provide competition to existing instit utions. Therefore, it is up to this Government to be
transformational and to use the public sector to pr ovide relief.
Mr. Speaker , the Government will do two
things to reduce the mortgage pressure on hardwor king Bermudians. Firstly, the Government will, in con-junction with private sector banks, pilot a mortgage
guarantee programme in return for a reduction in i nterest rates charged to Bermudians for their mortgages.

[Desk thumping]

Hon. Curtis L. Dickinson: Secondly, the Government
will create a government -backed mortgage lender to
relieve pressure on public sector employees by provi ding them with reduced mortgage rates.
[Desk th umping]
Hon. Curtis L. Dickinson: These two measures,
combined with the elimination of taxes on mortgage refinancing, are projected to save $5,300 a year for
the average family carrying a $500,000 mortgage.
Mr. Speaker, the economic case is simple:
Lower mortgage rates give more Bermudians more
disposable income. More disposable income means
that families have more money to spend and invest in
the Bermuda economy, which will support local bus inesses.

The Case for Economic Reform

Hon. Curtis L. Dickins on: Mr. Speaker, there is a
constant refrain in some quarters which speaks about
the need to relax our immigration laws even further to
boost the population in Bermuda. It is a simplistic ar-gument which wilfully ignores the other economic
challenges faced by Bermuda.
Mr. Speaker, immigration is not the core i ssue; economic competitiveness is. Under our current laws, any investor who wishes to come to Bermuda to
start a company can stay in Bermuda, apply to be-come a permanent resident, pass that PRC [perm anent resident certificate] status to their spouse and
children, and buy property here in Bermuda. Mr.
Speaker, the issue is not whether or not we have the
laws to attract investors and job creators to our country. The question that must be answered is why they
are choosing to invest in other places.


Bermuda House of Assembly Mr. Speaker, Bermuda’s challenge is not sol ely the need for immigration reform. Bermuda’s challenge is the need for fundamental economic reform —
reforms that reduce interest rates, reforms that reduce the cost of energy, reforms that reduce the cost of health insurance and reforms that reduce the cost of
doing business in Bermuda. These reforms are necessary to create the better and fairer Bermuda that
Bermudians voted for. A more competitive Bermuda
economy wil l create more jobs, which will, in turn, lead
to an increase in Bermuda’s population, as Bermudians return home to fill these new jobs, which is essential for our long- term economic survival.

Our Economic Plan

Hon. Curtis L. Dickinson: Mr. Speaker, some have
asked for this Government’s economic plan. Our plan
was spelled out in our 2017 election manifesto, and it
can be summed up by the following: Build on what we
currently do well in financial services and tourism, di-versify our economy so that we can at tract companies
in new industries to our shores, reduce the cost of living and the cost of doing business in Bermuda,
make our government more efficient, and reduce
regulations and red tape to stimulate investment while
promoting competition in the Bermuda economy.

Expanding Financial Services and Tourism

Hon. Curtis L. Dickinson: Mr. Speaker, our economic
plan is rooted in the twin pillars that have served the
Bermuda economy well —financial services and tourism. Our investments and combined efforts to grow
these pillars have been successful, as 2018 saw an
increase in incorporations and job growth in both i nternational business and hospitality. While our proper-ty and casualty and captive insurance sectors remain
stable, we have witnessed significant gro wth in the
long-term insurance sector. Bermuda continues to
make strides in attracting more asset managers to our
shores, and economic substance presents a unique
opportunity to leverage our proximity to the financial centres on the eastern seaboard of the US to attract
more asset managers to Bermuda.
In tourism, we will continue to invest more in
marketing and product development, while recogni sing that we must make tourism investment in Bermuda
more attractive. That is why the Government is wor king with unions and hoteliers to increase efficiency
and boost productivity in Bermuda’s hospitality industry. In 2019, when regional competition is fierce, friendly people and beautiful beaches are not enough.
Reform is necessary to make investing in Bermuda
hotel s profitable, which will serve to protect existing
jobs, while attracting additional investment leading to
new tourism jobs.
Diversifying the Economy

Hon. Curtis L. Dickinson: Mr. Speaker, the Gover nment, in conjunction with the Bermuda Business D evelop ment Agency, has a multi -faceted approach to
creating new areas of economic activity in Bermuda.
Mr. Speaker, over the last year, tremendous
strides have been made in establishing Bermuda as a
domicile for technology companies in the emerging
areas of Fi nTech, RegTech, and InsurTech. Mr.
Speaker, five of the ten largest companies in the world
are technology companies, and for Bermuda to play a
role in the future of financial services, we must have a
leadership position in FinTech. Our size and high re gulatory standards make Bermuda the ideal place for
technology companies to develop and test their products in our market before expanding those products to the rest of the world.
However, Mr. Speaker, in addition to looking
to attract technology companies to Bermuda, our ec onomic diversification strategy has specific focus on aviation and shipping, arbitration, biotech and life sc iences, the blue economy, intellectual property, sate llites and space, and nearshoring. The work on these
initiatives will be highl ighted during the Budget D ebate, and the Government looks forward to informing
Honourable Members of the progress to date.

Reduce the Cost of Doing Business

Hon. Curtis L. Dickinson: Mr. Speaker, fundamental
economic reform means that we need to reduce t he
cost of doing business in Bermuda. The costs of energy, health insurance and interest rates directly i mpact our ability to grow Bermuda’s economy. I have already spoken about our plans to provide relief to
Bermudians struggling with high interest rates, but
health insurance costs are also a burden for many
Bermudian families. Mr. Speaker, the Government committed in its platform to advance the National
Health Plan, which did not advance under the former
Government. Over the last 19 months, there has been
extensive consultation, and the Government will soon
unveil this important economic reform, which will e nsure that we are able to provide better coverage for all
Bermudians. Mr. Speaker, the core of this plan is si mple: to reduce the cost of health insurance for citizens,
for employers and for seniors. Reduced health insurance rates will mean more money in the pockets of
Bermudian families and that is the goal of this transformational reform. Mr. Speaker, the Regulatory Authority is in the
final stages of producing the Integrated Resource
Plan, which will be Bermuda’s national plan for our
Island’s future electricity needs. The Government
looks forward to the production of this plan, which is
an important step towards reducing the cost of elec-tricity.

586 22 February 2019 Official Hansard Report

Bermuda House of Assembly Making Government More Efficient

Hon. Curtis L. Dickinson: Mr. Speaker, while we r educe the cost of doing business in Bermuda, it is i mportant to invest to make government more efficient
so that, as the economy grows, the government is
able to provide servi ces to more residents in a cost -
effective manner. Over the past 15 months, the Government Efficiency Committee, chaired by the Junior
Minister of Finance, has worked with government departments to streamline processes, raise additional revenue and identify areas for additional savings.
Mr. Speaker, on Monday, the Government will
launch the Public Service Reform initiative to trans-form Bermuda’s public services. The top level of the public service will be reorganised to create a dedicated implementation team, which will focus on the ex ecution of the reform plan that has been developed over the last year.

Stimulating Investment & Competition

Hon. Curtis L. Dickinson: Mr. Speaker, the final pillar
of our economic plan is the transformational measures
necess ary to stimulate investment, which will create
jobs by promoting competition in the Bermuda economy, which will lead to reduced costs. Last year, the Government announced changes to allow international law firms to enter the Bermuda market, the moder nisation of the 60:40 rule, and the relaxation of height
and ownership restrictions for developments in the Northeast Hamilton Empowerment Zone.
Mr. Speaker, creating an additional supply of
condominiums will work only if there is additional demand for the pur chasing of these units; that is the
reason why the Government will relax ownership restrictions for these special developments. This is an
important change, as we must provide places for
money earned in Bermuda to stay in Bermuda and
circulate in our economy. The narrow relaxation of
these restrictions will put more Bermudians to work in
construction projects throughout the city and will cr eate fixed assets that provide ongoing maintenance
jobs. More residents in Northeast Hamilton will pr ovide more customers for local business, which will lead to an increase in economic activity in the em-powerment zone. These new developments will also
be key to attracting young Bermudians back to Bermuda, as the units will be ideal for singles and couples without children.
To unleash the entrepreneurial spirit of Bermudians, the Government, in conjunction with the Bermuda First Think Tank, will identify and eliminate
antiquated regulations that make Bermuda’s economy
uncompetitive and serve as a barrier to entrepreneurs.
Bermuda First has started working with the Ministry of
Tourism and Transport to relax complex public service
vehicle regulations to provide more flexible options to
residents and visitors, while creating additional rev e-nue opportunities for existing taxi and minibus oper ators.
Mr. Speaker, to provide clarity to Bermudian
entrepreneurs who are seeking alternative sources of capital in order to promote competition with existing businesses, the Government will publish guidelines for
the granting of exemptions f rom the 60:40 rule, while
concurrently simplifying the application process.

2018/19 FISCAL PERFORMANCE

Hon. Curtis L. Dickinson: Mr. Speaker, before going
into further detail on the 2019/20 Budget, I will now focus briefly on the forecasted financial res ults for the
current 2018/19 fiscal year, as they form the foundation for the 2019/20 Budget.
Mr. Speaker, the Government is forecast to
earn $1.079 billion in revenue in 2018/19. This is
$11.9 million (1.1 per cent) less than the $1.09 billion
in the or iginal estimates and is due mainly to lower -
than- expected customs duty, fees from sale of land to
non-Bermudians, and miscellaneous receipts. These
amounts were partially offset by higher collections in payroll tax, stamp duty and land tax. The projected
2018/19 operating expenses of the Government are
$932.0 million, or $2.8 million (0.3 per cent) higher
than the $929.1 million originally budgeted in 2018/19.
This increase was primarily a result of additional sub-sidy funding for the Bermuda Hospitals Board in relation to dialysis claims. This item was offset partially by
decreases in expenditure related to energy, and mat erials and supplies.
Mr. Speaker, included in total operating expenses is the 2 per cent salary increase awarded to
some public officers . As this amount was unbudgeted,
departments have had to find savings from within their
current budget allocations.
Revised capital expenditures for the year are
predicted to come in at $61.7 million, or $600,000
more . . . below plan . . . below the plan of $62.2 mi llion. Debt service costs for 2018/19 will be in line with
the original budget estimate of $188 million. Given the
factors outlined [previously], the revised estimate for
the overall deficit is $102.6 million, $12.9 million more
than projected. This deficit includes the Sinking Fund
contribution of $64.2 million. Excluding the impact of
the Sinking Fund contribution, the deficit would have
been $38.3 million.
During the 2018/19 fiscal year, the Gover nment executed an international bond transact ion for a
total of $620 million. The purpose of this financing was
(i) to repay a $135 million loan facility with Butterfield
Bank; (ii) to finance a portion of the 2018/19 [deficit];
and (iii) to refinance more expensive government
bonds. As a result of t he transaction, the Government
has lowered the weighted average rate of interest it pays on the total amount of bonds outstanding from approximately 4.63 per cent to 4.591 per cent and has


Bermuda House of Assembly reduced its interest expenses by about $1 million per
year.
Mr. S peaker, for the remainder of this fiscal
year, the Ministry of Finance will exercise prudent
management of funds to ensure that we do not incur any additional borrowing. Therefore, on the 31
st of
March 2019, gross public debt will stand at $2.68 bi llion an d net debt will stand at $2.465 billion. This
amount is $35 million below the debt ceiling of $2.5
billion. The Sinking Fund balance is projected to be
approximately $214.6 million at the end of 2018/19.

2019/20 BUDGET ESTIMATES

Hon. Curtis L. Dickinson : Mr. Speaker, I will now
turn my attention to the details of the budget for the
upcoming fiscal year. The highlights of the 2019/20 Budget feature a 0.4 per cent decrease in total expenditure of $4.3 million from last year’s original est imates. Revenues are forecast to rise by 2.6 per cent,
or $28.6 million, and the current account balance, be-fore interest on debt and capital expenditure, is budg-eted to be a surplus of $188.6 million.
The current account balance, after interest, is
also budgeted to come i n at a surplus in the amount of
$72.1 million. This represents an increase in the current account surplus of $35.4 million when compared
with the 2018/19 Budget on a like- for-like basis. Given
the aforementioned, Mr. Speaker, I am pleased to r eport that this year the Government of Bermuda will
report a budget surplus of $7.4 million.
[Desk thumping]
Hon. Curtis L. Dickinson: The projected current account balance (excluding debt service) indicates whether [revenues] can support the day -to-day ru nning of government, excluding interest on debt, capital
expenditures and the mandatory Sinking Fund. This
year’s budget, with a current account surplus of $188.6 million, represents an improvement over the
fiscal 2018/19 surplus, with sufficient revenue to cover
not only the day -to-day running of government, but
also the interest on debt and capital expenditures.
Mr. Speaker, the Gover nment does not antic ipate any long- term borrowing in this fiscal year and, at
31 March 2020, it is estimated that gross public debt],
will be $2.457 billion once we apply the projected surplus to the Sinking Fund.
Mr. Speaker, in keeping with our pledge from
last year, we expect that this year we will start reducing our debt. We will continue to reduce expenses
where we can, but we will also make the strategic i nvestments needed to stimulate economic growth.
Mr. Speaker, as our debt metrics stabilise an d
we project no new long- term borrowing in the 2019/20
fiscal year, the Government has no immediate plans to raise the country’s debt ceiling. Our debt ceiling is
currently set at $2.5 billion, and the Ministry of F i-nance will exercise prudent management of funds in
this year to ensure that we remain below the debt cei ling. During fiscal year 2019/20, certain government
private placement notes aggregating $180 million will
mature. The Government will draw from the Sinking Fund to repay these notes. This wil l reduce our interest expense by $12.1 million per year and lower our
weighted average cost of borrowing from 4.591 per
cent to 4.437 per cent.

Revenues
Hon. Curtis L. Dickinson: In order to reduce the deficit and provide for much- needed services, the Go vernment considers it appropriate to strategically i ncrease our revenues.
Mr. Speaker, the estimates for 2019/20 show
government revenues of $1.118 billion, which is $28.6
million, or 2.6 per cent, higher than the original est imate for the previous year. Honourable Members will
note that this increase is less than the $50 million in
revenue [increases] proposed in the Pre- Budget R eport. The Government has evaluated the risks facing the Island, in particular the potential EU action to list
Bermuda as a non- cooperative tax jurisdiction under
the EU Code of Conduct Group. Accordingl y, the
Government has decided that now is not the time to
extract an additional $50 million from the economy in
taxes. Even though we propose for deficit reduction in
[2019/20] to come from the revenue side, we recognise that the solution requires fiscal discipline by the
Government, where it properly prioritises the country’s
needs and wants. Mr. Speaker, there have been accusations
from some channels that this Government is a “ taxand-spend government ,” that increasing revenue is
only being brought about by this Government, and
others have not raised taxes. Well, Mr. Speaker, there
can be nothing further from the truth. The record will show that, during its time in office, the former admi nistration increased taxation from $866 million in 2013
to $1.052 b illion in March 2018. This amount repr esents a $185 million, or approximately 21.4 per cent,
increase. During this same period (2013 –2017), GDP
growth averaged a modest 0.1 per cent. Therefore,
the majority of this increase in taxes was from tax hikes rather than [from] economic growth.
Furthermore, it was the former administr ation’s plan to increase revenue to $1.146 billion by 2019/20, as set out in the last budget produced by the
OBA in 2017/18.
Also, recall that the former Government engaged CARTAC [ Caribbean Regional Technical A ssistance Centre] to complete a review of Bermuda’s
tax system and its administration in 2015. The report
was completed in September of 2015. Many stak eholders requested access to this document, but the former Government refus ed to share its contents. This
Government tabled the CARTAC report in Parliament
588 22 February 2019 Official Hansard Report

Bermuda House of Assembly on 6 October 2017 so that Parliamentarians and
members of the community could be made aware of
its recommendations.
Mr. Speaker, the report indicated that the
main objective of the tax review was to increase tax
revenue. The former Government’s preference was to
increase the revenue provided by the existing taxes,
although it was open to proposals that would expand
the tax base and improve equity. The main goal of the
reform was to increase revenues by about $100–
$150 million over a three- year period. Thus, we can
see that tax reform is nothing new. This Government did it in a transparent manner with the publication of
the Tax Reform Commission report, while the former
Government did it behind closed doors with no public scrutiny.
Mr. Speaker, I provide this information for
context only. Honourable Members are aware that the
Government released the Pre- Budget Report in advance of this budget. The Pre- Budget Report spoke of
the choices we face and discussed them in the context of the risks that we face. In addition, the report
contains some policy options that were under consi deration by the Government.
Mr. Speaker, the objective of the Pre- Budget
Report is to raise awarenes s of the choices faced by
the country and to stimulate discussion for moving
forward. The policy options that were presented in the
Pre-Budget Report are just that —options. As a Go vernment , we must lead, but we will also always listen.
I would like to thank all stakeholders who pr ovided submissions during the consultative pre- budget
process. It is an example of the approach that this
Government will take to ensure that we conduct our
business in an open and transparent manner. Follo wing consultation, the Mi nistry will take the following
actions to meet the Government’s revenue target in
2019/20.

Payroll Tax

Hon. Curtis L. Dickinson: Mr. Speaker, despite b eing a possible disincentive to job creation, payroll tax-es are a highly effective and reliable way to r aise re venue. The yield from payroll tax is estimated at $466.1 million in 2019/20, which is 41.7 per cent of total go vernment revenues. The Tax Reform Commission pr oposed various payroll tax recommendations; however,
due to uncertainties in other revenue projections, it is
proposed to leave most rates unchanged.

Economic Substance Incentives Programme

Hon. Curtis L. Dickinson: In the 2018/19 Budget
Statement, it was also announced that this Gover nment would encourage local and international companies to create jobs in Bermuda. To this end, the Mini stry of Finance worked with key business stakeholders to generate incentives for companies to create and locate additional staff in Bermuda, by providing payroll
tax relief for new positions created in Bermuda. As
announced already, in the upcoming budget the Go vernment will promote this relief for exempted compa-nies as part of our Economic Substance Incentives Programme. This programme will provide a two- year
employer payroll tax concession for additional jobs
created in Bermuda. The new EU Economic Substance Incentives Programme will also include the
application of the existing New Business Work Permit
Policy.

Payroll Tax Relief for the Retail Sector

Hon. Curtis L. Dickinson: The retail industry employs nearly 3,500 Bermudians, and the Government
is very much aware of the pressure on certain segments in this sector. In an effort to maintain and i ncrease employment levels in this sector, the Gover nment will provide targeted payroll tax relief to specific
busines ses by providing a concessionary employer
payroll tax rate of 7 per cent for all retailers whose
payroll is above $500,000 and whose primary sales are in fashion, shoes, jewellery and perfume.

Payroll Tax Relief for Local Musicians

Hon. Curtis L. Dickins on: Mr. Speaker, entertai nment plays a very important role in the culture and
development of Bermuda. We have seen a decrease
in entertainment over the years and note with concern
that our entertainers have very little business, if any, during our off seas on. Therefore, the Government will
be providing a concession to all businesses that hire local musicians and entertainers by removing the employer payroll tax for the next three years. The Government believes that this concession will encourage more businesses to hire local entertainers and e ncourage more Bermudians to become involved in this
extremely important industry.

Customs Duty

Hon. Curtis L. Dickinson: Mr. Speaker, the yield
from customs duty is estimated at $235 million, or
21 per cent of total go vernment revenues. Mr. Speaker, in line with the Health Ministry’s consultation paper, and as announced by the Minister of Health in the
House of Assembly in March 2018, it is proposed to
increase the rate of duty on a limited group of items
from 50 per cent to 75 per cent. In a further phase of
the implementation of the sugar tax, it is also pr oposed to extend the scope of items to be captured by
the up- rated 75 per cent sugar tax. These adjustments
will yield an additional $4 [million] to $5 million of cu stoms duty.
Mr. Speaker, the duty on cigarettes and t obacco, and on beer, wines and spirits will be raised in
April 2019 to achieve additional customs revenue of


Bermuda House of Assembly approximately $1.5 [million] to $2.5 million. The Go vernment will also extend the Hotels (Temporary Customs Duty Relief) Act 1991 and the Restaurants
(Temporary Customs Duty Relief) Act 2002 by a further five- year period expiring on the 31st of March
2024. These Acts provide a zero rate of customs duty
on imported capital goods intended for the renovation
and refurbishment of restaurants and hotels, and
many properties have benefited from these Acts over
the years.

Financial Service Tax

Hon. Curtis L. Dickinson: In the 2017/18 Budget, the
former Government enacted the Financial Services
Tax Act 2017. This legislation introduced a financial services tax on insurance premiums (excluding
health), money transmissions of a money service
business, and bank assets.
Mr. Speaker, in the Pre- Budget Report we
announced that the Government was considering i ncreasing the financial services fee on banks and i nsurance premiums to generate additional revenue and
that the increased fee on insurance premiums would
be the obligati on of the insurer. Following consult ation, the Government will increase the tax rate on
premiums by 1 per cent and increase the tax on bank
assets from 0.005 per cent to 0.0075 per cent of its
consolidated gross assets as at the end of a tax per iod. This w ill yield an additional $3.4 million in revenue.

Foreign Currency Purchase Tax (FCPT)

Hon. Curtis L. Dickinson: The Pre- Budget Report
signalled the Government’s proposal to increase the
Foreign Currency Purchase Tax from 1 per cent to
between 1.25 per cent and 1.75 per cent. Following
the pre- budget consultation, the Government proposes to increase the FCPT from 1 per cent to 1.25 per
cent, generating additional revenue of $4.1 million.

Residential and Commercial Rents

Hon. Curtis L. Dickinson: Mr. Speaker, the PreBudget Report stated that the Government was considering taxing residential and commercial rents. As announced already, following consultation, the Government will not introduce a new tax on residential or
commercial rents. Instead, the Government intends to
increase land tax.

Members! Members!
Minister —I want to hear from that one Minister
today. Thank you.
Land Tax

Hon. Curtis L. Dickinson: In the 2018/19 Budget
Statement, as a temporary measure, land tax rates on
commercial properties were increased by 5 per cent,
raising an additional $15 million in land tax revenues.
This provision will expire on the 30
th of June 2019, and
the legislation provides for the rat es to revert back to
7 per cent. It is now proposed to increase land tax on
commercial properties from 7 per cent to 9.5 per cent,
and land taxes on tourist properties from 7 per cent to
8 per cent.
Mr. Speaker, it is also proposed to amend the
land tax rate structure for residential properties by
amending the taxes for properties as follows: From
value ranges from zero to $44,000 ARV [annual rental
value], there is no rate change, but an introduction of
a base rate of $300. For rates for land value ranges
between [$44,001] and $90,000, the proposal is for a
base charge of $300, plus a 5 per cent increase in the
proposed tax rate. For [properties valued at] $90,001
to $120,000, there is a $300 base charge, plus an i ncrease in the rate from 25 per cent to 30 per cent. And
for properties rated [over] $120,000, there is an i ncrease in the rate of 3 per cent and a base charge of
$300.
The senior exemption will remain for all properties with an ARV of $45,500 or less. The total yield
for land tax in 2019/20 is projected to be $85.4 million.

Managed Service Tax

Hon. Curtis L. Dickinson: The Pre- Budget Report
signalled that the Government was considering lev ying a tax on professional services provided by nonBermudian businesses to local and international companies. Following consultation, the Government will
not introduce a new tax on professional services pr ovided by non- Bermudian businesses to local and i nternational companies.

Other Taxes and Fees
Hon. Curtis L. Dickinson: Mr. Speaker, following
pre-budget consultation with the Real Estate Division
of the Chamber of Commerce, it is proposed to i ncrease stamp duty on all residential and commercial leases. The Government will also be undertaking a
comprehensive review of its stamp duty legislation
with a view to updating this legislation and eliminating
loopholes. In addition, as announced in the Throne Speech, we will eliminate stamp duty on any mor tgage refinancing for amounts up to $750,000.
In the last fiscal year, the Ministry of Tourism
and Transport and the Bermuda Tourism Authority
(BTA) conducted a review of the tax levels and the competitive landscape in the cruise industry. Follo wing this review, the Ministry and the BTA were of the view that the current tax structure was outdated and
590 22 February 2019 Official Hansard Report

Bermuda House of Assembly unnecessarily complex and, therefore, it would benefit
from simplification and updating. Therefore, it is pr oposed to introduce a new tax structure for cruise ships
and cruise ship passengers, which will include a passenger departure tax, a cruise passenger visitor fee and a large ship infrastructure tax (with the current
cabin passenger tax being repealed). This tax structure will yield $40.2 million.
Mr. Speaker, the statutory period in the
Schedule to the Bermuda Immigration and Protection (Land- Holding Charges) Regul ations 2007 expires on
the 31
st of March 2019. These regulations reduced
licence fees for non- Bermudians’ purchase of Berm uda property. The Government proposes to extend the end date of this licence fee reduction period by 24
months, ending the 31
st of Mar ch 2021. During this
period, we will evaluate the effectiveness of these
concessions on property sales.
Finally, Mr. Speaker, legislation will be
amended to increase company discontinuance fees
from $425 to the current annual government registr ation fee for the respective company. It is noted that
other jurisdictions charge up to three times the current
annual registration fees.

Tax Collection and Accounts Receivable

Hon. Curtis L. Dickinson: Tax collection and accounts receivable have been a considerable problem
for the government for years. It is altogether unacceptable that taxes owing to government, according to
the law, are not being paid. It is now time to take corrective action. In the 2018 Pre- Budget Report, we
stated the following: “The Government will ensure that
the Office of the Tax Commissioner (OTC) has the
resources that it needs to collect taxes that are due.
Due to staffing shortages, not all taxes are being co llected and adjudicated. The Government has authorised the filling of these long- vacant posts to assist in
revenue collection.”
As highlighted in the latest Fiscal Responsibi lity Report, this item has been actioned and has al-ready proven productive in 2018, as previously unpaid
stamp duty of almost $3 million has been collected
and an additional $4.7 million in uncollected taxes
have been identified. We will take further action to
resolve this problem by approving the addition of five
new temporary staff members for a one- year period.
These staff members will be working in the Operations
Section of the OTC, with four in the Debt Management
Section, and one working closely with the Assistant
Tax Commissioner –Operations. These additional r esources for tax collection and enforcement should pay
for themselves many times over with the additional
revenue collected during this period.
It has been noted that only 50 per cent of pa yroll tax returns are received electronically. While this rate has improved in recent years, it is still unaccept ably low and must be raised dramatically during the comi ng fiscal year and beyond. Too much of the
OTC’s time and resources are devoted to processing manually filed tax returns. Accordingly, a new filing policy will be implemented on April 1
st, 2019, for taxpayers of gross annual payrolls in excess of $500,000 per year. It will be mandatory for taxpayers over that
threshold to file electronically, using the E -Tax sy stem, starting with the quarter April, May, June 2019,
which will be payable by the 15
th of July deadline.
Employers who do not adhere to the stipulated e- filing
requirements will be subject to penalties.
Mr. Speaker, over the years, the government
has been incurring millions of dollars in credit card
charges due to taxpayers using their credit cards to
pay their taxes. Effective from April 2019, gov ernment
will start to recover these fees by way of a recharge fee for this convenience.

Expenditures

Hon. Curtis L. Dickinson: Mr. Speaker, the Gover nment has set the overall budget expenditure, including
current account and capital account outlays, and debt
service (excluding the Sinking Fund contribution) at
$1.11 billion. The forecast for current, interest and
capital account spending in the 2019/20 Budget is
$4.3 million lower than the amount approved in 2018/19. This reduction was achieved despite th e
Government’s pay awards to public officers for this fiscal year.
Mr. Speaker, the level of spending will enable
the Government to provide targeted investments to
grow and diversify Bermuda’s economy; service our
debt; strengthen infrastructure, educate our children;
and provide health care and security for our citizens, and assistance to the less fortunate among us. There
is an ever -increasing demand for government services. However, the Government is mindful of the potential impact that increased operating expenditures
can have on the overall fiscal performance. Accor dingly, in the 2019/20 Budget, the level of current account spending, excluding debt service, has been fr ozen to 2018/19 Budget levels. Mr. Speaker, while there has been some success in r educing costs, it has become increasingly
difficult to implement further reductions under the cur-rent government structure and the across -the-board
expenditure cuts in previous budgets. With 51.5 per
cent of the current account expenditure (excluding debt service) representing employee costs and
34.1 per cent relating to grants and contributions,
there are very few other expenditure types that can be reduced and have a material impact on the level of
spending.
Moving forward, this Government will adopt a
revised strategy whereby further savings might be
effected, either by way of increased efficiencies or by
making structural reforms in the way in which services
are delivered and institutions are structured. To this


Bermuda House of Assembly end, the Government has established an Eff iciency
Committee [EC] to review the functioning of all government departments and recommend improvements
in the efficiency of operations. The Efficiency Commi ttee has highlighted how savings and greater effectiveness can be obtained by the government in t he
areas of financial assistance, purchasing of materials,
inventory management, and handling of staff vacancies. The EC has also emphasised the critical i mportance of developing a detailed overall strategic plan to guide the spending priorities of the gov ernment over the medium to long term.

Debt Service

Hon. Curtis L. Dickinson: Mr. Speaker, debt service
costs for 2019/20 are projected at $116.5 million,
which represents interest expense only.

Sinking Fund

Hon. Curtis L. Dickinson: Mr. Speaker, the Sinking
Fund currently has a balance of $214 million. During the fiscal year 2019/20, a total of $180 million of the
proceeds in the fund will be used to repay two tranc hes of maturing private placement notes. The Gover nment will suspend making mandatory contributions to
the Sinking Fund. This decision has been made in
light of the following factors: (i) apart from the private
placement notes referenced above, the next maturity
of government debt will occur in 2022; (ii) the interest
expense associated with borrowing to fund the mandatory Sinking Fund contributions will be greater than the investment return generated on those funds; and
(iii) the Government is forecasting continued operating
surpluses, which it intends to contribute to the Sinking
Fund or use to make open market purchases of its
existing debt.

Capital Expenditures

Hon. Curtis L. Dickinson: Mr. Speaker, the Gover nment is committed to making sound capital inves tments that will enhance the country’s infrastructure,
creat e jobs, generate growth and improve our quality
of life. The capital expenditure component of the
2019/20 Budget is set at $64.7 million, $2.5 million
higher than the 2018/19 original estimate. The most
significant items of capital development expenditure in
the 2019/20 Budget relate to upgrades to the Mid A tlantic Wellness Institute ($4.5 million), school maint enance ($3 million), and roadworks ($1.5 million). While most of the planned investment is related to construction projects, there is a capital acquisition provision of
$20.6 million for IT developments across government,
and new public buses and other vehicles to support public service delivery.
MINISTRY HIGHLIGHTS

Hon. Curtis L. Dickinson: Mr. Speaker, I will now
review highlights from the 10 ministries that form the
government.

Ministry of Education

Hon. Curtis L. Dickinson: Mr. Speaker, the Ministry
of Education has been given $136.9 million. This Mi nistry has allocated an estimated total of $2.8 million in
the fiscal year 2019/20 for the funding of initiatives
that support the execution of Plan 2022, and the intr oduction of a merit -based College Promise programme
for public school graduates to attend Bermuda Col-lege. Plan 2022 articulates a clear mission “to provide
all students with equitable access to holistic, varied
and high- quality instruction that is culturally relevant
and empowers students to reach their full potential.”
Of the $2.8 million, roughly $2.2 million was found as
a result of the Ministry’s undertaking a microscopic
review of its existing budget for greater efficiencies in
operational activity.
At the pre- school level, an expenditure of
$327,000 will support the implementation of an Autism Spectrum Disorder programme; introduce foreign languages to expand learning opportuniti es; continue to
offer programmes to educate parents; and hire an Early Childhood Quality Assurance Officer to provide
professional training and coaching for pre- school
teachers. At the primary school level, $770,000 will be spent to cover the cost of conti nuing the [deployment]
of the STEAM [science, technology, engineering, art
and mathematics] programme, inclusive of professional development training for teachers; updating the
social studies curricula; and expanding the literacy
programme to focus more on students’ literacy skills.
A total of $473,000 will be used to continue
the implementation of a standards -based grading sy stem covering site- based professional development
training, and $539,000 will be set aside to address the
urgent need to increase th e bandwidth for schools at
the primary and middle school levels. At the senior
school level, $129,500 will support the implementation
of the City and Guilds programme in English, and the mathematics programme will be progressed further;
and a virtual job- shadowing programme will be intr oduced to create a unique experience for students as
part of the Career Pathways programme.

Bermuda College

Hon. Curtis L. Dickinson: As the sole tertiary instit ution on the Island, Bermuda College is a key stak eholder in t he economic growth and development of
our Island, and during the 2019/20 fiscal year, the college will continue to meet its mission of setting Ber-muda’s students on their paths to success. Outside its
normal operating expenses, Bermuda College will
592 22 February 2019 Official Hansard Report

Bermuda House of Assembly fund the following initiatives during the 2019/20 fiscal
year:
Delivering Success, Bermuda College’s new
five-year strategic plan, will be the blueprint to steer
the college towards its 50th anniversary in 2024. The
college will continue to receive a special $300,000
grant to assist students with financial need in order to
ensure that no student is prohibited from attending
Bermuda College as a result of limited household i ncome. This investment commenced in 2017 and has supported close to 450 Bermudians in purs uing their
tertiary education at Bermuda College.
In addition, and as promised in this year’s
Speech from the Throne, a merit -based College
Promise programme will be introduced, which will
award scholarships to Bermuda College to public
school graduates with a GPA [grade point average] of
3.0 or higher. This initiative has been funded in this
year’s budget to the tune of $279,000. Another
[$85,000] will be set aside to assist non- traditional
students wishing to become certified as landscapers
and compliance professionals, and to assist nursing
students undergoing overseas practicums. It is antic ipated that $20,000 will support landscaping training
for a new cohort of students in order to decrease the
number of non- Bermudian employees on work permits. A fur ther $20,000 will support Bermudian nursing
students to undergo practicums at SickKids Hospital in Toronto, Temple University Hospital in Philadelphia
and Lahey Hospital in Boston. This funding will ensure
that students are able to complete the required ov erseas practicums as part of the nursing programme.
With so many industries requiring compliance
professionals, Bermuda College, working with its
Compliance Advisory Board, will offer a range of compliance courses and certifications for those new to the
industry, as well as those who are currently in the i ndustry, but have no certification. It is anticipated that
$45,000 will be set aside to support students in this
emerging industry. Approximately $40,000 will be used to support the development of the Nati onal Educators’ Institute, which will provide a centralised entity for public and private school educators and counsel-lors of all levels to engage in and benefit from professional development, professional learning and r esearch.

Ministry of Public Works

Hon. Curtis L. Dickinson: Mr. Speaker, the Ministry
of Public Works provides its services through its six
departments and has budgeted to spend $32.59 mi llion in capital development, $3.18 million in capital acquisitions and $73.45 million in operations in
2019/20, as detailed below. The Department of Works
and Engineering aims to improve service delivery and extend the useful life of key assets by repairing bridges, performing Tynes Bay maintenance, refurbishing
King’s Wharf and other ferry docks, upgrading water infrastructure and extensively resurfacing all main
roads. To this end, the department is committed to
aggressively attracting, training and retaining Berm udians in key and varied engineering posts to ensure
efficient provision of critical services to the public.
The department is aiming to achieve oper ational efficiencies by investing in controlled fleet and
equipment modernisation in order to enable it to carry
out its mandate. Charged with the responsibility of
efficient management of the government’s property
portfolio, the Department of Public Lands and Buil dings will be working on the refurbishment of Parli ament Building, school maintenance, major buildings
upgrades, and various office relocations and alter ations.
Lastly, Mr. Speaker, the Depart ment of Land
Title Registration is responsible for the creation and
maintenance of an electronic register of legal rights
and interests in land, thus providing legal security for
owners and third parties. With an operational budget
of $1.4 million in 2019/ 20, the department is seeking
to provide an opportunity to young, interested Berm udians to become the Island’s future land registrars and will continue with the voluntary registration of titles.

Ministry of Labour, Community Affairs and Sports

Hon. Curtis L. Dickinson: Mr. Speaker, the Ministry
of Labour, Community Affairs and Sports is the former
Ministry of Social Development. A restructuring in N ovember of 2018 moved the Departments of Child and
Family Services, Financial Assistance, National Drug Control and the Mirrors Programme to other ministries
and added the Department of Workforce Development
and the Labour Section to this Ministry. The 2019/20 Budget of $18.9 million for the Ministry reflects the
changes in the structure and responsibilities of the
Ministry, with an uplift of $455,019 for the Department
of Youth, Sport and Recreation.
Mr. Speaker, this uplift is mainly made up of a
$400,000 increase in the grant to the National Stadium trustees, from the 2018/19 grant of $800,000 to
$1.2 million for 2019/20. This is to take the grant back
to its 2014/15 levels, when it was reduced from $1.1
million to $850,000, and then to $800,000 in 2016/17. The increased costs of running the facility, particularly
with the addition of the swimming pool and t he reduction in grant, have provided a no- win situation for the
trustees that has resulted in maintenance and repair works suffering. This cannot continue. The trustees
will pursue alternative energy solutions for the stadium to address the very high energ y costs associated with
running a pool.
Mr. Speaker, the Ministry has a number of key
initiatives this year, including the implementation of a workforce development plan that will lay the foundation for a 21
st century workforce development system
for Ber muda—a system that has the primary aim of
connecting people with jobs. This Government beBermuda House of Assembly lieves that upgrading the skills of Bermuda’s labour
force through a solid workforce development plan is
critical to our long- term prospects for broad- based and
inclus ive economic growth.
Other initiatives include the modernisation of
the labour laws, implementation of a living wage and
pay equity for Bermudians.

[Desk thumping]

Hon. Curtis L. Dickinson: Our culture and history
continue to be high priorities. To thi s end, we are
promoting art, and particularly that of young Bermudians, with government buildings being used to display
and promote their work. Some $4.8 million is budget-ed in fiscal year 2019/20 to support sporting bodies,
youth organisations, apprenticeships, scholarships,
the arts, and community and cultural events.

Ministry of Health

Hon. Curtis L. Dickinson: Mr. Speaker, the Ministry
of Health leads the country’s health system to pr omote and protect Bermuda’s health. The Ministry comprises five budget heads, which fund seven departments; two quangos; and 29 boards, councils and
committees. Together, these entities work to improve the quality, access and sustainability of health services.
The Health Ministry’s budget was adjusted following the addition of the Department of Financial A ssistance. No budget head received additional funding,
so the total budget remained the same as in fiscal year 2018/19, at $241.5 million. The Government recognises the fragility of some of our health services
and the importance health plays to Bermuda’s ec onomic growth. Nevertheless, greater efficiencies must
be found to ensure sustainability of health funding.
The amount the country spends on health
care is a continued source of concern, and this Go vernment is committed t o implementing the reforms
necessary. Health financing reform is in development this year in order to create the foundation for the long-term sustainability of Bermuda’s health system by establishing better ways to fund and provide a decent
base package of insurance. Bermuda spends over
$700 million on the total health system annually. This
has to be enough to give all of our residents the health
care they need. But we need to be more efficient
about how we utilise these funds.
The care of adults with intel lectual disabilities
and mental health or psychiatric problems, who have no next of kin, at times falls on the state. Bermuda
does not have the social services infrastructure to
care for such individuals, and the government currently funds, through the Ministry of Health, two individu-als at an overseas institution, as there is no local c apacity to meet their needs. The Ministry is also under-taking to reform the Financial Assistance programme to improve its financial sustainability and ensure a
more equitabl e allocation of awards. Measures have
been identified to improve efficiency in order to pr event the need for additional funding.
[Desk thumping]

Ministry of Finance

Hon. Curtis L. Dickinson: Mr. Speaker, the Ministry
of Finance is provided with a budget, excluding debt
service, of $104.3 million, an increase of $943,470.
The majority of the Finance Ministry’s allocation
($84.8 million, or 81 per cent) relates to nondiscretionary items, which include an estimate of go vernment overheads and payments made under the
programme for war veterans. Ministerial restructuring resulted in the transfer of the Bermuda Gaming Commission to the Ministry of Finance, and $500,000 of
the aforementioned increase relates to a partial grant
to the Bermuda Gaming Commission to cover their
operations. The Commission will seek external financ-ing with local institutions to cover their other oper ational costs.
There have been several legislative changes
made in the pas t two years that have expanded the
role and mandate of the Registrar of Companies [ROC], particularly in regard to corporate compliance as a response to requirements of Anti -Money Laundering (AML), Counter Terrorist Financing (CTF), the
Organisation for Ec onomic Co- operation and Deve lopment (OECD), and the EU’s Economic Substance
Regime (ESR). Additionally, the ROC has embarked
upon implementation of a new IT registry system.
Considering these changes, it is proposed to increase
the ROC budget allocation by approximately $533,000
in order to meet their increased mandate.
Bermuda faces a number of external tax and
regulatory threats. These threats pose a real and pr esent danger to our economy. During the upcoming year, additional funds have been provided to t he Regulatory Unit and Treaty Unit in the Ministry of Finance
Headquarters to protect our economic security.
Mr. Speaker, the Ministry of Finance is r esponsible for the collection of the majority of gover nment revenue, and in 2017/18 collected $913.1 mi llion, or 85 per cent of government revenues. Accor dingly, it is critical that the capacity of the revenue-collecting departments to effectively collect revenues
is maintained. The OTC has been provided with add itional funding for five temporary additional [emplo yees]. This will allow increased follow -up on payment
plans, which is a main requirement for increased
payment plan compliance.
In the upcoming fiscal year, the Ministry will
continue with the development of an open budget
structure. The 2019/20 Pre -Budget Report has been a
great success and, no doubt, has fostered greater
public participation and clarity in budget decisions.
594 22 February 2019 Official Hansard Report

Bermuda House of Assembly Finally, Mr. Speaker, the Ministry of Finance
will keep the Progressive Labour Party platform pro mise of increasing pensions for our seniors by the rate
of inflation this year and every year as long as we are
in office.

[Desk thumping]

Cabinet Office

Hon. Curtis L. Dickinson: Mr. Speaker, the Cabinet
Office will receive a budget allocation of $46 million.
This Government’s visi on for public service is a future -
forward government for the people of Bermuda. With
input from public officers, the civil service executive ,
Ministers, trade unions and other stakeholders, a
Government Reform Strategic Plan has now been
completed.
Mr. S peaker, the plan includes the vision and
purpose which codify the overarching objectives of the Government of Bermuda. The main focus of the plan is the target operating model and an accompanying
short -term plan that lays out specific, practical actions
that can be accomplished in the near term.
The operating model is comprised of five str ategic areas:
1. Processes —clear administrative processes
and polic ies, sound fiscal management .
2. Platform —organisational structure, workplace
and IT infrastructure designed f or execution.
3. People—committed, capable, well -trained r esources receiving fair benefits for their work .
4. Perspective —customer service mentality embracing growth and business development .
5. Performance—culture of measuring activity
and results, enabling true accountability .
With cl ear direction, focused activity and
transparent performance measurement, the public
service can begin to realise positive change and embed a new, sustainable culture of reform into the departments and ministries.

Mr. Speaker, subst antive change will commence with the people functions. The Government will
undertake a complete overhaul of the delivery of its
human resource services. The future- state organis ational structure will provide the resources and capabil ities for the development and transformation of the
Bermuda Government’s workforce to satisfy the crit ical need of good governance. It centralises HR strategy and policy development; it differentiates between
strategic, consultative, and transactional roles; and it optimises and centralises HR processes.
The new Department of Employee and Orga nisational Development (Head 61) will be established, and ultimately will result in the centralisation of the Department of Human Resources and the more than
10 human resource satellite off ices that provide dupl icative services. The first phase, to occur in the u pcoming year, involves the amalgamation of the Com-pensation and Benefits Section, currently under the
remit of the Accountant General’s Office and the
Management Consulting Section.
In order to retain highly competent and energised individuals in the public service, it is important for the Government to ensure that career paths are
made available that will reward those employees who
demonstrate promise. To this end, one facet of the
public service Reform plan will be to identify “ highflyers ” within the public service and prepare those officers to assume leadership roles within the public service. Officers selected to participate will undergo leadership development training to prepare them for
senior roles within the public service.

Ministry of Tourism and Transport

Hon. Curtis L. Dickinson: Mr. Speaker, the Ministry
of Tourism and Transport will receive $88.5 million in
the upcoming year. In addition to funding the Depar tments of Tr ansport Control, Public Transportation,
and Marine and Ports Services, the Ministry provides
grants to the Bermuda Tourism Authority [BTA] and
Bermuda Airport Authority [BAA].
The BTA will see a reduction in its gover nment grant from $26 million to $22.5 m illion. A redu ction in the BTA grant does not mean, though, a reduc-tion in this Government’s commitment to investing in
tourism development. Indeed, as the BTA focuses on
implementation of the new National Tourism Plan, its
overall budget will increase fro m $31 million in 2018 to
$35.9 million in 2019. This is possible, in part, due to
the introduction of new visitor fees charged to cruise
ship passengers and visitors taking advantage of v acation rental properties. A portion of the $35.9 million
will be ear marked to the Bermuda Events Authority,
which will look to attract events to Bermuda that appeal to a younger generation of traveller.
Recognising that Bermuda’s transportation i nfrastructure is ageing, this Government will continue its phased investment i n a new fleet, while at the
same time ensuring that both Marine and Ports and
Public Transportation have increased capacity to undertake proper maintenance and refits of buses and
ferries, as and when required. The uplift for inventory,
maintenance and rep air for these departments is
made possible by the reduction in the grant to the
BTA. The challenges faced by our ageing transport ation infrastructure are real, and this Government will
continue to find a path forward for solutions that are fiscally respons ible.

Ministry of National Security

Hon. Curtis L. Dickinson: Mr. Speaker, the Ministry
of National Security will receive an allocation of
$134.9 million, an increase of $3.8 million compared
with the fiscal year 2018/19 actual budget. This i ncrease is attributed to the Cabinet reshuffle resulting


Bermuda House of Assembly in the Department of ICT Policy and Innovation moving to the Ministry of the Cabinet Office, and the D epartment of Immigration moving from the Ministry of
Home Affairs to the Ministry of National Security.
Seve ral of the uniformed services, including
the Department of Corrections, the Bermuda Police Service, the Customs Department, and the Bermuda
Fire and Rescue Service, are running recruitment
drives in fiscal year 2019/20 to fill vacant but funded
posts in or der to reduce the levels of overtime and
allow for best -practice services for the people of Bermuda.
In fiscal year 2019/20, the Ministry will focus
its efforts on two important projects —the Gang Vi olence Reduction Team and comprehensive immigr ation reform . Mr. Speaker, the Ministry continues to
provide support to address and to prevent anti -social
behaviour through the Gang Resistance Education and Training programme (otherwise known as
G.R.E.A.T.) which aims to prevent young gang affili ations among school -aged children, through early intervention. The team also provides restorative justice
circle sessions, which focus on the intervention and
mediation phases with inmates and others requiring
assistance. The team will expand in 2019/20 by
launching the Redemption Farm Programme. This is a
12- to 16- week therapeutic, incentivised programme
for at -risk individuals that aims to restore justice and
discourage criminality through case management, educational and post -training services.
Mr. Speaker, the Comprehensive Immigration
Reform project has already addressed the backlog of work permits in the department in its first phase. In the next phase, the project will implement process i mprovements to enhance efficiencies, reduce costs and
improve customer satisfact ion within the department.
Another phase includes amendments to current pol icies and legislation, and will involve public consult ation.

Ministry of Legal Affairs

Hon. Curtis L. Dickinson: The Ministry of Legal A ffairs will receive $48.9 million, an incr ease of
$967,000, or a 2 per cent increase, from the current
2018/19 fiscal year.
In the 2017 platform, the Government promised to “allow licensed practitioners to prescribe their
patients medicinal cannabis to address legitimate
health issues and establi sh a regime for domestic
medicinal cannabis production.” The Government has already delivered on a platform promise that targeted the removal of the criminal offences for simple possession by any person holding seven grams or less of
cannabis. In this 2019/20 budget year, the Ministry
intends to move from a standard of limited decriminal-isation of cannabis to establishing a robust licensing
regime that will create a comprehensive framework embracing the science of cannabis use for medicinal
purposes.
In the 2019/20 year, the Ministry of Legal A ffairs will introduce amendments that are designed to
improve and modernise the functioning of the Liquor Licensing Authority under the Liquor Licence Act
1974. It remains the duty of a responsible government
to ensur e that adequate protections exist in law to
administer the sales and consumption of alcohol in the
best interests of the whole society. The gaps identified
in the liquor licensing regime are preventing bus inesses from legally serving alcohol at certain eve nts.
It is anticipated that the amendments to the law will
decrease the practice of serving alcohol without the
proper authorisation.

Ministry of Home Affairs

Hon. Curtis L. Dickinson: Mr. Speaker, the Ministry
of Home Affairs will receive $18.2 million. The Ministry
will focus on completing the implementation of muni cipalities’ reform to modernise the municipalities in t oday’s Bermuda and will table a Bill to provide for the
long-awaited marina in the Town of St. George’s.
Consumer Affairs will complete phase one of the Debt
Collection Act 2018 and begin the consultative pr ocess with the BMA [Bermuda Monetary Authority] to
bring financial services conduct under the umbrella of Consumer Affairs.
Mr. Speaker, the Department of Planning will
complete the public consultation and objections pr ocess for the draft Bermuda Plan, and will publish and
release for public consultation the draft Local Plan for
North East Hamilton. The department will also publish
a World Heritage management plan for the sustainable economic, social and environmental protection of
Bermuda’s World Heritage sites.

CONCLUSION

Hon. Curtis L. Dickinson: Mr. Speaker, I am a husband and a father; I am the son of parents who
worked and sacrificed to provide the best for me. The
Bermuda of their youth rigidly denied opportunities to
too many of its citizens. The change of the 2017 Ge neral Election and the mandate to build a better and
fairer Bermuda mean that there is an expectation in
this country that we will foster an environment for
growth and the development of Bermudians.
The beauty of true democracy is that beyond
the numbers, graphs and charts lie real people. This economy does not permit us to do all that we want to
do, but the balance this budget brings to the delivery
of services, meeting external threats, investing in the
education of our children and advancing a system of
fairer taxation continues to build on the economic
foundation set out since our 2017 electoral victory.
Mr. Speaker, our “ quiet past ” has been u pended by this “ stormy present .” The norms on which
596 22 February 2019 Official Hansard Report

Bermuda House of Assembly Bermuda has relied are unlikely to present the full s olutions to these global issu es. The change required of
us all will not be easy. It challenges us to dig deeper
in pursuit of common goals, it defies our usual definitions of industry and the jobs that support them, and it tests our true value system. I believe that we are
equal to the task. Hundreds of Bermudians responded
to the call to acquire skills that would equip them to
work in new opportunities coming to Bermuda. That is
evidence of hope and proof of the importance of the
work we do every day in public service. We see the same expectancy when we visit Bermudians in their
homes and field questions on topics ranging from
health care to sports development to road paving.
Bermudians are keenly interested in a brighter future for themselves and their children, and I submit that
their trust in this Government is well placed.
Mr. Speaker, the values of hard work, sacr ifice, forthrightness and dedication I learned from my
parents have served me well through a decades -long
career in the private sector. They spurred me to seek
public of fice. And now, in this pivotal role as Minister
of Finance, I again draw on the lessons learned from them as I humbly present for the consideration of this
Honourable House the Estimates of Revenue and E xpenditure for the fiscal year 2019/20.
Thank you, Mr. Speaker.
[Desk thumping]

There were three written questions
submitted to the Premier from the Honourable Member Dunkley, each of which required a
written r esponse .

QUESTION: BRUSSELS OFFICE STAFF
COMPLEMENT

Hon. Michael H. Dunkley: Will the Honour able Premier please inform this Honourable
House if the position of Brussels represent ative filled by the Honourable Renee Webb was
advertised, and if so pl ease provide details?

Hon. Michael H. Dunkley: Will the Honour able Premier please provide to this Honourable
House complete details of her employment package including housing allowance, travel
expenses and any other benefits?

Hon. Michael H. Dunkley: Will the Honour able Premier please inform this Honourable
House of the names of any other staff or i nterns associated with the Brussels Office and
advise on the selection process used and the
benefit package associated with each?