February 16, 2018

Also, I would like to remind Members
that on your desk s you should find handouts that were
left last week from the Youth Parliament, reminding
Members of their events coming up. I think the first event is this Sunday with the movie, sharing a topic
that they will be debating on the following Thursday.
So, the invitation is for Members t o come out
and participate in both events, to view the movie and
be present for the debate. So this is just a reminder. [The invitation] is also to the public. Those
who are listening on the radio can also come and
support the Youth Parliament in those ev ents.

LIVESTREAMING OF BUDGET PRESENTATION

I would just like to also acknowledge
that today you will notice the cameras around us and
the cam era crew in here.
For the first time we will be live- streaming t oday’s Budget presentation. It is part of our exposing
what we do here in this House with greater means for the general public to be able to see the proceedings
and understand the process of the House. For those
who would like to view it live- stream, I believe it is on:
https:// www. facebook.com /Bermuda Government
.
Please tune in if you would like.

MESSAGES FROM THE SENATE

Continue.
Hon. E. David Burt: Thank you very much, Mr.
Speaker.
On this historic day, with cameras in the
House of Assembly transmitting our proceedings live,
I am cognisant that t he speech I will give today will be
carefully scrutinised by most of our citizens. At the
conclusion of this Statement, Mr. Speaker, the Mini ster of Finance will be the focus. However, Mr. Speaker, though the credit , or blame, comes to me, rest assured I a m not here today because I did all of the work
myself. Today’s Statement and the accom panying
Budget are the result of a team effort. And so, before I
begin my official remarks I must recognise the team
that make Budget Day possible.
First, Mr. Speaker, I must acknowledge my
famil y. Many in the Gallery today help out at home so
that I can devote the hours necessary in the weeks
leading up to Budget Day. Next, I must recognise my
Cabinet colleagues, who carefully toiled to ensure that
today’s Budget reflect s the priorities of the people who
elected us.
I must also thank the Members of the Pr ogressive Labour Party Parliamentary team , here and
in another place, who give their time and counsel to ensure that the Government remains grounded in its mission and f ocused on its mandate received at the
polls. This Budget is as much their Budget as it is the Government’s Budget.
Mr. Speaker, I must give special recognition to
the Honourable Member from Hamilton West, a man
many years my senior , but who serves as the Junior
Minister of Finance—

[Desk thumping]

Hon. E. David Burt: —for his tireless work and faithful
assistance in helping me prepare the pre- Budget R eport and this year’s Budget.
Mr. Speaker, I would like to thank all of the
hard- working public servan ts—the graphic designers,
the directors, the controllers, the permanent secretar-ies—across government for their dedication to the
task in executing the wishes of the elected Gover nment.
Finally, Mr. Speaker, I must thank the team at
the Ministry of Finance, led by the Financial Secretary,
Mr. Anthony Manders, and the Budget Director, Ms.
Tina Tucker, who are with us today, for the diligent
work in the face of what, for some, were very difficult
personal circumstances. They and the entire team of
the Ministr y of Finance, who have worked many late
nights and weekends, deserve the appreciation of all
Members of this House.
Now, Mr. Speaker, to the business of the day.

BUDGET STATEMENT
IN SUPPORT OF THE ESTIMATES OF
REVENUE AND EXPENDITURE
2018 –2019

Hon. E. David Burt: Mr. Speaker, in this, my first
Budget Statement , I am mindful of the fact that among
those listening are a single parent worried about next
month’ s nursery fees, a husband and wife whose joint
incomes still leave them short at the end of every
month, a university student who has doubts about
Bermuda welcoming her home once she has her d egree, and a senior citizen whose diminishing savings
may soon r esult in problems with paying health insu rance.
Mr. Speaker, national budgets are not just for
businesses, accountants , or property owners. This
Budget —as should be every budget —is about the
people. The results of July 2017’s g eneral election are
concrete proof of the rejection of trickle- down ec onomics. This Government accepts the economic real ities of Bermuda today, but we are determined to forge a future that defies and shifts those realities , and empowers this country’s citizens.
Mr. Speaker, this Gov ernment will not be
transactional, simply managing a system of gover nance that, at its core, was designed to ensure the
success of the few and the struggle of the many. This
Government will be transformational, opening the gates of economic growth to more and more Berm udians through economic diversification and greater
opportunity. Traditional businesses will be respected ,
but must compete for their market share and come to
terms with the voices of others at the table who will, in
turn, drive this economy.
To be clear, Mr. Speaker, this Government
will continue to cultivate and grow the business side of
Bermuda’s economy. International business is the
single largest contributor to economic activity in Bermuda. It is a partnership that has fuelled growth and
expansion in this country. As a jurisdiction and as a
people, we have consistently welcomed international
business, and successive governments have impl emented policies that have created the conditions for


Bermuda House of Assembly continued profits and success in this sector. Thi s
Government will continue to collaborate actively with
our international business partners to ensure that this
sector thrives and expands to the benefit of all of
Bermuda.
However, this partnership and this keen attention to the growth of international business can and
must coexist with a new emphasis on the diversific ation of Bermuda’s economy. In the September 2017
Spee ch from the Throne, we declared, and I quote,
“Bermuda’s economy is in desperate need of economic diversification as a means to provide additional jobs
and careers for Bermudians. The Government will
ensure that Bermuda is poised to meet new demands
and will be aggressive in reaching out to new global areas of growth.”
Mr. Speaker, the importance of economic diversification cannot be understated. A diversified
economy opens the field of [economic ] opportunity to
a wider cross section of Bermudians. A diversified
economy will signal to Bermudians abroad, whose
skills and interests were not complementary to either
international business or t ourism , that Bermuda wants
and needs them to return. A diversified economy will
help us, as a society, to break away from the systemic
inequality that has marred the Bermuda economic
miracle.
Mr. Speaker, Bermuda is a diverse society.
Different classes and races, millionaires and the wor king class , all mix in everyday activities. In Bermuda,
where poverty and struggle are not always outwardly
displayed, it is easy to think that need is minimal and
that we are essentially a society of those who “ make
it.”
This is an illusion, Mr. Speaker. Inequality of
earning potential, inequality of opportunity , and inequality of income are all real. These inequalities are not a recent phenomenon or simply by -products of the
global recession of 2008 and beyond. Inequality in
Bermuda is systemic. It is the regrettable result of a
system designed to preserve the economic power of
the few.
Mr. Speaker, a year ago, as I deliv ered the
Reply to the last B udget in this place , I stated , and I
quote, “We are not competing with the One Bermuda
Alliance to see who can be the best managers of the
status quo. Why , [Mr. Speaker] ? Because that status
quo has failed the majority of the people in this cou ntry!”
Mr. Speaker, this B udget will lay the economic
foundation needed to change the economic status quo
that has failed so many. It will see us invest in Berm udians, bring fairness to our tax system, scrap outdated
policies from the last century , which are a barrier to
true empowerment, and place Bermuda on a path t oward economic growth, economic diversification , and
economic security , for all Bermudians.
ECONOMIC OUTLOOK
Hon. E. David Burt: Mr. Speaker, the preparation of
the 2018/19 B udget takes into consideration global
and domestic [economic ] conditions. Bermuda is a
small, open, s ervices -based economy, making it
largely dependent on the free movement and flow of
people and capital. Our economy is directly influenced
by global economic trends, particularly those occurring in the United States and in Europe. As the Government has lim ited economic tools available to infl uence economic activity, we have a responsibility to act prudently and to support sustainable economic
growth.

Risks to Bermuda’s Economy

Hon. E. David Burt: Mr. Speaker, Bermuda faces a
number of challenges globally , which must be consi dered when planning our budgets and charting our
economic course for the future. Many of the challen ges are international, but there are also domestic challenges that can pose significant risk to our economy if
not managed.

US Tax Ref orm

Hon. E. David Burt: Mr. Speaker, the most pressing
threat that we face at this time is the recent tax reform
in the United States, which saw a reduction of corporate tax rates combined with protectionist tax
measures targeting global companies. Although the
tax changes were not directly targeted at Bermuda,
many of Bermuda’s international companies have had
to make quick adjustments to their operations to avoid
an additional tax burden.
During and after the debate in the US Congress, the Bermuda Government has maintained its
collaborative relationship with the Association of Bermuda Insurers and Reinsurers (ABIR) to protect Bermuda’s interests. Although we feared the worst, the
resulting tax changes will not be fatal to our insurance industry, and may present some opportunities for
growth due to the superior regulatory advantages for
companies operating from Bermuda.
Recently , the Minister responsible for I mmigration met with the leadership of ABIR and made it
clear that the Government will facilit ate any transfer of
jobs to Bermuda that may result from any restructuring caused by the US tax reform. Any transfer of jobs
to Bermuda will create additional opportunities for Bermudians, and this Government is committed to
preparing Bermudians to take advantage of those opportunities.



1022 16 February 2018 Official Hansard Report

Bermuda House of Assembly The EU’s List of Non -Cooperative Tax Jurisdi ctions

Hon. E. David Burt: Mr. Speaker, in December, the
European Union [EU] published a list of noncooperative tax jurisdictions . Although Bermuda was
not on the list, the EU Code of Conduct group has
expressed some concerns regarding Bermuda’s sy stem of taxation. Since December, the Government
has been meeting with various local stakeholders and
is in the process of formulating a response to address the European Council’s conc erns. It is the Gover nment’s view that the mischief that the European Union
is trying to cure—tax leakage from companies operating in their jurisdic tions —has largely been mitigated
by advances in international tax transparency , and
regimes such as country -by-country reporting, which
ensures that multinational companies report and pay
tax on their profits where their profits are earned. We
will continue to engage the European Union in constructive dialogue and are confident that the EU will
continue to recognise Bermuda’s leadership in the
area of global tax transparency and compliance.

CFATF Assessment

Hon. E. David Burt: Mr. Speaker, Bermuda has been
preparing for this year’s Caribbean Financial Action
Task Force [CFATF] assessment of Bermuda’s Anti -
Money Laundering and Counter -Terrorism Financing
regime. This assessment is critically important, and it is vital that Bermuda earns a positive report. Although
the work required to prepare the country for this assessment is not politically exciting, an u nsatisfactory
result could cause serious damage to our economy.
Other countries that have not done well have seen
correspondent banking relationships disappear; if this
were to happen in Bermuda, it would pose a critical
threat to our financial services industry. The full r esources of the Government have been marshalled to
ensure that Bermuda is prepared for the assessment ,
and we will continue to work with the Bermuda Mone-tary Authority and our industry partners.

Bermuda’s Ageing Population
Hon. E. David Burt: Mr. Speaker, Bermuda’s conti nued economic weakness since the great recession
has exacerbated the challenges of our ageing popul ation. The lack of economic opportunity and the high
cost of living have seen many Bermudians emigrate
as economic refugees. This drain has placed additional pressure on our fragile public finances and represents a real risk to a sustainable future. It will not be
possible for the Government to meet our obligations to
our retirees and pensioners without significant structural reforms to our economy. We must have more
Bermudians working in Bermuda, and we must have
more jobs located in Bermuda, to ensure that we co l-lect the revenue necessary to fund our pensions and
care for our seniors.

The Domestic Economy

Hon. E. David Burt: Mr. Speaker, I will now turn my
attention to the domestic economy. Many of the major
economic indicators —such as employment, emplo yment income, air visitors, imports , and retail sales —
increased in 2017, indicating some improvement in
the Bermudian ec onomy. However, the results must
be viewed in the context of Bermuda hosting the 35
th
America’s Cup [in 2017] .

Employment
Hon. E. David Burt: Mr. Speaker, employment in
Bermuda experienced marginal growth in 2017. The
Statistics Department’ s provisional estimates, which
cover employment changes between 2016 and 2017,
show that , on aggregate, the Bermuda job market r eported its second increase in nine years. The total
number of filled positions was reported to have i ncreased by 0.1 per cent , or 40 jobs, t o 33,521.
This marginal level of job growth is disappointing, given the hopes that the America’s Cup would
stimulate the economy and employment. Much of the
growth in jobs was fuelled by an increase in jobs filled
in the restaurants, cafés , and bars sector , which ad ded 113 jobs [ 5.6 per cent ], while higher -paying pos itions within the international business sector i ncreased only by 6 jobs [0.2 per cent ]. The report also
showed that there were employment increases in the
financial intermediation, construction, wholesale trade,
and motor vehicles sectors. These increases were
offset by declines in public admi nistration, which shed
54 jobs [ 1.4 per cent ]; education, health and social
work, which shed 67 jobs [ 1.8 per cent ]; “other community , social and personal services ,” which shed 158
positions [7.7 per cent ]; transport and communic ations, which shed 47 positions [2.3 per cent ]; and
manufac turing, which saw 11 jobs [1.9 per cent ] disappear.
Mr. Speaker, one of the major headwinds in
our gr owth 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 2017, employment income grew by $77.2 mi llion to $2.58 billion, an increase of 3.1 per cent , and
the official unemployment rate remained at 7 per cent .

Tourism
Hon. E. David Burt: Mr. Speaker, the Bermuda tourism industry recorded another year of growth. Air arrivals in 2017 grew by 10.3 per cent , while the number
of cruise passengers increased by 5.1 per cent . Total
visitor arrivals increased by 7.2 per cent over the pr eBermuda House of Assembly vious year. Total visitor spending in 2017 rose by
$72.6 million, or 20.3 per cent , settling at $431 million.

Other Economic Indicators
Hon. E. David Burt: Mr. Speaker, total retail sales for
2017 increased by 2.9 per cent , or $32.7 million , to
register at $1.175 billion, while jobs in the sector rose
by 0.7 per cent . Imports increased by 17.6 per cent in
the first th ree quarters of the year , to register at $849
million. This growth was primarily attributed to the i mports of finished equipment, which grew by $65.1 mi llion, or 28.2 per cent , when compared with the first
nine months of 2016. These imports were related to
Bermuda’s hosting of the 35th America’s Cup. Other
categories that contributed significantly to the positive
results were food, beverages , and tobacco; and m achinery . The total value of new construction projects
started in the first nine months of 2017 increased from
$87 million in 2016 to $538 million in 2017, an i ncrease of 517 per cent . This was mainly [attributed ] to
the airport redevelopment and St. Regis projects,
which , combined, are worth over $500 million. Ho wever, the estimated value of construction work put in
place fell from $77 million in 2016 to $72 million over
the first three quarters of 2017, a decline of 7 per cent .
The majority of the decrease can be attributed to a
reduction in the levels of work performed on residen-tial propert ies, industrial plant and other building pr ojects.
Mr. Speaker, headline inflation continues to
remain stable in Bermuda, as reflected in the December 2017 Consumer Price Index, which indicates an
average inflation rate of 1.9 per cent . Bermuda’s balance of payments remains strong and, over the first
three quarters of 2017, recorded a surplus on the current account of $672 million, which was $288 million
more than the corresponding surplus in 2016. The increase in the current account surplus was mainly
due to changes in the primary income account, where
there was significant growth in the net investment i ncome account. [ This growth] was the result of lower
reinvested earnings and a decline in dividends paid.
Some 793 new international companies and partnerships were registered in Bermuda during 2017, repr esenting a 1 per cent decrease compared with 802 registrations in 2016.

Forward GDP Projections

Hon. E. David Burt: Mr. Speaker, considering all
economic indicators, the Ministry of Finance is lowering it s 2017 GDP growth estimate by 0.75 per cent,
from 1.5 per cent to 2 per cent, to 0.75 per cent to
1.25 per cent. The reduction follows a marginal GDP
contraction of 0.1 per cent in 2016. Mr. Speaker, 2016 was the seventh year of economic contraction in the
last eight years. This shows the urgency of the need
to stimulate our economy and invest in long- term pol i-cies that will diversify the Bermuda economy and cr eate sustained economic growth, which will increase jobs and opportunity at all levels of Bermudian soci ety.

AUSTERITY VS. GROWTH

Hon. E. David Burt: Mr. Speaker, it is clear that our
economy is stagnant and therefore unable to provide
for those in our country. And so, we must ask the
question, How are we going to fix the problem? Finance ministers around the world have been faced
with the same question —Do we cut spending, or do
we invest to grow the economy? In answering the
question, some will compare the situation to how you
might manage your household budget. If you have
greater outlays than inc ome, you have three choices.
Firstly, you can cut. You cut off the Internet
service and cut the cable bill; you can buy only the
absolute necessities from the grocery store on a
Wednesday; you do not spend a cent in order to fix
your financial situation. W hile you may not be spending, it is questionable if you are living.
A second approach is to ignore the situation.
You continue to spend as you always have without worrying about cutting back. You simply borrow more
money to maintain your unaffordable lifes tyle while
doing nothing to improve your situation. While you
may be living, you are living on borrowed time.
The final approach is to invest in yourself in
the hopes of increasing your income so that it meets your expenses. This can come from taking out a loan
to increase your skills to get a better job, or from using that money to invest in a business that can cause your income to exceed your outlays.
Mr. Speaker, in economic terms, that is the
difference between austerity and stimulus. When gov-ernments f ollow a programme of austerity, they cut
the number of staff, they do not invest in maintenance
programmes for buses, seniors and the poor pay
more for services, and new trash trucks are not purchased. When the previous Government tried to cut
its way out of a recession without investing for the f uture, we ended up with mouldy schools, unreliable public services, crumbling infrastructure, a stagnant economy, and increasing economic inequality.
Mr. Speaker, there is nothing more dangerous
to a society than i nequality. This Government is seeking to ensure that the gap between the advantaged
and disadvantaged is reduced, by expanding the ec onomic pie and investing in those who have been on
the sidelines, watching others prosper.

[Desk thumping]

Hon. E. David Burt: To have a harmonious society,
the policies of government must benefit the many and
not the few.
1024 16 February 2018 Official Hansard Report

Bermuda House of Assembly Mr. Speaker, in July 2017, the people of Bermuda voted for a new way —a new approach. They
voted for an end to austerity and for a government
that committed to putting Bermudians first. Our objective is simple: to build an economy that puts Bermudians first by providing more opportunities for Bermudians to work and more opportunities for Bermudians to
become owners and not just employees.
[Desk thum ping]

OUR PATH FORWARD

Hon. E. David Burt: Mr. Speaker, to meet our objective of providing more opportunities for Bermudians,
we must remember that the world in 2018 is not the
same as in 1978. We cannot build walls around Bermuda to keep money here; s imilarly, we cannot reject
international investment and expect an island with few
natural resources to grow and prosper. The Bermuda
Monetary Authority reported that, over the last 10 years, $3 billion earned in Bermuda has left the Island
to be invested e lsewhere. In a global economy enabled by technology, money observes no artificial barriers; it moves where it is wanted and where it can
earn a decent return. Many Bermudians are resistant
to the idea of foreign capital, as it has never benefited them. Thi s is understandable, Mr. Speaker, as most
black Bermudians have been only spectators of the benefits of foreign investment, and not the beneficiaries.
Mr. Speaker, foreign investment is not the enemy; it is required to sustain our economy and our
way of l ife! The true enemy of Bermudians who feel
marginalised is an unbalanced and unfair economy
that allows the haves to get richer while the have- nots
fall further and further behind—

[Desk thumping]

Hon. E. David Burt: Mr. Speaker, this Government
was elected to level the playing field, expand opportunity and create a fairer, more just Bermuda. To do that, we will ensure that the have- nots can access
capital to build businesses and have the freedom to compete with the haves. However, to ensure that the have-nots can access capital, we must change the
laws of Bermuda, which for more than a century have
protected the haves from competition.

Stimulating Investment
Hon. E. David Burt: Mr. Speaker, Bermuda’s economy for many years has existed with laws that have
stunted our economic growth. Bermuda’s tourism mi racle and the subsequent insurance boom have
masked the underlying sickness of our economy. It is
uncompetitive, it is expensive, and it is inefficient.
While many countries actively seek investment to pr o-vide opportunities for their citizens, in Bermuda we
seem to be comfortable sending potential investment
elsewhere. In Bermuda, we allow persons such as
PRCs [Permanent Resident’s Certificate] to earn
money and stay here indefinitely, but then tell them to
invest their money overseas, which creates jobs and
opportunities elsewhere.
Mr. Speaker, as a country with a stagnant
economy and an ageing population, we cannot afford to stand still while other countries modernise to compete in the new global econom y. We must adapt to
the realities of the global technology -driven economy,
or as a country we will continue to fall further and further behind, finding ourselves unable to afford to take
care of our seniors, educate our students, fund public
services, or pay our pensioners. We must grow, and
the only path to growth is via increased investment inside of the Bermuda economy.

Welcoming Global Firms to Bermuda

Hon. E. David Burt: Mr. Speaker, the Government
has already begun the processes of making Berm uda’s economy more competitive and stimulating additional investment in Bermuda. The Registrar of Companies has commenced consultation with the legal
sector on allowing global law firms to have a presence
in Bermuda. As in Singapore, the Government will not open the floodgates; we will set definitive rules requi ring participation, opportunities, and progression for
Bermudians.
Mr. Speaker, many of us know family and
friends who were once employed in Bermuda’s banking sector, but who now, due to financial consol idation
and globalisation, find themselves out of work. To provide additional employment opportunities in the
banking sector, the Ministry of Finance will soon commence consultations on expanding the types of
banks that can operate in Bermuda.

[Desk thumping]

Hon. E. David Burt: Again, Mr. Speaker, our objective in these changes is simple: to build an economy
that puts Bermudians first by providing more opport unities for Bermudians to work and more opportunities
for Bermudians to become owners and not just e mployees.

Revision of the 60/40 Rule
Hon. E. David Burt: Mr. Speaker, the origins of the
60/40 rule bear witness to the history of Bermuda and the systemic inequalities to which I referred earlier.
The rule is the ultimate in protectionism, which runs
counter to the claim of Bermudian entrepreneurship. If
wealt h is concentrated in a few hands, and if those
hands will never invest in anything that competes with
their vested interests, then a true entrepreneur is conBermuda House of Assembly fronted with a policy that essentially tells him or her,
We’ve got ours; good luck getting yours.
In 2018, this vestige of our oligarchic past
must be ended. We need more economic activity in
Bermuda, and that means we must welcome inves tment from non- traditional quarters and not shy away
from the competition it may create. In the truly competitive mark etplace, the consumer will always be the
winner, and all Bermudians want lower prices for
goods and services.
As I indicated to the Bermuda branch of the
Alternative Investment Management Association, Mr. Speaker, and I quote, “You can own 100 per cent of a
$50,000 business or 40 per cent of a million- dollar
business —clearly, most people would prefer the la tter.” For too long, Mr. Speaker, the majority of Berm udians have been spectators of the creation of wealth
in this country. This Government is determined to cr eate the conditions and opportunities that usher the
“left-behind” from the stands and sidelines to the pla ying field. Bermudian entrepreneurs should not have to
rely on their inheritance, or banks that often refuse to
lend to fund their ambitions. We will increase access
to capital for Bermudians by reforming the 60/40 rule
to one that requires only 40 per cent Bermudian ow nership in order to operate in the domestic economy.
[Desk thumping]
Hon. E. David Burt: Mr. Speaker, I recognise that this
proposal will face opposition from both sides of the
political spectrum. There will be those who want to
protect their existing interests, and there will be those who feel that allowing entrepreneurs access to foreign
capital, enabling them to compete, is not consistent
with putting Bermudians first. However, Mr. Speaker, I
want to assure the people of Bermuda that the Go vernment will consult and will strike the right balance to
ensure that the revision of this rule has the intended
consequence of providing more opportunities for Bermudians to become wealth- generating owners and not
just employees.

Revising Height Restrictions in the Hamilton Ec onomic Empowerment Zone
Hon. E. David Burt: Mr. Speaker, space in Bermuda
is limited. However, given our demographic challenges, it is essential that we have more people living and
working in Bermuda. As we plan for this growth, it is
prudent to incentivise additional development within
the City of Hamilton, which will reduce future traffic congestion and strain on o ur roads infrastructure.
For as long as we can remember (or at least
me, Mr. Speaker), the Bermuda Cathedral has r estricted the height of buildings in the city. However, as we look to the future, it is time to consign old r estrictions to the history books. To increase the options
for development inside of the City of Hamilton and to provide economic activity to North Hamilton, the Government will revise height restrictions in the Hamilton
Economic Empowerment Zone for residential and
mixed -use development.
Revising height restrictions alone will not
stimulate demand for property, which is needed to jumpstart the construction industry. Therefore, in add ition to revising height restrictions, the Government will
relax condominium ownership restrictions for approved developments in the Hamilton Economic E mpowerment Zone, thus stimulating demand, generating wealth, and putting Bermudian construction wor kers back to work.
The Government will launch a consultation on
these changes, through the Ministry of Home Affai rs,
to ensure that these changes meet the Government’s objectives of providing opportunities for economic empowerment for Bermudians who have, to date,
been spectators of Bermuda’s economic miracle.

Embracing Future Technologies

Hon. E. David Burt: Mr. S peaker, almost every facet
of modern life is affected by the rapid advances in technology. To ensure that Bermuda and Bermudians
can benefit from these advances, we must ensure that
Bermuda is just as agile in accommodating the new technology innovators as we were in accommodating
the pioneers of our then- fledgling offshore business
many years ago. The Government has already moved
aggressively in this area, and we will have our first
technology incubator space operational by July 2018.

FinTech

Hon. E. David Burt: Mr. Speaker, in the 2015 Reply
to the Speech from the Throne, the Progressive Labour Party made it clear that, when we were elected,
we would make FinTech a priority. The Government has commenced discussions on the development of
the world’s fi rst Global Risk Management Digital Market in Bermuda. This initiative will support the Government’s FinTech ambitions and the establishment of
a smart Island innovation lab. This will attract and
support entrepreneurs, innovation, new business ven-tures, gr owth opportunities and, most importantly, job
creation.

Blockchain and Digital Currencies

Hon. E. David Burt: Mr. Speaker, digital currencies
are among the fastest -growing areas of global ec onomic activity. Blockchain -based technologies have
the potential to transform the way in which business in
the world is conducted. While digital currencies are the first breakout area, there will be many more advances, and the Government wants to ensure that Bermuda is positioned to benefit. In keeping with
Bermuda’s international reputation for sound regul a1026 16 February 2018 Official Hansard Report

Bermuda House of Assembly tion, the Government has assembled leaders in this
area of emerging technology to develop a legal
framework and regulatory regime that is strict, but
does not stifle innovation.
Bermuda will be well served b y the economic
growth and jobs that this emerging industry can bring to our economy. The Government is moving at a pace
reflective of the urgency of the need, while prudently
ensuring that this new sector is internationally r espected for its sound regulati on and adherence to the
highest standards of compliance, for which Bermuda is known.
Mr. Speaker, the Government, in conjunction
with the Bermuda Monetary Authority, is currently de-veloping legislation to govern Bermuda- based initial
coin offerings and, consistent with our vision, will build
a world- class regulatory framework for the oversight of
digital asset exchanges and digital currency bus inesses in Bermuda.

Cybersecurity

Hon. E. David Burt: Mr. Speaker, the importance of
cybersecurity to Bermuda has been played out on the
world stage. Staying ahead of those who would do us
harm by cyber means starts with protecting gover nment systems.
Mr. Speaker, the Cabinet has considered a
proposal to establish a cybersecurity and data centre
in Bermuda. This is an immense value proposition for
the country. Cybersecurity protection capability, in
partnership with a premier market leader, will provide
us with the ability to protect government facilities and operations from cyber threats. This capacity would
also extend to local business and afford much- needed
cyber protection to entities whose activities affect our
reputation as a jurisdiction. This centre will require a
physical presence, thus providing employment opportunities for Bermudians. These new opportunit ies will
be facilitated through definitive training links to leading institutions in the United States and the Bermuda College.
Mr. Speaker, as these technology initiatives
progress, the policies of this Government in educ ation, training, immigration, and economic empowerment will be shaped to create equality of opportunity
for Bermudians.

Enlarging the Economic Pie

Hon. E. David Burt: Mr. Speaker, while we can
change policies to make Bermuda a more attractive
place for investment, the Government can als o take
direct action to ensure that we enlarge the economic
pie for Bermudians. As one example, there are many
small and medium -sized businesses that, despite
many attempts, have never won a government contract. This Government will use its purchasing power
to reverse the legacy of economic inequality that is an enduring characteristic of Bermuda’s economy. A ccordingly, the Government announced a new Code of Practice for Project Management and Procurement,
which states that the Government will, and I quote,
Mr. Speaker, “use its purchasing power to promote
equality of opportunity with regard to disability, gender
and race.”

[Desk thumping]
Hon. E. David Burt: Mr. Speaker, in this current fiscal
year, the Government will reserve 20 per cent of capital spending for companies that meet the empowerment criteria under the new procurement policy. This
Government will ensure that contracts are given to
firms who have traditionally been unable to compete
with the scale of larger companies. The Office of Pr oject Management and Procurement will work with the
Bermuda Economic Development Corporation to ensure that this target is met, and the Government will
measure and report progress on this initiative, annually.

2017/18 FISCAL PERFORMANCE

Hon. E. David Burt: Mr. Speaker, this Government
took office in July 2017, three months into the budget
year. We came in focused on managing the country’s finances. And on behalf of the people of Bermuda, we
recognised that our civil servants had not received a
salary increase for over six years.
[Desk thumping]
Hon. E. David Burt: Mr. Speaker, after the awarding
of a well -deserved pay increase of 2.5 per cent,
[backdated to 1] April 2017, and increasing the headcount within certain government departments that had
remained understaffed by the former Administration, this Government has skilfully managed Bermuda’s
finances and exceeded all of the current year’s budget
targets.
Mr. Speaker, the Government is forecast to
earn $1.044 billion in revenue in 2017/18. This is $1.9
million [0.2 per cent] more than the $1.042 million in the original estimates and is due mainly to higher -
than- expected customs duty, payroll tax, and civil av iation receipts. These amounts were offset by lower collections in international company fees and financial
service tax receipts.
Mr. Speaker, the projected 2017/18 operating
expenses of the government are $921.5 million, or $2
million [0.2 per cent] lower than the $923.5 million
originally budgeted in 2017/18.

[Desk thumping]
Hon. E. David Burt: That is right, Mr. Speaker. D espite the millions of unbudgeted expenditures that this


Bermuda House of Assembly Government inherited, it is expected that we will not
exceed the original expenditure budget approved by
the former Government.

[Desk thumping]

Hea r, hear!
Hon. E. David Burt: Mr. Speaker, revised capital expenditures for the year are predicted to come in at
$60.4 million, or $7 million [10 per cent] below the budget of $67.5 million. Debt service costs for
2017/18 will be $4.5 million [2.4 per cent ] below bud get. Mr. Speaker, given the factors above, the revised
estimate for the overall deficit is $119.2 million, $15.2 million less than projected. This figure is $62.8 million
less than the actual 2016/17 deficit, a decrease of
35 per cent.

[Desk t humping]

Some Hon. Member s: Well done! Well done!
Hon. E. David Burt: Mr. Speaker, it is projected that,
during the current fiscal year . . . Mr. Speaker, ever yone is getting excited at these wonderful results.
Mr. Speaker, it is projected that, during the
current fiscal year, the Government will draw $85 mi llion on its loan facility, representing new borrowing.
Therefore, on the 31
st of March 2018, gross public
debt will stand at $2.57 billion and net debt will stand at $2.42 billion. This amount, Mr. S peaker, is $50 mi llion lower than the former Government’s forecasted net debt of $2.47 billion.

[Desk thumping and inaudible interjections ]
Hon. E. David Burt: The Sinking Fund balance is pr ojected to be approximately $148.8 million at the end of
2017/18. It is expected that the net debt /revenue ratio will be 232 per cent, and the debt service
cost/revenue ratio will be 17 per cent. Although these
ratios are trending downwards, we must continue to
work to bring our fiscal position in line with our targets
of 80 per cent and 10 per cent, respectively.

2018/19 BUDGET ESTIMATES

Hon. E. David Burt: Mr. Speaker, I will now turn my
attention to the Budget for this upcoming year. The
highlights of the 2018/19 Budget feature a modest
0.2 per cent increase in total expenditure of $2.5 mi llion from last year’s budgeted figure. Revenues are
forecast to ris e by 4.6 per cent, or $47.5 million, and
the current account balance, before debt service
charges, is budgeted to be a surplus of $160.7 million.
However, the current account balance, after debt ser-vice, including the Sinking Fund contribution, is bud geted to come in at a deficit of $27.5 million. This rep-resents a reduction in the current account deficit of
$39.7 million, or 59 per cent. The overall deficit is
budgeted to be $89.7 million, a drop of $44.9 million,
or 33 per cent, when compared with the 2017/18 ori ginal estimates.
The projected current account balance (excluding debt service) indicates whether revenues can
support the day -to-day running of government, excluding finance costs and capital expenditure. This year’s
Budget, with a current account surplus of $160.7 mi llion, represents an improvement over the 2017/18
surplus, with sufficient revenue to cover not only the
day-to-day running of government, but also interest
costs and over 50 per cent of the Sinking Fund [contribution].
The next fiscal milestone will be achieved
once we cover current expenditure, including all debt service costs, plus a portion of the capital expenditure.
It is expected that that milestone will be met next year.
The Government will have to incur new borrowing of
$89.7 m illion to finance the 2018/19 deficit and, at the
31
st of March 2019, it is estimated that gross public
debt will stand at $2.66 billion, and debt, net of the
Sinking Fund, will be $2.444 billion. It is important to
note that net debt will only increase by $24 million in
2018/19, as $64.2 million of the new borrowing will be
placed into the Sinking Fund.
Mr. Speaker, we acknowledge that there are
sceptics, but let me be very clear in this Honourable
House today: This year will be the last year in which
our debt will increase.
[Desk thumping]
Hon. E. David Burt: Next year we will start reducing
our debt! We will continue to reduce expenses where we can, but we will continue to invest to ensure that
we can grow our economy and create jobs. The
stronger our economic growth [is], the quicker we can
repay our outstanding debt.
Mr. Speaker, as this is the last year in which
we are expecting our net debt to increase, I have the pleasure to announce that the Government will not be
raising the country’s debt ceili ng.

[Desk thumping and inaudible interjections ]

Hear, hear!

Hon. E. David Burt: Our debt ceiling is currently set
at $2.5 billion, and the Ministry of Finance will exercise prudent management of funds in this year, our
final year of net borrowing, to ensure that we remain
below the debt ceiling.

Revenues

Hon. E. David Burt: Mr. Speaker, the estimates for
2018/19 project government revenues of $1.09 billion,
1028 16 February 2018 Official Hansard Report

Bermuda House of Assembly which is $47.5 million [or 4.6 per cent] higher than the
original estimate for the previous year. In 2017/18, the
former Government reformed payroll tax by adding a
progressive element to the tax rates paid by emplo yees, while raising rates for employers. Customs duty
was also increased, and a new financial services tax
on banks, insurance companies, and money service
businesses was introduced.
Honourable Members are aware that the
Government has established a Tax Reform Commi ssion to review our tax system; however, the need for
additional revenue is immediate. Therefore, as hig hlighted in the Pre- Budget Report, as an interim measure it was proposed to increase revenue in this fiscal year by $50 million by the following methods:
• implementing a biennial review of government
fees;
• introducing a “ professional services tax ” on
accounting firms and law firms;
• increasing fees on cell phones , as well as i mplementing the g overnment authorisation fee
of 2.5 per cent imposed on the electronic
communications industry;
• taxing commercial rents; and
• cracking down on notional abuse in the payroll
tax.
Mr. Speaker, I would like to thank all stak eholders who provided 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. Following consultation, the Ministry will take
the following actions to meet the Government’s rev enue target in 2018/19:

Payroll Tax

Hon. E. David Burt: Mr. Speaker, the yield from pa yroll tax is e stimated at $454 million in 2018/19, which
is 41.7 per cent of total Government revenues. There
are a number of new reforms and new concessions that will be made to the payroll tax structure.

Relief for Workers
Hon. E. David Burt: Mr. Speaker, for as long as I
have been speaking in this House, I have been clear
that I regard payroll taxes to be the enemy of job creation. Since 2013, the Progressive Labour Party has
been consistent in its desire to broaden the tax base
away from taxes on labour income only . Given this
Government’s clear desire to increase the number of
jobs in Bermuda, the Government will not implement
the second phase of the payroll tax increase put forward by the former Government. Accordingly, all employer rates will remain unchanged and will not increase as planned.
Mr. Speaker, workers in this country are still
under pressure and have suffered through wage stag-nation and increases in the cost of living. To provide
relief to those workers, the Government will adjust the
payroll tax empl oyee rate bands to provide tax reductions to those earning less than $96,000 per year. The lowest employee band will be reduced from 4.75 per
cent to 4 per cent, resulting in a working couple who
earn $48,000 each, or a combined total of $96,000
annually, receiving an increase in their take- home pay
of $720.
[Desk thumping]

Hon. E. David Burt: Anyone making less than
$96,000 will see a reduction in taxes; anyone earning
more than $96,000 will not see any change in their
payroll taxes. This reduction in t axes will reduce the
Government’s payroll tax yield by approximately $5.1
million. An illustration of the tax savings under the new
rates for select salaries is set out [in the accompan ying chart] and in more detail in Table XI in the back of the Budget Bo ok.
Mr. Speaker, this Government wants local and
international companies to create and move jobs to Bermuda. The Ministry has been working with key
business stakeholders to create incentives for companies to locate additional staff in Bermuda, by providing
payroll tax relief for new positions created in Bermuda. The final details of the “tax incentives to grow j obs”
programme is currently being finalised, and it is antic ipated that the programme will be in place this year.
Our objective is simple: to have m ore jobs based in
Bermuda, providing more opportunities for Bermudians who are looking for work or who may want to pr ogress in their careers.

Payroll Tax Reform for Notional Salaries

Hon. E. David Burt: Mr. Speaker, an often- abused
part of the payroll t ax system is the application of notional salaries (notionals) for payroll tax purposes in
owner -managed businesses. These notionals are a pplied to “ Deemed Employees ” who earn income partly
or wholly through sharing the profits of the business instead of only through salaried remuneration. As an
example, partners in local law firms and accounting firms may declare a notional salary of $200,000, while
they may actually earn $1 million from their business.
In this instance, the partner pays payroll tax only on
the $200,000 while not paying tax on their remaining
earnings.
The Office of the Tax Commissioner (OTC)
has already taken steps to tackle systemic abuses of the declaration and payment of tax based on notional
income levels. To further address this problem, the
Government will amend the Payroll Tax Act 1995 to
provide that, for all Deemed Employees, the notional
salaries will be replaced with a requirement to declare all income received, on a cash basis.



Bermuda House of Assembly [Desk thumping]

Hon. E. David Burt: This measure would cover all
Deemed Employees to ensure that no one group is
singled out. This change will improve transparency, assist enforcement, and largely eliminate the risk of
under -declaration and under -payment. It is estimated
that this change wi ll increase payroll tax revenues by
at least $10 million.

Payroll Tax Concessions

Hon. E. David Burt: Mr. Speaker, every year the Mi nistry of Finance is approached by representatives of
various industries seeking concessions from the crushing burden of the payroll tax. In response to
those representations, the Government will introduce the following tax concessions this year:

Persons with Disability

Hon. E. David Burt: Mr. Speaker, this Government
recognises the challenges that persons with disability
in Bermuda face, and as a society we have a long way to go in ensuring that they can enjoy a decent
quality of life. To assist persons with disability in gai ning access to employment, and to reward those employers who have already hired disabled Bermudians,
we will eliminate the employer portion of payroll tax for
any disabled employee.

Entrepreneurs —Small Business
Hon. E. David Burt: Mr. Speaker, in the Progressive
Labour Party’s 2017 election platform, we pledged to,
and I quote, “provide new tax reli ef for first -time entr epreneurs to assist them in creating Bermudian jobs.”
Accordingly, new entrepreneurs who register and
meet the criteria established by the Bermuda Ec onomic Development Corporation in the creation of a
new business will be exempt from the employer portion of payroll tax for themselves and any employee[s]
for the first year of business.

Taxi Operators
Hon. E. David Burt: Mr. Speaker, currently, full -time
taxi operators are required to pay $2,233 in payroll
taxes each year, while part -time operators are r equired to pay $1,118. Although there are in excess of 550 licensed taxis, there are only 411 active taxi dri vers registered with the Office of the Tax Commissioner, and even fewer drivers actually file returns. This
tax has been diffic ult to collect and last year yielded
only about $350,000, when, if fully collected, the yield
should have been at least $1.2 million. This Gover nment recognises the challenges faced by taxi oper ators; however, it is important that these taxes are col-lected . Therefore, to increase the yield from this tax and to make it easier to collect, we will amend the
payroll tax provisions for taxi operators by implementing an annual charge of $1,000, to be paid at the time
of registration. This fee will be borne by the taxi ow ner, and owners will be allowed to recoup it from taxi
operators. This fee represents a reduction in payroll
taxes to taxi operators of at least 50 per cent.

Retailers
Hon. E. David Burt: Mr. Speaker, the retail sector is a
consistent provider of Bermudian jobs, and this Government will work with this sector to promote its
growth. The Tax Reform Commission will lead a co nsultative process with the retail sector to determine
how tax policy can be adjusted to assist in encoura ging investment in fac ilities, diversification of product
offerings and, most importantly, growing the sector to produce Bermudian jobs.

Customs Duty
Hon. E. David Burt: Mr. Speaker, the yield from customs duty is estimated at $235 million, or 21.6 per
cent of total government revenues. Mr. Speaker, in
line with the Health Ministry’s consultation paper, it is
proposed to introduce the sugar tax as an increase in the rate of duty on a defined group of items. The sug-ar tax will be finalised after the consultation period
ends on the 1
st of March 2018. To offset the expected
increase in customs duty from the sugar tax, the Government will reduce or eliminate duty on healthy food
items. Accordingly, duty will be reduced from 5 per
cent to 0.0 per cent for eggs, potatoes, cauliflower,
broccoli, carrots, turnips, oranges, and apples.

[Desk thumping and cheers ]

Hon. E. David Burt: Mr. Speaker, the Minister of
Health seems incredibly excited.
A portion of the revenues from the sugar tax
will be earmarked for educational programmes to improve health outcomes.
[Desk thumping]
Hon. E. David Burt: Mr. Speaker, to reduce the cost
of living, the Government will lower the duty rate on
textiles, which include linen and blankets and shoes.
Duty relief will be provided to sporting clubs that have
youth programmes, and this relief will include full duty
relief on uniforms and equipment purchased and used
by these clubs.

[Desk thumping]
Hon. E. David Burt: Mr. Speaker, the Ministry of F inance, in consultation with the Ministry of Health, wil l
further increase the duty on tobacco to reduce the
1030 16 February 2018 Official Hansard Report

Bermuda House of Assembly inconsistency between duty rates on cigarettes and
tobacco. Finally, the duty on wines will be raised by
$0.30 cents per litre in April 2018 to achieve additional
customs revenue.

[Inaudible interjectio ns and laughter]

Hon. E. David Burt: Mr. Speaker, when I started I
said I will take the credit or the blame.

[Laughter]

Commercial Rents

Hon. E. David Burt: Mr. Speaker, the Pre- Budget
Report announced that the Government was considering taxing commercial rents. Following consultation,
the Government will not introduce a new tax on commercial rents, but rather —as a temporary measure—it
will increase land tax rates on commercial properties
by 5 per cent to yield an additional $15 million in land
taxes. This temporary increase will generate additional revenue while the Tax Reform Commission looks at commercial rents and at the income earned from
commercial properties whose income is not currently
subject to taxation. Properties in the Economic E mpowerment Zones will be exempt from this temporary
increase.

Professional Services Tax

Hon. E. David Burt: Mr. Speaker, the Government
signalled in the Pre- Budget Report that it was consi dering implementing a professional services tax. Fo llowing consultati on between the Government and
stakeholders, the Government has decided not to i mplement this tax and has instead adjusted the basis
for notional remuneration for payroll tax. Consequently, the existing corporate service tax will remain in
place.

Other Taxes and Fees

Hon. E. David Burt: Mr. Speaker, as an additional
revenue measure, the Government will increase fees
on cell phones and the Government authorisation fee of 2.5 per cent imposed on the telecommunications
industry. This is projected to yield $3.7 million in add itional revenue. Fees for most services provided to
residents and businesses will be increased by 5 per
cent. This biennial fee increase is projected to yield
$5–$6 million in additional revenue.

Expenditures

Hon. E. David Burt: Mr. Speaker, the Government
has set the overall budget expenditure, including current account and capital account outlays, debt service,
and the Sinking Fund contribution, at $1.18 billion. The forecasted modest increase in current and capital
account spending in the 2018/19 Budget is only $2.5
million higher than the amount approved in 2017/18.
This was achieved despite the Government’s pay
awards to public officers, which cost the Government approximately $9 million.
Mr. Speaker, this level of spending is necessary in order for the Government to implement its growth strategy while ensuring that we have the facil ities and equipment necessary to deliver public ser-vices. While the Government recognises the need to control the growth in public spending until we begin to
reduce our debt, we have committed increased fun ding to government priorities. More resources will be given to the Ministry of Education and Workforce D evelopment to cover expenditure for additional wor kforce training and development, and for enhanc ements to the public education system. We have pr ovided additional funding for the Ministry of Health, to
reinstate the BHB [Bermuda Hospitals Board] subsidy
budget and to provide long- term care and public
health services; for the Bermuda Tourism Aut hority
and the Bermuda Business Development Agency, to promote our tourism and international business sectors; and for the Bermuda Economic Development
Corporation, to enhance its products and services f acilitating opportunities for Bermuda’s entrepreneurs .
Mr. Speaker, the [aforementioned] increases
were partially offset by savings in other ministries, and
I will detail the highlights of each ministry, shortly.

Debt Service

Hon. E. David Burt: Mr. Speaker, debt service costs
for the 2018/19 Budget are predicted at $188.2 mi llion, 1 per cent higher than the 2017/18 allocation of
$186.1 million. This represents $124 million in interest
payments and a $64.2 million contribution to the Sinking Fund. Mr Speaker, it is expected that this will be the last year in which our debt service costs will i ncrease. Debt servicing is predicted to drop to $181
million in Fiscal Year 2019/20 and to reduce further to
$169 million the following fiscal year.

Capital Expenditures

Hon. E. David Burt: Mr. Speaker, high- quali ty infr astructure is an important element of a modern economy. It helps to strengthen economic growth through
enhancing efficiency; thus, the Government is commi tted to making sound capital investments. The capital
expenditure component of the 2018/19 Budg et is set
at $62.2 million, $5.2 million lower than the 2017/18
original estimate. The most significant items of capital
development expenditure in the 2018/19 Budget relate
to schools’ maintenance ($3 million) and road works
($3.5 million). While most of the planned investment is related to construction projects, there is a capital acquisition provision of $17.5 million for IT developments


Bermuda House of Assembly across government, and for new public buses and
other vehicles to support public service delivery. Mr.
Speaker, the largest single item in the capital budget
is the $6.3 million that the Government will have to
pay on the existing loan to build Cross Island to host the 2017 America’s Cup.

Boo! What a shame, what a
shame. Wow.

Hon. E. David Burt: Current figures indicate that the
Government will spend at least $48.8 million to repay
this loan.

MINISTRY HIGHLIGHTS

Hon. E. David Burt: Mr. Speaker, I will now review
highlights from the 11 ministries that form the Government. (I think I have been going for about an hour
now, Mr. Speaker. All right.)

MINISTRY OF EDUCATION
AND WORKFORCE DEVELOPMENT

Hon. E. David Burt: Mr. Speaker, the first topic covered in the Progressive Labour Party’s 2017 platform
was education. We laid out a comprehensive plan to trans form our public education system and ensure
that Bermudians of all ages can learn and upgrade their skills. Our commitment to education and training
is demonstrated in this, the first budget of this new
PLP Administration. This year’s investment in educ ation represents a renewed belief in our young people,
and the men and women responsible for teaching them. We are investing in the delivery of an education
that will equip our citizens with character, critical thinking, and a rounded sense of who they are and of their
value to this society. The transformation of Bermuda’s
economy begins in the classroom. As Dr. Martin Luther King, Jr., so profoundly said, and I quote, “The
function of education is to teach one to think intensiv ely and to think critically. Int elligence plus character —
that is the goal of true education.”
Mr. Speaker, the Ministry of Education and
Workforce Development will receive $140.5 million, an
increase of $5.8 million. This increase is to cover ex-penditures for additional workforce traini ng, and the
development and enhancement of key educational
programmes that will be delivered primarily by the
Department of Education, Bermuda College, and the
Department of Workforce Development.

Department of Education

Hon. E. David Burt: Mr. Speaker, Plan 2022, Berm uda’s Strategic Plan for Public School Education, will
be the blueprint for steering public school education
forward during the next five years. The additional
funding in this budget will support strategies outlined in Plan 2022 to modernise information technology
use, better manage facilities, and increase teacher
training. Increased funding of $1.9 million is being
provided to support the school budgets for both senior
schools. Under the former Administration, our senior school budgets were cut by 13 per cent, starving our
students of vital resources necessary for success.
This Government wants to ensure that our future
leaders have the tools they need to succeed, and this
increase is a tangible demonstration of that desire.

[Desk thumping]

Bermuda College

Hon. E. David Burt: Mr. Speaker, as our sole tertiary
institution, the Bermuda College is a key stakeholder
in the economic development of our Island. One of our
first actions on coming into office was to provide needbased funding, which assisted 189 Bermudian st udents to attend the Bermuda College to further their
educational ambitions. Owing to the success of this initiative, $300,000 will be provided to the college this
budget year to ensure that no student is prohibited
from attending the Bermuda College as a result of
limited financial resources.

[Desk thumping and cheers ]

Hon. E. David Burt: Further additional funds will be
provided to the College to provide gaming industry
training, landscaping training, and overseas pract icums for nursing students.

Department of W orkforce Development

Hon. E. David Burt: The Department of Workforce
Development will receive an additional $225,000,
which will be used for new initiatives to increase trai ning and to increase apprenticeship programmes.

MINISTRY OF ECONOMIC DEVELOPMENT
AND TOURISM
Hon. E. David Burt: Mr. Speaker, this PLP Gover nment has chosen to invest to stimulate the economy
and create economic growth. The Ministry of Economic Development and Tourism is the engine to drive
that growth and will receive $38 million, an increase of
$3 million. This increase is to support increased i nvestment in the Bermuda Economic Development Corporation [BEDC], the Bermuda Business Deve lopment Agency [BDA], and the Bermuda Tourism A uthority [BTA].
Mr. Speaker, the BEDC’s grant from the Government will be increased by $1 million (or by 64 per cent) to enable it to deliver on the Government’s key objective to foster increased economic empowerment
among Bermuda’s entrepreneurs.
1032 16 February 2018 Official Hansard Report

Bermuda House of Assembly [Desk thumping and cheers ]

Hon. E. David Burt: Increased f unding will enable
BEDC to increase its capitalisation, allowing it to both
expand its direct lending capability and increase its guarantee percentage amount for bank loans. The
increase in direct loans capacity will be used to su pport six businesses selec ted to participate in the
BEDC’s pilot physical incubator/accelerator pr ogramme called “ Enterprise Bermuda.” Additionally, the
increase will support another platform promise, and
that is to provide loan guarantees to assist sports
clubs in growing their services and developing their
facilities.
Along with this increased grant, the BEDC will
have an expanded economic development remit,
through promoting the establishment and growth of
economic empowerment tools like cooperative ec onomics. The BEDC will reorganise its structure to establish a new Economic and Cooperative Develop-ment Unit. This new unit will be tasked with researc hing and creating legislation to support the develo pment of social enterprises to spur social entrepreneur-ship, as promised in t he Progressive Labour Party’s
election platform.

[Desk thumping]

Hon. E. David Burt: Mr. Speaker, the Bermuda Bus iness Development Agency is a public –private par tnership that was conceived under the previous Pr ogressive Labour Party Government. Although this is a
partnership, last year the Government grant accounted for 88 per cent of the BDA’s funding. This cannot
be a true partnership if Government is footing the bill
and industry is not playing its part. If we are to be successful, industry must match the Government’s co mmitment to the BDA. Collectively, we must do more to
market and sell Bermuda overseas; therefore, the
Government has earmarked an additional $1 million,
which will be used to match private sector contributions to the BDA.
The Bermuda Tourism Authority will receive
an increase in funding of $1 million. The PLP has always held that we must increase the investment in . . .
I will start again, Mr. Speaker —not from the
beginning, of course.
Mr. Speaker, the Bermuda Tourism Authority
will r eceive an increase of $1 million. The PLP has
always held that we must increase our investment in our tourism marketing, and this Government will hold
true to that promise. It is the Government’s view that the BTA can streamline its management to direct
more resources to the promotion of Bermuda overseas and the development of our local product.
Through conditions attached to this year’s grant, the Government will ensure that a greater percentage of
the $26 million given to the BTA is spent on marketing and product development, and not salaries and bonuses.

[Desk thumping and cheers ]

MINISTRY OF HEALTH

Hon. E. David Burt: Mr. Speaker, the Ministry of
Health will receive $190 million, an increase of $27.3 million. This increase reflects the Government’s appreciation for the fragility of some of our health ser-vices and the importance health plays in Bermuda’s
society. We have restored the $25 million subsidy for
hospital care for children, indigents, and seniors,
which was cut by the former Government to fund the
America’s Cup.

Shame! Shame! Shame!

Hon. E. David Burt: Mr. Speaker, by reinstating this
funding, we aim to progress the sustainability of the
hospital while larger reforms in our health system f inancing are implemented.
Mr. Speaker, the $700 million that the country
is spending annually on health care is a continued source of concern, and this Government is committed
to implementing the reforms necessary, begun under
the National Health Plan —now the Bermuda Health
Strategy —to reform health financing. There is enough
funding in our health system to give all of our res idents the health care they need, but we must be much wiser with how we utilise these funds.
Additionally, the Ministry of Health will receive
an additional $1.8 mil lion to fund several previously
unfunded programmes —in particular, for long- term
care and public health services. Mr. Speaker, this
funding will enable the reopening of the fourth floor of
the Sylvia Richardson Care Facility —

[Desk thumping and cheers ]

Hon. E. David Burt: —which has been closed since
September 2016. Additionally, funds will be made
available for community health nurses, vector control,
and the child health programme.

THE CABINET OFFICE

Hon. E. David Burt: Mr. Speaker, the Cabinet Office
will receive $35.2 million, an increase of $535,000.
The Policy and Strategy Section will be reformed into a special projects implementation team to increase
the pace of new policy implementation across government.
Efforts to protect and strengthen the economy
will require increased resources to be allocated to external affairs. With increased pressures from Europe owing to the EU review of “N on-Cooperative Tax Jurisdictions, ” together with Brexit, it is necessary for


Bermuda House of Assembly Bermuda to increase its engagement with the Eur opean Union and member state governments. To this
end, Bermuda will establish a representative office in
Brussels, which will reduce the government expenditure on consultants in Europe.
The Information and Digital T echnologies D epartment will focus on increasing e- government services, and funding has been allocated for the devel-opment of e- payments and e- forms throughout government, as well as a Government of Bermuda mobile application to keep residents informed.
Mr. Speaker, the Official Gazette will be co nverted into an electronic platform, which will save an
estimated $150,000. However, recognising that not all
persons use computers, some official notices will con-tinue to be published in print media, and all notic es
will be available for printing at any post office.

MINISTRY OF LEGAL AFFAIRS

Hon. E. David Burt: Mr. Speaker, the Ministry of L egal Affairs will receive an increase of $600,000. Highlights for the Ministry include the reform of the legal
aid programme, which will see the hiring of additional
in-house legal counsel, to save $1 million annually.
The Ministry operates a pupillage programme to train
new lawyers for being called to the Bermuda Bar. A number of successful participants have moved on,
returned to, or remained with the Ministry. The list i ncludes the current Deputy Solicitor General, the Registrar of the Supreme Court, and the Deputy Director
of Public Prosecutions.
Unfortunately . . . and the Minister of Financial
Security.

[Laughter]

Hon. E. David Burt: Unfortunately, under the former
Government, this programme was minimised, with
only two pupils being funded by the Ministry of Legal
Affairs in the last five years. Mr. Speaker, this Government is serious when it comes to developing Bermudian talent, and therefore this budget funds places for three pupil barristers to assist in the development
of the next generation of Bermudian lawyers.

MINISTRY OF FINANCE

Hon. E. David Burt: Mr. Speaker, the Ministry of F inance, excluding debt service, is provided with a
budget of $103.4 million —a decrease of $232,000.
The Ministry will continue with the development of an
open budget structure, which was reintroduced after a
six-year absence. The 2018/19 Pre- Budget Report
has been a tremendous success and has fully met its
objective of providing greater transparency and public
participation in the budget process.
Mr. Speaker, in order to develop a fairer tax
system that reduces payroll tax and creates jobs in Bermuda, the Ministry of Finance will provide s upport
to the work of the Tax Reform Commission. To assist in the collection of revenue, all posts have been unfrozen in the Office of the Tax Commissioner and aggressive measures will be taken to reduce accounts receivable. To assist small and medium -sized bus inesses with the payment of payroll tax, the Ministry
will fund the development of a module for Quic kBooks, which will be offered to local taxpayers to r educe the complexity of tax filing while increasing compliance.
To achieve the Government’s future expenditure targets, the Ministry will establish an Efficiency
Team in the upcoming fiscal year. The Efficiency
Team will be supported by the private sector at minimal expense, and will scrutinise spending across all
individual departments and formulate action plans to increase efficiencies, thus reducing future costs.
Due to an increase in our “exchange of tax i nformation” network following the introduction of the
Common Reporting Standard, country -by-country a utomatic reporting regimes and membership in the
OECD Inclusive Framework on Base Erosion and Profit Shifting, additional funding of $290,000 has
been provided to the Treaty Unit within the Ministry.
Mr. Speaker, the Ministry of Finance will establish a programme of limited government guara ntees to support economic development in critical ar eas. This programme will be capped at $10 million and
will focus on supporting the development of senior
residential facilities that will reduce Bermuda’s overall
expenditure on health care.

[Desk thumping]

Hon. E. David Burt: Finally, Mr. Speaker, the Ministry
of Finance will keep the Progressive Labour Party’s
platform promise by increasing pensions for our seniors by the rate of inflation this year, and every year, as long as we are in office.

[Desk thumping]

Hear, hear!

MINISTRY OF SOCIAL DEVELOPMENT
AND SPORTS

Hon. E. David Burt: Mr. Speaker, the Ministry of S ocial Development and Sports is charged with the r esponsibility of strengthening the social fabric of our
commun ity by delivering programmes and initiatives
that directly benefit young people, families, and the
community as a whole. The Ministry has been alloca ted a budget of $86.3 million this fiscal year, which represents a reduction of $1 million after the move of the
community education programme to the Ministry of Education is taken into account.
1034 16 February 2018 Official Hansard Report

Bermuda House of Assembly Although the budget for this important Ministry
shows an overall reduction, it is important to note that
most departments will see an increase in funding, Mr.
Speaker. As called for in the September 2017 Speech
from the Throne, the Ministry has commenced an initiative to reform the Financial Assistance Programme
to reduce abuse, discourage dependency, and ensure
that work pays. It is expected that this reform will lead
to cost savings of $1.5 million.
The Ministry of Social Development and
Sports, in conjunction with the Bermuda Economic Development Corporation, has launched an initiative
to establish a loan guarantee scheme that will enable
community and sporting clubs t o upgrade their facil ities, develop programmes to serve our youth, spur
entrepreneurship, and ensure greater community outreach to the surrounding parishes and neighbourhoods.
Finally, Mr. Speaker, additional funding will
support a public consultation for a Green Paper on policy options to reduce drug abuse in Bermuda. In addition, to support substance abuse rehabilitation,
additional funds have been allocated to addiction
counselling and drug treatment services.

MINISTRY OF NATIONAL SECURITY

Hon. E. David Burt: Mr. Speaker, the Ministry of N ational Security will receive an allocation of $131.1 mi llion, a reduction of $2.1 million. This reduction has been achieved mostly by reducing the overtime budgets of the uniformed services. Concurrent with this
reduc tion is the lifting of a hiring freeze that contributed to significant staff shortages, burnout of remaining
staff, and frustrated succession planning.
By permitting recruitment to fill vacant but
funded posts, the Bermuda Police Service, the D epartment of Corrections, and the Bermuda Fire and
Rescue Service are in various stages of swelling their
ranks to levels that end undue austerity and allow for
best-practice service to the people of Bermuda. Add itionally, Mr. Speaker, this will improve staff morale,
which has been at historic lows under the pressures of unsustainable budget cuts and increased operational
demands.
Mr. Speaker, successive administrations have
committed to addressing the antisocial behaviour
which culminates in violence and community unrest.
These issues, too, are systemic in their origins. The
sustained economic marginalisation of black people in
this country has produced a generation of young men
and women who are angry at a society that promises them perpetual struggle and, too often, demeans their
desires to do things differently. Honourable Members
and the public will have seen the energy and empathy
brought to this problem, which has started with meet-ing the target population where they are, deescalating the potential for conflict, engaging the wider
community in tangible assistance, and providing op-portunities for a meaningful exit from a lifestyle proven
to end only in tragedy.
Mr. Speaker, these are socio- economic i ssues, and so there are natural limits to what can be
achieved b y law enforcement and other uniformed
services. Therefore, the Government has redirected
resources to education, training, and entrepreneurship
to better tackle the root causes of violence.

MINISTRY OF HOME AFFAIRS
Hon. E. David Burt: Mr. Speaker, the Mi nistry of
Home Affairs will receive $22.7 million, a reduction of $896,000. The Ministry will focus on providing more
services electronically to customers, including the i ntroduction of online applications, and online status updates of planning and immigration applications. The Department of Immigration will be fully funded to ensure that Bermuda’s immigration laws and policies are
enforced, while the Bipartisan Immigration Committee
will recommend reforms to the Bermuda Immigration
and Protection Act and other immigration policies.
Mr. Speaker, the Consumer Affairs Section
will begin overseeing the conduct of financial service
providers such as banks, to ensure that consumers
are treated fairly, by holding these companies accountable for their actions.

[Desk thumping]

Hon. E. David Burt: The Department of Planning will
work on reviewing the North East Hamilton plan in
light of the change of Government policy announced
today to revise building height restrictions in the Hamilton Economic Empowerment Zone.

MINISTRY OF PUBLIC WORKS

Hon. E. David Burt: Mr. Speaker, the Ministry of Pu blic Works will receive an allocation of $74 million, a
reduction of $1 million from last year’s allocation. Most
of the savings will be achieved by moving government
departments from private facilities, thus reducing the
government’s rental expenditure. The Ministry pr ovides its services through its six departments and has budgeted to spend $37 million on capital development
and $4.6 million on capital acquisitions. The Ministry is
committed to aggressively recruiting, training, and r etaining Bermudians in key and varied ministry pos itions, in accordance with this Government’s mandate
of developing Bermudian talent.
The Department of Works and Engineering
aims to improve service delivery and extend the useful
life of key assets by repairing and replacing bridges,
maintaining the Tynes Bay facility, refurbishing ferry
docks, upgrading water infrastructure, and extensively
resurfacing main roads. The department will also up-grade its fleet of sanitation trucks to ensure the reli ability of trash collection.


Bermuda House of Assembly [Desk thumping and inaudible interjections ]

Hon. E. David Burt: Mr. Speaker, the Department of
Public Lands and Buildings will concentrate on the
refurbishment of the Parliament B uilding, schools
maintenance and major buildings upgrades, office
relocations, and alterations to Global House. It is envisioned that early intervention, especially in the case
of schools’ maintenance, will alleviate problems beforehand, thus preventing unnecessary and costly
emergency measures. The department will be r esponsible for the installation of a replacement co mmunications tower used for key security and emergency communications.
Finally, Mr. Speaker, the Land Title and Registration Department is r esponsible for the creation
and maintenance of an electronic register of legal
rights and interests in land, thus providing legal sec urity for owners and third parties. The department is
working to ensure that Bermuda’s brand- new Land
Title Registry will b e an example to the world by putting the registry on a blockchain- based system.

[Desk thumping]

MINISTRY OF TRANSPORT AND
REGULATORY AFFAIRS

Hon. E. David Burt: Mr. Speaker, the Ministry of
Transport and Regulatory Affairs will receive $62.4 million. T his funding will ensure that Bermuda can
have a reliable public transportation system on land
and sea. Rebuilding the bus fleet is a priority for this Government, as we support public transport, and the
Ministry has been allocated $3 million for the purchase of eight new buses.
Mr. Speaker, the Ministry will assist in the
technology aims of the Government by upgrading the identification systems at the Transport Control D epartment to enable the Government to issue driving licences and identification cards w ith embedded smart
chips. The Ministry will also commence the move to
electronic fare collection for Bermuda’s public trans-portation system.

[Desk thumping and inaudible interjections ]

Hon. E. David Burt: Additionally, Mr. Speaker, the
Department of Energy has allocated $500,000 to r estart the solar rebate programme. This new rebate
programme will be targeted at seniors on low or fixed
incomes in order to reduce their electricity bills with solar -thermal w ater heating.

[Inaudible interjections ]

Hon. E. David Burt: I am almost finished, colleagues.
You do not have to laugh; it is okay. Just a few more
minutes, please. Finally, $2.5 million in capital spending has
been allocated for replacement of the ageing Doppler
weather radar system, which in recent times has experienced a number of outages that have resulted in
costly repairs.

CONCLUSION

Hon. E. David Burt: Mr. Speaker, in conclusion, I
started this speech by talking about the people of this
country whom we are elected to serve. I spoke about the single mother, the struggling family, the university
student, and the senior citizen.
Mr. Speaker, this Budget will ease the burdens on the single mother and the struggling family with a tax cut that will increase their take- home pay. It
will provide hope to the university student that the
Government is working to create opportunities for
them to return and succeed in the land of their birth.
And it will provide security for the senior citizen
through pens ion increases and reduced electricity
bills.
Mr. Speaker, stepping beyond the transactional governance of our past into the transformational
governance of our future is a journey. It will take all of
us out of a comfort zone padded by centuries of frustratingly benign conditions of inequality —frustrating
because they are conditions that provide a carefully crafted veneer of affluence, but which mask a society
of unrealised potential.
Mr. Speaker, I believe it is the responsibility of
government to do more than just diagnose the condition of the people and the society in which we live. It is the responsibility of government to lift up people and
to execute on the sacred trust achieved through an
electoral mandate. We are determined to implement
policies that are guided by this moral compass, which
represent a pact with the people of this country and
that puts them and their best interests first.
Mr. Speaker, we must be bold in our pursuit of
a more secure future for this country. I am a husband
and a father, and I know that, like me, parents and
guardians all over this country devote their lives to
making decisions, planning and investing in a future
for their children. The change signalled in this Budget Statement is founded on this Government’s promise
and our unwavering commitment to that future.
Mr. Speaker, in the name of those who have
always had to shout to be heard; on behalf of those who have fought for basic rights like health care, free
education, maternity leave, and vacation pay; in hon-our of those who have made their contribution, whose
marching days are now behind them, but whose
hearts remain on fire for social and economic justice;
and in the spirit of those to whom the future truly belongs and who, even now, are studying and working to
educat e themselves for a place in forging the future of
their country, I am honoured and humbled, on behalf
of this Bermuda Progressive Labour Party Gover n1036 16 February 2018 Official Hansard Report
B ermuda House of Assembly ment, to present for the consideration of this Honourable House the Estimates of Revenue and Expenditure for the Fiscal Year 2018/19.
Thank you, Mr. Speaker.
[Extended desk thumping]

Before we move on, I would just like to
acknowledge in our presence the President of the Senate and most of the Members of the Senate who have joined us this morning. We also have Sir John,
who has been here this morning with us, and former
Member of Parliament, Mr. Maxwell Burgess.
Thank you for your presence here this mor ning.
We will now move on.
REPORTS OF COMMITTEES