Maiden Speech in Parliament

Hansard–15 February 2013

Mr. Walton Brown: Thank you, Mr. Speaker.

 Mr. Speaker, I rise to echo the comments of our honourable leader, Mr. Bean, in saying that we are prepared as the Opposition to work with Government on all issues, policies, and legislation that we feel are in the best interests of our country. We care deeply for our country and we do want to see the best policy and the best legislation brought forward.

 Mr. Speaker, I want to commend the Government for demonstrating the courage and the initiative to clearly express support for including sexual orientation as a protected category under the Human Rights Act. Human rights are not meant to be subject to negotiation. It is important that in a mature and a strong democracy we give respect and

recognise the equality of all people irrespective of sexual orientation. So I do, Mr. Speaker, want to commend the Government for taking this bold initiative and making it absolutely clear that that is their intention.

The Speaker: Make sure you speak to the Speaker.

Mr. Walton Brown: Also, Mr. Speaker, I would like to commend the Government for making a very clear position with respect to shared parenting. It was an initiative brought forward by the previous Government. It has now been reaffirmed by this Government, and we think that any legislation which actually helps to strengthen families to ensure that both parents play as much of a role as possible in the raising of  their children cannot be but for the public good. So we support Government, and I commend Government for taking this initiative.

Now, Mr. Speaker, on the issue of education, I think it is very important to recognise that education is the critical foundation upon which all of our young people get real pportunities. Without that education it is going to be very difficult for our young people to be able to compete effectively in what clearly is a global environment. When people from all over the world have access to jobs, it is important that our young people get as well educated as possible and develop as many technical skills as possible in order to be competitive.

Now, having said that, I am somewhat concerned about the emphasis on introducing technical education into our public schools at such an early level at the middle school level. My concern, Mr. Speaker, is really rooted in the fact that today we have young people who are leaving our schools going on to tertiary education who do not have the minimum skill sets in terms of reading, writing, math skills, and critical thinking to operate effectively in at a tertiary level. Therefore, there is an abundance of programmes in place that require students to upgrade their skill set and competency. If there is a deficiency at the middle and senior school levels with those basic skills sets, I would rather see an emphasis on getting those critical skills in place first before we weaken and dilute the educational environment to include other subject matters. Because no matter what you do—whether it is in an academic track career or a technical track career—you will require great writing skills, reading skills, critical thinking

skills, and math skills. So we need to have these very much in place.

I would caution the Government about being overly enthusiastic about moving so firmly in the direction of technical education at such an early age. It will unduly contour some of our young people into areas and career paths when, at that age, they would clearly not have a very clear sense of what they want to do in terms of a career.  Mr. Speaker, we know that one of the most important aspects of a good education is to have excellent principals. One of the challenges of having a large bureaucracy is that we have not sufficiently allowed principals to have the level and the kind of autonomy they need in order to properly manage their schools. The issue of public education has never been an issue of budget. In fact, we have more money than we need to deliver a proper and responsive educational system. What we need to do, though, Mr. Speaker, is give our principals the autonomy—allow them to run their schools and manage their schools. So you hire competent principals to do the work. If they prove to be less than competent, then that is an issue that needs to be addressed. We need to hire competent teachers. I have no doubt, Mr. Speaker, that the vast majority of teachers today in public education have tremendous dedication, tremendous commitment, and are well qualified. But they are not all so, Mr. Speaker. And it will be the responsibility of a principal in a relatively autonomous environment to be able to sort out those who are able to deliver and those who need help in making that delivery. We cannot emphasise the importance of having that level of autonomy in our schools. We need it for our children and we need it for our future. 

Mr. Speaker, having taught at the Bermuda College for 12 years and having been in the immediate past Chairman of the Bermuda College I know that we have seen a decline in the capability of young people from both public and private schools coming to the College. It is not unique to Bermuda. If we go to any college or university in North America (and I suspect also Europe, although we have not done the research) that there is an abundance of programmes to help those students come to the level that they need in order to take university courses. So there is something going on at the middle school level, at the secondary school level, that needs to be addressed. It needs to be addressed here as it needs to be addressed elsewhere, Mr. Speaker. Now, once we get that right, we will be on our way to having real opportunities for our young people. The business community will not be able to say that our young people lack the talent or they lack the skill set.

We have an excellent example of how reform can make for a very effective institution. All one needs to do, Mr. Speaker, is to look at the example of Bermuda College. After a seven-year effort, the Bermuda College was able to secure accreditation with one of the accredited bodies in North America. You would know about that as well, Mr. Speaker, because you were previous Chairman of the Bermuda College. That seven-year effort demonstrated that in getting their recognition the Bermuda College—and, therefore, Bermuda—has a recognised tertiary institution where students can come for two years and then transfer to a wide range of colleges and universities in North America, Europe, and elsewhere. The question becomes, How do we better market that strong institution—Bermuda College—to a wider body of Bermudian? Because we have 1,200 students—about 400 are full time. A parent, parents, can save about $30,000 a year by sending their students to Bermuda College rather than overseas and then transfer in the third or fourth year to a highly reputable college or university. But they do not do so in sufficient numbers. That has more to do with our mind-set, Mr. Speaker, than anything else, because the competence is there and the recognition (more importantly) is there. If I can move on to another area, Mr. Speaker, and I will take the liberty of doing so especially since my whip has said, I am certainly allowed to do so. There are some aspects of the Throne Speech that have caused concern. The argument by the Government, or the position by the Government, is that they will introduce drug testing for the Members of Parliament. I am not sure if that was meant to be mischievous or whether it was a real soundly-thought-through policy.

Mr. Speaker, having been the principal research officer for the National Alcohol and Drug Agency, the National Drug Strategy, and the National Drug Commission, one of the very clear rationales that was advanced in terms of any drug policy was to try to reduce the harm associated with the actions. There was always a harm reduction approach that was key. This approach . . . I am not sure what it is meant to accomplish. What I will say is that one could undertake a drug test, Mr. Speaker, and test positive but never have broken a law in Bermuda. Because drug testing does not test impairment; it tests one’s use. And everyone knows that there are a number of substances that can be in one’s system for months. So if someone goes to a jurisdiction where it is quite legal to consume a drug that happens to be illegal in Bermuda, what, then, would you say to that person? 

We have to be very careful about what it is that we are trying to accomplish. Is it a moral authority that we are trying to argue? Or is it something else that is going on? Is that clearly thought through? I would encourage the Government to give real consideration to what it is meaning to accomplish in doing so.

The other issue that caused me some concern, Mr. Speaker, relates to the decision to vacate a policy regarding foreign-born spouses and Bermudians purchasing more than one home. The rationale for that, Mr. Speaker, was that we had no idea—and I think we still do not have any idea—how much land is currently being held by non-Bermudians. There was a piece of legislation passed in the mid-1970s which says there should be not more than 10 per cent of the land in Bermuda held by foreign hands. When a former minister, Minister Burch, was in charge, he put the policy in place while we tried to get a count of all the property that is held in non-Bermudian hands. Most people who comment on this issue, Mr. Speaker, will say that they believe the 10 per cent limit has long since been exceeded. And so the policy was put in place to try to contain that so that we could get a better count and then decide what the more appropriate strategy might be. This policy shift, Mr. Speaker, now means that it is open once again, and we are violating the law. There seems to be no regard for the law. So, on the one hand we want to have a drug testing policy in place, because we want to ensure that all Members of Parliament adhere to the law, yet the very Government, by its actions, may now be wilfully violating the law. And there seems to be no demonstrated effort to find out what that actual count is. So I would again encourage the Government to reconsider its position so that we can assure that all of our policies and laws we pass are consistent with the law.

Mr. Speaker, the Throne Speech is interesting for what it contains. Obviously, that is why we are here today. But it is also interesting for what it does not contain. There are some glaring omissions from this Throne Speech. And I say “glaring” because some concerns were matters that were raised repeatedly in the past 12 months, yet found no place in the Throne Speech that we saw, listened to, and read last week.

I refer to a position on gaming. I refer to electoral reform. There were many pundits who spoke about the importance of having proportional representation, having the overseas vote—because these were seen to be important tenets of a strong democracy. Yet, Mr. Speaker, there is absolute silence on those matters. I do not know if the Government no longer considers them to be important and if that was just a position as Opposition, or whether it is something that will come forward later. But we shall soon see.

Mr. Speaker, the Throne Speech talks in the concluding section about the importance of integrity, transparency, and openness in the decision-making process. Those principles are something that I think all of us can assuredly agree with. Those are essential to having a strong and vibrant democracy. But, Mr. Speaker, some of the initial decisions made by this Government test their commitment to those principles. I speak about a firm commitment—six months ago, three months ago, two months ago—regarding term limits, for example, and a commitment to suspending them. And then what I see as a contrived decision-making process which sees them eliminated altogether. That, Mr. Speaker, in my view, will test their commitment to integrity, transparency, and openness. 

But there are some more challenging aspects that relate to these commitments or principles, Mr. Speaker. We gradually moved over the past 14 years to a type of government which saw Ministers carrying out their responsibilities with full fervour and full commitment—the process whereby we elected full-time Ministers. In the old days (some say the bad old days, Mr. Speaker), you had a situation whereby Ministers were paid very low salaries and they would juggle their full-time job with their ministerial responsibilities. That created a cloud of concern because the rule of thumb back in the  ’60s and ’70s, and perhaps before, Mr. Speaker, was that you would use your access to Government in order to better advance your own narrowly defined interests. So, by having a process by which we moved toward full-time Ministers you tried to break that tenuous line between one’s private interests and the public interests.

When I see it going on today, Mr. Speaker, [it] raises concern about the extent of which the Government is going to be able to remain true to its commitment to transparency and integrity. Because, Mr. Speaker, if you have a Minister working in a reinsurance company in the morning, and then setting policy regarding work permits in the afternoon, you get into that murky area. If you have a Minister working for a large conglomerate in the morning and then deciding on economic development policy in the afternoon, Mr. Speaker, you are getting to that line whereby . . . Whose interests are really being best protected and advanced?

So I would encourage the Government, I would encourage our Honourable Premier to rethink a process that can best serve public interests, best serve the interests of the people in its totality. Because as much as one says in legal circles that justice has to be seen to be done, good governance has to be seen to be done. And it cannot be done where the waters are murky. And, Mr. Speaker, there is a level of murkiness in our waters today.

The final point I will make, Mr. Speaker, relates to what I see as the most glaring omission—the most glaring omission—in the Throne Speech. And that has to do with an area of politics, an area of decision-making that gets at the very heart of how we make decisions and where the authority to make decisions lies. There was no comment, really, about the relationship between the Bermuda Government and the United Kingdom Government. We heard some earlier comments about the relationship between the Bermuda Government and the Governor, who represents the UK Government in Bermuda, with respect to the police service.

But there is a more fundamental issue, Mr. Speaker, because last December the United Kingdom Government formally established a panel of Ministers of all the Overseas Territories, a panel that the Overseas Territory Minister will himself chair. And if you read their mandate, Mr. Speaker, their mandate is to cover virtually every aspect and every area of governance for the Overseas Territories. So what you will see is—what I think I have seen and what I think has been the case since 1999—a gradual devolution of power back to the United Kingdom. 

The principle for arguing this point first came in 2003 when Lord Triesman (the Overseas Territories Minister at the time) argued that the line of demarcation between domestic affairs and international affairs was becoming increasingly blurred and, therefore, the UK may involve themselves in areas that the Overseas Territory might consider to be its exclusive domain under the Constitution—that has now been cast aside—that separation of power. And so what I would like to hear from the Government is what its position is with respect to its relationship with the United Kingdom. The British Prime Minister has already said he wants to take on what he calls “the tax havens.” Many consider Bermuda to be a tax haven, Mr. Speaker. It may well be that there are occasions when the interests of the UK are not necessarily aligned with the interests of Bermuda. And sometimes it is just plain misinformation that creates challenges for us. The most explicit example of misinformation that created a real challenge for Bermuda, Mr. Speaker, was in 2006 when the Home Office misinformed the European Union that Bermuda citizens, Overseas Territory citizens, did not have the right of abode in the UK. It was because of that misinformation, Mr. Speaker, that we were all subject to a visa regime of the Schengen group of countries in the European Union.

So as we move forward, Mr. Speaker, as this Government seeks to set out its course for our country, and as we seek to be the critical evaluators of what Government does, I ask for this Government to give real consideration to the future relationship that we might have with the UK under this new Ministerial Council, what it means, and if they could come back to us through Parliament and to the people, at some point in the not too-distant future, to outline how that relationship—in their view—is going to evolve.

Thank you, Mr. Speaker.

“The official [Hansard] Report provides a record for posterity. It offers a day-to-day

account of proceedings, reflecting attitudes to the significant issues of the day and the

changing values and views of society. In short, it will help future generations to paint a

picture of how we live today.”

 Hansard (15 February 2013)

 Mr. Walton Brown

Ideology and Party Politics

The ideology embraced by a political party is perhaps the single most important factor in determining the policies that party promotes. All parties have an ideological outlook — whether its members are conscious of it or not — and that outlook is positioned somewhere along the left-right spectrum. And, no, Bermuda is not an exception.

The Progressive Labour Party was founded as a party of labour and has been a critical agent for social reform over almost 50 years. Over the decades, some of the strident “progressive” policies such as income tax and nationalisation have given way to the practicality of electoral politics and the party has moved toward, yet does not occupy, the political centre. Ideologically, the PLP is left of centre on Bermuda’s political spectrum and could rightly be labelled a liberal party.

A new political party, the One Bermuda Alliance occupies the same ideological space as the now marginalised United Bermuda Party. They are cut from the same cloth. The OBA tends to place greater emphasis on addressing business needs since business growth is seen as the engine for the growth of the country and therefore the betterment of people. Their agenda for governance would sit comfortably alongside that of the Conservative Party in the UK and is rightly placed right of the ideological centre.

There are striking parallels between the political battle around ideology and elections in Bermuda and what is going on in the US presidential campaign. Consider the issue of debt, the recession and budget deficits — no doubt critical issues for the election campaigns.

The Obama administration has implemented a number of decisions designed to inject money into the economy to prevent a further contraction, to help support those in need and to help provide for economic stimulus. During his tenure the US debt has increased significantly as these policies were set in motion. This is directly paralleled with economic programme Premier Cox has adopted.

The Romney campaign has excoriated President Obama for a massive increase in debt levels over the past four years and for growing budget deficits, which he has labelled irresponsible and indicative of mismanagement. He has pledged to significantly reduce debt levels and get to a balanced budget over two terms. The OBA has adopted a similar approach here.

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None of this is surprising given the ideological dispositions of the respective parties. What is surprising is that political parties would hold to positions based on ideology when substantive bodies of research and analysis point to it being wrong-headed. 

On the issue of debt, for example, the New York Times wrote yesterday in an editorial that the Eurostat Euro Indicators statistics released on Monday “provide objective support for what has been clear to just about everyone except pro-austerity German officials and deficit-crazed Republican politicians. Namely, deep government budget cuts at a time of economic weakness are counterproductive, complicating, if not ruining, the chances for economic growth.”

The power of ideology is such that it shapes a party’s ethos and it shapes its policies. At times, ideological purity will be sacrificed in the pursuit of electoral gains; and this can be done without moving away from core principles. Everyone has a way of seeing the world and they tend to support political parties that they find common cause with. A good friend of mine recently posed the following question: “If Barack Obama was Bermudian, which party would he vote for?” My answer: “That’s a question about ideology.”

A right, not a privilege

The right to vote is the most powerful expression of democracy for a country. It is sacrosanct, inviolable and should never be fettered in its expression. We have come a long way from the dark and oppressive pre-1968 era and while we still have a way to go, Bermuda’s strength as a vibrant democracy rests on the bed of democracy we have made over the decades. 

It was not until 1963 that all adults were granted the right to vote; this only after a successful public campaign by the Committee for Universal Suffrage forced the hand of a recalcitrant Parliament. But the old oligarchy restrained the full expression of democracy by, along with granting the vote to all adults, increased the voting age to 25; gave an extra vote to property owners; and gave the vote to all British subjects after three years’ residence. 

The plus vote was soon dropped; the voting age pushed back to 21; and British subjects coming to Bermuda after 1978 were no longer entitled to the vote. After years of effort by a pro-youth lobby, the vote was finally extended to 18 year olds in 1990. Even then, however, Bermuda had not yet become a proper democracy as the electoral system had two fundamental flaws: 

(1) electoral districts were structured to achieve a particular racial outcome and thereby embedded race into the political structure; and

(2) the constituency sizes varied widely, with the effect being that not only did voters in some constituencies have greater voting strength, the strength was also weighted toward white voters.

When the requirement to register to vote annually was eliminated and single seat constituencies were introduced in 2003, along with a constitutional requirement that constituencies be of, more or less, equal size, Bermuda finally had a democratic shell that matched the democratic ideals so many Bermudians seek.

The vote that we all share equally is not a privilege, rather a right. The vote provides you with the power to shape policies that affect you by determining who gets to run the country. It is not surprising to note that some Bermudians will vote in knee jerk fashion for ‘their’ party. That too is democracy. Many others will use their vote to reflect on the parties’ policies, their proposals, and the people who present themselves for elected office and render a decision about which party and which candidate can best advance their interests. That power is something you have without restraint.

As free and as protected as this right to vote is in Bermuda, there are those who will choose not to participate for any number of reasons. That too is a democratic right. My view is that those who do not participate lose legitimacy in speaking out on the social, political and economic issues that governments get to shape. How serious are you about the issues if, when given the right to shape outcomes, you step back from the simple yet very powerful responsibility to vote?

Alongside this unfettered right to vote, all of us should be concerned about attempts to suppress the vote. Efforts to take people off the voters’ list should be resisted strongly — it raises bad memories of the bad olé days pre-1968. 

Democracy is the cornerstone of a mature and progressive country and the vote is its most public expression. Every Bermudian has the ability to shape the outcome of our society by using what was won over the decades in a hard fought fight. While we may all be privileged to live here, exercising the vote is one of our fundamental rights.

We need an international view

One area seemingly never raised over successive elections is that of international relations. While our elected government has little direct control over external affairs, owing to our colonial status, Bermuda is impacted daily by global forces; how Government acts to address such challenges has important consequences for the lives we live. 

One of the most important challenges over the past ten years was the threat to our status as an international financial centre as the OECD and a number of regional bodies sought to label Bermuda as a “harmful tax” jurisdiction. Under successive Finance Ministers Eugene Cox and Paula Cox and the unsung efforts of the Ministry of Finance staff, we overcame that challenge and have protected both our global reputation and those companies that do business here.

Further, every time we sign another Tax Information Exchange Agreement (TIEA) with another country we lay the foundation for enhanced bilateral relations. As an example, one small consequence of signing with Australia is that Bermuda passport holders were able to apply for a visa online, as do British passport holders, and not have to bother with the cumbersome submission of paper documents.

Bermuda’s global interests do not necessarily run in tandem with those of the United Kingdom. A good example of this involves the matter of the four Uighurs brought to Bermuda. Premier Ewart Brown’s bold, controversial and divisive decision would certainly have been vetoed by the UK had they had prior knowledge, but perhaps more important than the humanitarian gesture it was is the geopolitical and economic reality that America matters more to Bermuda than the UK.

And this act served to strengthen our relationship with the United States. As an aside, the current “stateless” status of these four men will no doubt be resolved as soon as the key parties work toward a solution.

One of the constraints on best pursuing our interests globally is that we are only granted a voice with British consent or by taking action surreptitiously. When we are not sitting around the table when our interests are discussed the consequences can be significant. The European Union decision to impose a visa regime on Bermuda is a prime, even if, unfortunate example of this.

In 2006, the Foreign and Commonwealth Office misinformed the European Union that Overseas Territories Citizens of the UK did not have the right of abode in the UK. This was patently false since under the British Overseas Territories Act 2002 all Overseas Territories citizens were made British Citizens again, in May, 2002, having been deprived of that status under the British Nationality Act 1981.

On the basis of FCO misinformation the EU imposed a visa regime on Bermudians decades after a former Delegated Affairs Minister, Sir John Sharpe had successfully negotiated visa exemptions. If Bermuda was sitting around the EU table UK misinformation would not have gone unchallenged.

More generally, Bermuda-UK relations will require greater attention in the years ahead as the British seek to develop a new structure to the relationship. There can be no mistaking: this relationship is not based on any notion of equality as the power to decide resides with the British. If there is to be a partnership we are certainly the junior one. As a country we will have to decide if in the pursuit of our economic, political and social interests globally we are encased within the ideal political shell.

Global opportunities abound for Bermuda. They have the potential to strengthen our island in a multitude of ways from live/work opportunities beyond the EU to bilateral investment agreements. Now is the time to broaden our focus beyond 21 square miles and pursue opportunities where and when they emerge.

Accuracy in Polling

When I first started doing political polling in 1998 I knew that whatever the results were they would be controversial: one party, one leader would fare better than the other and in a charged political climate the messenger would be attacked.  My company was the lone (and much maligned) voice predicting a PLP victory in 1998 solely due to polling data but our methods were vindicated when the results came in. I knew then that  an important part of my focus was necessarily to ensure international best practices were followed at all levels and there was integrity in the results I published.

It is unfortunate that the MindMaps political survey falls short of this mark, rendering many of its findings inaccurate. The international standard question on “approval ratings” is based on a simple construct: “do you approve or disapprove”. The answer is either “yes”, “no” or “not sure”. This is the format used by CNN, IPSOS, Gallup, Pew, Zogby and every other reputable polling company world-wide. There are two reasons for this: (1) it allows comparisons of polls by different companies and it allows comparisons of leaders, for example and (2) it allows for clarity of a response, with little interpretation.

Comparison of polls is critical in a democracy since they effectively act as informal policing of quality control. If different companies ask the same questions yet get widely different answers the public will want to know why and questions of competence and manipulation will arise.  Further, by asking the same question worldwide we can compare approval ratings for Bermuda’s leaders with other leaders and gain greater insight into the drivers of public sentiment.

In contrast, the MindMaps survey, by using a scale of 1 to 5 (in industry speak it is called a Likert scale) asks respondents about the intensity of their approval, not simply whether or not they approve or disapprove. Why they would violate such a fundamental tenet of political polling is disconcerting since it raises questions about both their competence and motives.  With this approach, there are two positive and two negative responses and a mid-point of uncertainty, producing exactly the ambiguity the international standard question format was designed to prevent.  More importantly, those who have opted for the mid-point have their views discounted altogether , being placed in neither the positive nor negative category.  But what can you say about these respondents’ approval or disapproval of a leader? In fact, the MindMaps survey is not an assessment of approval ratings of leaders and should not be published as such – it simply tells us how strongly people approve or disapprove their leadership. And these are two quite distinct issues.

A different example may help illustrate the point. If I were to ask how strongly do you approve an amendment to the Human Rights Act to include sexual orientation I am certain I would get quite a different answer than if I simply asked if you approve its inclusion or not.

An equally important issue is the integrity in data collection. Any company which allows its staff to hand out forms to friends and colleagues to complete violates the central tenet of polling—randomness in data collection—and thus renders the data useless. As a result, any findings published or presented to clients will have no validity. For companies and political parties making decisions on bad data, they may well be in for some costly surprises.

Political polling is an important part of informing public opinion and giving the public a voice on many things political. Good polling provides reliable actionable data that can both inform strategies and help mobilize support. Bad polling, no matter how well it is packaged, provides no insight and will inevitably lead to flawed strategies because of its flawed premise. We need to move to a higher standard.

Note: This was first published as a Facebook Note December 2011.

Debunking the myths

We are truly immersed in the silly season. No doubt inspired by the tremendously creative political tactics permeating the American political landscape, Bermuda will clearly see more hyperbole coming from competing political forces. Alongside this, there is a sort of petulant propaganda masquerading as an economic recovery strategy. We see this in the series of arguments made recently by former Premier John Swan and Larry Burchall.

At last week’s public forum, Mr Burchall opined that, “Bermuda is undergoing an absolute decline in its residential population. This residential population decline underpins and affects everything else in Bermuda’s national economy.”

Based on this opinion Messrs Swan and Burchall proceeded to argue, in reverse Malthusian theory, that Bermuda needs to bring more people to the Island in order for economic growth to take place. And so we have a new economic growth theory advanced by non-economists and accepted nowhere in the world that some of us are actually taking seriously. Increased number of foreign workers may well be a consequence of various economic growth strategies but increased numbers alone will not stimulate growth. Mr Burchall has even gone so far as to identify the precise size our workforce should be: 40,000.

The reality is that our residential population has increased, not decreased, over a ten year period based on the only accurate count of Bermuda’s population — the census. Between 2000 and 2010 the total population increased from 62,059 to 64,237, or four percent, the residential workforce population increased during this same period from 29,970 to 30,729; and the total workforce grew from 36,878 to 37,197. These facts alone undermine the entirety of their argument.

A national census is a counting of numbers to allow for proper planning; it is undertaken at regular intervals to allow for trend analysis and to smooth out distortions created by sharp upward or downward movements — such as one would chart business sales and revenue.

The Swan — Burchall ‘theory’ is based on using figures that came from the height of our economic bubble, from 2007-2009, our own period of irrational exuberance, and taking that as the new norm — in direct contradiction to the most basic principle of statistical analysis. Adopting that technique is to descend into the realm of propaganda, to distort and misrepresent figures to meet the objective you seek.

The remedies proposed by Swan and Burchall are perhaps more important than the intellectual foundation of their argument. We do have to re-examine term limits, but not for the reasons they identify: my views on this issue were outlined a year ago in this column (September 21, 2011). And we do need to extend greater rights to PRC holders — ideally all rights as a Bermudian save for a Bermuda passport and the right to vote.

An increased residential population is not necessarily the outcome of increased foreign currency earnings for Bermuda. And it is earning more national income that is key. We have already seen from ABIR’s figures that they injected more money into the economy last year while experiencing a 1.7 percent decline in people employed.

I am also told by friends in the reinsurance arena that new companies coming to market are driven more by technology and thus require smaller staff than would otherwise have been the case ten years ago. Further, outsourcing will continue as cheaper technology is applied to sound business decision making — hence the HSBC call centre in the Philippines.

Beyond reinsurance, a successful regeneration of tourism will generate greater foreign earnings without the same considerations prevalent in discussion with the international business community.

Increasing the number of people today will certainly help in the rental of the many vacant properties and save commercial property developers who took a gamble during the bubble. And ideally, with an economic turnaround there will be modest increases in the population which will in turn provide a measure of relief in these areas. But no sound economic growth strategy will have such growth as part of its underpinning.

Insurance Fact and Fiction

I recently had the opportunity to review the 2011 Economic Impact Study put out by the Association of Bermuda Insurers and Reinsurers a few months ago. There is something rather odd going on: their narrative is at odds with their own data. 

In commenting on the study, ABIR chairman Constantine Iordanou cites as a key finding the continuing downward trend in jobs since “it means fewer jobs in Bermuda; lower payroll tax revenues; less compounding economic activity from these highly compensated executives; and fewer meetings filling up hotels and restaurants”. The organisation’s executive director Bradley Kading attributes the 2011 results to “the continued impacts of a global economy in recovery mode and a soft insurance market” but also “$105 billion in global natural disaster catastrophe losses”.

When the data are examined in aggregate we see that during this difficult economic period job reduction of the ABIR members was a negligible 1.7 percent in 2011 over 2010 (1,696 employees) and down 6.5 percent from the 2007 peak year. The number of Bermudian jobs is down by 13 from 2010, or 1.1 percent. It may well be that “the five ABIR members with historically the largest number of employees in Bermuda have reduced their employment during that time by an average of 23 percent” as Mr Iordanou asserts, but it also necessarily means there has been growth among other ABIR companies. Further, the data seem not to suggest there is “a direct correlation between these senior executives being in Bermuda and employment opportunities for Bermudians”.

By praising Government for passing the Job Creator’s Act, ABIR — and no doubt Government — believes there is a strong causality between encouraging more senior executives to the Island along with giving them security of tenure and the creation of more jobs for Bermudians. That remains to be seen but available data do not support this contention. This legislation is a consequence of international business lobbying and its origins seem to stem more from personal motivations than business logic and a focus on strengthening the Island’s economy. Perhaps it is a nod to fragility of our economy and that we rest on a single pillar. 

In contrast with the comment that job losses automatically lead to less injection of money into Bermuda we see that these declines in employment notwithstanding, ABIR’s 22 members had a greater economic impact in 2011 than during the previous year in critical areas: travel and entertainment expenses are up seven percent; business services expenses in Bermuda are up by about six percent; charitable donations up by 13 percent; and construction and housing costs up by 4.3 percent. That that increased revenue was derived with a slightly smaller workforce is instructive and there may well be some merit in probing deeper to better understand this. 

These findings should give us all pause. There is no doubt that international business — and insurance and reinsurance in particular — is the core of our economy today. 

We should all value it and work to ensure that it remains strong; and appropriate policies and strategies from both the government and private sector are important to achieve this goal. Decisions, though, should be rooted in fact, not anecdote, and careful assessment of available data. Our dependence on international business should not blind us to our responsibility to critically assess any and all assessments and proposals regarding improving our economy. A failure to do so may well mean we fail Bermuda.