Wednesday, July 6, 2011
Last week during the Motion to Adjourn in Parliament, MPs took the occasion to reflect on the PLP record. No doubt this will continue until the House rises for the summer recess and as political parties prepare for the election call, whenever that may be. There will be the inevitable posturing and a great deal of postulation. My reflections in this respect will today be limited to an assessment of the PLP government’s economic record. This government is most often criticised for an escalating national debt and over-expenditure on capital projects, leading to a seemingly logical conclusion that the PLP have been inept stewards of the economy.
There can be no denying that our national debt has increased significantly over the past 13 years; it is equally true that many capital projects have greatly exceeded the allocated budgets. Other than the $200 million in guarantees provided by government to prevent the collapse of Butterfield Bank (which few objected to) most of the debt has been generated to provide a greater measure of services to people in need increased pensions, day care, free public transportation for students, lower cost housing, and so on. Conservative economists will tell you a balanced budget is paramount and will cut services to people to ensure this. We have seen this in many other countries and we saw it in under many years of the UBP. Liberal economists will tell you debt is an effective short term measure to protect, help and to advance those who are either vulnerable or who have been marginalised by inherited circumstances. The Progressive Labour Party stands unapologetically in this liberal camp.
This stance though, is not without qualification. There are legally imposed limits to the debt and we have never defaulted or been late on any payment. The scaremongers calculate the per capita debt and leave the impression it is out of control. It is sobering to consider our national debt. But it is equally of note that in a world still strained by the global financial stress we have kept our debt levels at significantly lower levels than virtually every country in the developed world. Sceptics will dismiss this; ratings agencies, the IMF and the United Kingdom will not.
Capital projects seem to be the bane of most governments, everywhere. The PLP’s record is no better, and no worse than that of the UBP. The $88 million Berkeley Institute project escalating to $110 million under the PLP needs to be assessed in tandem with the Airport escalating under the UBP from $9 million to $25 million. The over-expenditure on such projects is not something intrinsic to the PLP, as some commentators would have you believe, it is intrinsic, I believe, to government managed projects. And we need to think of new and better ways to address this. For every airport project over-run or Dockyard project there is a Princess Diana memorial fountain.
These two issues need to be examined alongside the work done by government to strengthen Bermuda’s economy. It is an unfortunate reality that negative commentary always displaces good news. The good news is that Bermuda was saved from being placed on the “blacklist” created by the OECD of the ill-named and hypocritically constructed list of “tax havens” due to the detailed, prolonged and below the radar work of this government. Too many of us take this accomplishment for granted because we never endured to consequences of being placed on the negative list.
The good news is that government has created business zones designed to provide greater opportunities for growth in economically depressed areas through tax and other incentives. And the good news is that government has begun the process of restraining public expenditure through budget cuts and more effective management of the growth in the number of government jobs.
This government has certainly made mistakes in the area of the economy; it would be almost impossible for any government not to have made any in 13 years of governance. On balance, though, while the ride may remain choppy for as long as the recession continues, we are moving in the right direction.