Bermuda's PLP National debt could top half a billion dollars

by Sal | January 27, 2010 at 03:39 pm

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Larry Burchall

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1/27/2010 9:40:00 AM National debt could top half a billion dollars
Lazy? Read no further. Only want to hear good stuff? Stop here. Want honest facts? Read on.

The Ministry of Finance's blue Budget Book reports that on March 31st 2007, Net Public Debt was $198,159,000. In December 2009, reporting to the House of Assembly, the Minister for Finance reported that "Net Public Debt" now stood at $483,300,000.

Since March 31st 2007, Government had added $285,141,000 to our Public Debt - commonly called our National Debt.

The combination of recent overspends (cost over-runs for the dock at Dockyard; Port Royal Golf Course re-shaping; new Court House building; current account overspends in this Financial Year [2009/2010]) adds to about $91,000,000.

Add this overspend to the $30,000,000 shortfall in government revenue in 2009, and then toss in the expected lower tax revenue for this coming Financial Year. Clearly, Finance Minister Paula Cox will have to make up for her allowing these past over-spends as well as for facing future reductions in tax revenue.

For April 1st 2010, in order to get through the next Financial Year, Minister Cox will be fishing around for as much as an additional $150,000,000.

You and I know that she does not have a money-tree in her back yard. Nor is there a secret stash in those paid-for but unused Washington DC offices.

You and I know that she will have to either cut back materially on Civil Service staffing levels - which she and this Brown-led Cabinet will not do. Cut back significantly on delivering or providing government services - which, again, she will not do. Broadly raise overall tax receipts by ten percent (or more) which, in this stressed global situation would be economically stupid - though she is neutered, she is not stupid. Borrow more money - which is what she will end up having to do.

Minister Cox will have to borrow at least $100,000,000 (could be as high as $150m) to see her through FY 2010/2011. That means that Bermuda's Public Debt is poised to zoom way past half a billion dollars. It will likely hit $600,000,000 or more - tripling in just three years.

By April 1, 2010, this Brown/Cox Cabinet will have added at least $385,000,000 and possibly as much as $435,000,000 to Bermuda's Public Debt. Looked at another way, since March 31st 2007, during the past three years, this Brown/Cox combination will have been overspending by more than $128,000,000 every year.

With $385,000,000 (or $435,000,000) of additional debt dumped on us 50,000 Bermudians by this Brown/Cox combo, what, exactly, is there to show?

New Hospital? Additional Golf Courses? Improved St George's Town Cut channel? Public Education fixed? Lower crime ?

There is nothing to show. Nothing except DNA proof of massive and sustained financial mismanagement.

From today and going forward, who can you trust to manage Bermuda's public purse? Surely not the same overspending combo?

Now that you know the true and real extent of this Brown/Cox government's pattern and habit of overspending, what, exactly, does their $128,000,000 annual overspend mean?

It means $2,461,538 overspent every week (52 weeks). It means $350,685 every day (365 days). It means $14,612 every hour (24 hours). It means $243.53 every minute (60 minutes in an hour). Incredibly, it means that $4.06 is overspent every second (60 seconds in every minute) and is faster than any 'sailor' could spend.

If you used 50 seconds to read this far, government would have overspent $200. This is massive haemorrhaging. Reckless overspending. It never stops. It happens even while you are sleeping and sitting on the toilet.

Like an overdraft, overspent funds are borrowed funds. So the monthly interest and other charges get higher and higher (at least a 'sailor' is spending the money that he has earned).

First, though, that $200 has to come out of your pocket! First, you have to work and earn it. Then government tax collectors appear and loftily declare that what is yours must become theirs. Government jams its hands into your pocket and grabs. Government then recklessly overspends and creates new debt - leaving you to pay the charges!

Going forward, who can you trust to manage the public purse?

What is national debt?

The Government puts a credit card in every Bermudian's pocket (new-born babies, too). The CC shows $12,000 owing ($600,000,000 total debt shared between 50,000 Bermudians - babies, too). Thankfully, the Government does not want you to pay that CC balance today. Instead, the Government makes you keep paying the monthly charges. The Government can increase the CC 'limit' and then charge more to the CC. However, you will pay the higher monthly charges.

Reader Comments

Posted: Wednesday, January 27, 2010
Posted by: Brian

You get what you voted for.

Posted: Wednesday, January 27, 2010
Posted by: letariatpro

Glad someone is paying attention, I fear it goes over the heads of most, and unfortunately it is going to get much worse before it gets better, because the government and Paula Cox are still in the denial and spin stage, I guess acceptance and depression are on the horizon...

author,Larry Burchall,was the campaign Manager for the 1998 PLP victory

this comment shows his disgust and disillusionment with the party HE HELPED TO PUT IN POWER!

UPDATE: Ewart Brown attends horse show in Saudi Arabia

what PAY-TO-PLAY payoff does Brown get THIS TIME from Prince Khaled?

while hundreds are desperate for work,thousands cannot find housing , bourgeois Brown is living the life of an Arabian Prince ,Ewart "let them eat cake "we had to deceive you" Brown

" Premier Ewart Brown and his wife Wanda attended the third annual Khalediah Horse Show in Saudi Arabia last night.

The pair were the "official honoured guests" of Elbow Beach owner HRH Prince Khaled bin Sultan bin Abdul Aziz Al Saud.

Dr. Brown's press secretary issued a release this evening, about the event.

"Wanda and I were honoured to have been invited by His Royal Highness to this important event,""

Spending Like a Drunken SailorThe Bermuda Government under the PLP provides a constant circus of conflict, allegations, and political machinations.

That’s bad for Bermuda.

It’s good for the PLP though, because it keeps people focussed on the scandal-du-jour instead of seeing the big picture.

And that big picture is not pretty.

Larry Burchall points out that Bermuda’s Net Public Debt was $198,159,000 in February 2007.

In the very same paper, Paula Cox admits that Bermuda’s Net Public Debt today is $679,000,000 (excluding the $200 million guarantee made on behalf of the Bank of Butterfield).

In three years, the public debt has grown by $480,481,000!

And that’s before the economic recession really dug it’s teeth into Bermuda – that debt is likely to go up by $x00,000 again this year!

Prudent and efficient? Gold Standard? I think not!

Minister Cox admits she doesn’t have as much control over budgeting as she’d like:

I can indicate support or objection. However the sponsoring minister(s) knows that I cannot overrule their request unless I have others who join with me to support and uphold my position.

With the turbulence in Cabinet in recent years, it’s my opinion that it’s highly unlikely that anyone is holding Ministers accountable. And it shows. Oh, and by the way, that’s the LAMEST EXCUSE EVER from a Finance Minister.

The budgets have grown massively. And still the Ministries overspend. And there is no consequence for the politicians. In the US they have a charming tradition of naming legislation after the politicians that proposed it. I suggest a Bermudian variant. The Bermuda national debt – which will be with us for many years – should be called the “Brown/Cox Debt”.

Listening to the apologists on the local radio shows, the common denominator seems to be the old racial “it’s our turn” battle line. They seem to think that this extended waste and mismanagement will not impact them.

They are wrong. The costs of the constant circus are mounting fast, and only we Bermudians will be left holding the bucket.