General Reflections on the 2012 Budget

I skimmed through the budget late Friday night. I’ll need time to read it in greater detail and decide whether I feel there is anything I particularly want to comment on it. Below is just my initial thoughts, the things that came to mind in skimming through it.

The Budget’s Presentation Itself:

The first thought I had is that I dislike the format the budgets have been taking of late. The Premier presents a very general overview of the budget, overly stocked with meaningless rhetoric and platitudes, which only highlights some aspects of the budget, and the breakdown of numbers at the end could do with greater detail, imho. Each individual Minister then goes ahead and speaks on their particular Ministry’s budget and highlights some key issues of relevance; they do this largely in the form of a press conference.

Handling the Budget this way makes for some frustrating reading and analysis in my opinion. I need to go to numerous sources to find out what, exactly, the Budget is all about, what it translates to in terms of policies and resource allocation. I would much rather that each Ministry’s own budget be incorporated into the Budget document itself. Have it in the form of individual chapters, or even appendices. The Premier could then still give an overall introduction and then speak on those aspects of the Budget that fall under her, namely the Cabinet Office (with it’s consultants and Central Policy Unit) and the Ministry of Finance; each individual Minister could then speak on their relevant sections.

Pension Funds:

This remains one of my biggest concerns. I know the pension funds have been in crisis since at least 2007, and I’m of the understanding the crisis of the pension funds started long before then. I also know that this was freely acknowledged by Cabinet years ago. And yet only know they are organising an Actuarial review? And suspending pension funds for the year, as per the proposals to amend legislation or to apply such a ‘pension holiday’ for Government employees is just plain short-term thinking which will lead to a number of hardships in the future. I am aghast that the Government has even come up with such a short-term and counter-productive policy, and even more appalled that they have been lobbying so hard in favour of it.

Repealing Seniors Subsidies:

I was struck by the decision to repeal the subsidies to seniors relating to car licenses and land taxes.

I am not opposed to repealing them in the first place, although I am surprised they would risk this in an election year (and thus risk losing a significant segment of the voting public), but I am surprised that the policies were implemented as they were in the first place.

As for the car licensing, it should have been obvious in the first place that the policy – as implemented – was open to serious abuse. That this wasn’t anticipated (and I would actually wager that it was, at least by the civil service, but their concerns were overridden) is shocking and attests to the short-term policy focus of the PLP over the years. And why it was thought necessary to expand the subsidies to cover the most expensive vehicles is beyond me. If a senior can afford to own such luxury vehicles, they don’t need any subsidies from the State. So, I welcome making the policy more ‘fair’, but I’m left aghast that they failed to design the policy properly in the first place.

I have somewhat different sentiments regarding the land tax issue. While, on paper, it looks right to make this policy similar to that of car licensing, the reality can be a bit more complex. Some individuals are land rich and money poor, and this change to the policy may have some severe repercussions in terms of open-space or general issues of development. Seniors who may be land rich (through inheritance or whatnot) but money poor may no longer be able to pay the tax and will face the pressure to subdivide their property, or sell it outright, which may also have the same result. This end result being, ultimately, a further loss of our green infrastructure (the goods and services provided by the non-built environment which benefits us all, such as noise pollution mitigation, stress relief, biodiversity, amenity value, tourism, etc.). I would rather the policy on land tax, especially regarding seniors, to be means-tested rather than what I understand to be the current system.

Other:

I’m not really seeing the Budget setting out a clear path to really boost the economy, or position ourselves to either recover or benefit from the presumed global economic recovery. There is some aspects related to retraining, and, yes, the focus on telecommunications, marine and space resources could indeed bring in some increased revenue. While it would be interesting to learn more about what these will involve (and there is a risk of them being poorly implemented…), they themselves will not necessarily bring in many jobs – revenue, perhaps, but not significant jobs.

The focus on retraining is good, but it’s clear that we have a clear long-term vision on future economic growth. I find the reductions to the IB-relevant departments and quangos makes little sense to me – it just seems completely counter-productive.

The graph at the end of the budget, highlighted by Vexed, shows, quite clearly, how our public expenditure rather drastically diverged from our revenue stream from 2006 on. It also shows how our public debt radically increased from 2007 on. That this largely correlates with Dr. Brown’s Premiership is hard to ignore. And that Ms. Cox had been Finance Minister at the same time (she became Finance Minister in 2004) would indicate her complicity in this situation.

Debt, in itself, isn’t necessarily bad, if it is used to create the social and physical infrastructure which facilitates revenue in the future – that is, it pays for itself – either through future avoided costs (indirect benefit, such as saving on rent for Government offices) or direct benefit (from cruise ship revenue). At the moment though, it’s not clear to me what we spent the money on and how it’s expected to ‘pay for itself’ over time. While some of what was built in this time (new Government Office building, the Dockyard cruise-ship terminal) has obvious benefits, the apparent mismanagement and related cost overruns seem unforgivable and likely to render these infrastructure projects as overall losses in the long-term. Additional expenses which could have been easily avoided (such as the unbelievable cost of consultants for the municipal reforms which could have easily been handled ‘in-house’) have no doubt also added to this debt.

Final Thoughts:

What has really struck me over the years since those heady days of 1998 has been a failure to develop long-term policies. The vast majority of policies have appeared to have been short-term fudges. In doing so they have largely made a mockery of any attempt to realise long-term policy goals. Good ideas, implemented badly, seems to have been the general status quo. I think here particularly of the new Berkeley, the new Government building, the new cruise-ship terminal, the municpal reform, term-limits, subsidies for seniors, subsidies for public transportation, etc. Even the (generally unspoken) attempt at affirmative action was so badly implemented in the form of Pro-Active that it’s hard to really restart that policy and implement it properly. Too much political damage.

There have, of course, been some bright moments. The ambitious commitment to Sustainable Development and it’s resulting plan is perhaps one of the clearest attempts to set out long-term policy objectives and plans to realise them, focused on social, economic and environmental justice and long-term benefits. Spin-offs from this, the most obvious of which is the Economic Empowerment Zones and the various Good Governance initiatives (including the new oversight on tendering processes) are all good.

But these have been generally delayed and under-resourced in implementation, either through misunderstanding about the term ‘sustainable development’ itself (perceptions of being just about ‘tree-huggers’ or, essentially, ‘White’ upper-class interests – seeing it solely in terms of environmentalism and not social justice), or through direct political suppression (in as much as it was, rightly or wrongly, seen as the flagship project Alex Scott).

And we have all, collectively, paid the consequences of this emphasis on short-term policy goals rather than long-term planning.

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4 thoughts on “General Reflections on the 2012 Budget

  1. To be honest I got the impression that Minister Bean was referring to the idea that there are currently international fishing fleets exploiting our maritime EEZ and that we were currently unable to regulate it.

    As such, the idea was to find a cost-effective way to monitor that and charge these vessels for exploiting our fisheries. I also got the impression that his drone idea, in as much as it was to do the above, was also to help enforce the proposed maritime reserve.

    What I’ll do is read over the relevant aspects of the Budget and what documents I have regarding our maritime EEZ, and I’ll see if I can add to this.

  2. And how exactly is this proposal going to allow us to regulate foreign vessels that may be operating in our waters illegally? Unless you believe that the simple fact that Bermuda says “you have to pay us” will solve the problem it ain’t gonna make any difference.

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