2011 Throne Speech

November 8th, 2011 by De Onion

Now that we know the comment about Emirates and air links to the Middle East were at best a hair-brained idea I thought it relevant to go through the Throne speech and look at what is actually promised.

Explicit promises meeting the SMART criteria (Specific, Measurable, Attainable, Relevant, Time-bound)
– Job Corps – Planned by end of Q2, 2012
– Tri 30 – remedial basic education – In progress.
– Outlaw sham marriages – This Year
– Remove land licensing – This Year
– Make temporary work permit holders more expensive – This Year
– Implement Energy White Paper – This Parliamentary Session
– Create an Artists’ Registry – This Parliamentary Session

Promises with no measurable time horizon, but that are specific enough to be actionable:
– Merge NTB and Department of Labour and Training, create additional layer of bureaucracy in work permits
– Allow the civil service to tap their pensions early.
– Means-test social insurance.
– Exclude those who “hustle” from social insurance.
– Prevent business owners with outstanding pensions from registering another business.
– Some sort of legislation re: Family Council
– Legislation re: child custody
– Amend Educators Council Act
– Allow seizure of suspected proceeds of crime
– Allow for fines for gang activity
– Introduce a National Youth Service as an alternate to Regiment
– Re-classify some drugs in the criminal code
– Increase penalties for drunk driving
– Change health benefits to limit overseas care
– Some expansion of scope for Internal Audit and the Auditor General
– Whistle blower legislation expanded to include part-time/temporary staff and contractors.
– Outlaw inducements (bribes)

Everything else was an empty promise to do nothing but look busy.

Defaults

November 3rd, 2011 by De Onion

I think if Bob Stewart’s math is correct and the present value of Bermuda’s total public sector debt (cumulative deficits + pension/health liabilities) is somewhere around 100% of Bermuda’s GDP then we’re not far off many of the world’s most indebted countries.

If the PLP continues to shrink Bermuda’s economy and rack up debt at the rate of ~$100-$200 million per year then Bermuda will inevitably default. It will take very radical implementation of government financial control (union-busting) and economic growth (abandoning term limits and welcoming immigration) to avoid this fate.

Hat tip to Denis Pitcher for posting first, but it has been on my mind for a while.

Political Risk

July 10th, 2011 by De Onion

Well, it’s nice to see some liberalisation of immigration and housing, but these issues highlight what a political risk Bermuda has become.

The problem here is that to repeal the policies is too little too late – the problem is that these policies became law in the first place. Changes to both immigration and housing rules bought with them massive unintended consequences that have seriously hurt Bermuda and Bermudians– from the term-limit induced economic meltdown that began at the same time as the global recession to the blatant discrimination against Bermudians married to expatriates while foreign developers were given carte blanche to get into residential real estate.

This quote really sums it up:

Leroy Douglas, president of the Real Estate Division of the Bermuda Chamber of Commerce said: “I hoped that Government would be more receptive to some of our input. I’m delighted to see this coming to fruition.” He added: “In the past, rules and regulations were put into practice and we were given no opportunity to have a say. This is a start.”

At the core – the PLP politicians did not bother to understand the impact of the rules before they were put in place, and when warned about the likely consequences by experts they were ignored. The inability to listen to expertise is a real cultural problem in the party and is one of the major elements of their unfitness to govern. Thankfully some new ministers are finally getting the message.

The Bull Case.

August 8th, 2008 by De Onion

After my recent posts of relative skepticism about the Bermuda real estate market I think it’s worth outlining the bull case for Bermuda real estate. It can be located right here: Royal Gazette Employment Classifieds.

As long as the government continues to allow population growth then Bermuda’s economy will continue to grow largely independent of the rest of the world, and despite poor government (really terrible government could still cause a local recession/depression). However this population growth fuels the decline in standards of living as more of us are packed into condos/human filing cabinets, and spend more of our lives sitting in traffic. This population growth also shields government from responsibility and side effects of having a government producing large numbers of (mostly black, mostly male) people who are only employed because we are building as fast as we can to provide housing for the growing population, so as long as the government continues to keep the demand side for housing growing by allowing net immigration, and as long as they continue to artificially constrain the supply side through incompetent management of urban planning and building control, then we should see prices remain firm.

Of course, we are building a social house of cards by leaving the lower income Bermudians chronically under-housed, and by keeping prices and rents high are transferring wealth from the young and poor to older (mostly white) home owners.

Anyone who claims the PLP is the party of “social justice” is clueless.

The coming debt crisis.

July 23rd, 2008 by De Onion

An interesting article in the paper today: Car sales concerns.

With car sales dropping 24 percent in May alone, dealerships said it was hard not to notice a lack of customers.

This is not only an indication of economic weakness, but it’s also going to show up somewhere else where it hurts. The government takes a large tax on every car sold. Fewer sales means less tax revenue.

Since our government has presided over massive increase in spending which have not been fatal thanks to almost matching gains in tax revenue, we can expect nothing good from the combination of poor financial control, economic slowdown, and a Finance Minister who would have been fired if she was a company CFO.

Edit: Changed the link from a duplicate of the car sales story to Bob Richards’ response to the audit.

Outsourcing

July 17th, 2008 by De Onion

Since Bermuda’s government is picking up on the American right-wing’s penchant for outsourcing of government functions it’s probably worth it to start asking the question: Are government contractors more efficient than the civil service?

From the Wall Street Journal opinion section a somewhat slanted view:

One fact about government outsourcing is settled: It sure doesn’t save money. A Washington Post reporter who scrutinized Katrina reconstruction contracts in 2006 found that “the difference between the job’s actual price and the fee charged to taxpayers ranged from 40 percent to as high as 1,700 percent.” To cover damaged roofs with tarps, certain contractors billed the government $1.50 per square foot of roof covered; some of the people who actually did the work got under 10 cents per square foot. Guess who kept the difference.

The issue in my books are incentives – what are the incentives we create when we contract out government functions?

Global health

July 4th, 2008 by De Onion

Here’s a neat interactive side by side comparison of healthcare systems internationally. Just something I stumbled across.

As I’ve said before – the only conclusion that an honest economist can make about healthcare is that one that is for fully private and for-profit is the worst possible solution and Japan, which from an economic perspective is one of the best healthcare providers is also the worst for the doctors. This is not a coincidence, and it looks remarkably like the Bermudian system.

Pillars. Again.

June 26th, 2008 by De Onion

From The online Royal Gazette.

“We talked about Bermuda. He was interested in how we were doing in tourism and understood our rationale for rebuilding tourism and not having a one-legged economy.

Essentially shows one thing: The Premier, the President, or both do not understand international business.

As I have said before, we do not have a one-pillar economy, not even close. We have insurance/reinsurance, investment management, trusts & fiduciary services, and a number of others. Each of them is a completely different industry and each of them is highly efficient at bringing in revenue from overseas into Bermuda and depositing it into our economy in the form of salaries, rental payments, services, taxes, tourists, etc.

Each of these international industries can offer Bermudians completely hilariously high salaries in comparison to competing jurisdictions and other industries. If we do things right then these salaries funnel through to the service sectors and keep our blue collar workforce enjoying a good standard of living and unlimited opportunity for their children. Why? Because Bermuda has a sustainable competitive advantage of being a historically stable, well-run country with a legislative framework far more nimble than large countries (although a number of countries are gunning to take us down).

All of our pillars are suffering from the bad behaviour of Dr. Ewart Brown and his cronies and the utter mismanagement and corruption that is their standard operating procedure.

Unknown to most voters, and despite the politician’s best efforts to derail international business, in the background the machinery of the Bermuda regulatory system continues to do an acceptable job of keeping legislation up to date without the clown show of some of our competing jurisdictions.

Everyone gets a pony!

June 22nd, 2008 by De Onion

So it looks like the government is going to start making good on some hastily thought out election promises. I have a sneaking suspicion that we, the Bermudian taxpayers, are about to find out that no matter how poorly managed, any project can be completed if given an unlimited budget. Again.

Not that we’ll be able to tell exactly what they’re spending our money on thanks to the 36 page embarrassment of a government budget… when the budget is shorter than the Auditor General’s Report we have a problem.

Management

May 19th, 2008 by De Onion

There’s a quote somewhere that management is “Doing the right things well.

We all know that governments are not good at doing the right things… but it’s always a shock to find out just how badly things can actually be done.

Staff are said to be angry with the increasingly dilapidated state of the building and no longer consider it safe.

The letter is believed to have complained that a proposed multi-million renovation of the 300-pupils school never materialised — and as a result it will shut in June.

Honestly, is this a joke? Or are we going to see a contractor suddenly step up and do the work at the last minute at great expense?

It’s so hard not to get completely cynical.