Let me begin my remarks by mentioning the incredible achievement of McKenzie-Kohl Tuckett, who spoke in the House of Commons in London on Friday. I know that all of Bermuda is immensely proud of the eloquence and substance of her presentation.
This young woman continues to go from strength to strength, and I did communicate with her and her mother over the weekend to congratulate her and express the pride felt by so many Bermudians. In her speech in London, she spoke about a Throne Speech Initiative from 2020, the National Youth Policy. The Government delivered on that promise by launching the National Youth Policy in 2021, and Ms Tuckett is an active participant in the National Youth Policy working group.
To meet the challenges that confront Bermuda, the Government has set out a clear legislative path that touches all aspects of our society. The actions to be undertaken in this parliamentary session support our economic recovery plan, continue the assistance we must provide to the most vulnerable and build on the foundation already laid for making our systems more just.
The increase in the amount of the childcare benefit and the expansion of the pool of parents eligible to receive it comes as a direct result of listening and responding to a critical need among Bermuda’s working population. The cost of childcare has risen along with other costs, and as parents work to provide for their families and to play their part in the Island’s economy, this deliberate action on the part of the Government is what is required at this time.
A tremendous amount of work lies ahead, and across every Ministry, there is a focus on delivering what we promised the people of Bermuda. Promises which won their strong endorsement of our policies and programmes just over two years ago at the ballot box.
Over the next two weeks, Ministers will take the time to outline for the media and the people of Bermuda updates on the progress of initiatives in last year’s throne speech and provide additional details on the work proposed for this legislative year.
Legislation, whether new Bills or amendments to existing Acts, is one of the principal ways we can deliver change for the people of Bermuda. MPs and Senators are representatives, but they are principally legislators.
The Government is determined to advance a legislative agenda that gives statutory authority and reality to the mandate provided to this Government by the people of Bermuda.
As I turn now to address matters related to the Ministry of Finance, the legislative goals for the Ministry mirror those of the Government as a whole. Streamline processes for residents and businesses; promote equity in financial matters and the treatment of working people; and create the conditions for job creation and continued economic growth.
Significant work has been done to advance the Government’s commitments to reduce interest rates and address issues relating to bank fees as outlined in previous throne speeches. In the first phase, a number of discussions were held with local banks to encourage them to take action in this area voluntarily.
I’m also pleased to see certain that banks have now changed their approach to credit card over-limit fees, with such fees only being charged once if the customer breaches its authorized limit, rather than imposing multiple charges in the same period.
Other fees have been reduced or eliminated, particularly in relation to seniors. In addition, one of Bermuda’s major banks is now reviewing its approach to establishing mortgage rates in Bermuda to evaluate opportunities for further reduction of rates charged to residents. This review is a direct result of discussions with the Government and senior bank officials having oversight responsibilities for banking operations in Bermuda.
In this current interest rate environment where the US Federal Reserve Bank has increased interest rates by 3.75%, causing local banks to increase their rates with one bank this year alone, increasing their base lending rate by 1.5%, it is important for the Government to advance initiatives to cushion the impact of global increases in interest rates on residents.
The recently announced Mortgage Guarantee Program is an initiative which allows eligible persons to get a discounted mortgage rate on the basis of a portion of their mortgage being supported by a Government Guarantee. This program also speaks to the Government’s commitment to building a nation of owners as the first of the three phases of the program is open to first-time homeowners, and the subsequent phases will be open to persons seeking to refinance existing mortgages.
With a guarantee commitment of $50 million, this will allow for approximately 250 persons to benefit however it must also be emphasized that the mortgage guarantee program is a pilot programme, and work has already commenced on the broader program that will allow for international businesses, local banks and the Government to collaborate on a structure that will allow greater participation in a mortgage rate reduction scheme.
To further ensure customers’ rights are protected, amendments were made in the last session to the Banks and Deposit Companies Act to allow for a banking code of conduct to be developed and issued. This will allow for conduct issues to be taken into account in monitoring and enforcing compliance with regulatory requirements. The Bermuda Monetary Authority has completed the necessary steps to finalise the codes and will continue its work to progress the rules on banking fees.
All of this work highlights the priority the Government gives to the protection of consumers, to reducing the cost of financial services to the customer and to the promotion and support of Bermudians in achieving their goal of home ownership.
In the 2021 throne speech, in addition to conduct measures for banks that I just mentioned, the speech pledged that the Government “look to protect consumers by reducing the fees charged by service providers to residents with private pensions”.
By way of update, the Pension Commission has undertaken a review of fee charges and fee structures in Bermuda by third-party pension plan administrators in their financial institution pension plans established and operated under the National Pension Scheme. The Commission has had initial discussions with members of its Advisory Committee on the findings of the review.
The Advisory Committee is made up of representatives from plan administrators, unions, employers, the international business sector, and legal and accounting firms.
It is recognized that pension plan administrators have, over the years since the introduction of the National Pension Scheme in 2000, voluntarily undertaken to reduce fees incurred by pension plans and their members. However, in comparison to international standards and the significant impact fees have on the long-term value of pension benefits, the Government recognizes that additional reductions in fees should be advanced.
Further discussions will be held with the Commission’s Advisory Committee in order to make recommendations to the Commission, which will in turn, provide advice to the Ministry of Finance on opportunities and specific approaches to make further cost savings for plan members and their beneficiaries. It is anticipated that the Commission will provide its advice and recommendations in early 2023.
The government has committed to implementing a prudent and well-considered fiscal and economic strategy. The work done in this area has been positively assessed by international rating agencies, investors and other independent experts. This strategy includes initiatives to increase revenue while appropriately controlling expenditures, with a view to ensure that we are also appropriately managing the country’s debt. This well-developed strategy is being applied to the Government’s oversight of its various quangos.
There is now an even greater focus on ensuring that there is effective governance of these entities, carried out by persons with the appropriate skills and expertise to fulfil the responsibilities. and that compensation levels are consistent with the nature and scope of the work of the quango.
The Ministry of Finance has worked with quangos to achieve better financial accountability and ensure that these entities are operating in as cost-effective a manner as possible. Definitive steps have already been taken to ensure that these entities are providing good value for the money that has been entrusted to them and have the appropriate level of oversight.
Participation in Board discussions and review of annual work plans/budgets, as well as assessment of structures, is now being undertaken to an even greater level of detail than before, and the benefits of such actions are already evident. Reductions in financing costs and other overheads in various quangos have already been experienced.
One such example is the decision to merge Wedco and BLDC, and as mentioned in the Throne Speech, which was delivered on Friday, the appropriate legislation to effect this merger will be presented to Parliament in this session. This was the result of significant analysis and assessment, and similar work is being done in relation to other quangos to determine how and to what extent consolidation can improve effectiveness, create further efficiencies and provide better value for the taxpayers of Bermuda.
The government has been working to address a long-standing problem. Namely the significant unfunded liabilities in Bermuda’s two main pension Funds, the Contributory Pension Fund (CPF) and the Public Sector Superannuation Fund (PSSF).
Using the services of an independent firm with considerable expertise in this area, as well as our actuarial consultants for the funds, options to increase the contributions and/or more effectively manage the benefits are under review and discussions to ensure the long-term sustainability of the Funds have been held over the past two years.
In addition, steps are being taken to progress a critical aspect of this reform which will reflect this Government’s commitment to a fairer, more equitable society and bring Bermuda’s social insurance system in line with other countries around the world. In relation to social insurance contributions, it is intended that contributions will be changed from the current fixed rate for all persons, regardless of income, to one that mirrors other countries in the world where social insurance contributions are paid as a percentage of earnings.
The effect of this change would be to increase the take-home pay of low-wage earners while having high-wage earners pay more into the fund. Changes resulting from this work will be revenue accretive to the CPF, which will help to address the underfunded nature of the pension plans. It is anticipated that the relevant legislative amendments to address this issue and to address the problem of underfunding these pension funds will be enacted in this legislative session.
As highlighted already, this Government recognises the importance of ensuring effectiveness and efficiency as part of its fiscal and economic strategy. However, it is realised that further streamlining is necessary to enhance Bermuda’s competitiveness and promote greater efficiency under the Companies Act.
As licensing and regulatory requirements in other areas have been put in place or strengthened, there has been limited evaluation of related corporate approvals under the Companies Act to determine if they are still relevant or required. A detailed review of the Companies Act and the permissions required by the Minister of Finance under the Act has been completed, specifically the need for continued Ministerial approval of proposed actions and transactions.
By way of example, approval from the Minister of Finance is required to approve the establishment of a range of businesses, including those in the health field, legal field, and accounting field; all of these are areas where there are additional licensing requirements in place.
Streamlining the approval process in a number of areas is expected to be a very positive step for Bermuda, facilitating greater ministerial focus on policy and strategy, potentially reducing the cost of doing business, creating savings for the Government and increasing the attractiveness of the jurisdiction as a place to do business.
Another example; if companies wish to sub-lease their property or lease their property, they must go to a lawyer and apply for permission to do so to the Minister of Finance in order to do these leases. These are things that are rather antiquated in a 40-year-old Act, which will be updated because that is not the way that we want to do business efficiently in Bermuda.
If we are going to focus on reducing the cost of business to local companies and also to international companies, these are the streamlining changes that we can make happen inside of the Companies Act.
The ongoing actions to address the problems resulting from the structure and inadequate resources put in place to support the guarantee given to procure and develop Morgan’s Point have been extensive. The taxpayers of this country, to date, have had to invest considerable resources (human and financial) and over $210 million in funding to date in this project. Due to the failure of this project and the calling of this guarantee.
Approvals have been given by Cabinet for the establishment of a new company, which will be modelled after the Bermuda Land Development Company to progress a plan to return as much value as possible to the Government of Bermuda while providing appropriate benefits to the people of Bermuda. And the most important benefit is getting as much of the funds expended back.
Legislation to progress the establishment of this company will be progressed as a matter of priority in this session. As the Throne Speech mentioned, the MOrgan’s Point Act 2014 will be officially repealed.
The government has already demonstrated its commitment to providing support and assistance to the people of Bermuda to mitigate the impact of rising global inflation. The measures outlined previously and passed in the last session regarding duty reduction for essential goods have been brought into force. The Throne Speech mentioned that the monitoring process under the Cost of Living Commission will be brought forward by the Attorney General & Minister of Legislative Affairs and advanced.
But there was another step promised in September that the Ministry of Finance will deliver in this legislative session. That was a promised review of the Sugar Tax. The Government is reviewing the application of the sugar tax with a view to reducing the goods that are subject to the sugar tax.
In our discussions with importers and retailers, there was a discussion about the wide range of products that the sugar tax is now applicable to, and the Ministry of Finance is working with the Ministry of Health to narrow the application of the Sugar Tax to provide additional relief, while not going against the main purpose of the Sugar Tax, to reduce the consumption of sugary items to enable long-term benefits for healthcare as we know we have severe issues of chronic disease in Bermuda, specifically those of diabetes.
Those are the items mentioned on behalf of the Ministry of Finance during the Throne Speech. I will now hand it over to the Minister of Education to speak to the Education matters that were contained in the Throne Speech. And I am very pleased that he will be discussing the promises that the Government has laid out and the promises that the Government is going to deliver. Specifically on the issue of advancing education reform, advancing the Education Authority, and advancing Parish Primary Schools.
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