The study group, known as the SAGE Commission (Spending and Government Efficiency) was spearheaded by Brian Duperreault, a no-nonsense businessman who serves as CEO of insurance giant Marsh & McLennan Companies.
What Mr. Duperreault and his fellow commission members discovered has Bermuda reeling and the business community stunned. A summary of the report concludes:
“Bermuda is laboring under a cost of Government that continues to increase an already substantial debt and threatens to desabilise the financial foundation of the country. Its population is declining. Its two principal industries, tourism and international business, are facing increasing competitiveness. Where once its citizens had a choice of jobs, rampant unemployment hovers like a spectre over a country in profound transition.”
Since 2005 until today, Bermuda’s government has spent more than it has taken in. Current debt is approaching $2 billion – with no plan in place to reduce it.
Social experiments, including an ill-conceived and subsequently abandoned “rollover plan” (similar to Cayman’s) have proved disastrous. The murder rate, on a per capita basis, is more than double that of the U.S. and more than 10 times higher than the U.K.’s. Gang violence is endemic and racial tensions divide the population.
The report concludes that “the Bermuda Government, including the Legislature, is too big for the size of the country it serves. With too many ministries and departments, the organization has become bloated. As a result, there is evidence of unfocused, duplicated and diluted decision-making.”
The civil service comes in for particularly harsh criticism, the study stating that a “cumbersome lethargic culture is rife,” and concludes: “Inefficient use of the resources entrusted to the Government by the taxpayer should no longer be tolerated.”
Not surprisingly, the authors of the report recommend drastic cuts in government spending – $310 million (of an annual $900 million budget) over the next four years.
The report goes on to recommend the establishment of a “Privatisation & Outsourcing Authority” as an independent body that would consider privatizing airport operations, civil aviation, highways management, maritime administration, public lands and buildings, waste management and water and sewage management. In addition, the commission advocates further study into outsourcing conservation services, the corrections department, the Government Employee Health Insurance and the health insurance department, human resources, marine and ports, parks, public lands and buildings, public transportation, transport control, youth, sport and recreation, and vehicle and equipment operations and maintenance.
Regarding government employee pensions, Bermuda has underfunded its commitments by nearly $1 billion. “The stark reality,” states the report, “is that promises made regarding pensions will have to be broken.”
Commission investigators also found widespread abuse of employee sick leave among government workers as well as the private use of government vehicles.
In the aggregate, the SAGE Commission’s findings add up to an indictment of the Bermudian government’s running amok for far too many years. Its pattern of overspending and underperforming have caught up with it, and the bills are becoming due.
Certainly Cayman is not Bermuda, but the findings of the SAGE Commission sound far too familiar for our comfort. It was Bermuda’s minister of finance who commissioned the study in concert with the business community, and Cayman might be well advised to initiate a similar exercise in our own country.