Today Premier David Burt gave remarks in a post-Budget Press Conference.
POST 2024-25 BUDGET PRESS CONFERENCE
Remarks
The Hon. E. David Burt, JP, MP Premier & Minister of Finance February 19, 2024
Last Friday, I had the honour of delivering the 2024/25 Budget Statement on behalf of the Government to the House of Assembly and the people of Bermuda.
As its title signifies, this budget is about ‘Investing in Our People, and In Our Future’. We can do that thanks to the collective sacrifices of the people and businesses of our island, which are now beginning to reap benefits and helping to provide a foundation for us to build a more prosperous future.
I was pleased to announce on Friday that we expect to reach a significant milestone for our island and deliver a balanced budget this year for the first time since 2003. In simple terms, this means that the government will not need to borrow any more money and can focus its efforts and resources on continuing to reduce Bermuda’s debt and investing in initiatives that improve the lives of Bermudians.
This projection and our ability to do this without new taxes highlight this government's commitment to fiscal responsibility, sound debt management, the preservation and growth of investor confidence, and improved economic activity while allowing workers to keep more of their hard-earned money in their pockets.
Most importantly for residents and businesses, the government will achieve a balanced budget without introducing new taxes. This is a part of our ongoing effort to make living and doing business in Bermuda more accessible and affordable. This follows from last year’s budget pledge that saw no business pay more taxes and 86% of workers and businesses seeing their tax bill reduced.
These measures have allowed the average family in Bermuda to see $10,000 more in their pockets rather than spent on taxes to the Government. And some families see savings as high as $18,000 since this Government took office, when combined as a result of tax cuts over the last six years. This again means
$18,000 more in the pockets of our hard-working Bermudians who are making $48,000 a year to spend on their necessities rather than taxes.
This Government continues to take a people-centred approach to all that we do. We recognise that before we took office, the people of Bermuda had to contend with years of austerity, increasing debt, and underinvestment in education, infrastructure, and social programmes.
We also recognise that events such as wars, supply chain issues, and 40-year high global inflation have increased the cost of living and, therefore, the burden on many families. That is why this Government’s approach has and will remain focused on reducing costs where we can, as we have before.
Over the last few years, the government has taken measures such as eliminating duty on staple goods, reducing the sugar tax, freezing fuel prices, reducing vehicle licensing fees and reducing the tax burden for workers and businesses. These actions have helped to reduce the rate of inflation here in Bermuda, and we will continue to do our part to reduce the cost of living.
In this year’s budget, we have committed a $30 million allocation to prevent health insurance bills from increasing by freezing the Standard Premium Rate for the third year in a row, saving all policy-holders from an increase of $45 a month, which would have equated to an additional $540 a year.
If we did not take this action, health insurance premiums for every policyholder in Bermuda would have increased this year, and therefore, costs would have increased for individuals and businesses.
This Government has continually shown our commitment to reducing the financial burden for Bermudians where we can, and these $540 savings are a real benefit.
We will also continue to invest in initiatives vital to our community. We have committed an additional $10 million to affordable housing through the Bermuda Housing Corporation, which will help accelerate our efforts to increase the housing stock. This further investment is in addition to the $15 million already committed, which has resulted in 67 more affordable units being brought online.
The Government has earmarked more funds for education, including new IT equipment for students and education reform projects, infrastructure upgrades for the hospital, and enhancements to the Government’s IT infrastructure to enable better services for the public.
It is a fact that our Government has had significant underinvestment in Capital since 2010.
In the Budget statement, I highlighted our need to target the recommended benchmark of 2% of GDP for capital investment to ensure that our infrastructure does not reach this state again for future generations. This again highlights the importance of sound financial policy, prudent management, and investment, which this Government will continue to exemplify.
Looking at last year’s budget, the deficit is expected to be $28 million, $42 million (60%) below the original estimate of $70.0 million and a $38.2 million reduction compared to the previous fiscal year.
This is on the back of stronger-than-expected revenue and strong budget control by the Government.
This current year’s deficit is on target to be $44 million; however, given previous years where spending has been kept at bay, it is likely that figure will come in lower.
Looking forward to next year’s budget, which I presented on Friday, Government Revenue is expected to reach $1.23 billion, 6.6% or $76.8 million above the original estimates for this current fiscal year.
Most of this increase comes from projected growth and the revision of the new hire relief making up the balance.
Current Account Expenditure is forecasted at $992 million, an increase of $19.4 million above the original estimates for this fiscal year, which is attributed to union pay agreements, which totalled $20 million additional with pay, benefits and overheads.
Interest expense will fall next year due to our repayment of $50 million of long-term debt, reducing the interest bill by $2.4 million.
Capital expenditure for Fiscal 2024/25 is forecasted to be $112.3 million, $16.3 million, or 17% more than the current year’s original estimate. This level of capital expenditure will be the largest budgeted investment in capital since 2010. We are doubling our investment in road works to $5 million and investing in a new plant and equipment to ensure we speed the pace of roadworks.
We hear and acknowledge the rightful frustration of the community with the state of our roads. This investment is a sign of our commitment to bring our roads back to a state that the people of Bermuda expect.
We have also allocated additional capital funds this year to procure a new asphalt plant and related equipment, as well as training and development for highway personnel to ensure more frequent, efficient, and cost-effective road works.
Our economic performance continues to show positive trends, especially with growth in international business. 2023 saw 569 new company incorporations for the first three quarters and a 4.6% increase in jobs, with 215 new jobs being filled in international business. This sector now provides 4,909 jobs, the highest number of jobs in international business ever recorded. This surpasses the highest number previously recorded in 2008 before the global financial crisis and the Great Recession.
Since we came to office in 2017, there are 506 more Bermudians working in International business, which is more than ever before.
Looking at the broader economy, Real GDP Growth for 2022 was 6.4%, easily beating the projections of 3%, demonstrating that our recovery is broad-based. Given the continued strong numbers seen in 2023, we are projecting 4% real GDP Growth.
We can look forward to strong construction growth in the upcoming year with the Brookfield Building on Front Street, which we can see the demolition already occurring with that project expected to add 200 jobs to our economy and the Morgan’s Point development which was spoken about in the budget statement, with the first phase preparing to get underway.
And also, the start of the Fairmont Southampton project is getting underway, with a projection of 700 jobs during the construction phase, and once completed, it will support and improve our tourism sector, which is already seeing a resurgence.
In 2023, tourism showed a significant recovery, with both leisure air and cruise arrivals seeing substantial increases from the previous year.
Visitor spending rose sharply, with air and cruise tourists spending more than in 2022, and cruise visitor numbers and expenditures surpassed amounts spent before the pandemic.
While these numbers are essential, they only mean something if Bermudians feel the improvement.
I was pleased to report that this uptick in overall tourism activity has also resulted in the sector's second consecutive year of job growth, which added 339 jobs, bringing the total number of jobs to 3,636.
This budget invests in our people to ensure they can achieve success.
It is a budget that does not increase the tax burden on business - and meets the Fiscal Responsibility Panel’s target of delivering a $50 million budget surplus by Fiscal Year 26/27; most importantly, the
Government has projected this outcome without the benefit of additional revenues which may accrue to the Government from the Global Minimum Tax.
The Government will also be progressing with our work on pension reform and tax reform, working alongside the Tax Reform Commission, and any measures that we intend to progress will be open to consultation, as has always been the case with this Government.
As we continue to manage the public purse prudently, we also remain focused on growing and diversifying our economy and enhancing Bermuda’s value proposition.
This Government firmly believes that a thriving business environment is critical to the success of our economy, and that is why we will continue to execute the strategic priorities of our Economic
Development Strategy and improve conditions for businesses to set up, grow, and operate successfully.
Our work thus far has already led to success: many global companies attracted to our shores, 49 Bermudians on the path to homeownership because of the Government’s Mortgage Guarantee Programme, $440 million injected into our economy through the Economic Investment Certificate, new affordable housing units, and continued support for small and medium-sized businesses through the Bermuda Economic Development Corporation.
We are not taking a victory lap; we know that not every person or business in Bermuda feels the benefits of this work right now and still faces financial hardship. We recognise that there is still much work to be done, and this Government will continue to do the necessary work so that our island and people can return to stability and prosperity.
It is no doubt that this budget is a milestone. With the delivery of a balanced budget, meaning that the Government is no longer borrowing money, that means in future years, there will be more space for investment in our infrastructure, investment in our people, investment in vital services, and lower interest rates for government debt.
Again, I thank the Ministry of Finance team, led by Acting Financial Secretary Ms Cheryl Lister.
I send special thanks to the Budget Office and Budget Director, Ms Tina Tucker, for their outstanding work putting this year’s Budget together.
I thank MP Jache Adams for his hard work and support, as well as the Department of Communications and all public officers who contributed to this collective work.
Thank you.
To view the Premier’s press briefing, you can visit this link: Premier's Post Budget Press Conference - Feb. 19.