The following statement was released by Opposition Leader Cole Simons on Wednesday, June 8, 2022…
To be brutally honest – there are two Bermuda’s.
There are those who work in the International Business sector which is really on fire. These employers include international Insurance companies, international reinsurance companies, global life insurance companies, local and international banking and financing sector, the ILS sector and other global business which operate internationally from Bermuda.
The remaining employers are primarily fed by Bermuda’s hospitality industry, which has been dramatically challenged due to the COVID-19 travel restrictions, and more recently, the war in Ukraine.
With Russia and Ukraine being leaders in the global supply of wheat, sunflower oil, and oil and gas, our supply chains have been dramatically compromised. With this supply disruption and unabated demand for goods, comes inflation, and the cost-of-living problems that we face in Bermuda and around the world.
According to the governor of the Bank of England: “The rising cost of living and squeeze on living standards will not ease until next year, 2023.” He said that many people in the UK face a difficult period ahead. The same comments apply to the people of Bermuda and come after the rise in interest rates. The expected price increases are climbing faster than any pay increases.
“In the United States, The Brookings Institute and the US Labor Statistics Department confirm that their rate of inflation for the year ending October 31, 2021, came in at 6.2 per cent. Today it hovers around 7-7.5%.
The UK’s, ’The Independent’ newspaper indicated that their inflation rate for 2021 was at its highest in a decade at 7 percent.
The Eurozone state that their inflation rate rose to 4.1 per cent in October, hitting a new 13-year high according to the Euro Department of Statistics and CNB.
As Bermuda is dependent of imported goods, we can expect that our inflation figure for the year will be between 7 to 10%, after shipping and local profit margins are factored in.
With the above as a precursor, the One Bermuda Alliance takes the view that inflation and the continued rise in the cost of living, is an economical silent killer for the working class, the poor, retirees, and seniors who are on fixed income programs.
People on the lower end of the economic spectrum are economically bearing the brunt of this silent killer as their purchasing power is tied inversely to the rate of inflation i.e., for every 1% of increase in the rate of inflation and the cost of living, there is a correlated decrease in the purchasing power for those same individuals.
As noted, prior to the 2020 Pandemic and the outbreak of the Ukrainian war, Bermuda’s Cost of Living was the highest in the world and is largely attributed to the imported inflationary pressures and the spiraling domestic economic contributors which include Bermuda’s Health Care Costs, the cost of financing and debt, construction, and the current housing costs, be it in the rental markets or property ownership markets.
It should be further noted that the imported inflation is attributed to:
- Groceries and produce, which at minimum, have increased by approximately 16-20 percent in the past five years
- Increased oil prices and fuel prices
- Increased energy prices
- Increased costs for prescriptions and medical supplies.
- The increased cost of clothing; and
- the increased cost of importing vehicles and other modes of transportation
ONE BERMUDA ALLIANCE SOLUTIONS:
Having identified the root cause of inflation and the ever-increasing cost of living, what is the way forward? How do we fix the problem?
- The first obvious answer is to reinvigorate our tourism industry so that it can operate on all pistons. This industry employs most of Bermuda’s working class and working poor, who work in the front and back offices of hotels and guest houses, the retail sector, the restaurant sector, the transportation sector, the landscaping and gardening sector, the construction sector, mom, and pop shops. They are farmers and fishermen; and they are taxi drivers and many others who represent other small business sectors.
- Expand the workforce-incentivize and allow international job creators to come to Bermuda and bring jobs with them or create jobs on the Island after they arrive.
- Continue with the Economic Investment Residential Certificates for high-net-worth individuals who will invest over $2.5 million dollars in housing or our economy which will result in jobs for contract workers or regular staff.
- Utilize the training and retraining skills which are available at the Bermuda College or the National Training Board, or at other local or overseas institutions,
- Help the retail industry by collecting custom and import duties at the points of sale, not upfront when the goods are imported into the Island before they are sold.
- Review ad Valorem based taxes as the inflated costs of imported goods on which the taxes are based continue to increase, with the bye product being an automatic increase in government tax revenues. These also include taxes based on the value of a transaction, property, or real estate.
- Provide more low-cost housing to address the housing component of the higher cost of living in Bermuda.
- Challenge the cost of construction- shop around.
- Expand the mortgage market. Revisit the availability of private mortgages with appropriate protections between the mortgagor and mortgagee,
- Review and reassess the taxes applied to energy, fuel at the pumps, and imported vehicles.
- Review and reassess the taxes applied to materials and equipment imported for the construction industry.