Bob Richards, Peter Everson, George Hutchings, and Craig Simmons answered audience questions at the Budget Breakfast on Monday. *Photo by Don Burgess
Bob Richards, Peter Everson, George Hutchings, and Craig Simmons answered audience questions at the Budget Breakfast on Monday. *Photo by Don Burgess


When can we expect the economy to grow again?

Bob Richards

“We’re not very sanguine about the prospects for 2013. We are hoping for a return to growth by the next fiscal year. I’m not sure what the probabilities of that are, but we will have to reevaluate as we go through this year what the effect of the measures we have taken during the year have on the economy.

“Armchair quarterbacks can sit back and say ‘We look for growth in this, that and that.’ In reality, it’s not like that.

“We’ve taken action and we’re going to take some more actions. We have to monitor what effect those actions actually have in the real world, then reevaluate our prospects on that.

“I wouldn’t say I’ve written this year off, but things are going to be difficult for this year because what we’ve done so far has to take time to kick in.

“Next year I’m hopeful things will be better, but we’ll see as we go along.”

Peter Everson

“Currently the economy is sustained by building the new hospital. It’s foreign cash, but the bad news is we’ll pay for each month through increased health premiums. The Greens bought this hotel (Fairmont Hamilton Princess) and have put some money into it, but we need foreign capital all over the country.

“It is great our friends Link Bermuda here have invested capital into this country, but hotels are the obvious one.

“Until hotel investors overseas are ready, willing and able to come to Bermuda… the prerequisite is the current hotels need to make a profit. So working with the Tourism Authority will be a prerequisite.”

George Hutchings

“I am going to point out the obvious but I think growth has started in the real estate section.”

He said the change in taxes on overseas purchases has stimulated increased demand.

“As a result, that will start the process. That trickle down effect … The fact is once you start purchasing real estate, especially foreign purchasers, they’ll make changes, then jobs are created in the construction industry.

So that begats another level of economic activity.

Craig Simmons

“One of indicators I am using, which is a fairly inexpensive indicator accessible to all, is the Retail Sales Index. I am looking for four consecutive months of real growth in the Retail Sales Index and that will be a good sign, that it’s over. But we’re four months away from that.”


How can we diversify the economy?

Are there any initiatives to further diversify the economy?

Bob Richards

“There’s a lot of talk about diversification and it is one of the issues that the rating agencies keep bringing up. When they talk about Bermuda they say it’s a highly undiversified economy. The trick is to diversify into something in which you are competitive. It’s no use saying we want to diversify Bermuda so we start building cars at Southside. It’s just not going to be competitive.

“We have to try and broaden the industries we already have. In international business, for instance, we’re really big in reinsurance and insurance, we’re not as big in the asset management side, which is something dear to my heart. So if we increase the asset management component of international business offerings. That would be a kind of diversification.

“There is a kind of a melding of international business and asset management. That is also a type of diversification. We can diversify based on the type of industries that we have. Whether we can introduce something totally unrelated and be still be competitive in it is a big question, I don’t know the answer to that.

“We have been trying to diversify and spread out the financial services offerings as a way to diversify away from the big dog on the block, which is reinsurance. Reinsurance has been very good to Bermuda.

George Hutchings

“We have endeavoured to participate in activities that will help diversify the international business sector.

“We understand that’s one of the elements that we need to expand the economy within. 

“There is an effort with the BEDC, we from an ABIC point of view, strongly support that because we need a concerted and unified position of how we market this island will lead to a diversification, not only in terms revenue streams and where they come from, but all the type of businesses that may end up domiciling here.”


Is tourism getting too much money?

Should international business be given more money from Government?  It contributes a vast amount more than the tourism industry but receives a much smaller amount.

Bob Richards

“The premise of the correction is correct as Bermuda relies on international business.

“We have allocated more resources to the promotion of Bermuda through international business.

“But let me say this, international business doesn’t provide for employment opportunities of the same nature as the rest of the economy.

“Somebody who works for construction — you just can’t take that person and have them work for George (Hutchings, Association of Bermuda International Companies chairman), it’s just not going to work.

“Despite the fact that there are other sectors that account for a smaller section of the economy, we really have to promote some of those smaller sectors because of the nature of the jobs that they produce there and the qualifications of our people.

“That’s one of the reason tourism is critical to our moving forward.

“Just look at the numbers, tourism itself on the GDP table is only worth five to eight per cent of GDP, which is astonishingly small. But if we didn’t have that tourism component then a lot of the jobs that relate directly and indirectly to tourism would disappear.

“I don’t know what the guy who is a plumber, going to be able to do for George. He certainly can’t be an actuary so we have to have a balanced approach to promotion of sectors in Bermuda because of the nature of the jobs.”

George Hutchings

He supports Mr Richards’ view wholeheartedly.

“At the end of the day, tourism is the infrastructure that allows international business to operate in Bermuda.

“Without a healthy tourism industry, without the hotels, without the restaurants, without the airlift, this location would not work for international business.

“There needs to be a vibrant tourism industry for international business to continue to operate.”


How will debt ceiling affect our credit rating?

Will Bermuda’s credit rating be affected by the Budget and the raising of the debt ceiling?

Bob Richards

“I hope not as far as raising the debt ceiling is concerned. Prior to becoming the economy minister, I had read the detailed reports of some of the credit rating agencies.

“We have addressed some of the issues that the rating agencies have with Bermuda. We will be liaising very closely with our colleagues in the rating agencies to make sure Bermuda is viewed in the best possible frame going forward. There is no telling what the rating agencies will do, but we think we’re on the right track.”

George Hutchings

“The ratings agencies are an enigma. Whenever you walk into them you do not know what they are going to say, what they are going to do. They change their perspective on a year-to-year basis. They don’t give you an operating model necessarily to stay within.

“They have to be honestly dealt with and they are a necessary evil, but they aren’t consistent on a year-to-year basis.”