Mr Duperreault said there has been a profound demographic shift in our population. *File photo
Mr Duperreault said there has been a profound demographic shift in our population. *File photo

A pensions crisis combined with rocketing health care costs could sink Bermuda, the chairman of a new committee set up to cut the cost of government has warned.

Brian Duperreault, chairman of the SAGE Commission, said Bermuda “was not alone” in struggling to meet its pensions commitments.

He added that a recent article in the UK magazine The Economist reported on how the US was facing a pensions crisis as the retired population grows and the working population shrinks.

Mr Duperreault said: “It lays out how the States got into the mess they’re in with pensions, which is pretty much the same way we did.

“It notes that even though California Governor Jerry Brown is ‘basking in glory’ because his state is reporting a $1.2 billion surplus, the shortfall in funding state pensions will sink California if changes aren’t made to the way these benefits are structured and managed.

“We’re going to have to do the same type of thing in Bermuda. We can fix all the other problems we have but if we don’t fix pensions the issue will overwhelm us at some point and drain our budget.”

Mr Duperrreault added that he was pleased with the work of the commission on pensions – but said said health care costs continued to be a concern.

He said: “There’s been a profound demographic shift in our population that’s going to haunt us in years to come. We have an ageing, less healthy population and we’re going to have fewer working adults who are taxed but don’t spend.

“This is a complicated problem. As we prepare our interim report, which we’ll be submitting in mid-July, we’re thinking that we might make a separate recommendation on how a review of health care might be handled.”

Mr Duperrault was speaking to Hamilton Rotary Club on Tuesday, where he also outlined how SAGE would deal with the massive cost of government on the island – and change an out-of-touch and inefficient Civil Service.

He said: “As we get further and further into our review, it becomes more and more apparent that one of the biggest challenges we have to face is the culture of the Bermuda Civil Service.

“It’s been a surprise to private sector members of the Commission to learn of the number of reports produced by Civil Servants that outline plans for progressive change and the number of people who have worked hard to try to implement the recommendations in those reports.

“But this is not a culture that supports, encourages and rewards creativity and innovation. This is not a culture that promotes brave leadership.

“What we have is a lumbering organization with cumbersome bureaucracy, a vestige of a colonial mindset that can’t adapt to the 21st century because it hasn’t been given the tools to do so.”

Mr Duperreault said that in most organisations, hard work is rewarded, while poor performance is either addressed or the individual leaves.

But he added: “Staff who enter the Civil Service with a zeal to make a difference are worn down by a system that thwarts progress. Their ideas are ignored. If they’re not ignored, they drift for years before they’re implemented.

“Staff who feel they can sit back and coast in their jobs aren’t called to account. Staff who violate public service regulations might face a mild slap on the wrist. The chances of them being dismissed are slint to none.”

And he warned that the Civil Service would have change its culture so Bermuda can create “the government Bermuda needs and can afford.”

But he stressed: “I don’t want to give the impression that there aren’t good people working in Government. There are many of them.

“But the strong, passionate and innovative workers within Government are being hampered by a system that suppresses the development of positive initiatives.”