FRIDAY, FEBRUARY 1: BEST’s Blueprint on sustainable development aims to outline what it means to be a sustainable community and what it will take to get there.

Over the coming weeks the Bermuda Sun will continue publishing the text of the Blueprint, section by section.

 

In the last instalment, it was suggested that good intentions alone were insufficient when it comes to large-scale developments. This is also true when government undertakes capital projects.

The construction industry, which had been running in high drive for several years largely due to government projects, is rapidly winding down. Smaller companies have closed, workers have been laid off.

Comprehensive, long range planning firmly grounded in sustainability can help smooth out the ebbs and flows of economic change.

Capital expenditure can be defined as spending that creates future benefits, and is incurred when a business or government spends money either to buy or build fixed assets or to add to the value of existing ones.

Bermuda has experienced an increased investment in capital projects over the past decade with hundreds of millions of dollars being spent to both build new facilities and upgrade existing ones. 

When carefully planned, managed and executed, such projects have the potential to bring enormous social, economic and even environmental benefits to a community in both the short and longer term.  Given the large scale of many of these projects, measures to minimise any potential negative environmental impacts should undoubtedly be taken. This can be achieved by following the timeline agreed to in the Environmental Charter signed by Bermuda and the UK in 2003 for the conduct of a proper Environmental Impact Assessment (EIA), using the process laid out in the Department of Planning (DOP) Guidance Document (GN106).

Inflation

As cautioned by Pricewaterhouse Coopers (PwC) in the 2005 Budget Release,3 when planning any large-scale publicly-funded project, it is important to be mindful that expenditure on such capital programmes may contribute to and exacerbate existing inflationary pressures through increasing wage scales and increases in the cost of living.

It is arguable that overly high levels of investment in such projects, followed by unanticipated reductions due to budget cuts and related public debt, may actually exacerbate the extent of an economic decline, particularly in the construction sector.

Ideally, and if possible, capital projects should be used to cushion the economy in times of decline, thus providing much-needed employment and investment when economic times are otherwise difficult.  This could also reduce the need to import construction workers during boom periods, with corresponding benefits for carrying capacity and reduced competition between local and foreign construction workers whenever the economy contracts. 

BEST believes that capital projects must be preceded by thorough public and stakeholder consultation, extensive cost-benefit analysis, and an open tendering process.  Furthermore, strict adherence to the proper Environmental Impact Assessment (EIA) process, effective internal control of funds, and clear and enforced accountability are essential before, during and after project completion.

BEST is confident that this combination will produce the greatest economic and social benefit at the lowest environmental cost.  In short, such a combination will ensure that the taxpayer receives the best value for money whenever capital investments are made.

 

• This document was researched and written by members of the BEST research team led by: Alaina Cubbon, Stuart Hayward, Frances Marshall and Marlie Powell.

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