Legislators and the public service will be asked to “contribute” to help tackle the economic crisis brought on by the Covid-19 pandemic, the Minister of Finance warned.
Curtis Dickinson said the Government would hold talks with the Bermuda Industrial Union and the Bermuda Public Services Union in the next few days over cutbacks to prop up the economy.
He added: “My expectation is that in light of the curtailed or severe reduction in our revenue, that we’re going to require some sort of concessions from public officers.”
Mr Dickinson said that the public sector had “for the duration of the crisis thus far, not seen any diminution or cutbacks in their salaries, whereas a broad swath of the community has”.
He said: “It is not unreasonable, in my view, for us to ask for them to contribute something as well.
“My expectation for Members of Parliament, members of the Senate, ministers — they will follow suit with what the public officers do and make a contribution as well.”
Mr Dickinson was speaking in a Facebook conversation on the island’s economic outlook after the devastation wreaked by the coronavirus, where he also took questions from the public.
David Burt, the Premier, said last Friday that meetings with union leaders were expected to take place today.
Mr Dickinson said he was unable to give an exact figure for the loss of tax income over the four-week shelter-in-place period, which ended last weekend.
He added: “The preliminary estimates that I’m getting from my team show a reduction in tax revenues in the order of $150 to $200 million.”
Mr Dickinson said that he expected to borrow more money — but that he had planned to do that in any case.
He added that a $150 million loan, arranged earlier in the coronavirus crisis, but has not yet been used, would be called on to cover the Government’s unemployment benefits programme, as well as deficits.
Mr Dickinson said: “We will look at potentially borrowing more money as a way to promote stimulus in the economy.
“The exact amount of that money I have not decided yet.
“I am sensitive to the existing debt burden the country currently has and I have to be mindful that any money that I borrow has to be paid back.”
He added that a plan to allow people to access private pension pots was under consideration and that the proposal will be discussed in Cabinet tomorrow.
Mr Dickinson said there were two ideas on the table.
Mr Dickinson explained: “The first one is to allow for a hardship withdrawal relating to Covid-19 of $10,000.
“The second is to allow persons to withdraw, through a loan to themselves, up to 25 per cent of their pension balance that they can use it either to buy a home or to invest in a business.”
He was asked if there were plans for an extension to the 12-week unemployment benefits scheme. Mr Dickinson explained that the three-month time frame was used because people can apply for financial assistance after 12 weeks out of work.
Mr Dickinson said: “We have made about $15 million in payments in the form of 16,000 payments.”
He added: “We understand that there are still a number of folks who are still in the queue to get money and we’re working very hard to get those persons processed.
“I will tell you that in making payments, getting payments to people relatively quickly — a couple of observations. One, the government infrastructure was not built for quick turnaround. Two, as a result of that, I had to break a whole host of rules in order to get payments done for people.
“We are now working to, kind of, fix the things that I broke.
“I will tell you that some of the folks who work on my team were initially very resistant to the outside-the-box thinking, but I do believe that at the end of the day, rather than me worrying about the political heat that I will take for breaking the rules, it was more important to me to ensure that people who were vulnerable, who were out of work, who didn’t have money to sustain themselves, got their payments so that they could at least provide for their families.”
Mr Dickinson said that February’s Budget for the financial year would have to be rewritten because of the “profound” impact of the crisis.
He added: “We are going to do a recasting of the Budget for no other reason than to ensure that the general public ... understands where Government’s priorities are and how we plan to spend the money.
“Also, it’s important that we show people what the revenue’s going to look like.”
Mr Dickinson said that shelter-in-place measures “put the brakes on” the economy so that it “ground ... to a very slow crawl”.
He added that he was hopeful that “we can ... get back on our feet” as Bermuda entered phase one of a relaxation of the rules.
Mr Dickinson said that ideas under consideration to support sectors like hospitality and retail included payroll tax concessions and land tax relief.
But he added: “The tax receipts are the source of funding the Government, are also the source of repaying its debt and so we have to be very thoughtful about the relief and we’re looking for ideas from everybody.”