The Progressive Labour Party election platform said it would “grant additional powers to the existing Price Control Commission to examine ways to reduce the cost of living in Bermuda”.

On Friday, hidden among controversial Bills such as the Domestic Partnership Act and Casino Gaming Amendment Act, the Price Commission Amendment Act quietly passed in the House of Assembly, which:

• Renames the Price Control Commission, created in 1974, the Cost of Living Commission

• Increases fines for failing to comply with commission notices

The said amendment Act does nothing more than that. Increasing fines and changing the name certainly does not give the commission additional powers to examine ways to reduce the cost of living.

This lack of substantive change has not however stopped the Premier from espousing the virtues of price controls in his frequent verbal repertoire.

So what exactly are price controls?

Investopedia defines it as follows: “Price controls are government-mandated legal minimum or maximum prices set for specified goods, usually implemented as a means of direct economic intervention to manage the affordability of certain goods. Governments most commonly implement price controls on staples, essential items such as food or energy products.”

In Bermuda, price control works like this:

• A commission of three to four people, appointed by the Minister of Finance, reviews a list of businesses and goods and services that are subject to the Act

• If the undertaking is listed, that undertaking cannot increase a price or charge for a commodity also listed in the Act unless approved by the commission

• The Minister of Finance has sole discretion to add any business, and commodity provided by that business, to be controlled by the Act if he believes that the business in question — or related or group of businesses — are in substantial control of any goods or services, or if there are anti-competitive behaviours existing between various businesses in respect of certain goods and services

The saving grace is that any order must brought to Parliament at least for debate before it comes into force. This process has been in place for more than 40 years and is nothing new. Still, the commission’s powers are very broad, but the minister’s powers are even more so.

Electricity and electronic communication services are already under the control of the Regulatory Authority pursuant to the Regulatory Authority Act 2011, so what exactly is the Premier on about when he talks about reducing the cost of living in Bermuda?

In the last week of November, Burt discussed the problem of high food prices with Bermudians in London and he is reported to have quoted a conversation with the head of “one of the big supermarkets”, who claimed she “could lower prices by 15 to 20 per cent the next day if they cut out the middleman”.

So under the existing framework, which is not being amended in terms of process, Burt might be considering adding wholesale food companies to the list governed by the commission as well as certain food products — despite his assertions in Parliament that there is no intent to engage in price fixing. And this is where the fun begins. How do you pick and choose what products and companies should be subject to price controls?

Presumably, the minister would have to examine what is a standard basket of goods. This is considered when the consumer price index is calculated by the Department of Statistics and is no longer an accurate representation of the average Bermuda family’s shopping habits.

I know first-hand how difficult this is, as I negotiated with leading grocery stores in 2013 and 2014 to reduce groceries across the board by 10 per cent every Wednesday, with Lindo’s, MarketPlace and The Supermart taking part. It ended up being across the board since it was far too complicated to pick certain items — and with many staples, a 10 per cent permanent reduction would wipe out any profits whatsoever, margins that are often at about 3 per cent.

Second, the minister would presumably need to examine which entities actually control the supply of the basket of goods of necessities. But what is the necessity? Kellogg’s Corn Flakes or Shop-Rite Corn Flakes? Are all cereals considered necessities? Cereals, by the way, fluctuate severely because of wheat and grain prices globally, and are rarely raised in price to increase overall profits.

These kinds of issues are just the tip of the iceberg. Are microwave pizzas considered necessities? Oreo cookies v generic brands? Fresh pasta v dried? Organic eggs v non-organic? “Rat” cheese v fresh goat’s milk cheese? Are beer and wine staples?

There is of course some truth that cutting out the middleman can result in lower prices. Some supermarkets in Bermuda can bring in much of their own product directly, owing in part to the larger scale of their operations and as such their prices are lower, while smaller operations don’t and may concentrate on finer products, which will be more expensive. However, wholesale/middleman companies such as Butterfield & Vallis, BGA, Dunkley’s and Viking Foods are Bermudian-owned and employ hundreds upon hundreds of Bermudians and supply most of the island with their goods because of their infrastructure and investment in their respective operations. Is the Premier suggesting these businesses should somehow be interfered with when he says, “People say that might destroy employment opportunities throughout the economy. But you also have to examine the additional spending that might create inside the economy which we can have in other types of places.”

Price controls on food have been introduced in many countries across the world. More often than not, they are introduced in developing countries and more recently and frequently in countries with less than honourable records in economic management and/or democratic free markets. Ultimately, such controls have ended in failure and economists globally will tell you they simply don’t work. In fact, price controls rank among those rare topics where you have as close to a consensus as you can get from economists — among those on the Right and on the Left — about how inefficient or ineffective price controls are.

A Cost of Living Commission sounds good. It makes for good politics and it partially fulfils a PLP campaign promise, but ultimately it will not achieve very much, if anything at all, because it can’t. The economics do not work with such a small population, something the Premier recognises when he said: “One of the best ways to make Bermuda more affordable to live in is, surprisingly, to get more Bermudians living and working in Bermuda.” (I am sincerely in doubt that there are enough Bermudians who are away that want to come back to make a huge difference, which is why we require more immigration, hence “Pathways to Status”.)

Streamlining the Civil Service, having better collective bargaining agreements to increase productivity and decreasing government debt could lower the tax burden on the private sector that pay wages and salaries to Bermudians. Importing costs could be lowered by allowing 40ft containers, allowing duty to be paid after sale as well as bonded warehousing.

Per the Premier, “the more people living and working in Bermuda, the more customers you have but also more ability to spread fixed expenses across a greater number of people”. These things will ultimately lower the cost of living, not artificial price protections and minor amendments to outdated legislation. If there is supposedly no intent to engage in price fixing, then why make an amendment to 40-year-old legislation at all?

• Michael Fahy is a former Minister of Home Affairs, former Minister of Tourism, Transport and Municipalities, and former Junior Minister of Finance under the One Bermuda Alliance government