MR. SPEAKER, "Government must be responsive to the needs and the dreams of its people.''-- Mary Ellen Withrow "Until the great mass of the people shall be filled with the sense of responsibility for each other's welfare, social justice can never be attained.'' -- Helen Keller SOCIAL TRANSFORMATION Mr. Speaker, this Budget is notable for its lack of programmes to deal with promoting the social transformation of our economy.

Mr. Speaker, Government clearly had hoped that when one read the 1995 6 Budget Statement quickly, it would have had a somewhat sedative effect. After all, it was supposed to be a Budget which purportedly spares Mr. and Ms Bermuda further hardships. However, Mr. Speaker, the reality is that we need a government that has a commitment to social transformation. Budgets should not be just about monetary and fiscal policy, and balancing figures but about social engineering.

Mr. Speaker, it is a fact that we have lost those positive aspects of the old Bermuda -- where there was social stability, where people felt a sense of duty to one another and to society at large, where people cared about their extended families and were close to one another, where there were good neighbours, where there was less crime, more respect for authority and a powerful sense of belonging.

Mr. Speaker, we have seen a number of changes in the country since last year's Budget Day. Changes in the Bermuda economy and in particular changes in our social climate. This includes an historic first step by the UBP Government to introduce the concept of income tax in this year's 1995 6 Budget. Many of these changes stand out: 1. The continued slow recovery in the economy from one of the worst recessionary periods in Bermuda's economic history, has had debilitating effects on many of our citizens.

2. The imminent closure of the US Base lands, the already vacated Canadian Base at Daniel's Head, and the impending closure of Malabar at the Dockyard have all impacted significantly on the country's way of conducting business.

3. A dramatic increase in crime: a rise in domestic violence, the increasing incidence of drug abuse and the use of guns in carrying out assaults and robberies, has so affected us that the Department of Tourism has had to blunt its marketing strategy in so far as it touts Bermuda as a safe destination.

4. The shift in employment opportunities as employers were forced to streamline their operations by restructuring which meant, in some cases, drastic reductions in staffing levels.

Each of the above factors, to some degree has had a qualitative and in some cases a quantitative impact on Mr. and Ms Bermuda.

INCOME TAX Mr. Speaker, in this Budget the UBP Government has finally introduced the concept of income tax to Bermudians and residents of Bermuda. The combination of the hospital levy, and employment tax to create a new "Payroll Tax'', together with the 10% stamp duty to be paid by non-Bermudian residents on any capital gain realised upon the sale of their Bermuda residences sets the stage we believe for the gradual introduction of a whole host of forms of income tax.

Mr. Speaker, in our last Budget Reply, the PLP proposed to study the entire system of taxation in Bermuda with a view to making the system more equitable.

We also stated in our election Platform among our financial policy goals that we would conduct "a review of the entire tax system with a view to making the system more equitable. A Parliamentary Green Paper and a White Paper will follow completion of this review.'' In our view Mr. Speaker, instituting the capital gains tax sends the wrong signals. The Bahamian Government adopted measures which sent the wrong signals and which prompted a flight of foreign capital from those islands.

POLITICAL LEADERSHIP "It's not where you are today that counts, it's where you are headed.'' -- Arthur F. Lenehan The appointment of a foreign Police Commissioner and Deputy Commissioner, the proposed attempt to decide the independence issue by referendum, the Premier's recommendation that we change from a presumption of innocence to a presumption of guilt, the dissension in the UBP Government Party all attest to a UBP Government that has thoroughly lost touch with the people.

One would have thought that given the premium that our international business community place on political stability, the UBP Government would have made an effort to approach the independence issue from a non-partisan parliamentary level, e.g. by means of a Parliamentary Joint Select Committee such as the Progressive Labour Party suggested. Instead there has been this unseemly spectacle of a power struggle with various factions jockeying for control. Mr.

Speaker, we know that the test will come with the referendum debate, when one can determine if the factions have the courage of their convictions.

Stability, both politically and economically is a major concern for the UBP Government right now.

Hence their Budget statement 1995 6, a Budget which the Finance Minister, the Hon. Dr. Saul claims will "spare the little man''. Despite Dr. Saul's much-vaunted claim that the UBP Government is politically stable, it is only too painfully obvious that his view is not always shared by the international business community, or impartial observers in general.

Mr. Speaker, in fact you may recall that with the provisional liquidation of the Bermuda Fire & Marine Insurance, Bermuda was the subject of a blistering attack at the highest international level. A US Congressional Sub-Committee stated on the issue: "This transparent asset-stripping effort was vigorously defended by the Board of Directors of Bermuda Fire & Marine Insurance and the Bermuda Government.'' Highlights of the Sub-Committee's findings were "that foreign countries and their business leaders especially in cozy regulatory environments, cannot be expected to protect the legitimate interests of the American public.'' The Report went on to say: "The Federal government must take action to prevent entry into the US marketplace by companies domiciled in countries that harbour and defend deadbeat insurers.'' BASE LANDS AND INTERNATIONAL AIRPORT Mr. Speaker, Finance Minister, the Hon. Dr. David Saul says that the driving force of this year's 1995 6 Budget is the closure of the bases and the preparation that Bermuda has to make for assuming the control of the operations of the Airport and the management of the land resources of the Base lands. Yet repeated throughout the Budget the UBP Government states it is unsure and diffident of the way it should go forward with regard to the operation, management and control of the Airport and the Base lands. The UBP Government once it knew of the planned base closure needed to make plans for the future. By our parliamentary questions we suggested as much to the UBP Government.

Mr. Speaker, during our review of the Budget Statement we could not help but acknowledge Dr. Saul's cry for help in circumstances he has described as "the complex problem'' of managing the cost of operating the Bermuda International Airport. The United States have estimated these costs to be in excess of $10 million dollars and efforts to finance these costs, the reviews and contracts necessary to ensure that the Bermuda International Airport meets safety and proficiency standards, will truly have an overriding impact on our economy for at least the next 5 to 10 years.

Mr. Speaker, the Progressive Labour Party has maintained continually that the US military presence in Bermuda should have been viewed both from a short-term and long-term perspective in terms of what was in the best interests of Bermuda. Therefore, over the years, while short-sighted UBP governments were satisfied with the Bermuda S relationship that they had inherited -- successive PLP leaders and Parliamentarians have consistently called for a review of the terms in the US K Bases Agreement.

Mr. Speaker, let me outline the background for you. It was a series of PLP Parliamentary questions in 1992 that first alerted Bermudians to the fact that we (Bermuda) should prepare for the day when there would not be a military presence here.

Mr. Speaker, we asked: "Will Government reveal what plans have been made (formulated) for a Bermuda with a reduced level or non-existent foreign military presence?'' Mr. Speaker, the UBP answer was as follows: "There are four non-Bermudian military bases in Bermuda, the two United States facilities, the Canadian Base at Daniel's Head and HMS Malabar in Dockyard. There has been no public suggestion that HMS Malabar might close. Although we have recently received official word from the Canadian Government that it intends to shut its Daniel's Head facility as of December 31, 1993, Bermuda has no information, official or unofficial, which would indicate that the United States Government has decided to close either of its military facilities in Bermuda.'' "... It will be appreciated that without rather more specific information on what is intended, it is not feasible to make detailed plans.'' Mr. Speaker, the UBP Government delayed and lost as much as two years of preparation time. Time lost that should have been utilised drafting a contingency plan of action that placed Bermudian rights and protection up front, and preparing Bermuda and Bermudians for the contracts that the UBP are now belatedly trying to fill with foreign contracts (e.g. Serco and Vancouver Airport Authority) and many more foreign contract workers than would otherwise have been necessary.

Mr. Speaker, when you view Bermuda's current position against this backdrop, the Finance Minister's declaration that, "In 1994 it is necessary to begin to prepare for the heavy costs which the Base closures would impose on Bermuda, and plan for consequential funding requirements,'' comes both late and is short in substance.

Mr. Speaker, in specific reference to the sub-heading "Estimates of Revenue & Expenditure for 1995 6'', the Finance Minister states that air operations at the airport will assume the responsibility inter alia of providing air-traffic control, ground electronic maintenance, meteorology, aeronautical information services and crash, fire and rescue services.

Mr. Speaker, the PLP continues to believe that real employment opportunities for Bermudians are closely linked with immigration, education and training policies. Consequently, there must be a strict adherence to the concept of Bermudianisation as we open up the "new frontier'': the development and redevelopment of the Base lands, which are being transferred back to Bermuda.

Mr. Speaker, the PLP believes that there must be a strict monitoring and accounting of the number of posts and jobs to be filled and the number of these posts that will be initially filled by Bermudians and non-Bermudians. It does not suffice to say that: "The objective is to Bermudianise over the (5 year) life of the contract.'' In the view of the PLP, the contractor must be required to meet and publish a quarterly and annual schedule of Bermudianisation or be held in default of the terms of their contract. Government must not repeat the mistakes of the past.

For example, it leased the Club Med site to that organisation, Club Med undertook to employ 230 Bermudians, yet no more than 80 were ever hired in the final analysis.

Mr. Speaker, how can we honestly believe the UBP Government when they speak of their "sensible economic planning and sound budgetary preparation'', when we constantly see reminders which indicate the opposite. The Tynes Bay waste disposal plant, the airport departure terminal fiasco, the Westgate Correctional Facility, and let us not forget our "pride and joy'', the Bermuda National Stadium.

Mr. Speaker, we contend that the most significant issue relating to the base must be to determine the ultimate cost of taking over these properties. Based on the ultimate cost we can determine our funding requirements, while attempting to determine whether or not the current statutory borrowing limits are sufficient to meet our needs.

DELEGATED AND LEGISLATIVE AFFAIRS THE POLICE Mr. Speaker, you will recall that in our last year's Budget Reply, we recommended to the UBP Government that they increase the number of police cadet training placements which they had so ill-advisedly reduced. So you can well imagine that we are pleased to note the Hon. Finance Minister's belated announcement "that the Police budget is to be strengthened by an additional $215,000 to fund the cost of ten extra police cadets to add impetus to the Bermudianisation of the service.'' This is an extraordinary proposition, in light of recent events. Surely, the Hon. Minister cannot expect Bermudians to believe that the UBP Government is sincere in its commitment to Bermudianise the Police force, especially since a golden opportunity has been wasted all too recently to Bermudianise from the top down with the recent appointment of the two senior police posts. In fact it is only through the initiative of the efforts of those who sit on this side of the House that the Under Secretary of State, Mr. Tony Baldry, MP, has confirmed that the two appointments of the British Commissioner of Police and Deputy Commissioner of Police are to be short-term appointments -- i.e. not to exceed the initial three year terms.

Mr. Speaker, no one doubts that if the Premier or for that matter the Minister of Labour and Home Affairs had strenuously objected to the retrogressive step of bringing foreigners to fill these key and sensitive positions, the UK Government would have felt obliged to agree with them. However the spectacle of the UBP Minister of Labour and Home Affairs travelling to the UK to conduct interviews with the foreign officials for these positions spoke louder to the hollowness of the UBP Government's claims to support Bermudianisation Mr.

Speaker than any other act in recent memory. The UBP Government can never again aspire to any degree of credibility when it talks of advancing Bermudianisation in the work force.

Further Mr. Speaker, given the rising incidence of crime, we would suggest that more than ten cadets would be required, as an effective deterrent to the rising incidence of crime. We note also that there would be a higher level of tourists' and residents' comfort with a greater physical presence of police on the beat.

Mr. Speaker, we must question where are the funds which were to be allocated to the Police Service as suggested in the Tumim Report? The Government has stated it has a commitment to implementing the recommendations of the Report but we do not see any estimates for provision to be made in this regard.

FINANCIAL SERVICES INDUSTRY REGULATORY CONTROL Mr. Speaker, I welcome that the 1995 6 Budget has allocated $100,000 to the Registrar of Companies in additional funding to promote international business.

I should also like to applaud the efforts of organisations such as the Bermuda International Business Association (BIBA), which are spearheading efforts to promote Bermuda as a premier international business centre.

Mr. Speaker, you may recall it was recommended to the Bermuda Insurance Management Association (BIMA) that Bermuda needs to raise its international profile in the insurance market and that our marketing bias focused too much on the North American market and overlooked the European market. The point made was that Bermuda needed to diversify its marketing strategy and to extend its influence beyond traditional markets, as its dependence on the North American market made it especially vulnerable to circumstances beyond its control such as regulatory and tax changes in the US. In view of the foregoing Mr. Speaker, I would ask the Hon. Finance Minister whether he considers the $100,000 allocated for the promotion of international business by the Registrar of Companies is a realistic figure or should it not be revised upwards? Mr. Speaker, there is still a need for the Minister of Finance to be vigilant in terms of the levels of protection for investors. In view of some of our recent failures in the insurance industry, now is the time for the Government to give tangible assurances to both the local and international business community that we have tightened our controls and that the necessary legislation is in place to satisfy their requirements and to meet the criteria of proper review and scrutiny. This better safeguards Bermuda's reputation.

Mr. Speaker, the Finance Minister has stated publicly with regard to changes in the insurance law that Bermuda is about "change conducive to the market''.

We understand from media publicity last year that the Insurance Advisory Committee have proposed updated insurance regulations aimed at strengthening Bermuda's world role. These regulations should go a considerable way towards increasing Bermuda's credibility as an offshore insurance jurisdiction. We hope that this House will not have to wait too much longer for these regulations to come before us.