Government should trim its spending and look at deferring some capital projects as part of long-term contingency planning in response to potential economic fallout of the September 11 attacks on the United States, says shadow finance minister Dr. Grant Gibbons (pictured).

"It's a bit like having a two-income household and one of the members is laid off. I think you start to look fairly quickly for where you can do some belt tightening and do some planning so you have some reserve and buffer there to take care of contingencies in the future," he said.

An already weakening hospitality industry is widely expected to be hard hit, at least in the short term as Americans shy away from air travel. The possibility of the US economy going into free fall worsens the outlook for Bermuda.

"Bermuda has weathered storms before," said Dr. Gibbons. "This one is a little bit more unpredictable. . . But I think we should be looking for the longer term now and trying to plan for the possibility at least that it's going to be a pretty tough winter and we may have some longer term fallout.

Bermuda's competitors in the Caribbean are reporting millions of dollars worth of cancellations for the winter months.

Government has been in contingency planning mode since the crisis hit the US September 11. Finance Minister Eugene Cox will hold a press conference at 3 p.m. today to speak to the issue.

Some quarters have already criticised the Government for not talking to the people about the economic outlook much sooner.

"I think from the Government perspective it's very important to focus on unity and providing good leadership," continued Dr. Gibbons. "And I think it is important for the Government to talk to members of the different sectors of the economy, certainly labour, the hospitality sector and the international business sector because they are all going to have issues going forward that they are going to look to Government for support on. And I would like to have a sense of how Government is going to be carrying out its economic planning as well."

Asked what kind of spending cuts he was hoping for, Dr. Gibbons described as "irresponsible" the level of Government spending in previous years.

"I think it's important that Government start to look very quickly at where they can make efficiencies and cut out unnecessary spending," he said.

"It's going to be important to make allowances for some of the human issues that come out of it, be it housing or people out of work or needing social assistance. . ."

And with a reduced revenue base, spending cuts might have to impact capital projects, he said. "Government revenue is going to be under some stress going forward from the hospitality area. And what you don't want to do is continue to spend and you're going to have to find that revenue through massive borrowing which has its own costs or shifting additional taxation on people or businesses which are doing moderately well."

When asked whether the $70 million contract to build the new senior secondary school should be deferred, he could not give a definitive answer.

"I think it's a little difficult to say right now. . . I don't think there should be an immediate decision to stop it because there's obviously a cost involved there, but there are probably a lot of other projects in Government which you don't need to have all at once and maybe those should be deferred. . . I think they have to look at projects on an individual basis."

The former Finance Minister added that it was not a time to panic.