The Civil Service must be cut after the coming fiscal year, Finance Minister Bob Richards warned as he outlined the advantages of mutualisation or privatisation.

Staff layoffs will be inevitable unless “non-core functions” are outsourced after 2014/15, said Mr Richards in his Budget Statement.

He said Government had identified the following departments for mutualisation, outsourcing or privatisation:

• Airport Operations/Causeway

• Emissions and Vehicle Testing

• Aircraft Registry

• Ship Registry

• CITV

• Waste Management, including Tynes Bay and Garbage Collection

• Vehicle and Equipment Operations and Maintenance

• GEHI and Health Insurance Department

• Parks Maintenance

• Water and Sewage

• Department of Social Insurance

• Highway Maintenance

• Conservation Services.

An Efficiency and Reform Authority will be established to transform the delivery of services to the public to “achieve savings and enhance public use of such services”, said the Minister.

Outlining Government’s options beyond 2014/15, Mr Richards said: “Government has been able to project a reduced deficit and a reduced spending profile for the next fiscal year with no plans for redundancies.

“However, if we are to achieve the targets set out in the MTEF [medium-term expenditure framework] and avoid losing our financial independence and our ability to retain the confidence of international investors, upon whom we rely, spending cuts must continue year after year until the deficit is erased.

“Further reductions in costs after 2014/15 will not be achievable without either staff layoffs or the outsourcing of non-core functions through mutualisation or privatisation.

“Remaining as we are, with the current number of civil servants, will not be possible.

“No one, particularly this Government that has been elected to create jobs, would want to add to the ranks of the unemployed. There are too many struggling Bermudian families out there now.

“Furthermore, to lay off civil servants only to have them apply for Financial Assistance would be, financially, a wasted exercise.

“Outsourcing by way of mutualisation and/or privatisation is the alternative that offers affected staff and union members the least disruptive option.

“This option represents job shifts instead of losses and staff remain employed, retaining union membership if they so desire.

“This is the tough decision that will have to be made.”

Budget figures show public service employees will total 5,581 at the end of this March. That is expected to fall to 5,448 by the end of 2014/15.

The impact of furlough days is beginning to show in Budget salary figures, with the estimated $350,954,000 on salaries for the current fiscal year revised to $340,312,000; an estimated $325,042,000 has been set for 2014/15.

During his Statement, Mr Richards also said umbrella legislation called the Public Bodies Reform Act will be brought before Parliament to enable any type of savings through mutualisation, privatisation or outsourcing.

This Act will establish the legal authority of the Minister of Finance to make reforms such as abolishing, merging, modifying or transferring Government departments, quangos, funds, boards and committees, and related legislation.

This authority will include the transfer of functions or the provision of public services to an “eligible person”, which may be an entity such as a company, a public service mutual, a registered charity or a trust body.