Shadow Finance Minister Bob Richards today labelled last week's Budget as an election Budget designed “not to rehabilitate but to sedate”.The UBP was this morning given the opportunity to outline its reply to Premier Paula Cox's Budget and in a long statement to the House of Assembly he said the Island's Gross Domestic Product, a measure of how well the economy is performing, had shrunk 8.1 percent, tourism arrivals were at their lowest for 40 years and the hotel sector “hangs by a thread”.He said last week's U-turn on payroll tax, bringing it back down two percent, would not bring jobs back and that Government would be saddled with massive interest payments on its debt if a predicted rate rise took place.“Mr. Speaker, in the face of this economic crisis, we expected the Government to come forward with a plan to grow jobs, grow income and restore some level of public confidence that it understands what it is doing. But it did not. Clearly.“We give credit to Premier Cox for finally recognising the severity of the Island's economic challenges. This represents a step forward for a government that for years has shown indifference to the needs of the economy and the consequences of its actions.“In light of this Mr. Speaker, a question must be asked: How can a Government leader spend so much time in her Budget Statement outlining the gloomy economic picture before us and not put forward a plan to deal with it. You can argue all you want to the contrary, but this Budget Statement is not a plan. It provides no real direction and few concrete steps that give hope recovery is within reach.“So I return to our question: Why in the face of unprecedented decline and dislocation in the Bermuda economy has Premier Cox not laid down even the semblance of a plan to address the challenges?“Mr. Speaker, the only answer we can come up with is that this is an election budget; a budget designed not to rehabilitate but to sedate; to keep people thinking all is fine, even as the ground they are standing on is quaking.”Mr Richards said that all economic indicators confirmed that Bermuda was in recession “the likes of which no one under 70-years-old can remember”.He said: “The depth of the decline is breathtaking and reveals itself in lay-offs and lost jobs, shrinking paycheques and business closures, mortgage defaults and unpaid bills, stress in the home and anxiety about the future. This is the human cost of an economic challenge made much worse by the Government's failure to do what is necessary to keep this economy ticking over.”In his speech, Mr Richards focused on foreign exchange and “its absolutely critical importance to the economy and the everyday lives of all Bermudians”.“The Bermuda Dollar has no value whatsoever beyond our shores. Countries we buy from do not accept the Bermuda dollar as payment. The only reason Bermuda dollars are accepted for transactions is because each one is backed 100 percent by a US dollar, held by the Bermuda Monetary Authority or a bank.“Major foreign currencies like US dollars, Pounds Sterling, Euros and Yen are freely convertible into each other and, taken together, comprise “foreign exchange” for Bermuda. As a country that imports virtually everything we consume, foreign exchange is critical because we need to pay for those imports with foreign exchange. Where do we get this foreign exchange from?“We either earn it from selling goods and services to foreigners or we borrow it. But loans have to be repaid, so ultimately, the earning of foreign exchange is what we have to do to survive economically. Earned foreign exchange is the ultimate source of wealth in Bermuda. In recent years, these earnings have declined in the only two sectors that generate foreign earnings - international business and tourism. These two sectors need to start growing again if Bermuda is to end its recession.”He claimed the Premier had not acknowledged contractions in international business saying her claim that redomiciling of companies was having little operational impact was untrue.Mr Richards said as well as having to “fight our way” out of a recession, the Country also had to fight its way out of a “mountain of debt”, which he said was now pegged at more than $2.25 billion in public and private loans combined.“Mr. Speaker, how did this happen? Who knew about it? And why wasn't something done before it got to these excessive levels?“Mr. Speaker, nothing was done. The Government should have been leading by example, but it is very difficult for government to persuade someone else to control his/her spending if it is not controlling its own. The Government's moral authority in this area had long evaporated, so they just ignored the Opposition and the problem.”He said that today, the Government debt requires it to pay interest of $181,000 a day. “Our deepest concern with this figure is that it is an historic “bargain” that will not long last. If interest rates were to return to their 20-year average in five years, and assuming the increased borrowing implicit in this year's Budget, the interest payable of $181,000 per day would soar towards $366,000 per day or $133 million a year.“This is one of the limbs the Government has put Bermuda out on. If interest rates rise, which everyone expects to happen, a significant part of every tax dollar raised by the Government will go to service its debt, leaving less and less to pay for services the Government provides the public and the salaries of civil servants. It is debt that has debilitated many economies around the world and debt is debilitating Bermuda.”Mr Richards added: “This year's reversal on the payroll tax makes one wonder if there is any fiscal strategy at all in the Ministry of Finance. The Minister referred to the need for multi-year fiscal planning and this prompts us to ask for the rationale behind the plan to increase taxes one year then roll them back the next? It strikes us as trial and error. In Washington, it would be labeled flip-flop economics. Bermuda cannot afford this schizophrenic approach to fiscal planning.”