The following is the full text of the Budget Statement, which was delivered in the House of Assembly by Finance Minister Grant Gibbons yesterday.

To His Honour the Speaker and Members of the Honourable House of Assembly Mr. Speaker, By the end of the nineteenth century, the Industrial Revolution had transformed societies around the world. Evolving over more than a century, it caused profound change in the balance of power and relationships between social, economic and political institutions. As the Twentieth Century now draws to a close, the world is again faced with dramatic forces that have begun to affect the lives of every Bermudian in significant ways.

A digital revolution -- what some are calling the third great revolution in the history of the world -- is here now, with implications for societies, governments and economies as profound as those brought about by the Industrial Revolution, a little more than a century ago.

Governments have created new economic partnerships to compete effectively in the changing global economy. Highly sophisticated telecommunications networks allow businesses to compete from any part of the globe in any part of the globe. Our children learn and play on the Internet. Access to information networks can open avenues of opportunity, and that access is now available to more organisations and individuals than ever before.

The Government understands that whether we seek it or not, whether we like it or not, this revolution is underway. Our challenge and our responsibility is to recognise the changes taking place, understand their implications and make them work to Bermuda's advantage. How we manage this new revolution and the social, political and economic changes it brings will determine Bermuda's success as we enter the twenty-first century.

Mr. Speaker, Government will, through this Budget, demonstrate its commitment to this exciting future, not the ideas, commitments and slogans of yesterday.

The Budget gives continued support to preparing our young people for success in the new global economy, through significant capital and operational spending on education. The innovative middle school programme and the new facilities and forward-looking curricula that will soon be evident at Berkeley Institute and Cedarbridge Academy will give our children the skills they need to grasp the opportunities of the Twenty-first Century.

This Budget details the programmes and policies Government has set in place to ensure that all Bermudians -- including adult workers and those on the sidelines -- will have the opportunity to succeed in the new world economy.

This Budget provides support to the Department of Labour and Training and the new National Training Board, which will act in conjunction with the business community to train and retrain Bermudian workers to take advantage of the new opportunities available in our economy. The Budget will fund an innovative programme at Bermuda College, where tutorial and financial support will be offered to those young people who now wish to further their education, but who need assistance in meeting admissions requirements.

This Budget provides financial support for an intensive, public and private sector planning effort to strategically position our tourism industry to meet both increasing global competition and the anticipated demands of twenty-first century visitors. All businesses, institutions and groups with an interest in this vital sector of our economy will be invited to participate, to rethink, retool and repackage Bermuda tourism.

This Budget provides additional monies to enhance the working partnership between Government and international business and to increase Bermuda's attractiveness as a domicile for offshore business.

This Budget provides additional support to the Police Service, whose recent efforts to reduce crime have been highly successful. Government understands that our efforts to seize new global opportunities are meaningless unless our homes and streets are safe and our citizens and visitors feel secure. This Budget will also provide support to those least able to cope with changes in our world. This includes our children and our senior citizens. Recognising that change can cause significant strain on the family unit, Government will provide additional support to the strengthening of families and the prevention of child abuse. Bermuda's elderly population is growing, and additional funding will be provided to cover the cost of inpatient and outpatient care.

At the same time, Government will examine options for the delivery of quality care in a more cost-efficient manner and will implement the first phase of the National Pension Scheme.

Mr. Speaker, this Budget will also demonstrate how Government defines its changing role in the new world order, as a partner for progress. A look around the world at other economies and an assessment of our own experience highlight the fact that there is a limit to what Government can accomplish alone, there are limits to how much revenue it can raise and there are limits to spending.

Increasingly, success comes when Government works as a facilitator, creating a framework in which other groups can be successful, or when it creates partnerships with other institutions and businesses. Given the demands of rapid global change, successful partnerships require from both sides a complementary degree of commitment, professionalism, experience, knowledge and trust.

The role of Government as a facilitator and partner is illustrated by Government's relationship with the international business community over the last few years. The Insurance Advisory Committee (IAC), a statutory, Government/private sector committee, is a good example. The IAC has worked to create a balanced legislative environment for the insurance industry that provides effective oversight with opportunity for innovation in a business sector that is truly a Bermudian success story. Government has provided financial support to the Bermuda International Business Association (BIBA), participated in the marketing of Bermuda as a sophisticated financial centre and consulted with them to enact legislative change to enhance Bermuda's competitiveness as an offshore jurisdiction.

The challenging conditions currently being faced by the tourism sector will require a rethinking of Government's role in creating a framework that enhances our tourism product. Already, new partnerships have been established between Government and the private sector that will address service standards in our hotels and guest houses and will develop new tourism strategies.

Government's handling of the airport takeover and more recently the creation of the Bermuda Land Development Company also illustrate new approaches to complex problems. The new Department of Airport Operations, working in conjunction with private sector partners, has resulted in efficient management of our air operations responsibilities, enhanced levels of safety and cost effectiveness, and a high degree of Bermudianisation.

Recognising the enormous challenges of the baselands as well as the opportunities for Bermudians implicit in their development, Government has put in place a unique organisation, the Bermuda Land Development Company. Through its Board and Government shareholders, this company is designed to combine public sector responsibility with private sector expertise and experience.

Given the size and complexity of the baselands and their infrastructure, successful development will only come about through the investment of significant capital from both local and overseas sources. The Bermuda Land Development Company has been set up to use commercial methods to take advantage of these opportunities for the benefit of all Bermudians.

Job training and employment are the focus of yet another recently announced partnership between Government and the International Companies Division of the Chamber of Commerce. Through this scheme, participating international companies will provide structured job training along with full employment to a selected group of up to twenty-nine unemployed persons over two years.

Government will administer the programme and provide tax incentives to the employers.

Mr. Speaker, the digital revolution has also brought about an unprecedented rate of change. We must transform ourselves, our businesses and our country into learning organisations that adapt readily and constructively to a changing world order. We are beginning to understand again what was clearly apparent to our ancestors. Bermuda is not entitled to be prosperous. Our success was built upon vision, hard work and sacrifice. It was not granted by right. These attributes have served us well in the past, and they are essential if we are to be prosperous in the developing information society.

Whether we are hoteliers, bankers, transport operators or retailers, we must strive to be competitive and offer customers the services they seek at a value that is competitive.

It has been encouraging during 1996 to see efforts by different sectors of the business community to make themselves more competitive and more responsive to their customers.

The printing industry conducted a detailed situation analysis that recognised the need for substantial investment in technology and new techniques to improve its competitiveness and efficiency.

The banking community has been proactive, encouraging many of its clients to review the viability of their businesses and to introduce best management practices. It has also introduced a number of new services, including debit cards, to improve the efficiency of domestic banking for both individual and retail customers.

The Bermuda Stock Exchange has gained designated offshore securities market (DOSM) status from the Securities and Exchange Commission and has aggressively promoted itself -- both through the Internet and more traditional means -- as an offshore exchange for financial listings and trading to rival Dublin and Luxembourg.

Mr. Speaker, it is ironic, but perhaps not surprising, that the sector of Bermuda's economy that has been most successful in the last ten years has been that sector least protected from global competition. The reinsurance and financial services sector in Bermuda, truly knowledge-based industries, have been successful while competing directly, without protection, in the global marketplace. It is also instructive to recognise that this sector has been successful in spite of the high cost structure of Bermuda.

The Government, recognising these lessons, has made significant changes in the business environment in recent years that reflect the global trend toward less protectionism.

Many of these changes reflect recommendations made by the Commission on Competitiveness and include the relaxation of exchange controls and the removal of the ceiling on interest rates.

Government has also created a framework for greater competition in the telecommunications market that will reap benefits for Bermudian businesses and consumers. A second overseas telecommunications provider has recently been approved. A wireless cable company, a new cellular phone service and a fibreoptic telecommunications service are poised to enter the market. Still more service providers have applications before the Telecommunications Commission.

Increasingly, reciprocity between states, capital flows and barriers to investment must concern Bermuda as they concern other Commonwealth countries engaged in the broader economic debate. These issues were of paramount importance at the recent Commonwealth Finance Ministers Meeting in Bermuda. In order for Bermuda to attract the substantial local and foreign capital that will be required for baselands development and other projects, Government must reconsider barriers that may exist to such investment. Protectionist policies that no longer serve Bermuda's long-term needs may be reviewed as Government creates new partnerships for progress.

Mr. Speaker, while the new world order and information society offer impressive and exciting opportunities for Bermuda's economy, its businesses and its people, these are not and will not be easy times. Economic change can exacerbate social and political tensions. It can create conflict between those with a vested interest in the past and those with a vested interest in the future. It can widen the gap between those who have access to information and have learned how to use these assets and those who are increasingly on the sidelines, having difficulty adjusting to meet the demands of a changing economic environment. It can mean that certain sectors of our economy will grow, others will decline and new sectors will develop.

As Bermuda's economy responds to revolutionary global change and goes through an inevitable period of restructuring, it is important to remember that just as Government, businesses and institutions must become partners for progress, different sectors of our economy must realise that they are inextricably linked. Our twin economic pillars of tourism and international business do not stand apart and are not mutually exclusive; they stand side by side, and they succeed or fail together. These two vital sectors support and are supported by many other areas within our economy, from retail, to transportation, to construction and to professional services.

As we continue to improve Bermuda's competitive position, Government, businesses and institutions must work together as partners with a common goal, to ensure that Bermuda continues to enjoy in the future the same economic success we have enjoyed in the past. For its part, Government will continue to look closely at revenue and expenditure to ensure that they are appropriate to the needs of Bermudians and Bermuda's evolving economy.

Economic Performance 1996 Mr. Speaker, internationally, 1996 saw further steady growth of around 21 percent in the US and UK economies and a generally benign environment for price inflation. However, several large economies, including France, Germany and Switzerland, suffered much more difficult conditions as many of their industries faced up to underlying competitiveness problems.

A very similar pattern has been repeated in Bermuda. Overall, we have seen the emergence of an array of very encouraging economic statistics.