A programme of cuts in public spending of more than $70 million was yesterday announced by Finance Minister Bob Richards.

And he signalled further expenditure cuts of 15 percent over the next three years — but said that there would be no public service job losses this year.

However, he identified more than a dozen Government services that could be hived off, with a new Efficiency and Reform Authority given powers to spin off some functions.

Mr Richards said that the Government would spend a total of nearly $1.17 billion this year on current account and capital works — down by almost seven percent on the previous year.

“This does not sound like much, but it represents a $70.2 million cut in current expenditure,” he told the House of Assembly. “We expect that the planned reduction in spending can be achieved without layoffs of workers in the public sector for the coming fiscal year.”

The Government expects to take in more than $901 million in taxes, fees and other income — up by more than $9 million on the current year.

Mr Richards was speaking as he unveiled the first full OBA Budget since the party won power in December, 2012.

He said that the overall deficit in the Budget for the coming year was expected to be $267.3 million — a reduction of $64.3 million (19.4 percent) on the $331.6 million deficit for 2013-14.

“So we are moving in the right direction but much more work is required,” he said.

Mr Richards said there would be no new taxes — although most Government fees would increase by around five percent, bringing an extra $2-3 million.

And he signalled that Government would move towards outsourcing, privatising or the mutalisation — where workers take a stake in a hived-off service — this year, although the estimates did not include any potential savings from these moves.

“This is not to say that a Government will be idle on this front, not at all, but such actions are not factored in,” said the Minister.

Among the services Government will look to move out of its direct control are the Department of Airport Operations and the Causeway, parks maintenance, water and sewage, highway maintenance, the Aircraft and Shipping Registries and the health insurance department.

“This will all be new to Bermuda and Bermudians and we will be keeping the public apprised as we move forward,” said Mr Richards. “Also, we will have to obtain expertise from other jurisdictions, most notably the UK and Canada, which have experience in this regard.

“We recognise and understand people’s fears about change and we will work carefully to make change work for the individual and for the common good.”

But he warned: “Let there be no mistake about why we’re moving in this direction — the cost of Government, as the SAGE report concluded is ‘unsustainable and out of control.’ The status quo is not an option.”

And he also signalled an end to the 60/40 rule, which guarantees majority Bermuda ownership of companies, in a bid to attract more investment.

“The truth is the 60/40 rules were established by the old oligarchy to protect their own interests, to enable them to retain their position of economic dominance,” said Mr Richards.

“So the sources of calls for the retention of the 60/40 rule are most ironic.”

Mr Richards added that tax breaks for the struggling retail, restaurant and hospitality sectors would stay in place.

“Despite signs of recovery, the Bermuda economy remains fragile. An increase in tax rates would hurt recovery and impose new pressures on individuals and families struggling to make ends meet,” he said.

“The tax initiatives started last fiscal year will also continue into the next financial year. We are being conservative with our revenue estimates, projecting them to grow marginally next year.”

Shadow Finance Minister David Burt said: “The Minister of Finance attempted to give a long and unbalanced economic lesson, while ignoring the shortcomings which presented themselves in the first year of OBA governance.

“Though the PLP concedes we must reduce the cost of the Government, it is wholly unrealistic for the Minister to propose $70 million of cuts without recognising the impact that it will have on Government jobs.”

He added: “What was also noticeable in the Budget statement was the lack of specifics on banking, energy and healthcare reform.

“These areas are critical for Bermuda’s recovery and long term growth.

“I was encouraged by the Minister’s initial statements, especially regarding banking, but we need more than ‘Government is in discussions’ to see if we can work together on these important topics.”