Part two of lowlights in the 2016-2017 Bermuda Government Budget, a 54-page, meticulously prepared document containing shrewd observations on our local environment: finances, investments, government infrastructure and assets, impact on population, serious concerns relative to full employment, challenges Bermuda faces and an important economics lesson.

Readers, budgets are actually easy to set up, contrary to what is thought. After all, a budget only represents what we think we are going to spend in a year. A family budget can be monitored against actual spending on a routine basis; heck, even every day for some if you are smart phone literate. There is no excuse not to know where you (we) stand financially, given the huge numbers of apps available for laptops, and mobile devices, more than 153 million pages according to Google.

Websites such as MoneyUnder30, Youneedabudget, PocketGuard Budget, Good Budget, HomeBudget and so on are reviewed on 11 Best Budget Apps for 2016*.

Quite frankly, I’d like to see technology available to monitor government spending every day, too.

Unfortunately, we cannot say the same for the Bermuda Government budget whose projections and results are announced once a year, or six months at most. We have no means to know whether our money (yes, it is ours) is being spent irrationally, or conserved wisely — a frustrating situation, for sure. Further, the 2016-2017 Budget is presented to Parliament and the people of Bermuda before we know the actual real spending results for the last fiscal year 2015-2016. How can we — when that year does not end until March 31, 2016?

We, the people, have to rely upon the professionals in the Civil Service ranks to do the right thing, with each and every invoice, each and every spending request, each and every bank statement. That requires enormous trust on our part to wait all during the year, with bated breath, sometimes, to eventually find out whether our government’s actual cash spending results come into line, or have cost overruns, with the projected budget for the same time frame.

Here is only some of what we learn from the lowlight sections of the 2016-2017 Budget:

• Page 10 — Is Bermuda still paying Airline subsidies, if that is what the “statement securing enough airline capacity to meet demand” means?

• Page 10 — The Tourism Authority Fee for hotels has been raise to 5.5 per cent from 2.5 per cent to support the BTA.

• Page 13 — Eliminating our public debt is key to maintaining our credit worthiness as international business also reflects this situation.

• Page 4 and 31 — Government is living on credit. What will it cost to refinance this enormous debt as interest rates rise in the future?

• Page 15 — According to the Fiscal Policy Council, 85 per cent of current government revenues are pre-allocated to support civil service compensation, benefits, grants and debt.

• Page 35 — Net debt to annual revenue, now stands at 237 per cent. Example, if a demand from foreign investors to redeem their Bermuda Government bond investments came in today, our government — spending all revenue for the 2016-2017 year (meaning nothing available for civil service wages, benefits, capital projects, and the like) — would still owe in excess of $1.5 billion.

• Page 17 — Our demographic percentage of residents is changing for the worse. Less healthier younger people to grow the economy, higher numbers of seniors dependent upon our tax base.

• Page 19 — Government hiring freeze has reduced CS numbers by 225 people, not an appreciable number, nor did we see any reduction in percentage of benefits, including sick pay, and pensions — a hard fact when the private-sector employees have had many benefits stripped away.

• Page 21 — Payroll tax increases appeared to be grudgingly accepted.

• Page 22 — Abuses of the notional tax section of the payroll tax system will be corrected.

• Page 23 — Excise taxes increased. Most people probably would agree that tobacco and alcohol can be assessed additional tax, but would not agree to an increase on petrol.

• Page 24 — the new General Services Tax — the jury is still out, with not enough detail for comment, except that these costs will be passed on to the consumer, as usual.

• Page 18 — The cost of debt service to pay foreign investors, budgeted at $187 million this year, will overtake the Ministry of Health’s budget as the largest domestic government expense. Government’s ability to support the needs of Bermuda’s people is and will continue to be seriously undermined.

Everyone understands by now, I think that accumulating debt, whether personally or governmentally, is a bad thing. Contrary to what was expressed by politicians, debt is never a good thing. The only person who thinks debt is a great idea is the person or business to whom you owe the money! Debt ties you down, it creates the delusion that you own your purchase, but you don’t. Debt creates enormous stress; debt is immovable — you are not in control your creditor is; debt grows larger — the minute you fall behind in a payment.

Final budget words. It is our duty, readers, to monitor on a routine basis what our government is spending, where our money is being allocated, how it is being spent, what the return on our investment is, and most importantly, is there any cash in the bank at the end of the month. Will we do it? I have faith in you, dear readers, don’t let me down.

Personally, I would settle for quarterly (or more preferable monthly) Budget to Actual cash spent / revenue received reports from our Government. We cannot afford to be complacent about the financial future of our island economy.

Bermuda today is a recovering, but still very fragile economy. We are in a better financial position, but much more needs to be done. Economic threats from large nations, BEPS, FATCA, CRS initiatives and the like from global policy and government revenue organisations are more aggressive than ever before. It is never stated, but it sure is implied (reading between the lines) that the ubiquitous “they” would like to see small island economies go out of business. We must be absolutely vigilant and determined to never let that happen.

* 11 Best Budget Apps for 2016 http://www.gottabemobile.com/2016/02/19/best-budget-apps/

• Martha Harris Myron CPA PFS JSM, Masters of Law: International Tax and Financial Services. Appointed to the Professional Tax Advisory Council, American Citizens Abroad, https://americansabroad.org/. The Pondstraddler* Life™ Consultancy providing financial planning, publications, presentations for Bermuda residents, their multinational families and connections. Contact: martha@pondstraddler.com