Our Government has been hurtling along the road to fiscal ruin for the past few years. Finance Minister Bob Richards’ job yesterday was turn onto a more sustainable route, without driving the fragile economy into the ditch.

Only time will tell if he pulled it off, but Mr Richards certainly took some large steps in the right direction. He managed to cut seven percent from current-account spending without making any of the layoffs that many in the community had feared. While that is a start, Bermuda will still run a deficit of more than quarter of a billion dollars in the coming year, and so the Island’s net debt will be just shy of $2 billion at the end of the next fiscal year.

Further cuts will be necessary, progressively more painful and politically uncomfortable. To his credit, Mr Richards gave a clear picture of how much he intends to cut spending — by 15 percent over three years — and also gave some indication of how, with the list of Government departments that will be considered for privatisation, mutualisation or outsourcing.

Such decisions should not be rushed and by adopting a multi-year approach, Mr Richards is allowing time for proper consideration of what action is suitable for each department, as well as the machinery to do it in the form of the Efficiency and Reform Authority. Public-sector workers and the unions who represent them will be deeply concerned about their future. This will be an uncomfortable process in which transparency and consultation will be key to minimising conflict. The friction will not only be generated by the clash of rival political philosophies, but also by the fundamental nature of the change in the way services are delivered to a very conservative community.

The rationale behind the removal of any department from the public sector needs to be clearly explained, and in particular, how the public could be expected to get a better deal. Apart from the obvious concerns of workers who may lose their livelihoods, the public will also want assurances that badly needed revenue from departments like the aircraft registry — which in 2013/2014 generated more than $23 million for Government — will not be threatened to any extent by a perceived loss of Government control.

But Mr Richards’ assertion that “the status quo is our enemy” is difficult for anyone to dispute. No change in the size, remuneration or benefits of the Civil Service would result in the public debt mounting at an ever faster pace. Consider this: if payments into the Sinking Fund are included, then the $161 million to be spent on debt servicing in 2014/15 is a greater sum than that spent on any Ministry apart from Health and Environment. The momentum from the soaring borrowing costs of recent years will continue to drive interest payments higher still for the next two years at least, according to the Government’s own projections. And that will be the case even if Mr Richards achieves the desired spending cuts.

A public-sector workforce of 5,500 — comprising more than one person in 12 — is way too big to sustain for a small island with a bruised and undiversified economy. Mr Richards is simply stating the facts with his blunt assessment that “remaining as we are, with the current number of civil servants, will not be possible”.

The challenge for Mr Richards is that Government cuts, while improving fiscal health, harm the local economy. For example, most taxpayers will cheer the slashing of spending on consultants. But the $3.2 million less that Government intends to spend on local consultants next year will come directly out of the local economy. The reduction in salaries and wages will come out of the pockets of public employees, who will have less to spend at local businesses — the multiplier effect in reverse.

While substantial austerity measures are critical for the economic viability of our Island, economic recovery will come only with growth.

As Mr Richards rightly points out, the Government is not in a position to fund stimulus programmes through further borrowing. Attracting foreign capital — intellectual as well as financial — is the most obvious solution. Mr Richards spoke of the awarding of gaming licences to hotel developers, further lowering of immigration barriers and potentially scrapping the 60/40 ownership rule as ways to attract that badly needed influx of money and people.

Just as drastic changes are needed to cut Government spending, a similarly bold approach — sometimes involving equally uncomfortable change — is required for Bermuda to have a chance of beating fiercely competitive rival jurisdictions in the race for foreign investment dollars. The stark demographic reality of our ageing population is that failure to bolster our numbers with more foreign workers will inevitably lead to further economic pain.

Some may say that Mr Richards has not been bold enough in addressing either the austerity or growth side of the equation. But while laying out bold plans that will seem unpalatable to some he has been politically astute enough to allow time for the public to digest the ideas like privatisation and the lowering of protectionist barriers — and to contemplate the consequences of inaction.