This is the full text of the Budget Statement delivered by Finance Minister Paula Cox in the House of Assembly yesterday.

To His Honour the Speaker and Members of the Honourable House of Assembly

Mr. Speaker

This is my sixth National Budget and it is set amidst an array of very challenging economic and financial circumstances. The global economy is in recession and there is sustained turmoil in world capital and financial markets.

The lack of confidence within the banking and financial sectors has continued despite the most determined efforts of G8 leaders and policy-makers. Hundreds of billions of dollars in financial aid to stricken companies and economic stimulus packages have not yet made a difference. Yet a solution must be found.

We are at one of those watershed moments in history where it seems that our old ideas about the financial system and markets and about decision-making by companies are being severely challenged.

Yet despite the financial clouds, there is still the spark of hope that the financial clouds will ease over the next eighteen months.

However during this period, as the Government and as a community, we welcome President Obama's call for "a new era of responsibility".

With that spirit Bermuda will weather and withstand the financial storm. John Kenneth Galbraith, the famed economist who, some 25 years ago, penned the book entitled, A Journey Through Economic Time, spoke about the need for politicians and scholars in particular, to show confidence during difficult economic times.

He said and I quote: "…the economy should be viewed affirmatively by all responsible people. Economic pessimism… destroys confidence and inhibits consumer demand and industrial investment."

Mr. Speaker

Galbraith's comments are relevant to these very times we are experiencing today.

As policy leaders and as thought leaders in this historical moment, it is incumbent upon us to find the path to economic recovery and to map the way forward. Bermuda is part of the global network of interdependent economic geographies.

Already, we have experienced the bruising impact of the global economic and financial turbulence and the immediate outlook is clouded. The Ministry of Finance estimates that Bermuda's GDP will decline in 2009 in the region of 1.0 to 1.5 percent. However, the Ministry of Finance anticipates a slow recovery in 2010 should there be an improvement in global economic and financial conditions.

Mr. Speaker

While the economic outlook for 2009 is a cause for concern, Government is confident that with a collective response that integrates the resources, talent, wit and resilience of all stakeholders in our community, we will get through the challenging times ahead. Governments around the world are acting decisively and aggressively to implement monetary and fiscal policies aimed at preventing a free fall in the economy.

The Government of Bermuda is no different. We are using the fiscal tools at our disposal in an activist way to better shield Bermuda and her people from adversity in these difficult economic times.

The Government of Bermuda in the 2009–2010 National Budget has a recovery plan – Bermuda style. We are clear that as the Government we will provide tangible assistance to bolster Bermuda's people and businesses throughout the economic downturn, even if it is not a billion dollar rescue package.

A credible fiscal stimulus programme requires a focus on the short to medium term so that we anticipate and address the budgetary challenges over the next five to ten-year term.

We propose a sound medium-term fiscal framework as opposed to just running up millions of dollars in debt.

In the National Budget for 2009–2010, the Ministry of Finance has marshalled all resources at Government's disposal for the implementation of economic and financial contingency plans should it become necessary.

Government stands ready to meet the challenges. The maintenance of economic stability even through difficult periods has been a central feature of Government's successful economic management.

There is a plan for the likely economic scenarios, including the worst economic circumstance that could involve a prolonged recession. That scenario has a policy package of emergency temporary measures that would allow Government to maintain essential public services and continue to service public debt.

Our National Budget framework is one that balances the long term requirement to invest in much needed infrastructure with the more immediate short-term obligation to provide rescue measures for families, workers and businesses in need. Government's guiding mantra during this period of challenge is 'tenderness in tough times'.

Mr. Speaker

In the current economic conditions, it would be counter-productive for Government to decrease the stock or flow of funds in the private sector through increased taxation. Government's main objective in this period of economic challenge is to facilitate and stimulate economic activity, wherever possible, in order to sustain employment levels and household incomes.

Therefore, in the coming year, there will be no increases in major tax rates. Instead, Government will call upon some of its reserves and the balances in the Confiscated Assets Fund to cover some of the required expenditure in 2009–2010. This policy action is no different from what some other governments are doing to address the economic challenges of these times.

In Singapore, where they are facing their worst recession on record, the Singapore Government will tap its official reserves to help fund a record $20.5 billion Singapore dollar stimulus package.

The Singapore Finance Minister said his Government aims to use $4.9 billion Singapore dollars from its reserves so it avoids issuing debt to finance spending.

In a similar vein, the Government of Bermuda will tap its reserves as a source of contingency funding during this economic downturn. This helps us to limit the level of debt we incur in Government borrowing.

This way, the Government borrowing is limited to its investment in 'hard assets' for much-needed infrastructure as part of our multi-year phased capital expenditure programme, and for Government guarantees to support Public Private Partnerships.

Mr. Speaker

As stated, there have already been some job losses in various sectors. This has caused ripples through the community and has affected families. It has caused some to become insecure and fearful and to worry about their economic future. A key tipping point is confidence in job security.

The threat of losing one's job is life changing. It alters spending patterns and determines whether people can afford to pay their mortgage and other staples. The Government of Bermuda does not want Bermuda's residents to be afraid. We have determined that we will step in to assist as needed.

The only pre-condition we have for those businesses that request assistance is the commitment to retain their Bermudian staff in employment. The free day care programme, free public transportation for students and the free tuition at the Bermuda College will continue.

Unemployment assistance will be available to those in need. FutureCare, the upgraded health plan for senior citizens, will be launched in April 2009. In addition, Government will provide further assistance and incentive to individuals and families seeking to purchase their first home by exempting the conveyance of certain residential property from stamp duty.

Mr. Speaker

Against the background of economic, financial and potential international regulatory challenges, the National Budget 2009–2010 is set at $1.1 billion. The Government of Bermuda has determined that its funding priorities will focus on the twin prongs of strengthening the family and supporting youth development.

There is also Government's on-going commitment to bolster our economic pillars of international business and tourism. In addition to the funds that will be appropriated for the National Budget 2009–2010, Government also will draw on funding available in the Confiscated Assets Fund and the Sinking Fund.

It is noteworthy that as a result of the legal action initiated by the Ministry of Finance in defending Bermuda's reputation, the Government of Bermuda, through an effective partnership with various Bermuda – and overseas – regulatory and enforcement authorities, was successful in receiving the sum of just over $22 million as the proceeds of crime arising out of a successful multi-jurisdictional prosecution.

These monies have been paid into the Confiscated Assets Fund. Some $21 million out of this total has been committed to serve the public good in a myriad of ways.

The distributions from the Confiscated Assets Fund are shown in detail in a schedule attached to this Statement. Ministry of Health will receive $2.4 million for its Turning Point Substance Abuse Programme.

The Ministry of Culture and Social Rehabilitation will receive $7.8 million for a range of programmes, initiatives and grants to community organisations, for example, Co-ed Substance Abuse Drug Treatment Facility ($4.4 million), Camp Spirit ($300,000), Focus Counselling Services ($1.4 million), Parent Resource Institute for Drug Education ($402,000), Council for Alcohol and Drug Abuse ($230,000) and the Bermuda Addiction Certification Board ($200,000).

In addition, some $500,000 in additional grants will be released from the Confiscated Assets Fund to support preventive efforts in the community battle against substance abuse.

Mr. Speaker

It seems most fitting that the community and those who are often the victims, the vulnerable and the youth should benefit from the proceeds of criminal conduct since, too often, they are the targets and victims of criminals.

Funding also is being provided to those authorities that work vigilantly to police our perimeters and to enhance our anti money-laundering regime.

Mr. Speaker, at the start of the budget cycle for 2009–2010, the Ministry of Finance issued a general direction to Ministries to seek a 10.5 percent reduction from the 2008–2009 approved Budget so Government could accommodate new programmes without tax increases.

Some Ministries, for example the Ministries responsible for social services, health and education, were not expected to be able to adhere to this recommendation given their mandates to provide assistance for those who have a real need and to enhance health care and education.

However, many Ministries did develop their budgets to fit within the indicative constraint, namely, Works and Engineering, Labour, Home Affairs and Housing, the non-Ministry Departments and Ministry of Finance. Across the board, Ministers made a real effort to enhance efficiencies and to eliminate unnecessary costs and to eliminate or defer programmes where feasible.

The Financial Secretary, Mr. Donald Scott, and Director of Budget, Mrs. Tina Tucker and her team, performed a yeoman job in directing this effort.

The direction given by the Ministry of Finance was cognisant that in these economic times, Government would have to set aside additional monies to provide additional support to those individuals, businesses and sectors that were anticipated to need help and to provide for a greater stimulus to the local economy as we navigate these tougher economic times.

Globally the job of Ministers of Finance, Chancellors of the Exchequer and Treasury Secretaries has been exacerbated by the severity of the international financial crisis.

Yet I believe that in Bermuda we have got the balance right. We have alleviated undue hardship on the people and businesses by not levying increased taxation at this time.

Further, we have signalled that we will provide relief to sectors so long as there is job preservation for Bermudian employees and we have continued to deliver services.

Mr. Speaker

The Ministry of Culture and Social Rehabilitation is a key Ministry in delivering programmes and initiatives that directly benefit families and young people.

Accordingly, this Ministry is provided with a budget of $74 million in 2009–2010, an increase of 23 per cent above its 2008-2009 allocation.

In November 2008, after several months of policy development, the Ministry of Culture and Social Rehabilitation launched the much anticipated Child Day Care Allowance programme with an initial budget of $1.5 million to assist low income families with the cost of day care for children under four years old.

Under this programme, parents or guardians apply to the Department of Financial Assistance to determine eligibility. The maximum amount available is $800 per month per eligible child, and is paid directly to a designated child care provider.

This initiative is very timely, given our current economic climate, and appears to be having great success, with approximately 300 families approved under the programme to date.

This important programme will continue during fiscal year 2009–2010, and $4.4 million has been allocated for that purpose. In keeping with the emphasis on family and youth as highlighted in the November 2008 Speech From The Throne, The Ministry of Culture and Social Rehabilitation will initiate a Juvenile and Family Treatment System in 2009 to provide for the therapeutic treatment of dysfunctional families.

The programme, which will operate out of the Department of Child and Family Services, will involve detailed assessments of the families, the development of specific, comprehensive case plans, and then implementation of required services. An amount of $500,000 has been earmarked for this programme in 2009–2010.

The very successful Mirrors programme enters its third year in 2009–2010 and has been allocated a budget of $2.1 million. To date three intensive residential courses have been completed by a total of 93 youth participants. Continued funding of the Mirrors programme will enable the Ministry of Culture and Social Rehabilitation to further its efforts in redirecting at-risk youth towards a more productive lifestyle.

The Ministry of Culture and Social Rehabilitation has been allocated an increase of $2.4 million in fiscal year 2009–2010 given the demonstrated need for psycho-educational treatment services for certain youth with behavioural disorders.

The Minister of Culture and Social Rehabilitation has visited various treatment facilities overseas and seen first-hand the tremendous value of psycho-educational treatment programmes for the more serious problems of our at-risk youth.

While costly, the programme is extremely important, as we have no facilities on island to provide for such care.

Mr. Speaker, the year 2009 marks the 400th anniversary of the beginning of continuous human settlement in Bermuda. Funding for this initiative is a partnership effort, and Government has earmarked a maximum contribution of $2 million in this fiscal year to the Bermuda 2009 Charitable Trust to match private sector contributions.

This anniversary gives us the opportunity to honour and showcase Bermuda's people, our culture, and the events that have helped to shape Bermuda over the past 400 years. To mark the significance of Bermuda's 400th Anniversary, the Ministry of Culture and Social Rehabilitation will establish a Cultural Legacy Fund.

A sum of $100,000 has been allocated as seed funding as the Fund will serve as a legacy to celebrate Bermuda and her people, recognising that culture, heritage and the arts are vital for a strong, vibrant community. Government has recognised that it has to assume a pivotal role in promoting the development of our culture.

In the future, private sector organisations will be encouraged to contribute to the Fund. This Fund will be used to promote, transform and preserve Bermuda's arts and culture through support of cultural initiatives of national significance.

Mr. Speaker

The Ministry of Health has been provided with a budget of $177 million in 2009–2010.

The Ministry has determined that initiatives related to the health care sector as set out by the Sustainable Development Strategy: "Charting our Course: Sustaining Bermuda" provide a clear compilation of health care priorities.

Most importantly, the Minister identified the need to consolidate and build on the work already in progress as opposed to introducing a raft of new initiatives.

In its drive to reach its objective of delivering progressive and equitable health care for the community, the Ministry will undertake a review of health care funding which will include the role of LCCA, and the role of financial assistance in health care and the underinsured.

All programmes within the Ministry of Health will be evaluated for process, impact and outcomes to achieve both financial and outcome accountability.

The Ministry intends to benchmark performance, where possible, against international standards and to create standards of accountability for local services. For example, regulations will be promulgated to set standards regarding rooming houses that would improve the quality for those living in such quarters.

The Ministry of Health will launch FutureCare. A sum of $10 million has been earmarked to enhance the range of health care benefits for seniors.

Mr. Speaker

The Ministry of Education has been provided with a budget of $149 million in 2009–2010. The Education Ministry will take purposeful actions to address issues raised in the review of public education, and to deliver outcomes in accordance with the Ministry's mandate to raise the achievement of students in the public school system to the highest level.

Structured and targeted staff development for all educators will be offered in the belief that better trained educators will increase the performance of students.

Over a three-year period, the Lead and Learning Centre of Colorado will offer training specific to Bermuda's needs. The training is designed to raise the quality of instruction and the level of accountability of educators.

Certification will be offered in some topics so that lead teachers and instructional coaches can train their peers in best instructional techniques, thereby decreasing the need for overseas training. The aim is to have a public school system that is standards-based with a comprehensive plan for empirically-based assessment of performance and outcomes.

The Ministry of Education will implement other staffing changes in 2009–2010. As part of the reform, Assistant Directors will be identified.

At least four of these Assistant Directors will work under the Director for Educational Standards and Accountability to oversee the operation of schools within the various clusters, serve as advocates for schools and evaluate principals in the clusters.

An Assistant Director for Early Childhood Education will be hired to ensure that quality services are offered to preschoolers.

A psychologist will be situated at the Child Development Programme to assess young children before they enter preschool and primary school. Early assessment of children may help to prevent anti-social behaviours.

The curriculum will be streamlined to improve student outcomes. This will be accomplished through the use of improved instruction, coordinated strategies and focused resources, with the end result being better educated, healthier and more responsible citizens.

In the wake of the 2008 audit of the local curriculum, the central office will work to ensure that the written, the taught and the assessed curriculum are all aligned.

The Literacy Collaborative framework will continue to be used in the classroom. The Collaborative is a successful programme and during 2009–2010, already-trained, school-based primary teachers will coach their peers in best literacy practice, and trained middle school teachers will introduce the framework to their peers for the first time.

The Everyday Mathematics series, which provides a balance of theory with hands-on experience for students, will be introduced at the primary level in order that students develop a better understanding of mathematical concepts.

The role of experiential learning at the Middle School level will become more refined: M1 students will participate in the Waterwise programme, M2s will participate in Outward Bound, while M3s will work with the Bermuda Sloop Foundation.

During 2009–2010, the Bermuda College will implement Phase I of the newly developed Ten-Year Strategic Plan which was recently adopted by the Bermuda College Board. The College will complete its final self-study toward institutional accreditation through the New England Association of Schools and Colleges, and prepare for the final site visit in 2010.

In addition, steps will be taken to ensure that the Motor Vehicle Technology programme at the College will become accredited. The College will introduce relevant and proven student success and retention strategies including piloting Learning Communities for freshmen students in Fall 2009, and peer advising.

In order to continue to support the pursuit of further education and qualifications by Bermudians, the College will:

•implement the new Nursing Pathways Programme in partnership with the Ministry of Health and the Bermuda Hospitals Board.

•enter into partnership with institutions in the United Kingdom in order that our students may have a seamless transfer as they take advantage of the benefit of "home fees" in the UK.

• partner with the Community Schools to offer developmental courses currently offered at Bermuda College. This will allow students to complete basic mathematics and English skills prior to enrolling at the College.

Work will continue on the physical plant at the College as work continues on upgrading and completing internal renovations to Tech Hall to better support the technology/trades programmes. Improvements designed to facilitate accessibility for the physically challenged will be carried out through the installation of elevators/lifts and automatic doors around the campus. The already initiated programme of replacing roofs with SKB roofs will continue.

The technology infrastructure will be improved through the introduction of Active Admissions – a web-based admissions process. Also included are upgrades to the College website and the introduction of portals to service the various constituents of the Bermuda College community.

Mr. Speaker,

The Ministry of Labour, Home Affairs and Housing has been provided with $137 million in 2009–2010. The Ministry's key initiatives and programmes for 2009–2010 will take an umbrella approach for youth while strengthening families.

As the training of our local workforce remains paramount, the Department of Labour and Training will expand its Summer Employment Programme and implement the One Stop Career Centre to provide a single venue where individuals can explore career options, be assisted with job placement, receive training and be referred for further training.

The HUSTLE Truck Programme will partner with the Bermuda Housing Corporation and the Department of Labour and Training to provide a wider range of training opportunities to enhance workers' skills and to improve their chances of securing full-time employment.

The Ministry is prepared to rapidly expand this programme to meet any increase in unemployment. The Interest-Free Loans initiative, announced in the 2008 Throne Speech, for qualified Bermudians who wish to become first-time home owners will be implemented in this fiscal year.

In response to the current economic climate a modification of the original concept and phased implementation affords the Government an opportunity to take another giant step in providing opportunities for families to "own a piece of the rock".

The Hope for Life initiative will attempt to improve the quality of life for our young people by tackling gang violence and drug use that is destroying our young people's hope and their opportunities for a better life.

The Bermuda Housing Corporation will continue to provide affordable and high quality housing on a collaborative basis with private sector partners. The completion of the next phase of the Loughlands development will be another milestone in the successful partnership.

Additionally, the completion of the Rent-Geared-to-Income Perimeter Lane Development is scheduled for August 2009.

The Bermuda Tattoo 2009 will be the signature event of the 400th anniversary celebratory calendar. It will run 22–24 October 2009, with four performances over three days and aims to educate and entertain locals and visitors alike.

Mr. Speaker, the Ministry of Justice has been provided with a budget of $24 million in 2009–2010. During fiscal 2009–2010 the Judiciary will use the proposed budgetary allocation to meet its mandate of the administration of justice fairly, effectively and expeditiously.

The Criminal Justice Information System (CJIS), which stores records of all court matters, will continue. Saturday Court sessions will be held in the Magistrates' Court to assist with the implementation of the new PACE Legislation.

The Attorney-General's Chambers will continue to facilitate the professional development of Bermudians by funding overseas and online training for Bermudian Assistant Parliamentary Counsel.

The Pupil Barrister programme will continue to provide developmental opportunities for Bermudians who aspire to become lawyers in the public sector.

Through the introduction of a Legislative Information System (LIMS), Bermuda will become a leader in providing access to the law through high quality internet-based access to current consolidated legislation. LIMS will give Members of the House and the Senate access to Bills and the status of Bills and will enable the Attorney-General to meet statutory requirements to publish current legislation.

The introduction of LIMS will provide Chambers with a modern drafting, consolidation and publishing system.

The establishment of a Witness Care Unit to provide support and information to witnesses will ensure that witnesses will feel less intimidated and more willing to support the prosecution process. Two Witness Care Officers have been employed to provide service and care to witnesses in the Witness Care Unit.

With today's greater emphasis on security for witnesses, video conferencing is now an essential tool in judicial and legal environments. It also allows parole boards to include victims in hearings and will help to reduce congestion in holding cells and in the courthouse.

This videoconferencing initiative will also increase public safety; reduce issues related to staff shortages; improve reintegration success through effective educational programs (e.g. GED courses from prison); realise safe, virtual visitation for inmates and their families and facilitate the safe participation of expert witnesses and vulnerable witnesses during court cases.

The establishment of a Law Reform Commission will ensure the continuing and systematic reform of the law. The Commission will be charged with responsibility for keeping the laws of Bermuda under constant review so that our laws may become more responsive to the needs of Bermudian society.

Mr. Speaker

The Ministry of the Environment and Sports is provided with a budget of $40 million and has a number of exciting initiatives planned for the 2009–2010 fiscal year.

The Department of Parks will focus on the production of the 71st Annual Exhibition, implementation of a horticulture training programme and a cross-Ministry woodland management scheme. The Department also will provide support for the 400th Anniversary Celebration events at Fort St. Catherine, the Botanical Gardens and other fort sites.

The Department of Land Valuation is conducting the 2009 Revaluation which will come into effect on 1 January 2010. The Department of Planning currently is undergoing the objection phase of the Draft Bermuda Plan 2008. The Plan provides the framework for the effective management of the natural and built environment and resource development in a sustainable manner that best provides for the environmental, economic and social needs.

The construction of the new Animal Health Care Facility and development of the Madagascar Exhibit will be advanced by the Department of Conservation Services. The Department also will deploy tracking devices on the endemic Cahow and conduct the first ever total economic evaluation of Bermuda's coral reef system.

The latter will be published in June 2009. The Department of Environmental Protection will conduct training courses with the Bermuda Police Service. The training plan will to lead to Fishery Wardens becoming Special Constables.

The Department of Youth, Sport and Recreation will provide scholarship opportunities for students studying "Sports Management" and related fields leading to employment opportunities for successful candidates within the Department.

A Counsellor in Training Programme (CIT) programme also will be implemented for children between the ages of thirteen and fifteen to teach them how to succeed in the workplace.

These initiatives continue to support and promote the Ministry's mission to secure a balance between the protection, conservation and enhancement of Bermuda's natural environment and the sustainable development needs of the community, and to coordinate the development of Bermuda's young people through sports and recreation.

Mr. Speaker

The Ministry of Energy, Telecommunications and E-Commerce is provided with a budget of $32 million in 2009–2010.

The Ministry's primary objectives for the year will be the development of a National Energy Policy, the continuing reform of the telecommunications regulatory environment, the development of a data privacy and protection policy framework, the launch of a five-year initiative to modernise the postal sector and the redevelopment of the Government's information technology infrastructure.

The Department of Energy has allocated $250,000 of its total budget of $1.5 million towards the expenses for consultancy services required to develop an energy policy for Bermuda. A further $500,000 is allocated to create incentives to encourage the use of small scale alternative and renewable electricity generating systems.

The Department of Telecommunications has been provided with a budget of $2.2 million, of which $418,000 has been allocated for specialist consultancy services that will help to reshape Bermuda's telecommunications regulatory regime including the creation of an independent Regulatory Authority and the replacement of the current segmented licence structure by a single communications licence framework.

The Department of E-Commerce, with its total budget allocation of $1.3 million, in addition to developing a data privacy and protection policy framework, will also pursue initiatives that promote Bermuda's high rate of adoption of information and communications technologies.

The Department of E-Commerce has partnered with the Business Technology Division of the Chamber of Commerce to host the World Information Technology Services Alliance (WITSA) Global Public Policy Summit in Bermuda this November. WITSA is a consortium of more than 60 ICT industry associations from around the world.

They represent over 90 percent of the world ICT market, including world ICT leaders. Mr. Speaker, these Department of E-Commerce initiatives have received funding of $465,000. Government's Information Technology (IT) Office has an allocation of $8.4 million.

These funds support the Government's IT infrastructure and ensure that the required resiliency and redundancy are developed and maintained.

The IT Office is currently focusing on a major multi-year project to modernise the current infrastructure. This will create redundant data centres and the implementation of dual connectivity options to each of Government's critical locations.

The capital funding for the year for this project has been set at $3.2 million. While the operating expenses for the Department have risen by $1.7 million, these costs are to cover anticipated expansion in the network, and increased communications, staffing and support.

Mr. Speaker

The Cabinet Office Departments, together with the Ministry of Tourism and Transport, have a budget of $131 million in 2009–2010. The Cabinet Office Departments provide a unique nexus at the hub of Government. Broad policy implementation will continue to be managed with the assistance of the Sustainable Development Unit and the Central Policy Unit.

The successful internship programme "Jumpstart" will be renewed in 2009–2010 and the commitment to provide opportunities to young Bermudians within the public service will continue.

The Department of Communication and Information will be reviewed in order to gain greater efficiency and a more coordinated media effort, including an enhanced CITV and a web-based component will be undertaken.

The Department of Statistics will be engaged in significant preparation for the prescribed 2010 Population and Housing Census. The data collected will provide important information to guide policy-making over the next few years.

The Department of Archives will augment its record keeping, improve public access and encourage greater public use of the office and its records.

The Department of Human Resources will continue its drive to underpin the Government of Bermuda as the employer of choice. The recruitment and retention of the brightest and best Bermudians will enhance Government's service delivery.

In an exercise that has yielded greater efficiency and savings, the Department of Management Services has been amalgamated into the Department of Human Resources.

This "one-stop-shop" is expected to capitalise on the natural synergies between the two areas.

The Ministry of Tourism and Transport will continue to upgrade the tourism, public transportation, road safety and marine infrastructure.

Increased resources will be designated for Road Safety initiatives to address road user behaviours. The use of public transportation will be encouraged.

Ministry resources are actively engaged in ongoing efforts to facilitate the development of new hotels and attract investment to Bermuda.

The development climate mirrors the global economy but through an enduring, well-respected product and a committed Ministry team, significant and internationally recognised brands are preparing to progress new hotel sites.

This sector is set to bolster the Island overall economic position as its construction phase will shore up any potential softening in other areas. Prudent planning and bold decision-making in the last decade has set the stage for this renewal of Bermuda's tourism product.

Mr. Speaker

The Ministry of Works and Engineering is provided with an operational budget of $71 million and a capital expenditure budget of $33 million in 2009–2010 to meet the Government's infrastructure needs.

The Land Title Registry Office is now established and the coming year will see a range of activities to facilitate the Land Title Registry Office becoming fully operational, including the completion of the provisional registration of the Government estate and the preparation and implementation of legislation in order to facilitate the registration of private land.

Additionally, work has commenced on a new aerial survey to update the 2003 map of Bermuda that appears on the 400th Bermuda Anniversary Stamp Issue. This will be completed by the end of the year. Government's investment in high quality GIS data layers will provide benefits for all of Bermuda.

In a collaborative initiative between the Ministry of Finance and the Ministry of Works and Engineering designed to empower small businesses and start-up companies, $1 million of capital projects will be earmarked for graduates of the Bermuda Small Business Incubator. A Memorandum of Understanding has been signed to this effect.

The further development of a web-based bidding system in the coming year will assist in equal bidding opportunities for all contractors seeking Government work.

The Ministry of Works and Engineering is exploring a number of strategies designed to attract greater numbers of suitably qualified and experienced professional engineers, architects and surveyors.

For example, the Department of Architectural Design and Construction, with an operational budget of $1.5 million, is working with local private sector firms to second staff that would otherwise be laid off during this particularly challenging period.

This holds a number of benefits, including that the private sector firms can offer a short-term employment opportunity to their current staff while Government can deliver its projects by using experienced resources that are already familiar with Bermuda's processes.

The Department of Operations and Engineering has an operations budget of $36.5 million.

The Highways Section will continue its roads improvement initiative while the Structures Section will progress the required geotechnical investigation for the New Crossing initiative – that is, the replacement causeway – and oversee the required Environmental Impact Study.

Additionally, Government is considering a Public Private Partnership to fund this important capital project.

The Solid Waste Section will concentrate on improved fleet management to increase operational efficiency and to reduce overtime. Also, the Section will investigate the implementation of a "user-pay" charging system for waste disposal at the Airport and Marsh Folly sites, expand the existing e-waste programme, implement a scrap metal recycling programme, and commence an in-vessel compost concept to recycle horticultural waste.

The Water/Sewage Section will complete the implementation of a computerised water metering system to track customer billing and water usage more efficiently.

In addition, upgrades to the St George's Water Truckers' Outlet and to the Devon Springs and Prospect reverse osmosis plants will provide increased reliability of service to the surrounding locales.

Refurbishment of Tynes Bay Waste-to-Energy Facility incineration stream two combustion and pollution control systems is a priority as the facility maintains reliable waste disposal operations.

In addition, the Environmental Impact Study and Public Awareness Campaign for the Third Incineration Stream project will be undertaken, as will the commencement of construction for the new Ash Processing Plant.

The focus of the Quarry Section will be to maintain the reliability of the Government's motor fleet by enhanced staff training of staff given an increasingly computerised environment. In addition, the Quarry Section is increasing its apprenticeship programme by six to eight apprentices in the areas of heavy equipment, automotive apprentices, body and paint shop, millwright and welding.

The apprenticeship programme has been in place for some four years and develops young technically oriented individuals to become fully qualified tradesmen.

Mr. Speaker

The Ministry of Finance is provided with a budget of $121 million in 2009–2010. Competition in the global economy has intensified in the prevailing global economic and financial debacle. The strategic goal of safeguarding Bermuda's economic interests therefore is a high policy priority for the Ministry of Finance.

Bermuda is highly regarded as an international financial centre and in particular we are regarded as 'the World's Risk Capital' with some $440 billion of assets in the Bermuda market.

As part of the policy response to the increasingly competitive global environment, the Ministry of Finance has taken a more direct marketing role in the business development of Bermuda as a financial services jurisdiction.

We will continue to anticipate and to respond to the changing global regulatory environment. This is part of governing with foresight and anticipating the future.

The Ministry's work in this space will provide an overarching framework for the vital role conducted by the Bermuda International Business Association (BIBA) whose promotional work has contributed to raising the Island's profile in the global arena of international business. Government intends to continue supporting BIBA by grant funding, and the BIBA grant in 2009–2010 has been maintained at $2.6 million.

On the domestic front, the Ministry of Finance will continue its partnership with the Bermuda Small Business Development Corporation in the roll-out of 'Economic Empowerment Zones'. The grant to the Bermuda Small Business Development Corporation is $2.7 million.

HM Customs will introduce enhanced risk-based inspection processes and non-intrusive scanning technology at all ports of entry that will support the facilitation of legitimate trade, and compliant passengers while enhancing border controls and the detection of high-risk passengers and illicit goods.

Government will amend the Government Loans Act to provide the Minister of Finance with additional capacity to respond to severe economic conditions that impair Government's tax yields.

One of the proposed changes would enable the Minister of Finance to determine that the interest charge on long term public debt be paid from the Sinking Fund during a recession or to postpone the annual contribution into the Sinking Fund.

Accordingly, no appropriation will be made in respect of debt service and the contribution to the Sinking Fund in 2009–2010. Interest on long term debt will be paid out of the Sinking Fund in 2009–2010, following the proposed amendment to the Government Loans Act.

It is anticipated that in 2010–2011, interest on long term debt will be charged to the Consolidated Fund as per the norm, and a contribution will be made to the Sinking Fund.

Mr. Speaker

The capital expenditure component of the National Budget 2009–2010 is $150 million. While most of the funding is related to construction projects that are underway, there is also provision for IT development, new communications equipment, public transportation vehicles and air safety equipment at the LF Wade International Airport.

Some $22 million in the capital plan is earmarked for housing initiatives, and $15 million has been provided to the Police/Court project. The Lefroy House project is provided with $2.5 million and $16 million is allocated to the expansion of Tynes Bay Waste Treatment Facility.

Fifteen new wheelchair capable, low floor buses will be delivered and put into service. These buses will exceed Euro 4 clean air standards and have increased passenger capacity due to a redesign of the interiors. Many of these buses will be housed at the new west end Dockyard Depot, projected to open in the second quarter of this year.

The new facility will be a purpose-built facility capable of housing up to 30 buses and it will be outfitted with refuelling equipment, thereby eliminating the requirement for buses to return to the Devonshire Depot for staging and refuelling.

The Dockyard Depot will provide for more cost efficient service in the west end, particularly given that Heritage Wharf, the new cruise pier complex at Royal Naval Dockyard, is scheduled to open in May 2009.

As a result of this new facility's capability of docking larger ships, it is anticipated that Bermuda will attract increased numbers of cruise visitors.

As it relates to air transportation, upgrades to enhance navigational aids to replace some of the ageing air navigational equipment which was left by the US Military will move forward to ensure that the Airport's equipment meets ICAO standards.

The airport upgrades will also include the refurbishment of the Air Traffic Control Tower.

Meanwhile, a new vessel will replace the first response Pilot /Rescue boat the St. David which is 20 years old and no longer suitable for quick response Search and Rescue duties.

To complement this new vessel, a Long Range Identification and Tracking (LRIT) system for ships, which is a security measure that enables ships to be tracked anywhere in the world, will be implemented in compliance with international maritime administration requirements.

Mr. Speaker

The economic slowdown will have a negative impact on Government's total tax yield in 2009–2010. Government therefore is projecting a revenue budget of $969 million in 2009–2010, some $16 million below the original estimate of $985 million for 2008-2009.

None of the major tax rates will be increased in 2009–2010. On the contrary, Government proposes to extend some existing tax concessions on capital imports for major building and renovation projects in the hotel and restaurant sectors as well as the telecommunications sector.

The fuel concession for commercial fishermen also will be extended and duty rates for a range of energy-efficient goods will be set to zero. More importantly, first-time home purchasers will be relieved of the added cost of stamp duty on the conveyance of the property if the price of the real estate is below $750,000.

This concession should make home-ownership for young families both more achievable and more affordable.

Further, the proposed exemption from stamp duty on real estate transactions below $750,000 combined with the prevailing buyers' market in the real estate sector may have the effect of stimulating more renovation work on smaller properties with the expectation of a more likely sale.

This stamp duty concession represents the continuation of tax policy that has been both fair and reasonable to the community at large and to young families and individuals in particular. Seniors have benefited from the exemption of land tax on the home that they occupy. Families have benefited from the specific tax exemption for the primary family homestead as well as the customs duty concession on affordable housing schemes with pre-fixed sales prices below $750,000.

Following on last year's restructuring of stamp duty in this area, the proposed concession provides a further boost to young persons and other individuals or families seeking to secure their first 'piece of the rock'.

Mr. Speaker

Last year Government raised the rate of import duty on boats from 33.5 percent to 55 percent. Upon further reflection and consultation, and having regard to our maritime culture and the marking of our 400th Anniversary as an Island community, Government will reduce the rate of import duty on boats and associated parts to 22.25 percent in 2009–2010.

The impact is anticipated to be revenue neutral as it is likely to stimulate more sales and repair work and thereby drive revenue yields for both customs duty and payroll tax. The yield from customs duty in 2009–2010 is estimated at roughly $245 million.

The standard rate of payroll tax will remain at 14 percent in 2009–2010 and there will be no change in the salary cap of $350,000. The yield from payroll tax is estimated at $350 million, the same as the revised estimate for 2008–2009.

While it is anticipated that there will be a reduction in the number of jobs in the economy in 2009, it is also anticipated that modest salary and wage increases during the year will help to keep the yield from the payroll tax at its present level.

It is timely to recall at this juncture that there is a payroll tax exemption on the payroll of trainees, interns and apprentices. This has been in existence since 2005 and the only criterion for eligibility is to have the National Training Board certify that the training programme is valid.

The increased yield from the land tax is related to the new residential and commercial premises that have been added to the valuation lists during the course of the last year or premises that are anticipated to come on line during the course of 2009–2010.

In the prevailing economic climate, disciplined cash flow management will be a primary concern for all businesses.

In an effort to help ease the anticipated tighter cash flows for businesses, the Office of the Tax Commissioner will institute a payroll tax amnesty programme that, under specific conditions, will waive all penalties and additional taxes levied on outstanding payroll taxes.

In addition, HM Customs will work with retailers to defer part of their customs duty payments for up to three months with the anticipation that a significant proportion of merchandise will be sold within that time frame.

These temporary measures will impact on Government's own cash flows as tax collections from major revenue sources will be spread over a longer period of time. Accordingly, Government proposes to amend the Temporary Loans Act so that its own cash flows are not severely impaired while it seeks to assist key industry sectors.

The full details of the Revenue Estimates are shown in the annexes to this Statement and in the Estimates of Revenue and Expenditure For The Year 2009–2010. Government estimates that the borrowing requirement to assist in financing the planned capital expenditure programme will be $147 million in 2009–2010.

Government proposes to raise the statutory debt ceiling in 2009–2010 to accommodate the required borrowing for the capital plan and also to prepare for the financing of the new hospital as we look ahead to medium term requirements beyond 2009.

It is anticipated that a Government guarantee will feature as an element of the financing arrangement for the new acute care facility.

Further, in the current unsettled state of the global financial system, Governments around the world have been put 'on risk' in the likelihood of having to respond to an event that poses a systemic threat to the stability or viability of a key economic sector.

The proposed new statutory debt ceiling for long term debt has taken this factor into account.

Mr. Speaker

Honourable Members already are aware of the significant multi-billion dollar economic rescue efforts that have occurred in other larger economies. Fortunately to date, Bermuda has not had to embark on such a course. However, as part of our anticipatory planning, especially given the announced UK Review of Overseas Territories and Crown Dependencies, we are increasing the debt ceiling beyond our immediate needs as an economic fallback should we need to protect various key sectors of our economy.

This added financial cushion of approximately $250 million is not to cover Government operational expenditure or capital investment outlays, but for an extraordinary and strategic response, should it be required, to any subsequent systemic threat or risk issues to our economy.

Having regard to all of these considerations, Government proposes to set the statutory ceiling for long term debt at $1 billion. While we hope not to have any need to incur additional debt to cover any systemic risk, Government must hope for the best and plan for the worst.

Mr. Speaker

Despite the tough challenges ahead, there are still many reasons to feel positive about the future as we move towards a full recovery. Typically a recession – based on the traditional definition – lasts for around 18 months.

So in most G8 economies, there is at least another year to go. The good news is that with a recovery the upside is this:

•Businesses begin to regain confidence.

•Businesses hire more workers and the rate of redundancy slows.

•Increased profitability in one sector impacts positively on other businesses.

•More employment leads to increased consumer spending.

•Profit margins increase.

•GDP grows.

This is good for Bermuda and good for business.

Mr. Speaker

At the outset, I stated that the National Budget 2009–2010 has been framed in the context of some very challenging economic times. Clearly the sobering economic environment causes us all to embrace the concept of the audacity of hope.

One has only to listen to various media interviews with the men and women of Bermuda and to analyse the data results of various local polls to understand that Bermuda residents have fears, insecurities and doubts as to how Bermuda will manage and how, on a very personal level, they will have the resources to cope with this very challenging economic environment, but we can and we will.

The National Budget 2009–2010 provides a significant wraparound of measures that includes tax relief, financial assistance, duty deferrals, the Child Day Care Allowance, free Bermuda College tuition, FutureCare, affordable housing initiatives, unemployment assistance, support for our retail and tourism sectors, continued construction activity with our ongoing capital projects, financial support of meaningful social programmes out of the proceeds of the Confiscated Assets Fund to strengthen our families, assist our youth and to complement the work done by the National Anti-Money Laundering Committee and the Financial Intelligence Agency and a myriad of other Government programmes.

Mr. Speaker

We are a community that is living on the cusp of change. However, Government has taken steps to ensure that by our fiscal plan we provide the necessary resources to assist Bermuda and her people in these tough times so we have a sustainable economic recovery.

These times are not ideal for Bermuda and the global community. Yet we have the opportunity, the wherewithal, and the drive to do the necessary. Bermuda as our ship of state will stay the course – steady as she goes – as we weather the numerous economic storms.

It is probably an historic benchmark that this year as we celebrate Bermuda's 400th anniversary, we will have to demonstrate that same tried and true resilience and strong fortitude that our hardy ancestors had. We have stood the test of time and as a community, despite the challenges, we will be fine and we will succeed as a country together. Each one, reach one. Each one, help one.

That is the essence of the Bermuda spirit, and as your Government we intend to embody that by our tenderness in tough times. Allow me to recall the words of Nelson Mandela who said on overturning apartheid: "Some things seem impossible until they are done."

Thank you, Mr. Speaker