The Shadow Finance Minister who warned an economic crisis was on its way to Bermuda yesterday labelled Finance Minister Paula Cox's handling of the public purse "hopelessly naive".

United Bermuda Party MP Bob Richards was yesterday joined by Shawn Crockwell of the Bermuda Democratic Alliance in criticising Government's attempts to cope with the global downturn.

"The $100 million shortfall in Government finances this year is a clear failure on the part of the Finance Minister," said Mr. Richards in a statement.

"The Minister did not heed our warnings on the impending downturn nor international signals of oncoming recession.

"Turning a blind eye to pervasive economic realities, the Minister locked her Government into spending plans that far exceeded its income. Her excuse that economic developments are 'constantly evolving' and therefore problematic suggests she is not up to the challenge of economic management.

"Our warnings as far back as 2007 were explicit and unequivocal."

Mr. Richards called for Government to adjust its plans in the UBP's Reply to the Budget in February 2008.

He recalled yesterday: "We criticised the Finance Minister for not taking into account the economic storm clouds and for continuing the Government's spending spree 'despite the real possibility of revenue shortfalls as a result of a weak US economy'.

"In the face of these warnings, the Minister's management of the public purse has been naive or hopelessly optimistic or worse."

Mr. Richards said Premier Ewart Brown was also culpable for a record of fiscal indiscipline and waste which "exceeds all others".

"As Minister of Transport and Tourism, he has presided over building projects that have exceeded their original budgets by tens of millions of dollars — unprecedented cost overruns that could have been allocated this winter to a Government stimulus package to keep Bermudians employed and hire those who have lost their jobs," said Mr. Richards.

He recommended introducing a "sensible programme of budget cuts" without firing civil servants, by trimming travel and overseas consultants.

"Where possible, the Government should use its leverage as a significant tenant to negotiate down rents they are currently paying. In this area, they have huge bargaining power," he said.

He said he was sceptical of Ms Cox's ability to follow through in a 20 percent cutback in Civil Service spending.

"It is not enough to simply issue directives to her colleagues," he said. "A Minister, if she is to be effective, must enforce the spending rules she sets for them. The Minister clearly has not done this and we remain concerned she does not exercise the clout to ensure her colleagues submit to the dictates of the public fiscal interest.

"In this particular matter, we are also concerned the Minister does not have the backbone to stand up to the Premier, who continues his colossal mismanagement of capital projects without any accountability, without any acknowledgement that the Minister of Finance is supposed to be the guardian of the public purse.

"We have often criticised the Premier and his Government for failing to lead by example and this unfortunately is one more example where the disregard for public interest in their approach to taxpayers' money is notable for its absence."

He also recommended Government ensures social and financial assistance in the months ahead remain functional and fully funded, drop its plans to purchase new office buildings and install a Contractor General to improve supervision over the disbursements of public money on capital projects.

In his statement, Mr. Crockwell pointed to a string of missed signals that the economic crisis was on the way.

"It is hard to be critical because we all recognise the fact that Government revenues and expenses have fallen short of budget during what is clearly a severe global recession," he said.

"However, what is apparent is that Government has, firstly, mismanaged the Government coffers during the period of expansion that preceded the global recession.

"Any student of economic activity is aware that periods of expansion are generally followed by periods of stagnant growth or recession.

"The strong economic environment that existed during this Government's first eight years of power provided an opportunity to solidify our fiscal position. Instead, the Government embarked on a spending spree that further overheated the construction industry, in particular, and increased debt when revenues were very robust.

"Another contributing factor is Government's failure to recognise the recessionary threats earlier, when initial warning signs existed in 2006 after the US housing market peaked and, later, when US economic activity began to slow.

"Bermuda's economic activity has historically been closely linked to the US, so it is prudent to look for warning signs there. Our economy tends to lag the direction of the US; therefore it provides Government with an opportunity to take appropriate action/decisions in the face of recessionary forces in the US, an opportunity this Government clearly did not take advantage of."

Mr. Crockwell said Government should have significantly adjusted its revenue forecasts before the 2009/10 Budget.

"It appears as if Government is still being caught off-guard two years after clear signs that a significant recession was possible," he said.

"To be off by $20 million in the first quarter forecast of revenue in 2009/10 alone points to either a significant under estimation of the seriousness of the global recession or faulty modelling by the Government, particularly when you consider these forecasts were likely being made during the calendar fourth quarter of 2008 and calendar first quarter 2009, when the financial crisis was already full blown.

"No matter how one analyses our current economic predicament, it is clear that the Government, and more particularly the Minister of Finance, has not been prudent with the people's money."