Legislation to allow broader use of “excess” money in the Sinking Fund was passed in the Senate despite fierce opposition from independent and Opposition senators on Thursday evening.

The Government Loans Amendment Act 2024 will enable the Sinking Fund to provide monies to be “applied to a quango or other public funds”, if they are, in the opinion of the finance minister, not required to fund budget deficits.

The Sinking Fund includes an excess borrowing fund created in 2013, with the unused borrowing reserved for funding future deficits.

Douglas De Couto, the Shadow Minister of Finance, said while the One Bermuda Alliance supported the underlying policy objectives of providing affordable healthcare and housing, which could be achieved through funds being taken for the Mutual Reinsurance Fund or the Bermuda Housing Corporation, the party was unable to support the Bill as it was “not the careful thing to do”.

It went to the vote, resulting in 6 to 5 in favour of its passing.

Dr De Couto suggested that the goals could be achieved by other means whether through a supplemental budget increase, grants in the Budget or through a “narrowly tailored” piece of legislation, which he said the Opposition pledged to support.

Dr De Couto said: “This amendment doesn’t say anything about the BHC; it doesn’t say anything about the MRF; it doesn’t say anything about the amount that will be transferred or how the legislature will be able to review it.

“It is very important that we think very carefully before we remove that scrutiny and opportunity for discussion. The funds wouldn’t appear on the supplemental, we wouldn’t know if more money was spent than was planned, we wouldn’t know if money was spent in other places other than those talked about in the statement.

“We in the OBA have some concerns about that. We have heard in the Budget debate, and we know from the Auditor-General, that the accounts on many of those funds are years behind, never mind audits. When we think about accountability and scrutiny, we wouldn’t know.”

Leslie Robinson, the Junior Minister of Economy and Labour and Public Works, interjected to say that all public funds are audited.

However, Dr De Couto argued that many bodies were years behind in producing accounts and audits.

Kiernan Bell, the Senate vice-president, said she had examined the entire Government Loans Act 1978 and its various iterations to understand whether the amendment aligns with the purpose of the Sinking Fund.

She questioned how the amendment was not in direct conflict or inconsistent with section 12(b) of the Act, which does make provision for the powers of the Minister of Finance to apply any excess funds.

Section 12(b) provides that if at any time the amount of money in the Government borrowing Sinking Fund is, in the opinion of the minister, more than sufficient to cancel the total amount of the public debt, the minister may transfer into the Consolidated Fund an amount equal to the amount by which the monies in the fund exceed the total amount of the public debt.

Ms Bell said: “To paraphrase, if we had more than approximately $3 billion in the Sinking Fund, the Minister of Finance could transfer the excess to the Consolidated Fund.

“Of course, that is not the reality that we are in. We are not even close to having an excess. The Sinking Fund, however one describes it, has less than 5 per cent currently of the overall amount of Government debt in it.”

She added: “How is this amendment consistent with the principal and purpose of the Sinking Fund, which currently only makes provision for excess funds to be transferred to the Consolidated Fund, a threshold that we are billions of dollars away from reaching?”

She referred to the “ambiguous” language within the amendment and said that it was difficult to understand how it was consistent with, and could function within the financial provisions of, the Constitution.

“Unfortunately, the phrase public funds is not defined in the amending act unlike section 12(b) which specifically designates the Consolidated Fund, the language public funds is not subject to statutory definition in the Government Loans Act. It is not even statutorily defined in the Public Funds Act,” she said.

“I note that there was reference to the MRF, which is the designee of $30 million from the Sinking Fund. The MRF is not a public fund.”

She added: “The Consolidated Fund is the logical and only place that such funds should be applied if they were ever to be taken from a Sinking Fund or any other specifically created investment fund like a pension fund.”

John Wight, independent senator, described the amendment as “an absolutely inappropriate use of funds” and reflected poor governance.

Robin Tucker, Opposition Leader in the Senate, said the money in the Sinking Fund should be “retained for a rainy day”.

Ms Robinson said the Budget Statement demonstrated that Bermuda was on the path to a balanced budget and that the Bill sought to help people and businesses reeling from the pandemic, supply chain issues and the cost of living overall.

“I would hate to see that this Bill does pass, particularly when we are talking about healthcare and understanding that if we don’t do this, people are going to have to pay $45 more per month this year and we don’t want to have to increase any healthcare insurances.

“Similarly, we all know that we have a housing shortage.”

Owen Darrell, the Senate Leader, said: “Maybe I shouldn’t be surprised by the OBA, but I am surprised by some others that seem to be opposed to putting Bermudians first when it comes to this Bill. We seem to be opposed to keeping healthcare costs down and the construction of some desperately needed affordable housing units.”

Dwayne Robinson, Opposition senator, said it was “disingenuous to come to the people of Bermuda with goals and ideals knowing you can’t fund them”.

Arianna Hodgson, the Junior Minister of Finance who read the Bill, responded: “I am shocked but not surprised that senators would not support a financial measure that was approved by the lower house just recently that would provide an avenue for real relief for the people and businesses of this country.

“Politics aside, the one thing we can all agree on is the Sinking Fund represents funds that are set aside specifically to repay debt. These are funds that were borrowed in anticipation of future deficits. We do not project a deficit.”