“SAGE It Ain’t So!”: A Guide To The Interim Report

bermuda age demsThree months after its establishment in April, the new Spending and Government Efficiency (SAGE) Commission has produced an interim report on the financial health of the government and the bottom line is this: This shit has gotten so real we don’t even really know how real it is…really.

Even after meeting with the heads of most major government departments, the unions, the Chamber of Commerce, and the party caucuses, the commission still doesn’t know for sure how many people government employs, how much the departments are owed in taxes, fees, fines, etc., or what kinds of assets and properties government truly owns.

Their recommendations for immediate action are fairly drastic: mandatory retirement at 65 for all government workers and an immediate hiring freeze on all vacant posts. While the latter is expected to result in a $40 million budget savings, the rest of their recommendations are purely structural and won’t provide any budget relief. Things like integrating human resources, real estate management, and information systems into a centralized management plan is just so government and the commission can get a better picture of what remains unknown.

That’s like going to the ER with blood gushing out of your ears and the doctor telling you that before she can help you she first needs to find out how much blood you have in your body, but because she doesn’t have the right tools the best she can do is watch you bleed out and make an educated guess.

There are many, many things to be worried about in SAGE’s initial findings, but two big questions will need to be answered: How feasible is it to make large structural changes to these established institutions, and when can we expect to know how bad the situation really is?

On the first point, when head of SAGE Brian Duperreault tried to open a dialogue in very broad, unspecific terms about the cumbersome bureaucracy in the civil service earlier this month, the opposition accused him of being in violation of the Act’s secrecy provisions by even bringing the topic up in a public setting. Some choice quotes from Mr. Duperreault’s speech:

“What we have is a lumbering organization […], a vestige of a colonial mindset that can’t adapt to the 21st century because it hasn’t been given the tools to do so, […] The performance process doesn’t seem to produce reasonable outcomes that support healthy, well-managed growth and development.”

Tough love for sure, but we need more honest identification of the problems if we want to solve them, not more secrecy.

If the claims of violating secrecy weren’t enough, Bermuda Sun Columnist Christopher Famous has been claiming the “primary directive” of SAGE is to try to privatize the public sector even before the commission has made any recommendations. His claim is based on one of the seven stated functions of the commission (section (2), part (e) of the SAGE Commission Act) to “identify activities that can be privatised or outsourced”, and so he is asking his readers to assume that is the only function of the commission that matters.

Well, the SAGE interim report doesn’t provide any evidence of a push towards privatization as a primary directive, but this is clearly not an evidence-based discussion he’s having in his column. From last week:

“Bermuda’s postal services could be privatized to bring it back into the black, the Postmaster General Wayne Smith has revealed […] It seems my mate is finally letting the cat out of the bag as to what the OBA /SAGE may be planning to do.”

Could be privatized? May be planning to do? This type of speculation is not only a complete distraction from the issues, it’s an opinion divorced from any real facts.

But even if we are idealistic enough to think honest, factual discussion about SAGE’s recommendations will be encouraged going forward, it still might be awhile until we know for sure how bad things really are. Just consider that the things we DO already know, like the amount in unfunded pension liability, is completely undercut by what we still don’t know:

“The total unfunded liability for the three Pension Funds (including Ministers Pensions) […] is in excess of $2,906,644,000 […] this number is most likely understated.” (My emphasis)

It’s understated because we don’t know how many people are truly employed by government, the number of Bermudians aged 65 and older is rising (see graph above), and the cost of healthcare is skyrocketing. That is a trifecta of uncertainty for government and makes it hard to predict how much worse the situation could get.

If the desperation of the situation still escapes you at this point, keep that $2.9 billion dollars in mind when you hear the Premier announce that the agreed 5% pay cut for public sector workers may produce upwards of $50 million dollars over two years. Larry Burchall, an outspoken advocate for fiscal responsibility in the public sector, thinks a 15% cut is necessary at this point or else it’s just “big sharks snacking on small fry”:

“It is grossly, almost obscenely, unfair for the blue uniformed blue collar workers sweating it out in the hot sun to be forced to pay the same long term price as the $200,000 a year Civil Servants who, over nine years, kept supporting the financial decisions that resulted in Debt growing fourteen times (1,400%) in those nine years.”

That is an important point that bears repeating: Not only will this cut in wages result in an insignificant reduction in our deficit, it will impact those in the public sector who are already struggling.

However, in the spirit of throwing absolutely everything at the problem, SAGE is taking an admirable approach in offering cash prizes to members of the public with good ideas. The best idea will win $10,000, and the deadline is the Wednesday after Cup Match.

My personal idea for fiscal responsibility: stay away from the Crown and Anchor tables this year.

– P.D.

Remember, Kulcha! encourages conversation and feedback. If you have an expansion or opposing viewpoint of something here, let’s hear it in the comments, dun.

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4 responses to ““SAGE It Ain’t So!”: A Guide To The Interim Report

  1. Thank you for this breakdown! It is truly La-La land that we “don’t know how many people are truly employed by government.” How can this be?? Surely the people who pay the (vastly inflated) wages must know how many people they pay. Or is it the quangos that are distorting the picture? What else would cause this crazy phenomenon? I can’t quite wrap my head around the concept of “not knowing”.

    Please speak to the recent pay-cut. I thought that related to all government workers, not just the blue collar people. I thought at first a sliding scale of cuts would be best, but working a day without pay actually is a pretty even-handed way of reducing costs, since the loss of pay is relative to one’s salary. Can anyone tell whether or not the Parliamentarians are also working a day without pay? I know they took a pay cut when Parliament first convened (supposed to be 10% that worked out at 7-or-so%), but “to whom much is given, much is expected.” It would help a lot financially (and shut up some mouths – a major benefit in my book) if they demonstrated how serious this financial picture is by taking the additional cut and also working a day without pay. The upside is, if selling satellite air-space or whatever it is, actually comes through and brings in the millions that are hoped for, we can then reinstate people’s hours, etc. My hope and prayer is that our best legal and business minds are working on that project as we speak. Dem byes derr ink no slouches!

    • Syl – we don’t think any one is going to answer our calls at 2:15 on Cupmatch Eve, lol, but we’ll try to follow up on what you want to know.

      Thanks as always for supporting the team.

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