bernews/2014/12/opinion/ “You have a piece of land? Let me build you a brand new airport terminal for free.” These are the words that were said by no person ever. So the words from the OBA extolling the great deal for a new L. F. Wade International Airport without Bermuda borrowing any money may sound nice, but they don’t match with reality. There are simple principles of economics; one of them is that there is no such thing as a free lunch. Someone will have to pay for a new airport, and in the end, that someone will be the Bermuda taxpayer. Whether the Bermudian people borrow the money to build an airport, or the Canadian Commercial Corporation [CCC] borrows the money to build an airport and we pay them back, the money for new airport will have to be borrowed and must be repaid with interest. Whether or not the debt appears on Bermuda’s balance sheet is largely irrelevant, we will have to repay the lender with our future revenues, so the airport deal will add additional stress to Bermuda’s finances. If the OBA’s airport deal is going to put additional strain on our finances, shouldn’t the OBA ensure that Bermuda gets the best deal possible? The OBA keeps telling us that this is the best deal for Bermuda, but how do they know it’s the best deal if they haven’t asked anyone else if they can beat it? Wouldn’t it be the right thing to have an open, transparent, and competitive bidding process so that the amount of additional stress put on our finances is a little as possible? That may sound like common sense good governance to the average man, but to the OBA good governance “takes too long and is too expensive”. To try to justify their wholesale rejection of the principles of good governance, which require a competitive bidding process for large infrastructure projects, the OBA have come up with a convenient boogeyman – consultants! Again, I must remind the OBA, there is no such thing as a free lunch. The ‘value for money’ work will need to be done by someone, and that means that the Bermudian taxpayer will be on the hook – whether explicitly or buried within CCC’s massive contract. Money will be spent on consultants, but the taxpayer won’t know if they could have paid less and they will never know if a better deal was out there because the OBA refuses to ask anyone to see if they can beat CCC’s offer. The OBA’s plan would see the L. F. Wade International Airport privatised for a period of 30 years. One of our most important assets would be completely under foreign control along with the $25.2 million in revenue that our airport earns per year. That revenue stream, taken over 30 years and assuming a 2% inflation, rate exceeds $1 billion. But the OBA have admitted that the current revenue stream isn’t enough to build a new airport, so also under consideration is income from the creation of a solar farm on airport land and revenues from Bermuda controlling our own airspace. We are talking about a revenue stream that will easily exceed $1 billion over the next 30 years. With such a large amount of money, it is laughable that we are even talking about whether or not we should have a competitive bidding process. On Friday [Nov 28], we learned that the OBA’s $1 billion privatisation of our airport for 30 years without a tender has hit another snag. The UK government [Bermuda is still a colony] stated in its letter of entrustment that “The project for the redevelopment of the airport must meet value for money tests in accordance with best practice set out in Her Majesty’s Treasury’s Green Book”. The value for money tests in HMT’s Green Book [PDF] specify 4 different procedures that the OBA must follow to ensure value for money: open, restricted, competitive dialogue, or negotiated procedure. The most restricted of these 4 options, the negotiated procedure, requires the OBA to receive proposals from a minimum of three entities! However, such is the OBA’s determination to hand over more than $1 billion in revenue without a bid that they are now fighting the UK government to get their way. So let’s recap: $1 billion of revenue to CCC; 30 year privatisation of our gateway to the world; construction firm already selected without a competitive bidding process; and the OBA is fighting the UK to get their sole sourced way. Something doesn’t smell right about this airport deal, and it beggars belief that the OBA think that $1 billion of future revenue shouldn’t be subject to a competitive bidding process. The Bermudian people must demand the OBA hold fast to the most basic principles of good governance and engage in a competitive bidding process so that the Bermudian taxpayer gets the best deal for their tax dollar. - David Burt
Posted on: Mon, 01 Dec 2014 13:50:20 +0000
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