In a wide-ranging conversation discussing everything from the failures of the One Bermuda Alliance and medical marijuana to the emergence of Fintech on the island, Cooper Stevenson catches up with Nick Kempe, Opposition Senate Leader and Shadow Minister of Finance following his return to politics last year.
Nick Kempe joined the OBA in 2011, bright eyed and optimistic. In 2017, five days after being appointed chairman of the party, he abruptly stepped down following the appointment of Jeanne Atherden as party leader.
“After having a number of conversations with the Leader, it has become clear that my vision for the future of the OBA relative to its rebuilding is diametrically opposed to that of the Leader,” he wrote in a statement to the media.
“I joined and stood for the OBA because I believe in their principles and accordingly, I became a passionate advocate of those principles. My mandate was to bring change, but recent events demonstrate to me that the Executive will not be able to function with the fundamental political and policy discordance between its Chair and Leader during this key period of rebuilding. To remain and attempt to drive change without the necessary support would be an exercise in futility. It is my belief that this will hamper the Party’s ability to attract the necessary new talent in the immediate and long term. As such, I have decided to resign as Chair with immediate effect. I am grateful for the backing I received on Saturday and the support of my vision for change. I am sadly convinced that the Leadership is the embodiment of a mindset that has failed the electorate in the past. When that mindset has changed I will be more than prepared to serve the OBA again.”
That mindset changed when Jeanne Atherden was replaced with Craig Cannonier last September, and true to his word, Nick Kempe accepted an offer for the position of Senate Leader for the One Bermuda Alliance.
Could you explain your decision to leave the party, and what brought you back?
I didn’t agree with the direction of the previous leader [Atherden] and didn’t feel like my efforts would be effective in that environment—so I chose to step aside.
What specifically was it that you disagreed with? Was it an ideological difference?
I guess you could say it’s ideology. It’s somewhat hard to define, but there’s a certain mindset associated with the more stagnant parts of the former UBP members that I didn’t agree with. I got excited about politics in Bermuda for the first time when the BDA released their manifesto, and I felt like that energy and their principals, to a certain extent, were gone from the party after the OBA got into power, after Craig was no longer leader.
I’d come back to the island and they’d already merged into the OBA, and I was talking with someone at a party, about economic policies and things that were detrimental, I felt, to the island, and they suggested I get involved. And fair enough, I got called out. So I walked down to the OBA, signed up as a member, and on the sign-up form it kinda said, ‘What do you want to do? Volunteer? Donate? Serve on a committee? Possible candidate?’ So I said, ‘Sure.’ I was living at Table Rock Avenue [near Spanish Point] at the time and there was no one to my knowledge that was chosen as a candidate, so I [stepped up.]
I believe politics is hyper-local in Bermuda, and I place a great value on having a neighbourhood connection with the seat you’re running in. Not everyone shares that view, but I weight that aspect of the job quite strongly. You want your representative to live in and know the neighbourhood’s problems. Things as simple as needing a speed bump, or a lighting issue.
My challenge was that I wasn’t sure what I added to the equation, really. There were a lot of strong, economically profiled people within the OBA already, and I was walking into the room kind of wondering what I added because my background is in economics and business too. I guess I didn’t quite understand at the time though just how valuable, or how important, I was going to find the neighbourhood aspect of running [as an MP.] And I kind of went into that whole-hog. I had seven months in the lead-up to the election in the end—we didn’t really know when it was going to be held. But I had seven months and I ended up canvassing something crazy like 700 hours. Knocked on every door at least twice. Eighteen [Constituency 18, Pembroke West Central] was like eighty percent PLP in the election prior, so no one had me on the shortlist of seats to win. But I really tried to make a connection with the people that I was speaking to. It wasn’t a five-minute checklist at the door, you know. I was, too much chastising, spending 20-40 minutes in each house. So I’d go out at night and speak to like five houses. But I felt like I actually got to know my neighbours, which was nice as someone who’s a renter. Being able to build-out that neighbourhood connection…I feel that’s been lost to a certain extent in Bermuda. What’s nice about Eighteen is that there’s a lot of homeowners, so there are a lot of long-standing connections in the neighbourhood. So when I tried to do community projects and stuff I’d find that people would respond and they’d appreciate it.
Is that something the PLP did better than the OBA leading up to the election?
Potentially. I don’t know necessarily if it was at the neighbourhood level. There are strong neighbourhood candidates in both parties. It’s a bit of a roll of the dice unfortunately. There are some candidates who parachute in and rock up on election day. Usually the biggest canvassing efforts are in the marginal constituencies. I think what surprised people was the amount of canvassing work I put in, in a seat that nobody thought I was going to even get close to.
And you stayed there for the next election, right?
I stayed in Eighteen, yeah. I could’ve challenged or got pushy to try and get a safer seat on paper, but I still lived in Eighteen and it didn’t make sense to me to run anywhere else.
We talked about it on election day when I was covering your constituency. Obviously, you were being optimistic and saying all the things you’re supposed to, but did you think you had a realistic chance against David Burt?
I mean, I think there were two big currents on either side. Obviously, the OBA had some great economic successes in a very, very difficult climate, in an expense-reduction environment, which never makes anyone happy. But I think everyone knew going into 2012 that if we did our job well, we probably wouldn’t win the next election. But I think that the conversation, connecting why we were doing the economic things we were doing, failed. There was a lot of, you know, politically charged rhetoric of course, opposing things that were once big issues that seem to have disappeared now that the government has changed—as if the issue didn’t exist to begin with almost. Which is unfortunate. Bermuda’s politics has become so polarised. It sometimes makes it hard to just have meaningful conversations about the real issues that affect Bermuda. When we make things into political footballs, it makes it very difficult to find middle ground, and I think that does a disservice to Bermuda. And I’m uncertain how we’ll ever bridge that gap as a country with the Westminster system we have. It definitely becomes a black and white game—and I don’t mean that at all in a racial sense—just in the sense that things become very much one or the other.
Because that’s what works best in a Westminster system?
It does, unfortunately. You harden your base with opposing everything the other party does. And I think we’ve seen a lot of that with the PLP’s abundant majority after the election, too. And Bermuda suffered. You know, we’ve walked away from building on, for example, the legacy of the America’s Cup. And we’re seeing the BTA attacked now, which just…I mean, you ask anyone who works in tourism, anyone who works in the broader hospitality industry, things are undeniably more effective and it’s one of the few sectors in Bermuda that we’re seeing growth. When the OBA came into government there was the understanding that we needed to create and drive some tangible stimulus initiatives that would create jobs. Not necessarily jobs in international business—we need to create an environment of business confidence for investment both international and local—but we needed to create jobs. And that was certainly a targeted focus. You look at the number of hotels and properties that were developed, you look at the America’s Cup, these were real job-creators. And job-creators for Bermudians.
You look at the Endeavor programme, you look at the people that have gone through to get their pilot’s licences, people that have found jobs through the new cruise ship arrangements, there have been a lot of add-on jobs there. The airport’s obviously a huge job-creator, the St. Regis is still going, the Loren happened at Pink Beach…so right now those projects are carrying a bit of the job-creation, and they’ve got another three-to-five-year time span. But when they finish, we’re going to need new stimuli, and I’m not seeing the focus on that. I truly hope that Fintech becomes a job-creator, but I’m not seeing boots put on the ground right now. It’s certainly a valid industry. I think we do a disservice to the argument by not segregating the crypto part from the rest, the more legitimate part.
Going back to the OBA, your return could be seen as a marker for the direction Craig Cannonier wants to take the party. Is that a fair assessment?
That’s exactly it. It’s Craig’s buy-in to a rejuvenation of the party. It’s a night and day change in the opposition. The party was kind of a dead-man walking for a year. It was silent. The leadership didn’t really inspire the MP group to engage, and Craig’s brought new life and new energy. He’s willing to stand up and fight for things we need to fight for. He empowers youth to speak out, which I think is important. The party needs to rejuvenate, and the OBA project needs to finish. We’ve got far too many members that were in opposition in 2012. The OBA project that was really the BDA project needed to finish, and the OBA needs to be able to field some candidates, needs to have its own voice coming from people who joined the party based on the OBA’s ideals, and drive forward that conversation. There’s a lot of contrasting points between the OBA and the PLP. The OBA is more inclusive in terms of diversity, more socially progressive, more fiscally responsible with the public purse. The PLP has really characterised itself as identity politics, as very betrothed to the church and the union lobby, which are sacred cows in this country. I certainly would’ve liked to have seen the OBA take bolder stances on some of the socially progressive issues that came across our plate, and I think that disenfranchised a fair amount of our voter-base.
Personally, I know a lot of people who were very upset with the OBA’s handling of the same-sex marriage issue, for example.
Yeah. It was a torn caucus and we made a complete meal of it. The whole non-binding referendum was an embarrassment. It’s good to see that we have some new life in the party again, and I think the PLP had their honeymoon period operating essentially unopposed, and now is the time when the tire hits the tarmac. And it’s starting to look a lot like the emperor has no clothes. We’re not seeing any of these stimulus projects, we’re just seeing attacks and spending. We’ve got a declining active population and we’re just looking at pumping the few people that are left here working for more and more taxes. We really need to address the two elephants in the room, which is this enormous debt burden that we’re dealing with, and it’s not people that are 65–70 that are going to deal with this, it’s people that are our age. The economics of trying to ensure a retirement lifestyle that people who have put in their time working deserve is only possible if we have somewhat close to the same number of people coming behind them contributing to the system as employees, as workers, as business creators, as value drivers in the economy. We have an inverted pyramid if you look at our demographics in terms of age, and the fact of the matter is that having a robust guest-worker population here—they come here, they work, they pay health insurance, they claim very little, and they go home when they retire—that’s a huge multiplier for our healthcare system. The demographic reports are there, they’re a fact. Our maintenance ratio is set to go from 6:1 to 3:1, which means that there’s going to be half the people supporting the healthcare costs and other benefits of post-retirement-age Bermudians from the workforce. And that just means the burden’s going to be pushed more and more on the active population, and it’s unsustainable.
How do you take these concerns into your job as the opposition senate leader?
I try my best to break down economic things that are going on in a fashion that people who don’t necessarily have an economics background can understand. Most people when you talk about debt and deficits and that kind of thing tend to tune out. You talk about $124 million or $128 million in debt service cost, you’ve got a deficit. Great…what does that mean? What does that mean to you? But when you’re paying $500,000 a day in debt service, that’s a staggering number. And who own these government bonds? Well, it’s foreign investors.
$500,000 a day?
A day! And Bermuda was terribly close to not being able to meet its commitments in 2012 and the OBA had to come in and reestablish a set of government rigour and show a commitment to reducing the deficit. But at the end of the day when the OBA came into government in 2012, the government machine was spending some three, four hundred million more than it was taking in. You can’t reverse that overnight. Most businesses, and I believe the government is no different, spend about 40 percent or so of their expenditure on salaries, so short-term the only real levers you have to massively reduce that overspending is to lay off oodles of people, or slash social programmes. And clearly that’s not to the benefit of the country, so reducing the deficit had to come with a sustained approach to assessing and rationalising spend and making sure that we could reduce that deficit in a way that could reduce huge amounts of social challenges. You can’t just lay off half a government. That’s crazy talk. But the OBA put us on a glide path to both a reduced deficit and a slightly increased government revenue, through some taxation.
We talked recently about medical marijuana and you pointed out a lot of the challenges we’ll face in making that a reality. Could you go over those again?
First of all, I think the OBA missed an opportunity. They empanelled the CRC report but didn’t really follow through on the recommendations.
Much to the island’s chagrin…
Yes. But that said, I do understand there are some serious challenges. Here’s the thing. The OBA put in train the decriminalisation of small amounts of marijuana. But the challenges we have with government’s new proposal…I think it’s a little bit cynical. It was touted as being this great gesture—I think they’re trying to appeal to recreational smokers—but I would’ve been able to get behind it a lot more, understanding our constraints as a non-country which is bound by the stuff the UK signed with the UN on our behalf, if they simply allowed people with medical needs—glaucoma, cancer, etc—to get a permit to grow their own. Fine. There’s no commercialisation there. There’s no need for a bank, you avoid all of these challenges because the banks here won’t accept proceeds from a medical marijuana company just like they won’t in the US, because they’re bound by federal restrictions and it’s not federally legal in the US. So the corresponding bank relationships are too sacred to screw up. That’s why crypto is going to fail, that’s why after they poisoned the gaming commission, gaming’s not going to get banking. They’re not going to get off the ground. So you look at the recent move when the tourism minister was changed and they pulled gaming out of tourism and put it under finance—the challenge lies with banking. The three banks we have here, or four I guess, have corresponding bank relationships with US banks. And because they’re N.A. classified banks, they fall under federal regulations. They won’t touch any business involved with marijuana, even if it’s allowed here.
And I understand the social empowerment part, trying to find a way for people that were disadvantaged by possession of small amounts and people that were put on the blacklist, but if you ask doctors strictly from a medical perspective, there are clearly some benefits to cannabis-derived products. But the doctors don’t say that smoking raw weed is the best way to get these benefits—it’s through derived products like oils and other forms like edibles. So if we’re talking simply about allowing third parties to grow it here, one: they’re going to have to create businesses and they’re going to have trouble banking. Two: are we going to be able to create the most beneficial forms of it for medical use? And how are we going to be able to control it? It creates a whole new layer of bureaucracy when it would’ve probably been easier to lobby the UN to allow us to import greater quantities of synthetic or real cannabis derivatives—CBD or synthetic ones like Marinol. There are users that say it’s not as effective, so clearly the CBD-heavy product has more benefits than the THC-heavy stuff, but our hands are somewhat bound. The banking aspect is a major challenge if you’re trying to commercialise it.
If it wasn’t used as such a political point-scoring device you might be able to have a serious conversation about this, but I don’t think there’s much appetite to really have that serious conversation because we’re ignoring the limitations we have to do this. It’s not like we’re doing anything innovative. We’re behind the eight ball. Eventually it will come, when the US says “yes” the world will follow—I mean that’s the kind of world we live in.
Since 2007 the world’s middle class has grown by two billion people. Is the middle class growing here?
I worry they’re getting squeezed. The new taxes, the complexity of them…this idea that medium and large local businesses are squeezing the people for their money is misguided. We need to be encouraging business investment. We need to be creating an environment of business confidence, but clearly that’s not the case. Confidence right now is far from favourable.
Why do you think that is?
I think there’s been mixed messaging about the stability of what’s going on. There seems to be a rhetoric against job-creators and businesses as a whole. I’m not sure why they’re being so targeted. There’s been this mantra about promoting “small businesses” which is really micro-businesses–vendors and such. There’s been some good initiative for sure. There’s tax relief for the first year for new start-ups by a first-time business owner. And that’s very useful for the first twelve months when start-ups tend to not make a profit, but unless we can stimulate the economy as a whole, there’s not going to be much to look forward to in years two and three, which are very critical for a start-up’s success. When you look at the declining trends in retail sales, the declining workforce, you wonder where the spending in our local economy is going to come from. At the end of the day you need warm bodies here. Bermudians have a declining birth rate, and we have a demographic that, when the boomers start to retire, that is going to shift heavily towards retirees over workers. So to sustain our population, or to grow it, if it’s not going to come from a swell of new Bermudians entering the market, it’s going to have to come from immigration. And I agree that there’s no sense opening the immigration floodgates if there are no jobs for people to come to. All immigration needs to have a balance to ensure that Bermudians are getting a fair shake in access to jobs they’re qualified for.
And a fair shake at being qualified for those jobs?
Well exactly. It starts with education and it finishes with ensuring immigration policies are fair. But we need to be creating business confidence, investor confidence, where job-creators want to set up here. Certainly, diversification is needed. IB is going through further consolidation and mergers, and with every merger it’s the back-office that eventually gets cut. That’s your finance department, that’s your HR department, that’s where there’s the highest concentration of Bermudian jobs. Insurance and IB are going through consolidation because of their markets, but local business is suffering because there’s not enough people here spending money. And that’s where that 10 percent is so critical. If we don’t look to reverse the issues that are affecting local businesses—access to capital, a growing domestic consumption base—we’re going to see more and more businesses folding, and lower business confidence.
Finally, as senate opposition leader, what are the other things you’re keeping your eye closest on?
Really it’s the economic policies. I worry about this seeming attitude that everything will be fixed by taxing the people more. There seems to be more of a focus on government’s accounts as opposed to the economy as a whole. And just saying we’re going to balance our government books by taxing the bejeezus out of everyone isn’t good because if GDP’s going down, if there are fewer people able to spend, that affects the whole local business environment.
Thanks so much for talking with us.