Archive for March 4th, 2010

Mac faces civil servants

| 04/03/2010 | 131 Comments

Cayman Islands News, Grand Cayman headline news(CNS): The premier met with chief officers, department heads and other senior civil servants on Wednesday morning to discuss both the proposed reductions in their salaries and the need for dramatic cuts in spending to address what is now believed to be a deficit in excess of $62 million. McKeeva Bush told CNS that the discussions, which lasted for over three hours, went well and that senior public sector staff understood the need to make major cuts. He also confirmed that the government had decided to take the sale of the government office accommodation building off the table and it would be tackling the budget challenges through cuts.

Bush said he never had any intention to sell the GOAB and that it was always intended to be a lease back arrangement but that the details of the proposal were misreported in the media. The premier stated that the expression of interest that was circulated by GIS offering the freehold was not approved by him as the building was never for sale. However, given the circumstances now, he said that he would no longer be seeking a private finance partnership on the building but would be examining cuts in public expenditure instead. During today’s meeting it was estimated that more than $12 million could be removed from the deficit in the last quarter of 2009/10 if salaries and benefits were cut as suggested by the premier in his recent statement to the Legislative Assembly.

Bush warned, however, that without the sale of the GOAB it would now mean the remaining loan payments would stay on the government’s books for 2009/10, resulting in the deficit reaching as much as $100 million and requiring far greater cuts.

The deficit prediction was changing all the time, the premier noted, as government received various information from revenue sources, but presently it was estimated at over $62 million. With the need to find the cash for the schools projects as well as the GOAB, it could be much worse.

The premier also confirmed that he would be going to the UK next week to discuss the budget and the much talked about Miller Report, which was commissioned by the UDP government to look at potential revenue sources as a condition of the UK’s approval for borrowing to balance last year’s budget.

Following this morning’s long meeting with the public sector’s senior management, the premier said they were all well aware of what was required of them.

“The civil service know what cuts have to be made and they have gone away to consider what can be done,” the premier said. “We have had some very good discussions and we are now working through the cuts that can be made to reduce the deficit. Next week I will be going to London to discuss the challenges and the recommendations in the new Miller Report.”  

He said that at this stage it was not necessary to call a Finance Committee meeting as requested by independent MLA for North Side MLA Ezzard Miller. Bush said that there was “no need to do it as managers in the civil service knew what needed to be done.”  If he was not satisfied, however, the premier said he would call a meeting. Bush dismissed the comparison of the failure of the civil service to realize the 6% cuts when asked by the previous administration to the current situation and suggested the claim was unfounded.

“They are a pack of liars,” he said, referring to the PPM and added that they had failed to bring forward any solutions to the budget problem and the reason why there was a budget deficit in the last fiscal years was because they had overspent. “I am not confident that I could sit down with the PPM and move forward as they have no solutions,” he said. “I don’t have the time to waste. I am not going to allow them to play politics with this country.”

The PPM has been insisting since the 2009/10 budget was brought to the Legislative Assembly that Bush should negotiate with the UK to allow the CIG to spread its deficit like every other Western economy hit by the recession through planned borrowing, giving government a breathing period.

Alden McLaughlin, the former education minister, told CNS on Wednesday that the PPM had not yet seen the contents of the Miller report but believed this was behind the government’s sudden move towards cutting public sector costs.  “We understand the premier has had the Miller report for several weeks now and we don’t know why it is being withheld from the country, especially as it seems the move to cut civil service pay is as a result of the content of that report,” McLaughlin said, adding that it allegedly criticises government for not tackling civil service cuts in this fiscal year’s budget.

Bush admitted at a recent press briefing that he had seen the report though he has not yet revealed its contents. It was undertaken by former Ronald Reagan aide and conservative economist, James Miller III, along with former UK Conservative MP, David Shaw. It is no surprise, therefore, that the conclusions, if speculation is correct, point to dramatically reducing government spending.

The professional assessment was aimed at diversifying the government’s revenue base and was commissioned as part of the conditions imposed on the CIG by the UK to extend the country’s borrowing beyond the limits established under the Public Management and Finance Law.

The commission was expected to look at where and how Cayman can generate more cash for government coffers and how that will impact the economy, as well as look at cuts in the operating budget. Miller was also said to be examining estimated government revenue sources and expenditures for the 2009-10 budget year, and recommending measures to ensure it will balance.

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