Bush says Miller report is valuable resource

| 31/03/2010

Cayman Islands News, Grand Cayman Island headline news, James Miller(CNS): The premier has revealed that the cost to the Cayman Islands government for the recent report written by James Miller and David Shaw was CI$160,000. Hitting back at critics of the report, McKeeva Bush said that the work of the commission involved wide consultation with various senior stakeholders in private and public sector, as well as contributions from Phd level economists. Tabling the report in the Legislative Assembly he said people had chosen to discredit it because it does not say exactly what they want it to say but he believed the report offered valuable recommendations.

Bush added that government was in general agreement with many of those recommendations and it intended to implement quite a few of them. He said the government was generally pleased with the contribution made by the report, and while there were some who felt the report did not add value because it did not suggest direct taxes, Bush said taxes were not a sensible suggestion.

Speaking to members of the Legislative Assembly late on Thursday night, the premier said that that the report’s finding that there should be no direct taxation was one the government fully endorsed.

“It is our view that there is a substantial flaw in the argument that this country should alter the fundamental basis of our approach to taxation in terms of our status as a country, which relies exclusively on indirect taxes, because we are facing fiscal challenges,” Bush said.

Despite the fact that virtually every other country around the world is experiencing fiscal difficulties, irrespective of the nature of their tax systems, Cayman is being told it has problems because it does not have directtaxes, the premier said. “The argument being put to us … persistently by the UK is that somehow the introduction of a series of direct taxes would be more sustainable than the current set of indirect taxes that we have in this country,” the premier observed. “If direct taxes were so much more sustainable, why is that the vast majority of countries, and most of which rely heavily on direct taxation, are facing such severe fiscal andeconomic crises?”

Bush said he believed the Miller report had pointed to Cayman’s basic problems, which were that expenditures have grown much faster than the revenues and the country was negatively impacted by the global economic downturn, and not for the first time he suggested the previous government embarked on an overly ambitious capital expenditure program.

“I am under no disillusion that the primary reason for this was the global economic downturn,” he said. “Indeed it is crystal clear to me and from the evidence in the Miller Report that the first two factors, namely the rapid growth in expenditures and the overly ambitious capital expenditure program, were the key factors contributing to this crisis.”

Agreeing with Miller’s recommendation that government engages in privatization and asset sales, the premier noted that, contrary to what the opposition might spread, government did not agree with all of the reports conclusions. “We will proceed to have the various opportunities assessed by the so-called Big Four professional services firms, and I have already announced this initiative publicly. These firms will assess the options and provide us with their recommendations on what makes good business sense for the government,” he told the House.

Government also agreed there may be opportunities to restructure several existing government departments and agencies, Bush stated, adding that the reduction of civil service benefits would be examined by the deputy governor. He also said the governor would be examining broader cuts to the civil services and Bush said the goal was to limit personnel related cost to a specified amount for the 2010/2011 fiscal year, and the governor would meet with the civil service to devise solutions to achieve this. He said government believed the civil service headcount could be reduced through the divestment of various authorities and agencies, as well as through restructuring.

“My government does not believe that the government should be aggressively laying off civil servants in the current economic climate for both economic and social reasons,” the premier added.            

The reform of statutory authorities is another area where the government agreed with Miller, Bush said. “Several of these organisations currently receive an annual subsidy from the government, so it is indeed important that they are made to be more efficient to minimize, and we hope in some cases completely avoid, the need for any subsidy from the government,” Bush explained.

The premier said there was a need to change the way things were done, not only to recover but to make the country stronger.

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Comments (10)

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  1. Spiritualist says:

    Now there is a report (yours) worth paying for! Thanks for an excellent, educated and comprehensible post.

  2. Ray says:

    Very interesting. Please offer your name and your assistance to the Govt. or the opposition so that your points can be considered, discussed, put forward, etc. It will be no point saying “I told you so” anonymously.

  3. Anonymous says:

    It didn’t take a $160k report for us to know he is a loser and the government is incompetent, stupid and very very wasteful.

    He could have paid me half that and I would have confirmed it.

  4. Anonymous says:

    extremely well put. cheers.

  5. Hmm... says:

    Curious to know why this is even news. It is interesting in a country with so many news outlets at such pains to tout their superiority, that there has been no real investigative consideration more than a month later of the Miller Report, its context and the real implications for the Cayman Islands. 

    Some areas which I would have thought concerning for people interested in building a sustainable Cayman capable of weathering the economic storms that assail the rest of the world:  

    1) We know who the commissioners are and that none of them would be inclined to find in favour of tax. Exactly who recommended them? Did they just drop out of the sky? Do they have any affiliation with the Cayman Islands? Did the UK have any say in the composition of the review?

    2) If we are all being honest then it goes without saying that the report was not academic at all. Academic writing, like good reporting, requires exhaustive fairness, accuracy, proof and a willingness to consider the context of what is being recommended. It is impossible to detail the minutiae of where the report strays from accepted academic practice. One of the most telling examples is that of the 25 interviews conducted by what is actually an enormous team of PhDs over a period of at least four months, noone, other than the auditor general was interviewed, who might disagree or call into question the basic principles on which the report is premised. In no instance are opposing views interrogated. 

    3) Indeed the report makes little attempt to fact-check while throwing around populist assumptions that it is unable to back up. A lot of valid problems that it does bring up remain unexplored, even where such an exploration would have fit within the terms of reference.

    E.g. researchers didn’t even get it right when they said that the top five grades make more than Gordon Brown net tax. It’s actually the top two grades i.e. Cabinet Ministers, the Speaker of the House, Deputy Governor, Governor, Chief Justice, Puisne Judge etc– although they make quite a bit less pretax and without taking into account any allowances that the British PM may receive. Yet there is considerable documentation that will demonstrate that the bulk of the civil service gets a COLA only when this is available– The last time was 2007. Furthermore the same documentation will demonstrate that it has been ten years since the vast majority of civil servants deserving or undeserving have been able to progress up their paygrade– even by one point. In addition given that the civil service decreased by around 50 people in 2009– the savings per person were less than the average cost per civil servant– this suggests that the people who came into the service were likely making more than those who left. Read together this suggests that it is far from being the civil service as a collective will that is strangling the country, as Miller so emotively puts it, and that accountability most likely lies elsewhere with a much narrower group.  Is the answer really a simple cut of x millions of dollars from everyone’s salary, thereby withdrawing that money immediately from private schools, private doctors, and countless small businesses, although the report neglects to mention this?

    Whatever. Anyhow so now we are going to do  what Miller and Shaw recommended and everything is going to be OK. Indeed what Miller and Shaw recommended must be OK because it is eerily similar to the same economic agenda that the UDP has been proselytising since it lost the 2005 elections, and even more so since winning the 2009 elections in May.   

    Never mind that if the PhDs had tried submitting work like this back when they were trying to complete their doctoral theses, they likely would not have been available to provide support to the commissioners that they did. It is extremely unlikely that the report as it presently stands would be eligible for publication in any reputable academic journal.

    4) From a professional standpoint, it is hard to avoid the glaring gap between the reports terms of reference, intended to explore opportunities to build a diverse and sustainable economy, and what it actually achieved. Are Caymanians and expatriates who earn around the per capita GDP, any less at the mercy of the financial services elite and big investors? Is government more savvy about how it can improve public finance, more efficiently collect the revenues it is owed, or whether its present operational spending is efficient?  Does CIG usually pay researchers for turning in incomplete work? How did the team get the idea this would be OK?

    None of this means that there weren’t some sound points made by Miller. I for one would have liked to see quite a bit more about how we can use privatisation to build sustainable new industries while avoiding the economic crises that dramatic, unplanned civil service reductions have had in every other country that took that route.  What it does mean is that perhaps we shouldn’t be quite so ready to embrace the document as the Gospel.

    • Anonymous says:

      Wow. A very intelligent and thought-provoking post. Too bad we don’t see many posts like this, and even worse that when seen, input like this is rarely appreciated or acted upon. I thank you for your contribution.

    • Anonymous says:

      Hmm…10:31:

      Forget all the hot air about academic this and academic that. We don’t need peer review, control groups etc!!

       Central question: Is the civil service, which is government’s main expenditure item, too big (not necessarily their fault, if it is, you know) and are their non contributory benefits more than the Cayman Islands can now financially sustain.?

      I don’t think we needed a Miller Report to answer this. It’s been obvious for years but it took a recession to highlight the issues.

  6. Anonymous says:

    well then do something withit!!! implement its recommendations now!

  7. slowpoke says:

    The real problem is, that when you hire Reagan acolytes (the famous president who said "Facts are stupid things” (1988)), you get stupid reports, that are not worth CI$ 160,000…

     

    • Anonymous says:

      DUH! The greatest President the United States EVER had, Reagan, was absolutely correct when he said "Facts are stupid things" because FACTS ARE STUPID THINGS! DUH! Do not be blinded into stupidity by your partisan politics, that is what is destroying Cayman right now (a leader who can’t see what is best for Cayman because he is looking out for himself, cronies, family, friends & colleagues first). This is my honest belief, but always remember "facts are stupid things" so I may be wrong, but I doubt it!