Economy contracts 11%

| 17/06/2011

(CNS): Despite the government’s claims on improving government finances and its continued finger pointing at the opposition for the country’s economic woes, two years into office the opposition leader pointed out that Cayman’s economy has contracted by eleven percent under the UDP watch. In his response to the premier’s budget address, Alden McLaughlin said there was very little in it to offer hope to local businesses and the unemployed. The PPM leader asked McKeeva Bush how government was assisting the people and where in his budget plan would the lives and fortunes of the people be improved.

The leader of the opposition focused heavily on government’s failure to do anything about the very high cost of living and cost of doing business in Cayman. He said it was the fiscal policies pursued by the government over the last two years which have made the hard times brought on by the global recession harder.

“They have had the effect of increasing the cost of living, of reducing the amount of money in circulation, of discouraging investment, of reducing employment opportunities and of shrinking the economy,” he said. Since Bush's administration hasbeen in office, the Cayman Islands” economy has contracted by around 11%, McLaughlin said, adding, “He should be frightened by that.” 

McLaughlin noted that in the three budgets the UDP administration has delivered (there is now only one more before the next election) it has increased the tax burden on the people and businesses. Although in this budget the one fee increase is only on certain hedge funds, the PPM leader pointed out that it still added to the national tax burden and was another cost for the financial services sector to absorb.

He pointed to the fees and taxes imposed in the previous budgets as having “a truly crippling effect” because of their impact on everyone. McLaughlin accused the UDP of putting pressure on local businesses very early in its term with its attempt to balance its first budget after the elections by imposing a raft of additional taxation. Despite the pain, the promised $9 million surplus never materialized and the government wound up incurring a deficit of $15m while the fees drove up the cost of doing business.  Again in 2010 government imposed more taxes, fees and duties, the impact of which, he said, has been significant and in some cases devastating.

He reminded the House that the UDP had never missed an opportunity to talk about the need to nurture and support small business when in opposition and during the election campaign but once in the driver’s seat their concerns fell away as they increased fees and taxes with no consideration to the impact on small businesses.

“It would appear from the focus, or perhaps more accurately the obsession, of the premier with big business that really small business doesn’t matter to this government,” he added.  “Since the start of this administration there has been one grand announcement after another by the premier of some major private sector project or the other which is touted as the answer to all our economic woes.”

Some of these projects have “truly verged on lunacy”, McLaughlin stated, pointing to the proposal to dredge a channel through the reef and create man made islands in the North Sound, but thanks to the opposition to this “environmentally deadly” project, the government had withdrawn its support. He offered his congratulations and gratitude to Captain Bryan Ebanks and the “Save Cayman” team for the campaign which, he said, had convinced the government not to allow the project to proceed.

He pointed to the growing controversy around the East End Sea Port or ‘mega quarry’, which proposes to rip a 600 hundred foot gash in the southern coastline of East End and then dredge 60 feet deep for a ¼ of a mile inland.   “It will divert the current scenic road inland for a mile. It will undercut the largest, freshest and most important water lens in the Cayman Islands and risk turning it saline over time,” he said, and noted some of the alarming issues associated with this development. “Yet it appears to continue to have the support of the government,” he added as he pointed to comments made by Bush.

“That the government could support and encourage these two potentially environmentally disastrous projects as part of its economic development policy is, quite frankly, scary,” McLaughlin said and pointed to the premier’s claims of being committed to robustly defending the environment. “It’s just as well that the government is so committed to the environment.  I can’t imagine what would happen or what they would permit to be done in Cayman if they were not so environmentally conscious and committed,” he said.

He pointed to the concessions being offered to entice big investors and said he would speak at another time about the latest Dart-government deal which had been announced only hours before his presentation.

McLaughlin said concessions were important in encouraging investment when it is desirable, but the consistent demand of potential investors for reduction in duties and the relaxation of immigration regulations should be telling the government something. Although the premier is boasting about being investor-friendly, McLaughlin said he appeared to be so only in relation to rich foreign investors.

“It is the big foreign investors who get all the breaks — on work permit fees, on planning fees, on import duties — and it is the foreign investor who gets guaranteed work permits and other exemptions.  The government doesn’t seem to bat an eye in handing out concessions to big, foreign operations. On the other hand local businesses, or even foreign businesses which are established here, not only do not get concessions but over the course of the last couple of years have been targeted by the UDP government and required to pay higher and higher fees and taxes,” he added.

He asked why government does not give the local businessman a break with fees.

“Does the government take them for granted and believe they don’t contribute enough to the local economy to be worthy of a concession during these hard times, even if only temporarily?” he asked.

Despite government rhetoric, he said, it was ironic that in the two years the UDP has been in office not one major development has begun and it is existing business that keeps the economy moving at all.  “I call on the premier and his government again, as we in the opposition have done for the past two years, to roll back the increases in fees and taxes which they have imposed since they took office.”

Welcoming the reduction to fuel bills after government had increased the cost of diesel to CUC by 45 cents a gallon, whatever the rebate would be it will provide some break in the cost of electricity. But he called for a roll back of the additional 25 cents duty on fuel which government introduced last year to reduce the cost at the pump as well.

With the government still repeatedly blaming everything on the PPM, against the backdrop of an improving global economy, the government had missed an opportunity to improve people’s lives. “This budget offers no hope of any immediate reversal of our fortunes. It was uninspiring, unconvincing, unfulfilling. In short … it was unacceptable,” the opposition leader said, adding that government needed to return to the drawing board.

Category: Politics

Comments (38)

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  1. Anonymous says:

    Too many breaks, should not matter where you are from or to which political party you belong, if you are unable to compete get out of the game.

    2,500 Caymanians have to compete with 23,000 Non-Caymanians for jobs, this seem fair, all it shows is that 23,000 permit holders are more qualified for the jobs than Caymanians.

    Now give the people of the Cayman Islands the same political choice

    Why can't we have a political candidate from every one of the 150 different nationals living here.  If Caymanians have to compete with non Caymanians for jobs, why don't the politicians have to do the same or if this is not possible then the UK should send their people to balance the share of power the way that it's being done in the TCI.

     

     

  2. Anonymous says:

    I for one dont pretend to understand politics etc., but as a hard working mother of three small children I know that I cannot continue this way! CUC is sinking me into the ground every month no matter how much I try to turn of everything in my house, the fuel surcharge is killing me! The Water Company is no better! Fosters is driving me into the ground, can t keep up with the grocceries! School is in need of a dollars or two every day for something it is costing me just as much to keep my kids in public school as if they were in private school. Thank the good Lord above I have an understanding Land Lord or I would be on the street! Government should try and reel in CUC and the Water Company! CUC especially! Help the little man out Please!

    • Anonymous says:

      Reel them in. Right now. Socialism is the only way to go. Look how great it has worked in countries like Greece and France. Or better yet, China. You wouldn't have to worry about three kids because you were only allowed one.

       

    • Anonymous says:

       @Mother of three. I feel your pain and can say with convection that you are not alone. Suggest you seek financial advice from a professional and do a serious budget, every cent counts. By the way tell this to the Government as they are they need it.

      The trips and parties are a waste, can anyone say what we have spent for Travel Expences in the last six months?

    • Anonymous says:

      i think you mean reel in the CIG they're the peeps  that increased

      tax on fuel which the utilities passed on the charge to its customers.

    • Foxtrot Oscar says:

      People should not raise families larger than they can afford.

  3. Anonymous says:

    Bad

  4. Anonymous says:

    It is for this reason that Alden is right with his initiative to eliminate the "roll over policy" . The economies of the rest of the world have expanded and grown since the 2008 financial melt down, however we have contracted under the governance of our dictator when everyone else is developing their economic growth. 

    Welcome to the incompetence of the UDP.

  5. Anonymous says:

    Garrison politics this is its effect on the Cayman Islands, we haven't seen anything yet, this is just at its infancy.  

    We had to follow all the bad examples when there are so many good examples to follow, but the good book says "broad is the road to destruction" .

    Oh the good ship "Cayman" has sprung a leak and it is sinking fast time to plug it. 

  6. Bombo Rass Kloth says:

    alden have the nerve to continue speaking,  after yesterdays shocking announcement i don't ever want to hear another word from this lunatic!!

  7. The Lone Haranguer says:

    Alden you need to cut Ezzard and Arden loose, they are causing you to make bad decisions.

  8. Anonymous says:

    This 81million deficit in 2009 that we speak of, do we even know if that was real. My friends 2009 budget has still not been audited and Big Mac is hell bent on not getting the audit done.

    So here is my 2 cents. Before the last election our financial secretary stated  the estimated budget would be 29million deficit under the PPM watch. UDP wins and by the end of May that deficit became 81million, therefore if that is the case the financial secretary should be fired, but low and behold he is still in that position. This is all politics people, there was no such deficit nad that is why they dont want to have the 2009 budget audited.

    If there was a deficit of 81million the new budget now suggest a surplus of 12million that would mean that big Mac found approximately 100million over the past 2 year. Big Mac  accomplished this feat while the rest of the world was in a recession, and we had 5000 less work permits, land sales were down, no cut backs in the civil service. I say we send him to England so that he can help them get the budget balance.

    you can fool some people some time but you cant fool all the people all the time

    • Anonymous says:

      Then why are all the Caymanians still foolded all of the time?

      • Anonymous says:

        I can't speak for ALL of them but a good percentage of them do get rewarded with new fridges for being fools.

      • Anonymous says:

        Did McKeeva teach you how to spell?

    • anonymous says:

      The reason for the "gap" in the figures in 2009 and the reason the FS did not know is as follows:

      1. the Government is now split into 13 fairly independent entities that REPORT to the FS. If they do not fully report, the FS is unaware of the true situation. That is now the fundamental difference in our current FS's role in government over say when Mr. McCarthy was there.

      2. In 2009 the outgoing government and many ministries delayed reporting the LIABILITIES to the FS in essence hiding their true financial position, on purpose or due to them not having the info themselves.(Actually receiving invoices or 'posting' them after elections)

      3. Additionally the revenues projected by the previous government did not materialize due to a reduction in local economic activity due to the recession. Compounding this was the delayed reporting of costs on such items such as roads, land for roads, etc. That is thelikely the reason the FS was not fired – He simply did NOT know. Its the Chief Officers and the CPAs in the entities that should be fired but they simply say we were instructed by the ministers to spend, thus they also have a "get out of jail card."

      4. I understand from a very informed civil servant that at least one minister was aware that they had spent more than allocated.

      5. The audited figures will prove that the previous government overspent and had less revenue than projected. This government maybe lucky to have the revenue exceed projections only because the country will come out of the recession thanks to the DART group agreement that the government has negotiated. We wait to see.

      6. It may be correct that the overall PPM government was not aware of year-end situation as the elections was prior to that point. It is likely that UDP did find that situation when they arrived. So they may BOTH be correct on this point.

      Unfortunately that does not help the country one way or the other and certainly leaves us, the tax payers, in an uncomfortable position that the Government can have this gap in reporting and responsibilities.

      and that is the "true position"….

       

      • Anonymous says:

        "The audited figures will prove…"

        HaHaHa, you crack me up! HaHaHa

      • Anonymous says:

        You suggest that the PPM hid outgoings to make the financial position seem better than it was. If that is correct why did we still have wildly different figures coming from the UDP? One day we are having a $55 surplus and the next it is a $15m deficit. One day it is a deficit of $15m and a couple of weeks later it is a surplus of $12m. There is smoke and mirrors going on here and I am not convinced that it is all the PPM.  

    • Anonymous says:

      Your calculations miss one important figure..The Government BORROWED $160,000,000 to "balance" the budget. Kinda like when Truman Bodden said Cayman Airways had made a "profit" of $1M after he gave it a $4M contribution from the treasury. 

      Reality is the government actually therefore ran a $60M "deficit" when that is considered…

      That is the reality. So PPM lost $81M that year. UDP lost $60M last year. The economy is actually improving so UDP is correct but the country actually had to borrow to cover that big loss again last year.

      Now FCO has said no more borrowing. Government/economy now has to perform to say we have a "surplus" this year!

      Lets see if it does….

       

  9. Anonymous says:

    UDP and PPM. Tweedle Dee and Tweedle Dumb.

    Both parties are fully responsible for where we are.

    • fur real? says:

      …or perhaps Tweedle Dumber and Tweedle Dumberererer…

    • Anonymous says:

      And yet they are the BEST and only leadership Cayman has to offer.

    • Just Commentin' says:

      You are so wrong! Playing the blame game and pointing your finger at the wrong group. Your pointing fingers at the PPM and UDP is similar to the finger pointing that the parties do at each other to absolve themselves of responsibility.

      The true Tweedle Dumb's, and the ones who indeed are "fully" responsible for the situation this country is in, are the Caymanian people. Caymanians placed these morons in positions of power and then stand idly by and allow them to abuse that power.

      Why is it that the people of these islands cannot accept responsibility for their acts of stupidity?

      Caymanians need to admit that they made mistakes at the polls and do something about it before it is too late. Each second that passes we come a moment closer to doom.

  10. Anonymous says:

    'Some of the projects have "truly verged on lunacy", McLaughlin stated, …' . You know, for once I reckon Alden really knows what he's talking about.

     

     

  11. nauticalone says:

    Well said Mr. Mclaughlin!

    If concessions and waivers will be helpful to Big Investors…..the same should apply for small businesses.

    It seems clear that Mac treats the CI Govt. as "his business". That is NOT supposed to be the function of Govt. Govt. should be focused with creating an environment for the Islands People/Private Sector to flourish….while also protecting the natural environment to the best scientific data/peoples wishes and providing for the Social Needs of Cayman, including it's Security.

    CI Govt. is NOT to be treated as any Politician's private business!

    • Caymanian says:

      And on Friday's radio show, the UDP members slammed CNS and Wendy for "politricks"…please, who is fooling who?  Keep up the reporting and blogs CNS, we need a sane voice in Cayman and it certainly is not our greedy politicians.  I agree with the poster who said tweedle dee and tweedle dummer!

      I'm sick of these crazy politicians spending 100 million+ dollars.  We need decents schools (not the bad education administration we have now) hospitals, culture, and roads…that's it! So please stop spending our children's money on folly and foolishness.  I'm tired of this! I'd rather be a tiny county controlled by England than suffer another term of these greedy idiots.

  12. Anonymous says:

    This reflects some 'ok' politics by Alden but truth is this was an impossible situation for whichever government faced it in 2009. UK demanded that 81 million deficit be addressed. This could only be done by increasing revenues or reducing expenses. No governement in right mind wishes to reduce civil service (not even the PPM or any other govt in the future), due to the politics of that move, so fees had to be introduced to balance the budget. It is true that these fees had "some" negative impact on economy but the other reason for the contraction is that the global recession was still very much having its impact on cayman in 2009 and 2010, so were not exactly over that yet.   Only in 2011 are we starting to see some signs of a mild recovery locally. And we need to be aware that there are some further global developments lurking in the background which could create another lapse in the global economy (making our own recover that much more difficult).

    The alternative to new fees back then was direct taxes which was by far the worse of the 2 evils.

    My own preference would have been to reduce the civil service cost, and introduce a property tax and even if there was still a deficit , that deficit could be addressed over a longer period as the economy recovers rather than trying to fix it so quickly (but UK pressure was there to do that so maybe that was not possible…we dont know because we don't really get all the information from these guys anyway.)

    Unfortunately the debate by both sides of the house on the economy and fiscal situation is not truthful and very rudimentary/'banana republic' for what we should expect from cayman being a sophisticated country. It is riddled with politicking and does not address the real issues.

     

  13. Anonymous says:

    good response from alden!…..would love to hear the comeback from mckeeva…..

  14. Anonymous says:

    thats what happens when you try and tax yourself out of a recession……

    the upd budgets have been disastrous for the economy and especially the private sector………..but the civil service will not be cut????…pure lunacy…zzzzz

  15. Clarence says:

    Alden finds out that the Premier will get top ratings for his deal with Dart. So now all of sudden he is so vocal. He has become a critic now when it is too late.  It looks like UDP may just turn around the economy to his dismay!

    • Anonymous says:

      WOW, a fairly literate UDP supporter. WAY TO GO UDP!

    • Anonymous says:

      You are si right the opos leader has nothing see to contribute and has now been placed in a position where he looks well like the political weakling he is.

    • Unemployed UK degreed Caymanian says:

      Clarence, you crazy….did you drink the koolaide? These politicians dont acutally care about YOU, so why you loving dem so much?

      We've had a decade of decadence with wild spending (both UDP and PPM).  It's time to pull in the reigns and stop this madness!  Get rid of this party system, it has done nothing but get us into this mess!!!  We are looking more like the poor Eastern Caribbean every day.  UK save us from ourselves please!!!