Politics
CIG heads to London for annual territories meeting
(CNS): Premier Alden McLaughlin will lead a delegation of five people from the Cayman government, accompanied by Governor Helen Kilpatrick, to London tomorrow for the annual Overseas Territories Joint Ministerial Council (JMC). Financial Services Minister Wayne Panton, Senior Political Advisor Roy Tatum, Cabinet Secretary Samuel Rose, Home Affairs Ministry Chief Officer Eric Bushand this year’s JMC Sherpa, Jason Webster, will join the premier for the meetings to discuss political and constitutional issues between the governments of the Territories and the UK Government. It is the first time that McLaughlin will meet the latest OT minister, James Duddridge, who was appointed after Mark Simmonds announced he was leaving politics because of the poor pay.
Duddridge wrote to McLaughlin this week confirming that he would be watching carefully the progression being made on restoring the local public finances after government sent the FCO junior minister the Strategic Policy Statement in the Legislative Assembly on Wednesday.
In addition to public finances, the OT leaders and UK officials will discuss strategies for promoting the security and good governance of all Overseas Territories as well as economic diversification, attracting investment, vocational education and employment. They will also review and implement strategy and commitments in the 2012 White Paper ‘The Overseas Territories: Security, Success and Sustainability’.
“It is vitally important that we attend the JMC each year to keep the Cayman Islands in the forefront. Through our participation we can ensure that Cayman remains in the global spotlight and continues to build sustainable economies, create jobs and drive prosperity,” said the premier. “Once we do these things, we can ensure a better quality of life for our citizens and visitors.”
On Saturday, 29 November, McLaughlin will host a reception for Cayman students who are studying in the UK. And on 4 December he will host an invitation-only dinner for the Friends of Cayman, where he will deliver a speech and answer questions.
The CIG delegation returns to Cayman on Friday, 5 December.
CIG paints rosy picture
(CNS): Both the Cayman Islands premier and the finance minister were up-beat about the local economy and public finances on Wednesday as government presented its strategic policy statement. Marco Archer said Cayman was in a “sweet spot” with an economic outlook for the next three years showing sustainable growth and the strongest rates since the world financial crisis. Meanwhile, the Premier Alden McLaughlin said that the Progressive government had, so far, delivered on its pledges and had made strides to keep Cayman on a steady course. He told his Legislative colleagues that “things are getting better.”
He also said government was on track to meet the targets agreed with the UK to get the public purse back in line with the public management and finance law. “We are poised for compliance,” the premier said, as he stressed that the 2015-16 budget was crucial for government. “We have to comply withall Framework for Fiscal Responsibility ratios and come December 2015, we must legally comply with the mandated cash day’s ratio of 90 days,” he added.
Although things are on track for government with its budget targets and significant projected operating surpluses, McLaughlin pointed to some early budget pressures such as exceeding the refugee’s budget and losing some $5million because of concessions and waivers from the previous administration. But he said there was good news as well.
“Our managed vacancy programme is working with early savings noted in personnel costs and the government will retain positive cash outcomes throughout the fiscal year,” he said.
“Revenues of $5 million collected in the first quarter from annual permanent residents work permit fees is already $2.1 million more than the full budget year…Cayman Airways and the Port Authority are two statutory authorities that are reporting positive early results. We have also recorded a $2.7 million positive variance in stamp duty on land transfers for the first quarter.”
McLaughlin said that because of fiscal prudence government’s revenue for the 2015-16 budget year was up from the $648,172 unaudited figure in the 2013/14 budget to $661,224. “We are forecasting to grow the economy year on year with revenues of $672,205 in the 2016/17 fiscal year and $703,993 in fiscal year 2017/18,” he predicted.
The premier went on to list plans for achieving government’s goals as he spoke about a number of policy plans from the redevelopment of the airport to getting the construction of John Gray high school back on track.
McLaughlin said the SPS kept government on the path it began in May 2013 and what he described as “very clear policy objectives” aimed at ensuring a strong, stable and healthy society.
“We are keenly aware of our need to develop, but we are even more cognizant that the development we seek and welcome doesn’t leave our people behind or harm our environment,” he said as promised to push the country forward.
Having introduced the SPS the finance minister had also painted an upbeat picture forecasting surpluses for government over the next three years and economic growth from a number of planned development projects.
“The outlook for the Cayman Islands is one of renewed optimism and confidence,” Archer said, adding that the primary pillars of the economy remained vibrant with growing stay over tourism and a flourishing financial services industry.
“Overall, the economy is forecast to have moderate sustainable growth, and unemployment is expected to fall below 5 percent over the next three financial years,” he said, as he pointed to government plans to grow a stronger economy, improve public safety, promote a healthy society, and a culture of good governance.
“This strategic plan makes key provisions for the achievement of those goals. It allocates resources for the continued support of our tourism and financial services industries, education, and our law enforcement agencies. It also outlines strategies that will lead to job creation in the private sector and improved opportunities for Caymanians,” the minister added.
He said a main goal of the government was the restoration of public finances and the SPS, he said, shows that the plans laid by the Progressives to achieve “that goal is coming to fruition and that the Country is poised to realize the dream of restored public finances and the other benefits…”
See the SPS in full below.
Marco to tackle liabilities
(CNS): The finance minister has made a commitment to tackle the growing liabilities faced by the Cayman Islands government for future civil servants pensions as well as the anticipated cost of healthcare for retired public sector workers, seafarers, veterans and the poorer members of the community dependent on government health cover. Marco Archer revealed that government is facing a future liability of almost $1.2 billion, based on the numbers, interest rates and life expectancy, unless it does something to address it. Archer said he was taking ownership of the problem and government would create a solution.
Delivering the strategic policy statement in the Legislative Assembly on Wednesday morning, Archer noted that much has been said about government’s mounting future liabilities and it was evident something had to be done soon and officials wereanalyzing possible changes to deal with the billion dollar problem
The minister said, "This government will not bury its head in the sand and pretend it does not exist. Rather, the government plans to fully ventilate the issue, take ownership of it, and most importantly, do something about it."
Archer added that government was already making $11.6 million annual contributions towards its defined pension benefit plan for civil servants above and beyond the usual monthly pension payments and the money was budgeted over for the next three years to begin plugging that potential future shortfall.
He said that government had a legal and moral obligations to provide health cover for retired civil servants and others without health care cover. And with a potential future $1.18 billion liability based on the estimated numbers, projected interest rates, life expectancy and other elements, government had to take the issue on.
He said that the problem was not created overnight and a solution would not be found overnight but government was “not deterred”, as he promised transparency and consultation over what would happen.
Noting that "the number is big" and saying he was "under no illusions how it will be sensationalized”, Archer said he was making plans and by taking the issue on Cayman would be further ahead than many other governments that are facing the same future liability problems.
He pointed out that the government had been criticized for projecting significant surpluses for the current and coming budget years, but said that they were necessary to strengthen the public sector balance sheet so that it could be in a position to address the future liabilities.
He said the surpluses were laying the groundwork for how government would deal with what lies ahead. The minister stated that government should be applauded for taking it on and dealing with what is a difficult issue in such an open and forthright manner.
CS to get 4% pay rise in 2015
(CNS): Civil servants will be getting a 4% cost of living allowance (COLA) pay rise in the next budget year, the premier has promised. Speaking in the Legislative Assembly on Wednesday about government’s strategic policy statement, Alden McLaughlin said that civil servants had gone “far too long without a pay increase” and it was time for government workers “to get their due”. He pointed out that after losing their 3.2% COLA in 2010, public servants pay fell back to 2006 levels and since then inflation has grown some 11%. He said more than half of government workers earn less than $3,300 per month and many local families have struggled financially, which has a wider economic impact.
Announcing plans for the new pay increase to start on 1 July 2015 McLaughlin said that because of government's fiscal prudence there was enough room to give the civil service a four per cent cost of living adjustment.
“Government did not want to give less than the 3.2 per cent taken from them by the previous administration. In fact, this administration would have liked to have given more but this is all we can afford at present,” he said.
With inflation reducing the purchasing power of government workers by some 11 per cent, he said government workers were worse off today than they were six years ago. The removal of the COLA in 2010 came on top of a ban on grade salary increases and restrictions on allowances.
Over half the government’s workforce earns less than $40K per annum and 3 out of 4 civil servants are Caymanians, which has resulted in a fall in the living standards for many people because they have chosen to serve their country, McLaughlin added.
“Caymanians have a relatively higher propensity to spend. That means a huge percentage of the income earned is not stashed away in a savings account. Rather, it is re-circulated within the economy for the purchase of goods and services,” McLaughlin said as he noted the wider impact on the domestic economy of the cash-strapped public sector workers.
“The fiscal and economic impact of this cost of living adjustment is therefore not isolated to the single line of 'personnel cost' on the government’s financials. Rather, economic analysis proves that an increase in worker take home pay will naturally lead to an increase in government revenue from increased consumption,” he said.
The premier said the boost to the government pay packets would lead to an increase in employment as a result of increased demand for services, a reduction in the demand for social benefits when families are able to afford more on their own, and an increase in construction, as the slight increase will improve their chances of qualifying for mortgages or loans for home improvements.
He said the 4% rise ($1600 per annum for those on $40k) would be an effective economic stimulus.
“There is a clear economic and moral case for providing some relief to civil service workers and I am proud to lead a government that has managed the financial affairs of the country in such a manner as to be able to afford to do this in the 2015/16 financial year without significantly increasing the cost of running the government,” he added.
CIG to reveal plans with annual policy address
(CNS): When the country’s legislators return to the parliament on Wednesday morning, the Progressives will be delivering a Strategic Policy Statement covering the forthcoming budget years of 2015-16, 2016-17 and 2017-18, government officials have confirmed. The meeting will also include debates on the Summary Jurisdiction (amendment) Bill, the Second-hand Dealers Bill, the Trade and Business Licensing Bill, as well as the Development and Planning (amendment) Regulations 2014 to go with the controversial law that was passed during the last meeting. In addition to a number of financial reports, government will be answering parliamentary questions and dealing with private members' motions.
Officials stated that the SPS will outline the PPM government’s medium term fiscal plans and policy priorities that will guide the 2015-16 budget, which is expected to be delivered in May or June next year.
The meeting is scheduled to start at 10am and it is open to the public.
Bush postpones30 year anniversary bash
(CNS): The opposition leader, who is marking 30 years in Cayman politics this month, has postponed a public party at Pedro Castle, planned for this Friday, due to his wife’s ill-health. McKeeva Bush, who has had his fair share of trials and tribulations during his political career, has kept a low profile since he was acquitted of corruption charges by a jury after a month long trial in September and October. His wife was taken ill shortly after the trial and the couple are understood to have been in the US as a result. The celebration marking three decades as a West Bay representative for the leader of the UDP, now renamed Cayman Democratic Party, will now take place at Tiki Beach on Boxing Day.
“On behalf of the Cayman Islands Democratic Party (CDP) and myself, we would like to advise the public of a date and event change of the 30 years of Service Celebration in my honour, which was to be held on Friday, 28th November at Pedro Castle,” he said in a statement. “As Ihave been off island with my wife attending to medical issues, we have had to postpone the event to Friday, December 26th at Tiki Beach. This is an event that will be open to the public and I look forward to celebrating with you all,” he added.
After a long career in the Legislative Assembly that has seen Bush serve as a back-bencher, a minister of a number of different portfolios, leader of government business, the country’s first premier and now, for the second time, the opposition leader, the recent trial has overshadowed the political veteran’s milestone.
Although Bush cleared his name regarding the allegations of abuse of office, the courtroom drama revealed the extent to which Bush was gambling on slot machines during his time as the country’s leader at the beginning of the last UDP administration. Although his enjoyment of gambling had been the subject of public speculation for many years, the trial confirmed how much time and money Bush was spending on slot machines while he was leader of government business and then premier.
During the ten month period between July 2009 to April 2010 when Bush was accused of abusing his office because he had used a government credit card, along with several of his own, to draw cash in casinos, the court heard he had spent around $430,000 gambling and lost over $260,000 during that time period. The evidence revealed that Bush had been gambling at the machines for hours on end while on business trips as well as when on leave.
Although Bush was acquitted when he was able to demonstrate that there was no laws or regulations at the time preventing him from using his government credit card to take cash advances from anywhere, including casinos, it remains to be seen how much the revelations over the gambling have damaged his future political prospects.
After the UDP’s defeat in the 2013 election, which owed much to the party’s split as a result of Bush’s arrest, the opposition leader has renamed his party the Cayman Democratic Party.
Bush had stated after the trial that he would be hosting political public meetings but his wife’s ill health has prevented Bush from returning to the political hustings.
During his trial Bush was able to demonstrate that the FCO, and in particular former governor Duncan Taylor, seemed keen to see Bush’s political demise. When he was acquitted, the opposition leader indicated that Geoffrey Cox QC, his leading defence attorney, would be raising the issue in the corridors of power in Westminster.
A Conservative backbench MP in the UK parliament, Cox has not yet raised the issue in the House of Commons or made any public statements regarding the correspondence between Taylor, the FCO and the police commissioner.
Emails sent by Taylor indicated that he was directly involved in the numerous corruption investigations regarding Bush. It was also clear that the governor was hoping that at the very least the credit card charges would stick and oust him from office and ensure that the UDP leader would be fighting an election while facing what were originally charges of theft, making his re-election as the country's leader less likely.
Progress report published on UK-CIG shared goals
(CNS): Just two weeks ahead of the Joint Ministerial Council in London between the UK government and its overseas territories set to take place during the first week of December a progress report on the agreed goals between Cayman and the UK governments has been made public. Security, employment, education, the environment and international financial services were the main areas prioritised by the UK and its territories and an account of what’s been done in an effort to achieve them are outlined in what was described by officials as a progress report.
Urging the Cayman Islands public to read the 17-page document, which is posted below, Premier Alden McLaughlin, said it reflected the depth of the government’s commitment to consolidate ties with the UK.
“Our work so far has laid a great foundation on which we will continue to build. The UK will also contribute in a number of areas, including increased access to various commercial, educational, training and other opportunities. I hope Caymanians and residents will take the time to learn more about these programmes and the advantages that they offer,” McLaughlin said.
The report focuses heavily on Cayman’s efforts to address unemployment and education as well as work undertaken regarding the offshore sector and the areas that the UK has identified as being of a potential risk to it in the territories.
The details of the government’s trip to London and the usual pre-JMC meetings have not yet been revealed by government officials.
See report in full below
Dump consultants begin work
(CNS): The global consultant firm awarded the $0.5 million contract to shape government’s national waste management policy, make the outline business case and then assist in the procurement of contractors has begun work this week. Officials said that Phil Scott from AMEC, which won the competitive bid as the lowest priced and most technically able firm, has been in Cayman examining the current situation and beginning the assessment. His firm will guide government in its selection of the most suitable management solution to reduce the George Town dump and create a modern waste system for the future. Officials said the waste-management project should be ready for tender within twelve months.
The latest updates in the long-awaited George Town dump saga were revealed at a government press briefing Thursday, when Osbourne Bodden, the minister with responsibility for environmental health said government was well on the way to finding the solution to its waste-management problem. Well aware of the criticisms he has faced, Bodden said the government was committed to doing things properly this time. Had it gone headlong into a random solution, he said, it would have been throwing good money after bad. However, the minister said he was determined to get this right.
As AMEC begins its work on helping shape the national waste strategy, the chief officer in the ministry responsible for the dump, Jennifer Ahearn, said that there would be a public consultation period in the New Year to collect the input of the community before the policy was formulated.
The preferred method for tackling the management of the country’s waste going forward should be completed by the middle of next year. Then the consultants will work with government on the outline business case required under the Public Management Finance Law to justify what will be a significant cost. Once that is complete, AMEC will assist with the procurement process to find the most suitable contractor, or multiple contractors, depending on how government chooses to approach the future of waste management.
Whatever the end solution, it will include re-use and recycling composting and waste-reduction strategies with the goal of minimising rubbish for the landfill.
AMEC specialises in finding solutions to waste-management problems and its job now is to find and recommend the best most suitable, sustainable and cost-effective solutions for Cayman’s waste. It will not be involved in the actual waste-management but will help with the government’s tendering process to find the most appropriate experts to deal with the physical remediation of the George Town landfill, a.k.a. Mount Trashmore, as well as the landfills on the Sister Islands.
Although the minister said that he did not expect to see a fully operational waste management system until towards the end of 2017, going into the next administration, Bodden said work would begin well before the end of this government’s term. Even before the full procurement process is completed, government could begin work on creating composting and recycling centres.
The minister confirmed that while he was still committed to not moving the dump and that any landfill arrangements would be at the current George Town site, new elements of the system, such as a recycling depot or a composting centre for organic waste, may be located in other places.
Noting how outdated Cayman’s current system is, Scott from AMEC saidit was some 30 years behind the UK in terms of re-use and recycling and he made it clear that a future sustainable system in Cayman would require people to separate waste.
He said that as consultants they would be examining the practicalities of curb-side collection and drop-off centres for the separated garbage, but he also spoke about the need for an awareness and education campaign on waste reduction and to assess what commercial value, given the economies of scale there could be in waste. Scott said that in future residents would be separating their waste and recycling, glass, card, plastic and organic waste on top of the aluminium cans, which are the only things recycled by government at present.
With the project moving on to the nest stage, the minister said that it was a long and complex process. But he said it had started well and with AMEC now getting down to work there was "no turning back”.
Bodden said he believed it would be a PPM government again at the helm in 2017, but whoever held the reins of power in May 2017 would not be able to discontinue the work, he said.
Multi-year budgets deferred
(CNS): The finance minister has said that he does not expect to introduce the planned multi-year budget system or switch the financial year until the beginning of the 2016/17 fiscal year – the last financial year of this current administration. As government battles with public finances and the multiple problems surrounding governance, as well as proposals to downsize the civil service, Marco Archer told CNS recently that the idea to introduce government budgets exceeding the current 12 month span will not come until the end of this term. Government will be delivering is strategic policy statement outlining the budget requirements for 2015/16 next month and the minister said plans to bring in multi-year budgeting have been deferred.
The changeto the financial year dates and the multi-year budgets require a change in the Public Management and Finance Law. While the current government has been working on a number of amendments to the legislation relating in particular to the financial reporting issues, Archer said that the changes won’t be brought to the Legislative Assembly much before the end of this current 2014/15 year, which leaves little time to begin the multi-year budgets or a switch in dates.
Archer said, however, that introducing an 18 month budget in the first instance in the 2016/17 financial year would cover the problem period that exists for any new administration coming into office just one month before the end of the financial year and over the need for the interim budget.
This would then pave the way to introduce the multi-year budgets and switch the financial year in line with the calendar year in the next tem if the Progressives are re-elected, or allow any new government breathing room to develop its policies without the pressure of immediately needed to deal with a budget.
Archer said during last November’s policy statement that government had planned to move its fiscal year (which currently runs from 1 July through to 30 June) beginning on 1 January 2016 and that it would simultaneously introduce multi-year budgeting, with the first 18 month budget delivered at the end of this fiscal year followed by a two year budget on 1 January 2016.
Despite the complexities and expense of changing the fiscal year, the finance minister said it would bring numerous benefits.
However, those plans appear to have been shelved and instead Archer will be focusing on introducing the first 18 month public fiscal period in June 2016.
Auditor:Progress too slow
(CNS):The day before government patted itself on the back over what it claimed were advances in the production of public accounts last week, the auditor general pointed out that the Cayman government still had a long way to go to address its “dismal” past failures and that progress was too slow as government should have been much further ahead by now in addressing the fundamental problem. In a press briefing hosted by Premier Alden McLaughlin on 12 Nov he lauded the fact that things were improving. However, on 11 Nov Alastair Swarbrick, the government auditor, had said that while things were beginning to move in the right direction from a situation he had described as “scandalous”, there is still an awful lot to be done.
Since the press briefing on 12 November, when government said the deputy governor had received an email from the Office of the Auditor General congratulating him on the public finance submissions for this year, CNS has been asking for comment on the government’s position from the auditor. But the office confirmed Monday that until the audits are finished, Swarbrick will not be making further comment over and above those made on 11 November at government’s professional development week — the day before the press briefing.
In his speech to civil servants that day, Alastair Swarbrick spelled out the appalling state of government’s accounts. And while government was singing its own praises, Swarbrick warned about the dangers of losing momentum.
“I have found the pace of change frustratingly slow," he said. "If you had asked me four years ago what I would have hoped for by this time, it would be that we were quite a bit further on. In the four years I have seen some spurts of activity and progress, only to be followed by a loss of momentum.”
In an address that highlighted the still very poor state of affairs, Swarbrick said that much more still needed to be done.
“The momentum needs to build on the achievements so far. No doubt some changes to the PMFL (Public Management and Finance Law) will help but it should not be an excuse for not achieving accountability,” he said.
Reflecting on how bad things were, he said that when he arrived here in July 2010, if he had known the true extent of the problem, he wondered if he would have taken the job at all.
“Six years after the introduction of the PMFL the position was pretty bleak, and to all intents and purposes there was absolutely no accountability for the generation and use of public resources. Just as concerning, there didn’t seem to be a plan in place to rectify the situation,” he stated. “We can examine the reasons why this position was reached but at the end of the day, no matter how you look at it, I have to say that from my perspective it was pretty scandalous and it is clear that it is a causal factor in undermining public trust in government.”
Swarbrick said that what he found when he arrived in the Cayman Islands was diametrically opposed to anything he had seen in his 19 years of public sector auditing experience at that time.
“In those 19 years I could probably count on my fingers and toes the number of public sector entities that I had audited which had any form of qualification,” he said. “I had personally never been involved in any audit that had issued an adverse opinion or a disclaimer of opinion. Also it was very rare that audited financials were not completed and tabled in line with statutory requirements,” Swarbrick explained.
He said he had come across problems with financial managementand reporting, issues of waste or misuse of public funds. However, he emphasised that the fundamental principle of accountability through the presentation of an annual report, including the financial statements, was a serious requirement.
“Where there were failures in financial management and reporting, there were consequences,” he added. But this is the issue that has raised so much concern in Cayman. Despite ten years of failure by government to report back to the public how it spent the tax payers’ money, no one has been held responsible or accountable and no heads have rolled.
Swarbrick said that things were improving, given how bad they were, but the idea that he had been praising government, as implied by the premier, in an email to the deputy governor, appeared to be at odds with what Swarbrick said.
“I am hopeful that year ending 30 June 2014 may be the first year that we don’t have any adverse opinions or disclaimers on entity financials, although I must attach a significant health warning to that statement as some significant work is still required to get the full picture,” he said. “We continue to find governance and internal control issues that impact significantly on the effective stewardship of public resources.”
He said that government was still a long way off from delivering a picture to the people who pay for the public services how revenues government has generated from them has been used.
“They have no choice in paying the fees, charges, duties, taxes which fund government and the public services, unlike investors in the private sector, so as public servants our professional, ethical and fiduciary duties to safeguard public resources and assets, and report how those resources have been generated and used is significant, and in my opinion greater than that for private sector entities,” Swarbrick stated.
“Public trust in government finances is still a way off, impacting on the credibility of government overall,” he warned.