Archive for July, 2009

Deficit reaches $75.9M

(CNS): With the preliminary year end figures for 2008/09 now in, Leader of Government Business McKeeva Bush revealed that the government deficit is even worse than predicted at almost $76 million. Speaking at the Chamber’s Legislative Lunch on Thursday (23 July) he said central government had finished the year with a shortfall of $64.5 million, which when combined with the losses of around $11.5 million from statutory authorities, expenditure versus revenue was out by $75.9million.

The LoGB also confirmed that total government debt including statutory authority borrowing was at an all time high of $590.4 million. However, Bush promised the lunch guests from the business sector that his government would put things right. “We stand by our pledge to rebuild our economy until it is again on a sound footing. We were elected to act and we are taking action,” he said adding that while there were no quick fixes his government aimed to reduce the deficit within the next two years and return it to a surplus as well as addressing the record borrowing.

Giving an overview of a number of initiatives as well as plans that his government was embarking on he asked the business community to come up with ideas to raise revenue as he said he intended to keep the election promise not to create new taxes or increase any fees. He said he wanted to work with the Chamber as there was a need for everyone to work together to come out of what he called the economic “mess”.

He lamented the growth of divisions and disharmony in the community over the last few years, which he said had been to the detriment of Cayman and he could not stress enough the need for harmony at this time. He also noted that the country’s dependence on the finance and tourism industries as they were could not continue and that there was a desperate need for diversification. He revealed plans to attract inward investment and the expansion of the financial sector into new areas. He also warned that things needed to change, including the immigration policy.

“We have toprotect our own but we must attract people who will spend money.” Bush stated. “In the last few years we have driven people away and that is why we are suffering.”

He said he was well aware that some people would not like it but he said the need to bring in investment was crucial as once poverty took hold it was impossible to stop it. He warned of further increases in crime and that the country would self destruct if we could not attract new money. “We went from poverty to wealth because people came to Cayman andspent their money here, and we stand to lose it if we don’t change,” he added.

Speaking about tourism, Bush said the industry lacked a cohesive vision, stating that some in the industry say we should go after dive tourism, others high end, yet others family holidays, and everyone had their own opinion. But there was a need to create one shared vision, which his ministry was now working hard to achieve in order to push up visitors by 20,000 in the next year.

On the issue of cruise tourism, he promised a berthing facility as soon as possible and said the country was in discussion with the FCCA. He also noted that to get cruise ships to stay longer they would want to keep open what he termed their “services”, a reference to the on-board gambling which currently closes down when ships dock in Cayman. He also spoke about a cargo operation and said Cayman could develop a real commercial port that could become a third leg to the economy, but he said that it would have to be developed in the eastern districts. “This will be a real ‘Go East’ initiative,” he said.

He also acknowledged the issue of crime, which he said was something he would be working with the commissioner of police on, but that no matter how much money you throw at the police the community needed to speak out against the criminals in order to address the problem. He did say, however, that he was particularly concerned over the number of guns coming into the islands and that there was a need for some form of official coast guard and marine protection agency.

The leader of government business also talked about unemployment, training, the UCCI, cuts in government spending, refining the civil service and the work of the newly formed Immigration Review Team. He also spoke about the latest developments for the revived Cayman Islands Investment Bureau (See Cayman eyes Gulf wealth) as well as the government’s efforts to remove Cayman from the OECD grey list. He confirmed that the 12th bi-lateral Tax Information Exchange Agreement was set to be signed in Washington with the New Zealand government next month.

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School kitchens cost millions

(CNS): According to Hunter Jones (left) of Tom Jones International (TJI), the general contractor building Cayman’s two new schools, many of what he termed the “Cadillac items” in the design are too late to change as the projects are so far advanced. However, hedid say that his firm is working hard with the new government to help them shave some of the costs. Last week Rolston Anglin told the press that government is looking at a bill of $1.5 million for the school kitchens alone, which he said were five star restaurant grade fit-outs.

Anglin told the press at Friday’s media briefing that managing the situation surrounding the schools was literally a full time job for his ministry and that the priority was to get a team in place to deal with the litany of problems — one of which was the fact that the schools were rife with excesses.

“The PPM had promised us new schools but what they have given us is an operational mess,” he said. The new education minster explained that the lack of a project management team from the start had contributed further to the wider problems, from architects not being paid to sub-contractors walking off the job.

He said that a team and a reporting structure were being put together but the ministry was now seeking a manager to lead the project management team. He said a steering committee made up of people from the construction industry has also been established to work with TJI to reduce some of the costs, which he said were unnecessary and excessive.

“The kitchens cost more than most 5 star hotel kitchens at about $750,000 for each school,” he said. “We really need to get some semblance of sanity and some clarity on these projects,” the minister added.

Jones told CNS that there were a lot of custom designed items on the project that were part of the plans, which in many cases had already been made and paid for, and therefore it would not be possible to reduce a lot of the state-of-the-art facilities. “We are working with the government to change some of the Cadillac items to reduce costs, but the projects are so far advanced a lot of things just can’t be changed,” Jones said.

The question of overruns is also still outstanding as Jones has said that it could be as much as $17 million. However, the former education minster and the driving force behind the need to create state-of-the-art learning facilities, Alden McLaughlin, said that figure was absurdly high and that he believed the contractor was just trying to get more money than originally contracted. He told CNS last month that there could not possibly be any legitimate claims for such high overruns.

“I very much hope that the new government is not going to concede just because the developer makes a claim,” McLaughlin had said. “Up until I left office matters were still under discussion and no concessions had been made about the claims as webelieved that, by and large, they were not entirely genuine. We believed that the developer was taking advantage of the election to get more money, thinking government would give in to any demand.”

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