Government plans future cuts

| 19/11/2009

(CNS):  Although government is predicting operating expenses for 2010/11 to be only a fraction less than this year, at around $531.3 million, the premier said that the following two years will see core government spending cut to $522.3 million. Delivering the UDP administration’s Strategic Policy Statement for the fiscal year 2010/11 McKeeva Bush vowed to cut public expenditure and reduce government debt to around $470 million by the year 2013. Outlining wider policy goals for government, which included new revenue measures, improving the performance of statutory authorities and entering into private partnerships, he also vowed to control government spending.

Bush told the Legislative Assembly on Wednesday that public spending could not be allowed to continue growing at the rates of previous years. “Over the past four financial years, from 2005/06 to 2008/09, government operating expenses grew from $372.19 million to $525.98 million — that is a 41% increase,” he said. “This rate of increase is unacceptable to my government and we are taking definitive steps to address this in a sensible manner.”

Although he did not outline in detail what those steps would be, he said that a review of public services was to be conducted by a team, headed by Deputy Governor Donovan Ebanks, which would report back to Cabinet by January 2010, in time to make recommendations for the next budget.

“Our undertaking as a government is to act as needed to either reduce expenses or increase revenues,” Bush stated. He pointed to over staffing, improving management, further training and streamlining or simplifying processes as areas to examine.

The targets set out in the SPS, which, the premier said, were about complying with responsible financial management as set out in the PMFL, would not be easy to achieve and would require managers in public service to exercise strict financial management, but government would do its part to support and encourage the operation of government within the targets of the policy statement. However, he made it clear he expected public sector workers to deliver.

“”I maintain that in general we have a civil service of high quality. There is a saying that when the going gets tough, the tough get going. This is a chance for them to shine, to show what they can do,” Bush noted.

He did say that he was also committed to finding a wider more sustainable income base for the country and predicted, optimistically, that government’s core revenue for 2010/11 would be over $580 million, almost $20 million more than revenue expectations for this fiscal year. This goal was expected despite the fact that Cayman’s economic fortunes were expected to get worse in 2010/11 and that GDP would grow at only 1.6%.  With fortunes predicted to improve in 2012 and 2013, he said government revenue would reach $585m in 2011/12 and $590m in 2012/13, giving government a projected surplus of $22.8m next year and $35.6m and $41.15m in the following years.

Making the statement in his new role as the Minister for Finance, he went on to say that government aimed to keep borrowing well within the limits of the PMFL and that he would reduce the overall government debt burden as capital projects were completed and with no new borrowing. Bush said government would use the predicted budget surpluses to finance its capital projects over the next three fiscal years and would not add to the existing debt as he intended to start reducing it. The finance minister said he was committed to keeping all budgets compliant with the PMFL.

Outlining 19 broad outcome goals, Bush said government’s primary focus over the next three years would be economic improvement, as well as enhanced social welfare and the elevation of education standards. Promising to provide leadership in challenging times, he also took aim at the opposition benches.

“The focus of this administration is not on personal accusations and the destruction of people’s character, it is not even on the winning of the next election, as was evident in the political operations of the last government,” the premier said. “My government’s focus is on moving this country to higher and safer ground and making sure our people advance.”

Despite pointing out earlier in his presentation that the economy is expected to worsen before it gets better, he said the policy statement established realistic and achievable targets.

When Leader of the Opposition Kurt Tibbetts stood to make a response to the policy statement, he noted that in the SPS itself government has said the predictions were based on a thorough forecasting exercise in just the same way that his government had made its predictions in its previous SPS.

He then pointed out how different the real outcome had been and questioned whether the current government could depend on the financial predictions any more than his administration had been able to. He also said it would be difficult to meet the surplus given that the country was supposed to be bankrupt.

Asking if there were figures available yet to indicate if the 2009/10 budget was on track, Tibbetts also queried what government would do if the projections were incorrect, given the fact there was very little room for error in the current budget before it would be in deficit. “If the surplus is not realized, where do we go from there?” he asked.

In his rebuttal Bush accused the opposition of making a mess and then criticising him for not mopping hard enough. But he acknowledged that, given the global uncertainties and the precarious position left by the previous administration, there was no real certainty with the budget predictions.

He also pointed out that, whatever they said about the projections during their time in office, they had accepted those economic forecasts as they brought them to the LA and passed the budgets based on those forecasts. “They must have agreed with the estimates,” he said, adding that they couldn’t blame the civil servants. “You’ve got to take the blame for something,” he told the opposition benches emphatically. “You sat there for four years and spent the money.”

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  1. Anonymous says:

    Lets try and simplify the problem here.  BIG PICTURE TIME.  Goverment expenses have grown to match the population growth of Caymanians.  Lots and Lots of new Caymanians.  Same size island.  Even without reduceing Goverment jobs there are still not enough work generated on the island to feed the population.  So X=number of Caymanians.  Y=number of jobs the island can generate. Disregard for a moment the need for Z=number of qualified expats needed to keep some jobs running.

      There are only going to be so many jobs that the young and unexperianced can start in on Cayman.  Why?  Size of the island for one thing.  Nothing to export.  Construction is already maxed out.  Etc,Etc.

      Now How many just out of school and looking for a way to live and grow young Caymanians per year (and growing).=A

     The ONLY way this equation works is if A =Y give or take a few.  There is already Way too many A’s.  There is no way to generate enough Y’s to compensate.  There are many more Y’s on the way.  Takeing jobs from Z won’t work and won’t even be enough.

      So….What happens to a country that has way too many X’s, a pretty fixed number of Y’s, and NO WAY to control the growth of either one?

      Lots and Lots of unemployed Y’s =more crime, lower standard of living,  higher cost of living.  Basically  the cost of everything goes up, the worth of everything goes down.  Can you see it already?  No matter what is done about anything else,  no matter how much more revenue, and definitley no matter how many cuts The problem will not be solved period.

       How to fix it?  Lower the number of Y’s.  Soon (if not already) Caymanians will have to go off island to find work.  Soon (if not already) Caymanians will have to change their attitude about the Caymanian work ethic and start takeing back the jobs that they onced considered too menial.  There is lots of jobs here that expats do just because Caymanains don’t want to do them.

    This will help but not end the problem.  Look and see what happens to all countries that have too many people and not enough exports.  That is Caymans future.  Soon come.  Or any ideas on how to slow the growth of Y’s.  P.S.  Getting rid of highly educated,qualified and experianced expatswill only make it worse!  Think of something else!

  2. Anon says:

    "Is X here?"

    "Theyjust stepped out."

    "When will they be back?"


    "Can anyone else help me?"

    they looked up from their blackberries and newspapers as if i’d asked the stupidest question on earth.


    I felt badly for disturbing them.

    • Anonymous says:

      I’ve been to that department before.  X has always "just stepped out".  I don’t think that X really works there at all.

      • Uncivil Servant says:

        I’m here now but heading out to lunch soon. Back on Monday.

  3. Anonymous says:

    Start by reducing the civil service staff levels by 30% minimum and ditch the turtle farm. The private sector should not have to support such scandalous inefficiency and waste of resources. There will be some job losses, yes, but get on your bike and look for work, and keep looking until you find it.

  4. Twyla vargas says:

    I BELIEVE PREMIER BUSH is trying to make every one happy, so let us give him a chance and see how he works it.  We already know he is the right man for the job, so maybe if we help by being positive, rhings may work out that everyone gets a little piece of the pie.  After all, is,nt that what we want.?.

  5. Anonymous says:

    I hope you all don’t think that this is the first time that this has been said by Mac and others in leadership roles……..lets see if anything happens this time.

    Seriously doubt it !!!

  6. Anonymous says:

    “Our undertaking as a government is to act as needed to either reduce expenses or increase revenues,” Bush stated.

    Therein lies the problem, and it seems to exist with every administration elected.

    When will we ever elect someone with enough business acumen to stand up and say we will increase revenues AND reduce expenses?

    By stating the "either/or" option it is clear that IF revenues increase then it is his intention to spend it and ignore any options to reduce expenses.

    We are in a terrible state now because in good times expenses go up and in bad times they remain.

    With the number of consultants brought in to advise on everything imaginable under the sun, why don’t we get one to review and advise on restructuring the Civil Service?

    There is tremendous potential for cost savings from a leaner more efficient Civil Service, and all of the people necessary to run it are already there as employees. Unfortunately, anytime that issue comes up the politicians seem to think that the Civil Servants are the ones best suited to that task. After all, they are voters aren’t they? Having them review themselves will only result in the brightest and best moving to the private sector.

    I say it’s time to review the Civil Service structure, composition, role, and compensation. Advertise the contract and have it awarded by the CTC. Bring in a professional team and then let’s bite the bullet and implement their recommendations.

    Donnie Ebanks and James Watler should have no input or say in the decisions whatsoever. Let them live with the results the same as the rest of the Civil Servants.

    Anyone know what Ross Perot is doing these days?

  7. Anne Noneemus says:

    Things happen in politics and government because they are orchestrated to happen. It is a fact that the current leadership have not implemented any fiscal recovery measures that gives confidence to the people.

    There are two reasons for this:-

    1. They are totally incompetent and do not understand financial accountability and good money management.

    2. They know exactly what they are doing and are following a careful agenda with a planned end result.

    Let us take this situation to a logical conclusion. The recent borrowing by the government was in fact spread across several local banks. These banks will require the principal sum to be repaid with interest.

    Essentially, we have been given a big credit card because our other ones were maxed out. As an example, I believe Cayman Airways is carrying well over 40 million in debt. Well, when you live oncredit, eventually it will run out and you simply have to pay up.

    The banks could even decide to sell the debt and this opens up the door for the debt to be owned by unscrupulous investors who deal in what are called, "Vulture Funds"

    By definition, the owners of these funds show no mercy and extract every penny from the borrowers as several countries have already found out much to their chagrin.

    Seeing as Cayman sought approval from the UK for permission to borrow, there is no way that we can legally wriggle out of this one as we will be breaking the law if we default.

    If you think Ivan was disaster, this financial tsunami will make it seem like a nor’wester with the damage it will create.

    Have our politicians and leaders sold us out in exchange for their immunity? I don’t know and I hope it is not the case, but time will certainly tell.

  8. Anonymous says:

    Question – If "government operating expenses grew from $372.19 million to $525.98 million" in 3 years….has there ever been a DETAILED explanation, ministry by ministry or department by department, as to where these increases occurred.  I think that would shed a great deal of light on the subject.   There should be a reporting of the number of approved civil service persons in each department for each financial year. 

  9. anonymous says:


  10. Anonymous says:

    1.8% cut in expenditure in 2 years… wow what a joke… gov has not not got guts to tackle the civil service… don’t worry you can always keep increasing expat work permit fees……

  11. Mac the Spineless says:

    A mere $9m cut?  Less than 2% of a such bloated and indulgent public spending?  Pathetic and insufficient.  It is clear that the spending will in the end be no less than before.  Unless there is a massive cut in public spending (rather than killing the country’s economy with increased duties and levies) Cayman will never  suffer long term harm.  That means huge civil service cuts.  Now.  Mac talks big but he needs to act big and stand up to Mr. Watler.  So for he has shown himself to be totally spineless in that regard.

  12. Anonymous says:

    “Our undertaking as a government is to act as needed to either reduce expenses or increase revenues,” Bush stated.  He pointed to over staffing, improving management, further training and streamlining or simplifying processes as areas to examine.

    Damn right – bout time someone finally saw the light, even if they trying to shut the door long after the horse bolted!