Archive for June 28th, 2012

Bush blames woes on PPM

(CNS): The premier spent well over three hours on his feet berating the opposition on Thursday morning as he closed the Legislative Assembly debate on the motion for government’s stop-gap emergency budget. McKeeva Bush pointed the finger at the auditor general, whom he described as “a hit-man”, the governor and the FCO as well for preventing him from getting things moving but above all he blamed the PPM, and the party leader in particular, for his difficulties with this year’s budget.  During his response to yesterday’s debate Bush revealed that government expected to collect $75 million in revenue over the two month interim budget period.

This coupled with the $25 million overdraft is expected to cover government’s bills from now until the end of August. Government’s stop-gap emergency budget, which was approved by the UK, called for $102 million in spending and a $25 million overdraft facility.

The UDP government gained approval from the Legislative Assembly for the short term spending plan with the government benches voting yes. The opposition benches, including the independent member, abstained from the vote, indicating their disapproval but recognising the need for government to pay its bills.

In his response to Wednesday’s debate on the motion the premier revealed that his government was now engaged in a serious cost cutting exercise and he would bring the full budget for the 2012/13 fiscal year in a few weeks. He pointed to increases in liquor licensing fees and a possible 5 cent glass bottle tax on alcohol imports as new revenue raising measures likely to appear in the new budget to pay for the hospitality school.

Bush also announced plans for a new private sector development that was being posed by an unnamed investor that he said would create a new mixed-use town  with shops, restaurants, a cinema, a hotel and condos, straddling the districts of East End and North Side. He gave very few details but said the investment was worth around $300 million and the mystery developer required no special concessions.

Despite the issues associated with the port and the FCO’s difficulties approving the project until it is in line with international best procurement practice, Bush insisted he was continuing with his discussions with China Harbour and the Chinese firm was the best partner. He revealed that McAlpine, DECCO (Dart’s construction company) and Hurlstone Construction would all be working with CHEC on the project. (See more on this in separate CNS article).

Much of the premier’s speech was focused, however, on the shortcomings of the previous administration and its failure to manage the country’s finance. Although he was reading from a formal address, much of the speech was not from the script and saw Bush impassioned and animated as he yelled across the floor at the opposition benches, and took aim at CNS and the auditor general.

Bush said the mismanagement of the previous administration, which demitted office three years and one month ago, was the reason why he could not deliver a budget. It was they, he said, who had handed the power to the UK to approve the government’s budgets and control what he did. Instead of offering solutions, the premier said the opposition was “gleeful” about his inability to bring a full budget presentation before the year end.

As he railed against the regulation that he claimed was stopping him from getting anything done, he accused the opposition of enjoying the problems this bureaucracy was causing. “They are using that to be gleeful and sitting down eating carrots and drinking milk,” the premier said.

He pointed to the pressure the FCO was placing on him to follow international best practice and said the British were being “unrealistic” when they expected a small jurisdiction like Cayman to follow “some UN ideals” or World Bank standards.

Bush was particularly scathing about the auditor general, implying he was in some form of alliance against his government with the media, especially CNS, and the opposition as well, which he said was all “palsywalsy" with the auditor general and “brown nosing” with the governor and the FCO. Bush described Alastair Swarbrick and his audit office as “nothing but a hit-man” and revealed that he was suing the public auditor but did not reveal on what basis he was doing so.

Despite the major problems the UDP government now faces in trying to reduce operational expenses by a significant amount, Bush claimed that his government had made a turnaround in public finances. He then went on to say that the current budget crisis could be a major turning point as people would begin to understand that government can’t keep “spending and spending and borrowing and borrowing”.

Budget crisis aside, he told the Legislative Assembly that the country was “poised for better times” provide that the PPM and the North Side member didn’t get in power. “They think I’m weakened but I’m not,” he said at the end of his three hour plus address.

A much shorter scripted version of the speech delivered by the premier in the LA is posted below.

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UK officially publishes white paper after early error

(CNS): The new policy document setting out how the UK will be dealing with its overseas territories in future has finally been officially published on the FCO website. The document was revealed briefly in error on Monday but withdrawn from the site later that day. As reported on CNS on Monday, the official paper reveals that the UK will be taking a more hands-on approach and keeping a closer watch on finances, good governance and the potential for corruption across the last remnants of empire. In exchange, Britain will offer more expertise to the territories local governments from across the UK adminsitraiton.

The foreign secretary stated that he expects to see the same high standards of government in the territories as in the UK.

See full document here

See related story on CNS:

UK wants high standards

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No interim revenue revealed

(CNS): As legislators debated late on Wednesday evening, no details of how government intended to fund its request for $127 million were revealed. Although the premier has statedthat he needs to cut government’s core operational expenses to well below last year’s figure, there are no cuts in spending for the interim plan, which averages expense of almost $63.5 million per month. Bush did not say what government’s projected earnings would be for the next two months but has requested an overdraft facility of $25 million. If government was to continue spending at the same rate for the rest of the year it would need to cover expenses of around $760 million.

Although McKeeva Bush said the two month spending plan should not be translated as “2/12ths” of the amount that government will spend over the next fiscal year, he did not say how the expenses would be paid for or how he would then hone down the next ten months to an average monthly spending of less than $40 million to reach a balanced budget for the rest of the year.

Bush said the FCO is insisting on further reductions to the premier’s original spending target of $498 million. This means he will need to reduce operating expenses for government over the remaining ten months to an average of less than $37 million — a task which seems almost insurmountable without major legislative changes and the cancellation of many government programmes.

Bush has turned his sights on the liquor trade for an increase in fees but it is understood he is seeking to raise around $800,000 in order to fund a hospitality school. No other new revenue raising measures have yet been revealed, nor has government shown any figures reflecting the earnings it expects to see this fiscal year from its major revenue streams, such as work permits, duty and or financial services fees.

In the stop-gap budget government appears to have opted for business as usual and has included almost ¾ of a million dollars appropriations to the Nation Building Fund and a $2 million subsidy to the Turtle Farm, among other major costs.

The premier revealed that the UK had twice rejected his proposals over the last week. The FCO declined to approve the original budget proposal, which had included some $59 million of long term borrowing as well as the government overdraft. Bush then proposed to deliver the budget without the long term borrowing and to negotiate that with UK officials separately. However, the British also declined that proposal and said the premier needed to cut spending.

The UK has offered to send an economics expert to Cayman to help government shave its spending and present a balanced budget before the end of August.

Legislators return to the LA this morning at 10am, when the premier will deliver his response to yesterday’s debate on the motion for the stop-gap spending plan and for the House to vote on the motion. Given that not a single member of the government benches has ever voted against or deliberately abstained from a motion presented by the premier, the emergency budget is likely to pass.

See government’s motion for a stop-gap budget and the premier’s accompanying speech below.

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