Archive for August, 2012
YouTube video expresses disappointment with UDP
(CNS): The Cayman Islands premier is the subject of another video posted on YouTube that expresses the disappointment of many Caymanians with the UDP administration. Lacking the humour of the popular “What I see happening” video, in which Bush’s speeches were cleverly merged into a catchy tune about bureaucratic harassment, the latest videolists a number of issues that have fuelled the mounting opposition to the current administration throughout the community. The producers, who are using the label 'CayPolitics', remain anonymous and the video, entitled “UDP devastation in the Cayman Islands”, is set to Sam Cooke’s haunting song “A change is gonna come”.
See new 'UDP devastation’ video here
See ‘What I see happening’ video here
One solution to two problems
We are at this time in our history faced with multiple economic problems but they are all solvable. Aside from the financial tribulations being experienced by our government, the majority of us in this country are faced with what I will describe as a ‘pension dilemma’. Most of us are aware of the current financial problems faced by government, so there is no need to elaborate on this issue at this point in my article.
By the term ‘pension dilemma’ I mean that our pension system is flawed in several ways.
Firstly we are forced by law to pay pensions but there is no guarantee that upon retirement we will have more than we paid in to our pensions, or even the full amount that we paid.
The second flaw in our pension system is the fact that the pension providers are themselves faced with the issue of generating a return for their clients. This means investing in overseas financial markets and in some cases having to add a second layer of money managers, thereby increasing management fees. Additionally those financial markets are very unstable with the world going from one financial crisis to the other.
The third pension problem is that those of us who are at the lower income scale will not in our lifetime accumulate enough through our pension to ever sustain ourselves later in life and many of us will become dependent on government funded social services for assistance.
So how can we find an alternative that will solve our pension dilemma and at the same time have a positive impact on our economy and be beneficial to government’s financial position?
In relation to the government’s financial position this includes substantial debt and a significant amount of interest per year.
The obvious solution for government is to do a phased 5-year disposal of all of the public authorities, including the Water Authority, the sewerage system, the Port Authority, CINICO and Cayman Airways.
The major concern in their disposal is – to whom will we sell these essential components of our infrastructure? Certainly I would not recommend that we allow any single company or person to have this kind of control over our country. Furthermore these utilities should not be controlled by any foreign entity.
So here is an alternative that might solve all of the problems that I have set out above:
We need the pensions law amended so that it stipulates that at least 80% of the assets now held by our pension funds must be returned to Cayman and invested in specified local investment vehicles and the transfer of funds should be scheduled over the next five years.
We need the specified investment vehicles to be secure and to bring a guaranteed return on investment to our pensions and a fixed amount of management fees to all of the pension providers.
We need the pension contribution for everyone to be set at a minimum amount of $300 per month. If the salary is less than $3,000 per month then the employee should continue to pay 5% of salary and the employer make up the difference to bring it to $300.
For those who have not already put one and two together, I am suggesting that government should sell our public owned companies to our own pension fund providers.
The best way to accomplish all of the above is for government to retain 20% interest in each of these entities and to have a proportional role in their management. We all know that the private sector generally provides more efficient management than government, so this enables the private sector, in this case the pension fund appointed management systems, to have control and this thereby will improve efficiency.
I believe that our current utility company, CUC, is guaranteed a return on investment of somewhere between 10% and 15%, so these entities that will be owned by our pension funds and thereby ourselves will need the same arrangement.
There are many future benefits that will flow from what I am proposing here.
For example in five years time when the government has divested 80% of all of these assets, government will have earned enough to pay off the total public debt and have a surplus.
The civil service will have a significant reduction in employees because those employees previously working for the government-owned authorities will by that time be privately employed in the then private enterprises. This will bring the civil service and thereby government expenditure down to a manageable size.
The pension funds will have a stable and sufficient return on investment and will be in a better position to keep their management fees to a minimum.
The cost to consumers should not increase because more efficient management brings with it lower operating costs. And even if we complain about high utility costs at least we would know that in the long run our pensions will be substantially more than we contributed because we are the ultimate beneficiaries of the profit from our utilities.
This brings me back to the reason why I recommended a minimum pension amount of $300. A compound interest calculator shows that if we invested $3,600 annually for 21 years, with annual interest of 9% we would have more than $200,000 accumulated in our pension.
I don’t have to add that this will significantly reduce social services expenditure on those of us whose pensions would otherwise be insufficient to cover our living expenses in our later years.
If our pension fund has a return of 9% to 12%, we would all be in a much better financial position when retirement time comes around.
Finally, the biggest windfall of all will come in five years time, if we chose to take these companies public by having them listed on the NASDAQ or other exchange.
This public offering through a US or other international exchange will bring in substantial new investment, which can then be applied to green energy such as solar energy, wind-driven energy, the purchase of CUC, the purchase of our fuel depots (or the creation of our own), or other similar investments.
We would however need to structure any public offering so that control is maintained locally.
Admittedly, it will be almost impossible to guarantee fixed earnings for Cayman Airways and the two public attractions, but that does not mean that they cannot be made profitable by privatization and by the increased efficiency that privatization will bring.
To those critics who will say that this is not a viable solution, I say to you that this is a basic idea that can be revised, improved and amended. Our current system of sending our hard earned dollars to be lost in the US stock market is, in my opinion, much more risky than the solutions which I have outlined here.
The sale of our public authorities to any entity other than our pension funds might help government finances in a similar way, but we will then be left with the same pension dilemma and the additional scenario where the profit from our utilities might not be re-invested in Cayman.
My conclusion therefore is that a phased transfer of the assets of our pension funds back to Cayman to purchase our own infrastructure combined with a coordinated infrastructure disposal by government will go a long way to solving two of our major problems between now and the next five years.
Civil servants lose COLA for second time
(CNS): Public sector workers are set to take a 3.2% pay cut next month for the second time during the last three years. Government is once again rolling back the cost of living allowance (COLA), which was returned last September, in order to achieve a surplus budget at a time when government spending has reached a record $650million. Although the premier has stated on numerous occasions that he will not cut the public sector head count he said during his budget speech Monday evening that civil servants had agreed to give up the COLA. According to a memo circulated by the deputy governor yesterday the pay cut will begin on 1 September.
Although existing health and pension benefits of existing public servants will now no longer be affected, including the housing allowance for police officers, all civil servants included the lowest paid will lose the 3.2%.
The deputy governor said he cut was regrettable but the measure and other minor changes for new civil servants would prove the least disruptive.
Franz Manderson said his aim was to protect the jobs of existing civil servants but that new posts would not be filled which would require public servants to take on extra work. Some 140 vacancies will be eliminated over the next year and the moratorium on recruitment will lead to a further cut in the size of the local public sector over the next five years.
The deputy governor also announced plans for a voluntary redundancy scheme in the service and said he would discuss this with the Civil Service Association.
“The civil service has many critics and I welcome constructive criticism as it helps us to examine what we do and how we can improve,” Manderson wrote in the memo which was sent to all public sector workers. “I am confident that a strong, stable and efficient civil service will continue to contribute positively to the economic and social well-being and development of the Cayman Islands.”
He praised the local service for their work in recent weeks with the “unprecedented circumstances” and “Considerable uncertainty” during the budget crisis.
However, Manderson warned that the reduced resources would affect the timeliness of services and a public education campaign would be required to educate the public.
See full memo here
Year ends on $10m deficit
(CNS): The premier said the public finance year-end result for 2011/12 is a “remarkable testament to the government’s stewardship”, even though the year ended with a$10 million deficit, when the forecast figure had been for a small surplus. During a long and disjointed presentation on this financial year’s budget on Monday evening, McKeeva Bush claimed credit for reducing government’s operating deficit from $80 million when he took office in 2009 to $10m. The premier overlooked the three-year plan that was submitted to the UK in 2010, however, that had called for a more than $10 million surplus by the end of this financial year.
Bush stated in his budget address, which lasted more than three hours, that his government had brought the deficit down as a result of sound financial management. He said the core government deficit was only $2 million and the deficit for statutory authorities and government companies was just over $8 million, which produced an overall shortfall for government’s 2012/13 spending plans of just over $10 million.
Although this accounted for more than $13 million amiss in the forecast from last year, Bush claimed the deficit as an achievement — one that had been arrived at without cutting the civil service by 20%, which he said the UK had called for. Bush maintained that he was standing firm on civil service jobs and he would not cut the headcount in the forthcoming budget either.
However, he did reveal that the civil service was taking another pay cut as the cost of living allowance (COLA) of 3.2%, first rolled back at the beginning of the UDP term but returned to them last September, was being cut once again.
During the 2011/12 financial year government spending grew yet again, this time to an all time high of $546 million. Despite increases in public spending from less than $500 million in 2009, the premier insisted that, as a result of fiscal prudence, operating expenses had remained virtually unchanged since his government came to office, and all during the world’s worst ever economic recession.
A number of significant factors impacted spending this year which served to fuel the government’s $10 million plus deficit, even though it collected more revenue this year than any other government in the history of the Cayman Islands.
Bush said tertiary care costs were $5.3m more than expected, rising to $18.6m. Rental payments for people in need was $700,000 more than budgeted and transfer payments for scholarships and poor relief, among other things, also grew from the $28.8m forecasted to a whopping $34 million.
“These are increases in spending that can’t be avoided and represent the challenges we face,” he said, adding that the payments were “compulsory for a caring government” but he acknowledged that government had to implement policies to address these spending problems.
The premier said that his government would continue to play its part in the country’s recovery through fiscal discipline and that there would be no new long term borrowing. Bush emphasised on a number of occasions throughout his budget address how prudent his government had been towards debt.
However, he ignored the fact that he had originally asked for approval from the UK to increase the country’s long term borrowing by almost $60 million for a number of projects his government wished to pursue, which was declined.
Bush said that government’s debt was growing as a result of the last administration’s policies, which his government was left to deal with, as he railed once again about the new government schools and the Government Administration Building. He also said the constitutional changes, such as the bill of rights, were straining government’s resources.
He announced that government would be further restructuring its borrowing because he had been advised that the time was right and government should be able to reduce the cost of its debt payments, which are around $60 million a year in total, on accumulative debt, which currently stands at around $590 million.
See original three year budget plan here.
Experts find mangroves can slow surge
(CNS): Evidence from the latest scientific research suggests that mangroves can reduce the height of wind and swell waves over relatively short distance. According to a report by the Nature Conservancy and Wetlands International wave height can be reduced by as much as 66% over 100 metres of mangroves. With coastal populations particularly vulnerable to the impacts of extreme events such as storms and hurricanes researchers say mangrove forests can be used as a tool in coastal defence strategies making their conservation a key part of protection. Researchers say that more work needs to be done to better understand the role they can play in defending coasts.
While Cayman does provide for some protection of mangrove buffers under the planning regulations, the plant is still persistently removed in the face of development. This was evidence in 2010 when more than 370,000 sq.ft of costal mangrove was ripped up by the developer of the Ritz Carlton on land earmarked for the Dragon Bay development.
Michael Ryan was granted permission to rip out the mangrove more than two years ago but no development has taken place on the site. In addition the promised replenishment programme has also failed to materialize.
In this new report by the environmental researchers, the importance of dense healthy mangrove to protecting coastal areas from storms has been highlighted as the experts say the plant reduces the wave energy.
“While mangrove forests are usually found on shores with little incoming wave energy, they may receive larger waves during storms, hurricanes and periods of high winds. Large wind and swell waves can cause flooding and damage to coastal infrastructure. By reducing wave energy and height, mangroves can potentially reduce associated damage,” the authors of the new report state.
“All evidence suggests that mangroves can reduce the height of wind and swell waves over relatively short distances: wave height can be reduced by between 13 and 66% over 100 m of mangroves. The highest rate of wave height reduction per unit distance occurs near the mangrove edge, as waves begin their passage through the mangroves," the report finds.
It explains that waves are most rapidly reduced when they pass through a greater density of obstacles.
“Mangroves with aerial roots will attenuate waves in shallow water more rapidly than those without,” the researchers say. “At greater water depths, waves may pass above aerial roots, but the lower branches can perform a similar function. The slope of the shore and the height of the waves also affect wave reduction rates through mangroves.”
With confirmation that mangroves can attenuate wind and swell waves, the report states that research has focused on small but there is a need to measure the attenuation of larger wind and swell waves associated with greater water depths, which may occur during hurricanes.
“While more research is needed, existing knowledge is sufficient to substantiate the claim that mangroves attenuate wind and swell waves,” the report concludes. “Appropriate management of mangrove areas could increase wave attenuation. This might include the protection of mangrove areas in key settings, or lead to the restoration or planting of mangroves in degraded and deforested settings, where local conditions have been shown to support the establishment of mangrove seedlings.”
The authors go on to say that dense mangrove forest, including species with aerial roots will offer the highest level of protection from wind and swell waves.
See report here
Details and rules released for CIFEC new school year
(GIS): The school year is just about to begin and students need to make the necessary preparations to be ready for the upcoming academic year. Cayman Islands Further Education Centre (CIFEC) students need to be aware of the important dates and activities happening over the next few weeks. CIFEC students who completed the academic year 2011/2012 must collect their examination results on Monday 27 August. On this day, students will also be able to access advice and guidance on their next steps from a range of providers, including CIFEC, UCCI, Cayman Islands Government’s Scholarships Secretariat and the Private Schools who offer A Level studies.
Students must report to the Hall on the new CIFEC campus which is now located at 515 Walkers Road (old John Gray High School site) between 8:00am and 4:00pm. For the students who completed Year 11 in the 2011/2012 academic year, and are now entering CIFEC, there will be a three-step process to their enrolment.
During Step 1, students will come to collect their results and will be able to access advice and guidance about their progression pathways on Tuesday 28 August at CIFEC. At this point, students who are interested in pursuing the CIFEC Dual-Entry Programme, which allows eligible students to spend Year 12 pursuing advanced study at an external programme for credit towards graduation, will be given an opportunity to apply for permission for entry. In order to qualify for the Dual-Entry programme, students must have earned at least 5 Level 2 passes, including English and Mathematics.
Step 2 is for students who choose to study at CIFEC who will have an opportunity to enrol on this day. They will meet with specialist Careers Advisors and curriculum staff to discuss their options and to put together a programme that best suits them.
Step 3 is for all enrolled CIFEC students who will then undertake an intensive Induction Programme on Monday 3 September and Tuesday 4 September, which will introduce them to the year, their rights, responsibilities and activities. The rest of that week will be spent working with Careers Staff to identify the best fit for individual internships.
Furthermore, it is important for CIFEC students to know what will be the acceptable dress code for this upcoming school year. Due to the uniqueness of CIFEC, the uniform is slightly different from that of the other Government high schools.
The dress code for CIFEC is as follows:
All Clothing should be ironed
Torn, dirty, or frayed clothing is unacceptable
Uniform for Female Students:
Plain black shoes/sneakers – minimal heel permitted
White, grey or black crew socks
Black skirt or pants that fit properly and are worn at the waist. Skirt no shorter than knee length
A solid White/Grey/Black blouse/polo shirt with no logo, decoration or pattern
Underclothing beneath blouses must be white in colour
One pair of stud earrings, should be in good taste, worn in the lower lobe
Makeup, nail polish and false nails suitable for working environment only
Head Covers that are required for religious purposes are allowed.
Hair is to be kept groomed and smart and appropriate for the workplace
Uniform for Male Students
Plain black shoes/sneakers
White, grey or black crew socks
Black pants with pockets that fit properly and are worn at the waist
Solid black belt – no visible underwear
A solid White/Grey/Black collared long/short sleeve /polo shirt with no logo, decoration or pattern. T-shirts if worn underneath must be plain white.
Hair is to be groomed and smart. No extreme hairstyle, design in the hair or colour
Earrings and other types of jewellery should not be worn.
No items that display connection to gangs are allowed.
Eyebrows are not to be shaved or have designs
Head Covers that are required for religious purposes are allowed.
Bill of Rights to cost millions, says Manderson
(CNS): The deputy governor talked a good deal about the impact of the Bill of Rights on government in the Throne Speech delivered ahead of the budget presentation Tuesday, especially the cost. Presenting an overview of the government’s policies and plans for the coming financial year, Franz Manderson referred to the considerable amount of work going on in all of the portfolios and ministries in order to ready the administration for the bill, which takes effect in November. Manderson explained that much of the cost of implementing the Bill of Rights and ensuring government complies with it would be incurred in this financial year.
“Fulfilling its requirements, in the present economic climate, may call for a certain amount of creativity and innovation, as well as commitment to sustainability and good governance,” Manderson said in the official presentation. “Yet I am confident that these things are within the grasp of the Cayman Islands public service, although not without cost. Full implementation in the public sector is estimated to cost millions of dollars, much of which is in the present budget.”
The Bill of Rights forms part of the Cayman Islands 2009 Constitution and marks a sea-change in the relationship between the government and the people. For the first time Caymanians will have the right to access local legal redress when it comes to prejudice, discrimination or abuse against them by government entities.
The area of government that will be most affected by the BoR is the judicial services and legal department. Manderson said new procedures needed to be developed to ensure that the local courts could deal with applications alleging breach of the provisions in the bill.
“While the Judiciary will draw on experience elsewhere in the region, in Europe and in North America, its preparations will strive to ensure that its approach properly reflects the Cayman Islands culture and history,” he added.
The deputy governor pointed out that it would be his office in conjunction with the Portfolio of Legal Affairs that would continue to prepare government for the November implementation of the bill and specialist training for those public officials who have powers of arrest has now started.
The prison is another place where compliance with the bill will be important and feedback from the recent visit by the UK Prisons Inspectorate will help enhanced compliance for the treatment of incarcerated offenders in accordance with the BoR, he stated.
See full throne speech below.
Miller boycotts budget speech
(CNS): Following the premier’s decision to present his government’s budget to the Legislative Assembly Tuesday evening before gaining official UK approval, the independent member for North Side boycotted the proceedings. MLA Ezzard Miller said he refused to participate in the Throne Speech and Budget Address, which had not received agreement from the FCO’s OT minister, Henry Bellingham, as it was yet another example of the premier's continued circumvention of due process. With the government benches carrying the majority in parliament, Miller pointed to the futility of attempting to object to the proceedings in the LA when all eight UDP members “would simply follow in lockstep” anything the premier does.
As a result, the MLA simply walked out of the Legislative Assembly before the speeches were delivered as he said he could not be a party to further abuse of the system by Premier McKeeva Bush. Miller pointed to the memo circulated by Deputy Governor Franz Manderson an hour or so before the LA session opened.
“It is rather curious that the Premier, having cancelled several previously announced dates and times for convening the LA to present the budget, today makes the choice to present the budget without final FCO approval,” Miller stated, adding that he had become aware of the statement from the governor shortly before proceedings were due to start which made it clear the premier was delivering the budget in the knowledge that the OT minister had not, and may not give, his approval to the plans.
“I decided not to take part in the process because this is yet another example of the premier's continued circumvention of due process by ignoring the provisions of the PMFL and the FFR, which he signed with the FCO,” Miller said.
“I will, however, return to parliament … to debate and make my contribution on behalf of the people of North Side and this country. Hopefully, the premier, will by then have made the necessary adjustments to get FCO approval on the budget,” he added.
Miller missed a long and repetitive presentation by the premier, in which he said he had decided to bring the budget before getting official approval as there had been indications from the FCO that they would accept the latest reductions in operation expenses. He said these had been reduced to $531 million.
Bush said that Bellingham was “off” (the UK minister is understood to be taking his annual leave) but the Cayman government could not wait any longer to begin the budget process so he had made a decision to deliver the budget as he expected it would be approved.
Deputy Governor Manderson indicated in a statement released before the start of the LA that while the budget had not yet received official approval, the FCO had no objections to the Throne Speech being delivered.
Although Bush made his speech and gave some fleeting references to the spending and revenue measures contained in the budget, there were no documents to support the presentation. However, he said these would be delivered to members on Tuesday, though he did not indicate when the appropriations bill and supporting documents would be available to the public.
Warnings issued over 9th depression of season
(CNS): The National Hurricane Center in Miami began issuing warnings onTuesday morning in connection with Tropical Depression 9, which has formed east of The Lesser Antilles. Experts predicted that the weather system, which was travelling toward the west at around 20 mph, would become a tropical storm sometime today. At 7am local time it was located about 645 miles east of Guadeloupe, and although it currently poses no threat to the Cayman Islands, on the current forecast track it could be in the northwest Caribbean by Sunday.
The NHC said winds are currently around 35 mph with higher gusts and strengthening is expected over the next 48 Hours when it will become TS Issac.
Go to the NHC website for more information
Budget delivered without OK
(CNS): The premier spent more than three hours Monday evening delivering a rambling and unfocused budget address that offered very little detail on how his government will spend and raise cash in the forthcoming financial year. He revealed that civil servants will be losing their 3.2% cost of living allowance once again and that 24 new revenue raising measures would be introduced. He railed against the UK, which he accused of constantly moving the goalposts on the budget, which it has still not approved. Government hopes to raise almost $650 million in revenue during this financial year and will be spending around $530 million if the plan is eventually approved by the FCO.
Despite the obvious problems facing the UDP administration and the worst budget crisis in the country's history, the premier took no responsibility for the problems but attempted to claim various successes in what will be the last budget address of the current government.
Check back to CNS for a full report on the budget address.