Budget details released

| 08/10/2013

(CNS): The documents that spell out where government expects to spend $518 million running public services this year and how it will collect $644 million from the tax payer to pay for it have been released. Following the budget presentation by Finance Minister Marco Archer, the PPM’s policy statement by the premier and the throne speech by the governor on Monday, legislators will begin debating the budget Thursday and will then sit down in Finance Committee to scrutinize the line items set out in the annual plan and estimates and other budget documents.

The detailed paperwork shows that one of the biggest pay-outs of the public purse is for the RCIPS, which has a budget of close to $32 million, just over a $1 million less than it received last year. Spending has, however, increased on related correctional and intervention services, such as electronic monitoring, CCTV and court interventions, by just over $1 million.

Government will also spend around $13 million on various scholarships, over $6 million on poor relief and another $6 million on veterans' benefits. The Turtle Farm will get more than $10.2 million of tax payer’s cash again as it continues to drain public coffers, while Cayman Airways will receive just over $5 million in addition to the $18 million government pays for specific air services.

$6.3 million will be spent on the regulation of the financial services sector this year and well over $18 million on health insurance for retired civil servants. Government will spend $14 million on tertiary care at various local and overseas institutions and a further $11.7 million on health care for indigents. Controlling mosquitoes will cost the public purse more than $5.7 million this year and government will spend over $52.5 million on teaching for primary, high school and special needs students.

Meanwhile, the education minister will be the most expensive member of Cabinet when it comes to ministry assistance with more than $4 million set aside for policy advice, governance and ministerial support services, which is double and in some case three times that of her colleagues.

With a major surplus predicted, government expects to earn more than $644 million this year and that will come from a variety of existing coercive revenue measures, such as $90 million from company fees, around $42 million from mutual fund administrators, and over $87 million in regular imports, while $17 million will come from the sale of booze.

The banks are expected to chip in double that at more than $34 million. But even outstripping the earnings for banks this year will be the duty government will get from fuel at almost $35.7 million. It will also receive well over $60 million from work permit related fees.

See the Annual Plan and Estimates below.

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  1. Anonymous says:

    Didn't PPM say they were going to cut duties on fuel so that the cost of living was reduced?

    • Anonymous says:

      That was before the FCO told them they were not relaxing the FFR and they would have to increase surpluses. Give it a year or two.

  2. Anonymous says:

    $100 million surplus, simply by removing the UDP wote buying allowance. Well done Marco.

  3. Anonymous says:

    Tara given $4,000,000.00+ for assistance???  Can someone explain why she needs so much assistance that we have to pay for?  I am shocked that she would need 2 to 3X that of the other ministries.


  4. Anonymous says:

    I must have missed the details about how much government is spending on Cayman Airways. The airline should be reduced in size, the heavily paid executive management should be made to take shares or leave their jobs; cut the fat – the new cars for CEO, the boozy trips and expensive jaunts to open destinations that not one person has researched or evaluated the sustainability of. This needs to be run as a low cost carrier, cross train employees, promote hard working caymanians that have sustained the airlines for the better part of the 40+ years and get rid of those that are jsut using it to line their pockets and who will then depart the country andlive in the US, Jamaica, UK and Canada. Make the airline for Caymanians again and about Caymanians again, the current leadership missed that mark.

    • Anonymous says:

      Here's another Idea, only allow Caymanians to fly on Cayman Airways..

      • Anonymous says:

        A big part of Cayman Airways' justification for its existence is its impact on tourism.

    • Anonymous says:

      Your comment is way off the mark – maybe confusing the airline with the Airports Authority.  No new car, no boozy trips, no expensive jaunts to new destinations (you may be confusing that with the former Premier), management team and most staff are all Caymanian.  If ever a company was around for Caymanians and about Caymanians, it's Cayman Airways.  Try again.

      • Anonymous says:

        Nope that sounds about right no one on the Exec Team has a BBA or MBA with the exception of the VP of Finance really sad. They are grossly overpaid. Most airlines do not operate the way CAL does hence why the airline needs an yearly injection of cash from CIG. Young Caymanians with degrees are forced to leave the company because majority of the Company's management do not have a tertiary education, Go investigate if you feel that I'm being dishonest in anyway. Cayman Airways isn't Caymanian cannot be when you're hiring Expats from abroad to fill an managerial post. 

  5. Anonymous says:

    PPM srategy: make the people suffer two years – build up cash, and spend like a mofo for two years until election.

  6. Anonymous says:

    PPM you camapgned every day in MAY 2013 to reduce the cost of living. Is this the best you can do ?! Do not rock the boat and keep the UDP taxes on is your strategy? Alden – you would criticize UDP no end for raising fees. Why don't you bring those fees down Alden?

    Have you Alden and Marco heard of Reganism – aka Supply side economics. Lower taxes and watch the economy prosper.

    • Anonymous says:

      The PPM blasted the UDP at every turn to turn the people against them and wiggle their way into office and now all they are doing is the same things and trying to take credit for things that were started during the last administration. They lead a campaign of false promises saying that they would do things differently and now look what you have just another group of politricking politicians. Where are all the new ideas that you promised like reopening West Bay road fixing the GT Dump in place and lowering taxes.

      • Anonymous says:

        It is my understanding, after discussions with a PPM Member of the House, that the PPM is cognizant of the fact it promised to reduce duties on diesel, thereby reducing electricity costs for the consumer. Howeve, in attemepting to reduce the fees the FCO would not gree to it as they wish for the Government to get its finances in better shape before contemplating revenue cuts.

        • Anonymous says:

          Why didn't they push back and ask the FCO to have a heart – after all they promised it to the people and have a mandate to deliver on their promises.

          Or does the FCO not respect the mandate of an elected Government (they said they would even if it related to Independence)

          • Anonymous says:

            Who says they didn't push back? I think that is plain from the newspaper articles where the Premier was saying that austerity doesn't work. At the end of the day the UK will have its way on this since it has contingent liabilities should we collapse financially.  

  7. Seriously? says:

    How many "youth development of programmes" do we need? Who actually evaluates them?  Why are we paying for the same things over and over and over again? What are we getting out of it?  

  8. Anonymous says:

    There is no surplus they are just numbers on paper, the same incorrect projections that have been presented over the last 10 years. Ask the Auditor General he been saying that for the last 2 goverments udp and ppm

  9. Anonymous says:

    Just make sure that "surplus" goes to pay off the debt.  Don't squander it on the pathetic pleas for reductions in energy bills and gas costs.  Cayman cannot afford weakness of that type for some time.

    • Anonymous says:

      … agreed.  And once this is done we all expect the cost of living and government fees to go DOWN!

  10. Anonymous says:

    60 Million Dollars a year for Work Permit fees, and folks wonder why there are so many expats on the island, it’s clearly one of the biggest  money makers for the CIG and they are highly reliant on this income, which could probably only be replaced by some sort of Income tax.. This is probably one of the biggest reasons if not the main reason the CIG isn’t trying to push expats out of Cayman like a lot of people suggest they should. If this was to happen the outcome would cost each and every Caymanian. I also hear of lot of people saying things like I’m paying their salaries and its our money. Yet I don’t see much mention of how much Caymans Citizens are directly putting into Caymans coffers Like how much Cayman collects yearly in sales tax. The only thing I see mentioned is the tax on Gas. Can anyone explain to me where all the money people say they are giving to government Is coming from..

    • Anonymous says:

      To:Submitted by Anonymous (not verified) on Wed, 09/10/2013 – 08:40                             The public is not giving money to CI Government, they are paying money to Government.However once it has been paid over to Government it is no longer their money.Claiming"it is our money" is like saying the money they paid for their new car is still their money ,even after they have handed it over to the dealer.                                       Duty on Fuel (Gas Tax) and Duty on food and household items are the main ways that the majority of the public contribute to the Government coffers. Let us look at the Duty on Fuel;each time that you buy fuel you contribute to Fuel Duty .Even if you do not buy fuel ,you still indirectly pay towards Fuel Duty when you buy goods or services locally e.g electricity(CUC has a section showing how much Duty you are paying).Other businesses may not show a separate amount for Duty but it is included in their markup.In addition to the Duty charges on electricity a lot of these firms also pay duty on the goods they are selling,soas a member of the public you get more than one chance to pay Government some money.Please remember though that once it is paid out it is no longer your money.


    • Anonymous says:

      Add the fees generated from work permits to the fees generated by the Financial Servicesindustry and it will probably be clearly demonstrated that the majority of the government coffers come from foreign businesses and workers on-island.

      • Anonymous says:

        Funny. If there is a problem with employers you argue that employers are Caymanian, but when it comes to taking credit for govt. revenue they are "foreign businesses". Which is it? Are you saying that Caymanian businesses don't hire people on work permits?     

  11. Anonymous says:

    A party without ideas, a receipe for disaster!!

  12. Security - Stability - Prosperity says:

    Another $23 mln wasted on Cayman "black hole" Airways and another $10.2 mln on the loss-making Turtle Farm. Taken together, they almost make up for the $35.7 mln raked in through the fuel surcharge. I would expect “the best team the country has ever had” to do away with all three of them. But maybe the team is just not good enough…

    • Retired Airline Consultant / Economist says:

      Before you call Cayman Airways a 'black hole", maybe you should educate yourself about what the Cayman Islands derives from having a national airline. Government administration after administration have looked at shutting it down over the years, but they always come to the same conclusion; our beloved islands would be worse off for it, it’s really that simple. The only option is therefore to ensure that it is run as efficiently as possible in order to provide the highest return on the government’s annual investment. The throughput and economies of scale are not there to support profits for any airline that is or can be based in the Cayman Islands. Minister Kirkconnell and  the current government certainly understand however that the profit center is the Cayman Islands and not Cayman Airways. This article in the Cayman Compass was a good read and includes some facts that are not well appreciated. http://www.compasscayman.com/caycompass/2013/09/17/Officials–Cayman-Airways-a–key-economic-tool–for-country/

      We should realise that Cayman Airways is an important strategic tool for a government that really has no ability to effect monetary policy through exchange rate and interest rate controls. If you don’t know what I mean by that, then educate yourself so that you do, I don’t have the time to explain to you here, but it will help you be smarter with your remarks in the future. In that vein, the airline is used as a tool to influence pricing of our tourism product and in the process, the airline is paid by the government to operate routes that are not profitable for the airline but instead very profitable or essential for the country. Many neighboring countries are paying foreign carriers millions each year to maintain or provide service, so this is not a unique situation, when you are faced with as small a population and a s small a tourism industry as we have in the Cayman Islands. The really bad part is that when a country pays a foreign airline to retain service, that money ends up in a foreign country’s economy.  

      From a pricing perspective, have you ever checked the airfares between the Turks and Caicos and the US, I suggest you do that and compare the much lower fares that are charged by Cayman Airways, which in turn influences the pricing of all carriers serving the cayman Islands. If Cayman Airways wasn’t there, the fares would balloon and the visitor arrivals would fall. It’s really basic economics. Also, don’t confuse taxes collected by the airline on behalf of gateway governments and agencies to be the airlines revenue. At present the airline gets criticized for high ticket prices to Jamaica when USD 150 of the price of each return ticket is taxes the airlines collects for government agencies.  The Jamaican taxes alone are $100 per ticket and is more than any other gateway. The airline has no control over this and this revenue is not theirs. Cayman Airways gets the bashing for everything, so unfortunate.

      From a government fiscal policy perspective, the employment created by Cayman Airways directly and indirectly (much of it in highly specialised professions), has an immeasurable social impact and an economic impact estimated to be over $200 million annually. This would not be the case if we only had foreign airlines serving the Cayman Islands. Shutting down the airline is simply not an option and losing state control would be a big mistake as the huge strategic value will be lost. The airline business is probably the most difficult business in the world to operate profitably and it is commendable that the management and staff over the years are able to keep it going.

      The lack of capitalization and high cost structure resulting from prior debt at the airline combined with what I imagine would be serious cash flow challenges has to be preventing the best business decisions from being implemented. As an example, if you look at the tabled financial statements, you may deduce that the airline could be several million a year better off, if it had owned the aircraft it currently operates versus renting them from an entity that is obviously doing so for a profit. To purchase the aircraft however, would require a capital investment that is likely not possible because the government’s ability to fund such investments are limited, so the airline is forced to continue with higher costs than could be possible, with the right capital investment.  This is a reality which hopefully someone will be able to solve one day. In the meantime, let’s be thankful for the tenfold return on the government’s investment in the airline each year, when you consider that the annual economic contribution from Cayman Airways is in the $200 million range and the annual investment to be in the $20 million range. The government spends money each year on many things, much of which really has insignificant  return on investment, especially when the money ends up overseas, paying foreign vendors a an example. In the case of Cayman Airways at least we can see the benefits and we must realise that nothing good comes for free.

      • Security - Stability - Prosperity says:

        What the CIG calls "purchases for specific services" are really only subisidies. It has certainly learned from George Orwell's "doublethink". It is easy to see why successive governments have shied away from getting rid of the Airline: Simply because they would lose the employees' votes in the next elections. State-owned entities are rarely ever run efficiently, much less profitably. Why should they? At the end of the day, the government will foot the bill.

        As you say, KX has no chance of ever achieving any significant economies of scale like larger, more competitive foreign carriers that can embed the Cayman services in their existing route networks. The "Black Hole" will never make a profit. You cannot fill a barrel with no bottom, no matter how much money you pour into it. If not privatised or closed, it will always be the ball and the chain on the taxpayer's leg. Fuel costs will continue to rise, and the old 737-300 will soon become outdated. There will be no money to replace them with newer, more efficient aircraft. No one will invest in a loss-making business, and the CIG is stripped of cash and cannot take on any more debt. The only thing it can do, and probably will, is introducing a VAT or a property tax. Of course, the rates will be modest in the beginning. But they will rise over time in line with KX’s losses.

        An airline as a substitute for monetary policy? I must admit this thought has never occurred to me. And probably to no one else, either. No political interference or subsidy will ever beat the efficiency of free markets, as long as carriers are competing with each other. Any carrier, whether subsidised or not, would bring in tourists and stimulate the economy. The tourist business should be left entirely to the private sector, and Cayman Airways sold off. This was one of the recommendations in the Miller-Shaw Report, whose authors were certainly no less knowledgeable than Deloitte as far as economics are concerned, and who had no interest whatsoever in Cayman Airways.

        In KX’s case, the multiplier effect may well backfire: A lot of people travel for free, use the government-subsidised, err “purchased services” to go on shopping sprees abroad, spend their money there, and bring back home lotsof stuff for themselves, their friends and families. Money is lost to the local economy, and shops have to fire staff and close down. So the subisidies to the “Black Hole” actively contribute to cash outflows from the country, hurt the economy, raise unemployment and increase the public debt.

        Even without taking account of these dire effects, the airline’s accumulated debt amounts to approximately $600 mln, if not $700 mln. That is as much as $12,000 per person. Not to mention annual interest payments of more than $30 mln per year that are a further drain on the sluggish economy. With no national carrier, everyone would have $600 more to spend every year, and Cayman may in fact experience an economic boom. Instead, the government has piled up debt in much the same order of magnitude that it is struggling to repay. Not sure if everyone is aware of how dear KX really is 😉

  13. Anonymous says:

    A budget is merely a plan.


    The proof of the pudding is in the execution of the plan.


    I wish the PPM government all the best and hopethat they can execute.


    If they fail, then we will probably have McKeeva back in 4 years. Good Grief!!!!!

  14. Anonymous says:

    lmao,. sounds great. 10 million on frikkin turtles yet they choose to keep prisoners in a run down squallor building where they escape at will. i hope you have reserves in cash for the time they start suing the government under the human rights laws for minimal standards required for humane incarceration. what a mess.

    • Anonymous says:

      They have reserves alright. Reserves amounting to approx. 6 days according to the budget. 84 days less than what is preferred. Better not slip up!

  15. A Bush-Greenspan says:

    Real results and data are better than fantasy figures or surpluses.

  16. Bean Counter says:

    Dear PPM

    Is it possible to see a set of financials published that provide a comparison between last years actuals vs. the proposed 2013/14 budget.


  17. Anonymous says:

    PPM didn’t change a thing UDP did on revenue generation, except implement the Director Fees that UDP proposed but didn’t implement.


    • Anonymous says:

      LOL. You wanted the PPM to add more taxes on top of UDP's? Obviously PPM concentrated on cost-cutting. Good thing too.  

    • Sybil Savant says:

      You could infer from that that the politicians are really just along for the ride and the civil servants really run the show.

      • Anonymous says:

        Civil Servants didn't notice $2.8M wasn't being paid for PR – so obviously they aren't running anything else raising healthcare cost and not payinig for coverage, not answering the phone, and not and not and not. lol

    • Anonymous says:

      LOL. So you were hoping that they would further increase taxes on top of what the UDP did? That is the only "revenue generation" the UDP did, BTW. 

      • Anonymous says:

        No, but I thought reducing the cost of living was something they campaigned to do. 

        I don't see how NOT reducing the fees works towards lowering the cost of living.


        Why do they need a 100M surplus – and not reduce the fees that killing the people.


        • Anonymous says:

          They need the surplus to be able to reduce to debt burden to come into compliance with the FFR and Public Management and Finance Law. 

          • Anonymous says:

            If they need it for that purpose then its not a "surplus"

            In fact they inherited a $63Million dollar surplus so really this headline grabber of $100M is really them saying they are adding $34M – half of what the UDP achieved – to the surplus.


            • Anonymous says:

              You can't inherit a surplus. Each year has its own budget with its own revenues and expenditures.  

              If the PPM is able to improve upon the UDP's surplus by more than 50% without raising taxes further that should be commended.

              Give credit where credit is due and don't be so narrowly partisan.

    • Anonymous says:

      That's the type of creativity you get from the PPM.

      Maintain the status quo and hope that that will somehow reduce the cost of doing business or the cost of living.

      This is the type of genuis ideas the PPM campaigned on.