Members of the opposition People’s
Progressive Movement party are urging Cayman’s ruling government to roll back a
series of fee increases approved late last year that aimed to increase public
sector revenues.
The most recent financial
projections have revealed that government revenues fell $72 million below what
was expected by the end of the current budget year, which is 30 June, forcing
the administration to propose pay cuts for civil servants and other measure to
make ends meet.
“(Premier) McKeeva (Bush) lied to
the UK
government,” George Town MLA Alden McLaughlin said during a Tuesday night
political meeting outside a Savannah-area home. “He told them he was going to
produce a balanced budget. I am calling on government tonight, on behalf of the
opposition, to reconsider the increase in fees, particularly those in the
financial services sector.”
Mr. Bush took exception to those
comments.
“Mr. Alden
McLaughlin should be ashamed of himself, to stand on a public platform and
decry that I lied to the UK Government,” Mr. Bush said Wednesday. “Everyday, since being elected on May 20th
- this Government has had to cope with and respond to their four years of
financial mismanagement. He now has time to play politics at home, while I have
to travel internationally to clean up his mess.”
Mr. McLaughlin said the fee
increases had damaged the competitiveness of Cayman’s financial services
product.
“The result of losses (in the
financial services industry) is not just…possible losses of jobs to Caymanians
and others, but losses of revenue to government.”
Cayman Finance, the group that
represents the country’s financial services industry, has previously opined
that those fee increases would have to be taken back eventually.
“It was always intended that the
fee increases suggested for the financial industry were a short term expedient
to bridge the financial crisis whilst proper long term borrowing was put in
place and cuts undertaken to Government expenditure which was and remains
unsustainable,” Cayman Finance Chairman Anthony Travers wrote in an e-mail to
the Caymanian Compass Wednesday.
Premier Bush has frequently
lambasted the opposition members – who comprised the previous government – for
leaving office with an $81 million operational deficit and some half-a-billion
dollars in public sector debt.
He addressed the country about the
state of public finances in a lengthy speech Monday.
“In this message I have spoken
openly, frankly and honestly to the country,” Mr. Bush said. “If we continue to
borrow more money and add to what we already owe, we probably would lose our
triple-A debt rating and a possible devaluation of our currency would be no
different than have happened in other countries.”
“We will not follow the PPM and
make that mistake.”
The stakes are high. Premier Bush
and Cayman Islands Governor Duncan Taylor are meeting with UK Foreign and Commonwealth
Office officials this week to discuss a recently completed revenue study that
suggests – among other things – significant cuts to Cayman’s civil service.
UK
officials have previously demanded that Cayman meet certain principles of
responsible financial management before it allows the country to borrow any
further funds. Indeed, from the information presented to the country by Mr.
Bush on Monday it appeared some borrowing might be needed to get Cayman through
to 30 June.
Mr. McLaughlin agreed Tuesday that
the country was in “dire straits” and that “some pain” would be required before
the budget crisis could be brought under control.
However, he said the solution was
not as simple as merely cutting jobs or salaries for civil servants.
“The poor civil servants are taking
a beating everywhere you go,” he said. “I would say to those who believe that
we can simply cut civil service, the majority of people who work for government
are still Caymanian.”
“Consider the prospect of 200 or
300 or 400 Caymanian civil servants being sent home,” Mr. McLaughlin said. “Who
is going to hire them? If we get a situation where we have 20,000 work permits
in the country and you’ve got 300 or 400 civil servants who cannot get a job, I
don’t have to tell you what is going to happen in this place.”
Mr. Bush’s proposal to shave $17.3
million off the Cayman Islands government’s operating deficit does not call for
any job losses, but it would require between a five and 15 per cent pay cut,
depending on how much a civil servant makes per month.
Some civil servants would also be
required to pay 50 per cent of their health care premiums and a “100 per cent”
pension suspension has been proposed as well.
The Premier said the decision not
to divest government assets such as the new administration building had left
the ruling government with no choice but to make civil service cuts.
“The non-divestment of certain
public assets will have its consequences,” Mr. Bush said.