Saying that the rising costs of mortgages was a matter of national importance, Sister Islands MLA Moses Kirkconnell called for pension plans to invest 10 per cent of their contributions in the Cayman Islands Development Bank to provide low-cost mortgages to Caymanians.
Making the comments as part of his contribution to the Budget Debate in the Legislative Assembly Wednesday, Mr. Kirkconnell said if the CIDB could offer Caymanians loans at an interest rate of six per cent, it would give borrowers earning between $25,000 and $30,000 about five per cent more disposable income.
‘We have an opportunity to create low-cost money,’ he said, adding that legislators were elected to ‘think outside the box.’
Mr. Kirkconnell said the mandatory pension plans take in about $500 million a year, most of which is invested overseas, depriving Caymanians the opportunity to reap any of the benefits of those investments.
‘It’s helping to improve someone else’s country,’ he said.
Mr. Kirkconnell called for 10 per cent of the amount taken in by the authorised pension plans – or $50 million annually – to be invested with the CIDB with a two-point spread, meaning that the money would earn four per cent while loans were offered at six per cent.
The savings would allow Caymanians earning less than $30,000 annually the opportunity to own a home and to save money, or invest it in the future of their families.
Mr. Kirkconnell also said the rising cost of oil also was severely impacting the cost of living because it raised the cost getting goods to the Cayman Islands. Those cost increases were passed on to the consumer indirectly in the form of higher prices for goods and electricity, he said, while the cost of gasoline was passed on directly to consumers.
More information was needed to determine a way of getting the cost of oil down, Mr. Kirkconnell said.
‘We don’t understand how the oil companies price their product,’ he said, noting that oil companies are not regulated here so they do not have to reveal their method for pricing gasoline.
‘I would like the oil companies to share with us the method they use to price their product, and once they share with us their pricing model, we’ll be in a better position to work with them,’ he said. ‘We do not ask this in a hostile way.’
With the pricing model information, Mr. Kirkconnell said Cayman could determine if the high costs were caused by low volume purchases, and if getting larger storage capabilities could help.
Another possible solution would be consolidating gasoline purchases with another regional neighbour, he said.
Mr. Kirkconnell said the Cayman Islands needed to determine the answer to a simple question with regard to the local oil companies.
‘Is the profit being charged a fair profit to the people of these islands?’ he asked.
Another approach to the problem was to make sure the Cayman Islands were less dependent on a single energy source by exploring alternative energy sources like wind, solar and thermal energies.
It was import for Cayman to protect itself against drastic oil cost increases, said Mr. Kirkconnell, who then quoted an old Chinese proverb: ‘If we don’t change our course, then we’ll end up where we’re headed.’