As a way of reining in the high cost of living in the Cayman Islands, the Government plans to take a harder approach on certain segments of the private sector.
In presenting the Government’s Policy Statement after the delivery of the Budget Address in the Legislative Assembly on Friday, Leader of Government Business Kurt Tibbetts said three factors immediately came to mind as ones that affect people most: interest rates, fuel costs and electricity rates.
‘These components radically affect the price of goods on the shelf, transportation, housing costs and even our ability to support our families with the basic necessities of life, namely food, clothing and shelter,’ he said. ‘This is truly right at the top of the list of all the difficult challenges which any Government has to take on, especially in a free-market economy such as ours.’
Mr. Tibbetts said the Government knows the issue has to be addressed.
‘But private sector stakeholders must assist if we are really going to see any meaningful results.’
Speaking about interest rates, Mr. Tibbetts said the Government would be meeting with commercial banks during the current Meeting of the Legislative Assembly with a view to finding ways of not only lowering mortgage rates in particular, but of also having them offer fixed-rate loans.
‘These institutions by now have as much at stake as we do,’ he said. ‘They must now look at making certain concessions in order for us to continue our past successes.’
Mr. Tibbetts also noted that some banks have refused or not replied to requests to participate in the Government’s guaranteed mortgage scheme for low to middle-income Caymanians, which is scheduled to commence in the next few weeks.
‘Essentially, Government will guarantee up to 35 per cent of the upper layer of the mortgage, with the guarantee falling away once the equivalent amount of the principal is paid down.’
Mr. Tibbetts said the banks that have refused to get on board with a scheme that offers them little risk need to change their thinking.
‘Sooner or later, if they keep the attitude they have, all of us will lose, and they won’t be held out of the losing,’ he said.
Fuel prices are spiralling upwards all over the globe, so there are limits to what the Cayman Government can do about it, Mr. Tibbetts said.
But two consultant reports on bulk fuel distributor prices here in Cayman were just recently received.
‘Preliminary examination tells us a tale that requires sitting at the table with the bulk distributors,’ he said. ‘Their Local Companies Control Licences run until early 2011 and the arrangements they now enjoy will not continue beyond that time if I have anything to do with it.
‘In the meantime, armed with the knowledge of their mark-up methodology and profit margins, we will certainly engage them in discussions.’
With regard to electricity costs, Mr. Tibbetts said the licence renewal negotiations with Caribbean Utilities Company were extremely difficult.
‘The Minister, the negotiating team, all of us were hopeful and confident that by now we would have had a new contract in place, one that was fair to CUC and to the consumer,’ he said.
Those negotiations have gone on for 18 month now.
Although he would not give specific details on the matter, Mr. Tibbetts said the Government’s negotiating team had represented the country’s interests well.
The negotiating team is scheduled to give a presentation to Cabinet on 8 May and the following week CUC will be invited to explain their position to Cabinet.
‘After that, the Government will agree with the negotiating team on a position to take to the table,’ he said. ‘If there is an impasse, then Government will have to do whatever it has to do and move on.
‘Of this I am sure, there will be no more monopolies and if the negotiations are not successful, then Board of Directors of CUC will have to explain this to their shareholders. I have not doubt the Minister [Arden McLean] will not have any trouble explaining the Government’s position to the people of this country.’
Mr. Tibbetts said it was impossible to bring about quick results on the cost of living challenges.
‘But we continue to battle and the desired results will come.’
From its side, the Government did not add any pressure to the cost of living situation by proposing any new revenue measures, even though it had suggested in the Strategic Policy Statement last December it would include up to $4.7 million of such measures in the 2007/08 Budget.
‘This Government is keenly aware of the pressures on both businesses and individuals as a result of the cost of living in Cayman,’ Mr. Tibbetts said. ‘Among the efforts we are making to address that, we are determined not to increase the cost by imposing revenue measures which might have that effect.’