PPM suggests more borrowing

UDP plans to sell government assets, change immigration policy slammed

Calling the United Democratic
Party’s plans to deal with Cayman’s financial woes dangerous, Leader of the
Opposition Kurt Tibbetts said he believes borrowing more money is the way

Mr. Tibbetts made the comments to
several hundred people who packed the South Sound Community Centre Monday night
to attend a People’s Progressive Movement public meeting.

“There is no one here that could
convince me that if we simply sat down and talked to London… they would be
willing to listen to us, so we can say ‘we need a window to make this sustainable’,”
he said, adding that he thought the UK would have to agree since it has used
borrowing as a way through its own budgetary problems.

Mr. Tibbetts said the Cayman
Islands “should have come clean from the beginning” and told the UK that Cayman
needed some time to balance the budget and that Cayman could not impose
taxation during an economic crisis because it would have hurt the people who
were most vulnerable.

“I am certain the United Kingdom
would listen to us if we sat down with a reasonable and rational financial
plan,” he said.

Mr. Tibbetts said Cayman should
tell the UK it may need to change the borrowing limits for four to five years
from 10 per cent of core government revenue to possibly as high as 15 per cent.

He suggested the reason the UDP
government hasn’t tried the tactic already is that Premier McKeeva Bush
“doesn’t want to talk to London” because he had already portrayed the situation
one way and he didn’t want to admit the situation was different.

A different tune

Presenting quite a different
picture to what Mr. Tibbetts offered Monday night, a UK lawmaker told Britain’s
House of Commons earlier this month that the Cayman Islands is in a “vulnerable
situation” and must broaden its revenue base now.

Otherwise, UK Parliamentary
Undersecretary of State Chris Bryant said Cayman could eventually end up
joining the list of other British Overseas Territories which require periodic
financial support from the European Union to survive.

Mr. Bryant’s comments came in
response to a question asked by Conservative Party member Keith Simpson during
a 9 February house sitting. Mr. Simpson enquired whether the UK’s financial
burden with regard to its territories was expected to lessen over the next

“If (Mr. Simpson) had asked that
question three years ago in relation to Cayman, I would have said that it was
in a fairly strong situation,” Mr. Bryant said. “Now, I would say that Cayman,
even though it has a high GDP (Gross Domestic Product) per head compared with
the European Union – and therefore is not in receipt of money from the EU – is
in a vulnerable situation.”

Cayman ended the last budget year
with an operating deficit of CI$81 million, and projected an even larger gap at
the end of the current year if no measures were taken to increase revenues or
cut spending.

“I have urged (Cayman Islands
Premier) Mr. McKeeva Bush to deal seriously with the issues,” Mr. Bryant told
the house. “I do not think Cayman can steam forward with another round of
borrowing without proving that it has a sustainable economic model for the

“That (model) must include some
form of property tax, income tax or payroll tax,” the undersecretary continued.

The government is expected to
receive a completed revenue study from an independent consultant group by the
end of this month. That study is looking at potential alternative revenue
streams for the Cayman Islands including direct taxation, which does not exist
in Cayman.

“I have made clear, not least in my
discussions with ministers in Anguilla, the Cayman Islands, and the Turks and Caicos Islands, how essential it is that none
of the overseas territories believes that it can survive solely on the basis of
being a tax haven,” Mr. Bryant said. “The rest of the world is not prepared for
that to happen.”

The sale of assets

The announced proposed sale of
government assets, including the yet-completed Government Office Accommodation
Building and a yet-commenced sewerage system drew considerable criticism from
Mr. Tibbetts and his colleagues.

Mr. Tibbetts said that when the
previous PPM administration was in power, it felt the plan to build new office
accommodations was the least risky of all its capital projects because of the
high amount of rent government entities were paying for office space.

He suggested that plans to sell the
building and the land for about $100 million and then use the money to balance
the government’s operational budget made no sense because there would still be
a loan to pay-off for the building plus rent for the use of the office space.

Once the asset was sold and the
budget balanced for this financial year, Mr. Tibbetts – quoting a radio talk
show caller – asked what the government would do next year.

“In the short, medium or long
term… that makes no sense,” he said.

“The sale of assets is not going to
cure any budgetary problems except on a very temporary basis. We cannot go
about it in this manner and expect it’s going to be sustainable because it’s

Mr. Tibbetts also objected to the
sale of the sewerage system to a private sector entity that would control it
because he said there would be no way of controlling the cost to citizens.

Former PPM legislator Charles
Clifford, who shared the platform at the meeting, also said the proposed sale
of assets made no sense.

“We are not going to stand for
irrational and dangerous behaviour in this country,” he said, calling on the
public to support and attend a planned protest march against the government’s
proposals on Saturday, 6 March.

“We need to stand up and take the
country back,” he said. “We have to stop the nonsense of this UDP government.”

Mr. Clifford said the UDP
government would be invited to meet with the protesters at the end of the march
at the Glass House government administration building. He said if the
government refused to meet with the protesters and reverse its policies “we are
going to begin the process of dealing with this UDP government once and for
all”, apparently referring to his threat of starting a referendum to hold new

Key employee status

Mr. Clifford and George Town MLA
Alden McLaughlin also spoke out against the UDP’s plans to change the
immigration law to relax the provisions allowing foreign workers to obtain key
employee status.

Most foreign workers are subject to
a seven-year term limit in the Cayman Islands, after which they have to leave
the country for at least one year to break their residence.  Foreign workers designated key employees are
allowed to get work permits for nine years, long enough to apply for permanent
residence after being here eight years. 
If granted permanent residence under a defined point system, there is no
real impediment for a foreigner to obtain Caymanian status if they make an
application for such after being here at least 15 years.

Mr. Clifford stressed his objection
to the UDP’s proposal to make many positions in the financial sector and other
industries as nearly automatically approved for key employee designation was
not an anti-expatriate issue.

“When someone is designated key
employee, it virtually assures security of tenure, which leads to permanent
residence, which leads to Caymanian status,” he said, adding that those who
receive status then become part of the permanent population for which
government has ultimate responsibility.

Mr. Clifford said he had heard that
at a UDP social event before the election, the party had said it was going to
make 9,000 Caymanian status grants if it was elected.  He said that is where he had based his
estimate that the government intended to designate 9,000 foreigners as key
employees.  He estimated 2,000 people in
the financial services sector would get key employment designation, 3,000
people in the tourism industry would get it and about 3,000 people in the
construction and real estate industry would get it.

“When you add them all up, it adds
up to 9,000,” he said.  “We cannot
introduce a policy that would create a situation [in the workplace] where
Caymanians cannot move beyond the entry level.”

Mr. McLaughlin called the suggested
immigration policy change was the government’s way of “throwing a bone” to the
financial services sector for raising fees.

“Only a special, special genius
like our Premier McKeeva Bush thinks the way to increase business is to charge
more for doing it,” he said, “  he said.

Mr. McLaughlin said someone in the financial industry had called what the UDP
government has done since it took over “disastrous” to the financial
sector.  He dismissed statements made by
Anthony Travers of Cayman Finance that suggest the financial services sector
was in wide support of the increase in fees as “untrue” and that a good many of
those in the sector do not support the actions.

“These changes to immigration are
window dressing,” he said. “It’s not going to make any difference to business
in the financial sector.”

He called the plans “dangerous”
because he said Caymanians could forget about ever being able to get a job for
a position that had been designated key employee.

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