Premier defends fuel duty increase, North Sound project

A 25-cent per gallon increase on
fuel import duty is necessary to help raise revenues in Cayman, Premier McKeeva
Bush said Monday in response to opposition members’ statements that they would
not support the hike.

Mr. Bush criticised opposition
members for saying they would not support a budget that included the increase
in import duty on petrol and diesel, adding they had not offered any viable
alternatives or suggestions.

The government anticipates $10
million in revenue from increased fuel import fees. “In the absence of the
fees, we would have had to borrow more than the $155 million that has been
agreed to,” the premier said, adding that the Foreign and Commonwealth Office
would not let the Cayman Islands government borrow more than that.

Mr. Bush said the fuel duty hike
put the burden of the increase only on those who could afford it, namely
vehicle owners and the Caribbean Utilities Company.

“This has happened because we could
not borrow. If I could have borrowed a little bit more, I would have done it…
We had to get that little bit of revenue, and 25 cents on fuel is not going to
kill you,” Mr. Bush said.

The duty increase is expected to
take effect on 1 July but would not apply to Cayman Brac.

“The people that are grumbling
about the fees and saying they will not support us are the people who put us in
that position,” Mr. Bush said, taking a swipe at the People’s Progressive
Movement’s handling of the economy when it was in power.

Opposition leader Kurt Tibbetts and
fellow PPM member Arden McLean, along with independent Member of the
Legislative Assembly Ezzard Miller said Friday that they would not support the
Cayman Islands government’s proposed increase, which would put the levy on
petrol up to 75 cents per gallon and diesel import duty up to 85 cents per
gallon.

In a vote to pass the second
reading of the budget Monday, Mr. Tibbetts and Mr. Miller were absent and Mr.
McLean abstained.

Mr. Bush said measures like
increasing import tariffs on fuel was an alternative to laying off civil servants,
introducing income tax or implementing a property tax, adding that he would
rather resign as finance minister than introduce income tax in Cayman.

One of the objections the
opposition has to the import increase is that it is likely to lead to an
increase in electricity bills for the public, since each bill contains a fuel
charge. CUC is Cayman’s largest single user of fuel.

Mr. Bush said he hoped CUC would
not pass on the additional costs to customers, especially since the company
continues to make a profit.

CUC reported its net earnings for
the first quarter of 2010 at US$2.46 million, up from US$2.44 million for the first
three months of 2009.

Mr. McLean, in his speech to the
House on Friday, said the increased fuel charge would be passed on to
customers, including supermarket owners, who in turn would increase food
prices, driving up inflation and the Consumer Price Index.

Responding to that, Mr. Bush said a
decline

in housing rentals meant a drop in
the demand for electricity, and hence “the electricity company ought to be
aware that increasing prices in this environment is not the best option for a
company that continues to make profits – profits the opposition allowed them to
make by giving them the kind of contract that they did,” referring to the 2008
licence signed between the PPM government and CUC.

North Sound cargo port

Mr. Bush also dismissed concerns
raised by Mr. McLean and Mr. Miller about a proposed cargo dock and mega yacht
facilities in the North Sound, saying Cayman must embrace a potential third leg
to its economy, after tourism and financial services, in the form of transhipment
and yachting.

He said the opening up of Cuba and
its attraction for yachters put Cayman in an ideal position of being stable and
safe destination for yachters to moor their boats and to begin and end their
Caribbean cruising. Mr. Bush said the likelihood of Cuba opening up to American
and international yachting presented Cayman with a “golden opportunity”.

“We are now poised to become the
centre of the region, placed perfectly between the cruising grounds of Mexico
and Central America and the Leeward Islands. We are poised to be a gateway and
home base for the next chapter in Caribbean yachting. While the opportunity to
cruise to Cuba will attract the majority of yachts coming to the Caribbean, I
doubt they will go on to be based there,” he said.

Defending his plans to dredge a
channel in the North Sound and build a cargo dock and facilities for mega
yachts, Mr. Bush said: “The North Sound is one of the great natural harbours in
the region and we need to use it and use it wisely.”

He added that the North Sound was
already suffering from large ships that were damaging the seabed as well as
from pollution leaching from the dump.

“If we do nothing, the North Sound
will continue to suffer… I believe a proper channel, done correctly, will
work

. It will help the North Sound,” he
said, questioning the opinions of environmentalists who have warned against a
channel being cut in the North Sound.

“It is logical to combine this
channel with the long-overdue lengthening of the airport runway,” Mr. Bush
said, saying the government would work with the private sector on both those
initiatives.

He dismissed a suggestion by Mr.
McLean that mega yachts could moor off Eden Rock in George Town, saying bad
weather and rough seas often keep cruise ships from that area.

The premier said there were more
than 7,000 luxury yachts measuring over 80 feet in length worldwide, with 650
new yachts being built this year, leading to a demand for new cruising grounds
and port. “It is a growing trend that will continue for decades to come. These
vessels bring in substantial dollars to the places they stay in,” Mr. Bush
said, citing a Marine Industries Association of South Florida report which
found that the average spend for the largest 1,500 mega yachts was US$500,000
per yacht or US$750 million annually.

He insisted there would be
transparency, public consultation and oversight in the North Sound cargo and
yacht projects.

Mr. Bush’s response to the
opposition members’ speeches lasted almost three hours, during which he
rejected all their criticisms, defending his government’s record on crime and
dismissing allegations of back-door deals and corruption.