Government must find another $19M

Sewerage divestment ‘unrealistic’ by June

The Cayman Islands government may need to find another $19 million in this year’s budget.  

Requirements contained in the United Kingdom’s Framework for Fiscal Responsibility agreement with Cayman make it “unrealistic” for the local government to divest its interests in public sewerage system assets, Governor Duncan Taylor said.  

The government has been counting on the divestment of the wastewater system’s assets to occur during its 2011/12 budget year, which ends on 30 June, to help balance public sector finances. 

In a Strategic Policy Statement delivered late last year, Cayman Islands Premier McKeeva Bush noted that government planned to raise $59 million from the divestment of public assets this fiscal year. How much government might earn from the wastewater assets was not specifically mentioned in that address. The most recent annual report for the Water Authority-Cayman valued the sewerage system assets at $19.4 million.  

Money from the proposed divestment of the sewerage system assets is expected to go toward the completion of construction for two new high schools in Grand Cayman.  

Governor Taylor said Friday that he and Overseas Territories Minister Henry Bellingham were “very happy to support the government here in looking at how it can divest government assets when there is a business case to do so”.  

However, “doing so” by 30 June would need a credible business plan first, Mr. Taylor said.  

“There is a very clear process set out [in the Framework for Fiscal Responsibility], committed to by the premier and by the minister, for the divestment of assets,” Mr. Taylor said. “There first stage would be a clear business plan … and then other steps following that. 

“It would be unrealistic, in my view, to carry on that process in line with the commitments of the FFR within the next two-and-a-half months.”  

If the proposed divestment doesn’t go through, Cayman is left with a major budget gap in the current year – even if government is able to effect the divestment during the upcoming 2012/13 budget – and leaves the spectre of a potential third budget deficit in the last four years hanging over the Islands. It could also mean further delays in completing work on the high school projects. 

Governor Taylor offered no suggestions on how the local government might make up the deficit.  

“I think that’s really a matter for the premier,” he said. “I know Mr. [Deputy Governor Franz] Manderson is looking very hard at where he can make savings within the public service.”  


Cruise project delays   

Although Premier Bush indicated a start on the proposed cruise berthing project for downtown George Town would be pushed back to September at least, Mr. Bellingham gave strong indications that the UK government was not pleased with how the agreement with China Harbour Engineering had been carried out thus far.  

“We have a number of concerns about this particular project, this is after all a huge project … for the Cayman Islands and it’s incredibly important that we get it right,” Mr. Bellingham said. “I’m not going to get into the technical detail of all of this. The [Framework for Fiscal Responsibility] … makes it very clear that procurement must be carried out to very high standards. 

“I’ve asked [the premier] to reassure me as to how he will bring this process back in line with international best practice. I suggested that he seeks the views of the chairman of the CTC and the auditor general on how he will achieve this.”  

Mr. Bush has previously said that he would meet with those officials, which he said was partly the reason for the cruise ship port project being pushed back. China Harbour has proposed building not only the cruise ship dock in George Town, but a separate dock in West Bay and additional improvements to the Spotts dock area.  

The premier has groused on numerous occasions about “bureaucratic harassment” and UK interference in government projects that he said was “holding up business”.  

Mr. Bellingham took exception to such statements Friday.  

“I don’t accept that there’s been bureaucratic harassment or interference at all,” he said. “The whole idea of having a devolved government is that these competencies are devolved. There’s no way the UK’s going to interfere with details or try and micromanage what’s going on.’  

“The reason why the Caymans are successful, the reason why people want to come here to invest, the reasons why businesses want to come here is because they have confidence in the governance of the Cayman Islands and they have confidence in the UK as a partner to the Cayman Islands. If that governance slips … that confidence can be eroded and that’s what we’re concerned about.” 


  1. I will suggest a Flat payroll tax..

    In keeping with the merits of the push for a sustainable economy, fugal spending by government and a balanced sharing of the load should be sought..

    A Flat payroll Tax of 5% would be a quick painless way to help build the schools. The withdrawal framework is already in place for pension, so the administrative effort should be minimal. Persons earning under 35,000 per year exempt.

    Call it build the school tax if you must, and cancel the tax when project funding is satisfied.

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