Infrastructure enables economic growth

Dart’s lead  

UK Plan Outlined  

In the past few years, Cayman Islands officials have touted major new projects as ways to spark the country’s economy after being battered by the global financial crisis.

They’ve talked about developing the eastern half of Grand Cayman through projects such as Cayman Enterprise City and Dr. Devi Shetty’s medical tourism hospital, as well as reinvigorating George Town and Seven Mile Beach by way of cruise berthing and the For Cayman Investment Alliance with the Dart Group.

If completed, those projects will inject much-needed dollars into Cayman and bring people to the Islands, both as tourists and new residents. Preparation for that anticipated success requires major investment in the country’s infrastructure – roads, utilities, water and communications technology.

“Infrastructure development is key for Cayman’s future particularly as we embrace new industries and a growing population,” said Barry Bodden, managing director of Island Paving.

Bodden is one of two co-chairs of the infrastructure-focussed driver group that is part of the Cayman Islands Chamber of Commerce’s Future of Cayman economic development initiative. The other co-chair is Tristan Hydes, deputy permanent secretary in the Ministry of District Administration, Works, Lands and Agriculture.

“Build a Smarter Infrastructure” is one of five drivers identified as essential for the Islands’ ongoing and future success, Bodden said. Infrastructure is one of two drivers that will be highlighted at the second Future of Cayman Forum that takes place 23 November.

Planning by piecemeal

Currently, Cayman lacks a long-term infrastructure development plan that unites all components of infrastructure and simultaneously addresses the funding of infrastructure projects. Instead, the government operates according to several policy documents that, while often complementary, address different pieces of the infrastructure puzzle.

For example, the ‘Go East’ addendum to the National Tourism Management Plan is a guide to developing the eastern half of Grand Cayman. The Development Plan addresses land use and planning issues in Grand Cayman such as zoning and building guidelines. Meanwhile, the National Roads Authority has proposed a “Long-Term Projection of Road Corridors Grand Cayman” that anticipates traffic demands for the next 20 years. Adopted by the authority’s board in early 2009, the long-term roads plan has not been gazetted or considered by Cabinet, although its recommendations have influenced proposed developments that would conflict with the planned roads.

The infrastructure driver group has two main objectives, to “develop a national infrastructure plan” and also to “invest in critical infrastructure”.

Bodden said, “There is a need for a coordinated approach to long term infrastructure planning and financing. Money is being collected into various funds by Government but, in some cases, is not being directed specifically into the areas where the money is intended. As a result, investment in infrastructure is often neglected for long periods of time and then it becomes critical and expensive to address.”

As an illustration of Bodden’s point, the roads authority budget has been cut to $6 million for this year, down from $8.3 million for last year. The roads authority differs from entities such as the port airports authorities in that the roads authority does not have a dedicated source of revenue.

The Road Fund – made up of gasoline duty, diesel fuel duty, infrastructure fund fees and motor vehicle registration fees – is intended to finance the roads authority.

However, the government has determined to bypass the Road Fund and give the money directly to the roads authority.

Bodden said, “The Future of Cayman Infrastructure Driver Group believes that as we look to Cayman’s future needs and development in support of our economic pillars, we must examine our infrastructure investments to ensure that these investments are cost effective, sustainable and planned. Creating a national infrastructure plan and prioritising critical infrastructure projects will produce tremendous advantages for budget planning and private sector investment.”

The UK example

In 2010, the UK published its first-ever National Infrastructure Plan. Updated in November 2011, the UK’s plan could prove to be a good template for Cayman to start from, said Phoenix Group managing director Shayne Howe, who is chair of the Future of Cayman steering committee.

According to the UK’s plan, “This document sets out a comprehensive and detailed strategy for coordinating and planning public and private investment in UK infrastructure. It provides investors, builders and operators of infrastructure with the transparency and commitment, which they lacked for a decade. We will invest in all parts of the UK, helping to promote growth across regions and nations.

The decisions we have made to support new roads and railways, to build a high-speed broadband network and put our energy supply onto a more sustainable footing will create the foundations of a stronger, sustainable and more balanced economy. Britain’s infrastructure will be made fit for the 21st Century.”

The UK’s plan “brings together the first ever comprehensive cross-sectoral analysis of the UK’s infrastructure networks and sets out a clear pipeline of over 500 infrastructure projects”. The plan covers all different facets of infrastructure, including transportation, energy, communications, waste, the environment and intellectual capital.

In addition to evaluating current infrastructure and identifying future projects, the plan “sets out a new approach to coordinating public and private investment in UK infrastructure”.

According to the report, 60 per cent of infrastructure funding will come from private sources; more than 20 per cent will come from public/private partnerships; and less than 20 per cent will come straight from the public purse.

Bodden said the report “establishes priority programmes and projects and sectoral infrastructure plans for transport, energy, communications, environment, intellectual capital and securing efficient delivery of infrastructure and the investments. It is a planned approach so that the infrastructural priorities are identified, planned and financing is made available either by Government, the private sector or in partnership.”

 

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