Cayman Islands Premier McKeeva Bush announced on Monday two of the changes his government wishes to make in the Framework for Fiscal Responsibility agreement with the United Kingdom when it is passed into law.
However, there are other areas in which the language now proposed to be added to the territory’s Public Management and Finance Law from the fiscal framework agreement has been changed from the original agreement itself, which was signed in November 2011 by Mr. Bush and then-Overseas Territories Minister Henry Bellingham.
For instance, the amendment bill seeks to add section 14(A)(2) to the Public Management and Finance Law, stating: “The maximum period which may be permitted for the rectification of a breach is five fiscal years from the point at which the breach occurred …”
The language contained in the November 2011 agreement set that maximum period to rectify a breach in the framework agreement at just three years.
The Caymanian Compass contacted both Governor Duncan Taylor’s office and Premier Bush’s office about the difference between the two documents. The governor’s office declined to comment.
Premier Bush’s office issued the following brief statement with regard to changes to the fiscal framework agreement: “The bill is going to the House as agreed and as requested by the opposition.”
Opposition Leader Alden McLaughlin said he was unaware of what Mr. Bush’s statement was referring to.
“The government has had no discussions whatsoever with the opposition related to either the signing of the [Framework for Fiscal Responsibility] or the proposed amendments to the Public Management and Finance Law,” Mr. McLaughlin said.
The proposed amendments to the Public Management and Finance Law mirror the original framework agreement in requiring actuarial reviews of healthcare and pension liabilities every three years and annual audit reports of central government, statutory authorities and government-owned companies.
However, the November 2011 framework agreement stated: “Actuarial assessments will be published within three months of receipt. The government will publish its proposals to address the results of the assessments no later than the budget following the receipt of the actuarial assessment.”
No matching language within the amendment bill could be found. In a letter dated 30 October, which government officials said had been sent to British Overseas Territories Minister Mark Simmonds, Premier Bush indicated that the language contained in the Framework for Fiscal Responsibility would not be a cut-and-paste when it was transposed into law.
The premier said in the letter to Mr. Simmonds that the bill that transposes to the Framework for Fiscal Responsibility into law will meet “the necessary requirements to which we are committed”. However, Mr. Bush said that the two documents – the signed agreement and the law – cannot be identical.
“In the transposition, essential commercial tests must be passed for the mandatory performance that the legislation, as a law, would require,” Mr. Bush wrote. “We cannot afford the collapse of our entire structure of budgetary obligations under the weight of unwieldy processes.”
There were other areas of the original fiscal framework agreement that appeared to have been left out or changed in the text of the bill amending the Public Management and Finance Law. The Caymanian Compass was seeking further clarification on some of those matters at press time.
Government officials indicated that some of the provisions contained in the original framework would also appear in the regulations to the amended legislation, rather than the bill itself.
What is likely the largest change to the initial Framework for Fiscal Responsibility agreement is Section 8 of the amendment bill, which essentially seeks compensatory payments from the UK to Cayman in certain circumstances.
Section 8 of the amendment bill seeks to add to Section 81 of the current Public Management and Finance Bill to state: “Should advice emanating from the framework result in reputational damage to the Cayman Islands or additional costs incurred by the government, the United Kingdom government will compensate the government for the reputational damage or the additional costs”.
This wording does not appear in the original framework agreement signed between the UK and Cayman last year.
Mr. Simmonds stated in a letter to Mr. Bush Friday that such changes to the original framework agreement were “not acceptable”.
“We expect the government of the Cayman Islands to meet its commitments,” Mr. Simmonds wrote.
The opposition People’s Progressive Movement political party stated that the UK could simply impose the original framework agreement through an Order-in-Council.
“Or it could be much worse than that,” according to the PPM’s statement released Saturday. “The action which the UK may feel that it is forced to take may well have the unintended consequence of adversely affecting the livelihood and lifestyle of the people of these Islands.”
The UK has declined to state what other “alternatives” it would consider if the Framework for Fiscal Responsibility is not adopted as it originally intended.
Premier Bush’s response has been to threaten court action against the UK.
“I want to tell the [UK foreign office] and the PPM there is some good governance here all right,” Mr. Bush wrote in a response to the Compass sent Sunday. “The Court House! And good governance must apply to the FCO and the governor and the PPM as well. That’s where the FCO and the PPM will be taken if they try to do anything here against our constitutional rights.”