Third version of fiscal framework bill proposed
Cayman Islands lawmakers debated a third – and what Premier McKeeva Bush said he hoped was the final – version of a bill that introduces severe fiscal restrictions upon the local government.
The third amended version of the Public Management and Finance Law, made public in the Legislative Assembly on Wednesday, now contains a sixth schedule, which is the entirety of the Framework for Fiscal Responsibility as it was signed by Premier Bush and then-United Kingdom Overseas Territories Minister Henry Bellingham in November 2011.
The fiscal framework agreement sets a number of requirements on public project bidding, public financing and government spending that Cayman must adhere to until at least July 2016. Those include requirements that the territory no longer borrow to finance public projects and severe restrictions upon implementing public-private partnership proposals, among other things.
Mr. Bush told lawmakers on Wednesday that Cayman Islands Financial Secretary Ken Jefferson had received a communication from the UK government’s financial adviser on Monday that indicated the UK would assent to the third amended proposal as it was now written.
“The government brought one bill which was not satisfactory to the UK, the second bill was not satisfactory to the UK,” the premier said. “I thought it was all satisfactory. We thought that we were on target.”
With regard to the third amendment bill: “The UK has said this is what they wanted. Since the present bill would take the Framework for Fiscal Responsibility in its entirety … there’s no reason for those members not to vote on the bill.”
Opposition Leader Alden McLaughlin began the debate Wednesday afternoon by stating he would support the third version of the bill as drafted, largely because he said it was making the government do what it should have done years ago.
However, Mr. McLaughlin said the entire process involving the fiscal framework over the past year “ought to be a lesson to all of us”.
“When it comes to certain aspects of the management of affairs in this country … the UK government holds the final card,” Mr. McLaughlin said. “If the premier and his government are not ashamed, are not embarrassed about how this has played out over the last few weeks … I am.”
Mr. McLaughlin also touched on a theme from Friday’s Legislative Assembly, noting that some government backbenchers had been inclined not to support the fiscal framework in any form. Backbench members of the Legislative Assembly Ellio Solomon, Cline Glidden Jr. and Dwayne Seymour had not spoken during Wednesday’s debate by press time.
All three made clear their positions against the second amended draft of the bill on Friday afternoon.
George Town MLA Ellio Solomon said he thought some fellow legislators had still not realised “the gravity of the Framework for Fiscal Responsibility” that Premier Bush signed.
“[The UK] can now dictate to us, pretty much, what we can spend and how we can spend it,” Mr. Solomon said. “I have a problem … when jolly old England can send legislation here and say ‘forget about 21 days notice, forget about amendments … I want what I want’. I have a problem with that because it’s undemocratic; England wouldn’t do it in their own country.”
“I wonder at times why would a mother treat her child like this?” asked backbench Bodden Town MLA Dwayne Seymour, referring to the territorial relationship between Cayman and the UK wherein England is sometimes referred to as the Mother Country.
West Bay MLA Cline Glidden Jr. was the other government backbencher to voice objections to the amendment bill Friday.
“It is obvious now … that the government is not united in a position on this bill,” said George Town MLA Kurt Tibbetts, a member of the opposition party.
What the framework requires
Here are some of the major requirements of the UK-Cayman Framework for Fiscal Responsibility:
Cayman must “suitably appraise” all public projects before the procurement [bidding] process begins and all projects must have a sound business case, including a risk-assessment completed prior to bidding.
Projects above a lifetime value of $10 million, as well as any projects that use public-private partnerships, must be reviewed by independent legal and financial advisers. These projects will also have to be made public for consultation prior to procurement.
Public private partnership projects will not be considered if those projects are worth less than $15 million.
Cayman will not borrow fund capital expenditure unless the project will yield sufficient revenues to pay for debt service; or if the government has enough surplus funds to cover the costs of repaying debt.
Cayman will comply with all principles of responsible financial management by the end of the 2015/16 fiscal year (30 June, 2016).
The government will produce timely audits and account statements for all budget years.
If the Cayman Islands breaches of the Framework for Responsibility, it must present a plan to correct such a breach to the UK Secretary of State, which will be reflected in the government’s annual Strategic Policy Statement.
Government estimates show the Cayman Islands’ total public sector debt will remain well above $500 million by mid-2014, despite payments of more than $30 million per year until then.