Private sector to help shrink government

Accounting firm given $155,000 contract

The local office of “big four” accounting firm Ernst & Young has been tapped by the Cayman Islands government as it seeks to reduce the size and improve the effectiveness of the civil service.  

Since 2001, the overall government service has grown from about 4,000 employees to close to 6,000, including individuals employed in statutory authorities and government-owned companies that have been separated from the daily operations of central government. In the last two years, those staff increases have leveled off, but no major reductions have occurred.  

The Portfolio of the Civil Service, which manages government human resources, reported Friday that the Cayman Islands now has more than 80 core government entities and 25 separate authorities and government-owned companies. That doesn’t count various boards, commissions and committees appointed by government – which at last count a Caymanian Compass review numbered at 115.  

Ernst & Young was selected following a competitive bid process to assist government in several areas. The contract, according to a statement from the Portfolio on Friday, was for CI$155,000 plus expenses.  

The accounting firm will “identify those functions that would better be carried out with private sector involvement,” according to the portfolio statement. This includes offering suggestions as to where public-private partnerships might work better than the pubic sector going it alone, and instances where simply selling off government assets might be preferred.  

“Historically, the government of the Cayman Islands provided most public services as there was not a mature private sector,” the statement from the portfolio read. “The Cayman Islands economy has grown considerably and the government seeks to evaluate opportunities to engage the private sector where this would result in improved service delivery and greater efficiency.” 

In addition, the Ernst & Young review will seek to identify areas where government’s overall structure can be streamlined, for example, where certain departments could be merged.  

The company has also been asked to assess recommendations from previous civil service reviews, see where those have and have not been implemented and make suggestions on what steps should be taken.  

This latest review – called “Phase V” of the civil service rationalization program – is preceded by four previous evaluations done internally by the civil service. Those various reviews started as far back as late 2010 under former Deputy Governor Donovan Ebanks and were carried forward by current Deputy Governor Franz Manderson.  

The internal review process started following the issuance in early 2010 of the Miller-Shaw consultancy report, which exhaustively reviewed areas where government was losing money in operations and where privatization of entities or staff reductions might be implemented. Recommendations from the report were largely not put into effect.  

Some recommendations from follow-up civil service reviews have been put in place, including Mr. Manderson’s proposal in 2012 to reduce the “head count” of the government service by 360 within five years, largely via attrition.  

However, those steps have not curbed spending within public authorities outside of central government where, in 2012, staff levels actually saw an overall rise, according to a civil service human resources report.  

More recently, Cayman Islands Premier Alden McLaughlin has fretted that continuing to reduce central government numbers and supply budgets without regard to effect on services was unsustainable. Both the premier and Finance Minister Marco Archer have admitted that some privatization options would have to be considered in upcoming budget deliberations.  

“There will be no sacred cows,” Mr. McLaughlin said earlier this year.  

In a recent meeting of the Legislative Assembly, the premier did appear to place Cayman Airways off the table for privatization discussions.  

The outside review is not likely to be completed in time for the government’s 2014/15 budget, which is due to go before the Legislative Assembly in mid-May, assuming the United Kingdom approves the budget government has proposed.  

1 COMMENT

  1. There will be no sacred cows However Cayman Airways is of the Table. Sounds like another contradiction to me. Just like the Miller Shaw report Ernst Young will make a ton of money telling the CIG what needs to be done, but the question is will they actually do it. Check back after they’re done and see what CI155K actually means. Probably more like 1.5 Million.

  2. This is a very bold but indeed a vital move by government to effectively reduce the size of the present civil service and strive for greater efficiency. Let’s be brutally honest, there are certain functions that are being handled by government which the private sector would definitely administer much more effectively. Let us also bear in mind that most, if not all, functions of government involves lots of unnecessary red tape and delay for action.
    Reducing the size of the civil service might be a bitter pill for those concerned for many reasons and some legitimate ones too. For example, government employment over the years was always considered life-long with pretty good benefits, in comparison to some private sector jobs. Notwithstanding these considerations, unnecessary big government puts a strain on available resources to maintain and keep the things running. This must be taken into account in terms of income, expenditure, borrowing, budgets and deficits.
    The issue regarding Cayman Airways requires immediate decisive action. Mr McLaughlin’s statement, "There will be no sacred cows," should be applauded. Remember, when the patient is sick, the surgeon has no option but to use the scalpel.

  3. I am afraid that government actually looks for holy grail – how to reduce size and improve efficiency without reducing staff and efficiency. Considering how much time and money is spent on different committees and consultations, CI should be the best run country by far.