Private eyes on Cayman’s public sector

As the consultants at Ernst & Young get started on their assignment to advise government on how to reduce the size and cost of the public sector — paying particular attention to privatization — we would direct their attention to the small town of Sandy Springs outside of Atlanta, Georgia.

In 2005, Sandy Springs (population 94,000) collectively declared political independence from Fulton County and decided to privatize, well, just about everything except fire and police services. In 2012, the New York Times reported that things were going swimmingly: Sandy Springs had no long-term debt, no pension obligations, and was receiving high marks from residents on quality of life and government services.

A key mover in the Sandy Springs saga, Oliver W. Porter, recounted his experiences in a book entitled “Creating the New City of Sandy Springs.” In an essay on the topic, he posited, “Imagine starting a new city of over 90,000 with only two employees. We did it. Imagine improved employee attitude, less cost, more responsive government, decreased long-term liabilities and happier citizens. We did it.”

Now no one, certainly not the Compass, is suggesting that the Cayman Islands mirror the Sandy Springs model, but we are suggesting that our approach must be bold, not incremental, and certainly not politically sensitive to the status quo. A few key numbers explain why:

Since 2001, the number of Cayman’s public sector employees has grown from about 4,000 to 6,000. We don’t need the sharp-penciled accountants at Ernst & Young to tell us that’s an increase of 50 percent, far outpacing the growth of the country’s population.
A January 2011 report estimated the government’s unfunded public pension liabilities at $178 million over the next 20 years.

The government’s unfunded liabilities for public healthcare services is somewhere north of $654 million, a best guess dating from 2004. We don’t even have current numbers and, we suspect, government is too afraid to compile them.

Predictably, but unfortunately, the government’s response over the years to its own fiscal irresponsibility has consisted of more spending (particularly on extravagant capital projects), district-sensitive decision making (especially as it relates to subsidization of Cayman Brac), and an unwillingness to contemplate politically popular but financially distraught enterprises (such as the Turtle Farm).

Despite our fiscal conservatism and zeal for a smaller public sector, we are displeased with Premier Alden McLaughlin’s declaration (see Page One of today’s Compass) that civil servants will not have their on-again, off-again 3.2 percent wage increase restored in the 2014/15 budget.

As we’ve said before, it’s unfair — and unwise — for the government to break its promises to its employees. Additionally, the $5 million to $6 million required for the pay increase basically constitutes a rounding error in the government’s $650 million annual budget.

Further, rather than tinkering with head counts in its 80 core entities and 25 authorities and companies, government would be well advised to eliminate entire entities through privatization or the cessation of many activities.

Our potential candidates for privatization (we can imagine this becoming a popular parlor game in Cayman) might include: schools, hospitals, fire services, waste management, Government Information Services, Radio Cayman, airports and port management, ambulance services, road maintenance and construction, computer services, postal services, and (Premier McLaughlin’s protestations to the contrary), Cayman Airways.

That’s our short list.

2 COMMENTS

  1. Until we have leaders whose primary goal is to do what’s best for cayman and fixing the current financial situation in Lieu of a primary goal of getting re elected nothing will change.

  2. Until there is a minimum wage law there will be no downsizing of the civil service. People who own businesses have to either increase wages or decrease the cost of living. Since the cost of living is going up that means people need to except wages have to go up. There will be an economic time when people will have to downsize or close businesses in this island because of less purchasing of goods and services.
    Why people are fighting the inevitable is beyond common sense. Can’t you see the world is reaching its crescendo? People all over the world are raging war thinking that people will not do anything and just take this .
    This is the last of paradise don’t screw it up through your greed.
    Why I have made these comments over and over again is it is time for trade unions in the Cayman Islands. If MLA’s won’t protect just the civil service, then a union is the right path. This slave/master lifestyle is wrong it doesn’t matter whether Caymanian or foreigner. They need to do more then just work and not have enough for the things they need to provide for their children. When rent is 700 per month for a one bedroom apt how do you pay for one or two children? The couple has to be able to make 4000 per month together. If it doesn’t happen then you create the criminals of the future. The welfare state is also created, cause its better to stay home and take care of your kids .
    What happens when you have one parent and more kids ( dog eat u suppa) . Gov’t should not have to provide but how can they not.

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