The need to privatize … well, something

In a recent letter to Deputy Governor Franz Manderson, Chamber of Commerce President Johann Moxam says the Chamber supports the Cayman Islands government’s contracting with the accounting firm of Ernst & Young to examine the opportunities and advantages of privatizing various businesses and functions of government. The purpose, of course, is to reduce the overall size of government, which currently has a payroll of nearly 6,000 employees.

Ernst & Young, we have no doubt, will provide government with a well-documented and objective analysis of which entities are most suitable for public/private partnerships or total migration from the public to the private sector.

The second function of privatizing the analysis, we believe, is both unspoken but important — that is it gives political “cover” to the party in power to make these politically charged divestment decisions. That, too, is fine with us. In this instance, we are far less interested in process than in results.

As Mr. Moxam correctly points out, successive governments have declared their willingness, even eagerness, to slim down the size of the public sector. The 2010 Miller-Shaw report — which set the platinum standard for objective advice to the Cayman government — contains a bevy of insightful conclusions and practical recommendations that government could, and should, begin implementing right away (or better yet, four years ago).

And yet, to our knowledge, no government entity has ever been truly privatized — notwithstanding the creation of quasi-public “statutory authorities” and “government-owned companies.”

Frankly, the main reason why substantial cuts to the public sector have never materialized is that politicians become paralyzed with fear when faced with opposition or retribution from the civil service, which is the single-largest voting bloc in the country.

And, therefore, please forgive us for being somewhat skeptical that the Ernst & Young engagement is yet one more example of government “studying” in lieu of “acting.”

May we suggest a scenario that would prove us wrong:

While the Ernst & Young consultants are examining and analyzing the broad scope of government (and broad it is: a huge civil service, 80 departments, 25 authorities and companies), why doesn’t the sitting government move toward privatizing just one entity?

It would signal that this government at this time on this issue has serious intent and some credibility. Call it a show of good faith.

While there are so many obvious entities to choose from, high on our list would be the Cayman Turtle Farm, or, if that’s too big for a start, how about sanitation services, vehicle maintenance, road repair or Radio Cayman?

If even those are too politically unpalatable, we would leave it to government to pick the easiest one on its list. At this point, we’re not particularly interested in an immediate exodus from the public arena to the private sector. We would just like an indication that government is serious and committed to privatizing, well, anything.

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4 COMMENTS

  1. They said;
    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.
    What is really true, is that private sector would rather invest in a up and running business than to go through the long hall of developing their customer base. Who really believe that the chamber of commerce is more concerned with government expenditures, than they are with their profit. Remember the rich can afford to pay for the added cost a profit making entity will demand. So the call is to privatize something, forget about inflation, and the cost of living, forget about unemployment of Caymanians, for of course if they were not productive enough to run a not for profit efficiently how can they expect to make profit. Better management? Yes, better management is needed, management of government owned business to break the grip of inflation on all of us, not hoard away profit for the one per centers.
    Here be the crux of the matter, and clearly absent an objective that should be included, reduced cost to the consumers. Turning efficiency into profit is the reason the rich gets richer and the poor poorer. How can a for profit organization provide lower costs service to us than a not-for profit service?.. Efficiency? Our government agencies are seen as not efficient because of the headcount. Cayman, the Chamber of commerce and its members do not look at unemployment and profit the same way our government do. Here is another way to look at it. Consumers VS People, big business wants us to consume more, Government wish us to consume lest, Why?. Why would a country wish to increase its population, to increase consumers. Why would you want more mouths at the trough, to run an economic engine where profit drives the social and economic disciplines. Free inter-prize must have a strong government regulator, agencies like consumer protection and others. Further if government revenue generating entities are turned over to the private sector, taxes will have to follow.
    Caymanians, watch your platform, your sand and clear waters, the businesses that your forefathers made to provide service to the community through communal partnership, your liberal non tax regulation are profit makers, do not let your government give away your means of revenue. Insist that they run it efficiently yes, but insist that they manage it, and if it has to be bankrupted let it be by our hands to close it down, not at the whim of a private business owner. Don’t tell me if CUC was to go belly up tomorrow, that we as a community would not do what is necessary to keep electricity going. We would demand government get it done. Well we want them to get it done with managing our government owned businesses to success, be proactive not reactive..
    How about a report on the number of homes foreclosed in the last five years.

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  2. With all due respect to the editorial board, this is quite simply idiotic. It’s very clear from all editorials that the Compass is pro-private sector and anti-government. That’s fine – you are entitled to your opinion. But you’re not entitled to make ridiculously bad suggestions in support of your political agenda.

    First, the Government is paying good money to EY to get their professional opinion. Why would they move forward before they receive the advice they are paying for? If they did, no doubt you would lambast them. Second, your pick an entity approach boarders on the stupidest ideas printed in your paper EVER. Ok, let’s privatise road repair. Who is the buyer? Who is going to ensure it is accomplished? Who is paying for repair to public roads? So many questions with no answers, but they should just pick one and do it, right? Maybe that example is a bad one — let’s go with the Turtle Farm. Surely there are a long list of buyers out there and they can sell tomorrow, right? Maybe you can publish the list of interested buyers? Maybe they should just accept whatever offer someone makes?

    I don’t object to the Compass using its editorial to advance its obvious political agenda. What I do object to is the Compass saying absolutely nonsensical things in an attempt to paint the government in a poor light.

    With great power comes great responsibility. Time for the Compass editorial board to start being just the slightest bit responsible.

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  3. EY will most likely make similar recommendations to the CIG as the Miller Report did. But the simple fact is no politician is going to do anything to risk the public sector vote. I personally think it will be hard for government to privatize a lot of their services because not many people have faith in their word or their signed contracts for that matter. But all over the world there’s proven examples of how the private sector is better at getting things done than government is. Government needs to pay for a service and let then professionals in the private sector get the job done. The biggest concern the public sector workers have is they know that private sector companies aren’t going to carry them like the CIG does.

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  4. John, question regarding your comment. Are there actually governmemt owned entities that are revenue generating in which i mean bring in more then they cost to run. If so can you give me an example, I’d think those wouldn’t be the ones anyone would recommend selling.

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