Reining in Cayman’s public authorities

Back in 2001, when the Cayman Islands began its public service reform with the passage of the Public Management and Finance Law, the government planned to enact a Public Authorities Law as the third phase of reform. That law was never enacted.

Had it been, it would have gone a long way in holding Cayman’s public authorities and government companies accountable and would have forced them to operate as separate and economically feasible entities.

That law was shelved by the People’s Progressive Movement government in 2006. According to The Office of the Deputy Governor’s “Review of Public Service” website, the reason the government abandoned the Public Authorities Bill was that the bill received “little support” from the public authorities.

What a surprise.

The same year the Public Authorities Bill was abandoned, the Public Accounts Committee Chairman at the time, Osbourne Bodden, was already bemoaning the fact that some of Cayman’s statutory authorities were ignoring the Public Management and Finance Law and not submitting financial statements, an act of defiance that pre-dated the law and continued afterwards.

Still, the PPM chose to abandon the Public Authorities Bill because the public authorities, some of which they already knew were operating irresponsibly, didn’t support it.

Without the law in place, Cayman’s public authorities and statutory companies were not held accountable for their actions and have operated pretty much as they pleased, or as Premier Alden McLaughlin euphemistically called it, in a “somewhat ad hoc system.” Based on a recent report by the Auditor General’s Office, what many of them have been doing is engaging in blatant mismanagement that in some cases borders on potential fraud and theft.

Eight years later, the Progressives-led government has had enough and Premier McLaughlin last week announced that the Public Authorities Bill would proceed, potentially as soon as early next year.

After its passage into law, the elected government will obtain more direct control over statutory authorities and government companies, as they should, considering that their expenditures and their staffs are paid with public funds.

Since this decision is likely to cause some political fallout (as a consequence of the new law, some 2,000 people who work for statutory authorities and government companies will have to move their health insurance plans to the government-owned Cayman Islands National Insurance Company), it is a bold, but necessary, move by the government.

Frankly, we see this as one of the best things the government has announced in its 18 months in power.
Once enacted, we hope the government utilizes the full extent of the new law to ensure public entities are not only operating responsibly, but also efficiently and profitably.
Provisions should give the government power to take control of or eliminate entities that continually lose money or defy reporting requirements.

Ultimately, public service reform has been a disaster in the Cayman Islands and the lack of a Public Authorities Law has been a big part of the reason it’s failed. Some argued more than a decade ago that Cayman was too small and had too few human resources to decentralize government in the way they were planning. They were correct.

The Progressives-led government is now taking steps to regain an element of control over entities that are exhibiting no control over themselves, and that can only be a good thing.

However, if the passage of a Public Authorities Law still doesn’t rectify the situation, perhaps it will be necessary to abandon the model entirely and return to an even more centralized government.

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