EY report six months later

Radio-Cayman-L

A number of options proposed in the review of Cayman Islands government services by the Ernst & Young accounting firm remain under consideration more than six months since the 240-page review was released to the public.

A number of other recommendations made by the accounting firm have been rejected or changed by Cabinet members.

The Cayman Compass took a look at a number of higher-profile recommendations from the report and where they have ended up:

Sale, divestment 

One recommendation was to sell off or divest certain government assets, including “surplus” land, the water/sewage system, the government office building and Radio Cayman.

Premier Alden McLaughlin has more or less rejected any sale of the Water Authority, Cayman or the Government Administration Building. Mr. McLaughlin also said government was not convinced it made “good business sense” to sell and then lease back the government office accommodations.

The government also declined to sell public broadcaster Radio Cayman, instead opting for a merger of the radio station, government-owned CIG TV-20 and the Government Information Services department.

If the sale of Radio Cayman were not implemented, this was a secondary recommendation involving the approximately 35 staff members at GIS, the television station and the radio station. Mr. McLaughlin is expected to meet with consultants in the U.K. this week to further discuss proposals. There is no word yet on when or whether the merger will take place.

Health services 

Another recommendation was to outsource or establish a joint venture with a private sector entity to run or participate in the Health Services Authority.

This is under review and is expected to take some time to establish and set up, if it is approved. The Civil Service Association has expressed concern regarding “fly by night” operators in the healthcare industry that might take control at the Health Services Authority.

Privatization 

The initial recommendation from the EY report to create an academy-style system for local public schools has been taken up in another consultant review by the KPMG accounting firm. Consultant Roland Meredith has said potential options could range from “adding innovation” to the public schools system to the implementation of academy schools. The EY report recommended a pilot scheme that put four government schools under private sector control. Education Minister Tara Rivers has said the academy approach is under review.

Public-private partnership arrangements for the cruise berthing project and the airport expansion at Owen Roberts International Airport were also suggested.

Premier McLaughlin has said the government is already “far along” with its development plans for the new cruise dock and the airport expansion, and plans to implement them according to strategies already announced by government.

The report also recommends privatization of waste disposal.

This is being looked at by government in the wider context of George Town Landfill remediation efforts. The government just purchased five new garbage trucks for use by the Department of Environmental Health.

Cayman Islands Development Bank 

The EY recommendation was to shutter the loss-making bank if the “political will” did not exist to carry it forward. According to Finance Minister Marco Archer, there is such a will in the Progressives-led administration.

“Mistakes were made in the past which led the Cayman Islands Development Bank to the brink of bankruptcy,” Mr. Archer said. “This government has taken a more measured approach. Where a business shows true potential, the [development bank] will be placed in a position to provide further credit facilities.”

Other recommendations  

One proposal to immediately outsource 200 government jobs to the private sector, saving $2 million per year, has not been implemented to date.

This recommendation involved mainly security-related jobs in the courthouse or the prison.

A joint venture with the postal service and a private sector vendor to deliver parcels and post that would cut costs and provide more services than currently handled by the postal service remains under review.

A recommendation was made for the medium-term sale of the University College of the Cayman Islands. UCCI has proposed budget-cutting measures since then, aimed at shaving $500,000 off the school’s yearly operating budget.

The centralization of government human resources and simplification of government budget reporting was recommended. This is expected to be done as part of the revisions to the Public Management and Finance Law, according to Minister Archer.

The report proposed the creation of a government Utilities Commission. The idea here is to monitor all utilities, including petroleum, electricity and water-sewage providers, under a “one stop shop.” Premier McLaughlin has proposed the commission this year as a way to reduce costs and better monitor local fuel distributors and retailers.

The EY report also recommends no long-term IT plan for government. Instead, it identifies 18 specific areas in the central government service that could be outsourced immediately, thereby cutting jobs and expenses from the public sector payroll. The EY suggestions were being completed around the same time another consultant review of government IT services was being done by the Deloitte accounting firm. Deloitte recommended a longer-term strategy in which IT stayed under the control of the government, but certain services were outsourced.

Both Deputy Governor Franz Manderson and civil service chief officer Mary Rodrigues were contacted for this story, but did not provide a response by press time.

Radio-Cayman

The EY report recommended the sale of Radio Cayman. – Photo: Chris Court
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  1. If Alden is financially savvy enough to say that these recommendations by Ernest and Young do not make good business sense. Why in the world do they pay so much money for these reports. He obviously feels the CIG has better and smarter financial management resources than Ernest and Young does. Surely the financial decisions he’s made for Cayman in the past speak to this. Not to mention paying for information they don’t even think they need.

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  2. While Mr Davis said a mouthful in his comment, why The premier think that he can object to what the report is suggested, and why do Government need to spend the money to have these reports done . Why can”t the Government debate these entities in a by partisan way in the LA, to determine the benefits of it. What do they really do all year long for that big salary they get.

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  3. Michael, the answer to your question is the same the whole democratic world over. if you fear the answer to a problem will require painful decisions, then get someone else to recommend it. You also get the advantage that the report takes time to prepare, and people may forget the issue, and to use a cricket analogy, hit the ball into the long grass and get someone else to find the answer, you can then disagree with the answer and so the solution goes begging.
    There is another possible reason, and borrowing from JFK, too many people are satisfied with the comfort of an opinion without the discomfort of thought. So pay someone to think, and dispute the opinion!

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