The Cayman Islands government has not planned appropriately for the need to replace old, outdated equipment in a number of areas – including service vehicles – and has actually spent money intended for that purpose on other things.
Those findings were included in a special government committee report on the management of public finances released last week.
The committee, headed by George Town MLA Roy McTaggart, who is an accountant, noted that by the time an asset reaches the end of its useful life, there should be enough accumulated cash or cash equivalents to replace it. However, that has not always been the case in government, it seems.
“In some cases the funds are used to fund other purposes, rather than replace the asset,” the committee report found. “This results in the lack of adequate cash balances when the asset has reached the end of its useful life and needs to be replaced.”
The committee report stated the situation has led to a lack of reliability with government vehicles, particularly with garbage trucks. A series of breakdowns with government trash collection vehicles in 2013 left bags of garbage piling up on Grand Cayman streets. The trucks were eventually replaced all at once, at a significant cost.
In 2014, the Royal Cayman Islands Police Service reported that 65 percent of its patrol vehicles had reached the end of their service life with some cars still on the beat dating back to 1998.
“The consequences of not replacing inefficient assets include … safety and hazard issues to the [civil] service and the public,” the committee’s report indicated.
The committee recommended that government funds to replace vehicles and other key assets should be walled off from other spending.
Internal auditors last year identified “a growing fleet of dilapidated vehicles, most of which are attributed to the Department of Environmental Health, the Health Services Authority and the Royal Cayman Islands Police Service.”
“These entities’ vehicles consume over 50 percent of the Department of Vehicle and Equipment Services’ time and budget,” the Internal Audit report states.
As an example, the Department of Environmental Health maintained at the time of the audit that 18 of its 27 garbage trucks were more than 10 years old. In addition, 25 of the 27 trucks maintained at the time required “life cycle refurbishment.” Those works were expected to cost a total of $1.5 million, or $60,000 per vehicle.
This situation raised another issue with government vehicles, regarding whether purchasing a new vehicle would be more cost-effective than simply repairing old ones over and over again.
For instance, the June 2013 audit cited one example where the government spent $16,000 repairing a 1994 Toyota Coaster in 2011, including new paint and body repairs. The vehicle was 17 years old at the time.
Another $12,000 was spent for “parts and labor” on a 2005 Hyundai Matrix in 2012, when the purchase of a comparable new model would have cost about $20,000.
“The monies spent may have been better used to offset at least 50 percent of the costs of brand new vehicles of similar characteristics,” the Internal Audit report stated.