Finance minister: Budget surplus helping Caymanian people

Finance Minister Marco Archer. - PHOTO: MATT LAMERS

The Cayman Islands government has received “great criticism” in recent months for maintaining more than a $100 million operating surplus in its annual budget, despite increased spending during the same period on education, social welfare and healthcare programs, Finance Minister Marco Archer said.

Mr. Archer said, according to critics “who meant government no good,” the large surplus has been taken as an indication that “somehow this government is cruel, out of touch and does not care for the people.”

During budget debates, Opposition Leader McKeeva Bush and Bodden Town MLA Alva Suckoo both said that $30 million worth of targeted tax breaks by the Progressives-led administration had not “reached the consumer” so far. Mr. Bush has often said the government should spend more of its surplus funds to assist needy Caymanians via social and church programs.

“Did anyone ever take the time to look at the numbers?” Mr. Archer asked during his response to the Legislative Assembly budget debate on Friday. “To those who would say the government is just building a surplus and not caring about the people, I would say that is not correct.

“But it is irresponsible to promise more than the country can reasonably afford. To do so, we run the risk of taxing people to death in order to afford what we’ve promised that is more than reasonable.”

The $30 million in tax reductions, which include a cut to Caribbean Utilities Company diesel import duty rates, fee reductions for licensed importers and fee waivers or reductions for small business licenses, were made possible by the healthy operating surplus the government maintained, Mr. Archer said Friday.

He also acknowledged that the operating surplus had to be used to pay for other critically important items, including government debt principal repayments that cost tens of millions each year.

“In giving those tax breaks, we are also reducing the size of the surplus and we are giving back to the people what is due to the people,” Mr. Archer said. “Surplus is set aside for productive use. It isn’t something that I sit down and gloat over.”

Mr. Archer compared budget figures from the former United Democratic Party administration to the current 2015/16 budget managed by the Progressives-led coalition, seeking to show that government had actually increased spending for social programs while maintaining the budget surplus figures.

During the 2010/11 budget, the finance minister estimated that $41.2 million was spent on social security and welfare programs by the UDP government. In the current 2015/16 budget – which ends June 30 – he said that figure was estimated at $59.7 million.

Education and employment-related spending was $83.3 million in the 2010/11 budget, compared to $93.6 million in the current fiscal year.

Government spending on public health operations and programs was $80 million in 2010/11, compared to $88.4 million this year, he said.

“This government is no less concerned about the people who are in need of assistance and in some cases … we are more concerned, if that is reflected in the budget,” Mr. Archer said. “Analyze that, comprehend that, and then, refute that.”

There were objections raised to portions of the finance minister’s speech by opposition and independent members after Mr. Archer’s repeated references to “Harvard economists” that he said appeared to occupy the opposition half of the Legislative Assembly.

At one stage, Mr. Suckoo, an independent, noted that his master’s degree in business administration had come from Syracuse University in New York State, not Harvard University. Mr. Archer later apologized to anyone who had been offended.

Minister Archer said he preferred to err on the side of caution when estimating the budget operating surpluses, because no one could predict precise surplus figures each year, given Cayman’s system of indirect taxation on economic transactions.

“No government, for all the time of the Cayman Islands existence, has been or will ever be able to say exactly what the surplus will be,” he said. “If the economy performs as expected, we are close to what we expected.”