Bill seeks to rein in public spending

Legislation that seeks to “normalize” pay in the Cayman Islands government’s separately operating public authorities is set to come before lawmakers in the waning days of the Progressives-led coalition’s term in office.

The Public Authorities Bill, 2016, a copy of which was made public Monday, would place rank-and-file workers and senior managers in the statutory authorities and government-owned companies under “the same terms of conditions of service” as a rank-and-file civil servant or civil service manager.

In addition, the bill seeks to give Cabinet members far greater control – through appointed boards – over the financial management of those separate entities.

The government has approximately 26 authorities and companies for which Cabinet members now appoint boards, and in recent years lawmakers have alleged – backed by reports from the auditor general’s office – that those entities’ spending was excessive and irresponsible in many cases.

In one example from 2014, lawmakers revealed that the executive directors of the port, Cayman Airways and the airports authority made more than Premier Alden McLaughlin at the time.

According to Deputy Premier Moses Kirkconnell, the annual salary range for the port director at the time was between $180,000 and $204,000; for the Cayman Airways chief executive officer, between $150,000 and $180,000; and for the Cayman Islands Airports Authority chief executive, between $152,000 and $160,000.

The new Public Authorities Bill would set the pay ranges for those positions within the range of a “civil servant in a similar post.” The pay range for civil service chief officers is between $123,000 and $143,000 per year.

However, the bill, which is set to come before the assembly during its January meeting, provides a “grandfather clause” for individuals now serving in those jobs. “[It] ensures the continuation of existing terms and conditions of employment which are more generous than the provisions of this legislation would allow,” the bill states.

The bill, if approved, would also prevent a public authority from giving bonuses or salary increases to all staff members. That prohibition is in place only for an across-the-board increase; individual employees could still receive incentive pay for good performance without Cabinet permission.

The public authorities would also be placed under more stringent financial management requirements, which include returning some of their money to central government if the entity is in a strong position at year’s end. Statutory authorities and government companies cannot borrow money without prior approval from Cabinet, and they cannot issue additional capital to anyone or any entity without Cabinet approval.

If a public authority maintains cash reserves to cover more than 90 days of operating costs during any budget year, the surplus reserve would be returned to central government operations unless Cabinet members decide otherwise.

Board appointments

For the first time, the proposed legislation seeks to set specific requirements for the boards of directors of the various statutory authorities and government companies.

For instance, all of the appointed boards that oversee the operations of those entities must have no fewer than five members. The appointed board members are required to have some experience in corporate governance, financial management or knowledge of the areas that the board oversees.

Civil servants can be appointed as members of the authority boards, but they can make up no more than 40 percent of the total membership and cannot receive pay for serving in those positions.

Pay for board members who are appointed from the private sector will be determined by Cabinet and “shall be published in such media as the Cabinet determines,” according to the bill.

The chief executive appointed to run each entity is to be hired by the respective board, following consultation with Cabinet, the bill states.

Hiring concerns

The other major concern arising from the management of the separate public authorities dealt with the number of staff members hired by the entities over the years.

While the civil service has shown little growth over the past three years, the government’s Compendium of Statistics shows that staffing in the statutory authorities went from 1,842 in 2014 to 2,167 in 2015 – an 18 percent increase. Meanwhile, staff numbers at government-owned companies went from 489 to 584 in the same period – a 19 percent increase.

The staffing issues at the public authorities have been recognized for some time.

In 2001, when the central government first split its operations into “central government” and outside authorities, divesting the Health Services Authority from the civil service, there were approximately 4,034 government employees – 3,097 civil service workers and 937 employees at the lone government authority that existed at the time.

The civil service grew to a peak of about 3,800 employees in 2008 and has slowly declined to its current 3,591 workers in December 2015.

By contrast, the number of statutory authority and government company workers grew from 937 in 2001, to 2,194 in 2010 as more authorities and companies were added. According to government human resources reports, the number of employees in the outside authorities grew to 2,264 by mid-2012 and to 2,751 by the end of 2015.

The proposed legislation does not seek to directly cut staffing at the various authorities, but it makes reference to requirements that those entities be managed “in a manner which best serves the public interest.”

“It is the duty of a public authority to conduct its affairs in a responsible financial manner and, unless its ownership agreement provides otherwise, to operate as a profitable business,” the bill states.

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