Hear that train whistle off in the distance? A $1.7 billion locomotive – representing the Cayman Islands government’s healthcare liability – is approaching, slowly but inexorably. The alarm has been sounding for years, but our officials, it seems, continue to snooze in the middle of the tracks.
A similar valuation exercise completed in mid-2014 estimated the government’s 20-year healthcare liability (the amount of money the government expects to pay out for healthcare coverage for retired civil servants, veterans and seamen) to be $1.18 billion. The newly released valuation pegs that figure at $1.7 billion as of the end of June 2016. That means that over the span of two years, the already-astounding liability grew by an eye-popping, jaw-dropping $500 million.
Note that the annual revenue of Cayman’s entire public sector is less than $900 million. Also note the following from the government’s recent report, “For all intents and purposes, the government is on a ‘pay-as-you-go’ plan in respect of post-retirement healthcare liabilities. Currently, no long term assets have been established to start offsetting the government’s post-retirement healthcare liability.”
The $250 million-per-year explosion in healthcare liabilities should provide some perspective for the Progressives’ recent boasts of “achieving” a $48.1 million central government operating “surplus” by the end of 2017. Even before deductions for principal debt payments, compared to the astronomically-accumulating mountain of long-term liabilities, those figures amount to little more than a rounding error.
But with civil servants digging in their heels on possible changes to their generous compensation packages, and elected officials paralyzed by an absence of political will, our layman’s forecast is that the $1.7 billion healthcare liability is more likely to grow in the future, than to recede.
Meanwhile, government officials haven’t set up any sort of savings plan to draw upon when it is eventually, and inevitably, time to pay the piper.
(On the other side of the civil service retirement coin, remember that the unfunded portion of the government’s public pensions plans increased to about $220 million in 2016, up from $191 million in 2015.)
Our government’s perpetual “never saw it coming” attitude isn’t restricted to healthcare liabilities. As it relates to managing future catastrophes, our government could be caught off-guard by an advancing glacier.
Consider the significant changes to private pension legislation, which restricts work permit holders’ ability to “cash out” of their private pension plans when they leave the country. Since last year, companies have been warning officials that the changes would encourage an “exodus” of workers, which the Chamber of Commerce estimates could be as high as 2,500 people, about 10 percent of our foreign workforce and nearly 5 percent of Cayman’s total population.
So far, government officials such as Employment Minister Tara Rivers have responded with a shrug, a few cold-blooded phrases about the affected workers (basically amounting to “Good riddance to non-voters”) and, in response to advice that the government better be prepared to process thousands of new work permit applications before tourism high season, no indication that the government is planning to be prepared at all.
Then there’s the three-and-a-half years of Progressives’ thumb-twiddling on the obvious need for immigration reform while nearly 1,000 people lined up for permanent residence, despite the apparent exposure of Cayman’s public treasury to potentially costly legal liability. There’s the decades-long procession of young people through Cayman government schools into the local employment pool, without standards in place to ensure that each graduate is armed with a quality education as well as a diploma.
And, of course, there’s the George Town Landfill, which (as opposed to the mountain of public healthcare debt) is an actual, physical mountain – a visible (and smellable) reminder to neighbors, motorists and cruise ship visitors of our government’s incapacity, inability or unwillingness to address serious problems.
In the instances listed above, and for many other examples we don’t have the space here to address, the lack of solutions cannot be attributed to a lack of foresight. We all know about the $1.7 billion in public healthcare liabilities, the impending departure of thousands of workers, the lengthening PR backlog, the growing dump, etc.
But what we don’t know is what, exactly, Cayman’s government is going to do about it all – apart from the prevailing strategy … that is, not much.