The Cayman Compass invited Tourism Minister Moses Kirkconnell and Leader of the Opposition Ezzard Miller to present their views as advocates for and against the cruise pier dock, respectively, to the Cayman Islands public.
Tourism Minister Moses Kirkconnell
We are at a crossroads in our economy, forcing Government to make an important decision. Our twin pillars, financial services and tourism, both face external threats that we must grapple with. Do we continue to build our economy relying on a tourism product that includes cruise? And if we do not include cruise, what will replace it? Where will hundreds of Caymanians losing their jobs find new ones? How will we support them until they do?
For over 40 years, Caymanians have built a thriving cruise tourism industry that contributes more than $200 million a year to our economy. This was done through grit, hard work, and the CaymanKind hospitality that is our culture and our heritage. Today, hundreds of Caymanians either own, or are employed by businesses that are dependent on our cruise tourism guests. It is the taxi drivers, tour operators, restaurateurs, retail shop owners and other industrious and creative entrepreneurs and all of those who follow them in the future, who are on our minds as we move forward with this project.
We also think of the wider economy and how cruise tourism contributes to it in ways that aren’t always obvious. For example, the duties and other government revenue raised from this industry helps Government provide scholarships for our youth, pay salaries for teachers and police, provide new roads and social services for our most vulnerable people. We need this money in our economy because life will be drastically different without it. Our financial services industry continues to face global challenges that will not abate any time soon. We also have hundreds of students graduating each year seeking employment. As a government, it is our responsibility to proactively create an environment where Caymanians have opportunities for careers in an industry with longevity.
Cruise makes up 80 percent of Cayman’s tourism industry. The approximately 400,000 stay-over guests per year are also vitally important, but that volume on its own is not sufficient to provide jobs for thousands of Caymanians. Nor does it provide sufficient revenue to our economy.
Tendering not an option
The cruise lines have made it quite clear they have no intention of tendering Oasis- or Quantum-class ships and they have stuck to their word. Two of those brand-new ships, each carrying 6,000 of the highest-spending cruise passengers in the industry, are, every week sailing past us. That equates to US$1.350 million dollars a week that is not in our economy right now because we do not have berthing facilities.
I quote the following from Giora Israel, Senior Vice President, Carnival (October 2015):
“Carnival Corporation announced earlier this year the construction program for a series of larger ships, the first to be delivered in 2018. These state-of-the-art ships will have a capacity of over 6,000 passengers and will use for the first time in the cruise industry the environmentally friendly LNG. The ships will require piers/berthing facilities that can efficiently operate in all the destinations where they will operate in the future. The key for a smooth operation of large ships in transit ports is the availability of piers/berthing facilities. The itinerary planning executives at our various cruise brands that will operate those ships in the future, and no deployment decision for those ships have yet announced, will consider the availability of piers or berthing facilities as a key element in considering a destination and are unlikely to consider tender ports for such class of vessels.”
Adam Goldstein, Vice Chairman, Royal Caribbean Cruises, said in October 2015:
“When Royal Caribbean International launched Oasis Class ships six years ago, it was never intended that these vessels would be tendered. Royal has never tendered these ships and we have no plans for tendering them in the future.”
These are words to be taken seriously. As smaller, older ships calling here now gradually decommission, we will watch our cruise tourism industry slowly dwindle to half what it is now.
Passengers spend much of their day waiting to get on and off the ships, and little time enjoying activities and attractions. With more time ashore, they could do two tours, not just one, expanding the economic benefits of tourism and bringing more jobs and opportunities to areas outside of George Town. Our guests could explore areas they cannot now, particularly in the eastern districts: the Crystal Caves, the Botanic Park, Rum Point and other places entrepreneurial Caymanians will establish in the future with the confidence of an ongoing market.
PwC’s Outline Business Case provides an unequivocal argument for the piers. If we wish to remain in the cruise tourism industry and if we want to continue to provide business and employment opportunities for the Caymanians already in it and those yet to come, we need the piers.
The Environmental Impact Assessment (EIA) conducted was the most robust ever carried out in the Cayman Islands. We worked closely with the Department of Environment to come up with the terms of reference for the EIA and it was completed by Baird, a globally recognized environment and engineering consultancy group.
The first question that we asked the engineers was “is Seven Mile Beach at risk?” If the answer to that was yes, we would have abandoned the project immediately. However, the answer was a definitive “no.”
We heard the public’s concerns about dredging and agreed to move the piers to deeper water. We also agreed to transplant coral to a different location away from the working port. The Benthic Habitat Characterisation Study confirmed that not only is this feasible, but it has been done successfully in similar situations elsewhere.
As the elected government, we have a responsibility to balance the protection of our environment, both onshore and undersea, with the needs of our society. We must create opportunities for our people to participate in prosperity, both now and in the future. We cannot haul up the ladder on those still coming up behind us. We also cannot destroy the environment that underpins our lives, our culture and our tourism product.
By making the piers longer, they are in deeper water, so less dredging is required and the impact to the environment is reduced. This is the most environmentally friendly way of constructing this vital piece of infrastructure. It is the right decision.
Baird estimated the project to cost CI$156 million. Building the piers longer will cost extra. The upgrade to the cargo port is estimated at CI$40 million.
It is important to understand, and we have been saying this at every stage during this process and reiterate it again now: there will be NO Government guarantee, no bond and no loan to finance the project.
For added assurance, it is worth noting that we still operate under the construct of the Framework for Fiscal Responsibility (FFR). The U.K. Government would not allow this government to undertake a borrowing/bond/loan arrangement of this size, nor would we want to.
The procurement process nearing completion is seeking a provider who will cover the design, build, financing and maintenance of the whole project. This is called a DBFM infrastructure development model. It is quite common for projects of this magnitude, so we are not breaking new ground with this concept. An RFP will shortly be issued for the final designs and costs and those submissions are due back in December. We look forward to sharing the final design and costs with the public when the process is complete.
Currently, the cruise lines pay the Port Authority a fee for every passenger aboard, whether they disembark or not. These fees are allocated to different services related to the port and tendering operations. With the cruise lines offering confirmation of ongoing business once the piers are in place, the DBFM payment model is sustainable. The result is that the facility remains under the ownership of the Caymanian people and repayment will be complete in 25 years. This is a tremendous improvement on financing models presented in the past.
Cargo port expansion
We must remember that the George Town harbor is a working harbor. As an island, we rely on this active seaport for our food and other goods. The port is nearing capacity handling current cargo demands. With an increasing population and the number of new hotels under construction, there is a need to expand the cargo port to accommodate larger ships. This will lower shipping costs, and ultimately lower cost of goods.
Meticulous attention to detail has gone into this project. The best international consultants have advised us and there is no reason to doubt their experience, expertise or findings. All of the reports and studies we have invested in are still publicly available on the Ministry’s website. The procurement process is following international best practice and is fully transparent. No corners have been cut, no deals have been made and no bidder has an unfair advantage over another. It has taken five years to arrive at this stage in the procurement process. Delaying now, in this final phase, to hold a referendum on a project the people have already given the government a mandate to do will stop the piers and the cargo port expansion, irrespective of the referendum result. The value from the investment already made will be lost.
This project has been on the table for over 15 years. How many more times shall we start over?
This is the largest infrastructure project ever to be undertaken in the Cayman Islands, so we do expect questions. And we are happy to answer and provide the information we have. But the most important question everyone should be asking is not whether we can afford to build the piers – but whether we can afford not to. Can we afford to be without our cruise tourism industry? If the answer is no, then we must build the piers.