Cayman’s construction industry has been riding a wave of expansion over the last few years, but based on the latest government revenue figures it seems the boom is slowing, says Opposition Leader Roy McTaggart.
McTaggart, in a statement over the weekend, said the Progressives had warned for months of an apparent slowdown in the construction sector and now government’s latest figures confirm that drop in activity.
“The half-year financials show that stamp duties on property are some $15m lower than in the same period in 2022. This decrease suggests that property transactions have slowed considerably in the last year. At the same time, building permit fees are only one-third of the expected level and are lower than in 2022,” he said.
McTaggart, drilling down on government’s recently released financial numbers for the first half of the year, said that planning fees were also “significantly below budget”.
“This suggests that there are fewer projects in the construction pipeline,” he said.
Levies on property, according to the six-month report, stood at $39.47 million, a significant drop from the $56.44 million recorded during the same period last year.
Building-permit fees also took a hit, decreasing from $5.28 million last year at the end of June to $1.65 million for the first six months of 2023.
McTaggart, in his statement, said it was worth noting that no quarterly economic data has been published by government for nearly a year.
“The last published figures relate to the first quarter of 2022 and were released in September 2022. What has been happening in the economy since, and how should the country and the Government respond? These are vital questions that need an answer. The lack of published data is a real cause for concern for a government that trumpets a commitment to transparency and evidenced-based decisions,” he argued.
The last such Economics and Statistics Office report was published on 29 Sept. 2022 and related to the first quarter of last year.
The Cayman Compass has reached out to the ESO for comment on the lack of updated reports, and is awaiting a response.
McTaggart’s statement on Cayman’s economic standing follows Premier Wayne Panton’s warning to civil servants and his ministers through an internal memo to roll back on spending for the remainder of the year.
Panton, who is also the finance minister, told civil service leaders to help slash almost $50 million from the government’s budget by the end of the year as public spending neared the $1 billion mark.
Panton, in a comment to the Compass last week, said the $977 million target sought for operating expenditures for the 2023 financial year, “is realistic and reasonable considering that such expenditures totalled approximately $970 million in 2022”.
‘Tall ask’
McTaggart, however, this warning may be coming too late as government is unlikely to meet its revised revenue target.
“With more than half of the expected revenue already collected this year, the Government hopes to pull in an extra $32 million to meet a revenue target of $1.037 billion. That is a tall ask when revenues are at their lowest during the second half of the year,” he said.
“So there must be considerable doubt whether the revised revenue figure, presented in April, can be achieved. The Premier must know this.”
McTaggart noted, though, that the Opposition does not have access to the latest data and forecasts that ministers will have seen.
“Yet it is clear to us that there is a need for restraint and responsibility as Ministers draw up their new budget plans,” he said.
McTaggart said to achieve the $50 million in cost cuts that Panton has called for, the PACT government “must show an unusual unity of purpose and collective restraint”.
“Despite the huge ask, I do pray that the Premier can make it happen. The country does not need to enter a new budget period with concerns about a possible budget deficit for this year,” he said.
Government is set to deliver its budget later this year.
McTaggart said the Opposition hopes that the premier, as minister of finance, “is prepared to challenge his colleagues’ spending plans so that he can resolve his immediate problem with the 2023 finances”.
He added that he hopes Panton can also bring to the House a 2024/2025 budget “based on a firm understanding of the current financial picture and a realistic assessment of Cayman’s future economic and financial prospects”.
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Part of the reason revenue is done is because the government is making it very difficult to build. I am moving into a new building that is over 1 1/2 years late. A big part of that is the government and inspectors It seems that one department doesn’t talk to another. If this had been approved the government would have had over 2M dollars in stamp duty