Sidebar
Framework for Fiscal Responsibility
Sidebar
View the report
It seems independence for Cayman is still a long way off, if it is ever to happen at all. The Chamber takes a look at what must change and areas that will be up for discussion in 2012.
The United Kingdom’s focus for the Cayman Islands seems to be getting the overseas territory’s public finances in order.
According to a finalised Framework for Fiscal Responsibility document, which Premier McKeeva Bush signed in London in November, the UK deadline for Cayman’s government to comply with debt limits will occur at the end of the 2015/2016 budget year – meaning 30 June, 2016.
The Cayman Islands Government is out of compliance in three of the six areas measuring responsible financial management. In short, Cayman is paying too much each year to service its debts, its overall debts are too large compared with government revenues, and it does not have enough cash reserves to comply with legal requirements.
Government financial records show Cayman almost reached the legal requirement for cash reserves in its current budget, having 87 days worth rather than the required 90 days.
Cayman’s “net debt” – the government’s total debts as compared with revenues – was estimated at 108 per cent for the current 2011/12 budget year. According to the Public Management and Finance Law, the Cayman Islands should maintain a “net debt” ratio of 80 per cent when compared with its revenues.
Government estimates show the Cayman Islands’ total public sector debt will remain well above $500 million by mid-2014, despite payments of more than $30 million per year until then.
In the final framework agreement, the UK also eased up slightly on procurement and analysis requirements for public projects above a certain lifetime value.
The previous value figure of $5 million was doubled to $10 million, so that any projects with that lifetime value would be required to be evaluated for performance, published in the government’s annual Strategic Policy Statement and require Cayman to retain independent financial and legal advice.
The finalised framework agreement requires the Cayman Islands to borrow to fund capital [construction] projects only if the proposed project will earn enough to pay off financing costs. However, a separate section was added from the initial framework agreement allowing Cayman some wiggle room, if it has enough cash in the bank.
The final wording of the agreement reads,
“Unless in exceptional circumstances different arrangements are agreed in writing by the Cayman Islands Government and the [UK] secretary of state, the Cayman Islands government will borrow only to fund capital expenditure where; the proposed project is forecast to yield sufficient revenues to fund the additional debt service costs, or the government can demonstrate that it has sufficient operating cash flows to fund the additional debt service costs which arise from borrowing to finance such capital expenditure.”
A number of potential governance issues were raised in a recent survey gathered and collated by a committee nominated by Mr. Bush prior to meetings with British officials toward the end of November. A few of those areas could be changed without the Cayman Island going independent from the UK government.
One man, one vote
This proposal, which would change Cayman’s current district voting system; where four members of the Legislative Assembly are sent to parliament from West Bay and George Town, three from Bodden Town, two from the Sister Islands and one apiece from East End and North Side, has been the subject of considerable debate since the 2009 Constitution Order came into force.
Public meetings held earlier in the year by the Constitutional Commission seemed to elicit strong public support for changing the electoral system to single-member constituencies, sectioning off the Cayman Islands in 18 separate representative voting districts.
However, that proposal was not accepted during a review by the Electoral Boundary Commission, which decided to simply add two more legislative seats in George Town and one more in Bodden Town ahead of the May 2013 general elections.
North Side MLA Ezzard Miller, a member of one of Cayman’s two current single-member voting districts, said recently that he believes the 2009 Constitution mandates the “one man, one vote” principle.
Miller argues that it is unfair to his constituents in North Side, who can only vote once during an election, where voters in larger districts can cast three or four ballots per election. Miller has promised to continue to bring private members motions calling for the “one man, one vote” principle until government assents.
The United Democratic Party government, led by Premier McKeeva Bush, does not support single-member constituencies.
“I’m not going to change what I know works for something that I don’t know and that will also cost the Cayman Islands a lot more money to implement and run,” he says. “Do the people want the change?
There was recently a petition calling for single-member constituencies that got less than 500 signatures.”
Referendum
The 2009 Constitution does allow for people-initiated referendums [public votes] on government policy. Those votes, if they are approved by a “50 per cent plus one vote” majority of all registered voters in the Islands, are considered legally binding.
However, the threshold for even initiating a referendum in terms of the number of signatures required to be collected on a petition is very high. Also, the 50 per cent plus one rule is applied to the total number of registered voters, regardless of how many show up on election day.
For instance, if a public vote was held with 15,000 registered voters in Cayman, and only 10,000 showed up at the polls, a total of 7,501 of those 10,000 people would have to vote in favour of the referendum for it to pass – a 75 per cent margin of those who showed for the referendum.
Further, respondents to the governance survey indicated they wished for the right to call for a referendum in the Constitution itself “as opposed to it being dependent upon subsequent legislation for implementation”.
The issue here is that lawmakers would be left to essentially write the language of the referendum in the enabling legislation. Referendum proponents have been concerned this could lead to unintended results from a successful public vote.
Cabinet meetings
Survey respondents wondered if there could be more openness and transparency with regard to the way the business of the Cayman Islands Cabinet is conducted.
Some advocated that the governor, after consultation with Cabinet members [elected government ministers], be “required to publish a summary of the business of Cabinet within 15 days of a Cabinet meeting being held”.
Currently, Cayman Islands Cabinet meetings are not open to the public. Generally, ministers of Cabinet meet to decide which government policies and legislation to proceed with. The governor and premier together set the agenda for the meetings.
All legislation that comes before the Cayman Islands Legislative Assembly must first be approved by Cabinet members.
Related Videos
