2014 in Review: sense and cents

| 02/01/2015 | 0 Comments

(CNS): Finance Minister Marco Archer continued to gain respect across the political divide, for both his ability to deal fairly with opposition members and in his apparent success in getting government spending under control. However, reports from the Office of the Auditor General (OAG) revealed the staggering amount of unaccounted for spending during the last administration.


Following the release of more reports from the OAG that show government is falling below standard when it comes to good governance, transparency and accountability, especially over how it spends tax payers’ money, government committed to improvements and doing a better job. Statutory authorities and government companies (SAGCs) cost the Cayman taxpayer over $100 million every year but Auditor General Alastair Swarbrick found a complete lack of accountability in most of them, which appear to be failing on the good governance front even more than core government.


The Ministry of Home Affairs bought 26 new vehicles for the police, prison, immigration and customs departments, spending around three quarters of a million dollars to replace what officials said were older, less efficient and less reliable vehicles.


Former police commissioner, Stuart Kernohan, who was sacked during the discredited internal police corruption enquiry, Operation Tempura, was given a secret pay-off to settle a legal claim that he was wrongfully dismissed. Thought to be a significant sum, the exact figure was kept under wraps.


Two years after legislators passed changes to the legislation governing how much tax people pay on goods imported into the country, officials implemented the Customs Tariff Law (2012 Revision), which came into force on 1 March, a month after the implementation. The changes in the law introduce an internationally recognised tariff classification system comprising around 5,000 codes relating to different types of goods and commodities. The new customs code was found to be hugely problematic, causing long delays and creating another bureaucratic barrier to business.

Government announced its intention to spend over $155,000 on another review of the public sector to see what services could be sold off, delivered in partnership with the private sector or streamlined to be more efficient and to review the reviews. Ernst & Young was selected following a competitive tender to carry out the latest assessment in what was described as phase five of the rationalization programme regarding the goal to slim down government and the civil service in general.


The customs department was accused of ruining a wedding by confiscating a bride’s gown, which had the potential to do serious damage to the Department of Tourism’s push to make the Cayman Islands the destination of choice for weddings. The customs boss stated that the groom should have declared the dress when he arrived and paid a deposit. Because he did not declare various wedding outfits and have a receipt for the dress for his bride, who is a resident on the island, officers seized it and demanded $500. Customs officials later confirmed that all couples visiting the Cayman Islands to get married needed to pay either 22% duty or leave a 30% deposit on the value of their wedding outfits. However, the government acted quickly to amend the customs tariff law to permit the duty-free importation of new and used wedding apparel by tourists arriving as part of destination weddings.

The UK approved the Cayman Islands government for its 2014/15 spending plan, which Minister Archer said does not include any new revenue raising measures. He said government expected to exceed the more than $100 million forecast surplus for 2013/14 by more than $7million at 30 June.

The Cayman Islands Government expects to spend $4 million over the next two years just on the process towards implementing a waste-management solution. According to the Strategic Outline Case (SOC), officials believe it will cost government $2 million or so in each of the next two financial years to cover the fees and other costs of the various consultants, reports, reviews, environment assessments and the actual procurement of the project. In the first step towards a full national waste-management solution, which is expected to cost more than $100 million, the SOC reveals how far Cayman is from tackling not just the George Town landfill but dealing with future waste.

Government gave core civil servants a one-off bonus payment to reward public sector workers for their part in meeting the targets of last year’s budget and their work towards presenting this one.


Between 2009 and 2012 the UDP government ran up a bill of at least $8,576,554 on travel and hospitality expenses, a report from the OAG revealed, but because of poor record keeping the true figure is unknown and could have exceeded $10 million. Swarbrick said he couldn’t be exact because of the very poor management as well as what appears to be a laissez faire attitude to the public purse when it came to travelling by both ministers and civil servants. Despite the constraints on government coffers at the time, Swarbrick and his team found travel expense increased during these three years by some 10% and well over half of the cash spent on travel was run-up by the finance and tourism ministries, both of which were headed by McKeeva Bush.

Swarbrick found issues that go well beyond accounting incompetence and look more like abuse. A spokesperson for the Anti-Corruption Commission (ACC) said that members would be taking a look at the findings and the premier said that the Progressives-led government would work with the deputy governor to implement recommendations made by the OAG.


Government said the development of airports on all three Cayman Islands could be accomplished with funds that the Cayman Islands Airports Authority has in hand or with expected income, without the need for borrowing, and was estimated to cost around $122 million over 18-20 years, which includes $40 million for maintenance. The expansion of the terminal at Owen Roberts International Airport on Grand Cayman was said to be a priority, with the first phase costing around $50 million, which would increase the terminal footprint by about one third.


The PPM government opened a public discussion about revising the Sunday trading laws. Commerce Minister Wayne Panton said he wanted to modernize the law and make it more appropriate for the current business environment. However, the following month the premier said that while the law would not be amended to make Sunday a regular trading day, it would be changed to legalise the current limited trading that takes place on Sundays at corner stores and gas stations.


The local gross domestic product (GDP) expanded by an estimated 1.5 percent in the first quarter of the 2014 financial year, according to statistics published by the Economics and Statistics Office. The central government’s total outstanding debt also fell to CI$558.3 million as at March 2014 compared to CI$582.6 million a year ago.


Cayman’s dependency on fossil fuel was sealed for another 25 years after CUC won the bid to supply itself with the 36MW of extra power the firm needs to meet its future obligations with a new diesel generator.

The premier gave his first real public indication that the PPM administration will not be adopting a large number of the measures recommended in the controversial Ernst & Young report. Alden McLaughlin said that the report contained recommendations only and government would not do anything that it believed would not be in the interests of Caymanians to favour one sector of the community.

Government earnings were over $2.5 million more than expected and spending was down $5.5million less than projected in the first quarter of the 2014/15 financial year.

The OAG found that two ministries in the previous UDP administration were, between them, unable to account for more than $1 billion of public money as a result of the continued failure of the financial management systems, abuse and incompetence. Alastair Swarbrick said the Ministry of District Administration, Works, Lands and Agriculture has never produced a reliable or credible set of accounts since the introduction of the Public Management and Finance Law, while the Finance, Tourism and Development Ministry has failed to account for a broad variety of transactions.


The Education Ministry committed to spending around $300,000 on both a baseline inspection of all government schools and a review of the system by KPMG. Minister Tara Rivers said the consultant review will also examine alternative models for managing the education system and may see some schools put under private management, copying charter or academy type schools in the UK

Civil servants will be getting a 4% cost of living allowance (COLA) pay rise in the next budget year, the premier has promised.


Import duty concessions on building materials on all three islands as well as a 100% stamp duty waiver in Cayman Brac have been renewed. Government announced Monday that in an effort to continue to stimulate economic activity, certain duty concessions have been extended for another twelve months to 31 December 2015.

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Category: Economy, Politics

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