CIG working to offset inflation, says minister

| 12/02/2019 | 65 Comments
Cayman News Service

Finance Minister Roy McTaggart in the LA

(CNS): Finance Minister Roy McTaggart said government was “committed to continuously looking for ways to offset the burden of inflation on the average Caymanian”, in response to CNS enquiries about the issue, which has raised real concern among readers. The minister told us that the rising prices Cayman faces are largely external in nature, driven by international fuel and food costs, which have been going up in 2017 and 2018 and are “outside the control of the government”. But with real GDP higher than inflation and a growth in jobs, the purchasing power of residents is buffered against inflation, he said.

He noted that the Economics and Statistics Office projects that the inflation rate will trend downward in the short term and the gross domestic product is strong and resilient in the midst of the rise in global prices.

“Real GDP is an inflation-adjusted measure that reflects the value of all goods and services produced by an economy in a given year, expressed in base-year prices, and is often referred to as ‘inflation-corrected’ GDP or ‘constant dollar’ GDP,” McTaggart explained in a written response to CNS.

“Real GDP growth in the first half of 2018 is significantly higher than the average inflation rate during the same period by 3.7%, thus providing higher purchasing power for the islands’ residents in real terms. Thankfully, GDP growth in Cayman is not a jobless growth, as more Caymanians have jobs, affording them a real buffer in coping with the vicissitudes of rising global prices,” the minister added.

He said government had continuously evaluated ways to alleviate the impact of these increases on Caymanians, particularly the most vulnerable, with a range of policy measures. The minister pointed to the more than 25% increase in financial assistance for the poor this year compared to last, a 5% cost of living increase for civil servants and an increase in the personal duty-free allowance from $350 to $500.

He also said long-running concession policies remain on CUC’s diesel, import duty for traders and building materials, as well as the cuts to trade and business licence fees, stamp duty concessions and a waiver on duty for private schools supplies.

But Opposition Leader Ezzard Miller, who has significant concerns about inflation and its impact on older members of the community on fixed pensions, told CNS that government could be doing much more to offset inflationary pressures.

He said that he believed the CIG is allowing the construction and development sector to overheat while at the same time cutting its own gains by offering far too many concessions to major overseas investors and developers. And he raised concerns about the problem of stagnant pay in the private sector.

Miller pointed to the significant increase in the cost of development, with an an average increase of some $50 per sq.ft in building costs over the last six months. He suggested a moratorium on hotel development to slow things down, as he believed the government’s focus on continually trying to attract inward investment is not helping local people, but fuelling inflation and creating an over-priced property market, pushing out local buyers and investors.

He said government had done nothing to encourage private sector employers to increase wages.

“While government has given civil servants a pay increase, it has done nothing to persuade or encourage the private sector to respond in a similar way and address the problem of wage stagnation for so many people,” he said.

The minimum wage was also well overdue for a review and there was a pressing need for consumer protection legislation, he added.

Older members of the community who are drawing pensions are particularly hard hit, when every trip to the supermarket presents new increased prices, Miller warned. With health costs and medicines soaring, government could do more to help those on fixed pensions by removing duty from medical supplies, he said.

Miller said he was concerned that government’s sole economic policy of driving inward investment is making inflation worse.

“Pushing for overseas investment when the economy is heating up is not always a good thing for everyone,” he said.

A rapidly growing economy is not always good, especially if most Caymanians are not able to benefit from that investment and are seeing themselves priced out of opportunities and their wages stagnating, Miller said.

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Category: Economy, Politics

Comments (65)

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  1. Anonymous says:

    Elderly dont have no where to run. Even government retirees cant affort home and food on their meagre pensions.
    This should be a livable pension as well.
    Votes count though

    • Anonymous says:

      Better business bureau anyone. If we had somewhere to turn for some remedy for faulty or sub-standard purchases that would help. Right now you are stuck with it. It is like ” how dare you trying to return it!’

  2. V says:

    The grocery bill keeps going up. That would help out us average folks.

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  3. Anonymous says:

    Raise interest rates
    Lower the cost of CUC

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    • They Pave Paradise says:

      Raise interest rates to encourage savings for retirement.

      Regulate gas prices as they are wholly ridiculous and completely unjustified.

      Look into importing supermarket items from low cost countries. Nobody could survive in Jamaica paying the prices here. Supermarkets can install Solar panels on their roofs and car parks.

      A big proportion of CUC’s cost is in distribution and fuel costs, so producing power where it is consumed using solar and battery storage is a silent and sensible option. Let CUC install and service but not as a monopoly.

      Insurance costs are excessive for property and health. Too much competition so no economies of scale.

      Regulate doctors and dentists rates. Some work just a few days a week.

      Cut Govt red tape. Government is the biggest driver of cost of doing business.

      I could go on but the above are self evident to Hon Roy and our MLAs. We expect action not sound bites.

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    • Mark says:

      Drop Fuel prices and CUC bill will go down. Look at the fuel bill for CUC charges, that is the most expensive itemized item on your receipt.

  4. Ritchie Rincon says:

    CNS this headline seems incredulous. This one is more representative of the ways thing really are:

    “CIG Working to Inflate Their Pockets”

    When CPI increases it only follows that CIG increases spending. With the island becoming ever increasingly urbanised CPI will exponentially increase. CIG are facilitating this, playing up to Billionaire developers who cater exclusively to the upper class. Money is the drug of choice and CIG became hooked many moons ago.

    The class divide is very obvious now, and only blunt decisive action will help the middle and lower classes catch up.

    CNS NOTE: To be clear the headline represents the content of the story which is the minister says government is doing something about inflation. Now whether that is the case or not is indeed another issue but we asked the questions and this is what the minister told us. Hence clear use of ‘minister says’ in the headline.

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  5. Anonymous says:

    free solutions:
    deregulation
    increase competition
    allow sunday trading
    bring in daylight savings time
    allow uber

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    • Anonymous says:

      Solid points minus daylight savings. Developed Countries are attempting to remove transitioning to Daylight savings. It has no economic benefits

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  6. Anonymous says:

    Fuel and Food are the two areas where the CIG could do more. They can’t control macro global forces, but they can crack down on the cartels that make necessities inordinately expensive for everyday folk.

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  7. Hand Over Fist says:

    Hi CNS, maybe your headline should have read:
    “CIG Working On Ways To Inflate Their Pockets”
    At least this suggested headline sounds more believable, don’t you think?
    CNS Note: See above comment

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  8. Anonymous says:

    politics…guarding their constituents…the rich
    ..i am a native…will be looking for somewhere else to retire…you cant win here…they running us out

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    • BeaumontZodecloun says:

      You may be a native, but you don’t sound like a patriot. I will never abandon my country to the scoundrels nor give up on Her. I am Caymanian also, and will be here, influencing things in a positive way in any way I can.

      Go ahead. Flee. Good luck finding some place where you can retire with as little relative crime and stress as here. Our home isn’t the sleepy little laid-back place it was 30 years ago, but it’s a damn site better than just about anywhere else. Costa Rica, Panama, Thailand, Cambodia, those are places where your dollar might currently go further than here. All of
      them language is not much of a problem, crime not bad.

      I am betting on the Cayman Islands, where I will live and die. I urge you to not give up. “They” can’t chase anyone that won’t run. Stand your ground. I and others like me will stand with you. We will get through these days. We are a resilient and resourceful people. We need the expats, but perhaps not quite so many of them.

      The world is in turmoil. Stay and make a difference.

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  9. Anonymous says:

    The solution is that we all get to eat cake because veggies cost too much. Prepare the guillotine.

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  10. Anonymous says:

    HaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHa…prices are external and out of their control…HaHaHaHaHaHaHaHaHaHaHaHaHaHaHaHa…

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  11. Anonymous says:

    I am a Caymanian that will not be able to afford retirement here. The way things are going only the super rich will live in Cayman. I plan to move to the UK and take advantage of their benefits system.

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  12. Anonymous says:

    Can someone explain this to me please?

    If this is true..

    “He also said long running concession policies remain on CUC’s diesel, import duty for traders and building materials, as well as the cuts to trade and business licence fees, stamp duty concessions and a waiver on duty for private schools supplies.”

    Then explain this..

    “Miller pointed to the significant increase in the cost of development, with an an average increase of some $50 per sq.ft in building costs over the last six months. “

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    • Anonymous says:

      It’s high end construction.

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      • Anonymous says:

        So if I use a pallet of bricks, a gallon of paint and some shingles and build a regular house it’s $25 per sq ft but if I use the same materials but say I’m building a hotel it’s $75 a sq ft?

        WTF?

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  13. Tell it like it is says:

    People did you hear that inflation, high Prices high gdp etc. Real terms Mr. Minister: your salaries are over inflated for what ona do, ona can afford the high prices because of your exorbitant salaries and you all,ain’t gonna do nothing to assist in lowering the cost of living for the people simply because it takes too much effort. So people expect the cost of food to keep rising in the short and long term, because those who sell you the food not reducing their profit margins for youse. As for the rest of flubber in the article that is exactly what it is flubber.

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  14. Anonymous says:

    Agree with Mr. Ezzard that the minimum wage should be increased to a living wage, say $10/hour. Yes, that will raise the cost of goods, however if our goal is to get more able-bodied unemployed Caymanians jobs, and get more people out of the NAU, then this is necessary.

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    • Anonymous says:

      How about just telling immigration not to grant or renew permits to anyone in a commercial business earning less that CI$10/hour. Imagine what that would do for entry level jobs for Caymanians and apprenticeships. It could be done tomorrow. I dare ya!

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      • Anonymous says:

        Yea, all those aspiring Caymanian Dive instructors, grocery workers, laborers and maids cant get a leg up in this economy!

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      • Anonymous says:

        It’s the same thing. It doesn’t matter so much how you establish a minimum wage. It matters that the minimum wage is a living wage.

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    • Anonymous says:

      7:37, if the min. Wages is raised to $10, what going to happen to old folks that
      needs helpers and don’t have that kind of money to pay for their caretakers ?
      Will u pay it for them ?

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    • Anonymous says:

      But if I’m not mistaking it was Ezzard who brought the six dollars minimum wage.

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    • Anonymous says:

      Issue isn’t raising wages it’s lowering the cost of goods.

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  15. Anonymous says:

    Hey Roy, how about we stop importing poverty so that Caymanians can actually aspire to a living wage, rather than having to compete for CI$6 an hour with downtrodden masses from all over the region and beyond for every godforsaken role in our community. And no, when you start at $6, raising salaries 25% in commercial enterprises is NOT going to increase the cost of living. It will however increase the ability to live.

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    • Anonymous says:

      Of course it will increase the cost of living cause the owner isn’t going to take the hit in reducing his profit margin. He will just transfer the increase in the cost of doing business to the cost of the product/service.

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  16. Anonymous says:

    Cryptocurrencies solve the problem of inflation. It’s time to move on from the broken fiat currency systems.

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    • Anonymous says:

      6:35, You must be joking. Last week in Canada 115,000 people lost over $200 million of cryptocurrency. No one knows what to do and Canadian financial regulators washed their hands of any responsibility. 115,000 people have lost everything. Any ideas bright one?

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      • Anonymous says:

        That’s because it’s just that secure. Loss prevention measures should have been in place for those poor folks. The error falls with man not with crypto.

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        • Anonymous says:

          10:45, There is absolutely nothing you can do about hacked ex-changes. A few billion have been lost the past few years and the Canadians are the latest to be hit. Warren Buffet said a year ago that crypto-currency was “rat poison” and a lot of people are taking the poison.

          What loss prevention measures would you have suggested the 115,000 QuadrigaXC people should have taken?

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          • Anonymous says:

            It had nothing to do with a hacked exchange! The guy who had the password for the assets died, thus locking them away forever.

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            • Anonymous says:

              Don’t be so certain about that. There is more to this story than meets the eye. A number of crypto wallet movements happened after his so called death at 30 years of age.

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            • Anonymous says:

              In 2018, $2.7 million was stolen from crypto-exchanges every day.

            • Anonymous says:

              Some say orchestrated his death…. but that’s none of my business.

              Although, it’s THAT easy and things like that go on in the world; therefore, cryptocurrency is not ideal. Yet.

              It also wasn’t just Canadians that lost money.

              • Anonymous says:

                But it is your business if you are involved with crypto currencies because if it happened to 115,000 people it could happen to you too. There are just too many flaws in the bitcoin system that open it wide open to fraud and corruption.

      • Anonymous says:

        $200,000,000?? That’s like $1700 per person average. I would be careful saying they “lost everything”. I don’t think they lost the house.

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        • Anonymous says:

          According to media reports from Canada, many people lost their life savings. They took all of the rat poison rather than just a bite.

    • Anonymous says:

      How many people in CIG can even spell cryptocurrency?

    • Anonymous says:

      You’re as well to go and play roulette or blackjack. Potentially fun if you have loose change to spare – not the answer to a national cost of living crisis.

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    • Anonymous says:

      For those of you who think you are financial wizzes when it comes to crypto currencies just take a look at the chaos in Canada related to what was the largest crypto currency firm in Canada. BE CAREFUL OF THE RAT POISON.

      http://www.cbc.ca/news/business/quadrigacx-1.5019176

  17. Anonymous says:

    We are now mere months away from the second anniversary of the 2017 election
    Very little has been done for Caymanians in the past 2 years
    Including on inflation and stagnating wages in our economy

    If the government takes 10 years to implement things they are constitutionally required to do ( District Advisory Councils and the Standards in Public Life Law)
    Then they will likely never handle issues that they are not bound to address
    such as these

    Our system of democracy seemingly is DOA (dead on arrival)

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    • Anonymous says:

      This is correct. They are not even doing everything they are required to do. They are doing what they want to do. Anything serious that would make life better is too hard and no one can make them. That’s their attitude.

  18. Anonymous says:

    do-nothing ppm…keep on doing nothing.

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  19. Anonymous says:

    How about we start with adjusting our interest rate’s starting point. With the number of increases to the prime rate in the US in the last 2 years it has made a sensible purchase feel way less sensible.

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  20. Anonymous says:

    Neither is importing all the low ball labor to help the greedy developers. What happened to the builders bill that was going to enforce fair practices, job safety, pension & health payments in the construction business? Instead you have the unscrupulous builders just doing as they want with all the “cheap sub contractors”. Look at the new warehouse right behind the labor & pensions office yet they can not get out of their office to see all the violations. The owner of the project could care less as long as they get a cheap price.

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  21. Anonymous says:

    Roy. Three ideas: Reduce the cost of health insurance, subsidies and increase the quality of public transport, reduce the duty on diesel sold to CUC. All will reduce the cost of living, effectively, for Caymanians.

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  22. Anonymous says:

    Raise the minimum wage and give people a livable wage. People who work 8 hours a day should not have to live in poverty in the Cayman Islands.

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    • Anonymous says:

      Particularly if we are importing them and then condemning them to poverty all while forcing them to compete for scraps with poorer Caymanians. The government mismanagement of this is outrageous and is doing long term structural damage to our economy and society.

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    • Anonymous says:

      No…if you can’t make it on whatever salary you are making then get a second or a third job. That’s what people from around the world do. If that isn’t enough then look into advancing your skills. Go back to school. Take up an apprenticeship. Google and learn something. Low wage jobs aren’t meant to be permanent. These are truly intended for students learning and moving up in life, the elderly who are retired and want to be useful and a small percentage of imported labour. If we are heavily relying on imported labour, then maybe your skill set isn’t as valuable as it once was. This is just normal evolution of jobs. Once upon a time Cayman had no jobs and people went to sea. They didn’t just ask the government to increase the minimum wage. Other people get inventive and create something or start a business. If you can’t get a loan, start a go fund me or a kickstarter.

      It is survival of the fittest and if people are just too lazy to do something about their situation then that is not the governments problem.

      Now regarding the systemic problem of white collar expats ring fencing hiring practices/promotions/internal training opportunities, that is something the government should get involved in.

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      • Anonymous says:

        10:31, Ever tried doing an apprenticeship in the Cayman Islands where a trade / vocational school does not exist? You are talking like a person living in the UK, America or Canada. Not someone living in the Cayman Islands.

        Give people a livable wage and many more people will get economically ahead.

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    • Anonymous says:

      Raising minimum wage will not solve the problem. You have to lower the cost of goods.

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  23. Anonymous says:

    Man, that PPM balloon sure does soar on all that hot air.

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    • Anonymous says:

      9:08 It reminds me of that 1960s song by the Byrds, ‘Eight miles high and when you touch down you’ll find that it’s stranger than known.’ Sooner or later this BS is going to turn round and bite us all in arse!

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