Public purse will pay for cruise port, warns Miller
Cruise ship and tender in George Town Harbour
(CNS): The opposition leader is warning that the people of Cayman will be footing the bill for the cruise port piers, one way or another, if government insists on going ahead with the controversial and costly project. Concerns remain in the community, not just about the devastating impact the project will have on the marine environment, but also the stress on infrastructure and visitor attractions. Tourism stakeholders worry about the negative impact it will have on our booming stay-over tourism business, and those outside the business worry how the financing model will eventually hurt the public purse.
Ezzard Miller has been opposed to the project largely on the basis of cost. The independent MLA for North Side and leader of the official opposition group believes that the project could cost as much as $350 million, as Tourism Minister Moses Kirkconnell has admitted that Cabinet simply does not know what the final bill will be.
And, Miller told CNS, whatever financing model the government and its potential cruise line and development partners come up with, the public will be picking up the tab in the end.
He said taking passenger fees will cut the Port Authority’s cruise earnings, which in part help fund wider port operations, including cargo, so fees for local business will be increased or other fees and taxes will need to be generated to plug the whole. Miller also believes that the strategic and business cases published by government to support its case for the berthing facilities do not justify the costly and risky project.
“The Cayman Islands Government has not justified the need for cruise berthing facilities,” he said. “Ministers are bragging at every opportunity how successful the cruise business is at present.”
Miller supports overall improvements to the experience of passengers through the tendering process, shore handling and the facilities, but said that the development of the dock was not necessary to maintain a healthy balanced cruise sector, given the risk to public finances or the indirect fee increases that would need to be raised to pay for it in the end.
“It could cost over $350 million to build two piers to accommodate four Genesis class cruise ships,” he stated. “The money will come from the government coffers and the people will pay. Whether it is in one year or in 50 years, whatever happens, the liability will fall on the public purse.”
Miller said he disagrees with claims by government that there will be no risk to public sector cash because the scenarios being presented suggest that all of the fees collected will go to the cruise lines to finance the piers and remove a direct line of subsidy from cargo operations. He said other options, such as funding it through introducing a transshipment service, is “nothing more than a pipe dream”.
He said that the Port Authority will need to find new money from somewhere if they lose the passenger fees and that will come from the people in one form or another.
“No decision the size of this should be made when the people have no idea what will be built by who and how much it will cost,” he said, noting that the developers of this project will be in charge of the port area for years. “There is no government plan. What are the parameters of this proposed deal? We have no idea.”
Miller said the people should know what government is planning but all of the talks surrounding the potential model for the project are being conducted behind closed doors.
The last official input from the public was almost three years ago, when the Department of Environment conducted a public consultation. The results of that survey of almost 500 people found that more than 73% of the people were opposed to the project and the majority of those in support worked for Kirk Freeport, a major retailer and one of a handful of merchants that supports the project because they believe it will boost their sales.
The limited information in the public domain about the costs, who will be involved and how the talks are going with the cruise lines has been a cause for concern in the local community for some time. Pundits such as Johann Moxam, a former Chamber president and political commentator who has been vociferous in his objection to the project, are all concerned about the lack of information and the potential cost.
“This is a highly emotive topic and it feels like this proposal is already a fait accompli without the level of transparency that was originally promised by this and the previous government,” he told CNS. “Cayman cannot afford to get this wrong. We will all be left to pay the bill, so every Caymanian and business owner should be monitoring this discussion. It is naive to think that cruise lines will pay for this entire project and just hand it over to government,” the financial expert added.
Moxam said this government was doing the public a disservice by not being transparent about the project, given the overwhelming evidence that an expensive cruise berthing project is not a priority for most people.
“It is disingenuous of the government to continue painting a rosy picture when they are unwilling to provide fundamental information,” he said, adding that the failure to answer basic questions about the financing model speaks volumes. “If the costs and scenario was as positive as they would have the public believe, they would be bursting at the seams to share the information and score much-needed political points.”
Moxam said he was concerned that the project is being steered by those with significant commercial interests.
“Lets call this what it is. It is government-sponsored corporate welfare geared to benefit a select few businesses and key supporters,” he said. “It is too large and expensive a project for us to be threatened by the cruise business owners.”
Moxam told CNS, “We need to make decisions based on a clear plan for tourism that balances the costs and benefits of stay-over tourism with the costs and benefits of cruise tourism.”
Around the region travel and tourism experts are increasingly questioning the benefit of cruise infrastructure that is called for by cruise lines because the body of research into the socio-economics of cruising grows as the sector matures.
Martha Honey, the Executive Director of the Washington-based Center for Responsible Travel (CREST), which is in the process of completing a study on fifty years of cruise tourism in the Caribbean, said that stay-over tourism is still far more valuable than cruise tourism and regional governments should invest in sustainable options and review their attitude towards cruising. She has advocated an end to public funds being invested in cruise infrastructure because of the limited benefits to local people.
Questions have been raised here by politicians and pundits for years about who would really benefit from the expansion of cruise tourism and who would be harmed.
It is becoming increasingly common to hear politicians and community leaders, not just in Cayman but around the region, question the increasing emphasis on the ever-larger cruise ships, which are marketed as destinations in their own right, and their manipulation of ports of call.
Many believe that the lack of trickle-down revenue to local operators and small business is one of several challenges surrounding cruise tourism and is fuelling growing anti-cruise controversies in several destinations. The question is, will Cayman be the next port to live to regret the costly and damaging construction of piers?
Category: development, Government Finance, Local News, Politics
It always seems to me like the people pushing for the dock are also the ones who expect to make the most money out of it. If the cost is really going to be in the order of $350million anyone who can hitch a ride on that gravy train will be set up for life.
I’d love to know exactly who those profiteers would ultimately be, and their connections and family / friends… and their connections to those pushing this entire foolish project. I suspect we would end up with conflicted politicians, especially on a small island such as this. Very fishy.
If the cruise ship berthing facility becomes a reality the quaint little port town overlooking the sea will be a thing of the past. Instead it will be looking out at a dock where those in favor are the jewelry store owners and the Minister of Tourism. It will be the final nail into the coffin which was once George Town.
Please do not allow the fear and greed that the pro dock lobby have spread. Cayman does not need a dock and the infrastructure is overwhelmed now. Save the money and use it for the Cayman people not a few merchants.
meanwhile the Romans have their lavish parties in secret….?
Corruption is systemic in the Cayman Islands and drives the decision making process. Always has always will be too many pigs in the troughs to feed
Do you think it’s an accident that after years of granting concessions and negotiating these type of massive deals deals nobody in successive elected government or Cabinet and the civil service that handles the administrative process can provide any details of these deals or track benefits to the Cayman Islands?
In the case of the port, government need to publicly share information before they commit the country to a project of this magnitude and costs. How is this being handled any different to the China Harbor dock negotiations that contributed to McKeeva Bush’s down fall as Premier in 2012?
Corruption takes many forms and is institutionalized in the Cayman Islands. Hence, why none of the current or past elected officials want the Standards in Public Life Law to come into effect. Roaches prefer operate in the dark and the lack of accountability is the oxygen than makes them braver every year.
Reading all these comments and many others it is abundantly clear that the public are against this project. Nothing will happen before the next election so that is the time to end this Kirkbot fantasy.
Piece of the pie in the sky we surely can use more cruise ships everyday 50000 people no problem mon i say yes it can be done any ideas for sale
Are you kidding? I think it’s a terrible idea,and it does seem that many people are averse to this project, but Dart apparently have this already arranged so don’t be surprised to see this get pushed through. Despite the potential damage to SMB both short and long term.
Dart was offered the projected and turned it down once he crunch the numbers.
At the end of the day the public pays for all Govt projects either directly or indirectly so I don’t know who would be surprised by this?We need the port it’s very disheartening to see lines and lines of visitors waiting on a tender to take them back to thei ship.
You mean the people pay; the government spends.
Well said Mr. Moxam the cruise dock project is an example of government sponsored corporate welfare for a handful of businesses. Just like many other things that happen in cayman. It is how government has been making decisions for decades but the public are finally waking up now and calling out the BS!
John is insightful and very brave he’s consistently asked questions and raised concerns on topics that I agree with. The comments are spot on why this port is being pushed hard by ppm. We need the standards in public life law now. The Auditor General has to investigate the dock project before it’s too late.
Ezzard Miller for Premier
I’ll be proud to say I’m Caymanian when Ezzard becomes Premier – he’s the only one of them that is for a sustainable future for Cayman.
The cruise port will produce more problems for Cayman.
Do the math, the family that owns the tender boats makes approximately 75K USD a day.
15 dollars a head from the cruise industry, 10 from gov. You do the math. 3000 passengers x’s 25 USD per passenger. Andf thats only two boats and only unloading half the passengers! That is what the government would be earning. Not the family who owns the tender boats! Or in terms anyone can understand. If they use that profit to make caymanian jobs. That’s 2 jobs created per day, x’s 365 days or 730 Caymanians employed!!!! Forever. Great dent in unemployment huh?!
The dock is not going to be the environmental catastrophe everyone is scaremongering about. The dock is 1% of the island. Good god, does anyone use common sense any more?
and the final nail in the argument. What happens in 20 years when there are no more smaller ships and the cruise industry has finally moved onto the bigger ships. Because the bigger ships make more profit for them. The bigger ships are unable to dock here. The cruise industry is dead in cayman. How many jobs will Caymanians lose?
If the government waits 20 more years the dock will cost a billion and at that point the government will not be able to afford it. And your cruise industry dies. Now you better be really nice to the staycationers at that point. Because that is all you will have left. Forget the fact that cruise ship passengers are great advertisement for Cayman, as well.
Use your heads. The dock needs to be built. It is not going to damage the environment like those who will have you believe.
Gee how many islands have built them. They all still have their environment.
Even so Miller can get the money borrowed so as usual will use the people to build a useless dock where natural storms will batter it and guess whom be major contracting and such work permits to increase to pay mla another pay increase all this and more happens in the pass governance PPM is the Greatest there chioce i would approve over opposition Miller and others
PPM RULES
What?
There are far better ways of building docks and cheaper than what examples given
Lots of places in the world that has a cruise/port docking cant even dock when bad weather so what other drafts you may have to the table that will cost less be effective if you dont know if you ask me its simple but im not in the league to wave over education and money or split decisions over tendering situations figure it out $$$ is not the figure to solutions
100%
Just like how they’re proud of the white elephant of a school they built in frank sound that was originally budgeted to cost $68 million and wound up being $110 million?
This article is the best I have read on the pros and cons of an expensive mega dock. Mr. Miller and Mr. Moxam have pointed out how the building of this un-needed dock will never benefit the people of the Cayman islands…… except certain merchants and a handful of people associated with the operation and maintenance of the dock. Let’s face it, folks…. Grand Cayman is too small and undeveloped to support more cruise line pedestrians at this time. Anyone who has been in George Town when there are thousands of people wandering around knows that more people would lead to gridlock! We don’t have enough of ANYTHING to warrant such an increase of bodies…. and what do we (the ordinary people of Grand Cayman) get out of it? We get very little other than being inconvenienced!
If more money staying on the island is our objective, let’s get more stay-over visitors! Make Grand Cayman attractive for them.
Sad that the government is this short sighted and inept but it happens with everything they touch. The public is left to pay the debts and live with the mismanagement while they enjoy guaranteed pensions for life.
Why do voters keep electing the same people who do the same things they complained about?
One really has to wonder when our Cabinet plans to enact the Standards in Public Life Law? What is that date so we can put it on our calendars and schedule a collective sigh of relief?!? Nobody wants to turn on the lights and squash these cockroaches.
There isn’t enough of anything in Cayman to support the addition of 10-20,000 more cruise passengers every day. Not enough beach, not enough sights, not enough stingray city, not enough downtown waterfront, not enough parks, etc.
Just Another Day in Absurdistan
Do we not see that when Government do these kinds of projects they are not doing for profits or the benefits of everyone. They do them for bragging rights and a few to benefit from it .
Simple math. Annual cruise ship passengers are about 1.4 million. If you charge an extra $10 per passenger for a port facility capital improvement fee you generate $14mm per year. Straight line math and a 25 year bond will pay off a $350mm project – using only fees paid by passengers. No cost to locals. Can actually pay it off sooner if the fee is raised every 5 years. Cost is not an issue – make the passengers pay.
‘make the tourist pay’…it should be the motto of the cayman islands…
What about the overheads over those 25 years? Staffing, running and maintaining the facility won’t be cheap and on top of that there’ll be the interest on the money CIG will have to borrow to pay for the project. The other thing you’ve omitted from the calculations is the simple fact that nobody knows what the cruise lines are planning five years down the road let alone 25. It would only take one major cruise line to decide Grand Cayman is no longer viable as a destination for the wheels to fall off this fantasy.
Simple fact. The cruise lines as in other countries will never agree to this.
The calculated life of the project is 20 years. (All of the calculations, etc., are over a 20 year span because after that upkeep costs go up.) Thank you for proving that the dock won’t work because we’ll still have 5 years to pay off the first loan, I mean bond, when we need the next one to pay for repairs.
Dart own almost all why not drop the bill on him
Next time I want something built I will drop the bill on you. Sounds fair to me.
Aw, take a joke.
I have the same concerns as Miller and Moxam here. And the study by CREST is interesting and logical. Grand Cayman is a very small island and so can only accommodate a finite number of visitors, a small number when compared to many other locales. We are already over capacity at seven mile beach and stingray city / sandbar, which are our two most popular tourist sites.
Of genuine concern also is; as others have voiced is CIG’s poor track record at handling even moderate projects (good examples voiced as the high schools and now garbage collection / disposal) woes.
Add to this that the wealthy merchant class (including especially one local family) are to gain the most by more cruise ship passengers and the Tourism Minister and Deputy premier is of same family (should he be the leading Govt. person on this?…) and the lack of hard data or transparency….and we have a real long term mess brewing.
One that us and our children will be left to pay for for many years.
Seems to me we should be enhancing things for our stay over visitors and solving our problems with the dump and education….which both negatively impact our tourism product.
Until CIG can show conclusively and transparently the need / cost / benefits of this to the wider Cayman community, I cannot support this project.
Funny you think the CIG gives a damn whether Caymanians support the project or not, like I said last year there should have been multiple ballot initiatives on the 2017 Ballot relating to government projects and laws
This government of “national unity” took in two independents to bolster their numbers and will now proceed to push the PPM agenda uninhibited ( Jon Jon is silenced as a minister, though he is meant to be advocating and overseeing the environment and Austin is evidently trying to play nice) The opposition is ignored by the government and the media has little effect on holding our representatives accountable
The people have little say in any policies, the MLAs have little interest in your opinions on any policy never forget that
Did this statement come out of Alden mouth or Miller’s mouth ? It sounds like what would come from Alden not Miller .
I said when Alden was agreeing with Miller on the issue of Education and putting the opportunities back in the Caymanian hands that he Alden was just sucking Miller into his fold to get what Alden wanted .
I do not understand this fascination with encouraging the ‘Genesis’ class cruise ships to come here by extending the port facilities. It is common knowledge that the cruise line companies are leveraging more money for themselves at the expense of the cruise ship destination, they get their commission out of every tourist facility at the destination at the expense of the local operators.
Extend the pier? No! Extend the runway? Yes, that is where the future lies – stayover tourism.
The one point that the people fanatasising about turning GT into a ‘Genesis’ class destination miss is that the latest generation of cruise ships are floating resorts and designed to be self-sufficient. If anybody had bothered to check some of the current itineraries they might have noticed that the number of stops has dramatically reduced in the past couple of years and also that some of seven-day cruises actually spend 80% of their time at sea. The fact is that these vessels operate most efficently and make most money for their owners at sea. Bluntly, the people claiming that a cruise dock will guarantee the arrival of mega-liners in the future are delusional. This is the old, ‘If we build it they will come,’ mentality and trust me it doesn’t work – I’ve seen way too many tourism projects around the world that fell victim to similar thinking.
Let this thing die already. Build a trade school for your people. Finish the high schools, institute a proper public transportation system, fix the dump, etc. etc.
YESSS! If you are Caymanian can you please run for office?
This is like building a space ship with current technology and setting out hoping to find a new planet to settle on. On a whim and a prayer this administration is wanting to build a new cruise port just because they’ll get their name on it. Why are they so deaf dumb and blind, we missed the proverbial bus a decade ago. This will be the shackle that breaks Cayman’s neck and will leave a massive financial scar decades to come if it gets built. 350M is a pittance compared to what it will take to revamp George Town and the island’s other infrastructure in order to do this right and take full economic advantage of the opportunity. Anyway, who wants to see 15k tourists per day gridlocking George Town, show of hands please?
Maybe UK want us to jump off this cliff? Be very careful what you wish as this is certainly not in Cayman’s best interest right now, especially when we have neglected to upgrade other pieces of critical infrastructure for so many decades.
Same can be said for the stupid pie in the sky Breakers terminal they talking about.
No one spends 350 million without expecting a return on investment. It was considered that the public purse will pay for it, has it been forecasted how long it would take to break even? How many cruise ship passengers does it take to make $350 million in revenues?
Preface: I am neither for or against the port, and have zero qualifications to speak on the topic, but here’s some math.
Assume each cruise visitor generates $25 to $100 in revenue. Realistic? I don’t know the actual revenue figures.
$350,000,000 / $25 to 100= 3.5-14 million
Assume one ship offloads 5000 passengers.
3.5-14 million / 5000 = 700 to 2800 ships
700-2800 / 4 = 175 to 700
Assume 4 ships per day in port offloading 5000 passengers who each generate $25-100 in revenue, it would take 175 to 700 days to break even.
“generates $25 to $100 in revenue” Revenue to who? Not the people who paid for it!
If only it were that simple.
If only everything were so simple. Excuse the math that I vomited out – it was just to spark convo.
Like I said, don’t send a scientist to do a financial advisor’s job.
Charles Darvin , you are completely right that you have zero qualifications to speak on the topic
Ironic coming from an anti-vaxxer, please state your qualifications doctor
Who does? Common sense needed and none being shown by the kirkbots…trot out any old rubbish to support it with no facts. Like Trump. That’s when you know it’s wrong.
Lol I did preface by saying I have no knowledge about how a port is run, that’s not my specialty. It sparked interesting conversations, which was the point regardless of the flawed math.
As do the politicians, whose perpetual whims and failings they automatically assume we will pay for.
The reality is far worse than that I am afraid… Assuming the $350mm is CI$, and the current head tax is, I believe US$14 (approx CI$11.50). Now, using your same calcs:
350,000,000/11.50 = 30,434,783 passengers
@5000 (a bit high but run with it) per ship = 6087 ships
@4 a day (again, generous – over the year it is more like an average of 2 per day, but run with it) = 1522 days = a little over 4 years
More realistic figures for ship capacity and visit amounts would result in a figure closer to 7-8 years. And that is just to recoup the cost – no ongoing expenses, maintenance, improvements and things they won’t think about when they build it like shade – cause we all know the tourists are going to love a long walk on a concrete slab in the heat or rain…
And all that time, that same money, that previously went to other areas of the economy, is no longer flowing there, it is paying back a massive debt. So that money needs to now come from somewhere…
$350,000,000 / 75000 residents = $4670 per resident. Not a huge sum, but be assured this will translate into say a 20% increase in business licensing and permit fees, or a 30% increase in duty… All costs to the people as is correctly noted. And once those increases are in place, they will stay there…. LONG after the $350,000,000 is paid off…
The economics just do not support the port dock plan, plain and simple. Even if funded by someone else, they will want to make the money back – either by diverting head tax, increasing fees, or another manner which will no doubt trickle down to hit our pockets.
And the best part – with all those extra tourists, we will need a better infrastructure, roads, sidewalks etc. And then there is the additional waste we will have to manage…
And then, fingers crossed none of these ever happen – another global financial crisis cuts tourism spending, an acto of terrorism shuts down international travel, a hurricane hits Cayman and we cannot handle the ship visits for a few months or more… Then who covers the bill? Where do the loan payments come from then??? Not that any of those things could EVER happen here… But if they did, then what?
Anyone know of investors that like to buy sovereign debt like this and when the payments dry up, they get to foreclose on it?? Anyone?? Phew. OK, I guess we don’t have to worry about that as a possibility…
Don’t forget to account for the next hurricane, it is only a matter of time before we are devastated again
or another potential economic recession to the north… numbers will certainly decline.
Sorry but your numbers are flawed because you equate revenue with profit. Not the same.
Nor does the average ship disgorge 5,000 passengers. Only the biggest ones.
Furthermore we are already generating revenue from these boat people. So one must look at the INCREASE in profit to the island. Sure some people stay on board when the ship docks in Cayman. But some would do this anyway, even if they can walk off.
Now you get to a pay back time of 20 – 30 years.
A better option would be faster loading and unloading of tender passengers. Just look at a Youtube video of the Hong Kong Star Ferry being embarked and disembarked and you’ll get the idea.
Spot on. It’s the additional profit that matters not total revenue and I’ll wager it will never come close to making a return for the island.
Too many positive assumptions to be of any use in reality, not to mention this doesn’t account for accrued costs properly
I was generous with my flawed math. I prefaced it by saying look, this math that follows is getting pulled out of my rear because I don’t know how a port operates. I only posted it to spark conversation on the topic.
Don’t send a plumber to a mechanic’s job.
Bad Math
“Ezzard Miller has been opposed to the project largely on the basis of cost. The independent MLA for North Side and leader of the official opposition group believes that the project could cost as much as $350 million, as Tourism Minister Moses Kirkconnell has admitted that Cabinet simply does not know what the final bill will be.”
Just how can any rational person be in favor of a project when even the Tourism Minister spearheading the project “simply does not know what the final bill will be.”
Does that remind anyone else of the high school construction projects?
This berthing facility is a disaster waiting to happen.
cayman can not afford a port.
cig has not got the expertise to procure or manage it properly. (remember cig cannot even collect garbage)
end of story
Govt may not be able to collect garbage but they are experts at producing it.
2018 and still at square one….
we were told that the cruise industry would have stopped coming by this stage if we hadn’t got a port….but we did record numbers in 2017…..
very strange…
Not strange… the reality we all knew was there.. stuff the kirkbots.