Business and public can tackle inflation, says minister
(CNS): Having painted a bright picture of Cayman’s economic fortunes as he delivered his Budget Address on Friday, Finance Minister Roy McTaggart called on businesses and shoppers to address Cayman’s continuing inflation problem. With GDP expected to grow by more than 2% over the next two years, McTaggart said inflation will also be growing at around 2.5%. If his predictions are correct, that will be lower than the last two years but still challenging for those on fixed incomes and low pay.
“Inflationary pressures in the economy will persist based on higher international commodity prices and increased local demand and levels of consumption,” McTaggart told his colleagues in the Legislative Assembly as he pointed to some of the challenges the government faces controlling inflation.
“We must remember Cayman imports nearly all of its consumables and manufactured goods and as a result local prices are particularly vulnerable to price changes in the country of origin,” McTaggart stated, before calling on merchants to find cheaper goods and for consumers to use their power.
“I challenge our business community to continue to seek out new cost effective sources for the products they retail in our local market. Also, individual consumers, remember you have power too in the choices you make about the items that you spend your money on,” he said. “I urge you to use that power wisely.”
While unemployment is at all time low and expected to drop even more over the next two years to around 3.5%, indicating what the minister said was job market stability supported by a growing economy, the problem faced by workers is not a lack of jobs but a lack of jobs paying a living wage in what was recently marked as the most expensive country in the world to live.
McTaggart is largely relying on the private sector to manage the economic challenges itself but said the government would keep the current package of duty concessions in place to keep down the cost of doing business and the cost of living.
Reduced import duty on diesel fuel used by CUC will remain, as will the reduced import duty on building materials, he said. Concessions will remain in place for the Sister Islands and trade and business licence fees for new licencees. First time Caymanian buyers will also see reduced stamp duty rates remain in place, along with the reduced import duty for licensed traders.
But even though there is little evidence that duty cuts for retailers were passed on to the consumer, McTaggart said these measures had proven to be effective in supporting the economy and empowering people to make the most with their hard-earned income.
Meanwhile, in his Budget Policy Statement, Premier Alden McLaughlin said government had begun the long-awaited review of the minimum wage to help address the problems of Cayman’s low pay economy.
He attributed the problem of low wages to the “flexibility of Cayman’s labour market”, where he admitted wages lag behind growth. He said he hoped the “experts leading the review will look at the opportunity for an increase in real terms in the national minimum wage”.
But he said government was going to help civil servants tackle the higher prices in the shops by giving government workers another 5% cost of living increase from 1 January, 2020. He said he hoped that the wider labour market would be influenced by government’s pay hike and fuel wage growth elsewhere in the economy.
The premier also accepted that the cost of living in Cayman is high, fuelled by a catalogue of issues, from the out of control housing market to gas prices. Although he claimed that enhancing the port would cut the cost of imported goods, a claim refuted by others, he also said the public believes the cost of gas at the pumps in Cayman is unreasonably high and that at long last OfReg had hired consultants to find out how local prices are calculated.
“If that review finds that the fuel market here is not operating fairly in the interests of Caymanians and residents then there will have to be change. If fuel supply companies are not willing to respond positively then, as I have said before, the government will intervene if necessary,” he added
The premier also raised the question of whether or not the relatively high cost of living has a disproportionately greater impact on some parts of the community, as he pointed to the elderly and those on fixed incomes. As a result, he said, his government was rolling out a package of concessions designed to reduce the costs falling on older people.
“Across government, some 14 fees or duties will be significantly reduced or waived for persons over 65. The package includes reductions in vehicle licensing fees, duty reductions for mobility scooters and wheelchairs and reduced post office box rental fees. My own ministry will reduce work permit fees for caregivers of older persons and we will reduce import duties for older persons coming through the airport,” the premier stated.
Trying to control prices is only one part of the problem, McLaughlin noted, adding that government had more tools to grow income rather than control prices. Seafarers, veterans, those in need of social assistance and long serving civil service pensioners will see another increase from 1 January on their income of $100 per month to $850. Then in January 2021, the monthly payments will increase again to $950.
See the budget address and budget statement in the CNS Library
Category: Government Finance, Politics
Costs are going to keep increasing – we will increasingly have those with pots of money and those without and nothing in between. The health care costs are ever increasing and govt keeps failing to address this along with a slew of other factors. I wish they spent as much time tackling these issues as they do the port. Look how much of our public funds they are throwing at that! Teachers were promised a pay rise a year ago and that was then pulled back – disgrace when you look at the state of our education system. But amazing how the Civil Service is being given yet another increase… this will drive up the cost for the rest of us again. Madness.
They could lower health care costs by increasing the standard rates insurers are required to reimburse providers so that all these surcharges doctors have been forced to implement since 2005 could end. That would help ordinary people too. But nope! That is not what our government does. That would make insurers pay more and insurers are more powerful than doctors and patients put together. In some completely messed up, kleptocratic nightmarish way.
A finance minister who says that increasing wages will address inflation and cost of living? I am struggling to believe that a former senior partner at a big 4 firm could actually be so ignorant in regard to basic economics, which rather depressingly just makes him dishonest.
There are absolutely ZERO consumer protection laws is this country and this speech merely confirms that our Govt. will be doing absolutely ZERO about implementing any measures to address this in the future. Bunch of effing wasteman.
That’s why I try to purchase everything I need from overseas. Yet we still get screwed on groceries, fuel, and utilities. I’d also hazard a guess that some of our produce coming in does not meet USDA health standards and may well be offered at USD cost to the likes of Fosters, Hurleys and Kirk. We have no food lab here so how would we know if our conventional produce is contaminated. I don’t subscribe to paying 3 times regular price for so called organic either since no one here runs checks for contaminants. Live at your own peril!
My friend please don’t rely on a USDA stamp.
That’s like a kiss of death.
If you do, then do so at your own peril.
I just hope that no kids are involved.
Triple the GOL fee for Real Estate agents. They are bandits and demand an hourly wage equal to a senior lawyer. There are enough local agents now to fill this market.
There have always been enough local agents. The problem has always been with immigration, politicians and developers.
Exactly. If a politician’s wife can be the realtor for a major hotel and condominium development, my wife must also be qualified.
Talk about putting your head in the sand! “local prices are particularly vulnerable to price changes in the country of origin”. Nonsense, it’s the 40% tax you add (Except when it’s your mates and you give them a undocumented waiver) on to the price AND the shipping to pay off your government expense accounts!
If merchants can source goods somewhere cheaper, the prices will still go up to increase the profits of a few.
Cost of living is the highest in the world with one of the lowest minimum wages in the world.
Groceries are more than double the price in the us. And this has nothing to do with duty or cost of shipping.
It is the government allowing merchants to exploit consumers.
We need a price cap on basic goods e.g.Milk,flour,sugar,salt,rice,etc etc with regulation and enforcement. Years ago we had direct flights to Costa Rica and Panama, where we obtained competitive milk and quality fruit and veg. Dare I say those same fruit and veg were fresher and we avoided them going to the USA to be marked up. Plus shut down OfReg which is a farce. Too many ex C&W persons there who have no other experience to draw upon and appear to do nothing to hold their former employer to account.
The same fruit from Central America is exported to the USA and then imported to Cayman Islands. We need to cut out the middle man!
Government waste and excess spending is a prime contributor to the cost of living, as is the fact of their being too little competition in the private sector (too much is owned by too few). Government is in control of that. Simply reducing duty on the fuel we are charged for electricity consumption would help us all, but no, government doesn’t get that..
The article stated that fuel for cuc was discounted. But do we see those savings? Hell no!
The duty we are charged to bring good in to sell at my store makes it IMPOSSIBLE to sell at a reasonable price. Why aren’t all businesses who bring in goods given a break?!
How much is your electric bill’s fuel duty surcharge per month? How much will that really help? Last time I checked mine is small percentage of my CUC bill which is itself just a small percentage of my monthly expenses. And the CIG has kept the electricity fuel duty rate low for several years now. So a reduction of what is a fraction of a percent of my monthly expenses will NOT have any appreciable impact on the cost of living.
(Nor is “Government waste and excess spending … a prime contributor to the cost of living”.)
you implement a minimum wage, and this is what happens. Or does no one see the correlation. Before minimum wage, costs were high, but not absurdly so. Implement minimum wage, and a few years later, insane costs. It isn’t hard to see why. And there is no fix the moment you implement a minimum wage for any economy. Giving people more money to spend, means companys will always increase their prices. 1. labor costs more. 2. there is more money to spend so companies will naturally charge more because now they can.
So wait, your asinine theory is the cost of living has only gotten out of hand since the minimum wage… a measly $6
There is no rationale in this thought process
Just keep watching fox news and waxing lyrical about how the free market is going to keep you safe
Im sure it has nothing to do with stagnant wages and allowing the private sector to squeeze every bit of profit out of people they possibly can
Surely that has nothing to do with it, of course the issue are people who are getting paid the lowest wages in society
You people are literally just insane
stagnant wages would not allow companies to charge more. Because people would buy less.
the biggest sector in any economy is minimum wage Or near minimum wage.
You implement a minimum wage, those near minimum wage jobs will have to increase their wage. And it’s a snow ball effect. Why would you work for 6 dollars an hour, at X company before minimum wage, and you were fine with that wage. when they implemented a minimum wage of 6 dollars, and i can go work for any company. Making the exact same money.
Now as a store, you hire workers and are forced to give all of them the same increased wage. what do you think happens to the goods in that store. right. they increase.
why not give everyone a million dollars minimum wage, everyone is rich now. oh wait….companyies now charge 100k for a chocolate bar. See how that works?
Cayman needs a labour movement.
Long overdue. Peoples “real” wages have been stagnant for well over a decade but cost of living is always increasing. And the damn pension schemes is a joke, wait and see.
It is an open borders immigration policy, and lack of scrutiny Trade and Business policy which is to blame – not a paltry $6/hour minimum wage.
Most dangerous government you have ever had…once PPM and UDP combined you knew it was going to be a free for all pillage. Aldart and Mac have no shame.
What a rubbish argument. You implement a minimum wage to stop abuse of vulnerable employees, although the min wage here is so laughably low that that still continues.
Well done Mr Roy & Aldart, a broad list of ideas to decrease the cost of living but on the scale of things nothing substantial, – a look at fuel, consumers & retailers to look for cheaper goods, a decrease on post office boxes for the elderly and an increase in minimum wage. Once again the small business owner will take a hit and the obvious insane inflatery burden gets ignored – HEALTH INSURANCE, fix that and everyone across the board is better off.
Their advice would be worth nothing…accountants and lawyers are not necessarily economists.
The PPM back-stabbed the only economist they had in 2017 because he was no push over and was doing a good job.
He lost because of his ego. Plain and simple….
Or trained in management.
Offrigg has had enough time to made some logical report to us by now. Why hire a slue of managers and ceo who have to hire consultants to do their job. 🤨🚩
John – you are right to mention OfReg. They need to start performing instead of just collecting their salaries and having consultants do everything for them.How about starting with gas prices and utilitity bills especially CUC who keep increasing their rates whilst increasing their profits,
stop giving import duty breaks to SMB developments give some duty breaks for the small guy especially on food, do something about power prices as well.
idiot. the ppm have done nothing to tackle cost of living or doing business.
any increase in minimum wage will also increase prices/inflation further.
We haven’t actually heard businesses complain about the ‘cost of doing business’ for years. Maybe because they got their duty breaks combined with an influx of thousands of customers. Good for them, what about the rest of us? Why not a further drop in fuel duty – something sure to benefit ordinary people as CUC is obliged to pass the reduction on?
Business is getting everything they want under this government…concessions…work permits. LG for everyone but most Caymanians.
Voting yes!
“I challenge our business community to continue to seek out new cost effective sources for the products they retail in our local market. Also, individual consumers, remember you have power too in the choices you make about the items that you spend your money on,” he said. “I urge you to use that power wisely.”
Let me translate this for those of you who are unable to cut through the political doublespeak:
The government won’t be doing anything that will potentially upset the business community because they are the people who fund parties like the PPM and they can’t risk having their donors unhappy with upcoming elections
The working class Caymanians from whom all profits are sourced will be left at the mercies of our unregulated and predatory capitalistic economic system and squeezed of every ounce of wealth by the ruling class
The government would rather roll out annual COLA to civil servants(cost of living adjustments) along with sending people to the NAU than stepping in to force businesses to stop marking up prices and ripping people off
The system we are currently living under didn’t just manifest of its own accord, it was orchestrated and is maintained by those currently in power, to hoard wealth at the top and leave the scraps for everyone else
If you think it’s tough now try living under communism. Then there would be no opportunity for you to change your future.
Name one actual communist country that exists now or has ever existed
I’ll wait because what you are referring to are authoritarians who wrapped themselves in socialist imagery not actual socialists by ideology
The problem with people like you, is you don’t actually have any idea what you are talking about, you just throw around broad terms like communism without realizing that anyone who actually understands the concept of communism or has even the most basic education in political theories realizes it has never once actually been implemented. I could point to just as many “capitalist” countries that were just totalitarian/authoritarian regimes as easily as you say communism or capitalism, but that would be as inaccurate as your assertion
Also, if you actually think that simply saying the words socialism or communism as if that is a is a coherent defense of the unethical system of capitalism that is the current status quo then you are even less competent than I thought
Read it for yourself folks, the best defense for capitalism is “sure its shit now, but it might be worse if we actually take care of people in society instead of chasing profits and acting as if we live in an era of scarcity”
If the unrestricted free market and no overarching state is your dream might I suggest moving to Somalia
Imbecile.
Well this government sure isn’t going to do anything about it…too busy ignoring all prudent economic policies…”Economics…what’s dat? Sounds hard”
This is typical. Everyone fend for yourselves (even though it’s obvious Cayman is now owned and controlled by a few businesses and people getting fat off the masses) and we’ll continue giving breaks to developers and raises to civil servants and seamen. Buying votes from people contributing little, and leaving the productive but struggling to count quarters. What a paradise I turned out to be from. I used to like and be proud of this place! We need a recession to clear it out if you ask me.
Yep,its sad most Caymanians will look at this as a good thing while totally missing the message the PPM is putting out
The status quo is good
Nothing will change
Keep ripping people off and marking up prices and we will keep pretending we don’t see it… but don’t forget to give us our share in 2021
And a catastrophic hurricane to clear the trash and wipe our slate clean
Vote No