By: Coalition for Cayman

We appreciate the PPM’s open dialogue in responding to our summary of their budget and outlining how they are tackling some of the very difficult issues facing Cayman. The Coalition for Cayman is a public awareness effort with the single goal of helping to set our country on the right path, and we hope that the public is better informed about the state of the country’s finances as a result of this exchange.

All the information in our summary was taken from the PPM’s budget documents with the exception of a value for the future civil service healthcare liability where the determination of value today uses inflation rates issued from reputable sources.

Broadly our three largest financial concerns are set out below. Despite the PPM’s thoughtful response to our challenges, our view remains that the steps being taken are not sufficient. We have included the reasons why the public ought to be concerned.

1. The government should be making a significant reduction in the size of government resulting in the corresponding reduction in expenditures.

Reason: The current $645 million revenue which has already incorporated many fee increases totalling $97 million over the last two years should be more than sufficient to run the government for a country of our size

Expenditure needs to be reduced so that the taxes on the private sector can be reduced and businesses can again become competitive, grow and create employment The private sector businesses and individuals cannot continue to subsidize the government to the current levels without further damaging those businesses and individuals. Without a significant reduction in fees there will be increasing unemployment and the government will eventually have no alternative but to impose direct taxes.

2. The government should align the health and pension benefits of government employees to those in the private sector.

Reason: Same reason as in 1. In addition, it is not equitable that private sector employees should be required to contribute to their own health and pensions and then also pay for these benefits for government employees. This amounts to approximately $10,019 per year for annual health insurance and $5,882 pension costs per each government employee.

3. The government should be creating significant reserves to prepare for the massive future civil service healthcare entitlement amounts of $665 million

($1.1 billion in today’s terms).

Reason: The 2004 $665 million estimate (at a minimum $1.1 billion in today’s terms) is a massive amount and we need to get a handle on this liability right now, and provide for how it is going to be paid. Leaving this entire burden for future generations is wrong. Reserving for this amount would be in addition to paying off the decade old $194 million past pension liability (covering core government and statutory authorities).

From the PPM’s response it appears that it will take another 20 years to finally pay off. This is a lesson in what happens when no reserve is created for known future liabilities and why we need to have a plan in place to pay for the large future $1.1 billion civil service entitlement. We also remain concerned that, given the government’s inability to produce accurate consolidated financial statements, the ability to accurately measure the execution of any plan to improve the country’s finances remains questionable.

There is a cost in doing nothing. The PPM made a campaign promise to reduce fees for local working people and businesses, tourism and financial services. The time for “examination” has passed and we urge the PPM to take action and made good on its campaign promises.

Future generations need the government to significantly tighten its belt now, government employees to pay their share of their own pension and healthcare costs, and the government to reduce fees for the Caymanian people and the industries that made us competitive and successful.

The position we are in today is the fault of successive governments. However the PPM are the current elected government and they, together with the governor and the deputy governor, have the task of putting the country on the right path.

James Bergstrom, Gary Rutty, Clarence Bothwell, JC Calhoun, Paul Peene and Emmiel Scott for Coalition for Cayman