2014 State of the Nation

Delivered Thursday, 9 October, 2014

Ritz-Carlton, Grand Cayman

Premier Hon. Alden McLaughlin, MBE, JP, MLA

Your Excellency, Speaker of the House, Hon. Deputy Governor, Hon. Deputy Premier, Hon. Ministers and Members of Cabinet, Councillors, Members of the Legislative Assembly, Cabinet Secretary, Financial Secretary, Chief Officers, Commissioner Baines, President Moxam, The Executive and Members of the Cayman Islands Chamber of Commerce, Ladies and Gentlemen, good afternoon.

I can scarcely believe that a year has passed since we last gathered here. It is one of those curious situations where at the same time it seems both like yesterday and a very long time ago. I suspect that an intense focus on the affairs of state may be to blame for this. Your Government has worked hard every day since being returned to office to restore stability to the country and the economy. Our economic policies are working and the economic indices are pointing to encouraging growth.

The Cayman Islands Semi-Annual Economic Report 2014 shows that overall economic activity in the Cayman Islands grew by an estimated 2.2 per cent in the first six months of 2014. In the first quarter, the GDP grew by 1.5 per cent while second quarter growth is estimated at 3.3 per cent.

The growth rates are the strongest estimated so far for the country during the post-2008 global financial crisis period. The growth achieved so far in 2014 is also higher than the official annual forecast for the country in 2014, which is 1.9 per cent.

Greater economic growth occurred in several sectors including wholesale and retail trade; hotels and restaurants; transport storage and communication; real estate, renting and business activities; and construction.

With respect to the first quarter of the current fiscal year – that is, 1st July to 30th September 2014 – I can announce the following results:

* Government’s operating revenues earned for the quarter were $117.6 million, which were $2.5 million greater than budgeted;

* The Government incurred operating expenditures – the largest component of which is personnel costs – of $119.1 million during the first quarter and these were $5.5 million less than budgeted;

* Financing costs – which represent interest expense on Government’s public debt – amounted to $7.2 million; this is in line with budget expectations as the Government did not undertake any new borrowings and the interest rates on our existing debt portfolio are fixed.

* For the current fiscal year that will end on 30th June 2015, the projected operating surplus for Central Government is $120.9 million;

* Statutory Authorities and Government-Owned Companies are an integral part of the Public Sector and they have the same fiscal year as that of Central Government. In the first quarter of the current fiscal year, SAGCs collectively experienced an operating surplus of $1.7 million, $1 million above projections.

* The entire Public Sector will not undertake any long-term borrowing during the current fiscal year. Central Government will reduce its debt during the current fiscal year by repaying $25.4 million of debt-principal by 30th June, 2015. Before the Progressives-led Government took office, it was not uncommon for annual overdraft interest costs to be three-quarters of a million dollars. In the Government’s first year in office, we were able to reduce that figure to $66 thousand and this year, overdraft interest will be zero.

At 30 September, 2014, the Government’s Operating Bank account balances totalled $67.1 million and the Government is confident those balances will remain positive throughout the entire fiscal year.

As I have said before, confidence is the currency of investment, and in this regard I am proud to tell you that as a Government and a country we are fortunate to have the skill and zeal of a Minister of Finance like Hon. Marco Archer in charge of the purse strings. It is no mean feat to achieve approval of the Budget by the FCO on first submission. Investors like certainty, and Minister Archer has certainly brought this to the management of the public finances.

While we are being good stewards of the country’s finances, we are fighting hard against the phenomenon of jobless growth – particularly as it relates to Caymanians. I believe our strategy to increase employment is well known, but at the risk of repetition I will re-state it here. The Government has developed a multi-pronged approach to grow jobs because there is no single or simple solution.

As you would have seen recently, a director has been hired for the National Workforce Development Agency to enhance economic and educational opportunities for Caymanians. He will work with Government, businesses and educational sectors to ensure NWDA meets the needs of both job seekers and employers.

From 1 July 2013, to 30 September this year, the NWDA has found employment for 179 people and 1,003 companies have registered online with the employment agency. I can also tell you that work permits fell relative to the same period a year ago at June 30th, by 2.2 per cent to 20,166.

Other areas in which the NWDA is helping Caymanians find jobs is an intake and assessment process that includes the identification of barriers to employment and an appraisal of skills, interests and abilities of job seekers; working with the Department of Immigration to increase transparency in the work permit process and provide an efficient way for employers to communicate their efforts to hire Caymanians; and Community Outreach Days to help people look for jobs in their own communities.

Government also plans this year to publish for consultation a draft bill to amend the Labour Law.

These are the practical measures that form one prong of the attack on joblessness.

Our economic strategy and most recent concessions aimed at reducing the cost of doing business are designed to spur economic activity. While it might be tempting for some of you to take the savings in duties and license fees straight to the bottom line for increased profits, I would caution that this approach is short-sighted and will ultimately be bad for business. It is important that business plays its part by passing on the savings to its customers to generate more business and ultimately provide more opportunities for employment. You may well say that this is not your core function, but I think we both know that unemployed people cannot support your businesses. So there must be balance and partnership with Government if the country is to benefit and progress.

As a Government, we have invested millions of dollars by cutting revenue to reduce the cost of doing business. We appreciate that this is a big issue for business and thus we have:

* Reduced import duty to licensed traders by 2 percentage points to 20 per cent at a cost of $4 million.

* Reduced the duty on building materials to 15 per cent from as high as 22 per cent for some items.

* Removed the import duty on critical ingredients for local bakeries.

* Amended the Customs tariffs to give a duty rate of 10 per cent to electric motorcycles and electric segways – the same rate as for electric cars, and a 15 per cent duty on hybrid motorcycles – the same rate for hybrid cars.

* Implemented a series of changes to Trade and Business License Fees as an incentive to support the creation and development of new businesses. Businesses with 10 or fewer employees are being permitted to pay their annual license fee in quarterly instalments instead of the typical one-time full payment.

* Come the first of January next year, Government will reduce the import duty charged on diesel brought in by CUC for the generation of electricity from 75 cents per imperial gallon to 50 cents.

While we are looking after business here at home, we sometimes find ourselves drawn to matters on the global stage.

We have yet again had to defend the reputation of the Cayman Islands Financial Services Industry. Many of you know that the Cayman Islands recently found itself on a list of high-risk countries produced by the Financial Conduct Authority in London. We knew when we saw the list that they had made a grave mistake. Through a series of diplomatic exchanges we learnt that the list was indeed incorrect. It has now been removed and the FCA has committed to a full review. The Progressives-led Government will do everything in its power to ensure our good reputation is safeguarded and our positive story is told.

In this regard, I wish to specifically single out the Minister for Financial Services, Hon. Wayne Panton and his Ministry team led by Dr. Dax Basdeo for being decisive, focused and unflinching in standing up for the Cayman Islands during these past few months. You don’t have to pound your chest or sing your own praises to get your point across and Minister Panton demonstrated this at the highest professional level.

I look forward to next Tuesday when we launch the Anti-Money Laundering and Combatting Financing of Terrorism National Risk Assessment of the Cayman Islands.

The significance of the National Risk Assessment is that the Financial Action Task Force has now promulgated some 40 recommendations against which each country’s anti-money laundering framework will be benchmarked.

The Cayman Islands is due for a fourth round mutual evaluation in early 2017 and it is critical that we undertake a rigorous National Risk Assessment, as well as assess our regulatory and supervisory framework to be able to demonstrate their effectiveness.

I will have more to say about this initiative when I speak at the launch of the National Risk Assessment next week.

Marketing the Cayman Islands as a great place to do business continues to be a key focus of this administration. I am pleased to announce today that as a result of my attendance at the Internet Marketing Association’s IMPACT14 conference in Las Vegas last month at the invitation of Cayman Enterprise City, the Internet Marketing Association has decided to host an important event in Cayman next April. This event is a first for the jurisdiction and will bring IMA board members and some of the world’s technology thought leaders to Cayman for a series of meetings, tours of the CEC zone and industry networking events.

In addition, IMA will be establishing a small presence within CEC for its international business operations that will help promote the Cayman Islands and CEC.

This is good news for Cayman and Enterprise City and a good example of how partnering with the private sector can have positive, tangible results. I look forward to more interactions of this nature across all industries. The trip and its outcomes are just another way to build up confidence and reputation, both of which are critical to inward investment.

There is more good news with respect to CEC. I am pleased to announce that the company has acquired a 50-acre site that will become the permanent home for the CEC campus on the outskirts of George Town, just minutes from the airport and Government is working with them on completing an already gazetted access road, which is on Crown land. More exciting announcements about the start of construction of the campus will be forthcoming.

As part of our efforts to make the Cayman Islands more business friendly we are also making some further changes to Immigration Policy. Cabinet has just approved an amendment to the Immigration Regulations that will allow those travelling to the Islands for business to remain in the country for up to 10 days without the need for a work permit.

Also, we will shortly introduce a pilot programme offering VIP concierge services for business people to be fast-tracked through Immigration and Customs when they come into and leave the country. It will be a pay for play, if you will.

Another immigration policy directive just approved by Cabinet will give long-term visitors who own homes in Cayman the opportunity to receive permission to stay in the country up to six months without requiring them to make return trips to Immigration for extension on a month-to-month basis.

Economic activity is on the upswing and there are a number of new investments in the works, which we know will provide jobs once they come on stream.

Hopefully by year’s end we will see work begun on the 10-mile East-West arterial linking Hirst Road in Savannah to Frank Sound Road in North Side. The road is crucial to Ironwood Development, a residential golfing community that has the endorsement of golf legend Arnold Palmer who will design the course. Projects like this one are good for the Cayman Islands because it’s not a one-off, quick development that offers only a small window of jobs for Caymanians. Instead, it is anticipated that it will take 20 years for Ironwood to be completed, which should mean a steady need for Caymanian workers to help in construction and in the commercial ventures that eventually open. It is envisioned that Ironwood will ultimately spread across 600 acres and include a hotel, conference centre, sports village and homes for around 2,000 people.

The East-West arterial will also draw development along the new roadway, which again will help create jobs for Caymanians, as will the new hotel planned for Health City.

Dart is making headway on its boutique hotel, which will be managed by upscale Kimpton chain. Once the hotel is completed and opened in November 2016, it is anticipated the $309 million project will generate 400 jobs and add another layer to the options available in Cayman’s high-end tourism product.

An additional hotel is planned for Camana Bay between Royal Palms and the West Indian Club that, when finished, will provide additional rooms and residences. It will be a 10-15 year development, meaning a steady arena for jobs.

The build-out of Camana Bay is proceeding well with Forum Lane, an 85,000-square-foot commercial and residential complex.

Dart’s other project, the $7 million refurbishment of the Cayman Islands Yacht Club, is done, making space for additional vessels at new state-of-the-art docks, which gives us yet another tourism draw.

I am happy to say that Government’s negotiations with Dart to amend the terms of the NRA agreement are continuing and appear to be heading in the right direction. This has been a long and controversial affair and I should say no more about it at this stage lest I jinx the negotiations.

The old Hyatt hotel site is also being revived. Plans have been submitted to create a new 224-room resort and conference centre. The Central Planning Authority has also received separate plans to add two new stories and additional penthouse suites. If approved, the resort could open in 2017.

Government has also been working with a Caymanian developer to help him realize his dream of developing the Gran Palazzo, a waterfront condominium complex on the North Sound side of West Bay. Construction of the high-end development could create 250 jobs during the five-year build out.

And in Bodden Town, zoning changes have been made from low-density residential to hotel/tourism to help move along a planned hotel development in Beach Bay. This will go a long way to create employment opportunities in that district as well as increase available room stock for stay over visitors. A knock-on benefit will be the construction of a stretch of seaside road, linking Beach Bay Road with Manse Road. Construction of the road could mean added opportunities for Bodden Town entrepreneurs.

To complement these investments and provide employment opportunities within the hospitality industry, the long-awaited internationally accredited Cayman Islands School of Hospitality opened last month. Twenty-five young Caymanians have embarked on the necessary training and skills to not only take up front line positions in the hospitality sector, but to prepare them to become qualified professionals with a clear path for employment and advancement within the tourism sector. I am pleased to announce that because we have had such tremendous growth in the tourism industry and such interest in the programme, we have plans to double the number of students to 50 in 2015.

The Hospitality School’s programme aligns with our country’s current and future human capital development needs and has been designed to increase the number of Caymanians employed in the hospitality sector. The School’s curriculum was jointly developed through public and private sector collaboration and certification is internationally accredited.

The School’s success will ultimately be measured by the achievements of its graduates and how well they integrate into the workforce. I am optimistic that at the culmination of the course, the newly qualified participants will be well received by the growing industry that helped to train them.

When compared to 2013, total visitor arrivals for the first six months of 2014 surged by 8.8 per cent with 1,072,008 compared to 985,387. This performance is associated with a rebound of 8.6 per cent in cruise arrivals – 861,517 in the first six months of 2014 compared to 792,976 for 2013 – while air arrivals remain on the uptrend with growth of 9.4 per cent with 210,491 in 2014 compared to the first six months of 2013 with 192,411.

The growth of the tourism industry has served as a catalyst for expansion, particularly in the areas that directly interact with visitors. Earlier this year, the Public Transportation Board approved the granting of 34 taxi and 13 tour operators – all Caymanians I might add, contrary to what you hear on the Marl Road – to service the industry’s growing needs.

With yet more growth projected in cruise and stay-over arrivals, an additional 6 taxi permits are to be considered by the Public Transportation Board, bringing the total number of new taxi permits granted in 2014 to 40.

I trust that by now you have discerned our clear strategy connecting economic activity to employment opportunities. And so, at this point I must ask you, as Members of the Chamber, how you see your role.

Just last month we remembered the 10th anniversary of the devastation of Hurricane Ivan. I mention the hurricane because many of us in this room felt its blows on a personal, business or financial level. I recall that now-Government Councillor Joey Hew was president of the Chamber when Hurricane Ivan struck. It was under his leadership that the Chamber worked hand-in-hand with the Government and various organisations to help Grand Cayman recover.

It is with that spirit of cooperation between Government and the Chamber that we can keep the Cayman Islands on a steady course.

I appreciate the opportunity to be here with you today to update you on our achievements and also to raise with you a number of troubling issues relating to employment. I spoke before of the phenomenon of jobless growth, particularly as it relates to Caymanians. But the employment issues in Cayman have to do with more than just the economic conditions of recent times. As anyone who pays attention to what is happening in Cayman will be aware, there is a growing feeling of dissatisfaction, even resentment among many Caymanians about their treatment in the labour market. The age-old concerns about whether qualified and able Caymanians are being given proper preference for jobs and fair treatment in the workplace have increased and Government is becoming more and more concerned at what appears to be a trend among some companies of declaring jobs held by Caymanians as redundant, then retitling them and applying for work-permits. The complaints about unfair treatment in the work-place, calls for a greater voice for workers and the demands for a minimum or living wage continue to strengthen.

An unhappy local workforce must be a matter of concern, not just to Government, but to the Chamber as well. The government cannot address these issues alone. As I mentioned earlier, we are proposing certain amendments to the Labour Law and the Chamber is part of the committee looking at minimum wage. But the fundamental issue of the treatment of the Caymanian worker in the Cayman job market needs more than legislative change; it requires a change in attitude.

The Chamber’s pendulum continues to swing in favour of business, and rightly so, but the Chamber’s leadership has an obligation – a duty – to demand a certain standard of ethics and fair play from its membership. The hiring of capable and willing Caymanians and paying a good and fair wage should not be a matter for debate.

For our part, we will do our utmost to provide an environment where business can flourish and I believe we have, in the year and a half that we have been in office, demonstrated this to be the case.

Of course Government realizes that all the work done to create jobs, grow the economy and attract investment could be for naught if we don’t pay particular attention to crime.

The presence of gangs within Cayman has created a social problem, and at its worst in 2011 saw gun crime as a weekly occurrence. The action of RCIPS, supported by Government, has enabled a focused effort to not only stem the violence, but to prevent further violence by targeting and arresting those most involved. The arrest and conviction of some 6 major players was made possible by amended legislation that permits better witness protection and anonymity for witnesses who had previously been too frightened to give evidence in open court.

The conviction of those 6 key gang members removed the persons who would take a feud and escalate it to an assassination. We still have others to deal with but we are better able with updated laws to target, arrest and successfully prosecute offenders.

Whilst serious crime is showing a drop of 5.6 per cent, volume crime is showing increases particularly in theft and damage offences, up 40 per cent.

Government will shortly introduce a Second Hand Dealers Bill to the Legislative Assembly to help address the spike in property crimes. The new law will place additional controls on what has been a too obvious point of disposal in the Cayman Islands, cash for gold and pawn shop establishments.

Our new Customs management team has already proven effective with increased confiscation of contraband coming through our borders, including at the Owen Roberts International Airport. We have a new inspection process for shipping containers leaving the Islands whereby persons shipping goods must have their packages inspected at the port by Customs officers. Just this past July enforcement officers seized six shipping containers during a series of raids and stopped the shipment of stolen property that had been taken in break-ins. The new procedure does not apply to major traders and customs brokers, but to those individuals who export personal goods using shipping agencies.

Government is also tracking certain types of vessels taking goods off Cayman’s shores by way of the sea, again to tackle crime and the criminal element.

Through Government’s Crime Reduction Strategy we support an outreach programme in which police, prison officers, councillors and other subject area experts address students in schools under “lockdown” conditions where freedom is temporarily restricted. In addition, performance targets have been developed to define success in addressing recidivism.

I was interested to hear President Moxam say on a radio programme a few weeks ago that crime is a national problem. It can’t be fixed by Government alone, the Chamber or the police. And he’s right. A national problem such as crime needs a national fix, again with everyone at the table.

The Chamber has demanded that prisoners in Northward be rehabilitated. I’m here to tell you that they have been and are being rehabilitated. But unless the businesses represented by those of you in this room are willing to hire those who have been successfully rehabilitated, all of the policies, work and efforts of Government and Her Majesty’s Prison Service are for naught. This point is especially important given the increasing clamour for government to get out of the business of social employment.

While I agree that more needs to be done with the rehabilitation of prisoners, we must all join together to make the efforts successful.

What we must do, as I said earlier, is work together and keep the lines of communication open. If you have an issue with the Government, let us hear it first-hand. Appearing in the media and making statements about issues without all of the facts doesn’t auger well for the Chamber, the Government or the country.

Before I move on to talk about Government’s proposed infrastructural projects, I should raise the issue of the state of the construction industry. Although there are a number of construction projects under way, developments are still not near pre-2008 levels. In the aftermath of Hurricane Ivan there was a proliferation of construction companies formed; many by persons who knew little or nothing about building. This was and is still possible because all that is required to become a building contractor in Cayman is a Trade and Business Licence.

One of the consequences of this is that there are a multitude of construction companies, many of which hold work permits. Some operate without paying pension, health insurance or other benefits and thus are able to underbid companies that comply with the statutory requirements. Others don’t operate at all, but simply farm out their work permit holders. The result is that there are currently some 2,091 work permits held for construction workers at a time when a number of Caymanian tradesmen and labourers are unemployed. Contrary to common belief, the vast majority of these permits are not held by the large construction companies, but by smaller operators.

In addition, we have fielded a number of concerns from the public on the quality of workmanship by contractors, or of consumers being left with the responsibility of incomplete or poor quality projects. This is in part because many contractors don’t practice within their expertise. Often their inexperience in project and construction management leads to a mismanaged job and a consumer that is out of pocket.

Following consultation with the various building contractors’ groups, Government is pressing forward with amendments to the Builder’s Law, which was passed in 2007 but never brought into effect. The law will require builders to demonstrate their ability and to be licensed within their specific area of expertise. It is expected that this law will reduce the number of unqualified contractors in the market and the abuse of work permits thus creating more opportunities for Caymanians.

To help us continue to grow the economy and meet our fiscal responsibilities, Government has identified five projects as a matter of priority to maintain and upgrade our country’s physical infrastructure: The George Town Cruise Ship berthing facility; Owen Roberts International Airport Terminal upgrades; the revitalisation of George Town; the extension of the east-west arterial road; and a new solid waste management facility. All of these projects will be done with our commitment to follow best practice procurement processes.

The details of the Berthing Facility are already well known, so I will not bore you by repeating them here. Similarly, work is already under way at the Owen Roberts International Airport. We have undertaken interim measures at Owen Roberts to help with overcrowding, including a new roof providing shade and weather protection for waiting passengers, upgrades to the air conditioning system and an extension of the departure lounge to provide additional seating.

The redevelopment will begin in the first half of 2015. The expansion project includes more than doubling the size of the airport terminal, repaving and strengthening the tarmac and runway and, in the longer term and if financially feasible, putting in a taxiway parallel to the runway. When the Owen Roberts Airport opened in 1953 I don’t think our forefathers envisioned the high numbers of visitors who would come to our shores. In 2014 we’ve already experienced a 10 per cent increase in arrivals over last year: 249,684 compared to 226,291 in the same time frame in 2013. While it’s a nice problem to have, the time it takes to process those returning home and visitors has become cumbersome. Government has had to boost the budget for the Department of Immigration to pay overtime to put more Immigration Officers on the front lines to process arrivals in a more timely fashion.

As we make improvements to our airports for our residents and tourists alike, we are also aware that downtown George Town is in much need of its own makeover. I commend the downtown business owners that are putting in a seaside boardwalk without, I might add, Government funding.

We will take legislation to the House to amend the Development and Planning Law to ensure that downtown George Town is developed with a modern Caymanian feel throughout. We want property owners to be able to refit some of the downtown buildings for apartments and make George Town more pedestrian friendly with wider sidewalks, trees and benches. It is our vision for George Town to be restored as an economic hub, including residential, recreational, retail and commercial use.

Roadworks have already been approved for new connector roads to move traffic around downtown in a timelier and safer manner. New connector roads will run from Elgin Avenue to Eastern Avenue, from Elgin Avenue to Smith Road, from the Godfrey Nixon Way extension to North Church Street and the extension of Fort Street going north. Also planned are improvements to Smith Road, Godfrey Nixon Way and Edward and Fort Streets downtown. Work will be done in phases, creating new jobs, allowing companies to get contracts and new businesses will be encouraged to start or move to the Central Business District.

One of the challenges of successive governments has been the George Town Landfill. While we are going through the proper, transparent and accountable procedures for a long-term solution to solid waste, we are managing the existing site as best we can. Government is buying new equipment as needed, management has been improved and we are seeing the benefits. We have also hired a senior project manager for the Integrated Solid Waste Management System who started work on Monday. He brings over 25 years of waste management project experience and will be a welcome addition to the CIG team.

The Integrated Solid Waste Management System procurement process continues in line with the provisions of the Framework for Fiscal Responsibility, with the Central Tenders Committee approval to award the first consultancy of the project being given at the end of last month. The Ministry is in negotiations with the successful tenderer, and an announcement will be made as soon as the contract negotiations have been completed.

The Outline Business Case will commence early in the second quarter of 2015 and once approved, we will move to procurement of the preferred project in the first quarter of January 2016.

Let me say that my trip to Tampa to visit waste management facilities gave me a much clearer understanding of just what Cayman is facing in terms of waste management. We are taking a holistic approach to the landfill issues in the Cayman Islands instead of dissecting it into parts to fix only one thing at a time.

There are some other matters of immediate interest to the business community – Daylight Savings Time and Sunday Trading.

Daylight Savings Time is one of those issues that has been around for some time. I must commend the Chamber for its survey of members concerning the issue. Of the 113 who responded, 55.7 per cent said they supported changing to daylight savings time.

The Progressives-led Government is proposing a public consultation process on this matter because it is our considered judgment that both our financial and tourism sectors could benefit from the move to Daylight Savings Time. There are many benefits including elimination of confusion over travel times, putting our financial industry in sync with New York and putting an end to early arrivals and departures of cruise ships.

The other issue that has come to the fore in successive governments is that of Sunday Trading. Again, I must thank the Chamber for conducting the Sunday Trading Survey, which showed that 64.4 per cent of the 113 respondents supported allowing all businesses the option of opening on Sunday. We have taken those results into account as part of the public consultation on the issue.

I can announce today that the Progressives-led Government has decided not to turn Sunday into a general trading day, but to regularise trading so that the retailers currently operating in violation of the law will be made legal.

We will make modifications to the schedule of exemptions to the Sunday Trading Law to permit corner stores and the c-stores at gas stations to open lawfully on Sunday and sell their usual merchandise. We heard the misgivings from the business community, church leaders and private residents who did not want a wholesale opening of Sunday sales, but we also realized that we must ensure that those who have been providing essential goods and services on Sundays are able to continue to do so legally.

Most, if not all, of you are aware of the EY rationalization report delivered to Government last month. The Report was commissioned because this administration understands that government expenditure cannot be permitted to continue to grow in the way it has over the past decade. We also believe that government must strive to provide the services it does in a more efficient and effective manner. We therefore wanted professional advice and guidance as we seek to contain government expenditure and improve service. The Report provides 55 recommendations as to how the government’s objectives can be achieved. They include sale of government assets, hiving off of various services that government currently provides, the amalgamation of various agencies within the government and a number of other recommendations. But they are just that: recommendations.

The decisions about what will be done are for the Caucus and ultimately the Cabinet. We believe the Report is a useful tool and we thank EY for their good work in its production. But the Government is not going to adopt the Report wholesale. Some recommendations will be accepted, some will be modified and others will not be accepted. We are still carefully going through the review process and making decisions.

We are pleased that several initiatives already started by Government dovetail with some of the recommendations made in the EY Report. This is an indication that, with regard to those items, we are on the right track.

Some of these include:

* Airport renovation

* The PPP process for the cruise terminal

* Raising the retirement age of civil servants to 65

* Development of an Integrated Solid Waste Management System

* Simplifying budgetary and financial reporting

* Work is under way to identify, review and evaluate options to establish a new governance model of education that seeks to increase parents, private sector and community participation in public education and to determine ways to improve the financial performance of UCCI.

While we do agree on some issues, there are others that we see different approaches as being more palatable.

* The Government at this stage is not inclined to sell or lease the Water Authority as recommended. We have, however, has decided to develop a Request for Proposal for private sector interests to tender for the construction of a national sewerage system.

* While the Government has not rejected the concept of Real Estate Investment Trusts as recommended by EY, it is not inclined at this time to proceed with the sale of key Government assets such as the Government Administration Building. Instead of paying back a loan on an asset it owns, Government would instead have to make lease payments. We are not persuaded that this makes good commercial sense.

* Government has decided not to sell Radio Cayman. Aside from the fact that it is a Cayman institution, Radio Cayman provides a key and trusted service to the Cayman community. Instead of being sold, Radio Cayman and the other government media will be coordinated in order to serve government and the community more effectively.

While we recognize the need to rationalize Government services, before we make any moves toward privatization, amalgamation or restructuring, this Administration will have to be satisfied that any action Cabinet takes will be in the best interest of the Caymanian people. We acknowledge the concerns expressed by President Moxam about whether or not the Implementation Unit made up of only Civil Servants will have the nerve to implement Cabinet’s recommendations. On behalf of the Government therefore I would like to invite the Chamber to nominate one member to serve on the Steering Committee, which will guide the implementation process. Together, in the true spirit of partnership, I believe we can make it happen.

Before I close I want to acknowledge the guidance and support of Her Excellency, Mrs. Helen Kilpatrick and the hard work of all my colleagues in the Caucus and the Cabinet, including the Deputy Governor, Attorney General and the Cabinet Secretary and his team. It has not been easy, but I believe we have made great strides in the past 16 months. I also want to thank the men and women of the Public Service for their support of the Government’s initiatives. Despite the relentless negativity, I am here to say that by and large the Public Service is made up of hardworking, dedicated and able people who strive every day to serve the country well. They receive little by way of appreciation. Today as Premier, and one who works with them every day, I say thanks and salute the Public Service of the Cayman Islands.

I trust Chamber members now have a greater appreciation of Government’s policy initiatives as they relate to employment and the role that the business community can play in continuing to grow the economy. I thank you for the Chamber’s input during this past year and I look forward to future endeavours. We will not always agree on every issue, but by keeping dialogue open and dealing with each other directly and honestly we can work together to keep the country on course.

Thank you once again for giving me an opportunity to update you on our work since last September. I am happy to clarify any issues for you or answer any questions.