Chamber Luncheon Premier’s Remarks Noon, Thursday, 18th January 2018 Kimpton Seafire Good afternoon, Thank you, Kyle, for the introduction. That video was certainly interesting!
Many of you will have heard Ms Dukharan speak at conferences and are aware of her academic credentials and business experience. It warms my heart, as I hope it does yours, to hear an economist of her calibre state categorically that Cayman has “the best run economy in the whole Caribbean”.
But it also gives me cause for pause. Why is it that we need people from overseas to talk up our country and our achievements? Why do we not say these things loudly and proudly for ourselves? Why are we so consistently negative about our country? Why do so many in the media seem to delight in criticizing all things Caymanian? I am not suggesting that Cayman is perfect and that there are not issues we need to address and things we need to fix. Nor am I underestimating the threats to our continued success. But I do believe Cayman is a hugely successful story that we should all celebrate and shout from the rooftops.
The key macro-economic indicators tell our success story.
GDP growth for 2017 – when the numbers are finally in – is expected to be a healthy 2.1%. Significantly, growth is projected at 2.4% in this coming year and to stay above 2% through 2020, the last year of the current forecast period. This is on the back of healthy and sustained growth rates over the last four years and is amongst the best in the region.
Unemployment in our economy fell to 4.1% in spring 2017 and is projected to continue to fall as the economy grows. Inflation at the end of 2017 is forecast at 1.8% and although it is expected to increase to 2.4% by the end of this year, there are no signs of the economy overheating.
This success has not happened by chance. It is therefore worth reflecting on what Ms Dukharan highlights as the formula for the Cayman economic success story – “Strong leadership, fiscal responsibility and private sector led growth”. I and my Government agree wholeheartedly.
There is no doubt that the key to growth is a flourishing private sector business community. Cayman’s economy is founded on the strong entrepreneurial spirit of Caymanians and those of have joined us in the willingness to embrace the contributions of the expatriate community. I must stress that our continued success requires the continuation of both those factors. Those who espouse anti-business sentiment or choose to talk down the contribution of non-Caymanians as well as those who do not believe that Caymanians must be given opportunities to participate in the economic success of our country fail to understand the lessons of our history and risk undermining our future prosperity.
You will not hear those things from me or members of my Government. Others may play for what they believe to be short term populist appeal but the real task of political leaders is to take the right course of action for the long term prosperity of our country and its people. That has been the basis of my political career and it is what I will continue to do as Premier of these Islands.
Let us look at the evidence.
Our economy is based on the twin pillars of tourism and financial services and although we are determined to diversify, it is generally accepted that they will remain as the bedrock of growth for years to come. At least they will if we continue to work to support them.
Tourism remained strong with record arrivals in 2017 – over 418,000 stayover visitors and 1.7 million cruise passengers. And 2018 is expected to be even better because of private sector led growth. It is about large, multi-national corporations and small businesses taking risks and investing. It is about Caymanians and expatriates working together for mutual benefit. It is about a private sector that welcomes and values the support of Government. In that context, I applaud the work of the Honourable Deputy Premier and the teams in the Ministry and Department of Tourism for the support they give to enable that success.
This Government will continue the work of the last Progressives-led Administration to support the Tourism Industry. After decades of indecision by previous governments, we are delivering the badly-needed upgrade to Owen Roberts International Airport. Many improvements have already been made and next week we should see the opening of the new arrivals hall. The rest of the improvements will be completed this year, significantly increasing capacity and improving the experience of the travelling public.
We remain committed to delivering the cruise berthing and expanded cargo pier needed to safeguard the businesses and jobs that rely on the continued flow of visitors and goods to Grand Cayman.
Similarly, the Financial Services industry continues to perform well – contributing around 55% of our GDP. It is essential that it remains strong for all our futures.
But we must acknowledge, though, that the industry is under real threat. There are those who would like nothing better than to bring the Cayman Islands’ Financial Services Industry down and we must constantly respond to that threat.
We must maintain and keep up to date the necessary legislative and regulatory frameworks and for that reason the recently passed two-year budget saw increased resources going to both CIMA and the Ministry.
But while we continue to jump through the various technical hoops on transparency, anti-money laundering, tax information exchange and international law enforcement cooperation, we must recognize that much of the pressure against us is politically motivated. As a government we are doing all we can to address that challenge.
Just at the end of last year the Hon. Minister for Financial Services and I were in London and Brussels working together to help ensure that the Cayman Islands was not included on an EU blacklist of non-cooperative jurisdictions. This took considerable work on the part of everyone involved including our colleagues at Cayman Finance. We were successful in that round, but the challenges continue.
Future success also requires our Financial Services Industry to continue to do what it does best – to innovate and develop new products to attract businesses and investments to these Islands.
I know, for example, that our industry will maintain its efforts to attract more reinsurance business here and look at the possibilities in the emerging Financial Technologies space. Where government can support the continued development of the industry by making necessary legislative changes – as we did during the last Administration – we remain committed to do so.
As I said earlier, it is the inter-relationship between the three critical success factors highlighted in Ms Dukharan’s remarks, strong leadership, fiscal responsibility, and private sector led growth that underpin Cayman’s success story.
The growth delivered by the private sector contributes significantly to the fiscal performance of the Government. Business activity delivers huge revenues into Government’s coffers. What distinguishes my Government is our willingness to act responsibly in terms of how we utilize those revenues.
Our first duty is to make sure we put the income received to good use, delivering public services our people need.
My Government is ambitious for our people, and the objectives we have set out in our Strategic Policy Statement demonstrate that ambition. I hope you all take time to read the SPS but I want to highlight a few key issues.
Both businesses and citizens want to live and work in safe
communities and so Government is supporting and funding the
Royal Cayman Islands Police Service to improve its abilities in crime prevention and security – including Community Policing and improved border protection. Additional funding has been provided to allow 75 new police officers to be hired over the next three years, and the Commissioner of Police has committed to putting in place dedicated community police officers.
We are also working with the United Kingdom to create a new border protection service. This is a vital step forward in our work to counter illegal immigration and organized crime, including the smuggling of weapons and drugs into and out of Cayman. There will also be improvements to our search-and-rescue services to help save the lives of those in trouble at sea.
We are also working with authorities from the United States to improve border security. One important early success has already been announced. As you may have heard, the Cayman Islands Government and the United States Customs and Border Protection just this week signed a Memorandum of Understanding to initiate what has been termed the Miami International Airport Fast Track Pilot Programme.
This is the first of its kind and will allow the Cayman Islands Immigration and Customs officers to pre-clear passengers bound for the Cayman Islands at Miami International. Cayman Airways was chosen as the partner airline for the pilot programme – with Cayman Immigration Officers to be stationed at the CAL departure gate in Miami.
This exciting programme will allow pre-cleared passengers to be fast-tracked through immigration and customs controls upon landing in Grand Cayman. All of you in this room who travel through Miami will see the benefit of this agreement.
We also have plans to replace the West Bay Police station as well as provide for a new headquarters for the RCIPS in George Town. Updated or new court facilities are also being considered and, like the RCIPS headquarters, have been under consideration for more than a decade.
The Chief Justice in his remarks at the opening of the Grand Court yesterday reflected on how long this is taking, and in fact took Government to task for not providing capital funding in the current budget for a new court facility. I have to say I agree with him that this is a pressing issue – just as is the new RCIPS headquarters.
But where I differ with him fundamentally is that Government found it difficult to agree to a request to allocate a sum as large as $4 million to purchase land for a new court facility when, despite the many attempts, there are no agreed plans for any such facility; where there is no specific property being considered; and in an instance where Government already owns acres of crown land that can be used for a new modern court facility.
Contrary to the Chief Justice’s assertion, there is no lack of vision on Government’s part. Instead there is a keen sense of fiscal responsibility and the recognition that at this point the Cayman Islands Government simply cannot afford to spend between $150 million and $177 million on a court facility.
While we fully acknowledge the urgent need for additional modern court facilities, the price tag will have to be substantially less than what has been proposed.
In Government, as in business, one must make choices and at times that means not everyone will be happy. I will note, however, that this Government did allocate $845,000 in the current budget to take the court house project forward. This money essentially serves as a placeholder – allowing Government and the Chief Justice to come to a reasonable compromise on a location, a structure that is fit for purpose and, importantly, one that the country can afford.
As we work to make our country more secure, we also have a duty to support the most vulnerable in our society.
Therefore the budget also includes a strong social agenda with improved services to the elderly, as well as increased assistance to retired seamen and veterans. Similar increases will be paid to elderly retired civil servants with pensions below what is provided to persons on welfare assistance.
And we will reform the services to those in need of welfare support to ensure that the right help is received by the right people at the right time.
We are also building a much-needed mental health facility that will finally allow Caymanians and residents in need of mental health care to get treatment on Island and not in far-off facilities in Jamaica or the USA. This is better for the patient, their families and friends and ultimately offers better value for money.
But before you get the impression that the budget is all about spending, let me stress again that this Government is continuing down the path of fiscal responsibility established by the last Administration.
There are two parts to that responsibility.
First, we have renewed our previous commitment not to introduce any new revenue-raising measures and we have maintained through the next two years the various duty cuts and incentives put in place during the last term. We have continued the reduction on fuel duty to CUC along with the reduced duty on imports paid by licensed traders, including on building materials. We have continued the reduced trade and business license fees for new businesses, and the incentives to encourage development in Cayman Brac & Little Cayman. These measures directly benefit both families and businesses and are key contributors to the low inflation figures I mentioned previously.
Secondly, we continue to budget for surpluses while investing in the future and paying for infrastructure with cash rather than borrowing. Over the two year budget period, we expect to achieve a strong surplus for the entire public sector of about $140 million.
We continue to significantly repay debt and at the end of December 2019 Government debt will have been reduced to $318.5 million – the lowest it has been for many decades. Cash reserves are expected to be at a healthy $339 million.
The expectation of growth coupled with stable and effective political leadership, acting in a fiscally responsible way, creates the confidence that businesses and individuals need to provide the investment that drives future growth.
The most obvious expression of that is seen in the development sector that acts as a bellwether for business confidence. In fact that sector has been performing extremely well, with 1,156 planning applications approved in 2017 with a value of $799 million. This compared favorably to 971 applications in 2016 with a value of $407 million. The 2017 numbers included 3 hotels, 83 apartments and 276 residential homes – an indication of confidence right across our economy.
Indeed, things are going very well, but the reality is that there is a lot more to do. If it is true that our success has not happened by accident then it is also true that our continued success will require just as much hard work. If leadership has been vital in getting us to this point, it will be needed more than ever to strengthen our position in the future.
I spoke earlier about the threats being faced by our financial services industry. That is but one of the challenges to which our country now needs to rise.
But before looking at the detail of those challenges, I want to raise an important matter of principle.
At the start of this speech, I drew the distinction between the direction my Government is taking and the views of those who, through rhetoric, would undermine the business community and the contribution that expatriates, working alongside Caymanians, make both to our economy and our society.
As is often the case though, we must recognize that while we may fundamentally disagree with their conclusions, there is a kernel of truth at the heart of the arguments of some naysayers and prophets of doom.
That kernel of truth is this: As I have often said, the Caymanian success story was built upon the implicit understanding that Caymanians must have an opportunity to participate in and benefit from economic growth. This is the Caymanian “economic contract” that created the success from which we now all benefit.
My own parents were part of this economic miracle – building a home, raising a family and through their working life making a contribution to a growing and modern Cayman.
Their children, my sisters and I, and many more like us became what I like to call the bridge generation. We are the Caymanians who were able to obtain a better education and go on to careers or build successful businesses. We are the link between a mostly bygone Cayman and the modern Cayman Islands we live in today.
My own sons, and their peers, will continue the work to build their own bridge into the future. And they, and all Caymanians regardless of the work they do, must be a part of the ‘building up’ of an even brighter future for these Islands.
To do that means to accept both sides of the “economic contract” – the opportunities and the obligations that exist between wealth creators and the people.
There are those – even among elected legislators – who, it appears, would rather be king of nothing than prince of something. To all in this room, I say that as political and business leaders, it falls to us to ensure that no one feels left behind, serving as prey to those who want to stir them up to become part of a ‘tearing down’ of all we have built over the course of the last 50 years in particular. We cannot allow that to happen.
So, we must remember always that, collectively, we are not building an economy to only benefit business or an elite few. But we are building opportunities for all Caymanians who too must be beneficiaries of a buoyant Cayman economy.
Firstly, that means the opportunity to benefit directly through work.
I said at the start that total unemployment was relatively low and falling – this is also true of Caymanian unemployment, which was over 10% some seven years ago. However, at the current level of 6.2%, Caymanian unemployment is still too high in an economy as successful as ours. That is why my Government has set a clear target to achieve full Caymanian employment.
In the short term, this means ensuring fair access for Caymanians in the labour market and creating chances for those who would otherwise find it difficult to take advantage of the available opportunities for employment.
In the longer term, it means ensuring that our education system provides young people with the skills they need to be successful in an increasingly competitive and fast-changing labour market.
It falls to government to take action to tackle that short and long term need. However, it is the private sector that will create the jobs that are needed and it is you in this room who can give Caymanians the opportunities we all know they deserve.
For that reason, I was delighted to see, President Kyle, that the
very first commitment within the Chamber’s Advocacy Agenda is for business to help strengthen Education, Employment Opportunities and Workforce Development for Caymanians.
In particular, I welcome the commitment of the Chamber and its members to work with the Government on vocational training opportunities and to help provide a clear path to gainful employment for Caymanians.
I do not believe that I have ever heard this commitment stated so clearly by the Chamber before and so I respond in kind by committing my Government to work closely in partnership with you and your members to realise this jointly-held ambition.
Rest assured, Government will do its part.
We have committed to having at least 75% of high school graduates go on to further education or training after high school. This includes vocational training overseas or locally as well as apprenticeships that provide training and job opportunities.
We are working to better utilise the various vocational and technical training programmes that are provided in the community and to encourage Caymanians to once again consider these very good job opportunities. We will work with schools to improve the advice and support available for young people. But we need you in the private sector to provide the placements, internships, apprenticeships and ultimately the jobs for this approach to be successful.
A noteworthy example of the Government’s own approach is the Public Works Department apprenticeship programme. Last year five young Caymanian students completed the pilot programme and were successful in internationally recognized City and Guilds certifications – receiving either foundation or proficiency level certifications.
At the end of last year 15 apprentices enrolled in the programme and this is expected to rise to 30 by September this year.
More broadly, we have increased spending on education to some $228 million over the next two years – more than any previous Government. We will complete John Gray High School and make improvements to several primary schools. And we are hiring more teachers and support staff at our schools to help raise standards and boost achievement.
Those changes will equip future Caymanians with the skills they need. As I said, more immediately we have to find ways to work together to support Caymanians who find themselves struggling in the job market.
By way of example, I look forward to renewing our partnership in the successful Ready-2-Work programme the last
Administration initiated. The next phase of the programme will kick off in the coming months.
This initiative was successful because Government and businesses worked hand in hand on an innovative programme that focused on truly assisting persons who needed help, including counselling, to get and keep employment. It also provided assistance to businesses to make the commitment easier.
I say easier but I recognise that the businesses that participated worked hard to ensure the programme was successful. Most did not even accept the funding that was available to provide a stipend to participants, choosing to pay them themselves. The Chamber Executive and many of your members played a key role in helping the pilot programme to be a success and I publicly thank you.
President Kyle, and also Past President Paul – I will pause here and note that this administration, as did the last that I led, appreciates the partnership that we have had with the Chamber. If there were disagreements – and there were a few – we were able to meet and discuss them in a business-like fashion.
The quarterly meetings we had proved very useful. Election campaigning and budget preparation last year did interrupt our meetings but we are now back on track. Incoming President Paul (Byles), you have my commitment that the dialogue between Government and the Chamber will continue.
One of the issues we will discuss is support for small businesses. For many Caymanians, the route to successful participation in the economy will be to start their own businesses. Those in my Administration understand that government must be an enabler of entrepreneurship and not put stumbling blocks in place to prevent Caymanians from starting and growing businesses.
Thanks in no small measure to the considerably reduced fees and other support started under the previous Administration, the number of micro and small business startups has increased dramatically, and small businesses are faring better than they have done for over a decade.
We can and should do more to help.
We are now looking again at further ways to cut red tape that may put unnecessary hurdles in the way of business.
To start, the Minister responsible for Commerce, the Hon. Joey Hew, is not only a small business owner but he is also a past president of the Chamber of Commerce. He understands very well the challenges of starting and running a business in these Islands, including the impact – positive or negative – of
government actions and policies. He has already started to make reductions in unnecessary red tape a priority, including turning his attention to a review of the Trade and Business Licensing Law and Regulations.
Minister Hew has committed his Ministry to working closely with the Small Business Association and the Chamber of Commerce, particularly in the formation of a Small Business Development Centre that will cater to the needs of local entrepreneurs.
There are also plans to introduce a tiered fee structure that recognizes the need to ensure that smaller enterprises are not expected to pay fees at the same level as much larger organisations with higher revenues. We recognize this will not be easily done, but it will be done.
We also need to make it easier to transact with Government. The business section of the E-Government portal already includes the online planning system, the national job link portal, and immigration online. In the coming months you can expect an expanded range of e-services to simplify your interaction with Government.
On the subject of immigration, one of the first actions I took following the formation of this Government was to announce the establishment a National Human Resources Department to encompass the main administrative functions related to Immigration – processing applications for the grant of Work Permits, Permanent Residency, and Caymanian Status.
More importantly, the new department will bring all relevant Government functions relating to the labour market into one place. However, this will not merely be an exercise of rearranging the bureaucratic deck chairs, merging functional aspects of the National Workforce Development Agency and the Department of Immigration. It is clear that a radical shift is necessary in order to modernise the strategies, services, and processes if we are to build effective workforce readiness skills in conjunction with an efficient, fair, and transparent work permit and permanent residency regime.
When I was last here at a Chamber lunch, I spoke to you about concerns with a backlog of Permanent Residency applications.
Processing these applications continues to be a priority and so, as of mid-December 2017 over 800 PR Applications had been reviewed and decisions rendered. The boards will restart this month and will continue at a pace that ensures the remaining applications are disposed of as quickly as possible.
While developing the new department, work has already started to review the existing Immigration Law and Regulations and fix identified issues. As I mentioned at the last Chamber Luncheon, the problems are complex – the root of which go back to systems and processes in place for many years. So the fix is not simple but we are committed to providing the people of these Islands with a modern, fair and workable immigration system.
The other key issue for this Government is to put in place the infrastructure development on which future growth depends. I have already mentioned the significant progress that has been achieved on the airport expansion programme.
I am sure everyone will have noticed the road improvements around George Town. Further projects are under way. Road improvement projects across the country were announced in the budget and this Government will deliver the benefits of all such investment. I would remind you again that these major projects continue to be funded from Government cash; not borrowing.
Like the Airport project, finding a solution to Cayman’s waste management problems was something that successive Governments had failed to deliver. Until now.
The new Solid Waste Management project has progressed and as we know a Dart-led consortium has been selected as the preferred bidder. Once negotiations between Government and Dart are successfully completed then work on the waste management facility should begin later this year.
The cruise berthing project is progressing and the ongoing work includes discussions with cruise companies on the financing model.
I hope by now you have been able to grasp the scale of this Government’s ambition.
We continue to support our pillar industries while identifying and taking opportunities to diversify our economy.
We have committed to full Caymanian employment and have begun the crucial changes internally to help us play our part in delivery.
We want to achieve a major shift in education, particularly technical and vocational routes that will equip our young people to compete in the global job markets of the future.
We will ensure that Government supports and enables those Caymanians who want to start or grow their own small business and we will remove obstacles to and reduce the cost of doing business here.
We will maintain our fiscal discipline while ensuring resources go where needed in order to keep our communities safe and our borders secure; to support the vulnerable and those in need of help in our society; and to invest in the infrastructure this country needs for its future prosperity.
We are showing the political leadership that Ms Dukharan described in the video that kicked off this session.
But we cannot succeed without your support and leadership.
We need your confidence to invest to create the jobs that Caymanians need.
We need your support to provide opportunities for technical and vocational training.
And most of all we need to make sure that we work together. I believe that if the political and business leaders of our country continue to work together there is little that we cannot achieve. Cayman is indeed “the best run economy in the whole Caribbean” as Ms Dukharan said. It falls to us all to keep it that way.
In closing, I want to acknowledge, along with the Chamber, the work of Her Excellency the Governor over the past four-plus years. I have said before and I will say again, it has indeed been a pleasure and an education working with her and I sincerely appreciate the support that both my previous and current Administrations have received from her and her office. She will be sorely missed.
I want to thank my colleagues in Caucus for the team work as well as the workmanlike approach being taken by this
Government of National Unity. I also thank the Deputy Governor, Attorney General and Cabinet Secretary for their counsel and assistance over the past four years and seven months.
Lastly, I want to thank the Chamber of Commerce for its partnership with Government as well as for inviting me to speak to you today.
Thank you and I hope you enjoy the rest of your afternoon.