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Cayman Islands Chamber says CS team to implement EY Report will have conflicts of interest

GOAP-openThe following is from The Cayman Islands Chamber of Commerce:

Chamber Council calls for bi-partisan support for Project Future report

The Chamber Council has reviewed the Project Future report which was released on 1st September 2014. The 263-page report includes 55 recommendations that are intended to improve the performance and efficiency of the public service and, where appropriate, reduce costs.

We wish to acknowledge the Cayman Islands Government for commissioning this report and Ernst and Young, a corporate member, for accepting this assignment. The Cabinet is now charged with the significant responsibility of reviewing the recommendations and determining which ones will be implemented.

The review included conducting an assessment of past rationalisation recommendations, taking into account the current conditions in the Cayman Islands, assessing the feasibility of implementing past recommendations, identifying functions that would be better carried out by the private sector across Government’s portfolios of entities, reviewing Government’s assets and recommending those that could be sold to the private sector where a fair market exists, developing a roadmap for execution and cutting red tape for business, the Government and the broader Cayman Islands community.

The Council met with the consultants on 8th May 2014 and expressed support for the project and provided them with a letter addressed to the Deputy Governor listing the actions that we believed based on our consultation with the membership could assist them in their work.

The rationalisation of the public sector has been an important advocacy issue for the Chamber membership since the 1980s and has been the focus of many surveys, focus groups, discussions and submissions. Over the years Governments have introduced cosmetic reform initiatives that have yielded some positive results, but no full scale reform has ever been achieved that has resulted in comprehensive and whole scale reform due to lack of political will and internal support from the public sector.

What do all stakeholders in the Cayman Islands want to achieve from this exercise? Stakeholders, including residents, businesses and investors, are seeking a more efficient and responsive public sector; one that is consistent, transparent and accountable. They want systems that are easy to understand. They want to know that all applications will be processed objectively and do not require special calls to officials to be heard. Inefficiencies and inconsistencies waste time and money and frustrate residents, developers and investors. We want a Government that is fiscally responsible, accountable, and transparent with a clear plan for the future. We also want to ensure that we have the financial resources and reserves to invest in key infrastructure projects and to prioritise them accordingly.

The Council supports measures to reduce the cost of government, improve performance and relate efficiencies, increase enforcement, privatise non-essential services, introduce and apply reasonable regulation and eliminate waste and unnecessary bureaucracy. Members believe that Government works best when it creates a regulatory and enforcement environment that foster business development and growth rather than competing with the private sector by providing services that fall outside the central role of Government. The public service should be seen as an enabler of business and the regulator of standards and the protector of persons in our community who are most vulnerable and require assistance.

The Council calls for bi-partisan support of the Project Future report. Unless all political groups and elected officials are sincere and realistic about public sector reform and show support for austerity measures the report is likely to end up like the countless other reports over the years. If the elected officials fail to support the report then further money spent on consultant reports will only increase our deficit. What should be clear to all is that the status quo cannot continue.

The Council urges the Cabinet to consider each recommendation on its own merit and to be brave and bold in their selection of the recommendations that will be adopted. This is an ideal opportunity to accept new methods of operating the public sector, to improve service to all stakeholders and to outsource services better performed by the private sector. Evaluation of the recommendations should not be hindered by internal forces that may attempt to sabotage reform, to protect old and antiquated systems or to centralise power or to build up internal empires.

The Cabinet should assess each of the recommendations utlising the same objectives that the steering committee developed for the project:

 To preserve or enhance service levels and standards;

 To ensure fair and equitable treatment of existing employees;

 To attract local participation to provide public services and/or ownership of government assets where a fair market exists;

 To communicate with stakeholders throughout the process;

 To maximize employment for Caymanians;

 To promote fair competition in the marketplace;

 To consider the economic, financial and social implications of rationalisation.

The Council questions the decision by Government to assign a team of civil servants to lead the implementation of the recommendations that are to be accepted. We are concerned by the potential conflicts of interest and whether the team will have the requisite change management skills required to carry out this challenging process. We would have preferred to see some independent private sector involvement that can offer relevant expertise in, or oversight of, the implementation process. This partnership would strengthen the initiative and help to ensure the successful implementation of the recommendations. Creating a new department rather than simply outsourcing the implementation contradicts the aim of the Project Future report which is to change systems and to reduce expenditure. The implementation phase should not be led by bureaucrats who may lack the objectivity to guarantee the success of this initiative.

The assessment and placement of public sector employees who will need to be transitioned to the private sector (recommendation 48) is of paramount importance to the overall success of the rationalisation initiative. This transition must be agreed as a top priority to achieve success. The Implementation Steering Committee and the programme management office must ensure that no Caymanian is left behind and the private sector must be an active participant in the transitional process.

All relevant stakeholders including the National Workforce Development Agency, Department of Commerce and Investment and the Department of Labour and Pensions and private sector employers must work together to assist in the assessment, retooling, upskilling and placement of those impacted. This may mean that resources may need to be reallocated to improve the ability of these departments to assist with the smooth transition of public sector employees into the private sector.

The Council supports the development of a long term strategy for the Cayman Islands (recommendation19). The Chamber initiated and developed the Future of Cayman Economic Development initiative in 2009 ( in partnership with Government in an attempt to agree on some short to medium term strategies that we all agreed were essential for Cayman’s ongoing and future success. This economic development initiative is currently under review but when it was fully operational each of the five drivers was co-chaired by a representative from the Chamber of Commerce and a senior public sector official. The five drivers include:

 Develop Talent

 Build a Smarter Infrastructure

 Create a Business Friendly Climate

 Enhance the Quality of Life

 Diversify the Economy

Each of these drivers lists several objectives for action which included strategies to improve business procedures, reduce government bureaucracy, identify areas for procedural changes and methods to create a more business friendly environment that would encourage business growth and expansion in order to generate more income and cost savings for the Government and improve the quality of life for all residents. The Council would welcome an opportunity to re-engage and to re-establish this initiative, and partner with the Government for the development of a 2025 vision for the Cayman Islands.

The release of the Project Future report is a perfect opportunity for the Government to take decisive measures to improve financial accountability and to address the management of debts and liabilities that have lingered for many years. This rationalisation process is the result of years of uncontrolled public spending, a lack of sound fiscal management policy and a failure to adopt a financial strategy and national development plan. This led to the introduction of the Framework for Fiscal Responsibility (FFR) commitments and borrowing control Cayman’s financial affairs to minimise the United Kingdom’s contingent liabilities. The current Government has taken steps to control spending and to consolidate and to reduce debt, but for long term change to occur public sector reform is essential. Kicking the proverbial debt can down the road for future generations or politicians to address is unacceptable.

The Cayman Islands Government currently has 13 ministries and portfolios, over 70 departments and sections, 25 statutory authorities and Government companies and numerous boards, committees and commissions. The size of Government is leading to a strain on the budget that is not fiscally sustainable. The Project Future report includes recommendations to privatise several key government agencies some of which are losing millions of dollars annually, sharing government services among departments and agencies and introducing civil service changes to improve performance management of public service employees.

The Council calls upon Government to evaluate all 55 recommendations and to produce a detailed report listing which ones will be implemented in the short, medium and long term with a completion timeline for each. We call upon Cabinet to bring a level of transparency to the decision making process and to inform the community of their decision on each entity and the rationale/alternative course of action proposed if they disagree with the recommendation in the Project Future report. The Cabinet should also report regularly on the progress of the implementation team.

This rationalisation exercise is a perfect opportunity to ensure that Caymanians are given a chance to invest in key infrastructure assets. The Project Future report identifies the Water Authority, Cayman Islands National Insurance Company (CINICO), Airport, Port and Health Services Authorities, Cayman Airways, Radio Cayman, the Postal Service and the Turtle Farm as potential targets for sale, privatization, and outsourcing of services and/or public private partnerships.

Past Governments have been unwilling to demonstrate the necessary leadership and to put Cayman on a path for success by implementing similar recommendations that have been made in past reports. What is clear is that the status quo cannot continue. Total public service debt at 30th June 2014 is stated to amount to $874.5 million. If unfunded pension liabilities are included, total public sector liabilities amount to $1.15 billion. Furthermore, the Government is not in a position to significantly invest in infrastructure upgrades that are vital to Cayman’s future. We call upon Government to take these matters into consideration when they decide whether or not to introduce these recommendations.

The rationalisation of the public sector needs to be led by the Cayman Islands Government in partnership with the private sector with relevant expertise. There must be consensus and acknowledgement that reform is required and the only way that this will be achieved is if everyone is committed to change and the implementation of the report. Otherwise, the Project Future report will be placed on a dusty shelf like many similar reports of the past.

The Council considers the implementation of the report as one of the top priorities of the Government along with the airport redevelopment and the long term solution for solid waste management and George Town landfill. We look forward to receiving an update from the Premier at the Chamber’s Legislative Luncheon on 9th October on some of the proposals that have been accepted for implementation.


IMAGE: Cayman Islands Admin Building



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