The Journal has a review of the Cayman Business Outlook panel discussion: “Things Tough! So Don’t Cut My Pay, Tax Me Less & Give Me More Free Services … And Do Something About Crime … Education … and Jobs. And What About Those Expats?” Panelists: Roy Bodden; Sherri Bodden Cowan; Canover Watson; Burns Conolly; Tom McCallum and Theo Bullmore. The panel was moderated by Austin Harris of Rooster 101.
Our children need to be equipped to compete globally and being a Caymanian is no longer a qualification. Many of us have outsourced education to the government (or caregivers). What does the panel think we should do to bridge the gap between education standards in Cayman and global standards?
Mr. Bodden, tell us what you think. Is this the time to introduce chartered schools, where the government simply provides funding, the parents are involved in the quality and standard of education and teachers are rewarded based on performance?
Roy Bodden: I am an advocate of chartered schools to an extent but I don’t think they are a panacea for Cayman. There are certain problems that we need to address, certain notions that need to be removed such as the concept of entitlement. Caymanians are not entitled to anything but a fair opportunity to be educated. State schools can work well if their benchmark standards meet international standards because we have to be competitive.
We need to update teaching methodology to include smart boards and ICT technologies. Our children are ill equipped for tertiary education and are not attaining the necessary mastery of their subjects at the primary and secondary levels. We also need to better equip our own teachers so cultural concepts can be got across and the information better utilised.
Canover Watson: We need to start preaching a new message to our young people that they must be able to compete at the global level, but there needs to be a balance so our young people are given a fair opportunity in the workplace and the checks and balances are in place to ensure their advancement and growth. Outside labour is needed but a balance needs to be found.
Past and present governments support the roll-over policy and we Caymanians do so too. But if our prosperity depends on foreign investment and population growth, the roll-over policy appears inconsistent with these long-term goals. Should be abolish the roll-over policy? Mrs. Bodden-Cowan, having recently been reappointed as Chairman of the Immigration Board, is it time to do something radical?
Sherri Bodden Cowan: I do not believe that the rollover is not contrary to the plan to grow the economy. In 2003 the law was established to install a system in which the very best skilled professionals would get the opportunity to obtain permanent residency and from that naturalisation and on to full Caymanian status. It was the best way to grow the economy. It is impossible to keep 100 per cent of people here on work permits and offer them tenure and it is completely unreasonable and unfair to keep them on work permits with no opportunity to become citizens. Fifty to 60 per cent of work permit holders resident in the Cayman Islands won’t be able to afford to educate their children or take care of the cost if they were to become terminally ill or require housing for the elderly. If the rollover policy were to be abolished these problems would be handed down to our children. We need to go back to the 2003 law, whereby key employees are key to the organisation and are allowed to become permanent residents and Caymanian citizens. In that way we will grow a great population for our islands.
Will the period of time an individual needs to be away from the Islands during their rollover be radically reduced?
Sherri Bodden-Cowan: A 30 day holiday whereby an individual keeps their house, car and so on is meaningless. We would be in danger of a court deciding that this was not a proper break in stay.
The previous government had recommended a two year break in stay but this has been reduced to one year. We have to look at the risk of the break in stay becoming meaningless if it is reduced too far.
Theo Bullmore: The rollover policy has become a bit of a hobby horse of mine. I think it is morally wrong to say that people are dispensable, financially wrong because it imposes costs on businesses owned by Caymanians and sociologically wrong. I think it increases the divide between expats and Caymanians in an unnecessary way.
Canover Watson: I agree in principle with the concept, that we cannot absorb all nationals but I differ in the way it has been applied. It shouldn’t be uniformly applied across the board because our economy is not uniformly driven. The financial services and tourism are the primary drivers and we need to look carefully to see how best to balance these with the talent pool. We’ve allowed a lot of talent to leave to other jurisdictions and compete against us.
The common complaint on the airwaves and the blogs is that expats are taking jobs that could otherwise be filled by Caymanians. However, according to recent reports, the number of work permits has decreased by over 5,000. During this time, the unemployment rate amongst Caymanians has increased to about 10 per cent.
The Minister responsible for education and labour stated recently that Cayman does not have an unemployment problem as much as an employability problem.
What do think has created this problem?
Mr. Watson, as an educated Caymanian and a successful businessman, what do you think?
Canover Watson: We have to prepare young people to compete on a global stage because that is the bar by which they’ll be judged. The advent of the global market place means business owners have to ensure they find the most efficient way of doing business and therefore look to where the best talent is at the best price. The global downturn has highlighted problems.
There is a misconception by Caymanians that getting rid of an expat means a job for a Caymanian and I find this is a fundamental flaw in policies. We need to find out how we create meaningful jobs for Caymanians. When I joined Admiral I was employee number five and the only Caymanian. We have been able to build up the business to around 100 employees – about 50 per cent are Caymanian/50 per cent expats. We’ve been able to build up a bigger pie for Caymanians. Encouraging businesses to grow is the only way to protect Caymanian jobs.
Roy Bodden: In our heyday we had around 1,000 men at sea and then the world moved. Ships went from analogue to digital and no one thought to train our men, thus jobs were lost through the process of attrition. Caymanians were not educated or trained. Until we realise the failure of education and training things will not improve.
All of us know that when we balance our cheque book each month, we need to keep our expense below our income.
If we run over, we either have to beg the bank to give us an overdraft, or reduce expenses, or get another job, or work longer hours. Why doesn’t the government apply the same logic to balance their books?
Mr. McCallum, you’re an accountant and financial advisor. Is borrowing money to balance the budget a sustainable long-term policy or should we adopt the UK remedy of drastically cutting expenditure by reducing services and imposing user fees for basic services, or, embrace the unthinkable and introduce some form of direct taxation?
Tom McCallum: I have never seen a speech so huge by the Premier than the one we heard today – there were some big announcements for growth this year but there was nothing said about cutting services or becoming more efficient. There has to be a balance. In all our excitement about these new measures we cannot expect a few mega developments to bail us out. The biggest voting block is the civil service and there are a lot of very hard working public servants, but how much political will is there to rationalise services.
Burns Conolly: We have to cut costs to be more efficient to be sustainable. If the revenue in is not able to pay for what the government spends then they will be forced to make cuts.
The Government owes foreign banks about $600 million. It owes Caymanian civil servants another billion dollars in the form of future pension and medical benefits. This is equivalent to about $35,000 per man, woman and child living in Cayman and, if we just look at Caymanians, you can double that number.
Nobody is talking about it because they don’t realise they owe this money. What does the panel think is a long-term solution to this problem? Mr. Bullmore, how is the next generation going to deal with this problem?
Theo Bullmore: Debt itself is not good or bad – it depends how it is incurred. It’s good if it’s invested in capital, which brings returns. There needs to be proper mechanisms in place for servicing it – there needs to be proper safeguards and smooth repayment. Going back to the lessons learnt in school: politicians needs to tell the truth – tell the voting public about the extent of the problem and no off balance sheet loans; they need to play together – the two party system encourages one party to disagree with policies just because the other agrees with them, but these issues need to be addressed together as a country as the issue of debt is far too important to deal with it via two different approaches; they need to own up when they make a mistake – so that mistakes, such as spending the surplus when we had one, are not repeated.
Canover Watson: We have to take a shared responsibility to address the problems. The challenge is that while steps are being taken not enough is being done. We need decisions with a clear time line and a plan with regard to how to reduce expenditure and the debt incurred. We need a coming together by everyone – everyone must share the burden and come together with a solution.
We read everywhere that Cayman’s prosperity depends on foreigners investing in this country, fuelling growth and employment. But as Caymanians, we appear to be hostile to increasing foreign control of our economy.
How can we have our cake and eat it too? Mr. Conolly, how do we maintain the level of development necessary to fuel the economy and keep foreigners out?
Burns Conolly: Our two economic drivers – finance and tourism – have the same principle components – development and consumption, and we need to fuel the two. It is critical that we actively bring in foreign investment because we need to bring in constant revenue. There are significant developments going on but we haven’t explained how our economy works. We haven’t generated sufficient knowledge so that people understand why every tourist or investor that steps off the plane is important to us. We have detached the money in our own pocket from people coming here. We do not have enough Caymanian consumption to fund government spending. The problem has been exacerbated politically when people do not feel that they are getting their fair share of the pie and this must change.
Sherri Bodden-Cowan: It’s a question of trickle down economics. With regards to Immigration, there have been a number of initiatives to promote business, such as the introduction of the new 25 year certificates for those who have established a substantial business presence on the islands.
We’ve had five armed robberies in one week alone. Our country is increasingly looking like some of our neighbours. This crime wave is having a serious impact on our way of life and our faith in our law enforcement agencies is at an all-time low. We are limited to what we can do with these criminals.
What is the answer to this dilemma? Mr. Conolly, what do you think?
Burns Conolly: I think we need to separate crime that occurs out of dramatic need and opportunistic crimes. Crimes in Cayman have been linked to the lack of jobs but I don’t subscribe to that view. It’s easy to blame crime on the economy. We have had crimes before this recession, but because we are a small community crimes close to home have a direct impact on our psyche. We need to ensure that there is public support for the police and ensure that people are comfortable giving information to the police and ensure that the information stays there. Years ago Mr. Haines installed cells of police, isolated units that reduced the possibility of information leaking and I think we should go back to this. Crime is linked to opportunity, not lack of jobs.
Tom McCallum: We need to change things so that it is not socially acceptable to look away. We cannot allow this to happen any more. We must not be afraid. When your child or your friends’ children are doing something unacceptable we need to do something about it.
Like the United States, a large chunk of the Cayman economy is based on people spending money on basic necessities. And the spending is directly linked to the number of people who live or visit here.
What, if anything, should be done to increase the population and consumption and therefore the economy?
Mr. Bullmore, how do you see this happening when we appear averse to the idea of increasing the number of consumers?
Theo Bullmore: Our population has recently declined by around 10 per cent and this means every supermarket has lost about 10 per cent. To get to where the population used to be we have two options: Caymanians can procreate more or alternatively we can get more expats on the Island. The irrefutable logic is that we need to ensure that expats don’t leave. Metaphorically speaking Caymanians ought to get into the habit of hugging an expat every day and vice versa. We could encourage getting new expats onto the Island by offering Caymanians a bounty for every expat that they bring to Cayman. There needs to be a more positive welcome for expats. We need to make up that 10 per cent otherwise the country will never get back up to where it once was.
Sherri Bodden-Cowan: The only way to grow the population from within is to offer long term residency to people and their families – that should be our long term goal. Education should begin at school to get people to the level whereby they understand the importance of inviting expats to the island and the trickle down benefits. There is a disconnect and therefore we need an education process. Expats still feel unwelcome and so the private sector needs to work with government to ensure that everyone feels welcome.
This hysteria and panic that we are currently experiencing was not home-grown and these problems too shall pass. But this is the time when Caymanians have to make a choice.
Do we continue along the path of globalisation and all that goes with it or should we return to a simpler way of life?
Mr. Bodden, can we go back to the way of life that you once knew?
Roy Bodden: I would be a madman if I advocated going back. We are on a treadmill and there is no way off. We must keep pace or speed up the pace – we need to do things better than others. When people talk about diversification I cringe – there are no factories on this island – we are a service-based and knowledge-based economy and we need to grow expertise in this area. We need to have a national dialogue with expats and Caymanians about our mutual interests and we all need to work together to find a mutually beneficial solution.
Tom McCallum: I agree there is no way back. We are not globally competitive enough and not open enough to business. We need to recognise that we need to increase economic activity. Every law firm that started here now has operations overseas. Rollover is not our biggest issue – businesses need to know the rules and there are too many rules.
We have a mountain of garbage that is a health hazard to our community. But successive governments have failed to deal with this issue. Simple solutions, like recycling, have yet to be embraced by the Government.
Mr. Watson, as chairman of the Technical Committee on waste, did your mandate include a green initiative?
Canover Watson: I must commend the government for finally dealing with the problem that we have had for two decades. It can only drive the economy by bringing in more business.
Burns Conolly: Recycling and waste management is on the table and the dump will be capped which allows for the prevention of future leechate. The private sector has begun to come on board – supermarkets have confirmed that 2 million plastic bags will now not be brought onto the island. We have 21,000 people here on work permits and many will already be familiar with these issues so that is a good starting point for deeper green initiatives.