Well the 2013 election is now behind us. The UDP turned out to be a non-factor winning only three seats with beleaguered ex-Premier McKeeva Bush retaining his seat in West Bay. The various Independents grabbed five seats (three endorsed by C4C) and the People’s National Alliance took one. The PPM had the majority, 9/18 seats, but to form a government required the necessity of asking PNA member Julianna O’Connor Conolly to take the Speakers position, and Tara Rivers (endorsed by C4C) being offered a Cabinet seat which she accepted as an independent.
So what does all this mean for the country going forward? Well, there is more than one opinion about that as you might guess, but this is how I see it.
Initially, most breathed a sigh of relief that the UDP and its remnants did not win. With their leader having numerous charges of impropriety (corruption) levelled against him, and possibly more to come, many people had great concern about another UPD led government. And not only was this just local concern. Internationally Cayman’s reputation has suffered considerably as a result of their mess. See for example the recent Economist article “Treasure islands in trouble”.
With the PPM in power, it is unlikely we will see any of those types of shenanigans, and as a result, both the international business community and the local business community will be more inclined to spend money and undertake projects here. So, initially at least, the signs for an improved economy are good. Further, many of the countries most serious problems were exposed during the campaign this time as the independent candidates sought to focus the elections on issues rather than personalities and party politics. So, we would expect these issues would be front burner items for the new government. And lastly, there are some new faces in the Legislative Assembly now, which gives us some hope that things will be different this time around.
However, the PPM takes over a country with significant problems, some of which date back to the last PPM Administration. Let us not forget that under the last four years of PPM rule, government debt increased by 76 per cent, Caymanian unemployment by 32 per cent, and the cost of staples like eggs by 39 per cent. The UPD was just as bad or worse in most areas, but the PPM was by no means a poster child for fiscal responsibility.
Cayman has a total debt of about CI$1.5 billion, or $50,000 owed by every Caymanian, which has been accumulated by successive governments. Is there any real hope of a balanced budget by a new government whose leader has already stated “austerity is not the answer”? We can only hope the new government does not continue to walk the path that all of our recent governments have trod by trying to balance the budget simply by increasing revenue. This would be a recipe for disaster in that it would result in an even higher cost of living (more taxes and duties), and a loss of business (and therefore jobs), especially in the financial sector. Finding new sources of revenue always sounds good in theory – and it is if you mean attracting new business to Cayman. But historically it has meant increasing fees on all sorts of goods and services, and this is something our economy cannot tolerate right now.
This is a true “Gordian knot” of a problem which, as in ancient mythology, may have to be cut rather than untied. Right now, tough choices must be made. The UK is not likely to agree to further borrowing – and rightly so. Government itself must shrink and become more efficient and cost effective if we are to have any choice of cleaning up this financial mess. The UDP was bounced partly due to corruption charges, but also due to their ill-advised consideration of direct taxation in 2012. If the PPM is not ready to look in earnest at streamlining the civil service, and if they intend to move forward with any of the needed capital projects, then they will be forced to consider either gambling or direct taxation to balance the budget.
We all have to hope that the PPM has the political will which will be necessary to make the required cuts to bring our budget and debt back to reasonable levels. Let’s hope that some of the new blood within the PPM understands this and forces its leadership to do what is necessary going forward, and not just revisit old failed policies. Because if they don’t, we could see the Pandora’s box of direct taxation opened, which would change our country forever.