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(CNS): In his first address to parliament from the opposition benches since being fired from the PACT Cabinet, Chris Saunders (BTW) challenged the sustainability of some of the Cayman Islands Government’s fiscal and political plans. Sustainability has been billed as a major component of this government, but the now estranged independent MP said revenue derived from selling Cayman’s land and jobs was unsustainable.
The former finance minister said that in 2022 the government had an operating surplus of over CI$47 million. However, this had given him some cause for concern because a close look at the figures showed that most of it came from better-than-expected revenue from both work permits and stamp duty.
“When you break down how it came about, CI$45 million of that CI$47 million… was basically selling Caymanain jobs and selling Caymanian land, and that in itself is something that is unsustainable,” he said, noting that government did not hit its original customs duty target in 2022, which indicated that inflation had begun to impact consumption as people have less money to spend.
However, import duty was an important factor in the Cayman Islands’ tax base, he said, and the country was going to have to engage in a difficult conversation about future-proofing the economy and about where government derives its revenue.
Saunders said he was also concerned about the predictions for 2026 set out in the Strategic Policy Statement because just one major event could push the CIG into non-compliance with the Public Management and Finance Law. He further noted that over the SPS period, the government would no longer be able to finance capital and equity from its surpluses each year but would have to use savings, which was also unsustainable.
Cayman’s banking system was also facing some risks, Saunders said. He pointed out that the local banks had a combined loan portfolio of $2.4 billion, which, given the size of recent interest rate hikes and the domestic banks’ mismatch between loans and deposits, was unsustainable, and Cayman needed to create a capital market.
The rising cost of living, food insecurity, fuel prices and the growing population are all unsustainable, he said, as is a growing dependency gap between the working population and those in retirement, which without work permit holders would be the worst in the world at more than 50%.
The inadequate private sector pension system and the current healthcare situation were also unsustainable and in need of significant reform. While Saunders said the CIG must bring down public spending, he is proposing free healthcare for children and the over 68s because, he said, the government could not afford to keep picking up the healthcare tab for those who are under-insured or have no cover at all.
He said the current situation where the private health insurance firms gain all the profits while the public purse faces all the losses was also unsustainable. Saunders said that was why he had been driving the expansion of CINICO, though he recently told CNS that those efforts had been met with significant backlash from the private insurance providers, who were also influencing his former Cabinet colleagues.
The SPS is not the budget and is as much a political as a fiscal document. As such, the premier would have been a major driving force behind it. Nevertheless, Saunders, who was finance minister until last month, would have had some input into the figures, but since he split with PACT, he has indicated that he had concerns about the levels of government spending as well as future revenue.
However, he was more generous about the predictions made by the public sector technocrats and praised the hard work of those in the finance ministry.
See Saunders’ address on CIGTV below:
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