September 29th, 2023
Video Link: https://www.youtube.com/watch?v=yuvCjYRNanY
My fellow Caymanians and Residents
The country’s spending for this year is at record levels, and it is possible that spending will surpass revenues and leave us in a deficit at the end of this year. That could lead to dire consequences for the country and our people.
It was against that background that the Opposition refused to support Ministers’ additional spending plans in Parliament on Tuesday. We believe it is irresponsible for Ministers simply to add to spending and that instead they should reprioritise and find savings to fund necessary increases in spending elsewhere. For that reason, all opposition Members of Parliament abstained on the spending votes.
Two years ago, when the PACT Government passed the budget, the Opposition warned that they were playing fast and loose with Government finances. Since then, we have consistently cautioned that not only has the Government’s spending been getting out of control but the revenue that they projected for this year will not be achieved. Only last month, we warned that the Premier had to know that there is a real risk that the country could be in deficit this year and that was the reason why he asked his Ministers to curtail spending by almost $50 million so that the country’s expenses would not pass the one-billion-dollar mark.
But rather than acknowledge the financial risks his Government was taking, the Premier persisted in telling the country that all was well.
Well, in Finance Committee this week the Premier finally had to start being more truthful to the country and has finally indicated that the Opposition had been correct – his revenue targets will not be met. The Premier admitted that the revenue earned would be less than he told the country only back in April. And despite this, and despite his calling for spending cuts, he brought a spending bill to Finance Committee seeking to increase Government’s spending for this year by $68 million dollars. An amount that would push Government spending to a record $1.03 billion for this year.
At the April 2023 Strategic Policy Statement, the Premier had indicated that the Government would not reach a billion dollars in spending until 2026, assuming PACT continued to Govern following the next election. Well, the Premier is three years ahead of plan!
How much higher will spending go? I really wonder.
The effect of all this is that the Premier is now asking the country to accept that the Government will receive only $3 million more in revenue than it expects to spend.
My fellow Caymanians, it would not take much to go wrong for the expenditures to surpass revenues and the country would end up with a deficit for 2023. The Financial Secretary said the same when he was asked his view on such a low level of surplus.
This is not a situation I would have accepted when I was Finance Minister, and neither should the Premier in his role as Minister of Finance.
When questioned by the Opposition, the Government responded that they hoped that all the money that had been requested for spending would not actually be spent. Running the country’s finances on the basis of hope is no recipe for fiscal stability.
As such we determined that as an Opposition we could not, with all good conscience, vote for even more spending. Instead, the Government should find savings to cover the $68 million in extra spending for the year that would take the country past a billion dollars in expenses for this year.
The PACT Government continues to try to wish away its internal divisions while keeping its fingers crossed that the government finances will work out in the end.
If Cayman does avoid a deficit this year, that will be a matter of good fortune rather than sound financial management.
With the budget for the next two years already under pressure there will be tough decisions that need to be made about future priorities and spending. I fear that with the PACT Government in continual disarray, they will not be able to make the decisions that are necessary.
We in the Opposition will continue to hold the PACT Government to account; we will carefully scrutinize the upcoming budget proposals; and we will remain watchful on behalf of the Cayman public.
Thank you for listening to me, and may God continue to bless these beautiful Cayman Islands.
– Hon Roy McTaggart, Leader of the Opposition