Statement by Premier, Hon. Alden McLaughlin, MBE, JP, MLA
14th October, 2020
Opening of the Legislative Assembly
I will make a separate statement on the COVID-19 position during this meeting, Mr. Speaker, but, for now, suffice it to say that the Government recognises that we must get the tourism sector moving again but we will do so in a way that does not jeopardise the hard-won position we now have achieved.
Getting tourism and the broader economy moving again, however, does not mean just turning back to the way things were before. This crisis has changed Cayman. It has changed the world. It has created an unprecedented economic shock. It has changed consumer behaviours. Things will not just spring back as they were.
For all those reasons, Cayman now needs to think anew about its future and take the opportunity it gives us to re-chart our path back to prosperity.
The good news is that we are not starting from zero. The development sector is still doing well and has helped jump-start the domestic economy as we reopened - a very good indicator of the confidence in our Islands.
The Financial Services Industry and its support eco-system has carried on through the recent turmoil, if not uninterrupted then certainly in strength.
The task of Government in respect of the Financial Services Industry is two-fold.
First, we will continue our engagement with the European Union and building relationships in Brussels. Mr. Speaker, it feels to me that I have spent more time this term than anyone could have wanted travelling around Europe trying to persuade the EU of the bona fides of the Financial Services Industry in Cayman. Or travelling to the USA to reassure investors about the future of the jurisdiction. But this has been necessary and ultimately fruitful work.
I know we were all pleased that earlier this month the European Union acknowledged the work we have done to further strengthen our regulatory regime regarding funds and removed us from their list of non-cooperative jurisdictions for tax purposes. This was a significant achievement with all hands working over many months despite the pandemic. This work was greatly aided through our programme of engagement. But the job does not end here. As we know there will be other initiatives aimed at us and we will be ready.
Secondly, the partnership with the industry must continue and be strengthened. Government and industry have separate but complementary roles to play in keeping the sector strong. However, we must and will move forward in lock-step to secure the future of the Financial Services Industry.
The Minister for Financial Services has provided first-rate support through the process and her work in partnership with the industry has been crucial in providing the European Union and others with the evidence of Cayman’s commitment to the highest standards of international regulatory compliance. I thank the Minister for her hard work.
Let me quickly add Mr. Speaker, that whilst some may complain about the added requirements on a significant part of our Funds business, many in the sector believe that many benefits will accrue to these Islands, not least of which is the possibility of additional jobs and opportunities for Caymanians.
In addition, the economic substance rules require that appropriate businesses must have an adequate amount of operating expenditure incurred in these Islands, have an adequate physical presence here, and have full time qualified employees also located here. Also, the new requirement for annual audited financial statements for closed-ended funds will add to the work needing to be done here.
All this means that the changes are creating new job opportunities for Caymanians both directly in the financial services sector and indirectly as more money gets spent in our domestic economy.
The other pillar of our economy, tourism, still has an important part to play in Cayman’s future. It will recover but it will recover slowly and unevenly.
Both business economics and the on-going public health concerns dictate that it will be stay-over tourism that recovers here first. ‘RB5 – The Road Back to 500K Air Arrivals,’ the three-year plan published by the Deputy Premier, charts a realistic course by which Cayman can in time recover to its pre-COVID position of half a million stay-over visitors a year. I commend the clarity and thoughtfulness of the plan that he, his Ministry team and the industry itself have devised.
Across government, we are working to make sure that the implementation of that plan can be achieved with minimum risk to Cayman’s population. The key will be in the continued partnership with the industry to make sure Cayman’s hotels, when they reopen to business, are COVID-secure locations, maintaining the highest standards. The Government will give them the advice and support they need. The ‘resort bubble’ is one solution that is being worked on to help restart tourism in a phased and careful manner. As is the Global Citizens Concierge programme that will be launched shortly to attract longer-term visitors to live and work here. We are also in conversation with Villa management companies as to how to allow visitors to stay and quarantine at what is effectively a self-contained villa.
While we will continue to err on the side of caution as we reopen our borders, we understand that reopening Cayman successfully is required. We cannot stay closed indefinitely. While a successful reopening acknowledges that we will have some risk, we will take great pains to minimise the risk of an outbreak of the virus.
Mr. Speaker, we will need to be flexible and responsive as the situation changes. Once the serious threat of COVID-19 is abated we must make sure that we maximise the benefit from the visitors who do come to the Islands. We must get them out of hotels and apartments and broadly spending money in our economy from West Bay to East End and North Side and over to the Sister Islands along with the other districts in between. This offers real opportunities for Caymanians and the plan proposes a New Visitor Experience Development Fund to help provide funding and guidance to new business start-ups looking to exploit those opportunities.
Inevitably, the opening of Grand Cayman to the cruise industry will take more time and, in my view, it will take time for consumer confidence to return to that industry in any case. We cannot expect the numbers of cruise visitors we have been used to. The Government will therefore continue to offer both short term help to those impacted by that reality and longer-term support in terms of retraining and small business support to create more opportunities for Caymanians.
I have throughout my time as Premier spoken of the need to diversify the Caymanian economy. In particular, we need to embrace the opportunities offered by digital business and the knowledge economy.
The Government has made important steps in that direction. The framework of protections we created for intellectual property was a crucial step and we have seen initiatives like Enterprise City and Tech Cayman attracting increasing numbers of new businesses to our shores as a result.
The Virtual Assets Law, which this House passed in May, is another really important step forward. On the one hand, it is a significant regulatory provision to support the development of our financial services in the fast-moving world of cryptocurrencies and digital assets.
On the other hand, alongside the intellectual property regime, it opens the way for creative industries in Cayman to prosper. For young people looking to develop their interest in gaming or app development or music into a career, it offers them the chance to create digital content and receive safe payment here in Cayman. In the rapidly developing digital world, I believe Cayman’s young people have the creativity to drive success. This Government is providing both the legal frameworks they need and also the skills development and business support necessary to turn great ideas into viable income streams.
In the face of this current crisis, I recognise that we now need a step-change in our efforts on diversification. My government is willing to do more to support the location of knowledge-based business in the Cayman Islands. Discussions with the market leaders suggest that to attract and retain such businesses, Cayman needs to consider a third undersea communication cable to both increase capacity and improve resilience. Therefore, the Government has sought expressions of interest in providing that third cable.
I am determined that these developments, exciting as they are, must not just be about attracting overseas investment. Mr. Speaker, they must be about creating new opportunities for Caymanians.
Those opportunities will come in two forms. First, the investment will create new jobs in the digital industries. We have recognised that if Caymanians are to be in the best possible position for employment in the jobs being created, then they need the best possible education and training to equip them in the new marketplace.
The improvement of Cayman’s public schools is a long haul but this Government has made good progress. I want to thank the Minister of Education for the strategic approach she has taken, which is tackling some of the long-standing problems that were revealed through the important work on baseline assessments carried out during the government’s first term.
Central to the strategy has been improving the quality of teaching. Investment has been made in training for our teachers and salaries have been raised. The increases we have provided recognise the value of teachers in our society and also help to attract and retain the best to teach in our schools.
A testament to that was the special mention at the Clifton Hunter High School graduation this month of three students, Diamond Chambers, Joshua Peart and Aaliyah Powell, for attaining top performance status and being named in the top 10 for the Caribbean Region for their academic performance in external examinations in Integrated Science, Human and Social Biology and Electronic Document Preparation and Management.
I congratulate these young graduates, their parents and teachers on their outstanding achievements.
The latest round of inspections of our public schools is recognising the progress that has been made.
High-quality teachers need to be teaching the right things. The education system needs to challenge students and support them to achieve. For that reason, a new curriculum has been introduced in Cayman’s primary schools. That curriculum, based on that in place in England, expects more of our young people but, in doing so, gives them the education they need to be successful. Regrettably, the COVID crisis has delayed the further rollout of the new curriculum but that will be the key priority for the coming year.
The education system increasingly recognises the need to individualise the experience as far as possible so that each student is supported to reach his or her potential. The system is one that promotes excellence but remains inclusive. The Government has therefore also invested heavily in improving support for students with special needs so that no child is left behind.
The disruption of recent months has also delayed the changes to school governance that the Government wishes to bring forward. The key to maintaining the path towards excellence, the path that Cayman’s schools are on, lies in creating better accountability to ensure improved performance. New school governing bodies will provide an important new element in that system of accountability.
This is a new idea for Cayman and while we can learn from elsewhere, we need to design the right school governance arrangements specifically for Cayman. The Minister has therefore delegated authority to the Education Council to develop and implement a pilot project during 2021.
As well as jobs, Cayman’s increasingly diversified economy will create business opportunities for Caymanians. The new digital industries require an extensive eco-system of businesses to support them, which will provide new opportunities for Caymanian entrepreneurs to start or expand their enterprises.
Through the last seven months, the Government has stepped up to extend the support available to small businesses. Financial support, totalling CI$3 million, has been made available as a grant to meet immediate needs but in the longer-term access to the right advice and support is the most important factor in helping businesses to grow. The new Small Business Centre is offering a one-stop-shop centre of excellence for businesses to find the advice and support they need. Also, a recent initiative has established a $5 million fund to provide additional grants for micro and small businesses. This second phase of grants will assist qualifying Caymanian micro and small businesses with wages, commercial rent, digital enablement, business continuity, and business process innovation. Microbusinesses will be able to access up to CI$10,000 and small businesses packages up to CI$20,000. Those wishing to apply can find the information and application forms at www.cpiministry.gov.ky.
I would like to thank the Minister of Commerce for the work his Ministry has done both to create a lifeline that meets the immediate needs of small businesses and to bring forward their plans and to open the new centre ahead of schedule.
Infrastructure provision by Government will remain a key enabler of growth in the new Cayman economy. Despite the interruptions of the last few months, the Government has made considerable progress on national infrastructure priorities.
Work on the runway improvements and other enhancements in the airport development plan has continued apace. Work on short term improvements on the highway network and the longer-term extension of the East-West Arterial Road has also progressed. With the problems of congestion re-emerging as the schools re-opened, the completion of these much-needed improvements is crucial for the longer term.
As I have said before, however, highway network expansion cannot be the only thing we rely on. Cayman needs a new approach to meet future transportation needs that does not just rely upon private vehicles. Before the onset of COVID, the Government was starting the work needed to identify the right public transport solution for these Islands. This project was slowed during the lockdown but the Request for Proposals will go out by the end of this month for a company to do the analysis and recommend a suitable solution or list of solutions for the Government to consider and progress.
A successful public transport system is also one plank of the climate change strategy that this House has agreed is necessary.
What is clear, Mr. Speaker is that the current changed circumstances offer Cayman the opportunity not just to devise a new strategy but to take action that will benefit Cayman and contribute to reducing climate impacts.
In addition to transportation, another good example is the scope we have to accelerate the delivery of the National Energy Policy that my previous Administration devised. Two key actions stand out for their ability to genuinely move the dial on the Policy’s ambitions. In doing so they will both also create new jobs and business opportunities for Caymanians in a similar way to that offered by the digital economy I spoke about earlier.
The first is to reduce energy consumption by improving the energy efficiency of the existing building stock. The Government needs to take responsibility for its footprint in this respect and we are commissioning a series of energy audits for public sector buildings. The result will be a programme of energy-saving measures that can be implemented in the future, achieving energy and financial savings.
I want to see the same approach extended to private sector buildings in both the domestic and commercial property sectors. Government has a responsibility to support this work. Most obviously, some of the least energy-efficient buildings are houses occupied by some of those least able to finance improvements to those buildings. The Government will therefore look at the possibility of providing grants and incentives that do not just repair but also improve the energy efficiency of them.
These kinds of improvements will not just yield energy benefits. They will reduce the cost of living for poorer households, reduce fuel poverty and help improve outcomes for health issues linked to poor housing.
These types of programmes create jobs in the retrofit sector. Energy-saving measures are relatively labour intensive to implement and therefore the impact on jobs could be potentially significant, provided these jobs are taken by unemployed Caymanians.
As much of the technology may be new to the Islands, training and skills development would be required. The apprenticeship centre at the Public Works Department and the trade schools operating on the Island with the Government’s support could rapidly expand to provide the necessary training places for Caymanians as part of our existing strategy to revise this country’s approach to technical and vocational skills development. In short, I believe there is the potential for Cayman to develop as a centre of excellence in energy efficiency for the entire Caribbean region.
The second Energy Policy initiative is to accelerate moves to more renewable energy in line with the 70% target in the National Energy Policy. Solar energy provides the swiftest and easiest path to achieving that target and the Government has welcomed CUC’s announced plans to seek a partner in a further utility-scale solar project.
We also believe that there is the potential to look afresh at the contribution of distributed networks. The experience with the CORE programme gives us a place to start but the experience globally has moved on and new models have been developed from which we can learn. The Government has therefore welcomed the Governor’s offer to seek expert technical support from the United Kingdom to move work in the renewables sector forward.
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