(CMR) Leader of the Opposition Roy McTaggart said the government's willingness to borrow to finance capital expenditure is a mistake that will saddle future generations with debt.
In his contribution to the budget debate on Monday, 11 December, McTaggart said, “As I have stated many times, the willingness of PACT and now the UPM to borrow to finance its capital spending plans is a mistake that is saddling future generations with the bill for their grand plans while also creating a free-for-all when it comes to operational expenditure.”
McTaggart pointed out that over the next two years, the UPM government intends to borrow $150million, which in addition to the $349m already borrowed under the PACT government, will add “a staggering half a billion dollars of new borrowing to the government’s books.”
The opposition leader said borrowing over the next two years could even be more because projects announced by the Premier could require much more borrowing.
“The Premier should be honest and tell the country how much would need to be borrowed to fully deliver all the projects on the UPM’s list,” he said.
“If the new government adds new debts to be paid from current revenue streams, they will worsen the problem already caused by the previous PACT administration,” McTaggart added.
The leader of the Opposition said in order to finance its debt, the government will introduce new fews as has been indicated by the PRemier.
“Now, the Premier has come clean on the full extent of her government’s planned hikes in fees and duties—some $52m of new revenues expected in 2024 and $80m in 2025,” he said.
McTaggart said he predicted two years ago that once the government started borrowing, it would be difficult to stop.
“The fault line that ran through PACT’s two-year budget was its use of all available revenues to finance its extravagant spending plans and its consequent reliance on massive new debt to fund capital expenditure plans,” he stated.
The opposition leader said instead of 20 different things, the Progressives is urging the Premier to think about seven key priorities this budget should focus on.
He said three of those priorities that would tackle the most pressing challenges currently facing Cayman include overcoming the ongoing impacts of the cost-of-living crisis, reducing crime and the fear of crime, and enabling better, more affordable access to housing.
McTaggart said the other four priorities are areas where action in the next two years covered by this budget is necessary to meet immediate challenges and better prepare Cayman for the future. Those are:
-To fully restore Cayman’s economy to a path of steady, sustainable growth.
-To accelerate action to mitigate climate change and to adapt to its impacts.
-To resolve Grand Cayman’s worsening traffic problem.
-To respond positively to the challenges of an aging society.
He said to understand living standards in the Cayman Islands, “we need to look at GDP per capita, specifically GDP per capita in constant prices, so as to eliminate the impact of inflation.”
He pointed out that 2022 saw a 10.5% drop in GDP per capita in the Cayman Islands with the economy around 2% larger than at the end of 2019. However, the population grew by over 18% over the same period.
He also noted that despite the full opening up of the economy, the number of persons requiring help from the Needs Assessment Unit ballooned in 2022. The number receiving assistance climbed from 1,783 in 2021 to 2,591 in 2022, an increase of 45%.