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Port Redevelopment Update

Hon Kurt Tibbetts JP, Leader of Government Business, Minister

Statement by the Leader of Government Business

Update on Port Redevelopment

22 January 2009

Good Morning Members of the Media and Listening Public. Today I wish to provide a further update on the proposed Port Redevelopment Project. This update will cover three important areas, namely the ongoing Environmental Impact Assessment process, the existing Memorandum of Understanding and finally a high level overview of the economic impact of cruise tourism.

As you will be aware, two weeks ago I provided an update on the project and announced the commencement of the Environmental Impact Assessment Process.

It is worth repeating that in no time in our history has a capital project, whether by Government or the private sector, been subjected to such comprehensive and public scrutiny as has this project. However, notwithstanding the urgency of this project the Government has by design, put greater premium on doing this project correctly than it has in doing it expeditiously. Any it a road, an office building or even a single family home has some negative impact upon the natural environment. As we prepare for enhancing our current port facilities, we are considering how we might design the project to avoid harm where that is possible or to otherwise lessen or mitigate such harm. The project is also investigating ways in which benefits from the project may be optimised.

The George Town harbour has been home to a fully functional cruise and cargo port for decades. Anchors have been dropped, piers built and commercial zones established to facilitate the lifeline of these three islands. The existing facilities serve as the port of entry for the vast majority of goods consumed locally. In many respects, significant harm has already been caused in the port vicinity in order to support this vital activity.

It has been proposed by the Port Authority and Government that the existing site is the most appropriate location for future expansion. More than a decade ago, in the 1994 Master Port Development Plan, it was proposed that George Town was the most appropriate location for facilitating port expansion. Current plans call for utilizing this long-identified preferred location to expand the existing footprint for cruise facilities and to establish new cargo facilities within close proximity to the pre-existing cargo distribution centre. Going somewhere new and starting fresh will undoubtedly cost more and create significant harm in what might otherwise be pristine, virgin environments.

It is important to say that the EIA, while not a decision maker, is a decision informer. It is meant to provide a sound basis upon which decisions can be made.

ALL construction projects have some kind of impact on our environment. The EIA will tell us what can be done to avoid or otherwise minimise the anticipated impacts.

Having said that, the Government has officially stated that it will not proceed with the projects in the proposed locations if it is scientifically determined that serious and unavoidable harm would be caused to Seven Mile Beach, for example, if the project proceeds as proposed. However, rather than assuming what the impact will be, the DoE is utilising a highly respected firm, CH2M HILL, who has conducted prior work in the Cayman Islands to conduct the tests and to report back to the people and government.

Guiding the EIA process is a group of local technical advisors from the Department of Environment which serves as chair, along with representatives of the local Maritime Authority, Planning Department, and National Roads Authority.

The DoE began the EIA process having identified some 14 different matters to be studied ranging from environmental to socio-economic impacts of the project. This scientific review allows the Government to make decisions based upon scientific findings rather than speculation and diverse opinions.

On 13 & 14 January, meetings where held with the public at large and a wide group of stakeholders in the public and private sectors to determine whether this draft terms of reference was adequate or whether other matters should be included. Persons who were consulted over the two days include representatives from the Chamber of Commerce, the Cayman Islands Tourism Association, the Association for the Advancement of Cruise Tourism, local seamen, the Land and Sea Cooperative, the Taxi Association, CUC, the National Trust, Shipping Companies and Agents, waterfront businesses, the Department of Environmental Health, the Department of Environment, the Central Planning Authority, the National Museum, the Marine Conservation Board, Customs, Immigration, the Water Sports Association, the National Water Sports Association, the Department of Tourism, the Water Authority, the National Roads Authority, and the Maritime Authority.

Following these consultations, the public was advised that input could still be submitted to the DoE through this Friday, 23 January. Today, I would like to announce that, out of an abundance of caution, the Government has agreed to extend the consultation period for another week through 30 January 2009. Again, this consultation period focuses only on the Terms of Reference for the scientific study and there will be opportunities during and after the time the study is prepared, for the public to provide further feedback. When the public input concludes at month's end, the DoE and the consultants will review and finalise the Terms of Reference so that detailed testing may begin.

Another matter that I would like to address is the Memorandum of Understanding. It is evident that there is a great deal of speculation surrounding the MoU with some alleging that the Government has secretly contracted with private parties to build the port and that the EIA is a mere formality. I wish to confirm that this is absolutely not the case. The MoU signed in late July 2008 by representatives of the Ministry of Tourism, Port Authority and Atlantic Star Ltd was designed merely to provide a framework for parties to negotiate terms for the establishment of separate cruise and cargo facilities. No contracts were signed in this process. In keeping with the provisions of the Freedom of Information Law and upon the agreement of all parties to the MoU, the signed MoU is being released today for public information. As the contents will show, NO secret contract has been signed for the redevelopment of the port project. The MoU outlines what has already been stated publicly...that it allows for the framework of negotiations to occur between ASL and CIG in a confidential manner. This MoU has been extended through 31 January 2009. However, through the agreement of all parties it is being released early for public information. The MoU also specifically caters for key stakeholders to be consulted such as the cruise lines and users of the cargo facilities. The only reason this matter has been held in confidence is because the MoU specifically called for this during negotiations but there is nothing in the MoU that cannot withstand public scrutiny. By releasing the document today, we are as a government facilitating such scrutiny.

Finally, another matter which is worthy of further clarification is the economic implications of the project. The Port Authority has made the case to Government and the public that the existing port facilities will be incapable of dealing with cargo demand in as much as five years...between 2012 to 2014. The Port's cruise arrival numbers already demonstrate a decline from the arrivals experienced in 2005 and 2006.

Meanwhile around the region, competition is growing intensely as berthing facilities are becoming the norm. Cruise facilities are currently being redeveloped in neighbouring ports such as Jamaica and Haiti. Work has recently been completed in other ports such as St. Maartin and the Turks and Caicos. Just this month, countries like the Bahamas are pledging to continue to shore up their own cruise sector in the face of growing competition.

These destinations know, as we have known for many years, that cruise tourism makes considerable economic contributions in all aspects of society - either directly for people in areas like public transportation, tour operators, attractions, restaurants, and retail or indirectly through major contributions to the service sector supporting those business. Millions of dollars are directly earned for Government's general revenue and this funding makes possible social projects such as roads, schools, and healthcare.

In 2005/2006 cruise year (specifically the 12-month period of May 2005 to April 2006), 13.7million cruise passengers visited the Caribbean spending just over $1.3 billion in the region. In the Cayman Islands, the average spend was $82.73 according to the 2006 Report produced by the Business Research and Economic Advisors group on behalf of the FCCA. In the Cayman Islands in 2005/6, some US$180 million was spent comprised of US$138.3 million in Passenger expenditures, $12 million in crew expenditures on shore and US$29.4M in port and governmental fees.

This direct economic contribution represents 9 percent of the Cayman Islands GDP, before we consider the full impact of the indirect contribution which occurs through the multiplier effect as some 3,700 jobs or 10 percent of the total workforce is impacted by cruise tourism. These residents in turn spend a large portion of their income on food, housing, goods, and services which further multiplies the contribution to the local economy.

Cruise tourism is a mature industry and the Government's goal is simply to preserve our market share and the real financial contributions the cruise sector makes to the Caymanian economy and community. For each passenger on board a visiting cruise line, whether or not this passenger disembarks, $2.00 is collected and specifically earmarked for environmental conservation programmes. In a year when almost 2 million passengers visit...this means almost $4M is contributed to the Environmental Protection Fund from the cruise sector alone. These funds have been used to purchase land in Barkers National Park, for the Parrot Reserve in Cayman Brac and used to help clean up this island following the devastating impacts of Hurricane Ivan.

In conclusion, I wish to reiterate that the Government is undergoing a historic process of scientifically monitoring and evaluating the potential impacts --both positive and negative-- which might be created by the port redevelopment project. At this initial stage, the public's input is being sought on the draft terms of reference. This input can be given by contacting the Department of Environment via the telephone, email, mail or fax. The Government has agreed to extend the consultation period for the draft terms of reference for the EIA through 30 January 2009. The Government is today also making available through the Freedom on Information copies of the MoU which was signed. This MoU demonstrates that NO contract was entered into and that the parties merely agreed to negotiate in earnest.

Finally, we examined the cost of doing nothing. Millions of dollars in revenue to government and local businesses as well as thousands of jobs are at stake if we allow the cruise sector to stagnate or die. As countries around the world including our neighbours to the North are preparing aggressive economic recovery plans, we cannot afford to be complacent and to allow an industry representing some 9 percent of our overall GDP to shrink or possibly fail. We must act - responsibly and decisively to preserve our economic, environmental and social interests.

If the EIA proves that serious harm which cannot be avoided will be caused by building the facilities in their proposed location, the project will not be continued. However, if the EIA points to responsible ways to avoid or minimize negative impacts and to create net benefits, then we owe it to this and future generations to build the necessary infrastructure to support our economic survival and success.