Statements from Press Briefing
LoGB Remarks, 26 March Cabinet Press Briefing
Cayman's Commitment to Tax Information Assistance
Good morning ladies and gentlemen, and thank you for joining us today.
Further to the industry briefing given on 18 March, I would like to provide the general public with an update on Government's progress in re-affirming the Cayman Islands' commitment to international cooperation, particularly in the area of tax information assistance.
The tradition and track record we have of incorporating due process, intolerance of 'fishing expeditions' and other standard and recognized safeguards together with effective international cooperation are also integral to our tax cooperation arrangements.
It is clearly worth restating the following facts. The Cayman Islands was one of the first jurisdictions to commit to OECD standards for transparency and exchange of information in tax matters. We have upheld that commitment in three ways:
- One, by working with OECD and non-OECD colleagues to design effective standards;
- Two, by reflecting those standards in our domestic regime, via the Tax Information Authority Law, 2005;
- And three, by embarking on a programme to extend assistance arrangements to other countries; the first being our tax information agreement with the U.S. signed in 2001.
Two weeks ago, you will recall our announcement of the latest product of our bilateral negotiation programme, the conclusion of technical negotiations with the Nordic countries (Denmark, the Faroe Islands, Finland, Greenland, Iceland, Norway and Sweden) for a series of bilateral agreements, including tax information agreements.
The tax information agreements are currently going through the political authorisation process on both sides to enable execution at a signing ceremony in Stockholm next week on 1 April 2009 which Minister McLaughlin will attend, with the commercial agreements to follow in June.
Last Thursday, the Government announced the extension of comprehensive tax information assistance to seven new countries, under provisions in the Tax Information Authority Law introduced in 2008, which do not require a bilateral treaty.
The seven countries we announced that are now able to request tax information from the Cayman Islands under this unilateral mechanism are Germany, Austria, Belgium, Czech Republic, Luxembourg, Slovak Republic and Switzerland. Requests may be made in relation to both civil and criminal tax matters.
And on Tuesday of this week Cabinet added the UK to this schedule of countries as an interim measure, in anticipation of concluding tax cooperation arrangements with the UK, including commercial terms, in the very near future.
Our actions in extending tax information assistance to eight more countries is the culmination of many months of technical work, and we are especially grateful to Germany for the insight they were able to provide to our technical team by virtue of having a unilateral mechanism for cooperation in tax matters themselves. Commercial agreements with Germany will be forthcoming as well.
These major developments, combined with our existing tax information agreement with the U.S., mean that the Cayman Islands has a total of 16 tax information arrangements with OECD member states to the required OECD standard.
I should like to note that the unilateral mechanism introduced in 2008 is complementary to Cayman's bilateral negotiation programme, under which we expect to continue to treat with a number of OECD member states.
We have all heard the political positioning surrounding the upcoming G-20 Summit in London on 'jobs, growth and stability' calling for - as a 'bolt-on' to the weighty issues on the agenda - action in relation to so-called 'tax havens'. The language currently being employed is "protect[ion] of the financial system from 'non-transparent, non-cooperative jurisdictions including offshore centres."
As I speak to you this morning, it remains uncertain whether a 'black list' will emerge from the G-20 process. The government has and will continue to do all we can to receive equitable treatment for the Cayman Islands, as by any rational analysis we are transparent and cooperative. In particular, our 16 tax cooperation arrangements in fact represent over-compliance with the OECD benchmark of 12 such arrangements with OECD member states.
I have also sent letters to the UK prime minister, the chancellor and other key UK treasury and FCO ministers to reinforce Cayman's position directly, in view of both the UK's role as host of the G-20 summit and our metropolitan power.
Ladies and gentlemen, I must caution everyone again that the ultimate results are not under our control as the G-20 environment is exceedingly political and anyone perceived to be in the 'offshore' cohort, as defined by the UK and other states, is vulnerable. As one illustration of this, as recently as Tuesday, Prime Minister Gordon Brown in an address to the European Parliament said: "...I believe that for the first time we can also agree the big changes necessary for coordinated action that will signal the beginning of the end of offshore tax havens and offshore centres."
If he means to refer to centres that do not observe international standards and are uncooperative and non-transparent, so be it. But if he means to destroy legitimate, cooperative and transparent centres such as the Cayman Islands (and even London and New York, generally regarded as 'offshore centres') then you can see what we're up against.
What you can rely on is that your government will continue to be relentless in the pursuit of proper recognition of our status as a responsible and cooperative international financial services centre, not a so-called 'uncooperative and non-transparent offshore centre" as we know our private sector partners, led by the Cayman Islands Financial Services Association, will as well.
An Update on Government's Affordable Housing Programmes
I am very pleased to provide an update on Government's affordable housing programme.
As you will be aware from the periodic updates I have provided through this forum and in my statements in the Legislative Assembly, a lot of work has been going on behind the scenes for a very long time in this initiative - some of the results of this hard work have been readily evident, such as the GGHAM and the affordable homes in Cayman Brac, and because of the processes required, some have yet to come to a visible, tangible fruition. The last update I provided was in February when I tabled the audited financial statements for the National Housing Development Trust for 2007-08 in the Legislative Assembly. As there have been some very exciting developments since that time, I would like to take the opportunity this morning to update you once again.
Sister Islands Affordable Housing Development Committee
I would like to start by providing an update on the work of the Sister Islands Affordable Housing Development Corporation.
Construction of the first four homes in Cayman Brac was completed in December 2008. They are all located on Bonita Crescent, off Alta Vista Drive on the West End side.
Since then, the CTC has awarded the contract for Phase 2 to DSS Contractors. The contract is for construction of four houses in total - with two, two-bedroom units and two three-bedroom units. Construction is scheduled to begin in mid April, with completion expected in 40 weeks.
The SIAHDC has so far received some 44 applications of which 11 do not qualify and for 12 others, more information is required. All have been formally notified in writing. While the second phase of construction will bring the number of completed affordable homes to a total of 8, I am confident that under the guidance of the SIAHDC board these much needed homes will continue to be constructed to meet the demand for affordable housing in the Sister Islands.
National Housing Development Trust (NHDT)
I would now like to turn to the work being done by the National Housing Development Trust here in Grand Cayman.
The Government Guaranteed Home Assisted Mortgage, or "GGHAM" programme, is a programme that has been successful beyond our expectations. As you will know, this programme was launched in November 2007 in partnership with a number of local banks. The demand for the programme was so great that the initial $30 million that the banks agreed to lend over the first 5 years of the programme was "used up" in just one year. Because of the success of this programme, in January of this year signed an agreement with Government and the NHDT to double their commitments.
To date, close to 150 Caymanian families have been the beneficiaries of this programme, with some 60 applications pending. That means that in the sixteen months that this programme has been offered, it has helped over 135 Caymanian families, an average of just over 8 families per month, achieve the dream of home ownership.
The Build on Your Own Property Programme continues to receive applications from those who own their own property but need a bit of assistance in getting their home built. Two homes have been completed under this programme, and there are five more pre-approved applications which will be proceeding in short order.
The Affordable Housing Initiative is one that I know many, many people are waiting to see progress in earnest. The NHDT has existing homes on sites in West Bay and George Town, which are fully occupied. The demand for these homes is great; there are 752 applications registered with the NHDT.
As I mentioned in February, a substantial amount of work has been going on with the affordable housing initiative: identifying and securing sites; preparing subdivision plans; seeking and obtaining planning approval for these; determining the best way to phase the developments; securing financing and dealing with site works. It is a long, and sometimes arduous, road that must be travelled to bring these projects from conception to completion.
Let me briefly update you on what is happening in each district.
In East End, site works are continuing at a brisk pace. The land covers 9.38 acres off John McLean Drive and 59 single family lots are slated to be developed there. We have completed 35% of the site works as part of Phase I. Because of the excellent tendered price, we are also proceeding with Phase II and land clearing is ongoing even as we speak. All site works will be complete by mid-April, and this will be followed by work starting on roads and utilities. Actual construction of homes is scheduled to commence by June.
In West Bay, a second site near the Lighthouse has been vested to the NHDT. We have received Planning approval for the subdivision, and storm water and fill plans are now being finalised. We anticipate tendering for site works in mid-April with actual site works commencing the end of April or early May. The West Bay land covers 8.5 acres where a total of 50 single and multi-family lots are proposed.
In Bodden Town, Planning approval is being sought. The final surveying has been completed and we anticipate tendering for site works in early May. The site in Bodden Town is some 10 acres of land where a total of 55 single and multi-family lots are being proposed.
In George Town, we have received Planning approval for the 71 lot subdivision for the Fairbanks site. Final survey work is now underway and we anticipate going to tender for site works early next month.
As you may be aware, the existing affordable homes have not stood the test of time, and need constant maintenance and repair. Accordingly, a decision has been made to redevelop the existing affordable housing sites in phases, replacing the quickly deteriorating homes with new, concrete structures. The first site slated for this phased redevelopment is the Eastern Avenue site. Drawings are being finalised even as we speak and the application for Planning approval will be submitted tomorrow (Friday, 27 March) for multi-family apartments contained in three-storey units. Tendering for construction is anticipated by July.
The units proposed for the Eastern Avenue Site are as follows:
- Five three-storey apartment blocks with three units on each level, totalling 45 units;
- Two two-storey apartment blocks with three units on each level, for a total of 12 units; and
- Seven duplexes totalling 14 units.
- The three units on each level of the apartment blocks will be one three-bedroom unit; one two-bedroom unit and one one-bedroom unit.
In North Side, we have identified an eight-acre parcel of land which Government is presently in the process of acquiring for several different uses. A portion of this land will be vested with the NHDT to construct affordable housing. The final plans for the use of the entire site are yet to be drawn up, so exactly how much of the site will be used for affordable housing is yet to be determined.
One of the major hurdles which the NHDT has been faced with is how to finance this ambitious housing development programme. While they have not slowed down, and have been working steadily to get all of the necessary approvals in place, the question of how many could be built and how quickly could not be answered as it was entirely dependent on the availability of funds.
I am happy to report that on Friday gone (20 March), the Central Tenders Committee approved the issue of the US$14.5 million bond to be used for low cost housing on Grand Cayman. This is the second tranche of financing to the National Housing Development Trust. It will be used for completing site preparation and constructing of the affordable homes in all of the districts of Grand Cayman.
The CTC has agreed to the NHDT making arrangements with Bank of Butterfield for the award of the bond. Today, NHDT authorities will be holding discussions with the bank to discuss the agreement further, reporting back to the CTC to ensure that all criteria of the bond arrangement are met.
I am very pleased that this milestone has been reached - it means that the development of the much-needed affordable housing can proceed immediately, and it gives the NHDT the financial resources required to progress the projects in each of the districts. I know that it will be with a tremendous sense of pride and accomplishment that the NHDT hand over the keys to the first recipients of these new affordable homes, and I look forward to that day with great anticipation. And now that the bond has been approved, I know that that day is not too far off.
I would also like to share with you a further happy development at an existing affordable housing site. At the Windsor Park July Street site, I am happy to report that on March 14th, the NHDT opened its first community clubhouse for the benefit of children resident at the site. It is providing a valuable after-school programme for these children and I am even more delighted to report it has been very well received by the whole community there. It is staffed entirely by volunteers and I wish to place on record my sincerest thanks to these members of the community. They will be having a positive impact on the children and their families, and their contribution to the NHDT's programme is greatly appreciated.
To sum up, we have been steadily making progress and will continue to do so. We recognise that in these troubled economic times the need for affordable housing will become more urgent than ever, so the approval of the bond is very timely indeed. I look forward to seeing the new affordable homes under construction in fairly short order, and, perhaps more importantly, as these homes are completed, I look forward to seeing the families moving into their new affordable homes.
Contributions to Health Care Premiums by Civil Servants
The front page of NetNews, on Monday 23 March, 2009, ran an article under the headline: "Civil Servants Protest Charges". The article suggests that a decision has been made to require civil servants to contribute to the costs of their health care premiums.
Ladies and gentlemen, a number of statements have been made, and that is a good thing in many respects. This is, of course, a democracy. People need to speak out for democracies to work. Neither I nor any other government official will ever have a problem with discussion, comment or criticism fairly given. But it is my duty to make certain that the correct impression is given about where things stand and about the procedures that will be used should anything change.
With regard to the current discussions about civil servants and healthcare expenses, let me state the facts as I understand them:
- First, a meeting was held recently as a Budget Management initiative, supported by the Hon. Chief Secretary, to discuss the escalating cost of health care. The meeting was an internal one meant to stimulate discussion and come up with ideas and proposals for the consideration of policy makers. CICSA was present at that meeting, as were a range of other stakeholders.
- Second, that process is ongoing and no decisions have been proposed nor have any decisions been reached.
- Third, we need all the facts and all the concerns to be out and aired prior to a Cabinet review. That has not yet happened. It is under review, but no outcomes are determined of any sort.
I want to personally assure civil servants, their families and all our citizens that their voices on this matter will be heard clearly and completely prior to any decision being reached by Cabinet. Second, I want to offer further assurances that this Government will not avoid difficult issues. I finally assure you that we will go through the proper reviews to make good decisions even while doing it in a timely manner.
I have no pre-set opinion as to what the outcome will be on this topic. I need to know more, and so does the Cabinet. The best way for us to move further is to continue dialogue and to assure that the facts are clear.
When the process is played out, the Cabinet will make an informed decision based on input from all the stakeholders. We will also use the expert politically neutral advice it is the duty of civil servants to provide. Then we make a decision. For now, I urge all the parties to learn the facts, consider the possible resolutions, and to advance the process in a way that doesn't short-circuit the business of government. That will be my own strategy.
I always pray we all have the wisdom to work together to do the right things, and I trust this issue will be advanced by the wisdom we are so granted.
For further information contact: Bina Mani