Published 30th October 2019, 1:25pm
As well as that long term benefit, the short term job creation associated with the construction of the new port will be significant. I said some months ago when I introduced the SPS in this House, that all the indications are of a slow-down in the global economy in the next year or so. The port construction jobs will help shield Cayman’s economy and Caymanian jobs from some of the potential impact of that slowdown. The jobs are real and are available to Caymanians as anyone who plans to visit the jobs fair scheduled for tomorrow by the Verdant Isle partners will be able to confirm.
The last economic benefit I want to highlight concerns the enhanced cargo facilities. We have to accept that our current port is too small, too cramped and too inefficient. It can barely meet the needs of the country now and if Cayman continues to prosper and grow, as this government certainly intends it should, we need better cargo handling facilities.
This project delivers Cayman’s much-needed cargo port enhancement and creates the capacity we need to see us through the next 15 years or so of sustained growth. There will be an increase of almost 30% in the useable cargo space. The current lack of space causes delays on the vessel operations and the availability of the containers for the retailers and other importers in Cayman. The addition of a 3rd small berth for smaller ships and barges hauling the likes of aggregate and cement will be a significant improvement, which will allow operations of another vessel that cannot be done at this time. Moving that berth out of the way of container operations allows for the simultaneous operations of container vessel and bulk cargo. The improvements will mean that the port can use new specialist cargo cranes rather than the inefficient converted construction cranes it uses now. Taken together, these improvements will improve the efficiency of cargo handling at the port and will help to reduce shipping costs for importers.
The cargo improvements, if done on their own, would cost tens of millions of dollars. If the Port Authority had to finance the costs themselves, the only way it could do it would be to increase docking and handling charges, which in turn would increase the costs of imported goods. There is no viable ‘do nothing strategy’ for the cargo port. The throughput demand that we put upon it has outgrown the ability of the port to meet our needs. That position will only worsen as the port ages further and our demand for imported goods continues to increase. Enhancements to the cargo port are badly needed. Our choice is to move forward with the overall redevelopment project funded by Verdant Isle or to try to fund and build stand-alone cargo handling improvements. If we move forward with the planned project, we can achieve efficiencies to help to reduce import costs but if we try to finance a stand-alone cargo project then inevitably the costs will be added to the prices of imported goods. The cost of living in Cayman will go up.
If Central Government is asked to fund a stand-alone cargo dock then it would be by taking money from some other capital project. Which one should we take it from Mr. Speaker – Our school plant improvements? The John Gray High School? The just started mental health facility? Our road works programme? Which project should we sacrifice or slowdown to be able to make a start at paying for a larger cargo port facility? No, Mr. Speaker, that is not really a solution my Government or the public would accept. Neither would we entertain any new borrowing for this. The arrangement for additional cargo space coupled with cruise berthing that is funded by Verdant Isle partners and repaid from cruise ship passenger fees is an excellent arrangement, Mr. Speaker.
I have summarized the economic benefits of this project and in due course I will turn my attention to the costs.
But before I do that I wll address the environmental impact of the projects. I will start with this: Despite the oft-repeated claims of opponents of the port development, there is no impact on Seven Mile Beach.
All of the scientific evidence compiled for the environmental impact assessment demonstrates that fact quite clearly. Put simply, sand on Seven Mile Beach comes from the northwest and that flow is undisturbed and will be undisturbed by the redeveloped port infrastructure. After exhaustive scientific modeling of the tides, wind, wave climate and associated sediment transportation processes that operate along that whole coastal stretch, the conclusion in the Environmental Statement produced by Baird & Associates in 2015 is clear and inescapable:
Quote - “There is no apparent sediment transport linkage between George Town Harbour and Seven Mile Beach; therefore, the proposed project is not expected to have any impact on Seven Mile Beach. Fluctuations in the beach width will continue but the proposed project will not cause any changes in the erosion or deposition patterns along Seven Mile Beach.” End quote
Opponents of the project are usually keen to talk about the conclusions of the Environmental Impact Assessment but for some reason, this one, perhaps one of the most important in the whole study, is the one they chose to ignore. Actually, it is not just a matter of ignoring this evidence, they seek to deny the science through a mix of anecdote and assertion. I say to the country, do not be misled. The EIA is available, go and look at the evidence for yourself. You will see the rigour of the model, which allows testing of every combination of weather and sea conditions that has hit Cayman for decades. You will see the clarity of the report’s conclusions as I have just quoted them. Please ask those who assert that Seven Mile Beach will somehow get denuded of sand because of the port development to show you the detailed science behind that claim. My only advice to you is not to hold your breath while you wait for them to produce any relevant scientific data to support their wild assertions.
But Mr. Speaker, whilst the opponents of the project do not seem willing to accept the science that indicates that Seven Mile Beach will be safe, I am pleased to advise this Honourable House that, significantly, the Environmental Assessment Board has accepted the findings and endorsed the scientific methodology followed by Baird & Associates. The Environmental Assessment Board noted in its report on Baird’s Environmental Statement that it found the data collection and results outlined by Baird to be robust given the timeline for completion of the EIA. In referencing Seven Mile Beach specifically, the Environmental Assessment Board report states that:
Quote “we note the conclusions in the Environmental Statement that no large scale changes to the prevailing sediment transport patterns will arise as a result of the project. The EAB is satisfied that the results of the sediment transport modeling confirm/verify previously understood mechanisms for sediment transport regimes between George Town Harbour and Seven Mile Beach.” End quote
This information has been said many times Mr. Speaker but has been deliberately ignored. I hope that after today we will no longer have people and organisations who should know better continuing the narrative that Seven Mile Beach is at risk by this project.
Leaving aside the more fanciful claims; however, the Government does accept that there will be important environmental impacts to the close-by marine environment. Most significant is any potential degradation that may be caused by dredging to the coral in the area of the redeveloped port.
The Environmental Impact Assessment, which was completed in 2015, estimated the extent of the potential impact but it also considered how that impact might be mitigated. Before I talk about mitigation; however, I want to emphasise the work that has gone on since then to reduce the likely environmental impact. In response to concerns in our community, raised after the publication of the EIA, I gave a commitment that as we progressed this much-needed project, the government would take the opportunity to find ways to reduce the potential damage. The procurement approach that we have taken means that the contractor is responsible for designing the new facilities so we challenged the bidders to come back to us with designs that fulfilled the government’s pledge to the country.
I am delighted that they have been able to do so. The designs were made public a couple of weeks ago so people can see for themselves but the headline changes from the original proposals are that the cruise berths themselves have been completely redesigned and the cargo enhancements have been scaled back. Recognising the concerns over dredging in particular, the redesign moves the piers to deeper water. As a consequence, the footprint of the new port design requires 30% less dredging than the original design and eliminates completely the need for any dredging in Hog Sty Bay. In fact Mr. Speaker, despite stated concerns about the impact of the project on Eden Rock, I am advised that the reefs in that location are approximately two football fields away from the marine work by the dock and are extremely unlikely to be impacted at all by the dredging.
Even with the significant improvements in the design, there will be areas where coral will be impacted by the new facilities. Here is the role for mitigation. It is not possible to move the dredging so that it avoids the coral completely but it is possible to move coral so that it can thrive in areas well away from the working of the new port.
Perhaps surprisingly, this too has become an area of controversy in the project. Coral has been impacted in Cayman before, many times, not least by damage caused by cruise ship anchors. Mr. Speaker, let me remind the House of Cayman’s recent experience. There have been two large-scale coral re-attachment cases in the recent past in West Bay and Eden Rock. Shipping incidents dislodged and fractured large sections of the limestone reef and damaged thousands of corals at both sites. Polaris, Applied Sciences Inc., the proposed Verdant Isle Coral Relocation Partner, restored both of these sites in 2016 and 2017. Coral fragments that are broken and disturbed by vessel anchors and ship hulls should arguably have a lower survival rate than those removed more carefully as will be case with the port project yet monitoring studies have reported 89% survival of tagged specimens in the West Bay site two years following the restoration compared to 93% of unaffected coral colonies. Rather than joining with us to ensure that environmental mitigation works effectively, our opponents seem now just to want to decry those mitigation efforts and tell us that they will not be successful. In my view, exactly the same coral species, in the same vicinity, relocated by the same teams provides the best evidence of likelihood of success for this project.
This is not to underestimate the challenges involved in carrying out a coral relocation project at the scale envisaged in George Town Harbour. It is clear that the proposed coral relocation will never completely mitigate the ecological impacts of the port improvements. However, the experiences both locally and elsewhere can help us as we meet those challenges, drawing on the experience of what has worked, and what has failed, here in Cayman and around the world. There is every reason, as I have said, to be confident that the same experts who have been so successful in relocating coral in Cayman previously will be able to develop and implement an equally successful coral relocation plan for this project. We should be confident that they can achieve high survival rates and that they will help us to achieve the plan’s aim of no net loss of biodiversity, which is in keeping with the overall goal stated in the Cayman Islands National Biodiversity Action Plan, 2009. Indeed the project will include a coral nursery as part of its coral recovery plan so as to grow and transplant coral onto local reefs that are being degraded.
The last issue of substance for the decision on whether the country should move forward with building new cruise berthing and enhanced cargo facilities is the question of financing and affordability.
The upfront costs of building the new cruise berths and the enhanced cargo facilities amount to CI$200M. All of that will be paid for by Verdant Isle, the successful bidder. There will be no government cash contribution, no government borrowing or bonds and no government guarantees. The entire cost and all the risk sits with Verdant Isle.
They make their money back from the per passenger tax that is levied on all cruise ships calling at Grand Cayman. Here comes the first piece of misleading information about the finances put out by our opponents. They calculate that the total income that Verdant Isle will receive over their 25-year tenure will be $450M. I will not quibble with that calculation so let’s just accept it. They then express their indignation that a private sector entity will be receiving $450M in income when the build cost is only $200M. The $250M extra sounds like a massive profit flowing into the hands of the business partners in the consortium.
The first issue with it is that our opponents are conveniently forgetting that the contract also requires Verdant Isle to maintain the new facilities or the next 25 years. It is estimated that the maintenance costs are likely to total around CI$75M in that period. That reduces the surplus to $175M. That still sounds like an awful lot of profit to make though, doesn’t it? Well, no actually. $175M over 25 years equates to $7M per year. Against an up-front capital investment of $200M, that equates to an annual return of just 3.5% - again this assumes that the $450M is correct. If the partners in Verdant Isle were just looking to make money on an investment they would do better just lending their money out on the markets – they would get a better return.
Do not forget as well that the CI$200M projected cost includes the vital cargo port enhancements.
The other issue raised by our opponents is that, they claim, the Cayman people will be paying for the new facilities. The basis for that claim is as follows. The amount of the passenger tax that Verdant Isle will receive is mostly a replacement for the tender fees that the cruise companies will no longer be paying. However, in order to make the overall financial model work, the government is reducing the amount per passenger it receives by a small amount. That is absolutely true. The amount that was discussed previously by the Ministry was US$2.32 per passenger. However, this amount was based on the original design option that would cost some CI$229M. The option that we have chosen Mr. Speaker is one that will cost just under CI$200M – thus we do expect that the final per passenger cost, once the final contract numbers are agreed, should be less than US$2.32 per passenger.
On the basis of those facts our opponents have come to the conclusion that Cayman is, therefore, losing out financially. That is totally and factually incorrect.
What we are giving up is income that we would not have unless the project goes ahead. To understand this, remember the point I made at the very beginning. If we build the new cruise berths the number of passengers goes up. If we do not build the new berths the number of visitors to these Islands will decline. Put very simply, the Government’s total income is greater if the project goes ahead. It will be greater than we get now and much greater than if we do not build the new berths. The reason is that we are getting a slightly lower amount per passenger but the increased number of passengers means our total income goes up. Ask any Caymanian whether they would rather sell 20 mangoes for $6 each or have 25 mangoes that they can sell for $5 each. For the benefit of Members opposite, 20 mangos at $6 each yield an income of $120, while 25 mangoes at $5each yield $125. Would any Caymanian think that in the latter case they were better off because their total income was higher or that they were losing out by giving up one dollar per mango? If our opponents think that 20 mangoes for $6 each is the better option I invite them to come and buy their produce from my farm.
I have heard it said that the financing sounds too good to be true. Someone else builds Cayman the new cruise berths and enhanced cargo facilities it needs. They are willing to fund the project entirely themselves with no contribution or guarantee from the government. The total income to government from passenger tax goes up. Throughout the build and operation of the new facilities, the port stays the property of the Cayman people and it will continue to be operated by the Port Authority. There has to be a catch, right?
Wrong. There is no catch. This has been achieved because my government has been willing to go to the market positively and confidently, negotiating from strength in order to secure the kind of solution that has never been seen in the cruise industry before. Bidders were willing to take part in the procurement on those terms because of the strength of the Cayman offer to cruise visitors. Cruise passengers enjoy coming to Cayman and they want to continue to do so. The only barrier is the logistical one caused by the lack of berthing facilities. The model is attractive to the two cruise companies that anchor the consortium not because they will make money from the port itself but because keeping Cayman on their schedules helps them to sell cruises. That is where they make their money out of this.
Mr. Speaker, I confess that in some ways this referendum can be seen to be an unnecessary distraction. However, as I said earlier, I respect the work that has gone into gathering the necessary signatures and a referendum we will have.
In some ways though, this is a fitting debate for our country to be having. As a people, we need to decide the direction that our Islands will take in the decades to come. In doing so, let us reflect on what our people have achieved over the sixty years since we first gained a measure of self-government with the granting of our first written Constitution.
No doubt there were people then saying that Cayman should remain ‘the Islands that time forgot’. But there were others, Mr. Speaker, who were not content to leave things the way they were. People who wanted to improve the quality of life for Caymanians. They were willing to put in place the legal frameworks that brought the first banking and finance businesses to Cayman. They were willing to balance some loss of environmental amenity to build our airport and then, yes, our existing cargo port; to welcome hotel developers; and to invest in the necessary infrastructure to allow these Islands to grow.
Alongside those pioneers, some now recognized as our National Heroes, the Caymanian spirit of enterprise and entrepreneurship meant our people founded and grew the businesses that could take advantage of the new economic opportunities that presented themselves. Mr. Speaker, I believe that spirit is still alive and thriving in these Islands. Our people are not waiting for the government to come up with answers to questions about where tourists will go and what will they do. The government will play our part, but Caymanians will exploit the opportunities and create the businesses that answer those questions for themselves.
This is what occurred after the wharf on the ironshore was converted into a modern cargo dock facility in 1977. A cargo dock that has served us well and has been expanded over the years, but that is again in need of expansion.
But Mr. Speaker, as you well know the George Town Port Project that was opened in 1977 was controversial in its time. There were those who, like some opponents today, lacked vision and did not appreciate the need to modernise and improve our infrastructure.
Some of that history Mr. Speaker was captured in a supplement published by the Nor’wester Magazine on July 16th, 1977, to celebrate the completion of the George Town Port Project. I ask the indulgence of the House Mr. Speaker to lay a copy of this supplement on the table of the House and to recite a few words from it that mention the comments made by Mr. Berkley Bush, who was the ExCo member responsible for building the port, when he spoke at the opening:
Quoting from the article - “In his speech Mr. Bush outlined the history leading up to the construction of the port facility. Although he had been a central figure with his drive, determination, and enthusiasm in getting the port project started, he summed up the part he played by saying ‘There was a job to be done and someone had to do it and I just happened to be that man.’
The ceremony also gave Mr. Bush an obviously welcome opportunity to answer his critics who had carped about the facility and its positioning for many years. With obvious relish he pointed out to those who had said it was utter stupidity to build in George Town because of nor’westers, that the dock had survived two seasons of nor’westers while under construction.
To those who had pointed out that the Island had done alright with just the ironshore during the boom period, and why therefore was a dock facility needed, he wondered where the country would end up if such prophets of doom were in the driver’s seat.
To those who had said that he had lost his seat in the Legislative Assembly because of his involvement with the dock and insistence that it be in George Town, he replied in ringing tones that he would rather have the dock facility, and have it in George Town, than occupy every seat in the Legislative Assembly, representing people who did not want the port.” - End quote
Mr. Speaker, I want to mention another recorded statement from that supplement – that of Captain Charles Kirkconnell who spoke after Mr. Berkley:
Quoting from the article - “Captain Charles also pointed out that a gateway to larger and more up-to-date cargo ships had been opened and would link the Islands with international terminals. This was bound to result in savings to the consumer… The manner in which cargo was handled on the old wharf had caused damage and losses to the imported goods, which naturally forced prices to rise.” - End quote
Mr. Speaker, I thank God and we all should that we had representatives like Berkley Bush and Charles Kirkconnell who had vision and understood the need and benefit of vital infrastructure projects – in this case a modern port facility that has benefitted the country and our people hugely over the past 42 years. I do believe Mr. Speaker that 40 years hence those who occupy these hallowed halls will recognise that the building of this cruise berthing and enhanced cargo port was similarly significant for the future development and success of our Islands and our people. And Mr. Speaker, they may undoubtedly state how glad they are that the prophets of doom had failed to stop the project by way of this referendum.
The question on the ballot paper in this referendum is about cruise berthing and enhanced cargo facilities. The question for the country is whether we still have the confidence in ourselves and in our future to grasp the opportunities before us - the opportunities to start new businesses; the opportunities to improve still further our world-class Caymankind cruise tourism offer; and, yes, the opportunity to show we can deliver a world-leading coral relocation programme.
I believe in a strong and prosperous future for Cayman. I believe in opening the door to economic opportunity - not slamming the door on the jobs of the hundreds of Caymanians whose livelihoods depend on cruise visitors. Finally, I believe, Mr. Speaker, that the majority of Caymanians believe as I do. The referendum gives them the chance to show their confidence in themselves and in a prosperous future.
The choice facing the people of the Cayman Islands on 19th December is a clear one. On the one hand, we can choose to move forward with building our new cruise berthing and enhanced cargo port facilities. If we do so, we guarantee that cruise ships will continue to bring their visitors to Grand Cayman and in so doing we safeguard existing jobs and create more employment and business opportunities for Caymanians. The enhanced cargo facilities will mean that the port can handle bigger ships and more cargo more efficiently and this helps drive down the costs of all the goods we import. This redevelopment of our tired and inefficient cargo port can only be funded because it is being linked with our new cruise berths. Cayman can choose to move forward with building our new cruise berthing and enhanced cargo port facilities. We can and we should choose prosperity.
On the other hand, we could turn our backs on the redevelopment of our port. As cruise ships grow in size, they will increasingly pass by Cayman on their way to other destinations that have the facilities needed to cope with their passengers. Visitor numbers in Cayman will fall. Caymanians will lose their jobs and their businesses will fail. We could try to make do with cargo facilities that are already too small to meet our current needs, let alone meet the needs of a growing population. We could choose decline.
The deal the Government has negotiated with Verdant Isle partners ensures that no government funding is required to build the dock but the facilities remain in our ownership. Increased visitor numbers mean total revenue to government increases so we can afford to continue funding other things like schools and road improvements. There is no financial risk to Cayman, its government or its people.
The government has responded to people’s environmental concerns and the redesign of the port development has significantly reduced the environmental impact of the project. There is no dredging in Hog Sty Bay and no risk to Seven Mile Beach. There will be damage to existing marine environments but millions of dollars will be invested to relocate coral and we aim to achieve no net loss of biodiversity. The Government has done all it can to safeguard Cayman’s economic future while minimizing any environmental impact from Cayman’s port redevelopment. Prosperity or decline? This government chooses prosperity for this and future generations of Caymanians. We must get on and move forward with building the cruise berthing and enhanced cargo facilities that help to secure that future prosperity.
I ask all members of this Honourable House to vote aye to this referendum bill, and that those Caymanians who go out to the polls on referendum day to vote a resounding Yes to the question, “Should the Cayman Islands continue to move forward with building the cruise berthing and enhanced cargo port facility?”
Thank you Mr. Speaker.