In addition, I am aware that there is some interest by the civil service and the credit union to purchase the new government admin building and this will generate an initial capital injection of tens of millions while providing an investment opportunity for civil servants.

The government is already proceeding on a path that will result in a PFI for the two existing schools with the existing contractors.

However, it is not a question as to the Government's willingness to consider these new revenue measures. Rather the issue is that if these measures are implemented the wider community will have to pay these increased fees so we have to carefully consider them.

At this stage let me now read a statement directly from the FCO which highlight the serious gravity of the situation. Letter from the FCO to LoGB the Hon. McKeeva Bush.

The Way Forward

Do we now accept the UK's implication that we should introduce direct taxes such as income and property taxes in this country?

Or do we craft and implement our own vision on the way forward for a sustainable and successful economy in these islands?

I strongly believe that had we put some of the following ideas which I supported in 2005, we would be in a better position today.

There is an urgent need to move the cargo port of George Town which the cruise sector has also said must be done.

1. Relocation of cargo facility.

The advantages of creating a cargo facility in Eastern Districts at no cost to Government would provide a:

• Deep Water protected harbour

• Mega Yacht Marina

• Oil Bulk Storage facility outside of George Town and the flight path

• New Cargo Port adjacent to Government owned land

• A container port where the transshipment of cargo takes place

• Cruise Ship Home berthing opportunities (economic benefits)

• Provide much needed fill for roads and other infrastructure projects

• Provide jobs and economic stimulus to the country

As I understand it there are 2 proposals for this. One is a site at the Bodden Town side of Breakers and one is at Half Moon in East End.

2. We can widen the channel in the North Sound which will come in through the channel by Big Key, come across the head of barkers, meet the Morgan's harbour channel and come south to meet up all those channels already cut from West Bay up to George Town baccadere. The channel will allow mega yachts to come into George Town. Many of these are already registered in the Cayman Islands. The yacht owners will invest in homes, apartments and will support local businesses including transportation, restaurants, stores etc. This will bring jobs and business opportunities for Caymanians and cause a new sustainable economic boom on the North Sound of Seven Mile beach.

3. Build cruise ship berthing facilities. The FCCA was here yesterday and made it clear in no uncertain terms that the Cayman Islands must get the proper facilities or lose its cruise business. The building of our berthing facilities in George Town will allow our cruise business to be facilitated and improve our visitors experience. It will thereby increase revenues for the government.

4. Developing quickly a sewerage system for the country in particular in George Town can bring the government much needed revenues and employment for our people. I am hereby asking for expressions of interest without delay.

5. We should consider making additional efforts to attract first class five star resorts, coupled with convention centres, golf and gaming facilities.

The first point I wish to make in terms of the way forward is that things will need to change. I know that may sound obvious, but we must realize that we cannot continue as if everything is normal when faced with these unprecedented challenges. We must accept that our way of doing things and our own environment will have to change and it will have to change very quickly.

As I have said several times before, the ideal scenario as far as civil servants is concerned, is to minimise or completely avoid any cuts in jobs for the civil service. We have attempted to address that by making severe cuts in operational expenditures including the suspension of pension payments. We have already reached 90 million dollars in this regard.

We can attempt to cut our expenditures even further, but we also need to be realistic about how much can be achieved in that area beyond the cuts we have just made. The reason I say this is because as our economy grows there are increasing demands on services from the public sector. We cannot continue to support the needs of the economy in terms of these services as well as infrastructure needs without the necessary civil service apparatus.

At the same time that we have worked aggressively on cutting expenditures, it is clear that we need to increase government revenues.

In terms of increasing our revenues to meet the necessary expenses, there are two avenues:

The first is to increase our indirect taxes. This has been the approach in the past and we will continue to fund our infrastructure and public service needs via indirect taxes.

We are receiving input from civil servants as well as the private sector on ways to improve revenues and over the next few days, we will agree on a set of measures.

The second avenue for raising the necessary revenues is to put policies in place to increase economic activity. This will in turn create a natural increase in revenues for the government as our volume of economic activity and level of investment will have increased without any need to raise indirect taxes.

In practice I believe what will be required at this stage is a combination of these two approaches.

That is, we must immediately identify new sources of revenues while at the same time we must make swift changes to our domestic policy framework to get the economy moving.

I now want to say a few words now about the need to adjust what I see as our current approach to foreign investment in this country.

In my opinion, and particularly in these dire economic times, this is not the time to continue with overly protectionist policies towards inward investment. As I said earlier, if we can find ways to increase our revenues naturally, while minimising taxes, we will be better off.

But if we do not secure the necessary investment to give us the natural increase in revenues and employment, we will have to resort to other measures. This could well mean cuts in jobs for civil servants and these cuts would have to be made quickly if we do not have alternative solutions in place.

It could also mean making more aggressive increases in indirect taxes for the private sector which would be detrimental to the cost of living and to the economy as it would deter business.

To be clear, I want to avoid any solution that negatively impacts the civil service. And this government wants to avoid any significant increases in the cost of living and working in this country.

And we also want to minimize any significant increases in indirect taxes.

But we cannot and will not achieve any of this without making changes in other areas.

We cannot all continue to have everything without giving up something.

We must work together realising that changes will have to be made.

And one of those changes is that we will need to think differently about the way we treat those who continue to place their confidence and their money into our local economy. It is simply not acceptable for us to say we will take your investment but we will not provide you with the resources you need. Or that we will not do what is necessary to improve our systems to facilitate that investment. Or that we will take their tens of millions of investment dollars but we will fight them tooth and nail for every work permit or planning or environmental permits that they require.

In my opinion, this current approach is unacceptable.

The government is faced with an extraordinary situation that it must respond to.

There are many Caymanians out of a job right now. This is not the time to stifle inward investment. While other countries are falling over themselves to attract the necessary investment to put people back into jobs, we are encouraging a system that makes investors feel unwelcome.

We will either need to make aggressive cuts in either jobs or work hours for civil servants as well as raise indirect taxes or we will need to focus on the areas where we can secure the revenues without harming our economy and our quality of life.

The government therefore seeks your support to achieve the right result. I therefore ask that you consider what I have said today and take the message on the seriousness of our situation and the need to make urgent changes to the approach of our boards, departments and respective organizations.

There needs to be urgent changes to the way our bureaucracy impacts inward investment. And there needs to be a change in the attitude towards those who have helped to build this country to what it is today.

Finally I know that many of you in the audience will appreciate the opportunity to raise your feedback in this forum and at this time I will open the floor up for a few comments.

Those of you who have reports and formal submissions, we will certainly be looking at those with a more focused group to arrive at a final set of solutions on the way forward.

For more information, contact Paul Byles.