Paradise Girt by Sea - Kangaroo Island Council

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24 This additional cost, for passenger and freight movements to and from Kangaroo Island, has been dubbed the ‘Watergap’ and has been costed to be in the order of $4.5 million annually. On grounds of fairness and equity, several prominent KI individuals and organisations have called for extension to the island of a standing subsidy – from the State government for passenger movements and from the federal government for freight movements. For some, this is seen as the single most important impediment to sustained growth of Kangaroo Island enterprise and incomes. To date these calls have not been successful. We accept the cogency and respect the force of the ‘Watergap’ argument. We also recognize the argument that standing operational subsidies are problematic; the cost to government of any per unit subsidy rises with the volume of traffic; the benefit of the subsidy is expires coincident with the movement of freight or passengers; operating subsidies are chronically at risk of abrupt termination by governments perennially seeking to curtail public expenditure. Moreover, expenditure of public monies in sound capital investments promises a more enduring return than an equivalent amount spent on operating subsidies. It must also be acknowledge that a substantial proportion of the benefit from any passenger subsidy would accrue to non-island resident. If the quantum of resources available to KI over the next five years were of a magnitude roughly equivalent to the ‘Watergap’ we believe it would best be spent on capital projects to the direct and lasting benefit of KI residents and businesses. We think SEALINK has a vital part to play in KI’s future
development. The service can readily be scaled up to accommodate the substantial increase in the number of passengers and vehicles implied by the Five Year Plan. As a privately owned firm SEALINK requires healthy rates of return on its investments. In view of the essential service and natural monopoly characteristics attaching to the ferry service, there is a strong case for SEALINK to be subject to annual or periodic surveillance and review by an independent pricing authority. This would assist community understanding and acceptance that fares were fair. A regime of price control presently applies to Sealink freight charges. We understand that negotiations regarding price control for passenger movements are presently underway and we urge their early and transparent completion. Recommend Charges for SEALINK freight and passenger services between Cape Jervis to Penneshaw to be subject to price control. The models for price control and the mechanism for monitoring and enforcing the pricing should be reviewed within twelve months by an independent authority and at three yearly intervals thereafter. 25
Page 1: Paradise Girt by Sea Sustainable ec
Page 4 and 5: 4 1 What’s the problem? Kangaroo
Page 6 and 7: 6 2 What is to be done? We believe
Page 8 and 9: 8 3 Pieces in the puzzle
Page 10 and 11: 10 3.1 Five Year Plan A fixed-term
Page 12 and 13: 12 KI Council Major Projects 3.2 Ka
Page 14 and 15: 14 3.3 Skills The social dividend f
Page 16 and 17: 16 3.5 Farming Farming has been the
Page 18 and 19: 18 3.7 Roads Most of the island’s
Page 20 and 21: 20 3.8 Power and telecommunications
Page 22 and 23: 22 3.10 Sea connection SEALINK prov
Page 26 and 27: 26 3.11 Penneshaw Penneshaw is a de
Page 28: 28 3.12 Finance and tax This piece
Page 31 and 32: Kangaroo Island Futures Authority K
Page 33 and 34: There is no limit to imagination Th
Page 36 and 37: 36 Appendix - About this report A.1
Page 38: 38 A.3 List of references and repor

Paradise Girt by Sea - Kangaroo Island Council

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