Falklands : Legislative Council: Friday, 24 February 2006 (Part 1)
Submitted by Falkland Islands News Network (Juanita Brock) 01.03.2006 (Article Archived on 15.03.2006)
Questions for Oral Answer are discussed in this section.
LEGISLATIVE COUNCIL: FRIDAY, 24 FEBRUARY 2006
(Part 1 – Introduction and Questions for Oral Answer)
Compiled by J. Brock (FINN)
A meeting of Legislative Council took place in the Court and Council Chamber of the Town Hall at1030hrs on Friday, 24 February 2006. Present were Cllrs. Clausen, Hansen, Summers, Cockwell, Rendell, Davies, Robertson and Stevens as well as the Attorney General, Mr. David Lang, QC, the Financial Secretary, Mr. Derek Howatt, the Chief Executive, Mr. Chris Simpkins and the Speaker, Mr. Lewis Clifton and the Clerk of Councils, Mrs. Claudette Anderson. Commodore Ian Moncrieff, Commander British Forces South Atlantic Islands was also present as a Member of Legislative Council.
The Rev. Paul Sweeting of Christ Church Cathedral led the prayers. During the prayers a Councillor’s Mobile phone went off and the first warning from the Speaker was to ensure that all mobile phones were turned off. He had mentioned the policy at the beginning of the Legislative Council Meeting held on Friday, 16 December 2005. Councillor Robertson apologised.
The minutes of the Legislative Council meeting held on Friday, 16 December 2006 were perused and signed by Mr. Clifton.
Papers were laid on the table by the Hon. Chief Executive – copies of subsidiary legislation published in the Falkland Islands Gazette since the last sitting of Legislative Council and laid on the table pursuant to (section 34(1) of the Interpretation and General Clauses Ordinance 1977).
- Fisheries Conservation and Management Ordinance 2005 (Correction Order 2005)
- Fishery Products Hygiene Designated Vessel No. 2 Order 2005
- Coins No. 5 Order 2005
- Fisheries Conservation Management Ordinance 2005 (Replacement of Schedule 2 Order 2005)
- Stone Cottage Goose Green Building Preservation Order 2005
- Fisheries Aggregation Limits Regulations 2005
- Criminal Justice Act 2003 (sections 29 and 30 Diss-application Order 2006)
- Falkland Islands Pensions Scheme General Provisions Amendment Regulations 2006
QUESTIONS FOR ORAL ANSWER:
Q1-2006 by the Hon. Dr. Andrea Clausen (AC):
Could the Hon Janet Robertson please Advise this House as to why the Post Office takes up to 10 days to open and deliver sea mail when regular shipping freight can be collected immediately after cargo landing? Furthermore, can the Honourable Member also advise this House of any action that may be taken to address the issue of opening Hours?
Answer by the Hon. Mrs. Janet Robertson (JR):
I would like to thank the Post Office for providing the answers. The only delay that can be occasioned when (sea) mail has arrived is the delay in getting the mail off the ship. Once the mail arrives at the Post Office, it’s usually only two to three hours before that mail is actually delivered to the recipients. The delay can be occasioned by the placing of the mail in the ship in the container that has the mail in it. So, on some occasions the mail can be received prior to freight or the other way around. So, I would like to assure everyone that the delay is not occasioned in the Post Office itself.
With regard to opening hours, it is not usual practice for the Post Office to be open on Public Holidays, simply because there is less administrative business on those days. But it does open to co-inside with the arrival and departure of overseas flights. It’s also the case that for staff employed on a public holiday it will actually cause more cost as the staff would have to be on overtime. So, in order to maximise the efficiency of the Post Office, it is only open to co-inside with planes coming in and out of the Islands.
AC: Thank you, Hon. Janet Robertson
Cllr. the Hon. Mr. Mike Summers (MS):
Mr. Speaker, the explanation given by the Honourable Lady did not explain the delay of 10 days from the Post Office. Ships are never in that long and freight would never take that long to come. Can she assure us that there haven’t been any delays of up to 10 days?
JR: I understand that there was, indeed, in the early part of this year a delay for 10 days but I understand that this was due to the consolidation of containers. And, as far as the Post Office is concerned, the delay was not occasioned by them. I can certainly enquire as to why it might have taken 10 days to actually reach the Post Office. The delay was not in the Post Office itself.
Q2-2006 by the Hon. Dr. Andrea Clausen:
Would the Honourable Mike Rendell please advise this House as to why the re-introduction of the Medical Services Levy is not deemed as a satisfactory way to assist in fulfilling the “user pays” principle in respect of the Medical and Health Services?
Answer by the Hon. Mr. Mike Rendell (MR):
There is apparently a wide-spread view that the Medical Services Levy (MSL) should be re-introduced. This follows the well known fact that the nation’s health bill is rising rapidly. And, what better way to help pay for it than the tried and tested good, old, MSL? Let us be clear that the former MSL was, in affect an employment tax. It was another layer of direct tax, like income tax but on employed and self-employed earnings only. The amount of the levy was determined by reference to earnings, regardless of whether or not the tax-payer used Medical Services. The levy was raised against all wage earners – full time or part time – and it did not differentiate in any way. One percent of gross earnings were contributed by the employee and a further 1.5% by employers. However, the “user pays principle” involves a charge for the use of a particular service as and when it is used. The “user pay” charge is normally calculated on a cost recovery basis. Individuals who do not use the service do not pay any charge. “User pay” charges can be means tested where the income of the user is taken into account in determining the ability to pay. Therefore, as the Medical Services Levy was a tax, It is apparent that it does not meet the “user pay” principle. If it was deemed necessary to raise additional taxes to cover the rising health bill, particularly the cost of Medical treatment overseas, as we have seen earlier today (in Standing Finance Committee) then it would surely be more equitable to do this by raising the rate of income tax, so as to ensure that only those who are already paying for tax would contribute. To put this in context, however, the Taxation Office takes about £2Million in personal taxation per annum. And. If it was felt necessary to raise an additional £600,000.00 – to cover most of the cost of medical treatment overseas – this would require an increase of income tax of about 30%.
AC: I thank the Hon. Member for that.
JR: Would Cllr Mike Rendell not agree that even if we would not wish to cover the entire cost of any particular aspect of Medical Service, that some contribution towards it by the public, who use it, could be considered a good thing. And, that simply by adding the tax to the income tax will upset many people, whereas they might understand that a contribution in terms of a Medical Services Levy directly towards the Health Service would be more acceptable?
MR: I think the issue really is the cost of collection and whether the amount that you collect on that basis would have any real meaningful contribution to the costs of Medical Services. Maybe the Financial Secretary would like to explain a bit more on that particular issue.
Reply by the Hon. Financial Secretary (DH):
Mr. Speaker, Honourable Members, I support what the Honourable Mike Rendell said there about the amount that you could raise by a simple percentage that was in force previously. You might raise something like £.75Million today. And, the Medical Services Levy was not paid to the Medical Department. It came in to the Government and had to be paid into the Consolidated Fund. So, it was just another layer of tax. Certainly looking to raise more money that way for Medical Services would be to adjust the rates of income tax, which, taking into account our ability to pay – because there are thresholds under income tax. A personal allowance of £12,000.00 – anybody earning below £12,000.00 doesn’t pay, whereas with Medical Services Levy it was a flat rate tax on all income.
JR: Could you clarify, Financial Secretary, that it is not possible to allocate money received from a particular levy to go into a particular department – that it can only go to the consolidated fund?
DH: I can confirm that.
Q3-2006 by the Hon. Dr. Andrea Clausen:
Could the Hon. Richard Cockwell please advise this House as to when the Green Space adjacent to Anderson Drive, which was set aside for play provision for children in the East Stanley Residential area, is to be developed and the play facility completed?
Answer by the Hon. Mr. Richard Cockwell (RC):
Mr. Speaker, Honourable Members, it was not actually originally set aside but because the planning policy then being applied deemed the area not suitable for housing due to the restricted plot depth, rather than leaving it as blank space, the area was marked on plans as possible children’s playground. A report that was produced on playgrounds in 2003, which was aimed at setting out a time-scale for completing existing and developing new children’s play areas based on funding projections included in that capital budget. The Toddler’s Area in St. Mary’s Walk has taken all of the 2005/2006 funding, despite fundraising efforts. Funding of £25,000.00 is currently projected for 2007/2008. And, this is anticipated as being sufficient only to complete McKay Close, which currently is the next on the list. Anderson Drive, which follows Beaver Road on the current priority list – and I do admit that it is optional – Anderson Drive, which follows Beaver Road on the priority list would be unlikely to commence before 2112/13, unless funding increases and/or brought forward. So, I am sorry I can’t be more help than that.
AC: But you can, at least confirm that that area will be used, in any event, as a play area, if members of the community felt that they could assist Government in fundraising to carry that out, as has been the case in St. Mary’s Walk. That the Government actually does have that area set aside as play area now, as it’s on the list.
RC: As I said, it isn’t formally set aside though it has been pencelled in. However, this area is also being identified under a survey carried out by PWD and the EPO as offering real potential for housing in-fill. Given the savings that can be affected by utilising this land for housing compared with servicing green-filled areas but mindful of the perceived need for public recreational space for children in the East Stanley area, consideration is also needed for other locations for recreational space. One such large area to the south of Hansen Hill, which is effectively sterilised by the leading lights but which is near to Anderson Drive site cannot be used for housing but it may be very suitable for a playground area. This site could actually offer increased space, being less topographically constrained – it’s a much better area to do it and set back further from the road. Which could be a safety issue. So, that should be considered.
AC: I thank the Hon. Richard Cockwell for that answer but just to add that there was a contradiction in there. Originally, the Anderson Drive plot was deemed unsuitable for housing and now it suddenly is.
RC: That is correct but there is a reason for that. The guidelines for housing plots has changed so it is actually deemed suitable now when it wasn’t before. But I do take your point.
MS: Could the honourable Member please confirm that topographically constrained means flat.
RC: I believe so. This is the advice I got from PWD so I had to use the technical term.
Q4-2006 by the Hon Mrs. Janet Robertson (JR):
Could the Honourable Mike Summers please explain to this House how the operations of Stanley Services, as holders of a monopoly licence for the supply of fuel, are properly scrutinised and how they will be scrutinised in the event that FIG Shareholdings will be sold through HoldCo?
Answer by the Hon. Mr. Mike Summers (MS):
I am grateful to the Chief Executive for collaboration on this response. There have been a number of occasions in recent months when the effectiveness and value for money of Stanley Services monopoly and supply of fuels to Non-MOD customers has been brought into question. I am pleased to have the opportunity, which this question provides, to set out some facts and informative opinions. In doing so I should make it clear that I am responding as a Legislative Councillor and not as a director and indeed the current Chair of Stanley Services.
As a major shareholder the Government has two seats on the Board. The other is presently occupied by the Chief Executive. We sit in Board Meetings and are required by law to act in the best interests of the Company. But you can be absolutely certain that our knowledge of the Community and its needs are uppermost in our minds.
There is a distinction to be made between the Government’s powers as a major shareholder and its powers under the exclusive licence, which it granted to Stanley Services for the supply of fuel. In terms of formal powers, as opposed to the influence one can exert as a shareholder, the Government derives its power from the fuel supply agreement. Those powers would not be diluted if Government divested itself of its shareholding or any proportion of it. The Fuel Supply Agreement contains a detailed formula, which controls the retail price of fuel to civilian customers. This formula controls what costs and expenses can be charged against fuel prices and what cannot.
Additionally, the Government is empowered to audit how the formula, as applied and prices fixed by Stanley Services ensure that the operating costs of the Company are reasonable and excessive profits are not made. This has been done as a matter of routine for a number of years.
Of course we all know Stanley Services in also engaged in many other businesses activities. The operation of the Fuel Price Formula and the Audit of it ensures that costs attributable to the non-fuel supply activities of the Company are not charged to the fuel sector of the business, which would have the affect of raising fuel prices and subsidising non-fuel activities. That cannot and should not happen. And, the purpose of the audit is to prevent it.
The latest, very detailed audit of the operation, of what is called the “domestic fuel formula,” is drawing to a conclusion. And, I fully expect the statement on the outcome of that audit will be made in the very near future. Indeed, the Chief Executive advised Executive Council last week that it should be out next week.
At the request of the Government, the Board of Stanley Services has also agreed that the publication of the formula and an explanation of it should be done at this time. It is likely to coincide with the announcement regarding the outcome of the audit.
Finally, I just want to say that I am personally convinced that the monopoly supply arrangement provided by Stanley Services has served the Islands well and continues to do so. It provides certain obligations on the Company that couldn’t be provided by a competitive environment – for instance the requirement to hold at least three months’ and in some occasions 4 months stock in particular fuels to provide security for the Falklands. That wouldn’t happen in a competitive environment. There are also obligations to supply petroleum products, which may not happen in a competitive environment.
But we do have special circumstances here, which cannot be easily overcome and, which as we know as consumers can give rise to costs, which appear high compared to some other economies. Stanley Services is not the only company which has the benefit of a monopoly and it’s inevitable, bearing in mind the tiny size of the Falklands economy, that there are benefits, too.
The fuel supply business is complex and the logistics are far from easy. The relationship between Government and Stanley Services is far from cosy, as some people seem to imagine. And I am satisfied that the audit processes are robust and will not change when this Government sells any of its shares.
JR: I would just like to ask if the Honourable Mike Summers considers that the internal audit in the presence of two members of Government on the Board provides sufficient regulation for the activities of Stanley Services? And, in the event of HoldCo, would there still be Members of Government on the Board of Stanley Services to provide any form of regulation in its activities?
MS: The Honourable Member is now asking a very much wider question. She asked a question about the scrutiny and control of fuel prices. Control over other activities of Stanley Services would not be covered by the fuel supply agreement. And, any agreement to sell Government shares would possibly take away the presence of Government Directors in the Boardroom. However, the mechanisms of how the shares are to be sold through a holding company have only been set out in broad terms. There are a number of detailed possibilities that can and should be considered, including the holding of a “golden share” in HoldCo, which might give the Government the opportunity to retain a director. It might give the Government the opportunity of retaining the Chairman if we thought, in the longer term that that was the right thing to do. But there are a number of detailed issues, control issues, and how shares to be sold and what consequent regulation would be on the activities of Stanley Services outside the provision of fuel, which are yet to be determined.
JR: I apologise for having gone slightly off track but to go a bit closer back to the point, could the Honourable Mike Summers please confirm that the audit that you mentioned in your first reply will be made public?
MS: I believe I did say that but I can re-confirm again that the results of the audit will be made public in a statement from the Chief Executive next week.
Q5-2006 by the Hon. Mrs. Janet Robertson:
Following the recent curtailment of Ports being supplied directly as a result of the implementation of a ferry service, could the Honourable Richard Cockwell please advise what works programmes will be undertaken to improve Camp Roads on West Falkland to allow for the increased heavy traffic on the roads?
Answer by the Hon. Mr. Richard Cockwell (RC):
Mr. Speaker, Honourable Members, I am very pleased to get up and reply to this. However, this question really crosses two different portfolios. It is the Transport Advisory Committee that deals with transport issues and the Public Works. Public Works only carry out the policies of the Transport Advisory Committee create the policies. Public Works Department has a programme of grading on both East and West Falkland, which is on-going the year around. Grading has recently been completed on the Roads between Fox Bay and Port Howard and is ongoing in the Northwest. This maintenance is similar to that afforded to much of the East Falkland Network. Grading operations are weighted to favour those areas carrying the greater level of traffic. Substantial sums of money have been invested in the capping programme and this is currently being concentrated on the MPA Road. But this programme is scheduled to continue in future years on the highest priority areas. This financial year it is budgeted for £100,000.00.
In order to facilitate the long-term operation of the ferry, Executive Council approved in their January Meeting the construction of a road from Port Howard to Second Creek – the proposed location of the West Falkland ferry terminal, commencing in April 2006, which represents a further investment by £150,000.00.
This financial year, £150,000.00 was voted for the construction of the new bridge over the Chartres River, which was opened on 13 February 2006. This will allow vehicles of up to 32 tonnes to cross the river without having to use the ford or wait for floods to subside, thus allowing easy access from North to South. This was primarily aimed at addressing concerns over the movement of freight.
No other expenditure is proposed for the further improvement of existing roads on West Falkland, as all the available funds and resources are fully committed for the new road construction programme.
Total expenditure on the roads from West Falkland in financial year 2005/06 is expected to be £850,000.00. And, I have to repeat that Public Works is working for the policy laid down by the Transport advisory Committee. If that policy changes, then hopefully Public Works will be able to respond to that policy.
JR: I was just wondering if the Honourable Richard Cockwell could confirm that the roads will, at what stage, will all roads in West Falkland be able to take the weight of any trucks required for carrying fuel and heavy loads of wool?
RC: That is a very technical question, which I personally am not qualified to answer. However, I understand that it is the policy to make the roads capable of carrying the freight, which it is there required to carry. Obviously, working with the policies laid down by the Transport Advisory Committee, Public Works will respond to those policies as I say.
Response by the Hon. Mr. Michael Rendell (MR):
I would just like to come in here to elucidate a bit more on the Transport Advisory Committee’s role in all this and to make it absolutely clear we are well aware of the problems that exist on the roads on the West and we intend to have a meeting of the TAC within the next three weeks at which these matters will be addressed. On conclusion, we will be able to pass it back to Public Works for more money to be put into next year’s budget. It is well in hand.
MS: Does the Honourable Member recall after a brief prompt that the roads on the West are built to a weight limit of 4 tonnes and that that is considered to be adequate for most purposes? And, would he agree that in a particular circumstance, if that were not adequate, then the Coastal Vessel could be diverted to one of the ports that is not in regular use?
RC: Mr. Speaker that is a policy issue. However, is it 4 tonnes, or 4 tonnes per axel? I am not quite clear on that issue but that has been laid down. That is really a transport issue – not a public Works Issue but I do accept the point that he makes.
MR: I would like to say a bit more on that. It may be the case that the specification currently is fairly low, as some people would put it. And it may not be capable in the long term of dealing with heavier traffic that will come along as a result of the Ferry service and reduced services to other ports. That will be taken into account.
Q6-2006 by the Hon. Mrs. Janet Robertson:
Could the Honourable Richard Davies please explain to the House how damage by vehicular access – specifically mud tracking – in the Murrell area and Cape Pembroke Peninsula can be actively discouraged and, if there is any current Legislation in place to cover environmental Damage by irresponsible use of vehicles on common land?
Answer by the Hon. Dr. Richard Davies (RD):
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