Saturday, December 18, 2010

"Circle the Wagons"

In the absence of an effective public consultation process in these times of change, it would appear that we are being asked to leave our future in the hands of a very clearly change averse Norfolk Island Government and its Administration. Consider the following;

The range of responsibilities currently undertaken by the Norfolk Island Government is likely to change as the island becomes more closely integrated into the Australian system.
As a consequence of this, the Norfolk Island Administration will need to change the scope of its activities as it potentially sheds the more appropriately national responsibilities of border security and social security in favour of increased activity in municipal services and the provision of policy and administrative support to the NIG.
Change in the public sector, however, can be extremely difficult to progress as public servants (understandably) resist any change that might cause them to lose their jobs or have to undertake roles outside their normal comfort zones.
This behavior is neither unique to, nor universal within, the Norfolk Island public service.
The Norfolk Island Administration is a bureaucracy that has learned many of the lessons of process fairly well. However some processes within the Administration will have changed little in the life of self government and some officers will have been in the same role for a long time and will have received little in the way of training to equip them for new roles in an evolving bureaucracy. This is largely because the bureaucracy has not been evolving in any meaningful way.
The Hong Kong-based Political and Economic Risk Consultancy said in a report
on Singapore's bureaucracy, "the Singapore bureaucracy during normal times, when the system is not stress-tested, operates very well, however, during difficult times - or when mistakes are made that reflect badly on the system - there is a tendency among bureaucrats to circle the wagons in ways that lack transparency and make accountability difficult". Reflecting also on the Indian Bureaucracy the report went on, "they are a power centre in their own right at both the national and state levels, and are extremely resistant to reform that affects them or the way they go about their duties". These same traits exist to a greater or lesser extent in any tenured public service and are certainly found in the Norfolk Island Administration. A job for life in the public service does not serve the public well if the organisation remains frozen in time.
Public Administration (the public service) should, by definition, be driven by a culture of responsibility, accountability, and one would hope, altruism. However the degree to which a public service embraces these qualities will depend on the extent to which these qualities are found in their political masters. By contrast, the forces at work driving performance in commerce are substantially different. Commerce lives or dies on its responsiveness to change, it has no choice with profit being the primary driver of performance. It is ironic then, that the changes we all will be expected to live with are for the most part being driven by reluctant stakeholders while the enthusiasts for change sit on the benches.

The NIGs failure to understand the importance of investing in capacity building within its Administration may prove costly for us all. In dealing with the Commonwealth bureaucracy, Norfolk Island is seriously mismatched at both a political and an administrative level; it's a David and Goliath scenario.
It remains to be seen if, against this recalcitrant background, the Norfolk Island community can get a good outcome?

Tuesday, December 7, 2010

Public Sector Efficiency

Efficiency Dividend is inefficient:

The Norfolk Island Government /Administration has toyed with the idea of using the
efficiency dividend approach to save public money. The Chief Minister in the 12th Assembly, Andre Nobbs, spoke of the application of the ED approach during the dying days of the 12th Assembly, presumably on the advice of the then, and current CEO, George Plant, but those words have not been uttered of late. Maybe just as well.

Danger of waste on the way to a surplus
A new paper from the Centre for Policy Development examines the flaws
caused by blanket budget cuts and puts forward alternatives.

"As anyone who has tried budgeting knows, there is a limit to the
effectiveness of most cost-cutting measures. People who buy expensive
take-away food for their work lunches will find it relatively easy to save
money by bringing food from home instead. However, those already taking
homemade sandwiches every day will struggle to reduce their spending
further and still provide nutritious lunches.
After 20 years of the Efficiency Dividend, the public service is now at
the 'vegemite sandwich' stage of budgeting. Spending has been cut back to
the point at which Departments now need to reduce core functions in order
to deliver ongoing savings."

CPD's latest paper 'Beyond the Blunt Instrument: the Efficiency Dividend and
its alternatives' by CPD Fellow Jennifer Doggett discusses the many
problems caused by the Efficiency Dividend and recommends alternative
measures "

Monday, December 6, 2010

Public Sector Reform Essential

The $3.9m to be provided by the Commonwealth will provide little respite for the struggling Norfolk Island private sector. In the meantime the public sector continues to remain a safe harbor in these difficult times. Part of the rationale for this is that public sector wages trickle down and thus provide a degree of stability in our fragile economy. 
That argument can only be sustained for so long. 

All around the world, in Ireland, USA, Greece, Spain and France to name a few, governments are taking the hard decisions to trim public sector costs understanding, as they must,  that if government expenditure grows, or remains static, and public debt rises while revenue derived from the private sector shrinks, the outcome is inevitable.

The Norfolk Island Government has obviously come to the conclusion that the current model of government and its attendant administration cannot be sustained.
 
In seeking a bailout, Greece and Ireland, have acknowledged the need to restructure their respective administrations and this will in all probability play badly for them domestically when next they go to the polls.

In Bloombeg Business Week 04/12,   Ken Wattret, chief euro-area economist at BNP Paribas in London, wrote;

“Good news in the short run does not mean problem solved,”. “As we saw with Greece, securing financial support does not eradicate the underlying problem: the need for multi-year fiscal austerity to win back the markets confidence over the outlook for the public finances. That is going to be tough.”

In most OECD countries, the size of public sector employment today represents between 5% and 28% of the workforce . The Norfolk Island Census does not differentiate between public and private sector employment, conservatively though one could say, that Norfolk is at the high end of this range, if not beyond it.  
Any downsizing of the public sector is likely to impact on future election outcomes. 
It is that reality which retards action on the part of our politicians as much as the very real conflicts of interest present when friends, relatives and partners are effected by any tough decisions.
The unavoidable fact is that unless the private sector grows or the Commonwealth becomes extremely magnanimous the Norfolk Island public sector  is set for a serious downsizing.
At some point NIG will need to establish what is the core business of government and set about the task of re-engineering itself.

Friday, December 3, 2010

Memorandum of Understanding for Financial Assistance

In order for the Norfolk Island Government to gain financial support from the Commonwealth, both governments signed an MOU which outlines the basis on which the funds can be supplied.

To see the MOU, go to   http://tinyurl.com/2368ayl

Where to From Here ?

In his address to the community at Rawson Hall on Wednesday night Mr Robert Patch from the Dept. of Regional Development added, almost as an afterthought, “where to from here?”
A pretty standard wrap up for any forum where there is a requirement for subsequent action.
Mr Patch then gave an outline of the things that were expected to happen in order for Norfolk Island’s bids to find their way into his Department’s budget and ultimately into the Commonwealth budget cycle.
It is sobering to think that the Norfolk Island Government and the Administration have roughly 12 weeks to come up with the quantum of dollars that they are seeking from the Commonwealth for 2011/2012; their supporting arguments; and then for the Commonwealth to agree to this, or not; and for the basis on which there is to be agreement, or not, to be articulated.
The first part of this is probably the easiest. Truth be told, they’ve done it already.
You would expect that with financial collapse imminent any responsible government would know what it needed to survive and get ready for a bailout and include some contingencies to maximize the size of it depending on their appreciation of the disposition of the bailee.

Imagine you’re a sinking ship, your engines have failed, and half the crew has abandoned ship. The first thing needed is to prevent the ship from sinking e.g. plug the leaks. If that works then maybe you could ask a nearby ship’s captain for some engine parts so that your no longer leaking ship could get under way.
Then you might decide to stretch the friendship and broach the subject of some assistance with a crew because it’s not much good just fixing the leaks and getting underway only to have the ship sail around in circles with no understanding of “where to from here”.
To have some understanding of how the other ship’s captain might react is useful. If in the past you have been reluctant to accept assistance when it was offered, and if you have bad-mouthed other ships crews, then they might be inclined to leave you flopping around in the sea.

Taking the sinking ship analogy a little further, once the ship is out of danger and you have steerage and power, it might be a good time to talk to the passengers. Do they want to continue the cruise? Do they want to go forward, or backward? Standing still is not an option, so “where to from here?” This is where the important supporting arguments come from – all the passengers.
My point is, are we expected to leave our future in the hands of a few “faceless men” such as those of Mr Nobb’s as yet unnamed economic advisory committee, or to the fate of the Canberra lobbyists paid for by other “faceless men,” or do we get a real opportunity for input.
Should the future direction of the good ship Norfolk be dominated by the views of Norfolk Labor, the Chamber of Commerce, or the Pitcairn Society?

The answer, of course, is that the views of all should be factored in as openly as possible. This is a momentous time for Norfolk Island, it is crunch time, we all have a stake and we all need a hearing.

For this to occur the NIG, or the Commonwealth, needs to act fast and establish a process that we can have confidence in. For example:

1. Mail out to all residents on Tuesday December 7th 2010.
2. Call for submissions from organizations and/or individuals.
3. Closing date for input, Friday 22nd Jan 2011.
4. Review all submissions.
5. Tabulate all.
6. Cross reference all with NIG positions already determined.
7. Explain why a particular course of action will not be followed.
8. Provide all the above with final submissions as evidence of having considered the views of all stakeholders.

This is not rocket science, but it is good democratic process.

Fred Howe – Norfolk Island

(note: the writer is Vice-President of the Norfolk Island Chamber of Commerce)

Thursday, December 2, 2010

Australia provides a $3.9m assistance package for Norfolk Island

Norfolk Island's Chief Minister, David Buffett, announced to the Norfolk Island Assembly today that the Commonwealth Government has agreed to provide $3.9m to help our cash strapped government address a range of "urgent and needed" issues.
In agreeing to provide this short term package it is understood that the Commonwealth has not agreed to pick up existing Norfolk Island Government liabilities such as those related to the contractual arrangements for the provision of air services to the Island.
The Norfolk Island Government is now committed to working closely with the Commonwealth to determine the basis of longer term financial support and this may bring to an end the income tax free status of the island.
Minister Simon Crean is likley to visit Norfolk Island in February for discussions with the NIG. It is expected that Norfolk Island Government's proposals will be then go forward into the Commonwealth governments budget cycle for 2011/12.
At a public meeting in Rawson Hall later in the day, the Chief Minister and Mr Robert Patch from Minister Crean's Department, spoke to a large group of community members regarding the next steps to be taken in the process.

Friday, November 26, 2010

Law Reform for Norfolk Island

New Governance Arrangements for Norfolk Island as the Territories Law Reform Bill Passes into Law

Towards the end of the final day of the final sitting of the Senate for 2010 and after less than 20 minutes of debate, the Territories Law Reform Bill 2010, passed into law without amendment. It remains only for the Bill to be given Royal Assent by the Governor-General.
The Bill introduces a range of changes to the way government operates on Norfolk Island and raises the bar on transparency and accountability. The changes were an important step in the process of developing new arrangements with the Commonwealth for Norfolk Island.
Some of the changes will not be implemented until after the next Norfolk Island election but some relating to financial accountability will begin at the commencement of the 2011-2012 fiscal year. The range of changes will be summarized in future articles.

Wednesday, November 24, 2010

Fly to Norfolk Island from Domestic Aussie Terminals

An issue that has been discussed for some time on Norfolk Island is changing Norfolk Island to a domestic route from Australia.
Currently all flights to Norfolk depart from International Terminals in Brisbane, Sydney, Melbourne and Newcastle and this has its disadvantages.
Some of the benefits of coming out of the domestic include;

 No requirement for a passport to travel to Norfolk Island. More spontaneity in travel
 Easier transfers for the majority of our visitors who originate from within Australia.
 No passenger exposure to duty free shopping means Norfolk Island retailers would have increased opportunities
 No passenger exposure to duty free alcohol so Norfolk Island liquor bond sales should improve substantially
 Airport taxes lower ?

Some of the issues to consider would include;

 How do we monitor tourist movement – modified permit system ?
 Quarantine checks remain as they do between some AU states
 Domestic/International terminal categorization - what are the issues ?
 Security checks remain
 NZ incoming and outgoing what are the issues
 Access to gates at domestic depending on carrier
 Foreign owned aircraft any issues (Nauru owns the aircraft that flies to Norfolk Island
 Foreign crews any issues
 On-flying from NI to Aust by NZ citizens

I’d be pleased to hear about the issues associated with this change and some other perspectives. Post a comment

Sunday, November 21, 2010

HEY ! - WHAT ABOUT THE NORFOLK ISLAND PRIVATE SECTOR ?

This week, Norfolk Island’s Chief Minister and Finance Minister make the pilgrimage to Canberra for talks with the Federal Minister responsible for Regional Australia – and Norfolk Island, Simon Crean.
Word on the street is that the talks will be short but it remains to be seen, how sweet.
In this first face to face meeting, Norfolk Island’s Chief Minister has indicated that he has no preconceptions about the direction these talks will take other than that they will focus on the short term issues.
The major short term issue for Norfolk Island is our level of debt and the mismatch between revenue and expenditure. One would expect that the Norfolk Island Government will be hoping for sufficient funds from the Commonwealth to meet current debt obligations and presumably a little more to provide a bit of breathing space.
The NIG has previously made mention of the preparation of a “fact book”. This will probably contain the numbers in support of “the pitch”. The Feds will have their own “fact book”

We can be sure that the NI Government will be anxious for it’s financial situation to be shored up, and we can be sure that this will include funds to pay Public Service salaries, pensions and of course, politicians.
What we can’t be sure of are the measures contained in the NIG Fact Book, if any, specifically included to address the short term issues of the private sector.
So far the NIG has not been active in informing themselves about the needs of the private sector.
Members of the Norfolk Island government have at times reflected on the need for the Tourism industry i.e. tours and accommodation, retail etc. to upgrade and to improve level and quality of service. Equally the private sector has put forward its views on how and where the public sector can improve its performance.
The public sector has largely been insulated from the economic downturn with most of the pain being borne by the private sector. The NIG continues to rely on a private sector which is absorbing higher costs and accepting lower returns for longer hours to keep the ship of Norfolk afloat.
The government is remiss in not having seriously engaged with the private sector prior to developing a recovery package. It can only be hoped that the government has been adequately informed through the informal contacts that tend to occur on Norfolk.

There is no doubt that Norfolk Island will be less of a burden on the Commonwealth if we can generate wealth on the island. This is the role of a healthy private sector and both parties should not be allowed to forget it.

Thursday, November 18, 2010

CONSULTATION PROCESS ON NORFOLK ISLAND REFORMS UNDER WAY

The opening gambits in the process of re-aligning Norfolk Island with Australia began this week. As a member of the Norfolk Island Chamber of Commerce Executive, I participated in a meeting with the Administrator and Commonwealth Officers from Minister Simon Crean’s Department of Regional Development, and from the Department of Finance.
The officers were as professional as you would expect them to be, as familiar with the range of issues as they could be, and as open to input as you could hope they would be.

The meeting provided a useful opportunity to flag a wide range of issues, including, at the top of the list, airline services to Norfolk and the problems of Norfolk Air, the importance of Tourism growth to our economy, the need to pull back Norfolk Island’s involvement in some activities to reduce costs and improve services, particularly in the areas of Health, Social Security/Welfare and Education, and finally, the island’s debt position.
The Commonwealth commitment to regional Australia was emphasized along with the observations that Norfolk Island, in common with many other areas of regional Australia, has much to gain from its re-alignment with the Commonwealth

The immediate focus would appear to be on the here and now. This means addressing the financial position of the Island for the remainder of the financial year 2010/11.
Norfolk has substantial debt, a reduced cash flow and some costly long term commitments. Short term assistance is clearly vital, and the officers we met with acknowledged this necessity. Once they are in full knowledge of the facts of our position, they will brief Minister Crean, presumably prior to the Chief Minister going to Canberra on the 25th Nov.

Any expectation that Norfolk will be assisted to the extent of giving us a clean slate for 2011/2012 without rock solid commitment to long term change i.e. into the Australian Tax and Social Security system, would be delusional given the Australian domestic political situation and the Commonwealth’s current debt position. My words, but the message was clear.
The governance changes expressed in the Territories Reform Bill are important to the process of change and to giving us all renewed confidence in our system of government. The Bill has now been passed by the House of Representatives and is expected to go to the Senate and hopefully be passed by the senate before the weekend.

Saturday, November 13, 2010

KAVHA World Heritage Area Signs

It's good to see that the Kingston & Arthurs Vale Historic Area, now World Heritage listed is going to get some signs. Something that will tell you that you have arrived in this area that is so important to the island and clearly - to the world.
Lets hope that the signs befit the status of the area and that they work in style and proportion. Let's hope that some taste tests have been applied.
I'd hate to think we would end up with something akin to an "EL Rancho KAVHA" some mission brown disaster, or something really kitsch.
Watch for the signs as in my experience it is very easy to get this sort of thing wrong and they can around for a long time.

Friday, November 12, 2010

Mozart just going through the motions

Norfolk Island's sewage system is well past its design life and is in need of testing to determine how well it's doing the job (no pun intended) While some music could definately drive you to a breakdown, a German company has discovered that the music from the Magic Flute and the Marriage of Figaro encourages bacteria to break down solid waste so maybe that approach can help us.
The German company Mundus is checking out the sound system which will replicate vibrations from Mozart's music and when combined with oxygen apparently helps break down sewage.
The company's founder commented that Mozart “transposed the universal laws of nature into his music”, and after all microbes are living things too. As a matter of fact, Mozart was supposed to have been inspired by a starling.
Sydney Water, not previously known for its musical appreciation, is monitoring the tests. According to Sydney Water there's no actual data, but they're prepared to try anything.
Apparently this new treatment method needs special speakers. Sub woofers sound about right but you have to ask, how do they discover this &^%&.

My favorite bumper sticker:

"Support bacteria; it is the only culture we have left."

Read more: http://www.digitaljournal.com/article/299652#ixzz1574Qf0ki

Same Sex marriage

According to a Galaxy Poll released last month, a growing majority of Australians - 62% - believe that same-sex couples should have the right to marry.
The Greens are continuing to build support in the Parliament for their Marriage Equality Amendment Bill which will enshrine the right for all couples to marry.
As the next step in this campaign the Greens have moved a motion in the House of Representatives calling on Parliament to acknowledge the widespread public support for marriage equality and asking MPs to consult with their constituents to see for themselves just how much community attitudes have changed. The motion will be debated in Parliament on Monday, November 15.

The Netherlands, Belgium, Norway, Spain, Canada and South Africa and many states in the United States have already legislated for marriage equality.

Here in Australia both the major parties are opposed to change but more and more, people like Anna Bligh and Mark Arbib, Warren Entsch and Mal Washer are calling for a progressive approach, amending the Marriage Act is the next logical step towards marriage equality.
The Greens are asking all Autralians to ask their local members to participate in the debate

Thursday, November 11, 2010

Norfolk Island Tourism needs a kick along

Now that we are more engaged with the Commonwealth there could be a temptation to push for big ticket items to adress long standing infrastructure issues. Sure there is a place for that but the quickest was to get money circulating in the community is via tourism. So be it marketing or airfare pricing or a combination of both, that's where dollars will have an effect.

Be a part of the solution

Obviously the hottest topic in town on Norfolk is the announcement made by Chief Minister David Buffett in relation to our future relationship with Australia.
The inescapable conclusion to be drawn from this bolt from the blue is that Norfolk Island was, and remains, very close to flat broke.

It is also reasonable to speculate that the Chief Minister may have been faced with the real possibility that the Administration wages and pensions etc. could not have been paid in weeks ahead. Faced with the scenario of families with no pay packets in the Christmas period, and knowing that a combination of this and the traditionally low tourism period at Christmas could have totally collapsed the Island’s economy, the Chief Minister, in all probability, had no choice but to do what he did.
It is apparent that not everyone is happy about the Chief Ministers announcement however I suspect that they are in the minority given the gravity of the situation.

Like it or not, most of us will feel some degree of apprehension as to how the new arrangements will play out and over what time period. We will need now to turn our minds to gaining outcomes that will be best for all on Norfolk.
In the months or years to come there will be many meetings between politicians of both governments and officers of both governments. The Norfolk Government particularly will need constant reminding that we all have a stake in this.
The Commonwealth also has a responsibility to ensure that all who live on Norfolk Island are given every opportunity to express their views on any proposals put forward.
The Commonwealth must not abdicate its responsibility in this regard to the Norfolk Island Government on the basis that they are our elected representatives, that has been a major failing to date.
The Commonwealth should understand clearly that there are those in the Norfolk Island community who have the ear of government, who have always had the ear of government and who will be extremely focused on influencing the NIG to portray the outcome that they seek, as an outcome that will be good for Norfolk, when it is simply an outcome that is good for them. I would feel confident in saying that this is already happening.

In the lead up to this momentous change the Norfolk Island Government has not been honest with its constituents about the real state of the islands economy. It has painted a rosy picture about our prospects when there was no basis for optimism.
The decision to embrace the Commonwealth system has come pretty late in the day, and both governments must share responsibility for this. It is not good enough for the Commonwealth to say that the welfare of its citizens was the NIG responsibility and leave us to implode. Such an approach that would be acceptable in local government in Australia and one needs only look at the Northern Territory intervention to see that the Australian government can act unilaterally if it so chooses.

The way the future unfolds for us is something we should all be engaged in and it is naïve to assume that your interests will be considered if you do not actively participate in the process. It’s not the time to be a spectator.

Norfolk Island changes

Given the Chief Minister’s long standing support for Norfolk Island’s self governing status, and for the island to be as independent from Australia as possible within the constraints of the Norfolk Island Act, it is obvious that his government’s decision to join the Australia financial system, was the only decision possible. It is unfortunate that one of the most responsible decisions that this government has made, has been characterized by some as other than this.
What is important, now that the decision has been made, is that the process of negotiation begins, and we will hopefully get Norfolk moving once again.
This process of negotiation should involve the entire community.
This Norfolk Island Governments and its predecessors have not always acted in the best interests of the whole community because, cocooned in Kingston, they are often remarkably out of touch with reality.
Ask any struggling small business owner, single parent, a low income worker or, pensioner, when was the last time a member of the Norfolk Island Government really listened to your problems?, I mean really listened, as opposed to nodding while looking elsewhere and then heading off for a long lunch, coffee or to catch a flight.
Rest assured that in negotiating the way ahead, the NIG will continue to be overly influenced by well placed individuals representing their own interests which will not necessarily coincide with the broader community interest.
I would urge every member of the community to become engaged in this process as it unfolds and to make known the issues that are of concern to you and how you feel particular issues should be addressed.
The consultation process should include public meetings, focus groups working parties and formal submission opportunities, the whole gamut of consultation tools including Commonwealth officers based on Norfolk for extended periods in the months and years to come.
I would expect that the Commonwealth will establish such mechanisms and I would urge it to do so as soon as possible.

Friday, November 5, 2010

Commonwealth Parliamentary Association feedback

In his report on the Commonwealth Parliamentary Association (CPA) Conference in Kenya, the Deputy Speaker, Lisle Snell (Norfolk Islander 9/10) related a number of points from the conference as being relevant to Norfolk Island.
While many of these issues have been flagged locally ad nauseam, nothing apparently focuses the mind like a CPA conference half a world away.
The points taken from the conference by Mr. Snell are worthy of comment.
Firstly, in what looks like and attempt to justify Norfolk Islands plan to fix its waste management problem on the cheap with a homemade pit burner, we are told that Jersey (Channel Island) is not happy with its $100 million incinerator.

To put this in context, Jersey has a population of over 87,000, and its incinerator is a waste to energy facility that will provide electricity to 10,000 homes. Jerseys incinerator complies with EEC emission control standards, something which no pit burner does. There are orders of magnitude of difference here, in both the problem and the solution and while someone may have advised the NIG to use a Pit Burner in lieu of a proper incinerator, it most certainly wasnt the expert consultants (URS) hired by NIG for that purpose. URS examined a range of options for waste disposal, were paid around $60,000 for their work and provided a substantial report. 
Any serious effort to improve our WM practices, to keep our air and our beaches clean, wont be fixed with a pit burner.

We were also told that, “Nepotism is a concern, but unavoidable in small countries, and need not be a concern provided proper policy is followed”
Nepotism, defined as favoritism granted to relatives or friends with no regard to merit, is clearly avoidable. Proper observance of merit selection can prevent the reality of nepotism if not the perception of it. 
As for “proper policy”, the NI Administration needs considerable work to meet this millenniums public sector best practice standards in Human Resource policy.
Incidentally, Kenyas Prime Minister Raila Amolo Odinga, who formally closed the CPA conference is well practiced in the art of nepotism and cronyism. (google: Odinga, nepotism)

Its hard to decide if the next point should make us feel better or worse. “Small Governments suffer the same accusations of doing well, they must be corrupt, going bad, they must be incompetent”. The implication here is that politics is a thankless task, and its probably true, but if politicians spent less time using taxpayers money for junkets to exotic locations, and more time attending to the business of government, they wouldnt need to sit around the pool in Africa or Bermuda or Jamaica (sites of previous CPA conferences) sucking on umbrella laden cocktails moaning about their public image.

Finally, CPA tells us to “Make all government contracts and results of building process public”. What a good idea. It appears that at last we can we look forward to a new era of transparency beginning with the posting of airline and fuel supply contracts on the web ASAP. 

Thank you CPA, best $20,000 we ever spent.

Saturday, October 23, 2010

Domestic Terminal Departure for Norfolk Island a priority

During the last Norfolk Island election campaign many candidates spoke of the desirability of Norfolk bound aircraft departing from the domestic terminal. Most candidates felt that such a change would be beneficial to tourism and therefore to our economy.
This issue has been around for some time. When discussed at a Chamber of Commerce meeting and members and travel industry professionals agreed that it would be a positive development. Alternative airlines have also indicated that this would be a pre-condition for flying to Norfolk. Both the Australian and New Zealand governments are moving towards an open skies policy to improve the ease of travel between these two countries for sound economic reasons.
While we hear words of support for the idea of domestic terminal departure from individual members of the NI Government and the Assembly, there does not appear to be a clear Norfolk Island Government policy position on this. It has been said that the Commonwealth is the obstacle to this. Given the importance of getting the Tourism industry on Norfolk rolling again, and given that we now are engaging with the Commonwealth on a range of fronts, lets get this change happening ASAP

Norfolk Island Spin

With tourism underperforming as the major plank in Norfolk Island economy, Norfolk Island’s participation in the South Pacific Internet Network (SPIN) has been promoted as a vital addition to our infrastructure. It is seen as providing enhanced opportunities for a range of e-commerce opportunities as well as social benefits through services to education, information and health/telemedicine services. Other benefits flagged include;

• Meeting projected future needs in education e.g. a NSW Education proposal to deliver 10 Meg to all NSW schools.
• Enabling multimedia services such as the delivery of IP Television, Video on Demand, Video Telephony, 3G and 3.5G mobile capability.
• Making Norfolk more attractive to overseas firms considering establishing on Norfolk including remote business that may desire to Telehouse equipment on Norfolk Island.

SPIN however comes at a cost. With the current exchange rate this would amount to a fraction over A$1.8 million per year at a minimum for 20 years, almost $1.3 million more than current cost of $500,000 per year paid to NZ Telecom for the satellite service. In terms of capability, SPIN wins. Satellite bandwidth is currently limited at approximately 14Mbps while SPIN will provide 155Mbps in the proposed intial uptake. While the SPIN operation will eliminate the need to purchase satellite bandwidth from NZ Telecom, NZ Telecom would likely remain as our international gateway and some charges will remain.

The NIG has previously indicated that it holds letters of intent related to Gaming and from organisations interested in establishing Call Centres and Technology Centres as well as expressions of interest from other parties if SPIN becomes a reality and there are opportunities to sell excess capacity. Financial service providers are also possible players. It is of concern though, that until Norfolk Island can attract greater use of the bandwidth from commercial operators, the SPIN commitment will need to be fully funded from Norfolk Telecom’s existing activities, including a contribution from the Gaming GBE. NIG has previously suggested that new gaming initiatives could deliver as much as $5 million p.a. in additional revenue although they may wish to revise this down in the light of more recent events.

SPIN as a commercial project is now under a cloud as several players, important to the financial viability of the project have apparently withdrawn. This may be a touch of schadenfreude for Norfolk. While an ill timed withdrawal by Norfolk would attract a substantial penalty, if SPIN fails to deliver, we are off the hook. It is understood that NIG is looking at options other than SPIN which involve an enhanced satellite service. This is a wise move.
Unless there is some substantial take up of the bandwidth by other commercial operators, Norfolk Telecom, or more to the point, Norfolk Telecom consumers, cannot afford SPIN. Would you pay three times what you’re currently paying for internet? Without fibre to the home and without any 3G or 3.5G mobile capability – that will be extra. How about a cross subsidy from another loading on fuel prices? I don’t think so.

For SPIN to be viable, it needs to be part of a de-regulated market where Norfolk Telecom would be privatised as a whole or broken up into its constituent parts. Divestment of the mobile phone business and the ISP would allow profit driven operators the freedom to pursue new business opportunities with some vigour. Currently Norfolk Telecom is adopting a siege mentality and indulging in anti competitive practices. If Norfolk Telecom was purely an infrastructure provider selling access to its physical resources at competitive fees without itself being a retailer of services, we could anticipate more effective utilisation of increased capacity.
Norfolk Telecom, competitive practices aside, appears to operate quite effectively doing the “techhead” side of things, but it needs cashed up entrepreneurs with real market savy to take the next step.
At this point NI Telecom needs to step up or step down or alternatively, convince the Commonwealth that Norfolk should be part of the NBN, but that’s a whole new ball game.