T Y N W A L D C O U R T O F F I C I A L R E P O R T

R E C O R T Y S O I K O I L Q U A I Y L T I N V A A L

P R O C E E D I N G S

D A A L T Y N

(HANSARD)

Douglas, Wednesday, 15th December 2010

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Volume 128, No. 5

ISSN 1742-2256

Published by the Office of the Clerk of Tynwald, Legislative Buildings, Finch Road, Douglas, Isle of Man, IM1 3PW. © Court of Tynwald, 2010 TYNWALD COURT, WEDNESDAY, 15th DECEMBER 2010

BUSINESS TRANSACTED Page

Leave of absence granted...... 583

Orders of the Day 25. Isle of Man Steam Packet Company – Evaluation of placing into public ownership – Motion lost...... 583

The Council withdrew.

House of Keys...... 597

The House adjourned at 12.01 p.m.

Present:

The President of Tynwald (The Hon. N Q Cringle, OBE)

In the Council: The Lord Bishop of Sodor and Man (The Rt Rev. R M E Paterson), The Attorney General (Mr W J H Corlett QC), Mr R P Braidwood, Mr D M W Butt, Mr D A Callister, Mrs C M Christian, Mr E A Crowe, Mr A F Downie, Mr E G Lowey and Mr J R Turner, with Mr J King, Deputy Clerk of Tynwald.

In the Keys: The Speaker (Hon. S C Rodan) (); The Chief Minister (The Hon. J A Brown) (Castletown); Hon. D M Anderson (Glenfaba); Hon. A V Craine and Hon. A R Bell (Ramsey); Hon. W E Teare (Ayre); Mr J D Q Cannan (Michael); Mr T Crookall (Peel); Mr P Karran, Hon. A J Earnshaw and Mr D J Quirk (Onchan); Hon. G M Quayle (Middle); Mr J R Houghton (); Hon. D C Cretney and Mr W M Malarkey (); Mr C R Robertshaw (); Mr C G Corkish MBE and Hon. J P Shimmin (Douglas West); Mr G D Cregeen (); Mr J P Watterson, Hon. P A Gawne and Mr Q B Gill (); with Mr R I S Phillips, Clerk of Tynwald.

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Tynwald

The Court met at 10.30 a.m.

[MR PRESIDENT in the Chair]

The Deputy Clerk: Hon. Members, please be upstanding for the President of Tynwald.

PRAYERS The Lord Bishop

Leave of absence granted

The President: Hon. Members, Mr Henderson has reported in this morning that he is still not well and cannot attend. It is good to see Mr Gill back joining us again this morning.

Isle of Man Steam Packet Company Evaluation of placing into public ownership Motion lost

25. The Hon. Member for Michael (Mr Cannan) to move:

That Tynwald views with concern the current trading problems of the Isle of Man Steam Packet Company and considers that it is of fundamental importance to the Isle of Man that it 5 has reliable and financially sound passenger and freight ferry services with the United Kingdom; and establishes a Select Committee of three Members with powers to take written and oral evidence pursuant to sections 3 and 4 of the Tynwald Proceedings Act 1876, as amended, to evaluate the benefits of the Isle of Man Steam Packet Company being placed in public ownership and to report by 31st March 2011. 10 The President: Hon. Members we have reached Item 25 on our Order Paper, the one remaining Item which we have to deal with. It is headed up Isle of Man Steam Packet Company and I call the Hon. Member for Michael, Mr Cannan, to move, please.

15 Mr Cannan: Mr President, thank you very much. The motion is that Tynwald views with concern the current trading problems of the Isle of Man Steam Packet Company, considers that it is of fundamental importance to the Isle of Man that there is a reliable and financially sound passenger and freight service with the United Kingdom and establishes a select committee to evaluate the benefits of the Steam Packet being placed in 20 public ownership. In summary, Mr President, to evaluate the benefits of the Packet Company being placed in public ownership: I am no expert in shipping matters (Members: Hear, hear!) so I do not know if it is beneficial for the Steam Packet Company to be in public ownership, but I strongly believe that Tynwald should be professionally advised. A committee may evaluate there is no benefit in public 25 ownership, or it may recommend that it is in the public interest that the Packet Company is placed in public ownership, if and when necessary. To date there have been previously several debates and many parliamentary Questions and recently a Select Committee Report on the operations of the Packet Company and the terms of the Linkspan User Agreement. To date there has been no professional evaluation of the benefits or 30 otherwise of public ownership. These debates, select committees, Questions have used much ______583 T128 TYNWALD COURT, WEDNESDAY, 15th DECEMBER 2010

parliamentary time and cost and also much executive working time and cost to the Packet Company. I ask myself, having seen all these reports and Questions come before us, what has been achieved? Almost nothing. Endless, almost confrontation at times with the Packet Company for the services they provide, or perhaps are not providing, for the costs of travel. You have only got 35 to read the letters columns of the local newspapers to see what the public think. The past 30 years have been a troubled and contentious period for the Packet Company. Until 1977-78, the people of the Isle of Man were, in general, satisfied with the service provided by the Steam Packet Company. Then came the introduction of the alternative passenger and freight service by Manxline, later taken over by Sealink, which caused serious problems to the Packet 40 Company and Manxline as well. Manxline introduced the drive-on freight service while the Steam Packet Company continued with cargo handling. Both shipping lines suffered financial problems. Sealink withdrew, and in 1984-85 the Isle of Man Steam Packet Company was bought by Sea Containers, an American firm registered in the Bahamas, and from then to the present day there has been no Manx ownership of this Company. 45 Many of you here will recall, in 1984-85, the special settings of Tynwald when the Steam Packet Company was going to go into foreign ownership, the very large public meeting in Summerland when the late Sir stood up and said the solution to the problem was public ownership. I concurred with that policy then. Times have moved on, but that was his philosophy after 40 years as a Member of Tynwald, from 1946. 50 The new owners retain the trading name Isle of Man Steam Packet Company, but the directors are always beholden to the trading and investment policy of the beneficial owners, an overseas company. In brief, since 1985, the Packer Company has been an investment product for overseas earners, firstly, when the Company was purchased by Sea Containers, then later sold on to Montagu Holdings, a subsidiary of HSBC, and now owned by the Macquarie Bank of Australia 55 and others in Australia for the benefit of Australian pension funds and other financial institutions and funds. The trading operations of the Packet Company have been a matter of public concern and comment for the past 30 years, as I have already said. You look on your internet, you look on your letters to the newspapers: it is constant and continuous. On the one hand, it is fully recognised that the Isle of Man Steam Packet Company is a private 60 trading company whilst, on the other hand, it has a monopoly trading position – or did have – in respect of certainly passenger, and until recently, freight services that are fundamental to the economic well-being of the Isle of Man, through the sole use of the Government linkspan. The availability and sole use of that linkspan has been provided free of charge to the Steam Packet Company, who appear to have placed the facility as an asset on their balance sheet at something 65 like £200 million. So today we are where we are, Mr President. There is a commercial battle for the freight business between the Packet Company and Mezeron. Only three days ago, last Sunday, the Chairman of the Packet Company, in a public radio broadcast, stated that the beneficial owners of the Packet Company have authorised the local directors to see this commercial battle through to 70 the end. He stated that, presently, the Packet Company has lost in excess of 15% of its freight business, that in this commercial battle it may be necessary to increase passenger fares to compensate the loss of freight business. Those are not my words. Those are the Chairman of the Packet Company broadcast last Sunday and again on Monday morning ‘Mandate’. So the questions that have yet to be answered are how will this commercial battle benefit the 75 economic development of the Island, the benefit of the tourist industry, if passenger fares are increased? Already there are constant complaints about the cost of getting to the Island by tourists. We spend hundreds of thousands promoting the Isle of Man for tourism and we get a lot of comment that it is too expensive to come here. How will all this benefit, or otherwise, the prospects of job security for the employees of the 80 Company? At least half of Tynwald Members had a meeting last Wednesday with union representatives who voiced their views about their concerns about what is happening to their job security and their homes and their wives and children, because all of us need a certain amount of job security or income security. How will all this battle go on and benefit the everyday well-being of Island residents? 85 In my opinion, having listened to the Chairman of the Packet Company, the present problems will not go away. Mr President, most people will agree that it is of fundamental importance to the Isle of Man that it has reliable and financially sound passenger and freight ferry services with the United Kingdom. So what is to be done? In my opinion, there appear to be three scenarios in the present situation: firstly, for Government to do nothing and allow the present competition to run its 90 course, with possibly a serious outcome for the Isle of Man.

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I thought this was Council of Ministers’ policy until this morning: I got the Written Oral Answer to Question 4 on yesterday’s Question Paper, in which the Answer said, as a prudent measure one of the terms of reference Council has given to the working group is to consider options for future contingencies to provide roll on, roll off passenger and accompanied service and 95 unaccompanied freight services should, for any reason, the existing operator be unable to do so. That is the Written Answer from the Chief Minister to Question 4 yesterday. Secondly, is the Government to provide financial support in the form of a subsidy to the Steam Packet Company? I view this as totally unacceptable, (Several Members: Hear, hear.) because the Packet Company is basically an investment product of the Macquarie Bank and its associates. 100 People should realise that, whenever they pay fares or freight charges, the profit on these purchases goes down to these Australian institutions. These Australian pension funds rely on an income from the trading of the Steam Packet Company. Thirdly, Government, through supporting its Tynwald select committee, to examine the benefits of public ownership. I am not supporting public ownership. As I said at the beginning, I 105 am not an expert on shipping and I doubt if there are many in this Chamber who are experts on shipping, but at least we have had select committees, Mr President, on every aspect of the Steam Packet’s operations, questions and statements, but nobody has ever looked at the options, except until we got this paper on our desks this morning, saying that the Council of Ministers is looking at a contingency plan. 110 So, I will finish as I started: this motion is solely for a committee to evaluate the benefits of public – there may be no benefits – so that, by the end of March 2011, Tynwald has a contingency report for action or otherwise that may or may not be required. I say to Hon. Members: do not be frightened by the issue of public ownership. It is not a dirty word when applied to public ownership of utilities essential for the well-being of the community. Our electricity supply is in 115 public ownership, our water supply, our public transport. I have always been in favour of a free market economy when the operation of this free market is not to the detriment of the economic well-being of the Isle of Man. I am not prepared to sit back and watch a free market fight which will harm the Isle of Man. That I do not believe is acceptable. I do not believe that I am elected to sit back and watch a free market battle that is going to affect the well-being of all of us. 120 I will add this comment: if there is to be public ownership of the essential freight and passenger ferry service, then it must not be under the day-to-day control of politicians or civil servants, but outsourced to one of the ship management companies that are presently in business in the Isle of Man and a policy determined by the Council of Ministers for the operation. So I invite Members of Tynwald to support my motion for a select committee to evaluate the 125 benefits of the Packet Company being placed in public ownership. There is nothing radical in this motion. It is preparing a contingency plan for Tynwald to debate and consider in the worst-case scenario, if and when the Island’s economy is being seriously threatened by its lifeline sea services – not a lot different from the Chief Minister’s Answer to Question 4, which you had in your envelopes on the desk this morning. 130 Mr President, I move the motion in my name, sir.

The President: Hon. Member for Douglas East, Mr Robertshaw.

Mr Robertshaw: Thank you, Mr President. 135 I beg to second the motion. I believe my views on the User Agreement are fairly well known, having been an ardent and consistent critic of it for the past 15 years. In fact, I believe I did all that any one person could reasonably do to try to stop it at its inception back in the mid-1990s. Had we not had the User Agreement, the huge debt directly attributable to it, which was raised on the international money markets, would never have come into being in the first place and thus the Isle 140 of Man Steam Packet Company would not have found itself in the position it does today. This debate would not be taking place. I think the User Agreement is very well named, as the cost of the debt can only, in the end, be recovered from every individual on the Isle of Man and every business bringing in freight and, of course, from every visitor. You do not need to travel to and from the Isle of Man by ferry to 145 contribute to the cost of the debt; you simply have to buy goods from one of our shops. (A Member: Hear, hear.) We are a captive audience. We are all well and truly being used. It would have been more accurate if it had been called the Agreement to Use the People of the Isle of Man. Let me be blunt: the debt raised on the back of the User Agreement was grossly irresponsible and born out of market greed and excess during the boom years, (A Member: Hear, hear.) but 150 please do not take my word for it. As the Chairman of the Isle of Man Steam Packet Company said on Manx Radio last Sunday, this type of transaction used to be illegal. The debt is nothing to do ______585 T128 TYNWALD COURT, WEDNESDAY, 15th DECEMBER 2010

with our trading company, but it nonetheless impacts upon that service in every conceivable way through the cost of borrowing and for other reasons. I am not privy to the very latest ferry company numbers and accounts, but with a debt well 155 north of £200 million, it is not unreasonable to point to interest costs in the region of, say, £12 million to £13 million per annum, which rise towards £14 million when taking into account the at least £1 million per annum charge for the so-called management fee taken by the complex company structure above the actual ferry company. Given that these costs are deductible each year and that there appears little opportunity to pay 160 down the actual loan capital, one could reasonably say that this will mean a drain on our pockets in the next ten years alone of some £140 million, with absolutely no return. This debt controls and informs all the actions taken by the owners of our ferry company. Let me quickly run through three of the key issues; the balance sheet, the Company’s response to competition and, finally, future capital investment in new vessels. 165 First, the balance sheet: the required rate of depreciation of the dominant element of the balance sheet, namely the goodwill, which captures the perceived value of the User Agreement, seriously informs the owner’s determination to keep pushing for extensions of the User Agreement. In fact, it gives the company little alternative. Again, let me refer to the Steam Packet Chairman’s words last Sunday. It – the User Agreement – has been extended twice, on both 170 occasions at the instigation of the Isle of Man Steam Packet Company. He said we have taken out some very serious obligations, in order to get these extensions. Had they not persistently done this – and this is extremely important – inevitable and serious consequences would have followed. Let me explain. When you have the debt, the liabilities, the money borrowed by the company sitting on one 175 side of the balance sheet and a quickly depreciating figure on the other, the asset – that is the goodwill – born out of the User Agreement, then very quickly, the liabilities will exceed the assets. Serious consequences obviously come about when this happens. This, if the debt cannot be paid down – and I have seen no evidence that pay down is either happening or can be afforded… Clearly this is a very poor quality debt, because the asset upon which the debt was raised quickly 180 disappears, so the only way to recover from this is to extend the Agreement again and again and, in so doing, put back up the value of the goodwill to match the debt, then hope to goodness you can squeeze enough profit out of your customers to keep the balance sheet stable. That is pretty stressful and I think it is beginning to show. Compare this debt to one raised against property, at least you have the property at the end of 185 the term to sell on, should you so wish. This imperative to extend was of such major significance that older vessels were brought in and tarted up to engender an atmosphere of confidence and growth, sufficient to persuade our Government that it would be advantageous to allow extensions. Unfortunately, we fell for it not once but twice, and the result: ageing vessels with poor mechanical reliability records, the consequences of which we are now all too well aware. This 190 imperative on the debt drives all before it. It comes before the customer, before the Isle of Man and before the staff of the Company. Turning next to the Company’s response to competition, the complete inability of the ferry company to respond to a quite modest competitor has resulted in the most extraordinary few months. First the freight customers were insulted and then apologised to. Then it was the turn of 195 the passengers, both on foot and by car, to be threatened with higher fares. Then it was the turn of the staff, who have been put into a state of anxiety. Then, for good measure, a limitation of services was threatened and suggested. Had they been able to respond to competition in a normal way, then they would simply have reduced their prices, taken a hit, and then moved on, with a competitively priced service. This they cannot do because of the financing pressures that exist as a 200 direct consequence of the artificially high debt burden. Had the price structure enjoyed the respect of their customers in the first place, then the challenge would not have taken place. But again, the debt burden inhibits attractive pricing. Turning to future investment next, the debt raises a huge question mark over the ability of the ferry company to find further funds for quality vessel replacement, something that is becoming a 205 priority if the Isle of Man is to meet ever-changing market circumstances. Once again, allow me to use the Chairman of the Steam Packet’s own words to support my argument. When challenged about new vessels on Sunday, he said, and please listen to this:

‘Hang on –’ 210 – he said –

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‘… there is no commitment to renew vessels after 25 years. Our commitment is not to invest in vessels over 25 years of age.’ 215 I will say that again:

‘Hang on – there is no commitment to renew vessels after 25 years. Our commitment is not to invest in vessels over 25 years of age.’ 220 Welcome to a world of second and thirdhand vessels – almost a Greek tragedy. So, contrary to the expressed opinion of some, the User Agreement resulted in a seriously faulty strategy, unattractive pricing, poor customer relations and an inability to invest properly for the future. It denies the very thing it set out to achieve: a pretty damning indictment, if ever there 225 was one. To understand how we ended up with such a poor settlement between our ferry company and the is to understand the mindset at the time of signing originally. The then board of directors of the ferry company had failed to modernise in response to the enormous changes taking place in its markets. Their stubbornness, arrogance and complacency saw the 230 people of the Isle of Man turn away from its own ferry company in anger and frustration. It was only a matter of time before a competitor would arrive on the scene. So the original ferry company, badly directed and in no fit state to face a challenge, was set against a competitor of questionable quality and depth. The outcome was inevitable. Unfortunately, this experience also seriously undermined the confidence of our Government, 235 and it was in this state of mind that the User Agreement was entered into. Our Government negotiated from a perceived position of weakness and anxiety and, sadly, a degree of naïvety. So, here we are again, with confidence in our ferry company low and a new competitor on the scene, but this time we also have a massive debt, which has been placed at our door and from which you will gain nothing. Let us be clear about one simple principle: with an Island population 240 now in the region of 82,000, an improved standard of living, and a gradually expanding economy, this is a really attractive and solid business base for any company charged with the responsibility for a sea lifeline. We should recognise this and allow it to inform our thinking. We cannot exactly predict what is ahead, but we have a duty of care to ensure we are properly and fully informed. We cannot rely on hearsay or rumour or private conversation. We need to know exactly where we 245 stand. The last Select Committee on this subject did a good job in examining what is in our relation to the User Agreement, but it is now extremely important that we look at our options in the event of a variety of outcomes, to ensure our response this time is a sound one. I believe we have an absolute duty of care to do so. This is not simply a matter for the Department of Infrastructure to struggle 250 with, nor is it just for the Council of Ministers. It is a matter which impacts upon everyone’s lives, and it is only right and proper that this Hon. Court gives itself the opportunity to take evidence. The question is a simple one: does the ferry company serve the people of the Isle of Man or do we all serve the interests of the ferry company owners? Mr President, I see this motion as an opportunity to do our duty and I commend it to Hon. 255 Members.

The President: Mr Callister, Hon. Member.

Mr Callister: Thank you, Mr President. 260 The seeds of the Steam Packet’s problems of today date back to 1984 and 1985. They came to a head at a Steam Packet shareholders’ meeting which was held in Summerland on 21st March 1985. It was the meeting to merge the Steam Packet Company with the Sealink Manxline. What brought about that merger was competition: Manxline in competition with the Steam Packet Company and not enough business to sustain both. (Several Members: Hear, hear.) 265 History repeats itself, Mr President. It was Manxline that first brought in ro-ro – roll on, roll off. They were very reluctant to do so, as we have heard, but eventually they were forced to do it. It is ironic today that the other method which they were told to stop, lo-lo – load on, load off – was the very thing that they were forced to change. It is that that has now caused the problem for the Company. 270 In 1984, three of the Island’s major hauliers transferred their business to Sealink – history repeating itself again. It left the Steam Packet Company unprofitable. The trading position eventually would have led them to go out of business, and as we know, when they came to that meeting on 21st March 1985, the Steam Packet Company was virtually on its knees, and had no option but to go for the merger. ______587 T128 TYNWALD COURT, WEDNESDAY, 15th DECEMBER 2010

275 One of the problems they had with that, of course, was they had to leave Liverpool and go to Heysham, and that led to considerable problems for the Isle of Man, not least as far as the tourist business was concerned. It was one of the nails in the coffin of tourism, in my opinion. A group of shareholders came to Tynwald with a proposal that the Steam Packet should merge with Island Express and they were probably the largest of the hauliers on the company at that time. This was 280 not supported in Tynwald, and as the merger came ever closer, the Government decided to set up a select committee – a committee, as it turned out. In due course, the Select Committee reported and said it would be unhelpful for Government to interfere with commercial matters such as this, in what we now call the free market. At that time, Government held something like 14% of Steam Packet shares. There was a 285 proposal then that the Isle of Man Government could use that shareholding on the basis for nationalising the Company. That was also defeated in Tynwald. The Chairman of the Executive Council at the time was the late , and he announced that the Manx Government shares would be used to support the Steam Packet merger. That was then confirmed at the shareholders’ meeting in 1985 by the then Government 290 Treasurer, William Dawson. Also speaking at the meeting was the Member of the House of Keys for Michael, the man who still is the Member of the House of Keys for Michael, and he is the mover of this motion today, as we know. He did not seek at that time to move for nationalisation. What Mr Cannan sought at that time was the recapitalisation of the Company. Well, we have seen several recapitalisations of the Company in the meantime. 295 The formidable Sir Charles Kerruish was at that meeting and he stood up, opposing the merger, as 112 other people did, of the shareholders. He wanted to see new investment in the Steam Packet Company from business people and people who are prepared to back it in the Isle of Man. That never came to happen because the Steam Packet had come with just 10 days to decide by the shareholders whether or not they would go for the merger: 10 days, they were given to the end of 300 March. When it came to the end of March, the larger shareholders in the Steam Packet Company held sway, and the merger went ahead. Now, we already have had the Tynwald Select Committee Report – a Report that went into great depth. The Steam Packet Company were not happy about all of it. Nevertheless, we have had that. There is a report on the way from the Office of Fair Trading. The Chief Minister has set up a 305 working group, which will be meeting, obviously, with the Steam Packet Company. In the Department of Infrastructure, the Minister, Mr Gawne, and myself and officials have had several meetings already with the Steam Packet Company. We have had meetings with Mezeron, we had a meeting with the union leader, Bob Crow, and much is being done and achieved by these meetings. The Chief Minister has set up, as I say, a working group. That is also headed by Mr 310 Gawne. The Department of Transport, and now Infrastructure, has been having regular monthly meetings with the Steam Packet for a number of years. So we are going to stick on another committee on top of all this. It just does not make sense. Now going to the User Agreement, I believe the User Agreement has served the Island extremely well over the years and we would have been much worse without it. The fact that it has 315 been changed twice along the way is very much to the benefit of travelling passengers because we now have a guaranteed number of sailings that is at least three times what it was when the original Agreement was made. I cannot go into the number of specific sailings because I do not have it; however, there is a concern that if the Steam Packet goes back to its absolute basic number of sailings, it would be greatly to our disadvantage. We have discovered, as a result of a Question in 320 the Legislative Council, that if they do go to that basic sailings number, it is only just a little over two sailings a week less than we are getting at the present time. The Chairman of the Steam Packet Company has said to us in meetings, and indeed he said on the radio, that the Company will do everything it can to combat the opposition that has arisen. We must leave them to do that, certainly initially. 325 When Mr Cannan mentioned to me about a week or so before he put this motion, I suggested to him it would be premature and I still believe it is premature. What could a select committee achieve in the present circumstances? It could come back and say we should not have nationalisation, this is a commercial matter. It could come back and say, yes, we should have nationalisation and how would we go about that? How would we go about nationalising a 330 company, which has, around its neck at the moment, about £240 million worth of debt? Debt that has never been met, apart from paying the interest on it. I think, really, we need at this stage to leave the Steam Packet Company to deal with the situation it has found itself in and the fact that we are now monitoring this closely with all concerned should be quite sufficient. I believe that to support a select committee now would not be 335 gaining anything, Mr President. ______588 T128 TYNWALD COURT, WEDNESDAY, 15th DECEMBER 2010

The President: Mr Gawne, Hon. Member.

Mr Gawne: Gura mie eu, Eaghtyrane. It is premature of me to get up to speak, but if you have called me, fine. 340 Mr Callister has pinched many of my best lines; however, I think it is important I do make a few comments here.

The President: You are the only one on my list, sir.

345 Mr Gawne: Okay, well, I am happy to make some comments. I recall the last time the Steam Packet was in this situation, sitting in Brian Stowell’s physics lab in Liverpool Polytechnic with Adrian Cain, the pair of us supposedly learning Manx Gaelic from Brian and we spent most of our time trawling through the various stories in the Examiner which were reporting what was, and what was not, being said by the various powers at the time. 350 It does seem remarkably familiar, obviously not sat in the physics lab, not learning Manx, because I am now a fluent speaker, but the same sort of arguments, the same sort of issues, are being raised and I am not entirely clear that setting up, as my hon. colleague, Mr Callister, has suggested, another select committee is really going to help us. We have just had one Select Committee, only just, really, the ink has only just dried on their Report. We are awaiting the 355 results of the OFT report, which I am sure will assist us in some regard, but certainly, since we first became aware of the significant problem with regard to the competition between Steam Packet and Mezeron about six weeks ago, I have met with the Steam Packet several times already, along with Mr Callister and my officers and, indeed, Mr Crookall attended one of those meetings, too. 360 I have met with Mezeron/Döhle, and intend to meet them again in the not too distant future. I have met with the Unions and Steam Packet staff, I am due to meet with the Chamber of Commerce this afternoon, if we finish in time. I am meeting Travelwatch, which represents passengers. I am chairing the Council of Ministers’ working group, which has had several discussions, both formal and online. We have had, as Mr Cannan, the hon. mover, has mentioned, 365 an Oral Answer in written form from the Chief Minister, in relation to Mr Henderson’s Question, which clearly identifies that we are looking at our contingency plans, ensuring that we have a proper and robust service available to us, should the worst come to the worst. But we have also had, in the discussions that I have had with the Chairman of the Steam Packet – and, indeed, the Chairman of the Steam Packet was as clear as I think he possibly could be on 370 the radio – absolute assurance that the banks are in this for the long haul. They do not want the Steam Packet to go under. They will fight the opposition and, quite clearly, if you have loaned £240 million to a company, you are not just going to say, ‘Oh well, we will just walk away from this now, and we will lose our £240 million.’ That is just not going to happen. The Steam Packet Company – the current management, the Chairman – are absolutely correct 375 in what they are doing. They need to compete with the opposition. It is wholly inappropriate for Government to get involved in that competition at this stage. It is appropriate for Government to ensure that we have contingency plans in place, in the event that the worst comes to the worst and the Steam Packet is no longer able to meet its obligations, but it is highly unlikely, I have to say. The main bank now behind the Steam Packet, I think, is about the sixth biggest company in 380 Portugal. (Mr Downie: Espírito Santo.) Absolutely. It has a significant interest in the Steam Packet. It certainly does not want to write off the £240 million, so the Steam Packet are going to compete and they are going to do everything they can to continue to run their business. I think, with regard to the User Agreement, I know that there is certainly one, and we now understand from Mr Robertshaw there are definitely two Members of this Hon. Court who are 385 significantly opposed to the User Agreement. I have had my doubts over the years about the value of the User Agreement although, in recent months, certainly recent weeks, it seems to me that actually the User Agreement was entirely the right thing to do. If we had not had the User Agreement in place, we would be looking absolutely clearly at the Steam Packet significantly reducing the amount of services that it provides, because it could. The User Agreement means that 390 it cannot. The banks need to have the Company running profitably. They need to have the Company running in its existing form, because the User Agreement is the way in which, potentially, they will get their money back over a long period of time. So they are not going to let the Steam Packet Company go under, unless it is the very, very last thing that they can possibly do. 395 What we do know is, next year, with regard to freight charges, doing a trawl of various websites of freight companies operating in and around the Irish Sea, Steam Packet passenger ______589 T128 TYNWALD COURT, WEDNESDAY, 15th DECEMBER 2010

charges are 30% lower than its main competitors. Well, not competitors – there is nobody competing on the route for the passenger services – but across the Irish Sea, from Larne to Stranraer, Holyhead to Dublin, these sorts of routes, if you look at the passenger fares pounds per 400 mile, if you look at the equivalent for the Steam Packet: 30% cheaper. The Steam Packet is doing a pretty good job, really. (A Member: Hear, hear.) Obviously, with regard to charges for freight, that is a different matter, and this is why Mezeron has established itself in opposition. However, again going back to the Chairman of the Steam Packet’s comments, he is absolutely determined that his Company will compete and will 405 see off the ‘opposition’, as they would see it, and certainly my understanding is freight charges have fallen quite considerably with regard to the Steam Packet in recent weeks. Again, we have heard the word ‘monopoly’ used on several occasions by, I think it was Mr Robertshaw – it may have been the Hon. Member for Michael, Mr Cannan. The Steam Packet has regularly, in its defence of a charge against it by, I think, Seaside Shipping, made it absolutely 410 clear that it does not believe that it has a monopoly use of Douglas harbour. It has stated that very clearly. It has always stated that. It has always been the truth. Mezeron has been operating for many years out of Ramsey, recently out of Douglas, and now expanded from out of Douglas. It is fair to say that the Steam Packet had the major share of the market and, indeed, still does have the major share of the market, but it is not a monopoly, and never has been. 415 There is an ability for the Steam Packet to increase charges and to reduce services, but it is a very limited ability. Certainly we have heard already from the Hon. Member of Council, Mr Callister, that it could be reduced by two services per week over the course of a year. In reality, that is more likely to be four services a week over the summer because it does not operate as many services, clearly, over the wintertime, but it is still a relatively small proportion of services that 420 would need to be reduced. Then we heard from the mover that we have three options available to us. Government should do nothing and allow competition to run its course. Well, we have heard that Government is not doing nothing. Government is clearly doing something. Government is doing what you would expect Government to do. Government is not interfering in the marketplace, but Government is 425 ensuring that, should the worst come to the worst, we have in place contingency plans to ensure the lifeline to and from the Isle of Man is maintained. That is what we are doing. That is what governments are supposed to do. We are not supposed to start interfering with the way people run their companies. We are supposed to make sure that we have in place contingency plans, should the worst come to the worst, ensuring that we have good levels of service. We are also talking to 430 the key players to make sure that we are fully aware and fully briefed of what is going on and what is not going on with regard to sea services. The next option that Mr Cannan suggested was to subsidise the Steam Packet. I think that is a bizarre idea. Certainly, if you look at the amounts of money that would be required –

435 Mr Cannan: Point of order, Mr President, I said that was unacceptable.

Mr Gawne: If you look at the – that was Mr Cannan’s second option. He may not remember what he said, only what – less than an hour ago – but that is what he said. The second option was to subsidise the Steam Packet. I think it is a bizarre idea – it would be many millions of pounds to 440 subsidise the Steam Packet and certainly there has been no suggestion that we should do that and indeed, the Steam Packet Company itself has not asked us to do that. Then we go on to the third option. Mr Cannan stated, ‘I am not prepared to sit back and watch the competition run its course. I am going to do something. I am going to set up a committee.’ What an excellent idea, we will set up a committee and we will talk about it for several months 445 and nothing will happen. I am not so sure that people really want us to set up yet another committee. We have just, as I say, finished having one committee. We have got a further investigation that is ongoing. If Tynwald really wants to do all the work that I am currently doing as Minister for Infrastructure, then I am sure I would breathe a sigh of relief, because it is taking up an awful lot 450 of my time at the moment, time I could be spending on planning or sorting out roads, or all the other 101 things I am supposed to do, but actually, I feel that it is part of my role as a member of the executive to do this. That is what governments are for. Governments are there to ensure these services are provided. Parliaments are there, I would suggest, to ensure that the executive are doing their functions correctly. I do not know how establishing a select committee is going to do 455 that. Perhaps the select committee is going to do Government’s job for it. If that is what it really wants to do and if that is what Hon. Members of this Court really want, then that is fine.

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Then you have to look at the potential options that are available for nationalising the Steam Packet and most of them, I have to say, are ‘pigs might fly’ options, for want of a better term. The only realistic option is for us to go down to the Steam Packet and say, dear Mr Steam Packet, 460 would you like £250 million worth of taxpayers’ money? We will buy the company. That is the option. We then saddle the taxpayers with the debt (Members: Hear, hear.) and that is the only realistic way that we are going to do this, because the banks are certainly not going to write off half of their debt or any of this sort of thing. They are absolutely clear that they want their money back and you can understand, that is what banks are for. If they lend money, they get it back. They 465 are not charitable institutions. So, that is the only realistic option that I can see for us nationalising the Steam Packet… the second one, I suppose, in which Tynwald Court could pass some legislation and compulsorily purchase the Steam Packet Company at a vastly reduced price. Not sure what sort of position that would leave the Isle of Man in international finance markets, where we have just written off £200 470 million worth of a bank’s balance sheet. I cannot imagine that would go down particularly well. I am sure we could try it, but maybe that is a suggestion the select committee could come forward with. There are more likely pig-might-fly options which would be, for example, we could just go down to the Steam Packet Company and say, ‘Here’s a cheque for £50 million – will you sell?’ 475 and the Steam Packet Company turn round and say, ‘Oh, yes, that’s a good idea! We’re fed up with all this fighting with Mezeron. We’ll just sell up at £50 million.’ Come on, let’s live in the real world: that is not going to happen. Then the other potential is that the Steam Packet goes bust and Government steps in to buy the remaining assets. That is an option. I suppose it is an option, but we have already heard absolutely 480 clearly from the Chairman of the Steam Packet that they are going to fight this every way. We know from the banks backing the Steam Packet they are certainly not going to allow the Steam Packet to go bust, so that is highly unlikely to happen. Even if it did happen, can you honestly imagine Government managing to out-compete all the other freight companies, ferry companies, that may well wish to take on what is a reasonably profitable little Company? The Steam Packet 485 Company operates quite profitably. The problem is not the Steam Packet Company. The problem is the way that the owners of the Steam Packet Company have bought it. They have placed the debt in a holding company and then the Steam Packet Company has to service that debt. So the Steam Packet Company is a profitable Company; it will continue to be a profitable Company. If, for whatever highly unlikely reason, the Steam Packet went bust, I cannot imagine Government is 490 going to be the first one in the queue, being able to outbid all the other competitors who would want to buy this highly profitable company. So there are your options. We either saddle the Manx taxpayer with hundreds of millions of pounds worth of debt to nationalise the Steam Packet or there are the pigs-might-fly wholly ridiculous options that are never going to happen. If you want to set up a select committee to look 495 into that, well, so be it. I only hope that I am not chosen to be one of the members of that Committee. Thanks.

The President: Mr Malarkey. 500 Mr Malarkey: Thank you, Mr President. Some interesting comments this morning. ‘We do not want to saddle the Manx people with £240 million worth of debt’ – I think we have already got that. I think we have a company worth less than £100 million with £240 million debt. But that is by the by. 505 Mr President, having sat on both the Select Committees, and knowing quite a bit about what is going on with the Steam Packet, shall we reflect back to the original committee that reported I think, in early 2008, with regard to the Steam Packet. We had great problems at that time getting a set of accounts off them. Because of those problems getting the accounts, it was agreed by this Hon. Court that the Select Committee would be re-formed and try very hard to get the accounts, to 510 find out what was being hidden. Surprise, surprise! Yes, there was something being hidden. There was something none of us knew anything about. I remember standing in this Court, about 18 months ago, and warning every Member in here of what the future holds, with regard to the Steam Packet Company, about this massive £240 million debt that was hanging around their shoulders, that every person and every 515 freight passenger and every person using the Steam Packet was having to service this debt. I warned this Court at the time this was going to be a massive, massive problem for the future of the Isle of Man, in my opinion. ______591 T128 TYNWALD COURT, WEDNESDAY, 15th DECEMBER 2010

I also said in public, after Mezeron came in with the shipping company, all that Mezeron has done is accelerated the problem that was lying ahead. (Two Members: Hear, hear.) Now, 520 remember, there are still 15 years to go on this User Agreement. Talking about takeovers and anything else now is a load of rubbish! They have got 15 years of trading to do – good moneymaking trading. Nobody is going to roll over and let us walk in and take it over. I would love to nationalise it. I think the people of the Isle of Man would love to get it. I would love to pay what it is worth: it is worth £50 million. It is worth the vessels. It is our User Agreement. It is 525 nobody else’s User Agreement; it is ours. If we owned it, we operated it, we could have the profit. Why not use our pension funds to run our vessels for the good of the people in the Isle of Man – our people, the people we are here to serve?

A Member: Let’s run everything! 530 Mr Malarkey: ‘Let’s run everything.’ We are talking about the lifeline to the Isle of Man, the lifeline which no longer people come over and holidaymake any more because they cannot afford it half the time, certainly during TT Week, but that is a different issue, Mr President. I think the issue here today is where can we go from here and what is happening. Yes, there is 535 competition on the market now, and it is about time we see the Steam Packet dealing with the competition, but not one person has actually stood up in here today and said, ‘Is it fair competition?’ and I think, of all the things that are going on at the moment, that is what worries me more than anything else. It certainly worries the unions and it worries the crews and the staff of the Steam Packet, because we have had figures quoted at us with regard to how much some of 540 these seamen are getting paid per hour on the vessels, compared with what we are paying and the tax that we are getting from those, through the Steam Packet, who are working for us. I am all for competition, but it has to be fair competition, like for like, and I would be interested to know from somebody from the Department of Infrastructure how much they are looking at that, how much depth has gone into finding out how true are the allegations of £2.98 an hour. I do not believe that 545 is quite true. I have said to the unions I think it is closer to £5 an hour, but I do not think that is a reasonable rate. It is well below our minimum earnings. So I think we should be looking in a slightly different direction here. What is going to happen long term? The User Agreement is there. I believe there are somewhere in the region of six banks now supporting that loan that the Steam Packet has, so the problem is being shared around. As 550 several people have said, they are not going to roll over, so maybe we should rub our hands and think we are going to get a bit of competition and some reasonable pricing, for a change, on the Island. Certainly when times are a little bit hard for us all, maybe we could afford to get the prices down, because we know they cannot do an awful lot with the User Agreement. For once, let’s make the User Agreement work for us, not us be working for them, like we have done for several 555 years. The competition is there. Let’s make sure it is fair competition and let’s see what the Steam Packet come up with. The real crisis is going to come not for this Hon. Court, maybe not even for the next Hon. Court. There are still 15 years to run. The vessels are going to be ageing. The User Agreement: the only way the banks are going to start getting their money back is if they get an extension to the 560 User Agreement. We heard about the MEA £180 million loan. It was the American policy of asset-strip companies, never pay the debt back, let inflation catch up with itself, and then we will keep rolling it out, rolling it out, rolling it out for the next 100 years. We have got to stop this. We have got to stop it and we have got to stop it soon because, in another 15, 20 or 30 years’ time, there will be courts around here saying, ‘Yes, let’s give them 565 another 10 years’ extension on the User Agreement because if we don’t, they will fold tomorrow.’ But one thing the Select Committee managed to do when it reported back, it gave us an early warning system. It told us about that £240 million debt, and I take comfort in the Oral Answer that came from the Chief Minister yesterday, when he says he has got the Council looking into it and he does have a committee together, and we are looking at what could happen if the company was 570 to collapse. I do not think it will. The company has been going for a long time. They are going to fight. I think, hopefully, we are all going to benefit from it. The User Agreement is pretty tight, as I said. I go back to: is it fair competition? That, I think, is what we should really be debating today, as to the competition that has been put in place; whether the crews are on a reasonable rate, or are 575 they in for a quick kill, to kill off the company? That is also another possibility. There are lots of answers to be had. I do not think, personally, a select committee will be able to answer those questions. I think it is a situation that we are going to have to monitor and keep monitoring extremely closely. I think it is a situation that has been brought forward by competition, as I have ______592 T128 TYNWALD COURT, WEDNESDAY, 15th DECEMBER 2010

said. I have said it in public, and I will say it again, if I am lucky enough to get re-elected, as long 580 as I can draw breath, I will fight the User Agreement being renewed, certainly in its present form. There is no get-out clause. There is no sell-on clause. In fact, it is pretty water-tight. There is nothing we can do in this Court, unless the Steam Packet breaks some of the rules, to do anything. I go back to be the value of the Company. I think the set of accounts for 2008, if I remember, valued the Company at £260 million. I think that is quite incredible, really. That was the value put 585 on the Company at the time. What assets has it got? Three vessels, and I will say ageing vessels. They are all ageing. Even the Manannan was 10 years old when it was bought. So, there are 15 years left of the contract, so it is going to be 25 years old, by the time of the User Agreement. What could happen in the future? Well, we have heard today that… I unfortunately was not here at the weekend to hear the Chairman of the Steam Packet say they are going to fight it, which 590 is good. It can only be good for the Isle of Man. We have to monitor whether the User Agreement is being held to the actual letter of the word. If it is not, we have an option to then take it back and make it our User Agreement. On the very day we do that, the company is worth £50 million and not a penny more. In fact, probably about £30 million, because that will be the value of the vessels, because the only value in that company is our – our – User Agreement: the User 595 Agreement that we should own, that we should get the benefits of, that we should be controlling, not an Australian pension company, not an Australian bank who now only own 6% of the company. The £160 million to £180 million that they got out of it is in their back pocket, gone. Whether you like it or not, that is our money. Every time you have been getting on a vessel of the Isle of Man Steam Packet or ordering stuff to come over by freight, you have been paying that 600 £180 million that disappeared off to Australia, whether you like it or not. It is part of the debt. I believe, Mr President, things are going to have to run their course. We are going to have to watch this extremely carefully and make sure that if something does go wrong, we are ready for it. I believe that the Steam Packet Select Committee at the time gave us those warnings, gave us the opportunity to be prepared. 605 I will not be voting for the select committee at this present time, today. I am glad, though, that the Hon. Member for Michael has brought the issue to the floor today, to get it debated. I would be very interested to know what is going on behind the scenes with regard to the vessels being used by Mezeron and how fair they are and whether anything is being done to check them out on rates. I asked a question at the launch. I was told that they are all on European rates and we have to 610 acknowledge the fact that the members are on ITF rates. I find it a bit strange to believe that any vessels could be operating in our waters, paying so very little money to its crews, so I think that is what we should be looking at now. That is the issue more important than what is going to happen with the Steam Packet. We know six big banks are not about to roll over and say, ‘No, have the User Agreement back 615 – we do not want to lose money every year.’ They will fight tooth and nail, so if they want to fight tooth and nail, give them some fair competition to fight against, not something that we are condoning, which is, basically, if these rates we are being told about is slave labour, because that I do not believe, is fair. I certainly do not believe is fair and we do have a responsibility to those employed by the Steam Packet. I know they are not whiter than white and we know they pay their 620 national insurance through Guernsey. All their employees, we will get their money back. The Isle of Man Steam Packet Company itself do not pay any contributions to the Island or their NI, only the employees, so they are always quick to find a quick way out and the easy option. I know they are very quick to shout when competition comes in, but let us make sure it is fair competition, Mr President. 625 So, as I say, as the debate goes on, I do not think another select committee at this time will come up with any new answers, but the next parliament, I think will have some very major decisions to make with regard to the User Agreement and what is going to go on for the future of the Island. Thank you, Mr President. 630 The President: Mr Karran.

Mr Karran: Eaghtyrane, I have to say, firstly, that I totally disagree, as far as the Hon. Member for South Douglas says about nationalising the Steam Packet. I think it would be an 635 absolute retrograde step as far as the Island is concerned. One of my most embarrassing times was one of the elections when they wanted the euphoria of nationalisation of the Steam Packet, but I was saying the problem would be, around election time, you would have Tynwald wanting to give one-legged grannies free tickets on the boats, and, unfortunately, her husband turned up with one

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leg, (Laughter) which is a remarkable state of my life when it comes to being totally unlucky 640 about these situations! (Interjection) But I do feel today – it is certainly the case with this agenda paper – vindicated on three issues today, and I have to say that I believe what Minister Gawne is saying about Government should be left to govern, but my concern is the track record of Government being left to govern and not ending up trying to just drag us all – Government, parliament, the lot – to do the Government’s 645 wishes. I think that the situation is the argument we have got to have on this select committee is the argument… I was against having an MEA Select Committee because, quite frankly, I saw it as just jobs for the boys and it would be rubber-stamped and we would end up with a situation where the Report would have been farcical, an insult to people outside. The Report was a good Report for 650 standards of Tynwald and I think that they should be applauded for that. Just trying to blame it on one man when it was the systems of Government that were wrong, as far as the MEA… My concern with Mr Gawne’s analogy is the fact that we should have confidence that you, as the Minister, should be able to get on with the job but, as a parliament, I really do think that Tynwald does need to consider a select committee, not to nationalise the Steam Packet, not to get into the 655 ins and outs of the Department, but to be trying to push and make sure that it concentrates minds. This is an important situation. What I think is important is the fact that what a Select Committee can do is maybe force the agenda to keep them on their toes. Let us be honest, Eaghtyrane. We all went down for a meal, down at the Steam Packet Company, when the 2026 thing came about and I was laughing with Hamish. I said, ‘That was the best investment you have 660 ever done, by managing to get my lot to vote for the User Agreement to 2026!’

A Member: Shame on you.

Mr Karran: Not shame on us! The reality of the situation was that how can you have a User 665 Agreement, where we had no control on it being sold on. That is what happened. That is why we have got the problem, because we sold them, we gave them a User Agreement that this Court is… It is a shame, Ard-shirveishagh, that Tynwald Members were expected to be voting fodder and was not even allowed to see the detailed report. Any decent director of any decent company in any decent jurisdiction would be sacked for that. But it was too matey-matey. 670 I know it is not liked – but that is the problem. (Interjection by the Chief Minister) It is not disgusting –

The Chief Minister: You are, I said.

675 Mr Karran: The situation is that you do not like the truth. The situation –

The Chief Minister: Point of order, Mr President, the Hon. Member is accusing Members of voting for something because they had a free meal. I think that is a disgrace (Mr Downie: Hear, hear.) I think that is a slur on our integrity. That is the point, sir. 680 The President: Yes, I think you have got a fair point, so Mr Karran, just be a little wary. It is becoming weary when you go over the same ground continually, sir.

Mr Karran: Eaghtyrane, I do not understand what the Ard-shirveishagh is on about a 685 pecuniary interest. I am talking about the fact of the issue of how you do things right. That is what I was on about. I think the point is, Eaghtyrane, that why I think we should support the select committee today is because I think it will concentrate the mind of Government not to end up in a similar situation where, after the deal was done, we come along and we all vote for a situation where we were not 690 even allowed to read the User Agreement. It is not rocket science.

Mr Quirk: You can now, though.

Mr Karran: You can now – yes, but you have signed it until 2026, and the only reason you 695 can do it now is because the fact is people made constant representations for that. I have to be fair on that point, there has been fantastic movement, as far as the freedom of information over the last five years and we should not take credit away from the Council of Ministers on that point. The point is, I think, that that is one of the arguments that needs to be considered, if we are to have a select committee. ______594 T128 TYNWALD COURT, WEDNESDAY, 15th DECEMBER 2010

700 The other thing I think is important is that a select committee needs to be thinking about is, what do we do in the different analogies of what happens? I actually agree with Mr Gawne. Half a loaf is better than no loaf, as far as the bankers with their debt. The only time I take exception to Mr Gawne’s viewpoint over this issue is that it is all the bankers’ fault for paying too much for the User Agreement. 705 Mr Gawne: I didn’t say that.

Mr Karran: You did not say it this time, but you have said it in the past, sir. The point is the fault is lack of parliamentary scrutiny in us not putting in get-out clauses for us, not being able to 710 have some control over the change of beneficial owner. One of the things I think a select committee could do… We must not nationalise the Steam Packet. We have enough debt and we have enough things to try and run properly, as far as this Island is concerned, but they might come up with some sort of package that if anything does fail, then let’s look at a sensible way forward – and there are sensible ways forward. There are issues 715 that could be done, (a) that has been mentioned in this Court on a regular basis about a golden share, where the issue is of being the facilitator, once and for all, if we are to have this lifeline with a monopoly, that it has some sort of company basis where no-one can own more than 5%, where the owners have to be Isle of Man domiciled persons to own shares in it, because that would be the best factor of making sure that you got a decent service, because of the people who were on this 720 Island in it. There are options that could be looked at. I think the problem we have got is that if this select committee is going to be there for nationalisation, we should not vote for it, and there is no question about that. But if we are talking about a select committee that is going to keep them on their toes… because they have done a good job. The two Reports we have had on this sitting have been good, as far as the MEA is 725 concerned… They are a bit more reserved than I would have been, but they are good, and the Public Accounts Committee Report was a good Report. I think that that is one reason why I would have more confidence, as far as the Steam Packet is concerned, having this select committee, because what concerns me is about making something tangible and making sure there are some safeguards, because I personally feel that if there is somebody looking over their shoulder, then the 730 Council of Ministers cannot be apathetic on such an important thing. That is the only reason why I would support a select committee, but I would not want to see a select committee going down the road of nationalisation. I would want to see a select committee do anything other than looking at issues that can help augment and make sure that our executive, our Government of the Isle of Man, does what is right for the Isle of Man, as far as the Isle of Man is concerned. So I think Hon. 735 Members need to think long and hard about that issue.

The President: Mr Cannan to reply.

Mr Cannan: Thank you, Mr President. 740 Members seem to have deviated from the actual motion on the Order Paper. The Order Paper was not about nationalisation; it was to evaluate the benefits. If they evaluated them and there were no benefits, then fair enough; or they could evaluate and put up a balance sheet of the benefits and the disbenefits, and Members could judge for themselves. That was the purpose of the motion. 745 Mr Robertshaw gave a very good speech, in which he set out the problems of debts and the User Agreement and the fact that we were no longer in control of the User Agreement until 2026, and the User Agreement which we owned was being used to balance the books, becoming a valuation on the company accounts of the Macquarie Bank and its associates. The purpose of this motion was, at this present time, as is recognised by the Council of Ministers in their Answer to 750 Question 4, they too are looking for contingency plans. It is there in black and white and you have got it on your desks. This motion is to have a proper parliamentary evaluation of the pros and cons. Now, we know from the Chairman of the Packet Company that they have lost in excess of 15% of the freight business. We actually know – or I have been informed by credible sources – that the 755 cost of freight is going up by 4.5% in January. Rumour has it that the charges for curtained trailers are going to go down by a third, to try and move back Tesco. So in other words, there is a commercial battle going on. Is it going to be for the benefit of the Isle of Man? I do not know but, as Mr Robertshaw said, the ferry company has a duty of care, in his opinion and mine, to give a service to the people of the Isle of Man, not a duty of care to provide an investment product or an 760 income of investment product to overseas owners. That is the issue, as I see it. ______595 T128 TYNWALD COURT, WEDNESDAY, 15th DECEMBER 2010

Mr Callister gave a very interesting recount of the history of the takeover of the Steam Packet by Sealink and then Sea Containers – all very interesting, all very contentious. Then we moved on to Mr Gawne. Mr Gawne, first of all, does not really listen to other Members’ speeches, and he makes up and distorts what is said. And I will say what was said, 765 secondly. (Laughter and interjection) It said, Minister Gawne, for Government to provide financial support in the form of a subsidy to the Steam Packet Company, this is unacceptable, as the Isle of Man Packet Company is basically an investment product of the Macquarie Bank for the benefit of Australian pension funds and other financial institutions. People should realise, in the Isle of Man, if they do not already, that whenever they pay fares or freight charges, the profit on 770 these purchases is for overseas funds. That was a point emphasised by Mr Malarkey. Once upon a time, the Steam Packet was run for the benefit of the Isle of Man, but times have moved on since 1984 – 25 or 26 years – and we have a different scenario. We now have what I understand is a strong commercial company with freight and they have resources. So, the people of the Isle of Man, the economy of the Isle of Man, are just going to be piggy in the middle. 775 Mr Gawne says he has meetings here there and everywhere, but I wonder what his meetings achieve. (Mr Gawne: Lots.) Oh, lots – yes, I can see lots. Everybody can see lots. All he gave was a discourse on nationalisation. This motion, Mr President, is not about nationalisation.

Mr Gawne: Read the Order Paper. 780 Mr Cannan: It is to evaluate the benefits or otherwise (Mr Quirk: Public ownership.) of public ownership. (Laughter)

Mr Gawne: That is what it is about, then. 785 Mr Cannan: That is what it is about. The Chief Minister, in his Answer, says that he is evaluating the same thing. I believe that it should be open to parliament to discuss this, just as it was 25 years ago. This issue of the economic lifeline of the Isle of Man is fundamental to everybody in the Isle of Man. Everybody. It does not 790 matter if you never travel by the Steam Packet. Everybody who goes to a shop and buys a tin of beans, or whatever, that is coming into the Isle of Man, the costs are determined by the lifeline operators. We have heard a lot of discourse about the banks and their money and they will not do this, that and the other. They probably will not. But what would happen if the alternative company, 795 Mezeron, did not just pick up 15%, but 25% or 30% of the business of freight. Yes, there would then be restructuring. There would then be restructuring. There are issues here that need, in my view, not just to be left to let events take their course, but to be evaluated and have a contingency plan, if and when necessary, and maybe not necessary at all. But at least let people know what is in the background, and what can be done about it, 800 because I believe that, as freight charges have just gone up – as I have just said, 4.5% – the customers out there will not be best pleased, and the customers in the Isle of Man, whose goods are brought in, will find the price of their goods going up. Mr President, Mr Malarkey gave a very good discourse on the problems of the debts and the fact that we supposedly own a linkspan, but it is on somebody else’s balance sheet at £200 million 805 – supposedly own it. We seem to have allowed ourselves to be outmanoeuvred when setting up the agreements with the linkspan. Mr President, I will not go on. (Several Members: Hear, hear.) I will ask to vote, but this motion for a committee is not about going into public ownership; it is used to evaluate the benefits or otherwise. 810 Mr President, I move.

The President: Just before I put it to the vote, Hon. Members, Mr Karran.

Mr Karran: Point of order, Eaghtyrane. 815 I now understand what the Chief Minister’s outburst was and I do withdraw the statement that a meal at the Steam Packet… that there was any pecuniary interest. I did not mean that.

The President: Thank you, Mr Karran. I think it is actually the way you say things: sometimes it is your colourful language which leads you to imply that things are happening.

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820 Anyway, Hon. Members, the motion that I put to the Court is that printed at Item 25 on your Order Paper. Hon. Members, those in favour, please say aye; against, no. The noes have it. Division is called.

A division was called for and electronic voting resulted as follows:

In the Keys – Ayes 4, Noes 17

FOR AGAINST Mr Karran Mr Quirk Mr Cannan Mr Earnshaw Mr Robertshaw Mr Brown The Speaker Mr Crookall Mr Anderson Mrs Craine Mr Bell Mr Quayle Mr Teare Mr Cregeen Mr Houghton Mr Malarkey Mr Shimmin Mr Cretney Mr Watterson Mr Gawne Mr Gill

The Speaker: Mr President, in the Keys, 4 votes for, 17 against.

In the Council – Ayes 1, Noes 8

FOR AGAINST Mr Butt Mr Callister Mr Crowe Mr Downie Mrs Christian The Lord Bishop Mr Lowey Mr Turner Mr Braidwood

The President: And in the Council, Hon. Members, 1 Member voted for, 8 against. The motion, therefore, fails to carry. Hon. Members, that draws to a conclusion the business before the Court. Thank you for your 825 co-operation in dealing with the business which we dealt with yesterday evening, and again this morning. Thank you very much, Hon. Members. Can I remind Hon. Members that tomorrow at five past one, we have a Tynwald Carol Service, which we will be pleased to see you attending and, in fact, if anybody wishes to go along to hear the Wurlitzer at one o’clock today, down at the Arcade, I am sure Mr King would be pleased to 830 see you there as well. Tynwald Carol Service tomorrow afternoon, Hon. Members, at five past one. Thank you.

The Council withdrew.

House of Keys

The Speaker: Hon. Members, the House will stand adjourned until our next sitting on 21st December at 10 o’clock in our own Chamber.

The House adjourned at 12.01 p.m.

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