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109 MTRAN29/04CS Kangaroo Island Council

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109 MTRAN29/04CS Kangaroo Island Council 109 MTRAN29/04CS Kangaroo Island Council - Assistance in the Maintenance of Road Assets REFERRED TO BUDGET PROCESS All Mintsfers Not Relevant 2 CABINET COVER SHEET 1. TITLE: KANGAROO ISLAND COUNCIL - ASSISTANCE IN THE MAINTENANCE OF ROAD ASSETS 2. MINISTER: Trish White Minister for Transport 3. PURPOSE: To seek Cabinet approval: 1. To .provide funds to the Kangaroo Island Council to assist in the maintenance of road assets, 2. To fund this initiative from the increase in port charges for ferry operators using the ports of Cape Jervis, Penneshaw, American River and Kingscote. 4. IDENTIFY THE RELEVANT State Strategic Plan Targets: GOVERNMENT POLICY T1.13 "Tourism" AND/OR STATE STRATEGIC T5.11 "Regional Infrastructure" PLAN TARGET: 5. RESOURCES REQUIRED Additional expenditure authority will be required FOR IMPLEMENTATION: as follows: - 2005-06 $117,000 2006-07 $600,000 2007-08 + ongoing $600,000 Treasury and Finance agrees with the basis of the assessment of costs contained in this submission. 6. COMMUNITY AND 1. Family and Social impacts. Possible ENVIRONMENTAL IMPACT: increase in price of tickets for residents of Kangaroo Island. 2. Regional Development. Improved road access on Kangaroo Island and improved investment climate. 7. RISKS: Risk that increased port charges will be passed on to Sealink patrons. 8. CONSULTATION: The Mayor of Kangaroo Island Council has advised Council will accept any assistance that the Government can give in maintaining its road assets albeit raised by increasing charges to ferry passengers. 1 9. COMMUNICATION Advice from the Minister for Transport to the STRATEGY: Kangaroo Island Council. 10. URGENCY: Normal 11. RECOMMENDATIONS: It is recommended that Cabinet: 4.1 Approve that the funds collected by the new port charges after 1 April 2006 and over and above the current $533,000 collected, up to a maximum of $600,000 per annum, be made available to the Kangaroo Island Council for use in maintaining their road infrastructure on the basis of an annual program of works to be approved by the Minister for Transport. 4.2 Approve the following additional expenditure authority to the Transport Services Forward Estimates: - 2005-06 $117,000 2006-07 $600,000 2007-08 + ongoing $600,000 I declare that I have no actual or potential conflict of interest in relation to the proposals contained in this submission. Trish White MINISTER FOR TRANSPORT ~0 / / /2004 2 Minutes forming Enclosure to MTRAN 29/04 CS TO: THE PREMIER FOR CABINET RE: KANGAROO ISLAND COUNCIL - ASSISTANCE IN THE MAINTENANCE OF ROAD ASSETS 1. PROPOSAL 1.1 To seek Cabinet approval to provide funds to the Kangaroo Island Council to assist in the maintenance of road assets. 1.2 To seek Cabinet approval to fund this initiative from the increase in port charges for ferry operators using the ports of Cape Jervis, Penneshaw, American River and Kingscote. 2. BACKGROUND 2.1 Clause 31 of the Harbors and Navigation Act 1993 gives the Minister for Transport the power to charge for the use of ports under my control: 31. (1) Subject to any relevant law or determination the Minister may fix charges — (a) for the use of facilities provided by the Minister for — the mooring of vessels; the loading and unloading of passengers and goods; the storage of goods; the safe navigation of vessels; (v) any other purpose; or (b) for the entry of vessels into the waters under the Minister's control and management; or (c) for services provided by the Minister. (2) The Minister may fix default charges to be paid if a charge fixed under this section is not paid within a fixed period. (3) The Minister must publish the schedules of charges fixed under this section. 2.2 Currently $533,000 per annum is collected in port charges ($523,000 from SeaLink for its Cape Jervis to Penneshaw service and $10,000 from AusBulk for its grain barge service to Kingscote). These funds are expended on the maintenance of marine assets held in the name of the Minister for Transport throughout the state and including the Kangaroo Island related ports of Cape Jervis, Penneshaw, American River and Kingscote. 2.3 A new ferry service is about to begin as a result of the Expression of Interest process (Kangaroo Island Ferries Pty Ltd (KIF) operating between Wirrina and American River/Kingscote), and there are other potential services to Kangaroo Island e.g. a suggested freight service between Port Adelaide and Kingscote. 2.4 A separate recommendation has been made to Cabinet to increase the current level of port charges from the 1 April 2006. This will generate revenue of $1.1m per annum. 1 Minutes forming Enclosure to MTRAN 29104 CS 2.5 The Kangaroo Island Council maintains roads that are critically important tourism infrastructure. In particular they maintain the South Coast road, West End Highway and the portion of the Playford Highway west of Parndarna (144km in total). These roads access the premier tourist locations on the Island such as Seal Bay, Vivonne Bay, Flinders Chase, Cape Borda, North Coast bays etc. 2.6 Representations have been made in. the past to have these roads declared arterial roads and therefore become the responsibility of the State. However, an arterial road is currently defined as a road that links towns and as these roads do not (they simply provide a loop around the island), such representations have been refused lest their acceptance as arterial roads create a precedent in other areas of the State. 2.7 Currently a review of road classifications between arterial and local (i.e. State vs Local Government responsibility), is being undertaken by the Local Roads Advisory Committee. That review was established in May 2003 and the likely outcome is that the Kangaroo Island roads in question (as listed in 2.5) will represent the strongest case for local government calls for such roads to be funded by the State. Traffic volumes on these Kangaroo Island roads are likely to be used to underpin that argument (refer 3.1). 2.8 Beside the major roads detailed above, the Kangaroo Island Council also maintain many other roads used by tourists such as the Cape Willoughby road, and access roads to the numerous bays on the coastline. 2.9 The Minister for Transport received representations from the Kangaroo Island Council arguing that funds collected by port charges should be used to assist Council in maintaining their road infrastructure. They assert that the high numbers of tourists visiting the island cause an increased rate of deterioration of their assets and they have only a limited rate base and no capacity to have tourists contribute to the increased maintenance costs. This was also put to Cabinet at its Community Cabinet meeting on Kangaroo Island on 8 December 2003. 3, DISCUSSION 3.1 Albeit the South Coast Road, West End Highway and western portion of the Playford Highway are classified as local roads, they carry traffic volumes that are characteristic of arterial roads. For example, the traffic counts on the South Coast Road east of Seal Bay are comparable with those on Quorn — Hawker. The South Coast Road west of Vivonne Bay carries volumes comparable with Cowell — Cleve and Burra — Morgan. The West End Highway traffic is comparable to Elliston — Lock and Marree — Lyndhurst. It is also estimated that at least 75% of the traffic using these roads is associated with tourism. 3.2 Had these roads been classified as arterial (which on a traffic volume basis they would have been except for the quirk that they provide a loop road rather than linking towns), the State would be required to invest an estimated $820,000 per annum in their maintenance. This figure includes routine maintenance and an allowance for resealing every 5 to 8 years. 3.3 The current level of revenue ($523,000 per annum from SeaLink and $10,000 per annum from AusBulk) is used to partially maintain and operate the marine assets of the State that are under the care and control of the Minister for Transport. 2 Minutes forming Enclosure to MTRAN 29/04 CS 3.4 It is proposed that the additional funds raised by increased port charges (over and above the current level), will be allocated to the Kangaroo Island Council for use in maintaining its road assets on Kangaroo Island and in particular the major tourist roads, on the basis of an Annual Schedule of Works approved by-the Minister for Transport. 3.5 Given that the proposed new port charges will raise $1.1m per annum from their introduction on the 1 April 2006, it is also proposed that the maximum allocation to the Kangaroo Island Council be limited to $600,000 per annum. 3.6 Kangaroo Island Council has indicated that it is unable to maintain its infrastructure (principally roads), while its revenue base is limited to rate revenue from its residents. Council is expected to strongly support increased revenue from all users in the form of increased port charges. 3.7 3.7.1 Economic, financial and budgetary implications a) Required resources. The following additional expenditure authority will be required: - 2005-06 $117,000 2006-07 $600,000 2007-08 + on-going $600,000 b) Staffing implications. There are no staffing implications with the proposal. 3.7.2 Impact on the community and the environment a) Family and Social Impacts The increase in port charges, which are the subject of another Cabinet Submission, will in all probability be passed onto the fare paying passengers including Kangaroo Island residents. However the quantum of this increase is only approximately 0.75% of the cost of a ticket. By comparison SeaLink have recently increased their fare by 5%.
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