Brown says the subsidy will not only guarantee a regular service to the northern islands, but because the government is subsidising the operating cost of these vessels, there is expected to be a drop in the cost of freight and passenger fares on these ships.
“And this is good news for our people in the northern group, particularly at Christmas.”
He says the subsidy will also enable more economic activity to be undertaken by people in the northern group.
The subsidy came into force on Friday and Brown says the two companies that will be first in line to benefit will be the Layar Mas 291 barge operation and Tapi Taio’s shipping service.
Brown says the government is stepping in and providing an incentive for these private companies to be able to schedule a regular service, regardless of how much cargo they have.
“The government will subsidise their cost of being up in those islands on a regular service and we’re looking at every eight weeks, a vessel which will reach each of our northern group islands.”
Brown says the shipping companies will have to provide a pricing schedule which takes into account the subsidy as part of their tender process to government
He says the government has put aside $1.5 million over three years to support a regular shipping service to the northern group and says the amount appropriated this year for the subsidy is $500,000.
Previous years’ allocations went unspent and were subsequently reabsorbed into the national accounts, he says.
“It’s taken our team at the Ministry some time to determine and workout a subsidy programme that not only benefits our people in the outer islands, but ensures a level playing field for those companies providing the service.”
Brown says the government is happy to start the subsidy as of December 1 on a trial basis for the next seven months.
“I expect the subsidised shipping service will be a requirement if we are to ensure consistent shipping schedules.”
Relying on market forces and competition to provide a service has not worked for the Cook Islands, he says.
“Government has made the decision that it must provide clear policy interventions if we want to achieve the outcomes desired.”