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Joint Standing Committee on the National Capital and External Territories - 06/06/2014 - Economic development on Norfolk Island

TAYLOR, Mr Peter John, Vice President, Corporate Affairs Department, Carnival Australia

ZIMMERMAN, Mr Trent, Deputy Chief Executive and Director, Transport Policy, Tourism and Transport Forum

Committee met at 09:02.

CHAIR ( Mr Simpkins ): I would like to open this public hearing of the Joint Standing Committee on the National Capital and External Territories and thank you both for coming today. It is great to have you here. In the March 2014 the Minister for Infrastructure and Regional Development, the Hon. Jamie Briggs, referred to us an inquiry into the economic development on Norfolk Island. The committee has been asked to inquire into and report on redressing barriers to tourism with particular regard to air services, facilities for cruise ships, roads and other infrastructure, complements to tourism such as agriculture, other industry or small or medium business enterprises and proposals and opportunities for niche industries.

Today's hearing follows one held on Norfolk Island in late April with evidence taken from the Norfolk Island government, business owners, community representatives and residents. The community recognises that tourism is the main industry on the island but that visitor numbers have declined over the years. Witnesses voiced concerns about the adequacy of infrastructure and members saw for themselves some of the constraints to increasing tourism on the island. The committee saw how in the absence of adequate docking facilities, goods needed to be unloaded in a piecemeal manner.

We also heard how the existing facilities were susceptible to adverse weather, regularly preventing disembarkation of passengers and unloading of goods. The potential for the cruise ship industry to boost tourist numbers—with improvements to infrastructure such as the Cascade pier upgrade—and building the Norfolk Island economy in a sustainable manner, is something we are keen to explore further today with Carnival Australia and the Tourism and Transport Forum.

We will also hear from Mr Yates, a former public servant who has experience in developing the Norfolk Island road map.

Although the committee does not require you to give evidence under oath you should understand that these hearings are formal proceedings of the Commonwealth parliament and warrant the same respect as proceedings of the respective houses. The giving of false or misleading evidence is a serious matter and may be regarded as a contempt of parliament.

Thank you for your written submissions. Do you want to make a brief introductory statement before we proceed to questions?

Mr Taylor : Thank you for the invitation to present today and answer your questions. Norfolk Island is very close to the heart of the cruise industry in Australia. It was where the very first cruise went to, out of Sydney, 82 years ago. Norfolk Island has had an interesting history with cruises. Sadly, now, very few cruise ships visit, but we have big aspirations for the future.

It is interesting to provide some context of the cruise industry and the growth that other regions within Australia and other parts of the world are benefiting from. Ten years ago there were 116,000 Australians taking cruise holidays. Last year there were more than 800,000 Australians taking cruise holidays. We expect that by 2016, if not sooner, there will be one million Australians taking cruise holidays each year. There has been double digit growth, year on year, for eight consecutive years.

Many parts of Australia—certainly regional Australia, Queensland in particular—are benefiting from that. Carnival Australia, who I represent, makes up close to 80 per cent of the cruise market in the region. We own and operate the seven cruise lines that visit Australia. Three of those brands are home ported year-round in Australia: P&O, Carnival Cruise Lines and Princess Cruises. As well, there are the international lines Cunard, including Queen Mary 2 and so on, Seabourn, Holland America Line, and the UK version of P&O. So it is a significant organisation. At the moment it is only the P&O cruise ships that visit Norfolk Island but we have bigger aspirations for the future.

Our cruise ships carry between 1,800 and 2,500 passengers. That puts them on a par, in terms of how many people they carry, to places like Apollo Bay in Victoria. There are a lot of passengers that visit each time a ship comes to town. As I said, P&O is the only cruise liner within the Carnival group that visits Norfolk Island. Our competitor is Royal Caribbean, which has celebrity cruises. At this stage they do not visit Norfolk Island, though—I will speak on behalf of the broader industry—if we can get conditions right for visits then our competitor would also be considering visits to Norfolk Island.

We think Norfolk Island is perfect for the cruise market. Its diversity, history, nature and quirks, as well as the ability to see so much in one day, make it an easy sell for us to passengers. Some of the key attractions when we have successful visits—many of these you might have visited recently—are the Kingston historic site, the Cook monument, and the Emily Bay glass-bottom boat ride, which is hosted by one of the Fletcher Christian descendants. The shopping at Burnt Pine is surprisingly popular. I was talking to Trent before. Lego is a big seller on Norfolk Island. As well, there are visits to some of the quirkier places like the distilleries, the mazes, and the opportunities to live like a local for lunch or part of the day. A growing area is the soft adventure activities like four-wheel drive tours, horse-riding, hiking and golf.

It works very well for cruising because each time a cruise ship visits it brings more people to the island than live on the island. It brings about 2,000 passengers plus 800 crew per ship. All the passengers would disembark and visit the island. They do not require hotel rooms. The ship arrives in the morning and departs in the early evening. It utilises existing tourism assets and so does not require a significant infrastructure spend, but the dollars it brings in are significant. We are talking about $200,000 per visit of a cruise ship through landing fees but, predominantly, through passenger spend. Most passengers would book tours and an activity—that is about $100 spend per passenger, but that is fairly conservative when compared to visits to places like Port Vila and other Pacific islands, where each ship visit brings about $400,000 to $500,000 to the community.

There has been some significant hindrance and reasons we have been unsuccessful in making cruises work in recent times, and, Chair, you mentioned the weather conditions. So that you understand operationally how the cruise ships work: when visiting Norfolk Island, a ship drops anchor about half a mile out from the island and tender vessels, which also double as life-saving boats, are used to move passengers to and from the ship. Each vessel carries about 90 passengers each time and, because they do serve as life-saving vessels, we have to be very careful that they are not damaged in the process of moving passengers. When conditions are unfavourable, we risk damaging the lifeboats and then we have to abort the port. We have aborted about 70 per cent of visits over the last three years, and for that reason Norfolk Island has virtually been removed from all cruise itineraries. We have two visits planned in the next year or so from P&O to Norfolk Island but they are a part of very long, 60-night cruises. It means we can anticipate that the visit to Norfolk Island may be aborted but, because it is part of a much longer itinerary, we are comfortable with putting it in the itinerary. What Norfolk Island is missing out on is the much shorter itineraries out of Auckland, Sydney and Brisbane.

I have talked about the economic benefits. The Norfolk community has requested significant improvements to the Cascade Jetty, but, while that may be of great value in the longer term, what is really needed in the short term are three or four vessels based on the island to transport passengers to and from the ship in lieu of the life-saving craft. This is not dissimilar to the arrangements we have in places like Tangalooma on Moreton Island and many other regional locations. Carnival Australia has invested money in designing these boats and has costed them out at about $800,000 per vessel. We are suggesting three or four would be sufficient to cover the needs of cruises. Importantly, the design is a multipurpose one so that the vessels would be used for passengers on cruise days, but their seating can be removed so that the vessels can then be used to move freight to and from the cargo ships. That would be of huge benefit to the island. We think it is a fairly affordable solution, especially when you looking at $200,000 investment each time a cruise ship comes to the island. That would recover the costs fairly quickly. You should also know that we would be happy to pay to use the vessels, as we do when we visit other regional locations. We think Norfolk Island, and have done so for 80 years, was designed for cruises; we think it has great potential and the economic benefit could alleviate some of the real struggles faced by the community on Norfolk Island.

Mr Zimmerman : Today I am representing the Tourism and Transport Forum, which is the peak industry association for the tourism and transport sectors in Australia and which has approximately 200 members representing the accommodation, cruise shipping, aviation and transport sectors. Our interest in Norfolk Island is one driven by our perception that it can be part of the Australian offering to international and domestic travellers and also, more particularly and specifically, because we think it is an important part of the cruise-shipping industry. As Peter Taylor has alluded to, the cruise-shipping sector has really been the standout performer in relation to Australian tourism over the last decade. While tourism is growing well at the moment, cruise shipping is leaving everything in its wake, if I can use that analogy, and we think that providing increased access for cruise shipping to Norfolk Island would enhance the offering that cruise ship companies are able to offer to Australian and international passengers. In that regard, Carnival is obviously the major player in cruise shipping in Australian waters, but we also think there is greater potential for Norfolk Island to be included in the itineraries for other companies, including expedition cruise-shipping companies, for which there is considerable interest in expansion in Australian waters and territories.

We are concerned that tourism to Norfolk Island has declined so dramatically over the last decade, from a peak of almost 40,000 visitors just over 10 years ago to a predicted number of 23,500 this year. Obviously, that is catastrophic for an economy which is so dependent on tourism. I cannot think of another jurisdiction that Australia has responsibility for, state or territory, where tourism is such a part of the economy; I think it accounts for 40 per cent of gross island product. The reasons for that decline are many and varied, and some are beyond the control of Australian and Norfolk Island authorities. Fundamentally, we see the foundation for the recovery of the tourism sector being, firstly, the provision of regular and stable air services, and that is being delivered through the agreement with Air New Zealand, underwritten by the Australian government. Also, we believe the best potential for growth is to improve cruise ship visits to the island, with all the benefits they will bring. We would echo the comments that Carnival made in relation to the importance of ensuring that the transfer between ship and shore is dramatically improved so that it is a more attractive and reliable destination for cruise ships.

As Mr Taylor referred to, I think there is a perception that the important and significant investment in Cascade Pier was of itself going to facilitate more cruise ship visits. That project is an important one, and we were pleased when it was announced by the former government and reconfirmed by this one; but it is about improving the pier itself, not about improving the way you get from ship to shore. That is why we think the tenders that have been proposed by Carnival are the sensible way to go. If you get basically an 80 per cent success rate in being able to transfer passengers no matter what the weather conditions, then that is going to make it an attractive proposition for cruise ships to visit the island. We believe that, in establishing a sustainable base for the island economy and for the tourism sector, it would be a worthwhile investment for the Commonwealth to support the acquisition of those tenders in a way that supports the cruise-shipping sector.

CHAIR: There are three to four $800,000 tenders. Have you sent us any pictures of what they are likely to look like or what design they follow?

Mr Taylor : I will happily provide those. It was designed by a company called CMS Engineering approximately 18 months ago. We provided that information to the former federal government and also to the administration on Norfolk Island, but we will happily provide it to the committee.

CHAIR: As we know, there are currently two places where vessels can land—at Cascade and at Kingston—and, as you have said, weather knocks out so many of the potential visits by cruise ships. Is it because they are fundamentally worried about the safety of the life vessels? I am wondering whether we are going to have $800,000 vessels that could well still be redundant when the weather is bad. Is the main reason that the life vessels could be damaged?

Mr Taylor : Their life vessels are glass-reinforced plastic, as opposed to the aluminium model that has been proposed to be based on the island. They are far more fragile than the permanent solution. If there is any damage to one of the life craft we have to leave passengers on the island because there is a set number of life craft passengers per ship. Our modelling has shown that if the purchase was made of the three to four custom designed vessels it would increase the reliability to between 75 and 80 per cent, as opposed to 25 per cent as we are currently experiencing with using the vessels that we have on the ships. In terms of our itinerary planning, 70 per cent assurance is sufficient for the organisation to start to sell the itineraries. Our modelling shows that the assurance would not be 100 per cent, but 80 per cent would be enough for us to make a significant boost in the bookings to Norfolk Island.

CHAIR: What is the capacity of the vessel?

Mr Taylor : About 90 passengers, so it would be similar to what the current arrangements are with the tenders on the ships. It is a very short trip to and from—being half a mile—and it would not take more than 10 minutes to go to and from. With three or four vessels you would be able to move 2,000 passengers quite quickly.

CHAIR: What benefit is there for the companies that you operate on behalf of? What advantage is there?

Mr Taylor : With so many Australians taking cruise holidays, we are always trying to find new destinations. Cruising has an extraordinary repeat passenger rate. There is about 50 per cent repeat passengers. Someone who cruises first time, 50 per cent will cruise again within 18 months. So it is really important for us to continue to pioneer new destinations. We know that the satisfaction rates from Norfolk Island are among the highest of our destinations. We know it works, we know it sells. So clearly it is an itinerary that is in strong demand for P&O. I mentioned that P&O is the only brand going there now. We have spoken to the other cruise lines within the Carnival group—the likes of Holland America, Princess and Cunard—and they have got a strong appetite and should be able to prove, with the P&O experience, that it works, and they will add Norfolk Island to their itinerary mix as well.

Senator LUNDY: Why are your life rafts so fragile?

Mr Taylor : They are based on standards set for all crew ships around the world.

Senator LUNDY: So you cannot modify that to make them more robust to suit your lines.

Mr Taylor : One of the challenges is they need to be lightweight enough to be carried on the ships. There are usually two to four tender vessels which are designed for moving passengers to and from the ships, but a lot of it comes down to weight and how much weight the cruise ships can carry in those locations.

Senator LUNDY: So you are making an economic decision not to have heavier tenders on your boats.

Mr Taylor : No, structurally they need to be that weight. I am not an engineer, so I cannot provide an exact response to that. But it is not based on the dollars. It is based on what the ships can accommodate.

Senator LUNDY: So it is an engineering challenge and you work to the standards specified for the type of vessel.

Mr Taylor : Yes.

Senator LUNDY: Have P&O or the conglomerate of Carnival considered purchasing tenders themselves for Norfolk Island?

Mr Taylor : That is a valid question, and we have considered it but we would not. There are plenty of other destinations where our crew ships can go. It would not be economically viable for Carnival to make the purchase of the vessels, nor has Carnival done that anywhere else in the world.

Senator LUNDY: That was my next question.

Mr Taylor : There are several examples in Queensland, and throughout the Pacific as well, where the government, be that the state or local community, invest in the vessels to move passengers to and from the ships. I mentioned the economic contribution it makes. We are talking about $200,000 each time a cruise ship visits. We are talking about a purchase of $800,000 per vessel, and the Carnival group would pay to use the vessels as well. Much like we do when we visit parts of Queensland, we would pay a service fee each time we use the vessels. I think the cost of the vessel would be very quickly covered.

Senator LUNDY: So the communities get a good return on their investment in these vessels?

Mr Taylor : Yes, absolutely.

Senator LUNDY: Are there any other destinations where you use your lifeboats as the tender? Such as destinations that do not have tenders who are in a similar situation, perhaps with different weather conditions.

Mr Taylor : You are right. It is very standard for us to use the tender vessels—not only in the Carnival Group, but also across the cruise industry—but only where it is safe to do so. We have got a provision called Safety of Life at Sea, or SOLAS, an international standard that sets how many lifeboats must be carried per passenger and how many passengers per life craft. We use them only where we can do so safely. I should say, the decision whether to abort or not is made by the captain upon dropping anchor at the destination.

Senator LUNDY: I think we all respect that. If a destination has tenders that you would have to pay a fee for, and you have your lifeboats and the weather is great—so there is no risk—do you opt to use your own lifeboats rather than hire the tenders of the destination? What is the business practice around that?

Mr Taylor : That is a valid question. I do not have the answer. I will happily take it on notice and respond.

Senator LUNDY: I think it would be a consideration for assessing the business case around the purchase of a tender if, in good weather, it was an optional consideration for the captain of the cruise ship.

Mr VASTA: What is the volume of passengers in those? They are not smaller, are they?

Mr Taylor : No, we are talking about similar volume of passengers per boat, regardless of whether it is the tender vessel on the ship or the vessel based on land. I suspect that the preference would be to use the vessels based on the land because of the speed at which it can move passengers to and from, as well as being custom designed. But I will provide confirmation of that.

Senator LUNDY: One more question from me. What percentage of cruise ship patrons on Australian lines are international tourists? I am happy for you to take that on notice too.

Mr Taylor : The vast majority on the home-ported brands—P&O, Princess and Carnival cruise lines—are Australian or New Zealand. We are talking about 80+ per cent Australian and 10+ per cent New Zealand. It would be single digits in terms of international visitors on the home-ported brands. It is a different story when it comes to the international ships such as Seabourn, Cunard and Holland America.

Senator LUNDY: That goes without saying.

Mr Taylor : Yes, obviously they come in for their season. Australian has a six-month international cruise season. We have very nice weather conditions, which makes it a very appealing decision for the ships based in the Northern Hemisphere to come down south. The trip between New Zealand and Australia is one of the foundation cruises, and Norfolk Island is beautifully placed between the two.

Mr VASTA: The big difference between these is aluminium, as opposed to a resin plastic, so the durability of these other vessels is far more robust. Given the conditions in Norfolk Island, you would see continual use being less damaging on these purpose-built vessels. Is that one of the key factors?

Mr Taylor : Yes. How it would work is that there is an existing crane. The crane would lift the vessel into the water on a cruise day and the vessel would have the seats for the passengers. They would be operated by locals who are accredited to operate the vessels, and they would move them to and from the ship. The appeal is the durability and not having to risk the life vessels on the cruise ship.

Mr VASTA: Say you have got Kingston and Cascade. Would you alternate depending on the weather conditions? There is another part of the island there that might be quieter, but there is no provision for these boats to offload on that other side as well, is there?

Mr Taylor : Our modelling is based on primarily Cascade, and the modelling shows 75-80 per cent of the visits to Cascade would be successful.

Mr VASTA: More so than Kingston?

Mr Taylor : Yes. Kingston is a secondary option. Our preferred option is Cascade.

Mr VASTA: That is an interesting point. I will pass on to my colleague; I might come back.

Ms BRODTMANN: I have four questions. The issue is the inclement weather. You heard the famous story about the Governor-General trying to get there and she had to return home. I am wondering whether there is an issue with the current tender situation that you have. Are these larger tenders, these $800,000 tenders, more durable, more resilient? If this investment is made, what percentage of vessels can land in dubious weather? Would weather be a factor? Of course you have to look at the safety elements, but what percentage increase do you see?

Mr Taylor : At the moment we have about 25 per cent success at Norfolk Island. If it is part of the itinerary, only a quarter of the cruise visits are successful. If the investment were made in the new ones, our modelling shows that 75 to 80 per cent would be successful. It is not 100 per cent because sometimes the weather will simply be impossible to move passengers safely to and from, but it would be 75 to 80 per cent. A 70 per cent success rate is sufficient for us to put Norfolk Island back onto the itineraries.

Ms BRODTMANN: Regarding the payment that you make to each island—you mentioned Moreton Island and other places—can you give us an idea about what sort of money we are talking about?

Mr Taylor : That is again valid question. I would have to get back to you on that.

Ms BRODTMANN: Who has liability for the ferrying from the ship to shore?

Mr Taylor : That is a good question too. The vessel itself would have to be fully accredited based on Australian standards and the staff that operate the vessel would have to have full accreditation as well, which would likely require training. Staff would be required to travel to Norfolk Island to train the locals or the locals would need to travel to Queensland or to Tasmania to have the training. The insurance for the vessels would be managed by the owner of the vessel.

Ms BRODTMANN: Say, Norfolk Island or the Commonwealth government.

Mr Taylor : Yes.

Ms BRODTMANN: Finally, on the skill issue, you mentioned that people would need to be trained in terms of how to drive these things. In terms of maintenance, what do you think about the skill base on Norfolk Island currently to maintain these vessels? Would people need to be trained? I assume there is a standard on that too.

Mr Taylor : The maintenance and management of the ships is standardised. It is part of the accreditation for the vessels and for the crew that operate them. It is much like getting your car licence. It is a form of accreditation to move passengers to and from. The standards for maintaining are set by others, not by the Carnival group. In terms of our confidence in the locals operating and maintaining, our confidence is very high because many of the folk on Norfolk Island are known as seafarers. There are some very skilled people who currently transport goods to and from—

Mr VASTA: [inaudible]

Ms BRODTMANN: Exactly, and make good.

Mr Taylor : They are quite gifted and very brave.

Ms BRODTMANN: Would they need to establish a new facility for the maintenance?

Mr Taylor : No. The vessels would be lifted out of the water when it is not a cruise day to help maintain their life, their durability. It is no different to how it operates elsewhere in Australia or the Pacific Islands.

Ms BRODTMANN: Thank you.

Senator SESELJA: I had to step out so I apologise. This may well have been covered. I might just go over it for my own benefit, and I apologise to other committee members. Part of your submission talks about 100,000-plus tourists that could potentially go to Norfolk Island. Again, if you have covered this, I apologise. What is the capacity for the island to deal with that in your assessment? Would significant upgrades on the island be needed once people are there, in terms of continuing to be an attractive destination and having all of the facilities? How much work would need to be done in order for that to be realised and for 100,000 people to want to be there and to come back every year?

Mr Taylor : We have huge respect for the community of Norfolk Island in the way that they have embraced cruise passengers. It is quite extraordinary the welcome that the community provides to the passengers each time a ship visits and it is always disappointing when we need to abort the call because we are very conscious of how much work has taken place onshore to prepare for the visits. Each time a cruise ship visit about 2,000 passengers come ashore, so when we are talking about the long-term potential for the island as a cruise destination, we are looking at about 50 visits per year—so, on average, one per week. We think the current tourism offer is very strong. Of course, over time, it would be great to see that evolve. But what presently there is of strong demand and we do not see any significant additional investment required in the interim.

Senator SESELJA: And in terms of an evolution that you might want to see if numbers grew, are there particular areas where you see great potential for an improved offering?

Mr Taylor : I think when we look at the offer on Norfolk Island it is skewed toward an older demographic, playing on the nature and the history of the island. Looking at other successful cruise destinations, thinking of Moreton Island, adventure travel is one of the fastest growing parts of shore based to us. So I think Norfolk Island offers great potential to expand there longer term.

Mr VASTA: Can I put on the record of Moreton Island is in my electorate.

Senator SESELJA: How is it as a adventure destination.

Mr VASTA: It is great. We are very proud of Moreton Island.

CHAIR: Mr Zimmerman, do you have any thoughts on the possibilities of forms of adventure tourism on Norfolk Island? I don't think there is a whole lot there at the moment. I am not talking about four-wheel drive—maybe climbing on cliffs, zip lines or something a little bit wilder.

Mr Zimmerman : I am not familiar enough with the island to make any expert comment on that but I think it is important for the island tourism authorities to work out what their market is going to be and have realistic expectations about that. The primary attractors for Norfolk Island are I think its heritage, its remoteness and also some of the natural landscape. I think that is going to mean that the demographic is going to be a slightly older one; it is not a place where you are going to find backpackers going for a holiday. It is how they tap into things like the grey nomads when you actually have to take a ship or a trip to get them. But it is also making sure that the product is refreshed. I think part of the problem the island has had is obviously the cost structure is competing against destinations in the region which are more affordable. It is making sure that that product and the surrounding infrastructure is actually meeting the demands of the current market. The market has changed. There is greater emphasis on shorter visits—effectively, the long weekend almost—so you need to make sure that you have both a longer stay but shorter stay offerings as well. Obviously for the traveller today basic things like having adequate telecommunications that can do data as well as telephony and messaging is absolutely vital.

Mr VASTA: This type of concept was never raised with me when I stayed a couple of days later. You have already raised this point about the vessels with the Norfolk Island government. What was their reaction?

Mr Zimmerman : They have been very supportive.

Mr VASTA: Chair, did we get any submissions about this at all, because everyone was talking about the upgrade of the ports more so than anything about these vessels?

CHAIR: Leading onto that , is the 13 million upgrade of Cascade necessary, desirable? Even with new tenders, is it going to be a benefit, or is it—

Mr VASTA: A hindrance?

CHAIR: Is it redundant? If these boats can be provided, is that better than extending Cascade?

Mr Taylor : In terms of the hierarchy of needs, it is these vessels to begin with. The existing pontoon, the existing crane—based on our understanding with discussions with the engineers—would be sufficient. Long-term we see benefit in the upgrade to Cascade jetty, but the most pressing demand is for the vessels so we can actually begin to put Norfolk Island back on the itineraries and see the dollars being injected into the community, and perhaps that can go towards longer-term improvements.

Mr VASTA: A better crane rather than a white port rather than extending it all out there or doing something else?

Mr Zimmerman : I think the bigger point is that you do not need the pier upgrade to operate these tenders.

Mr VASTA: But having the pier upgraded, instead of 70 per cent to 80 per cent, does it make it 100 per cent or not at all?

Mr Zimmerman : No.

CHAIR: It is still weather out there, out with a ship is, that is the main problem.

Mr Taylor : And we have to take into account passenger comfort as well. If the weather is awfully uncomfortable, although it is only half a mile it can be a very long half mile if it is not particularly pleasant weather.

CHAIR: The adventure begins!

Mr VASTA: White-water rafting!

Mr Zimmerman : Before you get to shore.

Mr Taylor : We are writing the brochure already.

CHAIR: Are there any other points of clarification.

Ms BRODTMANN: Is the Norfolk route an international route as well? Does it encompassed the Pacific and then you come back into Australia? As you know, one of the real barriers to tourism for Norfolk Island is the need for a passport and the fact that it is on the international leg it is deemed as international. I am assuming that people need a passport. How does that work in terms of you managing their Customs processing? Is it seen as a barrier?

Mr Taylor : At the moment it does require a passport. In terms of how it works, a Customs officer would board the cruise ship once it drops anchor. They would have received the electronic list of passengers before, and that is usually very cleared very quickly. There is no stamping of passports or similar that takes place; it is quite smooth operation. At the moment the cruise to Norfolk Island is part of a much longer itinerary, which includes international.

Ms BRODTMANN: Okay, so they already have their passports.

Mr Taylor : Yes, they already have their passports. I think the potential is there for short cruises, certainly out of Auckland. It would be very close to Auckland in terms of a short three-night cruise to and from, and then there is the potential for a short cruise out of Sydney or Brisbane. But almost always it would likely see Norfolk Island being a part of an international trip, so it would most likely be Sydney-Norfolk Island-New Caledonia and back to Sydney. Trent, you might want to talk more broadly about passport arrangements with the Tasman.

Mr Zimmerman : The other observation we would make is that there is obviously a process under way between the New Zealand and Australian governments to try to streamline border processing for tourists visiting each country. We regard that as a high priority. We believe that it is important that we develop as domestic like an experience for people travelling between the two countries, and we think that it would make sense to ensure that Norfolk Island is included in those negotiations and discussions. It is obviously part of that route, so any positive developments in relation to New Zealand we think should also include Norfolk Island to reduce the complexity of the Customs process.

Ms BRODTMANN: Should this idea take off and you get one cruise ship visiting a week, do you think there is going to have to be significant work in upgrading the roads, because as you know they are very underdone? If you have that sort of volume growing, I would be grateful for your thoughts on what would need to be done to the roads in perhaps the short and medium terms?

Mr Taylor : When we talk about the 50 visits a year, that is several years away. Itinerary bookings are usually made two years in advance. The cruise industry publishes its itineraries 18 months ahead of the cruise date, so for any investment made the benefits would be 18 months away or longer . In other words, there is plenty of lead time as we begin to crawl, then walk with the cruise passengers there. There are limitations but it works at the moment based on the small number of visits that we do. We think that works in the short to medium term, but if we were to hit the 50 cruise visits a year then there would be a need for real upgrades.

CHAIR: Is there anything else that you would like to add?

Mr Zimmerman : Can I make one observation in relation to Senator Lundy's questioning earlier on? It is always an interesting issue where the costs of infrastructure like this should lie—whether they should be borne by the operators or by government. I do not think that there is an easy answer to that. Where there is a market failure, you have basically got to look at where the beneficiaries will be and whether there will be a charging regime. The observation I would make is that international cruise shipping, being such a growing and lucrative market, is highly competitive internationally, and we see governments in ports and other jurisdictions investing considerable money and import facilities to try and attract cruise shipping. Some destinations, like Sydney Harbour, are always going to pull in cruise ships. But the fact that cruise ships are not going to a destination like Norfolk Island at the moment points to the need for some type of government support, with a charging regime that follows.

CHAIR: Thank you very much for attending and giving evidence to the committee at today's hearing. If the committee has any further questions for you, these will be sent in writing through the secretariat.