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Falklands : Governor's Address to the Opening Session of the Legislative Assembly:
Submitted by Falkland Islands News Network (Juanita Brock) 26.05.2009 (Article Archived on 09.06.2009)

The long-awaited Next of Kin visit will take place via air.



Governor's Address to the Opening Session of the Legislative Assembly:

26 May 2009



Last year, the Governor’s address pointed to increasing problems in managing the budgetary pressures that faced government as revenues declined and public expectations of the level of public services remained high. It was becoming clear that we would have to take action to continue to be able to live within our means. This year, the problem has worsened significantly. We have seen a major shift in the world's economy, with many developed and less developed nations suffering substantial recession and unemployment. Growth rates in the USA and Europe have turned negative; stock markets have fallen substantially; interest rates are at an all time low and world markets are predicted to be slow to recover.


In the face of such global recession, the Falklands were bound to feel some effect. Returns from savings and investments have fallen substantially. The rapid decline in the value of the pound against both the Dollar and the Euro has had a major inflationary effect on imports, though this has mercifully been cushioned by reductions in the price of oil. We have also had a very poor illex season, with consequent reductions in Government revenues.  Budgetary pressures continue to increase, despite government attempts to find a further 3% saving in departmental expenditure.


 The Falklands economy remains relatively strong with substantial reserves and no borrowings but disposable reserves have now fallen below our target of 2 1/2 times operating costs and we have had to revise the Medium Term Financial Plan to reflect current reality. We face a deficit of £7.36m in this financial year, principally but not exclusively due to the failure of the Illex season. This is likely to be followed by two further deficit years before recovery can be anticipated. The plan for next year, which will be laid before the House today, foresees a deficit of not more than £2m and not more than £1m in 2010/11, followed by balanced or surplus budgets thereafter. To achieve this will require difficult choices, reductions in government expenditure, and wider sharing of the burden of public expenditure. However if we manage our public finances carefully and continue to support export development and private sector enterprise, and maintain key public services at affordable levels, we should be able to maintain positive economic growth.


The Government has issued a series of Green Papers on Government Revenue and Fiscal Policy, Options for the Funding of Higher and Further Education, Wealth Related Payments and Health Service Funding. Their purpose has been both to provide information on the economy and the state of public finances and to seek opinion on ways in which expenditure should be prioritised and the burden of cost most equitably spread. We are grateful to all those, who have commented.  We shall work to provide solutions that are fair and provide an affordable balance between public funding and the principle of “user pays”.


We have now issued two White Papers in the light of this public consultation. The first embeds the principle of individual and family contribution to the costs of personal expenses for further education students.  The second, on wealth related payments, seeks to weight benefits according to the means of those who need them and sets the principle by which the thresholds for payment will be set.


We have also produced the new Islands Plan for 2009-2014. This sets clear priorities and targets over each of the next 5 years, which will give clear direction to the civil service. We have continued to improve the links between our aspirations and available resources to make the Plan more realistic. As the Government’s strategic plan for the Islands, it should be seen as one of the most important Government documents and one that the public should read carefully.


Each department of Government is now also required to have a business plan, cascading down from the Islands Plan, which sets out clearly its objectives and standards of service. This will allow us to evaluate more readily how successful departments have been in fulfilling their objectives. This is an important development in improving the performance of Government across the board.


Mr Speaker,

It has been a feature of our economy for over 20 years that direct income to Government from fishing licenses has supported high levels of Government spending. This has allowed us to develop our infrastructure, improve living conditions, raise standards of living and encourage new businesses. The fishing industry remains the principle driver of the economy, and the quality of its management is crucial to long term success. This year has seen the transfer of most of the fishery science tasks previously carried out by Imperial College in London to the Fisheries Dept. This has reduced costs and allows greater interaction with stakeholders.


The most significant current issue for the industry, however, is the failure of this year’s Illex season.      The volatility of squid stocks is well known but, even if the squid return in the future, we shall have to restore confidence in the fishery.   There is much which could be done at a regional level to improve the conservation of Illex and other fish stocks, such as Southern Blue Whiting, though this continues to rely on the co-operation of Argentina, which is not forthcoming.  The SW Atlantic is the only major ocean area, which is not regulated by an international fisheries conservation body. We continue to believe that there are ways in which agreement could be reached with the Government of Argentina, which would allow such a body to be set up and for the bilateral South Atlantic Fisheries Commission (SAFC) to function properly.


The arrangements made to utilise the Falkland Islands fishing vessel ‘Castelo’ represent a very significant commitment to fisheries research.   There has been a gap of about a year without a dedicated research vessel capability but the first research cruise using the ‘Castelo’ should take place early in the new financial year, a welcome start to getting essential research work back on track.


The new fisheries law and Individual Transferable Quota (ITQ) system has brought huge change to the fishery, and it should provide an improved business environment for Falkland Island fishing companies.   Several ITQ transfers have taken place in ‘08/09, resulting in new opportunities for participants.   There is still more work to do to ensure that the new system functions smoothly and develops its full potential.


Mr Speaker,

The discovery of oil and gas in commercially exploitable quantities around the Falklands would be an enormous boost to our economy. Both the UK Government and we are keen to encourage the next round of exploratory drilling. We have re-opened Open Door licensing and have awarded an additional production licence in the northern area, bringing new investment into the Falklands. We also licensed two major offshore geotechnical surveys during the summer.


The major challenge in the next few months is to facilitate investment by other major oil companies to fund the drilling of wells both to the north and the south east and to see those wells drilled successfully and safely. This will require the development of plans, in partnership with the oil operators, FCO and MoD, for security and disaster management and the provision of advice to licensees on the requisite environmental, health and safety and well design standards so that companies can gain approval to bring a drilling rig to the Islands. 


Mr Speaker,

Good external transport communications are vital to the development of our economy. We were therefore grateful for the opportunity to engage with the FCO and MOD in negotiating a new operating arrangement for civilian access to the airbridge. Our aims in entering the negotiations were to ensure continued unchallenged civilian access to the service, to increase the number of seats available to Islanders, to achieve more affordable prices, to improve the booking arrangements and to secure some business class-type seating for those wishing to pay for it. We now have new arrangements that achieve at least some of those aims. Whilst the loss of the child/student half fare concession has been a major blow, since it reduces our scope for keeping fares low, the new twice a week service brings more flexibility – and the availability of premium seating should be attractive to business travellers. . We shall continue to review the operation of the service with London.


Agriculture continues to be the major employer and business activity outside of Stanley, though the new Rural Development Strategy will seek to chart new opportunities for camp businesses to thrive.

Achievements by the industry during the year include the continued successful sale of national stud flock and joint venture rams to farmers in spite of a global recession, thus continuing the spread of high value genetics on farms, and improved on-farm lamb production (both in quality and numbers) for sale through FIMCO for the export market. Consolidation of Farm Improvement Programme work on over 35 farms during the year continues to increase the availability of high quality crops for stock at critical times of the year.


We now have access to an internationally recognised organic farming scheme, with. ten farms enrolling to gain organic status.  Certification should give those farmers a much-needed premium for their wool and meat.  The Agriculture Department has also developed a cattle-tagging database in line with EU beef export requirements in preparation for the export of Falklands’ beef.


Mr Speaker,

There is a strong connection between the farming and tourism industries. In many cases the one would not be able to exist successfully without the other. The continued growth of tourism is therefore very welcome. The 2008/09 season has been highly successful with over 62,000 cruise ship passengers coming ashore and some very positive customer reaction.  98% of visitors rated their trip as “excellent” or “good” and over 60% expressed interest in returning to the Islands on a land-based holiday.


Statistics from local travel agencies suggest that the number of land-based international visitors to the Islands is just slightly down from last year. Nevertheless land-based tourism generated around £3.2 million in 2008 with 93% rating their stay as “excellent” or “good”.


The formation of the National Tourism Strategy Working Group, which brings together private sector planning with Government responsibilities, is an important new development, and the Jetty Visitor Centre has recently been upgraded to give a fresh, new feel for incoming visitors with better advertising facilities. The Government will continue to co-invest in the development of this key industry to ensure that we maximise potential and show all our visitors the real Falklands. Whilst we see some consolidation in cruise vessel activity due to the recession, the industry remains confident in its continued longer term development.


Mr Speaker,

The Government has invested heavily in strengthening the economic evaluation and planning resources in the Policy Unit. They launched the economic development strategy project in September '08 with participation by Councillors, senior civil servants and private sector representatives. This is a major exercise and is due to report in June next year and will include the work of the Rural Development Strategy group.  The unit has also sought to improve the collection of national economic data to assist the Government’s economic and fiscal policy decision-making.


Mr Speaker,

Modern society needs high quality telephone and broadband services. The new Camp system is nearing completion. Whilst some technical issues remain to be resolved, it has brought a significant new service to Camp. Stanley meanwhile is struggling with capacity shortages and frequent technical failures that make normal business operations at times very testing. The Government is committed to replacing our outdated regulatory framework for telecommunications and new proposals will be developed soon. It is essential for the continuing development of the Falklands that we have a service fit for purpose, reliable and affordable, but one that also gives the provider a reasonable rate of commercial return. There has been a significant loss of confidence in the current system and both the Government and Cable & Wireless need to take action to restore that confidence.


Mr Speaker,

In the major spending areas, the Department of Health and Social Services has a key role to play in multi-agency work to provide protection for children and other vulnerable people in society, as well as being active in various areas of preventative medicine, including PHSE for each year group at the FICS, providing guidance to patients on stopping smoking and resisting alcohol abuse, and the continuing bowel cancer screening programme. This is on top of the base workload of dental services, daily outpatient clinics, emergency services, routine surgery, overseas referrals for diagnosis and treatment, social services provision and caring for the sick and elderly. Outside observers rate the provision of medical services in the Falklands as exceptional. Our biggest challenge is to continue to provide those services at affordable rates. Our Green Paper on health service funding has generated considerable public debate and we shall come forward with a White Paper soon. In the meantime, we welcome the interim Director of Health, who comes with prior experience of the Islands and has an important task to review and update the systems and procedures in the hospital to ensure the safe and effective management of staff and resources.


It has been a dynamic year in Education, with significant effort to identify how the schools can meet the expectations of the community. This has involved a rigorous analysis of teaching provision and how this impacts on achievement. The standards of 11 year olds this year at the end of Key Stage 2 continue to be above the UK national average, and an enhanced management structure in the IJS provides the capacity to broaden and deepen achievement.


At FICS the new management structure is now well established and well on track to meet the challenges of providing an effective and broad-based secondary curriculum. There have already been improvements in overall lesson quality and student experience and now the school is focussed on working with parents and the community to raise the expectations of students, especially at senior levels. An external review of the Falkland Islands Community School conducted by the Service Children's Education Authority showed progress that was a cause for satisfaction.  Most students at Peter Symonds and Chichester College continue to perform well, as do our students in universities across the UK.


Staff of the Training Centre and the Community School are working together to introduce a range of vocational options as an alternative to GCSE. The structured entry to employment scheme for 16/17 year olds has been successful with a number of young people following this route into the world of work.


Staff at the Leisure Centre have completed a considerable amount of preliminary work to identify how it can become at ‘arms length’ from government. At the same time, they have continued to provide a wide range of activities and have identified potential developments for the future. Externally a group of 20 boys toured Punta Arenas playing a number of football matches. They attracted a great deal of positive publicity as a result of their sportsmanship and enthusiasm, and the junior cricketers similarly enhanced their experience with a trip to Santiago.


It has been a year of mixed fortunes for the Royal Falkland Islands Police. The joint agency seizure of a substantial quantity of cocaine from a Falkland registered fishing vessel was a significant success marred, I fear, by the subsequent theft of much of the evidence relating to the case. Despite this, a successful prosecution resulted in long prison sentences for the two Spanish fishermen involved.  Investigations into the circumstances surrounding the incident, however, have identified shortfalls in police management and areas for development, which need to be corrected.


The Chief Police Officer made a number of recommendations in his review of the RFIP to improve professionalism in the service. These were endorsed by the FCO Police Adviser and have since been accepted by Executive Council and incorporated into the 2009/2010 policing business plan.  We need now to help the police to achieve these objectives. They do a difficult job in difficult circumstances and need our support and encouragement.


The extensive building works and renovation of the 136 year old Police Station and Prison is now almost complete. The vastly improved prison extension was opened by HRH Princess Royal in March and provides cells to modern Home Office specification for up to 10 prisoners. The new police accommodation above the prison, together with refurbishments to the existing building, will provide a modern base and much improved customer interface.


The new building provides tangible evidence of the Government's commitment to community safety and protection, and our determination to have a police service that is committed at all levels to the delivery of the policing business plan. If further changes are required to deliver this, further changes will be made.


Mr Speaker,

The public works department continues to provide a professional service.  Planning for the next phase of the wind farm is well advanced. It is designed to almost double the current 24.2% fuel displacement. Major work on the overhead lines should eliminate the occasional faults through bird strike. PWD have completed the Newhaven harbour project and temporary works at Port Howard and capped a significant length of the Newhaven road to enable the inauguration of the new cross-Sound ferry service. . They have started on the construction of the roads to Byron Heights and Onion Range for the MoD and have installed the San Carlos river bridge. These are all major undertakings, routinely delivered by PWD with a minimum of fuss and great professionalism.


 Improving the road network in a way that is sustainable is a major challenge, with over 900 kilometres of unsurfaced road to maintain.  The trialling of a low cost surfacing for roads – called Otta seal – is an important development. If proved effective, it will be a very significant step forward.


Tasks for PWD next year include the delivery of sufficient housing and associated infrastructure in line with the Housing Strategy; planning the move of the asphalt plant to Pony’s Pass quarry to deliver further efficiency savings, with relocation currently scheduled for 2010/11; developing a waste management strategy to meet requirements for the next 20 years, including further recycling initiatives to minimise the waste going to landfill; and developing an energy strategy by 2010/11 to reduce energy consumption Island-wide.


Amongst the many highlights of other Government departments this year has been the signing of the MoU with MoD to establish the role of the FIDF in the defence plan for the Falklands; significant successes in the Tax Office in the recovery of corporate tax arrears; the publication of the Biodiversity Strategy by the Environmental Planning Department; the trialling of the new “shuttle” system at FIGAS; the detailed and painstaking work of the Treasury in monitoring expenditure and preparing this year’s budget under sometimes very stressful personal circumstances, the purchase of a new fire engine for the Fire and Rescue Service and a new ambulance; and the work of the Customs and Immigration Department both in the major drugs case and the continued enhancement of capability. Added to all this is the large amount of routine work that goes on throughout Government, often unnoticed and unheralded, for which we are extremely grateful.


None of the foregoing assumes that the Government is complacent: there is always room for improvement. A wide-ranging review of Government has been carried out by the Chief Executive, involving widespread consultation. The review contains a number of recommendations that have been adopted by Executive Council. These propose changes to the top level structure of the civil service to promote greater efficiency and accountability, downsizing and outsourcing services where that is in the public interest, improved regulation of statutory monopolies, more delegation to middle management to improve personal professional development and promotion capability, more effective performance management and performance reviews, a greater emphasis at senior level on strategic management, a substantial programme of training and development, the promotion of shared services to enhance efficiency, and clarification of the civil servant/elected member interface.


This is a substantial programme of improvement that will take some years to complete. It represents a major commitment by the Government to the people to deliver services effectively and at the least possible cost.  It will ensure that we build on the many years of Government input to education and training so that we can develop from within our own management resources and technical capability for the future.


Mr Speaker,

Last year, we changed the format of the Governor’s address so that it now reflects the views and policies of elected representatives rather than the Governor. This must be right. It reflects the policy behind the new Constitution, which received Royal Assent in November and came into effect on 1 January this year. The negotiation of the new Constitution was a major achievement. It has set the framework for a major step change in the development of internal self-government in the Falkland Islands, clearly setting out the formal relationship between Executive Council and the Governor, developing new institutions to enhance democracy, and enshrining the right to self-determination in the body of the Constitution. We are now a long way forward in agreeing the provisions for the new Public Accounts Committee, following public consultation, and we shall soon see a discussion paper on the new Complaints Commissioner distributed for public comment. Both institutions should be in place by the end of the year.


Mr Speaker,

Relations with Argentina on Falklands issues remain difficult.  The Argentine Government has maintained its diplomatic pressure on sovereignty issues in the UN and other international organisations, not always with success: they failed, for example, to secure language in the UN Fourth Committee, which suggested that the principle of self-determination should not apply in cases where there was a dispute over sovereignty.  They enacted their threatened legislation imposing sanctions on companies fishing in Falklands waters without an Argentine licence, whilst continuing to stall on UK requests for further meetings of the South Atlantic Fisheries Commission on matters of mutual concern over fisheries conservation.  They protested about the award of an additional licence for oil exploration and against the new Constitution - and most recently they have reacted negatively to the UK’s extended continental shelf submission in relation to the Falklands Islands and South Georgia and the South Sandwich Islands, having put in their own claim beforehand.


The UK Government continues to explain carefully and patiently that sovereignty is not negotiable whilst Islanders wish to remain British.  The Prime Minister reiterated this firmly when he met President Kirchner in Vina del Mar before the G20 summit.  The UK and Falkland Islands Governments both want to maintain good relations with Argentina, provided sovereignty is not in question.  There are many areas where progress could be made with good will under the so-called sovereignty umbrella. By insisting on sovereignty, the Argentines are foregoing real opportunities for mutual benefit, for example in fisheries conservation and in facilitating the exploitation of the oil and gas reserves that the oil operators so confidently assert are to be found in Falklands waters.


The Falkland Islands Government has no issue with the people of Argentina.  Falkland Islanders continue to welcome Argentine visitors to the Islands (over 3000 Argentine visitors came by cruise ship last year and a sizeable number for longer visits by air).  We continue to respect the need for Argentine veterans of the 1982 conflict and their next of kin to visit the battlefield sites and the cemetery at Darwin. It is striking that when British veterans meet their Argentine counterparts, when there is no political axe to grind, there is genuine reconciliation. 


Mr Speaker, Sir

I am pleased to announce that agreement has been reached on the way forward to allow the Argentine next of kin pilgrimage, requested by the Argentine Families Commission, to come to the Islands this year to inaugurate the memorial to the Argentine fallen at the cemetery near Darwin. The plan is that the Argentine visitors will travel by air on Saturday the third and Saturday the tenth of October using the scheduled LAN Chile service. We understand that LAN has agreed to put on a larger aircraft for the purpose on these two dates and to alter the schedule to allow the Argentine visitors to travel in and out on the same flight with sufficient time in between to allow them to attend a ceremony at the cemetery. Both flights will travel from Punta Arenas via Rio Gallegos and back via the same route: the Rio Gallegos leg on 17 October will therefore be cancelled. There have to be two successive Saturday flights (and therefore two ceremonies) to cope with the numbers requested.  They are not charter flights but rather the scheduled LAN flight, from which normal passengers to and from the Falklands will not be excluded. There is still much to do in working out the logistics for the pilgrimage and to agree the details of the ceremonies.  The Argentines of course accept that the next of kin will have to abide by FIG immigration requirements.


Why are we doing this? First because the issue has been dragging on since the Falklands Islands Government agreed to the Families Commission’s request back in late 2006.  Second, because it was becoming all too clear that the impasse over whether they should come by ship rather than by air was beginning to exacerbate relations to the point where, possibly, action might have been taken against our interests.  Third because all sides, including the Falkland Islands Government, wanted the pilgrimage to go ahead.   This proposal involves the next of kin coming by the scheduled flight, albeit with some minor re-arrangements.  It is a pragmatic solution, which should lead to a successful outcome.


Mr Speaker,

I should not let this opportunity pass without expressing pleasure that Her Royal Highness the Princess Royal and her husband, Admiral Laurence, were able to visit the Falklands as well as South Georgia earlier this year. This was her third visit to Stanley and the first Royal visit to South Georgia since 1957. It is a mark of the continued Royal interest and involvement in these British islands in the South Atlantic that is most welcome.



Finally, Mr Speaker, this is the last budget session for this Legislative Assembly. There will be elections on 5 November.   A test of good democracy includes the number and quality of candidates who make themselves available for election, the quality and inclusiveness of the debate at the hustings, and the turnout of voters to choose their next Government. Both the current Members and I hope that as many candidates as possible will consider making themselves available to serve and provide leadership to the community in the next few years.


Mr Speaker, Sir, I thank you.


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