AUSTRALIA underwent a successful transformation of its lighthouse system in the 1980s, leading to a massive reduction in lighthouse dues and improved service quality. How was all of this achieved?
First, it was recognised the single major cost driver was the flotilla of ships needed to maintain steel buoys and light vessels, the legacy floating aids to navigation. Where possible these floating aids to navigation were replaced with land-based structures or with modern, low-maintenance buoys and spar buoys.
Instead of spending millions replacing ships, we invested less than half the amount in modernising and replacing obsolete equipment and replacing power systems with modern solar lights. Floating aids have been minimised.
Attractive as it was to maintain the elegant and wonderful historic lighthouses, we replaced most of these classical lighthouse power systems with modern solar technology. Only where land-based lighthouses were well served with reliable mains power were the classical lenses retained — these lighthouses are also the ones that are visited easily and preserve historical value at the lowest cost.
It was recognised very early that with modern satellite navigation systems mariners’ reliance on conventional lights had been significantly reduced. The need to mark channels with buoys all along the roadstead has long gone.
All of this means a responsible marine safety authority has to consider very carefully the full array of safety measures at its disposal to ensure ships navigate safely and expeditiously in its coastal waters. Vessel traffic management, pilotage and other similar tools are now more than ever an integral part of the marine safety system.
Simply increasing the numbers of aids to navigation is no safeguard.
Secondly, the idea that maintenance and construction of aids to navigation could only be safely done by government workers was questioned openly. Offshore oil platforms and similar deepwater commercial activities showed plainly the private sector was capable of providing a service to the Australian Maritime Safety Authority.
Accordingly, maintenance and construction activity was put to public tender, and in 2000 a contract was entered into for the ongoing function. The initial cost savings had to meet a hurdle rate of at least 15% less than prevailing costs and this was easily achieved in the first round. Subsequent contracts have been let that reflect a saving when compared with the in-house costs of 1999 of over 50%.
The contract sets very stringent performance and reliability hurdles and has a significant performance reward component. The most pleasing — and in some ways surprising — feature of the outsourcing has been a measurable performance and reliability improvement.
AMSA was very proud of its extremely high standards and at great pains to ensure the act of contracting out to a commercial service provider would not diminish system reliability and quality.
The outcome has been that the system is now more reliable and quality has improved measurably. Private sector providers are equally (if not better) placed to find improvements than a government body which is often more intent on preservation than improvement.
During the discussions leading to the decision to outsource an alternative approach was examined, that the AMSA operation should be allowed to compete in the commercial market, in order to raise funds to offset high internal costs. This was not pursued, as the commercial providers already working in the sector were rightly concerned that marginal cost pricing would be used in an anti-competitive way. In addition, as AMSA was not subjected to full commercial taxes and charges it was operating from a distinctly anti-competitive advantage.
It was decided the best course was to simply market test the function and see if a better result could be achieved. The result has been an outstanding success. All AMSA staff were either transferred to the company or accepted retirement. There were no grievances from staff and the service provider company has grown its business successfully.
In the UK, the general Lighthouse authorities rightly have a long and immensely proud history. However, history is not a reason to continue to do something; history is where we come from, not where we are going.
With this in mind, I would strongly suggest the new joint strategic board and the UK government look to the Australian template as many other Commonwealth countries are doing.
I believe the board needs to question why the GLAs are maintaining buoys that are now over 40 years old by completely refurbishing them in purpose-built, state-of-the-art buoy yards and keeping specially built ships to handle obsolete buoys, when modern low maintenance buoys are available and do not require large ships to handle them.
The cost of modernising many of these floating aids would be less than the cost of replacing just one ship. Investing in a simple programme of modernisation would cost less than the ship replacement plan under way at the GLAs designed to preserve in place the existing archaic — but undoubtedly proven — array of marine navigation aids.
The current cost base of some £75m ($116.5) per annum should be more like £45m or less. Based on my experience in Australia, the entire UK and Irish system could be safely, efficiently and reliably serviced with the equivalent of one vessel and a single maintenance depot.
Presented with a 50% fall in light dues rate, I am sure the shipping industry would not be clamouring for reform of the light dues system to spread the burden.
Clive Davidson was chief executive of the Australian Maritime Safety Authority from 1998 to 2007, Australia’s representative to the International Maritime Organization for nine years and president of the International Association for Marine Aids to Navigation and Lighthouse Authorities from 2002 to 2006
Source: LLOYD’S LIST