Spirit III To Be Sold

The State Government has decided to sell Spirit of Tasmania III and close down the Sydney ferry service.

A meeting of Cabinet in Hobart today agreed to end the service, two and a half years after it began.

The last service of the ferry will run on August 27. The Government has been advised that most jobs can be absorbed by the company.

Premier Paul Lennon said today’s decision had been difficult but unavoidable, given the hard facts the Government had been presented with.

“This is a decision not about this year’s operation but the outlook for the next few years is extremely challenging,” Mr Lennon said.

“Aggressively attacking the Sydney and Queensland tourism markets by introducing Spirit III was a bold move.

“We have done everything possible to support the service but we have to recognise now that it is not sustainable.

“The Sydney service has allowed us to make inroads into new tourism markets and has delivered Tasmania strong benefits – in terms of promotion of the State’s image to tourists who would never have otherwise considered visiting Tasmania.”

Mr Lennon said the trigger for today’s decision had been expert forecasts indicating a down-turn in patronage, flowing from a forecast decline in national tourism expectations.

“In the current year of operation alone, more than 80,000 travellers will have used the Sydney ferry service,” he said.

“However, the business case depends on passenger numbers building to around 115,000 per year. Expert advice shows that those forecasts cannot be achieved.

“Running costs have been rising – mainly driven by fuel cost increases – and the numbers of passengers cannot keep pace with the increased costs.

“Treasury’s estimate is that TT-Line would require a funding injection of more than $50 million each year to be able to operate both Melbourne and Sydney ferry services on a sustainable basis.

“That’s effectively a subsidy of $5,300 for every additional passenger coming to Tasmania on Spirit III.

“Against those benchmarks, cancelling the service was a hard decision but a responsible one.”

“We cannot ignore the advice we have been given and responsibility to the taxpayers of Tasmania demands no other alternative than to call an end to the service.”

Mr Lennon also noted the Government’s full support for the TT-Line Board through the decision-making process.

“The Board has demonstrated great integrity and professionalism in the way it has considered these issues and brought them to the attention of the Government,” he said.

Mr Lennon said the Government had set aside a contingency of $22.5 million to cover the costs of ending the service and to ensure that the TT-Line would not be left with additional debt after the sale of the ship.

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For further information contact:

Matt Rogers 0408 563 957