Nola Marino (Forrest, Liberal Party) Share this | Hansard source

Australian produce is generally exported by ship. We are, after all, an island nation and, apart from some airfreight, the great bulk of our commodities and the vast majority of Australia's international trade by volume travels on the seas. The importance of shipping to modern trade and our economy cannot be underestimated, particularly on the back of the recent free trade agreements and the Trans-Pacific Partnership. In 2012-13, Australian ports managed over $400 billion worth of international cargo and saw some 4,900 overseas cargo ships make almost 14,000 port calls. With this level of activity, we cannot afford for this industry to be beset, as it is, by the dead weight of red tape and uncompetitive costs.

Under Labor's bureaucratic permit system, put in place simply to support the Maritime Union of Australia, there were almost 1,000 fewer coastal voyages and almost two million fewer tonnes of freight moved by foreign vessels in 2012-13. Labor's coastal-trading licencing system has resulted in a substantial increase in the freight rates experienced by shipping users—for example, Tasmanian company Bell Bay Aluminium recorded a 63 per cent increase in freight costs in one year. It has resulted in a 63 per cent reduction in the deadweight tonnage, or capacity, of major Australian flagged vessels with coastal licences from 2011-12 to 2013-14—I am not sure what about this the other side does not understand. And it has resulted in around 1,000 extra administration hours per year in the industry to meet the red tape of the scheme, as estimated by the Business Council of Australia. Under Labor, the fleet of major Australian registered ships—over 2,000 deadweight tonnes—with coastal licences plummeted from around 30 vessels in 2006-07 to just 15 in 2013-14. The number of ships on Australian transitional general licences has dropped from 16 to just eight. Looking forward, at this rate Australia's overall freight task is expected to grow by 80 per cent come 2030 but coastal shipping will only increase by 15 per cent.

Figures released in the Australian sea freight 2012-13 report show that 49 million tonnes of coastal freight was loaded in 2012-13 but that five years earlier, in 2007-08, it was over 59 million tonnes. It is an average 2.4 per cent decline each year in the total weight of coastal freight over that period. Since the period of the Australian sea freight2012-13 report, ships have been added to the fleet; however, over the two years of Labor's failed changes, dead weight tonnage of coastal shipping has actually plummeted by 64 per cent. This dogma, used to justify Labor's reform, did not save Australian jobs on the water and has cost Australian jobs on land. It is there in black and white.

The situation is even more grim when it comes to domestic freight. Between 2000 and 2012, shipping's share of national freight plummeted from 27 per cent to less than 17 per cent. Over the same time, the volume of Australian freight actually grew by 57 per cent. Projections over 2010 to 2030 will see Australia's national freight task grow by a massive 80 per cent. However, while the national road and rail tasks are expected to double, coastal shipping movements are only expected to rise around 15 per cent. This is due to the uncompetitive nature of sea freight in the current settings. Operating costs, particularly labour arrangements, are uncompetitive when compared with operating costs for foreign ships. We need to fix this to build a competitive shipping industry. For example, coastal shipping is bound by regulations where a ship has to wait idle in port for a day before loading can even start. This can cost companies $10,000 to $20,000 a day, and it hits domestic sea freight companies, whose costs have been increased by up to 50 per cent in some cases by Labor's changes. So Labor's permit system, which was a gift to the Maritime Union, is actually costing jobs and has the potential to cost a lot more jobs in our mining and manufacturing industries.

I was disappointed to hear the previous member's comments about the farming sector. The Business Council of Australia estimates that Labor's system has inflicted over 1,000 extra administration hours, as I said, per year on the industry, simply to comply with the new system. Shippers are telling the Australian government that container rates from Melbourne to Brisbane are almost twice the cost of those from Singapore to Melbourne. It is really extraordinary. Bulk freight rates on the east-west route have reportedly doubled in the past year, and transporting sugar from Thailand is actually cheaper than shipping it from Queensland. For example, according to Cristal Mining, in my electorate, Australian ships can cost around $5 million a year more than a comparable foreign ship on comparable routes.

On 8 April 2014 the Deputy Prime Minister released the Australian government's 'Options paper: approaches to regulating coastal shipping in Australia'. The paper was well received by industry. The Department of Infrastructure and Regional Development received 85 submissions and is continuing to receive supplementary submissions and additional information. The submissions highlighted the problems experienced by producers, manufacturers and other users of coastal shipping with the current system.

The five-voyage minimum requirement before a temporary licence can be granted actually hinders the ability to move one-off cargoes by coastal shipping. For example, a piece of heavy machinery was unable to be shipped as a single voyage, and therefore a temporary licence could not be granted. The machinery instead was moved by road, which required a police escort and removal of overhead power lines due to the oversized load. This was more complicated and costly than a voyage by ship.

Certain products, like LPG, are moved exclusively by foreign ships operating under temporary licences. Even though there are no Australian ships capable of carrying the products, the shippers must still obtain licences for the movement of the goods. It is a costly and time-consuming process that delivers no value to the Australian economy.

Tolerance limits make the current system inflexible for coastal shipping users. The tolerance limit for the amount of cargo carried means that last-minute changes to cargo simply cannot be made, or, if a change has to be made, the ship is delayed while waiting for the change to be approved. These delays can cost foreign vessels around $10,000 a day and more than $20,000 a day for Australian ships. Ships carrying petroleum products from offshore petroleum production facilities are not able to apply for a temporary licence, making it really difficult to bring those petroleum products directly to mainland Australia.

Submissions on the options paper have highlighted cost pressures faced by coastal shipping users, as I said. Bell Bay Aluminium, which I referred to earlier, has indicated an increase in costs from $18.20 a tonne in 2011 to $29.70 a tonne in 2012—an increase of 63 per cent following the introduction of the existing regulations. Compare that with freight rates offered by foreign vessels, which sat at $17.50 a tonne in 2012. This is the reality that we face. Overall, submissions shared a common goal: to reform the current regulation to increase flexibility and affordability for users of coastal shipping. The Australian government is carefully considering these issues and is committed to developing an internationally competitive coastal shipping framework that enables the industry to operate effectively, efficiently and in the national interest.

These policies are also washing ashore, having a knock-on negative effect on land-based Australian jobs and industry. The Business Council of Australia says that around 90,000 Australians are employed in the manufacturing sectors that use coastal shipping, including oil refining, cement, steel and aluminium. The BCA says that restrictions mean that Australian firms are paying rates that can be up to double the rates offered by foreign ships, adding tens of millions of dollars to their cost base and making their operations less viable as a result. Australian businesses are made less viable. That means ultimately less jobs.

Labor's coastal trading policies have clearly had a detrimental impact on coastal shipping and the economy, and Australian businesses report that it is cheaper to ship materials, as I said earlier, from overseas—it is extraordinary—than to move them around the Australian coast. Importing goods means that Australian business is lost to overseas competition, and it can put pressure on Australian jobs in the longer term.

There is a critical policy need for more affordable and flexible coastal shipping for major trade-exposed manufacturers—the ones that employ large numbers of Australians, especially when that employment is largely in a regional area like my electorate of Forrest. The port of Bunbury is central to the economic growth and development of the South West region. The major products moving out through the port are alumina, woodchips and mineral sands. The port does not currently have a container handling facility, despite calls for the development of this capacity for many years. There appears to be adequate cargo, within the South West region as its origin or destination, to allow for the development of container handling facilities. However, the port suffers from competition with the Perth based Fremantle-Kwinana port. The port of Bunbury needs to expand to handle containers, and I will continue to work to help facilitate this into the future.

In 2005 the state Labor government announced that they would build a new gas-fired power station in Kwinana instead of a coal-fired one in Collie. To compensate, they committed $60 million for the port of Bunbury for a dedicated coal berth to assist coal exports. However, like many Labor promises, it did not eventuate. This is very pertinent today, as a private coal company has been looking to export coal and there is no coal berth. At a time of uncertainty in Collie for the coal industry, the additional export opportunities that such a berth would have delivered would have been valuable indeed.

So, with those comments, I conclude my remarks.

Debate adjourned.

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