Ewen Jones (Herbert, Liberal Party) Share this | Link to this | Hansard source

I rise to speak on the shipping reform package. This legislation aims to stimulate investment in Australia's shipping industry through the use of tax incentives and to encourage further development of training opportunities for workers in the industry. The tax incentives which are provided in these bills seek to include accelerated depreciation of ships, income tax relief for Australian operators of Australian registered ships, a refundable tax offset for employers who choose to employ Australian seafarers and exemptions from royalty withholding tax for foreign owners who lease their ship to an Australian operator under a bareboat or demise charter.

These bills also seek to provide changes to our licensing system, with the introduction of a three-tiered system that includes: a general licence providing unrestricted access for Australian registered ships; a temporary licence providing limited access for foreign ships or those on the Australian international shipping register; and an emergency licence with restricted access for emergency situations, such as a natural disaster. Finally, they seek to create a second register of ships, the Australian International Shipping Register.

The coalition recognises the need to increase the role of shipping in our freight network. Over the last decade we have seen a drop in the number of ships registered in Australia, so that we are now left with only 22. Meanwhile, by 2020 our freight task will be double what it is now. Some of the slack will have to be picked up by increasing the role of shipping transport. We need the right policies to ensure adequate investment in our shipping industry to handle this.

The question I ask myself is: will these measures work? The response I get from my own reading and from conversations I have held with people in the industry is that they will not. Not only that; we have to be mindful of the consequences of enacting poorly designed and cumbersome legislation which may, in fact, have an effect which is the opposite of the intentions of these bills. That is why I believe that this whole suite of bills should be referred to the Productivity Commission. There will be consequences for a wide variety of industries, especially in places like my seat of Herbert, based in Townsville. We are a regional centre that is exposed to the tyranny of distance.

In contrast to the considered approach needed, the process of formulating this legislation has been disorganised and incomplete. After its initial release, it was determined that a major redraft of the Coastal Trading (Revitalising Australian Shipping) Bill 2012 was needed, but then only minimal consultation was undertaken before the legislation was tabled in the parliament. The House committee was given limited opportunity when compiling its report on the impact of these bills, and we are still waiting on the outcome of the Senate Economics Committee's equivalent report. This process has been rushed through and the result is legislation that could have serious unintended consequences for all Australian industries particularly those in regional centres. The coalition is certainly not alone in having reservations about some of the detail contained in these bills.

The changes made to the licensing system by this legislation will add more red-tape burden to the shipping industry. The licensing system involves the introduction of three new levels of shipping licence. This includes a temporary licence designed for vessels registered on the Australian International Shipping Register. This temporary licence is a real sticking point with both the coalition and with many of the industry stakeholders affected. The application for the licence comes with a set of prescriptive requirements. They include the provision of detailed information of expected loading dates, loading and discharge ports, and cargo type and volumes for the full 12 months duration of the licence.

How out of touch are this government that they expect industry to sit down and detail this information simply to apply for a licence? This is yet another unnecessary red-tape burden slapped on industry by this government. If we are not careful we risk regulating the domestic and international shipping industry out of the market rather than helping it to prosper.

To be eligible for the licence applicants are required to have a minimum of five voyages planned. While this is an improvement over the original minimum requirement of 10 voyages, contained in the draft legislation, it remains to be seen why a minimum number is necessary at all. While most shipping companies would well and truly exceed this number, it seems unnecessary to force the smaller companies to either change their operations or create fake trip plans to meet the licence requirements, and all this is for no explained reason.

The temporary licence does offer a variation to the number of voyages allowed only when requesting to add a minimum of five more trips. The allocation of a minimum number of trips is entirely unnecessary. If applicants find that they are able to do additional trips, why shouldn't they be able to amend the conditions of their licence accordingly regardless of how many trips they are doing? Once again, this is bureaucracy at its worse, which is something this government seems to be fantastic at. This requirement serves no purpose but to hold industry back for regulation sake alone.

All red tape comes at a price. When we burden industries with regulation, they in turn must increase their costs. These bills hurt the smaller players and will drive up the costs that other industries, like manufacturing, have to cop when it comes to shipping freight. Estimates have put these price increases at up to 16 per cent. Despite this very real risk, the government has not made any effort at all to price the cost impact that will result from this legislation. It is already acknowledged that Australia's shipping industry is more expensive than its international counterparts because of the higher costs involved with running an Australian ship. We should be trying to address that problem, not adding to it. Many parts of the industry, notably the Dry Bulk Shipping Users, have expressed concern at the impact of these bills. This is something that this House should know before it votes on the legislation. It is that simple. I believe that this legislation must be tested by the Productivity Commission before a vote is taken.

My electorate of Herbert has Townsville port which is a growing beast. It is capable of so much, and we have a team there who are proactive in their approach. The Townsville Port Authority is a very strong organisation. Our tonnage through the port is on a steady increase and I want to see that continue. If we can free up the port system and make it appealing and easy to put things on a boat, we will grow my port. If we make it harder and harder to do business, we will simply do less and less business especially in general freight.

Townsville is a major commercial and industrial hub for North Queensland. My city is situated on the Bruce Highway. On both sides of Townsville we are confronted with parts of this highway which are subject to flooding every wet season. To the south, places such as the Haughton River Bridge, Pink Lily Lagoon and the flats surrounding Giru are the first to go under water during the wet season. To the north towards Ingham we are faced with Cattle Creek, Gairloch and a number of other places which cannot be passed for weeks at a time during the wet season. If we had a viable, efficient, flexible and user-friendly port system, it would enable general goods to be shipped, especially from the south to Townsville for distribution. Every wet season as soon as a tropical low is detected in the Coral Sea many trucking companies initiate a transport levy because they know that at some stage they will have a refrigerated pantech sitting on the side of the road burning fuel while the driver waits to press forward over flooded roads.

If we make this legislation cumbersome, if we make it so hard for companies to pick up, transport and deliver goods, if we make it so hard for traders to access the services, they will simply walk away. That will have the effect of more trucks on the roads of North Queensland. We are not like Sydney, Melbourne, Brisbane and other areas. For the most part, the Bruce Highway is a two-lane road. When you put trucks on it, it gets busier. When it gets busier, we have accidents. Now, I am not blaming the truck drivers at all for the accidents, but I will state for the record the statistic that 16 per cent of all deaths on national highways—that is one in six—occur on the Bruce Highway. When a ship passes over the ocean the hole it leaves is instantly repaired. When a truck forces a hole in the road it is there until someone comes along, stops the traffic and fills it in. Added to that is the difficulty of shifting major machinery between major centres.

In early May I attended Battle of the Coral Sea commemorations in Cardwell, representing the true senator for North Queensland Senator Ian Macdonald. I was stopped at the northern base of the Cardwell Range. I was there for 45 minutes while a large tipper made its way over the range. Now, I do not know from where it was coming or to where it was headed, but the fact remains, if we cannot facilitate better port access, the trips for these large pieces of equipment will become more regular and travel farther along our highways. We need an efficient, productive and proactive port transport system which is complementary to getting the job done. We need things sped up, not slowed down. We need things which work for business—the ultimate vested interest—as they are the ones employing our people. My port has backload traffic from Papua New Guinea and Port Moresby of some 100 containers per week. If there is an opportunity to shift something we should be taking that opportunity and putting it through my port. In the transport game it is called a backload and the backload is the cream. If you can pick it up, you get your fuel paid on the way back. But if you are sending back empty containers then you are doing it for no particular reason.

These bills are full of burdensome regulation that serves no apparent purpose but does have very real consequences for shipping businesses, and for the Australian industry that relies on shipping freight. Given that the government has supposedly set out with the intention to foster and grow the shipping industry, it beggars belief that so many elements of this package may do exactly the opposite.

John Mullins, a good mate of mine, is a solicitor in Brisbane. His favourite saying is: perception is neither right nor wrong; it just is. If it is perceived that it is so hard to get things onto a wharf, so hard to get things onto a ship, then for those of us who do not have much interaction with the industry it just does not come up as an option for you. You simply will not think about it; you will just organise a truck to get it done. You will get heavy haulers to ship your stuff all the way through. We must make this industry appealing to people, to use the freight system, to use the port system and to get things up and down the coast. It has to be viable and efficient. But it must be perceived by the supplying public that it is an option.

As a consequence of these bills, I see more and more people will throw their hands in the air and say, 'It's just too hard.' That is the danger here: if we do not do this right, we will have more trucks on the road, more roads to repair and more deaths on the road. It is important that we do have a good maritime industry. But it is more important that it is cooperative, efficient, user-friendly and, even more than that, that it is perceived to be all those things. We must throw the mat out and we must ensure that these things are done correctly.

Jill Hall (Shortland, Australian Labor Party) Share this | Link to this | Hansard source

I will start my contribution to this debate on the Shipping Reform (Tax Incentives) Bill 2012 and cognate bills by congratulating the Minister for Infrastructure and Transport on coming up with reform legislation that I think will reshape and revitalise the shipping industry in Australia. It is no surprise to me that members on the other side of this parliament are, once again, saying no to a piece of legislation that will really turn around the shipping industry.

Furthermore, it is no surprise to me that members on the other side of this parliament are opposing the legislation, when you consider that when they were in government they almost demolished the Australian shipping industry to the stage where there are now very few Australian flagged ships circumventing our nation or carrying Australian products.

There are four elements of this reform package. These include tax reform, and establishing an International Shipping Register which requires the master and chief engineer to be Australian residents whilst the balance of the crew may be foreign residents paid at internationally competitive rates. My predecessor, Peter Morris, when he was in this parliament, was the chair of the former House of Representatives Standing Committee on Transport, Communications and Infrastructure. That committee brought out the report, Ships of shame, which showed how foreign flagged ships were exploiting the crews who were working those ships. The opposition, when they were in government, perpetuated the situation that existed there.

Another reform is the new licence regime to provide clarity and transparency to long-term planning and set clear boundaries around the necessary role of foreign vessels on our coastal trade. Also included in this bill, which I think is very important, is a Maritime Workforce Development Forum of industry, unions and education providers to improve access to maritime training.

The shipping reform embodied in this legislation was subject to widespread consultation. There were over 65 submissions received by the House of Representatives Standing Committee on Infrastructure and Communications inquiry. The Shipping Policy Advisory Group, comprising shipping, industry and unions, advised the government on how the inquiry recommendations might be achieved. A discussion paper was released in 2010. Over 40 submissions were received. Advice was given from three reference groups on specific implementation issues in regard to the regulatory reform, taxation and workforce issues, and an exposure draft of the legislation was provided to industry. There has been considerable consultation. Members on the other side of this parliament are not really interested in more consultation; they just want to see a further destruction of the Australian shipping industry.

This reform package is about ensuring that Australia's domestic and international trade is undertaken by Australian registered ships—in other words, it is about an Australian shipping industry. It creates opportunities for investment in job opportunities for Australians and regional seafarers.

There are very few trading ships owned and registered in Australia. Only four of the thousands of trading ships carrying Australian exports are Australian registered. This legislation is about ensuring that we really do have a shipping industry, along with all the associated industries that flow from having a vibrant shipping industry. It is an absolute disgrace that Australia, an island nation, with highways surrounding it, has four registered Australian ships. I have actually visited some of these flag-of-convenience ships and seen the crews that are staffing them. A ship can be flagged in Malta, Greece or wherever. It is then staffed by a crew from Burma. Their level of exploitation has been well documented. So not only are we creating a vibrant shipping industry but we are creating a situation where those people who are crewing Australian ships have to reach a certain standard.

In the 15 years prior to 2012, the number of Australian registered ships fell from 75 to 25 and is declining further. I think that is unacceptable, and I wonder how members on the other side of this parliament can oppose legislation that is about creating a vibrant shipping industry in our country.

This reform package facilitates the long-term growth and stability of the Australian shipping industry for both domestic and international trade—something everyone in this parliament should be supporting. It encourages investment and growth in Australian registered shipping. This can only benefit our domestic and international supply chain. It has got to be good for all businesses and all aspects of our Australian economy. It will contribute to a reliable and competitive service for shippers and it will develop a sustainable Australian maritime workforce—all really positive, good outcomes which should be supported by both sides of this parliament. It will maximise the Australian content of the domestic shipping industry, build Australian content in international shipping through the Australian International Shipping Register, encourage investment in the shipping industry and support the long-term interests of a competitive shipping industry.

What do those on the other side of this parliament say: 'Send it off to the Productivity Commission!' At the commencement of my contribution to this debate, I outlined the level of consultation that has already taken place. I have outlined the decline of the Australian shipping industry overseen by those on the other side of this parliament. As to sending this off somewhere else, as proposed by those on the other side of this parliament—they want anything that will avoid change to the shipping industry, anything that will avoid creating a sustainable shipping industry with all the associated industries that will flow from that. I think they should hang their heads in shame. It is just this 'no' philosophy that they have. But I think that this is a little bit different—this is ideologically driven. Those on the other side of this parliament would do anything to see the maritime industry within Australia destroyed. That is what they want to do—destroy the maritime industry rather than embrace this wonderful reform that has been introduced by the minister after extensive consultation with all those involved in the shipping industry. Hang your heads in shame! You are not about Australian jobs. You are not about Australian industry. You are just about constant opposition—opposition to everything.

Also included in this legislation are taxation incentives: the introduction of a zero company tax rate to replace the current corporate tax rate, and the reintroduction of accelerated depreciation—something that those on the other side of this parliament removed; they really have a lot to answer for—as well as changing the royalty withholding tax provisions. This is all consistent with international best practice. We have seen other countries embrace their shipping industry with massive reforms and massive promotion of their own shipping industry—the UK comes to mind. But those on the other side of this parliament want to destroy our shipping industry. And we are an island nation. Hang your heads in shame!

In addition, a labour relations compact has been reached between shipping owners and the unions. Everybody involved in the industry is happy with the reforms. Everyone is happy, except the opposition. Why aren't they happy? Because they want to destroy the industry. They want to say no. They want to destroy the industry. I have already demonstrated how the Australian shipping industry declined when they were in power and I have also demonstrated how they have supported the activities that happen on the ships of shame that circumvent our country's rules through their permit system. They really have a lot to answer for.

This shipping reform is good for the economy because it helps diversity and it will be complementing the resources and manufacturing sectors rather than going down the track of trying to destroy this very important industry. Australia has a long freight transport corridor, an enormous coastline and high levels of population density in our major cities. We cannot ignore the importance of the shipping industry. Australia is a trade- and maritime-dependent nation. It depends on shipping for 99 per cent of its trade. So if we do not have a strong shipping industry it will be an enormous economic loss to our country. Ships are the least energy intensive of all freight transport modes. A strong shipping market will also provide solid competition with rail and road, providing incentives for the other modes of transport to be more efficient. Australian shipping reform is good for Australian jobs. Securing a strong Australian shipping fleet in turn secures the supply chain and creates hundreds of new long-term Australian jobs. I think it is an absolute no-brainer. For those on the other side not to be supporting this legislation, not to be supporting a strong shipping industry within Australia, I would argue, as I have argued throughout my contribution to this debate, is not about Australian jobs, is not about the Australian shipping industry. Rather, it is about destroying an industry because of their ideology and the fact that they are prepared to sell Australian workers and the Australian shipping industry short.

We do not need any more reports. There have been so many reports that have demonstrated the benefits of a strong Australian shipping industry. We do not need to refer it off somewhere else and delay it so nothing happens. What we need is action. What we need is an opposition that, for once, can look at the benefit for the nation as opposed to their own self-interest and support good, sound legislation that is good for the economy, good for growth and good for Australian workers.

Rowan Ramsey (Grey, Liberal Party) Share this | Link to this | Hansard source

It gives me pleasure to rise to speak on the Shipping Reform (Tax Incentives) Bill 2012, which at first glance looks like an attempt by the government to try and reinvigorate the local shipping industry, which is slowly dying, in fact very close to death. There are parts of the legislation which one might support.

Ms Hall interjecting—

I would suggest, having just listened to her contribution, that the member for Shortland, instead of just reading the party speaking notes, should actually read the contributions to the Senate inquiry from the industry. She maintains that everybody is happy about this legislation except the opposition. If she was to read the submissions to the Senate inquiry she would find that many in the shipping industry are not happy at all and, in fact, will be severely implicated by the issues arising in this bill.

Jill Hall (Shortland, Australian Labor Party) Share this | Link to this | Hansard source

There was majority support.

Geoff Lyons (Bass, Australian Labor Party) Share this | Link to this | Hansard source

The member for Shortland has had her turn.

Rowan Ramsey (Grey, Liberal Party) Share this | Link to this | Hansard source

There are just 22 vessels remaining registered in Australia, down from 55 in 2006. The average age of the fleet is 19 years; the international average is 12. We have the fourth largest shipping task in the world and it is fair to say that we do not have an internationally competitive shipping industry.

I started digging around and having a good look at this package of bills because, as the member for Grey, I looked at the industries in my electorate that are using coastal shipping and there are a number. For instance, GRA is a joint venture between CSR and Boral. It produces around 90 per cent of the gypsum for Australian cement and plasterboard production at Penong in my electorate. It is west of Ceduna. The product, gypsum, travels by rail about 80 kilometres into Thevenard, where more than 1½ million tonnes a year are shipped out. Gypsum is not rare and not expensive to mine. In fact, it is virtually worthless at the mine gate. Most of the cost of gypsum in Australia is freighting it from a place like Penong to its point of manufacture—80 kilometres of rail and maybe 2,000 kilometres of coastal shipping. If coastal shipping is double the international rates, which it already is, suddenly gypsum from Thailand, Indonesia or India not only becomes feasible but cheaper. If the GRA contracts go, there go real Australian jobs and real Australian companies. More than 40 people are employed by GRA at Penong. I hope they are not to be the sacrificial lambs at the foot of this legislation.

OneSteel in Whyalla are big users of coastal shipping. Metallurgical coal is shipped from Queensland and New South Wales to Whyalla. Dolomite from Ardrossan is shipped around the bottom of Yorke Peninsula to Whyalla and to New South Wales for steel making. You would think that OneSteel would ship iron ore from their mines at Whyalla to Port Kembla but, no, it imports feedstock from Brazil. You can ponder why that might be so. I cannot be sure that the cost of coastal shipping is the only reason for this but, if it costs $20 a tonne to ship local product and $10 a tonne to import, it is likely to be a big part of the reason. I also understand that OneSteel import limestone, which is a flux in the blast furnace, from Japan. There is no shortage of limestone in Australia but OneSteel import it because it is cheaper at the furnace door than it is to use Australian product. The reason for that, of course, is that coastal shipping is uncompetitive.

Nyrstar are also significant users. They are already under considerable duress courtesy of the carbon tax of $6 million a year they will pay at the Port Pirie smelter—$6 million for absolutely nothing they can do about their emissions, but I will put that to one side for the moment. Over half of Nyrstar's concentrate is now sourced from overseas.

Australia is a major exporter of lead and zinc concentrates, but the only sum that matters here is the cost at the smelter door of the concentrate—that is, material costs plus freight. Australia's material costs are good, and that is why we make money out of exporting. But, increasingly, we must export our concentrates and import our feedstocks for the smelting industry because of the freight differentials.

To understand the change this promotes, we have to understand how the current system works. Essentially, Australian registered vessels are fully protected enterprises. If companies want to move product from an Australian port to another, they must use Australian shipping if available. They can currently engage offshore vessels if an Australian ship is unavailable or an offshore vessel is travelling between destinations with empty cargo space and they can obtain a special permit on a per-voyage basis. The single voyage permit is issued for a single voyage between designated ports for the carriage of specified cargoes or passengers. There is a continuing voyage permit, which enables a vessel to work within our waters for three months at a time. Currently, 29 per cent of the coastal trade is serviced by internationally registered vessels operating under these permits. The big sleeper in this legislation is that the single voyage permits will go. That is what the industry is concerned about. To understand how this works you have to understand demurrage. It is the period when the charter remains in possession of the vessel after the period normally allowed to load and unload cargo. That means, if a ship is held up at port waiting to load, there is a daily charge charged to the charterer. I believe the current waiting time at Port Kembla, for instance, is over 10 days. This comes and goes a bit. We often see a photo on the front of our newspapers of the ships lined up off Port Kembla or Gladstone.

Currently, for an international vessel, demurrage is $10,000 a day. For an Australian vessel it is $37,500. So a shipping company does not have to have a ship hanging at anchor for long, waiting to load or offload, to incur some pretty serious costs—and that spills over into the overall cost of the charter. That is effectively doubling the shipping rate. However, coming to these bills: the Adelaide based company Penrice Soda estimates that, after the passage of these bills, the transport cost could be 500 per cent higher than the lowest rate available when using foreign ships. That is using foreign vessels with crews operating under the International Labour Organisation wages and conditions, which is basically ships coming from the OECD countries. International shipping is a tough industry and vessels from the OECD countries meet those international shipping standards.

Since the government passed the Fair Work Act 2010, Fair Work Australia now insists that any vessel operating under permit on Australian coastal shipping must comply with the provisions of the act—that is, essentially, Australian pay and conditions. This has already lead to significantly higher costs for our industries. It is protecting Australian jobs, and that sounds pretty fair. But I have already pointed out that that may well come at the cost of other jobs in the economy—like the GRA workers at Penong.

It is interesting to have a look at who the operators of the remnants of the Australian shipping fleet are. The biggest company is a player called CSL. It sounds a bit like the Commonwealth Shipping Line, but it is in fact the Canadian Shipping Line, a privately held company with global reach. It is a multinational company. There is nothing particularly wrong with that, but we are in this case protecting a multinational company, not an Australian company. Yes, we have Australian workers. But my sources tell me that, while some crew members are Australian, most of the crews are the same as every other multinational vessel in global shipping—that is, predominantly Filipinos, Ukrainians, Indians and various others from around the world. And I bet they love it, because working on Australian pay and conditions in our waters is probably pretty good.

But this bill is actually likely to make their employment less likely because the incentives will be to convert to Australian crews. Of itself, that sounds okay. But it brings us closer and closer to a closed shop because it insists on either Australian labour or seafarers with permanent residency be employed on Australian registered vessels. It is interesting that the government would insist on changes like this at a time when they have approved 457 visas for Roy Hill. These would seem to be totally conflicting policies. The government are trying to move for full Australianisation of labour on Australian vessels when at the same time they are prepared to be more flexible and accommodating—quite rightly—in other parts of the economy.

These bills move to make the ships tax-free businesses, and wages paid to sailors tax free if they are engaging in overseas voyages. This would largely bring Australian tax arrangements into line with the rest of the OECD nations. I support that part of the bill, but of course I do not get the opportunity to support one part of it and not other parts of it. Theoretically, this would make our shipping lines more competitive and put them on a level playing surface to be able to offer cheaper services to business. But unfortunately there is little confidence in the business sector that this will be the outcome and that the tax breaks will not be vacuumed up by the MUA.

Of particular concern is the commitment of the unions to engage in negotiation for productivity efficiencies as a trade-off for the tax-free status. But as we debate the bills here today we are expected to take the minister and the unions at their word—and nothing of their past behaviour would give me any confidence that we are likely to see a significant improvement in productivity. Surely we should have been presented with the whole deal before being expected to tick off on these bills. The new arrangements are expected to start on 1 July. Here we are, just one month before that, with no possibility of the bills passing within the next two weeks before the Senate resumes. So we have a two-week kick-off time for the new arrangements.

I noticed an article in the marine publication Lloyd's List quoting a press release from Wallenius Wilhelmsen Logistics, or WWL. It said: 'WWL regrettably announces they are unable to commit to carriage of coastal cargo from 1 July. The new legislation the Coastal Trading Bill 2012 shows there will be substantial changes to the way foreign carriers apply for, and are granted, permission to carry coastal cargo around Australia. Based on these proposed changes and new requirements it may become very difficult for WWL to continue participating in the coastal trade.' The article goes on to say that it does not really know where it is heading in a month's time.

This is typical of this government. They have been in government for almost five years and they make these broad announcements with a broad-brush approach—'We're going to fix this, we're going to change that'—yet they leave it to the wire to make the legislative changes. They have had plenty of time to have these bills in the House long before now and not leave industry up in the air wondering where they are going.

The legislation also moves to establish a secondary register. This is not a bad idea but the associated red tape will see the end of special short-term permits. I raised this issue earlier. That really is the big problem in this legislation. Ships operating on the second register must nominate their voyages 12 months in advance and engage at least five voyages. This is simply impossible for industry to accord with. If alterations are needed, they must be done in multiples of five. So if you have engaged a ship over a 12-month period, nominated five voyages and nominated the dates, and you want to put two extra ones on, you cannot. You have to put five extra ones on or make a wholesale change. These are impossible regulations for the industry to comply with. What this is saying is: 'We are not interested in any other ship. You must use Australian ships only, even though it might cost you five times as much as internationally registered and regulated ships.' That is a cost too big for Australian industry to bear. It is certainly too big for the industries in my electorate to bear and I think it is too big for industries in the rest of Australia.

It is the same as every other tariff wall. In the efficient industries, for the jobs the economy has in steel making, mineral refining, plasterboard manufacturing, even coalmining, one man's tariff is always another man's job. It flies in the face of the Hawke and Keating reforms. What on earth must the Minister for Trade think of this? Dr Emerson is of the dry, practical, economic view. I have not heard him speak on this bill—I do not know if he intends to—but I think this would be making him sick. (Time expired)

Melissa Parke (Fremantle, Australian Labor Party) Share this | Link to this | Hansard source

It gives me enormous satisfaction to speak in support of these shipping bills and to welcome the package of further maritime reforms they contain. They certainly build on the government's earlier reforms, which have included the Navigation Amendment Bill, which enabled ratification of the International Labor Organisation's Maritime Labour Convention and amended provisions in line with the convention's guidelines when it comes to vessel tracking. Prior to that, we made changes to undo what had become the chronic and unjustifiable use of the permit system to avoid the sensible regulations that would otherwise apply to foreign flagged and registered vessels. All these steps are consonant with the government's overarching National Ports Strategy, which itself is a very important piece of future planning for Australia.

I represent an electorate, Fremantle, whose ports and maritime industry are absolutely essential to its economic, cultural and historical character. Fremantle port is far and away the largest general cargo port in WA; it receives 80 per cent of all seaborne imports by value and it is home to the largest branch of the Maritime Union of Australia. What is more, it has lent its workers' name and anchor symbol to potentially the best AFL side in the land. But, for all its current size and significance, there is a clear need and potential for Fremantle port to have a greater freight role in the years ahead, and there are many environmental and community amenity reasons why an increase in domestic freight by sea instead of road would be a welcome outcome. Having said that, we do need better land-side arrangements and infrastructure in Fremantle and the Perth metro area to assist in moving container freight into and out of Fremantle port on rail rather than on road. As I have observed before, this task was proceeding well under the Gallop-Carpenter government in WA but has fallen into a hole since 2008, with the proportion of freight on rail dropping by a third under the Barnett government.

As I noted at the outset, these bills follow from the earlier regulatory changes which addressed the discouraging and obstructive policies of the former government when it came to Australian owned and flagged vessels and therefore to the Australian coastal shipping industry. The bills we debate today go further in actually creating the incentives for Australian shipowners to upgrade and renew the ageing fleet of Australian vessels, and they offer further sensible encouragement for operating Australian registered vessels and for employing Australian seafarers. This package of incentives will boost investment in Australian shipping which in turn will mean better employment and training, an increase in coastal freight and an improved domestic shipping stock and capacity, with the security benefits and flexibility this brings.

I know that the people in my electorate would particularly welcome a rejuvenated coastal shipping industry. They are well aware that shipping represents a much lower carbon footprint than road transport and they know that trucks also carry much higher infrastructure costs in terms of road damage, in addition to the impact they have on the safety and amenity of communities along the freight route. Freo people, especially young people, stand to benefit enormously from the increased opportunities for Australian seafarers and for other kinds of Australian based maritime work because the changes we make here on an industry-wide basis will dovetail well with the training provided at South Fremantle High School's new maritime trades training centre.

Maritime reform in the shape of structural and regulatory changes designed to make for a revitalised, better managed and more economically sustainable industry is one of the very significant and yet relatively unsung achievements of this Labor government. These changes are an example of comprehensive policy reform that is clearly in the long-term national interest, and by securing this reform we will introduce measures that improve the position of employers and employees, shipowners and seafarers as well as international competitiveness, international labour law and safety compliance. All of that makes it very hard to understand how and why the coalition can have chosen to oppose these bills and the reforms they contain.

By way of contrast, I want to acknowledge the very constructive input that has been made by the Australian shipping industry and by the Maritime Union of Australia, members of which are in the gallery today. I very sincerely welcome them. The largest branch of the MUA has been and continues to be a critical mainstay of social values and industrial rights in Fremantle and Western Australia. The MUA has always been one of my community's strongest, most vibrant foundation blocks: an organisation whose contribution to the social capital in Freo goes far beyond its important industrial work to also encompass the wider general values of collective trust, care and obligation and the wider specific concerns in areas like safety, health, the environment and social justice.

I want to conclude by acknowledging the incredible work of the Minister for Infrastructure and Transport, his staff and his department. It is quite amazing to consider the scale and scope of the investment and reform that he has been responsible for within this government, not least because it is a government that has made transport and infrastructure investment of a never before seen breadth and not least because, in addition to those investments, which include more funding for urban public transport than all previous federal governments combined, there has also been the delivery of a range of complex and far-reaching reforms like the one we debate here today. As the minister said in question time this week, we are a country where 99.9 per cent of our exports are moved by ships, and there will soon be no Australian shipping fleet to revitalise. We need to act now or we will simply not have an industry at all, and an Aussie flag on the back of an Aussie ship will be consigned to history. This is sensible policy to level the playing field with our international competitors. That is why it has been welcomed by the shipping industry, and that is why it has been welcomed by many users of ships.

It is my privilege to represent a deeply maritime electorate. Fremantle is a place whose intersection between Swan River and the sea has made it an important and sacred place to the Nyungar people for thousands of years. It is a place whose natural harbour made it the obvious choice for the site of the Swan River colony and it is a place whose port has been the focus and spark of such diverse economic and cultural contributions as the engineering genius of CY O'Connor and the Labor movement fervour of people like Tom Edwards, Paddy Troy and John Curtin. These reforms will provide improvements for Fremantle and for Western Australia, and they are part of securing a safe, workable and sustainable maritime industry in the decades ahead.

Jamie Briggs (Mayo, Liberal Party, Chairman of the Scrutiny of Government Waste Committee) Share this | Link to this | Hansard source

I rise to support the amendment to the Shipping Reforms (Tax Incentives) Bill 2012 and related legislation moved by the shadow minister for transport and the Leader of the Nationals to send this bill to the Productivity Commission for a thorough inquiry. I think the bill before the House, as it is currently drafted, is flawed because it will add much red tape to an industry already under pressure and it will add to cost pressures in an extraordinary way.

When introducing the bill, the Minister for Infrastructure and Transport in his second reading speech couched these reforms in terms of saving and creating Australian jobs, and he has said that in the media on several occasions since then. The previous speaker, the member for Freemantle, said that as well. But what those in the government forget to mention is that the impact of increasing the costs on shipping will affect the flow through effects for businesses using coastal shipping and hence affect Australian jobs greatly. They forget to mention this rather important point. If you are trying to protect an industry, as this bill is essentially trying to do, adding a tariff will affect Australians, whether they are in the mining sector or in the sugar industry. I noted with interest the submissions from the sugar industry on this bill, which I will come back to.

The freight network is absolutely vital to the Australian shipping industry, given our location in world. We desperately need a prosperous and a low cost, as much as that is possible, shipping industry to move our goods. Sea transport carries over 99 per cent of international cargo by weight and 75 per cent by value. Coastal shipping carries about one quarter of interstate trade. It is true that there has been a decline in the number of Australian registered ships over the last decade, and currently there are only 22 Australian registered ships. With our freight task set to double by 2020, and treble along the eastern seaboard, coastal shipping will and must play an increasing role. That is all true and that is why we have said, through the shadow minister for transport, that it is important that we have a discussion about reforms to the shipping industry. But we think this approach from the government is flawed and that is why we do not support the current bills and we say that they should be sent to the Productivity Commission, the most qualified agency of government to give genuine consideration to the impact of these reforms.

In relation to Australian jobs, in conjunction with events outside this parliament in recent days, we have seen the Labor Party at times use arguments—which are a little difficult to understand given some of the other arguments they are using—where they claim during every question time that people are being too negative in this place and are scaremongering, particularly in the angry rhetoric of the Prime Minister, but in this debate we see them using that same angry rhetoric trying to scare people into thinking that the opposition is somehow trying to do over Aussie jobs and stand against necessary reform, which will make it easier for Australians to get jobs and our shipping industry survive. Nothing could be further from the truth. We are entitled to, and we should, pursue arguments where we think there is a problem with legislation, where we think the position put by those opposite is flawed. And we think this is badly flawed.

I refer particularly to the comments from the member for Wakefield. I was surprised and disappointed with the argument he used, especially towards the end of his contribution, where he compared the opposition's position on this bill to the opposition in the House of Commons over 100 years ago to the abolition of slavery. I want to put this in the context of what we see in question time every day.

Mr Ramsey interjecting—

It is hyperbole at its worst level, as the member Grey so rightly points out. We hear the government complain every day that the opposition is trying to scare people about the carbon tax and on 1 July this great, wonderful and incisive policy will begin, which will mean that the sky will not fall in—it is a great reflection of a policy that the best thing you can say about it is that the sky will not fall in. When we are opposed to reform which we think will increase costs and impact on the ability of Australia to export our minerals at a time when we should be getting as much out as we can, you have the member for Wakefield comparing our position to those who opposed the abolition of slavery. It really does put the Labor Party's current problems into context. It is not surprising given the reaction we have seen to the very wise and appropriate announcement by the minister for immigration and the Minister for Resources and Energy last Friday and the counter reaction from some of their supporters in the union movement. That provides the context of the game that they will play.

The member for Grey in his very good contribution referred to a story which was released yesterday about the potential impact of this bill. If you look through the submissions these points are made by an overwhelming number of the submissions. By now you have seen what the submissions predict may happen, come into force. You have seen WWL, an international shipping line, announce, regrettably, that it is unable to commit to carriage of coastal cargo after 1 July because of fear and uncertainty about the red-tape costs and about the additional costs that this bill, if it were to be passed by the parliament, would put on this industry. You can have no starker example than a company announcing a month before 1 July that post 1 July, if this bill goes through, it will not be able to commit to continuing their operations in Australia. That is a genuine concern, and that is why we say that the amendment moved by the shadow minister for transport is an appropriate amendment, in order to move this bill off to the Productivity Commission for them to have a considered look at the potential impacts before this parliament goes ahead and passes this bill.

If you go through the submissions, there are some very important points. I referred at the beginning to the sugar industry, which relies very much on the coastal transportation of its product. I quote from Sugar Australia's submission:

In summary Sugar Australia ships about 300kta of raw sugar from North Queensland to its refinery at Yarraville Melbourne. This is carried today in licensed vessels which are internationally flagged. They will be subjected to the transitional arrangements and will end up as General License vessels under the proposed legislation. This will increase the costs of coastal shipping by 10-16% according to a study by Deloittes Access Economics1 and reduce business flexibility. As an internationally traded commodity, it is difficult or not possible in the majority of cases, to pass on any additional business costs. In this case it is likely that the cheapest supply chain option will be pursued which could involve importing raw sugar from Asia to Melbourne and exporting raws from North Queensland.

It goes on to say:

By way of example the additional cost arising from the application of the Fair Work Act to international container ships (there are no Australian flagged container ships trading east coast to west coast) resulted in a loss of almost 30% of the Perth sugar market to Australian producers that demand being supplied by Malaysian refined sugar.

So, if we talk about Aussie jobs, there are some good examples from Sugar Australia in its submission.

CSR Ltd says in their submission:

CSR is concerned by the potential cost increase, loss of flexibility and additional red tape that will occur as a result of this policy.

They also refer to the study by Deloittes:

This adds to recent freight cost increases and the prospect of importing raw material from Asia and substituting that for Australian sourced material. This adds to the burden of other costs being added to Australian manufacturing eg carbon tax, VEET charges in Victoria etc, not faced by international suppliers.

That policy which will mean that the sky will not fall in on 1 July, of course.

We also have the Minerals Council of Australia. They were lectured last night by the Prime Minister about how it may be hard for them but they just have to get over it and get on with it, and, 'Don't worry that we're putting additional pressures on you and making it harder for you to do business,' and making investment decisions in Australia harder. It is like the Olympic Dam decision in South Australia, which looks now, very sadly, like it will be delayed because of federal government policy. The Minerals Council says:

The Minerals Council of Australia is concerned that the ramifications of the final versions of the Bills have not been properly examined.

Thus, if you look at the amendment we are moving it should be supported. Let the Productivity Commission have a genuine look at this. It continues:

Removing the flexibility of the coastal trading licencing system to adapt to the shipping requirements of customers engaged in highly competitive markets may be counterproductive.

The Business Council of Australia has also expressed concerns about the additional red tape and costs associated. These are the people who use the service. They represent the businesses who know what the cost impact will be.

When there is a cost impact there is an impact on the ability of these businesses to employ Australians. That is the truth; that is the flow-through effect. There is an effect on our ability to compete, for our mining sector particularly. Take advantage of this one-off situation in the world, in our region, with this amazing growth! The government approaches the mining boom as if Australia is the only country that has resources. They approach it as if we are the only place in the world where China, India, Malaysia and the Asian developing countries can come to get the resources they need to ensure that development. Of course it is simply not true. It is a highly competitive industry and, if there is demand other countries will seek to supply.

We are seeing already Australia losing market share because of the cost impact of the decisions that this government is making. Jac Nasser, the chairman of BHP, made it perfectly clear just two weeks ago in a long speech where he said that international decisions about investment by that Australian company are now being put at risk in Australia. Tom Albanese from Rio Tinto said that now he gets asked regularly, 'Are you afraid that you are too Australia-exposed?' That is a shameful thing for an Australian executive to be asked, and it is because of the policies that this government is pursuing; whether those be the 'sky-not-falling' policy, the carbon tax, which will start on 1 July, or this policy, which will increase the costs of business and the ability of people to be able to do business in our country.

The key points in the Australian Dry Bulk Shipping Users' submission to the committee inquiry that has looked into this issue were:

The Government’s proposed Coastal Trading Bill 2012 should NOT be passed through the Federal Parliament until it has been properly scrutinised as to whether it is an economic and productivity reform as it:

It could not be clearer. It also says, as the shadow minister for transport has made very clear, that this should be referred to a Productivity Commission inquiry. Finally, the last submission I will refer to is that of AiG. Some on this side have criticised AiG for being too close to the Labor Party. There have been some changes in the management of the AiG and I am confident that may lead to some changes in approaches. They are even critical. They make the same points that this should be scrutinised by the Productivity Commission. It is important that is the case.

What says to us that this is a little deal with the MUA, the big donors to the Labor Party, when the MUA always says it is not? In the Financial Review today, you have the MUA—and I note they are here watching today to ensure the debate goes properly for them—saying that it has nothing to do with them seeking IR by stealth. Of course, it does not and that is why they saying it out loud!

This bill should not pass until it has gone through the Productivity Commission. It will add costs, it will impact on Australian jobs in manufacturing and mining. It is a bad piece of legislation. It continues the run of very bad legislation that this government moves and they should support the shadow transport minister's amendment. (Time expired)

Deborah O'Neill (Robertson, Australian Labor Party) Share this | Link to this | Hansard source

I note the comments of the member for Mayo. He says we have security issues, that we need this industry desperately to be revitalised. The fact is we carry 10 per cent of the entire world's seaborne trade. There are just 21 flagged vessels. We have four that operate internationally, down from 55 in the 90s. We actually do need to do this. A great productivity measure for this nation is getting this legislation through and bringing about the possibility for jobs and revitalisation of this industry.

These bills will bring shipping back to Australia and these bills absolutely reveal our Labor values: beliefs in our nation, beliefs in our people and beliefs that we can share and respond to the reality and opportunities that are here. The innovation of Australians is up for grabs today. We going to make it possible with this legislation. These bills will bring jobs back and opportunities to our shores.

I want to acknowledge the members of the MUA here and send a hello out to all of those current and former merchant seamen in the seat of Robertson. I particularly want to mention Seamus O'Reilly who is a stalwart supporter of the Labor Party and a great advocate for the union itself.

This government will not let this nation drift aimlessly into the future. We will plan for it, prepare for it and establish the conditions for prosperity for the many, not just the few. We have a great opportunity to rebuild our local shipping industry and with it the economic, environmental and security benefits. We are not without peers in this cause because, while the former Howard government was overseeing the decline in our own industry, around the world Germany, the UK, France, the Netherlands, Japan and South Korea all embarked on extensive and successful programs to rebuild their shipping industries. These countries that were bold and brave and innovative like this government have reaped the benefits of a strong shipping industry and it will be this Labor government that delivers the same benefits for Australia.

This suite of bills tackles the major hindrances that companies face when they are trying to trade in Australian coastal waters. They follow on from the work that this government has already done in protecting the rights of seafarers. We have achieved this through ensuring the Maritime Labour Convention applies to vessels entering Australian waters. This convention ensures that good working conditions are maintained on Australian ships and that the seafarers working on all other ships that enter Australian ports have good working conditions. So spurious arguments by those opposite that Australian wages on Australian ships will make this industry uncompetitive are just plain wrong. These bills level the playing field to ensure that Australians can compete with our neighbours in the Asia-Pacific in cost effectiveness and service delivery.

This is about reducing red tape, bringing back the incentives and creating industry, not just providing subsidies. This package will bring much-needed reform to tax laws around shipping. It will introduce a zero per cent tax rate exempting qualifying income from shipping from taxation. It will introduce accelerated depreciation arrangements for assets, cutting the time in half from 20 years to just 10 years, creating demand and encouraging the purchase of new assets. This is about rebuilding opportunity for people in this nation. It is a Labor piece of legislation. These are vital reforms. They provide incentives, they create demand and they encourage the purchase of new assets within the shipping industry. Businesses will also have the option to roll over relief for selected capital assets under this new suite of bills.

Importantly, this government will introduce tax exemptions for seafarers working overseas on qualifying vessels that are at sea for more than 90 days in a tax year. This significantly will remove disincentives that exist for companies employing Australians and will level the playing field for Australian flagships in the international employment market. This means jobs for Australians who want to be seafarers. I can think of many of the young men who I have taught on the Central Coast over the years imagining a life at sea, and we are going to bring that possibility to this nation. It is a very important part of the delivery of this legislation today.

The Gillard government will also diversify the Australian Shipping Register to encourage a growth in Australian flagships by establishing an Australian International Shipping Register to be paired with the reformed Australian General Shipping Register. This will make sure that the master and chief engineer are preferably Australian residents, while the balance of the crew may be foreign residents paid at internationally competitive terms and conditions of employment. Key elements of the register are access to the tax exemption and other tax incentives introduced in this legislation. The same environmental, safety and OH&S standards—and I know that that matters to the members in this chamber and the people that they represent—will apply to the AISR vessels as they apply to the general registered vessels, and a seafarers bargaining unit will be formed for the purposes of negotiating terms and conditions for seafarers on international voyages.

The Gillard Labor government sees strong shipping as part of a strong economy. We are proud that this package is the culmination of more than four years of consultation with the industry, unions and regulators. What do the others say? They say, 'Wait, let's have a Productivity Commission inquiry.' In fact, what they are saying is, 'Be afraid.' That is what we hear from them day in, day out. We say, 'Believe in Australia.' We say, 'Be bold.' We say, 'Be active, get out and make these things happen,' and that is what this legislation will do. It is a piece of enacting and enabling legislation.

We have seen recommendations from the House of Representatives inquiry unanimously supported from over 65 submissions. We have seen industry and unions come together to discuss the implementation in the Shipping Policy Advisory Group. We have received over 40 submissions on the discussion paper released in December 2010. The opposition continues the same old cry, 'No, no, no.' They are determined to oppose the chance for Australian ships with Australian workers to compete on a level playing field against foreign ships to carry Australian goods on the Australian coast. During their last term of government, when the coalition scrapped the capital grants assistance, they scrapped accelerated depreciation and they scrapped, with it, the Australian shipping industry. All the while, the Howard government tripled the number of trading permits to foreign flagged crews from fewer than 1,000 in 1999 to more than 3,000 by 2008. And they stand here and make the bleating noise of 'no' when that is what they actually did: take away the Australian industry. What the Liberals and Nationals took away, the Labor Party will rebuild.

However, this goes beyond just economic arguments. A strong shipping industry has vital security repercussions for Australia. These include the opportunities available for transport of nationally important or sensitive goods, the capability increases of a heavy shipping fleet for defence purposes and, at its most basic level, the economic value and strategic importance of the commodities carried by the ships. Similarly, steel, aluminium and petroleum account for a large percentage of Australia's coastal cargo movements and have important strategic value. Should we ever face a defence crisis, it will be crucial to maintain a supply network of our own resources to protect our economic activity. Having a robust Australian flagged fleet will ensure that we are able to maintain economic and manufacturing supply chains during times of conflict both here and abroad. These are important considerations in the national interest.

The maintenance and logistics of our resource supply chains are important considerations as a source of our national wealth. Our resources are often in remote and inaccessible locations, making coastal shipping a vital link in the chain when transporting large quantities of goods around Australia and to our neighbours. It is important to realise that the loss of one ship or one port will have great repercussions throughout our economy. We as a government appreciate the importance of an Australian coastal shipping industry and the major contribution to our security and economic wellbeing that it makes. Other modes of transport are helpful but they do not provide a serious alternative to coastal shipping for the commodities moving by sea around our shores.

To facilitate mode switching on a large scale, an enormous expansion of interstate road, rail and pipeline infrastructure would be required—and we can be absolutely certain that those opposite would never be investing in that. For the most part we think our solution is a very, very helpful one for this country. So, instead, we offer this suite of legislation: a practical, enabling and visionary set of bills that breathe life into the current cadaver-like state of the Australian shipping industry. We stand ready to reinvigorate a vital industry that enhances our status, our security, our business capacity and interest, and it will create jobs, sounding a message of new jobs through the foghorn of the good ship Labor.

As usual, those with a miserly view of this country, those who oppose everything, who fear the great failure of this nation on a daily basis—those opposite, those of the Liberal-National Party coalition—do one thing: they oppose and say no. For the young, the free, those who understand that this great country is indeed girt by sea, our side offers a transformative suite of shipping legislation. I commend the bill to the House and urge its passage at the earliest opportunity.

Steve Irons (Swan, Liberal Party) Share this | Link to this | Hansard source

I rise to speak in this cognate debate on the Shipping Reform (Tax Incentives) Bill 2012, the Shipping Registration Amendment (Australian International Shipping Register) Bill 2012, the Coastal Trading (Revitalising Australian Shipping) Bill 2012, the Coastal Trading (Revitalising Australian Shipping) (Consequential Amendments and Transitional Provisions) Bill 2012 and the Tax Laws Amendment (Shipping Reform) Bill 2012, which are before the House.

I take a particular interest in the legislation because my electorate of Swan contains Perth's major freight and distribution hubs in Kewdale and Welshpool, and this area has a symbiotic relationship with the shipping industry. The freight network must be linked up and operating well to take advantage of the boom and reduce cost-of-living pressures in Perth which are higher because of the distance goods have to travel to get to the second most isolated capital city in the world. It is therefore important that steps are taken to help revitalise the shipping industry. However, one of the major problems with this legislation is that it is projected to increase shipping costs and freight rates by up to 16 per cent, which will be passed on to the consumers and will be an additional cost-of-living impost on top of the carbon tax for my constituents of Swan. I will go into some more detail on this later in my contribution.

I know that the Leader of the Opposition, Tony Abbott, understands the importance of the hubs in Kewdale and Welshpool as he has visited the area on a number of occasions since the last election, speaking to industry and transport services. By the way, I can say to the government members that the carbon tax has not gone down very well at all in this freight and distribution hub among the thousands of workers employed or the industry leaders. In fact, Tony Abbott was cheered by the workers on the shop floor during one particular visit that we did.

For a seafaring nation with a rich seafaring history, one would have thought that Australia would have a more prosperous shipping industry. However, while Australia has the fourth largest shipping task in the world, there has been a decline in the number of Australian registered ships over the last decade. In fact, there are currently only 22 Australian registered ships and, with Australia's freight task set to double by 2020, and travel along the eastern seaboard, this decline creates a certain amount of pause for thought. From Perth you can see the boats queuing offshore near Cottesloe all day and it is remarkable to think that across the country there are only 22 registered Australian ships and only four Australian flagged vessels participating solely in the international trade which, with sea transport carrying over 99 per cent of international cargo by weight and about 75 per cent by value, seems for Australia to be strikingly low.

Perhaps part of the issue facing the industry is that, traditionally, the Australian shipping industry has been uncompetitive internationally and the higher cost of running an Australian vessel as opposed to a foreign vessel has been prohibitive. It is in this context that in recent times there have been a number of calls to address this situation. While the idea of shipping reform has been around for many years and a number of inquiries and reports have occurred, these bills today are the government's attempt at addressing the situation.

In essence, the five bills before the House today are designed to provide a regulatory framework for coastal trading in Australia which will stimulate growth in the number of Australian ships on our coast and maximise the use of Australian flagged vessels. Yet the comments and submissions received suggest that there are a number of groups with serious concerns about the package—concerns which are wide-ranging but centred around the belief that these bills cannot meet the objective of revitalising the shipping industry and in fact may hasten its decline. I think that, after all the disasters and stuff-ups that this government has presided over, there would not be many members of the public who would be surprised that the Gillard government could create legislation that would do precisely the opposite of what it was intended to do. We in the coalition will do all we can to make the government see sense on these bills. The legislation has been rushed and proper consideration has therefore not been able to be given to the major issues in this bill. For example, the first draft of the Coastal Trading (Revitalising Australian Shipping) Bill that was released in December required a major redraft, along with the other bills comprising the total package, yet only a few weeks of consultation were undertaken before the package was introduced into parliament. When the coalition referred the bills to the House committee for scrutiny, the bills were given only a brief consideration and sent back with a dissenting report.

With the concerns that have been raised by the industry, it is clear that some scrutiny is needed. Given the reluctance of the government to use the committees for this purpose, I agree with the suggestion that has been made for a Productivity Commission investigation. This suggestion of a referral to the Productivity Commission was made, in part, because of the regulatory impact statement deficiencies, with customers and industry participants wanting to know basic details about the financial implications of the package—which you would have thought the government would have provided prior to introducing the legislation into parliament.

Another reason for a potential referral is the unfinished compact between the shippers and the unions which remains uncompleted, despite Minister Albanese having said it is vital for productivity. At this point, we do not know what, if any, productivity gains are likely to be made from this package of bills. As the coalition dissenting report notes, any improvements in productivity cannot be guaranteed, because they 'depend on yet to be concluded negotiations with notoriously militant unions such as the MUA'.

In asking the parliament to pass these bills, the government is effectively saying: 'Trust us. Trust us to keep our word and to confidently deliver a negotiated result.' I do not think there is anyone left in Australia who has any level of trust in the government—and the coalition will certainly not be affording the government this trust.

Sid Sidebottom (Braddon, Australian Labor Party, Parliamentary Secretary for Agriculture, Fisheries and Forestry) Share this | Link to this | Hansard source

Come on, come on!

Steve Irons (Swan, Liberal Party) Share this | Link to this | Hansard source

I hear the member from Tasmania interjecting. I would support moves for a referral to the Productivity Commission, which I know the Independents have indicated their support for. However, in the absence of any proposal to adjourn the debate and refer the matter to the Productivity Commission for further attention, the coalition will be moving a series of amendments. Today, I want to go to several of the specific problems with the legislation raised by concerned shipping industry groups, but I want first to make a few general points about the package of bills we are debating in the chamber this morning.

First, I would point out that this package is being billed by the government as a 'regulatory framework to stimulate growth' yet it is on this point that the government often falls down in its handling of industries. It is difficult to stimulate growth through the new regulations and, as I will discuss in a moment, it is the regulatory aspect of this package that has created many of the issues raised by those concerned. As Caltex has said in relation to the Coastal Trading (Revitalising Australian Shipping) Bill 2012:

The shipping reform package, in particular the Bill, will increase red tape at a time when Commonwealth and state governments, together with business, are seeking ways to reduce it. The Bill contains clear examples of unnecessary and unproductive regulatory requirements and therefore should be subjected to close scrutiny to remove all regulation not essential to the objects of the Act and the broader national objective of improving business productivity through greater efficiency.

The member for Grey and the member for Mayo have already spoken about an article in Marine Publications Lloyd's List yesterday which had the heading 'Cabotage concerns leave WWL with dilemma'. That article said:

… [WW] Logistics says it will not commit to carrying coastal cargo until new cabotage laws are finalised.

In a statement released this morning, WWL said it was “regrettably announcing” it was unable to commit to the carriage of coastal cargo after July 1.

"The new legislation ‘Coastal Trading Bill 2012’ shows there will be substantial changes to the way foreign carriers apply for and be granted permission to carry coastal cargo around Australia", the company said in a press release.

Based on these proposed changes and new requirements it may become very difficult for WWL to continue participating in the coastal trade, according to the new laws that are set to come into effect from 1 July. However final recommendations from the Senate committee are unlikely to be finished until June 19.

"This will give only 11 days notice before the planned legislation enactment," the company said, "and there are also other aspects of the legislation that are still not known."

This, again, is typical of this government in all the things they become involved with: not getting the detail out to industry or out to stakeholders.

While the idea of shipping reform has been around for many years, and a number of inquiries and reports have occurred, the specific details of the legislation have only recently been announced. The minister announced the broad outline of the shipping reform package in September last year and, at the same time, announced that the start date would be brought forward by 12 months so that the new scheme would commence on 1 July 2012. This reminds me of the National Disability Insurance Scheme, which has bipartisan support in the House.

After the budget, commentators were critical of the government for not sticking to the recommended time frame for the implementation of the package—a time frame that had been recommended by the Productivity Commission. By rushing the announcement in the budget, the process, which is important in the long term for getting this policy right, has been disrupted. It may be a hangover from the chaotic Kevin 07 days, but there still seems to be an element of disorder in how this government approaches major changes.

In addition to these general points, there are a couple of specific areas that should be the focus of attention here. The most significant one is the new licensing system and the red tape and increased costs associated with it. The licensing system proposed in the Coastal Trading (Revitalising Australian Shipping) Bill 2012 establishes a completely new, tripartite licence system consisting of: (1) a general licence, which provides unrestricted access to engage in coastal trading in Australian waters over 5 years; (2) a temporary licence, which provides limited access to engage in coastal trading over a 12-month period for foreign or registered vessels; and (3) an emergency licence, which is designed to cover emergencies such as natural disasters.

The regulations surrounding the temporary licence in particular just do not make sense. According to the explanatory memorandum to the Coastal Trading (Revitalising Australian Shipping) Bill, a temporary licence will be issued only for voyages where required information is known, including expected loading dates, loading and discharge ports, and cargo type and volumes. However, as Shipping Australia has said in a statement, it is impossible to forecast the movement of such cargoes over a 12-month period in terms of expected loading dates, kinds of volume of cargo, type of vessel and the ports of loading and unloading of cargo.

It just makes no sense to create a temporary licence that requires a 12-month plan. And if a 12-month plan is submitted and needs to be modified—which one would have thought a likely scenario—the shipping company would be required to add a minimum of five extra voyages. This for a start is an arbitrary number, but it will add red tape and reduce flexibility of Australia's shipping industry, the opposite of what I thought the bills were supposed to be doing. On a further point, to apply for a temporary licence in the first place, a minimum of five voyages is required, which inevitably discriminates against smaller coast shippers—another parallel here, this time to the mining tax deal that the Prime Minister did with the big miners at the expense of the small miners. These patterns just keep repeating and repeating in this parliament, and I appeal to the Independents: this is your chance to break the pattern and make sure this poorly thought out bill does not progress. It is this discrimination that in part has caused the projected 16 per cent increase in shipping and freight rates associated with this legislation that has been modelled by Deloitte Access Economics. Due to the five voyages a year requirement, smaller companies will be squeezed out of the market, reducing competition. Combined with the cost implications of the red tape in the new licensing scheme, this will see costs rise.

There are a few positive measures that are included in the tax incentives and shipping reform bills including a zero company tax rate for Australian shipping companies and provision for an accelerated depreciation of vessels via a cap of 10 years to the effective life of those vessels, down from 20 years. I note there are also measures for rollover relief from income tax on the sale of a vessel where a replacement ship is purchased by the end of two years, and an employer refundable tax offset in relation to seafarers and exemption from royalty withholding tax for payments made for the lease of shipping vessels by Australian resident companies. These measures would cost $254 million over the forward estimates and would bring taxation of the shipping industry in Australia more into line with international practice. While we are broadly supportive of these measures, it is important to note that there are a couple of issues, such as the fact that franked dividends are not permissible under the system and profits cannot be transferred overseas, which will provide no incentive for global companies to register on the AISR to take advantage of taxation changes. But, unfortunately, these positive measures are subsumed in this cognate debate and associated with the many flaws in the bill which cannot be separated.

To conclude, the idea of shipping reform has been around for many years, and a number of inquiries and reports have been undertaken in this time due to the diminished state of the coastal trading industry in Australia. These bills are the government's best attempt to deal with these issues but unfortunately, in their present form, I think we have to conclude that they would do more harm than good. The legislation represents a regulatory system that is meant to promote growth but instead creates red tape. There are more regulations to add to over 18,000 regulations, with only 86 repealed since the Labor Party came to power, despite their one-in one-out promise. This is not just a broken promise, but an obliterated promise. The regulations are projected to increase shipping costs by 16 per cent and will have damaging cost-of-living impacts for my constituents.

We support reform to the industry, and some elements such as tax incentives and accelerated depreciation rates. But these are overshadowed by the regulatory approach and chaotic approach the government has taken. Groups believe that in its current form this legislation will not achieve the objective of revitalising the Australian shipping industry but may, in fact, hasten the decline of the industry. That is why the coalition cannot support the passage of the legislation in its current form. Careful consideration in the Productivity Commission is the way to go, and I call on the Independents to meet their commitment to do the right thing. (Time expired)

Tony Zappia (Makin, Australian Labor Party) Share this | Link to this | Hansard source

I am going to speak briefly in support of the shipping reform bills, because I believe this is good legislation and much overdue legislation. This legislation delivers on commitments that Labor made to the Australian people in both the 2007 and 2010 election campaigns.

In a country where 99.9 per cent of our trade is moved by ships and shipping tonnage is increasing, we simultaneously are seeing the demise and—the way we are heading—the ultimate wipe-out of Australia's shipping industry. These bills replace outdated and irrelevant shipping laws, provide consistency of shipping laws across Australia, improve safety for Australian seafarers and establish the national marine safety regulator, consistent with national regulators being established for the road and rail transport sectors. The bills also encourage investment in Australian shipping through the Australian tax system. The consistency of shipping laws across Australia, along with a single national marine safety regulator, will lead to a reduction of red tape and productivity benefits worth an estimated $30 billion over 20 years.

Shipping is critical for international transport; and for Australia, being an island country, that is even more the case. More than 99 per cent of Australia's international trade is carried by ships, yet only 0.5 per cent of our exports are carried on Australian flagged vessels. That will be even more the case in the years ahead as exports of Australian resources grow, with the Australian freight task expected to triple by 2050.

Shipping, however, has not been without its problems or without its risks. Environmental disasters both within and outside Australian waters are becoming all too frequent. By all accounts those disasters in most cases arise because shipping operators, in order to cut costs, either use unseaworthy or poorly maintained vessels, employ untrained crews, employ insufficient crews with crews having to work unreasonably long hours or do not comply with shipping standards, knowing full well that there are poor compliance regimes in place in many parts of the world. In some cases it is a combination of all these factors. This legislation seeks to address those matters. It also seeks to ensure that workers employed in the shipping industry are provided with the level of protection that our industrial relations laws provide to other Australian workers.

Over recent decades we have seen the decline of Australia's shipping industry and the growth of foreign owned and operated shipping lines. In just over a decade—as other speakers have pointed out in the House time and time again—the number of Australian flagged ships has more than halved, falling from 55 ships in 1996 to about 21 today. Much of that change relates to the Australian domestic shipping trade where only three or four—I am not sure of the latest figure—Australian flagged ships are operating international trade. Foreign owned and operated vessels not only have taken over almost all of Australia's international shipping work but today carry about one-third of our domestic shipping work as well. About 1,000 seafarers' jobs having been lost to overseas operators over the last decade, and with the lost jobs come lost tax revenue and a worsening of Australia's balance of payments position.

Today Australia has an estimated international sea freight net debt of about $7.8 billion. We have an Australian trading fleet with an average age of 19 years, compared to a global average age of 12 years. The Shipping Reform (Tax Incentives) Bill 2012 and the Tax Laws Amendment (Shipping Reform) Bill 2012 are specifically intended to reverse this decline in Australian shipping investment by making tax laws applicable to Australia's shipping industry comparable to those applying in other countries. Furthermore, with Australia's shipping activity being the fourth largest in the world yet with Australian flagged ships carrying only 0.5 per cent of the cargo, there is an obvious opportunity for Australia to value-add to our resources exports by increasing our shipping operations. Why should overseas flagged shipping operators and not Australian ships carry Australian resources? This is a major industry with huge existing and future business potential which Australia is well placed to capitalise from. Yet, we have been sitting back and watching the opportunities presented by Australia's resources boom sail past us.

In too many places across the world the shipping industry continues to crew ships with what is effectively slave labour. Ships are using unskilled crews to work on unsafe ships, with no working rights and working under dreadful conditions with little or no pay. Other members in this place have referred to the 'ships of shame' debacle. Regrettably, that is what members opposite are prepared to turn a blind eye to by opposing this legislation under the guise that it will add to shipping costs for Australians. The exploitation of any worker should be condemned, and fair working conditions should apply to all people regardless of which country they originate from. I very much doubt that any fair-minded Australian would want to profit or benefit from the exploitation of others. Furthermore, I have seen no evidence that money saved by exploiting ship crews is passed on to the exporters, the importers or the consumers. The fact, however, is that a modern shipping operation with modern vessels and well-skilled crews with good working conditions can be competitive, and that is what this legislation seeks to achieve.

The House of Representatives Standing Committee on Infrastructure, Transport, Regional Development and Local Government presented a unanimous report on this matter in October 2008. Each of the key recommendations of that report has either been implemented by the government or is under consideration. Those recommendations, in conjunction with this legislation, are designed to encourage investment in Australian shipping by having a range of tax benefits which in turn will level the playing field with Australia's international competitors. The Australian Shipowners Association has stated that the tax concessions may trigger up to $4 billion in investment.

The opposition and others opposed to these reforms have made several claims and assumptions which are simply not correct. Some of those assertions arise from a report prepared by Deloitte Access Economics. The fact is that that report is factually incorrect with regard to the operation of the new licensing system. That in turn leads to several incorrect assumptions of likely economic impacts. Temporary licences will not be phased out in five years, nor will it be the case that all coastal cargo will be carried on an Australian licensed vessel. There are no plans to restrict the number of foreign vessels in Australian waters, and foreign vessels operating on Australia's coast are already required to pay Australian wages.

There are other objections being raised, which are also based on incorrect facts and assumptions, and I do not intend to address each of them individually. What is clear, however, is that without these reforms our shipping industry will slowly disappear. That may suit some members opposite and some industry sectors, but it is not in the national interest. This legislation will revive the Australian shipping industry, and I take this opportunity to commend the minister for the work he has done in bringing this legislation to the House, and I also commend the legislation to the House.

Don Randall (Canning, Liberal Party, Shadow Parliamentary Secretary for Local Government) Share this | Link to this | Hansard source

I am pleased to speak to the cognate debate on the Shipping Reform (Tax Incentives) Bill 2012 and other bills. Australia's shipping industry must play a more important role in our freight network. Australia has the fourth largest shipping task in the world, and sea transport carries over 99 per cent of international cargo by weight and about 75 per cent by value. Coastal shipping carries around one-quarter of interstate trade, and it is true that there has been a decline in the number of Australian registered ships over the last decade. Currently there are only 22 Australian registered ships.

With our freight task set to double by 2020 and treble along the eastern seaboard, coastal shipping must play a greater role. To that point I will mention an example. In Perth there has been an additional problem of overcrowding in the Fremantle port. At any one time between two and 13 ships might be waiting to enter the port. Those ships have to pay demurrage for the time spent waiting. For example, it cost a major Perth construction company, BGC, almost $1.5 million last year in demurrage. Fremantle port is also one of the most expensive for off-loading cargo. Again, for example, it charges $16 a tonne to off-load gypsum, which goes to make plasterboard, when the same work could be done for $8 a tonne at the Esperance port, $5 a tonne in Flinders in South Australia, and the international comparison is SGD$1.50 a tonne in Singapore.

These bills comprise the shipping reform package and they are designed to provide a regulatory framework for coastal trading in Australia, which will stimulate growth in the number of Australian ships on the coast and maximise the use of the Australian flagged vessels. That is its intention. The package attempts to achieve these objectives by introducing a variety of financial incentives for Australian flagged ships including company and income tax changes and accelerated depreciation for these ships. It is also creating a second register of Australian ships to be known as the Australian International Shipping Register. This is available to ships which meet the eligibility criteria, which include the requirement to have two senior Australian officers on board. Finally, the package abolishes part 4 of the Navigation Act 1912 and in doing so replaces the current permit and licence system with a new three-tiered licence system.

It should be noted that the bills do not address the serious problem of the cost and availability of ports that is also pushing up the cost of goods, as I said, in ports like Fremantle in Western Australia. The Minister for Infrastructure and Transport, Anthony Albanese, in announcing this package in September last year, said:

What we are doing is creating an economic and regulatory environment that will revitalise and sustain growth and productivity in our shipping industry.

I understand the coalition members of the House were not convinced that the bills before this House would revitalise the Australian shipping industry. I heard the member from Swan who outlined that very well. Many industry participants are also not convinced. The first objective listed in clause 3(1) of the Coastal Trading Bill is that the regulatory framework promotes a viable shipping industry that contributes to the broader Australian economy. In its submission to the House, Shipping Australia say, 'Some of the provisions, at least, in the Coastal Trading Bill, 2012 are confusing and, in our view, require substantial amendment to meet the effects of the bill.' Tom Pinder from Australian Coastal Shipping, which is involved in the east-west containerised coastal trading, says:

The proposed legislation, as it relates to coastal container shipping, can only exacerbate this situation and will not result in any Australian flagged/registered ships valiantly taking up the challenge of carrying containers on the principal coast route, namely, east coast to west coast.

That has been confirmed, which the member for Swan also referred to, in an article, which is headed 'Cabotage concerns leave WWL with dilemma'. The 30 May article, in Lloyd's List Australia, goes on:

Ro-ro operator Wallenius Wilhelmsen Logistics says it will not commit to carrying coastal cargo until new cabotage laws are finalised.

And further, 'Until this is finalised and the confusion taken away, it is going to be carefully considering its coastal shipping operations around Australia.' That is very concerning. Tom Pinder said, 'A continuation down the path of a one-size-fits-all policy would result eventually in all of the current east-west freight task being diverted to the inadequate infrastructure of road and rail with hugely increased costs and a totally detrimental effect on the carbon footprint of this country.'

The Dry Bulk Shipping Users, which represent 60 per cent of the customers of coastal trade, are worried about the impact that the shipping reform package will have on the Australian manufacturing industry. The department has done no modelling on how many ships will become Australian flagged as a result of the reform package. The department states:

Given the range of consideration that the shipping investors and companies may have regard to in assessing where vessels will be registered or entered into service it is not appropriate for the Department to speculate on the number of vessels that may take the opportunities afforded by the new investment platform.

A number of submissions to the House and Senate committee inquiries requested that a Productivity Commission inquiry be held to determine what impact this complex regulatory change will have on the Australian coastal shipping industry, the cost of freight and the costs to coastal shipping customers. As we know, the government do not like Productivity Commission inquiries. We saw that with the NBN and a whole range of other issues where, when they just want to ram something through, they do it at their own behest and will not go anywhere near a Productivity Commission inquiry in case it comes up with results they do not like.

Minister Albanese has not been able to put a figure on how much more it will cost to ship freight around our coastline under this new regime. But according to Deloitte these changes will inflict a $466 million burden on our economy over the next decade, with freight charges to soar to 16 per cent and with 570 full-time Australian jobs tossed overboard. We heard the previous speaker discrediting the Deloitte contribution because he did not like what it said.

Getting back to the Western Australian coastal shipping exercise, given that this bill is unlikely to meet any of its objectives we should take time to consider alternatives that might revitalise our shipping industry and its ability to ply its trade. A good example is the proposed James Point Port, a private port to be established in Perth around Kwinana under an agreement signed in 2000 by the state Liberal government under Richard Court. This private port would be established by James Point Pty Ltd at no cost to the taxpayer, as it would be built and maintained wholly by the private sector. It will provide an alternative point of entry and thus address the problem of the overcrowded Fremantle port where, at any one time, more than 10 ships can be waiting to enter and, as I said earlier, reducing demurrage costs for those shipping goods into Perth via this port. The private port could also offload cargo at a cheaper rate than the expensive rate of Fremantle port, as has already been said, and the cost of unloading cargo in Fremantle is significantly higher than at a number of other ports around Australia and in South-East Asia.

The Fremantle Port Authority has reportedly expressed concern about the impact that a private port would have on its profitability. But looking at its charge structure—as I said, $16 a tonne for gypsum, compared to $8 in other WA ports—it is clear it has some room to move to adjust its prices. Competition would benefit customers overall. Why is the Fremantle Port Authority concerned about competition? We know that competition ultimately brings down prices. The Fremantle Port has been the site of extensive industrial action over the years. Two strikes have occurred in the last six months alone, one in December 2011 and another in March 2012. The strike last December affected around 34 shipping movements. Hold-ups such as these strikes disrupt the operations of the port and worsen the existing problems related to overcrowding. About $26 billion worth of trade goes through Fremantle port every year, which equates to $3 million worth of trade every hour of the day. This puts into context the very significant impacts of even a one-day stoppage.

There is also a flow-on effect from any disruption to work at this port. Ports Australia have said:

… there will be flow on impacts for the whole of the transport chain and the backlog resulting from the delays to shipping movements which in turn adversely affects the ability of shipping lines to meet schedules in other Australian and international ports. Such disruption will also further erode our international reputation as a reliable supplier.

When costs for hold-ups are related to strikes and demurrage costs, and high offloading costs are incurred, these are passed on directly to WA consumers in the form of more expensive goods. This affects everything from the cost of clothing to construction, as well as the price of an average Japanese produced car, for example, which is offloaded at the port. The James Point Port would be a much-needed alternative to entering via Fremantle. It would take the pressure off this crowded port. It would offer competition, as I have said, and would go some way towards reducing offloading costs, and it would help reduce the impact of strikes and disruptions to the transport chain.

However, the WA government is yet to follow through on its agreement, as it has not even facilitated the sale of the land and adjacent land by LandCorp. I consider this to be an excellent example of the type of measure that will need to be taken to improve the shipping industry within Australia. To me, it beggars belief that the Western Australian Premier, Colin Barnett, who I think is doing a good job, is intransigent and seems to have a mental block on this issue, because he actively obstructs the BGC company in its willingness to build this alternative port. As part of this package of legislation, the tax incentives bill that our government will introduce a zero tax rate for Australian shipping companies. We are introducing provisions for: accelerated depreciation of vessels through a cap of 10 years, down from 20 years, to the effective life of the ship; roll-over tax relief on the sale of shipping vessels; employer refundable tax offsets in relation to seafarers; and exemptions from royalty withholding tax for payments made for the lease of shipping vessels. We are also introducing a generous income tax exemption for core shipping activities, allowing flexibility and increased competitiveness on the global stage.

As the Australian Financial Review noted on 8 March 2012, the opposition were initially behind our recommended tax changes in 2008, but in 2012 have turned their backs on this important measure. It is a shame that the opposition do not support these tax incentives; it really does seem that there is not a tax cut that they would not say no to.

The Australian Shipowners Association has welcomed these bills, saying that the legislation will level the playing field. The association, which represents BlueScope Steel, Caltex Australia, Rio Tinto Marine, BP Shipping, Newcastle Port Corporation, Toll Marine Logistics and ANL Container Lines, has estimated that these tax changes could trigger up to $4 billion worth of investment as local shipowners look to add to the 21 Australian operated ships. This is investment into Australia, investment into local industry and investment into local job creation. With almost 800,000 jobs created by this federal Labor government, we know that to continue this employment growth we must keep introducing the necessary reforms to sustain our competitiveness, sustain our local industry and retain the capacity to build diversity in our economy.

Other measures in these bills include the shipping registration amendment component, which will establish a new Australian International Shipping Register and Australian General Shipping Register. The bill sets out the operation, administration and associated employment conditions. This new national body will oversee our participation in international trade, facilitate growth within the local industry and promote the viability and enhancement of our maritime skills base. Importantly, the bill will provide employment terms and conditions that are consistent with the ILO's Maritime Labour Convention. The bill will set employment conditions in accordance with the Maritime Labour Convention and other relevant ILO treaties to which Australia is a signatory. I welcome that measure.

In April this year, the vessel MCP Kopenhagen was floating off the coast of Newcastle, temporarily storing 3,000 tonnes of ammonium nitrate for chemical company Orica to service the region's mines. By all accounts, the conditions for the Filipino seafarers aboard were abysmal. I have boarded flag of convenience ships in the port of Newcastle in the past, with Dean Summers from the ITF, and on several occasions I expressed my concerns regarding the management of dangerous cargoes as well as conditions on ships. I know that when our local MUA judges a ship or the welfare of its crew to be substandard then action does have to be taken. I am pleased that in this case the shipowners came through and signed an agreement with the International Transport Workers Federation, ensuring the workers' pay rise and that their wellbeing would be maintained on board.

But we must ask: why does it always have to come to a point where an inspector has to intervene and board a ship? Quality standards and conditions should be made a priority around the clock, but what we continue to see is a quest to keep prices down by neglecting responsibilities to crews, to safe practice and to the maintenance of an acceptable condition of ships. The stronger shipping bills will certainly go a long way towards addressing these concerns, concerns that the MUA has had the integrity to keep raising with governments for many years.

I cannot mention 'ships of shame' without acknowledging the former member for Shortland and minister for transport under the Hawke government, the Hon. Peter Morris, who, I am pleased to report to the House, was awarded an Order of Australia Medal this year. Peter chaired the International Commission on Shipping and headed the Ships of shame inquiry in the 1990s, an inquiry that found significant problems occurring within the maritime industry—from unseaworthy ships to ships being operated by seafarers with false qualifications. It was a very well deserved award. Peter is also the President of the Newcastle Maritime Centre, which this year commemorates the 70th anniversary of the Newcastle submarine attack, which saw a Japanese assault on merchant ships within the port, as well as the anniversary of the sinking of the Iron Chieftain on 3 June 1942, killing 12 crew members. The Iron Chieftain was one of the big iron ships of BHP, sailing from Newcastle to Whyalla. BHP's second ship, the Iron Crown, was also attacked the following day, with only five of the ship's 43 crew surviving. Those were the days when Australian merchant mariners prevailed, and they worked hard for our nation during times of peace and times of conflict. Sadly, you can count the iron fleet on one hand today.

I would also like to mention to the House that the Merchant Mariners Memorial Service will be held in Newcastle's foreshore park on 2 June, this coming weekend, to commemorate the most invaluable contributions made by our merchant mariners and the waterside workers who supported them.

Other measures in the bill include the three-tier licensing system which will increase efficiency within our national shipping system. A general licence for general register vessels will provide unrestricted access to engage in coastal trading within our waters. A temporary licence will provide access to coastal trading, limited in time and voyages, authorised by this licence. Emergency licences will also provide access to Australian waters for coastal trading purposes, with such licences granted within three business days for emergency situations such as natural disasters. We also recognise that change cannot happen overnight, and this legislation puts in place transitional arrangements through a transitional general licence, which will authorise foreign flagged ships operating under existing licences to continue their operations for up to five years. It is fair legislation and it certainly carries through on our belief that if you are working in Australian waters, you should have Australian regulation on your side.

The MUA's Paddy Crumlin says these changes will be a vital economic boost, stating in the Financial Review on 10 September 2011: 'It will be massive.' Citing London as an example of a successful shipping industry, he said: 'It's got 500 ships on its register. It's got no iron ore, no coal, no LNG.' And that is very true. He is absolutely correct. Why shouldn't Australia take advantage of its resources, of its capacity, of it strengths, to support our local industry and our primary resource industries with local ships, local jobs and fair working conditions? This is a Labor package that has been developed with no half measures. It will bring good news for our local shipping, keep our local industry afloat and deliver prosperity in Australia's maritime sector for many years to come. In conclusion, I note the AMWU's video 'Aussie Shipbuilders' Message to Clive Palmer'. I recommend that everyone has a look at it. It is certainly doing the rounds online and in my city. It features Newcastle's Forgacs, who, of course, build ships. We still do build ships, Mr Palmer, and now we have a real change to make sure we can build the shipping industry of the future. I commend the bills to the House.

Bob Katter (Kennedy, Independent) Share this | Link to this | Hansard source

This is one of the very few times in my 17 or 18 years in this place that I have been able to get up and actually praise a minister and an initiative. For the first time in 18 years there is actually a minister moving to protect Australian industry. When we use the word 'protection' in this place, we are looked at as some sort of foreign insect that has invaded Australia. Once upon a time, we were very proud to be able to say that we believed in seeing that our industries were protected.

I will give you an idea of what other countries do in respect of such issues as this. I represent what may be the biggest beef-producing area in Australia. Six thousand tonnes of beef—which may be 12,000 cattle—is all that is allowed into the European Union. So do not let the EU preach to us about free markets. They are the most protected market on earth. Do not let China preach to us about free trade. Not one single kilogram of Australian beef is allowed into China, which has the biggest population on earth. Do not let the Brazilians talk to us about free markets. The Brazilians simply took all the debt of their sugar industry—$6 billion—and wrote it off. The government took over their debt. The farmers owe no debt, the millers owe no debt and the people of Brazil have a debt of $6 billion. They did not stop there. They then said the industry had to be profitable. How do you make it profitable? Ethanol. They said: 'We've got dirty cities. Listen to us because this will clean up our cities.' Of course, ethanol gave them $440 a tonne for their sugar whereas the world price was $270 a tonne. As for the United States, in shipping, if your ship's hull was not been built in the United States you do not get into the United States.

That is free trade. Every other country proudly waves a flag that says: 'Don't come here, Buster Brown! We protect our people.' This government and the last government did not protect their people. But today we are actually seeing a minister—I do not know how he has got away with it, but God bless him; and I hope he replicates it—bravely saying, 'Yes, I believe that we should not send our champion into the arena with just a sword.' But every other minister who has sat here since I have been a member of parliament has said that we should send our champion into the arena with just a sword—in the Keating ministry, in the Howard ministry and, I regret to say, in the current ministry. Every single one of them has said: 'No, you don't go into that arena with a helmet and a shield. You go down there with just a sword.' Our champion says: 'Hold on a minute, mate! The other bloke has got a shield and a helmet.' They say, 'If you fight unprotected, without the shield and the helmet, it will make you tough.' Our champion says: 'Make me tough, mate? It's going to make me dead!'

That is what it is going to do. But no-one here can see that. They constantly come in here and preach to us about the marvels of free trade and removing all protection. Well, let us have a look at the marvellous outcomes. Cattle numbers are down by 30 per cent. Wool, our greatest industry—in 1990 it was the biggest export earner for this country—is down by 60 per cent. It will never come back. It was destroyed completely by Mr Keating's free-market policy. The sugar policy is down by 60 per cent, thanks to the free-market policies of the Howard government. They were entirely responsible for the crash in the sugar industry. And there has been the reluctance of successive governments to go into ethanol—which, I might add, would deliver cheaper petrol to us as well. But let me focus on agriculture. Cattle is down 25 per cent—I said 30 per cent before, but it is actually 25 per cent. Sugar is down by 30 per cent. The dairy herd is down by 30 per cent. The sheep herd is down by 60 per cent. Within three years this country will be a net importer of food, thanks to these stupid free-market policies.

We can say that Mr Albanese is right and all the other governments and ministers in recent Australia history were wrong. But let us compare Mr Albanese's performance with that of the rest of the world. I mean, no country on earth does anything like free trading—absolutely nothing remotely like it. To show the contrast: with the ideological approaches of the LNP-ALP junta, which runs Australia and every state in Australia, within three years this nation will be a net importer of food. As for our industrial and manufacturing base, it has been completely destroyed. We do not produce an electric motor in this country. We do not produce a motor car tyre in this country. Yes, I am well aware of the doctrine of comparative advantage. I did go to university and I did do a doctorate on comparative advantage. But not a single country on earth subscribes to this policy. Mr Costello and Mr Keating used to get up in this place and skite about how the high dollar was a judgment by the world's investors of how marvellous they were. In fact, it was a judgment on their incredible towering stupidity at having interest rates 400 per cent higher than the rest of the world. That is what it was a reflection upon; that is what it really disclosed. In the meantime, whilst Mr Keating and Mr Costello were skiting about how wonderful the high dollar is and how it demonstrates what a wonderful government you are, China and America were almost firing bombs at each other, both accusing each other—quite rightly, I might add—of holding down their currencies.

So here were the two greatest economies on earth both cheating on their currencies, but here was Australia saying, 'Oh, geez, it's a reflection upon how clever we are.' I disagree diametrically. It was a brilliant speech by the Prime Minister last night, I pay her great tribute, but I disagree diametrically with her saying to us that we have a wonderful economy because of the high dollar. We have a high dollar because we have interest rates 500 per cent higher than the European Union and 1,000 per cent higher than Japan and the United States. That is the only reason we have a high dollar.

Every industry, the Prime Minister said, has the Dutch disease. I will tell you one country that is riddled with it: it is our country. The Dutch had a high-flying currency because of North Sea oil, but they did nothing about it except skite about how they had a high currency because they had a wonderful economy. Of course, the North Sea oil is now running out and there is no industry left in Holland at all. Do I know of another country that has no industry left at all? Oh, yes! Australia. We have a coalmining quarry and an iron ore quarry—and there is nothing else left. When Mr Keating started this rubbish, 72 per cent of the cars in Australia were proudly Australian made. This year, it looks as if 12 per cent will be Australian made. A wonderful success story! Congratulations, Nick Minchin! Congratulations, Peter Costello! Congratulations, Paul Keating!

Today we see a minister with the courage to stand against the tide. In 1996 we had 55 Australian ships with a crew of maybe 30 or 40 on each of them; because you have to have standby crews, it might have been 100. So there might have been 5,000 jobs there. Today there are only 22 ships, so there are only 2,000 jobs and 3,000 Australian jobs have vanished. So today I pay the minister the highest of tributes. He has shown a lot of courage. He is swimming against the flow. That is how you get yourself in the history books—and I just wrote one; it is very successful—not by doing what the mob says is the right thing to do and leading your country down over the precipice. It is when you stand up. When Winston Churchill said, 'This Hitler bloke is bad,' everyone said, 'You dirty, filthy warmonger; you dangerous person.' Two years later, on their bended knees, they asked him to take over running the country. You might be in with a bit of a show there, Albo! When you stand against the tide, that is when you really deserve the accolades. If you are just drifting with the mob you do not deserve them.

There are 400 ships servicing 55 Australian ports internally, from Australian port to Australian port, but there are 400 ships servicing our ports and taking goods overseas or bringing them in. Less than five per cent of those ships are Australian owned. In America, by law they have to be 100 per cent owned. Either America is stupid and Australia is very clever or else we are very stupid and America is very clever. I tell you what, they get American ships carrying their goods and this country is losing $5,000 million a year because all those ships are foreign owned. That $5,000 million a year will only be recouped if ministers have the courage to do the right thing.

In my book on Australian history there is a statement in it that Ben Chifley is the Prime Minister without peer. There is no Prime Minister that has even got remotely close to Ben Chifley. He is the Prime Minister who had tuberculosis abolished in Australia, had a telephone put in every house in Australia, had 26,000 houses built after the war, gave us the Snowy Mountains scheme and gave us the wheat stabilisation scheme—the complete antithesis of free markets. He is in every history book because he introduced the wheat stabilisation scheme to Australia. That is what made him famous. That is why we say, 'What a great man' Chifley had delivered to Australia the Holden motor car. There was no free market then. If we had had free markets then, we would never have had Holden motor cars or an Australian motor vehicle industry.

I spit upon free markets. We are here to protect our people. We are here to take our people forward, and to do that we have to have a comprehensive, wide-ranging economy. I have a very big picture of the great John McEwen on a wall in my parliamentary office. I quote him in my book. He said:

The third reason for tariffs, but you are too young to appreciate this—

and he had a faraway look in his eyes—

is that I will never see my country placed in another war without the ability to build a main battletank.

Today, we cannot build a tyre; we cannot build an electric motor, let alone building a main battletank. We have no technology because the stupidity of the Dutch disease has contaminated virtually every single person in state—with the obvious exception of the minister for transport, God bless him—and has left the people of Australia without the heart and fight to go on.

Every single person who has tried to open a manufacturing business has just said: 'What's the use? I am up against the Chinese, who work for $5,000 a year. I am up against the Filipinos, who work for $4 a day.' Our farmers have said: 'What's the use? I can't compete. Even if I could, Woolworths and Coles are not going to pay me anything anyway.' So the free market has been the greatest disaster. Just read my book, Mr Deputy Speaker—it is only $39—and you will see the dimensions of the disaster. You are in a country now without any manufacturing, a country nearly without any agriculture—it has not reached quite that far yet but it is getting pretty close to it—and a country that cannot produce an electric motor or a tyre. That is the country that we live in. Except for the iron ore quarrying and the coal quarrying—not mining; quarrying—there is nothing left in our country. It has been completely destroyed and the iron ore will run out and the coal will run out— (Time expired)

Richard Marles (Corio, Australian Labor Party, Parliamentary Secretary for Pacific Island Affairs) Share this | Link to this | Hansard source

I would like to add my voice to the member for Kennedy's in commending the Minister for Transport and Infrastructure for his efforts and, like the member for Kennedy, I too say, 'God bless Albo'. I am here to support this package of reforms, in particular the Shipping Registration Amendment (Australian International Shipping Register) Bill 2012, which establishes an Australian international register—which will be a genuine and quality national register that upholds an appropriate standard of ships, robust regulations, decent labour standards and good safety.

The AISR provides for the establishment of a high-quality register under the regulation of the Australian Maritime Safety Authority, which is internationally regarded as a leading-edge regulator in international shipping. The bill establishes a strong regime for the employment of seafarers, recognising that to be internationally competitive with other quality shipping registers, such as Singapore, Denmark and the UK, the Fair Work Act and related Australian workers compensation standards cannot apply. Instead, the bill provides a framework for the establishment of labour relation standards that are comparable with better quality international registers, like those in Europe and the UK, based around the ILO Maritime Labour Convention and International Transport Workers Federation standards.

In that context, the bill allows for mixed crews on ships on the AISR, requiring a minimum of two Australian resident crew members, ideally the master and the chief engineer. The remainder of the crew can be non-nationals. Minister Albanese in his second reading speech acknowledged the opportunity for those non-nationals to be drawn from the near region—from seafarer nations of the Pacific and from Timor Leste. I fully support that objective and will work with the Australian stakeholders and regional nations to ensure that our regional neighbours are provided with the opportunity to participate in Australian shipping reform.

Australia understands labour mobility is critical to the economic sustainability of the Pacific region. In Kiribati, remittances—mainly from merchant seamen—represented around seven per cent of GDP in 2009. In Tuvalu last year, remittances— again mostly from locally-trained merchant seamen—were worth around six per cent of GDP. Our commitment to increasing opportunities for labour mobility was demonstrated last year when this government expanded the Pacific Seasonal Workers Scheme to nine countries across the Pacific and East Timor. This aspect of Australian shipping reform creates a new employment stream for the graduates of Pacific maritime institutes, a number of which are already delivering outcomes to IMO standards. It also creates opportunities to build the standing and standards of those regional maritime training institutes so they can also supply internationally recognised seafarers to other nations which encourage investment in shipping.

Of course, all of this will provide a new source of remittances for the nations of the Pacific. We know, as I have stated, that in some Pacific nations remittances from seafarers are a substantial part of the national economy.. Such an outcome fits well with the existing development assistance objectives around education and training and the creation of genuine employment streams in quality and sustainable industries. For Australia, there will be an opportunity for our high-quality seafarer training institutes, such as the Australian Maritime College or the Great Barrier Reef International Maritime College, to deliver top-up training to meet the requirements of the new IMO International Convention on Standards of Training, Certification and Watchkeeping, known as the 2010 Manila amendments, which create globally an international integrated rating.

The creation of a genuine regional seafarer labour market will help smooth out the peaks and troughs of the domestic seafarer labour market, driven by the demands of the offshore oil and gas industry. I am committed and I know AusAID is committed to fostering these opportunities. This will create economic benefit for Australia and for regional nations who come on board. This is one aspect of the shipping reform bills where Australia can show regional, and indeed global, leadership in a partnership with domestic stakeholders and regional nations.

The regional employment and training opportunities demonstrate how Labor has structured this package as an integrated package of bills that delivers positive benefits for Australia, for seafaring families and for the nations in the region. I commend the minister for his foresight in developing these bills. I will be providing my support to see that workers from Pacific and neighbouring countries have the opportunity to be part of high-quality seafaring crews under the AISR. I commend the bills, and in particular the Shipping Registration Amendment (Australian International Shipping Register) Bill 2012, to the House.

Anthony Albanese (Grayndler, Australian Labor Party, Leader of the House) Share this | Link to this | Hansard source

I thank all members of parliament for their contribution to the debate on these five bills that comprise the government's Stronger Shipping for a Stronger Economy legislative reforms. These bills represent the most significant overhaul of the Australian coastal trading arrangements since these arrangements were put in place in the 1920s. These reforms address the 40 per cent decline in the Australian fleet over the last decade by encouraging investment in Australian shipping and levelling the playing field for Australian flagged ships so they can better compete.

The Coastal Trading (Revitalising Australian Shipping) Bill sets out the new licensing arrangements to enable vessels to engage in coastal trading in Australian waters. Australian vessels paying Australian wages and providing jobs to Australians will be given preference to carry Australian goods on the Australian coast. However, as I have said previously, the new licensing arrangements do not close the coast to foreign ships.

The government recognises the legitimate role foreign-registered vessels have in our domestic shipping industry, and they will continue to have access to the coast, subject to Australian vessels being given the opportunity to compete for the job. The bill provides for an open and transparent decision-making process when deciding who gets that job. The bill also provides for sufficient flexibility to enable variations to existing licences. We have introduced government amendments to address concerns that have been raised by the major oil companies. Expedited variations may be made to temporary licences to enable fuel carriers to respond quickly to special energy related situations.

The Coastal Trading (Revitalising Australian Shipping) (Consequential Amendments and Transitional Provisions) Bill will provide for a smooth transition from the current coasting trade arrangements to the new regulatory framework to ensure the supply chain will continue to operate while the new regulatory regime is being bedded down. As I have said previously, we have only four Australian vessels participating solely in international trade. It is time that we take action to increase Australian participation in the international trades.

One way of achieving this is the creation of an Australian International Shipping Register through the Shipping Registration Amendment (Australian International Shipping Register) Bill. Over the last 20 years, international registers have been embraced by many advanced maritime nations to address loss of tonnage to open registers. Most of these countries have now established international registers, which provide financial and taxation incentives to increase the competitiveness of their fleets. The Australian International Shipping Register is not, however, a flag of convenience. Companies wishing to register on the Australian International Shipping Register will need to have strong links to Australia. This will ensure that our maritime safety regulator, the Australian Maritime Safety Authority, has the regulatory reach to ensure compliance with our safety, environmental and occupational health and safety standards.

Importantly, we have the Shipping Reform (Tax Incentives) Bill and the Tax Laws Amendment (Shipping Reform) Bill, which provide for tax and other fiscal incentives to ship operators. The major concessions provided through the tax bills are a zero tax rate for ship operators and a seafarers' tax exemption, measures that reduce the cost of Australian shipping operations. The tax bills also enable shipowners to depreciate the cost of their ships over 10 years instead of the average 20 years, along with roll-over relief on sale of a ship. Finally, an exemption from royalty withholding tax reduces the cost for Australian ship operators to secure foreign vessels. We have also introduced a minor government amendment to this arrangement to ensure the exemption from royalty withholding tax will not have the unintended consequence of creating an income tax liability for the foreign lessor in lieu of the royalty withholding tax.

When I introduced these bills I stated that the industry had to do its bit to reduce the costs of Australian shipping. I can advise the House that the shipping industry and unions have reached an agreement on an industry compact—something that the shadow minister said would not happen. It has happened and here it is: the bluewater Shipping Reform Labour Relations Compact, signed by Paddy Crumlin, the National Secretary of the Maritime Union of Australia; Fred Ross on behalf of the AMOU Executive Council; and Theresa Lloyd, the Executive Director of the bluewater employers' Australian Shipowners Association.

Here we have a historic agreement. I congratulate both industry and unions on getting together in the interests of our nation, putting aside sectional interest for the national interest. That is why this legislation should be supported by everyone in this House. It is extraordinary that you have a position whereby industry and unions are as one in urging support for this legislation; yet those opposite cannot bring themselves to support this legislation, even though it is consistent with the policy adopted at the National Party conference just a short time ago.

What the amendment before the House does is ask for another review lasting six months. We have had a House of Representatives committee inquiry, of which the member for Hinkler was the deputy chair. It produced unanimous recommendations. We then had a discussion paper released. We had a shipping advisory task force, comprising groups including the National Farmers Federation, people who use the ships, as well as the Australian Shipping Association and the unions. We then had another process where you had three groups: one looking at taxation, chaired by Treasury; one looking at regulatory reform; and one looking at workforce development. In this, groups across the sector were involved in the development of this legislation. We then had exposure drafts of the legislation released for people to comment on. We then had another House of Representatives inquiry into these bills. We have produced amendments as a result of some of the submissions to that inquiry. And what do they say over there? They say, 'Let's have another inquiry.'

We had 55 ships when this mob came to office in 1996, and we are now down to less than half of that. You reach a tipping point whereby there is no industry at all. We either do this today and get it done or the industry is done—there will be no Australian flag on our coast. The consequences of that not just for our economy but also for our national security and for our environment are dire indeed. We as an island continent with the fourth-largest shipping task in the world simply cannot walk away from our responsibility to take action. That is what I am urging here today—supported by industry and supported by unions.

I congratulate the delivery of key productivity reform in this agreement. Productivity and efficiency gains, a process to review minimum manning levels and the introduction of riding gangs in coastal trades are all included. In addition, the compact contains many other desirable clauses, such as a dispute resolution clause with a continuity of work commitment; a commitment to review the Seacare scheme, with the objective of protection and indemnity insurance clubs re-entering the market; and setting the crew to berth ratio at two to one. These reforms will benefit Australian shipping companies and establish a solid platform for investment in Australian shipping. More importantly, the revitalisation of the Australian shipping industry will build the maritime cluster and benefit the Australian economy as a whole. These legislative reforms are a product of a long and thorough process of review and industry consultations beginning back in 2007.

We simply cannot afford to continue to do nothing about these issues. In fact, a number of significant industry groups—Teekay Shipping and other shipping operators—have written to members of the opposition asking them to support this vital legislation. So I encourage the opposition to listen to Australian industry and think about the future prosperity of the nation. These reforms are long overdue. The country cannot afford any further inaction on this important issue. We are an island continent. We must be a shipping nation, not just a shipper nation. We have had the courage to take action. I encourage members of this House to do the same.

There are people up there in the public gallery—and I want to particularly single out Teresa Lloyd and Paddy Crumlin—who have had the courage to not get their ambit claims up in this process. They have not got everything that they want. They have had the courage to step away and to make decisions to make sure this reform can happen and that you have a movement forward on these issues. I commend the bills to the House and ask the House to reject the amendment moved by Leader of the National Party to set up yet another inquiry.

Kelvin Thomson (Wills, Australian Labor Party) Share this | Link to this | Hansard source

The question is that the amendment be agreed to.

Bill read a second time.