Warren Truss (Wide Bay, National Party, Leader of the Nationals) Share this | Link to this | Hansard source

I move:

That this bill be now read a second time.

Introduction

To ensure international shipping continues to be an economically viable proposition, shipowners are generally entitled to limit their liability in respect of claims arising from damage caused by their ships. This means that if a ship is involved in an incident which causes damage to persons, property or the environment, there is a limit on the maximum amount of compensation that a court can order the shipowner to pay.

The maximum liability of a shipowner is usually calculated based on the size of the ship involved in the incident and has no relationship to the amount of damage caused by the incident.

The rationale for allowing shipowners to limit their liability in respect of ship-sourced damage is to encourage shipping and trade. This involves balancing the competing objectives of compensating anybody who suffers loss or damage caused by shipowners or their representatives, while ensuring that ship operators are able to access commercially available insurance to cover their liability for that damage.

Australia is a party to the 1996 Protocol to the Convention on Limitation of Liability for Maritime Claims, which allows a shipowner (including the charterer, manager and operator of the ship) or salvor to limit the total amount they can be required to pay for damage caused by the ship, the shipowner or the salvor. Limits are specified for two types of claims: those for loss of life or personal injury; and those for other claims, such as damage to ships, property or harbour works. The limits are based on the gross tonnage of the ship, with larger ships having higher limits. It is administered by the International Maritime Organization, a specialised agency of the United Nations.

Other international maritime conventions adopt the limits of liability in the 1996 LLMC Protocol and apply them to shipowners for the purpose of limiting their liability under those conventions, including the International Convention on Civil Liability for Bunker Oil Pollution Damage which limits the liability of shipowners for pollution damage caused by bunker oil spills and requires shipowners to maintain liability insurance in respect of such damage up to the limit of their liability.

Purpose of the bill

The purpose of the bill is to implement amendments to the 1996 LLMC Protocol which will come into force on the later of either the day this act receives the royal assent and 8 June 2015. The bill will increase the liability limits for shipowners and salvors for maritime claims relating to ship-sourced damage to more adequately reflect the costs of such incidents.

Australia was the leading advocate of increasing the liability limits under the 1996 LLMC Protocol. A proposal to increase the limits was brought forward at the IMO by Australia following the Pacific Adventurer incident off the Queensland coast on 11 March 2009, which involved a bunker oil spill. The costs for cleaning up the spill were estimated at $34 million. However, under the 1996 LLMC Protocol (and therefore under the LLMC Act) the shipowner was legally entitled to limit its liability to approximately $17.5 million. The 1996 LLMC Protocol uses 'special drawing rights' to quantify the liability limits. Based on conversion rates as at 5 February 2015, the financial liability for a medium sized vessel of 50,000 gross tonnes 'in respect of claims for loss of life or personal injury' amounts to an increase of approximately A$33,600,000. A claim for the same sized vessel made 'in regard to any other claims' amounts to an increase of approximately A$16,800,000.

Conclusion

Ensuring the LLMC liability limits are raised in Australia as soon as they enter into force will reduce the risk of having to seek an increase to the Protection of the Sea Levy in the event that the shipowner's liability and/or insurance for an incident is insufficient or absent.

I commend the bill to the House.

Debate adjourned.