Nick Xenophon (SA, Independent) Share this | Hansard source

I, too, have real difficulties supporting the measures contained in this bill. In fact, if the bill is brought to a vote tonight, I will be voting against it. This bill has a number of retrograde measures. Senator Brown has raised a number of very legitimate concerns in relation to this bill.

The first of these measures is the abolition of the seafarer tax offset. This is another kick in the guts to an industry that is already on its knees. What is worse, the predicted savings achieved by the scrapping of this tax offset are miniscule—just $12 million over the forward estimates. I question whether there is no other place the government can find such modest savings, particularly in light of the challenges facing the shipping industry in Australia.

The seafarer tax offset is a refundable offset provided to companies for 30 per cent of salary, wages and allowances paid to Australian resident seafarers on international voyages. Importantly, it provides an incentive for Australian seafarers to be employed on vessels that travel through international waters. These experiences improve Australian seafarers' skills base, making them desirable employees. What is more, this tax offset provides an incentive for employers to hire Australian resident seafarers. Based on allegations made by Mr Bill Milby of North Star Cruises that he was advised by government officials to replace local staff with international crew in order to compete with foreign ships, it is clear Australian seafarers need all the help they can get.

I am concerned that this measure does not appear to be part of a plan to boost Australian shipping in this country. One of the points that has been put to me—and I do not dismiss this lightly—by Senator Abetz, the Leader of the Government in the Senate, and others, including shipping operators and the Deputy Prime Minister, the Hon. Mr Truss, is that there is a concern that it is more expensive to ship sugar from Bundaberg in Queensland to Melbourne by sea than it is from Thailand. If that is the case, we need to look at why that is so and whether there are efficiencies that can be made and work practices that need to be altered. My understanding is that maritime workers are not against having greater efficiencies in the sector. Maritime workers are not against being part of the solution, if that is the case. So I think we need to do a bit of fact checking so that that assertion that it is cheaper to bring in sugar by ship from Thailand to Melbourne than it is from Bundaberg can be verified and substantiated. If there are productivity impediments in the seafaring industry, we need to look at those and find reasonable, practicable ways to deal with them.

But one way we should not deal with them is by effectively saying that we will gut our local seafaring industry and replace it with workers who are being paid on wages way below Australian award rates. We have rules on cabotage here in Australia. That is something I have been quite active on in the past in relation to the airline industry in respect of Jetstar, for instance, when there were foreign crews, generally Thai based crews—and I have spoken to some of those crew members—being paid an absolute fraction of what Australian based crews are paid by Jetstar. This is something that arose several years ago. I understand there has been some improvement in relation to this where they would be involved in crewing domestic flights. From Darwin to Sydney, for instance, it might be the extension of an international flight, even though 90 per cent of the passengers on that flight—if not all the passenger—were domestic passengers. That to me is not what it should be about; that to me is an abuse of the cabotage principle.

We also need to look at what they do in the United States. The Jones Act, the Merchant Marine Act 1920, in the United States is in clear contrast to what is going on in this country. It is a federal statute that provides for the promotion and maintenance of the American merchant marine industry. I should say that is a line direct from a very quick Wikipedia reference that I dug up now, but it makes the point that under section 27 of the Jones Act, or the Merchant Marine Act 1920, they are much stricter and much tougher in ensuring that there is a domestic seafaring industry. In fact, I understand that even the ships that go coast to coast or port to port in the United States have to be made in the United States of America. They have a much more active approach to local industry participation than we do.

I think we should look at the impact of the legislation and what we can learn from it here. If there are, however, productivity issues in relation to our seafaring industry, let's deal with those in a sensible, rational, consultative manner rather than going down the path of throwing the baby out with the bathwater—of getting rid of this measure, which, while modest in scope is still very important to the local seafaring industry.

The second measure contained in this bill proposes a reduction in the rates of tax offsets under the research and development tax incentive. In a country with a long and proud history of inventors, of inventions and innovations, it seems the importance of encouraging research and development is critical. From the humble rotary clothes line, the Hills Hoist, to the black box flight recorder to the photocopier to the bar code, the depth of talent in Australian inventors cannot be underestimated. The potential for our economy of this innovation must not be lost on any government. In my home town of Adelaide, SupaShock is gaining attention around the world for its development of a shock absorber that is credited with the Ford racing team winning V8 supercar races because of what it does to a car's handling. Defence industries around the world are looking at it. I know one German defence contractor is looking at the way these shock absorbers work and the ride they give. The mining industry is talking to SupaShock because these shock absorbers will make a massive difference to heavy mining and earthmoving equipment. They will significantly reduce the levels of injuries in the workplace, particularly back injuries, because they will absorb the shocks of that heavy equipment.

I am concerned about the impact of these changes. It is worth reading a letter from the Cell Therapy Manufacturing Cooperative Research Centre of 11 October 2014. It was a submission to similar measures to the Senate Standing Committee on Economics. They said:

The CRC program provides funding to build critical mass in research ventures between end users and researchers to deliver significant economic, environmental and social benefits across Australia. There are approximately 40 CRCs across Australia and all have been established to address major challenges that require medium to long-term collaborative efforts.

The CRC also said:

Under the R&D Tax Incentive, our industry participants receive either a 40 percent non-refundable or a 45 percent refundable tax offset, depending on their turnover. This equates to a 10 or 15 percent permanent tax benefit. Under the proposed reduction, this would reduce the benefit by 10-15 percent. Such a large reduction will directly reduce R&D funding.

That is what the submission said, and it is directly relevant.

I want to put on the record that after much negotiation with Minister Cormann I supported changes to the R&D for large companies—those big companies that some would say are big enough and ugly enough, and I do not mean that in a pejorative way, to look after themselves—companies with massive turnovers, massive levels of revenue and income. But these changes will affect those innovative companies—those small and medium businesses that are the future of our advanced manufacturing and are at the cutting edge of research and development and are bringing forward innovations in this country to provide the jobs of the future.

And so I cannot support these changes. It is a change that will have a retrograde effect on small and medium businesses involved in research. With those remarks, regretfully, I cannot support these changes. I think that our shipping industry—our merchant marine industry—does have many challenges, but these proposed changes for our seafarers will not solve the problem; they will only make it worse. When it comes to R&D, we need to keep those current incentives in place so that those 200,000 jobs, which could well be lost in Victoria and South Australia by the end of 2017, once Ford, Holden and Toyota depart as car manufacturers from this country, can be replaced. For those reasons, I cannot in good conscience support this bill.