Tammy Tyrrell (Tasmania, Independent) Share this | Hansard source

Now the public hearings have wrapped up and before the committee reports, I want to share some insights from the Senate Select Committee on the Tasmanian Freight Equalisation Scheme or TFES, for short. This has been such a great committee to chair, and it's not just because working with the secretariat dream team of Bonnie, Hugh and Nick has been an absolute pleasure and that my fellow committee members have invested their time to help Tasmania—Senator Chandler included. The biggest win for me is that I can see how improving the TFES will make a real difference for Tasmanian businesses.

Committee members heard from Tasmanian businesses, all three levels of government and industry stakeholders at public hearings at both ends of the state. We visited King Island and heard from the mayor, Marcus Blackie, who told us why restoring the National Highway to the Bass Strait islands will increase equity. On King Island, two litres of milk cost up to $9 and petrol hovers around $2.40 to $2.60 per litre regularly. It's similar on Flinders Island. Last week, the Flinders Island mayor, Rachel Summers, told us two litres of milk cost $6 10, petrol was $2 42 per litre and a dozen eggs cost $8. Rachel wasn't wrong when she said Flinders residents 'pay a premium for being on the island'.

On that note, the distance the Spirit of Tasmania vessels travel between Geelong and Devonport is 242 nautical miles or 448 kilometres. The spirits are not the only vessels that transport freight between Tasmania and the port of Melbourne, but they offer a visual reference I expect many of you will know. If a Tasmanian business like Ashgrove Cheese or Norske Skog were transporting its product—in this case, cheese or paper—by road, the equivalent distance is 448 kilometres. I wonder if that 448 kilometres of Bass Strait receives the equivalent amount of funding to, say, 448 kilometres of the Hume Highway or the Bruce Highway? Several witnesses commented that Bass Strait was the most expensive piece of water to cross in the world. The TFES is supposed to compensate Tasmanian businesses because they don't have access to the National Highway and rail networks; they have to rely on shipping.

It's clear from the evidence the committee heard at all three hearings that the Tasmanian Freight Equalisation Scheme equalises nothing. Ashgrove's operations manager told us it costs the business $15 to send cheese from Elizabeth Town in the state's north-west to Strahan on the west coast, but the same amount of cheese sent from Elizabeth Town to a Melbourne suburb costs $90. Wine Tasmania told us that 40 per cent of their members don't claim a rebate from the TFES because of the huge amount of administration involved for a small return. They said it cost 35 to 70 per cent extra in freight for smaller operators to send their wine to mainland customers. Imagine how many of you could be enjoying more Tassie wine if freight didn't cost so much.

Essentially, freight costs have grown exponentially, but TFES rebates have stayed the same for decades. Fruit Growers Tasmania quantified this for us, saying that sea freight costs have gone up by 2.5 times in recent years, from $389 to $918. Even our pensioners get a rise in their payments every six months to reflect the increased cost of living. Tasmanian businesses have not had the same consideration. Economist Saul Eslake pointed out that he hoped this lack of regular adjustment in TFES payments was not deliberate discrimination against Tasmania.

One of the biggest points made by witnesses at the hearings was that TFES rebates only cover the cost of transport across water, not the other costs associated with freight like the cost of storage at the wharf if there is a delay or the cost of getting the goods from the sender to the receiver.

The perfect illustration of these additional costs came from Tasmanian farmer and transporter Matt Ryan, who told the committee that 30 per cent of the cost of a bag of carrots is the cost of getting them to the supermarket. How much does it cost to grow a bag of carrots? Those margins, if any, are very thin. We heard that it's cheaper to ship something from Tassie to Spain than it is to ship something from Tassie to Sydney. If that's not evidence of a system that's not working, I don't know what is. When it comes to evidence of a system that isn't working, the department responsible for the TFES said that it regularly reviews and discusses the scheme, but the fact it doesn't work has never been mentioned—go figure!

So what do we do now if the TFES is outdated and not fit for purpose? It's clunky, difficult to use and returns little for the investment of time. Let's fix this system and make it equal for Tasmanian businesses. (Time expired)