Richard Colbeck (Tasmania, Liberal Party) Share this | Hansard source

I rise to make a contribution with respect to the Senate Select Committee on the Tasmanian Freight Equalisation Scheme. Along with my colleague Senator Chandler, I was pleased to play an active role in the hearings of the inquiry, which were conducted on King Island, in Hobart and in Longford, in Tasmania.

As colleagues have indicated, the Tasmanian Freight Equalisation Scheme is a critical measure of support for the Tasmanian economy. It not only supports goods coming from Tasmania to the mainland and to export markets, which has been commented on by my colleagues who made contributions earlier in this debate, but also supports southbound goods, which are inputs to the manufacturing sector in Tasmania, and therefore the competitiveness of the Tasmanian manufacturing industry, much of which is food based. One of the things Tasmania is really good at is producing high-quality food for national and international markets. The inputs into those industries and the costs of transporting goods in those industries are absolutely critical. That's why, in the coalition's response we announced last Friday, supported by our leader, Peter Dutton, ensuring that not only northbound goods but also southbound goods were included was absolutely critical.

Aside from that, there are the two Bass Strait islands. As I said, the freight equalisation select committee went to King Island and spent a day there taking evidence. We heard, from a number of people across the King Island community, how important that scheme is to their economy but also, importantly, how the decay in the support that was being provided by the freight equalisation scheme is putting their economy, their community and their manufacturing sector under stress. From the day that I spent there with the select committee and from another couple of days I spent with the Liberal candidate for Braddon, Mal Hingston, what was clear to me was the importance of the road freight disadvantage—which is the measure supported by the freight equalisation scheme—being properly calculated and embedded into the design of the scheme. That's what the review announced by Peter Dutton on Friday will do—ensure that there is an appropriate level of road freight disadvantage incorporated into the new design of the freight equalisation scheme and that, while we're waiting for that to happen, there is immediate support for the Tasmanian economy, including that of the two Bass Strait islands, to compensate for the significant decay in the support for road freight disadvantage in the current legislative measures.

I also spent a couple of days on Flinders Island with the member for Bass, Bridget Archer, specifically talking to the community over there about freight equalisation. It's a critical part of their economy, just like it is on King Island and for the rest of the Tasmanian community. Ensuring that both Flinders Island and King Island are appropriately supported in the review of the scheme, as well as the measure that was announced last Friday, is absolutely critical from my perspective and of course for Mal Hingston, Bridget Archer and so many of those industries and businesses throughout the large electorate of Lyons, which takes in the largest proportion of the Tasmanian landmass. And ensuring support for the businesses that Susie Bower is supporting in Lyons is also critical.

There was some excellent evidence provided to us by submitters during the inquiry. I was particularly taken with the evidence provided by the TCCI and representatives from Norske Skog, who are significant users of the scheme—particularly Norske Skog—but have a very mature attitude to the way that the scheme should operate. Their description of how the class system that operates within the freight equalisation scheme has become misaligned over the years, and therefore the road freight disadvantage rebate decayed over that period of time, was quite compelling evidence as part of the inquiry. Also compelling was the evidence they provided to the committee that, if CPI had been applied to the intermodal costs since the turn of the century, since about the year 2000, the intermodal element of the freight equalisation scheme would now be paying out about $200, which is double what it's paying. Clearly there's an urgent need for the intermodal costs to be recalculated, and in my view they should be indexed to CPI into the future. That's a view that I came to based on the very good evidence that was received by the committee during the hearings. It is so closely aligned. When you do the calculation of CPI to the intermodal cost from 2001 to about now, it is within a few cents of being $200 instead of $100.

These changes will make a significant difference to the competitiveness of business and the capacity of business in Tasmania to compete in national and international markets. The $65 million that was announced on Friday—with $3 million of that to conduct the review and $62 million to support industry through the realignment of the fees and the support of the road freight disadvantage—is very important. Likewise, the Bass Strait Passenger Vehicle Equalisation Scheme, which was introduced by the coalition government back in 2004, is the reason we have two ferries on Bass Strait now. The then Premier was going to buy one. When he heard of the introduction of the Tasmanian Freight Equalisation Scheme, he made a decision to buy two, which significantly increased the capacity across Bass Strait.

The original intent of the Bass Strait Passenger Vehicle Equalisation Scheme was that you bought a ticket on the ferry and your car travelled for free. Can I tell you, that was a huge advertising boon for the Tasmanian tourism industry and the Tasmanian economy. Off the back of the introduction of that scheme and the two ferries, there was a significant surge in the Tasmanian economy—as there has been on each occasion when there has been a reduction in the cost of getting to Tasmania or an increase of capacity on Bass Strait. The Bass Strait Passenger Vehicle Equalisation Scheme was a significant element in the then Tasmanian government's decision to purchase two ferries and significantly increase the capacity on Bass Strait. Those two ferries are now a very valued part of the Tasmanian economy. But, of course, given time, and the fact that a subsidy is not necessarily a guarantee of price, cars no longer travel for free. So I think the decision by Peter Dutton to announce a review of the Bass Strait Passenger Vehicle Equalisation Scheme, as well as the Tasmanian Freight Equalisation Scheme, is a very important one for Tasmania and for the Tasmanian economy, to make sure that both of those schemes can be futureproofed.

One of the things that happened in recent years was a recommendation that updates to the road freight disadvantage be taken out of the scheme as an automatic feature. I think they should go back into the scheme so that we don't have a continued argument or a decay of the scheme by the fact that there's no indexation. We've seen that with the intermodal costs and likewise with the road freight disadvantage calculation. I think they should go into the scheme. The recommendation from the coalition senators was that we should have a review of the scheme every two years to make sure it keeps up with current costs. We saw, particularly over the last few years, how damaging a high-inflation environment is. The high-inflation environment of the last few years has been one of the significant factors in the decay of the support that the scheme offers to freight users, and I'm delighted that this coalition party has made a decision to put the significant support in place that was announced last week. I seek leave to continue my remarks later.

Leave granted; debate adjourned.